N-Q 1 c55773nvq.htm FORM N-Q nvq
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT
INVESTMENT COMPANY
Investment Company Act file number (811-07444)
American Strategic Income Portfolio Inc. III
 
(Exact name of registrant as specified in charter)
800 Nicollet Mall
Minneapolis, MN 55402
 
(Address of principal executive offices) (Zip code)
Charles D. Gariboldi, Jr.
800 Nicollet Mall Minneapolis, MN 55402
 
(Name and address of agent for service)
800-677-3863
 
Registrant’s telephone number, including area code
Date of fiscal year end: 08/31/10
Date of reporting period: 11/30/09
 
 

 

TABLE OF CONTENTS

Item 1. Schedule of Investments.
Item 2. Controls and Procedures.
Item 3. Exhibits.
SIGNATURES
EX-99.CERT

Table of Contents

Item 1. Schedule of Investments.
Schedule of Investments (unaudited)
American Strategic Income Portfolio III (CSP)   November 30, 2009
(Percentages of each investment category relate to total net assets)
                                 
    DATE                     FAIR  
DESCRIPTION   ACQUIRED     PAR     COST     VALUE  
 
                                
Whole Loans ¥ p — 85.5%
                                
Commercial Loans — 53.1%
                                
150 North Pantano I, Tucson, AZ, 5.90%, 2/1/10 β ¶ u
     1/4/05     $ 3,525,000     $ 3,525,000     $ 3,381,714  
150 North Pantano II, Tucson, AZ, 14.88%, 2/1/10 ¶ u
     1/4/05       440,000       440,000       325,463  
8324 East Hartford Drive I, Scottsdale, AZ, 7.90%, 5/1/12 β
     4/8/04       3,432,630       3,432,630       3,432,630  
Academy Spectrum, Colorado Springs, CO, 7.73%, 5/1/09 u §
     12/18/02       4,959,112       4,959,112       3,471,378  
Alliant University, Fresno, CA, 7.15%, 8/1/11 β
     7/12/06       2,769,900       2,769,900       2,825,298  
Apple Blossom Convenience Center, Winchester, VA, 6.58%, 8/1/12 β ¶
     7/9/07       2,150,000       2,150,000       2,214,500  
Biltmore Lakes Corporate Center, Phoenix, AZ, 6.00%, 9/1/14 β
     8/2/04       2,866,440       2,866,440       2,866,440  
Carrier 360 I, Grand Prairie, TX, 6.90%, 1/1/10 β
     6/28/04       3,116,143       3,116,143       3,116,143  
Carrier 360 II, Grand Prairie, TX, 6.88%, 1/1/10
     12/16/05       325,348       325,348       325,348  
Fairview Business Park, Salem, OR, 7.33%, 8/1/11 β u
     7/14/06       7,590,028       7,590,028       5,313,020  
First Colony Marketplace, Sugar Land, TX, 6.43%, 9/1/10 β ¶
     8/15/07       11,700,000       11,700,000       11,622,921  
France Avenue Business Park II, Brooklyn Center, MN, 7.40%, 10/1/12 β
     9/12/02       4,264,855       4,264,855       4,478,098  
France Avenue Business Park II (second), Brooklyn Center, MN, 7.38%, 10/1/12 ¶
     1/17/08       600,000       600,000       605,789  
Jilly’s American Grill, Scottsdale, AZ, 6.88%, 9/1/10 β ¶ D
     8/19/05       1,810,000       1,810,000       1,810,000  
La Cholla Plaza I, Tucson, AZ, 3.43%, 8/1/09 β ¶ § D
     7/26/06       11,135,604       11,135,604       11,011,161  
La Cholla Plaza II, Tucson, AZ, 14.88%, 8/1/09 ¶ u §
     7/26/06       1,389,396       1,389,396       937,830  
NCH Commercial Pool I, Tucson, AZ, 11.93%, 4/1/10 ¶ u
     3/27/07       5,500,000       5,500,000       3,047,229  
NCH Commercial Pool II, Phoenix, AZ, 11.93%, 1/1/11 ¶ u
     12/4/07       14,000,000       14,000,000       11,112,889  
Noah’s Ark Self Storage, San Antonio, TX, 6.48%, 9/1/10 β ¶
     8/24/07       2,400,000       2,400,000       2,424,000  
North Austin Business Center, Austin, TX, 5.65%, 11/1/11 β
     10/29/04       3,782,467       3,782,467       3,820,292  
Outlets at Casa Grande I, Casa Grande, AZ, 6.93%, 3/1/11 β ¶ u
     2/27/06       7,300,000       7,300,000       5,316,941  
Outlets at Casa Grande II, Casa Grande, AZ, 6.90%, 3/1/11 β ¶ u
     4/11/07       3,500,000       3,500,000       2,533,426  
Paradise Boulevard, Albuquerque, NM, 6.50%, 4/1/17 β ¶
     3/26/07       4,600,000       4,600,000       4,716,900  
RealtiCorp Fund III, Orlando/Crystal River, FL, 6.93%, 7/1/11 ¶
     2/28/06       4,222,755       4,222,755       4,222,755  
Shoppes at Jonathan’s Landing, Jupiter, FL, 7.95%, 5/1/10 β
     4/12/00       2,660,499       2,660,499       2,687,104  
Silver Star Storage, Austin, TX, 6.40%, 4/1/11 β ¶
     3/25/08       4,136,280       4,136,280       4,177,643  
Spa Atlantis, Pompano Beach, FL, 6.43%, 8/1/14 ¶
     9/30/05       11,000,000       11,000,000       11,000,000  
Tatum Ranch Center, Phoenix, AZ, 6.53%, 9/1/11 β
     8/25/04       3,449,821       3,449,821       3,518,817  
 
