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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Commission file number 33-00152
AMRECORP REALTY FUND III
(Exact name of registrant as specified in its charter)
Texas 75-2045888
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
2800 N Dallas Pkwy #100, Plano, Texas 75093-5994
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (972) 836-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
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, to the best of
Registrant's knowledge in definitive proxy or information to
Statements incorporated by reference in Part III of the Form 10-K
or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act).
Yes ___ No X.
Documents Incorporated by Reference
The Prospectus dated November 26, 1985 filed pursuant to Rule
424(b) as supplemented pursuant to Rule 424(c) on December 5, 1985.
PART I
Item 1. Business
The Registrant, Amrecorp Realty Fund III, (the "Partnership"),
is a limited partnership organized under the Texas Uniform Limited
Partnership Act pursuant to a Certificate of Limited Partnership
dated August 30, 1985 and amended on November 21, 1985. On December
31, 2004, the Partnership consisted of a corporate general partner,
LBAL, Inc. (wholly owned by Robert J. Werra) and266 limited
partners owning 2,382 limited partnership interests at $1,000 per
interest. The distribution of limited partnership interests
commenced November 26, 1985 pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933 (Registration #33-00152)
as amended.
The Partnership was organized to acquire a diversified
portfolio of income-producing real properties, primarily
apartments, as well as office buildings, industrial buildings, and
other similar properties
The Partnership intends to continue until December 31, 2015
unless terminated by an earlier sale of its Properties.
Univesco, Inc.("Univesco"), a Texas corporation, controlled by
Robert J. Werra, manages the affairs of the Partnership. Univesco
acts as the managing agent with respect to the Partnership's
Properties. Univesco may also engage other on-site property
managers and other agents, to the extent management considers
appropriate. Univesco and the general partner make all decisions
regarding investments in and disposition of Properties and has
ultimate authority regarding all property management decisions.
No material expenditure has been made or is anticipated for
either Partnership-sponsored or consumer research and development
activities relating to the development or improvement of facilities
or services provided by the Partnership. There neither has been,
nor are any anticipated, material expenditures required to comply
with any federal, state or local environmental provisions which
would materially affect the earnings or competitive position of the
Partnership.
The Partnership is engaged solely in the business of real
estate investments. Its business is believed by management to fall
entirely within a single industry segment. Management does not
anticipate that there will be any material seasonal affects upon
the operation of the Partnership.
Competition and Other Factors
The majority of the Property's leases are of six to twelve month
terms. Accordingly, operating income is highly susceptible to
varying market conditions. Occupancy and local market rents are
driven by general market conditions which include job creation, new
construction of single and multi-family projects, and demolition
and other reduction in net supply of apartment units.
Rents have generally been increasing in recent years due to the
generally positive relationship between apartment unit supply and
demand in the Partnership's markets. However, the property is
subject to substantial competition from similar and often newer
properties in the vicinity in which they are located. Capitalized
expenditures have increased as units are updated and made more
competitive in the market place.
Item 2. Properties
At December 31, 2003, the Partnership owned Las Brisas Apartment, a
376-unit apartment community located at 2010 South Clark Street,
Abilene, Taylor County, Texas 79606. The Partnership purchased a
fee simple interest in Las Brisas Apartments on July 30, 1986. The
property contains approximately 312,532 net rentable square feet,
one clubhouse, and five laundry facilities located on approximately
19.11 acres of land.
The property is encumbered by a mortgage note payable in monthly
installments of principal and interest through December 31, 2011,
when a lump-sum payment of approximately $3,447,000 is due. For
information regarding the encumbrances to which the property is
subject and the status of the related mortgage loans, see "
Management`s Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" contained
in Item 7 hereof and Note B to the Financial Statements and
Schedule Index contained in Item 8.
Occupancy Rates
Percent
2000 2001 2002 2003 2004
Las 95.0% 92.7% 93.9% 98.4% 97.6
Brisas
Item 3. Legal Proceedings
The Partnership is not engaged in any material legal
proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders
during the fourth quarter of the fiscal year.
By virtue of its organization as a limited partnership, the
Partnership has outstanding no securities possessing traditional
voting rights. However, as provided and qualified in the Limited
Partnership Agreement, limited partners have voting rights for,
among other things, the removal of the General Partner and
dissolution of the Partnership.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters
The Partnerships outstanding securities are in the form of Limited
Partnership Interests ("Interests"). As of December 31, 2004there
were approximately 266limited partners owning 2,382 interests at
$1,000 per interest. A public market for trading Interests has not
developed and none is expected to develop. In addition, transfer of
an Interest is restricted pursuant to the Limited Partnership
Agreement.
The General Partner continues to review the Partnership's ability
to make distributions on a quarter-by-quarter basis, however, no
such distributions have been made to the limited partners in
several years and none are anticipated in the immediate future due
to required debt service payments and the existence of the Special
Limited Partner, Mr. Robert J. Werra. The Special Limited Partner
has first right to all net operating cash flow and net proceeds
from disposals of assets to the extent of the special limited
partner distribution preference. During 2004 2003 and 2002 the
Special Limited Partner received distributions from the Partnership
totaling $90,000, $110,000, and $523,560, respectively.
