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 June 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,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
<PAGE>
BRAUVIN REAL ESTATE FUND II
Index
Page
PART I Financial Information
Item l. Financial Statements . . . . . . . . . . . . . . . . 3
Statements of Net Liabilities in Liquidation at
June 30, 1995(unaudited)and December 31, 1994
(audited) -(Liquidation Basis). . . . . . . . . . . . . 4
Statement of Changes in Net Liabilities in Liquidation
for the six months ended June 30,1995 (unaudited) -
(Liquidation Basis) . . . . . . . . . . . . . . . . . . .5
Statement of Changes in Net Liabilities in Liquidation
for the three months ended June 30, 1995 (unaudited)
- (Liquidation Basis). . . . . . . . . . . . . . . . . .6
Statement of Operations for the six months ended June
30, 1994 (unaudited) - (Going Concern Basis) . . . . . .7
Statement of Operations for the three months ended June
30, 1994 (unaudited) - (Going Concern Basis) . . . . . .8
Statement of Cash Flows for the six months ended June
30, 1994 (unaudited) - (Going Concern Basis) . . . . . .9
Notes to Financial Statements . . . . . . . . . . . . .10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . 12
PART II Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . .14
Item 2. Changes in Securities . . . . . . . . . . . . . . . . .14
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . .14
Item 4. Submission of Matters to a Vote of Security Holders . .14
Item 5. Other Information . . . . . . . . . . . . . . . . . . .14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . .14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<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 June 30, 1995, Statement of
Changes in Net Liabilities in Liquidation for the six months
ended June 30, 1995, Statements of Operations for the six and
three months ended June 30, 1994 , and Statement of Cash Flows
for the six months ended June 30, 1994 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)
June 30, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
Cash and cash equivalents 110,517 $ 45,077
Tenant receivables 40,506 57,891
Other assets 36,049 14,067
Real estate held for sale 5,911,000 5,911,000
Total Assets $ 6,098,072 $6,028,035
LIABILITIES
Accounts payable and other accrued
expenses 275,841 $ 276,028
Due to affiliates 367,797 214,235
Security deposits 5,483 6,266
Mortgages payable 5,548,537 5,548,537
Estimated losses through date of
liquidation 145,668 228,223
Total Liabilities 6,343,326 6,273,289
Net Liabilities $ 245,254 $ 245,254
See accompanying notes.
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION -
(UNAUDITED)
For the six months ended June 30, 1995
(Liquidation Basis)
Net liabilities in liquidation at December 31, 1994 $(245,254)
Net liabilities in liquidation at June 30, 1995 $(245,254)
See accompanying notes.
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION -
(UNAUDITED)
For the three months ended June 30, 1995
(Liquidation Basis)
Net liabilities in liquidation at March 31, 1995 $ (245,254)
Net liabilities in liquidation at June 30, 1995 $ (245,254)
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF OPERATIONS-(UNAUDITED)
For the six months ended June 30, 1994
(Going Concern Basis)
INCOME:
Rental $ 467,019
Interest 1,798
Other 52,098
Total income 520,915
EXPENSES:
Interest 256,003
Depreciation 85,991
Real estate taxes 70,800
Repairs and maintenance 61,615
Other property operating 85,990
General and administrative 71,657
Total expenses 632,056
Net loss $(111,141)
Net loss allocated to:
Limited Partners $(110,030)
General Partners (1,111)
$(111,141)
Net loss per Limited
Partnership Interest (4,279 Units): $ (25.71)
See accompanying notes.
.<PAGE>
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF OPERATIONS - (UNAUDITED)
For the three Months Ended June 30, 1994
(Going Concern Basis)
INCOME:
Rental $ 228,278
Interest 934
Other (7,502)
Total income 221,710
EXPENSES:
Interest 132,630
Depreciation 28,477
Real estate taxes 35,400
Repairs and maintenance 39,062
Other property operating 48,793
General and administrative 35,178
Total expenses 319,540
Net loss $ (97,830)
Net loss allocated to:
Limited Partners $ (96,852)
General Partners (978)
$ (97,830))
Net loss per Limited Partnership Interest
(4,279 Units): $ (22.63)
See accompanying notes.
BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF CASH FLOWS-(UNAUDITED)
For the six months ended June 30, 1994
(Going Concern Basis)
Cash Flow From Operating Activities:
Net loss $ (111,141)
Adjustments to reconcile net loss to cash used by
operating activities:
Depreciation and amortization expense 85,991
Changes in operating assets and liabilities:
Decrease in tenant receivables 16,772
Decrease in other assets 6,317
(Increase) decrease in accounts payable and
accrued expenses (1,577)
Decrease in accrued interest payable (9,256)
Increase in due to affiliates 14,674
Total adjustments 112,921
Net cash used by operating activities 1,780
Cash Flow From Investing Activities:
Capital expenditures (18,244)
Net cash used in investing activities (18,244)
Cash Flow From Financing Activities:
Proceeds from borrowing 18,244
Repayment of mortgages (20,001)
Net cash used by financing activities (1,757)
Net decrease in cash and cash equivalents (18,221)
Cash and cash equivalents at beginning of year 177,426
Cash and cash equivalents at end of period $ 159,205
See accompanying notes.
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 June 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 June 30, 1995.
(2) ADJUSTMENT TO 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 June 30, 1995, the provision for estimated
losses through date of liquidation was decreased by $82,555, net
loss from operations for the six months ended June 30, 1995.
(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 six months ended June 30,
1995 and 1994.
1995 1994
Legal fees $ -- $ 1,800
Management fees and reimbursable
administrative services 62,897 75,840
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 $344,131 and $213,335 at June 30, 1995 and December
31, 1994, respectively. The Partnership had payables to
affiliates for legal fees of $848 and $900 at June 30, 1995
and December 31, 1994, respectively.
(4) SUBSEQUENT EVENT
On July 1, 1995, the mortgage an Ingram Hills Shopping Center
become due. As a result of the Partnership not able to secure
refinancing or pay off the mortgage, the lender declared the loan
in default and proceeded to take title to the property on August
1, 1995.
<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 second quarter of
1995, the Partnership continued to work toward the sale 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. Both of the Partnership's assets have been actively
marketed for sale over the last year. The results of this
activity have been extremely disappointing.
The Partnership has marketed Ingram Hills Shopping Center
actively since last year.We have utilized the local expertise of
a national brokerage firm in order to give the property broad
exposure for its sale. Although the property remains 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
has been marketed for sale, the Partnership has also been
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 have been 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. Accordingly, we are
again actively marketing the building for sale. The property's
lender is cooperating in our efforts to sell the building. The
lender is continuing to allow interest payments to accrue and has
extended the maturity through the end of August. However, we
believe further extension of the loan will not be likely. We hope
to have the property under contract again by that time.
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 six and three months ended June 30,
1995 compared to June 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
six months ended June 30, 1995 reflect a net loss of $82,555
compared to a net loss of $111,141 for the six months ended June
30, 1994, a decrease of approximately $28,600. The results of
operations for the three months ended June 30, 1995 reflect a net
loss of $50,261 compared to a net loss of $97,830, a decrease of
approximately $47,600. The decrease in net loss was due to a
decrease in expenses which was mostly offset by a decrease in
total revenue.
Total income for the six months ended June 30, 1995 was
$444,868 compared to $520,915 for the six months ended June 30,
1994, a decrease of approximately $76,000. The decrease in total
income was mainly 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. Total income for the three months ended
June 30, 1995 was $223,441 compared to $221,710 for the three
months ended June 30, 1994, an increase of approximately $1,700.
The increase was due to an increase in tenant reimbursements.
Total expenses for the six months ended June 30, 1995 were
$527,423 compared to $632,056 for the six months ended June 30,
1994, a decrease of approximately $104,600. Total expenses for
the three months ended June 30, 1995 were $273,702 compared to
$319,540 for the three months ended June 30, 1994, a decrease of
approximately $45,800. 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: August 14, 1995
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer
DATE: August 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 110,517
<SECURITIES> 0
<RECEIVABLES> 40,506
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,911,000 <F1>
<DEPRECIATION> 0 <F2>
<TOTAL-ASSETS> 6,098,072
<CURRENT-LIABILITIES> 0
<BONDS> 5,548,537 <F3>
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,343,326
<SALES> 0
<TOTAL-REVENUES> 520,915 <F4>
<CGS> 0
<TOTAL-COSTS> 632,056 <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> (111,141)
<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>
