-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FoVcab2Zz45D7s6SZkFGwlQccHDVCkZecFngPwaWYDNzr9Io9jpo5spTg7o2DFEU TIBC91aX0TP2hwuivSuk2g== 0000950148-00-000723.txt : 20000417 0000950148-00-000723.hdr.sgml : 20000417 ACCESSION NUMBER: 0000950148-00-000723 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REAL ESTATE ASSOCIATES LTD III CENTRAL INDEX KEY: 0000318986 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953547611 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-10673 FILM NUMBER: 601295 BUSINESS ADDRESS: STREET 1: 9090 WILSHIRE BLVD STREET 2: STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 BUSINESS PHONE: 3102782192 MAIL ADDRESS: STREET 1: 9090 WILSHIRE BLVD STREET 2: STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 10-K405 1 FORM 10-K (DATED DECEMBER 31, 1999) 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended DECEMBER 31, 1999 Commission File Number 0-10673 REAL ESTATE ASSOCIATES LIMITED III A CALIFORNIA LIMITED PARTNERSHIP I.R.S. Employer Identification No. 95-3547611 9090 Wilshire Blvd., Suite 201, Beverly Hills, California 90211 Registrant's Telephone Number, Including Area Code (310) 278-2191 Securities Registered Pursuant to Section 12(b) or 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed with the Commission by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] 2 PART I. ITEM 1. BUSINESS: Real Estate Associates Limited III ("REAL III" or the "Partnership") is a limited partnership which was formed under the laws of the State of California on July 25, 1980. On January 5, 1981, Real Estate Associates Limited III offered 3,000 units consisting of 6,000 Limited Partnership Interests and Warrants to purchase a maximum of 6,000 Additional Limited Partnership Interests through a public offering managed by E.F. Hutton Inc. The general partners of Real Estate Associates Limited III are National Partnership Investments Corp. ("NAPICO"), a California Corporation (the "Corporate General Partner"), and Coast Housing Investments Associates, a Limited Partnership formed under the California Limited Partnership Act and consisting of Messrs. Nicholas G. Ciriello, an unrelated individual, as general partner, and Charles H. Boxenbaum as limited partner. The business of REAL III is conducted primarily by NAPICO. Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating Partnership"), a majority owned subsidiary of Casden Properties Inc., a real estate investment trust organized by Alan I. Casden, purchased a 95.25% economic interest in NAPICO. The current members of NAPICO's Board of Directors are Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden REAL III holds limited partnership interests in 11 local limited partnerships as of December 31, 1999, and a general partner interest in Real Estate Associates ("REA") which in turn holds limited partnership interests in an additional partnership; therefore, REAL III holds directly or indirectly through REA, investments in 12 local limited partnerships. The general partners of REA are REAL III and NAPICO. In December 1998, the Partnership sold its interest in 20 local limited partnerships to the Operating Partnership. Each of the limited partnerships owns a low income housing project which is subsidized and/or has a mortgage note payable to or insured by agencies of the federal or local government. In order to stimulate private investment in low income housing, the federal government and certain state and local agencies have provided significant ownership incentives, including among others, interest subsidies, rent supplements, and mortgage insurance, with the intent of reducing certain market risks and providing investors with certain tax benefits, plus limited cash distributions and the possibility of long-term capital gains. There remain, however, significant risks. The long-term nature of investments in government assisted housing limits the ability of REAL III to vary its portfolio in response to changing economic, financial and investment conditions; such investments are also subject to changes in local economic circumstances and housing patterns, as well as rising operating costs, vacancies, rent collection difficulties, energy shortages and other factors which have an impact on real estate values. These projects also require greater management expertise and may have higher operating expenses than conventional housing projects. Under recently adopted law and policy, the United States Department of Housing and Urban Development ("HUD") has determined not to renew the Housing Assistance Payment ("HAP") Contracts on a long term basis on the existing terms. In connection with renewals of the HAP Contracts under such new law and policy, the amount of rental assistance payments under renewed HAP Contracts will be based on market rentals instead of above market rentals, which may be the case under existing HAP Contracts. The payments under the renewed HAP Contracts are not expected to be in an amount that would provide sufficient cash flow to permit owners of properties subject to HAP Contracts to meet the debt service requirements of existing loans insured by the Federal Housing Administration of HUD ("FHA") unless such mortgage loans are restructured. In order to address the reduction in payments under HAP Contracts as a result of this new policy, the Multi-family Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was adopted in October 1997, provides for the restructuring of mortgage loans insured by the FHA with respect to properties subject to the Section 8 program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a first mortgage loan which will be amortized on a current basis and a low interest second 1 3 mortgage loan payable to FHA which will only be payable on maturity of the first mortgage loan. This restructuring results in a reduction in annual debt service payable by the owner of the FHA-insured mortgage loan and is expected to result in an insurance payment from FHA to the holder of the FHA-insured loan due to the reduction in the principal amount. MAHRAA also phases out project-based subsidies on selected properties serving families not located in rental markets with limited supply, converting such subsidies to a tenant-based subsidy. On September 11, 1998, HUD issued interim regulations implementing MAHRAA and final regulations are expected to be issued in 2000. When the HAP Contracts are subject to renewal, there can be no assurance that the local limited partnerships in which the Partnership has an investment will be permitted to restructure its mortgage indebtedness under MAHRAA. In addition, the economic impact on the Partnership of the combination of the reduced payments under the HAP Contracts and the restructuring of the existing FHA-insured mortgage loans under MAHRAA is uncertain. The partnerships in which REAL III has invested were, at least initially, organized by private developers who acquired the sites, or options thereon, and applied for applicable mortgage insurance and subsidies. REAL III became the principal limited partner in these local limited partnerships pursuant to arm's-length negotiations with these developers, or others, who act as general partners. As a limited partner, REAL III's liability for obligations of the local limited partnership is limited to its investment. The local general partner of the local limited partnership retains responsibility for developing, constructing, maintaining, operating and managing the Project. Under certain circumstances of default, REAL III has the right to replace the general partner of the local limited partnerships, but otherwise does not have control of sale or refinancing, etc. Although each of the partnerships in which REAL III has invested generally owns a project which must compete in the market place for tenants, interest subsidies and rent supplements from governmental agencies make it possible to offer these dwelling units to eligible "low income" tenants at a cost significantly below the market rate for comparable conventionally financed dwelling units in the area. 2 4 During 1999, the projects in which REAL III had invested were substantially rented. The following is a schedule of the status as of December 31, 1999, of the projects owned by local limited partnerships in which REAL III is a limited partner. SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL III HAS AN INVESTMENT DECEMBER 31, 1999
Units Authorized For Rental Assistance Under Section 8 or Other Rent Percentage of No. of Supplement Units Total Units Name and Location Units Program Occupied Occupied - ----------------- ------ ---------------- -------- ------------- Charlotte Lakeview, Riverview 553 0/0 517 93% Residential Project Rochester, NY Hidden Pines Apts 40 40/0 38 95% Greenville, MI Jenks School Apts 83 83/0 83 100% Pawtucket, RI Lakeside Apts 32 0/21 31 97% Stuart, FL Ramblewood Apts 64 0/13 62 97% Fort Payne, AL Santa Maria Apts 86 86/0 86 100% San German, Puerto Rico Sunset Grove Apts 22 22/0 22 100% Carson City, MI Sunshine Canyon 26 26/0 23 88% Stanton, MI Village Apts 50 50/0 50 100% La Follette, TN
3 5 SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL III HAS AN INVESTMENT DECEMBER 31, 1999 (CONTINUED)
Units Authorized For Rental Assistance Under Section 8 or Other Rent Percentage of No. of Supplement Units Total Units Name and Location Units Program Occupied Occupied - ----------------- ------ --------------- -------- ------------ Vincente Geigel 80 80/0 80 100% Polanco Apts Isabela, Puerto Rico Vista De Jagueyes 73 73/0 73 100% Aguas Buenas, PR Westgate Apts 72 0/16 66 92% Albertville, AL ----- ------ ----- ---- TOTALS 1,181 460/50 1,131 96% ===== ====== =====