An analysis of tax income or loss allocated and cash distributed to
Investors per $1,000 unit is as follows:
YEARS INCOME GAIN LOSS CASH DISTRIBUTED
1986 $0 $0 $186 $0
1987 0 0 286 0
1988 0 0 310 0
1989 0 0 278 0
1990 0 0 231 0
1991 0 0 142 0
1992 0 0 0 0
1993 0 153 162 0
1994 24 0 0 0
1995 0 0 5 0
1996 20 0 0 0
1997 0 0 (21) 0
1998 4 0 0 0
1999 72 0 0 0
2000 <1 0 0 0
2001 98 0 0 0
2002 57 0 0 0
2003 36 0 0 0
2004 33 0 0 0
Item 6. Selected Financial Data
The following table sets forth selected financial data regarding
the Partnership's results of operations and financial position as
of the dates indicated. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in Item 7 hereof and
the financial Statements and notes thereto contained in Item 8.
Year Ended December 31,
( in thousands except unit and per unit amounts)
2004 2003 2002 2001 2000
Limited Partner Units Outstanding - 2382 2382 2382 2382 2382
Basic
Statement of Operations
Total Revenues $1,754 $1,672 $1,616 $1,615 $1,591
Net Income (Loss) 23 (141) (64) 86 (23)
Limited Partner Net Income (Loss)
per Unit - Basis 10 (58.41) (26.62) 35.68 (9.76)
Cash Distributions to Limited
Partners per Unit - Basic 0 0 0 0 0
Balance Sheet:
Real Estate, net 2,994 3,198 3,418 3,576 3,787
Total Assets 3,292 3,468 3,735 4,332 4,123
Mortgages Payable 3,944 4,000 4,051 4,100 2,874
Partner's Equity (910) (844) (594) (6) 894
(a) For Federal Income Tax purposes only income was
reallocated in accordance the regulations promulgated
thereunder of the Internal Revenue Code of 1986 as amended.
Item 7. Management Discussion and Analysis of Financial Conditions
and Results of Operations
This discussion should be read in conjunction with Item 6 -
"Selected Financial Data" and Item 8 - "Financial Statements and
Supplemental Information".
Results of Operations: 2004VERSUS 2003
Revenue from Property Operations increased $81,879or 4.9%. Rental
income increased $69,138 or 4.39% as compared to 2003. Other
income increased $12,741 or 12.89% due to higher fee income from
residents. The following table illustrates the increases or
(decreases):
Increase Percent
(Decrease)
Rental income 69,138 4.39%
Fees & Other 12,741 12.89%
Net Increase 81,879 4.90%
Property operating expenses for 2004 decreased $82,335 or 4.54%.
General & administrative decreased $81,002 or 37.50% primarily due
to decreased insurance costs. Repair and maintenance expenses
decreased from 2003 by $28,315 or 14.79% deferred maintenance
projects from the prior year. Utilities decreased $32,183 or
12.35% due to lower consumption. Payroll increased $42,228 or
14.02 due to additional personnel. Real estate taxes increased
$4,612 or 3.37% primarily due to increased tax rates. Property
management fees are paid to an affiliated entity and represents 5%
of gross operating revenues (see Note 4 to Financial Statements and
Schedule Index contained in Item 8.) The following table
illustrates the increases or (decreases):
Increase Percent
(Decrease)
Utilities (32,183) (12.35%)
General and administrative (81,002) (37.50%)
Repairs and maintenance (28,315) (14.79%)
Payroll 42,228 14.02%
Property management fee 4,094 4.90%
Depreciation and amortization 11,540 3.16%
Interest (3,309) (1.33%)
Real estate taxes 4,612 3.37%
Total operating expenses (82,335) (4.54%)
Results of Operations: 2003 VERSUS 2002
Revenue from Property Operations increased $55,909 or 3.46%.
Rental income increased $60,449 or 4.00% as compared to 2002.
Other income decreased $4,540 or 4.39% due to lower fee income from
residents. The following table illustrates the increases or
(decreases):
Increase Percent
(Decrease)
Rental income 60,449 4.00%
Fees & Other (4,540) (4.39%)
Net Increase 55,909 3.46%
Property operating expenses for 2003 increased $132,425 or 7.88%.
Utilities increased $59,269 or 29.45% due to higher natural gas
prices. General & administrative increased $36,100 or 20.07%
primarily due to increased insurance and cable television costs.
Repair and maintenance expenses increased from 2002 by $27,102 or
16.50% primarily due to various plumbing and roof repairs. Payroll
increased $13,333 or 4.63% due to additional maintenance personnel
used for the exterior building maintenance. Real estate taxes
decreased $12,642 or 8.45% primarily due to decreased accessed
valuations. Property management fees are paid to an affiliated
entity and represents 5% of gross operating revenues (see Note 4 to
Financial Statements and Schedule Index contained in Item 8.) The
following table illustrates the increases or (decreases):
Increase Percent
(Decrease)
Utilities 59,269 29.45%
General and adminstrative 36,100 20.07%
Repairs and maintenance 27,102 16.50%
Payroll 13,333 4.63%
Property management fee 2,797 3.46%
Depreciation and amortization 10,077 2.83%
Interest (3,611) (1.43%)
Real estate taxes (12,642) (8.45%)
Total operating expenses 132,425 7.88%
Liquidity and Capital Resources
While it is the General Partners primary intention to operate and
manage the existing real estate investment, the General Partner
also continually evaluates this investment in light of current
economic conditions and trends to determine if this asset should be
considered for disposal. At this time, there is no plan to dispose
of Las Brisas Apartments.
As of December 31, 2004, the Partnership had $56,866 in cash and
cash equivalents as compared to $19,115 as of December 31, 2003.
The net increase in cash of $37,751 is principally due to cash flow
from operations.
