<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 March 31, 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
-----
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - March 31, 1997
and December 31, 1996.................................... 3
Statements of Income for the Three Months
Ended March 31, 1997 and 1996............................ 4
Statement of Partner's Capital for the
Three Months Ended March 31, 1997
and the Year Ended December 31, 1996..................... 5
Statements of Cash Flows for the Three
Months Ended March 31, 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
2
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets March 31, 1997 December 31, 1996
- ------------------------------------------------ -------------- ------------------
<S> <C> <C>
Real estate, at cost:
Land $ 576,350 $ 576,350
Building and improvements, less accumulated
depreciation of $654,640 in 1997 and $613,213
in 1996 2,923,961 2,965,388
----------- -----------
Total real estate 3,500,311 3,541,738
----------- -----------
Cash and cash equivalents 317,240 342,318
Investment in joint ventures (Note 2) 12,773,215 12,926,074
Due from affiliates 167,730 212,943
Accounts receivable 75,431 67,790
Prepaid expenses and other assets 28,806 24,100
----------- -----------
Total assets $16,862,733 $17,114,963
=========== ===========
Liabilities and Partners' Capital
- ------------------------------------------------
Liabilities:
Accounts payable $ 40,068 $ 35,941
Partnership distributions payable 3,733 324,495
Due to affiliates 11,396 11,396
----------- -----------
Total liabilities 55,197 371,832
----------- -----------
Partners' capital:
General Partners 0 0
Limited Partners:
Class A - 19,635,965 units outstanding 16,807,536 16,743,131
Class B - 2,544,540 units outstanding 0 0
----------- -----------
Total partners' capital 16,807,536 16,743,131
----------- -----------
Total liabilities and partners' capital $16,862,733 $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
------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Revenues:
Rental income $147,677 $145,742
Interest income 7,159 5,853
Equity in income of joint ventures (Note 2) 44,873 203,602
-------- --------
199,709 355,197
-------- --------
Expenses:
Management and leasing fees 9,108 8,774
Operating costs-rental properties,
net of tenant reimbursements 55,194 48,059
Depreciation 41,427 39,577
Legal and accounting expenses 11,617 1,543
Computer expense 3,306 1,327
Partnership administration 14,652 20,781
-------- --------
135,304 120,061
-------- --------
Net income $ 64,405 $235,136
======== ========
Net income allocated to
Class A Limited Partners $ 64,405 $235,136
Net loss allocated to
Class B Limited Partners $ 0 $ 0
Net income per Class A
Limited Partner Unit $0.00 $0.01
Net loss per Class B
Limited Partner Unit $ 0 $ 0
Cash distribution per Class A
Limited Partner Unit $ 0 $0.02
</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 THREE MONTHS ENDED
MARCH 31, 1997
<TABLE>
<CAPTION>
LIMITED PARTNERS TOTAL
--------------------------
CLASS A CLASS B 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 $ 64,405 0 0 $ 64,405
---------- ----------- --------- -- -----------
BALANCE, MARCH 31, 1997 19,635,965 $16,807,536 2,544,540 $0 $16,807,536
========== =========== ========= == ===========
</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>
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 64,405 $ 235,136
Adjustments to reconcile net income to net cash
used by operating activities:
Equity in income of joint ventures (44,873) (203,603)
Distributions received from joint ventures 242,945 336,217
Partnership distributions paid (320,762) (609,293)
Depreciation 41,427 39,577
Changes in assets and liabilities:
Accounts receivable (7,641) 997
Prepaids and other assets (4,706) 64
Accounts payable 4,127 13,207
Due to affiliates 0 (110)
--------- ---------
Net cash used in operating activities (25,078) (187,808)
--------- ---------
Net decrease in cash and cash
equivalents (25,078) (187,808)
Cash and cash equivalents, beginning of year 342,318 500,327
--------- ---------
Cash and cash equivalents, end of period $ 317,240 $ 312,519
========= =========
</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 to two
classes of limited partnership interests, Class A and Class B limited
partnership units.
