UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ------- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - ------- EXCHANGE ACT OF 1934
Commission File Number 0-24650
INDEPENDENCE TAX CREDIT PLUS L.P. III
-------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3746339
- - ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- - -------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
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
--- ---
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
============= ===========
September 30, March 31,
1998 1998
------------- -----------
<S> <C> <C>
ASSETS
Property and equipment - at cost,
less accumulated depreciation
of $4,793,311 and $3,800,117,
respectively $64,121,557 $65,105,052
Construction in progress 9,899,950 5,419,271
Cash and cash equivalents 5,860,401 7,157,348
Cash held in escrow 4,844,277 5,331,779
Deferred costs, less accumulated
amortization of $294,063
and $243,170, respectively 1,025,045 1,076,148
Other assets 795,269 987,717
----------- -----------
Total assets $86,546,499 $85,077,315
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $31,110,488 $29,673,823
Construction loan payable 9,102,030 7,080,766
Accounts payable and other
liabilities 3,105,769 3,322,397
Due to local general partners and
affiliates 5,086,838 5,986,326
Due to general partner and affiliates 793,819 614,979
----------- -----------
Total liabilities 49,198,944 46,678,291
----------- -----------
Minority interest 3,529,676 3,511,585
----------- -----------
Commitments and contingencies (Note 3)
Partners' capital:
Limited partners (43,440 BACs
issued and outstanding) 33,865,828 34,924,692
General partner (47,949) (37,253)
----------- -----------
Total partners' capital 33,817,879 34,887,439
----------- -----------
Total liabilities and partners' capital $86,546,499 $85,077,315
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
========================= ==========================
Three Months Ended Six Months Ended
September 30, September 30,
------------------------- --------------------------
1998 1997 1998 1997
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues
Rental income $1,272,313 $ 872,497 $2,483,243 $1,654,367
Other income 114,569 114,556 196,299 243,255
---------- ---------- ----------- ----------
Total revenues 1,386,882 987,053 2,679,542 1,897,622
---------- ---------- ----------- ----------
Expenses
General and
administrative 356,121 354,231 727,420 636,915
General and
administrative-
related parties
(Note 2) 189,663 86,217 365,586 189,914
Repairs and
maintenance 186,688 122,933 352,862 200,561
Operating 174,698 114,118 327,864 242,737
Taxes 69,520 19,070 118,007 57,199
Insurance 71,167 28,418 164,564 101,811
Financial,
principally
interest 329,732 229,873 621,241 444,970
Depreciation and
amortization 507,469 412,726 1,044,087 795,880
---------- ---------- ----------- ----------
Total expenses 1,885,058 1,367,586 3,721,631 2,669,987
---------- ---------- ----------- ----------
Net loss before
minority interest (498,176) (380,533) (1,042,089) (772,365)
Minority interest
in (income)
loss of subsidiary
partnerships (19,809) 1,226 (27,471) 1,539
---------- ---------- ----------- ----------
Net loss $ (517,985) $ (379,307) $(1,069,560) $ (770,826)
========== ========== =========== ==========
Net loss -limited
partners $ (512,805) $ (375,514) $(1,058,864) $ (763,118)
========== ========== =========== ==========
Number of BACs
outstanding 43,440 43,440 43,440 43,440
========== ========== =========== ==========
Net loss per BAC $ (11.81) $ (8.65) $ (24.38) $ (17.57)
========== ========== =========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Unaudited)
<TABLE>
<CAPTION>
=========== =========== ========
Limited General
Total Partners Partner
----------- ----------- --------
<S> <C> <C> <C>
Partners' capital -
April 1, 1998 $34,887,439 $34,924,692 $(37,253)
Net loss (1,069,560) (1,058,864) (10,696)
----------- ----------- --------
Partners' capital -
September 30,
1998 $34,817,879 $33,865,828 $(47,949)
=========== =========== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
============================
Six Months Ended
September 30,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,069,560) $ (770,826)
----------- -----------
