-----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, QURm5cXwalmUjYrnrx6YCm46a/+aDDxItunwSlo4N0jGe0guEZ2H2T7rkMe+H9TL wDc00n67ERIYpSWtRPG63w== 0000810587-98-000008.txt : 19980518 0000810587-98-000008.hdr.sgml : 19980518 ACCESSION NUMBER: 0000810587-98-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-14481 FILM NUMBER: 98625732 BUSINESS ADDRESS: STREET 1: BRAUVIN REAL ESTATE FUNDS STREET 2: 30 N LASALLE FUNDS CITY: CHICAGO STATE: IL ZIP: 60602 BUSINESS PHONE: 3124430922 MAIL ADDRESS: STREET 1: BRAUVIN REAL ESTATE FUNDS STREET 2: 30 N LASALLE ST STE 3100 CITY: CHICAGO STATE: IL ZIP: 60602 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 three months ended March 31, 1998 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 (Name of small business issuer as specified in its charter) Delaware 36-3432071 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 30 North LaSalle Street, Chicago, Illinois 60602 (Address of principal executive offices) (Zip Code) (312) 443-0922 (Issuer's telephone number) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 filling requirements for the past 90 days. Yes X No . BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) INDEX PART I Page Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheet at March 31, 1998 . . . . . . . . 4 Consolidated Statements of Operations for the three months ended March 31, 1998 and 1997. . . . . . . . 5 Consolidated Statements of Cash Flows for the three months ended March 31, 1998 and 1997. . . . . . . . 6 Notes to Consolidated Financial Statements . . . . . . . . . 7 Item 2. Management's Discussion and Analysis or Plan of Operation . . . . . . . . . . . . . . . . . . . . . . . .15 PART II Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .18 Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . .18 Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . .18 Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . . . . . . . .18 Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . .18 Item 6. Exhibits, and Reports on Form 8-K. . . . . . . . . . . . . .18 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 PART I - FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements The following Consolidated Balance Sheet as of March 31, 1998, Consolidated Statements of Operations for the three months ended March 31, 1998 and 1997 and Consolidated Statements of Cash Flows for the three months ended March 31, 1998 and 1997 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 1997 Annual Report on Form 10-KSB. BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) CONSOLIDATED BALANCE SHEET (Unaudited) March 31, 1998 ASSETS Investment in real estate: Land $ 2,411,849 Buildings and improvements 9,743,585 12,155,434 Less accumulated depreciation (3,087,039) Net investment in real estate 9,068,395 Investment in Strawberry Fields Joint Venture(Note 5) 524,829 Cash and cash equivalents 689,351 Rent receivable 99,137 Escrow deposits 166,016 Other assets 132,483 Due from affiliates 35,700 Total Assets $10,715,911 LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Mortgage notes payable (Note 3) $ 6,279,889 Accounts payable and accrued expenses 174,887 Tenant security deposits 44,733 Due to affiliates 12,080 Total Liabilities 6,511,589 MINORITY INTEREST IN SABAL PALM JOINT VENTURE 825,641 PARTNERS' CAPITAL: General Partners (32,056) Limited Partners (9,914.5 limited partnership units issued and outstanding) 3,410,737 Total Partners' Capital 3,378,681 Total Liabilities and Partners' Capital $10,715,911 See accompanying notes to consolidated financial statements BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF OPERATIONS For the three months ended March 31, (Unaudited) 1998 1997 INCOME Rental $429,321 $398,647 Interest 5,482 4,987 Other, primarily tenant expense reimbursements 50,812 50,117 Total income 485,615 453,751 EXPENSES Interest 137,304 141,550 Depreciation 67,621 67,386 Real estate taxes 33,942 35,868 Repairs and maintenance 7,931 12,522 Management fees (Note 4) 31,177 28,669 Other property operating 16,726 17,414 General and administrative 55,003 50,511 Total expenses 349,704 353,920 Income before minority and equity interests 135,911 99,831 Minority interest's share of Sabal Palm's net income (55,571) (44,510) Equity interest in Strawberry Fields Joint Venture's net loss (11,387) (7,532) Net income $68,953 $47,789 Net income Allocated to the General Partners $ 690 $ 478 Net income Allocated to the Limited Partners $68,263 $47,311 Net income Per Limited Partnership