AMENDMENT NO. 1 TO 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 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
o 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
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-556
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:
NONE
<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
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
2
<PAGE>
Item 1. Business
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"
or the "General Partner"). The general partners of TCP are WNC & Associates,
Inc. ("Associates") and Wilfred N. Cooper, Sr. Wilfred N. Cooper, Sr., through
the Cooper Revocable Trust, owns just less than 70% of the outstanding stock of
Associates. John B. Lester, Jr. is the original limited partners of the
Partnership and owns, through the Lester Family Trust, just less than 30% of
Associates. 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 of 15,000 Units
of Limited Partnership Interest ("Units"), at a price of $1,000 per Unit. As of
December 31, 1997, a total of 15,000 Units representing $15,000,000 had been
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 fifteen-year compliance
period (the "Compliance Period").
In general, in order to avoid recapture of Tax Credits, 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 15 year
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
year in the future, and (iii) the inability of the Partnership to directly cause
the sale of Apartment Complexes by the general partner of the respective Local
Limited Partnerships ("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
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.
3
<PAGE>
As of December 31, 1997, 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 or is expected to be 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 multifamily residential real
estate. Some of these risks are that neither the Partnership's investments nor
the Apartment Complexes owned by Local Limited Partnerships will be readily
marketable. Additionally, there can be no assurance that the Partnership will be
able to dispose of its interests in 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 general partners of the Local Limited Partnerships,
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, 1997, 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 general partners of the
respective Local Limited Partnerships ("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 Partner of the Local Limited Partnership
retains responsibility for developing, constructing, maintaining, operating and
managing the Apartment Complex.
The following is a schedule of the status as of December 31, 1997, of the
Apartment Complexes owned by Local Limited Partnerships in which HTCF III was a
limited partner as of December 31, 1997.
4
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF PROJECTS OWNED BY Limited Partnerships
IN WHICH HTCF III HAS AN INVESTMENT
AS OF DECEMBER 31, 1997
No. of Units Percentage of
Name & Location Units Completed Units Occupied Total Units
--------------- ----- --------- -------------- -----------
<S> <C> <C> <C> <C>
Beaumont Elderly Housing 30 30 29 98%
Beaumont, Mississippi
Brownfield Seniors Community 24 24 24 100%
Brownfield, Texas
Buffalo Apartments 24 24 21 88%
Buffalo, Texas
Cambridge Court Associates 39 39 39 100%
Grottoes, Virginia
Candleridge Apts. of Bondurant, L.P. 23 23 23 100%
Bondurant, Iowa
Candleridge Apts. of Waukee, L.P. 23 23 23 100%
Waukee, Iowa
Carlinville Associates 20 20 17 85%
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 24 100%
Albany, Kentucky
Coffeeville Housing, Ltd. 19 19 15 79%
Coffeeville, Alabama
Coosa Co. Housing, Ltd. 19 19 18 95%
Rockford, Alabama
Crockett Manor, Ltd. 40 40 39 98%
Crockett, Texas
Crockett Manor Snr. Citizens Cmplx, Ltd. 36 36 36 100%
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 12 100%
Fox Lake, Wisconsin
Ft. Deposit Housing, Ltd. 23 23 21 91%
Fort Deposit, Alabama
Gulf Coast Apartments, L.P. 59 59 58 98%
Gulfport, Mississippi
Gulf Coast Apts. of Long Beach 60 60 54 90%
Long Beach, Mississippi
