-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WQUnlKStSieNnFE8e6jkDHm9Pmmsak8TC3aZevieIGlad5TeB83ZbrnV1IRJqwLL qHrDjfboAxwE93ezF65Ndg== 0000711512-03-000001.txt : 20030401 0000711512-03-000001.hdr.sgml : 20030401 20030331175508 ACCESSION NUMBER: 0000711512-03-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN REPUBLIC REALTY FUND I CENTRAL INDEX KEY: 0000711512 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 391421936 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11578 FILM NUMBER: 03632354 BUSINESS ADDRESS: STREET 1: 2800 N DALLAS PKWY STREET 2: #100 CITY: PLANO STATE: TX ZIP: 75093-4707 BUSINESS PHONE: 9728368010 MAIL ADDRESS: STREET 1: 2800 N DALLAS PKWY STREET 2: #100 CITY: PLANO STATE: TX ZIP: 75093-4707 10-K 1 fund1.txt 2002 10-K FUND 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington D. C. 20549 [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Exchange Act of 1934 [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal year ended December 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 (I.R.S. Employer Incorporation or Organization) Identification Number) 2800 N Dallas Pkwy #100, Plano, Texas 75093-5994 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including area code (972) 836-8000 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on which Registered None None Securities registered pursuant to Section 12 (g) of the Act: Limited Partnership Interests (Title of Class) Indicated 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 ___. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained, to the best of Registrant's knowledge in definitive proxy on information to statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ..... No X. Documents Incorporated by Reference The Definitive Prospectus of American Republic Realty Fund I dated May 2, 1983 filed pursuant to Rule 424(b) is incorporated by reference as is the Supplement to that Prospectus filed pursuant to Rule 424(b) on May 25, 1984. PART I Item 1. Business The Registrant, American Republic Realty Fund I, (the "Partnership"), is a limited partnership organized under the Wisconsin Uniform Limited Partnership Act pursuant to a Certificate of Limited Partnership dated December 22, 1982. As of December 31, 2002, the Partnership consisted of an individual general partner, Mr. Robert J. Werra, (the "General Partner") and 672 limited partners owning 11,000 limited partnership interests at $1,000 per interest. The distribution of limited partnership interests commenced May 2, 1983 and ended April 17, 1984, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (Registration #0-11578) as amended. The Partnership was organized to acquire a diversified portfolio of income-producing real properties, primarily apartments, as well as office buildings, industrial buildings, and other similar properties. During 1983 and 1984, the Partnership acquired four properties: Kenwood Gardens Apartments, a 104 unit apartment community located in Fort Myers, Florida (acquired on September 1, 1983, subsequently disposed of by sale during 1988), Jupiter Plaza Office/Showroom, a 131,440 rentable square foot commercial building located in Garland, Texas (acquired on September 29, 1983, subsequently disposed of in foreclosure during 1988), Four Winds Apartments, a 154 unit apartment community located in Orange Park, Florida (Phase I acquired September 12, 1983 and Phase II acquired May 1, 1984) and Forestwood Apartments (formerly Oak Creek) a 263 unit apartment community located in Bedford, Texas (acquired December 20, 1983). No additional properties were purchased by the Partnership and the Partnership will not acquire additional properties in the future. The properties remaining are described more fully in this report at "Item 2. Properties". Univesco, Inc.("Univesco"), a Texas corporation, eighty three percent owned by Robert J. Werra ("Univesco") manages the affairs of the Partnership. Univesco acts as the managing agent with respect to the Partnership's properties. Univesco may also engage other on-site property managers and other agents to the extent the management considers appropriate. The General Partner has ultimate authority regarding property management decisions. The Partnership competes in the residential rental markets. Univesco prepared marketing analyses for all property areas and determined that these areas contain other like properties which are considered competitive on the basis of location, amenities and rental rates. It is realistic to assume that additional properties similar to the foregoing will be constructed within their various market areas. No material expenditure has been made or is anticipated for either Partnership-sponsored or consumer research and development activities relating to the development or improvement of facilities or services provided by the Partnership. There neither has been, nor are any anticipated, material expenditures required to comply with any federal, state, or local environmental provisions which would materially affect the earnings or competitive position of the Partnership. The Partnership is engaged solely in the business of real estate investments. Its business is believed by management to fall entirely within a single industry segment. Management does not anticipate that there will be any material seasonal effects upon the operation of the Partnership. Competition and Other Factors The majority of