                            
 
                     128,626,278       116,315,729  
 
                            
Multifamily Loans — 32.4%
                                
Avalon Hills I, Omaha, NE, 6.93%, 3/1/10 β ¶
     3/1/07       10,720,000       10,720,000       10,720,000  
Avalon Hills II, Omaha, NE, 9.88%, 3/1/10 ¶ ª S
     3/1/07       2,448,800       2,448,800       1,582,372  
Chateau Club Apartments I, Athens, GA, 6.68%, 12/1/10 ¶ u
     12/20/07       6,623,000       6,623,000       5,027,023  
Chateau Club Apartments II, Athens, GA, 6.88%, 12/1/10 ¶ ª S
     12/20/07       2,368,624       2,368,624       727,900  
Country Villa Apartments, West Lafayette, IN, 6.90%, 9/1/13 β
     8/29/03       2,423,579       2,423,579       2,433,498  
Courtyards at Mesquite I, Mesquite, TX, 6.53%, 11/1/09 β u §
    10/14/05       7,389,373       7,389,373       5,434,809  
Courtyards at Mesquite II, Mesquite, TX, 7.90%, 11/1/09 ¶ § ª S
     10/14/05       2,850,000       2,850,000       1,699,791  
El Dorado Apartments I, Tucson, AZ, 7.15%, 9/1/12 β
     8/26/04       2,498,851       2,498,851       2,573,817  
El Dorado Apartments II, Tucson, AZ, 7.13%, 9/1/12
     8/26/04       490,343       490,343       505,053  
Geneva Village Apartments I, West Jordan, UT, 7.00%, 1/1/14 β
     12/24/03       1,142,022       1,142,022       1,199,123  
Geneva Village Apartments II, West Jordan, UT, 9.88%, 1/1/13
     12/24/03       34,946       34,946       34,464  
Good Haven Apartments I, Dallas, TX, 5.43%, 9/1/07 ¶ u § D
     8/24/04       6,737,000       6,737,000       4,715,900  
Good Haven Apartments II, Dallas, TX, 14.88%, 9/1/07 ¶ u §
     8/24/04       842,000       842,000       22,800  
Good Haven Apartments III, Dallas, TX, 14.88%, 5/1/09 ¶ u §
     7/3/08       694,096       694,096       18,795  
Meadowview Village Apartments I, West Jordan, UT, 7.00%, 1/1/14
     12/24/03       828,887       828,887       870,331  
Meadowview Village Apartments II, West Jordan, UT, 9.88%, 1/1/13
     12/24/03       34,946       34,946       34,463  
Meridian Pointe Apartments, Kalispell, MT, 8.73%, 4/1/12 β
     3/7/97       1,013,591       1,013,591       1,043,999  
Montevista Apartments, Fort Worth, TX, 7.43%, 9/1/12 ¶ ª
     8/30/07       7,308,000       7,308,000       6,091,741  
NCH Multifamily Pool, Oklahoma City, OK, 11.93%, 11/1/09 ¶
     10/17/06       4,993,450       4,993,450       2,824,753  
Parkway Village Apartments I, West Jordan, UT, 7.00%, 1/1/14
     12/24/03       784,015       784,015       823,215  
Parkway Village Apartments II, West Jordan, UT, 9.88%, 1/1/13
     12/24/03       34,946       34,946       34,463  
FIRST AMERICAN MORTGAGE FUNDS     2009 Quarterly Report