HOI Limited Partnership of Benson 50 50 48 96%
Benson, North Carolina
HOI Limited Partnership of Dallas, 60 60 52 87%
Dallas, North Carolina
HOI Limited Partnership of Dunn, 34 34 34 100%
Dunn, North Carolina
5
<PAGE>
HOI Limited Partnership of Kings Mtn. 46 46 45 97%
Kings Mountain, North Carolina
HOI Limited Partnership of Lee 78 78 69 88%
Sanford, North Carolina
HOI Limited Partnership of Sanford 50 50 47 94%
Sanford, North Carolina
HOI of Limited Partnership Selma 58 58 55 95%
Selma, North Carolina
Heritage Colonial Homes 20 20 20 100%
Blackshear, Georgia
Killbuck Limited Partnership 24 24 24 100%
Killbuck, Ohio
Lake Ridge Apts 44 44 44 100%
Tiptonville, Tennessee
Levelland Manor, L.P 36 36 36 100%
Levelland, 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 80 100%
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 24 92%
Post, Texas
Red Bud Associates I 20 20 20 100%
Red Bud, Illinois
Steeleville Associates I 16 16 14 88%
Steeleville, Illinois
Tanglewood Limited Partnership 36 36 34 95%
Frankfurt, Ohio
Village Lane Properties 36 36 36 100%
Fort Smith, Arkansas
Whitted Forest 35 35 30 86%
Hillsborough, North Carolina
Wilcam 19 19 16 84%
Wilcox County, Alabama
Wills Point Manor, L.P. 24 24 23 96%
Wills Point, Texas
Windemere Associates Ltd. Partnership 38 38 38 100%
Lexington, Virginia
Woodland Apartments, L.P. 48 48 46 96%
Mt. Pleasant, Texas
Woodview Limited Partnership 12 12 12 100%
Chillicothe, Illinois
Woodview Limited Partnership 24 24 24 100%
Glasford, Illinois
------- ------------ --------------- -----------
</TABLE>
6
<PAGE>
Item 2. Properties
Through its investment in Local Limited Partnerships the Partnership holds an
interest 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
Item 5a.
(a) 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 Agreement of Limited Partnership ("Partnership
Agreement") are satisfied.
(b) At December 31, 1997, there were 1,020 Limited Partners.
(c) The Partnership was not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Limited Partnerships. The Limited Partners received $157
and $157 federal Low Income Housing Credits per Unit for the years 1997 and
1996, respectively.
7
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $11,158 $16,756 $57,741 $87,521 $137,116
Partnership operating
expenses 367,813 441,957 361,586 358,858 144,532
Equity in loss of
Local Limited Partnerships
(1,230,014) (1,406,638) (1,312,450) (1,323,487) (779,251)
----------- --------- --------- ---------- --------
Net loss $(1,586,669) $(1,831,839) $(1,616,295) $(1,594,824) $(786,667)
========== ========== ========== ========== ========
Net loss per Limited
Partnership Interest $(105) $(121) $(107) $(105) $(68)
===== ==== ==== ===== ===
Total assets $6,256,718 $7,670,485 $9,377.066 $11,181,316 $14,210,374
=========== ========= ========= =========== ===========
Net investment in
Local Limited Partnerships
$5,923,350 $7,221,643 $8,840,410 $9,933,747 $9,279,446
========= ========= ========= ========== ==========
Capital contributions
payable to Local Limited
Partnerships $50,818 $50,818 $159,730 $634,968 $2,226,811
====== ====== ======= ======== ==========
Accrued fees and expenses
due to affiliates $923,399 $750,497 $516,327 $229,044 $71,435
======= ======= ======= ======== =======
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Liquidity and Capital Resources
- -------------------------------
Since inception, the Partnership has received $15,000,000 in cash from the sale
ofUnits. 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 December 31,
1997, the Partnership had made capital contributions to Local Limited
Partnerships in the amount of approximately $10,857,000, and had commitments for
additional capital contributions of approximately $51,000.
8
<PAGE>
The Partnership was indebted to an affiliate of the General Partner in the
amount of approximately $923,400 and $750,500 at December 31, 1997 and 1996,
respectively. The component items of such indebtedness are as follows: accrued
management fees of approximately $922,700 and $748,300, advances for operating
expenses of approximately $700 and $2,200 for 1997 and 1996, respectively.
