<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
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Commission file number 0-16027
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REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3341425
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27611 La Paz Road, P.O. Box A-1, Laguna Niguel, California 92677-0100
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 643-7700
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12(g), 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve 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
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REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 1996
INDEX
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Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets -
March 31, 1996 (Unaudited) and December 31, 1995 . . . . . . . 3
Statements of Operations (Unaudited) -
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . 4
Statements of Cash Flows (Unaudited) -
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . 5
Notes to Financial Statements (Unaudited) . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . 9
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
BALANCE SHEETS
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<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
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(Unaudited) (Note)
<S> <C> <C>
ASSETS
- ------
Properties held for sale (net of valuation
allowance of $1,166,000 in 1996 and
$1,000,000 in 1995) $29,295,000 $29,457,000
Investment in Cooper Village Partners 2,970,000 2,916,000
Cash and cash equivalents 1,031,000 980,000
Accounts receivable (net of allowance for
doubtful accounts of $14,000 in 1995) 34,000 71,000
Accrued rent receivable 779,000 799,000
Prepaid expenses and other assets 568,000 627,000
----------- -----------
$34,677,000 $34,850,000
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Accounts payable and accrued liabilities $ 433,000 $ 448,000
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Partners' capital (deficit):
Limited Partners 34,450,000 34,607,000
General Partner (206,000) (205,000)
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34,244,000 34,402,000
Commitments and contingencies - -
----------- -----------
$34,677,000 $34,850,000
=========== ===========
</TABLE>
Note: The balance sheet at December 31, 1995 has been prepared from the
audited financial statements as of that date.
The accompanying notes are an integral part of these financial statements.
3
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REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(UNAUDITED)
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<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 1995
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<S> <C> <C>
REVENUES
- --------
Rental income $1,220,000 $1,262,000
Interest income 13,000 15,000
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Total revenues 1,233,000 1,277,000
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EXPENSES
- --------
Operating expenses 300,000 310,000
Real estate taxes 176,000 182,000
Depreciation and amortization 33,000 398,000
General and administrative 192,000 198,000
Adjustment to carrying value of
real estate 166,000 -
---------- ----------
Total expenses 867,000 1,088,000
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Income before equity in earnings 366,000 189,000
Equity in earnings of Cooper
Village Partners 113,000 31,000
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NET INCOME $ 479,000 $ 220,000
========== ==========
NET INCOME ALLOCABLE TO:
General Partner $ 5,000 $ 2,000
========== ==========
Limited Partners $ 474,000 $ 218,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
--------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 479,000 $ 220,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 33,000 398,000
Equity in earnings of Cooper Village
Partners (113,000) (31,000)
Adjustment to carrying value of real estate 166,000 -
Changes in:
Addition to properties held for sale (4,000) -
Accounts receivable 37,000 (35,000)
Prepaid expenses and other assets 26,000 (44,000)
Accrued rent receivable 20,000 (8,000)
Accounts payable and accrued liabilities (15,000) 94,000
---------- ----------
Net cash provided by operating activities 629,000 594,000
Cash flows from investing activities:
Investments in real estate - (47,000)
Distributions received from
Cooper Village Partners 59,000 55,000
---------- ----------
Net cash provided by investing activities 59,000 8,000
Cash flows from financing activities:
Distributions (637,000) (412,000)
---------- ----------
Net cash used in financing activities (637,000) (412,000)
Net increase in cash and cash equivalents 51,000 190,000
Cash and cash equivalents, beginning of
period 980,000 1,085,000
---------- ----------
Cash and cash equivalents, end of period $1,031,000 $1,275,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
(1) Accounting Policies
The financial statements of Real Estate Income Partners III, Limited
Partnership (the "Partnership") included herein have been prepared by
the General Partner, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. These
financial statements include all adjustments which are of a normal
recurring nature and, in the opinion of the General Partner, are
necessary for a fair presentation. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted, pursuant to the rules and regulations of the
Securities and Exchange Commission. These financial statements should
be read in conjunction with the financial statements and notes thereto
included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1995.
