10-Q 1 de043001-10q.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended April 30, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission File Number: 0-18146 DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. -------------------------------------------------------------------------------- (Exact name of registrant as specified in governing instrument) Delaware 13-3293754 -------------------------------------------------------------------------------- (State of organization) (IRS Employer Identification No.) 2 World Trade Center, New York, NY 10048 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 392-2974 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Former name, former address and former fiscal year, if changed since last report: not applicable 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 [X] No [ ] PART I - FINANCIAL INFORMATION ------------------------------ Item 1. Financial Statements DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. BALANCE SHEETS April 30, October 31, 2001 2000 -------------------------------------------------------------------------------- ASSETS Cash and cash equivalents $ 656,825 $ 1,614,341 Investment in joint venture 12,528 41,090 -------------------------------------------------------------------------------- $ 669,353 $ 1,655,431 ================================================================================ LIABILITIES AND PARTNERS' CAPITAL Accounts payable and accrued liabilities $ 218,455 $ 241,686 Distributions payable to General Partners 115,566 83,019 -------------------------------------------------------------------------------- 334,021 324,705 -------------------------------------------------------------------------------- Partners' capital (deficiency): General partners (8,662,027) (8,621,309) Limited partners ($500 per Unit, 534,020 Units issued) 8,997,359 9,952,035 -------------------------------------------------------------------------------- Total partners' capital 335,332 1,330,726 -------------------------------------------------------------------------------- $ 669,353 $ 1,655,431 ================================================================================ See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. STATEMENTS OF OPERATIONS Three and six months ended April 30, 2001 and 2000

Three months ended Six months ended April 30, ~~October~~April 3130, ~~2000 1999~~ ----------------------- ----------------------- 2001 2000 2001 2000 ------------------------------------------------------------------------------------- ~~ASSETS~~Revenues: ~~Cash~~Rental ~~and~~$ ~~cash~~- ~~equivalents~~$ - $~~1,943,106~~ - $ 135,~~744~~231 Equity in earnings of joint venture - 237,~~447~~284 ~~Real~~243 ~~estate~~382,326 ~~held~~Losses ~~for~~on sale of real estate - 9(18,~~457,148~~069) ~~Investment~~- in(49,164) ~~joint~~Interest ~~venture~~and other 7,~~477~~169 35,~~530~~736 631,~~962~~337 105,~~579~~060 ------------------------------------------------------------------------------------- 7,169 254,951 31,580 473,453 ------------------------------------------------------------------------------------- ~~Other~~Expenses: ~~assets~~Property ~~472,001~~operating ~~786~~(3,~~466~~413) $9,~~892~~287 (31,~~637~~759) ~~$ 18~~26,~~950,640~~972 ~~===================================================================================================================~~General ~~LIABILITES AND PARTNERS' CAPITAL Accounts payable~~ and ~~accrued~~administrative ~~liabilities~~76,948 $62,064 ~~256~~145,~~933~~053 ~~$ 343~~227,~~550~~383 ------------------------------------------------------------------------------------- 73,535 71,351 113,294 254,355 ------------------------------------------------------------------------------------- ~~Partners'~~Net ~~capital~~ (~~deficiency~~loss): ~~General~~income ~~partners~~$ (866,~~534,219~~366) $ 183,600 $ (881,~~561~~714) $ 219,~~045~~098 ===================================================================================== Net (loss) income allocated to: Limited ~~partners~~Partners $ (59,730) $~~500~~ ~~per~~163,432 ~~Unit~~$ (73,543) ~~534~~$ 192,~~020~~272 ~~Units~~General ~~issued)~~Partners 18(6,~~169,923~~636) 2720,168 (8,~~135~~171) 26,826 -------------------------------------------------------------------------------------~~------------------------------~~ ~~Total~~$ ~~partners'~~(66,366) ~~capital~~$ 9183,~~635~~600 $ (81,~~704~~714) 18$ 219,~~607,090~~098 ===================================================================================== Net (loss) income per Unit of limited partnership interest $ (0.11) $ 0.31 $ (0.14) $ 0.36 ============================== ~~$9,892,637 $ 18,950,640 See accompanying notes to consolidated financial statements.~~=======================================================