 

Table of Contents

Schedule of Investments (unaudited)
American Strategic Income Portfolio III (CSP)
                                 
    DATE                     FAIR  
DESCRIPTION   ACQUIRED     PAR     COST     VALUE  
 
                                
Plantation Pines I, Tyler, TX, 6.59%, 2/1/10 β ¶
     1/17/07     $ 3,328,000     $ 3,328,000     $ 3,268,838  
Plantation Pines II, Tyler, TX, 10.57%, 2/1/10 ¶
     1/17/07       416,000       416,000       310,212  
RiverPark Land Lot III, Oxnard, CA, 3.65%, 1/1/10 ¶ D
     10/9/07       3,650,000       3,650,000       3,621,199  
Villas of Woodgate, Lansing, MI, 6.40%, 2/1/12 β
     2/1/07       3,540,915       3,540,915       3,201,335  
Vista Village Apartments I, El Paso, TX, 6.53%, 4/1/10 β
     3/30/07       6,066,035       6,066,035       6,066,035  
Vista Village Apartments II, El Paso, TX, 9.88%, 4/1/10
     3/30/07       349,285       349,285       323,616  
Whispering Oaks I, Little Rock, AR, 5.93%, 2/1/12 β ¶ u
     1/10/07       5,800,000       5,800,000       5,007,345  
Whispering Oaks II, Little Rock, AR, 9.88%, 2/1/12 ¶ ª S
     1/10/07       2,636,000       2,636,000       921,653  
 
                            
 
                     88,046,704       71,138,543  
 
                            
Total Whole Loans
                     216,672,982       187,454,272  
 
                            
 
                                
Corporate Notes ¥ ¶ — 11.7%
                                
Fixed Rate — 11.7%
                                
Sarofim Brookhaven, 6.90%, 1/1/11
     12/21/07       10,040,375       10,040,375       10,241,183  
Stratus Properties IV, 6.56%, 12/31/11
     12/1/06       7,000,000       7,000,000       7,140,000  
Stratus Properties VI, 6.92%, 12/31/11
     6/1/07       8,000,000       8,000,000       8,160,000  
 
                            
Total Corporate Notes
                     25,040,375       25,541,183  
 
                            
 
                                
Private Mortgage-Backed Security ¥ — 0.0%
                                
Fixed Rate — 0.0%
                                
First Gibraltar, Series 1992-MM, Class B, 6.06%, 10/25/21
     7/30/93       93,038       59,147       —  
 
                            
 
                                
U.S. Government Agency Mortgage-Backed Securities a — 15.6%
                                
Fixed Rate — 15.6%
                                
Federal Home Loan Mortgage Corporation,
                                
5.50%, 1/1/18, #E93231
             2,122,976       2,166,117       2,295,490  
9.00%, 7/1/30, #C40149
             154,941       158,332       172,114  
5.00%, 5/1/39, #G05430
             5,329,620       5,472,057       5,594,956  
Federal National Mortgage Association,
                                
6.00%, 10/1/16, #607030
             156,497       157,025       169,923  
5.50%, 2/1/17, #623874
             276,248       275,830       299,085  
5.50%, 6/1/17, #648508
             189,340       189,949       204,992  
5.00%, 9/1/17, #254486
             306,766       307,297       329,537  
5.00%, 11/1/17, #657356
             628,818       630,994       675,494  
6.50%, 6/1/29, #252497
             535,061       532,105       584,460  
7.50%, 5/1/30, #535289
             94,218       91,611       107,402  
8.00%, 5/1/30, #538266
             40,427       40,006       46,419  
8.00%, 6/1/30, #253347
             106,428       105,318       122,202  
5.00%, 11/1/33, #725027
             3,708,238       3,791,993       3,902,703  
5.00%, 12/1/35, #995317
             8,038,101       8,290,465       8,459,630  
5.00%, 7/1/39, #AA9716
             8,592,780       8,834,053       9,024,601  
5.00%, 7/1/39, #935512
             2,199,599       2,244,018       2,310,137  
 
