FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1996
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: 0-21494
WNC HOUSING TAX CREDIT FUND III, L.P.
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
California 33-0463432
WNC HOUSING TAX CREDIT FUND III, L.P.
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
Title of Securities Exchanges on which Registered
NONE NOT APPLICABLE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
<PAGE>
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 ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
State the aggregate market value of the voting stoct held by non-affiliates
of the registrant. Inapplicable.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
NONE
<PAGE>
Item 1. Business
Organization
WNC Housing Tax Credit Fund III, L.P. ("HTCF III" or the "Partnership") is a
California Limited Partnership formed under the laws of the State of California
on May 10, 1991. The Partnership was formed to acquire limited partnership
interests in local limited partnerships ("Local Limited Partnerships") which own
multifamily apartment complexes that are eligible for low-income housing federal
income tax credits (the "Low Income Housing Credit").
The general partner of the Partnership is WNC Tax Credits Partners, L.P.
("TCP"). The general partners of TCP are WNC & Associates, Inc. ("Associates")
and Wilfred N. Cooper, Sr. The business of the Partnership is conducted
primarily through Associates as neither TCP nor the Partnership has employees of
its own.
On January 2, 1992, the Partnership commenced a public offering ("Offering") of
15,000 Units of Limited Partnership Interests ("Units"), at a price of $1,000
per Units. The Partnership closed its Offering September 30, 1993 with a total
of 15,000 Units representing $15,000,000 sold. Holders of Units are referred to
herein as "Limited Partners."
Description of Business
The Partnership's principal business is to invest as a limited partner in Local
Limited Partnerships which will own and operate an apartment complex ("Apartment
Complex") which will qualify for the Low Income Housing Credit. In general,
under Section 42, an owner of a low-income housing project is entitled to
receive the Low Income Housing Credit in each year of a ten-year period (the
"Credit Period"). The Apartment Complex is subject to a 15-year compliance
period (the "Compliance Period").
In general, in order to avoid recapture of Low Income Housing Credit, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by a Local Limited Partnership of any Apartment Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Apartment
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the inability of the
Partnership to directly cause the sale of Apartment Complexes by Local General
Partners, but generally only to require such Local General Partners to use their
respective best efforts to find a purchaser for the Apartment Complexes, it is
not possible at this time to predict whether the liquidation of substantially
all of the Partnership's assets and the disposition of the proceeds, if any, in
accordance with the Partnership's Agreement of Limited Partnership ("Partnership
Agreement") will be able to be accomplished promptly at the end of the 15-year
period. If a Local Limited Partnership is unable to sell an Apartment Complex,
it is anticipated that the Local General Partner will either continue to operate
such Apartment Complex or take such other actions as the Local General Partner
believes to be in the best interest of the Local Limited Partnership. In
addition, circumstances beyond the control of the General Partner may occur
during the Compliance Period which would require the Partnership to approve the
disposition of an Apartment Complex prior to the end thereof.
2
<PAGE>
As of December 31, 1996, HTCF III had invested in 48 Local Limited Partnerships.
One Local Limited Partnership owns three Apartment Complexes and each of the
remaining Local Limited Partnerships own one Apartment Complex that is eligible
for the Low Income Housing Credit. All of the Local Limited Partnerships also
benefit from government programs promoting low- or moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multifamily residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Apartment Complexes owned by the
Local Limited Partnerships will be readily marketable. Additionally, there can
be no assurance that the Partnership will be able to dispose of its interest in
the Local Limited Partnerships at the end of the Compliance Period. The value of
the Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the
Apartment Complexes and the Partnership. The Apartment Complexes will be subject
to loss through foreclosure. In addition, each Local Limited Partnership is
subject to risks relating to environmental hazards which might be uninsurable.
Because the Partnership's ability to control its operations will depend on these
and other factors beyond the control of the General Partners and the Local
General Partners, there can be no assurance that Partnership operations will be
profitable or that the anticipated Low Income Housing Credits will be available
to Limited Partners.
Each of the Local Limited Partnerships has received financial assistance from
the FmHA. The Partnership's ability to exercise the voting rights granted it
under the Local Limited Partnership Agreements and to transfer its Local Limited
Partnership Interests is subject to restrictions which would not be present if
assistance were received. In this regard, FmHA approval generally will be
required in connection with the removal of a Local General Partner, the sale of
an Apartment Complex or the sale of a Local Limited Partnership Interest. Any
such approval may be withheld upon the discretion of FmHA.
As of December 31, 1996, all of the Apartment Complexes were completed and in
operation The Apartment Complexes owned by the Local Limited Partnerships in
which HTCF III has invested were developed by the respective Local General
Partners who acquired the sites and applied for applicable mortgages and
subsidies. HTCF III became the principal limited partner in these Local Limited
Partnerships pursuant to arm's-length negotiations with the Local General
Partners. As a limited partner, HTCF III's liability for obligations of the
Local Limited Partnership is limited to its investment. The Local General
Partners of the Local Limited Partnership retain responsibility for maintaining,
operating and managing the Apartment Complex.
3
<PAGE>
The following is a schedule of the status, as of December 31, 1996, of the
Apartment Complexes owned by Local Limited Partnerships in which HTCF III was a
limited partner as of December 31, 1996.