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,044,087 795,880
Minority interest in income
(loss) of subsidiaries 27,471 (1,539)
Increase in accounts
payable and other liabilities 80,917 131,240
Increase in cash held in escrow (329,666) (533,039)
Decrease (increase) in other assets 192,448 (33,800)
Increase in due to local general
partners and affiliates 69,591 2,000
Decrease in due to local general
partners and affiliates (91,474) (32,809)
Increase in due to
general partner and affiliates 178,840 7,618
----------- -----------
Total adjustments 1,172,214 335,551
----------- -----------
Net cash provided by (used in)
operating activities 102,654 (435,275)
----------- -----------
Cash flows from investing activities:
Increase in property and equipment (9,699) (835,528)
Decrease in investments
available for sale 0 2,000,000
Increase in construction in progress (4,480,679) (7,325,538)
Decrease in cash held in escrow 817,168 987,452
Decrease in deferred costs 0 14,311
Decrease in accounts payable
and other liabilities (297,545) (383,353)
Increase in due to local general
partners and affiliates 85,100 2,674,421
Decrease in due to local general
partners and affiliates (930,048) (524,696)
Decrease in due from local general
partners and affiliates 0 317,056
----------- -----------
Net cash used in investing activities (4,815,703) (3,075,875)
----------- -----------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(continued)
(Unaudited)
<TABLE>
<CAPTION>
============================
Six Months Ended
September 30,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from financing activities:
Proceeds from mortgage notes 1,494,821 630,544
Repayments of mortgage notes (58,156) (321,591)
Proceeds from construction loans 2,021,264 1,668,837
Decrease in due to local general
partners and affiliates (32,657) 0
Decrease (increase) in deferred costs 210 (34,355)
(Decrease) increase in capitalization
of consolidated subsidiaries
attributable to minority interest (9,380) 89,519
----------- -----------
Net cash provided by financing
activities 3,416,102 2,032,954
----------- -----------
Net decrease in cash and
cash equivalents (1,296,947) (1,478,196)
Cash and cash equivalents at
beginning of period 7,157,348 7,573,213
----------- -----------
Cash and cash equivalents at
end of period $ 5,860,401 $ 6,095,017
=========== ===========
Supplemental disclosures of noncash
investing and financing activities:
Capitalization of deferred
acquisition costs $ 0 $ 189,135
Conversion of construction notes
payable to mortgage notes payable 0 1,450,000
Property and equipment reclassified
from construction in process 0 4,508,671
Consolidation of investment in
subsidiary partnership:*
Decrease in property and
equipment 0 1,577,356
Increase in construction in
progress 0 (1,577,356)
</TABLE>
*Prior to consolidation, investments in subsidiary partnerships are included
in property and equipment.
See Accompanying Notes to Consolidated Financial Statements.
6
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1998
(Unaudited)
Note 1 - General
Independence Tax Credit Plus L.P. III (a Delaware limited partnership) (the
"Partnership") was organized on December 23, 1993, and commenced its public
offering on June 7, 1994. The general partner of the Partnership is Related
Independence Associates III L.P., a Delaware limited partnership (the "General
Partner").
The Partnership's business is to invest in other partnerships ("Local
Partnerships", "subsidiaries" or "subsidiary partnerships") owning apartment
complexes that are eligible for the low-income housing tax credit ("Housing Tax
Credit") enacted in the Tax Reform Act of 1986, some of which complexes were
also eligible for the historic rehabilitation tax credit ("Historic Tax Credit";
together with Housing Tax Credits, "Tax Credits").
As of September 30, 1998, the Partnership has acquired limited partnership
interests in twenty subsidiary partnerships. Through the rights of the
Partnership and/or an affiliate of the General Partner, which affiliate has a
contractual obligation to act on behalf of the Partnership, to remove the
general partner of the subsidiary partnerships and to approve certain major
operating and financial decisions, the Partnership has a controlling financial
interest in the subsidiary partnerships.
