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 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
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BRAUVIN REAL ESTATE FUND II
Index
Page
PART I Financial Information
Item l. Financial Statements . 3
Statements 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 . . . 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
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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 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 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 there to included in the Partnership's 1994
Annual Report on Form 10-K.
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BRAUVIN REAL ESTATE FUND II
(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 $ 60,967 $ 45,077
Tenant receivables 47,941 57,891
Other assets 25,775 14,067
Real estate held for sale 5,911,000 5,911,000
Total Assets $6,045,683 $6,028,035
LIABILITIES
Accounts payable and
other accrued expenses $ 286,520 $276,028
Due to affiliates 260,899 214,235
Security deposits 11,050 6,266
Mortgages payable 5,536,538 5,548,537
Estimated losses through
date of liquidation 195,930 228,223
Total Liabilities 6,290,937 6,273,289
Net Liabilities $ 245,254 $ 245,254
See accompanying notes.
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BRAUVIN REAL ESTATE FUND II
(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$ (245,254)
Net liabilities in liquidation at March 31, 1995 $ (245,254)
See accompanying notes.
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BRAUVIN REAL ESTATE FUND II
(an Illinois limited partnership)
STATEMENT OF OPERATIONS-(UNAUDITED)
For the three months ended March 31, 1994
(Going Concern Basis)
INCOME:
Rental $ 238,741
Interest 864
Other 59,600
Total income 299,205
EXPENSES:
Interest 123,373
Depreciation 57,514
Real estate taxes 35,400
Repairs and maintenance 37,197
Other property operating 36,479
General and administrative 22,553
Total expenses 312,516
Net loss $(13,311)
Net loss allocated to:
Limited Partners $(13,178)
General Partners (133)
$(13,311)
Net loss per Limited
Partnership Interest (4,279 Units): $ (3.08)
See accompanying notes.
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BRAUVIN REAL ESTATE FUND II
(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 $ (13,311)
Adjustments to reconcile net loss to cash used by
operating activities:
Depreciation and amortization expense 57,514
Changes in operating assets and liabilities:
Increase in tenant receivables (50,645)
Decrease in other assets 5,842
Decrease in accounts payable and accrued expenses (20,653)
Increase in due to affiliates 8,184
Total adjustments 242
Net cash used by operating activities (13,069)
Cash Flow From Financing Activities:
Proceeds from borrowing 18,244
Repayment of mortgages (10,000)
Net cash used by financing activities 8,244
Net decrease in cash and cash equivalents (4,825)
Cash and cash equivalents at beginning of year 177,426
Cash and cash equivalents at end of period $ 172,601
See accompanying notes.
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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 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 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 March 31, 1995.
(2) 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 decreased by
$32,293, net loss from operations.
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(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 three months ended March 31, 1995 and 1994.
1995 1994
Legal fees $ 300 $ 900
Management fees and reimbursable
administrative services 30,323 26,320
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
$259,699 and $213,335 at March 31, 1995 and December 31, 1994, respectively.
The Partnership had payables to affiliates for legal fees of
$1,200 and $900 at March 31, 1995 and December 31, 1994, respectively.
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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 first 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.
The Partnership received a non-refundable deposit of $10,000 in connection
with the sale of 823 Commerce Drive. The environmental portion of the due
diligence review has been completed and the buyer has until mid-May to obtain
financing. Closing is scheduled to take place 30 days after the
financing contingency has been met. The lender continues to work with the
Partnership and is permitting the Partnership to accrue debt service through
the earlier of the sale date or June of 1995.
During the quarter, management received some preliminary interest in its
continuing efforts to market Ingram Hills Shopping Center. One offer was
rejected because if was substantially less than the current value of the
debt. Management is currently evaluating whether it is in the Partnership's
best interest to transfer the property to the lender when the current loan
matures on June 30, 1995.
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 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 a net loss of $32,293 compared
to a net loss of $13,311 for the three months ended March 31, 1994.
Total revenue for the three months ended March 31, 1995 was $221,427
compared to $299,205 for the three months ended March 31, 1994, a decrease
of approximately $77,700. The decrease in total revenue was mainly due to
the decrease in rental income at 823 Commerce as the result of occupancy
decreasing from 72% in the first quarter of 1994 to 40% in the first quarter
of 1995.
Total expenses for the three months ended March 31, 1995 was $253,721
compared to $312,516 for the three months ended March 31, 1994, a decrease of
approximately $59,400. 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.
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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 Report 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 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: May 18, 1995
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer
DATE: May 18, 1995
