<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(Mark one)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1997 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 0-18407
---------------------------------------------------------
Wells Real Estate Fund III, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1800833
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3885 Holcomb Bridge Road, Norcross, Georgia 30092
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 449-7800
-----------------------------
- --------------------------------------------------------------------------------
(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 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>
Form 10-Q
---------
Wells Real Estate Fund III, L.P.
--------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1997
and December 31, 1996................................................. 3
Statements of Income for the Three Months and Nine Months
Ended September 30, 1997 and 1996..................................... 4
Statement of Partner's Capital for the
Nine Months Ended September 30, 1997
and the Year Ended December 31, 1996.................................. 5
Statements of Cash Flows for the Nine
Months Ended September 30, 1997 and 1996.............................. 6
Condensed Notes to Financial Statements................................. 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................................................ 9
PART II. OTHER INFORMATION................................................................17
</TABLE>
2
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets September 30, 1997 December 31, 1996
------ ------------------ -----------------
<S> <C> <C>
Real estate, at cost:
Land $ 576,350 $ 576,350
Building and improvements, less accumulated
depreciation of $735,734 in 1997 and $613,213
in 1996 2,829,867 2,965,388
------------- -------------
Total real estate 3,406,217 3,541,738
------------- -------------
Cash and cash equivalents 173,207 342,318
Investment in joint ventures (Note 2) 13,078,995 12,926,074
Due from affiliates 309,342 212,943
Accounts receivable 76,919 67,790
Prepaid expenses and other assets 20,495 24,100
------------- -------------
Total assets $ 17,065,175 $ 17,114,963
============= =============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable $ 6,527 $ 35,941
Partnership distributions payable 352,128 324,495
Due to affiliates 5,034 11,396
------------- -------------
Total liabilities 363,689 371,832
------------- -------------
Partners' capital:
General Partners 0 0
Limited Partners:
Class A - 19,635,965 units outstanding 16,701,486 16,743,131
Class B - 2,544,540 units outstanding 0 0
------------- -------------
Total partners' capital 16,701,486 16,743,131
------------- -------------
Total liabilities and partners' capital $ 17,065,175 $ 17,114,963
============= =============
</TABLE>
See accompanying condensed notes to financial statements.
3
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ---------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30,1996
------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 144,667 $ 147,242 $ 440,279 $ 439,225
Equity in income of
joint ventures (Note 3) 135,909 137,437 226,789 521,120
Interest income 606 3,883 10,774 13,544
--------- --------- --------- ---------
281,182 288,562 677,842 973,889
--------- --------- --------- ---------
Expenses:
Management and leasing
fees 22,300 9,376 59,915 31,451
Operating costs - rental
property 32,514 67,241 113,625 95,557
Depreciation 39,666 39,577 122,521 118,731
Legal and Accounting 7,522 (8,738) 30,196 13,606
Computer costs 2,981 479 7,938 3,196
Partnership administration 7,728 11,503 35,354 49,350
--------- --------- --------- ---------
112,711 119,438 369,549 311,891
--------- --------- --------- ---------
Net income $ 168,471 $ 169,124 $ 308,293 $ 661,998
========= ========= ========= =========
Net income allocated to
General Partners $ 0 $ 0 $ 0 $ 0
Net income allocated to
Class A Limited Partners $ 168,471 $ 169,124 $ 308,293 $ 661,998
Net loss allocated to Class
B Limited Partners $ 0 $ 0 $ 0 $ 0
Net income per Class A
Limited Partner Unit $ 0.01 $ 0.01 $ 0.02 $ 0.03
Net loss per Class B Limited
Partner Unit $ 0 $ 0 $ 0 $ 0
Cash distribution per Class A
Limited Partner Unit $ 0.02 $ 0.02 $ 0.02 $ 0.06
</TABLE>
See accompanying condensed notes to financial statements.
