<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
DIVALL INCOME PROPERTIES 3 LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $680.00
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(2) Form, Schedule or Registration Statement No.: Schedule 14A
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(3) Filing Party: DiVall Income Properties 3 Limited Partnership
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(4) Date Filed: April 2, 1998
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<PAGE>
[LOGO]
DiVall Income Properties 3, L.P.
QUARTERLY NEWS
================================================================================
A publication of The Provo Group, Inc. FIRST QUARTER 1998
WHY THE INTEREST ... IN MY INTERESTS?
Madison, Wisconsin
At some point in time you may have or will be subject to third-party offers for
your interests in the Partnership. A common question we hear is "why the
interest in my interests?"
As we have communicated to you before, it's really quite simple -- the interests
you own in the Partnership offer immediate value to third-party tenderers.
Should you be selling your interests to a third-party tenderer? As your General
Partner, we don't think so, particularly if you want to be the recipient of
"full" value.
We believe you should be the one receiving the final return on your long-term
investment NOT someone who buys your interests at a discount for future profit
opportunities.
In accordance with the Agreement of Limited Partnership, we have requested your
consent to sell the properties in the Partnership -- which means that the
Partnership will be dissolved following the sale of the assets and final
distribution of the proceeds to you.
If a majority of Limited Partners are in agreement that the market conditions
are favorable for producing maximized value on your interests through
liquidation now, we will proceed with the sale of the properties and make a
final distribution to you.
Although any interest in your interests may cause you concern or confusion --
think of it this way, you have something they may want, and you have control
over whether they can have it or not.
======================
OTHER NEWS INSIDE...
. 1 Q 98 Distribution is the "Tops"....Distribution Highlights, pg 2
. First Quarter 1998 Property Sale.... Property Highlights, pg 3
<PAGE>
Page 2 DiVall 3 1 Q 98
=======================
Distribution Highlights
<TABLE>
<S> <C>
. 1.3% (approx.) annualized return . $74.26 per unit (approx.) for the
from operations and 14.3% First Quarter 1998 from both cash
(approx.) non-annualized return flow from operations and investing
of capital from a special activities.
distribution related to the
Denny's property sale based on . $672.00 to $508.00 range of
$8,700,000 ("net" remaining distributions per unit from the first
initial investment). unit sold to the last unit sold
before the offering closed (April
1992), respectively.
. $1,270,000 total amount
distributed for the First Distributions are from both cash flow
Quarter 1998 as budgeted. from operations and "net" cash
activity from financing and investing
activities.
</TABLE>
(NOTE: Original units were purchased for $1,000/unit.)
=======================
Statements of Income and Cash Flow Highlights
<TABLE>
. 5% increase in . 20% increase in . 2% decrease in net
"total" operating "total" expenses income from
revenues from from projections. projections.
projections.
<S> <C>
. $16,000 more than budgeted operating . Property appraisals in the amount of
revenues were received by the $14,000 were paid at the quarter's
Partnership due primarily to one end in connection with the proposed
month's rent being collected on the liquidation of the partnership.
"sold" Denny's and higher than Additionally, $7,000 in legal fees
expected interest income received on related to the proposed liquidation
this property sale. were not budgeted.
</TABLE>
<PAGE>
[THE PROVO GROUP LOGO]
Page 3 DiVall 3 1Q98
==================
Property Highlights
Vacancies
---------
There were no vacancies at March 31, 1998.
Rents Receivable
----------------
<TABLE>
<S> <C>
. B.T. Woodlipp, Inc., tenant of . DenAmerica Corporation, tenant of
Applebee's (Pittsburgh, PA), Denny's (Englewood, CO), was $3,500
was $7,400 delinquent in delinquent in scheduled rent at March
percentage at March 31, 1998. 31, 1998.
Scheduled rent is current.
</TABLE>
Sale of Property
----------------
. Denny's (Sanford, FL) was sold during the First Quarter 1998 for $1,250,000.
==================
Return of Capital
The following table has been updated to present the breakdown of distributions
since the Partnership's first quarterly distribution, for the period ended
September 30, 1990 through March 31, 1998.
