-----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, CUUw/yUcTPjnUQGTi02L2AOkp8Eta4ePdMA9D9vmpFfzhBgIpRdorHZASGHp6ywY E0qDluGXfNmXyxuOf8cvGw== 0000913762-96-000006.txt : 19961115 0000913762-96-000006.hdr.sgml : 19961115 ACCESSION NUMBER: 0000913762-96-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRAUVIN REAL ESTATE FUND LP 4 CENTRAL INDEX KEY: 0000736908 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363304339 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13402 FILM NUMBER: 96660870 BUSINESS ADDRESS: STREET 1: 150 S WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124430922 MAIL ADDRESS: STREET 1: 150 S WACKER DR STREET 2: SUITE 3200 CITY: CHICAGO STATE: IL ZIP: 60606 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 0-13402 Brauvin Real Estate Fund L.P. 4 (Exact name of small business issuer as specified in its charter) Delaware 36-3304339 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 South Wacker Drive, Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) (312) 443-0922 (Issuer's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 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 . INDEX Page PART I Financial Information Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheet at September 30, 1996 . . . . . . . 4 Consolidated Statements of Operations for the Nine Months Ended September 30, 1996 and 1995. . . . . . . . . 5 Consolidated Statements of Operations for the Three Months Ended September 30, 1996 and 1995 . . . . . . . . 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1996 and 1995. . . . . . . . . 7 Notes to Consolidated Financial Statements . . . . . . . . . . 8 Item 2. Management's Discussion and Analysis or Plan of Operation . . . . . . . . . . . . . . . . . . . . . . . . .10 PART II Other Information Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . .14 Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . .14 Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . .14 Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . .14 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . .14 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements The following Consolidated Balance Sheet as of September 30, 1996, Consolidated Statements of Operations for the nine and three months ended September 30, 1996 and 1995 and Consolidated Statements of Cash Flows for the nine months ended September 30, 1996 and 1995 for Brauvin Real Estate Fund L.P. 4 (the "Partnership") are unaudited but reflect, in the opinion of the management, all adjustments necessary to present fairly the information required. All such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's 1995 Annual Report on Form 10-K. CONSOLIDATED BALANCE SHEET September 30, 1996 (Unaudited) ASSETS Cash and cash equivalents $ 744,778 Tenant receivables (net of allowance of $73,544) 139,763 Escrow deposits 105,900 Other assets 76,473 Investment in affiliated joint venture 947,593 2,014,507 Investment in real estate, at cost: Land 4,035,301 Buildings 15,674,011 19,709,312 Less: Accumulated depreciation (4,751,229) Total investment in real estate, net 14,958,083 Total Assets $16,972,590 LIABILITIES AND PARTNERS' CAPITAL Liabilities Accounts payable and accrued expenses $ 192,810 Due to affiliates 5,880 Security deposits 50,784 Mortgages payable 11,763,516 Total Liabilities 12,012,990 Minority interest in affiliated joint venture 588,151 Partners' Capital General Partners (16,488) Limited Partners (9,550 limited partnership units issued and outstanding) 4,387,937 Total Partners' Capital 4,371,449 Total Liabilities and Partners' Capital $16,972,590 See notes to consolidated financial statements (unaudited). CONSOLIDATED STATEMENTS OF OPERATIONS For the Nine Months Ended September 30, 1996 and 1995 (Unaudited) 1996 1995 INCOME Rental $1,342,885 $1,413,723 Interest 25,743 19,845 Other, primarily tenant expense reimbursements 219,889 201,120 Total income 1,588,517 1,634,688 EXPENSES Interest 736,621 818,198 Depreciation 335,549 329,105 Real estate taxes 171,742 199,312 Repairs and maintenance 23,980 25,104 Operating 172,690 164,167 General and administrative 223,811 163,963 Total expenses 1,664,393 1,699,849 Equity in net income from affiliated joint venture 39,982 53,436 Loss before minority interest's share in affiliated joint venture (35,894) (11,725) Minority interest's share of affiliated joint venture 22,337 65,719 Net (Loss) Income $ (13,557) $ 53,994 Net (Loss) Income Per Limited Partnership Interest (9,550 Units) $ (1.41) $ 5.60 See notes to consolidated financial statements (unaudited). CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended September 30, 1996 and 1995 (Unaudited) 1996 1995 INCOME Rental $436,956 $481,700 Interest 8,357 6,975 Other, primarily tenant expense reimbursements 93,242 112,789 Total income 538,555 601,464 EXPENSES Interest 244,428 271,818 Depreciation 110,843 109,725 Real estate taxes 34,163 65,131 Repairs and maintenance 8,380 3,625 Operating 50,480 56,056 General and administrative 70,153 47,274 Total expenses 518,447 553,629 Equity in net income (loss) from affiliated joint venture 825 (3,284) Income before minority interest's share in affiliated joint venture 20,933 44,551 Minority interest's share of affiliated joint venture 1,172 24,867 Net Income $ 22,105 $ 69,418 Net Income Per Limited Partnership Interest (9,550 Units) $ 2.29 $ 7.20 See notes to consolidated financial statements (unaudited). CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1996 and 1995 (Unaudited) 1996 1995 Cash Flows From Operating Activities: Net (loss) income $(13,557) $ 53,994 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Equity in net income from affiliated joint venture (39,982) (53,436) Minority interest's share of affiliated joint venture net loss (22,337) (65,719) Provision for doubtful accounts 39,219 2,821 Depreciation 335,549 329,105 Normalized rental revenue (8,547) 4,446 Changes in operating assets and liabilities: Increase in tenant receivables, net (3,140) (106,364) (Increase) decrease in escrow deposits (9,152) 15,454 Increase in other assets (35,477) (35,639) Decrease (increase) in due from affiliates 58,781 (56,069) Increase in accounts payable and accrued expenses 73,661 93,352 Increase in security deposits 7,300 5,471 Net cash provided by operating activities 382,318 187,416 Cash Flows From Investing Activities: Capital expenditures (22,334) (16,881) Cash distribution from affiliated joint venture 96,350 82,250 Net cash provided by investing activities 74,016 65,369 Cash Flows From Financing Activities: Repayment of mortgages (219,860) (123,586) Cash used in financing activities (219,860) (123,586) Net increase in cash and cash equivalents 236,474 129,199 Cash and cash equivalents at beginning of period 508,304 404,347 Cash and cash equivalents at end of period $744,778 $533,546 See notes to consolidated financial statements (unaudited). NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 1995. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassifications Certain amounts in the 1995 financial statements have been reclassified to conform to the 1996 presentation. This has not affected the previously reported results of operations. (3) TRANSACTIONS WITH AFFILIATES Fees and other expenses paid to the General Partners or their affiliates for the nine months ended September 30, 1996 and 1995, were as follows: 1996 1995 Management fees $89,125 $91,419 Reimbursable office expenses 82,191 75,150 Legal fees 257 350 The Partnership believes the amounts paid to affiliates are representative of amounts which would have been paid to independent parties for similar services. The Partnership had made all payments to affiliates, except for $7,265 and $7,452 for legal services, as of September 30, 1996 and 1995, respectively. (4) INVESTMENT IN AFFILIATED JOINT VENTURE The Partnership owns a 47% interest in Sabal Palm and accounts for its investment under the equity method. The following are condensed income statements for Sabal Palm: INCOME STATEMENTS: Nine Months Ended September 30, 1996 1995 Rental and other income $570,067 $622,946 Interest income 2,881 2,098 572,948 625,044 Interest expense 224,566 226,532 Depreciation 101,134 105,165 Operating and administrative expenses 162,180 179,654 487,880 511,351 Net Income $ 85,068 $113,693 ITEM 2. Management's Discussion and Analysis or Plan of Operation. Liquidity and Capital Resources The Partnership intends to satisfy its short-term liquidity needs through cash flow from the properties. Long-term liquidity needs are expected to be satisfied through modification of the mortgages at more favorable interest rates. The occupancy level at Fortune at September 30, 1996 was 96% as compared to 86% at December 31, 1995 and 97% at September 30, 1995. The Partnership is continuing to work to sustain the occupancy level of Fortune. Fortune operated at a positive cash flow for the nine months ended September 30, 1996. Raleigh operated at a positive