UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Fiscal Year Ended December 31, 2007
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File Number 0-13331
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
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(Exact Name of Registrant as specified in its Charter)
Delaware 16-1234990
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(State of Formation) (IRS Employer Identification No.)
2350 North Forest Road Getzville, New York 14068
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(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-9090
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Units of Limited
Partnership Interest
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
[ ] Yes [X] No
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes [X] No
Indicate by a 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.
[X] Yes [ ] No
Indicate by a 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 the 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]
Indicate by a check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer" in Rule 12b-2 of the Exchange Act. (Check one):
[ ] Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer
Indicate by a check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).
[ ] Yes [X] No
DOCUMENTS INCORPORATED BY REFERENCE
See Item 15 for a list of all documents incorporated by reference
PART I
------
ITEM 1: BUSINESS
- ------- --------
The Registrant, Realmark Property Investors Limited Partnership-III
(the "Partnership"), is a Delaware Limited Partnership organized in 1983,
pursuant to a Second Amended and Restated Agreement and Certificate of Limited
Partnership (the "Partnership Agreement"), under the Delaware Revised Uniform
Limited Partnership Act. The Partnership's general partners are Realmark
Properties, Inc. (the "Corporate General Partner"), a Delaware corporation, and
Joseph M. Jayson (the "Individual General Partner").
The Registrant commenced the public offering of its limited partnership
units, registered with the Securities and Exchange Commission under the
Securities Act of 1933 as amended on February 1, 1984, and concluded the
offering on January 31, 1985, having raised a total of $15,551,000 before
deducting sales commissions and expenses of the offering.
The Partnership's primary business and its only industry segment is to
own and operate income-producing real property for the benefit of its partners.
At December 31, 2004, the Partnership had disposed of all its properties. On
April 5, 2004, the Partnership sold Inducon Amherst for $2,045,000 resulting in
a net gain of approximately $20,000. On May 20, 2004, the partnership disposed
of its last property, Perrymont, for $2,450,000, less a $600,000 credit for work
which the buyer determined was necessary on the property, resulting in a gain of
approximately $145,000. Accordingly, the Partnership has been in the process of
liquidating and on December 31, 2007 was officially dissolved by the State of
Delaware.
The business of the Partnership is not seasonal. As of December 31,
2007, the Partnership did not directly employ any persons in a full-time
position. All persons who regularly rendered services on behalf of the
Partnership through December 31, 2007 were employees of the Corporate General
Partner or its affiliates.
ITEM 2: PROPERTIES
- ------- ----------
As of December 31, 2007, the Partnership did not own any property
investments.
ITEM 3: LEGAL PROCEEDINGS
- ------- -----------------
As previously reported, the Partnership, as a nominal defendant, the
general partners of the Partnership and of affiliated public partnerships, (the
"Realmark Partnerships") and the officers and directors of the Corporate General
Partner, as defendants, had been involved in a class action litigation at the
state court level regarding the payment of fees and other management issues.
On August 29, 2001, the parties entered into a Stipulation of
Settlement (the "Settlement"). On October 4, 2001, the Court issued an "Order
Preliminary Approving Settlement" (the "Hearing Order") and on November 29,
2001, the Court issued an "Order and Final Judgment Approving Settlement and
Awarding Fees and Expenses" and dismissing the complaints with prejudice. The
Settlement provided, among other things, that all of the Realmark Partnerships'
properties be disposed of. The general partners will continue to have primary
authority to dispose of the Partnerships' properties. If either (i) the general
partners have not sold or contracted to sell 50% of the Partnerships' properties
(by value) by April 2, 2002 or (ii) the general partners have not sold or
1
contracted to sell 100% of the Partnerships' properties by September 29, 2002,
then the primary authority to dispose of the Partnerships' properties will pass
to a sales agent designated by plaintiffs' counsel and approved by the Court. On
October 4, 2002, the Court appointed a sales agent to work with the general
partners to continue to sell the Partnership's remaining properties.
The settlement also provided for the payment by the Partnerships of
fees to the plaintiffs' attorneys. These payments are payable out of the
proceeds from the sale of all of the properties owned by all of the Realmark
Partnerships, following the sale of the last of these properties in each
partnership. Plaintiffs' counsel will receive 15% of the amount by which the
sales proceeds distributable to limited partners in each partnership exceeds the
value of the limited partnership units in each partnership (based on the
weighted average of the units' trading prices on the secondary market as
reported by Partnership Spectrum for the period May through June 2001). In no
event may the increase on which the fees are calculated exceed 100% of the
market value of the units as calculated above. On May 20, 2004 the Partnership
sold its remaining property, and in December 2004, a payment of $404,501 was
made to the plaintiffs' attorneys.
