-----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, Ealv4/x/bNGMuX+P2QQlZia00Qh+3Ntqp7Q36LwnYgDAghXARN8C5nySD79YPpDb WIYrLk9W7aHOLh7UPaFonw== 0000821365-96-000007.txt : 19960816 0000821365-96-000007.hdr.sgml : 19960816 ACCESSION NUMBER: 0000821365-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96612644 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 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 June 30, 1996 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) June 30, December 31, 1996 1995 ---------- ------------ ASSETS Real estate investment, at cost: Land $ 636 $ 636 Buildings 1,612 1,612 ------ ------ 2,248 2,248 Less: Accumulated depreciation (345) (319) ------ ------ 1,903 1,929 Investments in joint ventures 2,155 2,105 Cash and cash equivalents 643 610 Receivables from affiliates 6 Deferred charges (net) and other assets 37 56 ------ ------ Total Assets $4,738 $4,706 ====== ====== LIABILITIES AND PARTNERS' EQUITY Payables to affiliates $ 47 $ Other liabilities 3 2 ------ ------ Total Liabilities 50 2 ------ ------ Partners' Equity Limited Partners' - 63,803 units outstanding in 1996 and 1995 4,676 4,693 General Partner 12 11 ------ ------ Total Partner's Equity 4,688 4,704 ------ ------ Total Liabilities and Partners' Equity $4,738 $4,706 ====== ======
See accompanying notes. LUTHERAN BROTHERHOOD REALTY FUND I STATEMENT OF OPERATIONS (Unaudited) (thousands except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 ---- ---- ---- ---- Revenue: Rental $ 128 $ 130 $ 260 $ 263 Interest 8 8 15 15 Equity in Joint Venture Capital 38 40 86 89 ----- ----- ----- ----- Total revenue 174 178 361 367 ----- ----- ----- ----- Expenses: Property taxes 34 33 66 64 Management fee 5 5 10 11 Other property expenses 8 7 23 19 Depreciation and amortization 23 23 46 45 Administrative 48 3 104 43 ----- ----- ----- ----- Total expenses 118 71 249 182 ----- ----- ----- ----- Net income $ 56 $ 107 $ 112 $ 185 ===== ===== ===== ===== Net income per weighted average number of limited partnership units outstanding $ .88 $ 1.68 $ 1.76 $ 2.90 ===== ===== ===== ===== 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 $ 2.00 $ 2.00 ====== ====== ====== ======
See accompanying notes. LUTHERAN BROTHERHOOD REALTY FUND I STATEMENT OF PARTNERS' EQUITY FROM DECEMBER 31, 1993 THROUGH JUNE 30, 1996 (in thousands)
Total General Limited Partners' Partner Partners Equity ------- -------- --------- 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 3 261 264 Distributions to Limited Partners (255) (255) Balance at December 31, 1995 11 4,693 4,704 Net income 1 111 112 ------ ------ ------ Distributions to Limited Partners (128) (128) Balance at June 30, 1996 $ 12 $4,676 $4,688 ====== ====== ======
See accompanying notes. LUTHERAN BROTHERHOOD REALTY FUND I STATEMENT OF CASH FLOW (Unaudited) (thousands)
Six Months Ended June 30 1996 1995 ---- ---- Net Income $112 $185 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 46 45 Distributions from joint ventures 86 77 Equity in joint venture earnings (86) (89) Changes in assets and liabilities: Receivable from affiliates 6 Other assets (1) 4 Payable to affiliates 47 (17) Other accrued operating expenses 1 4 ---- ---- Net cash provided by operating activities 211 209 ---- ---- Cash flows from investing activities: Capital improvements (2) Tenant reimbursements - capital improvements 23 Capital Infusion to Minnetonka 225 (30) Capital Infusion to Minnetonka 300/400 (20) ---- ---- Net cash provided by (used in) investing activities (50) 21 ---- ---- Cash flows from financing activities: Distributions to partners (128) (128) ---- ---- Net cash used in financing activities (128) (128) ---- ---- Net increase (decrease) in cash and cash equivalents 33 102 Cash and cash equivalents at beginning of period 610 521 ---- ---- Cash and cash equivalents at end of period $643 $623 ==== ==== 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 June 30, 1996 and June 30, 1995. 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 June 30, 1996 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 1,402 1,934 3,902 Deferred charges (net) and other assets 207 371 1,146 ------ ------ ------ 1,978 2,992 5,885 Liabilities (6) (20) (49) ------ ------ ------ Net assets $1,972 $2,972 $5,836 ====== ====== ======
Revenues and expenses of the joint ventures for the six month periods ending June 30, 1996 and 1995 were as follows (in thousands):
Minnetonka Minnetonka Worthington 225 300 & 400 Green Associates Associates Associates ---------- ---------- ---------- June 30, June 30, June 30, -------- -------- -------- 1996 1995 1996 1995 1996 1995 ---- ---- ---- ---- ---- ---- Revenues $ 217 $ 214 $ 314 $ 312 $ 596 $ 566 Property taxes (30) (55) (78) (68) (70) (69) Management fee (9) (10) (12) (14) (21) (17) Other operating expenses (24) (37) (97) (68) (171) (160) Depreciation (46) (38) (91) (80) (140) (131) ----- ----- ----- ----- ----- ----- Net income 108 74 36 82 194 189 ----- ----- ----- ----- ----- ----- Partnership interest 33.3% 33.3% 33.3% 33.3% 19.3% 19.3% Partnership income $ 36 $ 25 $ 12 $ 28 $ 38 $ 36 ===== ===== ===== ===== ===== =====