<TABLE>
<CAPTION>
SCHEDULE OF PROJECTS OWNED BY LIMITED PARTNERSHIPS
IN WHICH HTCF III HAS AN INVESTMENT
AS OF DECEMBER 31, 1996
No. of Units Units Occupied Percentage of
Name & Location Units Completed Total Units
<S> <C> <C> <C> <C>
Beaumont Elderly Housing 30 30 28 93%
Beaumont, Mississippi
Brownfield Seniors Community 24 24 24 100
Brownfield, Texas
Buffalo Apartments 24 24 24 100
Buffalo, Texas
Cambridge Court Associates 39 39 39 100
Grottoes, Virginia
Candleridge Apts. of Bondurant, L.P. 23 23 22 96
Bondurant, Iowa
Candleridge Apts. of Waukee, L.P. 23 23 23 100
Waukee, Iowa
Carlinville Associates 20 20 14 70
Carlinville, Illinois
Cherokee Housing, Ltd. 19 19 19 100
Cedar Bluff, Alabama
Chester Associates I 24 24 23 96
Chester, Illinois
Clinton Terrace Apartments, Ltd. 24 24 23 96
Albany, Kentucky
Coffeeville Housing, Ltd. 19 19 18 95
Coffeeville, Alabama
Coosa Co. Housing, Ltd. 19 19 18 95
Rockford, Alabama
Crockett Manor, Ltd. 40 40 37 93
Crockett, Texas
Crockett Manor Snr. Citizens Cmplx, Ltd. 36 36 34 94
Crockett, Texas
Delta Manor, L.P. 36 36 35 97
Techula, Mississippi
Eupora Apartments, L.P. 36 36 36 100
Eupora, Mississippi
Fairview Village Limited Partnership 20 20 20 100
Carroll, Iowa
Fox Lake Manor, L.P. 12 12 10 83
Fox Lake, Wisconsin
Ft. Deposit Housing, Ltd. 23 23 23 100
Fort Deposit, Alabama
Gulf Coast Apartments, L.P. 59 59 59 100
Gulfport, Mississippi
Gulf Coast Apts. of Long Beach 60 60 59 98
Long Beach, Mississippi
4
<PAGE>
<CAPTION>
No. of Units Units Occupied Percentage of
Name & Location Units Completed Total Units
<S> <C> <C> <C> <C>
HOI Limited Partnership of Benson 50 50 49 98
Benson, North Carolina
HOI Limited Partnership of Dallas, 60 60 60 100
Dallas, North Carolina
HOI Limited Partnership of Dunn, 34 34 34 100
Dunn, North Carolina
HOI Limited Partnership of Kings Mtn. 46 46 44 96
Kings Mountain, North Carolina
HOI Limited Partnership of Lee 78 78 74 95
Sanford, North Carolina
HOI Limited Partnership of Sanford 50 50 48 96
Sanford, North Carolina
HOI of Limited Partnership Selma 58 58 55 95
Selma, North Carolina
Heritage Colonial Homes 20 20 18 90
Blackshear, Georgia
Killbuck Limited Partnership 24 24 21 88
Killbuck, Ohio
Lake Ridge Apts 44 44 43 98
Tiptonville, Tennessee
Leveland Manor, L.P 36 36 35 97
Leveland, Texas
Logan Park 50 50 50 100
Caldwell, Idaho
Meadow Run Associates 43 43 43 100
Gordonsville, Virginia
Oakdale Senior Housing L. P. 80 80 79 99
Oakdale, California
Orange Beach 30 30 28 94
Orange Beach, Alabama
Parks I Limited Partnership 39 39 39 100
Roanoke, Virginia
Post Manor, L.P. 24 24 21 88
Post, Texas
Red Bud Associates I 20 20 18 90
Red Bud, Illinois
Steeleville Associates I 16 16 15 94
Steeleville, Illinois
Tanglewood Limited Partnership 36 36 32 89
Frankfurt, Ohio
Village Lane Properties 36 36 36 100
Fort Smith, Arkansas
Whitted Forest 35 35 34 97
Hillsborough, North Carolina
Wilcam 19 19 19 100
Wilcox County, Alabama
Wills Point Manor, L.P. 24 24 24 100
Wills Point, Texas
Windemere Associates Ltd. Partnership 38 38 38 100
Lexington, Virginia
Woodland Apartments, L.P. 48 48 47 98
Mt. Pleasant, Texas
Woodview Limited Partnership 12 12 12 100
Chillicothe, Illinois
Woodview Limited Partnership 24 24 24 100
Glasford, Illinois
------- ------------ --------------- -----------
1,684 1,684 1,628 97%
===== ===== ===== ===
</TABLE>
5
<PAGE>
Item 2. Properties
Through its investment in Local Limited Partnerships HTCF III holds interests in
Apartment Complexes. See Item 1 for information pertaining to these Apartment
Complexes.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Units are not traded on a public exchange but were sold through a public
offering. It is not anticipated that any public market will develop for the
purchase and sale of any Unit. Units can be assigned only if certain
requirements in HTCF III's Partnership Agreement are satisfied.
At December 31, 1996, there were 1,012 Limited Partners in HTCF III. The
Partnership was not designed to provide cash distributions to Limited Partners
in circumstances other than refinancing of Apartment Complexes or disposition of
its Local Partnership Interests. The Limited Partners received Low Income
Housing Credits per Unit as follows:
1996 1995 1994
---- ---- ----
$157 $152 $119
==== ==== ====
6
<PAGE>
Item 6. Selected Financial Data
<TABLE>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $16,756 $57,741 $87,521 $137,116 $45,236
Partnership operating
expenses (441,957) 361,586 358,858 144,532 17,109
Equity in loss of
Local Limited Partnerships (1,406,638) (1,312,450) (1,323,487) (779,251) (68,933)
--------- --------- --------- ------- ------
Net loss $(1,831,839) $(1,616,295) $(1,594,824) $(786,667) $(40,806)
========= ========= ========= ======= ======
Net loss per Limited
Partnership Interest $(121) $(107) $(105) $(68) $(34)
==== ==== ==== === ===
Total assets $7,670,485 $9,377.066 $11,181,316 $14,210,374 $5,321,303
========== ========== =========== =========== ==========
Net investment in
Local Limited Partnership $7,221,643 $8,840,410 $9,933,747 $9,279,446 $3,356,730
========= ========= ========= ========= =========
Capital contributions
payable to Local Limited
Partnerships $50,818 $159,730 $634,968 $2,226,811 $1,367,948
====== ======= ======= ========= =========
Accrued fees and expenses
due to affiliates $750,497 $516,327 $229,044 $71,435 $303,621
======= ======= ======= ====== =======
</TABLE>
7
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Liquidity and Capital Resources
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $71,300 for the period
ended December 31, 1996. This decrease in cash consisted of cash provided by
investing activities of approximately $2,600 and cash used by operations for the
Partnership of approximately $73,900. Cash provided from investing activities
consisted of distributions from Local Limited Partnerships of approximately
$25,600 cash used in investing activities consisted primarily of capital
contributions to Local Limited Partnerships. Cash provided by operating
activities consisted of interest income. Cash used consisted primarily of
payments for operating fees and expenses. The major components of all these
activities are discussed in greater detail below.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $590,700. for the period
ended December 31, 1995. This decrease in cash consisted of cash used by
investing activities and operations for the Partnership of approximately
$574,500 and $16,200, respectively. Cash provided from investing activities
consisted of distributions from Local Limited Partnerships and collections on
loans receivable of approximately $14,300 and $167,000, respectively, cash used
in investing activities consisted primarily of capital contributions to Local
Limited Partnerships and payment of acquisitions costs and fees of approximately
$755,500 and $300, respectively. Cash provided by operating activities consisted
of interest income. Cash used consisted primarily of payments for operating fees
and expenses. The major components of all these activities are discussed in
greater detail below.
The Partnership was indebted to an affiliate of the General Partner in the
amount of approximately $750,500 and $516,300 at December 31, 1996 and 1995,
respectively. The component items of such indebtedness are as follows: accrued
management fees of approximately $748,300 and $513,800 and advances for
operating expenses of approximately $2,200 and $2,500 for 1996 and 1995,
respectively.
8
<PAGE>
Since inception, the Partnership has received $15,000,000 in cash from the sale
of Units. Substantially all of the $15,000,000 has been committed to the
purchase price and acquisition fees and costs of investments in Local Limited
Partnerships, reserves and expenses of the offering. Although not presently the
case, the Partnership previously had identified its investments in advance of
receipt of sufficient cash capital to fund the investments. As of March 31, 1997
and December 31, 1996, the Partnership had made capital contributions to Limited
Partnerships in the amount of approximately $10,857,600 and had commitments for
additional capital contributions of approximately $50,800.
Prior to sale of the Apartment Complexes, it is not expected that any of the
Local Limited Partnerships in which the Partnership has invested will generate
cash sufficient to provide distributions to The Partnership of any material
amount. Distributions to the Partnership would first by used to meet operating
expenses of the Partnership, including the payment of the Asset Management Fee
to the General Partner. See Item 11 hereof. As a result, it is not anticipated
that the Partnership will provide distributions to the Limited Partners prior to
the sale of the Apartment Complexes, if ever.
