<PAGE>
DiVall Income Properties 3, L.P.
QUARTERLY NEWS
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A publication of The Provo Group, Inc. THIRD QUARTER 2000
The Right Buyer Hasn't Been Found
We have been unable to sell the DiVall 3 portfolio at a price we believe
reflects fair market value. The limited partners did not give us the authority
to "fire sale" this partnership and we won't.
For a small Partnership, the combined assets have certain unique characteristics
that require a sophisticated purchaser. We believe we have one major issue to
resolve before this Partnership can be marketed as a whole. We intend to
resolve that issue.
In the meantime, DiVall 3 is paying over 8% on the estimated net asset value.
The cash flow stream continues to be stable. In today's volatile financial
markets that's not bad.
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Distribution Highlights
. 8% (approx.) annualized return from
operations and other sources based on
$3,500,000 (estimated net asset value as
of December 31, 1999).
. $70,000 total amount distributed for the
Third Quarter 2000 which was $5,000
higher than originally projected.
. $4.09 per unit (approx.) for the Third
Quarter 2000 from cash flow from
operations.
. $701.00 to $540.00 range of distributions
per unit from the first unit sold to the last
unit sold before the offering closed (April
1992), respectively. [NOTE: Distributions
are from both cash flow from operations and
"net" cash activity from financing and
investing activities.]
<PAGE>
Page 2 DiVall 3 3 Q 00
Statements of Income and Cash Flow Highlights
. Revenues were consistent with the budget.
. Rental income shows a decline, which is
due to the way percentage rents are
accrued, based on new accounting
standards. This is offset by the
unbudgeted restitution payments which
have been received from Gary DiVall.
. There was an 10% decrease in "total"
expenses from projections.
. The decrease in expenses is primarily due
to lower than anticipated administrative
costs and costs associated with the
Advisory Board Meetings.
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Property Highlights
Vacancies: There were no vacancies as of September 30, 2000
.
Delinquencies: There were no delinquencies as of September 30, 2000.
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Questions & Answers
1. When can I expect my next distribution mailing?
Your distribution correspondence for the Third Quarter of 2000 is scheduled
to be mailed on November 15, 2000.
2. When can I expect my 2000 Schedule K-1?
The Schedule K-1's will be mailed no later than February 28,2000.
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For questions or additional information, please contact Investor Relations at:
1-800-547-7686 or 1-816-421-7444
All written inquiries may be mailed or faxed to:
The Provo Group, Inc.
101 West 11th Street, Suite 1110
Kansas City, Missouri 64105
(FAX 816-221-2130)
E-Mail: [email protected]
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<PAGE>
DIVALL INCOME PROPERTIES 3 L.P.
STATEMENTS OF INCOME AND CASH FLOW CHANGES
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
PROJECTED ACTUAL VARIANCE
--------- --------- --------
3RD 3RD
QUARTER QUARTER BETTER
9/30/00 9/30/00 (WORSE)
--------- --------- --------
<S> <C> <C> <C>
OPERATING REVENUES
Rental income $105,450 $ 101,925 $ (3,525)
Interest income 5,640 7,618 1,978
Other income 0 1,610 1,610
-------- --------- --------
TOTAL OPERATING REVENUES $111,090 $ 111,153 $ 63
-------- --------- --------
OPERATING EXPENSES
Insurance $ 717 $ 734 $ (17)
Management fees 16,545 16,836 (291)
Overhead allowance 1,356 1,358 (2)