the Properties' leases are six to twelve month terms. Accordingly, operating income is highly susceptible to changing market conditions. Occupancy and local market rents are driven by general market conditions which include job creation, new construction of single and multi-family projects, and demolition and other reduction in net supply of apartment units. Rents have generally been increasing in recent years due to the generally positive relationship between apartment unit supply and demand in the Partnership's markets. However, the properties are subject to substantial competition from similar and often newer properties in the vicinity in which they are located. In addition, operating expenses and capitalized expenditures have increased as units are updated and made more competitive in the market place. (See Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations".) Item 2. Properties At December 31, 2002 the Partnership owned two properties with approximately 416,623 net rentable square feet. Both properties are apartment communities. Name and Location General Description of the Property Forestwood A fee simple interest in a 263-unit Apartments apartment community located in Bedford, Texas, purchased in 1983 containing 244,407 net rentable square feet on approximately 14 acres of land. Four Winds Apartments A fee simple interest in a 100-unit Phase I community, located in Orange Park, Florida, purchased in 1983, containing approximately 110,716 net rentable square feet on 10 acres of land. Four Winds Apartments A fee simple interest in a 54-unit Phase II apartment community located in Orange Park, Florida, adjacent to four Winds Apartments I, purchased in 1984 and containing approximately 61,500 net rentable square feet on 3.73 acres of land. Occupancy Rates December 31, Percent 1998 1999 2000 2001 2002 Four Winds I & II 95.0% 94.0% 95.0% 95.2% 89.6% Forestwood 96.5% 96.9% 94.8% 95.9% 93.2% The Properties are encumbered by non-recourse mortgages payable. For information regarding the encumbrances to which the properties are subject and the status of the related mortgage loans, see "Management's Discussion and Analysis of Financial Condition and Results of Operating - Liquidity and Capital Resources" contained in Item 7 hereof and Note B to the Financial Statements contained in Item 8. Item 3. Legal Proceedings None. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of the unit holders of the Partnership during the fourth quarter of 2002. By virtue of its organization as a limited partnership, the Partnership has outstanding no securities possessing traditional voting rights. However, as provided and qualified in the Limited Partnership Agreement, limited partners have voting rights for, among other things, the removal of the General Partner and dissolution of the Partnership. PART II Item 5. Market for the Partnership's Securities and Related Unit Holder Matters The Partnership's outstanding securities are in the form of Limited Partnership Interests ("Interests"). The distribution period for the sale of the Interests began May 2, 1983,and closed April 17, 1984. As of December 31, 2002 there were approximately 672 limited partners owning 11,000 limited partnership interests at $1,000 per interest. A public market for trading Interests has not developed and none is expected to develop. In addition, transfer of an Interest is restricted pursuant to the Limited Partnership Agreement. Although a public market for trading Interests has not developed, MP Value Fund 5, LLC acquired 1,444.5 units, approximately 13.1%, of the outstanding Interests of the partnership during, 1999. MP Value Fund 5 has also tendered offers to other owners, although no additional Interests have been sold. The registrant knows of no other activity involving the sale or acquisition of Interest. The General Partner continues to review the Partnership's ability to make distributions on a quarter-by-quarter basis, however, no such distributions have been made and none are anticipated in the immediate future due to the debt service requirements of the Partnership. An analysis of taxable income or (loss) allocated, and cash distributed to Investors per $1,000 unit is as follows: YEARS INCOME GAIN LOSS CASH DISTRIBUTED 1984 $0 $0 $342 $0 1985 0 0 $291 0 1986 0 0 $271 0 1987 0 0 $279 0 1988 0 $43 $63 0 1989 0 $38 $127 0 1990 0 0 $126 0 1991 0 0 $122 0 1992 $121 0 0 0 1993 $2 $1,071 0 0 1994 $17 0 0 0 1995 0 (a) 0 0 0 1996 $45 0 0 0 1997 $0 0 $70 0 1998 $0 0 $48 0 1999 0 0 $39 0 2000 $46 0 2001 $47 $50 2001 $29 $25 (a) For Federal Income Tax purposes income only was reallocated in accordance with the regulations promulgated thereunder of the Internal Revenue code of 1986 as amended. Item 6: Selected Financial Data The following table sets forth selected financial data regarding the Partnership's results of operations and financial position as of the dates indicated. This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Item 7 hereof and Financial Statements and notes thereto contained in Item 8. 