                            
Total U.S. Government Agency Mortgage-Backed Securities
                     33,287,170       34,299,145  
 
                            
 
                                
Commercial Mortgage-Backed Securities D — 5.0%
                                
Other — 5.0%
                                
Banc of America Commercial Mortgage, Series 2005-4, Class A5B, 5.00%, 7/10/45
             6,400,000       4,089,055       5,393,693  
Citigroup/Deutsche Bank Commercial Mortgage Trust,
                                
Series 2007-CD5, Class A4, 5.89%, 11/15/44
             3,600,000       3,368,970       3,375,153  
LB-UBS Commercial Mortgage Trust, Series 2008-C1, Class A2, 6.32%, 4/15/41
             2,250,000       1,513,922       2,243,611  
 
                            
Total Commercial Mortgage-Backed Securities
                     8,971,947       11,012,457  
 
                            
FIRST AMERICAN MORTGAGE FUNDS     2009 Quarterly Report

 

Table of Contents

Schedule of Investments (unaudited)
American Strategic Income Portfolio III (CSP)
                         
                    FAIR  
DESCRIPTION   SHARES     COST     VALUE  
 
                        
Preferred Stocks — 18.6%
                        
Real Estate Investment Trusts — 18.6%
                        
AMB Property, Series L
     164,120     $ 3,789,361     $ 3,334,918  
AMB Property, Series M
     41,240       950,889       859,854  
AMB Property, Series O
     9,613       240,325       214,274  
AMB Property, Series P
     21,200       429,300       444,564  
BRE Properties, Series C
     66,300       1,317,381       1,386,996  
BRE Properties, Series D
     5,250       104,318       109,148  
Developers Diversified Realty, Series G
     57,600       997,080       1,092,096  
Developers Diversified Realty, Series H
     69,320       1,234,880       1,229,044  
Developers Diversified Realty, Series I
     4,270       89,030       75,793  
Duke Realty, Series J
     20,956       535,385       374,065  
Duke Realty, Series L
     19,220       367,486       340,771  
Duke Realty, Series M
     55,040       1,110,800       1,041,357  
Duke Realty, Series O
     44,550       1,051,380       1,023,313  
Equity Residential Properties, Series N
     10,700       226,305       245,993  
Kimco Realty, Series F
     163,000       3,797,000       3,419,740  
Kimco Realty, Series G
     114,700       2,796,559       2,753,947  
ProLogis Trust, Series F
     33,905       835,567       681,490  
ProLogis Trust, Series G
     8,300       174,300       167,245  
PS Business Parks, Series H
     26,520       530,400       546,842  
PS Business Parks, Series I
     94,300       1,634,731       1,927,492  
PS Business Parks, Series K
     25,000       575,000       586,250  
PS Business Parks, Series L
     7,000       179,550       159,530  
PS Business Parks, Series M
     26,520       546,312       561,959  
PS Business Parks, Series O
     100,000       2,050,000       2,165,000  
PS Business Parks, Series P
     8,200       157,194       162,442  
Public Storage, Series A
     38,000       921,909       818,900  
Public Storage, Series C
     30,000       626,100       663,600  
Public Storage, Series E
     9,300       186,000       208,506  
Public Storage, Series H
     40,000       876,000       928,000  
Public Storage, Series I
     26,520       576,810       657,696  
Public Storage, Series K
     17,550       381,712       430,326  
Public Storage, Series L
     20,000       430,000       459,400  
Public Storage, Series X
     74,000       1,786,319       1,593,960  
Public Storage, Series Z
     30,000       746,643       647,100  
Realty Income, Series D
     97,500       2,474,125       2,379,000  
Realty Income, Series E
     26,520       572,832       625,872  
Regency Centers, Series C
     26,520       573,362       587,418  
Regency Centers, Series E
     94,270       2,221,248       1,993,810  
Vornado Realty Trust, Series E
     7,400       186,598       166,574  
Vornado Realty Trust, Series F
     7,800       164,970       169,650  
Vornado Realty Trust, Series H
     163,000       2,771,000       3,586,000  
 