cash flow for the nine months ended September 30, 1996. The occupancy level at Raleigh at September 30, 1996 was 80% compared to 94% at December 31, 1995 and 99% at September 30, 1995. The decline in occupancy at Raleigh was due to a major tenant, T.J. Maxx, vacating during the first quarter of 1996. T.J. Maxx vacated its space in January 1996 but continued to pay rent through its lease expiration, March 31, 1996. The space is currently being marketed both regionally and nationally. During the third quarter a health group signed a $9.00 per square foot lease for approximately 40% of the T.J. Maxx space. Due to the vacancy of remaining T.J. Maxx space, which occupies approximately 13% of the center, the Partnership anticipates a decrease in cash flow. Management of the Partnership continues to actively market this space to alleviate this situation. Strawberry Fields operated at a positive cash flow for the nine months ended September 30, 1996. The occupancy level at Strawberry Fields at September 30, 1996 was 90% as compared to 83% at December 31, 1995 and at September 30, 1995. At Sabal Palm, the Partnership and its joint venture partner are continuing to work to sustain the occupancy level, which stood at 91% at September 30, 1996 as compared to 99% at December 31, 1995 and at September 30, 1995. Although the Sabal Palm retail market appears to be overbuilt, the property has operated at a positive cash flow since its acquisition in 1986. The Sabal Palm mortgage loan matures on February 1, 1997. The General Partners' are currently working with third party lenders to refinance this loan when it matures but there is no assurance that the General Partners will be successful in their refinancing efforts in which case the Partnership would sustain a loss upon foreclosure. The General Partners of the Partnership expect to distribute proceeds from operations, if any, and from the sale of real estate, to Limited Partners in a manner that is consistent with the investment objectives of the Partnership. Management of the Partnership believes that cash needs may arise from time to time which will have the effect of reducing distributions to Limited Partners to amounts less than would be available from refinancings or sale proceeds. These cash needs include, among other things, maintenance of working capital reserves in compliance with the partnership agreement as well as payments for major repairs, tenant improvements and leasing commissions in support of real estate operations. Results of Operations-Nine months Ended September 30, 1996 and 1995 (Amounts rounded to 000's) The Partnership generated a net loss of $14,000 for the nine months ended September 30, 1996 as compared to net income of $54,000 for the nine months ended September 30, 1995, a $68,000 decrease in net income. The $68,000 decrease in net income resulted primarily from a $46,000 decrease in total income, a $13,000 decrease in the Partnership's equity interest in Sabal Palm's net income and a $43,000 decrease in the minority interest's share of Strawberry's net loss. These decreases were offset by a $35,000 decrease in total expenses. Total income for the nine months ended September 30, 1996 was $1,589,000 as compared to $1,635,000 for the same nine month period in 1995, a decrease of $46,000. The $46,000 decrease resulted primarily from a $71,000 decrease in rental income. The $71,000 decrease in rental income was mainly attributed to a $138,000 decrease in rental income at Raleigh. The $138,000 decrease in Raleigh's rental income was offset by a $18,000 increase in rental income at Fortune and a $49,000 increase in rental income at Strawberry Fields. The decrease in rental income at Raleigh was the result of T.J. Maxx vacating its space in the first quarter of 1996. During the third quarter, approximately 40% of the T.J. Maxx space was leased to a health group at $9.00 per square foot. The $18,000 increase in rental income at Fortune was a result of increased rental rates on released spaces and the $49,000 increase in rental income at Strawberry Fields was a result of occupancy increasing from 83% at September 30, 1995 to 90% at September 30, 1996. For the nine months ended September 30, 1996 total expenses were $1,664,000 as compared to $1,700,000 for the nine months ended September 30, 1995, a decrease of $36,000. The $36,000 decrease was mainly attributed to a $82,000 decrease in interest expense and a $28,000 decrease in real estate taxes which were offset