SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1998 Commission file number 0-11578
AMERICAN REPUBLIC REALTY FUND I
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1421936
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification Number)
6210 Campbell Road Suite 140
Dallas, Texas 75248
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 380-8000.
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:__Y__ No:_____
REGISTRANT IS A LIMITED PARTNERSHIP
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of June 30, 1998 and
December 31, 1997 Page 3
Consolidated Statements of Operations for the Six
Months Ended June 30, 1998 and 1997 Page 4
Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1998 and 1997 Page 5
Item 2.Results of Operations and Management's Discussion
and Analysis of Financial Condition Page 6
Liquidity and Capital Resources Page 8
Other Information Page 9
Signatures Page 10
The statements, insofar as they relate to the period subsequent to
December 31, 1997, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
June 30 December 31,
1998 1997
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and 15,348,507 15,348,507
improvements
17,171,225 17,171,225
Less: Accumulated (9,357,393) (9,037,393)
depreciation
Real Estate net 7,813,832 8,133,832
Cash including cash 70,429 16,900
investments
Escrow deposits 538,552 702,955
Prepaid Expenses 43,888 20,686
Deferred Financing Fees 188,215 217,958
TOTAL ASSETS $8,654,916 $9,092,331
LIABILIBITIES & PARTNERS'EQUITY:
LIABILITIES
Mortgage and notes payable $10,715,511 $10,769,977
Note Payable to affuliates 674,008 759,788
Amounts due affiliates 749 45,235
Real estate taxes payable 135,000 0
Security deposits 51,562 46,591
Accounts payable & 173,582 306,030
accrued expenses
Total liabilities 11,750,412 11,927,621
PARTNERS CAPITAL (DEFICIT)
Limited Partners (3,151,236) (2,892,632)
General Partner 55,740 57,342
Total Partners Capitral (Deficit) (3,095,496) (2,835,290)
TOTAL LIBILITES AND PARTNER DEFICIT $8,654,916 $9,092,331
See notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
REVENUES 1998 1997 1998 1997
Rental income $647,333 $635,855 $1,286,180 $1,235,634
other property 15,565 15,006 27,305 23,990
Total revenues 662,898 650,861 1,313,485 1,259,624
EXPENSES
Salaries & wages 75,447 77,361 137,074 140,638
Maintenance & repairs 111,272 58,787 198,840 111,518
Utilities 43,636 41,075 91,669 93,011
Real estate taxes 67,500 66,900 135,000 133,800
General administrative 27,019 21,889 53,261 29,421
Contract services 27,831 31,339 56,049 59,465
Insurance 12,025 13,649 27,248 25,747
Interest 225,913 64,540 459,153 126,267
Depreciation and amortization 174,871 151,000 349,742 302,000
Property management fees (a) 33,127 32,535 65,655 62,954
Total expenses 798,641 559,075 1,573,691 1,084,821
Net Income ($135,743) $91,786 (260,206) $174,803
NET INCOME PER UNITS $(12.34) $8.34 $(23.66) $15.89
See Notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Cash Flows
See Notes to Condensed Consolidated Financial Statements
Unaudited
Six Months
Ended
June 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($260,206) $174,803
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 320,000 302,000
Net Effect of changes in operating accounts
Escrow deposits 164,403 (49,247)
Prepaid expenses (23,202) (38,992)
Accrued real estate taxes 135,000 133,156
Security deposits 4,971 4,579
Accounts payable (132,448) 29,996
Other assets 29,743 0
Net cash provided by (used for) operating 238,261 556,295
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (54,466) (350,311)
Repayment of notes payable to affiliates (85,780) 0
Proceeds from amounts due affiliates (44,486) 0
Repayment of amounts due affiliates (167,527)
Net cash used for investing activities (184,732) (517,838)
NET INCREASE (DECREASE) IN CASH 53,529 38,457
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, 16,900 23,211
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PEROD $70,429 $61,668
Basis of Presentation:
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Partnership believes that the
disclosures are adequate to make the information presented not misleading.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included in
the Partnership's latest annual report on Form 10-K.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
SECOND QUARTER 1998 COMPARED TO SECOND QUARTER 1997
At June 30, 1998 the Partnership owned two properties with approximately
416,623 net rentable square feet. Both properties are apartment communities.
The portfolio had an average occupancy of 95.8% for the second quarter of
1998, as compared to 95% for the second quarter of 1996.
Revenue from property operations increased $12,037, or 1.85%, for the second
quarter of 1998, as compared to the 1997 second quarter. The increase in
rental income of $11,478 or 1.81% is primarily due to an increase in
occupancy and rental rates. The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income 11,478 1.81%
Other property 559 3.73%
Net Increase (Decrease) 12,037 1.85%
Property operating expenses increased $239,566, or 42.85%, for the second
quarter of 1998, as compared to the same period in 1997, primarily due to
increases in interest expense and maintenance & repairs. The increase in
interest expense is due to the interest paid on the new mortgages.