The Partnership owns interests in properties through equity ownership in
the following joint ventures: (i) The Fund II - Fund III Joint Venture,
(ii) The Fund II, III, VI and VII Associates Joint Venture and (iii) The
Fund III - Fund IV Joint Venture.
As of March 31, 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) Boeing at 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 Wells Real Estate Fund III, L.P. (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
7
<PAGE>
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 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
----------------------------
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 Fund II - Fund II-OW Joint Venture holds approximately 66% equity
interest in the Fund II - Fund III Joint Venture, and the Partnership holds
approximately 34% equity interest in the Fund II - Fund III Joint Venture.
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 their occupancy on April 15, 1997, and it
is anticipated that they will begin paying rent on approximately May 15,
1997. The total cost of completing the required tenant improvements and
outside broker commissions of
8
<PAGE>
approximately $1.4 million will be funded from the reserves and cash flows
of the Partnership, Wells Fund II and Wells Fund II-OW.
For a description of other joint ventures and properties owned by the
Partnership, please refer to the Partnership's Form 10-K for the year ended
December 31, 1996.
(3) Legal Proceedings
-----------------
Litigation was instituted in the Superior Court of Gwinnett County, Georgia
on January 13, 1997 against the Partnership, Wells Real Estate Fund II,
L.P. ("Wells Fund II"), Wells Capital, Inc. and Leo F. Wells, III, who are
the general partners of the Partnership and Wells Fund II, in connection
with a request by a limited partner in the Partnership and Wells Fund II
for a list of the names, addresses and ownership interests of the limited
partners which to date the defendants have refused to furnish to the
plaintiff. The case is styled Gramercy Park Investments L.P. v. Wells Real
--------------------------------------------
Estate Fund II, Wells Real Estate Fund III, L.P., Wells Capital, Inc. and
-------------------------------------------------------------------------
Leo F. Wells, III. The plaintiff, which is a limited partner in both the
------------------
Partnership and Wells Fund II, alleges that it is entitled to copies of the
limited partner lists under applicable provisions of Georgia partnership
law and the partnership agreements of the Partnership and Wells Fund II so
that plaintiff may make an offer to purchase up to 4.9% of the partnership
units in each fund. The plaintiff is seeking an order directing the
defendants to furnish to the plaintiff a current list of the names,
addresses and ownership interests of the limited partners in the
Partnership and Wells Fund II, as well as an award of certain damages,
including its costs and attorneys' fees and such other relief as the court
deems just and proper. On February 26, 1997, the Court denied the
plaintiff's request for an immediate order requiring defendants to furnish
the lists to the plaintiff and instead ordered expedited discovery to be
completed by March 31, 1997. Thereafter, the Court will again consider the
plaintiff's request to turn over the limited partner lists.
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 1993 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.
9
<PAGE>
Results in Operations and Changes in Financial Conditions
---------------------------------------------------------
General
-------
Gross revenues of the Partnership were $199,709 for the three months ended
March 31, 1997, as compared to $355,197 for the three months ended March
31, 1996. The decrease for 1997 over 1996 was due to decreased income
from joint ventures, primarily due to the vacancy at The Atrium.
Expenses of the Partnership increased for 1997 compared to 1996, from
$120,061 for the three months ended March 31, 1996, to $135,304 for the
three months ended March 31, 1997. The increase in expenses was due
primarily to increased operating costs, legal and accounting expenses, and
computer costs.
Net cash used in operating activities decreased from $187,808 in 1996 to
$25,078 in 1997. The decrease was due primarily to an increase in
Partnership distributions paid. Cash and cash equivalents remained
relatively stable for each of the three months ending March 31, 1996 and
1997. While the Partnership generally distributes cash available less
reserves to the Limited Partners, as discussed previously, the total cost
to complete the required tenant improvements and outside brokerage
commissions relating to the new lease for The Atrium is estimated to be
approximately $1,400,000, which is being funded out of cash which would
otherwise be available for distribution to Limited Partners, along with
reserves of the Partnership, Wells Fund II and Wells Fund II-OW.
