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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the quarterly period ended March 31, 2003
-----------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT of 1934
For the transition period from _________________________ to ____________________
Commission file number
0-16850
---------------------------------------
CNL Income Fund III, Ltd.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2809460
- -------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 South Orange Avenue
Orlando, Florida 32801
- -------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number
(including area code) (407) 540-2000
-----------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act): Yes ____ No X
CONTENTS
Page
Part I.
Item 1. Financial Statements:
Condensed Balance Sheets 1
Condensed Statements of Income 2
Condensed Statements of Partners' Capital 3
Condensed Statements of Cash Flows 4
Notes to Condensed Financial Statements 5-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 10
Item 4. Controls and Procedures 10
Part II.
Other Information 11-12
CNL INCOME FUND III, LTD.
(A Florida Limited Partnership)
CONDENSED BALANCE SHEETS
March 31, December 31,
2003 2002
------------------- -------------------
ASSETS
Real estate properties with operating leases, net $ 7,310,285 $ 7,362,460
Real estate held for sale -- 368,737
Investment in joint ventures 2,081,549 2,084,178
Cash and cash equivalents 1,250,294 1,994,246
Receivables 676 10,195
Accrued rental income 101,489 95,861
Other assets 37,322 32,861
------------------- -------------------
$ 10,781,615 $ 11,948,538
=================== ===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 13,975 $ 21,199
Real estate taxes payable 14,399 11,892
Distributions payable 701,563 1,357,500
Due to related parties 194,040 243,170
Rents paid in advance 60,814 35,424
------------------- -------------------
Total liabilities 984,791 1,669,185
Minority interest 123,947 124,632
Partners' capital 9,672,877 10,154,721
------------------- -------------------
$ 10,781,615 $ 11,948,538
=================== ===================
See accompanying notes to condensed financial statements.
CNL INCOME FUND III, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF INCOME
Quarter Ended
March 31,
2003 2002
--------------- ---------------
Revenues:
Rental income from operating leases $ 257,652 $ 269,348
Earned income from direct financing leases -- 8,976
Contingent rental income 23,363 27,020
Interest and other income 593 5,891
--------------- ---------------
281,608 311,235
--------------- ---------------
Expenses:
General operating and administrative 53,581 60,802
Property expenses 963 1,010
State and other taxes 2,313 21,030
Depreciation 52,176 52,176
--------------- ---------------
109,033 135,018
--------------- ---------------
Income Before Minority Interest in Income of
Consolidated Joint Venture and Equity in Earnings
of Unconsolidated Joint Ventures 172,575 176,217
Minority Interest in Income of Consolidated
Joint Venture (4,359 ) (4,203 )
Equity in Earnings of Unconsolidated Joint Ventures 53,401 50,630
--------------- ---------------
Income from Continuing Operations 221,617 222,644
--------------- ---------------
Discontinued Operations:
Loss from discontinued operations (4,123 ) (26,638 )
Gain on disposal of discontinued operations 2,225 --
--------------- ---------------
(1,898 ) (26,638 )
--------------- ---------------
Net Income $ 219,719 $ 196,006
=============== ===============
Income (Loss) per Limited Partner Unit:
Continuing operations $ 4.43 $ 4.45
Discontinued operations (0.04 ) (0.53 )
--------------- ---------------
$ 4.39 $ 3.92
=============== ===============
Weighted Average Number of Limited Partner
Units Outstanding 50,000 50,000
=============== ===============
See accompanying notes to condensed financial statements.
CNL INCOME FUND III, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF PARTNERS' CAPITAL
Quarter Ended Year Ended
March 31, December 31,
2003 2002
------------------- ------------------
General partners:
Beginning balance $ 371,371 $ 371,371
Net income -- --
------------------- ------------------
371,371 371,371
------------------- ------------------
Limited partners:
Beginning balance 9,783,350 12,586,051
Net income 219,719 279,799
Distributions ($14.03 and $61.65 per
limited partner unit, respectively) (701,563 ) (3,082,500 )
------------------- ------------------
9,301,506 9,783,350
------------------- ------------------
Total partners' capital $ 9,672,877 $ 10,154,721
=================== ==================
CNL INCOME FUND III, LTD.