ITEM 4: SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ----------------------------------------------------
None.
2
PART II
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ITEM 5: MARKET FOR REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST
- ------- -------------------------------------------------------------
There is currently no active trading market for the units of limited
partnership interest of the Partnership and it is not anticipated that any will
develop in the future. Accordingly, information as to the market value of a unit
at any given date is not available. As of December 31, 2005, there were 1,736
record holders of units of limited partnership interest. In December 2004, the
Partnership made distributions of its previously undistributed net cash from
sales proceeds. These distributions were made in accordance with the settlement
of the lawsuit (Item 3). A total of $1,525,136 was distributed on behalf of the
limited partners. Of this amount, $404,501 was paid to legal counsel in
accordance with the settlement of the lawsuit and $1,120,635 was distributed
directly to record holders of units of limited partnership interest. There were
no distributions to partners made in 2007 or 2006.
3
ITEM 6: SELECTED FINANCIAL DATA
- ------- -----------------------
At or for the years ended December 31,
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2007 (1) 2006 (1) 2005 (1) 2004 (1) 2003
-------------------------------------------------------------------------------------
BALANCE SHEET DATA
Net rental property $ - - - - 3,505,259
Total assets - 47,514 114,266 192,941 3,751,314
Mortgage loans payable - - - - 1,703,787
Partners' equity - - - - 1,801,045
=====================================================================================
OPERATING DATA
Rental income - - - 186,495 601,259
Other income - - - 50,990 187,936
-------------------------------------------------------------------------------------
Total revenue - - - 237,485 789,195
-------------------------------------------------------------------------------------
Property operating costs - - - 265,108 598,898
Interest expense - - - 26,848 166,442
Administrative expenses - - - 267,337 236,408
-------------------------------------------------------------------------------------
Total expenses - - - 559,293 1,001,748
-------------------------------------------------------------------------------------
Operating loss - - - (321,808) (212,553)
Gain on property sales - - - 164,286 -
Extraordinary loss - - - (404,501) -
-------------------------------------------------------------------------------------
Net income (loss) - - - (562,023) (212,553)
=====================================================================================
CASH FLOW DATA
Net cash provided (used) by:
Operating activities - - - (201,677) (29,409)
Investing activities - - - 3,593,248 (50,768)
Financing activities - - - (3,228,923) (32,541)
-------------------------------------------------------------------------------------
Net increase (decrease) in
cash and equivalents - - - 162,648 (112,718)
=====================================================================================
PER LIMITED PARTNERSHIP UNIT:
Net income (loss) $ - - - (9.51) (13.26)
Distributions $ - - - 98.07 -
=====================================================================================
(1) The Partnership began reporting on the liquidation basis of accounting
effective May 21, 2004. Therefore, operations for the years ended December 31,
2005 and 2004 are reported on the consolidated statement of changes in net
assets in liquidation for the year ended December 31, 2005 and for the period
from May 21, 2004 to December 31, 2004, while operations from the period from
January 1, 2004 to May 20, 2004 and for the year ended December 31, 2003 are
reported on the going concern basis in the consolidated statements of
operations. Balance sheet data at December 31, 2007, 2006 and 2005 represents
the total assets and net assets in liquidation as reported in the consolidated
statement of net assets in liquidation (liquidation basis) at December 31, 2007,
2006 and 2005 (page F-3).
4
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- -----------------------------------------------------------------------
OF OPERATIONS
-------------
Liquidity and Capital Resources:
- --------------------------------
Effective January 1, 2001, management began formally marketing all
properties in the Partnership for sale. On April 5, 2004, the Partnership sold
Inducon Amherst to an unaffiliated entity for cash of $2,045,000. After
satisfaction of the $1,704,000 mortgage loan on the property and payment of
closing costs, the net cash proceeds available amounted to $425,000, before
satisfaction of any remaining obligations related to the property. Additionally,
on May 20, 2004, the Partnership's only remaining property, Perrymont, was sold
to an unaffiliated entity for cash of $2,450,000, less a $600,000 credit for
work which the buyer determined was necessary on the property. After
satisfaction of closing costs, the net cash proceeds available amounted to
approximately $1,658,000, before satisfaction of any remaining obligations
related to the property. These proceeds enabled the partnership to make a
distribution in December 2004 of $1,120,635 after a payment of $404,501 to the
plaintiff's counsel in accordance with the settlement of the lawsuit (Item 3).