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 June 30, 1996 and December 31, 1995 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 June 30, 1996, the Partnership paid distributions totaling $63,803, to the Limited Partners at the rate of 4% per annum on the Limited Partners' invested capital. Subsequent Event On July 3, 1996, at a special meeting of the Limited Partners of the Partnership, the partners approved the liquidation of the Partnership in accordance with the liquidation proposal described in the Proxy Statement, which had been mailed to them on or about June 11, 1996. The terms of the liquidation proposal include sale of the property owned by the Partnership and the properties owned by joint ventures in which the Partnership is a co- venturer ("the Properties") over a period of time not to exceed two years from the date of Limited Partner approval, followed by the dissolution and winding up of the Partnership. Note 5. Fees and Reimbursements For the six months ended June 30, 1996 and 1995, the Partnership was allocated $52,800 and $16,300, respectively, in partnership administrative expenses by the General Partner and other affiliated entities. Note 6. Recently Issued Accounting Standards In March, 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 121, "Accounting for Impairment of Long- Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS 121 establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of. The Partnership has adopted SFAS 121 by reviewing long-lived assets to be held and used for impairment effective January 1, 1996. As a result of this review, no material adjustments have been made to the carrying value of the Partnership's real estate investments through June 30, 1996. 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. At a special meeting held on July 3, 1996, the limited partners approved a liquidation proposal to begin the process of selling the Properties and winding up the Partnership. The General Partner has listed the Properties with real estate agencies to market them for sale and has received some indications of interest. There can be no assurance, however, that the General Partner will be able to accomplish such sales during 1996 or thereafter. 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 There was little change in gross rental revenues for NWDC during both the second quarter and first six months of 1996 compared to the same periods in 1995 because occupancy levels were at 100% during all periods. Administrative expenses for all periods increased substantially in 1996 compared to 1995 due to legal fees and other costs incurred by the General Partner in conducting the liquidation approval process. The Partnership's share of total joint venture income declined slightly to $38,000 during the second quarter of 1996 from $40,000 during the second quarter in 1995 and to $86,000 during the first six months of 1996 compared to $89,000 during the first six months of 1995. The Partnership's share of joint venture income from the Minnetonka 225 joint venture increased to $21,000 during the second quarter of 1996 compared to $8,000 during the second quarter of 1995 and to $36,000 for the first six months of 1996 compared to $25,000 during the same period in 1995. The primary reason for the increase was a large refund of 1995 property taxes received during the second quarter of 1996. In addition, property operating expenses declined 35% during the first six months of 1996 compared to the first six months of 1995 due to roof repair expenses incurred during the first quarter of 1995. This was partially offset by a 21% increase in depreciation and amortization expense during the first six months of 1996 compared to the first six months of 1995 resulting from additional building and tenant improvements. In contrast, the Partnership's share of net income from the Minnetonka 300/400 joint venture declined 100% to -1000 during the second quarter of 1996 compared to $15,000 during the second quarter of 1995 and 57% to $12,000 for the first six months of 1996 compared to $28,000 during the first six months of 1995. The primary reason for this decline in net income was a significant increase in property operating expenses during both periods in 1996 compared to 1995 as a result of parking lot improvements to the Minnetonka 300 property and exterior block repairs to both properties during the second quarter of 1996. Property taxes and depreciation expense also rose by nearly 15% during both comparable periods. Gross rental revenues at Worthington Green rose approximately 5% during both the second quarter of 1996 and first six months of 1996 compared to the same periods in 1995 due to slight increases in both occupancy and rental rates during 1996. This revenue increase was offset by modest increases in property operations expenses and depreciation of additional building improvements. As a result, there was no significant change in the Partnership's share of net income from this joint venture for the second quarter and first six months of 1996 compared to the same periods in 1995. INFLATION The moderate inflation experienced in 1995 had little effect on the Partnership's operations. It is anticipated that during 1996, 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 In general, the industrial-bulk warehouse market continues to show strength, with occupancies exceeding 95% in the Twin Cities market area. The property continues to be 100% occupied by two tenants, with the next lease expiration during June 1997 for 17% of the property. The Village at Worthington Green Occupancy for The Village remained strong during the second quarter of 1996. In addition, rent loss (rent concessions and