-----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, G91flh6QTB8F7Vt9l0k3i8jf5Xb6cHMbL3ToXMVzJHsNeuG2B6m8oHacCcHs2pB7 P3U8f/bitaYkainrIlFdaw== 0000821365-95-000014.txt : 19951119 0000821365-95-000014.hdr.sgml : 19951119 ACCESSION NUMBER: 0000821365-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LUTHERAN BROTHERHOOD REALTY FUND I CENTRAL INDEX KEY: 0000821365 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 943046442 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17617 FILM NUMBER: 95589717 BUSINESS ADDRESS: STREET 1: 625 FOURTH AVE SOUTH CITY: MINNEAPOLIS STATE: MN ZIP: 55415 BUSINESS PHONE: 6123407215 MAIL ADDRESS: STREET 1: 625 FOURTH AVENUE SOUTH CITY: MINNEAPOLIS STATE: MN ZIP: 55415 10-Q 1 FORM 10-Q FOR PERIOD ENDED 9/30/95 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-17617 LUTHERAN BROTHERHOOD REALTY FUND I, a California limited partnership (Exact name of registrant as specified in its charter) California 94-3046442 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 625 Fourth Avenue South Minneapolis, Minnesota 55415 (Address of principal executive offices) (612) 339-8091 (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 ___ PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS In the opinion of Lutheran Brotherhood Real Estate Products Company (the "General Partner"), the General Partner of Lutheran Brotherhood Realty Fund I, a California limited partnership (the "Partnership"), all adjustments necessary for a fair presentation of the Partnership's results have been made in the following financial statements for the interim periods presented. All such adjustments are of a recurring nature. However, such financial statements are unaudited and subject to any year-end adjustments that may be necessary. LUTHERAN BROTHERHOOD REALTY FUND I BALANCE SHEET (thousands)
(Unaudited) September 30, December 31, 1995 1994 ------------ ------------ ASSETS Real estate investment, at cost: Land $ 636 $ 636 Buildings 1,642 1,612 ------ ------ 2,278 2,248 Less: Accumulated depreciation (306) (268) ------ ------ 1,972 1,980 Investments in joint ventures 2,109 2,095 Cash and cash equivalents 637 521 Receivables from affiliates 40 Deferred charges (net) and other assets 65 122 ------ ------ Total Assets $4,823 $4,718 ====== ====== LIABILITIES AND PARTNERS' EQUITY Payables to affiliates $ 9 $ 23 ------ ------ Other liabilities 79 Total Liabilities 88 23 ------ ------ Partners' Equity Limited Partners' - 63,803 units outstanding in 1995 and 1994 4,725 4,687 General Partner 10 8 ------ ------ Total Partner's Equity 4,735 4,695 ------ ------ Total Liabilities and Partners' Equity $4,823 $4,718 ====== ======
See accompanying notes. LUTHERAN BROTHERHOOD REALTY FUND I STATEMENT OF OPERATIONS (Unaudited) (thousands except per share amounts)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 ------------------ ----------------- Revenue: Rental $ 126 $ 125 $ 389 $ 373 Interest 8 5 23 13 ----- ----- ----- ----- Total revenue 134 130 412 386 ----- ----- ----- ----- Expenses: Property operations 92 45 186 131 Depreciation and amortization 23 16 68 48 Administrative 15 11 58 55 ----- ----- ----- ----- Total expenses 130 72 312 234 ----- ----- ----- ----- Net income from operations 4 58 100 152 Income from Joint Ventures 42 38 131 98 ----- ----- ----- ----- Net income $ 46 $ 96 $ 231 $ 250 ===== ===== ===== ===== Net income per weighted average number of limited partnership units $ .72 $1.50 $3.62 $3.92 ===== ===== ===== ===== Weighted average number of limited partnership units outstanding 63,803 63,803 63,803 63,803 ====== ====== ====== ====== Distributions per weighted average limited partnership units outstanding $ 1.00 $ 1.00 $ 3.00 $ 3.00 ====== ====== ====== ======
See accompanying notes. LUTHERAN BROTHERHOOD REALTY FUND I STATEMENT OF PARTNERS' EQUITY FROM DECEMBER 31, 1992 THROUGH SEPTEMBER 30 1995 (in thousands)
Total General Limited Partners' Partner Partners Equity ------ -------- -------- Balance at December 31, 1992 2 4,593 4,595 Net income 3 295 298 Distributions to Limited Partners (255) (255) ------ ------ ------ Balance at December 31, 1993 5 4,633 4,638 Net income 3 309 312 Distributions to Limited Partners (255) (255) ------ ------ ------ Balance at December 31, 1994 8 4,687 4,695 Net income 2 229 231 ------ ------ ------ Distributions to Limited Partners (191) (191) Balance at September 30, 1995 $ 10 $4,725 $4,735 ====== ====== ======
See accompanying notes. LUTHERAN BROTHERHOOD REALTY FUND I STATEMENT OF CASH FLOW (Unaudited) (thousands)
Nine Months Ended September 30, 1995 1994 ----------------- Net Income $ 231 $ 250 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 68 48 Changes in assets and liabilities: Due from affiliates (40) Other assets 6 (2) Payable to affiliates (14) 16 Property taxes payable 32 19 Other accrued operating expenses 47 (3) ------ ---- Net cash provided by operating activities 330 328 ------ ----- Cash flows from investing activities: Capital improvements (32) (33) Tenant reimbursements for capital improvements 23 Capital Infusion to Minnetonka 300/400 (80) Distributions from joint ventures 117 125 Equity in joint venture earnings (131) (98) ------ ----- Net cash provided by (used in) investing activities (23) (86) ------ ----- Cash flows from financing activities: Distributions to partners (191) (192) ------ ----- Net cash used in financing activities (191) (192) ------ ----- Net increase (decrease) in cash and cash equivalents 116 50 Cash and cash equivalents at beginning of period 521 562 ------ ----- Cash and cash equivalents at end of period $ 637 $ 612 ====== ====== Supplemental Schedules: Interest paid $ 0 $ 0 Income taxes paid $ 0 $ 0
