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 September 30, 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
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 16-1234990
---------------------- ---------------------------------
(State of organization) (IRS Employer Identification No.)
2350 North Forest Road, Suite 35B, Getzville, New York 14068
- ------------------------------------------------------------
(Address of principal executive offices)
(716) 636-0280
- -------------------------------
(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
--------------------
Statement of Net Assets in Liquidation
--------------------------------------
(Liquidation Basis - Unaudited)
September 30, 2004
Assets - cash $ 1,850,698
-------------
Liabilities:
Accounts payable and accrued expenses 450,822
Payable to affiliates 3,209
Distributions payable 86,586
Estimated costs during the period of liquidation 79,437
-------------
Total liabilities 620,054
-------------
Net assets in liquidation $ 1,230,644
=============
Statement of Changes in Net Assets in Liquidation
-------------------------------------------------
(Liquidation Basis - Unaudited)
For the period May 21, 2004 to September 30, 2004
Partners' equity at May 21, 2004 $ 1,727,195
Adjustment to Liquidation Basis - loss on settlement of lawsuit (396,551)
-------------
Net assets in liquidation at May 21, 2004 1,330,644
Estimated costs during the period of liquidation (100,000)
-------------
Net assets in liquidation at September 30, 2004 $ 1,230,644
=============
2
Condensed Consolidated Balance Sheet
------------------------------------
December 31,
Assets 2003
- ------------------------------------------------------ -----------------
Cost of property and equipment, all held for sale $ 6,584,596
Less accumulated depreciation 3,079,337
-----------------
3,505,259
Cash and equivalents 30,293
Escrow deposits 150,315
Other assets 65,447
-----------------
Total assets $ 3,751,314
=================
Liabilities and Partners' Equity
- ------------------------------------------------------
Mortgage loan payable 1,703,787
Accounts payable and accrued expenses 185,199
Payable to affiliates 7,311
Other liabilities 53,972
Partners' equity 1,801,045
-----------------
Total liabilities and partners' equity $ 3,751,314
=================
Condensed Consolidated Statements of Operations
-----------------------------------------------
(Unaudited)
Period from Three months
January 1, ended Nine months ended
2004 to September 30, September 30,
May 20, 2004 2003 2003
---------------- -------------- -----------------
Rental income $ 177,762 153,170 448,306
Other income 51,208 42,849 140,600
---------------- -------------- --------------
Total income 228,970 196,019 588,906
---------------- -------------- --------------
Property operating costs 252,274 146,682 467,093
Administrative expense - affiliates 114,866 31,583 96,121
Other administrative expense 73,922 22,037 88,608
Interest 26,044 41,811 124,448
---------------- -------------- --------------
Total expenses 467,106 242,113 776,270
---------------- -------------- --------------
Loss before gain on sale of properties (238,136) (46,094) (187,364)
Gain on sale of properties 164,286 -- --
---------------- -------------- --------------
Net loss $ (73,850) (46,094) (187,364)
================ ============== ==============
Net loss per limited partnership unit $ (4.29) (2.88) (11.69)
================ ============== ==============
Weighted average limited partnership units
outstanding 15,551 15,551 15,551
================ ============== ==============
3
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(Unaudited)
Period from Nine months
January 1, ended
2004 to September 30,
May 20, 2004 2003
---------------- ----------------
Cash provided by (used in):
Operating activities:
Net loss $ (73,850) (187,364)
Adjustments:
Gain on sale of properties (164,286) --
Other, principally changes in other assets and liabilities 230,065 103,969
---------------- ----------------
Net cash used in operating activities (8,071) (83,395)
---------------- ----------------
Investing activities:
Additions to property and equipment -- (35,576)
Proceeds from sale of properties 3,593,248 --
---------------- ----------------
Net cash provided by (used in) investing activities 3,593,248 (35,576)
---------------- ----------------
Financing activities - principal payments on mortgage loan (1,703,787) (24,040)
---------------- ----------------
Net increase (decrease) in cash and equivalents 1,881,390 (143,011)
Cash and equivalents at beginning of period 30,293 143,011
---------------- ----------------
Cash and equivalents at end of period $ 1,911,683 --
================ ================
Notes to Consolidated Financial Statements
Nine months ended September 30, 2004 and 2003
(Unaudited)
Liquidation of the Partnership
- ------------------------------
On May 20, 2004, the Partnership sold its remaining property investment,
Perrymont, at which time the Partnership adopted a plan of termination and
liquidation under which liabilities will be paid and net proceeds will be
distributed to the Partners.
Organization
- ------------
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
- ---------------------
As a result of the plan termination and liquidation, the Partnership changed its
basis of accounting to the liquidation basis effective May 21, 2004. Under the
liquidation basis of accounting, assets are stated at their estimated net
realizable values and liabilities are stated at their estimated settlement
amounts.
4
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
- ----------------------
On April 5, 2004, the Partnership closed on the sale of Inducon Amherst,
resulting in a gain of $19,501. On May 20, 2004, the Partnership closed on the
sale of its remaining property, Perrymont, resulting in a gain of $144,785.
During 2004 and 2003, the Partnership's properties were being actively marketed
for sale and, therefore, were not being depreciated. Depreciation not recorded
for the period from January 1, 2004 to May 20, 2004 was approximately $94,000.
Depreciation not recorded in the three and nine month periods ended September
30, 2003 was approximately $66,000 and $195,000, respectively. As of September
30, 2004, the Partnership does not have an interest in any property or
equipment.
PART I - Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Liquidity and Capital Resources
- -------------------------------
Since January 1, 2001, the Partnership's remaining properties, Perrymont and
Inducon Amherst, had been actively marketed for sale. On April 5, 2004, the
Partnership sold Inducon Amherst to an unaffiliated entity for cash of
$2,045,000. After satisfaction of the $1,700,000 mortgage loan on the property,
including a prepayment penalty, and payment of closing costs, the net proceeds
available amounted to approximately $425,000, before satisfaction of any
remaining obligations related to the property. On May 20, 2004, the Partnership
sold Perrymont to an unaffiliated entity for cash of $2,450,000, less a $600,000
credit for work that the buyer has determined is necessary on the property. The
net proceeds available amounted to approximately $1,658,000, before satisfaction
of any remaining obligations related to the property.
Prior to the sale of Inducon Amherst and Perrymont, the Partnership maintained a
cash position adequate to fund capital improvements and scheduled debt payments.
Results of Operations
- ---------------------
As a result of the sale of the remaining properties, Inducon Amherst and
Perrymont, and the establishment of a plan of liquidation, the Partnership began
reporting on the liquidation basis of accounting effective May 21, 2004.
Therefore, operations for the period May 21, 2004 to September 30, 2004 are
reported on the statement of changes in net assets in liquidation while the
operations for the period January 1, 2004 to May 20, 2004 and for the three and
5
nine months ended September 30, 2003 are reported on the condensed consolidated
statement of operations.
As discussed above, the Partnership began reporting on the liquidation basis of
accounting effective May 21, 2004. The only significant changes as of September
30, 2004 as compared to the same period in 2003 are the sales of the remaining
properties, Inducon Amherst and Perrymont.
PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
The Partnership's cash equivalents are short-term, non-interest bearing bank
accounts. It has not entered into any derivative contracts. Therefore, it has no
market risk exposure.
PART I - Item 4. Controls and Procedures
-----------------------
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 on 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 changes in the
Partnership's internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities 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
-----------------
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 5. Other Information
-----------------
(a) Reports on Form 8-K.
None.
Item 6. 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.
6
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 15, 2004 /s/ Joseph M. Jayson
----------------- ------------------------------
Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
7