The Partnership's investments are not readily marketable and may be affected by
adverse general economic conditions which, in turn, could substantially increase
the risk of operating losses for the Apartment Complexes, the Local Limited
Partnerships and the Partnership. These problems may result from a number of
factors, many of which cannot be controlled by the General Partner.
Nevertheless, the General Partner anticipates that capital raised from the sale
of the Units is sufficient to fund the Partnership's operations.
Upon completion of its public offering (in 1993), the Partnership established
working capital reserves of approximately 3.0% of the Limited Partners' capital
contributions. This amount is anticipated to be sufficient to satisfy general
working capital and administrative expense requirements of the Partnership
including payment of the asset management fee as well as expenses attendant to
the preparation of tax returns and reports to the limited partners and other
investor servicing obligations of the Partnership. Liquidity would, however, be
adversely affected by unanticipated or greater than anticipated operating costs.
To the extent that working capital reserves are insufficient to satisfy the cash
requirements of the Partnership, it is anticipated that additional funds would
be sought through bank loans or other institutional financing. The General
Partner may also apply any cash distributions received from the local limited
partnerships for such purposes or to replenish or increase working capital
reserves.
Under its Partnership Agreement the Partnership does not have the ability to
assess its partners for additional capital contributions to provide capital if
needed by the Partnership or Local Limited Partnerships. Accordingly, if
circumstances arise that cause the Local Limited Partnerships to require capital
in addition to that contributed by the Partnership and any equity of the Local
General Partners, the only sources from which such capital needs will be able to
be satisfied (other than the limited reserves available at the Partnership
level) will be (i) third-party debt financing (which may not be available, as
the Apartment Complexes owned by the Local Limited Partnerships are already
substantially leveraged), (ii) additional equity contributions or advances of
the Local General Partners, (iii) other equity sources (which could adversely
affect the Partnership's interest in Low Income Housing Credits, cash flow
and/or proceeds of sale or refinancing of the Apartment Complexes and result in
9
<PAGE>
adverse tax consequences to the Limited Partners), or (iv) the sale or
disposition of the Apartment Complexes (which could have the same adverse
effects as discussed in (iii) above). There can be no assurance that funds from
any of such sources would be readily available in sufficient amounts to fund the
capital requirement of the Local Limited Partnerships in question. If such funds
are not available, the Local Limited Partnerships would risk foreclosure on
their Apartment Complexes if they were unable to renegotiate the terms of their
first mortgages and any other debt secured by the Apartment Complexes to the
extent the capital requirements of the Local Limited Partnerships relate to such
debt.
The Partnership's capital needs and resources were expected to undergo major
changes at least through 1994 as a result of the completion of its offering of
Units and its acquisition of investments. Thereafter, the Partnership's capital
needs and resources are expected to be relatively stable over the holding
periods of the investments.
Results of Operations
As of December 31, 1996, the Partnership had acquired in 48 Local Limited
Partnership Interests. Each of the 50 Apartment Complexes owned by the 48 Local
Limited Partnerships receives or is expected to receive Government Assistance
and each of them has received a reservation for Low Income Housing Credits. As
of December 31, 1996 all 50 of the Apartment Complexes had commenced operations.
As reflected on its Statements of Operations, the Partnership had losses of
approximately, $1,831,800, $1,616,300, and $1,594,800 for the years ended
December 31, 1996, 1995, and 1994, respectively. The component items of revenue
and expense are discussed below.
Revenue. Partnership revenues consist of recovery of bad debt write off (1995
only), reporting fees from Local Limited Partnerships(1994) and interest earned
on cash deposits held in financial institutions (i) as Reserves, or (ii) pending
investment in Local Limited Partnerships. Interest revenue in future years will
be a function of prevailing interest rates and the amount of cash balances. It
is anticipated that the Partnership will maintain cash reserves in an amount not
materially in excess of the minimum amount required by its Partnership
Agreement, which is 3% of capital contributions.
10
<PAGE>
Expenses. The most significant component of operating expenses is expected to be
the asset management fee. The asset management fee is equal to 0.5% of invested
assets of Local Limited Partnerships; accordingly, the amount to be incurred in
the future is a function of the level of such invested assets (i.e., the sum of
the Partnerships' capital contributions to the Limited Partnerships plus the
Partnership's share of the debts related to the Apartment Complexes owned by
such Limited Partnerships). The annual management fee incurred was $299,500,
$293,500, and $241,000 for the years ended December 31, 1996, 1995, and 1994,
respectively. Bad debts of approximately $70,500, $0, $46,000 were written off
in 1996, 1995 and 1994, respectively.
Amortization expense consists of the amortization over a period of 30 years of
the Acquisition Fee and other expenses attributable to the acquisition of Local
Limited Partnership investments.
Office expense consists of the Partnership's administrative expenses, such as
accounting and legal fees, bank charges and investor reporting expenses.
Equity in losses from Limited Partnerships. The Partnership's equity in losses
from Limited Partnerships is equal to approximately 99% of the aggregate net
loss of the Limited Partnerships. After rent-up, the Local Limited Partnerships
are expected to generate losses during each year of operations; this is so
because, although rental income is expected to exceed cash operating expenses,
depreciation and amortization deductions claimed by the Limited Partnerships are
expected to exceed net rental income.
11
<PAGE>
Item 8. Financial Statements and Supplementary Data
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Years Ended
December 31, 1996, 1995 and 1994
with
INDEPENDENT AUDITORS' REPORT THEREON
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund III, L.P.
We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
III, L.P. (a California Limited Partnership) (the "Partnership") as of December
31, 1996 and 1995, and the related statements of operations, partners' equity
and cash flows for the years ended December 31, 1996, 1995 and 1994. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of the limited
partnerships in which WNC Housing Tax Credit Fund III, L.P. is a limited
partner. These investments, as discussed in Note 2 to the financial statements,
are accounted for by the equity method. The investments in these limited
partnerships represented 94% of the total assets of WNC Housing Tax Credit Fund
III, L.P. at December 31, 1996 and 1995. Substantially all of the financial
statements of the limited partnerships were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to the
amounts included for these limited partnerships, is based solely on the reports
of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund III, L.P. (a California
Limited Partnership) as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years ended December 31, 1996, 1995 and
1994, in conformity with generally accepted accounting principles.