4
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Limited Partners
--------------------------------------------------------
Class A Class B Total
----------------------- ---------------------- Partners'
Units Amounts Units Amounts Capital
----- ------- ----- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1995 19,635,965 $ 17,430,457 2,544,540 $ 0 $ 17,430,457
Net income 0 731,244 0 0 731,244
Partnership distributions 0 (1,418,570) 0 0 (1,418,570)
----------- ------------- ---------- ------------- -------------
BALANCE, December 31, 1996 19,635,965 16,743,131 2,544,540 0 16,743,131
Net income 0 308,293 0 0 308,293
Partnership distributions 0 (349,938) 0 0 (349,938)
----------- -------------- ---------- ------------- -------------
BALANCE, September 30, 1997 19,635,965 $ 16,701,486 2,544,540 $ 0 $ 16,701,486
=========== ============= ========== ============= ============
</TABLE>
See accompanying condensed notes to financial statements.
5
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 308,293 $ 661,998
Adjustments to reconcile net earnings to net cash
used in operating activities:
Equity in income of joint ventures (226,789) (521,120)
Depreciation 122,521 118,731
Changes in assets and liabilities:
Accounts receivable (9,129) 256
Prepaids and other assets 3,605 2,992
Accounts payable (16,414) 5,374
Due to affiliates (33,616) 9,301
------------------ ------------------
Net cash provided by operating activities 148,471 277,532
------------------ ------------------
Cash flow from investing activities:
Investment in joint ventures (659,810) 0
Distributions received from joint ventures 664,533 1,058,515
------------------ ------------------
Net cash provided by investing activities 4,723 1,058,515
Cash flow from financing activities:
Partnership distributions paid (322,305) (1,399,363)
------------------ ------------------
Net decrease in cash and cash equivalents (169,111) (63,316)
Cash and cash equivalents, beginning of year 342,318 500,327
------------------ ------------------
Cash and cash equivalents, end of period $ 173,207 $ 437,011
================== ==================
</TABLE>
See accompanying condensed notes to financial statements.
6
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A Georgia Public Limited Partnership)
Condensed Notes to Financial Statements
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) General
------------
Wells Real Estate Fund III, L.P. (the "Partnership") is a Georgia
public limited partnership having Leo F. Wells, III and Wells Capital,
Inc., a Georgia corporation, as General Partners. The Partnership was
formed on July 31, 1988, for the purpose of acquiring, developing,
constructing, owning, operating, improving, leasing and otherwise
managing for investment purposes income-producing commercial
properties.
On October 24, 1988, the Partnership commenced a public offering of its
limited partnership units pursuant to a Registration Statement filed on
Form S-11 under the Securities Act of 1933. The Partnership terminated
its offering on October 23, 1990, and received gross proceeds of
$22,206,319 representing subscriptions from 2,700 Limited Partners,
composed of two classes of limited partnership interests, Class A and
Class B limited partnership units.
The Partnership owns interests in properties directly and through
equity ownership in the following joint ventures: (i) The Fund II -
Fund III Joint Venture, (ii) The Fund II, III, VI and VII Joint
Venture, and (iii) The Fund III - Fund IV Joint Venture.
As of September 30, 1997, the Partnership owned interest in the
following properties: (i) the Greenville Property, an office building
in Greenville, North Carolina, owned by Fund III, (ii) The Atrium, an
office building in Houston, Texas, owned by Fund II - Fund III Joint
Venture, (iii) the Brookwood Grill, a restaurant located in Roswell,
Georgia, owned by The Fund II - Fund III Joint Venture, (iv) the
Stockbridge Village Shopping Center, a retail shopping center located
in Stockbridge, Georgia, southeast of Atlanta, owned by Fund III - Fund
IV Joint Venture, (v) the G.E. Office Building located in Richmond,
Virginia, owned by Fund III - Fund IV Joint Venture, and (vi) an
office/retail center in Roswell, Georgia, owned by Fund II, III, VI and
VII Joint Venture. All of the foregoing properties were acquired on an
all cash basis.