2002 2001 2000 1999 1998 Limited Partner Units Outstanding 11,000 11,000 11,000 11,000 11,000 Statement of Operations Total Revenues $2,760 $2,896 $2,797 $2,752 $2,675 Net Income (Loss) (217) (42) (65) (137) (194) Limited Partner Net Income (19.54) (3.45) (5.33) (12.31) (17.53) (Loss) per Unit - Basic Cash Distributions to Limited 25 50 0 Partners per Unit - Basic Balance Sheet: Real Estate, net $5,382 $5,943 $6,499 $7,096 $7,639 Total Assets 6,305 6,941 7,613 7,941 8,426 Mortgages Payable 10,211 10,341 10,461 10,572 10,675 Notes Payable to Affiliate 0 0 0 165 399 Partner's Deficit (4,316) (3,824) (3,231) (3,166) (3,030) Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations This discussion should be read in conjunction with Item 6 - "Selected Financial Data" and Item 8 - "Financial Statements and Supplemental Information." Results of Operations: 2002 VERSUS 2001 - Revenue from Property Operations decreased $136,588 or 4.7% as compared to 2001. This decrease is primarily attributed to a $120,366 decrease in rental revenue, which was principally due to an decrease in occupancy. Interest income decreased $22,187 due to a decrease in interest rates and available funds for investment during 2002. The increase in other revenues of $5,965 were principally caused by a increase in fees from tenants and vending revenues. The following table illustrates the increases: Increase/ (Decrease) Rental income $(120,366) Interest (22,187) Fees & Other 5,965 Net Increase $(136,588) Property operating expenses for 2002 increased $38,431 or 1.31%. General and administrative expenses increased $70,152 or 16.45% primarily due to increased incurance costs. . Real estate taxes increased $9,498 or 3.18% due to increased assessed valuation of the underlying real estate assets Maintenance and repairs increased $7,419 or 2.80% due primarily to the increased deferred maintenance projects performed. Interest expense on mortgage payable decreased $9,873 or 1.21% due to normal amortization. Utilities decreased $22,784 or 10,10% primarily due to lower utility rates. Administrative service fees are paid to an affiliate of the general partner and represent reimbursements for accounting and bookkeeping costs. Property management fees are paid to an affiliated entity and represent approximately 5% of gross revenues (see Note C to the Financial Statements and Schedule Index contained in Item 8). The following table illustrates the increases or (decreases): Increase (Decrease) General and administrative 70,152 Real estate taxes 9,498 Maintenance and repairs 7,419 Depreciation and amortization -4,137 Property management fee to affiliate -5,769 Advertising and marketing -6,075 Interest expense on mortgages payable -9,873 Utilities -22,784 Total operating expenses 38,431 Results of Operations: 2001 VERSUS 2000 - Revenue from Property Operations increased $99,614 or 3.6% as compared to 2000. This increase is primarily attributed to a $87,680 increase in rental revenue, which was principally due to an increase in rents. Interest income increased $10,990 due to a increase in available funds for investment during 2001. The increase in other revenues of $944 were principally caused by a increase in fees from tenants and vending revenues. The following table illustrates the increases: Increase/ (Decrease) Rental income $87,680 Interest 10,990 Other 944 Net Increase $99,614 Property operating expenses for 2001 increased $76,599 or 2.68%. Utilities increased $33,998 or 17.75% primarily due to higher utility rates. Interest expense on note payable to affiliate decreased $2,175 due to the payoff of the note early in 2000. Real estate taxes increased $21,413 or 7.73% due to increased assessed valuation of the underlying real estate assets. General and administrative expenses increased $28,237 or 7.09% primarily due to increased operational administrative costs. Maintenance and repairs increased $9,646 or 3.78% due primarily to the increased deferred maintenance projects performed. Interest expense on mortgage payable decreased $9,129 or 1.1% due to normal amortization. Administrative service fees are paid to an affiliate of the general partner and represent reimbursements for accounting and bookkeeping costs. Property management fees are paid to an affiliated entity and represent approximately 5% of gross revenues (see Note C to the Financial Statements and Schedule Index contained in Item 8). The following table illustrates the increases or (decreases): Increase (Decrease) Interest expense on mortgages payable -9,129 Depreciation and amortization -14,455 General and administrative 28,237 Real estate taxes 21,413 Maintenance and repairs 9,646 Utilities 33,998 Property management fee to affiliate 4,398 Advertising and marketing 2,266 Administrative service fee to general partner 2,400 Interest expense on notes payable to affiliates -2,175 Total operating expenses 76,599 Liquidity and Capital Resources While it is the General Partner's 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 these assets should be considered for disposal. At this time, there is no plan to dispose of either Property. As of December 31, 2002, the Partnership had $214,237 in cash and cash equivalents as compared to $294,437 as of December 31, 2001. The reduction of cash on hand reflects the distribution of $25 per limited partnership unit paid in December 2002. See Note C to the Financial Statements contained in Item 8 for information regarding related party transactions. The properties are encumbered by two non-recourse mortgage notes as of December 31, 2002. These mortgages payable have a carrying value of $10,211,238 at December 31, 2002. The mortgage notes were entered into during 1997 to refinance certain mortgage notes. The general partner had provided funding to the Partnership in the form of notes payable that were paid off during 2000. During February 2000, the Partnership repaid the $165,346 remaining to the general partner. The general partner is not obligated to provide additional funding to the Partnership. 