The property is encumbered by a non-recourse mortgage with a
principal balance of $3,944,478 as of December 31, 2004. The
mortgage payable bears interest at 6.18% and is payable in monthly
installments of principal and interest until December 2011 when a
lump-sum payment of approximately $3,447,000 is due. The required
principal reductions for the five years ending December 31, 2009
are $58,568, $62,292, $66,253, $70,465 and $74,945 respectively.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments (excluding balloon mortgage payments),
improvements and capital expenditures will be funded by net cash
from operations. The primary source of capital to fund the balloon
mortgage payment will be proceeds from the sale, financing or
refinancing of the Property.
The $1,176,420 in Special Limited Partner equity is the result of
previous fundings for operating deficits and other partner loans
made to the Partnership by a related entity. These loans were
reclassified to equity during 1993. The Special Limited Partner
has first right to all net operating cash flows and net proceeds
from disposals of assets to the extent of the Special Limited
Partners distribution preference. During 2004, 2003, and 2002, the
Special Limited Partner received distributions from the Partnership
totaling $90,000, $110,000, and $523,560, respectively. For
further information please see Note G to the audited financial
statements.
Item 7a - Quantitative and Qualitative Disclosure about Market Risk
Market Risk
The Partnership is exposed to interest rate changes primarily as a
result of its real estate mortgages. The Partnerships interest
rate risk management objective is to limit the impact of interest
rate changes on earnings and cash flows and to lower it's overall
borrowing costs. To achieve its objectives, the Partnership
borrows primarily at fixed rates. The Partnership does not enter
into derivative or interest rate transactions for any purpose.
The Partnerships' activities do not contain material risk due to
changes in general market conditions. The partnership invests only
in fully insured bank certificates of deposits, and mutual funds
investing in United States treasury obligations.
Risk Associated with Forward-Looking Statements Included in this
Form 10-K This Form 10-K contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created
thereby. These statements include the plans and objectives of
management for future operations, including plans and objectives
relating to capital expenditures and rehabilitation costs on the
Properties. The forward-looking statements included herein are
based on current expectations that involve numerous risks and
uncertainties. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions,
all of which are difficult or impossible to predict accurately and
many of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-
looking statements are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this Form 10-K will prove to
be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the
Company will be achieved.
AMRECORP REALTY FUND III
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS' REPORTS
December 31, 2004 and 2003
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm 1
Financial Statements
Balance Sheets as of December 31, 2004 and 2003 3
Statements of Operations for the years ended December 31, 2004,
2003 and 2002 4
Statements of Partners' Equity (Deficit) for the years ended
December 31, 2004, 2003 and 2002 5
Statements of Cash Flows for the years ended December 31, 2004,
2003 and 2002 6
Notes to Financial Statements 7
Schedule III - Real Estate and Accumulated Depreciation14
All other schedules have been omitted because they are not
applicable, not required or the information has been supplied in
the financial statements or notes thereto.
Report of Independent Registered Public Accounting Firm
To the General Partner and Limited Partners of
Amrecorp Realty Fund III
We have audited the accompanying balance sheets of Amrecorp Realty
Fund III, a Texas limited partnership (the "Partnership") as of
December 31, 2004 and 2003, and the related statements of
operations, partners' equity (deficit), and cash flows for the
years ended December 31, 2004, 2003 and 2002. 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 conducted our audits in accordance with the standards of the
public company accounting oversight board (United States). 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 presentation of the
financial statements. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Amrecorp Realty Fund III as of December 31, 2004 and 2003, and the
results of its operations and its cash flows for the years ended
December 31, 2004, 2003 and 2002 in conformity with U.S. generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. Schedule III for the
year ended December 31, 2004 is presented for the purpose of
complying with the Securities and Exchange Commission's rules and
is not a required part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion,
fairly states, in all material respects, the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
January 17, 2005
Plano, Texas
AMRECORP REALTY FUND III
BALANCE SHEETS
December 31,
ASSETS
2004 2003
Investments in real estate at cost
Land $1,000,000 $1,000,000
Buildings, improvements and
furniture and fixtures 7,345,211 7,180,636
8,345,211 8,180,636
Accumulated depreciation (5,351,122) (4,983,023)
2,994,089 3,197,613
Cash and cash equivalents 56,866 19,115
Escrow deposits 136,621 149,208
Deferred financing costs, net of accumulated 62,753 71,881
Other assets 41,560 29,787
TOTAL ASSETS 3,291,889 3,467,604
LIABILITIES AND PARTNERS' EQUITY
Mortgage payable 3,944,478 3,999,545
Accrued interest payable 20,314 20,598
Accounts payable 38,080 95,577
Real estate taxes payable 140,629 136,892
Due to affiliates 1,220 1,338
Security deposits 57,644 57,788
TOTAL LIABILITIES 4,205,365 4,311,738
PARTNERS' EQUITY (910,476) (844,134)
TOTAL LIABILITIES AND PARTNERS' EQUITY $3,291,889 $3,467,604
AMRECORP REALTY FUND III