/s/ Corbin & Wertz
___________________
CORBIN & WERTZ
Irvine, California
April 21, 1997
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS 1996 1995
---------- ----------
Cash and cash equivalents $ 448,311 $ 519,652
Investments in limited partnerships
(Note 2) 7,221,643 8,840,410
Other assets (Note 3) 531 17,004
---------- ----------
$7,670,485 $9,377,066
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Due to limited partnerships (Note 5) $ 50,818 $ 159,730
Accrued fees and expenses due to
general partner and affiliates
(Note 4) 750,497 516,327
---------- ----------
Total liabilities 801,315 676,057
---------- ----------
Partners' equity:
General partner 28,170 46,488
Limited partners (15,000 units authorized;
15,000 units issued and outstanding at
December 31, 1996 and 1995) 6,841,000 8,654,521
---------- ----------
Total partners' equity 6,869,170 8,701,009
---------- ----------
$7,670,485 $9,377,066
========== ==========
See accompanying notes to financial statements
FS-2
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- ----------
Income:
Interest income $ 16,756 $ 27,741 $ 77,448
Other (Note 3) -- 30,000 10,073
---------- ---------- ----------
Total income 16,756 57,741 87,521
---------- ---------- ----------
Operating expenses:
Amortization (Note 4) 47,176 47,176 45,724
Partnership management fees
(Note 4) 299,473 293,476 241,017
Bad debts (Note 2) 70,455 -- 16,000
Loans receivable write-off
(Note 3) -- -- 30,000
Office 24,853 20,934 26,117
---------- ---------- ----------
Total operating expenses 441,957 361,586 358,858
---------- ---------- ----------
Loss from operations (425,201) (303,845) (271,337)
Equity in losses of limited
partnerships (Note 2) (1,406,638) (1,312,450) (1,323,487)
---------- ---------- ----------
Net loss $(1,831,839) $(1,616,295) $(1,594,824)
========== ========== ==========
Net loss allocable to:
General partner $ (18,318) $ (16,163) $ (15,948)
========== ========== ==========
Limited partners $(1,813,521) $(1,600,132) $(1,578,876)
========== ========== ==========
Net loss per weighted limited
partner units $ (120.90) $ (106.68) $ (105.26)
========== ========== ==========
Outstanding weighted limited
partner units 15,000 15,000 15,000
========== ========== ==========
See accompanying notes to financial statements
FS-3
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
For The Years Ended December 31, 1996, 1995 and 1994
General Limited
Partner Partners Total
------- -------- -----
Equity, January 1, 1994 $ 78,599 $ 11,833,529 $ 11,912,128
Net loss
(15,948) (1,578,876) (1,594,824)
---------- ---------- ----------
Equity, December 31, 1994 62,651 10,254,653 10,317,304
Net loss (16,163) (1,600,132) (1,616,295)
---------- ---------- ----------
Equity, December 31, 1995 46,488 8,654,521 8,701,009
Net loss (18,318) (1,813,521) (1,831,839)
---------- ---------- ----------
Equity, December 31, 1996 $ 28,170 $ 6,841,000 $ 6,869,170
========== ========== ==========
See accompanying notes to financial statements
FS-4
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
---------- ---------- ----------
Cash flows from operating
activities:
Net loss $(1,831,839) $(1,616,295) $(1,594,824)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Amortization 47,176 47,176 45,724
Bad Debts 70,455 -- --
Equity in losses of limited
partnerships 1,406,638 1,312,450 1,323,487
(Recapture) write-off of loan
receivable (Note 3) -- (30,000) 30,000
Change in other assets (531) (16,784) (220)
Change in accrued fees and
expenses due to general partner
and affiliates 234,170 287,283 157,609
---------- ---------- ----------
Net cash used in operating
activities ( 73,931) (16,170) (38,224)
---------- ---------- ----------
Cash flows from investing activities:
Investments in limited
partnerships, net (20,939) (755,513) (3,397,145)
Capitalized acquisition costs
and fees (2,100) (300) (218,210)
Distribution from limited
partnership 25,629 14,286 --
Decrease in loans receivable,
including recapture of written-
off loan receivable -- 167,000 298,636
---------- ---------- ----------
Net cash provided by (used in)
investing activities 2,590 (574,527) (3,316,719)
---------- ---------- ----------
Cash flows from financing activities -
Collection of subscriptions and
investor costs -- -- 702,892
---------- ---------- ----------
Net change in cash and cash
equivalents (71,341) (590,697) (2,652,051)
Cash and cash equivalents,
beginning of year 519,652 1,110,349 3,762,400
---------- ---------- ----------
Cash and cash equivalents,
end of year $ 448,311 $ 519,652 $ 1,110,349
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $ -- $ -- $ --
========== ========== =======
Taxes paid $ 800 $ 800 $ 800
========== ========== ==========
See accompanying notes to financial statements
FS-5
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------
WNC Housing Tax Credit Fund III, L.P. (A California Limited Partnership) (the
"Partnership") was formed on May 10, 1991 under the laws of the State of
California. The Partnership was formed to invest primarily in other limited
partnerships which own and operate multifamily housing complexes that are
eligible for low income housing tax credits.
The general partner is WNC Tax Credit Partners, L.P. (the "General Partner"), a
California limited partnership. WNC & Associates, Inc. and Wilfred N. Cooper are
the general partners of the General Partner. The Cooper Revocable Trust is the
principal shareholder of the outstanding stock of WNC & Associates, Inc. John B.
Lester is the original limited partner of the Partnership and owns 30% of the
outstanding stock of WNC & Associates, Inc.
The Partnership shall continue in full force and effect until December 31, 2050
unless terminated prior to that date pursuant to the partnership agreement or
law.
The partnership agreement authorized the sale of up to 15,000 units of Limited
Partnership Interests at $1,000 per Unit ("Units"). The offering of Units
concluded on September 30, 1993 at which time 15,000 Units, representing
subscriptions in the amount of $15,000,000, had been accepted. The General
Partner has a 1% interest in operating profits and losses of the Partnership.
The limited partners will be allocated the remaining 99% interest in proportion
to their respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received a
subordinated disposition fee (as described in Note 5), any additional sale or
refinancing proceeds will be distributed 90% to the limited partners (in
proportion to their respective investments) and 10% to the General Partner.
Method of Accounting For Investments in Limited Partnerships
- ------------------------------------------------------------
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of each limited partnership's results of operations and
for any distributions received. The accounting policies of the limited
partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments in limited partnerships are capitalized
as part of the investment and are being amortized over 30 years (see Note 2).
Losses from limited partnerships allocated to the Partnership are not recognized
to the extent that the investment balance would be adjusted below zero.
Cash and Cash Equivalents
- -------------------------
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents.
Continued
FS-6
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Concentration of Credit Risk
- ----------------------------
At times, the Partnership has maintained cash balances at certain financial
institutions in excess of amounts insured by Federal agencies.
Offering Expenses
- -----------------
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling Units. The
General Partner is obligated to pay all offering and organization costs in
excess of 15% (including sales commissions) of the total offering proceeds.
Offering expenses are reflected as a reduction of limited partners' capital and
amounted to $2,250,000 as of December 31, 1996 and 1995.
Use of Estimates
- ----------------
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 materially differ from those estimates.
Net Loss Per Weighted Limited Partner Units
- -------------------------------------------
Net loss per weighted limited partner units are computed by dividing the limited
partners' share of net loss by the weighted number of limited partner units
outstanding during the year.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------
As of December 31, 1996 and 1995, the Partnership has acquired limited
partnership interests in 48 limited partnerships which own and operate apartment
complexes consisting of 1,684 apartment units. The general partners of the
limited partnerships manage the day-to-day operations of the limited
partnerships. Significant business decisions, as defined, require the approval
of the Partnership. The Partnership, as a limited partner, is generally entitled
to 99% of the operating profits and losses of the limited partnerships.