Interest (9,914.5 Units) $ 6.89 $ 4.77 See accompanying notes to consolidated financial statements BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, (Unaudited) 1998 1997 Cash Flows From Operating Activities: Net income $ 68,953 $ 47,789 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 67,621 67,386 Provision for doubtful accounts 4,700 1,800 Equity interest in Strawberry Fields Joint Venture's net loss 11,387 7,532 Minority Interest's share of Sabal Palm Joint Venture's net income 55,571 44,510 Change in rent receivables 1,988 23,555 Change in other assets 7,548 3,626 Change in escrow deposits (47,263) (40,764) Change in accounts payable and accrued expenses 64,210 (37,350) Change in due to affiliates 4,131 7,976 Change in tenant security deposits 1,000 (634) Net cash provided by operating activities 239,846 125,426 Cash Flows From Investing Activities: Capital expenditures (1,320) -- Cash distribution to Minority Partner of Sabal Palm Joint Venture (79,900) (13,160) Cash used in investing activities (81,220) (13,160) Cash Flows From Financing Activities: Repayment of mortgage notes payable (29,668) (3,103,716) Proceeds from refinancing -- 3,200,000 Payment of loan fees -- (54,919) Net cash (used in) provided by financing activities (29,668) 41,365 Net increase in cash and cash equivalents 128,958 153,631 Cash and cash equivalents at beginning of period 560,393 408,869 Cash and cash equivalents at end of period $ 689,351 $ 562,500 Supplemental disclosure of cash flow information: Cash paid for interest $129,885 $ 161,668 See accompanying notes to consolidated financial statements BRAUVIN REAL ESTATE FUND L.P. 5 (a Delaware limited partnership) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Brauvin Real Estate Fund L.P. 5 (the "Partnership") was organized on June 28, 1985. The General Partners of the Partnership are Brauvin Ventures, Inc. and Jerome J. Brault. On August 8, 1997, Mr. Cezar M. Froelich resigned as an Individual General Partner effective 90 days from August 14, 1997. Brauvin Ventures Inc. is owned by A.G.E. Realty Corporation Inc. (50%) and by Messrs. Jerome J. Brault (beneficially) (25%) and Cezar M. Froelich (25%). A. G. Edwards & Sons, Inc. and Brauvin Securities, Inc., affiliates of the General Partners, were the selling agents of the Partnership. The Partnership is managed by an affiliate of the General Partners. The Partnership was formed on June 28, 1985 and filed a Registration Statement on Form S-11 with the Securities and Exchange Commission which became effective on March 1, 1985. The sale of the minimum of $1,200,000 of limited partnership interests of the Partnership (the "Units") necessary for the Partnership to commence operations was achieved on June 28, 1985. The Partnership's offering closed on February 28, 1986. A total of $9,914,500 of Units were subscribed for and issued between March 1, 1985 and February 28, 1986 pursuant to the Partnership's public offering. The Partnership has acquired directly or through joint ventures the land and buildings underlying the Crown Point, Strawberry Fields and Sabal Palm shopping centers. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Management's Use of Estimates The preparation of financial statements in conformity with 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 the reporting period. Actual results could differ from those estimates. Accounting Method The accompanying consolidated financial statements have been prepared using the accrual method of accounting. Rental Income Rental income is recognized on a straight line basis over the life of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are credited or charged, as applicable, to deferred rent receivable. Federal Income Taxes Under the provisions of the Internal Revenue Code, the Partnership's income and losses are reportable by the partners on their respective income tax returns. Accordingly, no provision is made for Federal income taxes in the financial statements. Consolidation of Special Purpose Entity The Partnership has one special purpose entity ("SPE"), Brauvin/Crown Point L.P., which is owned 99% by the Partnership and 1% by an affiliate of the General Partners. Distributions from the SPE are subordinated to the Partnership which effectively precludes any distributions from the SPE to affiliates of the General Partners. The creation of the SPE did not affect the Partnership's economic ownership of the property. Furthermore, this change in ownership structure had no material effect on the financial