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, 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 June 30, 1999 and
December 31, 1998 Page 3
Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 1999 and 1998 Page 4
Consolidated Statements of Cash Flows for the Six months
Ended June 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 I
Condensed Consolidated Balance Sheets
See notes to Condensed Consolidated Financial Statements
June 30 December
31,
1999 1998
(Unaudited)
Assets:
Real Estate assets, at
cost
Land $1,822,718 $1,822,718
Buildings and 15,519,676 15,519,676
improvements
17,342,394 17,342,394
Less: Accumulated (10,032,703) (9,702,703)
depreciation
Real Estate, net 7,309,691 7,639,691
Cash including cash 109,932 146,358
investments
Escrow deposits 441,044 430,820
Prepaid Expenses 43,007 14,421
Deferred Financing 165,274 195,016
Fees
TOTAL ASSETS $8,068,948 $8,426,306
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES
Mortgage and notes $10,616,136 $10,675,051
payable
Note Payable to 300,461 399,392
affiliates
Amounts due affiliates 0 46,853
Real estate taxes 135,000 0
payable
Security deposits 64,591 56,924
Accounts payable & 155,234 278,099
accrued expenses
Total LIABILITIES 11,271,422 11,456,319
PARTNERS CAPITAL (DEFICIT)
Limited Partners (3,256,144) (3,085,408)
General Partner 53,670 55,395
Total Partners Capital (Deficit) (3,202,474) (3,030,013)
TOTAL LIABILITIES AND PARTNER $8,068,948 $8,426,306
DEFICIT
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Six Months
Months Ended
Ended
June June
30, 30,
REVENUES 1999 1998 1999 1998
Rental income $657,602 647,333 $1,321,433 $1,286,180
Other property 13,710 15,565 28,738 27,305
Total revenues 671,312 662,898 1,350,171 1,313,485
EXPENSES
Salaries & wages 84,225 75,447 150,502 137,074
Maintenance & repairs 70,921 111,272 167,253 198,840
Utilities 43,265 43,636 86,577 91,669
Real estate taxes 67,500 67,500 135,000 135,000
General administrative 31,121 27,019 59,784 53,261
Contract services 26,981 27,831 55,116 56,049
Insurance 10,209 12,025 20,821 27,248
Interest 209,356 225,913 420,436 459,153
Depreciation and 179,872 174,871 359,743 349,742
amortization
Property management 33,514 33,127 67,400 65,655
fees (a)
Total expenses 756,964 798,641 1,522,632 1,573,691
Net Income ($85,652)($135,743) (172,461) (260,206)
NET INCOME PER UNITS $(7.79) $(12.34) $(15.68) $(23.66)
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Cash Flows
See Notes to Condensed Consolidated Financial Statements
Unaudited
Six
Months
Ended
June
30,
1999 1998
CASH FLOWS FROM OPERATING
ACTIVITY
Net income (loss) ($172,461) ($260,206)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization 330,000 320,000
Net Effect of changes in
operating accounts
Escrow Deposits (10,224) 164,403
Prepaid Expenses (28,586) (23,202)
Accrued Real Estate Taxes 135,000 135,000
Security Deposits 7,667 4,971
Accounts Payable (122,865) (132,448)
Other Assets 29,742 29,743
Net cash provided by (used for) 168,273 238,261
operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Repayment of mortgage notes pay. (58,915) (54,466)
Repayment of notes payable (98,931) 0
to affiliates
Proceeds from amounts due (46,853) (85,780)
affiliates
Repayment of amounts due (44,486)
affiliates
Net cash used for investing (204,699) (184,732)
activities
NET INCREASE (DECREASE) IN CASH (36,426) 53,529
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, 146,358 16,900
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF$109,932 $70,429
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
SECOND QUARTER 1999 COMPARED TO SECOND QUARTER 1998
At June 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 94.2% for the second quarter of 1999, as
compared to 95.8% for the second quarter of 1998.
Revenue from property operations increased $8,4149, or 1.27%,
for the second quarter of 1999, as compared to the 1998 second
quarter. The increase in rental income of $10,269 or 1.59% is
primarily due to an increase in rental rates. The decrease in
other income of $1,855 or 11.92% is primarily due to an
decrease in Late and other fee collections from the properties.
The following table illustrates the components:
Increase Per
Cent
(Decrease) Change
Rental income 10,269 1.59%
Other property (1,855) 11.92%
Net Increase 8,414 1.27%
(Decrease)
Property operating expenses decreased $41,677, or 5.22%, for
the second quarter of 1999, as compared to the same period in
1998, primarily due to decreases in maintenance and repairs.
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
$4,102 or 15.18% primarily due to costs incurred contesting
real estate tax valuations. Insurance costs decreased $1,816
or 15.1% 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 8,778 11.63%
Maintenance & (40,351) 36.26%
repairs
Utilities (371) 0.85%
Real estate taxes 0 0.00%
General 4,102 15.18%
administrative
Contract services (850) 3.05%
Insurance (1,816) 15.10%
Interest (16,557) 7.33%
Depreciation and 5,001 2.86%
amortization
Property management 387 1.17%
fees (a)
Net Increase (41,677) 5.22%
(Decrease)
FIRST SIX MONTHS 1999 COMPARED TO FIRST SIX MONTHS 1998
Revenue from property operations increased $36,686, or 2.79%,
for the first six months of 1999, as compared to the 1998 first
six months. The increase in rental income of $35,253 or 2.74%
is primarily due to an increase in rental rates. The increase
in other income of $1,433 or 5.25% is primarily due to fee
income from the properties. The following table illustrates
the components:
Increase Per
Cent
(Decrease) Change
Rental income 35,253 2.74%
Other property 1,433 5.25%
Net Increase (Decrease) 36,686 2.79%
Property operating expenses decreased $51,059, or 3.24%, for
the first six months of 1999, as compared to the same period in
1998, primarily due to decreases in interest and maintenance
and repairs. The decrease in interest is primarily due to the
refinancing of both properties at lower interest rates. 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 $6,523 or
12.25% primarily due to costs incurred contesting real estate
tax valuations. Insurance costs decreased $6,427 or 23.59%
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 13,428 9.80%
Maintenance & repairs (31,587) 15.89%
Utilities (5,092) 5.55%
Real estate taxes 0 0.00%
General administrative 6,523 12.25%
Contract services (933) 1.66%
Insurance (6,427) 23.59%
Interest (38,717) 8.43%
Depreciation and 10,001 2.86%
amortization
Property management fees 1,745 2.66%
(a)
Net Increase (Decrease) (51,059) 3.24%
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, 1999, the Partnership had $109,932 in cash and
cash equivalents as compared to $146,358 as of December 31,
1998 . The net decrease in cash of $36,426 is principally due
to the repayment of notes payable to affiliates.
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 June 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 indicate compliance to
date will be completed by June 1999. 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.2-81074effective 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 June 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 I
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: July 29, 1999
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE June 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] JUN-30-1999
[CASH] 109,932
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 17,342,394
[DEPRECIATION] 10,032,703
[TOTAL-ASSETS] 8,068,948
[CURRENT-LIABILITIES] 0
[BONDS] 10,616,136
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] (3,202,474)
[TOTAL-LIABILITY-AND-EQUITY] 8,068,948
[SALES] 0
[TOTAL-REVENUES] 671,312
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 547,608
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 209,356
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (85,652)
[EPS-BASIC] (7.79)
[EPS-DILUTED] 0
</TABLE>