For financial reporting purposes, the Partnership's fiscal quarter ends
September 30. All subsidiaries have fiscal quarters ending June 30. Accounts of
the subsidiaries have been adjusted for intercompany transactions from July 1
through September 30. The Partnership's fiscal quarter ends September 30 in
order to allow adequate time for the subsidiaries financial statements to be
prepared and consolidated.
All intercompany accounts and transactions with the subsidiary partnerships have
been eliminated in consolidation.
Increases (decreases) in the capitalization of consolidated subsidiaries
attributable to minority interest arise from cash contributions from and cash
distributions to the minority interest partners.
7
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1998
(Unaudited)
Losses attributable to minority interests which exceed the minority interests'
investment in a subsidiary have been charged to the Partnership. Such losses
aggregated approximately $2,900 and $2,400 and $6,200 and $5,500 for the three
and six months ended September 30, 1998 and 1997, respectively. The
Partnership's investment in each subsidiary is equal to the respective
subsidiary's partners' equity less minority interest capital, if any. In
consolidation, all subsidiary partnership losses are included in the
Partnership's capital account except for losses allocated to minority interest
capital.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted or condensed. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K for the period ended March 31,
1998.
The books and records of the Partnership are maintained on the accrual basis of
accounting in accordance with generally accepted accounting principles. In the
opinion of the General Partner of the Partnership, the accompanying unaudited
financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position of the
Partnership as of September 30, 1998, the results of operations for the three
and six months ended September 30, 1998 and 1997 and cash flows for the six
months ended September 30, 1998 and 1997. However, the operating results for the
six months ended September 30, 1998 may not be indicative of the results for the
year.
8
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1998
(Unaudited)
Note 2 - Related Party Transactions
An affiliate of the General Partner has a .01% interest as a special limited
partner, in each of the Local Partnerships.
A) Other Related Party Expenses
The costs incurred to related parties for the three and six months ended
September 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
====================== =======================
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- -----------------------
1998 1997 1998 1997
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Partnership manage-
ment fees (a) $105,000 $12,500 $185,000 $ 25,000
Expense reimburse-
ment (b) 21,955 27,526 59,439 72,978
Local administra-
tive fee (d) 11,000 7,000 22,000 13,000
-------- ------- -------- --------
137,955 47,026 266,439 110,978
-------- ------- -------- --------
Property manage-
ment fees incurred
to affiliates of
the subsidiary
partnerships'
general partners (c) 51,708 39,191 99,147 78,936
-------- ------- -------- --------
Total general and
administrative-
related parties $189,663 $86,217 $365,586 $189,914
======== ======= ======== ========
</TABLE>
(a) The General Partner is entitled to receive a partnership management fee,
after payment of all Partnership expenses, which together with the annual local
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. Subject to the foregoing limitation, the partnership
management fee will be determined by the General Partner in its sole discretion
based upon its review of the Partnership's investments. Unpaid partnership
management fees for any year will be accrued without interest and will be
payable from working capital reserves or to the extent of available funds after
the Partnership has made distributions to the limited partners of sale or
refinanc-
9
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. III
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1998
(Unaudited)
ing proceeds equal to their original capital contributions plus a 10% priority
return thereon (to the extent not theretofore paid out of cash flow).
Partnership management fees owed to the General Partner amounting to
approximately $335,000 and $200,000 were accrued and unpaid as of September 30,
1998 and March 31, 1998, respectively.
(b) The Partnership reimburses the General Partner and its affiliates for actual
Partnership operating expenses incurred by the General Partner and its
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partner performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.
(c) Property management fees incurred by Local Partnerships amounted to $90,693
and $59,902 and $174,046 and $112,848 for the three and six months ended
September 30, 1998 and 1997, respectively. Of these fees $51,708 and $39,191 and
$99,147 and $78,936 were incurred to affiliates of the subsidiary partnerships'
general partners.
(d) Independence SLP III L.P., a special limited partner of the subsidiary
partnerships, is entitled to receive a local administrative fee of up to $5,000
per year from each subsidiary partnership.