Advisory Board 4,300 1,313 2,988
Administrative 7,452 2,923 4,529
Professional services 3,075 2,535 540
Auditing 8,250 9,050 (800)
Legal 1,800 3,095 (1,295)
Defaulted tenants 150 0 150
-------- --------- --------
TOTAL OPERATING EXPENSES $ 43,645 $ 37,844 $ 5,802
-------- --------- --------
INVESTIGATION AND RESTORATION EXPENSES $ 0 $ 0 $ 0
-------- --------- --------
NON-OPERATING EXPENSES
Depreciation $ 16,324 $ 16,323 $ 1
Amortization 446 446 0
-------- --------- --------
TOTAL NON-OPERATING EXPENSES $ 16,770 $ 16,769 $ 1
-------- --------- --------
TOTAL EXPENSES $ 60,415 $ 54,613 $ 5,803
-------- --------- --------
NET INCOME $ 50,675 $ 56,541 $ 5,866
VARIANCE
OPERATING CASH RECONCILIATION: --------
Depreciation and amortization 16,770 16,769 (1)
Recovery of amounts previously written off 0 (1,610) (1,610)
(Increase) Decrease in current assets (5,986) (2,795) 3,191
Increase (Decrease) in current liabilities 8,048 (10,583) (18,631)
(Increase) Decrease in cash reserved for payables (8,251) 10,000 18,251
Advance from/(to) future cash flows for current distributions 3,375 3,375 0
-------- --------- --------
Net Cash Provided From Operating Activities $ 64,631 $ 71,697 $ 7,066
-------- --------- --------
CASH FLOWS FROM (USED IN) INVESTING AND FINANCING ACTIVITIES
Recoveries from former general partners 0 1,610 1,610
-------- --------- --------
Net Cash Provided from Investing And Financing Activities $ 0 $ 1,610 $ 1,610
-------- --------- --------
Total Cash Flow For Quarter $ 64,631 $ 73,307 $ 8,676
Cash Balance Beginning of Period 269,055 279,385 10,330
Less 2nd quarter distributions paid 8/00 (65,000) (65,000) 0
Change in cash reserved for payables or distributions 4,876 (13,375) (18,251)
-------- --------- --------
Cash Balance End of Period $273,562 $ 274,317 $ 755
Cash reserved for 3rd quarter L.P. distributions (65,000) (70,000) (5,000)
Cash advanced from (reserved for) future distributions (1,875) (1,875) 0
Cash reserved for payment of payables (24,758) (67,500) (42,742)
-------- --------- --------
Unrestricted Cash Balance End of Period $181,929 $ 134,942 $(46,988)
======== ========= ========
PROJECTED ACTUAL VARIANCE
--------- --------- --------
* Quarterly Distribution $ 65,000 $ 70,000 $ 5,000
Mailing Date 11/15/00 (enclosed) -
</TABLE>
*Refer to distribution letter for detail of quarterly distribution.
<PAGE>
PROJECTIONS FOR
DISCUSSION PURPOSES
DIVALL INCOME PROPERTIES 3 LIMITED PARTNERSHIP
2000 PROPERTY SUMMARY
AND RELATED ESTIMATED RECEIPTS
PORTFOLIO (Note 1)
<TABLE>
<CAPTION>
REAL ESTATE EQUIPMENT TOTALS
-------------------------- --------------------------------------- ---------------------------
ANNUAL LEASE ANNUAL
BASE % EXPIRATION LEASE % ANNUAL %
CONCEPT LOCATION COST RENT YIELD DATE COST RECEIPTS RETURN COST RECEIPTS RETURN
------------- --------------- --------- ------- ------ ---------- --------- -------- ------ --------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
APPLEBEE'S PITTSBURGH, PA 891,333 116,040 13.02% 290,469 0.00% 1,239,896 116,040 9.36%
" " 58,094 0.00%
DENNY'S CO SPRINGS, CO 580,183 77,460 13.35% 210,976 0 0.00% 791,159 77,460 9.79%
DENNY'S ENGLEWOOD, CO 213,211 35,880 16.83% 210,976 0.00% 424,187 35,880 8.46%
HARDEE'S (3) ST. FRANCIS, WI 1,194,381 92,000 7.70% (2) 369,688 0 0.00% 1,648,569 92,000 5.58%
" " (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% 1,929,472 88,000 4.56%
" " (2) 105,488 0 0.00%
--------- ------- ------ --------- - ----- --------- ------- -----
PORTFOLIO TOTALS (5 Properties) 4,221,014 409,380 9.70% 1,812,269 0 0.00% 6,033,283 409,380 6.79%
</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.
