SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 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 No. 0-18531
Development Partners III (A Massachusetts Limited Partnership)
(formerly Berry and Boyle Development Partners III)
(Exact name of registrant as specified in its charter)
------
Massachusetts 04-3017036
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5110 Langdale Way, Colorado Springs, CO 80906
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(719) 527-0544
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interests
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 and 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>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<PAGE>
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
March 31, December 30,
1998 1997
ASSETS
Assets held for sale/Property, at cost (Notes 8)
<S> <C> <C>
Land ..................................................................... $ 2,976,101 $ 2,976,101
Buildings and improvements ............................................... 7,648,060 7,648,060
Equipment, furnishings and fixtures ...................................... 1,122,596 1,122,596
------------ ------------
11,746,757 11,746,757
Less accumulated depreciation ............................................ (2,228,967) (2,228,967)
------------ ------------
9,517,790 9,517,790
Cash and cash equivalents .................................................. 270,985 253,777
Accounts receivable ........................................................ 5,907
Real estate tax escrow and prepaid expenses ................................ 53,443 25,821
Deposits ................................................................... 1,950 1,950
Deferred expenses, net of accumulated
amortization of $130,342 and $123,914 .................................... 7,499 13,927
------------ ------------
Total assets ...................................................... $ 9,851,667 $ 9,819,172
============ ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Mortgage note payable ...................................................... 6,734,895 $ 6,766,437
Accounts payable and accrued expenses ...................................... 155,033 163,023
Due to affiliates (Note 7) ................................................. 20,407 5,370
Tenant security deposits ................................................... 23,207 23,090
------------ ------------
Total liabilities ................................................. 6,933,542 6,957,920
Minority Interest .......................................................... 1,235,374 1,196,756
General Partners' deficit .................................................. (50,314) (51,227)
Limited Partners' equity ................................................... 1,733,065 1,715,723
------------ ------------
Total liabilities and partners' equity ............................. $ 9,851,667 $ 9,819,172
============ ============
<PAGE>
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
-------------
Three months ended
March 31,
1998 1997
---- ----
Revenue:
<S> <C> <C>
Rental income $411,717 $387,829
Interest Income 2,488 5,922
----------- --------------
$414,205 $393,751
Expenses:
Operating Expenses 167,905 182,748
Interest 154,121 156,862
Depreciation and amortization 6,428 66,684
General and administrative 28,878 17,877
----------- --------------
357,332 424,171
----------- --------------
Net loss before minority interest 56,873 (30,420)
Minority interests' equity in
subsidiary net (income) loss (38,618) 7,995
----------- --------------
Net loss $18,255 ($22,425)
=========== ==============
Net loss allocated to:
General Partners $1,460 ($224)
Basic and diluted per unit of
Investor Limited
Partner interest:
7,401 Units issued $2.27 ($3.00)
<PAGE>
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
-------------
Investor Total
General Limited Partners'
Partners Partners Equity
<S> <C> <C> <C>
Balance at December 31, 1996 (47,185) 1,862,467 1,815,282
Cash distributions (2,896) (33,304) (36,200)
Net loss (1,146) (113,440) (114,586)
-------------- -------------- -----------------
Balance at December 31, 1997 (51,227) 1,715,723 1,664,496
Cash distributions - - -
Net loss 913 17,342 18,255
-------------- -------------- -----------------
Balance at March 31, 1998 ($50,314) $1,733,065 $1,682,751
============== ============== =================
<PAGE>
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
-------------
Three Months
Ended
March 31,
1998 1997
Cash flows from operating activities:
<S> <C> <C>
Interest received $2,488 $5,922
Cash received from rents 417,741 385,243
Administrative expenses (26,201) (27,471)
Rental operations expenses (189,640) (162,062)
Interest paid (154,121) (156,862)
---------------- ---------------
Net cash provided by operating activities 50,267 44,771
Cash flows from investing activities:
Capital Improvements - (42,695)
----------------- ---------------
Net cash provided (used) by investing activities - (42,695)
Cash flows from financing activities:
Distributions to partners - (33,305)
Payments on mortgage note payable (31,542) (28,801)
Cash paid for prepaid expenses (1,517) -
---------------- ---------------
Net cash provided (used) by financing activities (33,059) (62,106)
---------------- ---------------
