-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JqBMncqi8B8JFX9oEIM1k1BsveGJC1RadhPWcp5f5eJC9AjXpnOj+Ddl9WEPmnf/ 8bS9Z7PovmM5yMNwW+fVGQ== 0000762848-95-000002.txt : 19950517 0000762848-95-000002.hdr.sgml : 19950517 ACCESSION NUMBER: 0000762848-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950516 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRAUVIN REAL ESTATE FUND LP 5 CENTRAL INDEX KEY: 0000762848 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363432071 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14481 FILM NUMBER: 95540367 BUSINESS ADDRESS: STREET 1: 150 SOUTH WACKER DRIVE 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 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1995 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 0-14481 Brauvin Real Estate Fund L.P. 5 (Exact name of registrant as specified in its charter) Delaware 36-3432071 (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 (Registrant's telephone number, including area code) 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 X No . BRAUVIN REAL ESTATE FUND L.P. 5 INDEX Page PART I Financial Information Item 1. Financial Statements . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets at March 31, 1995 and December 31, 1994. . . . . . . . . . . . . . . . . 4 Consolidated Statements of Operations for the three months ended March 31, 1995 and 1994 . . . . . . 5 Consolidated Statement of Partners' Capital for the period January 1,1995 to March 31, 1995. . . . 6 Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1994 . . . . 7 Notes to Consolidated Financial Statements . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . .10 PART II Other Information Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . .12 Item 2. Changes in Securities. . . . . . . . . . . . . . . . .12 Item 3. Defaults Upon Senior Securities. . . . . . . . . . . .12 Item 4. Submissions of Matters to a Vote of Security Holders .12 Item 5. Other Information. . . . . . . . . . . . . . . . . . .12 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . .12 SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . .13 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Except for the December 31, 1994 Consolidated Balance Sheet, the following Consolidated Balance Sheet as of March 31, 1995, Consolidated Statements of Operations for the three months ended March 31, 1995 and 1994, Consolidated Statement of Partners' Capital for the period January 1, 1995 to March 31, 1995 and Consolidated Statements of Cash Flows for the three months ended March 31, 1995 and 1994 for Brauvin Real Estate Fund L.P. 5 (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 1994 Annual Report on Form 10-K. BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) CONSOLIDATED BALANCE SHEETS (UNAUDITED) March 31, 1995 December 31, 1994 ASSETS Cash and cash equivalents $ 217,867 $ 106,289 Cash held by receiver 64,072 -- Tenant receivables (net of allowance of $6,395 and $3,095, respectively) 41,916 93,422 Escrow and other deposits 27,404 83,199 Other assets 9,859 13,126 Investment in affiliated joint venture 689,925 712,179 Deposit with title company 2,918,479 2,929,581 3,969,522 3,937,796 Investment in real estate, at cost: Land 3,716,151 3,716,151 Buildings 15,353,131 15,341,631 19,069,282 19,057,782 Less: accumulated depreciation (4,205,154) (4,103,727) Total investment in real estate, net 14,864,128 14,954,055 Total Assets $18,833,650 $18,891,851 LIABILITIES AND PARTNERS' CAPITAL Liabilities Accounts payable and accrued expenses$ 563,181 $ 602,607 Due to affiliates 22,686 25,988 Security deposits 60,910 56,772 Note payable 2,918,479 2,929,581 Mortgages payable 11,407,275 11,427,743 Total Liabilities 14,972,531 15,042,691 Minority Interest in Sabal Palm 1,015,584 1,019,775 Minority Interest (deficit) in the Annex of Schaumburg (233,753) (231,115) Partners' Capital General Partners (35,051) (35,239) Limited Partners (9,914.5 limited partnership units issued and outstanding) 3,114,339 3,095,739 Total Partners' Capital 3,079,288 3,060,500 Total Liabilities and Partners' Capital $18,833,650 $18,891,851 See notes to consolidated financial statements(unaudited). BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, 1995 and 1994 (UNAUDITED) 1995 1994 INCOME Rental $524,082 $591,904 Interest 2,108 1,034 Other, primarily expense reimbursements 114,506 148,446 Total income 640,696 741,384 EXPENSES Mortgage and other interest 165,927 280,155 Depreciation 101,427 112,313 Real estate taxes 154,700 169,200 Repairs and maintenance 2,925 30,532 Other property operating 72,690 69,549 General and administrative 52,414 61,552 Total expenses 550,083 723,301 Income before affiliated joint venture participation and minority interests 90,613 18,083 Equity interest in affiliated joint venture's net loss (22,254) (23,755) Minority interest's share of Sabal Palm's net income (52,209) (43,506) Minority interest's share of the Annex's net loss 2,638 24,037 Net Income (Loss) $ 18,788 $ (25,141) NET INCOME (LOSS) PER LIMITED PARTNERSHIP INTEREST (9,914.5 UNITS): $ 1.88 $ (2.51) See notes to consolidated financial statements (unaudited). BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL For the Period January 1, 1995 to March 31, 1995 (UNAUDITED) General Limited Partners Partners Total BALANCE at January 1, 1995 $(35,239) $3,095,739 $3,060,500 Net income 188 18,600 18,788 BALANCE at March 31, 1995 $(35,051) $3,114,339 $3,079,288 See notes to consolidated financial