SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 2007 Commission file number
33-00152
AMRECORP REALTY FUND III
(Exact name of registrant as specified in its charter)
TEXAS 75-2045888
(State or other jurisdiction of (IRS Employer
Incorporation or organization Identification
Number)
2800 N Dallas Pkwy Suite 100
Plano, Texas 75093-5994
(Address of principal executive offices)
Registrant's telephone number, including area code: (972)836-8000.
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes: Y No:
Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).
Yes: No: N
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes: No: N
REGISTRANT IS A LIMITED PARTNERSHIP
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed
herewith:
Balance Sheet as of June 30, 2007 and
December 31, 2006 Page 3
Statements of Operations for the Three and Six
Months Ended June 30, 2007 and 2006 Page 4
Statements of Cash Flows for the Six
Months Ended June 30, 2007 and 2006 Page 5
Item 2. Results of Operations and Management's
Discussion and Analysis of
Financial Condition Page 6
Item 3. Quantitative and Qualitative Disclosures
about Market Risk Page 8
Item 4. Controls and Procedures Page 8
Part II
Other Information Page 9
Signatures Page 11
The statements, insofar as they relate to the period
subsequent to December 31, 2006 are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND III
Condensed Balance Sheets
June 30 December 31,
2007 2006
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,000,000 $1,000,000
Buildings and improvements 7,569,497 7,541,187
8,569,497 8,541,187
Less: Accumulated
depreciation (6,252,815) (6,070,815)
2,316,682 2,470,372
Cash including cash
investments 1,065 28,866
Escrow deposits 78,425 160,214
Deferred Financing Costs 39,934 44,498
Other assets 89,818 42,422
TOTAL ASSETS $2,525,924 $2,746,372
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $3,791,002 $3,823,618
Payable - Affiliates 3,811 1,602
Real estate taxes payable 79,500 177,346
Security deposits 64,237 63,187
Accounts payable & accrued
expenses 60,309 58,711
3,998,859 4,124,464
Partners Capital (Deficit)
Limited Partners (2,101,840) (2,136,645)
Special Limited Partner 785,875 915,875
General Partner (156,970) (157,322)
Total Partners Capital (1,472,935) (1,378,092)
(Deficit)
Total Liabilities And
Partners' Equity $2,525,924 $2,746,372
See notes to Condensed Financial Statements
AMRECORP REALTY FUND III
Condensed Statement of Operations
Three Months Ended Six Months Ended
June 30, June 30,
REVENUES 2007 2006 2007 2006
Rental income $457,070 $451,981 $899,756 $891,522
Other property 36,506 34,407 71,907 73,807
Total revenues 493,576 486,388 971,663 965,329
EXPENSES
Salaries & wages 108,362 99,527 195,791 179,533
Maintenance & repairs 32,858 44,491 59,783 67,633
Utilities 52,783 39,002 98,475 88,165
Real estate taxes 39,750 39,750 79,500 79,500
General & administrative 18,347 22,996 29,383 35,932
Contract services 33,048 33,338 61,243 56,819
Insurance 28,178 24,312 59,452 50,106
Interest 58,740 59,723 117,732 119,630
Depreciation and amortization 93,282 93,282 186,564 186,564
Property management fees 24,679 24,319 48,583 48,266
Total expenses 490,027 480,740 936,506 912,148
NET INCOME $3,549 $5,648 $35,157 $53,181
NET INCOME LIMITED PARTNERSHIP $1.48 $2.35 $14.61 $22.10
UNIT - BASIC
Limited Partnership units 2,382 2,382 2,382 2,382
outstanding Basic
See Notes to Condensed Financial Statements
AMRECORP REALTY FUND III
Condensed Statement of Cash Flows
Unaudited
Six Months Ended
June 30,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITY
Net income $35,157 $53,181
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 186,564 186,564
Net Effect of changes in operating accounts
Escrow deposits 81,789 79,055
Accrued real estate taxes (97,846) (78,025)
Security deposits 1,050 354
Accounts payable 1,598 (7,274)
Payable to affiliates 2,209 984
Other assets (47,396) (74,989)
Net cash provided by operating activities 163,125 159,850
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Real Estate (28,310) (25,000)
Net cash used by investing activities (28,310) (25,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (32,616) (30,666)
Distribution to special limited partner (130,000) 0
Net cash used by financing activities (162,616) (30,666)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (27,801) 104,184
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 28,866 23,891
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,065 $128,075
See Notes to Condensed Financial Statements
Basis of Presentation:
The accompanying unaudited condensed financial statements have
been prepared by Amrecorp Realty Fund III (the "Partnership")
pursuant to the rules and regulations of the Securities and
Exchange Commission. The financial statements reflect all
adjustments that are, in the opinion of management, necessary
to fairly present such information. All such adjustments are
of a normal recurring nature. Although the Partnership
believes that the disclosures are adequate to make the
information presented not misleading, certain information and
footnote disclosures, including a description of significant
accounting policies normally included in financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America, have been condensed
or omitted pursuant to such rules and regulations.