Net increase (decrease) in cash and cash equivalents 17,208 (60,030)
Cash and cash equivalents at beginning of year 253,777 531,778
---------------- ---------------
Cash and cash equivalents at end of year $270,985 $471,748
================ ===============
<PAGE>
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
-------------
Reconciliation of net loss to net cash provided by operating activities:
Three months
ended
March 31,
1998 1997
-------- --------
<S> <C> <C>
Net loss ....................................................................... $ 18,255 ($22,425)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization .................................................. 6,428 66,684
Minority interests' equity in subsidiary (income) loss ......................... 38,618 (7,995)
Change in assets and liabilities net of effects from investing and financing
activities:
Decrease in accounts and interest receivable ............................... 5,907
Increase in real estate tax escrow and prepaid ............................. (26,105) (25,887)
expenses
(Decrease) increase in accounts
payable and accrued expenses ............................................. (7,990) 34,204
Increase in due to affiliates .............................................. 15,037 2,776
Decrease in rents received in advance ...................................... -- (3,507)
Increase in tenant security deposits ....................................... 117 921
-------- --------
Net cash provided by operating activities ...................................... $ 50,267 $ 44,771
======== ========
</TABLE>
<PAGE>
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PART I
1. Organization of Partnership
Development Partners III (A Massachusetts Limited Partnership) (the
"Partnership"), formerly Berry and Boyle Development Partners III, was formed on
July 11, 1988. GP L'Auberge Communities, L.P., a California Limited Partnership
(formerly Berry and Boyle Management) and Stephen B. Boyle are the General
Partners. In September, 1995, with the consent of Limited Partners holding a
majority of the outstanding Units, as well as the consent of the mortgage
lenders for the Partnership's three properties, Richard G. Berry resigned as a
general partner of the Partnership. Except under certain limited circumstances
upon termination of the Partnership, the General Partners are not required to
make any additional capital contributions. The General Partners or their
affiliates will receive various fees for services and reimbursement for various
organizational, administrative and selling costs incurred on behalf of the
Partnership.
On January 13, 1989 the Securities and Exchange Commission declared the
Partnership's public offering (the "Prospectus") of up to 80,000 units of
Limited Partnership Interests at $500 per unit (the "Units") effective and the
marketing and sale of the Units commenced shortly thereafter. The initial
closing of the offering took place on December 28, 1989 at which time the
holders of 3,048 Units were admitted into the Partnership. The Partnership
continued to admit subscribers monthly thereafter until December 27, 1991, its
last closing date. The Partnership terminated the offering on January 13, 1992
having admitted 289 investors acquiring 7,401 Units totaling $3,700,500.
The Partnership will continue until December 31, 2018, unless earlier terminated
by the sale of all, or substantially all, of the assets of the Partnership, or
as otherwise provided in the Partnership Agreement (See Note 8.)
2. Significant Accounting Policies
A. Basis of Presentation
The consolidated financial statements include the accounts of the
Partnership and its subsidiary Casabella Associates. All intercompany
accounts and transactions have been eliminated in consolidation. The
Partnership follows the accrual basis of accounting. Refer to Note 4
regarding the termination of the Casabella Joint Venture.
B. Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. The
carrying value of cash and cash equivalents approximates fair value. It
is the Partnership's policy to invest cash in income-producing
temporary cash investments. The Partnership mitigates any potential
risk from such concentration of credit by placing investments with high
quality financial institutions.
C. Significant Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
D. Depreciation
Depreciation is provided for by the use of the straight-line method
over the estimated useful lives as follows:
Buildings and improvements 39-40 years
Equipment, furnishings and fixtures 5-15 years
E. Deferred Expenses
Costs of obtaining or extending the mortgage on Casabella are being
amortized over the mortgage term using the straight-line method, which
approximates the effective interest method. Any unamortized costs
remaining at the date of refinancing are expensed in the year of
refinancing.
F. Income Taxes
The Partnership is not liable for Federal or state income taxes because
Partnership income or loss is allocated to the Partners for income tax
purposes. If the Partnership's tax returns are examined by the Internal
Revenue Service or state taxing authority and such an examination
results in a change in Partnership taxable income (loss), such change
will be reported to the Partners.