(A Florida Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
Quarter Ended
March 31,
2003 2002
---------------- --------------
Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities $ 235,256 $ 348,793
---------------- --------------
Cash Flows from Investing Activities:
Proceeds from sale of assets 383,336 --
Liquidating distribution from joint venture -- 106,521
---------------- --------------
Net cash provided by investing activities 383,336 106,521
---------------- --------------
Cash Flows from Financing Activities:
Distributions to limited partners (1,357,500 ) (437,500 )
Distributions to holders of minority interests (5,044 ) (5,049 )
---------------- --------------
Net cash used in financing activities (1,362,544 ) (442,549 )
---------------- --------------
Net Increase (Decrease) in Cash and Cash Equivalents (743,952 ) 12,765
Cash and Cash Equivalents at Beginning of Quarter 1,994,246 1,242,931
---------------- --------------
Cash and Cash Equivalents at End of Quarter $ 1,250,294 $ 1,255,696
================ ==============
Supplemental Schedule of Non-Cash Investing and Financing
Activities:
Deferred real estate disposition fee incurred and unpaid
at end of quarter $ 12,375 $ --
================ ==============
Distributions declared and unpaid at end of quarter $ 701,563 $ 975,000
================ ==============
See accompanying notes to condensed financial statements.
CNL INCOME FUND III, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 2003 and 2002
1. Basis of Presentation:
---------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and note disclosures required by
generally accepted accounting principles. The financial statements
reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of the general partners, necessary to a fair
statement of the results for the interim periods presented. Operating
results for the quarter ended March 31, 2003 may not be indicative of
the results that may be expected for the year ending December 31, 2003.
Amounts as of December 31, 2002, included in the financial statements
have been derived from audited financial statements as of that date.
These unaudited financial statements should be read in conjunction with
the financial statements and notes thereto included in Form 10-K of CNL
Income Fund III, Ltd. (the "Partnership") for the year ended December
31, 2002.
The Partnership accounts for its 69.07% interest in Tuscawilla Joint
Venture using the consolidation method. Minority interests represents
the minority joint venture partners' proportionate share of the equity
in the Partnership's consolidated joint venture. All significant
intercompany accounts and transactions have been eliminated.
In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" to expand upon and
strengthen existing accounting guidance that addresses when a company
should include the assets, liabilities and activities of another entity
in its financial statements. To improve financial reporting by
companies involved with variable interest entities (more commonly
referred to as special-purpose entities or off-balance sheet
structures), FIN 46 requires that a variable interest entity be
consolidated by a company if that company is subject to a majority risk
of loss from the variable interest entity's activities or entitled to
receive a majority of the entity's residual returns or both. Prior to
FIN 46, a company generally included another entity in its consolidated
financial statements only if it controlled the entity through voting
interests. Consolidation of variable interest entities will provide
more complete information about the resources, obligations, risks and
opportunities of the consolidated company. The consolidation
requirements of FIN 46 apply immediately to variable interest entities
created after January 31, 2003, and to older entities, in the first
fiscal year or interim period beginning after June 15, 2003. The
general partners believe adoption of this standard may result in either
consolidation or additional disclosure requirements with respect to the
Partnership's unconsolidated joint ventures or properties held with
affiliates of the general partners as tenants-in-common, which are
currently accounted for under the equity method. However, such
consolidation is not expected to significantly impact the Partnership's
results of operations.
2. Reclassification:
----------------
Certain items in the prior year's financial statements have been
reclassified to conform to 2003 presentation. These reclassifications
had no effect on total partners' capital or net income.
CNL INCOME FUND III, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 2003 and 2002
3. Discontinued Operations:
-----------------------
During 2002, the Partnership identified for sale three properties that
were classified as Discontinued Operations in the accompanying
financial statements. The Partnership sold two of the three properties
during 2002. In February 2003, the Partnership sold the third property,
and recorded a gain on disposal of assets of approximately $2,200
during the quarter ended March 31, 2003. The Partnership had recorded
provisions for write-down of assets in previous years relating to this
property.