The Partnership made no distributions to limited partners in 2006 and 2007. The
Partnership does not anticipate any remaining proceeds, net of those amounts
that are required to pay the estimated payables and costs of operating the
partnership during liquidation, will be available for distribution to the
limited partners.
Except as described above and in the consolidated financial statements,
the general partner is not aware of any trends or events, commitments or
uncertainties that may impact liquidity in a material way.
Results of Operations:
- ----------------------
As a result of the sale of the remaining property, Perrymont, and the
establishment of a plan of liquidation, the Partnership began operating on the
liquidation basis of accounting effective May 21, 2004. Therefore, operations
for the years ended December 31, 2007, 2006 and 2005 are reported in the
consolidated statement of changes in net assets in liquidation.
Inflation has been consistently low during the periods presented in the
consolidated financial statements and, as a result, has not had a significant
effect on the operations of the Partnership or its properties.
2007 as compared to 2006
- ------------------------
As discussed above, the Partnership began reporting on a liquidation
basis of accounting on May 20, 2004. Operating activity for 2007 consisted of
the incurrence of $101,904 in liquidation costs. This exceeds the original
estimate of liquidation costs by $60,396. This excess of cost has been closed to
the general partners capital account at December 31, 2007, net of $8,823
previously contributed by the general partner.
.
2006 as compared to 2005
- ------------------------
As discussed above, the Partnership began reporting on a liquidation
basis of accounting on May 20, 2004. Operating activity for 2006 consisted of
the repayment of receivables from affiliates amounting to $114,266 at December
31, 2005.
5
ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- ------- ----------------------------------------------------------
Not applicable.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
Listed under Item 15 of this report.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------- ---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
ITEM 9A: CONTROLS AND PROCEDURES
- -------- -----------------------
The Partnership maintains a set of disclosure controls and procedures
designed to ensure that information required to be disclosed by the Partnership
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. Within the 90-day period
prior to the filing of this report, an evaluation was carried out under the
supervision and with the participation of the Partnership's management,
including the Partnership's Individual General Partner and Principal Financial
Officer, of the effectiveness of the Partnership's disclosure controls and
procedures. Based on that evaluation, the Partnership's Individual General
Partner and Principal Financial Officer concluded that the Partnership's
disclosure controls and procedures are effective.
Subsequent to the date of their most recent evaluation, there have been
no significant changes in the Partnership's internal control over financial
reporting or in other factors that could significantly affect the internal
control over financial reporting.
6
PART III
--------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- --------------------------------------------------
The Partnership, as an entity, does not have any directors or officers.
The Individual General Partner of the Partnership is Joseph M. Jayson. The
directors and executive officers of Realmark Properties, Inc., the Partnership's
Corporate General Partner, as of December 31, 2007, are listed below. Each
director is subject to election on an annual basis.
Title of All Positions Held with Year First
Name the Corporate General Partner Elected to Position
- ---- ----------------------------- -------------------
Joseph M. Jayson Chairman of the Board, President 1979
and Treasurer
Judith P. Jayson Vice President and Director 1979
Joseph M. Jayson and Judith P. Jayson are married to each other.
The Directors and Executive Officers of the Corporate General Partner
and their principal occupations and affiliations during the last five years or
more are as follows:
Joseph M. Jayson, age 69, is Chairman, Director and sole stockholder of
J. M. Jayson and Company, Inc. and certain of its affiliated companies: U.S.
Apartments LLC, Westmoreland Capital Corporation, Oilmark Corporation and U.S.
