FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2002
Commission File Number: 0-13331
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
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(Exact name of registrant as specified in its charter)
Delaware 16-1234990
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(State of organization) (IRS Employer Identification No.)
2350 North Forest Road, Suite 12A,Getzville, New York 14068
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(Address of principal executive offices)
(716) 636-0280
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(Registrant's telephone number)
Indicate by a 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 [ ]
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
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Condensed Consolidated Balance Sheets
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September 30, December 31,
2002 2001
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Assets
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Cost of property and equipment, all held for sale $ 6,515,707 6,417,370
Less accumulated depreciation 3,079,337 3,079,337
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3,436,370 3,338,033
Cash and equivalents 157,458 298,916
Escrow deposits 175,559 320,219
Other assets 148,359 200,018
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Total assets $ 3,917,746 4,157,186
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Liabilities and Partners' Equity
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Mortgage loans payable 1,744,131 1,766,156
Accounts payable and accrued expenses 83,118 54,923
Other liabilities 45,355 22,544
Partners' equity 2,045,142 2,313,563
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Total liabilities and partners' equity $ 3,917,746 4,157,186
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Condensed Consolidated Statements of Operations
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Three months ended Sept. 30, Nine months ended Sept. 30,
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2002 2001 2002 2001
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Rental income $ 155,126 608,060 450,522 1,815,146
Other income 32,387 81,531 103,775 290,801
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Total income 187,513 689,591 554,297 2,105,947
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Property operating costs 190,668 465,649 498,347 1,329,620
Administrative expense - affiliates 34,192 88,482 116,787 238,850
Other administrative expense 13,357 63,320 81,993 179,170
Interest 41,770 108,640 125,591 330,498
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Total expenses 279,987 726,091 822,718 2,078,138
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Net income (loss) $ (92,474) (36,500) (268,421) 27,809
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Net income (loss) per limited partnership unit $ (5.77) (2.28) (16.74) 1.73
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Weighted average limited partnership units 15,551 15,551 15,551 15,551
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Condensed Consolidated Statements of Cash Flows
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Nine months ended September 30,
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2002 2001
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Cash provided (used) by:
Operating activities:
Net income (loss) $ (268,421) 27,809
Adjustments - other, principally changes in other assets
and liabilities 247,325 22,499
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Net cash provided (used) by operating activities (21,096) 50,308
Investing activities - additions to property and equipment (98,337) (47,049)
Financing activities - principal payments on mortgage loans (22,025) (55,567)
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Net decrease in cash and equivalents (141,458) (52,308)
Cash and equivalents at beginning of period
298,916 599,594
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Cash and equivalents at end of period $ 157,458 547,286
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Notes to Consolidated Financial Statements
Nine months ended September 30, 2002 and 2001
Organization
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Realmark Property Investors Limited Partnership - III (the Partnership), a
Delaware limited partnership, was formed on November 18, 1983, to invest in a
diversified portfolio of income-producing real estate investments. The general
partners are Realmark Properties, Inc. (the corporate general partner) and
Joseph M. Jayson (the individual general partner). Joseph M. Jayson is the sole
shareholder of J.M. Jayson & Company, Inc. Realmark Properties, Inc. is a
wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership
agreement, the general partners and their affiliates can receive compensation
for services rendered and reimbursement for expenses incurred on behalf of the
Partnership.
Basis of Presentation
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The accompanying interim financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and, in the opinion of management, contain all necessary adjustments for a fair
presentation. The Partnership's significant accounting policies are set forth in
its December 31, 2001 Form 10-K. The interim financial statements should be read
in conjunction with the financial statements included therein. The interim
results should not be considered indicative of the annual results.
Property and Equipment
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At September 30, 2002, the Partnership owned and operated two commercial
buildings (Perrymont and Inducon Amherst). Both of the properties are being
actively marketed for sale and, therefore, are not being depreciated.
Depreciation not recorded for the three and nine months ended September 30, 2002
was approximately $63,000 and $189,000, respectively. Depreciation not recorded
for the three and nine months ended September 30, 2001 was approximately
$117,000 and $350,000, respectively.
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Current Accounting Pronouncements
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Statements of Financial Accounting Standards Nos. 145, 146 and 147 which concern
accounting for gains and losses from the extinguishments of debt, exit or
disposal activities, and acquisitions of certain financial institutions will
become effective for the Partnership in the first quarter of 2003. The
Partnership is currently evaluating the impact of these pronouncements to
determine the effect, if any, they may have on the consolidated financial
position and results of operations.
PART I - Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Liquidity and Capital Resources
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The Partnership continues to maintain a cash position adequate to fund capital
improvements and to make scheduled debt payments. Cash decreased approximately
$140,000 during the first nine months of 2002. The Partnership's cash position
and the sale of one of its properties, Ambassador Towers (sold October 18,
2001), enabled the Partnership to make a $5,000,000 distribution to the Limited
Partners in the last quarter of 2001.
Results of Operations
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As compared to the first nine months of 2001, the Partnership's loss, excluding
Ambassador Towers, which was sold in October 2001, increased approximately
$30,000 from a loss of $240,000 in 2001 to a loss of $270,000 in 2002.
Rental income at Perrymont increased approximately $80,000 for the first nine
months as occupancy increased to above 57%. Rental income at Inducon Amherst
decreased approximately $20,000 for the first nine months as occupancy decreased
to about 69%. The net change in rental income was an increase of approximately
$60,000. The increase in rental income along with a decrease in other income of
$80,000, primarily common area maintenance fees at the property level and
interest income, was offset by an increase in property operations of $74,000, a
decrease in other administrative expense of $16,000, and a decrease in
administrative expense to affiliates of $45,000. The increase in property
operating costs was primarily attributable to an increase in payroll and
utilities. The decrease in administrative expenses was a result of a decrease in
professional fees.
PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
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The Partnership's cash equivalents are short term, interest bearing bank
accounts and its mortgage loans are fixed-rate. It has not entered into any
derivative contracts. Therefore, it has no market risk exposure.
PART I - Item 4. Controls and Procedures
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Within the 90 days prior to the filing date of this report, the Partnership
carried out an evaluation, under the supervision and with the participation of
the Partnership's management, including Joseph M. Jayson (the Partnership's
Individual General Partner and Principal Financial Officer), of the
effectiveness of the design and operation of the Partnership's disclosure
controls and procedures. Based upon that evaluation, the Principal Financial
Officer concluded that the Partnership's disclosure controls and procedures are
effective in timely alerting them to material information relating to the
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Partnership (including its consolidated subsidiaries) required to be included in
the Partnership's periodic SEC filings. There have been no significant changes
in the Partnership's internal controls or in other factors that could
significantly affect these controls subsequent to the date of the evaluation.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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As previously reported, the Partnership, as a nominal defendant, the General
Partners of the Partnership and of affiliated public partnerships (the "Realmark
Partnerships") and the officers and directors of the Corporate General Partner,
as defendants, had been involved in a class action litigation in New York State
court. The Partnership's settlement of this litigation is described in its
Annual Report on Form 10-K for the year ended December 31, 2001. Subsequent to
September 30, 2002, the court appointed a sales agent to work with the General
Partners to continue to sell the Partnerships' remaining properties.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
99.1 Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes- Oxley Act of 2002.
99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 10-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP - III
November 14, 2002 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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