These financial statements should be read in conjunction with
the financial statements and notes thereto included in the
Partnership's 2006 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations
for interim periods are not necessarily indicative of the
results for any subsequent quarter or the entire fiscal year
ending December 31, 2007.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
Results of Operations
At June 30, 2007 the Partnership owned Las Brisas Apartments,
a 376-unit apartment community located at 2010 South Clark
Street, Abilene, Taylor County, Texas 79606. The Partnership
purchased a fee simple interest in Las Brisas Apartments on
July 30, 1986. The property contains approximately 312,532 net
rentable square feet, one clubhouse, and five laundry
facilities located on approximately 19.11 acres of land.
The occupancy of Las Brisas averaged 95.6% during the second
quarter of 2007 as compared to 96.5% for the second quarter of
2006.
SECOND QUARTER 2007 COMPARED TO SECOND QUARTER 2006
Revenue from property operations decreased $7,188, or 1.48%,
for the second quarter of 2007, as compared to the second
quarter of 2006. Rental income increased $5,089 or 1.13% due
to higher rental rates. Other property income increased
$2,099 or 6.10% from increased fee collections. The
following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income 5,089 1.13%
Other property 2,099 6.10%
Net Increase 7,188 1.48%
(Decrease)
Property operating expenses: increased by $9,287 or 1.93% for
the second quarter of 2007 compared to the second quarter of
2006 due primarily to increased salaries and wages. Salaries
and wages increased $8,835 or 8.88% due to higher staffing
levels. Maintenance and repairs decreased $11,633 or 26.15%
due to plumbing repairs in the prior year. Utilities
increased $13,781 or 35.33% due to higher gas and electric
costs. Insurance increased $3,866 or 15.90% due to increased
flood insurance costs. General and administrative decreased
$4,649 or 20.22% due to decreased professional fees. The
following table illustrates the components:
Increase Per Cent
(Decrease) Change
Salaries & wages 8,835 8.88%
Maintenance & repairs (11,633) 26.15%
Utilities 13,781 35.33%
Real estate taxes 0 0.00%
General & administrative (4,649) 20.22%
Contract services (290) 0.87%
Insurance 3,866 15.90%
Interest (983) 1.65%
Depreciation and amortization 0 0.00%
Property management fees 360 1.48%
Net Increase 9,287 1.93%
(Decrease)
FIRST SIX MONTHS 2007 COMPARED TO FIRST SIX MONTHS 2006
Revenue from property operations increased $6,334, or 0.66%,
for the first six months of 2007, as compared to the first six
months of 2006. Rental income increased $8,234 or 0.92% due
to higher rental rates. Other property income decreased
$1,900 or 2.57% mainly due to decreased fee collections. The
following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income 8,234 0.92%
Other property (1,900) 2.57%
6,334 0.66%
Property operating expenses: increased by $24,358 or 2.67% for
the first six months of 2007 compared to the first six months
of 2006 due primarily to increased utilities. Utilities
increased $10,310 or 11.69% do to higher gas costs. Salaries
and wages increased $16,258 or 9.06% due to additional
employees. Maintenance and repairs decreased $7,850 or 11.61%
due to prior year exterior building maintenance. Insurance
increased $9,346 or 18.65% due to higher flood insurance
premiums. General and administrative decreased $6,549 or
18.23% due to decreased information technology costs. The
following table illustrates the components:
Increase Per Cent
(Decrease) Change
Salaries & wages 16,258 9.06%
Maintenance & repairs (7,850) 11.61%
Utilities 10,310 11.69%
General & administrative (6,549) 18.23%
Contract services 4,424 7.79%
Insurance 9,346 18.65%
Interest (1,898) 1.59%
Depreciation and amortization 0 0.00%
Property management fees 317 0.66%
Net Increase (Decrease) 24,358 2.67%
LIQUIDITY AND CAPITAL RESOURCES
While it is the General Partners primary intention to operate
and manage the existing real estate investment, the General
Partner also continually evaluates this investment in light of
current economic conditions and trends to determine if this
asset should be considered for disposal. At this time, there
is no plan to dispose of Las Brisas Apartments.
As of June 30, 2007, the Partnership had $1,065 in cash and
cash equivalents as compared to $28,866 as of December 31,
2006. The net decrease in cash of $27,801 was capital
purchases and repayments to the special limited partner.
The property is encumbered by a non-recourse mortgage with a
principal balance of $3,791,002 as of June 30, 2007. During
the year ended December 31, 2001, the Partnership refinanced
the mortgage payable. The mortgage payable bears interest at a
rate of 6.18% and is payable in monthly installments of
principal and interest of $25,058 through December 2011, at
which time a lump sum payment of approximately $3,447,000 is
due. This mortgage note is secured by real estate with a net
book value of $2,316,682.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments (excluding balloon mortgage
payments), improvements and capital expenditures will be
funded by net cash from operations. The primary source of
capital to fund future Partnership balloon mortgage payments
will be proceeds from the sale financing or refinancing of the
Property.
