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, 1999 Commission file number 0-11578
AMERICAN REPUBLIC REALTY FUND
(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, 1999 and
December 31, 1998 Page 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 1999 and 1998 Page 4
Consolidated Statements of Cash Flows for the Nine months Ended
September 30, 1999 and 1998 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, insofar as they relate to the period subsequent to
December 31, 1998, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND
Condensed Consolidated Balance Sheets
See notes to Condensed Consolidated Financial Statements
September December
30, 31,
1999 1998
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 15,519,676 15,519,676
17,342,394 17,342,394
Less: Accumulated Depreciation (10,197,703) (9,702,703)
Real Estate, Net 7,144,691 7,639,691
Cash including cash investments 228,306 146,358
Escrow deposits 531,051 430,820
Prepaid Expenses 32,665 14,421
Deferred Financing Fees 150,403 195,016
TOTAL ASSETS $8,087,116 $8,426,306
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $10,590,050 $10,675,051
Note Payable to affiliates 300,461 399,392
Amounts due affiliates 637 46,853
Real estate taxes payable 202,916 0
Security deposits 71,752 56,924
Accounts payable & accrued expenses 175,514 278,099
Total Liabilities 11,341,330 11,456,319
PARTNERS CAPITAL (DEFICIT)
Limited Partners (3,307,367) (3,085,408)
General Partner 53,153 55,395
Total Partners Capital (Deficit) (3,254,214) (3,030,013)
TOTAL LIABILITIES & PARTNER DEFICIT $8,087,116 $8,426,306
AMERICAN REPUBLIC REALTY FUND
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 1999 1998 1999 1998
Rental income $668,947 $646,753 $1,990,380 $1,932,933
Other property 14,364 17,532 43,102 44,837
Total revenues 683,311 664,285 2,033,482 1,977,770
EXPENSES
Salaries & wages 71,197 68,772 221,699 205,846
Maintenance & repairs 61,445 94,507 228,698 293,347
Utilities 43,058 41,442 129,635 133,111
Real estate taxes 67,916 67,500 202,916 202,500
General administrative 29,962 26,714 89,746 79,975
Contract services 28,300 29,446 83,416 85,495
Insurance 10,352 10,612 31,173 37,860
Interest 208,850 201,453 629,286 660,606
Depreciation and Amort. 179,871 174,872 539,614 524,614
Property management Fees 34,100 33,172 101,500 98,827
fees
Total expenses 735,051 748,490 2,257,683 2,322,181
Net Income ($51,740)($84,205) (224,201) (344,411)
NET INCOME PER UNIT $(4.70) $(7.66) $(20.38) $(31.31)
AMERICAN REPUBLIC REALTY FUND
Condensed Consolidated Statement of Cash Flows
See Notes to Condensed Consolidated Financial Statements
Unaudited
Nine Months Ended
September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($224,201) ($344,411)
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation and amortization 495,000 480,000
Net Effect of changes in operating accounts
Escrow deposits (100,231) 247,254
Prepaid expenses (18,244) (12,590)
Accrued real estate taxes 202,916 202,500
Security deposits 14,828 11,014
Accounts payable (102,585) (132,323)
Other assets 44,613 44,614
Net cash provided by (used for) 312,096 496,058
operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (85,001) (78,583)
Repayment of notes payable to affiliates (98,931) 0
Repayment of amounts due affiliates (46,216) (374,285)
Net cash used for investing activities (230,148) (452,868)
NET INCREASE (DECREASE) IN CASH AND 81,948 43,190
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 146,358 16,900
CASH AND CASH EQUIVALENTS, END OF PERIOD $228,306 $60,090
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 1999 COMPARED TO THIRD QUARTER 1998
At September 30, 1999 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 96.2% for the third quarter of 1999, as
compared to 95.8% for the third quarter of 1998.