Overall, as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of approximately $115,000. for the period
ended December 31, 1997. This decrease in cash consisted of cash from investing
activities and cash used in operations for the Partnership of approximately
$21,000 and $(136,000), respectively. Cash provided from investing activities
consisted of distributions from Local Limited Partnerships. Cash provided by
operating activities consisted of interest income. Cash used in operating
activities 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 $71,300. for the period
ended December 31, 1996. This decrease in cash consisted of cash provided by
investing activities and cash used in operating activities of the Partnership of
approximately $2,600 and $(73,900), respectively. Cash provided from investing
activities consisted of distributions from Local Limited Partnerships less cash
used in capital contributions to Local Limited Partnerships and acquisition
costs. Cash provided by operating activities consisted of interest income. Cash
used in operating activities consisted primarily of payments for operating fees
and expenses. The major components of all these activities are discussed in
greater detail below. .
Prior to sale of the Apartment Complexes, it is not expected that any of the
Local Limited Partnerships in which the Partnership has invested or will invest
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 same of the Apartment Complexes.
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 Limited Partnership Interests is sufficient to fund the Partnership's
operations.
9
<PAGE>
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, if,
as expected, 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 tax credits, cash flow and/or
proceeds of sale or refinancing of the apartment complexes and result in 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.
Results of Operations
- ---------------------
As of December 31, 1997, 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.
10
<PAGE>
As reflected on its Statements of Operations, the Partnership had losses of
approximately, $1,586,700, $1,831,800 and $1,616,300 for the years ended
December 31, 1997, 1996, and 1995, respectively. The component items of revenue
and expense are discussed below.
Revenue. Partnership revenues consist of recovery of bad debt write off (1995
only), 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.
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 $299,473,
$299,473, and $293,476 for the years ended December 31, 1997, 1996, and 1995,
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 99% of the aggregate net loss of the
Limited Partnerships. After rent-up, the 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, 1997, 1996 and 1995
with
INDEPENDENT AUDITORS' REPORT THEREON
12
<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, 1997 and 1996, and the related statements of operations, partners' equity
and cash flows for the years ended December 31, 1997, 1996 and 1995. 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 95% and 94% of the total assets of WNC Housing Tax
Credit Fund III, L.P. at December 31, 1997 and 1996, respectively. 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 the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the 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, 1997 and 1996, and the results of its
operations and its cash flows for the years ended December 31, 1997, 1996 and
1995, in conformity with generally accepted accounting principles.
/s/ CORBIN & WERTZ
------------------
CORBIN & WERTZ
Irvine, California
March 23, 1998
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 333,368 $ 448,311
Investments in limited partnerships (Note 2) 5,923,350 7,221,643
Other assets - 531
--------------- ----------------
$ 6,256,718 $ 7,670,485
=============== ================
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Due to limited partnerships (Note 4) $ 50,818 $ 50,818
Accrued fees and expenses due to general partner
and affiliates (Note 3) 923,399 750,497
--------------- ----------------
Total liabilities 974,217 801,315
--------------- ----------------
Partners' equity:
General partner 12,304 28,170
Limited partners (15,000 units authorized; 15,000
units issued and outstanding at December 31,
1997 and 1996) 5,270,197 6,841,000
--------------- ----------------
Total partners' equity 5,282,501 6,869,170
--------------- ----------------
$ 6,256,718 $ 7,670,485
=============== ================
</TABLE>
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, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- -----------------
<S> <C> <C> <C>
Income:
Interest income $ 11,158 $ 16,756 $ 27,741
Other - - 30,000
--------------- --------------- ----------------
Total income 11,158 16,756 57,741
--------------- --------------- ----------------
Operating expenses:
Amortization (Note 3) 47,248 47,176 47,176
Partnership management fees
(Note 3) 299,473 299,473 293,476
Bad debts (Note 2) - 70,455 -
Office 21,092 24,853 20,934
--------------- --------------- ----------------
Total operating expenses 367,813 441,957 361,586
--------------- --------------- ----------------
Loss from operations (356,655) (425,201) (303,845)
Equity in losses of limited partnerships
(Note 2) (1,230,014) (1,406,638) (1,312,450)
--------------- --------------- ----------------
Net loss $ (1,586,669) $ (1,831,839) $ (1,616,295)
=============== =============== ================
Net loss allocable to:
General partner $ (15,866) $ (18,318) $ (16,163)
=============== =============== ================
Limited partner $ (1,570,803) $ (1,813,521) $ (1,600,132)
=============== =============== ================
Net loss per weighted limited
partner units $ (104.72) $ (120.90) $ (106.68)
=============== =============== ===============
Outstanding weighted limited
partner units 15,000 15,000 15,000
=============== =============== ================
</TABLE>
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, 1997, 1996 and 1995
<TABLE>
<CAPTION>
General Partner Limited
Partners Total
---------------- ---------------- -----------------
<S> <C> <C> <C>
Equity at January 1, 1995 $ 62,651 $ 10,254,653 $ 10,317,304
Net loss (16,163) (1,600,132) (1,616,295)
---------------- ---------------- -----------------
Equity at December 31, 1995 46,488 8,654,521 8,701,009
Net loss (18,318) (1,813,521) (1,831,839)
---------------- ---------------- -----------------
Equity at December 31, 1996 28,170 6,841,000 6,869,170
Net loss (15,866) (1,570,803) (1,586,669)
---------------- ---------------- -----------------
Equity at December 31, 1997 $ 12,304 $ 5,270,197 $ 5,282,501
=============== =============== ================
</TABLE>
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, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,586,669) $ (1,831,839) $ (1,616,295)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization 47,248 47,176 47,176
Bad debts - 70,455 -
Equity in losses of limited
partnerships 1,230,014 1,406,638 1,312,450
Recapture of loan receivable - - (30,000)
Change in other assets 531 (531) (16,784)
Change in accrued fees and
expenses due to general partner
and affiliates 172,902 234,170 287,283
--------------- --------------- ----------------
Net cash used in operating activities (135,974) (73,931) (16,170)
--------------- --------------- ----------------
Cash flows from investing activities:
Investments in limited partnerships, net - (20,939) (755,513)
Capitalized acquisition costs and fees - (2,100) (300)
Distribution from limited partnership 21,031 25,629 14,286
Decrease in loans receivable,
including recapture of written-
off loan receivable - - 167,000
--------------- --------------- ----------------
Net cash provided by (used in)
investing activities 21,031 2,590 (574,527)
--------------- --------------- ----------------
Net decrease in cash and cash
equivalents (114,943) (71,341) (590,697)
Cash and cash equivalents,
beginning of year 448,311 519,652 1,110,349
--------------- --------------- ----------------
Cash and cash equivalents,
end of year $ 333,368 $ 448,311 $ 519,652
=============== =============== ================
Continued
</TABLE>
See accompanying notes to financial statements
FS-5
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS - CONTINUED
For The Years Ended
December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------------- ---------------- -----------------
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
<S> <C> <C> <C>
Interest paid $ - $ - $ -
=============== =============== ================
Taxes paid $ 800 $ 800 $ 800
=============== =============== ================
</TABLE>
See accompanying notes to financial statements
FS-6
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended
December 31, 1997, 1996 and 1995
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 3), 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.
The Partnership's investments in limited partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate,
and include the risks that neither the Partnership's investments nor the
apartment complexes owned by the limited partnerships will be readily
marketable. Additionally there can be no assurance that the Partnership will be
able to dispose of its interests in the limited partnerships. 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 could be
subject to loss through foreclosure. In addition, each limited partnership is
subject to risks relating to
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, 1997, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
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 Partner and the general partners of the limited
partnerships, there can be no assurance that Partnership operations will be
profitable or that the anticipated housing tax credits will be available to
limited partners.
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.
Concentration of Credit Risk
- ----------------------------
At December 31, 1997, the Partnership has maintained cash balances at certain
financial institutions in excess of amounts insured by Federal agencies.
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.
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, 1997, 1996 and 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
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, 1997 and 1996.
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, 1997 and 1996, 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, 1997 and 1996, are approximately
$1,465,000 and $1,298,000, respectively, greater than the Partnership's equity
as shown in the limited partnerships' combined financial statements. This
difference is due to unrecorded losses, as discussed below, and 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 3). The capitalized acquisition costs are being
amortized over 30 years.
Equity in losses of limited partnerships is recognized in the financial
statements until the related investment account is reduced to a zero balance.