Energy Development Corporation. In addition, Mr. Jayson is Chairman of Realmark
Corporation, Chairman, President and Treasurer of Realmark Properties, Inc.,
wholly-owned subsidiaries of J. M. Jayson and Company, Inc. and co-general
partner of Realmark Property Investors Limited Partnership, Realmark Property
Investors Limited Partnership-II, Realmark Property Investors Limited
Partnership-III, Realmark Property Investors Limited Partnership-V, and Realmark
Property Investors Limited Partnership-VI A. Mr. Jayson has been in the real
estate business for the last 45 years and is a Certified Property Manager as
designated by the Institute of Real Estate Management ("I.R.E.M."). Mr. Jayson
received a B.S. Degree in Education in 1961 from Indiana University, a Masters
Degree from the University of Buffalo in 1963, and has served on the educational
faculty of the Institute of Real Estate Management. Mr. Jayson has for the last
45 years been engaged in various aspects of real estate brokerage and
investment. He brokered residential properties from 1962 to 1964, commercial
investment properties from 1964 to 1967, and in 1967 left commercial real estate
to form his own investment firm. Since that time, Mr. Jayson and J. M. Jayson &
Company, Inc. have formed or participated in various ways with forming over 30
real estate related limited partnerships. For the past 26 years, Mr. Jayson and
an affiliate have also engaged in developmental drilling for gas and oil.
Judith P. Jayson, age 67, is currently Vice President and a Director of
Realmark Properties, Inc. She is also a Director of the property management
affiliate, Realmark Corporation. Mrs. Jayson has been involved in property
management for the last 36 years and has extensive experience in the hiring and
training of property management personnel and in directing, developing and
implementing property management systems and programs. Mrs. Jayson, prior to
joining the firm in 1973, taught business in the Buffalo, New York High School
System. Mrs. Jayson graduated from St. Mary of the Woods College in Terre Haute,
Indiana, with a degree in Business Administration.
7
Audit Committee
- ---------------
The Partnership has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Exchange Act. The
members of the audit committee are Joseph M. Jayson and Duane Neyman, CPA.
Audit Committee Financial Expert
- --------------------------------
The Directors and Executive Officers of the Corporate General Partner
have determined that Duane Neyman, CPA is an audit committee financial expert as
defined by Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Mr. Neyman is not independent within the
meaning of Item 7(d)(3)(iv) of Schedule 14A of the Exchange Act due to limited
circumstances - namely that the Partnership is small in size and there is
limited personnel. Mr. Neyman is not independent as a result of being an
employee of an affiliate of the Corporate General Partner.
Code of Ethics
- --------------
The Partnership has adopted a code of ethics for the partners,
principal financial officer, and employees of the Corporate General Partner or
its affiliates who render services on behalf of the Partnership. The Partnership
will provide to any person without charge, upon request, a copy of the code of
ethics which is available from:
Realmark Property Investors Limited Partnership - III
Attention: Investor Relations
2350 North Forest Road
Getzville, New York 14068
ITEM 11: EXECUTIVE COMPENSATION
- -------- ----------------------
No direct remuneration was paid or payable by the Partnership to
directors and officers (since it has no directors or officers), nor was any
direct remuneration paid or payable by the Partnership to directors or officers
of Realmark Properties, Inc., the Corporate General Partner and sponsor, for the
year ended December 31, 2007. The Corporate General Partner and its affiliate,
Realmark Corporation, are entitled to fees and to certain expense reimbursements
with respect to Partnership operations, as set forth in Item 13 hereof and in
the notes to the consolidated financial statements.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------- --------------------------------------------------------------
No person is known to the Partnership to have owned of record or
beneficially, more than 5% of the units of limited partnership interests of the
Partnership, except for affiliates of the general partners that owned 1111.9
units of limited partnership interest amounting to approximately 7.2% of the
partnership interest at December 31, 2007, the date of dissolution. The general
partners and the executive officers of the Corporate General Partner, as of
December 31, 2007, the date of dissolution, owned 25.5 units of limited
partnership interest. The general partners and affiliates received their
proportionate share, as limited partners, of any distributable proceeds from the
sale of the properties.
8
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The properties of the Partnership and its subsidiary are managed by
Realmark Corporation, an affiliate of the Partnership's corporate general
partner, for a fee of generally 5% of annual net rental income of the
properties. Realmark Corporation and the Corporate General Partner are also
reimbursed for disbursements made on behalf of the Partnership. Those
transactions are further described, and quantified, in the note to the
consolidated financial statements entitled "Related Party Transactions."
ITEM 14: PRINCIPAL ACCOUNTING FEES AND SERVICES
- -------- --------------------------------------
Audit Engagement: Rotenberg & Co., L.L.P. was engaged as the Partnership's
independent auditor for the years ended 2007 and 2006. All fees incurred for the
years ended December 31, 2007 and 2006 were approved by the Audit Committee.
Audit Fees: Audit fees for the audit of the Partnership's annual financial
statement included in the Partnership's annual report on Form 10-K and those
financial statements included in the Partnership's quarterly reports on Form
10-Q by Rotenberg & Co. for the years ended December 31, 2007 and 2006 amounting
to $27,700 and $17,000, respectively.