G. Rental Income
Leases require the payment of rent in advance, however, rental income
is recorded as earned.
H. Long-Lived Assets
In 1996, the Partnership adopted Statement of Financial Accounting
Standards No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and Assets to be Disposed of." SFAS 121 requires that
long-lived assets be reviewed for impairment whenever events or changes
in circumstances indicate that their carrying value may not be
recoverable. The adoption of SFAS 121 had no effect on reported results
in 1996. As further discussed in Note 9, for the year ended December
31, 1997 the Partnership recorded its property at the lower of carrying
value or net realizable value and has included these amounts as Assets
Held for Sale.
For the period ended March 31, 1998 and 1997, permanent impairment
conditions did not exist at the Partnership's property.
I. New Accounting Standard
In 1997, the Partnership adopted Statement of Financial Accounting
Standards No. 128 (SFAS 128), "Earnings Per Share." This accounting
standard specifies new computation, presentation, and disclosure
requirements for earnings per share to be applied retroactively. Among
other things, SFAS 128 requires presentation of basic and diluted
earnings per share on the face of the income statement. The computation
of basic and diluted earnings per share was based on income available
to the Limited Partners divided by the weighted average number of units
outstanding during the period. The Partnership has no dilutive type
securities. The adoption of SFAS 128 had no effect on the per unit
results previously reported.
3. Cash and cash equivalents
Cash and cash equivalents at March 31, 1998 and 1997 consisted of the following:
March 31, December 31,
1998 1997
Cash on hand ..................................... $183,275 $167,044
Money market accounts ............................ 87,710 86,733
-------- --------
$270,985 $253,777
======== ========
4. Joint Venture and Property Acquisitions
On September 28, 1990, the Partnership acquired a majority interest in Casabella
Associates, a general partnership comprised of the Partnership, Development
Partners (A Massachusetts Limited Partnership) ("DPI"), formerly Berry and Boyle
Development Partners, and Development Partners II (A Massachusetts Limited
Partnership) ("DPII"), formerly Berry and Boyle Development Partners II.
Casabella Associates was formed to acquire a majority interest in the Casabella
Joint Venture which owns Casabella, a 154-unit residential property located in
Scottsdale, Arizona. Since the Partnership owns a majority interest in Casabella
Associates, the accounts and operations of Casabella Associates (including the
accounts and operations relating to Casabella Associates' majority interest in
the Casabella Joint Venture) have been consolidated into the Partnership.
The co-venture partner was an affiliate of Evans Withycombe, Inc. ("EWI"), a
Phoenix based residential development, construction and management firm. EWI
also developed the property known as Casabella.
At March 31, 1998, the Partnership, DPI and DPII had contributed $2,500,000,
$400,000 and $1,800,000, respectively, to Casabella Associates. Of the total
contributions, $3,845,154 was used to purchase the majority interest in the
Casabella Joint Venture referred to in the second preceding paragraph and
$500,000 was used to fund an escrow account maintained by the permanent lender.
In addition to the $4,700,000 of cash contributions referred to above, the
Partnership, DPI and DPII collectively incurred $280,930 of acquisition costs
which have been recorded as additional capital contributions to Casabella
Associates.
The Partnership has invested in a single property located in Scottsdale,
Arizona. The success of the Partnership will depend upon factors which are
difficult to predict including general economic and real estate market
conditions, both on a national basis and in the area where the Partnership's
investment is located.
JANUARY 1, 1996 THROUGH MAY 13, 1996:
Cash distributions and allocations of income and loss from Casabella Associates
are governed by the partnership agreement and are generally based on the ratio
of capital contributed by each of the joint venture partners.
Net cash from operations of the Casabella Joint Venture, to the extent
available, shall be distributed not less often than quarterly with respect to
each fiscal year, as follows:
(A) First, to Associates, an amount equal to a 10.6% per annum
(computed on a simple noncompounded daily basis from the date
of the closing) of their capital investment;
(B) Second, the balance 70% to Associates and 30% to the property
developer.
4. Joint Venture and Property Acquisitions, continued
All losses from operations and depreciation for the Casabella Joint Venture were
allocated 99.5% to Associates and 0.5% to the property developer.
