UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ________________.
Commission File Number 0-11975
BRAUVIN REAL ESTATE FUND L.P. 3
(Exact name of registrant as specified in its charter)
Delaware 36-3290420
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 South Wacker Drive, Suite 1020, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 443-0922
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
ecurities 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 X NO
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 3
INDEX
Page
PART I Financial Information
Item 1. Financial Statements . . . . 3
Statements of Net Liabilities in Liquidation
at June 30, 1995 (unaudited) and December 31,
1994 (audited) -(Liquidation Basis). . . . . 4
Statement of Changes in Net Liabilities in
Liquidation for the six months ended June 30,
1995 (unaudited) - (Liquidation Basis) . . . 5
Statement of Changes in Net Liabilities in
Liquidation for the three months ended June 30,
1995 (unaudited) - (Liquidation Basis) 6
Statement of Operations for the six months
ended June 30, 1994 (unaudited) - (Going
Concern Basis) . . . . . . . . . . . . . . 7
Statement of Operations for the three months
ended June 30, 1994 (unaudited) - (Going
Concern Basis) . . . . . . . . . . . . . . 8
Statement of Cash Flows for the six months
ended June 30, 1994 (unaudited) - (Going
Concern Basis). . . . . . . . . . . . . . . 9
Notes to Financial Statements. . . . . . . 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 13
PART II Other Information
Item 1. Legal Proceedings. . . . . 15
Item 2. Changes in Securities. . . . 15
Item 3. Defaults Upon Senior Securities. . . . 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 5. Other Information. . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 16
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Except for the December 31, 1994 audited Statement of Net
Liabilities in Liquidation, the following Statement of Net
Liabilities in Liquidation as of June 30, 1995, the Statement of
Changes in Net Liabilities in Liquidation for the six months
ended June 30, 1995, Statements of Operations for the six and
three months ended June 30, 1994, and Statement of Cash Flows for
the six months ended June 30, 1994 for Brauvin Real Estate Fund
L.P. 3 (the "Partnership") are unaudited and have not been
examined by independent public accountants but reflect in the
opinion of management, all adjustments necessary to present
fairly the information required.
These financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Partnership's 1994 Annual Report on Form 10-K.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
STATEMENTS OF NET LIABILITIES IN LIQUIDATION
(Liquidation Basis)
June 30, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
Cash $ 51,284 $ 65,468
Tenant receivables 9,485 17,475
Other assets 25,002 16,454
Real estate held for sale 2,015,650 4,974,040
Total Assets $2,101,421 $5,073,437
LIABILITIES
Accounts payable and other
accrued expenses $ 32,361 $ 42,213
Due to affiliates 219,321 574,171
Security deposits 29,590 40,152
Note payable -- 125,000
Mortgages payable 1,812,781 4,608,211
Estimated losses through
date of liquidation 200,000 164,000
Total Liabilities 2,294,053 5,553,747
Net liabilities in liquidation$ 192,632 $ 480,310
See accompanying notes.<PAGE>
BRAUVIN REAL ESTATE L.P. 3
(a Delaware limited partnership)
STATEMENT OF CHANGES IN NET LIABILITIES IN
LIQUIDATION-(UNAUDITED)
For the six months ended June 30, 1995
(Liquidation Basis)
Net liabilities in liquidation at December 31,1994 $ (480,310)
Adjustment to provision of estimated losses through
date of liquidation 287,678
Net liabilities in liquidation at June 30, 1995 $ (192,632)
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE L.P. 3
(a Delaware limited partnership)
STATEMENT OF CHANGES IN NET LIABILITIES IN
LIQUIDATION-(UNAUDITED)
For the three months ended June 30, 1995
(Liquidation Basis)
Net liabilities in liquidation at March 31, 1995 $ (480,310)
Adjustment to provision of estimated losses
through date of liquidation 287,678
Net liabilities in liquidation at June 30, 1995 $ (192,632)
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
STATEMENT OF OPERATIONS - (UNAUDITED)
For the six months ended June 30, 1994
(Going Concern Basis)
INCOME:
Rental $ 479,404
Interest 77
Other 43,723
Total income 523,204
EXPENSES:
Interest 211,533
Depreciation 106,968
Real estate taxes 44,400