See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. STATEMENT OF PARTNERS' CAPITAL Six months ended April 30, 2001 Limited General Partners Partners Total ------------------------------------------------------------------------ Partners' capital (deficiency) at November 1, 2000 $9,952,035 $(8,621,309) $1,330,726 Net loss (73,543) (8,171) (81,714) Distributions (881,133) (32,547) (913,680) ------------------------------------------------------------------------ Partners' capital (deficiency) at April 30, 2001 $8,997,359 $(8,662,027) $ 335,332 ======================================================================== See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. STATEMENTS OF CASH FLOWS Six months ended April 30, 2001 and 2000

~~Three~~2001 ~~months~~2000 ~~ended Six months ended April 30, April 30,~~ ------------------- --------------------- ~~2000 1999 2000 1999~~ ------------------- -------------------------- ~~Revenues~~Cash flows from operating activities: $Net -(loss) income $ 1(81,~~350,597~~714) $ 35219,~~231~~098 $Adjustments ~~2,974,598~~to ~~Rental~~reconcile ~~237,284~~net ~~236,866~~(loss) ~~382,326~~income ~~444,968~~to ~~Equity~~net cash (used in) ~~earnings~~provided ofby ~~joint~~operating ~~ventures~~activities: ~~35,736~~Losses ~~39,021~~on ~~104,434~~sale ~~68,244~~of ~~Interest~~real ~~(18,069)~~estate ~~(4,900,000)~~- (49,164 Equity in earnings of joint venture (243) (4382,~~900,000~~326) ~~Losses~~Decrease onin ~~real~~other ~~estate~~assets - 1314,~~717~~465 ~~626~~Decrease 50in accounts payable and accrued liabilities (23,~~164~~231) ~~Other~~(86,617) ------------------------------------------------- ------------------ ------------------- Net cash (used in) provided by operating activities (105,188) 113,784 ------------------- -------------------- ~~254,951 (3,271,799) 473,453 (1,362,026)~~ ---------------------------------------------- Cash flows from investing activities: Proceeds from real estate sold - 9,472,224 Additions to real estate held for sale - (64,240) Investments in joint venture - (557,792) Distributions from joint venture 28,805 425,167 ------------------ ------------------- ------------------- -------------------- ~~Expenses: Property operating 9,287 624,641 26,972 1,102,229 Depreciation~~ - ~~295,095~~ - ~~669,855 Amortization~~ ------- ~~15,281~~Net -cash ~~30,229~~provided ~~General~~by ~~and~~investing ~~administrative~~activities 6228,~~064~~805 579,~~636 227~~275,~~383~~359 ~~208,679~~ ------------------------------------------------- ------------------ ------------------ Cash flows from financing activities: Distributions (913,680) (9,190,484) Increase in distributions payable to General Partners 32,547 - ------------------- -------------------- ~~71,351 992,653 254,355 2,010,992~~ ---------------------------------------------- Net cash used in financing activities (881,133) (9,190,484) --- ------------------ ------------------- ------------------- -------------------------- ~~Net income~~ (~~loss~~Decrease) $increase ~~183,600~~in ~~$(4,264,452)~~cash $and ~~219,098~~cash $equivalents (3957,~~373,018~~516) ~~=================================================~~198,659 ~~==================~~Cash ~~===================~~and ~~===================~~cash ~~====================~~equivalents ~~Net~~at ~~income~~beginning ~~(loss)~~of ~~allocated~~period ~~to: Limited partners $ 163~~1,~~432 $(4~~614,~~328,007)~~341 ~~$ 192~~1,~~272 $(3~~744,~~525,716)~~447 ~~General partners 20,168 63,555 26,826 152,698~~ ------------------------------------------------- ------------------ ------------------- ~~-------------------~~Cash ~~--------------------~~and $cash ~~183,600~~equivalents ~~$(4,264,452)~~at $end ~~219,098 $(3,373,018) ================================================= ================== =================== =================== ==================== Net income (loss) per Unit~~ of ~~limited~~period ~~partnership interest~~ $ ~~0.31~~656,825 $1,943,106 ~~(8.10) $ 0.36 $ (6.60)~~ ================================================= ================== ==================~~= =================== ==================== See accompanying notes to consolidated financial statements.~~