All profits from operations of the Casabella Joint Venture were allocated in
accordance with distributions of net cash from operations; provided, however,
that if any fiscal year has no distributable net cash from operations, profits
will be allocated 99.5% to Associates and 0.5% to the property developer.
In the case of certain capital transactions and distributions as defined in the
Casabella joint venture agreement, the allocation of related profits, losses and
cash distributions, if any, would be different than as described above and would
be affected by the relative balance in the individual partners' capital
accounts.
MAY 14, 1996 THROUGH MARCH 31, 1998:
On May 14, 1996, the Partnership and certain affiliates consummated an agreement
with Evans Withycombe Management, Inc. and certain of its affiliates ("EWI")
which separated the interests of EWI and the Partnership, thus affording the
Partnership greater flexibility in the operation and disposition of Casabella.
The Partnership, DPI, and DPII paid $71,009 to EWI ($38,345 of which was the
Partnership's portion) and delivered certain mutual releases. EWI (i)
relinquished its contract to manage Casabella and its option to exercise its
rights to first refusal with regard to the sale of the property and (ii)
assigned all of its interest in the Casabella Joint Venture to the Partnership,
DPII and DPIII (while preserving the economic interest of the venture in these
Joint Ventures), which resulted in the dissolution of the Casabella Joint
Venture. EWI may still share in the cash flow distributions or the proceeds from
sale of the properties if certain performance levels are met.
5. Mortgage Note Payable
All of the property owned by the Partnership is pledged as collateral for the
nonrecourse mortgage note payable pertaining to Casabella in the original
principal amount of $7,320,000. The original maturity date for this note was
July 15, 1997. On July 10, 1997 the lender extended the terms of the mortgage
note for a period of one year. Under the modification agreement, monthly
principal and interest payments of $61,887 and a fixed interest rate of 9.125%
remain unchanged. The terms of the agreement provide for a pre-payment penalty
of 0.5% of the outstanding loan amount in the event the note is paid prior to 60
days before the note becomes due. The balance of the note will be due on July
15, 1998.
As discussed in Note 8, the Casabella Associates entered into a Sales Agreement
for Casabella. The estimated sales price is sufficient to cover the mortgage
loan balance. However, there can be no assurance that the sale of the property
will occur.
In the event the sales do not occur, the Partnership will seek new sources of
financing for the property on a long-term basis or seek to renegotiate the
mortgage note with its existing lender. If the general economic climate for real
estate in these respective locations were to deteriorate resulting in an
increase in interest rates for mortgage financing or a reduction in the
availability of real estate mortgage financing or a decline in the market values
of real estate it may affect the Partnership's ability to complete the
refinancing or sell the property.
Accrued interest included in accrued expenses on the Balance Sheets of the
Consolidated Financial Statements at March 31, 1998 and December 31, 1997,
consisted of $25,727 and $25,727, respectively.
The principal balance of the mortgage note payable appearing on the consolidated
balance sheets approximates the fair value of such note at March 31, 1998 and
December 31, 1997.
6. Partners' Equity
Under the terms of the Partnership Agreement, as amended, profits are allocated
92% to the Limited Partners and 8% to the General Partners; losses are allocated
99% to the Limited Partners and 1% to the General Partners.
Cash distributions to the partners are governed by the Partnership Agreement and
are made, to the extent available, 92% to the Limited Partners and 8% to the
General Partners.
In the case of certain events as defined in the Partnership Agreement, such as
the sale of an investment property or an interest in a joint venture
partnership, the allocation of the related profits, losses, and distributions,
if any, would be different than described above.
7. Related Party Transactions
L'Auberge Communities, Inc. is a General Partner of L'Auberge Communities, which
owns a 99% interest in GP L'Auberge Communities, L.P. (formerly Berry and Boyle
Management). Due to affiliates at March 31, 1998 and December 31, 1997 consisted
of $20,407 and $5,370, respectively, of reimbursable costs payable to L'Auberge
Communities, Inc., formerly Berry and Boyle Inc.
For the period ended March 31, 1998 and 1997, general and administrative
expenses included $2,980 and $5,788, respectively, of salary reimbursements paid
to the General Partners for certain administrative and accounting personnel who
performed services for the Partnership.