                    
Total Preferred Stocks
             41,216,161       40,819,935  
 
                    
Total Unaffiliated Investments
             325,247,782       299,126,992  
 
                    
Real Estate Owned ¥ l — 1.4%
                        
Memphis Medical Building, Memphis, TN
             4,250,000       2,975,000  
 
                    
Short-Term Investment — 1.1%
                        
First American Prime Obligations Fund, Class Z, 0.11% x
     2,418,874       2,418,874       2,418,874  
 
                    
Total Investments 5 — 138.9%
           $ 331,916,656     $ 304,520,866  
 
                    
Other Assets and Liabilities, Net — (38.9)%
                     (85,278,938 )
 
                      
Total Net Assets — 100.0%
                   $ 219,241,928  
 
                      
FIRST AMERICAN MORTGAGE FUNDS     2009 Quarterly Report

 

Table of Contents

Schedule of Investments (unaudited)
American Strategic Income Portfolio III (CSP)
 
    The fund’s investments in whole loans (single family, multifamily, and commercial), are generally not traded in any organized market and therefore, market quotations are not readily available. These investments are valued at fair value according to procedures adopted by the fund’s board of directors. Pursuant to these procedures, these investments are initially fair valued at cost as this approximates fair value and adjusted using a FAF Advisors pricing model designed to incorporate, among other things, the present value of the projected stream of cash flows on such investments. The pricing model takes into account a number of relevant factors including the projected rate of prepayments, the delinquency profile, the historical payment record, the expected yield at purchase, changes in prevailing interest rates, and changes in the real or perceived liquidity of whole loans as the case may be. Changes in prevailing interest rates, real or perceived liquidity, yield spreads, and creditworthiness are factored into the pricing model each week. The results of the pricing model may be further subject to price floors given the intrinsic values of the underlying properties subject to the loans and price ceilings due to the illiquid nature of the loans. FAF Advisors has modified, and may in the future modify, price floors and ceilings in light of changing economic and market conditions. Such modifications will affect the fund’s net asset value.
 
    Certain mortgage loan information is received once a month. This information includes, but is not limited to, the projected rate of prepayments, projected rate and severity of defaults, the delinquency profile, and the historical payment record. Valuations of whole loans are determined no less frequently than weekly. Although FAF Advisors believes the pricing model to be reasonable and appropriate, the actual values that may be realized upon the sale of whole loans can only be determined in negotiations between the fund and third parties.
 
    Security valuations for the fund’s investments (other than whole loans) are generally furnished by an independent pricing service that has been approved by the fund’s board of directors. Investments in equity securities that are traded on a national securities exchange (or reported on the Nasdaq national market system) are stated at the last quoted sales price if readily available for such securities on each business day. For securities traded on the Nasdaq national market system, the fund utilizes the Nasdaq Official Closing Price which compares the last trade to the bid/ask price of a security. If the last trade falls within the bid/ask range, then that price will be the closing price. If the last trade is outside the bid/ask range, and falls above the ask, the ask price will be the closing price. If the last trade is below the bid, the bid will be the closing price. Other equity securities traded in the over-the-counter market and listed equity securities for which no sale was reported on that date are stated at the last quoted bid price. Investments in open-end mutual funds are valued at their respective net asset values on the valuation date.
 
    Debt obligations exceeding 60 days to maturity are valued by an independent pricing service. The pricing service may employ methodologies that utilize actual market transactions, broker-dealer supplied valuations, or other formula-driven valuation techniques. These techniques generally consider such factors as yields or prices of bonds of comparable quality, type of issue, coupon, maturity, ratings, and general market conditions. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities or from a widely-used quotation system. Debt obligations with 60 days or less remaining until maturity may be valued at their amortized cost which approximates market value.
 
    The following investment vehicles, when held by the fund, are priced as follows: Exchange listed futures and options on futures are priced at their last sale price on the exchange on which they are principally traded, as determined by FAF Advisors, Inc. (“FAF Advisors”), on the day the valuation is made. If there were no sales on that day, futures and options on futures will be valued at the last reported bid price. Options on securities and indices traded on Nasdaq or listed on a stock exchange are valued at the last sale price on Nasdaq or on any exchange on the day the valuation is made. If there were no sales on that day, the options will be valued at the last sale price on the previous valuation date. Last sale prices are obtained from an independent pricing service. Forward contracts, swaps, and over-the-counter options on securities and indices are valued at the quotations received from an independent pricing service, if available.
 