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
2004 2003 2002
INCOME
Rentals $1,642,672 $1,573,534 $1,513,085
Other 111,588 98,847 103,387
Total income 1,754,260 1,672,381 1,616,472
OPERATING EXPENSES
Depreciation and amortization 377,227 365,687 355,610
Payroll 343,383 301,155 287,822
Interest 245,346 248,655 252,266
Utilities 228,326 260,509 201,240
General and administrative 135,004 216,006 179,906
Repairs and maintenance 163,075 191,390 164,288
Real estate taxes 141,504 136,892 149,534
Property management fee to affiliate 87,713 83,619 80,822
Administrative service fee to affiliate 9,024 9,024 9,024
Total operating expenses 1,730,602 1,812,937 1,680,512
NET INCOME (LOSS) $23,658 $(140,556) $(64,040)
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT - BASIC $9.83 $(58.41) $(26.62)
LIMITED PARTNERSHIP UNITS
OUTSTANDING - BASIC 2,382 2,382 2,382
AMRECORP REALTY FUND III
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended December 31, 2004, 2003 and 2002
Special
General Limited Limited
Partner Partners Partners Total
Balance, January 1, 2002 (136,991) 254,823 (123,810) (5,978)
Reclassification to correct
allocation of Distributions
made to Special Limited
Partners for distribution
preference (15,684) 1,568,437 (1,552,753) ---
Distributions --- (523,560) --- (523,560)
Reallocation for payment
of Special Limited Partner
distributions for
distribution preference (368) 36,817 (36,449) ---
Net loss (640) --- (63,400) (64,040)
Balance, December 31, 2002 (153,683) 1,336,517 (1,776,412) (593,578)
Distributions --- (110,000) --- (110,000)
Reallocation for payment
of Special Limited Partner
distributions for
distribution preference (252) 25,218 (24,966) ---
Net income (1,406) --- (139,150) (140,556)
Balance, December 31, 2003 $(155,341) $1,251,735 $(1,940,528) $(844,134)
Distributions --- (90,000) --- (90,000)
Reallocation for payment of
Special
Limited Partner distributions for
distribution preference (147) 14,685 (14,538) ---
Net income 237 --- 23,421 23,658
Balance, December 31, 2004 $(155,251) $1,176,420 $(1,931,645) $(910,476)
AMRECORP REALTY FUND III
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2004 2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $23,658 $(140,556) $(64,040)
Adjustments to reconcile net
income (loss) to net cash
provided by operations:
Depreciation and amortization 377,227 365,687 355,610
Changes in assets and liabilities:
Escrow deposits 12,587 (1,219) (147,989)
Other assets (11,773) 33,554 (12,875)
Accrued interest payable (284) (266) (251)
Security deposits (144) 2,243 527
Accounts payable (57,497) 44,961 11,871
Due to affiliates (118) 1,075 (122,608)
Real estate taxes payable 3,737 (12,642) 149,297
Net cash provided by operating
activities 347,393 292,837 169,542
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate (164,575) (136,055) (188,465)
Capital replacement reserve --- 284 55,340
Net cash used for investing
activities (164,575) (135,771) (133,125)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on mortgages and notes
payable (55,067) (51,775) (48,680)
Proceeds from refinancing --- --- ---
Deferred financing costs --- --- ---
Liquidity reserve --- --- ---
Distributions (90,000) (110,000) (523,560)
Net cash provided by
(used for) financing activities (145,067) (161,775) (572,240)
Net increase (decrease) in cash
and cash equivalents 37,751 (4,709) (535,823)
Cash and cash equivalents at
beginning of period 19,115 23,824 559,647
Cash and cash equivalents at
end of period $56,866 $19,115 $23,824
Supplemental disclosure of cash
flow information:
Cash paid during the year for
interest $245,630 $248,921 $252,017
Noncash financing activity :
Refinancing of mortgage
payable $ --- $ --- $ ---
AMRECORP REALTY FUND III
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Amrecorp Realty Fund III (the "Partnership"), a Texas
limited partnership, was formed on August 30, 1985, under
the laws of the state of Texas, for the purpose of
acquiring, maintaining, developing, operating, and selling
buildings and improvements. The Partnership owns and
operates rental apartments in Abilene, Texas. The
Partnership will be terminated by December 31, 2015,
although this date can be extended if certain events occur.
LBAL, Inc., a Texas corporation wholly owned by Mr. Robert
J. Werra, is the general partner. Mr. Werra is the first
special limited partner and third special limited partner.
The second special limited partner is an affiliate of the
general partner.
An aggregate of 25,000 limited partner units at $1,000 per
unit are authorized, of which 2,382 units were outstanding
for each of the three years ended December 31, 2004, 2003
and 2002. Under the terms of the offering, no additional
units will be offered. Effective November 1, 1993, the
partnership agreement was amended to establish a first,
second and third special limited partner status as referred
to above.
Allocation of Net Income (Loss) and Cash
All distributions of net operating cash flow and net
proceeds of the Partnership shall be distributed first to
special limited partners to satisfy the special limited
partner distribution preference, then to repay any
unreturned portion of their contribution. The total
distribution preference due to the special limited partners
is approximately $920,000 as of December 31, 2004. Any
additional available cash will then be distributed in
accordance with the partnership agreement. During 2004,
2003 and 2002, distributions of $ 90,000, $110,000, and
$523,560, respectively, were made to the special limited
partners in accordance with this agreement.
Net operating income and loss are allocated 1% to general
partners and 99% to limited partners. Net operating cash
flow, as defined in the partnership agreement, shall be
distributed to the limited and general partners first to the
limited partners in an amount equal to a variable
distribution preference on capital contributions for the
current year and then to the extent the preference has not
been satisfied for all preceding years, and, thereafter, 10%
to the general partner and 90% to the limited partners.