4 6 ITEM 2. PROPERTIES: The local limited partnerships in which REAL III holds interests own various multi-family rental properties. See Item 1 for information pertaining to these properties. ITEM 3. LEGAL PROCEEDINGS: On August 27, 1998, two investors holding an aggregate of eight units of limited partnership interests in the Partnership and two investors holding an aggregate of five units of limited partnership interest in Real Estate Associates Limited VI (another affiliated partnership in which NAPICO is the managing general partner) commenced an action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The complaint alleges that the defendants breached their fiduciary duty to the limited partners of certain NAPICO managed partnerships and made materially false and misleading statements in the consent solicitation statements sent to the limited partners of such partnerships relating to approval of the transfer of partnership interests in limited partnerships, owning certain of the properties, to the Operating Partnership organized by an affiliate of NAPICO. The plaintiffs seek equitable relief, as well as compensatory damages and litigation related costs. On August 4, 1999, one investor holding one unit of limited partnership interest in Housing Programs Limited (another affiliated partnership in which NAPICO is the managing general partner) commenced a virtually identical action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The managing general partner of such NAPICO managed partnerships and the other defendants believe that the plaintiffs' claims are without merit and intend to contest the actions vigorously. As of December 31, 1999, REAL III's Corporate General Partner was plaintiff or defendant in several other lawsuits. None of these suits were related to REAL III. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: In August 1998, a consent solicitation statement was sent to the limited partners setting forth the terms and conditions of the purchase of the limited partners' interests, held for investment by the Partnership, by the Operating Partnership, together with certain amendments to the Partnership Agreement and other disclosures of various conflicts of interest in connection with the proposed transaction. Prior to the sale of the partnership interests in 1998, the consents of the limited partners to the sale and amendments to the Partnership Agreement were obtained. PART II. ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS The Limited Partnership Interests are not traded on a public exchange but were sold through a public offering managed by E.F. Hutton Inc. It is not anticipated that any public market will develop for the purchase and sale of any Partnership interest. Limited Partnership Interests may be transferred only if certain requirements are satisfied. At December 31, 1999 there were 1,950 registered holders of units in REAL III. One distribution in the aggregate amount of $3,345,000 (or $584 per unit) was made in 1989. This represented the proceeds from the sale of one of the Partnership's real estate investments. The Partnership has invested in certain government assisted projects under programs which in many instances restrict the cash return available to Project owners. The Partnership was not designed to provide cash distributions to investors in circumstances other than refinancing or disposition of its investment in the limited partnerships. In March 1999, the Partnership made distributions of $6,881,025 to the limited partners and $69,506 to the general partners, which included using proceeds from the sale of the partnership interests. 5 7 ITEM 6. SELECTED FINANCIAL DATA:
Year Ended December 31, --------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 ------------ ------------ ------------ ------------ ------------ Loss From Operations $ (515,047) $ (928,096) $ (443,767) $ (518,472) $ (567,421) Gain on Sale of Limited Partnership Interests -- 2,647,716 -- -- -- Distributions From Limited Partnerships Recognized as Income 18,112 1,508,602 1,072,912 858,869 765,514 Equity in Income of Limited Partnerships and Amortization of Acquisition Costs 190,985 564,059 255,652 383,682 887,919 ------------ ------------ ------------ ------------ ------------ Net (Loss) Income $ (305,950) $ 3,792,281 $ 884,797 $ 724,079 $ 1,086,012 ============ ============ ============ ============ ============ Net (Loss) Income per Limited Partnership Interest $ (26) $ 328 $ 76 $ 63 $ 94 ============ ============ ============ ============ ============ Total assets $ 6,467,723 $ 14,026,790 $ 11,960,231 $ 10,933,018 $ 10,185,039 ============ ============ ============ ============ ============ Investments in Limited Partnerships $ 894,213 $ 744,457 $ 1,249,421 $ 1,063,487 $ 930,576 ============ ============ ============ ============ ============ Notes Payable $ -- $ -- $ 1,510,000 $ 1,510,000 $ 1,510,000 ============ ============ ============ ============ ============
6 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: LIQUIDITY The Partnership's primary sources of funds include interest income on money market investments and certificates of deposit and distributions from local partnerships in which the Partnership has invested. It is not expected that any of the local limited partnerships in which the Partnership has invested will generate cash flow sufficient to provide for distributions to the Partnership's limited partners in any material amount. The Partnership made a cash distribution to investors in March 1999, primarily using proceeds from the disposition of its investments in certain limited partnerships. CAPITAL RESOURCES REAL III received $14,320,000 in subscriptions for units of Limited Partnership Interests (at $5,000 per unit) during the period March 31, l981 to October 30, 1981, pursuant to a registration statement on Form S-11. As of March 10, 1982, REAL III received an additional $14,320,000 in subscriptions pursuant to the exercise of warrants and the sale of Additional Limited Partnership Interests. RESULTS OF OPERATIONS The Partnership was formed to provide various benefits to its partners as discussed in Item 1. It is anticipated that the local limited partnerships in which REAL III has invested could produce tax losses for as long as 20 years. Tax benefits will decline over time as the advantages of accelerated depreciation are greatest in the earlier years, as deductions for interest expense will decrease as mortgage principal is amortized and as the Tax Reform Act of 1986 limits the deductions available. At December 31, 1999, the Partnership has investments in 12 limited partnerships, all of which own housing projects that were substantially all rented. The Partnership sold its interests in 20 local partnerships in December 1998. The Partnership, as a limited partner, is entitled to 75% to 99% of the profits and losses of the local limited partnerships. The Partnership accounts for its investments in the local limited partnerships on the equity method, thereby adjusting its investment balance by its proportionate share of the income or loss of the local limited partnerships. Equity in losses of limited partnerships are recognized in the financial statements until the limited partnership investment account is reduced to a zero balance. Losses incurred after the limited partnership investment account is reduced to zero are not recognized. Limited partners are not liable for losses beyond their contributed capital. At December 31, 1999, the Partnership has a positive investment balance in only one local limited partnerships. Distributions received from limited partnerships are recognized as return of capital until the investment balance has been reduced to zero or to a negative amount equal to future capital contributions required. Subsequent distributions received are recognized as income. The total net (loss) income from the local limited partnerships that was allocated to the Partnership was $(310,000), $99,000 and $55,000 for the years ended December 31, 1999, 1998 and 1997, respectively. However, because losses incurred after the investment account is reduced to a zero balance are not recognized and subsequent income is not recognized until the investment account becomes positive again, the Partnership recognized equity in income of limited partnerships of $190,985, $564,059 and $255,652 for the years ended December 31, 1999, 1998 and 1997, respectively. The income recognized decreased in 1999 as a result of the sale of certain partnership interests on December 30, 1998. The cumulative amount of the unrecognized equity in losses of certain limited partnerships was approximately $16,745,000 and $16,224,000 as of December 31, 1999 and 1998, respectively. Distributions from the local limited partnerships in which the Partnership did not have a positive investment balance were $18,112, $1,508,602 and $1,072,912 for the years ended December 31, 1999, 1998 and 1997, respectively. These 7 9 amounts were recognized as income on the accompanying statements of operations, in accordance with the equity method of accounting. Distributions decreased in 1999 as a result of the sale of certain partnership interests in 1998. As of December 31, 1999, 1998 and 1997, the Partnership has cash and cash equivalents of $5,571,366, $11,331,803 and $10,575,810, respectively. Substantially all of these amounts are on deposit with two high credit quality financial institutions, earning interest. Interest income has been decreasing as a