Item 1. Business
The Registrant, Amrecorp Realty Fund III, (the "Partnership"), is a limited partnership organized under the Texas Uniform Limited Partnership Act pursuant to a Certificate of Limited Partnership dated August 3O, 1985 and amended on November 21, 1985. On December 31, 1996, the Partnership consisted of a corporate general partner, LBAL, Inc. (wholly owned by Robert J. Werra) and 278 limited partners owning 2,382 limited partnership interests at $1,000 per interest. The distribution of limited partnership interests commenced November 26, 1985 pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (Registration #33-00152) as amended.
The Partnership was organized to acquire a diversified portfolio of income-producing real properties, primarily apartments, as well as office buildings, industrial buildings, and other similar properties
The Partnership intends to continue until December 31, 2015 unless terminated by an earlier sale of its Properties.
Univesco, Inc.("Univesco"), a Texas corporation, wholly owned by Robert J. Werra, manages the affairs of the Partnership. Univesco acts as the managing agent with respect to the Partnership's Properties. Univesco may also engage other on-site property managers and other agents, to the extent management considers appropriate. Univesco and the general partner make all decisions regarding investments in and disposition of Properties and has ultimate authority regarding all property management decisions.
No material expenditure has been made or is anticipated for either Partnership-sponsored or consumer research and development activities relating to the development or improvement of facilities or services provided by the Partnership. There neither has been, nor are any anticipated, material expenditures required to comply with any federal, state or local environmental provisions which would materially affect the earnings or competitive position of the Partnership.
The Partnership is engaged solely in the business of real estate investments. Its business is believed by management to fall entirely within a single industry segment. Management does not anticipate that there will be any material seasonal affects upon the operation of the Partnership.
Competition and Other Factors
The majority of the Property's leases are of six to twelve month terms. Accordingly, operating income is highly susceptible to varying market conditions. Occupancy and street rents are driven by general market conditions which include job creation, new construction of single and multi-family projects, and demolition and other reduction in net supply of apartment units.
Rents have generally been increasing in recent years due to the generally positive relationship between apartment unit supply and demand in the Partnership's markets. However, the property is subject to substantial competition from similar and often newer properties in the vicinity in which they are located. In addition, operating expenses have decreased primarily due to outsourcing of labor costs and non-recurring mandated repairs incurred in 1995. Capitalized expenditures have increased as units are updated and made more competitive in the market place.
Item 2.
Item 2. Properties - ------------------
At December 31, 1996 the Partnership owned Las Brisas Apartment, a 376 unit apartment community located at 2010 South Clark Street,Abilene, Taylor County, Texas 79606. The Partnership purchased a fee simple interest in Las Brisas Apartments on July 30, 1986. The property contains approximately 312,532 net rentable square feet, one clubhouse, and five laundry facilities located on approximately 19.11 acres of land.
The property is encumbered by a mortgage note payable in monthly installments of principal and interest through December 31, 2003, when a lump-sum payment of approximately $2,642,000 is due. For information regarding the encumbrances to which the properties are subject and the status of the related mortgage loans, see " Management`s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" contained in Item 7 hereof and Note 3 to Consolidated Financial Statements and Schedule Index contained in Item 8.
Occupancy Rates --------------- Per Cent --------
1992 1993 1994 1995 1996 Las Brisas 87.60% 89.90% 90.30% 92.40% 91.70%
Item 3.
Item 3. Legal Proceedings - --------------------------
The Partnership is not engaged in any material legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------
There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year.
By virtue of its organization as a limited partnership, the Partnership has outstanding no securities possessing traditional voting rights. However, as provided and qualified in the Limited Partnership Agreement, limited partners have voting rights for, among other things, the removal of the General Partner and dissolution of the Partnership.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholders Matters - ------------------------------------------------------------------------------
The Partnerships outstanding securities are in the form of Limited Partnership Interests ("Interests"). As of December 31, 1996 there were approximately 278 limited partners owning 2,382 interests at $1,000 per interest. A public market for trading Interests has not developed and none is expected to develop. In addition, transfer of an Interest is restricted pursuant to the Limited Partnership Agreement.