by a $60,000 increase in general and administrative expenses. The $82,000 decrease in interest expense was due primarily to a $74,000 decrease in interest expense at Strawberry as a result of the decrease in the interest rate from 9.0% to 7.55% on November 1, 1995 when the loan was restructured. The $28,000 decrease in real estate taxes was primarily due to a $35,000 decrease in Raleigh's real estate taxes which resulted from real estate tax refunds on prior year taxes. General and administrative expenses increased by $60,000 which was primarily due to a $42,000 increase in provision for bad debts. Provision for bad debts increased $28,000 at Raleigh and $15,000 at Strawberry Fields. Results of Operations-Three months Ended September 30, 1996 and 1995 (Amounts rounded to 000's) The Partnership generated net income of $22,000 for the three months ended September 30, 1996 as compared to net income of $69,000 for the three months ended September 30, 1995, a $47,000 decrease in net income. This $47,000 decrease in net income resulted primarily from a $63,000 decrease in total income and a $24,000 decrease in the minority interest's share in Strawberry's net loss. These decreases were offset by a $35,000 decrease in total expenses. Total income for the three months ended September 30, 1996 was $539,000 as compared to $601,000 for the three months ended September 30, 1995, a decrease of $63,000. The $63,000 decrease was a result of a decrease of $45,000 in rental income and a decrease of $20,000 in tenant expense reimbursements. The $45,000 decrease in rental income was attributable to a $63,000 decrease in Raleigh's rental income. The decrease in Raleigh's rental income was offset by a $16,000 increase in rental income at Strawberry. The $20,000 decrease in tenant expense reimbursements resulted from a $43,000 decrease at Raleigh and a $22,000 increase at Strawberry. The $63,000 decrease in rental income and the $43,000 decrease in tenant expense reimbursements at Raleigh were a result of the vacant T.J. Maxx space. The $16,000 increase in rental income and the $22,000 increase in tenant expense reimbursements at Strawberry Fields was a result of occupancy increasing from 83% at September 30, 1995 to 90% at September 30, 1996. For the three months ended September 30, 1996 total expenses were $518,000 as compared to $554,000 for the same three month period in 1995, a decrease of $36,000. The $36,000 decrease in total expenses was the result of a decrease in interest expense of $27,000 and a $31,000 decrease in real estate taxes which were offset by an increase in general and administrative expenses of $23,000. The $27,000 decrease in interest expense was due primarily to a $25,000 decrease in interest expense at Strawberry as a result of the decrease in the interest rate from 9.0% to 7.55% on November 1, 1995 when the loan was restructured. The $31,000 decrease in real estate taxes were primarily due to a $34,000 decrease in Raleigh's real estate taxes which resulted from real estate tax refunds on prior year taxes. General and administrative expenses increased by $23,000 which was primarily due to a $12,000 increase in provision for bad debts. Provision for bad debts increased $21,000 at Raleigh and decreased $8,000 at Fortune. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings. None. 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. Exhibits and Reports On Form 8-K. Exhibit 27. Financial Data Schedule 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. BY: Brauvin Ventures, Inc. Corporate General Partner of Brauvin Real Estate Fund L.P. 4 BY: /s/ Jerome J. Brault Jerome J. Brault Chairman of the Board of Directors and President DATE: November 13, 1996 BY: /s/ B. Allen Aynessazian B. Allen Aynessazian Chief Financial Officer and Treasurer DATE: November 13, 1996 EX-27 2
5 9-MOS DEC-31-1996 SEP-30-1996 744,778 947,593 139,763 0 0 0 19,709,312 4,751,229 16,972,590 0 11,763,516 0 0 4,371,449 0 16,972,590 0 1,588,517 0 1,664,393 (62,319) 0 736,621 0 0 0 0 0 0 (13,557) 0 0 "SECURITIES" REPRESENTS INVESTMENT IN JOINT VENTURE "PP&E" REPRESENTS INVESTMENT IN REAL ESTATE [LAND AND BUILDING] "BONDS" REPRESENTS MORTGAGES PAYABLE "COMMON" REPRESENTS TOTAL PARTNERS' CAPITAL "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER INCOME "TOTAL COSTS" REPRESENTS TOTAL EXPENSES "OTHER EXPENSES" REPRESENTS EQUITY AND MINORITY INTEREST IN JOINT VENTURES' NET (INCOME)/LOSS
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