10-Q 1 f1q0201.txt FUND 1 10Q MARCH 31, 2002 10 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, 2002 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) 2800 N. Dallas Pkwy Suite 100 Plano, Texas 75093-4707 (Address of principal executive offices) Registrant's telephone number, including area code: (972) 836-8000. 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, 2002 and December 31, 2001 Page 3 Consolidated Statements of Operations for the Three Months Ended March 31, 2002 and 2001 Page 4 Consolidated Statements of Cash Flows for the Three months Ended March 31, 2002 and 2001 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, 2001, are Unaudited. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Balance Sheets March 31 December 31, 2002 2001 (Unaudited) ASSETS Real Estate assets, at cost Land $1,822,718 $1,822,71 8 Buildings and improvements 15,886,583 15,886,58 3 17,709,301 17,709,30 1 Less: Accumulated (11,940,922) (11,765,9 depreciation 22) Real Estate, net 5,768,379 5,943,379 Cash including cash 348,645 294,437 investments Escrow deposits 489,161 552,994 Prepaid Expenses 14,363 24,039 Deferred Financing Fees 120,450 126,186 TOTAL ASSETS $6,740,998 $6,941,03 5 LIABILITIES AND PARTNERS' EQUITY: LIABILI TIES Mortgage and notes payable $10,298,993 $10,341,1 78 Amounts due affiliates 7,591 1,911 Real estate taxes payable 76,248 0 Security deposits 73,434 79,501 Accounts payable & accrued 172,840 342,521 expenses Total liabilities 10,629,106 10,765,11 1 PARTNERS CAPITAL (DEFICIT) Limited Partners (3,930,766) (3,867,37 4) General Partner 42,658 43,298 Total Partners Capital (Deficit) (3,888,108) (3,824,07 6) TOTAL LIABILITES AND PARTNER $6,740,998 $6,941,03 DEFICIT 5 AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Statement of Operations (Unaudited) Three Months Ended March 31, REVENUES 2002 2001 Rental income 674,226 694,386 Other property 17,773 22,411 Total revenues 691,999 716,797 EXPENSES Salaries & wages 86,211 80,704 Maintenance & repairs 55,050 67,278 Utilities 51,571 62,002 Real estate taxes 76,248 71,250 General administrative 24,254 21,861 Contract services 26,553 27,746 Insurance 17,676 12,389 Interest 203,194 205,590 Depreciation and 180,736 185,736 amortization Property management fees 34,538 35,396 (a) Total expenses 756,031 769,952 NET INCOME before ($64,032 ($53,155) extraordinary item ) Net Income ($64,032 ($53,155) ) NET INCOME PER UNIT $ $ (5.82) (4.83) 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, 2002 2001 CASH FLOWS FROM OPERATING ACTIVITY Net income (loss) ($64,032 ($53,155) ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 175,000 180,000 Net Effect of changes in operating accounts Escrow deposits 63,833 65,153 Prepaid expenses 9,676 4,389 Accrued real 76,248 71,250 estate taxes Security deposits (6,067) 4,466 Accounts payable (169,681 (136,567) ) Other assets 5,736 5,735 Net cash provided by (used for) 90,713 141,271 operating activities CASH FLOWS FROM INVESTING ACTIVITIES Repayment of mortgage notes (42,185) (39,001) payable Proceeds from amounts due 5,680 0 affiliates Net cash used for investing activities (36,505) (39,001) NET INCREASE (DECREASE) IN CASH AND 54,208 102,270 CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF 294,437 442,739 PERIOD CASH AND CASH EQUIVALENTS, END OF $348,645 $545,009 PERIOD 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 2002 COMPARED TO FIRST QUARTER 2001 At March 31, 2002 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 89.5% for the first quarter of 2002, as compared to 95.9% for the first quarter of 2001. Revenue from property operations decreased $24,798, or 3.46%, for the first quarter of 2002, as compared to the 2001 first quarter. The decrease in rental income of $20,160 or 2.90% is primarily due to an increase in vacancy. The decrease in other income of $4,638 or 20.70% is primarily due to an decrease in Late and other fee collections from the properties. The following table illustrates the components: Increase Perce nt (Decreas Chang e) e Rental income (20,160) 2.90% Other property (4,638) 20.70 % Net Increase (24,798) 3.46% (Decrease) Property operating expenses decreased $13,921, or 1.81%, for the first quarter of 2002, as compared to the same period in 2001, primarily due to decreases in maintenance & repair expense. The decrease in maintenance & repairs expense is preventive maintenance projects being completed in 2001. Utilities decreased $10,431 or 16.82% primarily due to decreased rates. Insurance increased $5,287 or 42.67% in connection with the annual policy renewal. The following table illustrates the components by category: Increase Perce nt (Decreas Chang e) e Salaries & wages 5,507 6.82% Maintenance & (12,228) 18.18 repairs % Utilities (10,431) 16.82 % Real estate taxes 4,998 7.01% General 2,393 10.95 administrative % Contract services (1,193) 4.30% Insurance 5,287 42.67 % Interest (2,396) 1.17% Depreciation and (5,000) 2.69% amortization Property management (858) 2.42% fees (a) Net Increase (13,921) 1.81% (Decrease) FIRST QUARTER 2001 COMPARED TO FIRST QUARTER 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 Percen t (Decreas Change e) 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 Percen t (Decreas Change e) Salaries & wages 13,778 20.59% Maintenance & 23,035 52.06% repairs Utilities 103 0.17% Real estate taxes 2,502 3.64% General 1,897 9.50% administrative Contract services (1,065) 3.70% Insurance 2,037 19.68% Interest (4,388) 2.09% Depreciation and 10,000 5.69% amortization Property management 813 2.35% fees (a) Net Increase 48,712 6.75% (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, 2002, the Partnership had $348,645 in cash and cash equivalents as compared to $294,437 as of December 31, 2001. The net increase in cash of $54,208 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- 81074effective 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, 2002. 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, 2002