The General Partner continues to review the Partnership's ability to make distributions on a quarter by quarter basis, however, no such distributions have been made to the limited partners in several years and none are anticipated in the immediate future due to required debt service payments and the existence of the Special Limited Partner, Mr. Robert J. Werra. The Special Limited Partner has first right to all net operating cash flow and net proceeds from disposals of assets to the extent of the special limited partner distribution preference. During 1996 and 1995, the Special Limited Partner received distributions from the Partnership totaling $195,002 and $170,000 respectively.
An analysis of income or (loss) allocated, and cash distributed to Investors per $1,000 unit is as follows:
YEARS INCOME GAIN LOSS CASH DISTRIBUTED 1986 $0 $0 $186 $0 1987 0 0 286 30 1988 0 0 310 0 1989 0 0 278 0 1990 0 0 231 0 1991 0 0 142 0 1992 0 0 0 0 1993 0 153 162 0 1994 24 0 0 0 1995 0 0 5 0 1996 20 0 0 0
Item 6.
Item 6. Selected Financial Data - ---------------------------------
The following table sets forth selected financial data regarding the Partnership's results of operations and financial position as of the dates indicated. this information should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Item 7
Item 7. Management Discussion and Analysis of Financial Conditions and Results of Operations - -----------------------------------------------------------------------
This discussion should be read in conjunction with Item 6 - Selected Financial Data and Item 8
Item 8.) The following table illustrates the increases or (decreases):
Payroll $41,346 Utilities 8,681 Real estate taxes (6,179) Repairs and maintenance 69,798 General and administrative 13,134 Interest (3,882) Depreciation and amortization 6,116 Management fee 4,198 --------- Total Increase (Decrease) in Operating Expenses $133,212 ==========
Liquidity and Capital Resources - --------------------------------
While it is the General Partners primary intention to operate and manage the existing real estate investment, the General Partner also continually evaluates this investment in light of current economic conditions and trends to determine if this assets should be considered for disposal. At this time, there is no plan to dispose of Las Brisas Apartments.
As of December 31, 1996, the Partnership had $30,280 in cash and cash equivalents as compared to $5,124 as of December 31, 1995. The net increase in cash of $25,156 is principally due to net income from operations offset by $195,002 in distributions on special limited partner equity (see Note 4 to Consolidated Financial Statements and Schedule Index contained in Item 8.)
The property is encumbered by a non-recourse mortgage with a principal balance of $3,114,512 as of December 31, 1996. The mortgage payable bears interest at 8.15% and is payable in monthly installments of principal and interest until December 2003 when a lump-sum payment of approximately $2,642,000 is due. The required principal reductions for the five years ending December 31, 2001, are $53,012, $57,498, $62,363 $67,640 and $73,363, respectively.
For the foreseeable future, the Partnership anticipates that mortgage principal payments ( excluding balloon mortgage payments), improvements and capital expenditures will be funded by net cash from operations. The primary source of capital to fund future Partnership acquisitions and balloon mortgage payments will be proceeds from the sale financing or refinancing of the Property.
The $1,828,231 in Special Limited Partner equity is the result of previous fundings for operating deficits and other partner loans made to the Partnership by a related entity. These loans were reclassified to equity during 1993. The Special Limited Partner has first right to all net operating cash flows and net proceeds from disposals of assets to the extent of the Special Limited Partners distribution preference. During 1996 and 1995, the Special Limited Partner received distributions from the Partnership totaling $195,002 and $170,000, respectively.