Earnings Per Unit
The Partnership Agreement does not designate investment interests in
units. All investment interests are calculated on a "percent of
Partnership" basis, in part to accommodate reduced rates on sales
commissions for subscriptions in excess of certain specified amounts.
A Limited Partner who was charged a reduced sales commission or no
sales commission was credited with proportionately larger Invested
Capital and therefore had a disproportionately greater interest in the
capital and revenues of the Partnership than a Limited Partner who
paid commissions at a higher rate. As a result, the Partnership has
no set unit value as all accounting, investor reporting and tax
information is based upon each investor's relative percentage of
Invested Capital. Accordingly, earnings or loss per unit is not
presented in the accompanying financial statements.
Carrying Value of Real Estate
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," ("FAS 121"). This Statement requires that if the
General Partner believes factors are present that may indicate
long-lived assets are impaired, the undiscounted cash flows, before
debt service, related to the assets should be estimated. If these
estimated cash flows are less than the carrying value of the asset,
then impairment is deemed to exist. If impairment exists, the asset
should be written down to the estimated fair value.
6
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REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(1) Accounting Policies (Cont'd.)
Further, assets held for sale, including any unrecoverable accrued
rent receivable or capitalized leasing commissions, should be carried
at the lower of carrying value or fair value less estimated selling
costs. Any adjustment to carrying value is recorded as a valuation
allowance against property held for sale. Each reporting period, the
General Partner will review its estimates of fair value, which may be
decreased or increased up to the original carrying value. Finally,
assets held for sale are no longer depreciated. The General Partner
adopted FAS 121 at December 31, 1995 and the adoption did not have a
material impact on the Partnership's operations or financial position,
as prior to December 31, 1995, the Partnership had not had any
properties held for sale.
As noted above, as of December 31, 1995, the General Partner decided
to account for the Partnership's properties as assets held for sale,
assuming an average 12 month holding period, instead of for
investment. Accordingly, the General Partner compared the carrying
value of each property to its appraised value as of January 1, 1996.
If the carrying value of the property and certain related assets was
greater than its appraised value, less selling costs, the General
Partner reduced the carrying value of the property by the difference.
Using this methodology, the General Partner determined that Creek Edge
Business Center, Flaircentre and NorthTech had carrying values greater
than they had appraised values, and therefore reduced their carrying
values by $50,000, $600,000 and $350,000 to $3,802,000, $2,155,000 and
$13,933,000, respectively.
During the first quarter of 1996, the Partnership incurred $166,000 in
leasing commissions and other related assets at Creek Edge. Since
these expenditures had already been anticipated by the Partnership in
1995 and taken into account in the third-party appraisals that form
the basis of the General Partner's estimate of the fair market value
of the Partnership's portfolio as of December 31, 1995, the General
Partner did not change its estimate of the fair market value of the
portfolio as of March 31, 1996.
(2) Transactions with Affiliates
The Partnership has no employees and, accordingly, the General Partner
and its affiliates perform services on behalf of the Partnership in
connection with administering the affairs of the Partnership. The
General Partner and affiliates are reimbursed for their general
and administrative costs actually incurred and associated with services
performed on behalf of the Partnership. For the three months ended
March 31, 1996 and 1995, the Partnership incurred approximately
$35,000 and $41,000, respectively, of such expenses.
7
<PAGE> 8
REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
Transactions with Affiliates (Cont'd.)
An affiliate of the General Partner provides property management
services with respect to the Partnership's properties and receives a
fee for such services not to exceed 6% of the gross receipts from the
properties under management provided leasing services are performed,
otherwise not to exceed 3%. Such fees amounted to approximately
$49,000 and $47,000, respectively, for the three months ended March
31, 1996 and 1995. In addition, an affiliate of the General Partner
received $17,000 and $24,000 for the three months ended March 31, 1996
and 1995, respectively, as reimbursement of costs of on-site property
management personnel and other reimbursable costs.
