1
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION Washington, D.C.
20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended January 31,
2000
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ________
to ________.
Commission File Number: 0-
18146
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P.
(Exact name of registrant as specified in governing
instrument)
Delaware 13-
3293754
(State of organization)
(IRS Employer
Identification No.)
2 World Trade Center, New York, NY
10048
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(212) 392-1054
Former name, former address and former fiscal year,
if changed since last report: not applicable
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required
to file such reports), and (2) has been subject
to such filing
requirements for the past 90 days. Yes X No
Page 1
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P. CONSOLIDATED BALANCE SHEETS
<CAPTION>
January
31, October 31,
2000 1999 <S>
<C> <C>
ASSETS
Cash and cash equivalents $1,959,592
$
1,744,447
Real estate held for sale -
9,457,148
Investments in joint venture 6,786,621
6,962,579
Other assets 991,487
786,466
$9,737,700
$ 18,950,640
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 285,596
$
343,550
Partners' capital (deficiency):
General partners
(8,554,387)
(8,561,045)
Limited partners ($500 per Unit, 534,020 Units
issued) 18,006,491
27,168,135
Total partners' capital 9,452,104
18,607,090
$9,737,700
$ 18,950,640
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P. CONSOLIDATED INCOME STATEMENTS
Three months ended January 31, 2000
and 1999 <CAPTION>
2000
1999 <S> <C>
<C>
Revenues:
Rental $ 35,231
$1,624,001
Equity in earnings of joint 145,042
208,102
ventures 68,698
29,223
Interest (31,095)
- -
Loss on sale of real estate 626
48,447
Other
218,502
1,909,773
Expenses:
Property operating 17,685
477,588
Depreciation -
374,760
Amortization -
14,948
General and administrative 165,319
151,043
183,004
1,018,339
Net income $ 35,498 $
891,434
Net income allocated to:
Limited partners $ 28,840 $
802,291
General partners 6,658
89,143
$ 35,498 $
891,434
Net income per Unit of limited
partnership interest $ 0.05 $
1.50
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
Three months ended January 31, 2000
<CAPTION>
Limited
General
Partners
Partners Total <S>
<C> <C>
<C>
Partners' capital (deficiency)
at November 1, 1999 $ 27,168,135
$(8,561,045)
$ 18,607,090
Net income 28,840
6,658 35,498
Distribution (9,190,484)
- -
(9,190,484)
Partners' capital (deficiency)
at January 31, 2000 $ 18,006,491
$(8,554,387) $ 9,452,104
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended January 31, 2000 and 1999
<CAPTION>
2000 1999 <S>
<C>
<C>
Cash flows from operating activities:
Net income $
35,498 $
891,434
Adjustments to reconcile net income to net
cash provided by operating activities:
Loss on sale of real estate
31,095
- -
Depreciation and amortization -
389,708
Equity in
earnings of joint ventures
(145,042)
(208,102)
(Increase) decrease in other assets
(205,021)
244,020
Decrease in liabilities
(57,954)
(7,099)
Net cash (used in) provided by operating
activities (3 41,424)
1,309,961
Cash flows from investing activities:
Proceeds from real estate sold
9,490,293
- -
Additions to real estate and real estate held for
sale
(64,240) (63,094)
Investments in joint ventures
(15,823)
(14,910)
Distributions from joint ventures
336,823
335,662
Net cash provided by investing
activities 9,747,053 257,658
Cash flows from financing activities:
Cash distributions
(9,190,484)
- -
Increase in cash and cash equivalents 215,145
1,567,619
Cash and cash equivalents at beginning of
period 1,744,447
1,919,694
Cash and cash equivalents at end of period
$1,959,592$3,487
,313
Supplemental disclosure of non-cash investing
activities: Reclassification of real estate to
real estate held for sale:
Real estate, at cost
Land $ -
$1,023,904
Buildings and improvements
- -
9,226,747
Accumulated depreciation -
(1,051,108)
Real estate held for sale $ -
$9,199,543
See accompanying notes to consolidated financial
statements.
</TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P.
Notes to Consolidated Financial Statements
1. The Partnership
Dean Witter Realty Income Partnership III, L.P.
(the
"Partnership") is a limited partnership organized
under
the laws of the State of Delaware in
1985. The
Partnership's fiscal year ends on October
31.
The financial statements include the
accounts of the
Partnership, Part Six Associates and
Laurel-Vincent Place Associates
Limited Partnership on a consolidated
basis. The Partnership's interests in
Taxter Corporate Park and the
partnership which owns interests in
Chesterbrook Corporate Center (sold in
April 1998) were accounted for using the
equity method.
The Partnership's records are maintained on
the accrual basis of accounting
for financial reporting and tax
reporting purposes.
Net income per Unit of limited
partnership interest
amounts are calculated by dividing net
income allocated to Limited Partners, in
accordance with the Partnership Agreement,
by the weighted average number of Units
outstanding.
In the opinion of management, the
accompanying
financial statements, which have not
been audited, include all adjustments
necessary to present fairly the results
for the interim period. Except for the
reclassification of real estate held for
sale and loss on real estate (see
Note 2), such adjustments consist
only of normal recurring accruals.