Audit-Related Fees: None.
Tax Fees: The Partnership engaged Toski, Schaefer & Co., P.C. to provide tax
filing and compliance services during the years ended 2007 and 2006. The fees
paid to Toski, Schaefer & Co., P.C. for these services amounted to $16,619 and
$4,535 for the years ended December 31, 2007 and 2006, respectively..
All Other Fees: None.
The Audit Committee has set a policy that all fees incurred by the
Partnership for services performed by its independent auditors must be
pre-approved by the Audit Committee. All fees related to 2007 and 2006 were
pre-approved by the Audit Committee.
The Audit Committee oversees the Partnership's financial reporting
process. Management has the primary responsibility for the financial statements
and the financial reporting process, including the systems of internal controls.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the
audited financial statements with management, including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the
financial statements.
The Audit Committee has the sole authority to retain and terminate the
Partnership's independent auditors and approves all fees paid to the independent
auditors. During 2007 and 2006, the Audit Committee reviewed with the
independent auditors, who are responsible for expressing an opinion on the
conformity of those audited financial statements with generally accepted
accounting principles, their judgments as to the quality, not just the
acceptability, of the Partnership's accounting principles and such other matters
as are required to be discussed with the Audit Committee under generally
accepted auditing standards. In addition, the Audit Committee has discussed with
the independent auditors the auditors' independence from management and the
Partnership, including the matters in the written disclosures required by the
Independence Standards Board, and considered the scope and type of non-audit
services provided by the auditor when reviewing the compatibility of those
non-audit services with the auditors' independence.
9
The Audit Committee discussed with the Partnership's independent
auditors the overall scope and plans for their audit. The Audit Committee meets
with the independent auditors to discuss the results of their examination, their
evaluations of the Partnership's internal controls, and the overall quality of
the Partnership's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the General Partners (and the General Partners have
approved) that the audited financial statements be included in the annual report
on Form 10-K for the year ended December 31, 2007.
10
PART IV
-------
ITEM 15:EXHIBITS, FINANCIAL STATEMENTS, AND SCHEDULES
- ------- ---------------------------------------------
(a) Consolidated Financial Statements Page
--------------------------------- ----
Independent Auditor's Report F-1
Consolidated Statement of Net Assets in Liquidation as of
December 31, 2007 and 2006 F-2
Consolidated Statement of Changes in Net Assets in Liquidation for
the years ended December 31, 2007, 2006 and 2005 F-3
Notes to Consolidated Financial Statements F-4
All other schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial statements
or the notes thereto.
(b) Exhibits
--------
2. Plan of acquisition, reorganization, arrangement, liquidation, or
succession
(a) Stipulation of Settlement Agreement dated August 29, 2001 is
incorporated herein by reference.
(b) Order and Final Judgment Approving Settlement and Awarding Fees
and Expenses dated November 29, 2001 is incorporated herein by
reference.
4. Instruments defining the rights of security holder, including
indentures
(a) Second Amended and Restated Agreement and Certificate of Limited
Partnership filed with the Registration Statement of the
Registrant Form S-11, filed November 21, 1983, and subsequently
amended is incorporated herein by reference.
10. Material contracts
(a) Property Management Agreement with Realmark Corporation included
with the Registration Statement of the Registrant as filed and
amended to date is incorporated herein by reference.
14. Code of Ethics filed December 31, 2003, is incorporated herein by
reference.
21. Subsidiary of the Partnership is filed herewith.
31. Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002, is filed herewith.
32. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is
filed herewith.
11
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.
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
By: /s/ Joseph M. Jayson March 28, 2008
----------------------------------- --------------
JOSEPH M. JAYSON, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934,
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: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/ Joseph M. Jayson March 28, 2008
----------------------------------- --------------
JOSEPH M. JAYSON, Date
President, Treasurer and Director
/s/ Judith P. Jayson March 28, 2008
----------------------------------- --------------
JUDITH P. JAYSON, Date
Vice President and Director
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Partners
Realmark Property Investors Limited Partnership - III
and Subsidiary
Getzville, New York
We have audited the accompanying consolidated statement of net assets
in liquidation (liquidation basis) of Realmark Property Investors Limited
Partnership - III and Subsidiary ("the Company") as of December 31, 2007 and
2006, and the related consolidated statements of changes in net assets in
liquidation (liquidation basis) for each of the years in the three year period
ended December 31, 2007. Realmark Property Investors Limited Partnership - III
and Subsidiary's management is responsible for these consolidated financial
statements. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Realmark
Property Investors Limited Partnership - III and Subsidiary as of December 31,
2007 and 2006, and the results of its operations and its cash flows for each of
the years in the three-year period then ended, in conformity with accounting
principles generally accepted in the United States of America.
