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 JUNE 30, 1998
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 June 30, 1998
and December 31, 1997. . . . . . . . . . . . . . . . . . . 3
Statements of Income for the Three and Six
Months Ended June 30, 1998 and 1997. . . . . . . . . . . . 4
Statements of Cash Flows for the Six
Months Ended June 30, 1998 and 1997. . . . . . . . . . . . 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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<CAPTION>
PART I - FINANCIAL INFORMATION
FLORIDA INCOME FUND III, LIMITED PARTNERSHIP
BALANCE SHEETS (Unaudited)
June 30 Dec. 31
1998 1997
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 332,060 156,000
Accts Recvable Trade, Net of Allowance
for Doubtful Accts of $17,492 for
6/30/98 and $18,579 for 12/31/97 50,255 377,930
Inventory 0 69,837
Prepaid Expenses and Other 60,567 90,797
__________ _________
Total Current Assets 442,882 694,564
Rental Properties
Abandonment 3,082,157 3,082,157
Rental Properties, (Net of accumulated
depreciation of $0 at 6/30/97
and $4,536,637 at 12/31/97 0 14,485,000
Intangible Assets
Deferred Loan and
Organizational Costs Net 0 31,864
___________ ___________
Total Assets 3,525,039 18,293,585
LIABILITIES & PARTNERS' CAPITAL
CURRENT LIABILITIES
Current Maturities of Notes Mtgs Payable 0 722,549
Accounts Payable, Trade 0 405,986
Accrued Expenses 124,574 481,669
Customer and Security Deposits 0 504,885
__________ __________
Total Current Liabilities 124,574 2,115,089
Mtgs Payable related to Rental Prpty Mgmt 3,200,000 3,200,000
Mtgs Payable, Less Current Maturities 0 4,804,961
PARTNERS' CAPITAL
General Partners Capital (31,450) (31,450)
Limited Partners Capital (6,459,108) 8,204,985
Net Income 6,691,023 0
__________ ___________
Total Partners' Equity 200,465 8,173,535
Total Liabilities & Partners' Capitl 3,525,039 18,293,585
</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 For Six Months Ended
06/30/98 06/30/97 06/30/98 06/30/97
__________________________________________
<S> <C> <C> <C> <C>
REVENUES:
Sales Proceeds 19,969,322 0 19,969,322 0
Rental Income 1,288,966 2,503,643 4,917,128 6,170,907
Interest Income 237 6,252 1,367 7,745
_________ __________ _________ _________
Total Revenues 21,258,525 2,509,895 24,887,817 6,178,652
COSTS AND EXPENSES:
Cost of Sales 14,754,856 0 14,754,856 0
Property Operating
Expenses 752,533 2,045,981 2,841,854 4,221,676
Real Estate Taxes 22,500 48,525 90,000 97,050
Interest Expense 45,590 143,147 202,220 298,161
Depreciation 69,000 200,056 276,000 401,238
Amortization 28,248 4,179 31,864 7,231
__________ _________ _________ ________
Total Expenses 15,672,727 2,441,888 18,196,794 5,025,356
Net Income (Loss) 5,585,798 68,007 6,691,023 1,153,296
</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 Six Months Ended
6/30/98 6/30/97
_________ __________
<S> <C> <C>
Cash flows from operating activities:
Net Income 6,691,023 1,153,296
Adjustments to reconcile net income to
net cash provided by operations:
Cost of sales 14,283,704 0
Depreciation & Amortization 307,864 408,469
(Increase) decrease in Accts recvble 327,675 (16,432)
Prepaid expenses and other 90,797 188,466
Inventory 69,837 7,639
Increase (decrease) in:
Accounts payable and Accrued expense (823,648) (629,184)
Customer & security deposits (504,885) (161,625)
_________ _________
Net Cash flows provided by operating
activities 20,442,367 950,629
Cash flows from investing activities:
Acquisition of and improvements to
rental properties (74,704) (76,706)
_____________________
Net cash used in investing activities (74,704) (76,706)
Cash flows from financing activities:
Partner distributions paid (14,664,093) (275,943)
Repayment of long term borrowing (5,527,510) (194,261)
_________ ___________
Net cash flows used by financing
activities (20,191,603) (470,204)
Net increase (decrease) in cash 176,060 403,719
Cash December 31 156,000 101,108
Cash June 30 332,060 504,827
</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
JUNE 30, 1998
(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, 1997.
