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 0-14481
Brauvin Real Estate Fund L.P. 5
(Exact name of registrant as specified in its charter)
Delaware 36-3432071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, 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 .
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 5
INDEX
Page
PART I Financial Information
Item 1. Financial Statements . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets at March 31, 1995
and December 31, 1994. . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations for the
three months ended March 31, 1995 and 1994 . . . . . . 5
Consolidated Statement of Partners' Capital
for the period January 1,1995 to March 31, 1995. . . . 6
Consolidated Statements of Cash Flows for
the three months ended March 31, 1995 and 1994 . . . . 7
Notes to Consolidated 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. . . . . . . . . . . . . . . . . . .12
Item 2. Changes in Securities. . . . . . . . . . . . . . . . .12
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . .12
Item 4. Submissions of Matters to a Vote of Security Holders .12
Item 5. Other Information. . . . . . . . . . . . . . . . . . .12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . .12
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . .13
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Except for the December 31, 1994 Consolidated Balance Sheet, the
following Consolidated Balance Sheet as of March 31, 1995, Consolidated
Statements of Operations for the three months ended March 31, 1995 and
1994, Consolidated Statement of Partners' Capital for the period January 1,
1995 to March 31, 1995 and Consolidated Statements of Cash Flows for the
three months ended March 31, 1995 and 1994 for Brauvin Real Estate Fund
L.P. 5 (the "Partnership") are unaudited but reflect, in the opinion of the
management, all adjustments necessary to present fairly the information
required. All such adjustments are of a normal recurring nature.
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. 5
(a Delaware limited partnership)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 1995 December 31, 1994
ASSETS
Cash and cash equivalents $ 217,867 $ 106,289
Cash held by receiver 64,072 --
Tenant receivables (net of
allowance of $6,395 and $3,095,
respectively) 41,916 93,422
Escrow and other deposits 27,404 83,199
Other assets 9,859 13,126
Investment in affiliated
joint venture 689,925 712,179
Deposit with title company 2,918,479 2,929,581
3,969,522 3,937,796
Investment in real estate, at cost:
Land 3,716,151 3,716,151
Buildings 15,353,131 15,341,631
19,069,282 19,057,782
Less: accumulated depreciation (4,205,154) (4,103,727)
Total investment in real
estate, net 14,864,128 14,954,055
Total Assets $18,833,650 $18,891,851
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses$ 563,181 $ 602,607
Due to affiliates 22,686 25,988
Security deposits 60,910 56,772
Note payable 2,918,479 2,929,581
Mortgages payable 11,407,275 11,427,743
Total Liabilities 14,972,531 15,042,691
Minority Interest in Sabal Palm 1,015,584 1,019,775
Minority Interest (deficit)
in the Annex of Schaumburg (233,753) (231,115)
Partners' Capital
General Partners (35,051) (35,239)
Limited Partners (9,914.5 limited
partnership units issued and
outstanding) 3,114,339 3,095,739
Total Partners' Capital 3,079,288 3,060,500
Total Liabilities and
Partners' Capital $18,833,650 $18,891,851
See notes to consolidated financial statements(unaudited).
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BRAUVIN REAL ESTATE FUND L.P. 5
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1995 and 1994
(UNAUDITED)
1995 1994
INCOME
Rental $524,082 $591,904
Interest 2,108 1,034
Other, primarily expense reimbursements 114,506 148,446
Total income 640,696 741,384
EXPENSES
Mortgage and other interest 165,927 280,155
Depreciation 101,427 112,313
Real estate taxes 154,700 169,200
Repairs and maintenance 2,925 30,532
Other property operating 72,690 69,549
General and administrative 52,414 61,552
Total expenses 550,083 723,301
Income before affiliated joint venture
participation and minority interests 90,613 18,083
Equity interest in affiliated joint
venture's net loss (22,254) (23,755)
Minority interest's share of Sabal
Palm's net income (52,209) (43,506)
Minority interest's share of the
Annex's net loss 2,638 24,037
Net Income (Loss) $ 18,788 $ (25,141)
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP INTEREST (9,914.5 UNITS): $ 1.88 $ (2.51)
See notes to consolidated financial statements (unaudited).
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 5
(a Delaware limited partnership)
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
For the Period January 1, 1995 to March 31, 1995
(UNAUDITED)
General Limited
Partners Partners Total
BALANCE at January 1, 1995 $(35,239) $3,095,739 $3,060,500
Net income 188 18,600 18,788
BALANCE at March 31, 1995 $(35,051) $3,114,339 $3,079,288
See notes to consolidated financial statements(unaudited).