(b) Basis of Presentation
--------------------------
The financial statements of the Partnership have been prepared in
accordance with instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. These quarterly
statements have not been examined by independent accountants, but in
the opinion of the General Partners, the statements for the unaudited
interim periods presented include all adjustments, which are of a
normal and recurring nature, necessary to present a fair presentation
of the results for such periods. For further information, refer
7
<PAGE>
to the financial statements and footnotes included in the Partnership's
Form 10-K for the year ended December 31, 1996.
(2) Investment in Joint Ventures
----------------------------
As of September 30, 1997, the Partnership owned interests in six
properties directly or through equity ownership in the joint venture
described above. The Partnership does not have control over the
operations of the joint ventures; however, it does exercise significant
influence. Accordingly, investment in joint ventures is recorded on the
equity method.
Boeing at The Atrium/Fund II - Fund III Joint Venture
-----------------------------------------------------
On April 3, 1989, the Partnership formed a joint venture (the "Fund II
- Fund III Joint Venture") with an existing joint venture (the "Fund II
- Fund II-OW Joint Venture") previously formed between Wells Real
Estate Fund II ("Wells Fund II") and Wells Real Estate Fund II-OW
("Wells Fund II-OW"). Wells Fund II and Wells Fund II-OW are public
limited partnerships affiliated with the Partnership through common
general partners with investment objectives substantially identical to
those of the Partnership.
In April 1989, the Fund II-Fund III Joint Venture acquired a four-story
office building located on a 5.6 acre tract of land adjacent to the
Johnson Space Center in metropolitan Houston, in the City of Nassau
Bay, Harris County, Texas, known as "The Atrium at Nassau Bay" (the
"Atrium").
The Atrium was first occupied in 1987 and contains approximately
119,000 net leasable square feet. On March 3, 1997, a lease was signed
with The Boeing Company for the entire Atrium Building. The lease is
for a period of five years with an option to renew for an additional
five year term. The rental rate for the first three years of the lease
term is $12.25 per square foot and $12.50 per square foot for the final
two years of initial lease term. The rate for the optional five year
term will be determined based upon the current market rates. Upon 150
day prior written notice, Boeing has the right to cancel its lease in
the event that NASA or another prime contractor were to cancel or
substantially reduce its contract. In addition, there is a no-cause
cancellation provision at the end of the first three year period. If
this no-cause cancellation is exercised, Boeing would be required to
pay unamortized, up-front tenant improvement costs. The lease also
provides that tenant will pay certain operating expenses in excess of
$5.50 per square foot on an annual basis.
Boeing began the move-in phase of its occupancy on April 15, 1997, and
began paying rent on May 15, 1997. The total cost of completing the
required tenant improvements and outside broker commissions of
approximately $1.4 million is being funded out of reserves and cash
flows of the Partnership, Wells Fund II and Wells Fund II-OW.
8
<PAGE>
As of September 30, 1997, the Partnership had contributed approximately
$659,810, Wells Fund II had contributed approximately $387,752, and
Wells Fund II-OW had contributed approximately $21,744 to fund the
tenant improvements and outside broker commissions required. The
ownership percentages in The Atrium have been adjusted as a result of
these additional capital contributions, and as of September 30, 1997,
the Fund II - Fund II-OW Joint Venture holds an equity interest of
approximately 61%, and Wells Fund III holds an equity interest of
approximately 39% in the Fund II - Fund III Joint Venture.
For further information, refer to the financial statements and
footnotes included in the Partnership's Form 10-K for the year ended
December 31, 1996.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-----------------------------------------------------------------------
RESULTS OF OPERATIONS.
---------------------
The following discussion and analysis should be read in conjunction
with the accompanying financial statements of the Partnership and notes
thereto. This Report contains forward-looking statements, with the
meaning of Section 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including discussion and analysis of
the financial condition of the Partnership, anticipated capital
expenditures required to complete certain projects, amounts of cash
distributions anticipated to be distributed to Limited Partners in the
future and certain other matters. Readers of this Report should be
aware that there are various factors that could cause actual results to
differ materially from any forward-looking statement made in the
Report, which include construction costs which may exceed estimates,
construction delays, lease-up risks, inability to obtain new tenants
upon the expiration of existing leases, and the potential need to fund
tenant improvements or other capital expenditures out of operating cash
flow.
