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 March 31, 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 March 31, 1998 and
December 31, 1997 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1998 and 1997 Page 4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 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 7
Other Information Page 8
Signatures Page 9
The statements, in so far 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
March 31 December 31
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 (9,197,393) (9,037,393)
Real Estate,net 7,973,832 8,133,832
Cash including cash investments 67,404 16,900
Escrow deposits 519,212 702,955
Prepaid Expenses 13,464 20,686
Deferred Financing Fees 203,087 217,958
TOTAL ASSETS $8,776,999 $9,092,331
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES
Mortgage and notes Payable $10,739,160 $10,769,977
Note Payable to affiliates 690,752 759,788
Amounts due affiliates 123 45,235
Real estate taxes payable 67,500 0
Security deposits 48,169 46,591
Accounts payable & 191,048 306,030
accrued expenses
Total liabilities 11,736,752 11,927,621
PARTNERS CAPITAL (DEFICIT)
Limited Partners (3,015,850) (2,892,632)
General Partner 56,097 57,342
Total Partners Capital (Deficit) (2,959,753) (2,835,290)
TOTAL LIABILITIES AND $8,776,999 $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
March 31,
REVENUES 1998 1997
Rental income $638,847 $599,779
Other property 11,740 8,984
Total revenues 650,587 608,763
EXPENSES
Salaries & wages 61,627 63,277
Maintenance & repairs 87,568 52,731
Utilities 48,033 51,936
Real estate taxes 67,500 66,900
General administrative 26,242 7,532
Contract services 28,218 28,126
Insurance 15,223 12,098
Interest 233,240 61,727
Depreciation and amortization 174,871 151,000
Property management fees (a) 32,528 30,419
Total expenses 775,050 525,746
Net Income ($124,463) $83,017
NET INCOME PER UNIT $ (11.31) $ 7.55
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
Three Months Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($124,463) $83,017
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 160,000 151,000
Net Effect of changes in operating accounts
Escrow deposits 183,743 (60,099)
Prepaid expenses 7,222 6,152
Accrued real estate taxes 67,500 66,900
Security deposits 1,578 (489)
Accounts payable (114,982) 30,890
Other assets 14,871 0
Net cash provided by 195,469 277,371
(used for) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (30,817) (220,847)
Repayment of notes payable to affiliates (69,036) 0
Repayment of amounts due affiliates (45,112) (23,255)
Net cash used for investing activities (144,965) (244,102)
NET INCREASE (DECREASE) IN CASH AND 50,504 33,269
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING 16,900 23,211
OF PERIOD
CASH AND CASH EQUIVALENTS, END OF $67,404 $56,480
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
FIRST THREE MONTHS 1998 COMPARED TO FIRST THREE MONTHS 1997
At March 31, 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 95.0% for the first Three Months of
1998, as compared to 90.25% for the first Three Months of
1997.
Revenue from property operations increased $39,068, or
6.51%, for the first Three Months of 1998, as compared to
the 1997 first Three Months. The increase in other income of
$2,756 or 30.68% is primarily due to a increase in late and
returned check charges over the prior year. The following
table illustrates the components:
Increase Percent
(Decrease) Change
Rental income $39,068 6.51%
Other property 2,756 30.68%
Net Increase (Decrease) $41,824 6.87%
Property operating expenses increased $249,304, or 47.42%,
for the first Three 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 by under the new mortgage
notes. Insurance costs rose $3,125 or 25.83% due to higher
overall insurance costs at the annual renewal. The
following table illustrates the components by category:
Increase Percent
(Decrease) Change
Salaries & wages $(1,650) 2.61%
Maintenance & repairs 34,837 66.07%
Utilities (3,903) 7.52%
Real estate taxes 600 0.90%
General administrative 18,710 248.41%
Contract services 92 0.33%
Insurance 3,125 25.83%
Interest 171,513 277.86%
Depreciation and amortization 23,871 15.81%
Property management fees (a) 2,109 6.93%
Net Increase (Decrease) $249,304 47.42%
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 March 31, 1998, the Partnership had $67,404 in cash
and cash equivalents as compared to $16,900 as of December
31, 1997 . The net decrease in cash of $50,504 is
principally due to the properties operations.
Each asset of the fund refinanced its debt during the
quarter. The fund retired debt with a face value of
$6,500,000 and replace it 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 $582,703 at September 30,1997.
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.
The properties were encumbered by two non-recourse mortgage
notes as of December 31, 1996. These mortgages payable had
a carrying value of $7,239,679 at December 31, 1996. The
mortgage notes were entered into during 1993 and 1992 to
refinance certain mortgage notes which were in default. The
Partnership accounted for these transactions as troubled
debt restructuring, and accordingly, are being carried at
the total future cash outflows for principal and interest.
Accordingly, no interest expense was or will be recorded on
these notes.
Additionally, the general partner has provided funding to
the Partnership in the form of notes payable with balances
at December 31,1996 totaling $2,35,310 which accrue interest
at prime plus 2% and are due on June 30, 2001, or upon
demand. Additional funds have been provided by the general
partner in the form of advances which totaled $1,282,696 at
December 31, 1996. 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 $94,927, $102,678, and
$111,063 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 March 31,1998.
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: April 22, 1998
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<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE MARCH 31, 1998 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> AMERICAN REPUBLIC REALTY FUND I
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