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 0-10293
BRAUVIN REAL ESTATE FUND I
(Exact name of registrant as specified in its charter)
Illinois 36-3121769
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 South Wacker Drive, Suite 3200, 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
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BRAUVIN REAL ESTATE FUND I
Index
Page
PART I Financial Information
Item 1.Financial Statements . 3
Statemenst of Net Liabilities in Liquidation at March 31,
1995 (unaudited) and December 31, 1994 (audited) -
(Liquidation Basis) . 4
Statement of Changes in Net Liabilities in Liquidation
for the three months ended March 31, 1995 (unaudited) -
(Liquidation Basis) . . . . . . . 5
Statement of Operations for the three months ended
March 31, 1994 (unaudited) - (Going Concern Basis) . . . . . . 6
Statement of Cash Flows for the three months ended
March 31, 1994 (unaudited) - (Going Concern Basis) . . . . . 7
Notes to 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.Submission 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
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Except for the December 31, 1994 audited Statement of Net Liabilities
in Liquidation, the following Statement of Net Liabilities in Liquidation as
of March 31, 1995, Statement of Changes in Net Liabilities in Liquidation for
the three months ended March 31, 1995, Statement of Operations for the three
months ended March 31, 1994, and Statement of Cash Flows for the three months
ended March 31, 1994 for Brauvin Real Estate Fund I (the "Partnership") are
unaudited and have not ben been examined by independent public accountants but
reflect in the opinion of the management, all adjustments necessary to present
fairly the information required.
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.
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BRAUVIN REAL ESTATE FUND I
(an Illinois limited partnership)
STATEMENTS OF NET LIABILITIES IN LIQUIDATION
(Liquidation Basis)
March 31, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 67,776 $ 144,483
Due from General Partner 234,500 234,500
Tenant receivables 216,475 132,396
Other assets 62,706 49,357
Real estate held for sale 4,031,033 4,031,033
Total Assets $4,612,490 $4,591,769
LIABILITIES
Accounts payable and other accrued
expenses $ 531,250 $ 551,855
Due to affiliates 809,683 790,099
Security deposits 48,207 44,607
Note payable 200,000 200,000
Mortgages payable 3,662,192 3,673,628
Estimated losses through date
of liquidation 229,578 200,000
Total Liabilities 5,480,910 5,460,189
Net liabilities in liquidation $ 868,420 $ 868,420
See accompanying notes.
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BRAUVIN REAL ESTATE FUND I
(an Illinois limited partnership)
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION-(UNAUDITED)
For the three months ended March 31, 1995
(Liquidation Basis)
Net liabilities in liquidation at December 31, 1994 $ (868,420)
Net liabilities in liquidation at March 31, 1995 $ (868,420)
See accompanying notes.
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BRAUVIN REAL ESTATE FUND I
(an Illinois limited partnership)
STATEMENT OF OPERATIONS-(UNAUDITED)
For the three months ended March 31, 1994
(Going Concern Basis)
INCOME:
Rental $ 196,721
Interest 485
Other 63,871
Total income 261,077
EXPENSES:
Interest 95,213
Depreciation 47,070
Real estate taxes 93,000
Repairs and Maintenance 27,062
Other property operating 40,158
General and administrative 38,054
Total expenses 340,557
Loss from operations (79,480)
Net loss $ (79,480)
Net loss allocated to:
Limited Partners $ (77,096)
General Partners (2,384)
$ (79,480)
Net loss per Limited
Partnership Interest
(5,696 Units): $ (13.54)
See accompanying notes.
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BRAUVIN REAL ESTATE FUND I
(an Illinois limited partnership)
STATEMENT OF CASH FLOWS-(UNAUDITED)
For the three months ended March 31, 1994
(Going Concern Basis)
Cash Flow From Operating Activities:
Net loss $ (79,480)
Adjustments to reconcile net loss to cash used by
operating activities:
Depreciation and amortization expense 59,201
Changes in assets and liabilities:
Increase in tenant receivables (45,421)
Increase in other assets (19,108)
Increase in accounts payable and accrued expenses 34,806
Increase in due to affiliates 36,366
Total adjustments 65,844
Net cash used by operating activities (13,636)
Cash Flow From Financing Activities:
Repayment of mortgages (9,484)
Cash used by financing activities (9,484)
Net decrease in cash and cash equivalents (23,120)
Cash and cash equivalents at beginning of period 86,660
Cash and cash equivalents at end of period $ 63,540
See accompanying notes.
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BRAUVIN REAL ESTATE FUND I
(an Illinois limited partnership)
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited 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. For further
information, refer to the financial statements and footnotes thereto included
in the Partnership's annual report on Form 10-K for the year
ended December 31, 1994.
As a result of the General Partner's decision to cease operations, and in
accordance with generally accepted accounting principles, the Partnership's
financial statements as of March 31, 1995 have been prepared on a
liquidation basis. Accordingly, the carrying values of the assets are
presented at estimated realizable amounts and all liabilities are presented
at estimated settlement amounts, including estimated costs associated with
carrying out the liquidation. Preparation of the financial statements on a
liquidation basis required significant assumptions by management, including
assumptions regarding the amounts that creditors would agree to accept in
settlement of obligations due them, the estimate of liquidation costs to be
incurred and the resolution of contingent liabilities, including tax
liabilities, resulting from the liquidation. There may be differences
between the assumptions and the actual results because events and
circumstances frequently do not occur as expected. Those differences, if any,
could result in a change in the net liabilities recorded in the statement of
net liabilities in liquidation as of March 31, 1995.
