UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2004
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: 0-13331
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 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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Condensed Consolidated Balance Sheets
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(Unaudited)
March 31, December 31,
2004 2003
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Assets
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Cost of property and equipment, all held for sale $ 6,584,596 6,584,596
Less accumulated depreciation 3,079,337 3,079,337
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3,505,259 3,505,259
Cash and equivalents 22,279 30,293
Escrow deposits 151,434 150,315
Other assets 69,898 65,447
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Total assets $ 3,748,870 3,751,314
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Liabilities and Partners' Equity
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Mortgage loan payable 1,695,106 1,703,787
Accounts payable and accrued expenses 176,129 185,199
Accounts payable - affiliates 75,204 7,311
Other liabilities 42,339 53,972
Partners' equity 1,760,092 1,801,045
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Total liabilities and partners' equity $ 3,748,870 3,751,314
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Condensed Consolidated Statements of Operations
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(Unaudited)
Three months ended March 31,
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2004 2003
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Rental income $ 149,920 156,283
Other income 49,142 44,112
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Total income 199,062 200,395
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Property operating costs 145,262 166,973
Administrative expense - affiliates 28,269 39,291
Other administrative expense 40,526 38,677
Interest 25,958 41,308
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Total expenses 240,015 286,249
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Net loss $ (40,953) (85,854)
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Net loss per limited partnership unit $ (2.55) (5.36)
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Weighted average limited partnership units outstanding 15,551 15,551
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Condensed Consolidated Statements of Cash Flows
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(Unaudited)
Three months ended March 31,
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2004 2003
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Cash provided (used) by:
Operating activities:
Net loss $ (40,953) (85,854)
Adjustments - other, principally changes
in other assets and liabilities 41,620 1,045
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Net cash provided (used) by operating activities 667 (84,809)
Investing activities - additions to property and equipment - (4,728)
Financing activities - principal payments on mortgage loan (8,681) (8,381)
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Net decrease in cash and equivalents (8,014) (97,918)
Cash and equivalents at beginning of period 30,293 143,011
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Cash and equivalents at end of period $ 22,279 45,093
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Notes to Consolidated Financial Statements
Three months ended March 31, 2004 and 2003
(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, 2003 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, 2003 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 March 31, 2004, 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
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recorded for the three months ended March 31, 2004 and 2003 was approximately
$65,000. On March 23, 2004, the Partnership entered into a $2,450,000 sales
agreement with an unaffiliated entity for the sale of Perrymont. This sale, if
closed, will result in no gain to the Partnership.
Current Accounting Pronouncements
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In January 2003, the Financial Accounting Standards Board (FASB) issued
Financial Interpretation (FIN) No. 46, "Consolidation of Variable Interest
Entities." In December 2003, the FASB reissued FIN No. 46R with certain
modifications and clarifications. This pronouncement became effective for the
Partnership on March 31, 2004 and did not have any effect on its consolidated
financial statements.
Subsequent Event - Sale of Property
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On April 5, 2004, the Partnership sold one of its remaining properties, Inducon
Amherst, to an unaffiliated entity for cash of $2,045,000, resulting in a net
gain of approximately $25,000. After satisfaction of the $1.7 million mortgage
loan on the property and payment of closing costs, the net cash proceeds
available amounted to approximately $363,000 before satisfaction of any
remaining obligations related to the property. The proceeds will be used to
satisfy remaining net liabilities.
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 remaining
properties in the Partnership for sale. The Partnership continued to experience
difficulties generating sufficient cash to cover its financial obligations. Cash
decreased approximately $8,000 during the first three months of 2004. The
Partnership made no distributions to limited partners in the first quarter of
2004. On April 5, 2004, the Partnership sold one of its properties (Inducon
Amherst). In accordance with the settlement of the lawsuit (Part II, Item 1), it
is anticipated that with the sale of the remaining property, 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 quarter of 2003, the Partnership's loss decreased
approximately $45,000 from a loss of $86,000 in 2003 to a loss of $41,000 in
2004.
Rental income at Perrymont increased approximately $3,000 for the first quarter
while rental income at Inducon Amherst decreased $9,000 as a result of increased
vacancies. Other income increased approximately $5,000 due to an increase in
common area maintenance fees and forfeited security deposits.
Total expenses decreased approximately $46,000. Property operations decreased
approximately $20,000 due to decreases in cleaning, taxes, leasing and
contracted work at Perrymont. The decrease of approximately $11,000 in
administrative expense and reimbursement to affiliates was a result of a
decrease in management fees and portfolio reimbursed expenses. Other
administrative expense remained consistent. Interest expense decreased
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approximately $15,000 as a result of the scheduled amortization of the mortgage
and the assumption of accrued interest on the mortgage loan of Inducon Amherst
by an unaffiliated entity which purchased the property on April 5, 2004.
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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Disclosure Controls and Procedures: The Partnership's management, with the
participation of the Partnership's Individual General Partner and Principal
Financial Officer, has evaluated the effectiveness of the Partnership's
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this report. Based upon such evaluation, the Partnership's
Individual General Partner and Principal Financial Officer have concluded that,
as of the end of such period, the Partnership's disclosure controls and
procedures are effective.
Internal Control Over Financial Reporting: There have been no significant
changes in the Partnership's internal control over financial reporting (as
defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as
amended) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Partnership's internal control over financial reporting.
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, 2003.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
31. Certification Pursuant to Rule 13a-14(a), 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.
(b) Reports on Form 8-K
The Partnership reported the sale of Inducon Amherst on April 5,
2004, under item 2 of Form 8-K, filed on April 16, 2004.
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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
May 17, 2004 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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