    When market quotations are not readily available, securities are valued at fair value as determined in good faith by procedures established and approved by the fund’s board of directors. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on disposition; trading in similar securities of the same issuer or comparable companies; information from broker-dealers; and an evaluation of the forces that influence the market in which the securities are purchased or sold. If events occur that materially affect the value of securities between the close of trading in those securities and the close of regular trading on the New York Stock Exchange, the securities will be valued at fair value.
 
    In accordance with the valuation procedures adopted by the fund’s board of directors, real estate acquired through foreclosure, if any, is initially valued similar to defaulted multifamily and commercial whole loans. The value is subsequently revised to an estimated market value, as determined by independent third party appraisals, less estimated selling costs.
 
    As of November 30, 2009, the fund held internally fair valued securities with a value of $215,970,455 or 98.6% of total net assets.
 
¥   Securities purchased as part of a private placement which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933 and which are considered to be illiquid. These securities are fair valued in accordance with the board approved valuation procedures. See footnote above. The total fair value of all illiquid securities was $215,970,455 or 98.6% of total net assets.
 
p    Interest rates on commercial and multifamily loans are the net coupon rates in effect (after reducing the coupon rate by any mortgage servicing fees paid to mortgage servicers) on November 30, 2009. For participating loans the rates are based on the annual cash flow payments expected at the time of purchase.
FIRST AMERICAN MORTGAGE FUNDS     2009 Quarterly Report

 

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Schedule of Investments (unaudited)
American Strategic Income Portfolio III (CSP)
β    Securities pledged as collateral for outstanding borrowings under a loan agreement with Massachusetts Mutual Life Insurance Company (“MMLIC”). On November 30, 2009, securities valued at $122,215,847 were pledged as collateral for the following outstanding borrowings:
                     
                  Accrued  
  Amount     Rate*     Interest  
  $ 54,400,000       5.00 %   $ 7,556  
    2,175,000       5.00 %     302  
                   
  $ 56,575,000             $ 7,858  
                   
 
*   Interest rate as of November 30, 2009. Rate is based on the London Interbank Offered Rate (“LIBOR”) plus 2.625% subject to a “floor” interest rate of 5.00% and reset monthly.
    Description of collateral:
150 North Pantano I, Tucson, AZ, 5.90%, 2/1/10, $3,525,000 par
8324 East Hartford Drive I, Scottsdale, AZ, 7.90%, 5/1/12, $3,432,630 par
Alliant University, Fresno, CA, 7.15%, 8/1/11, $2,769,900 par
Apple Blossom Convenience Center, Winchester, VA, 6.58%, 8/1/12, $2,150,000 par
Avalon Hills I, Omaha, NE, 6.93%, 3/1/10, $10,720,000 par
Biltmore Lakes Corporate Center, Phoenix, AZ, 6.00%, 9/1/14, $2,866,440 par
Carrier 360 I, Grand Prairie, TX, 6.90%, 1/1/10, $3,116,143 par
Country Villa Apartments, West Lafayette, IN, 6.90%, 9/1/13, $2,423,579 par
Courtyards at Mesquite I, Mesquite, TX, 6.53%, 11/1/09, $7,389,373 par
El Dorado Apartments I, Tucson, AZ, 7.15%, 9/1/12, $2,498,851 par
Fairview Business Park, Salem, OR, 7.33%, 8/1/11, $7,590,028 par
First Colony Marketplace, Sugar Land, TX, 6.43%, 9/1/10, $11,700,000 par
France Avenue Business Park II, Brooklyn Center, MN, 7.40%, 10/1/12, $4,264,855 par
Geneva Village Apartments I, West Jordan, UT, 7.00%, 1/1/14, $1,142,022 par
Jilly’s American Grill, Scottsdale, AZ, 6.88%, 9/1/10, $1,810,000 par
La Cholla Plaza I, Tucson, AZ, 3.43%, 8/1/09, $11,135,604 par
Meridian Pointe Apartments, Kalispell, MT, 8.73%, 4/1/12, $1,013,591 par
Noah’s Ark Self Storage, San Antonio, TX, 6.48%, 9/1/10, $2,400,000 par
North Austin Business Center, Austin, TX, 5.65%, 11/1/11, $3,782,467 par
Outlets at Casa Grande I, Casa Grande, AZ, 6.93%, 3/1/11, $7,300,000 par
Outlets at Casa Grande II, Casa Grande, AZ, 6.90%, 3/1/11, $3,500,000 par
Paradise Boulevard, Albuquerque, NM, 6.50%, 4/1/17, $4,600,000 par
Plantation Pines I, Tyler, TX, 6.59%, 2/1/10, $3,328,000 par
Shoppes at Jonathan’s Landing, Jupiter, FL, 7.95%, 5/1/10, $2,660,499 par
Silver Star Storage, Austin, TX, 6.40%, 4/1/11, $4,136,280 par
Tatum Ranch Center, Phoenix, AZ, 6.53%, 9/1/11, $3,449,821 par
Villas of Woodgate, Lansing, MI, 6.40%, 2/1/12, $3,540,915 par
Vista Village Apartments I, El Paso, TX, 6.53%, 4/1/10, $6,066,035 par
Whispering Oaks I, Little Rock, AR, 5.93%, 2/1/12, $5,800,000 par
    The fund has entered into a loan agreement with MMLIC under which MMLIC made a term loan to the fund of $54,400,000, which matures on July 31, 2011, and agreed to make revolving loans to the fund of up to $15,600,000. Loans made under the loan agreement are secured by whole loans in the fund’s portfolio and bear interest at the one-month LIBOR plus 2.625% with a “floor” interest rate of 5.00%. In addition, the fund pays an annual fee of 1.28% on any unused portion of the fund’s revolving loan commitment.
 
