10-Q 1 fund1201.txt FUND 1 2ND QTR 10Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) Of the Securities Exchange Act of 1934 For Quarter Ended June 30, 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 June 30, 2001 and December 31, 2000 Page 3 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2001 and 2000 Page 4 Consolidated Statements of Cash Flows for the Six months ended June 30, 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 June 30 December 31, 2001 2000 (Unaudited) ASSETS Real Estate assets, at cost Land $1,822,718 $1,822,718 Buildings and improvements 15,757,931 15,757,931 17,580,649 17,580,649 Less: Accumulated depreciation (11,441,467) (11,081,467) Real Estate, net 6,139,182 6,499,182 Cash including cash investments 637,970 442,739 Escrow deposits 493,958 505,202 Prepaid Expenses 60,494 16,835 Deferred Financing Fees 137,658 149,129 TOTAL ASSETS $7,469,262 $7,613,087 LIABILITIES AND PARTNERS' EQUITY: LIABILITIES Mortgage and notes payable $10,392,381 $10,461,310 Note Payable to affiliates 0 0 Amounts due affiliates 0 0 Real estate taxes payable 142,500 0 Security deposits 79,844 73,445 Accounts payable & accrued expenses 185,929 310,272 Total liabilities 10,800,654 10,845,027 PARTNERS CAPITAL (DEFICIT) Limited Partners (3,377,910) (3,279,452) General Partner 46,518 47,512 Total Partners Capital (3,331,392) (3,231,940) (Deficit) TOTAL LIABILITIES AND PARTNER DEFICIT $7,469,262 $7,613,087 AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Statement of Operations (Unaudited) Three Months Ended Six Months Ended June 30, June 30, REVENUES 2001 2000 2001 2000 Rental income 700,087 677,399 1,394,473 1,353,120 Other property 21,163 14,546 43,574 32,167 Total revenues 721,250 691,945 1,438,047 1,385,287 EXPENSES Salaries & wages 69,091 63,764 149,795 130,690 Maintenance & repairs 72,241 57,568 139,519 101,811 Utilities 52,486 28,724 114,488 90,623 Real estate taxes 71,250 68,748 142,500 137,496 General administrative 34,568 33,682 56,429 53,646 Contract services 27,681 26,007 55,427 54,818 Insurance 13,696 11,374 26,085 21,726 Interest 205,008 207,270 410,598 417,248 Depreciation and amortization 185,736 175,736 371,472 351,472 Property management fees(a) 35,790 34,648 71,186 69,231 Total expenses 767,547 707,521 1,537,499 1,428,761 Net Income ($46,297) ($15,576) ($99,452) ($43,474) NET INCOME PER UNIT $(4.21) $(1.42) $(9.04) $(3.95) 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 Six Months Ended March 31, 2001 2000 CASH FLOWS FROM OPERATING ACTIVITY Net income (loss) ($99,452) ($43,474) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 360,000 340,000 Net Effect of changes in operating accounts Escrow deposits 11,244 114,579 Prepaid expenses (43,659) (35,828) Accrued real estate taxes 142,500 137,496 Security deposits 6,399 3,390 Accounts payable (124,343) (140,359) Other assets 11,471 11,471 Net cash provided by (used for) operating activities 264,160 387,275 CASH FLOWS FROM INVESTING ACTIVITIES Repayment of mortgage notes payable (68,929) (63,725) Repayment of notes payable to affiliates 0 0 Proceeds from amounts due affiliates 0 (165,346) Repayment of amounts due 0 (4,490) Net cash used for investing activities (68,929) (233,561) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 195,231 153,714 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 442,739 116,649 CASH AND CASH EQUIVALENTS, END OF PERIOD $637,970 $270,363 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 SECOND QUARTER 2001 COMPARED TO SECOND QUARTER 2000 At June 30, 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 96.0% for the second quarter of 2001, as compared to 94.3% for the second quarter of 2000. Revenue from property operations increased $29,305, or 4.24%, for the second quarter of 2001, as compared to the 2000-second quarter. The increase in rental income of $22,668 or 3.35% is primarily due to an increase in rental rates. The increase in other income of $6,617 or 45.49% 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 22,688 3.35% Other property 6,617 45.49% Net Increase (Decrease) 29,305 4.24% Property operating expenses increased $60,026, or 8.48%, for the second quarter of 2001, as compared to the same period in 2000, primarily due to increases in utilities expense. The increase in utilities expense is due to significantly higher gas bills. Maintenance and repairs increased $14,673 or 25.49% primarily due to exterior building maintenance. Salaries & Wages increased $5,327 or 8.35%due to high salaries. Insurance increased $2,322 or 20.41% in connection with the annual policy renewal. The following table illustrates the components by category: Increase Percent (Decrease) Change Salaries & wages 5,327 8.35% Maintenance & repairs 14,673 25.49% Utilities 23,762 82.73% Real estate taxes 2,502 3.64% General administrative 886 2.63% Contract services 1,674 6.44% Insurance 2,322 20.41% Interest (2,262) 1.09% Depreciation and amoritization 10,000 5.69% Property management fees (a) 1,142 3.30% Net Increase (Decrease) 60,026 8.48% SECOND QUARTER 2000 COMPARED TO SECOND QUARTER 1999 Revenue from property operations increased $20,633, or 3.07%, for the second quarter of 2000, as compared to the 1999-second quarter. The increase in rental income of $19,797 or 3.01% is primarily due to an increase in rental rates. The increase in other income of $836 or 6.10% 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 19,797 3.01% Other property 836 6.10% Net Increase (Decrease) 20,633 3.07% Property operating expenses decreased $49,443, or 6.53%, for the second 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. Salaries and wages decreased $20,461 or 24.29% primarily due to staffing shortages. Utilities decreased $14,541 or 33.61% primarily due to decreased consumption. Insurance increased $1,165 or 11.41% with the annual policy renewal. The following table illustrates the components by category: Increase Percent (Decrease) Change Salaries & wages (20,461) 24.29% Maintenance & repairs (13,353) 18.83% Utilities (14,541) 33.61% Real estate taxes 1,248 1.85% General administrative 2,561 8.23% Contract services (974) 3.61% Insurance 1,165 11.41% Interest (2,086) 1.00% Depreciation and amortization (4,136) 2.30% Property management fees (a) 1,134 3.38% Net Increase (Decrease) (49,443) 6.53% 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 June 30, 2001, the Partnership had $637,970 in cash and cash equivalents as compared to $442,739 as of December 31, 2000. The net increase in cash of $195,231 is principally due to cash flow from operations. During the first quarter of 2000 ending June 30, 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 carries 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 June 30, 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: August 1, 2001