These financial statements should be
read in
conjunction with the annual financial
statements and notes thereto included
in the Partnership's annual
report on Form 10-K filed with the
Securities and Exchange Commission for
the year ended October 31, 1999. Operating results
of interim periods may not be
indicative of the operating results for
the entire
year.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
Notes to Consolidated Financial Statements
2. Real Estate
Pursuant to a Purchase and Sale Agreement
dated as of February 16, 1999, the
Partnership entered into an agreement,
as amended, to sell the Westland Crossing
property, for a negotiated sale price of
$10.2 million, to New Plan Excel Realty
Trust, Inc., an unaffiliated party. As
permitted by the contract, New Plan
assigned its purchase rights to its
affiliate, Landamerica Exchange Company.
The closing of the sale took place on
November 16, 1999. At closing: a) the
Partnership received proceeds of
approximately $9.2 million, net of closing
costs and other deductions (including
$373,800 of capital expenditure
commitments) and a $250,000 escrow to
secure the Partnership's obligations, if
any, pursuant to representations and
warranties in the Agreement; and b) New
Plan discontinued a lawsuit which it
had commenced against the Partnership in
September 1999 to compel the Partnership
to sell the property to it.
In fiscal 1999, the net carrying value of
the property was reclassified to Real
Estate Held for Sale and the Partnership
wrote down its carrying value to the amount
expected to be received from the sale
(including the return of the escrow),
resulting in a loss of
approximately $802,000. An additional
$31,000 loss was recorded in the first
quarter of fiscal 2000. In
accordance with the Partnership Agreement
the loss was allocated 100% to the Limited
Partners.
<PAGE>
<TABLE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
Notes to Consolidated Financial Statements
3. Investment in Joint Venture
On February 8, 1999, an affiliate of
the Managing General Partners (the
"Affiliate"), as an accommodation to the
Partnership and the other partners of the
Taxter
Partnership, purchased a leasehold
interest in
approximately 20% of the space at the
Taxter property for $6.75 million,
and assumed the rights and
obligations of the Taxter Partnership under
the lease covering the space subject to
the leasehold interest (the "Lease").
The leasehold interest was previously
owned by the tenant subject to the Lease.
As part of the purchase of the leasehold
interest, the Taxter Partnership received
an option to purchase the leasehold
interest and assume the new lease from
the Affiliate for a purchase price of
$6.75 million plus the costs of any
tenant improvements, leasing commissions
and capital expenditures incurred by the
Affiliate in connection with the
leasehold interest (collectively, the
"Resale Price"). The Taxter
Partnership also granted the Affiliate an
option to require the Taxter
Partnership to purchase the
leasehold interest and assume the new
lease for the Resale price. When the
property is sold, the Taxter Partnership
will be obligated to purchase the leasehold
interest and assume the new lease from
the Affiliate for the Resale Price.
Summarized financial information of
the Taxter Partnership is as follows:
<CAPTION>
Quarter ended January
3
1
,
2
0
0
0
1999
<S> <C> <C>
Revenues
$1,336,759
$1,470,722
Expenses
1,011,552
1,006,067
Net income $ 325,207
$ 464,655
</TABLE>
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
Notes to Consolidated Financial Statements
4. Related Party Transactions
In fiscal 1999, an affiliate of the
Managing General Partner managed the
Westland Crossing property through January
1999 and the Taxter property through
December 1998. The Partnership incurred
management fees to the affiliate of
approximately $41,000 for the three months
ended January 31, 1999. This amount is
included in property operating expense.
Another affiliate of the Managing
General Partner performs administrative
functions, processes investor transactions
and prepares tax information for the
Partnership. For the three months ended
January 31, 2000 and 1999, the
Partnership incurred approximately $38,000
and $116,000, respectively, for these
services. These amounts are included
in general and
administrative expenses.
As of January 31, 2000, the affiliates
were owed a total of approximately
$38,000 for these services. <PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
The Partnership raised $267,010,000 in
a public offering of 534,020 Units which
was terminated in 1987. The Partnership
has no plans to raise additional
capital.
As the result of property sales,
Partnership cash flow from operations
decreased during the three months ended
January 31, 2000 as compared to 1999.
On November 16, 1999, the Partnership sold
the Westland Crossing property. See Note
2 to the consolidated financial
statements. On December 20, 1999, the
Partnership distributed $9.2 million
($17.21 per Unit) of net proceeds from
the sale of the Westland Crossing property.
The distribution was paid 100% to Limited
Partners.
As of November 17, 1999, the Partnership's
interest in the Taxter Corporate Park
office property is the Partnership's
sole property interest. The partnership
which owns the property (the "Taxter
Partnership") has accepted a bid from
an unaffiliated third party to purchase
the property, and the parties are
currently negotiating the terms of a
purchase and sale agreement. However,
there can be no assurance that the
property will be sold.
An affiliate of the Managing General
Partner owns a leasehold interest in
approximately 20% of the property's
space. See Note 3 to the consolidated
financial statements. The Taxter
Partnership expects to buy and
immediately sell the leasehold interest at
the time the property is sold, using a
portion of the proceeds from the sale of
the Taxter property.