There were no cash distributions to Limited Partners holding Class A Units
for the first quarter of 1997, as compared to $0.02 per unit for the first
quarter of 1996. No cash distributions were made to Limited Partners
holding Class B Units or the General Partners for the three months ended
March 31, 1997 and 1996. As set forth above, substantially all cash
generated from the operations of properties owned by the Partnership in the
first quarter of 1997 is being used to fund the required tenant
improvements and outside brokerage commissions relating to the new lease at
The Atrium. In addition, it is anticipated that operating cash flow
generated from properties owned by the Partnership for the second quarter
of 1997 will also be used to fund such required tenant improvements and
outside brokerage commissions, and Limited Partners hold Class A Units
should not expect cash distributions from the Partnership to commence again
until at least the third quarter ending September 30, 1997.
10
<PAGE>
PROPERTY OPERATIONS
- -------------------
As of March 31, 1997, the Partnership owned interests in the following
properties:
The Greenville Property- Fund III
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Revenues:
Rental Income $159,437 $145,742
Expenses:
Depreciation 41,428 39,577
Management and leasing expenses 16,698 17,568
Other operating expenses 59,364 39,805
-------- --------
117,490 96,950
-------- --------
Net income $ 41,947 $ 48,792
======== ========
Occupied % 100% 98%
Partnership Ownership % 100% 100%
Cash generated to the Partnership $ 85,463 $ 90,788
Net income allocated to the Partnership $ 41,947 $ 48,792
</TABLE>
Rental income increased from 1996 to 1997 due to regularly scheduled rent
increase. Expenses of the Greenville Property increased from $96,950 in 1996 to
$117,490 in 1997 due primarily to increased utilities, contract services and
repairs and maintenance.
Depreciation and management and leasing expenses remained relatively stable
during the periods of March 31, 1997 and March 31, 1996.
The Greenville Property remained 100% occupied as of March 31, 1997.
11
<PAGE>
Boeing at the Atrium/Fund II and Fund III Joint Venture
- -------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Revenues:
Rental income $ 0 $519,836
Interest income 2,517 7,686
--------- --------
2,517 527,522
--------- --------
Expenses:
Depreciation 168,642 168,478
Management and leasing expenses 0 35,690
Other operating expenses 97,967 85,942
--------- --------
266,609 290,110
--------- --------
Net (loss) income $(264,092) $237,412
========= ========
Occupied % 0% 100%
Partnership Ownership % 62.1% 62.1%
Cash generated to the Partnership $ 0 $293,631
Net (loss) income allocated to the Partnership $ (90,848) $155,742
</TABLE>
Net income decreased for the three months ended March 31, 1997, compared to the
same period in 1996, due to the vacancy of the Atrium. Expenses decreased in
first quarter 1997 compared to 1996 due to the building being vacant and the
decrease in management and leasing fees. The increase in operating expenses was
due primarily to expenditures of approximately $9,700 on window replacement in
the building.
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
--------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Revenues:
Rental Income $56,544 $56,188
Equity in income (loss) of joint venture 10,857 (5,433)
------- -------
67,401 50,755
Expenses: ------- -------
Depreciation 13,503 13,503
Management and leasing expenses 6,761 6,968
Other operating expenses 2,259 17,889
------- -------
22,523 38,360
------- -------
Net income $44,878 $12,395
======= =======
Occupied % 100% 100%
Partnership Ownership % 38.0% 62.0%
Cash generated to the Partnership $28,460 $17,136
Net income allocated to the Partnership $16,896 $ 7,728
</TABLE>
Rental income has remained stable for the three months ended March 31, 1997 as
compared to 1996. The decrease in operating expenses for the first quarter of
1997 over the same period of 1996 is due primarily to an adjustment in property
tax expense accrued in 1997 and billing of reimbursements for first quarter
1997. The increase in net income is due primarily to an increase of
approximately $15,000 in the equity income of the joint venture and the
adjustment and billing noted above.