The Partnership's investments in limited partnerships as shown in the
accompanying balance sheets at December 31, 1996 and 1995, are approximately
$1,298,000 and $1,451,000, respectively, greater than the Partnership's equity
as shown in the limited partnerships' combined financial statements. This
difference is due primarily to acquisition costs related to the acquisition of
the limited partnerships which were capitalized in the Partnership's investment
account and capital contributions accrued but not paid (see Note 5). The
capitalized acquisition costs are being amortized over 30 years.
Continued
FS-7
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
Following is a summary of the equity method activity of the investments in
limited partnerships for the years ended December 31:
1996 1995
---------- ----------
Investments per balance sheet,
beginning of year $ 8,840,410 $ 9,933,747
Capital contributions to limited
partnerships -- 280,275
Capitalized acquisition costs and
acquisition fees 2,100 300
Equity in losses of limited partnerships (1,406,638) (1,312,450)
Distributions from limited partnerships (25,629) (14,286)
Tax credit adjustments (141,424) --
Amortization of capitalized acquisition
costs (47,176) (47,176)
---------- ----------
Investments per balance sheet, end of year $ 7,221,643 $ 8,840,410
========== ==========
Approximate combined condensed financial information from the individual
financial statements of the limited partnerships as of December 31 and for the
years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
Assets 1996 1995
- ------ ---------- ----------
Buildings and improvements, net of
accumulated depreciation for 1996 and
1995 of $6,997,000 and $5,004,000,
respectively $53,383,000 $55,296,000
Land 4,067,000 4,074,000
Due from related parties 21,000 78,000
Other assets 3,667,000 3,316,000
---------- ----------
Total assets $61,138,000 $62,764,000
========== ==========
Liabilities
- -----------
Mortgage and construction loans
payable $50,118,000 $50,246,000
Other liabilities 3,305,000 3,331,000
---------- ----------
Total liabilities 53,423,000 53,577,000
---------- ----------
Partners' Capital
WNC Housing Tax Credit Fund III, L.P. 5,924,000 7,389,000
Other partners 1,791,000 1,798,000
---------- ----------
Total partners' capital 7,715,000 9,187,000
---------- ----------
Total liabilities and partners' capital $61,138,000 $62,764,000
========== ==========
Continued
FS-8
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS
1996 1995 1994
---------- ---------- ----------
Total revenues $ 6,270,000 $ 5,878,000 $ 4,900,000
Expenses:
Operating expenses 3,778,000 3,374,000 2,874,000
Interest expense 1,922,000 1,877,000 1,674,000
Depreciation and
amortization 1,993,000 1,954,000 1,700,000
---------- ---------- ----------
Total expenses 7,693,000 7,205,000 6,248,000
---------- ---------- ----------
Net loss $(1,423,000) $(1,327,000) $(1,348,000)
========== ========== ==========
Net loss allocable to
the Partnership $(1,407,000) $(1,312,000) $(1,323,000)
========== ========== ==========
In connection with tax credit adjustments, as defined in the partnership
agreements, the Company had amounts due from certain limited partnerships. As of
December 31, 1996 and 1994, such amounts were deemed by management to be
uncollectible. Accordingly, amounts were charged to operations totaling $70,455
and $16,000 for the years ended December 31, 1996 and 1994, respectively.
Certain limited partnerships have incurred operating losses and have working
capital deficiencies. In the event these limited partnerships continue to incur
operating losses, additional capital contributions by the Partnership may be
required to sustain the operations of such limited partnerships. If additional
capital contributions are not made when they are required, the Partnership's
investment in certain of such limited partnerships could be impaired.
NOTE 3 - LOANS RECEIVABLE
- -------------------------
Loans receivable represented amounts loaned by the Partnership to certain
limited partnerships in which the Partnership may invest. These loans were
applied against the first capital contribution upon the Partnership acquiring
the limited partnership interest. Loans with a balance of $30,000 at December
31, 1993 were written-off during 1994. In connection with the acquisition of
this limited partnership interest by an affiliated partnership, during 1995 the
Partnership was reimbursed the $30,000, from such affiliated partnership.
NOTE 4 - RELATED PARTY TRANSACTIONS
- -----------------------------------
Under the terms of the Partnership Agreement the Partnership has paid or is
obligated to the General Partner or its affiliates for the following items:
Acquisition fees not to exceed 9% of the gross proceeds from the sale
of partnership units as compensation to the General Partner for
services rendered to the Partnership in connection with the
acquisition of limited partnership. As of December 31, 1996 and 1995,
acquisition fees of $1,350,000 had been incurred. Accumulated
amortization amounted to $160,133 and $115,137 as of December 31, 1996
and 1995, respectively.
Continued
FS-9
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended December 31, 1996, 1995 and 1994
NOTE 4 - RELATED PARTY TRANSACTIONS, continued
- ----------------------------------------------
Reimbursement of costs incurred by an affiliate of the General Partner
in connection with the acquisition of limited partnerships. These
reimbursements have not exceeded 1.6% of the gross proceeds. As of
December 31, 1996, the Partnership has incurred aggregate acquisition
costs of $67,424 which have been included in limited partnership
investment. Accumulated amortization amounted to $7,815 and $5,635 as
of December 31, 1996 and 1995.
An annual asset management fee equal to 0.5% of the invested assets of
the limited partnerships, including the Partnership's allocable share
of the mortgages. Asset management fees of $299,473, $293,476 and
$241,017 were incurred for 1996, 1995 and 1994, respectively. Asset
management fees of $65,000, $57,000 and $25,065 were paid during 1996,
1995 and 1994, respectively.
A subordinated disposition fee in an amount equal to 1% of the sales
price of any property sold. Payment of this fee to the General Partner
is subordinated to the limited partners who receive a 6% preferred
return (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render specified services.
Accrued fees and expenses due to general partner and affiliates are summarized
as of December 31 as follows:
1996 1995
---------- ----------
Advances from general partner $ 2,239 $ 2,541
Accrued asset management fees 748,258 513,786
---------- ----------
Total $ 750,497 $ 516,327
========== ==========
NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Due to limited partnerships at December 31, 1996 and 1995 represents amounts
which are due at various times based on conditions specified in the respective
limited partnership agreements. These contributions are payable in installments,
are generally due upon the limited partnerships achieving certain development
and operating benchmarks, and are generally expected to be paid within two years
of the Partnership's initial investment.
NOTE 6 - INCOME TAXES
- ---------------------
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
FS-10
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
WILFRED N. COOPER, SR., age 65, has been the principal shareholder and a
Director of WNC & ASSOCIATES, INC. since its organization in 1971, of SHELTER
RESOURCE CORPORATION since its organization in 1981 and of WNC RESOURCES, INC.
from its organization in 1988 through its acquisition by WNC & ASSOCIATES, INC.
in 1991, serving as President of those companies until 1992 and as Chief
Executive Officer since 1992, and has been a Director of WNC CAPITAL CORPORATION
since its organization. He is also a general partner with WNC & ASSOCIATES, INC.
in WNC FINANCIAL GROUP, L.P. and WNC TAX CREDIT PARTNERS, L.P. During 1970 and
1971 he was a principal of Creative Equity Development Corporation, a
predecessor of WNC & ASSOCIATES, INC., and of Creative Equity Corporation, a
real estate investment firm. For 12 years prior to that, Mr. Cooper was employed
by Rockwell International Corporation, last serving as its manager of housing
and urban developments. Previously, he had responsibility for new business
development including factory-built housing evaluation and project management in
urban planning and development. Mr. Cooper is a Director and a member of the
Executive Committee of the National Association of Home Builders ("NAHB") and a
Chairman of the NAHB's Rural Housing Council, a Director of the National Housing
Conference, a Director of the Affordable Housing Tax Credit Coalition, a past
President of the Rural Builders Council of California ("RBCC") and a past
President of Southern California Chapter II of the Real Estate Syndication and
Securities Institute ("RESSI") of the National Association of Realtors ("NAR").