Maintenance and repairs increased $52,485 or 89.28% primarily due to
maintenance projects required by under the new mortgage notes. Depreciation
and Amortization increased $23,871 or 15.81% primarily due to amortization of
fees relating to the new loans. The following table illustrates the components
by category:
Increase
(Decrease)
Salaries & wages (1,914) 2.47%
Maintenance & repairs 52,485 89.28%
Utilities 2,561 6.23%
Real estate taxes 600 0.90%
General administrative 5,130 23.44%
Contract services (3,508) 11.19%
Insurance (1,624) 11.90%
Interest 161,373 250.04%
Depreciation and amortization 23,871 15.81%
Property management fees (a) 592 1.82%
Net Increase (Decrease) 239,566 42.85%
FIRST SIX MONTHS 1998 COMPARED TO FIRST SIX MONTHS 1997
At June 30, 1998 the Partnership owned two properties with
approximately 416,623 net rentable square feet. Both
properties are apartment communities. The portfolio had an
average occupancy of 95.3% for the first six months of 1998,
as compared to 93.7% for the first six months of 1997.
Revenue from property operations increased $53,861, or
4.28%, for the first six months of 1998, as compared to the
1997 first six months. The increase in other income of
$3,315 or 13.82% is primarily due to a increase in late and
returned check charges over the prior year. The increase in
rental income of $50,546 or 4.09% is primarily due to an
increase in occupancy and rental rates. The following table
illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income 50,546 4.09%
Other property 3,315 13.82%
Net Increase (Decrease) 53,861 4.28%
Property operating expenses increased $488,870, or 45.06%,
for the first six months of 1998, as compared to the same
period in 1997, primarily due to increases in interest
expense and maintenance & repairs. The increase in interest
expense is due to the refinancing of the properties within
the fund. Maintenance and repairs increased primarily due
to maintenance projects required under the new mortgage
notes. General and administrative costs increased $23,840
or 81.03% primarily due to higher advertising costs. The
following table illustrates the components by category:
Increase
(Decrease)
Salaries & wages (3,564) 2.53%
Maintenance & repairs 87,322 78.30%
Utilities (1,342) 1.44%
Real estate taxes 1,200 0.90%
General administrative 23,840 81.03%
Contract services (3,416) 5.74%
Insurance 1,501 5.83%
Interest 332,886 263.64%
Depreciation and 47,742 15.81%
amortization
Property management fees 2,701 4.29%
(a)
Net Increase (Decrease) 488,870 45.06%
LIQUIDITY AND CAPITAL RESOURCES
While it is the General Partners primary intention to
operate and manage the existing real estate investments, the
General Partner also continually evaluates this investment
in light of current economic conditions and trends to
determine if this asset should be considered for disposal.
At this time, there is no plan to dispose of either
property.
As of June 30, 1998, the Partnership had $70,429 in cash and
cash equivalents as compared to $16,900 as of December 31,
1997 . The net increase in cash of $53,529 is principally
due to the properties operations.
Each asset of the fund refinanced its debt during July 1997.
The fund retired debt with a face value of $6,500,000 and
replaced with debt of $10,800,000. The new mortgages in the
amounts of $4,000,000, $6,800,000 carry interest rates of
7.8% and 7.92% respectively. The notes come due August,
2007.
Net proceeds from the refinancing were used to reduce the
notes payable to affiliates. During July, 1997 payments of
$3,500,000 were made to reduce the debt to affiliates. This
together with interest on the debt reduced the amounts due
affiliates to $674,008 at June 30, 1998.
A gain on retirement of debt arose with the note refinancing
being triggered by the early retirement of the debt. The
recognized gain of $348,836, was the difference between the
carrying value of the debt and the funds necessary to retire
the debt.
Additionally, the general partner has provided funding to
the Partnership in the form of notes payable with balances
at December 31,1997 totaling $759,788 which accrue interest
at prime plus 2% and are due on June 30, 2001, or upon
demand. The general partner is not obligated to provide
additional funding to the Partnership.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments (excluding any balloon mortgage
payments), improvements and capital expenditures will be
funded by net cash from operations. The primary source of
capital to fund future Partnership acquisitions and balloon
mortgage payments will be proceeds from the sale, financing
or refinancing of the Properties.
The Partnership's required principal payments due under the
stated terms of the Partnership's mortgage notes payable
and notes payable to affiliates are $102,678, $111,063 and
$120,131 for each of the next three years.
Other Information
Item 1. Legal Proceedings
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. Exhibit and Reports on Form 8-K
(A)The following documents are filed herewith
or incorporated herein by reference as
indicated as Exhibits:
Exhibit Designation Document Description
2 Certificate of Limited partnership, as
amended, incorporated by reference to
Registration Statement No.2-81074
effective May 2, 1983.
Limited Partnership Agreement,
incorporated by reference to Registration
Statement No.2-81074 effective May 2,1983.
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
20 Not Applicable
23 Not Applicable
24 Not Applicable
25 Power of Attorney,incorporated by
reference to Registration Statement
No. 2-81074 effective May 2, 1983.
28 None
(B) Reports on Form 8-K for the quarter ended June 30,1998.
1 None
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.
AMERICAN REPUBLIC REALTY FUND I
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: August 10, 1998
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE JUNE 30, 1998 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
[CIK] 0000711512
[NAME] AMERICAN REPUBLIC REALTY FUND I
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] JUN-30-1998
[CASH] 70,429
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 17,171,225
[DEPRECIATION] 9,357,393
[TOTAL-ASSETS] 8,654,916
[CURRENT-LIABILITIES] 0
[BONDS] 10,715,511
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] (3,095,496)
[TOTAL-LIABILITY-AND-EQUITY] 8,654,916
[SALES] 0
[TOTAL-REVENUES] 662,898
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 572,728
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 225,913
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (135,743)
[EPS-PRIMARY] (12.34)
[EPS-DILUTED] 0
</TABLE>