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 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 $314,958 were incurred during the second quarter of 1998. This
compares to $762,273 of costs that were incurred during the second
quarter of 1997. 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 $39,232 in management fees in accordance with the
Partnership agreement. This compares to $150,877 in management fees
which were incurred during the second quarter of 1997.
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
June 30, 1998, was $332,060. This compares to its cash position of
$156,000 at December 31, 1997. The Partnership's cash position at June
30, 1997, was $504,827.
PAGE 6<PAGE>
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Liquidity - Continued
For the six months ended June 30, 1998, the Partnership's cash increased
$176,060. The increase in cash was due to cash flow from operations of
$20,442,367; cash outlays for capital improvements of $74,704; cash
outlays for partner distributions of $14,664,093 and net repayment of
long term debt of $5,527,510.
The Partnership's total investment in properties for its portfolio at
June 30, 1998, was $3,846,621. This compares to its total property
investment of $22,868,258 at December 31, 1997.
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. The foreclosure proceedings had not been finalized
at June 30, 1998.
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.
During the first quarter of 1998, the Partnership entered into a
Purchase Agreement with a hotel company to sell the Pink Shell. Limited
Partners approval of this proposed transaction was solicited in April of
1998. The sale was approved and closed May 1, 1998 as reported in an
8-K filed May 13, 1998. The sale generated approximately $14,191,000
which was distributed to the partners. The general partners will adopt
a formal plan of liquidation, in accordance with the Partnership
agreement, which will be implemented as soon as all the terms and
conditions of the sale are satisfied.
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.
PAGE 7<PAGE>
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Capital Resources
The Partnership paid down $5,527,510 of principal on long term
borrowings during the six month period. Partnership debt as of June 30,
1998, was $3,200,000 as compared to $8,727,510 as of December 31, 1997.
Also during the six months, the Partnership paid $74,704 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 $6,691,023 for the six months ended
June 30, 1998. This compares with net income of $1,153,296 for the six
month period ended June 30, 1997. The increase in net income is due to
revenues decreasing by $1,253,779, property operating expenses
decreasing by $1,379,822, real estate taxes decreasing by $7,050,
interest expense decreasing by $95,941 and depreciation and amortization
decreasing by $100,605.
Pink Shell's revenues decreased $1,253,779 due to the sale of the
property on May 1, 1998. Interest income decreased $6,378 due to a
smaller amount of funds being invested in short term Government
Securities.
Property operating expenses have decreased for the six months by
$1,379,822 as a result of the sale of the property.
Real Estate Taxes have decreased $7,050.
Interest expense decreased by $95,941.
Depreciation and amortization have decreased $100,605.
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)
8/14/98 By: /s/ ALLEN G. TEN BROEK
--------------------------------
Allen G. Ten Broek
President, Director and CEO
Mariner Capital Management, Inc.
(Principal Executive Officer)
8/14/98 By: /s/ ELAINE HAWKINS
--------------------------------
Elaine Hawkins
Secretary/Treasurer
Mariner Capital Management, Inc.
(Principal Financial and Accounting Officer)
PAGE 10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 332,060
<SECURITIES> 0
<RECEIVABLES> 67,747
<ALLOWANCES> 17,492
<INVENTORY> 0
<CURRENT-ASSETS> 442,882
<PP&E> 3,846,621
<DEPRECIATION> 764,464
<TOTAL-ASSETS> 3,525,039
<CURRENT-LIABILITIES> 124,574
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,525,039
<SALES> 19,969,322
<TOTAL-REVENUES> 24,887,817
<CGS> 14,754,856
<TOTAL-COSTS> 14,754,856
<OTHER-EXPENSES> 3,239,718
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 202,220
<INCOME-PRETAX> 6,691,023
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 6,691,023
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,691,023
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