Risk Associated with Forward-Looking Statements Included in this Form 10-K
This Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to capital expenditures and rehabilitation costs on the Properties. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward- looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
AMRECORP REALTY FUND III (A TEXAS LIMITED PARTNERSHIP)
ITEM 8 - FINANCIAL STATEMENTS AND SCHEDULE INDEX - ------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 10
BALANCE SHEETS 11
STATEMENTS OF OPERATIONS 12
STATEMENTS OF PARTNERS' EQUITY (DEFICIT) 13
STATEMENTS OF CASH FLOWS 14
NOTES TO FINANCIAL STATEMENTS 15-18
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION 19-20
INDEPENDENT AUDITORS' REPORT
To the General Partner and Limited Partners Amrecorp Realty Fund III Dallas, Texas
We have audited the balance sheets of Amrecorp Realty Fund III (a Texas limited partnership) (the "Partnership") as of December 31, 1996 and 1995, and the related statements of operations, partners' equity (deficit) and cash flows for each of the three years in the period ended December 31, 1996. Our audits also included the financial statement schedule listed in the index at Item 14(a)(2). These financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on the financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of Amrecorp Realty Fund III at December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Dallas, Texas February 17, 1997
AMRECORP REALTY FUND III (A Texas Limited Partnership)
BALANCE SHEETS DECEMBER 31, 1996 AND 1995 - ---------------------------------------------------------------------------
ASSETS 1996 1995
INVESTMENTS IN REAL ESTATE, AT COST (Note 3): Land $1,000,000 $1,000,000 Buildings and improvements 6,198,619 6,084,005 ----------- ----------- 7,198,619 7,084,005
Less accumulated depreciation (2,746,375) (2,479,835)
4,452,244 4,604,170
CASH AND CASH EQUIVALENTS 40,820 5,124
RESTRICTED CASH 30,000 30,000
ESCROW DEPOSITS 114,755 135,501
CAPITAL REPLACEMENT RESERVE (Note 3) 92,957 144,515
LIQUIDITY RESERVE (Note 3) 82,588 78,833
OTHER ASSETS 13,015 12,220 ----------- ---------- TOTAL $4,826,379 $5,010,363 ========== ==========
LIABILITIES AND PARTNERS' EQUITY
MORTGAGE PAYABLE (Note 3) $3,114,512 $3,163,388
ACCRUED INTEREST PAYABLE 21,153 21,485
ACCOUNTS PAYABLE 24,276 26,298
REAL ESTATE TAXES PAYABLE 98,416 89,159
DUE TO AFFILIATES (Note 4) 122,785 126,510
SECURITY DEPOSITS 35,060 34,193
3,416,202 3,461,033 --------- --------- PARTNERS' EQUITY 1,410,177 1,549,330 --------- --------- TOTAL $4,826,379 $5,010,363 ========== ==========
See notes to financial statements.
AMRECORP REALTY FUND III (A Texas Limited Partnership)
STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 - -----------------------------------------------------------------------------
1996 1995 1994
INCOME: Rentals $ 1,396,290 $1,328,532 $ 1,228,639 Other 75,475 62,391 78,320 ----------- ---------- ----------- Total income 1,471,765 1,390,923 1,306,959
OPERATING EXPENSES: Payroll 268,433 285,826 244,480 Utilities 166,177 156,904 148,223 Real estate taxes 98,416 89,159 95,338 Repairs and maintenance 195,714 229,321 159,523 General and administrative 91,310 76,607 63,473 Interest 255,738 259,434 263,316 Depreciation and amortization 266,540 253,823 247,707 Management fees (Note 4) 73,588 69,546 65,348 ---------- -------- --------- Total operating expenses 1,415,916 1,420,620 1,287,408 ----------- --------- ---------
NET INCOME (LOSS) (Note 5) $ 55,849 $ (29,697) $ 19,551 ========== ========== =========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP UNIT $ 23.21 $ (12.34) $ 8.13 ======== ========== =========
LIMITED PARTNERSHIP UNITS OUTSTANDING 2,382 2,382 2,382 ===== ===== =====
See notes to financial statements.
AMRECORP REALTY FUND III (A Texas Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT) YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 - -----------------------------------------------------------------------------
Special General Limited Limited Partner Partners Partners Total
BALANCE, JANUARY 1, 1994 $ (139,020) $ 2,268,233 $(324,737) $ 1,804,476
Distributions - (75,000) - (75,000)
Net income 196 - 19,355 19,551 ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1994 (138,824) 2,193,233 (305,382) 1,749,027
Distributions - (170,000 - (170,000)
Net loss (297) - (29,400) (29,697) ---------- ---------- ---------- --------- BALANCE, DECEMBER 31, 1995 (139,121) 2,023,233 (334,782) 1,549,330
Distributions - (195,002) - (195,002)
Net income 558 - 55,291 55,849
BALANCE, DECEMBER 31, 1996 $(138,563) $1,828,231 $(279,491) $1,410,177 ========== ========== ========== ==========
See notes to financial statements.