Mr. Cooper graduated from Pomona College in 1956 with a Bachelor of Arts degree.
JOHN B. LESTER, JR., age 62, has been a shareholder, a Director and Secretary of
WNC & ASSOCIATES, INC. since 1986, Executive Vice President from 1986 to 1992,
and President and Chief Operating Officer since 1992, and has been a Director of
WNC CAPITAL CORPORATION since its organization. He was a shareholder, Executive
Vice President, Secretary and a Director of WNC RESOURCES, INC. from 1988
through its acquisition by WNC & ASSOCIATES, INC. in 1991. From 1973 to 1986 he
was Chairman of the Board and Vice President or President of E & L Associates,
Inc., a provider of engineering and construction services to the oil refinery
and petrochemical industries which he co-founded in 1973. Mr. Lester is a former
Director of the Los Angeles Chapter of the Associated General Contractors of
California. His responsibilities at WNC & ASSOCIATES, INC. include property
acquisitions and company operations. Mr. Lester graduated from the University of
Southern California in 1956 with a Bachelor of Science degree in Mechanical
Engineering.
<PAGE>
DAVID N. SHAFER, age 44, has been a Senior Vice President of WNC & ASSOCIATES,
INC. since 1992 and General Counsel since 1990, and served as Asset Management
Director from 1990 to 1992. Previously he was employed as an associate attorney
by the law firms of Morinello, Barone, Holden & Nardulli from 1987 until 1990,
Frye, Brandt & Lyster from 1986 to 1987 and Simon and Sheridan from 1984 to
1986. Mr. Shafer is a Director and President of RBCC, a member of NAHB's Rural
Housing Council, a past President of Southern California Chapter II of RESSI, a
past Director of the Council of Affordable and Rural Housing and Development and
a member of the State Bar of California. Mr. Shafer graduated from the
University of California at Santa Barbara in 1978 with a Bachelor of Arts
degree, from the New England School of Law in 1983 with a Juris Doctor degree
and from the University of San Diego in 1986 with a Master of Law degree in
Taxation.
WILFRED N. COOPER, JR., age 33, has been employed by WNC & ASSOCIATES, INC.
since 1988 and has been a Senior Vice President or Vice President since 1992.
Mr. Cooper heads the Acquisition Origination department at WNC and has been
President of and a registered principal with WNC CAPITAL CORPORATION, a member
firm of the NASD, since its organization. Previously, he was employed as a
government affairs assistant by Honda North America from 1987 to 1988, and as a
legal assistant with respect to Federal legislative and regulatory matters by
the law firm of Schwartz, Woods and Miller from 1986 to 1987. Mr. Cooper is a
member of NAHB's Rural Housing Council and serves as Chairman of its Membership
Committee. Mr. Cooper graduated from The American University in 1985 with a
Bachelor of Arts degree.
THEODORE M. PAUL, age 40, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990. Previously, he was a
Vice President and Chief Financial Officer of National Partnership Investments
Corp., a sponsor and general partner of syndicated partnerships investing in
affordable rental housing qualified for tax credits, from 1986 until 1990, and
was employed as an associate by the accounting firms of Laventhol & Horwath,
during 1985, and Mann & Pollack Accountants, from 1979 to 1984. Mr. Paul is a
member of the California Society of Certified Public Accountants and the
American Institute of Certified Public Accountants. His responsibilities at WNC
& ASSOCIATES, INC. include supervision of investor partnership accounting and
tax reporting matters and monitoring the financial condition of the Local
Limited Partnerships in which the Partnership will invest. Mr. Paul graduated
from the University of Illinois in 1978 with a Bachelor of Science degree and is
a Certified Public Accountant in the State of California.
THOMAS J. RIHA, age 41, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994. He has more than 17 years' experience in commercial
and multi-family real estate investment and management. Previously, Mr. Riha was
employed by Trust Realty Advisor, a real estate acquisition and management
company, from 1988 to 1994, last serving as Vice President - Operations. His
responsibilities at WNC & ASSOCIATES, INC. include monitoring the operations and
financial performance of, and regulatory compliance by, properties in the WNC
portfolio. Mr. Riha graduated from the California State University, Fullerton in
1977 with a Bachelor of Arts degree (cum laude) in Business Administration with
a concentration in Accounting and is a Certified Public Accountant in the State
of California and a member of the California Society of Certified Public
Accountants and the American Institute of Certified Public Accountants.
<PAGE>
SY GARBAN, age 50, has 19 years' experience in the real estate securities and
syndication industry. He has been associated with WNC & ASSOCIATES, INC., since
1989, serving as National Sales Director through 1992 and as Vice President -
National Sales since 1992. Previously, he was employed by MRW, Inc., Newport
Beach, California from 1980 to 1989, a real estate acquisition, development and
management firm. Mr. Garban is a member of the International Association of
Financial Planners. Mr. Garban graduated from Michigan State University in 1967
with a Bachelor of Science degree in Business Administration.
CARL FARRINGTON, age 50, has been associated with WNC & ASSOCIATES, INC. since
1993, currently serving as Director - Originations since 1994. Mr. Farrington
has more than 12 years' experience in finance and real estate acquisitions.
Previously, he served as Acquisitions Director for The Arcand Company from 1991
to 1993, and as Treasurer and Director of Finance and Administrator for Polytron
Corporation from 1988 to 1991. Mr. Farrington is a member and Director of the
Council of Affordable and Rural Housing and Development. Mr. Farrington
graduated from Yale University with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Master of Business Administration in 1970.
MICHELE M. TAYLOR, age 41, has been employed by WNC & ASSOCIATES, INC. since
1986, serving as a paralegal and office manager, and currently is the Investor
Services Director. Previously she was self-employed between 1982 and 1985 in
non-financial services activities and from 1978 to 1981 she was employed as a
paralegal by a law firm which specialized in real estate limited partnership
transactions. Ms. Taylor graduated from the University of California, Irvine in
1976 with a Bachelor of Arts degree.
THERESA I. CHAMPANY, age 38, has been employed by WNC & ASSOCIATES, INC., since
1989 and currently is the Marketing Services Director and a registered principal
with WNC CAPITAL CORPORATION. Previously, she was employed as Manager of
Marketing Services by August Financial Corporation from 1986 to 1989 and as
office manager and Assistant to the Vice President of Real Estate Syndications
by McCombs Securities Co., Inc. from 1979 to 1986. Ms. Champany attended
Manchester (Conn.) Community College from 1976 to 1978.