statements of the Partnership. Consolidation of Joint Venture Partnership The Partnership owns a 53% interest in the Sabal Palm Joint Venture which owns Sabal Palm Shopping Center. The accompanying financial statements have consolidated 100% of the assets, liabilities, operations and partners' capital of Sabal Palm Joint Venture. The minority interests of the consolidated joint venture are adjusted for the respective joint venture partner's share of income or loss and any cash contributions from or distributions to the joint venture partner, if any. All intercompany items and transactions have been eliminated. Investment in Joint Venture Partnership The Partnership owns a 42% equity interest in the Strawberry Fields Joint Venture (see Note 6). Strawberry Fields is reported as an investment in an affiliated joint venture. The accompanying financial statements include the investment in Strawberry Fields Joint Venture using the equity method of accounting. Investment in Real Estate The Partnership's rental properties are stated at cost including acquisition costs, leasing commissions, tenant improvements and are net of provision for impairment. Depreciation and amortization are recorded on a straight-line basis over the estimated economic lives of the properties, which approximate 31.5 years, and the term of the applicable leases, respectively. All of the Partnership's properties are subject to liens under first mortgages (see Note 3). In 1995, the Partnership adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121). In conjunction with the adoption of SFAS 121, the Partnership performed an analysis of its long-lived assets, and the Partnership's management determined that there were no events or changes in circumstances that indicated that the carrying amount of the assets may not be recoverable at March 31, 1998 and December 31, 1997. Accordingly, no impairment loss has been recorded in the accompanying financial statements for the three months ended March 31, 1998 and the year ended December 31, 1997. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid debt instruments with an original maturity within three months from date of purchase. Estimated Fair Value of Financial Instruments Disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107, "Disclosure About Fair Value of Financial Instruments." The estimated fair value amounts have been determined by using available market information and appropriate valuation methodologies. However, considerable judgement is necessarily required in interpreting market data to develop estimates of fair value. The fair value estimates presented herein are based on information available to management as of March 31, 1998, but may not necessarily be indicative of the amounts that the Partnership could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The carrying amounts of the following items are reasonable estimates of fair value: cash and cash equivalents; rent receivable; escrow deposits; accounts payable and accrued expenses; tenant security deposits; and due to/from affiliates. (2) PARTNERSHIP AGREEMENT The Partnership Agreement (the "Agreement") provides that 99% of the net profits and losses from operations of the Partnership for each fiscal year shall be allocated to the Limited Partners and 1% of net profits and losses from operations shall be allocated to the General Partners. The net profit of the Partnership from the sale or other disposition of a Partnership property shall be allocated as follows: first, there shall be allocated to the General Partners the greater of: (i) 1% of such net profits; or (ii) the amount distributable to the General Partners as Net Sale Proceeds from such sale or other disposition, as defined in the Partnership Agreement; and second, all remaining profits shall be allocated to the Limited Partners. The net loss of the Partnership from any sale or other disposition of a Partnership property shall be allocated as follows: 99% of such net loss shall be allocated to the Limited Partners and 1% of such net loss shall be allocated to the General Partners. The Agreement provides that distributions of Operating Cash Flow, as defined in the Agreement, shall be distributed 99% to the Limited Partners and 1% to the General Partners. The receipt by the General Partners of such 1% of Operating Cash Flow shall be subordinated to the receipt by the Limited Partners of Operating Cash Flow equal to a 10% per annum, cumulative, non-compounded return on Adjusted Investment, as such term is