<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the six months ended June 30, 1998
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
(Name of small business issuer as specified in its charter)
Delaware 36-3432071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 North LaSalle Street, Chicago, Illinois 60602
(Address of principal executive offices) (Zip Code)
(312) 443-0922
(Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filling
requirements for the past 90 days. Yes X No .
BRAUVIN REAL ESTATE FUND L.P. 5
(a Delaware limited partnership)
INDEX
PART I
Page
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet at June 30, 1998. . . . . . . . . 4
Consolidated Statements of Operations for the
six months ended June 30, 1998 and 1997 . . . . . . . . . 5
Consolidated Statements of Operations for the
three months ended June 30, 1998 and 1997 . . . . . . . . 6
Consolidated Statements of Cash Flows for the
six months ended June 30, 1998 and 1997 . . . . . . . . . 7
Notes to Consolidated Financial Statements . . . . . . . . . 8
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . . . . . .16
PART II
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . .20
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . .20
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . .20
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . .20
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . .20
Item 6. Exhibits, and Reports on Form 8-K. . . . . . . . . . . . . .20
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
The following Consolidated Balance Sheet as of June 30, 1998,
Consolidated Statements of Operations for the six months ended June
30, 1998 and 1997, Consolidated Statements of Operations for the
three months ended June 30, 1998 and 1997, and Consolidated
Statements of Cash Flows for the six months ended June 30, 1998 and
1997 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 1997 Annual Report on Form 10-KSB.
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CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30,
1998
ASSETS
Investment in real estate:
Land $ 2,411,849
Buildings and improvements 9,743,585
12,155,434
Less accumulated depreciation (3,154,770)
Net investment in real estate 9,000,664
Cash and cash equivalents 722,927
Rent receivable 83,706
Escrow deposits 213,280
Other assets 145,272
Due from affiliates 35,700
Total Assets $10,201,549
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Mortgage notes payable (Note 3) $ 6,251,189
Accounts payable and accrued expenses 206,900
Tenant security deposits 44,733
Due to affiliates 11,107
Total Liabilities 6,513,929
Investment in Strawberry Fields
Joint Venture - Distributions and
losses in excess of invested
amounts(Note 5) 147,700
MINORITY INTEREST IN SABAL PALM
JOINT VENTURE 820,281
PARTNERS' CAPITAL:
General Partners (38,647)
Limited Partners (9,914.5 limited
partnership units issued and
outstanding) 2,758,286
Total Partners' Capital 2,719,639
Total Liabilities and
Partners' Capital $10,201,549
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS
For the six months ended June 30,
(Unaudited)
1998 1997
INCOME
Rental $ 721,337 $696,509
Interest 12,516 11,319
Other, primarily tenant
expense reimbursements 99,768 103,661
Total income 833,621 811,489
EXPENSES
Interest 274,636 281,362
Depreciation 135,352 134,772
Real estate taxes 67,883 71,736
Repairs and maintenance 29,812 17,686
Management fees (Note 4) 52,601 49,988
Other property operating 27,691 30,829
General and administrative 101,608 113,890
Total expenses 689,583 700,263
Income before minority
and equity interests 144,038 111,226
Minority interest's share of
Sabal Palm's net income (50,211) (34,217)
Equity interest in Strawberry
Fields Joint Venture's
net loss (683,916) (12,915)
Net (loss) income $(590,089) $ 64,094
Net (loss) income Allocated
to the General Partners $ (5,901) $ 641
Net (loss) income Allocated
to the Limited Partners $(584,188) $ 63,453
Net (loss) income Per Limited
Partnership Interest
(9,914.5 Units) $ (58.92) $ 6.40
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended June 30,
(Unaudited)
1998 1997
INCOME
Rental $292,016 $297,862
Interest 7,034 6,332
Other, primarily tenant
expense reimbursements 48,956 53,544
Total income 348,006 357,738
EXPENSES
Interest 137,332 139,812
Depreciation 67,731 67,386
Real estate taxes 33,941 35,868
Repairs and maintenance 21,881 5,164
Management fees (Note 4) 21,424 21,319
Other property operating 10,965 13,415
General and administrative 46,605 63,379
Total expenses 339,879 346,343
Income before minority
and equity interests 8,127 11,395
Minority interest's share of
Sabal Palm's net loss 5,360 10,293
Equity interest in Strawberry
Fields Joint Venture's
net loss (672,529) (5,383)
Net (loss) income $(659,042) $ 16,305
Net (loss) income Allocated
to the General Partners $ (6,590) $ 163
Net (loss) income Allocated
to the Limited Partners $(652,452) $ 16,142
Net (loss)income Per Limited
Partnership Interest
(9,914.5 Units) $ (65.81) $ 1.63
See accompanying notes to consolidated financial statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30,
(Unaudited)
1998 1997
Cash Flows From Operating Activities:
Net (loss) income $(590,089) $ 64,094