Results in Operations and Changes in Financial Conditions
---------------------------------------------------------
General
-------
As of September 30, 1997, the developed properties owned by the
Partnership were 96.7% occupied, as compared to 72.27% occupied as of
September 30, 1996. Gross revenues of the Partnership were $677,842 for
the nine months ended September 30, 1997, as compared to $973,889 for
the nine months ended September 30, 1996. The decrease for 1997 as
compared to 1996 was due to decreased income from joint ventures,
primarily due to the vacancy at The Atrium.
Expenses of the Partnership increased from $311,891 for the nine months
ended September 30, 1996, to $369,549 for the nine months ended
September 30, 1997. The increase in expenses was due primarily to
increased operating costs, management and lease fees and legal fees.
This increase was offset partially by savings in Partnership
administration expenses.
9
<PAGE>
Net cash provided by operating activities decreased from $277,532 in
1996 to $148,471 in 1997. The decrease was due primarily to increased
expenses as discussed above. Net cash provided by investing activities
decreased from $1,058,515 in 1996 to $4,723 in 1997, due to the new
lease at The Atrium Building. As a result, cash and cash equivalents
decreased from $437,011 in 1996 to $173,207.
As set forth above, the total cost to complete the required tenant
improvements and outside brokerage commissions relating to the new
lease at The Atrium is estimated to be approximately $1,400,000, which
is being funded from reserves of the Partnership, Wells Fund II and
Wells Fund II-OW, along with cash flow from operations of the
properties owned by such partnerships.
The Partnership made cash distributions to the Limited Partners holding
Class A Units of $.02 per Class A Unit for the three months ended
September 30, 1997 and 1996. No cash distributions were made to Limited
Partners holding Class B Units or the General Partners for the nine
months ended September 30, 1997 and 1996. As set forth above,
substantially all cash generated from the operations of properties
owned by the Partnership in the first and second quarters of 1997 was
used to fund the required tenant improvements and outside brokerage
commissions relating to the new lease at The Atrium.
The Partnership's distributions paid and payable through the third
quarter of 1997 have been paid from net cash from operations and from
distributions received from its investments in joint ventures, and the
Partnership anticipates that distributions will continue to be paid on
a quarterly basis from such sources. The Partnership expects to meet
liquidity requirements and budget demands through cash flows.
The Partnership is unaware of any known demands, commitments, events or
capital expenditures other than that which is required for the normal
operations of its properties or the properties in which it owns a joint
venture interest that will result in the Partnership's liquidity
increasing or decreasing in any material way.
10
<PAGE>
Property Operations
- -------------------
As of September 30, 1997, the Partnership owned interests in the following
properties:
The Greenville Property- Fund III
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ---------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 144,667 $ 147,242 $ 440,279 $ 439,225
---------- ---------- ---------- ----------
Expenses:
Depreciation 39,667 39,577 122,522 118,731
Management and leasing
expenses 22,300 21,995 59,915 57,817
Other operating expenses 32,514 53,182 113,625 69,192
---------- ---------- ---------- ----------
94,481 114,754 296,062 245,740
---------- ---------- ---------- ----------
Net income $ 50,186 $ 32,488 $ 144,217 $ 193,485
========== ========== ========== ==========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to the
Partnership $ 97,845 $ 73,858 $ 278,785 $ 318,847
Net income allocated to the
Partnership $ 50,186 $ 32,488 $ 144,217 $ 193,485
</TABLE>
Rental income remained relatively stable from 1996 to 1997. Operating expenses
increased for the nine months ended September 30, 1997, as compared to the same
period in 1996, due to timing differences in the billing of the IBM tenant
reimbursement. Prior year expenses were reimbursed in the second quarter of
1996, while IBM is making monthly estimated payments toward current year
expenses.