(2) MORTGAGES
In February, 1995, the Partnership received a third modification from the
Mokena Industrial Building first mortgage lender extending the maturity date
from January 31, 1995 to January 31, 1998. The interest rate was increased
to 10.25% from 9.875% and the amortization period was reduced to 10 years.
(3) ADJUSTMENT TO LIQUIDATION BASIS
At July 1, 1994, in accordance with the liquidation basis of accounting,
assets were adjusted to estimated net realizable value and liabilities were
adjusted to estimated settlement amounts, including estimated costs
associated with carrying out the liquidation. At March 31, 1995, the
provision for estimated losses through date of liquidation was increased
by $29,578, net income from operations. The provision was increased based
on the Partnership's reassessment of the estimate of costs to complete the
liquidation.
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BRAUVIN REAL ESTATE FUND I
(an Illinois limited partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) TRANSACTIONS WITH AFFILIATES
The General Partners and other affiliates provide various services to
support operating activities of the Partnership. Fees, commissions and
other expense incurred by the Partnership with respect to such services for
the three months ended March 31, 1995 and 1994 are as follows:
1995 1994
Legal fees $ 300 $ 900
Management fees and reimbursable
administrative services 30,668 32,172
The Partnership believes the amounts paid to affiliates are representative
of amounts which would have been paid to independent parties for similar
services. Management fees cannot exceed 5% of gross operating revenues
generated by the Partnership properties. The Partnership had payables to
affiliates for management fees and reimbursable administrative services of
$776,088 and $756,804 at March 31, 1995 and December 31, 1994, respectively.
The Partnership had payables to affiliates for legal fees of $33,595 and
$33,295 at March 31, 1995 and December 31, 1994, respectively.
(5) SUBSEQUENT EVENT
On May 16, 1995, the Partnership sold the Mokena Industrial Building
to an unaffiliated third party for approximately $1.9 million. The net
sales proceeds to the Partnership was approximately $750,000.
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Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
The General Partners of the Partnership have decided to conclude the
Partnership operations. During the first quarter of 1995, the Partnership
continued to work toward the disposition of its properties and the winding
up of its affairs. The Partnership continues to be unable to pay all of its
expenses; and several expense items are being accrued for payment out of
property sales proceeds.
The buyer of the Mokena Industrial Park has satisfied the contract
contingencies and the sale is expected to close prior to the end of May 1995.
The selling price is approximately $1.9 million.
The Partnership has had preliminary discussions with the mortgage holder
at Cross Creek regarding the possibility of reducing the debt on the property
to achieve a sale. The lender is unwilling to reduce its current debt level.
As previously reported, the General Partners believe the value of the property
is below the mortgage amount; and unless significant value can be created
through leasing, the General Partners believe it is in the Partnership's best
interest to negotiate with the lender to deed the property back to the lender.
Occupancy at Cross Creek remained constant at 87% and the property continued
to operate at a break-even cash flow. Ace Hardware, one of the two anchor
tenants at Cross Creek Commons has notified the Partnership that they will
not be renewing their lease in 1996. The other anchor tenant, Butera Foods,
whose lease expires in 1998, has indicated that the store's revenues and
profitability have declined and has requested that the Partnership consider
allowing it to transfer or, alternatively, to cancel its lease. Management
continues to market this property for lease or sale and has begun looking
for a "big box" user to take over these two spaces. Additionally, management
has considered several space reconfigurations including those alterations
necessary to secure a new anchor tenant. Unfortunately, these options do not
generate enough cash flow to offset the build-out and tenant relocation
expense. Accordingly, the Partnership is evaluating whether it is in its best
interest to transfer this property to the lender for the value of the debt.
It is the intention of the General Partners to conclude the Partnership's
operations in 1995. There can be no assurance that this timing will be met
due to circumstances beyond the control of the General Partners. In light of
the Partnership's current operating condition and expenses which have been
accrued, the proceeds from the sale of the Partnership's properties will,
in all likelihood, not be sufficient to return investors' initial capital.
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Results of Operations - For the three months ended March 31, 1995 compared
to March 31, 1994
Pursuant to its liquidation basis of accounting, results of operations
for the three months ended March 31, 1995 reflected net income of $29,578,
compared to a net loss of $79,480 for the three months ended March 31, 1994.
Total revenue generated for the three months ended March 31, 1995 was
$306,728 compared to $261,077 for the three months ended March 31, 1994,
an income of approximately $45,600. The increase in total revenue was mainly
due to an increase in tenant reimbursement billings during the first
quarter of 1995 compared to the first quarter of 1994 as a result of the
closing on the sale of the Mokena Industrial Park building early in the
second quarter of 1995.
Total expenses for the three months ended March 31, 1995 were $277,150
compared to $340,557 for the three months ended March 31, 1994, a decrease
of approximately $63,400. The decrease in expenses was mainly due to a
decrease in depreciation expense as a result of the liquidation basis of
accounting which reduced the properties to their net realizable value.
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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.
None.
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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 Properties, Inc.
Corporate General Partner of
Brauvin Real Estate Fund I
BY: /s/ Jerome J. Brault
Jerome J. Brault
President and
Chief Executive Officer
DATE: May 18, 1995
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer
DATE: May 18, 1995