Losses incurred after the investment account is reduced to zero are not
recognized. If the limited partnerships report net income in future years, the
Partnership will resume applying the equity method only after its share of such
net income equals the share of net losses not recognized during the period(s)
the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income.
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, 1997, 1996 and 1995
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
At December 31, 1997, the investment accounts in certain limited partnerships
have reached a zero balance. Consequently, the Partnership's share of losses
during the year ended December 31, 1997 amounting to approximately $157,000 have
not been recognized. As of December 31, 1997, the aggregate share of net losses
not recognized by the Partnership amounted to $157,000.
The following is a summary of the equity method activity of the investments in
limited partnerships for the years ended December 31:
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
Investments per balance sheet, beginning of year $ 7,221,643 $ 8,840,410
Capitalized acquisition costs and acquisition fees - 2,100
Equity in losses of limited partnerships (1,230,014) (1,406,638)
Distributions from limited partnerships (21,031) (25,629)
Tax credit adjustments - (141,424)
Amortization of capitalized acquisition costs (47,248) (47,176)
--------------- ----------------
Investments per balance sheet, end of year $ 5,923,350 $ 7,221,643
=============== ================
</TABLE>
FS-10
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended
December 31, 1997, 1996 and 1995
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
The financial information from the individual financial statements of the
limited partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted in
interest expense. 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:
<TABLE>
<CAPTION>
COMBINED CONDENSED BALANCE SHEETS
1997 1996
--------------- ---------------
<S> <C> <C>
ASSETS
Buildings and improvements, net of accumulated
depreciation for 1997 and 1996 of $8,955,000 and
$6,997,000, respectively $ 51,626,000 $ 53,383,000
Land 4,077,000 4,067,000
Due from related parties 21,000 21,000
Other assets 3,906,000 3,667,000
--------------- ----------------
Total assets $ 59,630,000 $ 61,138,000
=============== ================
LIABILITIES
Mortgage and construction loans payable $ 49,923,000 $ 50,118,000
Other liabilities 3,425,000 3,305,000
--------------- ----------------
Total liabilities 53,348,000 53,423,000
--------------- ----------------
PARTNERS' CAPITAL
WNC Housing Tax Credit Fund III, L.P. 4,458,000 5,924,000
Other partners 1,824,000 1,791,000
--------------- ----------------
Total partners' capital 6,282,000 7,715,000
--------------- ----------------
Total liabilities and partners' capital $ 59,630,000 $ 61,138,000
=============== ================
</TABLE>
FS-11
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended
December 31, 1997, 1996 and 1995
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
<TABLE>
<CAPTION>
COMBINED CONDENSED STATEMENTS OF OPERATIONS
1997 1996 1995
---------------- ---------------- -----------------
<S> <C> <C> <C>
Total revenues $ 6,416,000 $ 6,270,000 $ 5,878,000
Expenses:
Operating expenses 3,989,000 3,778,000 3,374,000
Interest expense 1,873,000 1,922,000 1,877,000
Depreciation and amortization 1,958,000 1,993,000 1,954,000
--------------- --------------- ----------------
Total expenses 7,820,000 7,693,000 7,205,000
--------------- --------------- ----------------
Net loss $ (1,404,000) $ (1,423,000) $ (1,327,000)
=============== =============== ================
Net loss allocable to the Partnership $ (1,387,000) $ (1,407,000) $ (1,312,000)
=============== =============== ================
</TABLE>
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, such amounts were deemed by management to be uncollectible.
Accordingly, amounts were charged to operations totaling $70,455 for the year
ended December 31, 1996.
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 - 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 partnerships. As of December 31, 1997 and 1996,
acquisition fees of $1,350,000 had been incurred. Accumulated
amortization amounted to $205,129 and $160,133 as of December 31, 1997
and 1996, respectively.
FS-12
<PAGE>
WNC HOUSING TAX CREDIT FUND III, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For The Years Ended
December 31, 1997, 1996 and 1995
NOTE 3 - 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, 1997 and 1996, the Partnership has incurred aggregate
acquisition costs of $67,423, which have been included in limited
partnership investment. Accumulated amortization amounted to $10,067
and $7,815 as of December 31, 1997 and 1996.
