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 June 30, 2003
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Commission File Number: 0-13331
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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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(Unaudited)
June 30, December 31,
2003 2002
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Assets
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Property and equipment, all held for sale $ 6,576,469 6,549,021
Less accumulated depreciation 3,079,337 3,079,337
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3,497,132 3,469,684
Cash and equivalents - 143,011
Escrow deposits 163,421 169,892
Other assets 82,332 109,086
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Total assets $ 3,742,885 3,891,673
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Liabilities and Partners' Equity
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Mortgage loan payable 1,720,205 1,736,328
Accounts payable and accrued expenses 97,012 81,772
Other liabilities 53,340 59,975
Partners' equity 1,872,328 2,013,598
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Total liabilities and partners' equity $ 3,742,885 3,891,673
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Condensed Consolidated Statements of Operations
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(Unaudited)
Three months ended June 30, Six months ended June 30,
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2003 2002 2003 2002
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Rental income $ 138,853 131,116 295,136 274,462
Other income 53,639 55,181 97,751 92,322
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Total income 192,492 186,297 392,887 366,784
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Property operating costs 153,438 135,383 320,411 307,679
Administrative expense - affiliates 25,247 51,023 64,538 82,595
Other administrative expense 27,894 44,855 66,571 68,636
Interest 41,329 41,769 82,637 83,821
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Total expenses 247,908 273,030 534,157 542,731
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Net loss $ (55,416) (86,733) (141,270) (175,947)
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Net loss per limited partnership unit $ (3.46) (5.41) (8.81) (10.97)
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Weighted average limited partnership units
outstanding 15,551 15,551 15,551 15,551
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Condensed Consolidated Statements of Cash Flows
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(Unaudited)
Six months ended June 30,
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2003 2002
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Cash provided (used) by:
Operating activities:
Net loss $ (141,270) (175,947)
Adjustments - other, principally changes in other assets and liabilities 41,830 301,021
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Net cash provided by (used in) operating activities (99,440) 125,074
Investing activities - additions to property and equipment (27,448) (46,895)
Financing activities - principal payments on mortgage loan (16,123) (14,799)
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Net increase (decrease) in cash and equivalents (143,011) 63,380
Cash and equivalents at beginning of period 143,011 298,916
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Cash and equivalents at end of period $ - 362,296
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Notes to Consolidated Financial Statements
Six months ended June 30, 2003 and 2002
(Unaudited)
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 unaudited interim consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and the instructions to Form 10-Q. Accordingly, they do
not include all of the information and notes required by accounting principles
generally accepted in the United States of America for complete financial
statements. The balance sheet at December 31, 2002 has been derived from the
audited financial statements at that date. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation, have been included. The Partnership's significant
accounting policies are set forth in its December 31, 2002 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 June 30, 2003, the Partnership owned and operated two commercial buildings
(Perrymont Office Building 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 six months ended June 30, 2003 was
approximately $66,000 and $129,000, respectively. Depreciation not recorded for
the three and six months ended June 30, 2002 was approximately $63,000 and
$126,000, respectively.
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Current Accounting Pronouncements
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Statements of Financial Accounting Standards (SFAS) Nos. 145, 146, 147, and 148
which concern accounting for gains and losses from the extinguishments of debt,
exit or disposal activities, acquisitions of certain financial institutions, and
accounting for stock-based compensation, respectively, became effective for the
Partnership on January 1, 2003 and did not have any effect on the Partnership's
consolidated financial statements.
In April 2003, the Financial Accounting Standards Board issued SFAS No. 149
"Amendment of Statement 133 on Derivative Instruments and Hedging Activities."
This statement is effective for contract and hedging relationships entered into
or modified after June 30, 2003. In May 2003, the Financial Accounting Standards
Board issued SFAS No. 150 "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equities." This statement is effective
for financial instruments entered into or modified after May 31, 2003 and is
effective for all other financial instruments as of the first interim period
beginning after June 15, 2003. The Partnership does not believe that either
statement will have a material impact on its consolidated financial statements.
In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities." The Partnership does not
believe that the Interpretation will have a material impact on its consolidated
financial statements.
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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Effective January 1, 2001, management began formally marketing all properties in
the Partnership for sale. Although cash decreased approximately $143,000 during
the first six months of 2003, the Partnership continues to fund capital
improvements and to make scheduled debt payments. The partnership made no
distributions to limited partners in the first six months of 2003. In accordance
with the settlement of the lawsuit (Part II, Item 1), it is anticipated that
with the sale of the remaining properties, the Partnership may be in a position
to make distributions to the limited partners.
Results of Operations
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As compared to the first six months of 2002, the Partnership's loss decreased
approximately $35,000 from a loss of $176,000 in 2002 to a loss of $141,000 in
2003.
Rental income at Perrymont increased approximately $20,000 for the first six
months while rental income at Inducon Amherst remained unchanged. Other income
increased approximately $5,000 due to an increase in common area maintenance
fees.
Total expenses decreased approximately $8,000. Property operating costs
increased $13,000, administrative expense to affiliates decreased $18,000, other
administrative expense decreased $2,000 and interest expense decreased $1,000.
The increase in property operating costs was primarily attributable to repairs
made to the common area at Inducon Amherst. The decrease in administrative
expense to affiliates was due to a decrease in the costs associated with
portfolio management. The decrease in other administrative expense was primarily
attributable to a decrease in legal and professional services.
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PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
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The Partnership invests only in short term money market instruments, in amounts
in excess of daily working cash requirements. The rates of earnings on those
investments increase or decrease in line with the general movement of interest
rates. The mortgage loan on the Partnership's property is fixed-rate and
therefore, is not subject to market risk.
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. 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, 2002.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
31. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is
filed herewith.
(b) Reports on 8-K
None.
SIGNATURES
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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
August 14, 2003 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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