The operating results of the discontinued operations for the above
properties are as follows:
Quarter Ended March 31,
2003 2002
------------------ ---------------
Rental revenues $ -- $ 41,974
Expenses (4,123 ) (22,256 )
Provision for write-down of assets -- (46,356 )
Gain on disposal of assets 2,225 --
------------------ ---------------
Loss from discontinued operations $ (1,898) $ (26,638 )
================== ===============
4. Related Party Transactions:
--------------------------
An affiliate of the Partnership is entitled to receive a deferred,
subordinated real estate disposition fee, payable upon the sale of one
or more properties, based on the lesser of one-half of a competitive
real estate commission or three percent of the sales price if the
Advisor provides a substantial amount of services in connection with
the sales. However, if the net sales proceeds are reinvested in a
replacement property, no such real estate disposition fees will be
incurred until such replacement property is sold and the net sales
proceeds are distributed. The payment of the real estate disposition
fee is subordinated to the receipt by the limited partners of their
aggregate, cumulative 10% Preferred Return, plus their adjusted capital
contributions. During the quarter ended March 31, 2003, the Partnership
incurred a deferred, subordinated real estate disposition fee of
$12,375 as a result of the Partnership's sale of the property in
Fayetteville, North Carolina.
5. Concentration of Credit Risk:
-----------------------------
The following schedule presents total rental revenues from individual
lessees, each representing more than 10% of the Partnership's total
rental revenues (including the Partnership's share of rental revenues
from joint ventures and the properties held as tenants-in-common with
affiliates of the general partners) for each of the quarters ended
March 31:
2003 2002
--------------- ---------------
IHOP Properties, Inc. $ 70,147 $ 69,922
2 BAM, Ltd. 34,663 N/A
Golden Corral Corp. N/A 42,433
CNL INCOME FUND III, LTD.
(A Florida Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
Quarters Ended March 31, 2003 and 2002
5. Concentration of Credit Risk - Continued:
-----------------------------------------
In addition, the following schedule presents total rental revenues from
individual restaurant chains, each representing more than 10% of the
Partnership's total rental revenues (including the Partnership's share
of rental revenues from joint ventures and the properties held as
tenants-in-common with affiliates of the general partners) for each of
the quarter ended March 31:
2003 2002
-------------- -------------
IHOP $ 70,147 $ 69,922
KFC 64,303 70,971
Pizza Hut 50,036 48,582
Taco Bell 44,724 43,167
Golden Corral Family
Steakhouse Restaurants N/A 69,927
The information denoted by N/A indicates that for each period
presented, the tenants or the chains did not represent more than 10% of
the Partnership's total rental revenues.
Although the Partnership's properties have some geographical diversity
in the United States and the Partnership's lessees operate a variety of
restaurant concepts, default by any one of these lessees or restaurant
chains will significantly impact the results of operations of the
Partnership if the Partnership is not able to re-lease the properties
in a timely manner.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CNL Income Fund III, Ltd. (the "Partnership") is a Florida limited
partnership that was organized on June 1, 1987 to acquire for cash, either
directly or through joint venture arrangements, both newly constructed and
existing restaurant properties, as well as land upon which restaurants were to
be constructed (the "Properties"), which are leased primarily to operators of
selected national and regional fast-food restaurant chains. The leases generally
are triple-net leases, with the lessees responsible for all repairs and
maintenance, property taxes, insurance and utilities. As of March 31, 2002, the
Partnership owned 18 Properties directly and six Properties indirectly through
joint venture or tenancy in common arrangements. As of March 31, 2003, the
Partnership owned 14 Properties directly and six Properties indirectly through
joint venture or tenancy in common arrangements.
Capital Resources
Cash from operating activities was $235,256 and $348,793 for the
quarters ended March 31, 2003 and 2002, respectively. The decrease in cash from
operating activities during the quarter ended March 31, 2003, as compared to the
same period of 2002 was the result of changes in the Partnership's working
capital and the distribution of proceeds from the sale of Properties during 2001
and 2002.
