<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, 1998 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, 1998
and December 31, 1997....................................... 3
Statements of Income for the Three Months and Nine Months
Ended September 30, 1998 and 1997........................... 4
Statement of Partner's Capital for the
Nine Months Ended September 30, 1998
and the Year Ended December 31, 1997........................ 5
Statements of Cash Flows for the Nine
Months Ended September 30, 1998 and 1997.................... 6
Condensed Notes to Financial Statements...................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................................. 8
PART II. OTHER INFORMATION...................................................... 16
</TABLE>
2
<PAGE>
WELLS REAL ESTATE FUND III, L.P.
(A GEORGIA PUBLIC LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
Assets September 30, 1998 December 31, 1997
------ ------------------ ------------------
<S> <C> <C>
Real estate, at cost:
Land $ 576,350 $ 576,350
Building and improvements, less accumulated
depreciation of $891,116 in 1998 and $771,521
in 1997 2,709,100 2,794,080
----------- -----------
Total real estate 3,285,450 3,370,430
----------- -----------
Cash and cash equivalents 199,451 216,961
Investment in joint ventures (Note 2) 12,314,373 12,807,576
Due from affiliates 309,517 316,089
Accounts receivable 32,968 62,621
Prepaid expenses and other assets 27,985 17,990
----------- -----------
Total assets $16,169,744 $16,791,667
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable $ 29,842 $ 7,535
Partnership distributions payable 396,714 396,991
Due to affiliates 23,605 3,436
----------- -----------
Total liabilities 450,161 407,962
----------- -----------
Partners' capital:
General Partners 0 0
Limited Partners:
Class A - 19,635,965 units outstanding 15,719,583 16,383,705
Class B - 2,544,540 units outstanding 0 0
----------- -----------
Total partners' capital 15,719,583 16,383,705
----------- -----------
Total liabilities and partners' capital $16,169,744 $16,791,667
=========== ===========
</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, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $150,184 $144,667 $427,842 $440,279
Equity in income of
joint ventures (Note 3) 119,907 135,909 382,327 226,789
Interest income 25 606 1,044 10,774
-------- -------- -------- --------
270,116 281,182 811,213 677,842
-------- -------- -------- --------
Expenses:
Management and leasing
fees 46,859 22,300 66,625 59,915
Operating costs - rental
property (31,063) 32,514 63,538 113,625
Depreciation and
Amortization 45,018 39,666 124,172 122,521
Legal and Accounting 531 7,522 14,450 30,196
Computer costs 2,325 2,981 6,173 7,938
Partnership administration 20,883 7,728 42,373 35,354
-------- -------- -------- --------
84,553 112,711 317,331 369,549
-------- -------- -------- --------
Net income $185,563 $168,471 $493,882 $308,293
======== ======== ======== ========
Net income allocated to
General Partners $ 0 $ 0 $ 0 $ 0
Net income allocated to
Class A Limited Partners $185,563 $168,471 $493,882 $308,293
Net loss allocated to Class
B Limited Partners $ 0 $ 0 $ 0 $ 0
Net income per Class A
Limited Partner Unit $ 0.01 $ 0.01 $ 0.03 $ 0.02
Net loss per Class B Limited
Partner Unit $ 0 $ 0 $ 0 $ 0
Cash distribution per Class A
Limited Partner Unit $ 0.02 $ 0.02 $ 0.06 $ 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, 1997 AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
LIMITED PARTNERS TOTAL
---------------------------------------------
CLASS A CLASS B PARTNERS'
------------------------- ------------------
UNITS AMOUNTS UNITS AMOUNTS CAPITAL
---------- ------------- --------- ------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 19,635,965 $16,743,131 2,544,540 $0 $16,743,131
Net income 0 385,224 0 0 385,224
Partnership distributions 0 (744,650) 0 0 (744,650)
---------- ----------- --------- -- -----------
BALANCE, DECEMBER 31, 1997 19,635,965 16,383,705 2,544,540 0 16,383,705
Net income 0 493,882 0 0 493,882
Partnership distributions 0 (1,158,004) 0 0 (1,158,004)
---------- ----------- --------- -- -----------
BALANCE, SEPTEMBER 30, 1998 19,635,965 $15,719,583 2,544,540 $0 $15,719,583
========== =========== ========= == ===========
</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, 1998 September 30, 1997
--------------------------- --------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 493,882 $ 308,293
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Equity in income of joint ventures (382,327) (226,789)
Depreciation and Amortization 124,172 122,521