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 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 and notes payable to affiliates are $140,551, $152,028 $164,442,$177,870, and 9,576,346 for each of the next five years. Item 7a - Quantitative and Qualitative Disclosure about Market Risk Market Risk The Partnership is exposed to interest rate changes primarily as a result of its real estate mortgages. The Partnerships interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower it's overall borrowing costs. To achieve its objectives, the partnership borrows primarily at fixed rates. The partnership does not enter into derivative or interest rate transactions for any purpose. The Partnerships' activities do not contain material risk due to changes in general market conditions. The partnership invests only in fully insured bank certificates of deposits, and mutual funds investing in United States treasury obligations. Risk Associated with Forward-Looking Statements Included in this Form 10-KThis Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are intended to be covered by the safe harbors created thereby. These statements include the plans and objectives of management for future operations, including plans and objectives relating to capital expenditures and rehabilitation costs on the Properties. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate. In light of the significant uncertainties inherent in the forward- looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved. AMERICAN REPUBLIC REALTY FUND I COMBINED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORTS December 31, 2002 and 2001 INDEX TO FINANCIAL STATEMENTS Page Independent Auditors' Reports 2 Combined Financial Statements Balance Sheets as of December 31, 2002 and 2001 3 Statements of Operations for the years ended December 31, 2002, 2001 and 2000 4 Statements of Partners' Equity (Deficit) for the years ended December 31, 2002, 2001 and 2000 5 Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000 6 Notes to Financial Statements 7 Schedule III - Real Estate and Accumulated Depreciation13 All other schedules have been omitted because they are not applicable, not required or the information has been supplied in the financial statements or notes thereto. INDEPENDENT AUDITORS' REPORT To the General Partner and Limited Partners of American Republic Realty Fund I We have audited the accompanying combined balance sheets of American Republic Realty Fund I and subsidiary, a Wisconsin limited partnership (the "Partnership") as of December 31, 2002 and 2001, and the related combined statements of operations, partners' equity (deficit), and cash flows for the years ended December 31, 2002, 2001 and 2000. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of American Republic Realty Fund I as of December 31, 2002 and 2001, and the results of its operations and its cash flows for the years ended December 31, 2002, 2001 and 2000 in conformity with U.S. generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule III for the year ended December 31, 2002 is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not a required part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. January 24, 2003 Plano, Texas AMERICAN REPUBLIC REALTY FUND I COMBINED BALANCE SHEETS December 31, 2002 and 2001 ASSETS 2002 2001 Investments in real estate at cost Land $1,822,718 $1,822,718 Buildings, improvements and furniture and fixtures $16,006,007 15,886,583 17,828,725 17,709,301 Accumulated depreciation (12,446,239) (11,765,922) 5,382,486 5,943,379 Cash and cash equivalents 214,237 294,437 Escrow deposits 572,601 552,994 Deferred financing costs, net of accumulated amortization of $126,188 and $103,244, respectively 103,242 126,186 Prepaid expenses 32,194 24,039 TOTAL ASSETS 6,304,760 6,941,035 LIABILITIES AND PARTNERS' DEFICIT Mortgages payable 10,211,238 10,341,178 Amounts due affiliates 1,725 1,911 Accounts payable and accrued expenses 333,000 342,521 Security deposits 75,028 79,501 TOTAL LIABILITIES 10,620,991 10,765,111 PARTNERS' DEFICIT (4,316,231) (3,824,076) TOTAL LIABILITIES AND PARTNERS' DEFICIT $6,304,760 $6,941,035 AMERICAN REPUBLIC REALTY FUND I COMBINED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2002, 2001 and 2000 2002 2001 2000 INCOME Rentals $2,686,909 $2,807,275 $2,719,595 Fees and other 69,060 63,095 62,151 Interest 4,256 26,443 15,453 Total income 2,760,225 2,896,813 2,797,199 OPERATING EXPENSES Interest expense on mortgages payable 808,952 818,825 827,954 Depreciation and amortization 703,261 707,398 721,853 General and administrative 496,504 426,352 398,115 Real estate taxes 307,848 298,350 276,937 Maintenance and repairs 272,282 264,863 255,217 Utilities 202,803 225,587 191,589 Property management fee to affiliate 137,883 143,652 139,254 Advertising and marketing 35,439 41,514 39,248 Administrative service fee to general partner 12,408 12,408 10,008 Interest expense on notes payable to affiliates --- --- 2,175 Total operating expenses 2,977,380 2,938,949 2,862,350 NET LOSS $(217,155) $(42,136) $(65,151) NET LOSS PER LIMITED PARTNERSHIP UNIT - BASIC Net loss per unit - basic $(19.54) $(3.45) $(5.33) LIMITED PARTNERSHIP UNITS