defined in the Agreement (the "Preferential Distribution"). In the event the full Preferential Distribution is not made in any year (herein referred to as a "Preferential Distribution Deficiency") and Operating Cash Flow is available in following years in excess of the Preferential Distribution for said years, then the Limited Partners shall be paid such excess Operating Cash Flow until they have paid any unpaid Preferential Distribution Deficiency from prior years. Net Sale Proceeds, as defined in the Agreement, received by the Partnership shall be distributed as follows: (a) first, to the Limited Partners until such time as the Limited Partners have been paid an amount equal to the amount of their Adjusted Investment; (b) second, to the Limited Partners until such time as the Limited Partners have been paid an amount equal to any unpaid Preferential Distribution Deficiency; and (c) third, 85% of any remaining Net Sale Proceeds to the Limited Partners, and the remaining 15% of the Net Sale Proceeds to the General Partners. The Preferential Distribution Deficiency at March 31, 1998 equaled $10,086,519. (3) MORTGAGES NOTES PAYABLE Mortgages payable at March 31, 1998 consist of the following: Interest Date 1998 Rate Due Crown Point Shopping Center (a) $3,109,521 7.55% 1/03 Sabal Palm Square Shopping Center (b) 3,170,368 8.93% 3/02 $6,279,889 Each shopping center serves as collateral under its respective nonrecourse debt obligation. Maturities of the mortgages payable are as follows: 1998 $ 88,613 1999 128,086 2000 137,877 2001 150,124 2002 3,138,289 Thereafter 2,636,900 $6,279,889 (a) On December 28, 1995, the acquisition loan balance was paid in full when Crown Point Shopping Center ("Crown Point") was refinanced by NationsBanc Mortgage Capital Corporation (the "Successor Lender"). The refinancing resulted in a $3,275,000 non- recourse loan with a fixed interest rate of 7.55%, and amortization based on a twenty year term with a maturity of January 1, 2003. As a precondition to the new financing, the Successor Lender required that ownership of the property reside in a single purpose entity ("SPE"). To accommodate the lender's requirements, ownership of the property was transferred to the SPE, Brauvin/Crown Point L.P., which is owned 99% by the Partnership and 1% by an affiliate of the General Partners. Distributions of Brauvin/Crown Point L.P. are subordinated to the Partnership which effectively precludes any distributions from the SPE to affiliates of the General Partners. The creation of Brauvin/Crown Point L.P. did not affect the Partnership's economic ownership of Crown Point. Furthermore, this change in ownership structure had no material effect on the financial statements of the Partnership. The carrying value of Crown Point at March 31, 1998 was approximately $4,250,000. (b) On February 19, 1987, the Partnership and its joint venture partner obtained a first mortgage loan secured by the Sabal Palm Shopping Center ("Sabal Palm") in the amount of $3,200,000 from an unaffiliated lender. The loan was payable with interest only at 9.5% per annum until February 1992 and then required payments of principal and interest based on a 30-year amortization schedule with a balloon mortgage payment in February 1997. Prior to the scheduled maturity of this loan, the lender granted Sabal Palm an extension until April 1, 1997. On March 31, 1997, Sabal Palm obtained a new first mortgage loan in the amount of $3,200,000 (the "First Mortgage Loan") secured by its real estate, from NationsBanc Mortgage Capital Corporation. The First Mortgage Loan bears interest at the rate of 8.93% per annum, is amortized over a 25- year period, requires monthly payments of principal and interest of approximately $26,700 and matures on March 26, 2002. A portion of the proceeds of the First Mortgage Loan, approximately $3,077,000, were used to retire Sabal Palm's existing mortgage from Lincoln National Pension Insurance Company. The outstanding mortgage balance encumbered by the property is $3,170,368 at March 31, 1998. In the first quarter of 1998, the Partnership has became aware that both Winn-Dixie and Walgreens may vacate their respective spaces at Sabal Palm prior to their lease termination dates. Although the Partnership has not been given official notice of this potential event, the General Partners believe that there is a likelihood that these tenants will vacate. The General Partners are working with these tenants to determine their intent and the most beneficial steps to be taken