Changes in assets and liabilities:
Accounts receivable 29,653 (9,129)
Prepaids and other assets (14,571) 3,605
Accounts payable 22,307 (16,414)
Due to affiliates 20,169 (33,616)
----------- ----------
Net cash provided by operating activities 293,285 148,471
----------- ----------
Cash flow from investing activities:
Investment in joint ventures (93,820) (659,810)
Distributions received from joint ventures 941,306 664,533
----------- ----------
Net cash provided by investing activities 847,486 4,723
Cash flow from financing activities:
Partnership distributions paid (1,158,281) (322,305)
----------- ----------
Net increase (decrease) in cash and cash equivalents (17,510) (169,111)
Cash and cash equivalents, beginning of year 216,961 342,318
----------- ----------
Cash and cash equivalents, end of period $ 199,451 $ 173,207
=========== ==========
</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, 1998, the Partnership owned interest in the following
properties: (i) the Greenville Property, an office building in Greenville,
North Carolina, owned by the Partnership, (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) the Holcomb Bridge Road
Property, 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. 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
7
<PAGE>
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 to the financial statements and footnotes included in
the Partnership's Form 10-K for the year ended December 31, 1997.
(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.
For a description of the joint ventures and properties owned by the
Partnership, please refer to the Partnership's Form 10-K for the year ended
December 31, 1997.
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, 1998, the properties owned by the Partnership were
97.5% occupied, as compared to 96.7% occupied as of September 30, 1997.
Gross revenues of the Partnership were $811,213 for the nine months ended
September 30, 1998, as compared to $677,842 for the nine months ended
September 30, 1997. The increase for 1998, as compared to 1997, was due
to increased income from joint ventures, primarily due to the occupancy
increases at Boeing at the Atrium, who occupied the building in mid-May of
1997, and the Holcomb Bridge Road Property in Roswell, Georgia.
8
<PAGE>
Expenses of the Partnership decreased from $369,549 for the nine months
ended September 30, 1997, to $317,331 for the nine months ended September
30, 1998, due primarily to tenant reimbursements at the Greenville
property.
Net cash provided by operating activities increased from $148,471 in 1997,
to $293,285 in 1998. The increase was due primarily to increased net
income as discussed above. Net cash provided by investing activities
increased from $4,723 in 1997, to $847,486 in 1998, due to the decrease in
investment in joint venture (primarily the Atrium) and the increase in
distributions from the Atrium. As a result, cash and cash equivalents
increased from $173,207 in 1997, to $199,451.
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, 1998 and 1997. No cash distributions were made to the Limited Partners
holding Class B Units or the General Partners for the nine months ended
September 30, 1998 and 1997.
The Partnership's distributions paid and payable through the third quarter
of 1998 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.
The General Partners have verified that all operational computer systems
are year 2000 compliant. This includes systems supporting accounting,
property management and investor services. Also, as part of this review,
all building control systems have been verified as compliant. The current
line of business applications are based on compliant operating systems and
database servers. All of these products are scheduled for additional
upgrades before the year 2000. Therefore, it is not anticipated that the
year 2000 will have significant impact on operations.
RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income", requires certain transactions (e.g., unrealized
gains/losses on available for sale securities) that are not reflected in
net income to be displayed as other comprehensive income. The Statement
also requires an entity to report total comprehensive income (i.e., net
income plus other comprehensive income) for every period in which an income
statement is presented. SFAS No. 130 is effective for annual and interim
periods beginning after December 15, 1997. None of the transactions
9
<PAGE>
required to be reported in other comprehensive income pertain to the
Partnership; consequently, adoption of this Statement had no impact on the
partnership's disclosures.