delinquencies) for the quarter were at their lowest levels in more than nine months. Rental rates have increased more than 3% since January of 1996 due to a tightening apartment market in Worthington. A new 300 unit apartment project located approximately two miles from The Village is currently under construction, with the first units available by the fall of 1996. This project is expected to have little effect on the leasing of units at The Village. Minnetonka Industrial Properties The market for industrial-office/warehouse buildings such as the Minnetonka properties remained fairly healthy through March of 1996. Much development is occuring in the marketplace because existing occupancy for office/warehouse buildings is at an all-time high, approximating 95%. Minnetonka 225 and Minnetonka 300 are both currently 100% occupied and do not have leases expiring until mid-1997 or later. Minnetonka 400 is currently 77% occupied by one tenant, whose lease will expire in December, 1996. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1996, the Partnership held cash and cash equivalents of $643,000. The Partnership improved its cash position by $33,000 during the first six months as a result of net cash provided from operating activities of $211,000 offset by cash used for investing activities of $50,000 and distributions to Partners of $128,000. The Partnership has sufficient cash and cash equivalents to meet its 3% required reserve. Cash provided from operations in 1996 is expected to be sufficient to satisfy substantially all of the Partnership's working capital and normal capital expenditure needs. During the first six months, the Partnership's share of capital expenditures for the Joint Venture properties was approximately $167,000. Additional capital expenditures are anticipated during the remainder of 1996 for which the partnership's share is expected to total $68,000. However, cash provided from operations in 1996 may not be sufficient to provide anticipated distributions to the Limited Partners for the entire year. The Partnership will not acquire additional properties or additional interests in joint ventures which own properties. During the holding period of the Partnership's properties, cash flow from operations is expected to contribute to the liquidity of the Partnership and to generate current income. The General Partner has listed the Partnership's properties with real estate agencies to market them for sale. There can be no assurance, however, that the General Partner will be able to accomplish such sales during 1996 or thereafter. PART II OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ A Special Meeting of the Partnership's limited partners was held on Wednesday, July 3, 1996. Present at the Special Meeting in person or by proxy were limited partners holding a majority of Limited Partnership Units ("Units") representing a quorum for the purposes of the Special Meeting. Pursuant to a proxy statement provided to the limited partners, the limited partners were asked to approve a proposal to begin the liquidation of the Partnership through the sale of the Properties within two years after the date of approval of such proposal (the "Liquidation Proposal"). The limited partners were also asked to approve a proposal to allow the adjournment of the Special Meeting, if requested by the General Partner (the "Adjournment Proposal"). The General Partner did not request adjournment of the Special Meeting Pursuant to the Adjournment Proposal. The limited partners were also asked to approve such other matters as were properly brought before the meeting. The General Partner noted that the record date for determination of limited partners entitled to vote at the Special Meeting had been set at April 26, 1996, in the proxy statement, which was more than sixty (60) days before the Special Meeting. To reset the record date within such sixty day period, the General Partner requested ratification by the limited partners of May 6, 1996 as the record date (the "Date Proposal") and reported that the limited partnership interests were held of record by the same limited partners on April 26, 1996 (the previous record date) and May 6, 1996 (the revised record date). 1. The votes of the Units for the Liquidation Proposal were as follows: 46,238.35 FOR 660 AGAINST 15,103.65 ABSTAIN 2. The votes of the Units for the Adjournment Proposal were as follows: 46,238.35 FOR 660 AGAINST 15,103.65 ABSTAIN 3. The votes of the Units for the Date Proposal were as follows: 46,238.35 FOR 660 AGAINST 15,103.65 ABSTAIN 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 June 30, 1996. 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: August 13, 1996 By: /s/ Mitchell F. Felchle ----------------------- Mitchell F. Felchle President Date: August 13, 1996 By: /s/ Anita J. T. Young ----------------------- Anita J. T. Young Treasurer (Chief Financial Officer) INDEX TO EXHIBIT EXHIBIT NUMBER PAGE IN REGISTRATION STATEMENT 27 Financial Data Schedule 12 EX-27 2
5 This schedule contains summary financial information extracted from Lutheran Brotherhood Realty Fund I Form 10-Q for the Quarter ended June 30, 1996 and is qualified in its entirety by reference to such Form 10-Q. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 643 0 0 0 0 643 2,248 345 4,738 50 0 0 0 0 4,688 4,738 260 361 145 145 0 0 0 112 0 112 0 0 0 112 0 0
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