As previously reported, on June 24, 1993, the Partnership completed
its solicitation of written consent from its Limited Partners. A
majority in interest of the Partnership's Limited Partners approved
each of the proposals contained in the Information Statement dated May
5, 1993. Those proposals have been implemented by the Partnership as
contemplated by the Information Statement as amendments to the
Partnership Agreement, and are reflected in these financial statements
as such.
The amended Partnership Agreement provides for the Partnership's
payment to the General Partner of an annual asset management fee equal
to .75% of the aggregate appraised value of the Partnership's
properties as determined by independent appraisal undertaken in
January of each year. Such fees for the three months ended March 31,
1996 and 1995, amounted to $58,000 and $60,000, respectively. In
addition, the amended Partnership Agreement provides for payment to
the General Partner of a leasing fee for services rendered in
connection with leasing space in a Partnership property after the
expiration or termination of leases. Fees for leasing services for
the three months ended March 31, 1996 and 1995, amounted to $26,000
and $23,000, respectively.
In addition to the aforementioned, the General Partner was also paid
$16,000 and $15,000 related to the Partnership's portion (42%) of
asset management fees, property management fees, leasing fees and
reimbursement of on-site personnel and other reimbursable expenses for
Cooper Village Partners for the three months ended March 31, 1996 and
1995, respectively.
(3) Commitments and Contingencies
The Partnership is not a party to any pending legal proceedings other
than ordinary routine litigation incidental to its business. It is
the General Partner's belief that the outcome of these proceedings
will not be material to the business or financial condition of the
Partnership.
8
<PAGE> 9
REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resource
Since completion of its acquisition program in December 1988, the
Partnership has been engaged primarily in the operation of its
properties. The Partnership's objective has been to hold its
properties as long-term investments, although properties may be sold
at any time depending upon the General Partner's judgment of the
anticipated remaining economic benefits of continued ownership.
Working capital is and will be provided principally from the operation
of the Partnership's properties. The Partnership may incur mortgage
indebtedness relating to such properties by borrowing funds primarily
to fund capital improvements or to obtain sale or financing proceeds
for distribution to the Partners.
Certain of the Partnership's properties are not fully leased. The
Partnership is actively marketing the vacant space in these
properties, subject to the competitive environment in each of the
market areas. To the extent the Partnership is not successful in
maintaining or increasing occupancy levels at these properties, the
Partnership's future cash flow and distributions may be reduced.
The General Partner has renewed and expanded Apertus Technologies at
Creek Edge. The lease encompasses 76,297 square feet and will require
approximately $722,000 in tenant improvements and leasing commissions.
Payment of such expenses will reduce the Partnership's distribution
for the next two quarters.
Distributions through March 31, 1996 represent cash flow generated
from operations of the Partnership's properties and interest earned on
the Partnership's working capital, net of capital reserve
requirements. Future cash distributions will be made principally to
the extent of cash flow attributable to operations and sales of the
Partnership's properties and interest earned on the investment by
capital reserves, after payment for capital improvements to the
Partnership's properties and providing for capital reserves.
In accordance with the terms of the Partnership Agreement, each year
the Partnership secures an independent appraisal of each of the
Partnership's properties as of January 1. Prior to the January 1,
1995 appraisals, the independent appraiser had estimated each
property's "Investment Value," utilizing a seven to ten-year cash flow
model to estimate value based upon an income approach.
9
<PAGE> 10
REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
The amendment to the Partnership Agreement consented to by the Limited
Partners in June 1993 mandated, among other things, that the General
Partner seek a vote of (and provide an analysis and recommendation to)
the Limited Partners no later than December 31, 1996 regarding the
prompt liquidation of the Partnership in the event that properties
with (then) current appraised values constituting at least one-half of
the total (then) current appraised values of all of the Partnership's
properties are not sold or under contract for sale by the end of 1996.