result of decreasing cash and cash equivalent balances. This resulted in the Partnership earning $215,072, $493,522 and $477,624 in interest income for the years ended December 31, 1999, 1998 and 1997, respectively. The amount of interest income varies with market rates available on deposits and with the amount of funds available for investment. Cash equivalents can be converted to cash to meet obligations of the Partnership as they arise. The Partnership intends to continue investing available funds in this manner. A recurring partnership expense is the annual management fee. The fee is payable to the Corporate General Partner of the Partnership and is calculated at .4 percent of the Partnership's original remaining invested assets. The management fee is paid to the Corporate General Partner for its continuing management of partnership affairs. The fee is payable beginning with the month following the Partnership's initial investment in a local limited partnership. Because of the decrease in invested assets at the end of 1998 as a result of the sale of partnership interests, management fees decreased from $454,800 for 1998 and 1997 to $129,292 for 1999. Until the sale of the partnership interests on December 30, 1998, the Partnership was obligated on non-recourse notes payable of $1,510,000 which bore interest at 10 percent per annum and had principal maturities ranging from June 2020 to March 2024. The notes and related interest were payable from cash flow generated from operations of the related rental properties as defined in the notes. These obligations were collateralized by the Partnership's investments in the limited partnerships. Unpaid interest was due at maturity of the notes. Because no payments were made on these notes through the sale of the limited partnership interests, interest expense remained constant at $151,000 for each of the two years in the period ended December 31, 1998 and 1997. The Partnership was relieved of these notes and related accrued interest in connection with the sale of the partnership interests. Under recently adopted law and policy, the United States Department of Housing and Urban Development ("HUD") has determined not to renew the Housing Assistance Payment ("HAP") Contracts on a long term basis on the existing terms. In connection with renewals of the HAP Contracts under such new law and policy, the amount of rental assistance payments under renewed HAP Contracts will be based on market rentals instead of above market rentals, which may be the case under existing HAP Contracts. The payments under the renewed HAP Contracts are not expected to be in an amount that would provide sufficient cash flow to permit owners of properties subject to HAP Contracts to meet the debt service requirements of existing loans insured by the Federal Housing Administration of HUD ("FHA") unless such mortgage loans are restructured. In order to address the reduction in payments under HAP Contracts as a result of this new policy, the Multi-family Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was adopted in October 1997, provides for the restructuring of mortgage loans insured by the FHA with respect to properties subject to the Section 8 program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a first mortgage loan which will be amortized on a current basis and a low interest second mortgage loan payable to FHA which will only be payable on maturity of the first mortgage loan. This restructuring results in a reduction in annual debt service payable to the owner of the FHA-insured mortgage loan and is expected to result in an insurance payment from FHA to the holder of the FHA-insured loan due to the reduction in the principal amount. MAHRAA also phases out project-based subsidies on selected properties serving families not located in rental markets with limited supply, converting such subsidies to a tenant-based subsidy. On September 11, 1998, HUD issued interim regulations implementing MAHRAA and final regulations are expected to be issued in 2000. When the HAP Contracts are subject to renewal, there can be no assurance that the local limited partnerships in which the Partnership has an investment will be permitted to restructure its mortgage indebtedness under MAHRAA. In 8 10 addition, the economic impact on the Partnership of the combination of the reduced payments under the HAP Contracts and the restructuring of the existing FHA-insured mortgage loans under MAHRAA is uncertain. As a result of the foregoing, the Partnership in 1997 undertook an extensive review of disposition, refinancing or re-engineering alternatives for the properties in which the limited partnerships have invested and are subject to HUD mortgage and rental subsidy programs. The Partnership has incurred expenses in connection with this review by various third party professionals, including accounting, legal, valuation, structural and engineering costs, which amounted to $434,940, $627,059 and $140,915 for the years ended December 31, 1999, 1998 and 1997, respectively, and are included in administrative expenses. On December 30, 1998, the Partnership sold its limited partnership interests in 20 local limited partnerships, with a total carrying value of $988,570, to the Operating Partnership. The sale resulted in proceeds to the Partnership of $1,950,530 and a net gain of $2,647,716, after being relieved of notes and interest payable of $1,947,962 and incurring selling costs of $262,206. The cash proceeds were held in escrow at December 31, 1998 and received subsequent to year-end. In March 1999, the Partnership made cash distributions of $6,881,025 to the limited partners and $69,506 to the general partners, which included using proceeds from the sale of the partnership interests. The Operating Partnership purchased such limited partner interests for cash, which it raised in connection with a private placement of its equity securities. The purchase was subject to, among other things, (i) the purchase of the general partner interests in the local limited partnerships by the Operating Partnership; (iii) the approval of HUD and certain state housing finance agencies; and (iii) the consent of the limited partners to the sale of the local limited partnership interests held for investment by the Partnership. In August 1998, a consent solicitation statement was sent to the limited partners setting forth the terms and conditions of the purchase of the limited partners' interests held for investment by the Partnership, together with certain amendments to the Partnership Agreement and other disclosures of various conflicts of interest in connection with the proposed transaction. Prior to the sale of the partnership interests, the consents of the limited partners to the sale and amendments to the Partnership Agreement were obtained. Operating expenses, other than management fees and interest expense, consist of legal and accounting fees for services rendered to the Partnership and administrative expenses. Legal and accounting fees were generally consistent and were $94,550, $83,573 and $76,993 for the years ended December 31, 1999, 1998 and 1997, respectively. Administrative expenses were $506,277, $732,245 and $238,598 for the years ended December 31, 1999, 1998 and 1997, respectively. Included in administrative expenses are reimbursements to NAPICO for certain expenses, which totaled $16,488, $35,231 and $35,227 for the years ended December 31, 1999, 1998 and 1997, respectively. Also included in administrative expenses for 1999, 1998 and 1997 is $434,940, $627,059 and $140,915, respectively, related to the aforementioned third party review of the properties owned by the local partnerships. Accounts payable at December 31, 1998 includes $283,861 of such costs. Revenues and expenses of the local limited partnerships decreased during the year ended December 31, 1999 as compared to prior years, as a result of the sale of 20 partnership interests on December 30, 1998. Total revenue for the local partnerships has decreased from $22,480,000 and $23,173,000 for the years ended December 31, 1998 and 1997, respectively, to $6,525,000 for the year ended December 31, 1999. Revenues were higher in 1997 as compared to 1998 primarily as a result of retroactive Housing Assistance Payments of $669,000 received in 1998 by five local partnerships pursuant to the terms of a settlement agreement with HUD. Total expenses for the local partnerships decreased from $22,380,000 and $22,652,000 for the years ended December 31, 1998 and 1997, respectively, to $6,835,000 for the year ended December 31, 1999. 9 11 The total net (loss) income for the local partnerships for 1999, 1998 and 1997 aggregated $(310,000), $101,000 and $59,000, respectively. The income allocated to the Partnership was $(310,000), $99,000 and $55,000 for 1999, 1998 and 1997, respectively. The Partnership, as a Limited Partner in the local limited partnerships in which it has invested, is subject to the risks incident to the construction, management, and ownership of improved real estate. The Partnership investments are also subject to adverse general economic conditions, and, accordingly, the status of the national economy, including substantial unemployment, concurrent inflation and changing legislation which could increase vacancy levels, rental payment defaults, and operating expenses, which in turn, could substantially increase the risk of operating losses for the projects. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA: The Financial Statements and Supplementary Data are listed under Item 14. ITEM 9. CHANGES WITH AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE: Not applicable. 