Other sources and uses of cash included the following during the quarter
ended March 31, 2003.
In February 2003, the Partnership sold its Property in Fayetteville,
North Carolina, to a third party and received net sales proceeds of
approximately $383,300, resulting in a gain on disposal of assets of
approximately $2,200 during the quarter ended March 31, 2003. The Partnership
had recorded provisions for write-down of assets in previous years relating to
this asset. In connection with the sale, the Partnership incurred a deferred,
subordinated real estate disposition fee of $12,375. Payment of the real estate
disposition fee is subordinated to the receipt by the limited partners of their
aggregate, cumulative 10% Preferred Return, plus their adjusted capital
contributions. The Partnership distributed the sales proceeds as a special
distribution to the limited partners, as described below.
At March 31, 2003, the Partnership had $1,250,294 in cash and cash
equivalents, as compared to $1,994,246 at December 31, 2002. This decrease was
primarily a result of the Partnership distributing to the limited partners,
sales proceeds that were held at December 31, 2002, as described below. The
funds remaining at March 31, 2003, after the payment of distributions and other
liabilities, will be used to meet the Partnership's working capital needs.
Short-Term Liquidity
The Partnership's investment strategy of acquiring Properties for cash
and leasing them under triple-net leases to operators who generally meet
specified financial standards minimizes the Partnership's operating expenses.
The general partners believe that the leases will generate net cash flow in
excess of operating expenses.
The Partnership's short-term liquidity requirements consist primarily of
the operating expenses of the Partnership.
The general partners have the right, but not the obligation, to make
additional capital contributions if they deem it appropriate in connection with
the operations of the Partnership.
Total liabilities of the Partnership, including distributions payable,
were $984,791 at March 31, 2003, as compared to $1,669,185 at December 31, 2002.
The decrease in liabilities at March 31, 2003 was due to the Partnership paying
a special distribution to the limited partners that had been declared at
December 31, 2002 and due to a decrease in amounts due to related parties at
March 31, 2003, as compared to December 31, 2002. The general partners believe
that the Partnership has sufficient cash on hand to meet its current working
capital needs.
The Partnership generally distributes cash from operations remaining
after the payment of operating expenses of the Partnership, to the extent that
the general partners determine that such funds are available for distribution.
Based on current and anticipated future cash from operations, and for the
quarter ended March 31, 2003, the net sales proceeds from the sale of the
Property in Fayetteville, North Carolina, and for the quarter ended March 31,
2002, the net sales proceeds from the 2001 sale of the Property in Washington,
Illinois and the liquidating distribution received from Titusville Joint
Venture, the Partnership declared distributions to limited partners of $701,563
and $975,000 for the quarters ended March 31, 2003 and 2002, respectively. This
represents distributions of $14.03 and $19.50 per unit for the quarters ended
March 31, 2003 and 2002, respectively. Distributions for the quarter ended March
31, 2003 included a special distribution of $350,000 as a result of the
distribution of the net sales proceeds from the 2003 sale of the Property in
Fayetteville, North Carolina. Distributions for the quarter ended March 31, 2002
included a special distribution of $600,000 as a result of the distribution of
the net sales proceeds from the 2001 sale of the Property in Washington,
Illinois and the 2002 liquidating distribution received from Titusville Joint
Venture. These special distributions were effectively a return of a portion of
the limited partners' investment, although, in accordance with the Partnership
agreement, it was applied to the limited partner's unpaid cumulative 10%
Preferred Return. As a result of the sales of the Properties, the Partnership's
total revenue was reduced and is expected to remain reduced in subsequent
periods, while the majority of the Partnership's operating expenses remained and
are expected to remain fixed. Due to the sales of Properties and current and
anticipated future cash from operations, distributions of net cash flow were
adjusted commencing during the quarter ended March 31, 2003. No distributions
were made to the general partners for the quarters ended March 31, 2003 and
2002. No amounts distributed to the limited partners for the quarters ended
March 31, 2003 and 2002 are required to be or have been treated by the
Partnership as a return of capital for purposes of calculating the limited
partners' return on their adjusted capital contributions. The Partnership
intends to continue to make distributions of cash available for distribution to
the limited partners on a quarterly basis.