As discussed in note 1 to the consolidated financial statements, the
Company filed a Certificate of Cancellation in the office of the Secretary of
State of Delaware to cancel the Certificate of Limited Partnership of Realmark
Property Investors Limited Partnership - III. The Company is currently
dissolved.
/s/ Rotenberg & Co., LLP
- ------------------------
Rotenberg & Co., LLP
Rochester, New York
March 31, 2008
F-1A
INDEPENDENT AUDITOR'S REPORT
The Partners
Realmark Property Investors Limited Partnership - III:
We have audited the accompanying consolidated statement of changes in net assets
in liquidation of Realmark Property Investors Limited Partnership - III and
Subsidiary for the year ended December 31, 2005. Our audit also included the
financial statement schedule listed in the index at Item 15. This consolidated
financial statement and the financial statement schedule are the responsibility
of the General Partners. Our responsibility is to express an option on the
consolidated financial statement and the financial statement schedule based on
our audits
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Partnership is not required to
have, nor were engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances but not for the purpose of expressing an
opinion on the effectiveness of the Partnership's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provide a
reasonable basis for our opinion.
As discussed in note 1 to the consolidated financial statements, on May 20, 2004
the Partnership adopted a plan of termination and liquidation. As a result, the
Partnership has changed its basis of accounting from the going concern to the
liquidation basis effective May 21, 2004.
In our opinion, the consolidated financial statement referred to above presents
fairly, in all material respects, the changes in net assets in liquidation of
Realmark Property Investors Limited Partnership - III and Subsidiary for the
year ended December 31, 2005 in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the financial
statement schedule, when considered in relation to the basic financial statement
taken as a whole, presents fairly in all material respects the information set
forth therein.
/s/ Toski, Schaefer & CO., P.C.
- -------------------------------
Toski, Schaefer & CO., P.C.
Williamsville, New York
March 31, 2006
F-1B
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Consolidated Statement of Net Assets in Liquidation
(Liquidation Basis)
December 31, 2007 and 2006
2007 2006
---- ----
Assets - Cash $ -- 47,514
--------- ------
Liabilities:
Accounts payable and accrued expenses -- 3,175
Payable to affiliated parties -- 2,831
Estimated costs during the period of liquidation -- 41,508
--------- ------
Total liabilities -- 47,514
--------- ------
Net assets in liquidation $ -- --
========= ======
See accompanying notes to consolidated financial statements.
F-2
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Consolidated Statements of Changes in Net Assets in Liquidation
(Liquidation Basis)
For the years ended December 31, 2007, 2006 and 2005
Net assets in liquidation at December 31, 2004 $ --
Change in net assets --
-----------------
Net assets in liquidation at December 31, 2005 --
-----------------
Change in net assets --
-----------------
Net assets in liquidation at December 31, 2006 --
Change in net assets --
-----------------
Net assets in liquidation at December 31, 2007 $ --
=================
See accompanying notes to consolidated financial statements.
F-3
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 2007, 2006, 2005
(1) Liquidation of the Partnership
------------------------------
On May 20, 2004, the Partnership sold its remaining property investment,
Perrymont, and adopted a plan of termination and liquidation under which
obligations to non-affiliates will be paid and net proceeds will be
distributed to the limited partners.
On January 3, 2008, in response to the dissolution of the Partnership by
the State of Delaware on December 31, 2007, the Partnership filed a
Certificate of Cancellation in the office of the Secretary of State of
Delaware to cancel the Certificate of Limited Partnership of Realmark
Property Investors Limited Partnership - III.
(2) Formation and Operation of Partnership
--------------------------------------
Realmark Property Investors Limited Partnership - III (the Partnership) is
a Delaware limited partnership formed on November 18, 1983, to invest in a
diversified portfolio of income-producing real estate investments.
In 1984 and 1985, the Partnership sold through a public offering, 15,551
units of limited partnership interest for $15,551,000. The general partners
are Realmark Properties, Inc. (the Corporate General Partner) and Joseph M.