Given that mandate, the General Partner requested that the appraiser
provide an assessment of value that reflects a shorter investment
holding term. Although the General Partner does not currently have a
specific liquidation plan for the Partnership's properties, it
requested that the appraiser assume that the entire portfolio would be
sold over four years, in connection with the January 1995 appraisals
and over three years in connection with the January 1996 appraisals.
Using the shorter-term investment methodology that is consistent with
the mandate of the 1993 amendment to the Partnership Agreement, the
appraiser estimated the value of the Partnership's properties at
January 1, 1996 to be $33,857,000, or $5,329 per $10,000 original
investor subscription.
Over the past year, the General Partner has examined several
alternative methods to achieve the Partnership's goal of selling the
Partnership's properties and liquidating the Partnership at the
earliest practicable time consistent with achieving reasonable value
for the Limited Partners' investment. As explained in the
Partnership's May 5, 1993 Information Statement, "achieving reasonable
value" has meant for the Partnership to balance receiving higher sales
prices per property than their 1993 values while at the same
time not waiting forever to sell at a theoretical "top of the
market." Alternatives under consideration by the General Partner may
include a property-by-property liquidation or selling all of the
properties as a single portfolio. The General Partner has had
preliminary discussions regarding disposition, in whole or in part, of
the Partnership's properties with various potential purchasers of some
or all of the Partnership's portfolio.
In connection with its consideration of these alternatives, the
General Partner has decided to treat its properties as held for sale
instead of for investment for financial statement purposes. In
accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," the carrying value of
10
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REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
these properties was evaluated to ensure that each property was
carried on the Partnership's balance sheet at the lower of cost or
fair value less estimated selling costs. The General Partner
estimated fair value for this purpose based on appraisals performed as
of January 1, 1996. However, fair value can only be determined based
upon sales to third parties, and sales proceeds could differ
substantially.
Based upon the General Partner's survey of the current marketplace,
the General Partner believes, in fact, that in the relatively short
term the Partnership's properties could generate sales prices that, in
the aggregate, could be materially less than their aggregate appraised
values based upon an "Investment Value" appraisal model. The amount
of the possible variance between the aggregate appraised values and
potential sales prices cannot be reliably estimated at this time,
because of the numerous variables that could affect the sales prices,
including but not limited to the time frame in which the properties
must be sold, method of sale (property-by-property or single
transaction), prevailing capitalization rates at which comparable
properties are being sold at the time of the Partnership's sales,
constantly changing local market conditions and the state of leasing
negotiations and capital expenditures for the properties at the time
of sale.
Results of Operations for the Three Months Ended March 31, 1996
Compared With the Three Months Ended March 31, 1995
The decrease in rental income for the three months ended March 31,
1996 as compared to the corresponding period in 1995, was primarily
attributable to the following factors: 1) at Creek Edge, Computer Data
Products, Inc. terminated its lease upon expiration in August 1995 and
Soultronix terminated its lease prior to scheduled termination in
September 1995, which resulted in a $43,000 decrease in revenue in
1996; 2) at the Forum, operating expense recoveries decreased by
$39,000 in 1996 when compared to 1995; 3) at Flaircentre, termination
of the American Personnel lease in late 1995 resulted in a $24,000
decrease in revenue. The aforementioned decreases were partially
offset by a $74,000 increase in revenue at NorthTech which was
primarily a result of the commencement of International Data Products'
lease effective March 1, 1995.
Interest income resulted from the temporary investment of Partnership
working capital. The decrease for the three months ended March 31,
1996, as compared to the corresponding period in 1995, was
attributable to a lower rate-of-return on short-term investments
achieved during 1996.
11
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REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Results of Operations for the Three Months Ended March 31, 1996
Compared With the Three Months Ended March 31, 1995 (Cont'd.)
The decrease in operating expenses for the three months ended March
31, 1996, as compared to 1995, was primarily attributable to a
decrease in space planning and janitorial expenses at NorthTech.
The decrease in real estate taxes for the three months ended March 31,
1996, as compared to the corresponding period in 1995, was primarily
the result of a lower tax assessment at NorthTech.