AMRECORP REALTY FUND III (A Texas Limited Partnership)
STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 - -----------------------------------------------------------------------------
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 55,849 $ (29,697) $ 19,551 Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 266,540 253,823 247,707 Change in assets and liabilities: Restricted cash (30,000) Escrow deposits 20,746 (7,835) (102,960) Other assets (795) 495 (3,177) Accrued interest payable (332) (306) (283) Security deposits 867 2,989 4,369 Accounts payable (2,022) (12,732) (16,243) Real estate taxes payable 9,257 (6,179) 95,338 ------- -------- -------- 294,261 200,255 224,751 -------- -------- -------- Net cash provided by operating activities 350,110 170,558 244,302 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital replacement reserve 51,558 44,929 (88,844) Investments in real estate (114,614) (68,867) (71,602) -------- -------- -------- Net cash used in investing activities (63,056) (23,938) (160,446) --------- -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Payments on mortgages and notes payable (48,876) (45,154) (41,458) Net proceeds from (payments on) amounts due affiliates (3,725) 2,372 (44,590) Liquidity reserve (3,755) (765) (2,868) Distributions (195,002) (170,000) (75,000) --------- --------- -------- Net cash used in financing activities (251,358) (213,547) (163,916) -------- -------- -------- NET INCREASE (DECREASE) IN CASH 35,696 (66,927) (80,060)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 5,124 72,051 152,111 --------- --------- --------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 40,820 $ 5,124 $ 72,051 ======== ======== ======== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ 256,070 $ 259,740 $ 263,599 ======== ======== =========
See notes to financial statements.
AMRECORP REALTY FUND III (A TEXAS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 - -----------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - Amrecorp Realty Fund III (a Texas limited partnership) (the "Partnership") maintains its books and prepares its income tax returns using the accrual income tax basis of accounting. Memo adjustments have been made in preparing the accompanying financial statements in accordance with generally accepted accounting principles (see Note 5). The financial statements include only those assets, liabilities and results of operations which relate to the business of the Partnership. The financial statements do not include any assets, liabilities, revenues or expenses attributable to the partners' individual activities.
Property and Equipment - Buildings and improvements are depreciated using the straight-line method over the estimated useful lives of the assets which are five years for improvements and 25 years for buildings. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," Partnership management routinely reviews its investments for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Syndication Costs - Costs or fees incurred to raise capital for the Partnership are netted against the respective partners' equity accounts.
Revenue Recognition - The Partnership has leased substantially all of its investment in real estate (apartment building) under operating leases for periods generally less than one year.
Income Taxes - No provision has been made for income taxes, since these taxes are the responsibility of the individual partners. For tax purposes, the basis of the Partnership assets is $2,687,000 at December 31, 1996.
Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of certain assets, liabilities, revenues and expenses as of and for the reporting periods. Actual results may differ from such estimates.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the Partnership considers all highly liquid instruments with a remaining maturity at the date of purchase of three months or less to be cash equivalents. Univesco, Inc. ("Univesco"), an affiliate of the general partner, Robert J. Werra, and the management agent, maintains a single controlled disbursement account for all properties managed by Univesco. Funds are transferred at the time of cash disbursements from the project's operating account to the controlled disbursement account to reimburse checks issued.
Restricted Cash - Restricted cash consists of tenant security deposits which are maintained in a separate account in accordance with the mortgage agreement.
Environmental Remediation Costs - The Partnership accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. Partnership management is not aware of any environmental remediation obligations which would materially affect the operations, financial position or cash flows of the Partnership.
Reclassification - Certain previous year balances have been reclasified to conform with current year presentation.
2. PARTNERSHIP
General - The Partnership was formed on August 30, 1985, under the Texas Uniform Limited Partnership Act, for the purpose of acquiring, maintaining, developing, operating and selling buildings and improvements. The Partnership owns and operates an apartment property in Abilene, Texas. The Partnership will be terminated by December 31, 2015, although this date can be extended if certain events occur.
LBAL, Inc., a Texas corporation wholly owned by Mr. Robert J. Werra, is the general partner; Mr. Werra is the first special limited partner and third special limited partner. An affiliate of the general partner is the second special limited partner. An aggregate of 25,000 limited partner units at $1,000 per unit are authorized, of which 2,382 units were issued and outstanding during the years ended December 31, 1996, 1995 and 1994. Under the terms of the partnership agreement, no additional limited partner units will be offered. Effective November 1, 1993, the partnership agreement was amended to establish a first, second and third special limited partner status as outlined above.