<TABLE>
<CAPTION>
================================================================================
Distribution Capital
------------- -------
Analysis Balance
-------- -------
<S> <C> <C>
Original Capital Balance - $17,102,520
Cash Flow From Operations Since Inception $ 1,709,816 -
Total Distributions Since Inception (10,142,983) -
------------
(Return) of Capital ($8,433,167) (8,433,167)
============ -----------
"Net" Remaining Initial Investment
by Original Partners - $ 8,669,353
===========
================================================================================
</TABLE>
(NOTE: For a more individualized discussion of return of capital contact
Investor Relations.)
<PAGE>
Page 4 DiVall 3 1 Q 98
----------------------------
Questions & Answers
. When can I expect my next distribution mailing?
Your distribution correspondence for the Second Quarter of 1998 is scheduled to
be mailed on August 14, 1998.
* * *
================================================================================
For questions or additional information, please contact Investor Relations at:
1-800-547-7686 or 1-608-244-7661
All written inquiries may be mailed or faxed to:
The Provo Group, Inc.
Post Office Box 8673 1410 Northport Drive
Madison, Wisconsin 53708-8673 Madison, Wisconsin 53704
(FAX 608-244-7663)
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
DIVALL INCOME PROPERTIES 3 L.P.
STATEMENTS OF INCOME AND CASH FLOW CHANGES
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PROJECTED ACTUAL VARIANCE
- ---------------------------------------------------------------------------------------------------------
1ST 1ST
QUARTER QUARTER BETTER
OPERATING REVENUES 3/31/98 3/31/98 (WORSE)
----------- ----------- --------
<S> <C> <C> <C>
Rental income $ 96,708 $ 104,019 $ 7,311
Interest income 7,945 16,369 8,424
Gain on sale of assets 238,698 238,698 0
Other income 0 43 43
----------- ----------- --------
TOTAL OPERATING REVENUES $ 343,351 $ 359,129 $ 15,778
----------- ----------- --------
OPERATING EXPENSES
Insurance $ 1,203 $ 1,095 $ 108
Management fees 16,120 16,045 75
Disposition fees 37,500 37,500 0
Overhead allowance 1,300 1,294 6
Advisory Board 3,400 4,358 (958)
Administrative 9,654 10,822 (1,168)
Professional services 2,180 2,973 (793)
Appraisal fees 0 13,900 (13,900)
Auditing 11,650 10,897 753
Legal 1,850 8,722 (6,872)
Defaulted tenants 1,050 0 1,050
----------- ----------- --------
TOTAL OPERATING EXPENSES $ 85,907 $ 107,606 ($21,699)
----------- ----------- --------
INVESTIGATION AND RESTORATION EXPENSES $ 546 $ 479 $ 67
----------- ----------- --------
NON-OPERATING EXPENSES
Depreciation $ 22,330 $ 22,329 $ 1
Amortization 446 446 0
----------- ----------- --------
TOTAL NON-OPERATING EXPENSES $ 22,776 $ 22,775 $ 1
----------- ----------- --------
TOTAL EXPENSES $ 109,229 $ 130,860 ($21,631)
----------- ----------- --------
NET INCOME $ 234,122 $ 228,269 ($5,853)
OPERATING CASH RECONCILIATION: VARIANCE
---------
Depreciation and amortization 22,776 22,775 (1)
Gain on sale of assets (238,698) (238,698) 0
(Increase) Decrease in current assets 8,253 14,671 6,418
Increase (Decrease) in current liabilities (36,424) (18,363) 18,061
(Increase) Decrease in cash reserved for payables 35,488 18,000 (17,488)
Advance from/(to) future cash flows for current distribution 4,000 4,000 0
----------- ----------- --------
Net Cash Provided From Operating Activities $ 29,517 $ 30,654 $ 1,137
----------- ----------- --------
CASH FLOWS FROM (USED IN) INVESTING
AND FINANCING ACTIVITIES
Recoveries from former G.P. affiliates 0 0 0
Proceeds from sale of property 1,242,563 1,242,562 (1)
----------- ----------- --------
Net Cash Provided from Investing And Financing
Activities $ 1,242,563 $ 1,242,562 ($1)
----------- ----------- --------
Total Cash Flow For Quarter $ 1,272,080 $ 1,273,216 $ 1,136
Cash Balance Beginning of Period 580,143 595,420 15,277
Less 4th quarter distributions paid 2/98 (385,000) (385,000) 0
Change in cash reserved for payables or distributions (39,488) (22,000) 17,488
----------- ----------- --------
Cash Balance End of Period $ 1,427,735 $ 1,461,636 $ 33,901
Cash reserved for 1st quarter L.P. distributions (1,270,000) (1,270,000) 0
Cash advanced from (reserved for) future distributions 4,000 4,000 0
Cash reserved for payment of payables 7,500 (52,000) (59,500)
----------- ----------- --------
Unrestricted Cash Balance End of Period $ 169,235 $ 143,636 ($25,599)
=========== =========== ========
- ---------------------------------------------------------------------------------------------------------
PROJECTED ACTUAL VARIANCE
-------------------------------------------
* Quarterly Distribution $ 1,270,000 $1,270,000 $ 0
Mailing Date 5/15/98 (enclosed) -
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Refer to distribution letter for detail of quarterly distribution.