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, $299,473 and
$293,476 were incurred for 1997, 1996 and 1995, respectively. Asset
management fees of $125,000, $65,000 and $57,000 were paid during
1997, 1996 and 1995, 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:
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
Advances from general partner $ 668 $ 2,239
Accrued asset management fees 922,731 748,258
--------------- ----------------
Total $ 923,399 $ 750,497
=============== ================
</TABLE>
NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------
Due to limited partnerships at December 31, 1997 and 1996 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 5 - 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-13
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
NONE
Item 10. Directors and Executive Officers of the Registrant
Directors of 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.
- ----------------------------------------------------------
The directors of Associates are Wilfred N. Cooper, Sr., who serves as Chairman
of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N. Cooper, Jr. and
Kay L. Cooper. Substantially all of the shares of Associates are owned by
Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, and John B. Lester,
Jr., through the Lester Family Trust.
WILFRED N. COOPER, SR., age 67, 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 of the Executive
Committee of the National Association of Home Builders (NAHB) and a past
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 California Council of Affordable Housing (CCAH) (formerly Rural
Builders Council of California), 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 64, 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.
13
<PAGE>
DAVID N. SHAFER, age 45, has been a Director of WNC & ASSOCIATES, INC. since
1997, a Senior Vice President since 1992, and General Counsel since 1990, and
served as Asset Management Director from 1990 to 1992, and has been a Director
and Secretary of WNC Management, Inc. since its organization. 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
CCAH, 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 35, has been employed by WNC & ASSOCIATES, INC.
since 1988 and has been a Director since 1997 Executive Vice President since
1998, and a Senior Vice President since 1992. Mr. Cooper heads the Acquisition
Originations department at WNC, has been President of, and a registered
principal with, WNC CAPITAL CORPORATION, a member firm of the NASD, since its
organization, and has been a Director of WNC Management Inc. 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 an alternate director and 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 42, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief Financial Officer since 1990, and has been a Director
and Chief Financial Officer of WNC Management Inc. since its organization.
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.
14
<PAGE>
THOMAS J. RIHA, age 43, has been Vice President - Asset Management of WNC &
ASSOCIATES, INC. since 1994, and has been a Director and Chief Executive Officer
of WNC Management Inc. since its organization. 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
American Institute of Certified Public Accountants.
SY P. GARBAN, age 52, has 20 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 as Executive Vice
President by MRW, Inc., Newport Beach, California from 1980 to 1989, a real
estate development and management firm. Mr. Garban is a member of the
International Association of Financial Planners. He graduated from Michigan
State University in 1967 with a Bachelor of Science degree in Business
Administration.
CARL FARRINGTON, age 55, has been associated with WNC & ASSOCIATES, INC. since
1993, and has served 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.
DAVID TUREK, age 43, has been Director - Originations of WNC & ASSOCIATES, INC.
since 1996. He has 23 years' experience in real estate finance and acquisitions.
Previously, from 1995 to 1996 Mr. Turek served as a consultant for a national
Low Income Housing Credit sponsor where he was responsible for on-site
feasibility studies and due diligence analyses of Low Income Housing Credit
properties, from 1992 to 1995 he served as Executive Vice President for Levcor,
Inc., a multi-family development company, and from 1990 to 1992 he served as
Vice President for the Paragon Group where he was responsible for Low Income
Housing Credit development activities. Mr. Turek graduated from Southern
Methodist University in 1976 with a Bachelor of Business Administration degree.
15
<PAGE>
N. PAUL BUCKLAND, age 36, has been employed by WNC & ASSOCIATES, INC. since 1994
and currently serves as Vice President - Acquisitions. He has 11 years'
experience in analysis pertaining to the development of multi-family and
commercial properties. Previously, from 1986 to 1994 he served on the
development team of the Bixby Ranch which constructed more than 700 apartment
units and more than one million square feet of "Class A" office space in
California and neighboring states, and from 1984 to 1986 he served as a land
acquisition coordinator with Lincoln Property Company where he identified and
analyzed multi-family developments. Mr. Buckland graduated from California State
University, Fullerton in 1992 with a Bachelor of Science degree in Business
Finance.