See accompanying notes to financial statements. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. Notes to Financial Statements 1. The Partnership --------------- Dean Witter Realty Income Partnership III, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of Delaware in 1985. The Partnership's fiscal year ends on October 31. The Partnership's last remaining property investment was its 44.6% interest in the partnership ("TPA") which owned Taxter Corporate Park. TPA sold the Taxter property on May 23, 2000, and this sale has effectuated the dissolution of the Partnership. However, the Partnership can't wind up its affairs and distribute the balance of the Partnership's cash reserves until TPA terminates its operations (see Note 2). The Managing General Partner plans to terminate the Partnership in 2001. The Partnership's interest in TPA was accounted for using the equity method. The Partnership's records are maintained on the accrual basis of accounting for financial reporting and tax reporting purposes. Net (loss) income per Unit of limited partnership interest amounts are calculated by dividing net (loss) income allocated to Limited Partners by the weighted average number of Units outstanding. In the opinion of management, the accompanying financial statements, which have not been audited, include all adjustments necessary to present fairly the results for the interim period. Except for the 2000 losses on sale of real estate, such adjustments consist only of normal recurring accruals. These financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Partnership's annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended October 31, 2000. Operating results of interim periods may not be indicative of the operating results for the entire year. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. Notes to Financial Statements 2. Investment in Joint Venture --------------------------- The Partnership understands that TPA has certain operating issues that TPA must resolve, both with the buyer of the Taxter property and other third parties, before TPA can terminate its operations. Resolution of these issues is not anticipated to require any significant funding from the Partnership. Summarized income statements of TPA are as follows:

~~Limited~~Three ~~General~~months ~~Partners~~ended ~~Partners~~Six ~~Total~~months ended April 30, April 30, ----------------------- ----------------------- 2001 2000 2001 2000 ------------------------------------------------------------------------------------- ~~Partners'~~Revenues ~~capital~~$ ~~(deficiency)~~- ~~at November~~ $1, ~~1999 $27~~332,~~168,135~~700 $~~(8,561,045)~~ $544 18$2,~~607~~669,~~090~~459 ~~Net~~Expenses ~~income~~- ~~192~~800,~~272~~675 ~~26,826~~- ~~219~~1,~~098~~812,227 -------------------------------------------------------------------------------------~~------------------------------~~ ~~Distribution~~Net ~~(9,190,484)~~income $ - ~~(9,190,484)~~$ ~~Partners' capital (deficiency) at April 30~~532,025 ~~2000~~ $~~18,169,923~~ ~~$(8,534,219)~~544 $ 9857,~~635,704~~232 =====================================================================================~~============================== See accompanying notes to consolidated financial statements.~~

3. Related Party Transactions -------------------------- An affiliate of the Managing General Partner performs administrative functions, processes investor transactions and prepares tax information for the Partnership. For the six months ended April 30, 2001 and 2000, the Partnership incurred approximately $42,000 and $75,000, respectively, for these services. These amounts are included in general and administrative expenses. The 2001 fees are also included in accounts payable and accrued liabilities as of April 30, 2001. 4. Cash Distribution ----------------- On February 27, 2001, the Partnership distributed, 100% to Limited Partners, approximately $881,000($1.65 per Unit). This distribution consisted of approximately $588,000($1.10 per Unit) of previously undistributed proceeds from the sale of the Taxter property and cash reserves of $293,000($0.55 per Unit). The General Partners deferred receipt of their share of the cash reserves distribution (approximately $32,500) to ensure that the Partnership would have cash on hand to cover DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. Notes to Financial Statements all liabilities that may arise while the Partnership winds up its affairs. The amounts deferred were charged against partners' capital and recorded as distributions payable. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- Liquidity and Capital Resources ------------------------------- As discussed in Note 1 to the Financial Statements, the partnership ("TPA") which owned the Taxter office property sold the property on May 23, 2000. The Partnership's interest in TPA was the Partnership's only remaining property interest. The Partnership dissolved pursuant to the terms of its Partnership Agreement, effective May 23, 2000, the date on which the Taxter property was sold. The Partnership plans to wind up its affairs, distribute its remaining cash reserves and terminate its existence by filing a certificate of cancellation in the office of the Delaware Secretary of State in 2001. As discussed in Note 4 to the Financial Statements, on February 27, 2001, the Partnership paid, to Limited Partners only, a distribution of $1.65 per Unit. The Partnership believes that its cash reserves are adequate for its needs until it is terminated. Except as described above and in the financial statements, the Managing General Partner is not aware of any trends or events, commitments or uncertainties that may impact liquidity in a material way. Operations ---------- Fluctuations in the Partnership's operating results for the three and six month periods ended April 30, 2001 compared to 2000 were primarily attributable to the following: The decreases in equity in earnings of joint venture in 2001 are due to the loss of operating income from TPA after it sold the Taxter property in May 2000. The losses on sale of real estate in fiscal 2000 were generated by the November 1999 sale of the Westland Crossing shopping center. The absence of rental revenues and positive property operating expenses in 2001 is due to the fiscal 2000 sale of the Westland Crossing property. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. Interest and other revenues decreased during the six month period ended April 30, 2001 compared to 2000 primarily due to the interest earned on the proceeds from the fiscal 2000 sale of the Westland Crossing property before such proceeds were distributed to the Limited Partners in December 1999. The negative property operating expenses in 2001 were primarily caused by the collection of tenant receivables which were previously written off by the Partnership. There were no other individually significant factors which caused changes in revenues and expenses. Inflation --------- Inflation has been consistently low during the periods presented in the financial statements and, as a result, has not had a significant effect on the operations of the Partnership or its properties. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. PART II - OTHER INFORMATION --------------------------- Item 6. Exhibits & Reports on form 8-K ------- ------------------------------ (a) Exhibits. None (b) Reports on Form 8-K None DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. 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. DEAN WITTER REALTY INCOME PARTNERSHIP III, L.P. By: Dean Witter Realty Income Properties III Inc. Managing General Partner Date: June 13, 2001 By: /s/ E. Davisson Hardman, Jr. ------------------------------- E. Davisson Hardman, Jr. President Date: June 13, 2001 By: /s/ Raymond E. Koch ------------------------------- Raymond E. Koch Controller (Principal Financial and Accounting Officer)