AMRECORP REALTY FUND III
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Net income from the sale of property is allocated first, to
the extent there are cumulative net losses, 1% to the
general partner and 99% to the limited partners; second, to
the limited partners in an amount equal to their
distribution preference as determined on the date of the
partners' entry into the Partnership; and, thereafter, 15%
to the general partner and 85% to the limited partners.
Cash proceeds from the sale of property or refinancing are
allocated first to the limited partners to the extent of
their capital contributions and distribution preference as
determined on the date of the partners' entry into the
Partnership; and, thereafter, 15% to the general partner and
85% to the limited partners.
Basis of Accounting
The Partnership maintains its books on the basis of
accounting used for federal income tax reporting purposes.
Memorandum entries have been made to present the
accompanying financial statements in accordance with U.S.
generally accepted accounting principles.
Investments in Real Estate and Depreciation
Buildings, improvements, and furniture and fixtures are
recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the assets ranging
from 5 to 27.5 years.
Income Taxes
No provision for income taxes has been made since the
partners report their respective share of the results of
operations on their individual income tax return.
Deferred Financing Costs
Costs incurred to obtain mortgage financing are being
amortized over the life of the mortgage using the straight-
line method.
Revenue Recognition
The Partnership has leased substantially all of its rental
apartments under cancelable leases for periods generally
less than one year. Rental revenue is recognized on a
monthly basis as earned.
AMRECORP REALTY FUND III
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Syndication Costs
Costs or fees incurred to raise capital for the Partnership
are netted against the respective partners' equity accounts.
Cash and Cash Equivalents
The Partnership considers all highly liquid instruments with
a maturity of three months or less to be cash equivalents.
Long-Lived Assets
In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting For the Impairment
of Long-Lived Assets and For Long-Lived Assets to be
Disposed Of", the Partnership records impairment losses on
long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the
assets' carrying amount. SFAS No. 121 also addresses the
accounting for long-lived assets that are expected to be
disposed of. Based on current estimates, management does
not believe impairment of operating properties is present.
Computation of Earnings Per Unit
The Partnership has adopted Statement of Financial
Accounting Standards ("SFAS") No.128, "Earnings per Share".
Basic earnings per unit is computed by dividing net income
(loss) attributable to the limited partners' interests by
the weighted average number of units outstanding. Earnings
per unit assuming dilution would be computed by dividing net
income (loss) attributable to the limited partners'
interests by the weighted average number of units and
equivalent units outstanding. The Partnership has no
equivalent units outstanding for any period presented.
Segment Information
The Partnership is in one business segment, the real estate
investments business, and follows the requirements of FAS
131, "Disclosures about Segments of an Enterprise and
Related Information."
AMRECORP REALTY FUND III
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Concentration of Credit Risk
Financial instruments which potentially subject the
Partnership to concentrations of credit risk consist
primarily of cash. The Partnership places its cash with
various financial institutions. The Partnership's exposure
to loss should any of these financial institutions fail
would be limited to any amount in excess of the amount
insured by the Federal Deposit Insurance Corporation and
Securities Investor Protection Corporation. Management does
not believe significant credit risk exists at December 31,
2004.
Use of Estimates
The preparation of financial statements in conformity with
U.S. 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 that reporting period. Actual results
could differ from those estimates.
Environmental Remediation Costs
The Partnership accrues for losses associated with
environmental remediation obligations when such losses are
probable and reasonably estimable. Accruals for estimated
losses from environmental remediation obligations generally
are recognized no later than completion of the remedial
feasibility study. Such accruals are adjusted as further
information develops or circumstances change. Costs of
future expenditures for environmental remediation
obligations are not discounted to their present value.
Recoveries of environmental remediation costs from other
parties are recorded as assets when their receipt is deemed
probable. Project management is not aware of any
environmental remediation obligations that would materially
affect the operations, financial position or cash flows of
the Project.
Comprehensive Income
Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income, (SFAS 130), requires that
total comprehensive income be reported in the financial
statements. For the years ended December 31, 2004, 2003 and
2002, the Partnership's comprehensive income (loss) was
equal to its net income (loss) and the Partnership does not
have income meeting the definition of other comprehensive
income.
AMRECORP REALTY FUND III
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
NOTE B - MORTGAGE PAYABLE
The mortgage payable of $3,944,478 at December 31, 2004
bears interest at a rate of 6.18% and is payable in monthly
installments of principal and interest of $25,058 through
December 2011, at which time a lump sum payment of
approximately $3,447,000 is due. This mortgage note is
secured by real estate with a net book value of $2,994,090.
At December 31, 2004, required principal payments due under
the stated terms of the Partnership's mortgage note payable
are as follows:
2005 58,568
2006 62,292
2007 66,253
2008 70,465
2009 74,945
Thereafter 3,611,955
$3,944,478
NOTE C - RELATED PARTY TRANSACTIONS
The Partnership agreement specifies that certain fees be
paid to the general partner or his designee. An affiliate
of the general partner receives a property management fee
that is approximately 4% of the Partnership's gross
receipts. In addition, a Partnership fee equal to 1% of
gross revenues from operations is to be paid from "Excess
Property Income", as defined in the partnership agreement.
2004 2003 2002
Property management fee $70,170 $66,895 $64,659
Partnership fee 17,543 16,724 16,163
Administrative service fees paid to an affiliate of the
general partner were $9,024, $9,024 and $9,024 for each of
the years ended December 31, 2004, 2003 and 2002,
respectively.
Resulting from the above transactions, amounts due an
affiliate of the general partner as of December 31, 2004,
and 2003, totaled $1,220 and $1,338, respectively.