OUTSTANDING - BASIC 11,000 11,000 11,000 AMERICAN REPUBLIC REALTY FUND I COMBINED STATEMENTS OF PARTNERS' EQUITY (DEFICIT) For the Years Ended December 31, 2002, 2001 and 2000 General Limited Partner Partners Total Balance, January 1,2000 $54,027 (3,220,816) (3,166,789) Net loss (6,515) (58,636) (65,151) Balance, December 31,2000 47,512 (3,279,452) (3,231,940) Distributions --- (550,000) (550,000) Net loss (4,214) (37,922) (42,136) Balance, December 31,2001 43,298 (3,867,374) (3,824,076) Distributions --- (275,000) (275,000) Net loss (2,172) (214,983) (217,155) Balance, December 31,2002 $41,126 $(4,357,357) $(4,316,231) AMERICAN REPUBLIC REALTY FUND I COMBINED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2002, 2001 and 2000 2002 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(217,155) $(42,136) $(65,151) Adjustments to reconcile net loss to net cash provided by operations: Depreciation and amortization 703,261 707,398 721,853 Change in assets and liabilities: Prepaid expenses (8,155) (7,204) (2,768) Escrow deposits (2,095) (6,238) (18,500) Accounts payable and accrued expenses (9,519) 32,248 12,661 Security deposits (4,473) 6,056 4,836 Net cash provided by operating activities 461,864 690,124 652,931 CASH FLOWS FROM INVESTING ACTIVITIES Investments in real estate (119,424) (128,652) (101,315) Net proceeds from (payments to) reserve for replacement (17,514) (41,553) 55,372 Net cash used for investing activities (136,938) (170,205) (45,943) CASH FLOWS FROM FINANCING ACTIVITIES Payments on mortgages payable (129,940) (120,132) (111,062) Payments on notes payable to affiliates --- --- (165,346) Distributions (275,000) (550,000) --- Proceeds from (payments on) amounts due affiliates (186) 1,911 (4,490) Net cash used for financing activities (405,126) (668,221) (280,898) Net increase (decrease) in cash and cash equivalents (80,200) (148,302) 326,090 Cash and cash equivalents at beginning of period 294,437 442,739 116,649 Cash and cash equivalents at end of period $214,237 $294,437 $442,739 Supplemental disclosure of cash flow information: Cash paid during the year for interest $809,805 $819,613 $ 828,683 AMERICAN REPUBLIC REALTY FUND I NOTES TO COMBINED FINANCIAL STATEMENTS December 31, 2002 and 2001 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations American Republic Realty Fund I (the "Partnership"), a Wisconsin limited partnership, was formed on December 22, 1982, under the laws of the state of Wisconsin, for the purpose of acquiring, maintaining, developing, operating, and selling buildings and improvements. The Partnership operates rental apartments in Texas and Florida. The Partnership will be terminated by December 31, 2012, although this date can be extended if certain events occur. The general partner is Mr. Robert J. Werra. An aggregate of 20,000 units is authorized, of which 11,000 were outstanding for each of the three years ended December 31, 2002. Under the terms of the offering, no additional units will be offered. Allocation of Net Income (Loss) and Cash Net operating income and loss are allocated 1% to general partners and 99% to limited partners. Net operating cash flow, as defined in the partnership agreement, shall be distributed to the limited and general partners first to the limited partners in an amount equal to a variable distribution preference on capital contributions for the current year and then to the extent the preference has not been satisfied for all preceding years, and, thereafter, 10% to the general partner and 90% to the limited partners. Net income from the sale of property is allocated first, to the extent there are cumulative net losses, 1% to the general partner and 99% to the limited partners; second, to the limited partners in an amount equal to their distribution preference; and, thereafter, 15% to the general partner and 85% to the limited partners. Cash proceeds from the sale of property or refinancing are allocated first to the limited partners to the extent of their capital contributions and their distribution preference and, thereafter, 15% to the general partner and 85% to the limited partners. Basis of Accounting The Partnership maintains its books on the basis of accounting used for federal income tax reporting purposes. Memorandum entries have been made to present the accompanying financial statements in accordance with U.S. generally accepted accounting principles. Investments in Real Estate and Depreciation Buildings, improvements, and furniture and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets ranging from 5 to 27.5 years. AMERICAN REPUBLIC REALTY FUND I NOTES TO COMBINED FINANCIAL STATEMENTS December 31, 2002 and 2001 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Income Taxes No provision for income taxes has been made since the partners report their respective share of the results of operations on their individual income tax return. Revenue Recognition The Partnership has leased substantially all of its rental apartments under cancelable leases for periods generally less than one year. Rental revenue is recognized on a monthly basis as earned. Deferred Financing Costs Costs incurred to obtain mortgage financing are being amortized over the life of the mortgage using the straight- line method. Combination The financial statements include the accounts of the Partnership and a wholly owned entity. All intercompany amounts have been eliminated. Cash and