KAY L. COOPER, age 59, has been an officer and Director of WNC & ASSOCIATES,
INC. since 1971 and of WNC RESOURCES, INC. from 1988 through its acquisition by
WNC & ASSOCIATES, INC. in 1991. Mrs. Cooper has also been the sole proprietor of
Agate 108, a manufacturer and retailer of home accessory products, since 1975.
She is the wife of Wilfred N. Cooper, Sr., the mother of Wilfred N. Cooper, Jr.
and the sister of John B. Lester, Jr. Mrs. Cooper graduated from the University
of Southern California in 1958 with a Bachelor of Science degree.
<PAGE>
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:
(a) An annual asset management fee in an amount equal to 0.5% of invested assets
(the sum of the Partnership's Investment in Local Limited Partnership Interests
and the Partnership's allocable share of the amount of the mortgage loans on and
other debts related to, the Apartment Complexes owned by such Local Limited
Partnerships.) Fees of $299,473 were incurred for 1996.
(b) A subordinated disposition fee in an amount equal to 1% of the sale price
received in connection with the sale or disposition of an Apartment Complex or
Local Limited Partnership Interest. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital contributions
and payment of the Preferred Return to the Limited Partners. "Preferred Return"
means an annual, cumulative but not compounded, "return" to the Limited Partners
(including Low Income Housing Credits) as a class on their adjusted capital
contributions commencing for each Limited Partner on the last day of the
calendar quarter during which the Limited Partner's capital contribution is
received by the Partnership, calculated at the following rates: (i) 16% through
December 31, 2002, and (ii) 6% for the balance of the Partnerships term. No
disposition fees have been paid.
(c) In 1996 the General Partner was allocated federal Low Income Housing Credits
of $23,743.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the outstanding
Units.
(b) Security Ownership of Management
Neither the General Partner, Associates nor any of the officers or
directors of Associates own directly or beneficially any Units in HTCF III.
<PAGE>
(c) Changes in Control
The management and control of the General Partners may be changed at any time in
accordance with their respective organizational documents, without the consent
or approval of the Limited Partners. In addition, the Partnership Agreement
provides for the admission of one or more additional and successor General
Partners in certain circumstances. First, with the consent of any other General
Partners and a majority-in-interest of the Limited Partners, any General Partner
may designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of any other
General Partner or the Limited Partners, (I) substitute in its stead as General
Partner any entity which has, by merger, consolidation or otherwise, acquired
substantially all of its assets, stock or other evidence of equity interest and
continued its business, or (ii) cause to be admitted to the Partnership an
additional General Partner or Partners if it deems such admission to be
necessary or desirable so that the Partnership will be classified a partnership
for Federal income tax purposes. Finally, a majority-in-interest of the Limited
Partners may at anytime remove the General Partner of the Partnership and elect
a successor General Partner.
Item 13. Certain Relationships and Related Transactions
All of the Partnership's affairs are managed by the General Partner, through
Associates. The transactions with the General Partner and Associates are
primarily in the form of fees paid by the Partnership for services rendered to
the Partnership, as discussed in Item 11 and in the notes to the accompanying
financial statements.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
Financial Statements:
Report of independent public accountants.
Balance sheets as of December 31, 1996 and 1995.
Statements of Operations for the years ended December 31, 1996, 1995, and 1994.
Statement of Partners' Equity for the years ended December 31, 1996, 1995, and
1994.
Statements of Cash Flows for the years ended December 31, 1996, 1995, and 1994.
Notes to Financial Statements.
Financial Statement Schedules:
N/A
<PAGE>
Exhibits
(3): Articles of incorporation and by-laws: The registrant is not incorporated.
The Partnership Agreement is included as Exhibit B to the Prospectus, filed as
Exhibit 28.1 to Form 10-K for the year ended December 31, 1994.
(10) Material contracts:
10.1 Third Amended and Restated Agreement and Certificate of Limited
Partnership of Cambridge Court Limited Partnership filed as exhibit 10.3
to Form 10-K dated December 31, 1992 is hereby incorporated herein by
reference as exhibit 10.1.
10.2 Amended and Restated Agreement and Certification of Limited Partnership of
Chester Associates I, A Limited Partnership filed as exhibit 10.4 to Form
10-K dated December 31, 1992 is hereby incorporated herein by reference as
exhibit 10.2.
10.3 Amended and Restated Agreement and Certification of Limited Partnership of
Red Bud I, A Limited Partnership filed as exhibit 10.5 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.3.
10.4 Amended and Restated Agreement of Limited Partnership of Post Manor, L.P.
filed as exhibit 10.6 to Form 10-K dated December 31, 1992 is hereby
incorporated herein by reference as exhibit 10.4.
10.5 Amended and Restated Agreement and Certification of Limited Partnership of
Steelville Associates I, A Limited Partnership filed as exhibit 10.7 to
Form 10-K dated December 31, 1992 is hereby incorporated herein by
reference as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Wills Point
Manor, L.P. filed as exhibit 10.8 to Form 10-K dated December 31, 1992 is
hereby incorporated herein by reference as exhibit 10.6.
10.7 Amended and Restated Agreement and Certificate of Limited Partnership of
Killbuck Limited Partnership filed as exhibit 10.9 to Form 10-K dated
December 31, 1992 is hereby incorporated herein by reference as exhibit
10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Coosa Co.
Housing, Ltd. filed as exhibit 10.10 to Form 10-K dated December 31, 1992
is hereby incorporated herein by reference as exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of Ft. Deposit
Housing, Ltd. filed as exhibit 10.11 to Form 10-K dated December 31, 1992
is hereby incorporated herein by reference as exhibit 10.9.
10.10 Second Amended and Restated Agreement and Certificate of Limited
Partnership of Tanglewood Limited Partnership (7) filed as exhibit 10.11
to Post-Effective Amendment No. 9 dated March 31, 1993 is hereby
incorporated herein by reference as exhibit 10.10.
10.11 Amended and Restated Agreement of Limited Partnership of Windemere
Associates Limited Partnership filed as exhibit 10.12 to Post-Effective
Amendment No. 9 dated March 31, 1993 is hereby incorporated herein by
reference as exhibit 10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Woodland
Apartments, L.P. filed as exhibit 10.13 to Post-Effective Amendment No. 9
dated March 31, 1993 is hereby incorporated herein by reference as exhibit
10.12.
<PAGE>
10.13 Amended and Restated Agreement of Limited Partnership of Meadow Run
Associates Limited Partnership filed as exhibit 10.14 to Post-Effective
Amendment No. 9 dated March 31, 1993 is hereby incorporated herein by
reference as exhibit 10.13.
10.14 Amended and Restated Agreement of Limited Partnership of Candleridge
Apartments of Bondurant L.P. filed as exhibit 10.15 to Post-Effective
Amendment No. 9 dated March 31, 1993 is hereby incorporated herein by
reference as exhibit 10.14.
10.15 Amended and Restated Agreement of Limited Partnership of Candleridge
Apartments of Waukee L.P. filed as exhibit 10.16 to Post-Effective
Amendment No. 9 dated March 31, 1993 is hereby incorporated herein by
reference as exhibit 10.15.
10.16 Amended and Restated Agreement and Certification of Limited Partnership of
Fairview Village V, Limited Partnership filed as exhibit 10.17 to
Post-Effective Amendment No. 9 dated March 31, 1993 is hereby incorporated
herein by reference as exhibit 10.16.