PROPERTY OPERATIONS
- -------------------
As of September 30, 1998, the Partnership owned interests in the following
properties:
The Greenville Property- Fund III
- ---------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $150,184 $144,667 $427,842 $440,279
-------- -------- -------- --------
Expenses:
Depreciation 45,018 39,667 124,172 122,522
Management and leasing
expenses 29,656 22,300 66,625 59,915
Other operating expenses (13,861) 32,514 63,537 113,625
-------- -------- -------- --------
60,813 94,481 254,334 296,062
-------- -------- -------- --------
Net income $ 89,371 $ 50,186 $173,508 $144,217
======== ======== ======== ========
Occupied % 92% 100% 92% 100%
Partnership's Ownership % 100% 100% 100% 100%
Cash generated to the
Partnership $128,433 $ 97,845 $310,224 $278,785
Net income allocated to the
Partnership $ 89,371 $ 50,186 $173,508 $144,217
</TABLE>
Rental income decreased for the nine month period ended September 30, 1998, as
compared to the same period in 1997, due to a decline in occupancy from 100% to
92%. Operating expenses decreased significantly for the three month and nine
month period ended September 30, 1998 due to additional tenant reimbursements of
approximately $63,000 during the third quarter of 1998.
10
<PAGE>
Boeing at The Atrium/Fund II and Fund III Joint Venture
- -------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $367,536 $367,536 $1,102,608 $ 557,232
Interest income 0 0 0 2,617
Other income 0 8,438 13,280 8,438
-------- -------- ---------- ----------
367,536 375,974 1,115,888 568,287
-------- -------- ---------- ----------
Expenses:
Depreciation 216,930 216,666 650,790 553,951
Management and leasing
expenses 44,775 41,283 133,942 70,293
Other operating expenses 174,424 183,894 516,248 473,093
-------- -------- ---------- ----------
436,129 441,843 1,300,980 1,097,337
-------- -------- ---------- ----------
Net (loss) income $(68,593) $(65,869) $ (185,092) $ (529,050)
======== ======== ========== ==========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 38.72% 38.72% 38.72% 38.72%
Cash distributions to the
Partnership $ 65,091 $ 26,829 $ 203,110 $ 26,829
Net (loss) income allocated
to the Partnership $(26,582) $(25,491) $ (71,667) $ (193,386)
</TABLE>
Rental income increased for the nine months ended September 30, 1998, compared
to the same period in 1997, due to the vacancy of the Atrium for the first four
and a half months of 1997.
Depreciation, management and leasing, and other expenses have increased in 1998,
compared to 1997, with the occupancy of the building by Boeing for the full nine
months of 1998. Cash distributions to the Partnership increased, due primarily
to the increase in rental revenues and reimbursement of tenant improvements of
approximately $12,000 received from Boeing.
11
<PAGE>
The Brookwood Grill Property/Fund II and Fund III Joint Venture
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $56,488 $56,188 $168,863 $168,919
Equity income (loss) of
joint venture 20,308 5,606 53,382 23,961
------- ------- -------- --------
76,796 61,794 222,245 192,880
------- ------- -------- --------
Expenses:
Depreciation 13,503 13,503 40,509 40,509
Management and leasing
expenses 6,250 7,032 19,775 21,077
Other operating expenses 8,271 1,656 (10,221) 17,787
------- ------- -------- --------
28,024 22,191 50,063 79,373
------- ------- -------- --------
Net income $48,772 $39,603 $172,182 $113,507
======= ======= ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 37.65% 37.65% 37.65% 37.65%
Cash distributions to the
Partnership $35,220 $29,573 $116,145 $ 84,248
Net income allocated to the
Partnership $17,911 $14,910 $ 64,375 $ 42,735
</TABLE>
Although rental income remained relatively stable, total revenues increased for
the three month and nine month periods ended September 30, 1998, as compared to
the same periods in 1997, due to the increased equity in income from the Fund
II, III, VI, and VII Joint Venture, as the Holcomb Bridge Road property became
100% occupied. Year-to-date operating expenses decreased in 1998, as compared to
1997, due primarily to a change in the rental agreement of billing water
reimbursements to the tenant which will result in the tenant being charged for a
greater share of the total bill.