The decrease in depreciation and amortization for the three months
ended March 31, 1996, as compared to the corresponding period in 1995,
was attributable to the adoption of Statement of Financial Accounting
Standards, No. 121, "Accounting for the Impairment of Long-Lived
Assets or Long-Lived Assets to Be Disposed Of." As previously
reported, as of December 31, 1995, the General Partner decided to
account for the Partnership's properties as assets held for sale,
which are no longer depreciated.
The Partnership adjusted the carrying value of the portfolio by
$166,000, which is the amount spent on leasing commissions and other
related assets for Creek Edge Business Center.
The increase in equity in earnings of Cooper Village Partners for the
three months ended March 31, 1996, as compared to the corresponding
period in 1995, was primarily attributable to the Partnership's
portion (42%) of a $127,000 lease termination settlement fee collected
from Boston Store in March 1996.
General and administrative expenses for the three months ended March
31, 1996 and 1995, included charges of $119,000 and $124,000,
respectively, from the General Partner and its affiliates for services
rendered in connection with administering the affairs of the
Partnership and operating the Partnership's properties. Also included
in general and administrative expenses for the three months ended
March 31, 1996 and 1995, are direct charges of $73,000 and $74,000,
respectively, relating to audit fees, tax preparation fees, legal and
professional fees, insurance expenses, costs incurred in providing
information to the Limited Partners and other miscellaneous costs.
12
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REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Results of Operations for the Three Months Ended March 31, 1996
Compared With the Three Months Ended March 31, 1995 (Cont'd.)
The decrease in general and administrative expenses for the three
months ended March 31, 1996, as compared to the corresponding period
in 1995, was primarily attributable to a decrease in general and
administrative wages in 1996.
In February 1996, the General Partner entered into a contract to sell
Flaircentre for $2,300,000. The property is currently in escrow and
closing of the sale is subject to the buyer obtaining financing, a
conditional use permit, planning commission approval and other minor
contingencies. Escrow is currently scheduled to close on or before
May 29, 1996.
13
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REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
So far as is known to the General Partner, neither the Partnership nor
its properties are subject to any material pending legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
27 - Financial Data Schedule
b) Reports on Form 8-K:
None filed in quarter ended March 31, 1996.
14
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REAL ESTATE INCOME PARTNERS INCOME III, LIMITED PARTNERSHIP
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.
REAL ESTATE INCOME PARTNERS III
By: BIRTCHER/LIQUIDITY By: BIRTCHER INVESTORS,
PROPERTIES a California limited partnership
(General Partner)
By: BIRTCHER INVESTMENTS,
a California general partnership,
General Partner of Birtcher Investors
By: BIRTCHER LIMITED,
a California limited partnership,
General Partner of Birtcher Investments
By: BREICORP,
a California corporation,
formerly known as Birtcher
Real Estate Inc., General
Partner of Birtcher Limited
Date: May 13, 1996 By: /s/ ROBERT M. ANDERSON
--------------------------------
Robert M. Anderson
Executive Director
BREICORP
By: LF Special Fund I, L.P.,
a California limited partnership
By: Liquidity Fund Asset Management, Inc.,
a California corporation, General
Partner of LF Special Fund I, L.P.
Date: May 13, 1996 By: /s/ BRENT R. DONALDSON
------------------------------------
Brent R. Donaldson
President
Liquidity Fund Asset
Management, Inc.
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENT OF OPERATIONS OF REAL ESTATE INCOME PARTNERS III AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,031,000
<SECURITIES> 0
<RECEIVABLES> 34,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,412,000
<PP&E> 29,295,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,677,000
<CURRENT-LIABILITIES> 433,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 34,244,000
<TOTAL-LIABILITY-AND-EQUITY> 34,677,000
<SALES> 0
<TOTAL-REVENUES> 1,233,000
<CGS> 0
<TOTAL-COSTS> 701,000
<OTHER-EXPENSES> 166,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 479,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 479,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>