UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
Commission File Number:
33-19152
Exact name of Registrant as specified in its charter:
Florida Income Fund III, Limited Partnership
State or other Jurisdiction of incorporation or organization:
Delaware
I.R.S. Employer Identification Number:
65-0016187
Address of Principal Executive Offices:
12800 University Drive, Ste 675
Fort Myers, FL 33907
Registrant's Telephone Number, including Area Code:
(941) 481-2011
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
The registrant 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 has been subject
to such filing requirements for the past 90 days.
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FLORIDA INCOME FUND III, L.P.
INDEX
PART I PAGE NO.
FINANCIAL INFORMATION
Balance Sheets at March 31, 1997
and December 31, 1996. . . . . . . . . . . . . . . . . .3
Statements of Income for the Three
Months Ended March 31, 1997 and 1996 . . . . . . . . . .4
Statements of Cash Flows for the Three
Months Ended March 31, 1997 and 1996 . . . . . . . . . .5
Notes to Financial Statements. . . . . . . . . . . . . .6
Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . .6-8
PART II
OTHER INFORMATION
Items 1 through 6. . . . . . . . . . . . . . . . . . . .9
PART III
Signatures . . . . . . . . . . . . . . . . . . . . . . 10
COVER PAGE
EXHIBIT 27 - Financial Data Schedule
PAGE 2<PAGE>
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
BALANCE SHEETS (Unaudited)
March 31 Dec. 31
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 667,380 101,108
Accts Recvable Trade, Net of Allowance
for Doubtful Accts of $17,492 for
3/31/97 and $19,457 for 12/31/96 541,921 346,767
Notes Receivable 0 0
Inventory 61,895 68,422
Prepaid Expenses and Other 32,447 201,608
__________ __________
Total Current Assets 1,303,643 717,905
Rental Properties
Abandonment 3,082,157 3,082,157
Rental Properties, (Net of accumulated
depreciation of $4,763,193 at
3/31/97 $4,562,574 at 12/31/96 14,888,296 15,073,430
Intangible Assets
Deferred Loan and
Organizational Costs Net 42,710 46,326
__________ __________
Total Assets 19,316,806 18,919,818
LIABILITIES & PARTNERS' CAPITAL
CURRENT LIABILITIES
Current Maturities of Notes Mtgs Payable 543,573 383,573
Accounts Payable, Trade 542,689 619,317
Accrued Expenses 341,052 702,971
Customer and Security Deposits 378,750 453,988
__________ __________
Total Current Liabilities 1,806,064 2,159,849
Mtgs Payable related to Rental Prpty Mgmt 3,200,000 3,200,000
Mtgs Payable, Less Current Maturities 5,119,827 5,380,758
PARTNERS' CAPITAL
General Partners Capital (38,189) (38,189)
Limited Partners Capital 8,143,815 8,217,400
Net Income 1,085,289 0
__________ ___________
Total Partners' Equity 9,190,915 8,179,211
Total Liabilities & Partners' Capitl 19,316,806 18,919,818
</TABLE>
See Accompanying Notes to the Financial Statements
PAGE 3<PAGE>
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<TABLE>
<CAPTION>
FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(Unaudited)
For Three Months Ended
03/31/97 03/31/96
_________ _________
<S> <C> <C>
REVENUES:
Rental Income 3,667,264 3,541,241
Interest Income 1,493 4,840
__________ __________
Total Revenues 3,668,757 3,546,081
COSTS AND EXPENSES:
Property Operating Expenses 2,175,695 2,071,562
Real Estate Taxes 48,525 69,315
Interest Expense 155,014 239,792
Depreciation 204,234 202,670
Amortization 0 4,179
__________ __________
Total Expenses 2,583,468 2,587,518
Net Income 1,085,289 958,563
</TABLE>
See Accompanying Notes to the Financial Statements
PAGE 4<PAGE>
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<TABLE>
<CAPTION>
FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(Unaudited)
For The Three Months Ended
3/31/97 3/31/96
_________ __________
<S> <C> <C>
Cash flows from operating activities:
Net Income 1,085,289 958,563
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation & Amortization 204,235 206,849
(Increase) decrease in Accts recvble (195,154) (67,078)
Prepaid expenses and other 169,161 10,644
Inventory 6,527 4,623
Increase (decrease) in:
Accounts payable and Accrued expense (438,547) 59,925