Repairs and Maintenance 44,090
Other property operating 121,418
General and administrative 150,472
Total expenses 678,881
Net Loss $ (155,677)
Net loss allocated to:
General Partners $ (1,557)
Limited Partners (154,120)
$ (155,677)
Net loss per Limited Partnership Interest
(7,729 Units): $ (19.94)
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
STATEMENT OF OPERATIONS - (UNAUDITED)
For the three months ended June 30,
1994
INCOME:
Rental $ 239,741
Interest 37
Other 13,205
Total income 252,983
EXPENSES:
Interest 105,584
Depreciation 52,188
Real estate taxes 22,200
Repairs and maintenance 24,559
Other property operating 61,609
General and administrative 118,896
Total expenses 385,036
Net loss $(132,053)
Net (loss) income allocated to:
General Partners $ (1,321)
Limited Partners (130,732)
$(132,053)
Net (loss) income per LimitedPartnership
Interest (7,729 Units): $ (16.91)
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
STATEMENT OF CASH FLOWS-(UNAUDITED)
For the six months ended June 30, 1994
(Going Concern Basis)
Cash Flow From Operating Activities:
Net loss $(155,677)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization expense 110,802
Changes in assets and liabilities:
Increase in tenant receivables, net (32,778)
Decrease in other assets 42,558
Decrease in due from affiliates 146,548
Decrease in accounts payable and accrued expenses (47,518)
Increase in tenant security deposits 6,556
Total adjustments 226,168
Net cash provided by operating activities 70,491
Cash Flow From Investing Activities:
Capital expenditures (9,644)
Cash used by investing activities (9,644)
Cash Flow From Financing Activities:
Repayment of mortgages (60,847)
Cash used by financing activities (60,847)
Net increase in cash and cash equivalents --
Cash and cash equivalents at beginning of period --
Cash and cash equivalents at end of period $ --
See accompanying notes.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
For further information, refer to the financial statements and
footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1994.
As a result of the General Partners' decision to cease
operations, and in accordance with generally accepted accounting
principles, the Partnership's financial statements as of June 30,
1995 have been prepared on a liquidation basis. Accordingly, the
carrying values of the assets are presented at estimated
realizable amounts and all liabilities are presented at estimated
settlement amounts, including estimated costs associated with
carrying out the liquidation. Preparation of the financial
statements on a liquidation basis required significant
assumptions by management, including assumptions regarding the
amounts that creditors would agree to accept in settlement of
obligations due them, the estimate of liquidation costs to be
incurred and the resolution of contingent liabilities, including
tax liabilities, resulting from the liquidation. There may be
differences between the assumptions and the actual results
because events and circumstances frequently do not occur as
expected. Those differences, if any, could result in a change in
the net liabilities recorded in the statement of net liabilities
in liquidation as of June 30, 1995.
(2) MORTGAGES AND NOTE PAYABLE
On April 20, 1995, the Partnership received a modification
from the Bear Canyon I first mortgage lender extending the
maturity date from May 1, 1995 to May 1, 1996. The modification
increased the interest rate from 8.87% to 10.00%.
On May 26, 1995, the Partnership paid off the Bear Canyon II
first mortgage as the result of the sale of Bear Canyon II to an
unaffiliated third party for $920,000. (See Note 5)
On May 31, 1995, a Certificate of Sale for Country Club was
executed and filed by the Brevard County, Florida Circuit Court
as a result of the uncontested final Judgment of Foreclosure,
dated April 25, 1995. On June 13, 1995, the Certificate of
Title was issued to the new unaffiliated owner of Country Club.
(See Note 6)
(3) ADJUSTMENT TO PROVISION OF ESTIMATED LOSSES THROUGH DATE OF
LIQUIDATION
At July 1, 1994, in accordance with the liquidation basis of
accounting, assets were adjusted to estimated net realizable
value and liabilities were adjusted to estimated settlement
amounts, including estimated costs associated with carrying out
the liquidation. At June 30, 1995, the provision for estimated
losses through date of liquidation was decreased by $287,678.