Cash Equivalents The Partnership considers all highly liquid instruments with a maturity of three months or less to be cash equivalents. Long-Lived Assets In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting For the Impairment of Long-Lived Assets and For Long-Lived Assets to be Disposed Of", the Partnership records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. Based on current estimates, management does not believe impairment of operating properties is present. AMERICAN REPUBLIC REALTY FUND I NOTES TO COMBINED FINANCIAL STATEMENTS December 31, 2002 and 2001 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Computation of Earnings Per Unit The Partnership has adopted Statement of Financial Accounting Standards ("SFAS") No.128, "Earnings per Share". Basic earnings per unit is computed by dividing net income (loss) attributable to the limited partners' interests by the weighted average number of units outstanding. Earnings per unit assuming dilution would be computed by dividing net income (loss) attributable to the limited partners' interests by the weighted average number of units and equivalent units outstanding. The Partnership has no equivalent units outstanding for any period presented. Concentration of Credit Risk Financial instruments which potentially subject the Partnership to concentrations of credit risk consist primarily of cash. The Partnership places its cash with various financial institutions. The Partnership's exposure to loss should any of these financial institutions fail would be limited to any amount in excess of the amount insured by the Federal Deposit Insurance Corporation or Securities Investor Protection Corporation, where applicable. Management does not believe significant credit risk exists at December 31, 2002. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during that reporting period. Actual results could differ from those estimates. Environmental Remediation Costs The Partnership accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. Project management is not aware of any environmental remediation obligations that would materially affect the operations, financial position or cash flows of the Project. AMERICAN REPUBLIC REALTY FUND I NOTES TO COMBINED FINANCIAL STATEMENTS December 31, 2002 and 2000 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Comprehensive Income Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, (SFAS 130), requires that total comprehensive income be reported in the financial statements. For the years ended December 31, 2002, December 31, 2001, and December 31, 2000, the Partnership's comprehensive income (loss) was equal to its net income (loss) and the Partnership does not have income meeting the definition of other comprehensive income. Segment Information The Partnership is in one business segment, the real estate investment business, and follows the requirements of FAS 131, "Disclosures about Segments of an Enterprise and Related Information." NOTE B - MORTGAGES PAYABLE Mortgages payable at December 31, 2002 and 2001, consisted of the following: 2002 2001 Mortgage note, original face value of $6,800,000, payable in monthly installments of principal and interest of $49,517, bears interest at a rate of 7.92% and matures August 1, 2007, at which time a lump-sum payment of approximately $5,965,548 is due. This mortgage note is secured by real estate assets with a net book value of approximately $3,443,603. $6,432,178 $6,513,428 Mortgage note, original face value of $4,000,000, payable in monthly installments of principal and interest of $28,795 bears interest at a rate of 7.8% and matures August 1, 2007, at which time a lump-sum payment of approximately $3,500,406 is due. This mortgage note is secured by real estate assets with a net book value of approximately $1,938,883. 3,779,060 3,827,750 $10,211,238 $10,341,178 AMERICAN REPUBLIC REALTY FUND I NOTES TO COMBINED FINANCIAL STATEMENTS December 31, 2002 and 2001 NOTE B - MORTGAGES PAYABLE - CONTINUED At December 31, 2002, required principal payments due under the stated terms of the Partnership's mortgage notes payable and notes payable to affiliates are as follows: 2003 140,551 2004 152,028 2005 164,443 2006 177,870 2007 9,576,346 Thereafter --- $10,211,238 NOTE C - RELATED PARTY TRANSACTIONS The Partnership agreement specifies that certain fees be paid to the general partner or his designee. An affiliate of the general partner receives a property management fee that is 5% of the Partnership 's gross receipts. Additionally, the Partnership reimburses the affiliate for administrative expenditures. The following fees and reimbursements earned by an affiliate of the general partner in 2002, 2001 and 2000: 2002 2001 2000 Property management fee $137,883 $143,652 $139,254 Administrative service fee 12,408 12,408 10,008 NOTE D - COMMITMENTS The Partnership will pay a real estate commission to the general partner or his affiliates in an amount not exceeding the lessor of 50% of the amounts customarily charged by others rendering similar services or 3% of the gross sales price of a property sold by the Partnership, provided that the limited partners have received their original capital plus preferential interest, as defined. AMERICAN REPUBLIC REALTY FUND I NOTES TO COMBINED FINANCIAL STATEMENTS December 31, 2002 and 2001 NOTE E - RECONCILIATION OF BOOK TO TAX LOSS (UNAUDITED) If the accompanying financial statements had been prepared in accordance with the accrual income tax basis of accounting rather than generally accepted accounting principals ("GAAP"), the excess of revenues over expenses for 2002 would have been as follows: Net loss per accompanying financial statements $(217,155) Add - book basis depreciation using straight-line method 680,317 Deduct - income tax basis depreciation expense using ACRS method 145,426 Excess of revenues over expenses, accrual income tax basis $317,736 NOTE F - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS The following estimated fair value amounts have been determined using available market information or other appropriate valuation methodologies that require considerable judgement in interpreting market data and developing estimates. Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Partnership could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The fair value of financial instruments that are short-term or reprice frequently and have a history of negligible credit losses is considered to approximate their carrying value. These include cash and cash equivalents, accounts payable and other liabilities. Management has reviewed the carrying values of its mortgages payable in connection with interest rates currently available to the Partnership for borrowings with similar characteristics and maturities and has determined that their estimated fair value would approximate their carrying value as of December 31, 2002 and 2001. The fair value information presented herein is based on pertinent information available to management. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and therefore, current estimates of fair value may differ significantly from the amounts presented herein. AMERICAN REPUBLIC REALTY FUND I Schedule III - Real Estate and Accumulated Depreciation December 31, 2002 Initial Cost to Partnership Description Encumbrances Land Building Total Cost And Improvements Subsequent to Acquisitions 26 two-story apartment buildings of concrete block construction with stucco and cedar exterior and gabled roofs located in Jacksonville, Florida (b) $583,000 $5,686,771 $454,416 37 two-story apartment buildings of concrete block construction with brick veneer, stucco and wood siding exterior, and composition, shingled roofs located in Bedford, Texas (b) 1,239,718 8,679,421 1,185,399 $1,822,718 $14,366,192 $1,639,815 Gross Amounts at Which Carried at Close of Year Buildings and Accumulated Description Land Improvements Total Depreciation (c)(d) (c) 26 two-story apartment buildings of concrete block construction with stucco and cedar exterior and gabled roofs located in Jacksonville, Florida 583,000 6,141,187 6,724,187 4,785,304 37 two-story apartment buildings of concrete block construction with brick veneer, stucco and wood siding exterior, and composition, shingled roofs located in Bedford, Texas 1,239,718 9,864,820 11,104,538 7,660,935 1,822,718 16,006,007 17,828,725 12,446,239 Life on Which Date of Date Depreciation Construction Acquired is Computed 26 two-story apartment buildings of concrete block construction with stucco and cedar exterior and gabled roofs Phase I complete at located in date acquired; 9/12/83 (a) Jacksonville, Phase II complete at Florida date acquired; 5/1/84 (a) 37 two-story apartment buildings of concrete block construction with brick veneer, stucco and wood siding exterior, and composition, shingled roofs located in Bedford, Complete at Texas date acquired; 12/20/83 (a) See notes to Schedule III. AMERICAN REPUBLIC REALTY FUND I Schedule III - Real Estate and Accumulated Depreciation (Continued) December 31, 2002 NOTES TO SCHEDULE III: (a) See Note A to financial statements outlining depreciation methods and lives. (b) See description of mortgages and notes payable in Note B to the financial statements. (c) The reconciliation of investments in real estate and accumulated depreciation for the years ended December 31, 2002, 2001 and 2000 is as follows: Investments Accumulated in Real Estate Depreciation Balance, January 1, 2000 17,479,334 10,382,557 Acquisitions 101,315 --- Depreciation expense --- 698,910 Balance, December 31, 2000 17,580,649 11,081,467 Acquisitions 128,652 --- Depreciation expense --- 684,455 Balance, December 31, 2001 $17,709,301 $11,765,922 Acquisitions 119,424 --- Depreciation expense --- 680,317 Balance, December 31, 2002 $17,828,725 $12,446,239 (d) Aggregate cost for federal income tax purposes is $17,375,988. Item 9. Changes in and Disagreements on Accounting and Financial Disclosure On November 6, 1998, an 8-K was filed to disclose the change in auditors. No financial statements were issued in conjunction with this filing. The Registrant has not been involved in any disagreements on accounting and financial disclosure. PART III Item 10. Directors and Executive Officer of the Partnership The Partnership itself has no officers or directors. Robert J. Werra is the General Partner of the Partnership. Robert J. Werra, 64, the General Partner, Mr. Werra joined Loewi & Co., Incorporated ("Loewi") in 1967 as a Registered Representative. In 1971, he formed the Loewi real estate department, and was responsible for its first sales of privately placed real estate programs. Loewi Realty was incorporated in 1974, as a wholly owned subsidiary of Loewi & Co., with Mr. Werra as President. In 1980, Mr. Werra, along with three other individuals, formed Amrecorp Inc. to