Long-Term Liquidity
The Partnership has no long-term debt or other long-term liquidity
requirements.
Results of Operations
Total rental revenues were $257,652 during the quarter ended March 31,
2003, as compared to $278,324 during the same period of 2002. Rental revenues
were lower during the quarter ended March 31, 2003 due to the Partnership
selling its Property in Montgomery, Alabama in May 2002. The tenant of this
Property experienced financial difficulties during 2002. Rental revenues were
also lower during the quarter ended March 31, 2003 due to the Partnership
terminating the leases relating to the Properties in Hastings, Nebraska and
Wichita, Kansas during 2002. Each lease was scheduled to expire in 2002. The
Partnership re-leased these Properties during 2002, each to a new tenant with
slightly lower rents.
The Partnership also earned $53,401 attributable to net income earned by
unconsolidated joint ventures during the quarter ended March 31, 2003, as
compared to $50,630 during the same period of 2002.
The Partnership earned $593 in interest and other income during the
quarter ended March 31, 2003, as compared to $5,891 during the same period of
2002. Interest income was lower during 2003 because the Partnership distributed
sales proceeds during 2002 that had been held in interest bearing bank accounts.
During the quarter ended March 31, 2003, two lessees of the Partnership,
IHOP Properties, Inc., and 2BAM, Ltd., each contributed more than 10% of the
Partnership's total rental revenues (including rental revenues from the
Partnership's consolidated joint venture and the Partnership's share of rental
revenues from Properties owned by unconsolidated joint ventures and Properties
owned with affiliates of the general partners as tenants-in-common). It is
anticipated that, based on the minimum rental payments required by the leases,
both of these tenants will continue to contribute more than 10% of the
Partnership's total rental revenues. In addition, four restaurant chains, IHOP,
KFC, Pizza Hut and Taco Bell, each accounted for more than 10% of the
Partnership's total rental revenues, (including rental revenues from the
Partnership's consolidated joint venture and the Partnership's share of the
rental revenues from Properties owned by unconsolidated joint ventures and
Properties owned with affiliates of the general partners as tenants-in-common).
It is anticipated that these four restaurant chains, each will continue to
account for more than 10% of total rental revenues to which the Partnership is
entitled under the terms of the leases. Any failure of these lessees or any of
these restaurant chains could materially affect the Partnership's income, if the
Partnership is not able to re-lease these Properties in a timely manner.
Operating expenses, including depreciation expense, were $109,033 during
the quarter ended March 31, 2003, as compared to $135,018 during the same period
of 2002. Operating expenses were lower during the quarter ended March 31, 2003,
due to a decrease in the amount of state tax expense relating to several states
in which the Partnership conducts business and a decrease in the costs incurred
for administrative expenses for servicing the Partnership and its Properties.
During the year ended December 31, 2002, the Partnership identified for
sale three Properties that were classified as Discontinued Operations in the
accompanying financial statements. The Partnership recognized a net rental loss
(rental revenues less Property related expenses), of $26,638 during the quarter
ended March 31, 2002 relating to these three Properties. The Partnership sold
the Properties in Altus, Oklahoma and Canton Township, Michigan subsequent to
March 31, 2002. In February 2003, the Partnership sold the third Property,
located in Fayetteville, North Carolina, and recorded a gain on disposal of
assets of approximately $2,200. The Partnership had recorded provisions for
write-down of assets in previous years relating to this Property. The
Partnership recognized a net rental loss of $4,123 during the quarter ended
March 31, 2003 relating to this Property.
