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 September 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 September 30, 1998 and
December 31, 1997 Page 3
Consolidated Statements of Operations for the Six
Months Ended September 30, 1998 and 1997 Page 4
Consolidated Statements of Cash Flows for the Nine months
Ended September 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
September December 31,
30
1998 1997
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 15,348,507 15,348,507
17,171,225 17,171,225
Less: Accumulated depreciation (9,517,393) (9,037,393)
Real Estate Net 7,653,832 8,133,832
Cash including cash investments 60,090 16,900
Escrow deposits 455,701 702,955
Prepaid Expenses 33,276 20,686
Deferred Financing Fees 173,344 217,958
TOTAL ASSETS $8,376,243 $9,092,331
LIABILITIES AND PARTNERS'EQUITY:
LIABILITES
Mortgage and notes payable $10,691,394 $10,769,977
Note Payable to affiliates 430,414 759,788
Amounts due affiliates 324 45,235
Real estate taxes payable 202,500 0
Security deposits 57,605 46,591
Accounts payable & 173,707 306,030
accrued expenses
Total liabilities 11,555,944 11,927,621
PARTNERS CAPITAL (DEFICIT)
Limited Partners (3,233,599) (2,892,632)
General Partner 53,898 57,342
Total Partners Capital (DEFICIT) (3,179,701) (2,835,290)
TOTAL LIABILITES AND $8,376,243 $9,092,331
PARTNER DEFICIT
See notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September30, September 30,
REVENUES 1998 1997 1998 1997
Rental income $646,753 $606,530 $1,932,933 $1,842,164
Other property 17,532 15,812 44,837 39,802
Total revenues 664,285 622,342 1,977,770 1,881,966
EXPENSES
Salaries & wages 68,772 67,875 205,846 208,513
Maintenance & repairs 94,507 206,704 293,347 318,222
Utilities 41,442 40,825 133,111 133,836
Real estate taxes 67,500 66,900 202,500 200,700
General administrative 26,714 28,665 79,975 58,086
Contract services 29,446 29,282 85,495 88,747
Insurance 10,612 15,227 37,860 40,974
Interest 201,453 387,527 660,606 513,794
Depreciation and 174,872 165,871 524,614 467,871
amortization
Property management fees (a) 33,172 31,029 98,827 93,983
Total expenses 748,490 1,039,905 2,322,181 2,124,726
NET INCOME before ($84,205) ($417,563) ($344,411) ($242,760)
extraordinary item
Extraordinary Item - Gain 0 348,836 0 348,836
on Debt Extinguish
Net Income ($84,205) ($68,727) (344,411) 106,076
NET INCOME PER UNITS $(7.66) $(6.25) $(31.31) $ 9.64
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
Nine Months Ended September 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($344,411) ($242,760)
Adjustments to reconcile net
income (loss) to net cash provided
by operating activities:
Depreciation and amortization 480,000 453,000
Extraordinary Item - Gain 0 348,836
on Extinguish of Debt
Net Effect of changes in
operating accounts
Esccrow deposits 247,254 (516,831)
Prepaid expenses (12,590) (239,257)
Accrued real estate taxes 202,500 200,056
Security deposits 11,014 5,235
Accounts payable (132,323) 53,529
Other assets 44,614 0
Net cash provided by (used for) _______ _______
operating activities 496,058 61,808
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (78,583) 3,545,408
Repayment of notes payable to affiliates (329,374)
Proceeds from amounts due (44,911) (2,352,607)
Repayment of amounts due affiliates 0 (1,275,739)
Net cash used for investing activities (452,868) (82,938)
NET INCREASE (DECREASE) IN CASH 43,190 (21,130)
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, 16,900 23,211
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF $60,090 $2,081
PERIOD
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
THIRD QUARTER 1998 COMPARED TO THIRD QUARTER 1997
At September 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 third quarter of 1998,
as compared to 93.8% for the third quarter of 1997.
Revenue from property operations increased $41,943, or 6.74%, for the third
quarter of 1998, as compared to the 1997 third quarter. The increase in
rental income of $40,223 or 6.63% is primarily due to an increase in
occupancy and rental rates. The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income 40,223 6.63%
Other property 1,720 10.88%
Net Increase (Decrease) 41,943 6.74%
Property operating expenses decreased $291,415, or 28.02%, for the third
quarter of 1998, as compared to the same period in 1997, primarily due to
decreases in interest expense and maintenance & repairs. The decrease in
interest expense is due to principal payoffs in 1997. Maintenance and
repairs decreased $112,197 or 54.28% primarily due to roof replacements
done in 1997. The following table illustrates the components by
category:
Increase
(Decrease)
Salaries & wages 897 1.32%
Maintenance & repairs (112,197) 54.28%
Utilities 617 1.51%
Real estate taxes 600 0.90%
General admisistrative (1,951) 6.81%
Contract services 164 0.56%
Insurance (4,615) 30.31%
Interest (186,074) 48.02%
Depreciation and amortization 9,001 5.43%
Property management fees (a) 2,143 6.91%
Net Increase (Decrease) (291,415) 28.02%
FIRST NINE MONTHS 1998 COMPARED TO FIRST NINE MONTHS 1997
At September 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 95.5% for the first nine months of
1998,as compared to 93.7% for the first nine months of 1997.
Revenue from property operations increased $95,804, or 5.09%, for the first
nine months of 1998, as compared to the 1997first nine months. The increase
in other income of $5,035 or 12.65% is primarily due to a increase in late
and returned check charges over the prior year. The increase in rental
income of $90,769 or 4.93% is primarily due to an increase in occupancy and
rental rates. The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income 90,769 4.93%
Other property 5,035 12.65%
Net Increase (Decrease) 95,804 5.09%
Property operating expenses increased $197,455 or 9.29%, for the first nine
months of 1998, as compared to the same period in 1997, primarily due to
increases in interest expense. The increase in interest expense is due to
the refinancing of the properties within the fund. Maintenance and repairs
decreased $24,875 or 7.82% primarily due to roof being replaced in 1997.
General and administrative costs increased $21,889 or 37.68% primarily due to
higher administrative costs associated with the refinancing. The following
table illustrates the components by category:
Increase
(Decrease)
Salaries & wages (2,667) 1.28%
Maintenance & repairs (24,875) 7.82%
Utilities (725) 0.54%
Real estate taxes 1,800 0.90%
General administrative 21,889 37.68%
Contract services (3,252) 3.66%
Insurance (3,114) 7.60%
Interest 146,812 28.57%
Depreciation and amortization 56,743 12.13%
Property management fees (a) 4,844 5.15%
Net Increase (Decrease) 197,455 9.29%
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 September 30, 1998, the Partnership had $60,090 in cash
and cash equivalents as compared to $16,900 as of December 31,
1997 . The net increase in cash of $43,190 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 $430,414 at September 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- 81074effective 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 September 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: November 9, 1998
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE SEPTEMBER 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] SEP-30-1998
[CASH] 60,090
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 17,171,225
[DEPRECIATION] 9,517,393
[TOTAL-ASSETS] 8,376,243
[CURRENT-LIABILITIES] 0
[BONDS] 10,691,394
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] (3,179,701)
[TOTAL-LIABILITY-AND-EQUITY] 8,376,394
[SALES] 0
[TOTAL-REVENUES] 664,285
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 547,037
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 201,453
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (84,205)
[EPS-PRIMARY] (7.66)
[EPS-DILUTED] 0
</TABLE>
