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 September 30, 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 2-76683
BRAUVIN REAL ESTATE FUND II
(Exact name of registrant as specified in its charter)
Illinois 36-3191827
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 443-0922
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. YES X NO
<PAGE>
BRAUVIN REAL ESTATE FUND II
Index
Page
PART I Financial Information
Item l. Financial Statements . . . . . . . 3
Statements of Net Liabilities in Liquidation
at September 30, 1995 (unaudited) and
December 31, 1994 (audited) -
(Liquidation Basis) . . . . . . . . . . . . . . . . . 4
Statement of Changes in Net Liabilities in
Liquidation for the nine months ended
September 30, 1995 (unaudited) -
(Liquidation Basis) . . . . . . . . . . . . . . . . . 5
Statement of Changes in Net Liabilities in
Liquidation for the three months ended
September 30, 1995 (unaudited) -
(Liquidation Basis) . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . 9
PART II Other Information
Item 1. Legal Proceedings . . . . . . . . 11
Item 2. Changes in Securities . . . . . . 11
Item 3. Defaults Upon Senior Securities . . . . . . . . 11
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . . . . 11
Item 5. Other Information . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
PART I - FINANCIAL INFORMATION
Item l. 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 September 30, 1995, and Statements of Changes in
Net Liabilities in Liquidation for the nine and three months ended
September 30, 1995, for Brauvin Real Estate Fund II (the "Partnership")
are unaudited and have not been examined by independent public
accountants but reflect, in the opinion of 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.
<PAGE>
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENTS OF NET LIABILITIES IN LIQUIDATION
(Liquidation Basis)
September 30, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents $ 111,834 $ 45,077
Tenant receivables -- 57,891
Other assets 15,569 14,067
Real estate held for sale 1,711,000 5,911,000
Total Assets $1,838,403 $6,028,035
LIABILITIES
Accounts payable and other accrued
expenses $ 262,635 $ 276,028
Due to affiliates 286,338 214,235
Security deposits 5,483 6,266
Mortgages payable 1,348,537 5,548,537
Estimated losses through date of
liquidation 100,000 228,223
Total Liabilities 2,002,993 6,273,289
Net Liabilities $ 164,590 $ 245,254
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION-(UNAUDITED)
For the nine months ended September 30, 1995
(Liquidation Basis)
Net liabilities in liquidation at
December 31, 1994 $(245,254)
Adjustment to provision of estimated
losses through date of liquidation 80,664
Net liabilities in liquidation at
September 30, 1995 $(164,590)
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION-(UNAUDITED)
For the three months ended September 30, 1995
(Liquidation Basis)
Net liabilities in liquidation at
June 30, 1995 $ (245,254)
Adjustment to provision of estimated
losses through date of liquidation 80,664
Net liabilities in liquidation at
September 30, 1995 $(164,590)
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND II
(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 instruction 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 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 September 30, 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 requires
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 September 30, 1995.
(2) PROVISION OF ESTIMATED LOSSES THROUGH DATE OF LIQUIDATION
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 September 30, 1995, the provision for estimated losses through date
of liquidation was decreased by $46,463, the net loss from operations
for the nine months ended September 30, 1995 and a $81,760 reduction to
the provision based on the Partnership's reassessment of the estimate
of costs to complete the liquidation.
(3) TRANSACTIONS WITH AFFILIATES
The General Partner and other affiliates provide various services to
support operating activities of the Partnership. Fees, commissions and
other expenses incurred by the Partnership with respect to such
services for the nine months ended September 30, 1995 and 1994 were as
follows:
1995 1994
Legal fees $ -- $ 417
Management fees and
reimbursable administrative
services 84,341 98,611
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 6% of
gross operating revenues generated by the Partnership's properties.
The Partnership had payables to affiliates for management fees and
reimbursable administrative services of $286,338 and $213,335 at
September 30, 1995 and December 31, 1994, respectively. The
Partnership had payables to affiliates for legal fees of $848 and $900
at September 30, 1995 and December 31, 1994, respectively.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The General Partners of the Partnership have decided to conclude the
Partnership operations. During the third quarter of 1995, the
Partnership continued to work toward the sale of the remaining property
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 sale proceeds.