Note 3 - Commitments and Contingencies
There were no material changes and/or additions to disclosures regarding the
subsidiary partnerships which were included in the Partnership's Annual Report
on Form 10-K for the period ended March 31, 1998.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership's primary source of funds include (i) interest earned on Gross
Proceeds which are invested in tax-exempt money market instruments pending final
payments to Local Partnerships and (ii) working capital reserves and interest
earned thereon. All these sources of funds are available to meet obligations of
the Partnership.
As of September 30, 1998, the Partnership has invested approximately $35,000,000
(including approximately $3,142,000 classified as loans repayable from
sale/refinancing proceeds in accordance with the Local Partnership Contribution
Agreements and not including acquisition fees of approximately $2,510,000) of
net proceeds in twenty Local Partnerships of which approximately $3,169,000
remains to be paid to the Local Partnerships (not including approximately
$2,336,000 being held in escrow) as certain benchmarks, such as occupancy level,
must be attained prior to the release of the funds. The Partnership does not
intend to acquire additional properties. During the six months ended September
30, 1998, approximately $1,075,000 was paid to Local Partnerships, including
purchase price adjustments (of which approximately $63,000 was released from
escrow). Although the Partnership will not be acquiring additional properties,
the Partnership may be required to fund potential purchase price adjustments
based on tax credit adjustor clauses. Such adjustments resulted in a net
increase in purchase price of approximately $80,000 during the six months ended
September 30, 1998.
For the six months ended September 30, 1998, cash and cash equivalents of the
Partnership and its twenty consolidated Local Partnerships decreased
approximately $1,297,000 primarily due to an increase in construction in
progress ($4,481,000), a net decrease in due to local general partners and
affiliates relating to investing and financing activities ($877,000) an increase
in property and equipment ($10,000) and a decrease in accounts payable and other
liabilities relating to investing activities ($298,000) which exceeded cash
provided by operating activities ($103,000), net proceeds from mortgage and
construction loans ($3,458,000) and a decrease in cash held in escrow relating
to investing activities ($817,000). Included in the adjustments to reconcile the
net loss to cash provided by operating activities is depreciation and
amortization in the amount of approximately $1,044,000.
11
<PAGE>
The working capital reserve at September 30, 1998 and March 31, 1998 was
approximately $290,000 and $792,000, respectively, which includes amounts which
may be required for potential purchase price adjustments based on tax credit
adjustor clauses. The General Partner believes that these reserves, plus any
cash distributions received from the operations of the Local Partnerships will
be sufficient to fund the Partnership's ongoing operations for the foreseeable
future. During six months ended September 30, 1998 and 1997, the Partnership
received cash flow distributions from operations of the Local Partnerships
amounting to approximately $9,000 and $4,000, respectively. Management
anticipates continuing to receive distributions in the future, although not to a
level sufficient to permit providing cash distributions to the BACs holders.
Partnership management fees owed to the General Partner amounting to
approximately $335,000 and $200,000 were accrued and unpaid as of September 30,
1998 and March 31, 1998, respectively (see Note 2).
The Partnership has negotiated development deficit guarantees with the Local
Partnerships in which it has invested. The Local General Partners have agreed to
fund development deficits through the breakeven dates of each of the Local
Partnerships.
The Partnership has negotiated Operating Deficit Guaranty Agreements with all
Local Partnerships by which the general partners of the Local Partnerships have
agreed to fund operating deficits for a specified period of time. The terms of
the Operating Deficit Guaranty Agreements vary for each Local Partnership, with
maximum dollar amounts to be funded for a specified period of time, generally
three years, commencing on the break-even date. As of September 30, 1998 and
March 31, 1998, the gross amount of the Operating Deficit Guarantees aggregates
approximately $5,254,000 and $4,597,000 , respectively.
The Partnership has also negotiated rent-up guaranty agreements in which the
Local General Partners agreed to pay a liquidated damage if predetermined
occupancy rates are not achieved.