¶    Interest Only — Represents securities that entitle holders to receive only interest payments on the mortgage. Principal balance on the loan is due at maturity. The interest rate disclosed represents the net coupon rate in effect as of November 30, 2009.
 
u    Loan is currently in default with regards to scheduled interest and/or principal payments.
 
§    Loan has matured and the fund is anticipating payoff or refinancing. Unless disclosed otherwise, the loan continues to make monthly payments.
 
D    Variable Rate Security — The rate shown is the net coupon rate in effect as of November 30, 2009.
 
ª    Participating Loan — A participating loan is one which contains provisions for the fund to participate in the income stream provided by the property, including net cash flows and capital proceeds. Monthly cash flow proceeds are only required to the extent excess cash flow is generated by the property as determined by the loan documents.
 
S    The participating loan is not currently making monthly cash flow payments.
FIRST AMERICAN MORTGAGE FUNDS     2009 Quarterly Report

 

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Schedule of Investments (unaudited)
American Strategic Income Portfolio III (CSP)
a    Securities pledged as collateral for outstanding reverse repurchase agreements. On November 30, 2009, securities valued at $34,040,902 were pledged as collateral for the following outstanding reverse repurchase agreements:
                                             
                                        Name of Broker  
        Acquisition                     Accrued     and Description  
Amount     Date     Rate*     Due     Interest     of Collateral  
$ 28,457,000       11/23/09       0.30 %     12/23/09     $ 1,897       (1 )
  3,659,000       11/9/09       0.30 %     12/9/09       671       (2 )
                                         
$ 32,116,000                             $ 2,568          
                                         
 
*   Interest rate as of November 30, 2009. Rate is based on LIBOR plus a spread and reset monthly.
    Name of broker and description of collateral:
  (1)   Goldman Sachs:
 
      Federal Home Loan Mortgage Corporation, 5.50%, 1/1/18, $1,884,141 par
Federal Home Loan Mortgage Corporation, 9.00%, 7/1/30, $154,941 par
Federal Home Loan Mortgage Corporation, 5.00%, 5/1/39, $5,329,620 par
Federal National Mortgage Association, 6.00%, 10/1/16, $156,497 par
Federal National Mortgage Association, 5.50%, 2/1/17, $276,248 par
Federal National Mortgage Association, 5.50%, 6/1/17, $189,340 par
Federal National Mortgage Association, 5.00%, 9/1/17, $306,766 par
Federal National Mortgage Association, 5.00%, 11/1/17, $628,818 par
Federal National Mortgage Association, 6.50%, 6/1/29, $535,061 par
Federal National Mortgage Association, 7.50%, 5/1/30, $94,218 par
Federal National Mortgage Association, 8.00%, 5/1/30, $40,427 par
Federal National Mortgage Association, 8.00%, 6/1/30, $106,428 par
Federal National Mortgage Association, 5.00%, 11/1/33, $3,708,238 par
Federal National Mortgage Association, 5.00%, 12/1/35, $8,038,101 par
Federal National Mortgage Association, 5.00%, 7/1/39, $8,592,101 par
Federal National Mortgage Association, 5.00%, 7/1/39, $2,199,599 par
 