11
<PAGE>
Boeing at The Atrium/Fund II and Fund III Joint Venture
- -------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------------------- --------------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 367,536 $ 8,909 $ 557,232 $ 1,048,582
Interest income 0 6,091 2,617 21,409
Other income 8,438 0 8,438 0
----------- ----------- ----------- -----------
375,974 15,000 568,287 1,069,991
----------- ----------- ----------- -----------
Expenses:
Depreciation 216,666 168,691 553,951 505,788
Management and leasing
expenses 41,283 0 70,293 71,380
Other operating expenses 183,894 (176,240) 473,093 57,310
----------- ----------- ----------- -----------
441,843 (7,549) 1,097,337 634,478
----------- ----------- ----------- -----------
Net (loss) income $ (65,869) $ 22,549 $ (529,050) $ 435,513
=========== =========== =========== ===========
Occupied % 100% 0% 100% 0%
Partnership's Ownership % 38.72% 62.1% 38.72% 62.1%
Cash distributions to the
Partnership $ 26,829 $ 0 $ 26,829 $ 472,173
Net (loss) income allocated
to the Partnership $ (25,491) $ 14,792 $ (193,386) $ 285,696
</TABLE>
Rental income decreased for the nine month period ended September 30, 1997,
compared to the nine months ended September 30, 1996, due to the lower rental
rate being paid by Boeing, the new tenant, and the vacancy of the building for
the first four and one-half months of 1997. Other income increased for the three
and nine months ended September 30, 1997, compared to the three and nine months
ended September 30, 1996, due to a one-time adjustment for unused credits on the
original build out of The Atrium and a $5,000 reimbursement for the sale of
office system components which were unusable by the new tenant. Operating
expenses increased for the three and nine months ended September 30, 1997,
compared to the three and nine months ended September 30, 1996, due to increased
utility, repair, and maintenance expenses being paid with the leasing of the
building to Boeing.
For details related to the recent leasing of The Atrium, please refer to the
Condensed Notes to Financial Statements, (2) Investment in Joint Ventures.
12
<PAGE>
The Brookwood Grill Property/Fund II and Fund III Joint Venture
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------------- -----------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 56,188 $ 56,797 $ 168,919 $ 169,172
Equity income (loss) of
joint venture 5,606 (573) 23,961 (26,996)
--------- --------- --------- ---------
61,794 56,224 192,880 142,176
--------- --------- --------- ---------
Expenses:
Depreciation 13,503 13,503 40,509 40,509
Management and leasing
expenses 7,032 7,483 21,077 20,178
Other operating expenses 1,656 13,665 17,787 48,941
--------- --------- --------- ---------
22,191 34,651 79,373 109,628
--------- --------- --------- ---------
Net income $ 39,603 $ 21,573 $ 113,507 $ 32,548
========= ========= ========= =========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 37.65% 37.65% 37.65% 37.65%
Cash distributions to the
Partnership $ 29,573 $ 16,207 $ 84,248 $ 39,829
Net income allocated to the
Partnership $ 14,910 $ 8,122 $ 42,735 $ 12,254
</TABLE>
Although rental income remained relatively stable, total revenues increased for
the three month and nine month periods ended September 30, 1997, as compared to
the same periods in 1996, due to the increased equity in income from the Fund
II, III, VI, and VII Joint Venture, as a result of increased occupancy at the
Holcomb Bridge Road property. Operating expenses decreased in 1997 compared to
1996 due primarily to a decrease in property tax reimbursements in 1996.