The development deficit, operating deficit and the rent-up guaranty agreements
were negotiated to protect the Partnership's interest in the Local Partnerships
and to provide incentive to the Local General Partners to generate positive cash
flow.
12
<PAGE>
For a discussion of contingencies affecting certain Local Partnerships, see Note
3 to the financial statements. Since the maximum loss the Partnership would be
liable for is its net investment in the respective subsidiary partnerships, the
resolution of the existing contingencies is not anticipated to impact future
results of operations, liquidity or financial condition in a material way.
However, the Partnership's loss of its investment in a Local Partnership will
eliminate the ability to generate future tax credits from such Local Partnership
and may also result in recapture of tax credits if the investment is lost before
the expiration of the compliance period.
Management has been in contact with all the Local Partnerships in the southeast
region and does not anticipate any significant increases to repairs and
maintenance due to the effect of Hurricane Georges on the portfolio.
Management is not aware of any trends or events, commitments or uncertainties
which have not otherwise been disclosed that will or are likely to impact
liquidity in a material way. Management believes the only impact would be from
laws that have not yet been adopted. The portfolio is diversified by the
location of the properties around the United States so that if one area of the
country is experiencing downturns in the economy, the remaining properties in
the portfolio may be experiencing upswings. However, the geographic
diversification of the portfolio may not protect against a general downturn in
the national economy. The Partnership has invested the proceeds of its offering
in twenty Local Partnerships, all of which fully have their tax credits in
place. The tax credits are attached to the project for a period of ten years,
and are transferable with the property during the remainder of such ten year
period. If the General Partner determined that a sale of a property is
warranted, the remaining tax credits would transfer to the new owner, thereby
adding value to the property on the market, which are not included in the
financial statement carrying amount.
Results of Operations
As of September 30, 1998 and 1997, the Partnership had acquired an interest in
twenty and eighteen Local Partnerships, twenty and eighteen of which were
consolidated, respectively. The Partnership does not intend to acquire
additional interests in Local Partnerships.
The Partnership's results of operations for the three and six months ended
September 30, 1998 and 1997 consisted primarily of
13
<PAGE>
(1) approximately $33,000 and $88,000 and $72,000 and $182,000, respectively, of
tax-exempt interest income earned on funds not currently invested in Local
Partnerships and (2) the results of the Partnership's investment in twenty of
twenty and fifteen of eighteen consolidated Local Partnerships, respectively.
For the three and six months ended September 30, 1998 as compared to 1997,
rental income and all categories of expenses increased and the results of
operations are not comparable due to the continued construction and rent up of
properties, and are not reflective of future operations of the Partnership due
to uncompleted property construction, rent up of properties and the continued
utilization of the net proceeds of the offering to invest in Local Partnerships.
In addition, interest income will decrease in future periods since a substantial
portion of the proceeds from the Offering are invested in Local Partnerships.
Other income decreased approximately $47,000 for the six months ended September
30, 1998 as compared to 1997 primarily due to a decrease in interest income as a
result of the acquisition of and the release of proceeds to the Local
Partnerships.
For the three months ended September 30, 1998 and 1997, zero and zero of the
Partnership's twenty and eighteen consolidated properties, respectively,
completed construction, and were in various stages of rent up. In addition, zero
and one of the properties, respectively, had completed construction in a
previous fiscal quarter, but were in various stages of rent up for the three
months. Also, for the three months ended September 30, 1998 and 1997, seventeen
and thirteen of the properties had completed construction and were rented up in
a previous fiscal quarter. For the six months ended September 30, 1998 and 1997,
zero and zero of the Partnership's twenty and eighteen consolidated properties,
respectively, completed construction, and were in various stages of rent up. In
addition, zero and two of the properties, respectively, had completed
construction in a previous fiscal quarter, but were in various stages of rent up
for the six months. Also, for the six months ended September 30, 1998 and 1997,
seventeen and thirteen of the properties had completed construction and were
rented up in a previous fiscal quarter. As of the end of the six months ended
September 30, 1998 and 1997, three and four of the Partnership's twenty and
eighteen consolidated properties, respectively, were still under construction
and three and four of the properties, respectively, had construction loans with
commitments for permanent financing.