purchase the stock of Loewi Real Estate Inc., and Loewi Realty. In 1991 Univesco, Inc. became the management agent for the Partnership. Limited Partners have no right to participate in management of the Partnership. Item 11. Management Remuneration and Transactions As stated above, the Partnership has no officers or directors. Pursuant to the terms of the Limited Partnership Agreement, the General Partner receives 1% of Partnership income and loss and up to 15% of Net Proceeds received from sale or refinancing of Partnership properties (after return of Limited Partner capital contributions and payment of a 6% Current Distribution Preference thereon). Univesco, Inc., an affiliate of the General Partner, is entitled to receive a management fee with respect to properties actually managed of 5% of the actual gross receipts from a property or an amount competitive in price or terms for comparable services available from non-affiliated persons. The Partnership is also permitted to engage in various transactions involving affiliates of the General Partner as described under the caption "Compensation and Fees" at pages 6-8, "Management" at page 17 and "Allocation of Net Income and Losses and Cash Distributions" at pages 34-36 of the Prospectus as supplemented, incorporated in the Form S-11 Registration Statement which was filed with the Securities and Exchange Commission and made effective on May 2, 1983. For the years ended December 31, 2002, 2001, 2000, and, property management fees earned totaled $137,883, $143,642, and $139,254, respectively. An additional administration service fee was paid to the General Partner of $12,408, $10,008 and $10,008 for the years ended December 31, 2002, 2001, and 2000, respectively. Item 12. Security Ownership of Certain Beneficial Owners and Management (a) No one except as listed in item (b) below, owns of record, and the General Partner knows of no one who owns beneficially, more than five percent of the Interests in the Partnership, the only class of securities outstanding. Amount and Nature Title Name of of Beneficial Percent of Class Beneficial Owner Ownership of Interest Limited M.P. Valu Fund IV L.L.C. 1,439 13.08% Partnership Interests (b) By virtue of its organization as a limited partnership, the Partnership has no officers or directors. Persons performing functions similar to those of officers and directors of the Partnership, beneficially own, the following Units of the Partnership as of March 1, 2002. Amount and Nature Title Name of of Beneficial Percent of Class Beneficial Owner Ownership of Interest Limited Robert J. Werra 566 5.14% Partnership Interests No Selling Commissions were paid in connection with the purchase of these Units. (c) There is no arrangement, known to the Partnership, which may, at a subsequent date, result in a change in control of the Partnership. Item 13. Certain Relationships and Related Transactions None other than discussed in Item 11 and Note C to the financial statements at Item 8 elsewhere in this 10-K. Item 14. Controls and Procedures Based on their most recent evaluation, which was completed within 90 days of the filing of this Form 10-K, our Principal Financial Officer and Principal Executive Officer, believe our disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) are effective. There were not any significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, and there has not been any corrective action with regard to significant deficiencies and material weaknesses. PART IV Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K (A) 1. See accompanying Financial Statements Index 2. Additional financial information required to be furnished: Schedule III - Real Estate and Accumulate Depreciation. 3. Exhibits None (B) Reports on Form 8-K for the quarter ended December 31, 2002. None (C) Exhibits 3. Certificate of Limited Partnership, incorporated by reference to Registration Statement No. 0-11578 effective May 2, 1983. 4. Limited Partnership Agreement, incorporated by reference to Registration Statement No. 0-11578 effective May 2, 1983. 9. Not Applicable 10. Not Applicable 11. Not Applicable 12. Not Applicable 13. Reports to security holders, incorporated by reference from Registrant's Quarterly Reports on Form 1O-Q, dated September 30, 1998. 18. Not Applicable 19. Not Applicable 22. Not Applicable 23. Not Applicable 24. Not Applicable 25. Power of Attorney, incorporated by reference to Registration Statement No. 0-11578 effective May 2, 1983. 28. None (d) Financial Statement Schedules excluded from the annual report None Pursuant to the requirements of Section 13 or 15(d) 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 ROBERT J. WERRA, GENERAL PARTNER /s/ Robert J. Werra March 21, 2003 CERTIFICATION I, Robert J Werra, certify that: 1. I have reviewed this annual report on Form 10-K of American Republic Realty Fund; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 21, 2003 /s/ Robert J. Werra General Partner CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of American Republic Realty Fund ("the Company") on Form 10-K for the year ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Robert J. Werra, Acting Principal Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that: (1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Robert J. Werra Acting Principal Executive Officer and Chief Financial Officer March 21, 2003 -----END PRIVACY-ENHANCED MESSAGE-----