12
<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, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $226,233 $181,877 $648,113 $477,974
-------- -------- -------- --------
Expenses:
Depreciation 94,128 84,509 282,161 220,621
Management and leasing
expenses 20,198 26,156 79,450 69,219
Other operating expenses 27,664 48,870 64,494 92,810
-------- -------- -------- --------
141,990 159,535 426,105 382,650
-------- -------- -------- --------
Net income (loss) $ 84,243 $ 22,342 $222,008 $ 95,324
======== ======== ======== ========
Occupied % 100% 87.1% 100% 87.1%
Partnership's Ownership %
in the Fund II-III-VI-VII
Joint Venture 9.06% 9.4% 9.06% 9.4%
Cash distributed to the
Fund II-Fund III Joint
Venture $ 45,561 $ 23,826 $128,719 $ 77,150
Net income (loss) allocated to
the Fund II-Fund III Joint
Venture $ 20,308 $ 5,606 $ 53,382 $ 23,961
</TABLE>
The Partnership holds a 37.65% ownership interest 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 to the Fund II, III, VI,
and VII Joint Venture. Development has been completed on two buildings
containing a total of approximately 49,500 square feet.
As of September 30, 1998, fourteen tenants are occupying approximately 49,500
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 and nine
months ended September 30, 1998, compared to the same periods of 1997, are due
to the property being 100% occupied as of September 30, 1998, as compared to
87.1% at the end of the same period of 1997.
13
<PAGE>
The G.E. Building/Richmond-Fund III-Fund IV Joint Venture
- ---------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $131,857 $131,857 $395,569 $395,569
-------- -------- -------- --------
Expenses:
Depreciation 49,056 49,056 147,162 147,168
Management and leasing
expenses 10,095 10,031 30,204 29,961
Other operating expenses 1,918 (2,183) 17,470 1,509
-------- -------- -------- --------
61,069 56,904 194,836 178,638
-------- -------- -------- --------
Net income $ 70,788 $ 74,953 $200,733 $216,931
======== ======== ======== ========
Occupied % 100% 100% 100% 100%
Partnership's Ownership % 57.3% 57.3% 57.3% 57.3%
Cash distribution to the
Partnership $ 72,449 $ 72,477 $209,192 $213,161
Net income allocated to the
Partnership $ 40,573 $ 42,961 $115,053 $124,338
</TABLE>
Rental income remained constant for 1998 and 1997. Net income and cash
distributions generated from the G.E. Building decreased for the nine months
ended September 30, 1998, as compared to the same period in 1997, due to
increased expenses in the first quarter of 1998 for extraordinary roof repairs.
14
<PAGE>
The Stockbridge Village Shopping Center Property/Fund III-Fund IV Joint Venture
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $312,855 $276,979 $898,740 $825,016
Interest income 2,425 3,040 6,355 9,157
-------- -------- -------- --------
315,280 280,019 905,095 834,173
-------- -------- -------- --------
Expenses:
Depreciation 87,501 84,747 258,368 254,241
Management and leasing
expenses 29,558 25,648 84,381 81,085
Other operating expenses 44,681 (11,004) 83,314 57,259
-------- -------- -------- --------
161,740 99,391 426,063 392,585
-------- -------- -------- --------
Net income $153,540 $180,628 $479,032 $441,588
======== ======== ======== ========
Occupied % 97% 93% 97% 93%
Partnership's Ownership % 57.3% 57.3% 57.3% 57.3%
Cash distributed to the
Partnership $136,306 $153,209 $405,834 $409,439
Net income allocated to the
Partnership $ 88,004 $103,530 $274,565 $253,103
</TABLE>
Rental income increased for the three and the nine months ended September 30,
1998, as compared to the same periods in 1997, due to increased rental renewal
rates and increased occupancy. Expenses of the property increased from $392,585
in 1997 to $426,063 in 1998, due primarily to increased expenses in parking lot
repairs.
15
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6(b). No reports on Form 8-K were filed during the third quarter of 1998.
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, 1998 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.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 199,451
<SECURITIES> 12,314,373
<RECEIVABLES> 342,485
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,985
<PP&E> 4,176,566
<DEPRECIATION> 891,116
<TOTAL-ASSETS> 16,169,744
<CURRENT-LIABILITIES> 450,161
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 15,719,583
<TOTAL-LIABILITY-AND-EQUITY> 16,169,744
<SALES> 0
<TOTAL-REVENUES> 811,213
<CGS> 0
<TOTAL-COSTS> 317,331
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 493,882
<INCOME-TAX> 493,882
<INCOME-CONTINUING> 493,882
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 493,882
<EPS-PRIMARY> .06
<EPS-DILUTED> 0
</TABLE>
