10-Q 1 f1101.txt FUND 1 10 Q FIRST QTR 2001 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 March 31, 2001 Commission file number 0-11578 AMERICAN REPUBLIC REALTY FUND I (Exact name of registrant as specified in its 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 March 31, 2001 and December 31, 2000 Page 3 Consolidated Statements of Operations for the Three Months Ended March 31, 2001 and 2000 Page 4 Consolidated Statements of Cash Flows for the Three months Ended March 31, 2001 and 2000 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, 2000, are Unaudited. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Balance Sheets March 31 December 31, 2001 2000 (Unaudited) ASSETS Real Estate assets, at cost Land $1,822,718 $1,822,718 Buildings and 15,757,931 15,757,931 improvements 17,580,649 17,580,649 Less: Accumulated (11,261,467) (11,081,467) depreciation Real Estate, net 6,319,182 6,499,182 Cash including cash 545,009 442,739 investments Escrow deposits 440,049 505,202 Prepaid Expenses 12,446 16,835 Deferred Financing 143,394 149,129 Fees TOTAL ASSETS $7,460,08 $7,613,087 LIABILITIES AND PARTNERS' EQUITY: LIABILITIES Mortgage and notes $10,422,309 $10,461,310 payable Note Payable to 0 0 affiliates Amounts due affiliates 0 0 affiliates Real estate taxes 71,250 0 payable Security deposits 77,911 73,445 Accounts payable & 173,705 310,272 accrued expenses Total liabilities 10,745,175 10,845,027 PARTNERS CAPITAL (DEFICIT) Limited Partners (3,332,076) (3,279,452) General Partner 46,981 47,512 Total Partners Capital (3,285,095) (3,231,940) (Deficit) TOTAL LIABILITES AND $7,460,080 $7,613,087 PARTNER DEFICIT AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Statement of Operations (Unaudited) Three Months Ended March 31, REVENUES 2001 2000 Rental income 694,386 675,721 Other property 22,411 17,621 Total revenues 716,797 693,342 EXPENSES Salaries & wages 80,704 66,926 Maintenance & repairs 67,278 44,243 Utilities 62,002 61,899 Real estate taxes 71,250 68,748 General administrative 21,861 19,964 Contract services 27,746 28,811 Insurance 12,389 10,352 Interest 205,590 209,978 Depreciation and amortization 185,736 175,736 Property management fees (a) 35,396 34,583 Total expenses 769,952 721,240 NET INCOME before ($53,155) ($27,898) extraordinary item Net Income ($53,155) ($27,898) NET INCOME PER UNIT $(4.83) $(2.54) 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) Three Months Ended March 31, 2001 2000 CASH FLOWS FROM OPERATING ACTIVITY Net income (loss) ($53,155) ($27,898) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 180,000 170,000 Net Effect of changes in operating accounts Escrow deposits 65,153 78,573 Prepaid expenses 4,389 2,352 Accrued real estate taxes 71,250 68,748 Security deposits 4,466 1,009 Accounts payable (136,567) (140,548) Other assets 5,735 21,669 Net cash provided by (used for) operating 141,271 173,905 activities CASH FLOWS FROM INVESTING ACTIVITIES Repayment of mortgage notes payable (39,001) (36,056) Repayment of notes payable to affiliates 0 (165,346) Repayment of amounts due affiliates 0 4,509 Net cash used for investing activities (39,001) (196,893) NET INCREASE (DECREASE) IN CASH AND CASH 102,270 (22,988) EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF 442,739 116,649 PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD $545,009 $93,661 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 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION FIRST QUARTER 2001 COMPARED TO FIRST QUARTER 2000 At March 31, 2001 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 95.9% for the first quarter of 2001, as compared to 95.3% for the first quarter of 2000. Revenue from property operations increased $23,455, or 3.38%, for the first quarter of 2001, as compared to the 2000 first quarter. The increase in rental income of $18,665 or 2.76% is primarily due to an increase in rental rates. The increase in other income of $4,790 or 27.18% 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 18,665 2.76% Other property 4,790 27.18% Net Increase 23,455 3.38% (Decrease) Property operating expenses increased $48,712, or 6.75%, for the first quarter of 2001, as compared to the same period in 2000, primarily due to increases in maintenance & repairs expense. The increase in maintenance & repairs expense is due to parking lot repaving. Salaries and wages increased $13,778 or 20.59% primarily due to increased staffing. 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 13,778 20.59% Maintenance & repairs 23,035 52.06% Utilities 103 0.17% Real estate taxes 2,502 3.64% General administrative 1,897 9.50% Contract services (1,065) 3.70% Insurance 2,037 19.68% Interest (4,388) 2.09% Depreciation and amortization 10,000 5.69% Property management fees (a) 813 2.35% Net Increase 48,712 6.75% (Decrease) FIRST QUARTER 2000 COMPARED TO FIRST QUARTER 1999 At March 31, 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 95.3% for the first quarter of 2000, as compared to 95.8% for the first quarter of 1999. Revenue from property operations increased $14,483, or 2.13%, for the first quarter of 2000, as compared to the 1999 first quarter. The increase in rental income of $11,890 or 1.79% is primarily due to an increase in rental rates. The increase in other income of $2,593 or 17.25% 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 11,890 1.79% Other property 2,593 17.25% Net Increase 14,483 2.13% (Decrease) Property operating expenses decreased $44,428, or 5.80%, for the first quarter 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. Utilities rose $18,587 or 42.91% primarily due to increases in usage and rates of water and wastewater charges. General and Administrative decreased $8,699 or 30.35% primarily due to professional fees relating to cable wiring of the properties. The following table illustrates the components by category: Increase Percent (Decrease) Change Salaries & wages 649 0.98% Maintenance & repairs (52,089) 54.07% Utilities 18,587 42.91% Real estate taxes 1,248 1.85% General admonistrative (8,699) 30.35% Contract services 676 2.40% Insurance (260) 2.45% Interest (1,102) 0.52% Depreciation and amortization (4,135) 2.30% Property management fees (a) 697 2.06% Net Increase (44,428) 5.80% (Decrease) 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 March 31, 2001, the Partnership had $545,009 in cash and cash equivalents as compared to $442,739 as of December 31, 2000. The net increase in cash of $102,270 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 Partnerships required principal payments due under the stated terms of the Partnerships mortgage notes payable and notes payable to affiliates are $120,132 $129,941, and $140,551 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. 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. 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 March 31, 2001. 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: May 1, 2001