10 12 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT DECEMBER 31, 1999 11 13 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of Real Estate Associates Limited III (A California limited partnership) We have audited the accompanying balance sheets of Real Estate Associates Limited III (a California limited partnership) as of December 31, 1999 and 1998, and the related statements of operations, partners' equity (deficiency) and cash flows for each of the three years in period ended December 31, 1999. Our audits also included the financial statement schedules listed in the index in item 14. These financial statements and financial statement schedules are the responsibility of the management of the Partnership. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We did not audit the financial statements of certain limited partnerships, the investments in which are reflected in the accompanying financial statements using the equity method of accounting. The investments in these limited partnerships represent 13 percent and 5 percent of total assets as of December 31, 1999 and 1998, respectively, and the equity in income of these limited partnerships represents 17 percent, 11 percent and 19 percent of the total net income of the Partnership for the years ended December 31, 1999, 1998 and 1997, respectively, and represent a substantial portion of the investee information in Note 2 and the financial statement schedules. The financial statements of these limited partnerships were audited by other auditors. Their reports have been furnished to us and our opinion, insofar as it relates to the amounts included for these limited partnerships, is based solely on the reports of the other auditors. 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 our audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Real Estate Associates Limited III as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. Also, in our opinion, based on our audits and the reports of other auditors, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Los Angeles, California March 31, 2000 12 14 REAL ESTATE ASSOCIATES LIMITED III (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS DECEMBER 31, 1999 AND 1998 ASSETS
1999 1998 ----------- ---------- INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 894,213 $ 744,457 CASH AND CASH EQUIVALENTS (Note 1) 5,571,366 11,331,803 CASH DUE FROM ESCROW (Note 2) - 1,950,530 DUE FROM NAPICO (Note 4) 2,144 - ----------- ----------- TOTAL ASSETS $ 6,467,723 $14,026,790 =========== =========== LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY) LIABILITIES: Accounts payable (Note 2) $ 6,161 $ 308,747 ----------- ----------- COMMITMENTS AND CONTINGENCIES (Notes 4 and 5) PARTNERS' EQUITY (DEFICIENCY): General partners (134,361) (61,795) Limited partners 6,595,923 13,779,838 ----------- ----------- 6,461,562 13,718,043 ----------- ----------- TOTAL LIABILITIES AND PARTNERS' EQUITY $ 6,467,723 $14,026,790 =========== ===========
The accompanying notes are integral part of these financial statements. 13 15 REAL ESTATE ASSOCIATES LIMITED III (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997 ----------- ----------- ------------ INTEREST AND OTHER INCOME $ 215,072 $ 493,522 $ 477,624 OPERATING EXPENSES: Legal and accounting 94,550 83,573 76,993 Management fees - general partner (Note 4) 129,292 454,800 454,800 Interest (Note 3) - 151,000 151,000 Administrative (Note 4) 506,277 732,245 238,598 ---------- ---------- ----------- Total operating expenses 730,119 1,421,618 921,391 ---------- ---------- ----------- LOSS FROM OPERATIONS (515,047) (928,096) (443,767) GAIN ON SALE OF LIMITED PARTNERSHIP INTERESTS (Note 2) - 2,647,716 - DISTRIBUTIONS FROM LIMITED PARTNERSHIPS RECOGNIZED AS INCOME (Note 2) 18,112 1,508,602 1,072,912 EQUITY IN INCOME OF LIMITED PARTNERSHIPS AND AMORTI- ZATION OF ACQUISITION COSTS (Note 2) 190,985 564,059 255,652 ---------- ---------- ----------- NET (LOSS) INCOME $ (305,950) $3,792,281 $ 884,797 ========== ========== =========== NET (LOSS) INCOME PER LIMITED PARTNERSHIP INTEREST (Note 1) $ (26) $ 328 $ 76 ========== ========== ===========
The accompanying notes are integral part of these financial statements. 14 16 REAL ESTATE ASSOCIATES LIMITED III (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY) FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
General Limited Partners Partners Total ---------- ------------ ------------ EQUITY (DEFICIENCY), January 1, 1997 $(108,566) $ 9,149,531 $ 9,040,965 Net income for 1997 8,848 875,949 884,797 --------- ----------- ----------- EQUITY (DEFICIENCY), December 31, 1997 (99,718) 10,025,480 9,925,762 Net income for 1998 37,923 3,754,358 3,792,281 --------- ----------- ----------- EQUITY (DEFICIENCY), December 31, 1998 (61,795) 13,779,838 13,718,043 Distributions (69,506) (6,881,025) (6,950,531) Net loss for 1999 (3,060) (302,890) (305,950) --------- ----------- ----------- EQUITY (DEFICIENCY), December 31, 1999 $(134,361) $ 6,595,923 $ 6,461,562 ========= =========== ===========
The accompanying notes are integral part of these financial statements. 15 17 REAL ESTATE ASSOCIATES LIMITED III (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997 ------------ ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (305,950) $ 3,792,281 $ 884,797 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Gain on sale of limited partnership interests - (2,647,716) Equity in income of limited partnerships and amortization of acquisition costs (190,985) (564,059) (255,652) (Increase) decrease in other assets (2,144) 135,000 - Increase accrued interest payable - 23,685 - (Decrease) increase in accounts payables (302,586) 198,555 142,416 ----------- ----------- ----------- Net cash (used in) provided by operating activities (801,665) 937,746 771,561 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Costs related to sale of partnership interests - (262,206) Distribution from limited partnerships recognized as return of capital 41,229 305,634 69,718 Capital contributions and advances to limited partnerships - (225,181) - Proceeds from the sale of limited partnership interests 1,950,530 - ----------- ----------- ----------- Net cash provided by (used in) investing activities 1,991,759 (181,753) 69,718 ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners (6,950,531) - - ----------- ----------- ----------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,760,437) 755,993 841,279 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11,331,803 10,575,810 9,734,531 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, END OF YEAR $ 5,571,366 $11,331,803 $10,575,810 =========== =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ - $ 127,315 $ 111,326 =========== =========== =========== SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES See Note 2 to financial statements regarding notes and interest payable
The accompanying notes are integral part of these financial statements. 16 18 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Real Estate Associates Limited III (the "Partnership") was formed under the California Limited Partnership Act on July 25, 1980. The Partnership was formed to invest either directly or indirectly in other partnerships which own and operate primarily federal, state and local government-assisted housing projects. The general partners are National Partnership Investments Corp. (NAPICO), the corporate general partner, and Coast Housing Investment Associates (CHIA), a limited partnership. Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating Partnership"), a majority owned subsidiary of Casden Properties Inc., a real estate investment trust organized by Alan I. Casden, purchased a 95.25% economic interest in NAPICO. The business of REAL III is conducted primarily by NAPICO. These financial statements include the accounts of Real Estate Associates Limited III and Real Estate Associates ("REA"), a California general partnership in which the Partnership holds a 99.9 percent general partner interest. Losses in excess of the minority interest in equity that would otherwise be attributed to the minority interest are being allocated to the Partnership. The Partnership offered 3,000 units and issued 2,864 units of limited partner interests through a public offering. Each unit was comprised of two limited partner interests and a warrant granting the investor the right to purchase two additional limited partner interests. An additional 5,728 interests were issued from the exercise of the warrants and the sale of interests associated with warrants not exercised. The general partners have a 1 percent interest in profits and losses of the Partnership. The limited partners have the remaining 99 percent interest in proportion to their respective investments. The Partnership shall be dissolved only upon the expiration of 52 complete calendar years (December 31, 2032) from the date of the formation of the Partnership or the occurrence of other events as specified in the terms of the Partnership agreement. Upon total or partial liquidation of the Partnership or the disposition or partial disposition of a project or project interest and distribution of the proceeds, the general partners will be entitled to a liquidation fee as stipulated in the Partnership agreement. The limited partners 17 19 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) will have a priority return equal to their invested capital attributable to the project(s) or project interest(s) sold and shall receive from the sale of the project(s) or project interest(s) an amount sufficient to pay state and federal income taxes, if any, calculated at the maximum rate then in effect. The general partners' liquidation fee may accrue but shall not be paid until the limited partners have received distributions equal to 100 percent of their capital contributions. On December 30, 1998, the Partnership sold its interests in 20 local limited partnerships for $1,950,530 to the Operating Partnership. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Method of Accounting for Investments in Limited Partnerships The investments in limited partnerships are accounted for on the equity method. Acquisition, selection and other costs related to the acquisition of the projects are capitalized as part of the investment account and are being amortized on a straight line basis over the estimated lives of the underlying assets, which is generally 30 years. Net Income (Loss) Per Limited Partnership Interest Net income per limited partnership interest was computed by dividing the limited partners' share of net income (loss) by the number of limited partnership interests outstanding during the year. The number of limited partnership interests was 11,456 for all years presented. Cash and Cash Equivalents Cash and cash equivalents consist of cash and bank certificates of deposit with an original maturity of three months or less. The Partnership has its cash and cash equivalents on deposit primarily with two high credit quality financial institutions. Such cash and cash equivalents are in excess of the FDIC insurance limit. 18 20 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Impairment of Long-Lived Assets The Partnership reviews long-lived assets to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows is less than the carrying amount of the assets, the Partnership recognizes an impairment loss. 2. INVESTMENTS IN LIMITED PARTNERSHIPS The Partnership holds limited partnership interests in 12 limited partnerships as of December 31, 1999 and 1998, after selling its interest in 20 limited partnerships in 1998. The limited partnerships own residential low income rental projects consisting of 1,181 apartment units. The mortgage loans of these projects are payable to or insured by various governmental agencies. The Partnership, as a limited partner, is entitled to between 75 percent and 99 percent of the profits and losses of the limited partnerships it has invested in directly. The Partnership is also entitled to 99.9 percent of the profits and losses of REA. REA holds a 99 percent interest in the limited partnerships in which it has invested. Equity in losses of limited partnerships is recognized in the financial statements until the limited partnership investment account is reduced to a zero balance. Losses incurred after the limited partnership investment account is reduced to zero are not recognized. The cumulative amount of the unrecognized equity in losses of certain limited partnerships was approximately $16,745,000 and $16,224,000 as of December 31, 1999 and 1998, respectively. Distributions from limited partnerships are recognized as a reduction of capital until the investment balance has been reduced to zero. Subsequent distributions received are recognized as income. 19 21 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED) The following is a summary of the investments in limited partnerships and reconciliation to the limited partnership accounts:
1999 1998 ----------- --------- Investment balance, beginning of year $ 744,457 $1,249,421 Capital contributions 225,181 Equity in income of limited partnerships 193,206 570,032 Investment in limited partnerships sold (988,570) Amortization of capitalized acquisition costs and fees (2,221) (5,973) Cash distributions recognized as return of capital (41,229) (305,634) ----------- ----------- Investment balance, end of year $ 894,213 $ 744,457 =========== ===========
The difference between the investment in the accompanying balance sheets at December 31, 1999 and 1998, and the deficiency per the limited partnerships' combined financial statements is due primarily to the cumulative unrecognized equity in losses of certain limited partnerships, costs capitalized to the investment account and cumulative distributions recognized as income. Selected financial information from the combined financial statements at December 31, 1999 and 1998 and for each of the three years in the period ended December 31, 1999, of the limited partnerships in which the Partnership has invested directly or indirectly, is as follows: 20 22 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED) Balance Sheets
1999 1998 -------- -------- (in thousands) Land and buildings, net $ 12,614 $ 13,709 ========= ======== Total assets $ 15,787 $ 16,672 ========= ======== Mortgages payable $ 29,569 $ 30,089 ========= ======== Total liabilities $ 31,810 $ 32,270 ========= ======== Deficiency in Equity of Real Estate Associates Limited III $(16,338) $(15,950) ======== ======== Equity of other partners $ 315 $ 352 ======== ========
Statements of Operations
1999 1998 1997 ------- -------- ------- (in thousands) Total revenue $ 6,525 $22,480 $23,173 ======= ======= ======= Interest expense $ 1,787 $ 6,564 $ 6,929 ======= ======== ======== Depreciation $ 1,264 $ 3,617 $ 3,674 ======= ======== ======== Total expenses $ 6,835 $22,380 $23,114 ======= ======= ======= Net income (loss) $ (310) $ 101 $ 59 ======= ======= ======= Net (loss) income allocable to the Partnership $ (310) $ 99 $ 55 ======= ======= =======
21 23 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED) Land and buildings, above, have been adjusted for the amount by which the investments in the limited partnerships exceed the Partnership's share of the net book value of the underlying net assets of the investee which are recorded at historical costs. Depreciation on the adjustment is provided for over the estimated remaining useful lives of the properties. An affiliate of NAPICO was the general partner in one of the limited partnerships in which the partnership interests were sold on December 30, 1998, and another affiliate received property management fees of 5 percent of its revenue. The affiliate received property management fees of $16,128 and $17,408 in 1998 and 1997, respectively. Under recently adopted law and policy, the United States Department of Housing and Urban Development ("HUD") has determined not to renew the Housing Assistance Payment ("HAP") Contracts on a long term basis on the existing terms. In connection with renewals of the HAP Contracts under such new law and policy, the amount of rental assistance payments under renewed HAP Contracts will be based on market rentals instead of above market rentals, which may be the case under existing HAP Contracts. The payments under the renewed HAP Contracts are not expected to be in an amount that would provide sufficient cash flow to permit owners of properties subject to HAP Contracts to meet the debt service requirements of existing loans insured by the Federal Housing Administration of HUD ("FHA") unless such mortgage loans are restructured. In order to address the reduction in payments under HAP Contracts as a result of this new policy, the Multi-family Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was adopted in October 1997, provides for the restructuring of mortgage loans insured by the FHA with respect to properties subject to the Section 8 program. Under MAHRAA, an FHA-insured mortgage loan can be restructured into a first mortgage loan which will be amortized on a current basis and a low interest second mortgage loan payable to FHA which will only be payable on maturity of the first mortgage loan. This restructuring results in a reduction in annual debt service payable to the owner of the FHA-insured mortgage loan and is expected to result in an insurance payment from FHA to the holder of the FHA-insured loan due to the reduction in the principal amount. MAHRAA also phases out project-based subsidies on selected properties serving families not located in rental markets with limited supply, converting such subsidies to a tenant-based subsidy. On September 11, 1998, HUD issued interim regulations implementing MAHRAA and final regulations are expected to be issued in 2000. 