In January 2003, FASB issued FASB Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" to expand upon and strengthen
existing accounting guidance that addresses when a company should include the
assets, liabilities and activities of another entity in its financial
statements. To improve financial reporting by companies involved with variable
interest entities (more commonly referred to as special-purpose entities or
off-balance sheet structures), FIN 46 requires that a variable interest entity
be consolidated by a company if that company is subject to a majority risk of
loss from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns or both. Prior to FIN 46, a company
generally included another entity in its consolidated financial statements only
if it controlled the entity through voting interests. Consolidation of variable
interest entities will provide more complete information about the resources,
obligations, risks and opportunities of the consolidated company. The
consolidation requirements of FIN 46 apply immediately to variable interest
entities created after January 31, 2003, and to older entities, in the first
fiscal year or interim period beginning after June 15, 2003. The general
partners believe adoption of this standard may result in either consolidation or
additional disclosure requirements with respect to the Partnership's
unconsolidated joint ventures or Properties held with affiliates of the general
partners as tenants-in-common, which are currently accounted for under the
equity method. However, such consolidation is not expected to significantly
impact the Partnership's results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
The general partners maintain a set of disclosure controls and
procedures designed to ensure that information required to be disclosed in the
Partnership's filings under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms. The principal executive
and financial officers of the corporate general partner have evaluated the
Partnership's disclosure controls and procedures within 90 days prior to the
filing of this Quarterly Report on Form 10-Q and have determined that such
disclosure controls and procedures are effective.
Subsequent to the above evaluation, there were no significant changes in
internal controls or other factors that could significantly affect these
controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. Inapplicable.
-----------------
Item 2. Changes in Securities. Inapplicable.
---------------------
Item 3. Defaults upon Senior Securities. Inapplicable.
--------------------------------
Item 4. Submission of Matters to a Vote of Security Holders. Inapplicable.
---------------------------------------------------
Item 5. Other Information. Inapplicable.
------------------
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
3.1 Certificate of Limited Partnership of CNL Income
Fund III, Ltd. (Included as Exhibit 3.1 to
Amendment No. 1 to the Registration Statement No.
33-15374 on Form S-11 and incorporated herein by
reference.)
3.2 Amended and Restated Agreement and Certificate of
Limited Partnership of CNL Income Fund III, Ltd.
(Included as Exhibit 3.2 to Form 10-K filed with
the Securities and Exchange Commission on April
5, 1993, and incorporated herein by reference.)
4.1 Certificate of Limited Partnership of CNL Income
Fund III, Ltd. (Included as Exhibit 4.1 to
Amendment No. 1 to Registration Statement No.
33-15374 on Form S-11 and incorporated herein by
reference.)
4.2 Amended and Restated Agreement and Certificate of
Limited Partnership of CNL Income Fund III, Ltd.
(Included as Exhibit 3.2 to Form 10-K filed with
the Securities and Exchange Commission on April
5, 1993, and incorporated herein by reference.)
10.1 Property Management Agreement (Included as
Exhibit 10.1 to Form 10-K filed with the
Securities and Exchange Commission on April 5,
1993, and incorporated herein by reference.)
10.2 Assignment of Property Management Agreement from
CNL Investment Company to CNL Income Fund
Advisors, Inc. (Included as Exhibit 10.2 to Form
10-K filed with the Securities and Exchange
Commission on March 30, 1995, and incorporated
herein by reference.)
10.3 Assignment of Property Management Agreement from
CNL Income Fund Advisors, Inc. to CNL Fund
Advisors, Inc. (Included as Exhibit 10.3 to Form
10-K filed with the Securities and Exchange
Commission on April 1, 1996, and incorporated
herein by reference.)
10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included
as Exhibit 10.4 to Form 10-Q filed with the
Securities and Exchange Commission on August 10,
2001, and incorporated herein by reference.)
10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc.
(Included as Exhibit 10.5 to Form 10-Q filed with
the Securities and Exchange Commission on August
14, 2002, and incorporated herein by reference.)
99.1 Certification of Chief Executive Officer of
Corporate General Partner Pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
99.2 Certification of Chief Financial Officer of
Corporate General Partner Pursuant to 18 U.S.C.
Section 1350 as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002. (Filed
herewith.)
(b) Reports on Form 8-K
No reports of Form 8-K were filed during the quarter ended
March 31, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
DATED this 6th day of May, 2003.
CNL INCOME FUND III, LTD.