Allocation of Net Income (Loss) and Cash - Net income and net operating cash flow as defined in the partnership agreement are allocated first to the limited partners in an amount equal to a distribution preference (as defined) on capital contributions from the first day of the month following their capital contribution and thereafter generally 10% to the general partner and 90% to the limited partners. Net loss is allocated 1% to the general partner and 99% to the limited partners.
Net income from the sale of property is allocated first, to the extent there are cumulative net losses, 1% to the general partner and 99% to the limited partners; second, to the limited partners in an amount equal to their distribution preference as determined on the date of the partners' entry into the Partnership; and thereafter 15% to the general partner and 85% to the limited partners.
Cash proceeds from the sale of property or refinancing are allocated first to the limited partners to the extent of their capital contributions and distribution preference as determined on the date of the partners' entry into the Partnership and thereafter 15% to the general partner and 85% to the limited partners.
All distributions of net operating cash flow and net proceeds of the Partnership shall be distributed first to the special limited partners to satisfy the special limited partner distribution preference, then to repay any unreturned portion of their contribution. Any additional available cash will be distributed in accordance with the partnership agreement.
During 1996, 1995 and 1994, distributions of $195,002, $170,000 and $75,000, respectively, were made to the special limited partners in accordance with this agreement.
3. MORTGAGE PAYABLE
The mortgage payable at December 31, 1996 and 1995, consisted of an 8.15% mortgage note which is payable in monthly principal and interest installments of $25,408 through December 2003, at which time a lump-sum payment of approximately $2,642,000 is due.
The mortgage payable, which had a balance of $3,114,512 and $3,163,388 as of December 31, 1996 and 1995, respectively, is collateralized by the investments in real estate.
The following sets forth the required principal payments due under the Partnership's mortgage for the next five years and thereafter:
1997 $ 53,012 1998 57,498 1999 62,363 2000 67,640 2001 73,363 Thereafter 2,800,636
In conjunction with its mortgage payable, the Partnership is required to fund a liquidity reserve and a capital replacement reserve. Both reserves are refundable to the Partnership.
4. RELATED PARTY TRANSACTIONS
The Partnership has an agreement with Univesco for the management of its project under which Univesco receives 4% of the gross revenues from operations as a property management fee. In addition, Univesco receives a Partnership fee equal to 1% of gross revenues from operations to be paid from Excess Property Income, as defined in the loan agreement. The following schedule represents the amounts included as management and Partnership fees recorded by the Partnership:
1996 1995 1994
Property management fees $ 58,870 $ 55,637 $ 52,278 Partnership fees 14,718 13,909 13,070
Upon sale of a property, the Partnership will pay a real estate commission to the general partner or their affiliates in an amount not exceeding the lesser of 50% of the amounts customarily charged by others rendering similar services or 3% of the gross sales price.
5. RECONCILIATION OF BOOK TO TAX LOSS (UNAUDITED)
If the accompanying financial statements had been prepared in accordance with the accrual income tax basis of accounting rather than generally accepted accounting principles, the excess of expenses over revenues for 1996 would have been as follows:
Net income per accompanying financial statements $ 55,849 Add - book basis depreciation expense using straight-line method 266,540 Deduct - income tax basis amortization of loan costs (19,705) Deduct - income tax basis depreciation expense using ACRS method (229,387) Deduct - special limited partner distributions (147,086) ------------ Excess of expenses over revenues, accrual income tax basis $ (73,789) ============ 6. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments," requires disclosure of the estimated fair values of certain financial instruments. The estimated fair value amounts have been determined using available market information or other appropriate valuation methodologies that require considerable judgment in interpreting market data and developing estimates. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Partnership could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.
The fair value of financial instruments that are short-term or reprice frequently and have a history of negligible credit losses is considered to approximate their carrying value. These include cash and cash equivalents, short-term receivables, accounts payable and other liabilities. Real estate and other assets consist of nonfinancial instruments, which are excluded from the scope of SFAS No. 107
Management has reviewed the carrying values of its mortgage payable in connection with interest rates currently available to the Partnership for borrowings with similar characteristics and maturities and has determined that its carrying value approximates its estimated fair value as of December 31, 1996.