22 24 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED) When the HAP Contracts are subject to renewal, there can be no assurance that the local limited partnerships in which the Partnership has an investment will be permitted to restructure its mortgage indebtedness under MAHRAA. In addition, the economic impact on the Partnership of the combination of the reduced payments under the HAP Contracts and the restructuring of the existing FHA-insured mortgage loans under MAHRAA is uncertain. As a result of the foregoing, the Partnership in 1997 undertook an extensive review of disposition, refinancing or re-engineering alternatives for the properties in which the limited partnerships have invested and are subject to HUD mortgage and rental subsidy programs. The Partnership has incurred expenses in connection with this review by various third party professionals, including accounting, legal, valuation, structural and engineering costs, which amounted to $434,940, $627,059 and $140,915 for the years ended December 31, 1999, 1998 and 1997, respectively, and are included in administrative expenses. Accounts payable at December 31, 1998 includes $283,861 of such costs. On December 30, 1998, the Partnership sold its limited partnership interests in 20 local limited partnerships, with a total carrying value of $988,570, to the Operating Partnership. The sale resulted in proceeds to the Partnership of $1,950,530 and a net gain of $2,647,716, after being relieved of notes and interest payable of $1,947,962 and incurring selling costs of $262,206. The cash proceeds were held in escrow at December 31, 1998 and were collected in 1999. In March 1999, the Partnership made cash distributions of $6,881,025 to the limited partners and $69,506 to the general partners, which included using proceeds from the sale of the partnership interests. The Operating Partnership purchased such limited partner interests for cash, which it raised in connection with a private placement of its equity securities. The purchase was subject to, among other things, (i) the purchase of the general partner interests in the local limited partnerships by the Operating Partnership; (iii) the approval of HUD and certain state housing finance agencies; and (iii) the consent of the limited partners to the sale of the local limited partnership interests held for investment by the Partnership. In August 1998, a consent solicitation statement was sent to the limited partners setting forth the terms and conditions of the purchase of the limited partners' interests held for investment by the Partnership, together with certain amendments to the Partnership Agreement and other disclosures of various conflicts of interest in connection with the proposed transaction. Prior to the sale of the partnership interests, the consents of the limited partners to the sale and amendments to the Partnership Agreement were obtained. 23 25 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 3. NOTES PAYABLE Certain of the Partnership's investments involved purchases of partnership interests from partners who subsequently withdrew from the operating partnership. The Partnership was obligated on non-recourse notes payable of $1,510,000, bearing interest at 10 percent, to the sellers of the partnership interests. These notes were payable by the Partnership through REA, and had principal maturity dates in June 2020 and March 2024 or upon the sale or refinancing of the underlying partnership properties. These notes and the related interest were collateralized by REA's investment in the respective limited partnerships and were payable only out of cash distributions from the investee partnerships, as defined in the notes. Unpaid interest was due at maturity of the notes. The Partnership was relieved of these notes and related accrued interest in connection with the sale of the partnership interests in 1998. 4. FEES AND EXPENSES DUE GENERAL PARTNER Under the terms of the Restated Certificate and Agreement of Limited Partners, the Partnership is liable to NAPICO for an annual management fee equal to .4 percent of the original invested assets of the remaining limited partnerships. Invested assets is defined as the costs of acquiring project interests, including the proportionate amount of the mortgage loans related to the Partnership's interest in the capital accounts of the respective partnerships. The Partnership reimburses NAPICO for certain expenses. The reimbursement to NAPICO was $16,488, $35,231 and $35,227 in 1999, 1998 and 1997, respectively, and is included in administrative expenses. 5. CONTINGENCIES On August 27, 1998, two investors holding an aggregate of eight units of limited partnership interests in the Partnership and two investors holding an aggregate of five units of limited partnership interest in Real Estate Associates Limited VI (another affiliated partnership in which NAPICO is the managing general partner) commenced an action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The complaint alleges that the defendants breached their fiduciary duty to the limited partners of certain NAPICO managed partnerships and made materially false and misleading statements in the consent solicitation statements sent to the 24 26 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 5. CONTINGENCIES (CONTINUED) limited partners of such partnerships relating to approval of the transfer of partnership interests in limited partnerships, owning certain of the properties, to the Operating Partnership organized by an affiliate of NAPICO. The plaintiffs seek equitable relief, as well as compensatory damages and litigation related costs. On August 4, 1999, one investor holding one unit of limited partnership interest in Housing Programs Limited (another affiliated partnership in which NAPICO is the managing general partner) commenced a virtually identical action in the United States District Court for the Central District of California against the Partnership, NAPICO and certain other affiliated entities. The managing general partner of such NAPICO managed partnerships and the other defendants believe that the plaintiffs' claims are without merit and intend to contest the actions vigorously. The corporate general partner of the Partnership is a plaintiff in various lawsuits and has also been named a defendant in other lawsuits arising from transactions in the ordinary course of business. In the opinion of management and the corporate general partner, the claims will not result in any material liability to the Partnership. 6. INCOME TAXES No provision has been made for income taxes in the accompanying financial statements since such taxes, if any, are the liability of the individual partners. The major differences in tax and financial reporting result from the use of different bases and depreciation methods for the properties held by the limited partnerships. Differences in tax and financial losses also arise as losses are not recognized for financial reporting purposes when the investment balance has been reduced to zero. 7. FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments. The carrying amount of assets and liabilities reported on the balance sheets that require such disclosure approximates fair value due to their short-term maturity. 25 27 REAL ESTATE ASSOCIATES LIMITED III (A California limited partnership) NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1999 8. FOURTH QUARTER ADJUSTMENT The Partnership's policy is to record its equity in income of limited partnerships on a quarterly basis, using estimated financial information furnished by the various local operating general partners. The equity in income reflected in the accompanying annual financial statements is based primarily upon audited financial statements of the investee limited partnerships. The increase of approximately $26,000, between the estimated nine-month equity in income and the actual total for 1999 equity in income has been recorded in the fourth quarter. 26 28 SCHEDULE REAL ESTATE ASSOCIATES LIMITED III INVESTMENTS IN LIMITED PARTNERSHIPS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Year Ended December 31, 1999 ------------------------------------------------------------------------------------- Cash Equity Balance Distri- in Balance January Capital butions Income December Limited Partnerships 1, 1999 Contributions Received (Loss) Sale 31, 1999 - ----------------------------- ----------- ------------ ---------- ---------- ---------- ----------- Charlotte $ $ $ $ $ $ Hidden Pines Apartments Jenks School Apartments 744,457 (41,229) 190,985 894,213 Lakeside Apartments Ramblewood Apartments Santa Maria Apartments Sunset Grove Apartments Sunshine Canyon Apartments Vicente Geigel Polanco Apts. Village Apartments Vista De Jagueyes Westgate Apartments ---------- ----------- --------- --------- --------- ---------- $ 744,457 $ - $ (41,229) $ 190,985 $ - $ 894,213 ========== =========== ========= ========= ========= ==========
27 29 SCHEDULE (Continued) REAL ESTATE ASSOCIATES LIMITED III INVESTMENTS IN LIMITED PARTNERSHIPS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Year Ended December 31, 1998 ------------------------------------------------------------------------------------- Cash Equity Balance Distri- in Balance January Capital butions Income December Limited Partnerships 1, 1998 Contributions Received (Loss) Sale 31, 1998 - ----------------------------- ----------- ------------ ---------- ---------- ---------- ----------- Bowin Place * $ 683,280 $ $ (39,861) $ 154,970 $ (798,389) $ - Casa de las Hermanitas * Charlotte Creekview Apartments * Foothill Gardens * Frazier Park Apartments * Gary Manor * Grandview Homes * Hidden Pines Apartments Highlawn Place * (175,156) 175,156 - Jenks School Apartments 566,141 (41,229) 219,545 744,457 Kern Villa * Lakeside Apartments New Baltimore Towers * (23,749) 23,749 - Panorama Park Apartments * (25,639) 25,639 - Ramblewood Apartments 35,000 (35,000) - Santa Maria Apartments Senior Chateau * Sheraton Towers * South Bay Villa * Sunset Grove Apartments Sunshine Canyon Apartments Tujunga Gardens * Twenty-Nine Palms Apartments * Vicente Geigel Polanco Apts. Village Apartments Village Apartments (Kaufman) * Village Grove Apartments * 190,181 (190,181) - Vista De Jagueyes Westgate Apartments Wilderness Trail Manor * Wilkes Towers * ----------- ------------ ---------- ---------- ---------- ----------- $ 1,249,421 $ 225,181 $ (305,634) $ 564,059 $ (988,570) $ 744,457 =========== ============ ========== ========== ========== ===========
* Sold to the Operating Partnership in 1998 28 30 SCHEDULE (Continued) REAL ESTATE ASSOCIATES LIMITED III INVESTMENTS IN LIMITED PARTNERSHIPS FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
