10-Q 1 0001.txt 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 September 30, 2000 Commission file number 0-11578 AMERICAN REPUBLIC REALTY FUND I (Exact name of registrant as specified in it's charter) WISCONSIN 39-1421936 (State or other jurisdiction of (IRS Employer incorporation or organization Identification Number) 6210 Campbell Road Suite 140 Dallas, Texas 75248 (Address of principal executive offices) Registrant's telephone number, including area code: (972)380-8000. 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: REGISTRANT IS A LIMITED PARTNERSHIP TABLE OF CONTENTS Item 1. Financial Statements The following Unaudited financial statements are filed herewith: Consolidated Balance Sheet as of September 30, 2000 and December 31, 1999. Page 3 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2000 and 1999. Page 4 Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2000 and 1999. Page 5 Item 2. Results of Operations and Management's Discussion and Analysis of Financial Condition Page 6 Liquidity and Capital Resources Page 7 Other Information Page 8 Signatures Page 9 The statements, insofar as they relate to the period subsequent to December 31, 1999, are Unaudited. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Balance Sheets September 30,2000 December 31,1999 (Unaudited) ASSETS Real Estate assets, at cost Land $1,822,718 $1,822,718 Buildings and improvements 15,656,616 15,656,616 17,479,334 17,479,334 Less: Accumulated depreciation (10,892,557) (10,382,557) Real Estate, net 6,586,777 7,096,777 Cash including cash investments 353,887 116,649 Escrow deposits 535,819 542,074 Prepaid Expenses 37,507 14,067 Deferred Financing Fees 154,865 172,072 TOTAL ASSETS $7,668,855 $7,941,639 LIABILITIES AND PARTNERS'EQUITY: LIABILITIES Mortgage and notes payable $10,480,431 $10,572,372 Note Payable to affiliates 0 165,346 Amounts due affiliates 0 4,490 Real estate taxes payable 207,078 0 Security deposits 79,631 68,610 Accounts payable & accrued expenses 170,592 297,610 Total liabilities 10,937,732 11,108,428 PARTNERS CAPITAL(DEFICIT) Limited Partners (3,321,883) (3,220,816) General Partner 53,006 54,027 Total Partners Capital(Deficit) (3,268,877) (3,166,789) TOTAL LIABILITIES AND PARTNER DEFICIT $7,668,855 $7,941,639 See notes to Condensed Consolidated Financial Statements AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Statement of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, REVENUES 2000 1999 2000 1999 Rental income 684,484 668,947 2,037,604 $1,990,380 Other property 19,121 14,364 51,288 43,102 Total revenues 703,605 683,311 2,088,892 2,033,482 EXPENSES Salaries & wages 78,734 71,197 209,424 221,699 Maintenance & repairs 66,576 61,445 168,387 228,698 Utilities 49,529 43,058 140,152 129,635 Real estate taxes 69,582 67,916 207,078 202,916 General administrative 41,372 29,962 95,018 89,746 Contract services 26,634 28,300 81,452 83,416 Insurance 12,389 10,352 34,115 31,173 Interest 206,720 208,850 623,968 629,286 Depreciation and 175,735 179,871 527,207 539,614 amortization Property management 34,949 34,100 104,180 101,500 fees (a) Total expenses 762,220 735,051 2,190,981 2,257,683 Net Income ($58,615) ($51,740) (102,089) (224,201) NET INCOME PER UNIT $(5.33) $(4.70) $(9.28) $(20.38) See Notes to Condensed Consolidated Financial Statements AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Statement of Cash Flows See Notes to Condensed Consolidated Financial Statements Unaudited Nine Months Ended September 30, 2000 1999 CASH FLOWS FROM OPERATING ACTIVITY Net income (loss) ($102,089) ($224,201) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 510,000 495,000 Net Effect of changes in operating accounts Escrow deposits 6,255 (100,231) Prepaid expenses (23,440) (18,244) Accrued real estate taxes 207,078 202,916 Security deposits 11,021 14,828 Accounts payable (127,018) (102,585) Other assets 17,207 44,613 Net cash provided by (used for) 499,014 312,096 operating activities CASH FLOWS FROM INVESTING ACTIVITIES Repayment of mortgage notes payable (91,941) (85,001) Repayment of notes payable to affiliates (165,346) 0 Proceeds from amounts due affiliates (4,490) (98,931) Repayment of amounts due affiliates 0 (46,216) Net cash used for investing activities (261,777) (230,148) NET INCREASE (DECREASE) IN CASH 237,237 81,948 AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 116,650 146,358 CASH AND CASH EQUIVALENTS, END OF PERIOD $353,887 $228,306 Basis of Presentation: Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Partnership's latest annual report on Form 10-K. Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION THIRD QUARTER 2000 COMPARED TO THIRD QUARTER 1999 At September 30, 2000 the Partnership owned two properties with approximately 416,623 net rentable square feet. Both properties are apartment communities. The portfolio had an average occupancy of 96.4% for the third quarter of 2000, as compared to 96.2% for the third quarter of 1999. Revenue from property operations increased $20,294, or 2.97%, for the third quarter of 2000, as compared to the 1999 third quarter. The increase in rental income of $15,537 or 2.32% is primarily due to an increase in rental rates. The increase in other income of $4,757 or 33.12% is primarily due to an increase in Late and other fee collections from the properties. The following table illustrates the components: Increase Percent (Decrease) Change Rental income 15,537 2.32% Other property 4,757 33.12% Net Increase(Decrease) 20,294 2.97% Property operating expenses increased $27,169, or 3.70%, for the third quarter of 2000, as compared to the same period in 1999, primarily due to increases in general and administrative expense. The increase in general and administrative expense is due to legal expenses incurred with regard to a tender offer on the fund. Salaries and wages increased $7,537 or 10.59% primarily due to increased staffing. Utilities increased $6,471 or 15.03% primarily due to increased consumption. Insurance increased $2,037 or 19.68% in connection with the annual policy renewal. The following table illustrates the components by category: Increase Percent (Decrease) Change Salaries & wages 7,537 10.59% Maintenance & repairs 5,131 8.35% Utilities 6,471 15.03% Real estate taxes 1,666 2.45% General administrative 11,410 38.08% Contract services (1,666) 5.89% Insurance 2,037 19.68% Interest (2,130) 1.02% Depreciation and amortization (4,136) 2.30% Property management fees 849 2.49% Net Increase 27,169 3.70% (Decrease) FIRST NINE MONTHS 2000 COMPARED TO FIRST NINE MONTHS 1999 Revenue from property operations increased $55,410, or 2.72%, for the first nine months of 2000, as compared to the 1999 first nine months . The increase in rental income of $47,224 or 2.37 is primarily due to an increase in rental rates. The increase in other income of $8,186 or 18.99% is primarily due to an increase in Late and other fee collections from the properties. The following table illustrates the components: Increase Percent (Decrease) Change Rental income 47,224 2.37% Other property 8,186 18.99% Net Increase (Decrease) 55,410 2.72% Property operating expenses decreased $66,702, or 2.95%, for the first nine months of 2000, as compared to the same period in 1999, primarily due to decreases in maintenance and repairs expense. The decrease in maintenance and repairs expense is due to a one time charge in 1999 for resurfacing the parking lots. Salaries and wages decreased $12,275 or 5.54% primarily due to staffing shortages. Utilities rose $10,517 or 8.11% primarily due to increases in usage and rates of water and wastewater charges. Insurance increased $2,942 or 9.44% in connection with the annual policy renewal General and Administrative increased $5,272 or 5.87% primarily due to legal expenses incurred with regard to a tender offer on the Fund. The following table illustrates the components by category: Increase Percent (Decrease) Change Salaries & wages (12,275) 5.54% Maintenance & repairs (60,311) 26.37% Utilities 10,517 8.11% Real estate taxes 4,162 2.05% General administrative 5,272 5.87% Contract services (1,964) 2.35% Insurance 2,942 9.44% Interest (5,318) 0.85% Depreciation and amortization (12,407 2.30% Property management fees 2,680 2.64% Net Increase (Decrease) (66,702) 2.95% LIQUIDITY AND CAPITAL RESOURCES While it is the General Partners