The provision was decreased based on the Partnership's
reassessment of the estimate of costs to complete the liquidation
(4) TRANSACTIONS WITH AFFILIATES
The General Partners and other affiliates provide various
services to support operating activities of the Partnership.
Fees, commissions and other expenses incurred by the Partnership
with respect to such services for the six months ended June 30,
1995 and 1994 are as follows:
1995 1994
Legal fees $ -- $ 1,800
Management fees and
reimbursable administrative service 45,189 145,710
The Partnership believes the amounts paid to affiliates are
representative of amounts which would have been paid to
independent parties for similar services. Management fees cannot
exceed 6% of gross operating revenues generated by the
Partnership properties. The Partnership had payables to
affiliates for management fees and reimbursable administrative
services of $193,247 and $433,015 at June 30, 1995 and December
31, 1994, respectively. The Partnership had payables to
affiliates for legal fees of $26,075 and $141,156 at June 30,
1995 and December 31, 1994, respectively.
(5) SALE OF BEAR CANYON II BUILDING
On May 26, 1995, the Partnership sold the Bear Canyon II
building to an unaffiliated third party for $920,000. The net
sales proceeds to the Partnership were approximately $377,000.
Pursuant to the liquidation basis of accounting, the gain of
$24,969 related to the sale served to increase the provision of
estimated losses through date of liquidation.
(6) FORECLOSURE SALE OF COUNTRY CLUB
On August 19, 1994, the Partnership received a notice of
default from the Country Club first mortgage lender. The notice
stated that the default was a result of the Partnership's failure
to make the interest payments of $18,065 due July 8, 1994 and
August 8, 1994. The notice also stated that the Partnership had
five business days from receipt of the notice to cure the default
or the lender would exercise its rights granted under the
security documents by and between the Partnership and the lender.
The Partnership decided not to cure the default and on October
19, 1994, agreed to a joint stipulation for entry of final
judgement of foreclosure and for appointment of a receiver. The
Partnership and lender further agreed that if the receiver is
unsuccessful in liquidating the property by May 31, 1995, the
lender would immediately thereafter obtain a sale date for the
property to be sold at a foreclosure sale which would take place
no later than June 30, 1995.
On May 31, 1995, a Certificate of Sale for Country Club was
executed and filed by the Brevard County Florida Circuit Court as
a result of the uncontested final judgement of Foreclosure, dated
April 25, 1995. On June 13, 1995, the Certificate of Title was
issued to the new unaffiliated owner of Country Club.
Pursuant to the liquidation basis of accounting, the gain
of $125,000 related to the foreclosure sale served to increase
the provision of estimated losses through date of liquidation.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
The General Partners of the Partnership have decided to
conclude the Partnership operations. During the second quarter
of 1995, the Partnership continued to work toward the disposition
of its properties and the winding up of its affairs. The
Partnership continues to be unable to pay its operating expenses
and several expense items are being accrued for payment out of
property sales proceeds.
On May 26, 1995, the Partnership sold the Bear Canyon II
building to an unaffiliated third party for approximately
$920,000. Sales proceeds were used to repay the property's
mortgage and satisfy a portion of the Partnership's outstanding
payables.
The Partnership continues to actively market Bear Canyon I
and Bear Canyon III. A new local broker has been engaged to
assist in the sales. Some minor cosmetic improvements have been
made to facilitate the sale. The properties have been reviewed
by several prospective purchasers.
On May 31, 1995, a Certificate of Sale for Country Club was
executed and filed by the Brevard County, Florida Circuit Court
as a result of the uncontested Final Judgment of Foreclosure,
dated April 25, 1995. On June 13, 1995, the Certificate of
Title was issued to the new unaffiliated owner of Country Club.