by the Partnership in response. The carrying value of Sabal Palm approximated $4,818,000 at March 31, 1998. (4) TRANSACTIONS WITH AFFILIATES Fees and other expenses paid or payable to the General Partners or its affiliates for the three months ended March 31, 1998 and 1997 were as follows: 1998 1997 Management fees $ 31,177 $ 20,536 Reimbursable office expenses 23,100 21,979 Legal fees -- 187 The Partnership believes the amounts paid to affiliates are representative of amounts which would have been paid to independent parties for similar services. As of March 31, 1998, the Partnership had made all payments to affiliates, except for management fees of $10,319 and legal fees of $1,761. An amount of $35,700 due from affiliates at March 31, 1998 represented an advance made to Strawberry Fields. (5) EQUITY INVESTMENT The Partnership owns a 42% interest in Strawberry Fields Joint Venture, located in West Palm Beach, Florida, and accounts for its investment under the equity method. The following are condensed financial statements for Strawberry Fields Joint Venture: March 31, 1998 Land, building and personal property, net $6,951,300 Other assets 146,990 $7,098,290 Mortgage note payable $5,599,209 Other liabilities 247,916 5,847,125 Partners' capital 1,251,165 $7,098,290 For the three months ended March 31, 1998 1997 Rental income $ 196,546 $ 200,079 Other income 47,251 20,708 243,797 220,787 Mortgage and other interest 126,969 109,109 Depreciation 49,968 51,407 Operating and administrative expenses 93,973 78,205 270,910 238,721 Net loss $ (27,113) $ (17,934) ITEM 2.Management's Discussion and Analysis or Plan of Operation. General Certain statements in this Annual Report that are not historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, words such as "anticipates", "expects", "intends", "plans" and similar expressions are intended to identify forward-looking statements. These statements are subject to a number of risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. The Partnership undertakes no obligation to update these forward- looking statements to reflect future events or circumstances. Year 2000 In 1997, the Partnership initiated the conversion from its existing accounting software to a program that is year 2000 compliant. Management has determined that the year 2000 issue will not pose significant operational problems for its computer system. All costs associated with this conversion are being expensed as incurred, and are not material. Also in 1997, management of the Partnership initiated formal communications with all of its significant third party vendors, service providers and financial institutions to determine the extent to which the Partnership is vulnerable to those third parties failure to remedy their own year 2000 issue. There can be no guarantee that the systems of these third parties will be timely converted and would not have an adverse effect on the Partnership. 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 refinancing of the mortgages when they mature. The anchor tenant at Crown Point is Food City. The overall occupancy level at Crown Point increased to 100% at March 31, 1998 and at December 31, 1997 when compared to 98% at March 31, 1997. The Partnership is working to sustain the occupancy level of Crown Point. The occupancy level at Strawberry Fields at March 31, 1998 was 83%, compared to 86% at December 31, 1997 and 88% at March 31, 1997. Strawberry had a negative cash flow for the three months ended March 31, 1998. On September 18, 1995, the Strawberry Fields Joint Venture notified the Lutheran Brotherhood (the "Strawberry Lender") that it would exercise its option to extend the term of the Strawberry Fields loan from the original maturity of November 1, 1995 to December 1, 1998. The terms of the extension called for all provisions of the loan to remain the same except for an additional monthly principal payment of $12,500. Effective November 1, 1995, the Strawberry Fields Joint Venture and the Strawberry Lender agreed to modify the loan by reducing the interest rate to 7.5% for November 1, 1995 through October 31, 1997 and by reducing the monthly principal payment to $12,000. As of November 1, 1997 and through the maturity date, December 1, 1998, the interest rate reverted to the original 9.0% rate. At Sabal Palm, the Partnership and its joint venture partner are working to improve the occupancy level of Sabal Palm which stood at 96% as of March 31, 1998. Although the Sabal Palm retail market appears to be overbuilt, the