The officers and principal shareholders of Evans Withycombe, Inc., the developer
of Casabella, together hold a two and one half percent cumulative profit or
partnership voting interest in LP L'Auberge Communities, formerly Berry and
Boyle.
During the three months ended March 31, 1998 and 1997, property management fees
of $16,425 and $15,575, respectively were paid to Residential
Services-L'Auberge, an affiliate of the General Partner. This represents 4% of
the rental revenues.
8. Asset Held for Sale
During the fourth quarter of 1997, the General Partners of the Partnership
committed to a plan to dispose of Casabella in Scottsdale, Arizona. On February
4, 1998, Casabella Associates entered into a Sales Agreement (the "Agreement")
to sell Casabella to an unaffiliated third party. The selling price for
Casabella is approximately $11,700,000. The Agreement is subject to completion
of customary due diligence to the satisfaction of the purchaser, and the
purchaser obtaining a financing commitment for the purchase of the property on
commercially reasonable terms and conditions. The Partnership expects to
consummate this sale in 1998. Under certain conditions, the sale is contingent
upon the approval of the Limited Partners.
As it is the intent of the General Partners to pursue the sale of this Property,
the Partnership has recorded the assets at the lower of carrying value or net
realizable value and has included these amounts as Assets held for Sale on the
Consolidated Balance Sheets at December 31, 1997. In accordance with SFAS 121,
the Partnership has stopped depreciating these assets effective January 1, 1998.
If closing of the sale were to occur, any proceeds from the sale will be
allocated to the Partners in accordance with the terms of the Partnership
Agreement and the Partnership will likely be liquidated.
<PAGE>
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements including those concerning the
General Partners' expectations regarding future financial performance and future
events. These forward-looking statements involve significant risk and
uncertainties, including those described herein. Actual results may differ
materially from those anticipated by such forward-looking statements.
Liquidity; Capital Resources
The working capital reserves of the Partnership consist of cash and cash
equivalents and short-term investments. These reserves provide the Partnership
with the necessary liquidity to carry on its day-to-day operations and to make
necessary contributions to Casabella. At March 31, 1998, the Partnership had
cash and cash equivalents of $270,985 compared with $253,777 at December 31,
1997. The aggregate net increase of $17,208 in working capital reserves resulted
primarily from cash provided by operations of $50,267, offset by principal
payments on mortgage notes payable of $31,542 and $1,517 of prepaid expenses.
With regard to a balloon payment on the existing first mortgage debt on
Casabella (see Note 5) which is due and payable in 1998, the General Partners
anticipate repaying such loan utilizing a portion of the sales proceeds from the
pending sale of the property. In the event that the pending sale is not
consummated, the General Partners will seek to renegotiate the mortgage note
with its existing lender or seek new sources of financing for the property. To
date, the General Partners have neither sought to extend or renegotiate the
existing mortgage debt nor have they sought new financing for the property and
there can be no assurance that they would be successful in doing so. The General
Partners believe that existing cash flow from the property will be sufficient to
support a level of borrowing that is at least equal to amount outstanding as of
March 31, 1998. If the general economic climate for real estate in the location
of Casabella were to deteriorate resulting in an increase in interest rates for
mortgage financing or a reduction in the availability of real estate mortgage
financing or a decline in the market values of real estate it may affect the
Partnership's ability to complete a refinancing.
In the event that Casabella is not sold pursuant to the Purchase Agreement, the
Partnership would continue to operate the property until a substitute sale could
be negotiated and consummated. The Partnership's ability to generate cash
adequate to meet its needs is dependent primarily on the successful operations
of Casabella. Such ability may also be dependent upon the future availability of
bank borrowings, and upon the future refinancing and sale of the Partnership's
real estate investments and the collection of any mortgage receivable, which may
result from such sale. These sources of liquidity will be used by the
Partnership for payment of expenses related to real estate operations, debt
service and professional and management fees and expenses. Net Cash From
Operations and Net Proceeds, if any, as defined in the Partnership Agreement,
will then be available for distribution to the Partners in accordance with
Section 10 of the Partnership Agreement. The General Partners believe that the
current working capital reserves together with projected cash flows for 1998 are
adequate to meet the Partnership's operating cash needs in the coming year if
the Partnership is required to continue to own and operate its property assuming
the existing mortgage debt can be extended, renegotiated or refinanced.