  (2)   Goldman Sachs:
 
      Federal National Mortgage Association, 5.00%, 11/1/33, $3,708,238 par
    The fund has entered into a lending commitment with Goldman Sachs. The monthly agreement permits the fund to enter into reverse repurchase agreements using U.S. Government agency mortgage-backed securities as collateral.
 
l    Real estate owned. See footnote above.
 
x    Investment in affiliated security. This money market fund is advised by FAF Advisors, Inc., which also serves as advisor for the fund. The rate quoted is the annualized seven-day effective yield as of November 30, 2009.
 
5    On November 30, 2009, the cost of investments for federal income tax purposes was approximately $331,916,656. The approximate aggregate gross unrealized appreciation and depreciation of investments, based on this cost, were as follows:
         
Gross unrealized appreciation
   $ 6,294,103  
Gross unrealized depreciation
     (33,689,893 )
 
      
Net unrealized depreciation
   $ (27,395,790 )
 
      
Summary of Fair Value Exposure
Generally accepted accounting principles (“GAAP”) require disclosures regarding the inputs and valuation techniques used to measure fair value and any changes in valuation inputs or technique. These principles establish a three-tier fair value hierarchy for inputs used in measuring fair value. Fair value inputs are summarized in the three broad levels listed below:
Level 1 — Quoted prices in active markets for identical securities.
Level 2 — Other significant observable inputs (including quoted prices for similar securities, with similar interest rates, prepayment speeds, credit risk, etc.).
Level 3 — Significant unobservable inputs (including a funds’ own assumptions in determining the fair value of investments). Generally, the types of securities included in Level 3 of a fund are securities that are not traded in any organized market, or for which there are significant unobservable fair value inputs available such as the funds’ investments in whole loans.
The valuation levels are not necessarily an indication of the risk associated with investing in these investments.
FIRST AMERICAN MORTGAGE FUNDS     2009 Quarterly Report

 

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Schedule of Investments (unaudited)
American Strategic Income Portfolio III (CSP)
As of November 30, 2009, the fund’s investments in securities were classified as follows:
                                 
                            Total  
    Level 1     Level 2     Level 3     Fair Value  
Whole Loans
   $ —     $ —     $ 187,454,272     $ 187,454,272  
Preferred Stocks
     40,819,935       —       —       40,819,935  
U.S. Government Agency Mortgage-Backed Securities
     —       34,299,145       —       34,299,145  
Corporate Notes
     —       —       25,541,183       25,541,183  
Commercial Mortgage-Backed Securities
     —       11,012,457       —       11,012,457  
Real Estate Owned
   —     —     2,975,000     2,975,000  
Short-Term Investment
     2,418,874       —       —       2,418,874  
Private Mortgage-Backed Security
     —       —       —       —  
 
                        
Total Investments
   $ 43,238,809     $ 45,311,602     $ 215,970,455     $ 304,520,866  
 
                        
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
         
    Investments in  
    Securities  
Balance as of August 31, 2009
   $ 238,264,939  
Accrued discounts/premiums
     710  
Realized gain (loss)
     —  
Net change in unrealized appreciation or depreciation
     (11,064,186 )
Net purchases (sales)
     (11,231,008 )
 
      
Balance as of November 30, 2009
   $ 215,970,455  
 
      
 
        
Net change in unrealized appreciation or depreciation of Level 3 investments as of November 30, 2009
   $ (11,096,739 )
 
      
FIRST AMERICAN MORTGAGE FUNDS     2009 Quarterly Report

 

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Item 2. Controls and Procedures.
(a)   The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.
 
(b)   There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
Item 3. Exhibits.
Separate certifications for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act are filed herewith.

 

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
American Strategic Income Portfolio Inc. III
 		  
By:   /s/ Thomas S. Schreier, Jr.  
  Thomas S. Schreier, Jr.   
  President   
Date: January 26, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
By:   /s/ Thomas S. Schreier, Jr.  
  Thomas S. Schreier, Jr.   
  President   
Date: January 26, 2010
         
By:   /s/ Charles D. Gariboldi, Jr.  
  Charles D. Gariboldi, Jr.   
  Treasurer   
Date: January 26, 2010