By: CNL REALTY CORPORATION
General Partner
By: /s/ James M. Seneff, Jr.
----------------------------
AMES M. SENEFF, JR.
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert A. Bourne
----------------------------
ROBERT A. BOURNE
President and Treasurer
(Principal Financial and
Accounting Officer)
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF CORPORATE GENERAL PARTNER
PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James M. Seneff, Jr., the Chief Executive Officer of CNL Realty
Corporation, the corporate general partner of CNL Income Fund III, Ltd. (the
"registrant"), certify that:
1. I have reviewed this quarterly report on Form 10-Q of the
registrant;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we 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 quarterly report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c. presented in this quarterly 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 officer and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; 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; and
6. The registrant's other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: May 6, 2003
/s/ James M. Seneff, Jr.
- ---------------------------
James M. Seneff, Jr.
Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF CORPORATE GENERAL PARTNER
PURSUANT TO RULE 13a-14 AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert A. Bourne, President and Treasurer of CNL Realty Corporation,
the corporate general partner of CNL Income Fund III, Ltd. (the "registrant")
certify that:
1. I have reviewed this quarterly report on Form 10-Q of the
registrant;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officer and I are responsible
for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the registrant and we 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 quarterly report is being
prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c. presented in this quarterly 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 officer and I have disclosed,
based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; 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; and
6. The registrant's other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of
our most recent evaluation, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Date: May 6, 2003
/s/ Robert A. Bourne
Robert A. Bourne
President and Treasurer
EXHIBIT INDEX
Exhibit Number
(c) Exhibits
3.1 Certificate of Limited Partnership of CNL Income Fund
III, Ltd. (Included as Exhibit 3.1 to Amendment No. 1
to the Registration Statement No. 33-15374 on Form
S-11 and incorporated herein by reference.)
3.2 Amended and Restated Agreement and Certificate of
Limited Partnership of CNL Income Fund III, Ltd.
(Included as Exhibit 3.2 to Form 10-K filed with the
Securities and Exchange Commission on April 5, 1993,
and incorporated herein by reference.)
4.1 Certificate of Limited Partnership of CNL Income Fund
III, Ltd. (Included as Exhibit 4.1 to Amendment No. 1
to Registration Statement No. 33-15374 on Form S-11
and incorporated herein by reference.)
4.2 Amended and Restated Agreement and Certificate of
Limited Partnership of CNL Income Fund III, Ltd.
(Included as Exhibit 3.2 to Form 10-K filed with the
Securities and Exchange Commission on April 5, 1993,
and incorporated herein by reference.)
10.1 Property Management Agreement (Included as Exhibit
10.1 to Form 10-K filed with the Securities and
Exchange Commission on April 5, 1993, and
incorporated herein by reference.)
10.2 Assignment of Property Management Agreement from CNL
Investment Company to CNL Income Fund Advisors, Inc.
(Included as Exhibit 10.2 to Form 10-K filed with the
Securities and Exchange Commission on March 30, 1995,
and incorporated herein by reference.)
10.3 Assignment of Property Management Agreement from CNL
Income Fund Advisors, Inc. to CNL Fund Advisors, Inc.
(Included as Exhibit 10.3 to Form 10-K filed with the
Securities and Exchange Commission on April 1, 1996,
and incorporated herein by reference.)
10.4 Assignment of Management Agreement from CNL Fund
Advisors, Inc. to CNL APF Partners, LP. (Included as
Exhibit 10.4 to Form 10-Q filed with the Securities
and Exchange Commission on August 10, 2001, and
incorporated herein by reference.)
10.5 Assignment of Management Agreement from CNL APF
Partners, LP to CNL Restaurants XVIII, Inc. (Included
as Exhibit 10.5 to Form 10-Q filed with the
Securities and Exchange Commission on August 14,
2002, and incorporated herein by reference.)
99.1 Certification of Chief Executive Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)
99.2 Certification of Chief Financial Officer of Corporate
General Partner Pursuant to 18 U.S.C. Section 1350 as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002. (Filed herewith.)
EXHIBIT 99.1
EXHIBIT 99.2