14
<PAGE>
Year 2000 Compliance
The Partnership utilizes the computer services of an affiliate of the General
Partner. The affiliate of the General Partner is in the process of upgrading its
computer information systems to be year 2000 compliant and beyond. The Year 2000
compliance issue concerns the inability of a computerized system to accurately
record dates after 1999. The affiliate of the General Partner recently underwent
a conversion of its financial systems applications and is in the process of
upgrading and testing the in house software and hardware inventory. The
workstations that experienced problems from this process were corrected with an
upgrade patch. The affiliate of the General Partner has incurred costs of
approximately $1,000,000 to date and estimates the total costs to be
approximately $2,000,000. These costs are not being charged to the Partnership.
In regard to third parties, the Partnership's General Partner is in the process
of evaluating the potential adverse impact that could result from the failure of
material service providers to be year 2000 compliant. A detailed survey and
assessment of third party readiness will be sent to material third parties in
the fourth quarter of 1998. The results of the surveys will be compiled in early
1999. No estimate can be made at this time as to the impact of the readiness of
such third parties. The Partnership's General Partner plans to have these issues
fully assessed by early 1999, at which time the risks will be addressed and
a contingency plan will be implemented if necessary.
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3A) Agreement of Limited Partnership of Independence Tax Credit
Plus L.P. III as adopted on December 23, 1993*
(3B) Form of Amended and Restated Agreement of Limited
Partnership of Independence Tax Credit Plus L.P. III, attached to the Prospectus
as Exhibit A**
(3C) Certificate of Limited Partnership of Independence Tax
Credit Plus L.P. III as filed on December 23, 1993*
(10A) Form of Subscription Agreement attached to the Prospectus
as Exhibit B**
(10B) Escrow Agreement between Independence Tax Credit Plus L.P.
III and Bankers Trust Company*
(10C) Form of Purchase and Sales Agreement pertaining to the
Partnership's acquisition of Local Partnership Interests*
(10D) Form of Amended and Restated Agreement of Limited
Partnership of Local Partnerships*
(27) Financial Data Schedule (filed herewith)
*Incorporated herein as an exhibit by reference to exhibits filed
with Post-Effective Amendment No. 4 to the Registration Statement on Form S-11
{Registration No. 33-37704}
16
<PAGE>
**Incorporated herein as an exhibit by reference to exhibits
filed with Post-Effective Amendment No. 8 to the Registration Statement on Form
S-11 {Registration No. 33-37704}
(b) Reports on Form 8-K - No reports on Form 8-K were filed during this
quarter.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INDEPENDENCE TAX CREDIT PLUS L.P. III
(Registrant)
By: RELATED INDEPENDENCE
ASSOCIATES III L.P., General Partner
By: RELATED INDEPENDENCE
ASSOCIATES III INC., General Partner
Date: November 11, 1998
By: /s/ Alan P. Hirmes
-----------------------------
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: November 11, 1998
By: /s/ Glenn F. Hopps
-----------------------------
Glenn F. Hopps,
Treasurer
(principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Independence Tax Credit Plus L.P.
III and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<CIK> 0000924124
<NAME> Independence Tax Credit Plus L.P. III
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 10,704,678
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<DEPRECIATION> 4,793,311
<TOTAL-ASSETS> 86,546,499
<CURRENT-LIABILITIES> 8,986,426
<BONDS> 40,212,518
0
0
<COMMON> 0
<OTHER-SE> 37,346,555
<TOTAL-LIABILITY-AND-EQUITY> 86,546,499
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<TOTAL-REVENUES> 2,679,542
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<INTEREST-EXPENSE> 621,241
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<NET-INCOME> (1,042,089)
<EPS-PRIMARY> (24.38)
<EPS-DILUTED> 0
</TABLE>
