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 March 31, 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 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 X NO
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 March
31, 1995 (unaudited) and December 31, 1994 (audited) -
(Liquidation Basis). . . . . 4
Statement of Changes in Net Liabilities in Liquidation
for the three months ended March 31, 1995 (unaudited) -
(Liquidation Basis) . . . . . . 5
Statement of Operations for the three months ended
March 31, 1994 (unaudited) - (Going Concern Basis) .. . 6
Statement of Cash Flows for the three months ended
March 31, 1994 (unaudited) - (Going Concern Basis). .. . 7
Notes to Financial Statements. . . . . . . . . . 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . .10
PART II Other Information
Item 1. Legal Proceedings. . . 11
Item 2. Changes in Securities. 11
Item 3. Defaults Upon Senior Securities. 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information. . . 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
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 March 31, 1995,
the Statement of Changes in Net Liabilities
in Liquidation for the three months ended March 31, 1995,
Statement of Operations for the three months ended
March 31, 1994, and Statement of Cash Flows for the three months
ended March 31, 1994 for Brauvin Real
Estate Fund L.P. 3 (the "Partnership") are unaudited and have
not been examined by independent public accountant but reflect in the
opinion of the 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)
March 31, December 31,
1995 1994
(Unaudited) (Audited)
ASSETS
Cash $ 59,035 $ 65,468
Tenant receivables 156,712 17,475
Other assets 24,760 16,454
Due from affiliates 18,722 --
Real estate held for sale 4,974,040 4,974,040
Total Assets $5,233,269 $5,073,437
LIABILITIES
Accounts payable and other accrued
expenses $ 48,343 $ 42,213
Due to affiliates 597,682 574,171
Security deposits 46,538 40,152
Note payable 125,000 125,000
Mortgages payable 4,576,198 4,608,211
Estimated losses through date
of liquidation 319,818 164,000
Total Liabilities 5,713,579 5,553,747
Net liabilities in liquidation $ 480,310 $ 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 three months ended March 31, 1995
(Liquidation Basis)
Net liabilities in liquidation at December 31, 1994 $ (480,310)
Net liabilities in liquidation at March 31, 1995 $ (480,310)
See accompanying notes.
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
STATEMENT OF OPERATIONS - (UNAUDITED)
For the three months ended March 31, 1994
(Going Concern Basis)
INCOME:
Rental $ 239,663
Interest 40
Other 30,518
Total income 270,221
EXPENSES:
Interest 105,949
Depreciation 54,780
Real estate taxes 22,200
Repairs and Maintenance 19,531
Other property operating 59,809
General and administrative 31,576
Total expenses 293,845
Net Loss $ (23,624)
Net loss allocated to:
Limited Partners $ (23,388)
General Partners (236)
$ (23,624)
Net loss per Limited Partnership Interest
(7,729 Units): $ (3.03)
See accompanying notes.
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
STATEMENT OF CASH FLOWS-(UNAUDITED)
For the three months ended March 31, 1994
(Going Concern Basis)
Cash Flow From Operating Activities:
Net loss $ (23,624)
Adjustments to reconcile net loss to
cash provided by operating activities:
Depreciation and amortization expense 56,697
Changes in assets and liabilities:
Increase in tenant receivables, net (27,671)
Decrease in other assets 43,280
Decrease in due from affiliates 28,081
Decrease in accounts payable and accrued expenses (48,878)
Increase in tenant security deposits 3,905
Total adjustments 55,414
Net cash provided by operating activities 31,790
Cash Flow From Investing Activities:
Capital expenditures (3,225)
Cash used by investing activities (3,225)
Cash Flow From Financing Activities:
Repayment of mortgages (28,565)
Cash used by financing activities (28,565)
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 and 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 March 31, 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
March 31, 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%.
(3) ADJUSTMENT TO LIQUIDATION BASIS
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
March 31, 1995, the provision for
estimated losses through date of liquidation was increased by
$155,818, net income from operations. The
provision was increased based on the Partnership's reassessment
of the estimate of costs to complete the liquidation.
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 3
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(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 three months ended March 31, 1995 and 1994 are
as follows:
1995 1994
Legal fees $ 300 $ 900
Management fees and
reimbursable administrative service 22,427
36,625
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
$456,226 and $433,015 at March 31, 1995
and December 31, 1994, respectively. The Partnership had
payables to affiliates for legal fees of $141,456
and $141,156 at March 31, 1995 and December 31, 1994,
respectively.
<PAGE>
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 first 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.
During the quarter the occupancy rate remained near 100%
for the Bear Canyon properties with
renewal rates meeting our increased expectations. Sales efforts
for all three buildings have produced a
number of interested buyers. The Partnership has accepted a
purchase offer for Bear Canyon II of
approximately $920,000. The buyer has obtained a financing
commitment and the closing is projected to
occur prior to May 30, 1995.
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 8.875% to 10.00%.
The Partnership negotiated the transfer of control of
Country Club Plaza during the fourth quarter
of 1994. The transfer of ownership to the lender of the property
is expected to occur by the end of the
second quarter of 1995.
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 three months ended March 31, 1995
compared to March 31, 1994
Pursuant to its liquidation basis of accounting, results of
operations for the three months ended
March 31, 1995 reflected net income of $155,818 compared to a net
loss of $23,624 for the three months
ended March 31, 1994.
Total revenue generated for the three months ended March
31, 1995 was $376,930 compared to
$270,221 for the three months ended March 31, 1994, an increase
of approximately $106,700. The increase
in revenue was due to increased occupancy and rental rates at the
Bear Canyon properties.
Total expenses for the three months ended March 31, 1995
was $221,112 compared to $293,845
for the three months ended March 31, 1994, a decrease of
approximately $72,700. 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.
<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. The Partnership
believes the Plaintiff's claim lacks merit and intends to oppose
the claim vigorously and to proceed to
prosecute the counterclaim. Given the recent nature of these
actions, no prediction as to the possible
outcome can be made.
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.
None.
<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: May 18, 1995
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer
DATE: May 18, 1995