<PAGE>
Results of Operations
The Partnership's operating results for the year ended March 31, 1998 consisted
of interest earned on short-term investments, general and administrative
expenses, amortization expense and its share of the income (loss) from Casabella
Associates and Casabella. A summary of these operating results (unaudited)
appears below:
<TABLE>
Casabella Partnership Consolidated
Casabella Associates Level Totals
<S> <C> <C> <C> <C>
Revenue ........................................................... $ 411,717 $ 579 $ 1,909 $ 414,205
Expenses:
General and administrative ...................................... -- 1,325 27,553 28,878
Operations ...................................................... 167,905 -- -- 167,905
Depreciation and amortization ................................... 6,428 -- -- 6,428
Interest ........................................................ 154,121 -- -- 154,121
--------- --------- --------- ---------
328,454 1,325 27,553 357,332
--------- --------- --------- ---------
Net loss before minority interest ................................. 83,263 (746) (25,644) 56,873
Minority Interests' share of
net (income) loss .............................................. -- (38,618) -- (38,618)
--------- --------- --------- ---------
Net income (loss) ................................................. $ 83,263 ($ 39,364) ($ 25,644) $ 18,255
========= ========= ========= =========
The Partnership's operating results for the three months ended March 31, 1997
consisted of interest earned on short-term investments, general and
administrative expenses, amortization expense, and its share of the income
(loss) from Casabella Associates and Casabella Joint Venture. A summary of these
operating results (unaudited) appears below:
Casabella Partnership Consolidated
Casabella Associates Level Totals
<S> <C> <C> <C> <C>
Revenue ....................................................... $ 387,829 $ 2,847 $ 3,075 $ 393,751
Expenses:
General and administrative .................................. -- 1,543 16,411 17,954
Operations .................................................. 182,671 -- -- 182,671
Depreciation and amortization ............................... 66,684 -- -- 66,684
Interest .................................................... 156,862 -- -- 156,862
--------- --------- --------- ---------
406,217 1,543 16,411 424,171
--------- --------- --------- ---------
Net loss before minority ...................................... (18,388) 1,304 (13,336) (30,420)
interest
Minority Interests' share of
net (income) loss .......................................... -- 7,995 -- 7,995
--------- --------- --------- ---------
Net income (loss) ............................................. ($ 18,388) $ 9,299 ($ 13,336) ($ 22,425)
========= ========= ========= =========
</TABLE>
Comparison of March 31, 1998 and 1997 Operating Results
Partnership operations for the three months ended March 31, 1998 generated net
income of $18,255 compared with a net loss of $22,425 for the corresponding
period in 1997. Total revenue increased by $20,454 or 5%, primarily due to an
increase of rental income as a result of higher occupancy levels throughout the
year. Operating expenses decreased by $14,766 or 8%, primarily due to a
reduction in maintenance personnel, resulting in lower salary expense of
$10,624, and a reduction of advertising costs. General and administrative
expenses increased by $10,924 or 91% due to the legal costs associated with the
sales contract, as well as the preparation, printing and mailing of the consent
solicitation sent to the Limited Partners for the dissolution of the
Partnership.
<PAGE>
F-17
PART II - OTHER INFORMATION
-----------------
ITEM 1. Legal Proceedings
Response: None
ITEM 2. Changes in Securities
Response: None
ITEM 3. Defaults Upon Senior Securities
Response: None
ITEM 4. Submission of Matters to a Vote of Security Holders
Response: None
ITEM 5. Other Information
ITEM 6. Exhibits and Reports on Form 8-K
Response: None
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.
DEVELOPMENT PARTNERS III
(A Massachusetts Limited Partnership)
By: GP L'Auberge Communities, L.P., A California Limited Partnership,
General Partner
By: L'Auberge Communities, Inc., its General Partner
By: ____/s/ Stephen B. Boyle________________
Stephen B. Boyle, President
Date: May 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 270,985
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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0
0
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</TABLE>