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 5
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1995 and 1994
(UNAUDITED)
1995 1994
Cash Flows From Operating Activities:
Net income (loss) $ 18,788 $(25,141)
Adjustments to reconcile net income(loss)
to net cash provided by operating activities:
Equity interest in affiliated joint
venture's net loss 22,254 23,755
Minority interest's share of Sabal
Palm's net income 52,209 43,506
Minority interest's share of the
Annex's net loss (2,638) (24,037)
Provision for doubtful accounts 3,300 16,500
Depreciation 101,427 112,313
Amortization 1,195 14,710
Normalized rental revenue (3,297) 5,307
Changes in operating assets and liabilities:
Decrease (increase) in tenant receivables 51,503 (53,188)
Increase in other assets (1,120) (14,808)
Decrease (increase) in escrow and other
deposits 55,795 (82,314)
Increase in cash held by receiver (64,072) --
(Decrease) increase in accounts payable
and accrued expenses (39,426) 125,784
(Decrease) increase in due from affiliates (110) 7,240
Increase in tenant security deposits 4,138 167
Net cash provided by operating activities 199,946 149,794
Cash Flows From Investing Activities:
Capital expenditures (11,500) --
Cash contribution to joint venture -- (16,800)
Cash distribution to minority partner-
Sabal Palm (56,400) (44,650)
Cash contribution from minority partner-Annex -- 4,600
Net cash used in investing activities (67,900) (56,850)
Cash Flows From Financing Activities:
Repayment of mortgages (20,468) (20,012)
Repayment of note payable (11,102) (11,102)
Decrease in deposit with title company 11,102 11,102
Net cash used in financing activities (20,468) (20,012)
Net increase in cash and cash equivalents 111,578 72,932
Cash and cash equivalents at beginning of
period 106,289 66,577
Cash and cash equivalents at end of period $ 217,867 $ 139,509
See notes to consolidated financial statements (unaudited).
<PAGE>
BRAUVIN REAL ESTATE FUND L.P. 5
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated 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. Operating results for the three
month period ended March 31, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Annual Report on Form 10-K for the year ended
December 31, 1994.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassifications
Certain amounts in the 1994 financial statements have been reclassified
to conform to the 1995 presentation. This has not affected the previously
reported results of operations.
(3) MORTGAGES PAYABLE
On November 22, 1994, the lender to Crown Point, NationsBank of
Tennessee (the "Lender") exercised the right to call all amounts due as of
March 1, 1995. On March 1, 1995, a Forbearance Agreement was executed
between the Partnership and the Lender whereas the Lender has agreed to
forbear pursuing remedies with respect to defaults through and including
September 1, 1995 (the "Forbearance Period"). During the Forbearance
Period the terms and conditions shall remain unchanged. The General Partners
are pursuing alternative financing, however there is no assurance that the
General Partners will be successful. If the General Partners are unsuccessful
in their efforts to obtain financing the Partnership would sustain a loss upon
foreclosure as the carrying value of the property exceeds the carrying value of
the debt. The financial statements do not reflect any adjustments that might
result from the outcome of this uncertainty. The carrying value of Crown Point
at March 31, 1995, approximates $4,632,000, which exceeds the carrying value of
the debt by approximately $1,398,000 at March 31, 1995.
On August 23, 1994, the Brauvin/The Annex of Schaumburg (the "Joint
Venture") filed a voluntary petition for bankruptcy (Chapter 11) in the
United States Bankruptcy Court in the Northern District of Illinois. On
February 10, 1995, the Bankruptcy Court ordered the dismissal of the
voluntary petition for bankruptcy effectively eliminating the protection of
the property from its creditors. Also on February 10, 1995, AUSA Life
Insurance Company ("AUSA") filed a motion for appointment of a receiver
against the Joint Venture. On February 17, 1995 the motion was granted and
an order was issued. The receiver will have full power and authority to
operate, manage and conserve the Annex pursuant to the order. On February
15, 1995, the Joint Venture received an amended notice of mortgage foreclosure
from AUSA. The Joint Venture had until March 17, 1995 to file an answer to the
amended notice. If the Joint Venture did not answer on or before March 17,
1995, default may be entered against the Joint Venture and a judgement in
accordance with the request for relief. On April 3, 1995, a judgment of
foreclosure and sale was entered into against the Joint Venture. A sheriff's
sale of the Annex is scheduled to be held on May 10, 1995. The equity in joint
venture's loss for the three months ended March 31, 1995, does not include any
other adjustments that might result from the outcome of the foreclosure action
by AUSA.
(4) TRANSACTIONS WITH AFFILIATES
Fees and other expenses paid to the General Partners or its
affiliates for the three months ended March 31, 1995 and 1994,
were as follows:
1995 1994
Management fees $34,675 $40,336
Reimbursable office expenses 25,621 33,642
The Partnership believes the amounts paid to affiliates are representative of
amounts which would have been paid to independent parties for similar services.
The Partnership had made all payments to affiliates, except for $4,580 for
legal services, as of March 31, 1995.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The Partnership intends to satisfy its short-term liquidity needs
through cash reserves, cash flow from the properties and the refinancing of
Crown Point.
On November 22, 1994, the lender to Crown Point, NationsBank of Tennessee,
(the "Lender") exercised the right to call all amounts due as of March 1, 1995.
