<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 24, 1997
-------------------------
REAL ESTATE INCOME PARTNERS III, LIMITED PARTNERSHIP
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
0-16027 13-3341425
- ----------------------------------- --------------------------------------
Commission File Number (I.R.S. Employer 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
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
<PAGE> 2
REAL ESTATE INCOME PARTNERS III
ITEM 5. OTHER EVENTS.
On January 24, 1997, Real Estate Income Partners III, Limited
Partnership (the "Partnership") sold Northtech, a research and
development complex consisting of three two-story buildings
encompassing 73,166 rentable square feet, located on 10.2 acres of
land in Gaithersburg, Maryland for $13,600,000. Northtech had been
appraised at a value of $14,700,000 as of January 1, 1996.
Since the last appraisal, a tenant that occupies approximately
50% of the property had sold off a portion of its business,
restructured the balance, defaulted on its lease and announced its
intention to vacate the property at the expiration of its lease term
in 1999 unless its lease payments were reduced substantially. The
likelihood that in the near future the owner of Northtech would be
faced with reduced revenues and demands for capital and tenant
improvements from any tenant that would replace the defaulting tenant,
and the uncertain financial status of the incumbent tenant reduced the
market value of the property.
The Partnership realized approximately $13,079,000 from the
sale of Northtech, after accounting for closing costs and prorations
of approximately $521,000. The purchaser of Northtech has for three
years had a preexisting relationship with an affiliate of Birtcher
Investors, pursuant to which the purchaser had contracted with
Birtcher to locate, acquire and manage real property for the
purchaser's account. No broker was paid a commission as part of the
transaction. Since the sale price exceeded the January 1, 1993
appraised value ($12,900,000), pursuant to the 1993 Amendment of the
Partnership Agreement, the General Partner earned and has been paid a
property disposition fee of approximately $340,000 in connection with
the sale. The purchaser paid a net investment advisory fee of $52,350
to the affiliate of Birtcher Investors and has retained Birtcher
Property Services to manage the property.
The Partnership will distribute proceeds of the sale of
Northtech to the limited partners on February 28, 1997, together with
the Partnership's normal quarterly distribution. After paying the
property disposition fee and holding back approximately $1,000,000 to
replenish and increase the Partnership's reserves, the General Partner
currently estimates that the Partnership will distribute approximately
$11,700,000 to the limited partners, or approximately $184 per $1,000
investment.
2
<PAGE> 3
REAL ESTATE INCOME PARTNERS III
ITEM 5. OTHER EVENTS. (CONT'D.)
The large reserve fund is prudent because after the sale of
Flaircentre and Northtech, the Partnership's asset base is effectively
half its former size. The Partnership's remaining assets will
generate less cash flow, necessitating a larger reserve fund to cover
potential emergencies or demands for capital expenditures. Since
NorthTech generated approximately 68% of the cash flow that funded the
Partnership's regular operations and distributions for the year ended
December 31 1996, future distributions to limited partners of net cash
from operations are expected to be significantly reduced.
3
<PAGE> 4
REAL ESTATE INCOME PARTNERS III
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,
LIMITED PARTNERSHIP
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: January 31, 1997 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: January 31, 1997 By: /s/ Brent R. Donaldson
------------------------------
Brent R. Donaldson
President
Liquidity Fund Asset Management, Inc.
4