13
<PAGE>
Holcomb Bridge Road Property/Fund II, III, VI, VII Joint Venture
- ----------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Revenues:
Rental Income $160,185 $ 9,421
Expenses:
Depreciation 66,130 6,120
Management and leasing expenses 20,580 1,051
Other operating expenses 30,307 18,839
-------- --------
117,017 26,010
-------- --------
Net income (loss) $ 43,168 $(16,589)
======== ========
Occupied % 63% 21%
Partnership Ownership % in Fund II, III, VI, VII 9.5% 12.3%
Cash distribution to the
Fund II-Fund III Joint Venture* $ 27,496 $ 0
Net income (loss) allocated to the
Fund II-Fund III Joint Venture* $ 10,857 $ (5,433)
</TABLE>
*The Partnership holds a 37.65% ownership in the Fund II-Fund III Joint Venture.
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
currently underway for approximately 6,700 square feet of spaces for which
leases have been signed. Efforts are continuing to lease the remaining space of
approximately 11,500 square feet.
As of March 31, 1997, nine tenants are occupying approximately 31,140 square
feet of space in the retail and office building under leases of varying lengths.
Increases in revenues, expenses and net income for the quarter ended March 31,
1997, compared to the same quarter of 1996 are due to the rental income from the
additional tenants and the operation of the property for a full three months.
14
<PAGE>
The G.E. Building/Richmond-Fund III-Fund IV Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Revenues:
Rental Income $131,856 $131,856
Expenses:
Depreciation 49,056 49,053
Management and leasing expenses 9,965 9,965
Other operating expenses 3,403 3,020
-------- --------
62,424 62,038
-------- --------
Net income $ 69,432 $ 69,818
======== ========
Occupied % 100% 100%
Partnership Ownership % 57.3% 57.3%
Cash distributed to the Partnership $ 68,743 $ 67,519
Net income allocated to the Partnership $ 39,796 $ 40,017
</TABLE>
Rental income remained constant for 1997 and 1996. In addition, expenses, net
income and cash distributions generated from the G.E. Building remained
relatively stable in the first quarter of 1997, as compared to the same period
for 1996.
15
<PAGE>
The Stockbridge Village Shopping Center Property/Fund III-Fund IV Joint Venture
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
March 31, 1997 March 31, 1996
--------------- ---------------
<S> <C> <C>
Revenues:
Rental Income $273,737 $268,455
Interest income 3,643 3,613
-------- --------
277,380 272,068
Expenses: -------- --------
Depreciation 84,747 84,748
Management and leasing expenses 30,336 27,154
Other operating expenses 24,418 25,392
-------- --------
139,501 137,294
-------- --------
Net income $137,879 $134,774
======== ========
Occupied % 93% 93%
Partnership Ownership % 57.3% 57.3%
Cash distributed to the Partnership $133,367 $132,544
Net income allocated to the Partnership $ 79,028 $ 77,248
</TABLE>
Rental income and net income increased in 1997, as compared to 1996, due
primarily to increased rental rates offset partially by a slight increase in
expenses.
16
<PAGE>
PART II - OTHER INFORMATION
-----------------------------
Item 6(b). No reports on Form 8-K were filed during the first 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: May 13, 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
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-30-1997
<CASH> 317240
<SECURITIES> 12773215
<RECEIVABLES> 243161
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 28806
<PP&E> 4154951
<DEPRECIATION> (654640)
<TOTAL-ASSETS> 16862733
<CURRENT-LIABILITIES> 55197
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16807537
<TOTAL-LIABILITY-AND-EQUITY> 16862733
<SALES> 0
<TOTAL-REVENUES> 199709
<CGS> 0
<TOTAL-COSTS> 135304
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 64405
<INCOME-TAX> 0
<INCOME-CONTINUING> 64405
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 64405
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