See accompanying notes. Note 1. Organization and Partnership Matters Termination of the Offering The Partnership's offering expired on February 11, 1989, having raised a total of $6,365,000 in contributed capital (including Initial Limited Partner's Contribution) from which the Partnership netted $5,719,000 after underwriting commissions and registration expenses. Note 2. Net Income Per Partnership Unit The Partnership Agreement of the Partnership ("Partnership Agreement") provides for net income and net losses from operations for financial reporting purposes to be allocated 99% to the Limited Partners and 1% to the General Partner. Net income per weighted average number of Limited Partnership Units is computed by dividing net income allocated to the Limited Partners by the weighted average number of Limited Partnership Units outstanding. Per unit information has been computed based on 63,803 weighted average units outstanding at both September 30, 1995 and September 30, 1994. Note 3. Real Estate Investments On September 29, 1989, the Partnership restructured (the "Restructure") its investment portfolio by consummating the following agreements entered into as of June 30, 1989. The Restructure completely eliminated the Partnership's debt. Worthington Green Associates Pursuant to a joint venture agreement, Lutheran Brotherhood ("LB"), the parent of the General Partner contributed $6,161,595 cash for an 84% interest in the joint venture. The Partnership deeded the Village at Worthington Green ("Village") for a 16% interest in the joint venture and $6,161,595 cash. On December 1, 1989, the agreement was revised to increase the Partnership's interest in the joint venture to 19.3% in exchange for an additional $200,000 in cash. Northwest Distribution Center Pursuant to a purchase agreement with LB which was assigned to LB from the General Partner, the Partnership purchased the Northwest Distribution Center ("NWDC"), a bulk warehouse/distribution center located in New Hope, Minnesota, for $2,256,750. Minnetonka 225 Associates Pursuant to a joint venture agreement with LB, the Partnership contributed $606,430 cash for a 33% interest in a joint venture which owns and operates a multi-tenant office/warehouse facility located in Minnetonka, Minnesota. Minnetonka 300 & 400 Associates Pursuant to a joint venture agreement with LB, the Partnership contributed $891,089 cash for a 33% interest in a joint venture which owns and operates two multi-tenant office/warehouse facilities located in Minnetonka, Minnesota. At September 30, 1995 the assets and liabilities of the joint ventures were as follows (in thousands):
Minnetonka Minnetonka Worthington 225 300 & 400 Green Associates Associates Associates ---------- ---------- ---------- Land $ 369 $ 687 $ 837 Property less depreciation 1,174 1,861 4,095 Deferred charges (net) and other assets 349 468 927 ------ ------ ------ 1,892 3,016 5,859 Liabilities 36 52 45 ------ ------ ------ Net assets $1,856 $2,964 $5,814 ====== ====== ======
Revenues and expenses of the joint ventures for the period from January 1, 1995 through September 30, 1995 were as follows (in thousands): Revenues $ 323 $ 472 $ 859 Property taxes (88) (102) (103) Management fee (14) (21) (28) Other operating expenses (51) (92) (277) Depreciation (59) (125) (196) ------ ------ ------ Net income 111 132 255 Partnership interest 33.3% 33.3% 19.3% ------ ------ ------ Partnership income $ 37 $ 44 $ 50 ------ ------ ------ Total income from joint ventures $ 131 ======
Note 4. Commitments, Contingencies, and Subsequent Events Commitments Under the Partnership Agreement, the Partnership is required to maintain reasonable reserves for normal repairs, replacements, working capital, and contingencies in an amount equal to at least 3% of Capital Contributions. In the event expenditures are made from these reserves, a portion of the cash generated from operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Reserves, including cash on hand and short term securities, at September 30, 1995 and December 31, 1994 were in excess of 3% of Capital Contributions. Pending Litigation The Partnership is not a party to, nor is any of the Partnership's property the subject of, any material legal proceedings. Subsequent Distribution Subsequent to quarter end, but as of September 30, 1995, the Partnership paid distributions totaling $63,803, to the Limited Partners at the rate of 4% per annum on the Limited Partners' invested capital. Note 5. Fees and Reimbursements For the nine months ended September 30, 1995 and 1994, the Partnership was allocated $24,900 and $26,800, respectively, in partnership administrative expenses by the General Partner and other affiliated entities. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The Partnership was formed to engage in the business of acquiring and operating income-producing real properties and holding the properties for investment. The Partnership's public offering commenced on December 4, 1987, and expired on February 11, 1989. The offering raised a total of $6,365,000 in contributed capital (including the Initial Partners' contributions) from which the Partnership netted $5,719,000 after underwriting and registration expenses. The Partnership completed its start-up and investment-in-properties phases in 1989 and is currently in an operational phase in which the Partnership's activities will be focused on efforts to increase income and distributions to Limited Partners through active management of the Partnership's properties. Currently, the Partnership owns a warehouse/distribution center in New Hope, Minnesota and is a co-venturer in three joint ventures holding four residential and commercial properties. See Part I, Item 1, Note 3, Real Estate Investments, for a description of the September, 1989 restructure of the Partnership's investment portfolio pursuant to which the Partnership acquired its interest in these properties. RESULTS OF OPERATIONS Due to a small increase in rental rates, gross rental revenue for NWDC for the first nine months of 1995 increased 4% compared to the first nine months of 1994. There was no significant change in gross rental revenues between the third quarters of 1995 and 1994 since the property was 100% occupied during both periods. Interest income has nearly doubled for both comparative periods due to rising short term interest rates. Depreciation and amortization expense increased over 40% during both comparative periods as a result of the capitalization of additional tenant improvements late in 1994. Property operations expense more than doubled for the third quarter of 1995 compared to the third quarter of 1994 and rose over 40% for the first nine months of 1995 compared to the first nine months of 1994. This increase was primarily due to the painting of the exterior of the building and partial replacement of the retaining wall. The Partnership's share of Joint Venture income increased over 10% during the third quarter of 1995 compared to the same period in 1994 and climbed over 30% for the first nine months of 1995 compared to the first nine months of 1994. The Minnetonka 225 property was again largely responsible for this improvement. Gross rental revenues were up over 50% for the third quarter of 1995 compared to the third quarter of 1994 and over 85% for the first nine months of 1995 compared to the same period in 1994. These increases were due to a contribution of significantly higher rental and occupancy rates. In addition, there were unusually high operating expense reimbursements paid to the tenants during the first quarter of 1994. These 1994 reimbursements primarily related to real estate tax refunds received on the property in 1993. In order to attract new tenants, capital improvements were made to the property which resulted in significantly higher depreciation and amortization charges in 1995. Property taxes also rose over 25% for both the third quarter and first nine months of 1995 compared to the same periods in 1994. However, despite the depreciation and property tax increases, the Partnership's share of net income from the Minnetonka 225 joint venture increased to $12,000 for the third quarter of 1995 compared to $4,000 for the third quarter of 1994 and to $37,000 for the first nine months of 1995 compared to $3,000 during the same period of 1994. Gross rental revenues for Minnetonka 300/400 were also up again, rising 24% in both the third quarter of 1995 and the first nine months of 1995 compared to the same periods in 1994. However, depreciation expense doubled between both comparative periods due to capitalized roof replacement costs at Minnetonka 300 in late 1994. Operating expenses are also up during the first nine months of 1995 compared to the first nine months of 1994 due to landscaping and interior repairs during the first half of 1995. As a result, the Partnership's share of joint venture income from these properties increased to only $17,000 for the third quarter of 1995 compared to $14,000 for the third quarter of 1994 and to $44,000 for the first nine months of 1995 compared to $41,000 for the first nine months of 1994. Gross rental revenue at Worthington Green rose moderately during both comparative periods despite a level occupancy rate due to rent increases in early 1995. However, operating expenses jumped nearly $40,000 during the third quarter of 1995 and first nine months of 1995 compared to the same periods in 1994 due to higher charges for noncapitalized property replacements such as carpeting and appliances. As a result, the Partnership's share of income from the joint venture slipped to $13,000 for the third quarter of 1995 compared to $19,000 for the third quarter of 1994 and to $49,000 for the first nine months of 1995 compared to $54,000 for the first nine months of 1994. INFLATION The moderate inflation experienced in 1994 had little effect on the Partnership's operations. It is anticipated that during 1995, inflation will continue at a moderate level and that the Partnership's operations will not be significantly influenced by inflation. PROPERTY HIGHLIGHTS Northwest Distribution Center NWDC continues to be 100% occupied by two tenants, the larger of whom was purchased by ExhibitGroup Inc., a wholly-owned subsidiary of The Dial Corp., a national service company with over 30 affiliates and subsidiaries in businesses such as express money orders, travel services, transportation services, and convention services. ExhibitGroup assumed the obligations of our current tenant under their lease at NWDC