On March 1, 1995, a Forbearance Agreement was executed between the Partnership
and the Lender whereas the Lender has agreed to forbear pursuing remedies with
respect to defaults through and including September 1, 1995 (the "Forbearance
Period"). During the Forbearance Period the terms and conditions shall remain
unchanged. The General Partners are pursuing alternative financing, however
there is no assurance that the General Partners will be successful. If the
General Partners are unsuccessful in their efforts to obtain financing, the
Partnership would sustain a loss upon foreclosure as the carrying value of the
property exceeds the carrying value of the debt.
On August 23, 1994, the Brauvin/The Annex of Schaumburg (the "Joint
Venture") filed a voluntary petition for bankruptcy (Chapter 11) in the
United States Bankruptcy Court in the Northern District of Illinois. On
February 10, 1995, the Bankruptcy Court ordered the dismissal of the
voluntary petition for bankruptcy effectively eliminating the protection of
the property from its creditors. Also on February 10, 1995, AUSA Life
Insurance Company ("AUSA") filed a motion for appointment of a receiver
against the Joint Venture. On February 17, 1995 the motion was granted and
an order was issued. The receiver will have full power and authority to
operate, manage and conserve the Annex pursuant to the order. On February
15, 1995, the Joint Venture received an amended notice of mortgage
foreclosure from AUSA. The Joint Venture had until March 17, 1995 to file
an answer to the amended notice. If the Joint Venture did not answer on
or before March 17, 1995, default may be entered against the Joint Venture
and a judgement in accordance with the request for relief. On April 3,
1995, a judgment of foreclosure and sale was entered into against the Joint
Venture. A sheriff's sale of the Annex is scheduled to be held on May 10,
1995.
Long-term liquidity needs are expected to be satisfied through modification
of the mortgages at more favorable interest rates and refinancing of the Sabal
Palm mortgage when it matures.
The occupancy level at Crown Point at March 31, 1995 and at December 31, 1994
was 95%. The Partnership is continuing to work to sustain the occupancy level
of Crown Point. Crown Point operated at a positive cash flow for the three
months ended March 31, 1995.
Strawberry Fields continued to generate negative cash flow for the
three months ended March 31, 1995. The occupancy level at Strawberry
Fields at March 31, 1995 was 85% compared to 78% at December 31, 1994.
At Sabal Palm, the Partnership and its joint venture partner are
continuing to work to sustain the occupancy level, which stood at 99% at
March 31, 1995 and December 31, 1994. Although the Sabal Palm retail
market appears to be overbuilt, the property has continued to generate
positive cash flow since its acquisition in 1986.
The General Partners of the Partnership expects to distribute proceeds from
operations, if any, and from the sale of real estate, to Limited Partners in a
manner that is consistent with the investment objectives of the Partnership.
Management of the Partnership believes that cash needs may arise from time to
time which will have the effect of reducing distributions to Limited Partners
to amounts less than would be available from refinancings or sale proceeds.
These cash needs include, among other things, maintenance of working capital
reserves in compliance with the Agreement as well as payments for major
repairs, tenant improvements and leasing commissions in support of real estate
operations.
Results of Operations - Three Months Ended March 31, 1995 and 1994
(Amounts rounded to 000's)
The Partnership generated net income of $19,000 in the first quarter of
1995 as compared to a net loss of $25,000 in 1994. The $44,000 increase in
net income resulted primarily from a $114,000 decrease in
mortgage and other interest, which was partially offset by a decline in
rental income of $68,000.
First quarter total income was $641,000 in 1995 as compared to
$741,000 in 1994, a decrease of $100,000. This decrease of $100,000 was
primarily a result of a $61,000 decrease in rental income and a $68,000
decrease in other income (primarily tenant expense reimbursements) at the
Annex of Schaumburg (the "Annex"). The decrease in rental and other income
at the Annex is primarily the result of a decline in occupancy from 61% at
March 31, 1994 to 56% at March 31, 1995.
First quarter expenses were $550,000 in 1995 as compared to $723,000 in 1994,
a decrease of $173,000. The decrease in total expenses of $173,000 was
primarily a result of $114,000 decrease in mortgage and other interest, a
$28,000 decrease in repairs and maintenance, and a $11,000 decrease in
depreciation expense. The decrease in mortgage and other interest is the
result of the cessation of mortgage interest expense at the Annex due to the
foreclosure action against the Joint Venture. Repairs and maintenance and
depreciation expenses also declined primarily as a result of the current
foreclosure action and the prior year impairment charges against the Annex
property. The repairs and maintenance, and depreciation expenses decreased
at the Annex by $26,000 and $12,000, respectively.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
None.
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. Exhibits and Reports On Form 8-K.
The Partnership filed the following report on Form 8-K
during the three months ended March 31, 1995:
1. On March 1, 1995, the Partnership filed Form 8-K dated
February 15, 1995 which reported as Item 3 the appointment of
a receiver for Brauvin/The Annex of Schaumburg.
<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 Ventures, Inc.
Corporate General Partner of
Brauvin Real Estate Fund L.P. 5
BY: /s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of
Directors and President
DATE: May 12, 1995
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer and Treasurer
DATE: May 12, 1995