Year Ended December 31, 1997 --------------------------------------------------------------------- Cash Equity Balance Distri- in Balance January Capital butions Income December Limited Partnerships 1, 1997 Contributions Received (Loss) 31, 1997 ----------- ------------ ---------- ---------- ---------- Bowin Place $ 596,966 $ $ (28,489) $ 114,803 $ 683,280 Casa de las Hermanitas Charlotte Creekview Apartments Foothill Gardens Frazier Park Apartments Gary Manor Grandview Homes Hidden Pines Apartments Highlawn Place Jenks School Apartments 466,521 (41,229) 140,849 566,141 Kern Villa Lakeside Apartments New Baltimore Towers Panorama Park Apartments Ramblewood Apartments Santa Maria Apartments Senior Chateau Sheraton Towers South Bay Villa Sunset Grove Apartments Sunshine Canyon Apartments Tujunga Gardens Twenty-Nine Palms Apartments Vicente Geigel Polanco Apts. Village Apartments Village Apartments (Kaufman) Village Grove Apartments Vista De Jagueyes Westgate Apartments Wilderness Trail Manor Wilkes Towers ----------- ------------ ---------- ---------- ---------- $ 1,063,487 $ - $ (69,718) $ 255,652 $1,249,421 =========== ============ ========== ========== ==========
29 31 SCHEDULE (CONTINUED) REAL ESTATE ASSOCIATES LIMITED III INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED FROM AFFILIATES AND OTHER PERSONS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 NOTES: 1. Equity in losses of the limited partnerships represents the Partnership's allocable share of the net loss from the limited partnerships for the year. Equity in losses of the limited partnerships will be recognized until the investment balance is reduced to zero or below zero to an amount equal to future capital contributions to be made by the Partnership. 2. Cash distributions from the local limited partnerships will be treated as a return on the investment and will reduce the investment balance until such time as the investment is reduced to an amount equal to additional contributions. Distributions subsequently received will be recognized as income. 30 32 SCHEDULE III REAL ESTATE ASSOCIATES LIMITED III REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL III HAS INVESTMENTS DECEMBER 31, 1999
Building Furnishings and Equipment- Initial Cost to Partnership Number and Amount of Outstanding Carried at Accumulated Construction Partnership/Location Units Mortgage Loans Land Close of Period Total Depreciation Period - -------------------- ----- -------------- ---------- --------------- ----------- ------------ ------------ Charlottle Lakeview 553 $12,194,921 $ 551,500 $19,112,102 $19,663,602 $15,966,823 (A) Rochester, NY Hidden Pines Apartments 40 1,360,326 43,954 1,648,093 1,692,047 1,642,417 1981 Greenville, Michigan Jenks School Apartments 83 1,913,510 96,740 3,682,974 3,779,714 2,089,083 1981-1982 Pawtucket, Rhode Island Lakeside Apartments 32 871,855 72,336 1,018,475 1,090,811 801,742 1980-1981 Stuart, Florida Ramblewood Apartments 64 1,479,759 53,267 2,075,176 2,128,443 1,116,926 1980-1981 Fort Payne, Alabama Santa Maria Apartments 86 2,773,619 86,106 3,412,337 3,498,443 2,189,926 1981-1982 San German, Puerto Rico Sunset Groove Apartments 22 648,496 19,432 815,429 834,861 797,138 1981-1982 Carson City, Michigan Sunshine Canyon Apartments 26 829,990 20,262 999,551 1,019,813 978,542 1981-1982 Stanton, Michigan Village Apartments 50 1,429,932 65,245 1,774,324 1,839,569 1,274,669 1981-1982 La Follette, Tennessee Vicente Geigel Polanco Apts 80 2,550,526 107,685 3,012,687 3,120,372 1,902,285 1981-1982 Issabela, Puerto Rico Vista De Jagueyes 73 2,515,518 102,554 3,265,050 3,367,604 2,224,802 1981-1982 Aguas Buenas, Puerto Rico Westgate Apartments 72 1,000,872 80,000 1,486,035 1,566,035 823,148 1980-1981 Albertville, Alabama Additional basis of real estate due to REAL III's capital contribution to investee limited partnership 84,671 2,649,036 2,733,707 1,913,598 ----------- ---------- ----------- ----------- ----------- TOTAL 1181 $29,569,324 $1,383,752 $44,951,269 $46,335,021 $33,721,099 =========== ========== =========== ============ ===========
(A) This project was completed when REAL III entered the local partnership. 31 33 SCHEDULE III (CONTINUED) REAL ESTATE ASSOCIATES LIMITED III REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL III HAS INVESTMENTS DECEMBER 31, 1999, 1998 AND 1997 NOTES: 1. Each local limited partnership has developed, owns and operates the housing project. Substantially all projects costs, including construction period interest expense, were capitalized by the limited partnerships. 2. Depreciation is provided for by various methods over the estimated useful lives of Projects. The estimated composite useful lives of the buildings are generally from 25 to 40 years. 3. Investments in property and equipment:
Buildings, Furnishings Land and Equipment Total ------------ ------------- ------------- Balance, January 1, 1997 $ 8,822,413 $ 121,718,426 $ 130,540,839 Net additions during 1997 5,770 1,271,089 1,276,859 ------------ ------------- ------------- Balance, December 31, 1997 8,828,183 122,989,515 131,817,698 Sales of Properties during 1998 (7,444,431) (78,827,654) (86,272,085) Net additions during 1998 - 655,826 655,826 ------------ ------------- ------------- Balance, December 31, 1998 1,383,752 44,817,687 46,201,439 Net additions during 1999 - 133,582 133,582 ------------ ------------- ------------- Balance, December 31, 1999 $ 1,383,752 $ 44,951,269 $ 46,335,021 ============ ============= =============
32 34 SCHEDULE III (Continued) REAL ESTATE ASSOCIATES LIMITED III REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS IN WHICH REAL III HAS INVESTMENTS DECEMBER 31, 1999
Buildings, Furnishings And Equipment ------------- Accumulated Depreciation: Balance, January 1, 1997 $ 75,533,431 Net additions during 1997 3,617,652 ------------ Balance, December 31, 1997 79,151,083 Sales of Properties during 1998 (50,235,484) Net additions during 1998 3,576,549 ------------ Balance, December 31, 1998 32,492,148 Net additions during 1999 1,228,951 ------------ Balance, December 31, 1999 $ 33,721,099 ============
33 35 PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT: REAL ESTATE ASSOCIATES LIMITED III (the "Partnership") has no directors or executive officers of its own. Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating Partnership"), a majority owned subsidiary of Casden Properties Inc., a real estate investment trust organized by Alan I. Casden, purchased a 95.25% economic interest in NAPICO. The following biographical information is presented for the directors and executive officers of NAPICO with principal responsibility for the Partnership's affairs. CHARLES H. BOXENBAUM, 70, Chairman of the Board of Directors and Chief Executive Officer of NAPICO. Mr. Boxenbaum has been associated with the NAPICO since its inception. He has been active in the real estate industry since 1960, and prior to joining NAPICO was a real estate broker with the Beverly Hills firm of Carl Rhodes Company. Mr. Boxenbaum has been a guest lecturer at national and state realty conventions, certified properties exchanger's seminars, Los Angeles Town Hall, National Association of Home Builders, International Council of Shopping Centers, Society of Conventional Appraisers, California Real Estate Association, National Institute of Real Estate Brokers, Appraisal Institute, various mortgage banking seminars, and the North American Property Forum held in London, England. In 1963, he was the winner of the Snyder Award, the highest annual award offered by the National Association of Real Estate Boards for Best Exchange. He is one of the founders and a past director of the First Los Angeles Bank, organized in November 1974. Mr. Boxenbaum was a member of the Board of Directors of the National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree from the University of Chicago. BRUCE E. NELSON, 48, President and a director of NAPICO. Mr. Nelson joined the NAPICO in 1980 and became President in February 1989. He is responsible for the operations of all NAPICO sponsored limited partnerships. Prior to that he was primarily responsible for the securities aspects of the publicly offered real estate investment programs. Mr. Nelson is also involved in the identification, analysis, and negotiation of real estate investments. From February 1979 to October 1980, Mr. Nelson held the position of Associate General Counsel at Western Consulting Group, Inc., private residential and commercial real estate syndicators. Prior to that time Mr. Nelson was engaged in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor of Arts degree from the University of Wisconsin and is a graduate of the University of Colorado School of Law. He is a member of the State Bar of California and is a licensed real estate broker in California and Texas. ALAN I. CASDEN, 54, Chairman of Casden Properties Inc., a director and member of the audit committee of NAPICO, and chairman of the Executive Committee of NAPICO. Mr. Casden has been involved in approximately $3 billion of real estate financings and sales and has been responsible for the development and construction of more than 12,000 apartment units and 5,000 single-family homes and condominiums. Mr. Casden is a member of the American Institute of Certified Public Accountants and of the California Society of Certified Public Accountants. Mr. Casden is a member of the advisory board of the National Multi-Family Housing Conference, the Multi-Family Housing Council, and the President's Council of the California Building Industry Association. He also serves on the advisory board to the School of Accounting of the University of 34 36 Southern California. He holds a Bachelor of Science and a Masters in Business Administration degree from the University of Southern California. PAUL PATIERNO, 43, Chief Financial Officer. Mr. Patierno joined NAPICO in 1998 and is responsible for its financial affairs, as well as the limited partnerships sponsored by it. From 1995 until joining NAPICO in September 1998, Mr. Patierno was a senior manager in the affordable housing group of Altschuler, Melvoin and Glasser LLP, a national public accounting firm. From 1990 to 1995, he practiced public accounting with a firm specializing in real estate syndication. Mr. Patierno received his bachelor of science degree in accounting from California State University at Northridge, and is a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. PATRICIA W. TOY, 70, Senior Vice President - Communications and Assistant Secretary. Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a U.S. Naval Officer in communications and personnel assignments. She holds a Bachelor of Arts Degree from the University of Nebraska. MARK L. WALTHER, 39, Executive Vice President, General Counsel and Assistant Secretary. Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther worked in the San Francisco law firm of Browne and Kahn which specialized in construction litigation. Mr. Walther received his Bachelor of Arts Degree in Political Science from the University of California, Santa Barbara and is a graduate of the University of California, Davis, School of Law. He is a member of the State Bar of Hawaii. NAPICO and several of its officers, directors and affiliates, including Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on June 25, 1997, of an administrative cease and desist order by the U.S. Securities and Exchange Commission (the "Commission"), without admitting or denying any of the findings made by the Commission. The Commission found that NAPICO and others had violated certain federal securities laws in connection with transactions unrelated to the Partnership. The Commission's order did not impose any cost, burden or penalty on any partnership managed by NAPICO and does not impact NAPICO's ability to serve as the Partnership's Managing General Partner. ITEM 11. MANAGEMENT RENUMERATION AND TRANSACTIONS Real Estate Associates Limited III has no officers, employees or directors. However, under the terms of the Restated Certificate and Agreement of Limited Partnership, the Partnership is obligated to pay the Corporate General Partner an annual management fee The annual management fee is approximately equal to .4 percent of the invested assets, including the Partnership's allocable share of the mortgages related to real estate properties held by local limited partnerships is to be paid to the general partners. The fee is earned beginning in the month the Partnership makes its initial contribution to the limited partnership. In addition, the Partnership reimburses the Corporate General Partner for certain expenses. 35 37 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT: (a) Security Ownership of Certain Beneficial Owners The general partners own all of the outstanding general partnership interests of REAL III; no person is known to own beneficially in excess of 5% of the outstanding limited partnership interests. (b) At December 31, 1999, security ownership of management is as listed:
Amount and Percentage of Nature of Outstanding Name of Beneficial Limited Title of Class Beneficial Owner Owner Partner Interests - -------------- ---------------- ---------- ----------------- Limited Partnership Interest Coast Housing Investments Associates (CHIA) 9090 Wilshire Blvd., #201 Beverly Hills, CA 90211 30,000 * Limited Partnership Interest Charles H. Boxenbaum 780 Latimer Road Santa Monica, CA 90402 17,500 * Limited Partnership Interest Bruce E. Nelson 7036 Grasswood Avenue Malibu, CA 90265 5,000 *
* Cumulative Limited Partnership interests owned by corporate officers or the general partner is less than 1% interest of total outstanding Limited Partnership interests. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: The Partnership has no officers, directors or employees of its own. All of its affairs are managed by the Corporate General Partner, National Partnership Investments Corp. The Partnership is obligated to NAPICO for an annual management fee equal to .4 percent of the original remaining invested assets of the limited partnerships. Invested assets is defined as the costs of acquiring project interests, including the proportionate amount of the mortgage loans related to the Partnership's interest in the capital accounts of the respective partnerships. The management fee was $129,292 for the year ended December 31, 1999 and $454,800 for each of the two years in the period ended December 31, 1998. The Partnership reimburses NAPICO for certain expenses. The reimbursement to NAPICO was $16,488, $35,231 and $35,227 in 1999, 1998 and 1997, respectively, and is included in operating expenses. An affiliate of NAPICO was the general partner in one of the limited partnerships in which the partnership interests were sold on December 30, 1998, and another affiliate received property management fees of approximately 5 percent of its revenue. The affiliate received property management fees of $16,128 and $17,408 in 1998 and 1997, respectively. On December 30, 1998, the Partnership sold its limited partnership interests in 20 local limited partnerships, with a carrying value of $988,570, to the Operating Partnership. The sale resulted in net proceeds to the 36 38 Partnership of $1,950,530 and a net gain of $2,647,716, after being relieved of notes and interest payable of $1,947,962 and incurring selling cost of $262,206. In March 1999, the Partnership made cash distributions of $6,881,025 to the limited partners and $69,506 to the general partners, which included using proceeds from the sale of the partnership interests. The Operating Partnership purchased such limited partner interests for cash, which it raised in connection with a private placement of its equity securities. The purchase was subject to, among other things, (i) the purchase of the general partner interests in the local limited partnerships by the Operating Partnership; (ii) the approval of HUD and certain state housing finance agencies; and (iii) the consent of the limited partners to the sale of the local limited partnership interests held for investment by the Partnership. In August 1998, a consent solicitation statement was sent to the limited partners setting forth the terms and conditions of the purchase of the limited partners' interests held for investment by the Partnership, together with certain amendments to the Partnership Agreement and other disclosures of various conflicts of interest in connection with the proposed transaction. Prior to the sale of the partnership interests, the consents of the limited partners to the sale and amendments to the Partnership Agreement were obtained. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K: FINANCIAL STATEMENTS Report of Independent Public Accountants. Balance Sheets as of December 31, 1999 and 1998. Statements of Operations for the years ended December 31, 1999, 1998 and 1997. Statements of Partners' Equity (Deficiency) for the years ended December 31, 1999, 1998 and 1997. Statements of Cash Flow for the years ended December 31, 1999, 1998 and 1997. Notes to Financial Statements. FINANCIAL STATEMENT SCHEDULES APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED III, REAL ESTATE ASSOCIATES AND THE LIMITED PARTNERSHIPS IN WHICH REAL ESTATE ASSOCIATES LIMITED III AND REAL ESTATE ASSOCIATES HAVE INVESTMENTS: Schedule - Investments in Limited Partnerships, December 31, 1999, 1998 and 1997. Schedule III - Real estate and accumulated depreciation, December 31, 1999, 1998 and 1997. The remaining schedules are omitted because the required information is included in the financial statements and notes thereto or they are not applicable or not required. EXHIBITS (3) Articles of incorporation and bylaws: The registrant is not incorporated. The Partnership Agreement was filed with Form S-11 #268983 incorporated herein by reference. 37 39 (10) Material contracts: The registrant is not party to any material contracts, other than the Restated Certificate and Agreement of Limited Partnership dated January 5, 1981, and the thirty-three contracts representing the Partnership investment directly or indirectly in local limited partnerships as previously filed at the Securities Exchange Commission, File 268983 which is hereby incorporated by reference. REPORTS ON FORM 8-K No reports on Form 8-K were filed during the year ended December 31, 1999. 38 40 SIGNATURES 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 in the City of Los Angeles, State of California. REAL ESTATE ASSOCIATES LIMITED III By: NATIONAL PARTNERSHIP INVESTMENTS CORP. General Partner /s/ CHARLES H. BOXENBAUM - ----------------------------------- Charles H. Boxenbaum Chairman of the Board of Directors and Chief Executive Officer /s/ BRUCE E. NELSON - ----------------------------------- Bruce E. Nelson Director and President /s/ ALAN I. CASDEN - ----------------------------------- Alan I. Casden Director /s/ PAUL PATIERNO - ----------------------------------- Paul Patierno Chief Financial Officer 39 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENS. 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 5,571,366 0 2,144 0 0 5,573,510 0 0 6,467,723 6,161 0 0 0 0 6,461,563 6,467,723 0 424,169 0 0 730,119 0 0 (305,950) 0 (305,950) 0 0 0 (305,950) 0 0
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