Customer & security deposits (75,238) (173,648)
Deferred Income 0 0
__________ _________
Net Cash flows provided by operating
activities 756,273 999,878
Cash flows from investing activities:
Cost of condominiums sold 0 0
Cost of condominium construction 0 0
Acquisition of and improvements to
rental properties (15,485) (123,765)
__________ _________
Net cash used in investing activities (15,485) (123,765)
Cash flows from financing activities:
Loan Origination Fee paid 0 0
Partner distributions paid (73,585) (202,359)
Repayment of long term borrowing (100,931) (91,943)
Proceeds from long term borrowing 0 0
Net cash flows used by financing
activities (174,516) (294,302)
Net increase (decrease) in cash 566,272 581,811
Cash December 31 101,108 164,966
Cash March 31 667,380 746,777
</TABLE>
See Accompanying Notes to the Financial Statements
PAGE 5<PAGE>
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FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with the instructions to Form 10-Q and therefore, do not include all
disclosures necessary for a fair presentation of the Partnership's
financial position, results of operations and statements of cash flows
in conformity with generally accepted accounting principles as set forth
in the Partnership's form 10-K for the period ended December 31, 1996.
In management's opinion, all adjustments have been made to the financial
statements necessary for a fair presentation of interim periods
presented.
NOTE 2 - RELATED PARTY TRANSACTIONS
The General Partner and their affiliates are also entitled to
reimbursement of costs (including amounts of any salaries paid to
employees or its affiliates) directly attributable to the operation of
the Partnership that could have been provided by independent parties.
Costs amounting to $739,648 were incurred during the first quarter of
1997. This compares to $792,025 of costs that were incurred during the
first quarter of 1996. The decrease in cost is primarily due to
decreases in insurance premiums. An affiliate company, South Seas
Resorts Company, Inc., pays the payroll and related benefits and charges
them back to the Pink Shell. South Seas Resorts Company, Inc. also
provides room reservation services for the resort. During the quarter,
the Partnership incurred $220,125 in management fees in accordance with
the Partnership agreement. This compares to $208,260 in management fees
which were incurred during the first quarter of 1996.
NOTE 3 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity
The Partnership's cash position, including interest bearing deposits at
March 31, 1997, was $667,380. This compares to its cash position of
$101,108 at December 31, 1996. The Partnership's cash position at March
31, 1996, was $746,777.
PAGE 6<PAGE>
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Liquidity - Continued
For the three months ended March 31, 1997, the Partnership's cash
increased $566,272. The increase in cash was due to cash flow from
operations of $756,273; cash outlays for capital improvements of
$15,485; cash outlays for partner distributions of $73,585; and net
repayment of long term debt of $100,931.
The Partnership's total investment in properties for its portfolio at
March 31, 1997, was $22,733,646. This compares to its total property
investment of $22,718,161 at December 31, 1996.
On November 27, 1996, the Partnership defaulted under the terms of a
$3,200,000 mortgage loan on the Walsingham Commons Shopping Center. The
Partnership agreed to the appointment of a receiver on the Walsingham
Commons on February 3, 1997. All rights, powers, interests and
obligations in Walsingham Commons have been transferred to the receiver
as of November 27, 1996. The outstanding mortgage balance $3,200,000 is
nonrecourse and will be satisfied upon the final judgment of
foreclosure. Details of this transaction were provided in an 8-K filed
on April 15, 1997.
This action was taken in response to a declining rental market in the
area of Largo, FL where this property is located. The subject
neighborhood has been declining and losing many of the long term tenants
to newer buildings located in more desirable areas of Pinellas County.