occupancy level of the building has stayed relatively constant and it has generated positive cash flow since its acquisition in 1986. In addition, in the first quarter of 1998, the Partnership became aware that both Winn-Dixie and Walgreens may vacate their respective spaces at Sabal Palm prior to their lease termination dates. Although the Partnership has not been given official notice of this potential event, the General Partners believe that there is a likelihood that these tenants will vacate. The General Partners are working with these tenants to determine their intent and the most beneficial steps to be taken by the Partnership in response. Sabal Palm was required to make a balloon mortgage payment in February 1997. Prior to the scheduled maturity of the First Mortgage Loan, the lender granted Sabal Palm an extension until April 1, 1997. On March 31, 1997, Sabal Palm obtained a first mortgage loan in the amount of $3,200,000 (the "First Mortgage Loan"), secured by its real estate, from NationsBanc Mortgage Capital Corporation. The First Mortgage Loan bears interest at the rate of 8.93% per annum, is amortized over a 25-year period, requires monthly payments of principal and interest of approximately $26,700 and matures on March 26, 2002. A portion of the proceeds of the First Mortgage Loan, approximately $3,077,000, were used to retire Sabal Palm's existing mortgage from Lincoln National Pension Insurance Company. The General Partners expect to distribute proceeds from operating cash flow, 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 refinancing 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, 1998 and 1997 (Amounts rounded to 000's) The Partnership generated net income of $69,000 for the three months ended March 31, 1998 as compared to net income of $48,000 for the same three month period in 1997. The $21,000 increase in net income resulted primarily from the net of a $32,000 increase in total income and an increase of $11,000 in the minority interest's share of Sabal Palm's net income. Total income for the three months ended March 31, 1998 was $486,000 as compared to $454,000 for the same three month period in 1997, a increase of $32,000. The $32,000 increase resulted primarily from an increase in the occupancy rate at Sabal Palm from 92% at March 31, 1997 to 96% at March 31, 1998. Additionally contributing to the increase in rental income was increased percentage rents earned at Sabal Palm. For the three months ended March 31, 1998, total expenses were $350,000 as compared to $354,000 for the same three month period in 1997, a decrease of $4,000. The $4,000 decrease in total expenses resulted primarily from a decrease in repairs and maintenance at Sabal Palm. 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. On May 15, 1998, B. Allen Aynessazian resigned as Chief Financial Officer from the Corporate General Partner. Mr. Aynessazian is returning to Giordano's Enterprises, a privately held restaurant concern where he worked from 1989 until 1996, prior to joining the Brauvin organization. Mr. Aynessazian is being succeeded by Mr. Thomas E. Murphy, age 31. Mr. Murphy will be the Partnership's Principal Accounting Officer. He is responsible for the daily operations of Partnership accounting and financial reporting to regulatory agencies. Mr. Murphy received a B.S. degree from Northern Illinois University in 1988. Prior to joining the Brauvin organization he was in the accounting department of Zell/Merrill Lynch and First Capital Real Estate Funds where he was responsible for the preparation of the accounting and financial reporting for several real estate limited partnerships and corporations. Mr. Murphy is a Certified Public Accountant and is a member of the Illinois Certified Public Accountants Society. ITEM 6. Exhibits and Reports on Form 8-K. Exhibit 27. Financial Data Schedule SIGNATURES In accordance with the requirements of the Exchange Act, the registrant 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 15, 1998 BY: /s/ B. Allen Aynessazian B. Allen Aynessazian Chief Financial Officer And Treasurer DATE: May 15, 1998 EX-27 2
5 3-MOS DEC-31-1998 MAR-31-1998 689,351 524,829 99,137 0 0 0 12,155,434 3,087,039 10,715,911 231,700 6,279,889 0 0 3,378,681 0 10,715,911 0 485,615 0 212,400 66,958 0 137,304 0 0 0 0 0 0 68,953 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 LESS INTEREST EXPENSE "OTHER EXPENSES" REPRESENTS INTEREST IN JOINT VENTURES' NET INCOME/LOSS
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