AMRECORP REALTY FUND III
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
NOTE D - ACCUMULATED AMORTIZATION
At December 31, 2004, amortization expense for deferred
financing costs over the next five years is as follows:
2005 9,128
2006 9,128
2007 9,128
2008 9,128
2009 9,128
Thereafter 17,113
$62,753
NOTE E - COMMITMENTS
The Partnership will pay a real estate commission to the
general partner or his affiliates in an amount not exceeding
the lessor of 50% of the amounts customarily charged by
others rendering similar services or 3% of the gross sales
price of a property sold by the Partnership.
NOTE F - RECONCILIATION OF BOOK TO TAX LOSS (UNAUDITED)
If the accompanying financial statements had been prepared
in accordance with the accrual income tax basis of
accounting rather than U.S. generally accepted accounting
principals ("GAAP"), the excess of revenues over expenses
for 2003 would have been as follows:
Net income (loss) per accompanying
financial statements $23,658
Add - book basis depreciation using
straight-line method 368,099
Add - other temporary timing difference
19,998
Deduct - income tax basis depreciation
expense using ACRS method
114,464
Excess of revenues over expenses,
accrual income tax basis $297,291
NOTE G - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value amounts have been
determined using available market information or other
appropriate valuation methodologies that require
considerable judgement in interpreting market data and
developing estimates. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that
the Partnership could realize in a current market exchange.
The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated
fair value amounts.
AMRECORP REALTY FUND III
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
NOTE G - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
The fair value of financial instruments that are short-term
or reprice frequently and have a history of negligible
credit losses is considered to approximate their carrying
value. These include cash and cash equivalents, accounts
payable and other liabilities.
Management has reviewed the carrying values of its mortgages
payable and notes payable to related parties in connection
with interest rates currently available to the Partnership
for borrowings with similar characteristics and maturities
and has determined that their estimated fair value would
approximate their carrying value as of December 31, 2004 and
2003.
The fair value information presented herein is based on
pertinent information available to management. Although
management is not aware of any factors that would
significantly affect the estimated fair value amounts, such
amounts have not been comprehensively revalued for purposes
of these financial statements since that date, and
therefore, current estimates of fair value may differ
significantly from the amounts presented herein.
NOTE G - RECLASSIFICATION
The Statement of Partners' Equity for the year ending
December 31, 2002 includes a reclassification to correct an
error in the original allocation of distributions made to
the special limited partners. In prior years, distributions
were allocated as return of special limited partners'
contributions when, per the terms of the second amendment to
the limited partnership agreement, distributions are to be
allocated first to the preferred return, as defined in the
amendment, then to the return of the contribution of the
first special limited partner then in the same manner for
the second and third special limited partners. The
reclassification reallocates the capital accounts to their
respective balances had the distribution been properly
allocated when made. Total partners' equity is not affected
by the reclassification.
AMRECORP REALTY FUND III
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2004
Initial Cost
Cost to Partnership
Description Encumberances Land Buildings Total Cost
And Subsequent to
Improvements Acquisition
Twenty-eight
two-story apartment
buildings of concrete
block construction
with brick veneer,
stucco and wood siding
exterior, and
composition roofs
located in Abilene,
Texas (b) $1,000,000 $5,721,811 $1,623,400
Gross Amounts at Which
Carried at Close of Year
Buildings
And Accumulated
Description Land Improvements Total Depreciation
(c)(d) (c)
Twenty-eight
two-story apartment
buildings of concrete
block construction
with brick veneer,
stucco and wood siding
exterior, and
composition roofs
located in Abilene,
Texas $1,000,000 $7,345,211 $8,345,211 $5,351,122
Life on Which
Date of Date Depreciation
Description Construction Acquired Is Computed
Twenty-eight
two-story apartment
buildings of concrete
block construction
with brick veneer,
stucco and wood siding
exterior, and
composition roofs
located in Abilene, Complete at
Texas Date Acquired 7/31/86 (a)
See notes to Schedule III.
AMRECORP REALTY FUND III
Schedule III - Real Estate and Accumulated Depreciation (Continued)
December 31, 2004
NOTES TO SCHEDULE III:
(a) See Note A to financial statements outlining depreciation methods
and lives.
(b) See description of mortgages and notes payable in Note B to the
financial statements.
(c) The reconciliation of investments in real estate and accumulated
depreciation for the years ended December 31, 2004, 2003 and 2002 is
as follows:
Investments in Accumulated
Real Estate Depreciation
Balance, January 1, 2002
7,856,116 4,279,982
Acquisitions 188,465 ---
Depreciation expense --- 346,482
Balance, December 31, 2002 $8,044,581 $4,626,464
Acquisitions 136,055 ---
Depreciation expense --- 356,559
Balance, December 31, 2003 8,180,636 4,983,023
Acquisitions 164,575 ---
Depreciation expense --- 368,099
Balance, December 31, 2004 8,345,211 5,351,122
(d) Aggregate cost for federal income tax purposes is $6,800,466.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
On November 6, 1998, an 8-K was filed to disclose the change in
auditors. No financial statements were issued in conjunction with this
filing. The Registrant has not been involved in any disagreements on
accounting and financial disclosure.
Item 9a. Controls and Procedures
Based on their most recent evaluation, which was completed within 90
days of the filing of this Form 10-K, our Principal Financial Officer
and Principal Executive Officer, believe our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) are
effective. There were not any significant changes in internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, and there has not been any
corrective action with regard to significant deficiencies and material
weaknesses.