This has resulted in a high supply of vacant space versus very low
demand which has in turn led to reduced rental rates. The General
Partner was of the opinion that the problem is long term and felt it was
economically prudent to default on the mortgage loan to eliminate the
negative cash flow being generated by the property.
Other than as discussed herein, there are no known trends, demands,
commitments, events or uncertainties, that in management's opinion, will
result or are reasonably likely to result in the registrant's liquidity
increasing or decreasing in any material way.
Capital Resources
The Partnership has entered into long term leases with 42 condominium
unit owners. This enables the Partnership to include the 42 units in
its resort rental operation. The Partnership pays a minimum annual
rental of $25,000 in 12 equal monthly installments to each unit owner
for a total minimum annual rental of $1,050,000. In addition, the
Partnership pays the owner an amount by which 42.5% of the annual gross
rental income generated by the lessee from the unit exceeds the amount
of annual base rent paid. These leases expire at various times between
December 31, 2000, and December 31, 2005.
PAGE 7
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Capital Resources - Continued
The Partnership paid down $100,931 of principal on long term borrowings
during the three month period. Partnership debt as of March 31, 1997,
was $8,863,400 as compared to $8,964,331 as of December 31, 1996.
Also during the quarter, the Partnership paid $15,485 for improvements
at the Pink Shell in order to refurbish the units and to meet Best
Western requirements.
Results of Operations
The Partnership had net income of $1,085,289 for the three months ended
March 31, 1997. This compares with net income of $958,563 for the three
month period ended March 31, 1996. The increase in net income is due to
revenues increasing by $122,676, property operating expenses increasing
by $104,133, real estate taxes decreasing by $20,790, interest expense
decreasing by $84,778 and depreciation and amortization decreasing by
$2,615.
Pink Shell's revenues increased $204,718 due to increased room rates and
higher occupancy. Room revenue increased $155,984, store revenue
increased $41,577, and other revenues increased $7,157. Interest income
decreased $3,347 due to a smaller amount of funds being invested in
short term Government Securities.
Property operating expenses have increased for the quarter by $104,133.
The Primary increases are in the operations of the Pink Shell.
Guaranteed payments to owners have increased $28,097 compared to the
first quarter of 1996. This is due to the lease back agreements signed
with the 42 unit condominium owners. Marketing expenses have decreased
$5,695 and insurance has decreased $37,390. Other operating expense
increases are in relation to the increased occupancy and room revenue.
The resort has moved to daily housekeeping in order to meet guest
expectations and Best Western affiliation requirements.
Real Estate Taxes have decreased $20,790 which reflects the abandonment
of Walsingham Commons.
Interest expense decreased by $84,778 due to the Partnership having a
lower amount of debt, and due to the abandonment of Walsingham Commons.
Depreciation and amortization have decreased $2,615.
PAGE 8<PAGE>
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PART II
OTHER INFORMATION
FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
None
PAGE 9<PAGE>
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PART 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.
FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
MARINER CAPITAL MANAGEMENT, INC.
MANAGING GENERAL PARTNER
(Registrant)
5/13/97 By: /s/ LAWRENCE A. RAIMONDI
--------------------------------
Lawrence A. Raimondi
President, Director and CEO
Mariner Capital Management, Inc.
(Principal Executive Officer)
5/13/97 By: /s/ JOE K. BLACKETER
--------------------------------
Joe K. Blacketer
Secretary/Treasurer
Mariner Capital Management, Inc.
(Principal Financial and Accounting
Officer)
PAGE 10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 667,380
<SECURITIES> 0
<RECEIVABLES> 559,413
<ALLOWANCES> 17,492
<INVENTORY> 61,895
<CURRENT-ASSETS> 1,303,643
<PP&E> 22,733,646
<DEPRECIATION> 4,763,193
<TOTAL-ASSETS> 19,316,806
<CURRENT-LIABILITIES> 1,806,064
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,316,806
<SALES> 3,667,264
<TOTAL-REVENUES> 3,668,757
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,428,454
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 155,014
<INCOME-PRETAX> 1,085,289
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,085,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,085,289
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