statements(unaudited). BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 1995 and 1994 (UNAUDITED) 1995 1994 Cash Flows From Operating Activities: Net income (loss) $ 18,788 $(25,141) Adjustments to reconcile net income(loss) to net cash provided by operating activities: Equity interest in affiliated joint venture's net loss 22,254 23,755 Minority interest's share of Sabal Palm's net income 52,209 43,506 Minority interest's share of the Annex's net loss (2,638) (24,037) Provision for doubtful accounts 3,300 16,500 Depreciation 101,427 112,313 Amortization 1,195 14,710 Normalized rental revenue (3,297) 5,307 Changes in operating assets and liabilities: Decrease (increase) in tenant receivables 51,503 (53,188) Increase in other assets (1,120) (14,808) Decrease (increase) in escrow and other deposits 55,795 (82,314) Increase in cash held by receiver (64,072) -- (Decrease) increase in accounts payable and accrued expenses (39,426) 125,784 (Decrease) increase in due from affiliates (110) 7,240 Increase in tenant security deposits 4,138 167 Net cash provided by operating activities 199,946 149,794 Cash Flows From Investing Activities: Capital expenditures (11,500) -- Cash contribution to joint venture -- (16,800) Cash distribution to minority partner- Sabal Palm (56,400) (44,650) Cash contribution from minority partner-Annex -- 4,600 Net cash used in investing activities (67,900) (56,850) Cash Flows From Financing Activities: Repayment of mortgages (20,468) (20,012) Repayment of note payable (11,102) (11,102) Decrease in deposit with title company 11,102 11,102 Net cash used in financing activities (20,468) (20,012) Net increase in cash and cash equivalents 111,578 72,932 Cash and cash equivalents at beginning of period 106,289 66,577 Cash and cash equivalents at end of period $ 217,867 $ 139,509 See notes to consolidated financial statements (unaudited). BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) 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-Q 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 three month period ended March 31, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. 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, 1994. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassifications Certain amounts in the 1994 financial statements have been reclassified to conform to the 1995 presentation. This has not affected the previously reported results of operations. (3) MORTGAGES PAYABLE On November 22, 1994, the lender to Crown Point, NationsBank of Tennessee (the "Lender") exercised the right to call all amounts due as of March 1, 1995. On March 1, 1995, a Forbearance Agreement was executed between the Partnership and the Lender whereas the Lender has agreed to forbear pursuing remedies with respect to defaults through and including September 1, 1995 (the "Forbearance Period"). During the Forbearance Period the terms and conditions shall remain unchanged. The General Partners are pursuing alternative financing, however there is no assurance that the General Partners will be successful. If the General Partners are unsuccessful in their efforts to obtain financing the Partnership would sustain a loss upon foreclosure as the carrying value of the property exceeds the carrying value of the debt. The financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. The carrying value of Crown Point at March 31, 1995, approximates $4,632,000, which exceeds the carrying value of the debt by approximately $1,398,000 at March 31, 1995. On August 23, 1994, the Brauvin/The Annex of Schaumburg (the "Joint Venture") filed a voluntary petition for bankruptcy (Chapter 11) in the United States Bankruptcy Court in the Northern District of Illinois. On February 10, 1995, the Bankruptcy Court ordered the dismissal of the voluntary petition for bankruptcy effectively eliminating the protection of the property from its creditors. Also on February 10, 1995, AUSA Life Insurance Company ("AUSA") filed a motion for appointment of a receiver against the Joint Venture. On February 17, 1995 the motion was granted and an order was issued. The receiver will have full power and authority to operate, manage and conserve the Annex pursuant to the order. On February 15, 1995, the Joint Venture received an amended notice of mortgage foreclosure from AUSA. The Joint Venture had until March 17, 1995 to file an answer to the amended notice. If the Joint Venture did not answer on or before March 17, 1995, default may be entered against the Joint Venture and a judgement in accordance with the request for relief. On April 3, 1995, a judgment of foreclosure and sale was entered into against the Joint Venture. A sheriff's sale of the Annex is scheduled to be held on May 10, 1995. The equity in joint venture's loss for the three months ended March 31, 1995, does not include any other adjustments that might result from the outcome of the foreclosure action by AUSA. (4) TRANSACTIONS WITH AFFILIATES Fees and other expenses paid to the General Partners or its affiliates for the three months ended March 31, 1995 and 1994, were as follows: 1995 1994 Management fees $34,675 $40,336 Reimbursable office expenses 25,621 33,642 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 $4,580 for legal services, as of March 31, 1995. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Partnership intends to satisfy its short-term liquidity needs through cash reserves, cash flow from the properties and the refinancing of Crown Point. On November 22, 1994, the lender to Crown Point, NationsBank of Tennessee, (the "Lender") exercised the right to call all amounts due as of March 1, 1995. On March 1, 1995, a Forbearance Agreement was executed between the Partnership and the Lender whereas the Lender has agreed to forbear pursuing remedies with respect to defaults through and including September 1, 1995 (the "Forbearance Period"). During the Forbearance Period the terms and conditions shall remain unchanged. The General Partners are pursuing alternative financing, however there is no assurance that the General Partners will be successful. If the General Partners are unsuccessful in their efforts to obtain financing, the Partnership would sustain a loss upon foreclosure as the carrying value of the property exceeds the carrying value of the debt. On August 23, 1994, the Brauvin/The Annex of Schaumburg (the "Joint Venture") filed a voluntary petition for bankruptcy (Chapter 11) in the United States Bankruptcy Court in the Northern District of Illinois. On February 10, 1995, the Bankruptcy Court ordered the dismissal of the voluntary petition for bankruptcy effectively eliminating the protection of the property from its creditors. Also on February 10, 1995, AUSA Life Insurance Company ("AUSA") filed a motion for appointment of a receiver against the Joint Venture. On February 17, 1995 the motion was granted and an order was issued. The receiver will have full power and authority to operate, manage and conserve the Annex pursuant to the order. On February 15, 1995, the Joint Venture received an amended notice of mortgage foreclosure from AUSA. The Joint Venture had until March 17, 1995 to file an answer to the amended notice. If the Joint Venture did not answer on or before March 17, 1995, default may be entered against the Joint Venture and a judgement in accordance with the request for relief. On April 3, 1995, a judgment of foreclosure and sale was entered into against the Joint Venture. A sheriff's sale of the Annex is scheduled to be held on May 10, 1995. Long-term liquidity needs are expected to be satisfied through modification of the mortgages at more favorable interest rates and refinancing of the Sabal Palm mortgage when it matures. The occupancy level at Crown Point at March 31, 1995 and at December 31, 1994 was 95%. The Partnership is continuing to work to sustain the occupancy level of Crown Point. Crown Point operated at a positive cash flow for the three months ended March 31, 1995. Strawberry Fields continued to generate negative cash flow for the three months ended March 31, 1995. The occupancy level at Strawberry Fields at March 31, 1995 was 85% compared to 78% at December 31, 1994. At Sabal Palm, the Partnership and its joint venture partner are continuing to work to sustain the occupancy level, which stood at 99% at March 31, 1995 and December 31, 1994. Although the Sabal Palm retail market appears to be overbuilt, the property has continued to generate positive cash flow since its acquisition in 1986. The General Partners of the Partnership expects 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 Agreement as well as payments for major repairs, tenant improvements and leasing commissions in support of real estate operations. Results of Operations - Three Months Ended March 31, 1995 and 1994 (Amounts rounded to 000's) The Partnership generated net income of $19,000 in the first quarter of 1995 as compared to a net loss of $25,000 in 1994. The $44,000 increase in net income resulted primarily from a $114,000 decrease in mortgage and other interest, which was partially offset by a decline in rental income of $68,000. First quarter total income was $641,000 in 1995 as compared to $741,000 in 1994, a decrease of $100,000. This decrease of $100,000 was primarily a result of a $61,000 decrease in rental income and a $68,000 decrease in other income (primarily tenant expense reimbursements) at the Annex of Schaumburg (the "Annex"). The decrease in rental and other income at the Annex is primarily the result of a decline in occupancy from 61% at March 31, 1994 to 56% at March 31, 1995. First quarter expenses were $550,000 in 1995 as compared to $723,000 in 1994, a decrease of $173,000. The decrease in total expenses of $173,000 was primarily a result of $114,000 decrease in mortgage and other interest, a $28,000 decrease in repairs and maintenance, and a $11,000 decrease in depreciation expense. The decrease in mortgage and other interest is the result of the cessation of mortgage interest expense at the Annex due to the foreclosure action against the Joint Venture. Repairs and maintenance and depreciation expenses also declined primarily as a result of the current foreclosure action and the prior year impairment charges against the Annex property. The repairs and maintenance, and depreciation expenses decreased at the Annex by $26,000 and $12,000, respectively. 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. The Partnership filed the following report on Form 8-K during the three months ended March 31, 1995: 1. On March 1, 1995, the Partnership filed Form 8-K dated February 15, 1995 which reported as Item 3 the appointment of a receiver for Brauvin/The Annex of Schaumburg. 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. 5 BY: /s/ Jerome J. Brault Jerome J. Brault Chairman of the Board of Directors and President DATE: May 12, 1995 BY: /s/ Thomas J. Coorsh Thomas J. Coorsh Chief Financial Officer and Treasurer DATE: May 12, 1995 -----END PRIVACY-ENHANCED MESSAGE-----