and plans to continue to occupy the property during the years ahead. Two projects were completed this quarter: the painting of the exterior of the building and the replacement of the retaining wall at the entrance. As a result, this property is now in generally excellent condition. The Village at Worthington Green Occupancy at The Village remained consistently above 95% throughout the third quarter. However, rents have not seen any increase since early in 1995. This is largely a result of increased competition from newly- constructed apartment communities and lower interest rates resulting in more affordable single family housing opportunities. Two buildings (sixteen units) were re-roofed during September with a new 35-year shingle system. The new roofs also enhance the appearance of the buildings by adding a textured look to the roofline. In addition to the roof work, new asphalt was placed at each entry to the project to replace failed asphalt. A change in on-site managers also occurred during September. Minnetonka Industrial Properties The overall industrial market within the Twin Cities continues to see demand exceed supply, and as a result, rental rates continue to increase and occupancies are at their highest point since the mid-1980's. Many local developers are currently planning and/or building new projects which are expected to stabilize supply with demand by mid-1996. Minnetonka 225 is currently 100% occupied, with the next lease expiration during January of 1996 for approximately 9,000 square feet. We are presently negotiating to extend that lease for a minimum of two years. During September, a contract to replace the roof of the building was awarded and the work commenced. Completion is expected by the end of 1995. Minnetonka 300 is also currently 100% occupied. However, as of October 31, a tenant representing roughly 8% of the property will vacate due to their purchase of a building. We are in the final stages of completing a lease to replace this tenancy by December 1, 1995. No significant projects were undertaken during the third quarter, and no projects are planned at this property for the balance of 1995. Minnetonka 400 is currently 78% occupied by one tenant whose lease will expire December 31, 1996. We are presently working with this tenant on a possible lease extension and expansion into the remaining vacant space at the property. We have also submitted a proposal to a third party who would require occupancy by January. However, completion of this lease is on hold until the current tenant's expansion requirements are determined. Roof replacement will begin in early November and should be completed by the end of January 1996. LIQUIDITY AND CAPITAL RESOURCES At September 30, 1995, the Partnership held cash and cash equivalents of $637,000. The Partnership improved its cash position by $116,000 during the first nine months as a result of net cash provided by operating activities of $330,000 offset by cash used in investing activities of $23,000 and distributions to Partners of $191,000. The Partnership has sufficient cash and cash equivalents to meet its 3% required reserve. Cash provided from operations in 1995 is expected to be sufficient to satisfy substantially all of the Partnership's working capital and normal capital expenditure needs. During the first nine months of 1995, the Partnership's share of capital expenditures was approximately $116,000. An additional $175,000 in capital expenditures is anticipated during the remainder of 1995. However, cash provided from operations in 1995 may not be sufficient to provide anticipated distributions to the Limited Partners for the entire year. The Partnership may borrow funds from the General Partner to provide cash for distributions to Limited Partners but it is not anticipated that such borrowing will occur. It is not anticipated that the Partnership will acquire additional properties or additional interests in joint ventures which own properties. During the holding period of the properties, cash flow from operations is expected to contribute to the liquidity of the Partnership as the Partnership's primary objective is to generate current income. Secondarily, the General Partner's intent is to realize an increased value for the properties at sale, thus enhancing the Partnership's ability to make surplus funds distributions to the Limited Partners upon such property sales. PART II. Other Information ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) No exhibits are filed as part of this report. (b) There were no reports on Form 8-K filed during the quarter ended September 30, 1995. 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. LUTHERAN BROTHERHOOD REALTY FUND I, a California limited partnership By: Lutheran Brotherhood Real Estate Products Company, Its General Partner Date: November 13, 1995 By: /S/ Mitchell F. Felchle Mitchell F. Felchle President Date: November 13, 1995 By: /S/ Anita J. T. Young Anita J. T. Young Treasurer (Chief Financial Officer) 10Q-930.txt EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Lutheran Brotherhood Realty Fund I for the Quarter ended September 30, 1995 and is qualified in its entirety by reference to such Form 10-Q. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 637 0 0 0 0 637 2278 306 4823 88 0 0 0 0 4735 4823 389 543 254 254 0 0 0 231 0 231 0 0 0 231 0 0
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