Revenue from property operations increased $19,026, or 2.86%,
for the third quarter of 1999, as compared to the 1998 third
quarter. The increase in rental income of $22,194 or 3.43% is
primarily due to an increase in rental rates. The decrease in
other income of $3,168 or 18.07% is primarily due to an
decrease in fee income collections from the properties. The
following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income 22,194 3.43%
Other property (3,168) 18.07%
Net Increase 19,026 2.86%
(Decrease)
Property operating expenses decreased $13,439, or 1.8%, for the
third quarter of 1999, as compared to the same period in 1998,
primarily due to decreases in maintenance and repairs of
$33,062 or 34.98%. The decrease in maintenance and repairs is
due to fewer deferred maintenance projects than in 1998 as then
required by the new mortgage notes. General and administrative
increased $3,248 or 12.16% primarily due to costs incurred
contesting real estate tax valuations. The following table
illustrates the components by category:
Increase Per Cent
(Decrease) Change
Salaries & wages 2,425 3.53%
Maintenance & repairs (33,062) 34.98%
Utilities 1,616 3.90%
Real estate taxes 416 0.62%
General & Administrative 3,248 12.16%
Contract services (1,146) 3.89%
Insurance (260) 2.45%
Interest 7,397 3.67%
Depreciation and amortization 4,999 2.86%
Property management fees 928 2.80%
Net Increase (Decrease) (13,439) 1.80%
(Decrease)
FIRST NINE MONTHS 1999 COMPARED TO FIRST NINE MONTHS 1998
Revenue from property operations increased $55,712or 2.82%, for
the first nine months of 1999, as compared to the 1998 first
nine months. The increase in rental income of $57,447 or 2.97%
is primarily due to an increase in rental rates. The decrease
in other income of $1,735 or 3.87% is primarily due to
reductions of fee income from the properties. The following
table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income 57,447 2.97%
Other property (1,735) 3.87%
Net Increase (Decrease) 55,712 2.82%
Property operating expenses decreased $64,498, or 2.78%, for
the first nine months of 1999, as compared to the same period
in 1998, primarily due to decreases in maintenance & repairs
and interest. The decrease in maintenance and repairs is due
to fewer deferred maintenance projects than in 1998 as then
required by the new mortgage notes The decrease in interest is
primarily due to the refinancing of both properties at lower
interest rates. General and administrative increased $9,771 or
12.22% primarily due to costs incurred contesting real estate
tax valuations. Insurance costs decreased $6,687 or 17.66%
primarily due to lower rates as a result of better than
expected loss claims. The following table illustrates the
components by category:
Increase Per Cent
(Decrease) Change
Salaries & wages 15,853 7.70%
Maintenance & repairs (64,649) 22.04%
Utilities (3,476) 2.61%
Real estate taxes 416 0.21%
General administrative 9,771 12.22%
Contract services (2,079) 2.43%
Insurance (6,687) 17.66%
Interest (31,320) 4.74%
Depreciation and amortization 15,000 2.86%
Property management fees 2,673 2.70%
Net Increase (Decrease) (64,498) 2.78%
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, 1999, the Partnership had $228,306 in cash
and cash equivalents as compared to $146,358 as of December 31,
1998. The net increase in cash of $81,948 is principally due to
operating cash flow .
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. 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 $120,132,
for each of the next three years.
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 $300,461 at September 30, 1999.
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 31,1998 totaling $399,392 which accrue interest at
rates ranging from prime plus 2%; to 8.25% 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.
Year 2000
The Partnership and Management Company have replaced all data
processing systems with the last three years within year 2000
compliant hardware and software. The Partnership and Management
Company has completed testing of its data processing systems.
While no certainty can not be assured, the systems tested to
date are compliant.
Surveys of financial institutions and vendors used by the
Partnership and Management Company also indicates compliance.
The Partnership and Management Company have prepared
contingency plans. These include redundant back-ups and paper
copies of all system reports through 1999.
The Partnership anticipates that it will not incur any costs
associated with its computers and building operating systems as
it relates to the conversion to the year 2000.
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 September 30,
1999.
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
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: October 20, 1999
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE September 30, 1999 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-31-1999
[PERIOD-END] SEP-30-1999
[CASH] 228,306
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 17,342,394
[DEPRECIATION] 10,197,703
[TOTAL-ASSETS] 8,087,116
[CURRENT-LIABILITIES] 0
[BONDS] 10,590,050
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] (3,254,214)
[TOTAL-LIABILITY-AND-EQUITY] 8,087,116
[SALES] 0
[TOTAL-REVENUES] 683,311
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 526,201
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 208,850
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (51,740)
[EPS-BASIC] (4.70)
[EPS-DILUTED] 0
</TABLE>