PART III
Item 10. Directors and Executive Officer of the Partnership
The Partnership itself has no officers or directors. LBAL, Inc.,
a Texas Corporation, which is wholly owned by Robert J. Werra, is the
General Partner of the Partnership.
Robert J. Werra, 65, joined Loewi & Co., Incorporated ("Loewi")
in 1967 as a Registered Representative. In 1971, he formed the Loewi
real estate department, and was responsible for its first sales of
privately placed real estate programs. Loewi Realty was incorporated
in 1974, as a wholly owned subsidiary of Loewi & Co., with Mr. Werra
as President. In 1980, Mr. Werra, along with three other individuals,
formed Amrecorp Inc. to purchase the stock of Loewi Real Estate Inc.,
and Loewi Realty. In 1991 Univesco, Inc. became the management agent
for the Partnership. Limited Partners have no right to participate in
management of Partnership.
Item 11. Management Remuneration and Transactions
As stated above, the Partnership has no officers or directors.
Pursuant to the terms of the Limited Partnership Agreement, the
General Partner receives 1% of Partnership income and loss and up to
15% of Net Proceeds received from sale or refinancing of Partnership
properties (after return of Limited Partner capital contributions and
payment of a 6% Current Distribution Preference thereon).
Univesco, Inc., an affiliate of the General Partner, is entitled
to receive a management fee with respect to the properties actually
managed of 5% of actual gross receipts from a property or an amount
competitive in price or terms for comparable services available from a
non-affiliated persons. The Partnership is also permitted to engage
in various transactions involving affiliates of the General Partner as
described under the caption "Compensation and Fees" at pages 6-8,
"Management" at pages 18-20 and "Allocation of Net Income and Losses
and Cash Distributions" at pages 49-51 of the Prospectus as
supplemented, incorporated in the Form S-11 Registration Statement
which was filed with the Securities and Exchange Commission and made
effective on November 26, 1985.
For the Fiscal year ended December 31, 2004, 2003, and 2002,
property management fees earned totaled $87,713, $83,619, and $80,822,
respectively. An additional administration service fee was paid to
the general partner of $9,024, $9,024, and 9,024 for the years ended
December 31, 2004, 2003, and 2002, respectively.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
(a)
Title of Class Name and Address Amount and Nature Percent of
Limited William E. Kreger 300 units 12.59%
Partnership 3301 Biddle Ave. #1101
Interest Wyandette, MI 48192
Juanita L. Werra 127 units 5.33%
1409 Tree Farm Dr
Plano, TX 75093
Monty L. Parker 127 units 5.33%
9144 North Silver Brook Lane
Brown Deer, WI 53223
(b) By virtue of its organization as a limited partnership, the
Partnership has no officers or directors. Persons performing
functions similar to those of officers and directors of the
Partnership, beneficially own, the following units of the Partnership
as of March 1, 2002.
Title of Name and Address Amount and Nature Percent of
Class of Beneficial Owner of Beneficial Ownership Class
Limited Robert J. Werra 10 units .42%
Partnership 2800 N Dallas Pkwy #100
Interest Plano, TX 75093
(c) There is no arrangement, known to the Partnership, which may, at
a subsequent date, result in a change in control of the Partnership.
Item 13. Certain Relations and Related Transactions
As stated in item 11, the Partnership has no officers or
directors. Pursuant to the terms of the Limited Partnership
Agreement, the general partner receives 1% of partnership income and
loss and up to 15%of Net Proceeds received from the sale or
refinancing of Partnership Properties (after return of Limited Partner
capital contributions and payment of a Current Distribution Preference
thereon).
Univesco, Inc. (an affiliate of the General Partner), is entitled
to receive a management fee with respect to the Properties. For
residential Properties (including all leasing and releasing fees and
fees for leasing-related services), the lesser of 5% of gross receipts
of the Partnership from such Properties or an amount which is
competitive in price and terms with other non-affiliated persons
rendering comparable services which could reasonably be made available
to the Partnership. The Partnership is also permitted to engage in
various transactions involving affiliates of the general partner as
described under the caption "Compensation and Fees" at pages 6-8,
"Management" at pages 18-20 and "Allocation of Net Income and Losses
and Cash Distributions" at pages 49-51 of the definitive Prospectus,
incorporated in the form S-11 Registration Statement which was filed
with the Securities and Exchange Commission and made effective of
November 26, 1985 and incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The following table sets forth the aggregate fees for professional
services rendered to the Partnership for the years 2004 and 2003 by
the Partnership principal accounting firm, Farmer, Fuqua, & Huff, P.C.
Type of Fees 2004 2003
Audit Fees $11,500 $8,500
Audit related fees --- ---
Tax fees --- ---
All other fees --- ---
PART IV
Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 10-K
(A) 1. Financial Statements
The financial statements of Amrecorp Realty Fund III
are included in Part II, Item 8.
2. Financial Statements and Schedules
All schedules for which provision is made is the
applicable accounting regulations of the Securities and
Exchange Commission are not required under the related
instructions, are inapplicable, or the information is
presented in the financial statements or related notes,
and therefore have been omitted.
3. Exhibits
None.
(B) Reports on Form 8-K for the quarter ended December 31, 2004.
None.
(C) Exhibits
3. Certificate of Limited Partnership, incorporated by
reference to Registration Statement No. 33-00152
effective November 26, 1985
4. Limited Partnership Agreement, incorporated by reference to
Registration Statement N. 33-00152 effective November 26, 1985.