2000 1999 ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income (loss) $ 219,098 $ (3,373,018) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Loss on sale of real estate 49,164 4,900,000 Depreciation and amortization - 700,084 Equity in earnings of joint ventures (382,326) (444,968) Decrease in other assets 314,465 887,593 Decrease in accounts payable and accrued liabilities (86,617) (270,510) ------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 113,784 2,399,181 ------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from real estate sold 9,472,224 - Additions to real estate held for sale (64,240) (777,318) Investments in joint ventures (557,792) (42,163) Distributions from joint ventures 425,167 335,062 ------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 9,275,359 (484,419) ------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Cash distributions (9,190,484) - ------------------------------------------------------------------------------------------------------------------- Increase in cash and cash equivalents 198,659 1,914,762 Cash and cash equivalents at beginning of period 1,744,447 1,919,694 ------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $1,943,106 $ 3,834,456 =================================================================================================================== Supplemental disclosure of non-cash investing activities: Reclassification of real estate to real estate held for sale: Real estate, at cost Land $ - $ 8,823,904 Buildings and improvements - 56,051,638 Accumulated depreciation - (15,026,541) Estimated costs of disposition - (4,900,000) Deferred leasing commissions, net - 388,464 Other assets - 428,465 ------------------------------------------------------------------------------------------------------------------- Real estate held for sale $ - $45,765,930 =================================================================================================================== See accompanying notes to consolidated financial statements.

Summarized balance sheet information of TPA is as follows: April 30, October 31, 2000 1999 -------------------------------------------------------------------------------------------- Real estate held for sale $15,851,278 $ - Land and buildings, net - 15,680,607 Other 2,719,198 1,670,760 -------------------------------------------------------------------------------------------- Total assets $18,570,476 $17,351,367 ============================================================================================ Liabilities $ 278,781 $ 214,272 Partners' Capital 18,291,695 17,137,095 -------------------------------------------------------------------------------------------- Total liabilities and capital $18,570,476 $17,351,367 =========================================================================================== Summarized income statements of TPA are as follows: Three months Six months ended April 30, ended April 30, ------------------- -------------------- 2000 1999 2000 1999 ------------------------------------------------------------------------------------------- Revenues $1,332,700 $1,527,966 $2,669,459 $2,998,688 Expenses 800,675 995,530 1,812,227 2,001,597 ------------------------------------------------------------------------------------------- Net income $ 532,025 $ 532,436 $ 857,232 $ 997,091 =========================================================================================== On March 31, 2000, TPA reclassified its investment in the Taxter property as real estate held for sale. Accordingly, TPA did not record depreciation expense in April 2000 on the building and related improvements.

Filing Compare · DEAN WITTER REALTY INCOME PARTNERSHIP III LP