It is the intention of the General Partners to conclude the
Partnership's operations in 1995. There can be no assurance that
this timing will be met due to circumstances beyond the control
of the General Partners. In light of the Partnership's current
operating condition and expenses which have been accrued, the
proceeds from the sale of the Partnership's properties will, in
all likelihood, not be sufficient to return investors' initial
capital.
Results of Operations - For the six and three months ended June
30, 1995 compared to June 30, 1994
Pursuant to its liquidation basis of accounting, results of
operations have been charged to the provision of estimated losses
through date of liquidation. The results of operations for the
six months ended June 30, 1995 reflect net income of $43,547
compared to a net loss of $155,677 for the six months ended June
30, 1994, an increase of approximately $199,224. The increase in
net income was mainly due to the decrease in total expenses. The
results of operations for the three months ended June 30, 1995
reflect a net loss of $112,271 compared to a net loss of $132,053
for the three months ended June 30, 1994, a decrease of
approximately $19,800. The decrease in net loss was due to the
decrease in total expenses.
Total income generated for the six months ended June 30,
1995 was $475,399 compared to $523,204 for the six months ended
June 30, 1994, a decrease of approximately $47,800. Total income
generated for the three months ended June 30, 1995 was $98,469
compared to $252,983 for the three months ended June 30, 1994, a
decrease of approximately $154,500. The decrease in total income
is due to a decrease in rental income as the result of the
decrease in properties owned and operated during the second
quarter of 1995.
Total expenses for the six months ended June 30, 1995 were
$433,060 compared to $678,881 for the six months ended June 30,
1994, a decrease of approximately $245,800. Total expenses for
the three months ended June 30, 1995 were $211,948 compared to
$385,036 for the three months ended June 30, 1994, a decrease of
approximately $173,000. The decrease in expenses is mainly due
to a decrease in depreciation expense as a result of the
liquidation basis of accounting which reduced the properties to
their net realizable value and the decrease of property operating
expenses as the result of the decrease in properties owned and
operated.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On July 22, 1994 a complaint was filed with the second
Judicial District Court, in the County of Bernalillo, in the
State of New Mexico, against the Partnership and Brauvin Real
Estate Fund L.P. 4 (BREF 4), (the "Defendants"). United of Omaha
Life Insurance Company (the "Plaintiff") alleges that the
Defendants failed and refused to make payments when due and are
in default under the Modification Agreements, secured by the Bear
Canyon III building and a property in BREF 4, dated November 13,
1991. The Plaintiff declared due and owing, from the Partnership
only, the principal sum of $1,510,300, together with accrued
interest of $594,954, and non-payment of cash flow payments in
the amount of $25,930, totaling $2,131,184. On September 6,
1994, the Partnership filed an answer and counterclaim. The
counterclaim alleges breach of contract and breach of the duty of
good faith and dealing. During the second quarter of 1995, the
complaint was settled.
Item 2. Changes in Securities.
None.
Item 3. Default Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits And Reports On Form 8-K.
Exhibit 27. Financial Data Schedule
<PAGE>
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.
BY: Brauvin Realty Partners, Inc.
Corporate General Partner of
Brauvin Real Estate Fund L.P. 3
BY: /s/ Jerome J. Brault
Jerome J. Brault
President and
Chief Executive Officer
DATE: August 14, 1995
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer
DATE: August 14, 1995
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 51,284
<SECURITIES> 0
<RECEIVABLES> 9,485
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,015,650 <F1>
<DEPRECIATION> 0 <F2>
<TOTAL-ASSETS> 2,101,421
<CURRENT-LIABILITIES> 0
<BONDS> 1,812,781 <F3>
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,294,053
<SALES> 0
<TOTAL-REVENUES> 523,204 <F4>
<CGS> 0
<TOTAL-COSTS> 678,881 <F5>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (155,677)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> "PP&E" REPRESENTS REAL ESTATE HELD FOR SALE
<F2> "DEPRECIATION" IS INCLUDED IN "PP&E"
<F3> "BONDS" REPRESENTS MORTGAGE PAYABLE
<F4> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER
INCOME
<F5> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES
</FN>
</TABLE>