primary intention to operate and manage the existing real estate investments, 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 either property. As of September 30, 2000, the Partnership had $353,887 in cash and cash equivalents as compared to $116,649 as of December 31, 1999. The net increase in cash of $237,238 is principally due to cash flow from operations. During the first quarter of 2000 ending March 31, the partnership paid off the remaining balance owned to the general partner of $165,346. The payment was made with operating cash flow from the partnership. Each asset of the fund refinanced its debt during July 1997. The fund retired debt with a face value of $6,500,000 and replaced with debt of $10,800,000. The new mortgages in the amounts of $4,000,000, $6,800,000 carry interest rates of 7.8% and 7.92% respectively. The notes come due August, 2007. The Partnership's required principal payments due under the stated terms of the Partnership's mortgage notes payable and notes payable to affiliates are $111,063, $120,132 and $129,941, for each of the next three years. Net proceeds from the refinancing were used to reduce the notes payable to affiliates. During July, 1997 payments of $3,500,000 were made to reduce the debt to affiliates. This together with interest on the debt reduced the amounts due affiliates to $300,461 at March 31, 1999. A gain on retirement of debt arose with the note refinancing being triggered by the early retirement of the debt. The recognized gain of $348,836, was the difference between the carrying value of the debt and the funds necessary to retire the debt. For the foreseeable future, the Partnership anticipates that mortgage principal payments (excluding any balloon mortgage payments), improvements and capital expenditures will be funded by net cash from operations. The primary source of capital to fund future Partnership acquisitions and balloon mortgage payments will be proceeds from the sale, financing or refinancing of the Properties. The Partnership's required principal payments due under the stated terms of the Partnership's mortgage notes payable are $102,678, $111,063 and $120,131 for each of the next three years. Other Information Item 1. Legal Proceedings 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. Exhibit and Reports on Form 8-K (A)The following documents are filed herewith or incorporated herein by reference as indicated as Exhibits: Exhibit Designation Document Description 2 Certificate of Limited partnership, as amended, incorporated by reference to Registration Statement No.2-81074 effective May 2, 1983. Limited Partnership Agreement, incorporated by reference to Registration Statement No.2-81074 effective May 2,1983. 11 Not Applicable 15 Not Applicable 18 Not Applicable 19 Not Applicable 20 Not Applicable 23 Not Applicable 24 Not Applicable 25 Power of Attorney, incorporated by reference to Registration Statement No. 2-81074 effective May 2, 1983. 28 None (B) Reports on Form 8-K for the quarter ended September 30, 2000 1 None 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. AMERICAN REPUBLIC REALTY FUND I a Wisconsin limited partnership By: /s/ Robert J. Werra Robert J. Werra, General Partner Date: November 1, 2000 [ARTICLE] 5 [LEGEND] THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH THE September 30, 2000 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. [/LEGEND] [CIK] 0000711512 [NAME] AMERICAN REPUBLIC REALTY FUND I [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] DEC-31-2000 [PERIOD-END] SEP-30-2000 [CASH] 353,887 [SECURITIES] 0 [RECEIVABLES] 0 [ALLOWANCES] 0 [INVENTORY] 0 [CURRENT-ASSETS] 0 [PP&E] 17,479,334 [DEPRECIATION] 10,892,557 [TOTAL-ASSETS] 7,668,855 [CURRENT-LIABILITIES] 0 [BONDS] 10,480,431 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 0 [OTHER-SE] (3,268,877) [TOTAL-LIABILITY-AND-EQUITY] 7,668,855 [SALES] 0 [TOTAL-REVENUES] 703,605 [CGS] 0 [TOTAL-COSTS] 0 [OTHER-EXPENSES] 555,500 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 206,720 [INCOME-PRETAX] 0 [INCOME-TAX] 0 [INCOME-CONTINUING] 0 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] (58,615) [EPS-BASIC] (5.33) [EPS-DILUTED] 0