10.17 Woodview Limited Partnership Amended and Restated Limited Partnership
Agreement filed as exhibit 10.18 to Post-Effective Amendment No. 9 dated
March 31, 1993 is hereby incorporated herein by reference as exhibit
10.17.
10.18 Amended and Restated Agreement of Limited Partnership of Coffeeville
Housing, Ltd. filed as exhibit 10.19 to Post-Effective Amendment No. 9
dated March 31, 1993 is hereby incorporated herein by reference as exhibit
10.18.
10.19 Amended and Restated Agreement of Limited Partnership of Crockett Manor
Senior Citizens Complex, Ltd. filed as exhibit 10.20 to Post-Effective
Amendment No. 9 dated March 31, 1993 is hereby incorporated herein by
reference as exhibit 10.19.
10.20 Amended and Restated Agreement and Certificate of Limited Partnership of
Delta Manor, L.P. filed as exhibit 10.21 to Post-Effective Amendment No. 9
dated March 31, 1993 is hereby incorporated herein by reference as exhibit
10.20.
10.21 Amended and Restated Agreement and Certificate of Limited Partnership of
Eupora Apartments, L.P. filed as exhibit 10.22 to Post-Effective Amendment
No. 9 dated March 31, 1993 is hereby incorporated herein by reference as
exhibit 10.21.
10.22 Amended and Restated Agreement of Limited Partnership of Levelland Manor,
L.P. filed as exhibit 10.23 to Post-Effective Amendment No. 9 dated March
31, 1993 is hereby incorporated herein by reference as exhibit 10.22.
10.23 Third Amendment to the Partnership Agreement of Parks I Limited
Partnership filed as exhibit 10.24 to Post-Effective Amendment No. 9 dated
March 31, 1993 is hereby incorporated herein by reference as exhibit
10.23.
10.24 Second Amendment Village Lane Properties Certificate and Agreement of
Limited Partnership filed as exhibit 10.25 to Post-Effective Amendment No.
9 dated March 31, 1993 is hereby incorporated herein by reference as
exhibit 10.24.
<PAGE>
10.25 Amended and Restated Agreement of Limited Partnership of Gulf Coast
Apartments, L.P. filed as exhibit 10.1 to Form 8-K/A Current Report
Amendment No. 1 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.25.
10.26 Amended and Restated Agreement of Limited Partnership of Gulf Coast
Apartments of Long Beach, L.P. filed as exhibit 10.2 to Form 8-K/A Current
Report Amendment No. 1 dated June 23, 1993 is hereby incorporated herein
by reference as exhibit 10.26.
10.27 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Benson filed as exhibit 10.3 to Form 8-K/A Current Report
Amendment No. 1 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.27.
10.28 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Dallas filed as exhibit 10.4 to Form 8-K/A Current Report
Amendment No. 1 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.28.
10.29 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Dunn filed as exhibit 10.5 to Form 8-K/A Current Report
Amendment No. 1 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.29.
10.30 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Kings Mountain filed as exhibit 10.6 to Form 8-K/A Current
Report Amendment No. 1 dated June 23, 1993 is hereby incorporated herein
by reference as exhibit 10.30.
10.31 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Lee filed as exhibit 10.7 to Form 8-K/A Current Report
Amendment No. 1 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.31.
10.32 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Sanford filed as exhibit 10.8 to Form 8-K/A Current Report
Amendment No. 1 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.32.
10.33 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Selma filed as exhibit 10.9 to Form 8-K/A Current Report
Amendment No. 1 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.33.
10.34 Amended and Restated Agreement of Limited Partnership of Logan Park
Associates Limited Partnership filed as exhibit 10.10 to Form 8-K/A
Current Report Amendment 10.34.
10.35 Agreement of Limited Partnership of Oakdale Senior Housing Limited
Partnership filed as exhibit 10.11 to Form 8-K/A Current Report Amendment
No. 1 dated June 23, 1993 is hereby incorporated herein by reference as
exhibit 10.35.
<PAGE>
10.36 Amended and Restated Agreement of Limited Partnership of Clinton Terrace
Apartments, Ltd. filed as exhibit 10.12 to Form 8-K/A Current Report
Amendment No. 2 dated June 23, 1993 is hereby incorporated herein by
reference as exhibit 10.36.
10.37 Amended and Restated Agreement and Certification of Limited Partnership of
Wilcam Housing, Ltd. filed as exhibit 10.38 to Post-Effective Amendment
No. 13 dated October 22, 1993 is hereby incorporated herein by reference
as exhibit 10.37.
10.38 Amended and Restated Agreement and Certificate of Limited Partnership of
Cherokee Housing, Ltd. filed as exhibit 10.39 to Post-Effective Amendment
No. 13 dated October 22, 1993 is hereby incorporated herein by reference
as exhibit 10.38.
10.39 Amended and Restated Agreement of Limited Partnership of Beaumont Elderly
Housing, L.P. filed as exhibit 10.1 to Form 8-K dated January 4, 1994 is
hereby incorporated herein by reference as exhibit 10.39.
10.40 Amended and Restated Agreement of Limited Partnership of Lake Ridge
Apartments, Ltd. filed as exhibit 10.2 to Form 8-K dated January 4, 1994
is hereby incorporated herein by reference as exhibit 10.40.
10.41 Amended and Restated Agreement of Limited Partnership of Orange Beach
Housing, Ltd. filed as exhibit 10. 3 to Form 8-K dated January 4, 1994 is
hereby incorporated herein by reference as exhibit 10.41.
Reports on Form 8-K
No reports of Form 8-K were filed during the fourth quarter ended December 31,
1996.
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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.
WNC HOUSING TAX CREDIT FUND III, L.P.
By: WNC Tax Credit Partners, L.P. General Partner of the Registrant
By: WNC & Associates, Inc. General Partner of WNC California Tax Credit Partners
III, L.P.
By: /s/ John B. Lester, Jr
-----------------------------------------------------
John B. Lester, Jr. President and Chief Opertating Officer of WNC & Associates,
Inc.
Date: May 6, 1997
By: /s/ Theodore M. Paul
-----------------------------------------------------
Theodore M. Paul Vice-President Finance and Chief Financial Officer of WNC &
Associates, Inc.
Date: May 6, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Wilfred N. Cooper, Sr.
-----------------------------------------------------
Wilfred N. Cooper, Sr. Director and Chairman of the Board WNC & Associates, Inc.
Date: May 6, 1997
By: /s/ John B. Lester, Jr
-----------------------------------------------------
John B. Lester, Jr. Director and Secretary of the Board WNC & Associates, Inc.
Date: May 6, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000875278
<NAME> WNC HOUSING TAX CREDIT FUND III, L.P.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 448,311
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 448,311
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,670,485
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,869,170
<TOTAL-LIABILITY-AND-EQUITY> 7,670,485
<SALES> 0
<TOTAL-REVENUES> 16,756
<CGS> 0
<TOTAL-COSTS> 441,957
<OTHER-EXPENSES> 1,406,638
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,831,839)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,831,839)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,831,829)
<EPS-PRIMARY> (120.90)
<EPS-DILUTED> 0
</TABLE>