13
<PAGE>
Holcomb Bridge Road Property/Fund II, III, VI, VII Joint Venture
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Six Months Ended
----------------------------------------- ----------------- ----------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 181,877 $ 82,869 $ 477,974 $ 136,044
Expenses:
Depreciation 84,509 54,939 220,621 138,881
Management and leasing
expenses 26,156 8,530 69,219 14,610
Other operating expenses 48,870 22,279 92,810 70,012
--------- --------- --------- ---------
159,535 85,748 382,650 223,503
--------- --------- --------- ---------
Net income (loss) $ 22,342 $ (2,879) $ 95,324 $ (87,459)
========= ========= ========= =========
Occupied % 87.1% 53.6% 87.1% 53.6%
Partnership's Ownership %
in the Fund II-III-VI-VII
Joint Venture 9.4% 9.5% 9.4% 9.5%
Cash distributed to the
Fund II-Fund III Joint
Venture $ 23,826 $ 7,022 $ 77,150 $ 7,022
Net income (loss) allocated
to the Fund II-Fund III Joint
Venture $ 5,606 $ (572) $ 23,961 $ 26,995
</TABLE>
In January 1995, the Fund II-Fund III Joint Venture contributed 4.3 acres of
land and land improvements at 880 Holcomb Bridge Road (the "Holcomb Bridge Road
Property") to the Fund II, III, VI, and VII Joint Venture. Development is being
completed on two buildings containing a total of approximately 49,500 square
feet. Approximately 3,500 square feet is currently under construction for which
leases have been signed. Efforts are continuing to lease the remaining space of
approximately 2,900 square feet.
As of September 30, 1997, thirteen tenants are occupying approximately 43,100
square feet of space in the retail and office building under leases of varying
lengths. Operating expenses increased for the three month period ended September
30, 1997, as compared to September 30, 1996, due to increased occupancy at the
property. Increases in revenues, expenses and net income for the nine months
ended September 30, 1997, compared to the six months ended September 30, 1996,
are also due to increased occupancy at the property.
14
<PAGE>
The G.E. Building/Richmond-Fund III-Fund IV Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------------ -----------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 131,857 $ 131,857 $ 395,569 $ 395,569
Expenses:
Depreciation 49,056 49,056 147,168 147,162
Management and leasing
expenses 10,031 9,965 29,961 29,895
Other operating expenses (2,183) 708 1,509 7,890
--------- --------- --------- ---------
56,904 59,729 178,638 184,947
--------- --------- --------- ---------
Net income $ 74,953 $ 72,128 $ 216,931 $ 210,622
========= ========= ========= =========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 57.3% 57.3% 57.3% 57.3%
Cash distribution to the
Partnership $ 72,477 $ 69,214 $ 213,161 $ 205,040
Net income allocated to the
Partnership $ 42,961 $ 41,341 $ 124,338 $ 120,721
</TABLE>
Rental income remained constant for 1997 and 1996. Total expenses decreased in
1997, as compared to 1996, and accordingly, net income increased in 1997, as
compared to 1996, due primarily to a decrease in the cost of property insurance.
15
<PAGE>
The Stockbridge Village Shopping Center Property/Fund III-Fund IV Joint Venture
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------------------ -----------------------------------------
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 276,979 $ 271,532 $ 825,016 $ 809,874
Interest income 3,040 3,526 9,157 10,218
--------- --------- --------- ---------
280,019 275,058 834,173 820,092
Expenses:
Depreciation 84,747 84,747 254,241 254,243
Management and leasing
expenses 25,648 24,114 81,085 75,434
Other operating expenses (11,004) 26,243 57,259 74,605
--------- --------- --------- ---------
99,391 135,104 392,585 404,282
--------- --------- --------- ---------
Net income $ 180,628 $ 139,954 $ 441,588 $ 415,810
========= ========= ========= =========
Occupied % 93% 93% 93% 93%
Partnership's Ownership % 57.3% 57.3% 57.3% 57.3%
Cash distributed to the
Partnership $ 153,209 $ 135,507 $ 409,439 $ 404,219
Net income allocated to the
Partnership $ 103,530 $ 80,217 $ 253,103 $ 238,328
</TABLE>
Rental income increased for the three and the nine months ended September 30,
1997, as compared to the same periods in 1996, due to lease renewals at
increased rental rates. Expenses of the property decreased from $404,282 in 1996
to $392,585 in 1997 due primarily to timing differences in billing tenant
expense reimbursements.
16
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6(b). No reports on Form 8-K were filed during the third quarter of 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
WELLS REAL ESTATE FUND III, L.P.
(Registrant)
Dated: November 10, 1997 By: /s/Leo F. Wells, III
----------------------
Leo F. Wells, III, as Individual
General Partner and as President,
Sole Director and Chief Financial
Officer of Wells Capital, Inc.
17
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