MICHELE M. TAYLOR, age 43, 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 40, 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 61, 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.
16
<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 its affiliates for the following fees:
(a) Organization and Offering Expenses. The Partnership paid the General Partner
or its affiliates as of December 31, 1997 $2,250,000, consisting of commissions
and other fees and expenses of the Partnership's offering of Units of $1,125,000
and $1,125,000, respectively. Of the total paid to the General Partner or its
affiliates, all of the amount of $2,250,000 was paid (reallowed) to unaffiliated
persons participating in the Partnership's offering or rendering other services
in connection with the Partnership's offering.
(b) Acquisition fees in an amount equal to 9% of the gross proceeds of the
Partnership's offering ("Gross Proceeds"). Through December 31, 1997, the
aggregate amount of acquisition fees of $1,350,000 have been paid to the General
Partner or its affiliates.
(c) The Partnership reimbursed the General Partner or its affiliates as of
December 31, 1997 for acquisition expenses expended by such persons on behalf of
the Partnership in the amounts $67,423.
(d) 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, $299,473 and 293,476 were incurred for 1997,
1996, and 1995, respectively. The Partnership paid the General Partner or its
affiliates $125,000, $65,000 and $57,000 of those fees in 1997, 1996 and 1995,
respectively.
(e) 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 on investment 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.
(f) The General Partner was allocated Housing Tax Credits for 1997 and 1996 of
$23,782 and $23,743, respectively.
17
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
No person is known to the General Partner to own beneficially in excess of 5% of
the outstanding Units.
Security Ownership of Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to own beneficially in excess of 5% of the outstanding
Limited Partnership Interests.
(b) Security Ownership of Management
Neither the General Partner, its affiliates nor any of the officers or
directors of Associates or its affiliates own directly or beneficially any
limited partnership interests in the Partnership.
(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
18
<PAGE>
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 sheet as of December 31, 1997 and 1996.
Statements of Operations for the years ended December 31, 1997, 1996, and 1995.
Statement of Partners' Equity for the years ended December 31, 1997, 1996, and
1995.
Statements of Cash Flows for the years ended December 31, 1997, 1996, and 1995.
Notes to Financial Statements.
Financial Statement Schedules:
N/A
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 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 10.1.
10.2 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 10.2.
10.3 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
10.3.
19
<PAGE>
10.4 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 10.4.
10.5 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 10.5.
10.6 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 10.6.
10.7 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 10.7.
10.8 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 10.8.
10.9 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
10.9.
10.10Amended 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 10.10.
10.11Amended 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
10.11.
10.12Amended 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 10.12.
10.13Amended 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 10.13.
10.14Third 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 10.14.
10.15Second 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 10.15.
20
<PAGE>
10.16Amended 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 10.16.
10.17Amended 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 10.17.
10.18Amended 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 10.18.
10.19Amended 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 10.19.
10.20Amended 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 10.20.
10.21Amended 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 10.21.
10.22Amended 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 10.22.
10.23Amended 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 10.23.
10.24Amended 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 10.24.
10.25Amended 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 10.25.
10.26Agreement 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 10.26.
21
<PAGE>
10.27Amended 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 10.27.
10.28Amended 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 10.28.
10.29Amended 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 10.29.
10.30Amended 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 10.30.
10.31Amended 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 10.31.
10.32Amended 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 10.32.
Reports on Form 8-K
No reports of Form 8-K were filed during the fourth quarter ended December 31,
1997.
22
<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 of WNC & Associates, Inc.
Date: April 14, 1998
By: /s/ Theodore M. Paul
- -----------------------------------------------------
Theodore M. Paul Vice-President Finance of WNC & Associates, Inc.
Date: April 14, 1998
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: April 14, 1998
By: /s/ John B. Lester, Jr.
- -----------------------------------------------------
John B. Lester, Jr. Director and Secretary of the Board
WNC & Associates, Inc.
Date: April 14, 1998
By: /s/ David N. Shafer
- -----------------------------------------------------
David N. Shafer Director of WNC & Associates, Inc.
Date: April 14, 1998
23
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