Jayson (the Individual General Partner) who is the sole shareholder of J.M.
Jayson & Company, Inc. Realmark Properties, Inc. is a wholly-owned
subsidiary of J.M. Jayson & Company, Inc.
Under the partnership agreement, the general partners and their affiliates
received compensation for services rendered and reimbursement for expenses
incurred on behalf of the Partnership (note 7).
(3) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Accounting and Consolidation
-------------------------------------
As a result of the plan of termination and liquidation, the
Partnership changed its basis of accounting from the going concern
basis to the liquidation basis effective May 21, 2004. Under the
liquidation basis of accounting, assets are stated at their estimated
net realizable values and liabilities are stated at their estimated
settlement amounts.
In estimating liquidation values, fees paid to the plaintiffs' legal
counsel, amounting to $404,501 were recorded as a loss on settlement
of the lawsuit.
The accompanying consolidated financial statements have been prepared
on the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America and
include the accounts of the Partnership and its wholly-owned
subsidiary, Realmark - Inducon Amherst, LLC which owns Inducon
Amherst, an office building located in Amherst, New York, acquired in
1985.
F-4
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(3) Summary of Significant Accounting Policies, Continued
-----------------------------------------------------
In consolidation, all intercompany accounts and transactions have been
eliminated.
(b) Estimates
---------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
(c) Cash and Equivalents
--------------------
Cash and equivalents includes money market accounts and any highly
liquid debt instruments purchased with a maturity of three months or
less.
(d) Fair Value of Financial Instruments
-----------------------------------
The fair value of the Partnerships financial instruments approximated
their carrying values.
(e) Per Unit Data
-------------
Per limited partnership unit is based on the weighted average number
of limited partnership units outstanding for the year.
(f) Income Allocation and Distributable Cash Flow
---------------------------------------------
The partnership agreement provided that income not arising from sale
and refinancing activities and all partnership losses are to be
allocated 97% to the limited partners and 3% to the general partners.
Partnership income arising from sale or refinancing activities is
allocated in the same proportion as distributions of distributable
cash from sale proceeds. In the event there is no distributable cash
from sale proceeds, taxable income will be allocated 87% to the
limited partners and 13% to the general partners. The above is subject
to tax laws that were applicable at the time of the formation of the
Partnership and may be adjusted due to subsequent changes in the
Internal Revenue Code.
(g) Income Allocation and Distributable Cash Flow
---------------------------------------------
The partnership agreement also provided for the distribution to the
partners of net cash flow from operations. As a result of the sale of
the Partnership's last property, there will be no future distributions
of net cash flow from operations. Sale or refinancing proceeds are
distributed to the extent available, 100% to the limited partners
until there has been a return of the limited partner's capital
contribution plus an amount sufficient to provide a 7%, not
compounded, return on their adjusted capital contributions for all
years following the termination of the offering of the units. There
will not be sufficient cash flow to provide this return to the limited
partners.
F-5
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(3) Summary of Significant Accounting Policies, Continued
-----------------------------------------------------
(h) Income Taxes
------------
No income taxes are included in the consolidated financial statements
since the taxable income or loss of the Partnership is reportable by
the partners on their income tax returns. At December 31, 2007, net
assets for financial reporting purposes were equal to the tax bases of
the net assets.
(i) Segment Information
-------------------
The Partnership's operating segments all involve the ownership and
operation of income-producing real property and are aggregated into one
reporting segment.
(4) Investments in Real Estate
--------------------------
On May 20, 2004, the Partnership sold Perrymont to an unaffiliated entity
for cash of $2,450,000, less a $600,000 credit for work which the buyer
determined was necessary on the property, and recognized a related gain on
the sale amounting to $144,785.
On April 5, 2004, the Partnership sold Inducon Amherst to an unaffiliated
entity for cash of $2,045,000 and recognized a related gain on the sale
amounting to $19,501.
(5) Estimated Costs During the Period of Liquidation
------------------------------------------------
Under the liquidation basis of accounting, the Partnership is required to
estimate and record the costs associated with executing the plan of
liquidation as a liability. These amounts can vary significantly due to,
among other things, the costs of retaining personnel, the costs of
insurance, the timing and amounts associated with discharging known and
contingent liabilities and the costs associated with cessation of the
Partnership's operations. These costs are estimates and are expected to be
paid out over the liquidation period. The Partnership's remaining estimated
costs during the period of liquidation as of December 31, 2007, 2006 and
2005 are as follows:
2007 2006 2005
---- ---- ----
Professional fees $ - 1,790 21,519
Office and administrative expense - 39,718 35,560
-------- ------ ------
Total $ - 41,508 57,079
======== ====== ======
F-6
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(6) Related Party Transactions
--------------------------
The Corporate General Partner and its affiliates earn fees, principally for
property and partnership management and are reimbursed for services
rendered to the Partnership, as provided for in the partnership agreement.