As of December 31, 1996, the fair value information presented herein is based on pertinent information available to management. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and therefore, current estimates of fair value may differ significantly from the amounts presented herein.
****** AMRECORP REALTY FUND III (A Texas Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - ---------------------------------------------------------------------------- DECEMBER 31, 1996
Initial Cost To Partnership -----------------------------
Encum- Buildings Total Cost and Subsequent to Description brances Land improvements Acquisition
Twenty-eight two story apartment buildings of concrete block construction with brick veneer, stucco and wood siding exterior, and composition shingled roofs located in Abiline, Texas (b) $ 1,000,000 $ 5,721,811 $ 476,808 =========== =========== ==========
Gross Amounts at Which Carried at Close of year -------------------------
Buildings and Accumulated Description Land Improvements Total Depreciation (c)(d) (c) Twenty-eight two story apartment Buildings on concrete block construction with brick veneer, stucco and wood siding exterior, and composition shingled roofs located in Abilene, Texas $ 1,000,000 $6,198,619 $ 7,198,619 $ 2,746,375
Date of Construction: Complete at date acquired Date Acquired: 7/31/96 Life on Which Depreciation Is Computed: (a)
See notes to Schedule III.
AMRECORP REALTY FUND III (A TEXAS LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) DECEMBER 31, 1996 - -----------------------------------------------------------------------------
NOTES TO SCHEDULE III:
(a)See Note 1 to financial statements outlining depreciation methods and lives.
(b)See description of mortgages and note payable in Note 3 to the financial statements.
(c)Reconciliation of investments in real estate and accumulated depreciation for the years ended December 31, 1996, 1995 and 1994.
Investments in Accumulated Real Estate Depreciation
BALANCE, JANUARY 1, 1994 $ 6,943,536 $ 1,978,305
Additions during the year: Acquisitions 71,602 - Depreciation expense - 247,707 --------- ---------
BALANCE, DECEMBER 31, 1994 7,015,138 2,226,012
Additions during the year: Acquisitions 68,867 - Depreciation expense - 253,823 --------- ---------
BALANCE, DECEMBER 31, 1995 7,084,005 2,479,835
Additions during the year: Acquisitions 114,614 - Depreciation expense - 266,540 --------- --------- BALANCE, DECEMBER 31, 1996 $ 7,198,619 $ 2,746,375 =========== ===========
(d)Aggregate cost of real estate for federal income tax purposes is $5,748,619.
Item 9.
Item 9. Disagreements on Accounting and Financial Disclosure - ------------------------------------------------------------
The Registrant has not been involved in any disagreements on accounting and financial disclosure.
PART III
Item 10.
Item 10. Directors and Executive Officer of the Partnership - ----------------------------------------------------------- The Partnership itself has no officers or directors. LBAL, Inc., a Texas Corporation, which is wholly owned by Robert J. Werra, is the General Partner of the Partnership.
Robert J. Werra, 57, joined Loewi & Co., Incorporated ("Loewi") in 1967 as a Registered Representative. In 1971, he formed the Loewi real estate department, and was responsible for its first sales of privately placed real estate programs. Loewi Realty was incorporated in 1974, as a wholly owned subsidiary of Loewi & Co., with Mr. Werra as President. In 198O, Mr. Werra, along with three other individuals, formed Amrecorp Inc. to purchase the stock of Loewi Real Estate Inc., and Loewi Realty. In 1991 Univesco, Inc. became the management agent for the Partnership. Limited Partners have no right to participate in management of the Partnership.
Item 11.
Item 11. Management Remuneration and Transactions - -------------------------------------------------
As stated above, the Partnership has no officers or directors. Pursuant to the terms of the Limited Partnership Agreement, the General Partner receives 1% of Partnership income and loss and up to 15% of Net Proceeds received from sale or refinancing of Partnership properties (after return of Limited Partner capital contributions and payment of a 6% Current Distribution Preference thereon).