The Partnership marketed Ingram Hills Shopping Center actively since
last year. We utilized the local expertise of a national brokerage
firm in order to give the property broad exposure for its sale.
Although the property remained 94% occupied at the end of the second
quarter, net profits from the center were not substantial enough to
attract an offer for purchase at an amount higher than the mortgage
debt. In fact, the only offer the Partnership did receive on the
property was significantly below the current debt amount. During the
period the property was marketed for sale, the Partnership also was
seeking to refinance its debt through our own efforts as well as
through a mortgage broker. However, because of the Property's marginal
cash flow and low value (relative to the existing debt), we were unable
to secure refinancing. As a result, when the underlying mortgages
matured on July 1, 1995, the lender declared the loan in default and
proceeded to take title to the property on August 1, 1995.
With regard to 823 Commerce Drive, the property had been under
contract for sale with an expected completion in the second quarter.
However, the buyer was unable to meet the terms of the contract and the
sale has fallen through. Subsequent to the end of the third quarter,
the Partnership executed a letter of intent to sell the property for
$1,725,000. The sale is subject to a due diligence review by the
buyer. We are hopeful of a closing date in late November or early
December. The property's lender continues to cooperate with our
efforts to sell the building. We anticipate the lender will forbear
any adverse action against the property in connection with the sale.
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.
Results of Operations For the nine and three months ended September 30,
1995 compared to September 30, 1994
Pursuant to its liquidation basis of accounting, results of
operations have been charged to the provision of estimated losses
through date of liquidation. The results of operations for the nine
months ended September 30, 1995 reflect a net loss of $47,559 compared
to a net loss of $212,745 for the nine months ended September 30, 1994,
a decrease of approximately $165,000. The results of operations for
the three months ended September 30, 1995 reflect net income of $34,996
compared to a net loss of $101,604, a decrease of approximately
$136,600. The decrease in net loss was due to a decrease in expenses
as the result of the decrease in properties owned and operated during
1995.
Total income for the nine months ended September 30, 1995 was
$581,166 compared to $747,656 for the nine months ended September 30,
1994, a decrease of approximately $166,500. Total income for the three
months ended September 30, 1995 was $136,298 compared to $226,741 for
the three months ended September 30, 1994, a decrease of approximately
$90,400. The decrease in total income was due to the decrease in rental
income at 823 Commerce as the result of the loss of a major tenant
during the first quarter of 1994 and the foreclosure of Ingram Hills on
August 1, 1995.
Total expenses for the nine months ended September 30, 1995 were
$628,725 compared to $960,401 for the nine months ended September 30,
1994, a decrease of approximately $331,700. Total expenses for the
three months ended September 30, 1995 were $101,302 compared to
$328,345 for the three months ended September 30, 1994, a decrease of
approximately $227,000. The decrease in expenses was 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.
<PAGE>
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 Report on Form 8-K.
Exhibit 27. Financial Data Schedule
<PAGE>
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 Realty Partners, Inc.
Corporate General Partner of
Brauvin Real Estate Fund II
BY: /s/ Jerome J. Brault
Jerome J. Brault
President and
Chief Executive Officer
DATE: November 14, 1995
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer
DATE: November 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 111,834
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,711,000 <F1>
<DEPRECIATION> 0 <F2>
<TOTAL-ASSETS> 1,838,403
<CURRENT-LIABILITIES> 0
<BONDS> 1,348,537 <F3>
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,002,993
<SALES> 0
<TOTAL-REVENUES> 581,166 <F4>
<CGS> 0
<TOTAL-COSTS> 628,725 <F5>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,559)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> "PP&E" REPRESENTS REAL ESTATE HELD FOR SALE
<F2> "DEPRECIATION" IS INCLUDED IN "PP&E"
<F3> "BONDS" REPRESENTS MORTGAGE PAYABLE
<F4> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER
INCOME
<F5> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES
</FN>
</TABLE>