<PAGE>
The office markets in Westchester County,
New York and the west Westchester sub-
market in which Taxter Corporate Park
is located are improving as both
occupancy levels and rental rates are
increasing. During the quarter ended
January 31, 2000, occupancy at the
property increased slightly to 74%.
Subsequently, the Taxter Partnership
leased 16% of the property's space to
Nextel Communications Inc. (a new tenant
who will occupy approximately 14% of the
space for five years) and two existing
tenants; these tenants will begin to
occupy their new spaces during the
second fiscal quarter of 2000. The
Taxter Partnership also
extended its lease with Fuji Photo
Film (for approximately 30% of the
property's space) from 2001 to 2003.
During the three months ended January 31,
2000, the Taxter property generated
positive cash flow from operations, and
it is anticipated that it will continue to
do so during the period the Partnership
continues to own its interest in it.
During the three months ended January 31,
2000, the Partnership's distributions
received from the Taxter Partnership
exceeded its capital expenditures and
contributions to the Taxter Partnership.
As of January 31, 2000 the Partnership has
commitments to fund approximately
$1,465,000 for its share of tenant
improvements and leasing commissions at
the Taxter property. Any unfunded costs at
the time the Taxter property is sold
may be deducted from the Partnership's
share of the sale proceeds.
In December 1999, the Partnership
paid a cash distribution of $17.21 per
Unit from the net proceeds from the sale
in November of the Westland Crossing
property. The distribution, which totaled
$9,190,484 was paid 100% to the
Limited Partners. Generally, future cash
distributions and any remaining capital
expenditures will be paid from cash
reserves and from proceeds received
from the Taxter Corporate Park
property sale.
The Partnership believes remaining cash
reserves will be sufficient for its
needs during the remainder of 2000.
Other assets increased primarily by the
$250,000 escrow relating to the sale of the
Westland Crossing property.
Except as described above and in the
consolidated financial statements, the
Managing General Partner is not aware of
any <PAGE>
trends or events, commitments or
uncertainties that may impact liquidity in
a material way.
Operations
Fluctuations in the Partnership's operating
results for the three-month period ended
January 31, 2000 compared to 1999 were
primarily attributable to the following:
Rental revenues, other revenue,
property operating expenses,
depreciation and amortization expenses
decreased in 2000 primarily due to the
sales of the Laurel Lakes property in
September 1999 and the
Westland Crossing property in November
1999.
General and administrative expense
increased because of a tax payment of
approximately $40,000; other general and
administrative expense decreased due to the
reduced level of partnership activities.
The decrease in equity in earnings of
joint ventures during the three-month
period in 2000 is primarily due to lower
occupancy at the Taxter property.
Interest revenue increased due to interest
earned on the proceeds from the sale of
the Westland Crossing property before such
proceeds were distributed to the Limited
Partners.
The loss on real estate during the three-
month period ended January 31, 2000
was attributable to an additional
capital expenditure at the Westland
Crossing property.
There were no other individually
significant factors which caused changes
in revenues and expenses.
Inflation
Inflation has been consistently low during
the periods presented in the financial
statements and, as a result, has not had a
significant effect on the operations of
the Partnership or its properties.
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
PART II - OTHER INFORMATION
Item 6. Exhibits & Reports on form 8-K
(a) Exhibits.
An exhibit index has been
filed as part of this Report
on Page E1.
(b) Reports on Form 8-K
None
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP III,
L.P.
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the
registrant has duly caused this report to
be signed on its behalf by the undersigned
thereunto duly authorized.
DEAN WITTER
REALTY INCOME PARTNERSHIP III, L.P.
By: Dean Witter
Realty Income Properties III Inc.
Managing
General Partner
Date: March 15, 2000 By: /s/E.
Davisson Hardman,
Jr.
E. Davisson
Hardman, Jr.
President
Date: March 15, 2000 By: /s/Charles
M. Charrow
Charles Charrow
Controller
(Principal
Financial and Accounting Officer)
<PAGE>
DEAN WITTER REALTY INCOME PARTNERSHIP
III, L.P. Quarter Ended July
31, 1999
Exhibit Index
Exhibit No. Description
27 Financial
Data Schedule
E1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real esate, and real
estate joint ventures. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
unaudited financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 1,959,592
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,737,700<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,452,104<F2>
<TOTAL-LIABILITY-AND-EQUITY> 9,737,700<F3>
<SALES> 0
<TOTAL-REVENUES> 218,502
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 183,004
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 35,498
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,498
<EPS-BASIC> 0.05<F5>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash, total assets include investments in joint venture
of $6,786,621 and other assets of $991,487.
<F2>Other Stockholders' Equity represents partners' capital.
<F3>Liablities include accounts payable and accrued liabilities of $285,596.
(F4> Total revenue includes rent of $35,231, equity in earnings of joint
ventures of $145,042, interest of $68,698, other revenues of $626 and loss
on real estate of $31,095.
<F5>Represents net income per Unit of limited partnership interest.
</FN>
</TABLE>