The Partnership Agreement allows for a management fee of five percent (5%) of the gross income from operations. In connection with the new loan obtained from Lexington Mortgage Company, Univesco, Inc. entered into a management agreement that pays Univesco, Inc., an affiliated company, four percent (4%) of the monthly gross income from operations. The Partnership's obligation to pay an additional one percent (1%) of the monthly gross income from operations shall be paid by the Partnership from Excess Property Income, as that term is defined in the Loan Agreement between Lexington Mortgage Company and the Partnership dated November 12, 1993. The Partnership is also permitted to engage in various transactions involving affiliates of the General Partner as described under the caption "Compensation and Fees" at pages 6-8, "Management" at pages 18-20 and "Allocation of Net Income and Losses and Cash Distributions" at pages 49-51 of the Prospectus as supplemented, incorporated in the Form S-11 Registration Statement which was filed with the Securities and Exchange Commission and made effective on November 26, 1985.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management - -----------------------------------------------------------------------
(a)
Title of Class Name and Address Amount and Nature Percent of
Limited William E. Kreger 300 units 12.59% Partnership 3301 Biddle Ave. #1101 Interest Wyandette, MI 48192
Juanita L. Werra 127 units 5.33% 5881 Prestonview Blvd. #143 Dallas, TX 75243
Monty L. Parker 127 units 5.33% 9144 North Silver Brook Lane Brown Deer, WI 53223
(b) By virtue of its organization as a limited partnership, the Partnership has no officers or directors. The General Partner is responsible for management of the Partnership, subject to certain limited democracy rights of the Limited Partners. The following persons performing functions similar to those of officers and directors of the partnership own units of limited partnership interest in the partnership.
Title of Name and Address Amount and Nature Percent of Class of Beneficial Owner of Beneficial Ownership Class
Limited Robert J. Werra 10 units .42% Partnership 6210 Campbell Road, Suite 140 Interest Dallas, TX 75248
(c) There is no arrangement, known to the Partnership, which may, at a subsequent date, result in a change in control of the Partnership.
Item 13.
Item 13. Certain Relations and Related Transactions - --------------------------------------------------- As stated in Item 11., the Partnership has no officers or directors. Pursuant to the terms of the Limited Partnership Agreement, the general partner receives 1% of partnership income and loss and up to 15% of Net Proceeds received from the sale or refinancing of Partnership Properties (after return of Limited Partner capital contributions and payment of a Current Distribution Preference thereon).
Univesco, Inc. (an affiliate of the General Partner), is entitled to receive a management fee with respect to the Properties. For residential Properties (including all leasing and releasing fees and fees for leasing-related services), the lesser of 5% of gross receipts of the Partnership from such Properties or an amount which is competitive in price and terms with other non-affiliated persons rendering comparable services which could reasonably be made available to the Partnership. The Partnership is also permitted to engage in various transactions involving affiliates of the general partner as described under the caption "Compensation and Fees" at pages 6-8, "Management" at pages 18-2O and "Allocation of Net Income and Losses and Cash Distributions" at pages 49-51 of the definitive Prospectus, incorporated in the Form S-11 Registration Statement which was filed with the Securities and Exchange Commission and made effective on November 26, 1985 and incorporated herein by reference.
PART IV
Item 14.
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K - -------------------------------------------------------------------------- (A) 1. Financial Statements
The financial statements of Amrecorp Realty Fund III are included in Part II, Item 8.
2. Financial Statements and Schedules
All schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the information is presented in the financial statements or related notes, and therefore have been omitted.
3. Exhibits None.
(B) Reports on Form 8-K for the quarter ended December 31, 1996.
None.
(C) Exhibits
3. Certificate of Limited Partnership, incorporated by reference to Registration Statement No. 33-OO152 effective November 26, 1985.
4. Limited Partnership Agreement, incorporated by reference to Registration Statement No. 33-OO152 effective November 26, 1985.
9. Not Applicable.
1O. None.
11. Not Applicable.
12. Not Applicable.
13. Not Applicable.
18. Not Applicable.
19. Not Applicable.
22. Not Applicable.
23. Not Applicable.
24. Not Applicable. 25. Power of Attorney, incorporated by reference to Registration Statement No. 33-OO152 effective November 26, 1985.
28. None.
Pursuant to the requirements of Section 13 or 15(d) 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.
AMRECORP REALTY FUND III
LBAL, Ltd., General Partner
By:________________________________
Robert J. Werra, President
April 10, 1997