9. Not Applicable.
10. None.
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
14. Code of Ethics for Senior Financial Officers
18. Not Applicable.
19. Not Applicable.
22. Not Applicable.
23. Not Applicable.
24. Not Applicable.
25. Power of Attorney, incorporated by reference to Registration
Statement No. 33-00152 effective November 26, 1985.
28. None.
31. Certification
32. Officers' Section 1350 Certification
(d) Financial Statement Schedules excluded from the annual report
None
EXHIBIT 14
Code of Ethics for Senior Financial Officers
The principal executive officer, president, principal financial
officer, chief financial officer, principal accounting officer and
controller (all, the company's "Senior Financial Officers") hold an
important and elevated role in corporate governance, vested with both
the responsibility and authority to protect, balance, and preserve the
interests of all of the enterprise stakeholders, including
shareholders, customers, employees, suppliers, and citizens of the
communities in which business is conducted. Senior Financial Officers
fulfill this responsibility by prescribing and enforcing the policies
and procedures employed in the operation of the enterprise's financial
organization and by acting in good faith and in the company's best
interests in accordance with the company's Code of Business Conduct
and Ethics.
1 Honest and Ethical Conduct
Senior Financial Officers will exhibit and promote honest and
ethical conduct through the establishment and operation of policies
and procedures that:
Encourage and reward professional integrity in all
aspects of the financial organization, by eliminating
inhibitions and barriers to responsible behavior, such
as coercion, fear of reprisal, or alienation from the
financial organization or the enterprise itself.
Promote the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships.
Provide a mechanism for members of the finance
organization to inform senior Management of deviations
in the practice from policies and procedures governing
honest and ethical behavior.
Respect the confidentiality of information acquired in
the course of work, except when authorized or otherwise
legally obligated to disclose such information, and
restrict the use of confidential information acquired
in the course of work for personal advantage.
Demonstrate their personal support for such policies
and procedures through periodic communication
reinforcing these ethical standards throughout the
finance organization.
2 Financial Records and Periodic Reports
Senior Financial Officers will establish and manage the
enterprise transaction and reporting systems and procedures
to provide that:
Business transactions are properly authorized and
accurately and timely recorded on the company's books
and records in accordance with Generally Accepted
Accounting Principles ("GAAP") and established company
financial policy.
No false or artificial statements or entries for any
purpose are made in the company's books and records,
financial statements and related communications.
The retention or proper disposal of company records
shall be in accordance with established records
retention policies and applicable legal and regulatory
requirements.
Periodic financial communications and reports will
include full, fair, accurate, timely and understandable
disclosure.
3 Compliance with Applicable Laws, Rules and Regulations.
Senior Financial Officers will establish and maintain
mechanisms to:
Educate members of the finance organization about any
federal, state or local statute, regulation or
administrative procedure that affects the operation of
the finance organization and the enterprise generally.
Monitor the compliance of the finance organization with
any applicable federal, state or local statute,
regulation or administrative rule.
Identify, report and correct in a swift and certain
manner, any detected deviations from applicable
federal, state or local statute or regulation.
4 Reporting of Non-Compliance
Senior Financial Officers will promptly bring to the attention of
the Audit Committee:
Material information that affects the disclosures made
by the partnership in its public filings.
Information concerning significant deficiencies in the
design or operation of internal controls that could
adversely affect the partnership's ability to record,
process, summarize and report financial data.
Senior Financial Officers will promptly bring to the attention of the
General Counsel and to the Audit Committee:
Fraud, whether or not material, that involves management or
other employees who have a significant role in the
company's financial reporting, disclosures or internal
controls.
Information concerning a violation of this Code or the
Partnership's Code of Business and Ethics Conduct,
including any actual or apparent conflicts of interest
between personal and professional relationships, involving
management or other employees who have a significant role
in the company's financial reporting, disclosures or
internal controls.
Evidence of a material violation by the partnership or its
employees or agents of applicable laws, rules or
regulations.
5 Disciplinary Action
In the event of violation by Senior Financial Officers of
this Code or the partnership's Code of Business Conduct and
Ethics, the Audit Committee of the Board of Directors shall
recommend appropriate disciplinary and remedial actions.
Exhibit 31
CERTIFICATIONS
I, Robert J. Werra, certify that:
1 . I have reviewed this annual report on Form 10-K of Amrecorp
Realty Fund III;
2 . Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report;
3 . Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this
annual report;
4 . The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13-15(e) and 15d-15e) and have internal
control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f) for the registrant and have:
(a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this annual report is being prepared;
(b) designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with generally accepted
accounting principals; and
(c) evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the controls and
procedures as of the end of the period covered by this report
based on such evaluation; and
(d) disclosed in this report any change in the
registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter that
has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
(e) presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies and material weaknesses
in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize and report
financial information; and
(b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls.
Dated: March 30, 2005.
/s/ Robert J. Werra
Exhibit 32
Officers' Section 1350 Certifications
The undersigned officer of First Equity Properties, Inc., a Texas
limited partnership (the "Partnership"), hereby certifies that (i) the
Partnership's Annual Report on Form 10-K for the year ended December 31,
2004 fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934, and (ii) the information contained in the
Partnership's Annual Report on Form 10-K for the year ended December 31,
2004 fairly presents, in all material respects, the financial condition
and results of operations of the Partnership, at and for the periods
indicated.
Dated: March 30, 2005.
/s/ Robert J. Werra