A summary of those items follows:
Liquidation Period
------------------
2007 2006 2005
---- ---- ----
Reimbursement for cost of services
to the Partnership that include
investor relations, marketing of
properties, professional fees,
communications, supplies, accounting,
printing, postage and other items $ 15,170 16,603 13,463
--------- ------ ------
In addition to the above, other property specific expenses such as payroll,
benefits, etc. are charged to property operations on the Partnership's
consolidated statements of operations. Payable to affiliated parties bears
interest at 8%, are payable on demand and amounted to $2,831 at December
31, 2007. The deficiency of the Partnership at dissolution totaled $51,573
and was absorbed by the general partner in closing out the Partnership at
December 31, 2007. This deficiency was the due to actual liquidation costs
exceeding the amount originally estimated.
F-7
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(6) Related Party Transactions, Continued
-------------------------------------
Property Disposition Fees
-------------------------
According to the terms of the partnership agreement, the general
partners are allowed to collect property disposition fees upon the sale
of acquired properties. This fee is not to exceed the lesser of 50% of
amounts customarily charged in arm's-length transactions by others
rendering similar services for comparable properties, or 2.75% of the
sales price. The property disposition fee is subordinate to payments to
the limited partners of a cumulative annual return (not compounded)
equal to 7% of their average adjusted capital balances and to repayment
to the limited partners of an amount equal to their capital
contributions. The general partners have not to date received a
disposition fee on any property sales, as the limited partners of the
Partnership have not received a return of 7% on their average adjusted
capital or their original capital as defined in the partnership
agreement. Fees earned on the sales will not be recorded as liabilities
by the Partnership until such time as payment is probable.
(7) Settlement of Lawsuit
---------------------
As previously reported, the Partnership, as a nominal defendant, the
general partners of the Partnership and of affiliated public partnerships
(the "Realmark Partnerships") and the officers and directors of the
Corporate General Partner, as defendants, had been involved in a class
action litigation at the state court level regarding the payment of fees
and other management issues.
On August 29, 2001, the parties entered into a Stipulation of Settlement
(the "Settlement"). On October 4, 2001, the Court issued an "Order
Preliminary Approving Settlement" (the "Hearing Order") and on November 29,
2001, the Court issued an "Order and Final Judgment Approving Settlement
and Awarding Fees and Expenses" and dismissing the complaints with
prejudice. The Settlement provided, among other things, that all of the
Realmark Partnerships' properties be disposed of. The general partners will
continue to have primary authority to dispose of the Partnerships'
properties. If either (i) the general partners have not sold or contracted
to sell 50% of the Partnerships' properties (by value) by April 2, 2002 or
(ii) the general partners have not sold or contracted to sell 100% of the
Partnerships' properties by September 29, 2002, then the primary authority
to dispose of the Partnerships' properties will pass to a sales agent
designated by plaintiffs' counsel and approved by the Court. On October 4,
2002, the Court appointed a sales agent to work with the general partners
to continue to sell the Partnerships' remaining properties.
F-8
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III
AND SUBSIDIARY
Notes to Consolidated Financial Statements, Continued
(7) Settlement of Lawsuit, Continued
--------------------------------
The settlement also provided for the payment by the Partnerships of fees to
the plaintiffs' attorneys. These payments are payable out of the proceeds
from the sale of all of the properties owned by all of the Realmark
Partnerships, following the sale of the last of these properties in each
partnership. Plaintiffs' counsel will receive 15% of the amount by which
the sales proceeds distributable to limited partners in each partnership
exceeds the value of the limited partnership units in each partnership
(based on the weighted average of the units' trading prices on the
secondary market as reported by Partnership Spectrum for the period May
through June 2001). In no event may the increase on which the fees are
calculated exceed 100% of the market value of the units as calculated
above. On May 20, 2004, the Partnership sold its remaining property, and in
December 2004, a payment of $404,501 was made to the plantiffs' attorneys.
F-9