<PAGE>
[LOGO OF THE PROVO GROUP]
PROJECTIONS FOR
DISCUSSION PURPOSES
------------------------------
ORIGINAL CAPITAL $17,102,520
NET DISTRIBUTION OF
CAPITAL SINCE
INCEPTION $8,433,167
-----------
CURRENT EQUITY $8,669,353
-----------
------------------------------
DIVALL INCOME PROPERTIES 3 LIMITED PARTNERSHIP
1998 PROPERTY SUMMARY
AND RELATED ESTIMATED RECEIPTS
PORTFOLIO (Note 1)
<TABLE>
<CAPTION>
--------------------------------- --------------------------------------------
REAL ESTATE EQUIPMENT
--------------------------------- --------------------------------------------
ANNUAL LEASE ANNUAL
- -------------------------------- BASE % EXPIRATION LEASE %
CONCEPT LOCATION COST RENT YIELD DATE COST RECEIPTS RETURN
- -------------------------------- --------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
APPLEBEE'S PITTSBURGH, PA 891,333 116,040 13.02% 290,469 0.00%
" " 58,094 0.00%
DENNY'S CO SPRINGS, CO 580,183 77,460 13.35% 210,976 0 0.00%
DENNY'S ENGLEWOOD, CO 213,211 35,880 16.83% 210,976 0.00%
HARDEE'S (3) ST. FRANCIS, WI 1,194,381 92,000 7.70% (2) 369,688 0 0.00%
" " (2) 84,500 0 0.00%
HARDEE'S (3) OAK CREEK, WI 1,341,906 88,000 6.56% (2) 482,078 0 0.00%
" " (2) 105,488 0 0.00%
- -------------------------------- --------------------------------- --------------------------------------------
- -------------------------------- --------------------------------- --------------------------------
PORTFOLIO TOTALS (5 Properties) 4,221,014 409,380 9.70% 1,812,269 0 0.00%
- -------------------------------- --------------------------------- --------------------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------- -------------
TOTALS TOTAL %
-------------------------------------- ON $8,669,353
- -------------------------------- ANNUAL % EQUITY
CONCEPT LOCATION COST RECEIPTS RETURN RAISE
- -------------------------------- -------------------------------------- -------------
<S> <C> <C> <C> <C> <C>
APPLEBEE'S PITTSBURGH, PA 1,239,896 116,040 9.36%
" "
DENNY'S CO SPRINGS, CO 791,159 77,460 9.79%
DENNY'S ENGLEWOOD, CO 424,187 35,880 8.46%
HARDEE'S (3) ST. FRANCIS, WI 1,648,569 92,000 5.58%
" "
HARDEE'S (3) OAK CREEK, WI 1,929,472 88,000 4.56%
" "
- -------------------------------- -------------------------------------- -------------
- -------------------------------- -------------------------------------- -------------
PORTFOLIO TOTALS (5 Properties) 6,033,283 409,380 6.79% 4.72%
- -------------------------------- -------------------------------------- -------------
</TABLE>
Note 1: This property summary includes only current property and equipment held
by the Partnership. Equipment lease receipts shown include a return of
capital.
2: The lease was terminated and the equipment sold to Hardee's Food
Systems in conjunction with their assumption of the Terratron leases.
3: These leases were assumed by Hardee's Food Systems at rental rates
lower than those stated in the original leases.