The special limited partner distribution preference arises
from a preferred return on certain special limited partnership
contributions made in prior years in conjunction with the
refinancing of the mortgage debt. The total unpaid amount due
to the special limited partners at June 30, 2007 is
approximately $1,567,000 of which $724,000 is the remaining
distribution preference and $843,000 is the original
contribution. Any additional available cash will then be
distributed in accordance with the partnership agreement.
During 2007, 2006, and 2005, distributions of $130,000,
$300,000, and $320,000, respectively, were made to the special
limited partners in accordance with this agreement.
Item 3 - Quantitative and Qualitative Disclosure about Market
Risk
The Partnership is exposed to interest rate changes primarily
as a result of its real estate mortgages. The Partnerships
interest rate risk management objective is to limit the impact
of interest rate changes on earnings and cash flows and to
lower it's overall borrowing costs. To achieve its
objectives, the Partnership borrows primarily at fixed rates.
The Partnership does not enter into derivative or interest
rate transactions for any purpose.
The Partnerships' activities do not contain material risk due
to changes in general market conditions. The partnership
invests only in fully insured bank certificates of deposits,
and mutual funds investing in United States treasury
obligations.
Item 4 - Controls and Procedures
Based on their most recent evaluation, which was completed
June 30, 2007, our Acting Principal Executive Officer and
Chief Financial Officer, believe our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-
14) are effective. There were not any significant changes in
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their
evaluation, and there has not been any corrective action with
regard to significant deficiencies and material weaknesses.
PART II
Other Information
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities.
None
Item 4. Submission of Matters to a vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits
(A) The following documents are filed herewith or
incorporated herein by reference as indicated as Exhibits:
Exhibit Designation Document Description
3 Certificate of Limited
Partnership, Incorporated
by reference to Registration
Statement No. 33-00152 Effective
November 26, 1985.
4 Certificate of Limited
Partnership, Incorporated
by reference to Registration
Statement No. 33-00152
Effective November 26, 1985
9 Not Applicable.
10 None.
11 Not Applicable.
12 Not Applicable.
13 Not Applicable.
18 Not Applicable.
19 Not Applicable.
22 Not Applicable.
23 Not Applicable.
24 Not Applicable.
25 Power of Attorney,
Incorporated by reference
to Registration Statement
No. 33-00152
Effective November 26, 1985
28 None.
31.1 Certification Pursuant to
Rules 13a-14 and 15d-14
Under the Securities
Exchange Act of 1934, as
Adopted Pursuant to Section
302 of the Sarbanes-Oxley
Act of 2002, filed
herewith.
32.1 Certification Pursuant to
18 U.S.C. Section 1350, as
Adopted Pursuant to Section
906 of the Sarbanes-Oxley
Act of 2002, filed
herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
AMRECORP REALTY FUND III
A Texas limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: August 7, 2007
Exhibit 31.1
CERTIFICATION
I, Robert J. Werra, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
American Republic Realty Fund;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such
disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed
under our supervision, to ensure that material
information relating to the registrant, including
its consolidated subsidiaries, is made known to us
by others within those entities, particularly during
the period in which this report is being prepared;
(b) Designed such
internal control over financial reporting, or caused
such internal control over financial reporting to be
designed under our supervision, to provide
reasonable assurance regarding the reliability of
financial reporting and the preparation of financial
statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the
effectiveness of the registrant's disclosure
controls and procedures and presented in this report
our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of
the period covered by this report based on such
evaluation; and
(d) Disclosed in this
report any change in the registrant's internal
control over financial reporting that occurred
during the registrant's most recent fiscal quarter
(the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected,
or is reasonably likely to materially affect, the
registrant's internal control over financial
reporting; and
5. I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions):
(a) All significant
deficiencies and material weaknesses in the design
or operation of internal control over financial
reporting which are reasonably likely to adversely
affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or
not material, that involves management or other
employees who have a significant role in the
registrant's internal control over financial
reporting.
Date: August 7, 2007 /s/ Robert J. Werra
Robert J. Werra
Acting Chief Executive
Officer
Exhibit 32.1
CERTIFICATION
Pursuant to 18 United States Code 1350
I, Robert J. Werra, General Partner of Amrecorp Realty Fund
III Quarterly Report on Form 10-Q for the quarter ended June
30, 2007 of Amrecorp Realty Fund III. (the "Company") filed
with the Securities and Exchange Commission on the date hereof
fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934 and that the
information contained in such report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Date: August 7, 2007 /s/ Robert J. Werra
Robert J. Werra
Acting Principal Executive Officer
and Chief Financial Officer