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation 135,352 134,772
Provision for doubtful accounts 4,700 3,600
Equity interest in Strawberry Fields Joint
Venture's net loss 683,916 12,915
Minority Interest's share of Sabal
Palm Joint Venture's net income 50,211 34,217
Change in rent receivables 17,419 (27,932)
Change in other assets (5,241) 6,214
Change in escrow deposits (94,527) (73,129)
Change in accounts payable
and accrued expenses 96,223 47,694
Change in due to affiliates 3,158 8,621
Change in tenant security deposits 1,000 1,366
Net cash provided by operating activities 302,122 212,432
Cash Flows From Investing Activities:
Capital expenditures (1,320) (4,310)
Cash distribution to Minority Partner of
Sabal Palm Joint Venture (79,900) (13,160)
Cash used in investing activities (81,220) (17,470)
Cash Flows From Financing Activities:
Repayment of mortgage notes payable (58,368) (3,128,095)
Proceeds from refinancing -- 3,200,000
Payment of loan fees -- (54,919)
Net cash (used in) provided by
financing activities (58,368) 16,986
Net increase in cash and cash equivalents 162,534 211,948
Cash and cash equivalents at beginning
of period 560,393 408,869
Cash and cash equivalents at end of
period $722,927 $ 620,817
Supplemental disclosure of
cash flow information:
Cash paid for interest $260,739 $ 270,142
See accompanying notes to consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Brauvin Real Estate Fund L.P. 5 (the "Partnership") was organized
on June 28, 1985. The General Partners of the Partnership are
Brauvin Ventures, Inc. and Jerome J. Brault. On August 8, 1997, Mr.
Cezar M. Froelich resigned as an Individual General Partner
effective 90 days from August 14, 1997. Brauvin Ventures Inc. is
owned by A.G.E. Realty Corporation Inc. (50%) and by Messrs. Brault
(beneficially) (25%) and Froelich (25%). A. G. Edwards & Sons,
Inc. and Brauvin Securities, Inc., affiliates of the General
Partners, were the selling agents of the Partnership. The
Partnership is managed by an affiliate of the General Partners.
The Partnership was formed on June 28, 1985 and filed a
Registration Statement on Form S-11 with the Securities and
Exchange Commission which became effective on March 1, 1985. The
sale of the minimum of $1,200,000 of limited partnership interests
of the Partnership (the "Units") necessary for the Partnership to
commence operations was achieved on June 28, 1985. The
Partnership's offering closed on February 28, 1986. A total of
$9,914,500 of Units were subscribed for and issued between March 1,
1985 and February 28, 1986 pursuant to the Partnership's public
offering.
The Partnership has acquired directly or through joint ventures
the land and buildings underlying the Crown Point, Strawberry
Fields and Sabal Palm shopping centers.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Accounting Method
The accompanying consolidated financial statements have been
prepared using the accrual method of accounting.
Rental Income
Rental income is recognized on a straight line basis over the
life of the related leases. Differences between rental income
earned and amounts due per the respective lease agreements are
credited or charged, as applicable, to deferred rent receivable.
Federal Income Taxes
Under the provisions of the Internal Revenue Code, the
Partnership's income and losses are reportable by the partners on
their respective income tax returns. Accordingly, no provision is
made for Federal income taxes in the financial statements.
Consolidation of Special Purpose Entity
The Partnership has one special purpose entity ("SPE"),
Brauvin/Crown Point L.P., which is owned 99% by the Partnership
and 1% by an affiliate of the General Partners. Distributions from
the SPE are subordinated to the Partnership which effectively
precludes any distributions from the SPE to affiliates of the
General Partners. The creation of the SPE did not affect the
Partnership's economic ownership of the property. Furthermore,
this change in ownership structure had no material effect on the
financial statements of the Partnership.
Consolidation of Joint Venture Partnership
The Partnership owns a 53% interest in the Sabal Palm Joint
Venture which owns Sabal Palm Shopping Center. The accompanying
financial statements have consolidated 100% of the assets,
liabilities, operations and partners' capital of Sabal Palm Joint
Venture. The minority interests of the consolidated joint venture
are adjusted for the respective joint venture partner's share of
income or loss and any cash contributions from or distributions to
the joint venture partner, if any. All intercompany items and
transactions have been eliminated.
Investment in Joint Venture Partnership
The Partnership owns a 42% equity interest in the Strawberry
Fields Joint Venture (see Note 5). Strawberry Fields is reported
as an investment in an affiliated joint venture. The accompanying
financial statements include the investment in Strawberry Fields
Joint Venture using the equity method of accounting.
Investment in Real Estate
The Partnership's rental properties are stated at cost including
acquisition costs, leasing commissions, tenant improvements and are
net of provision for impairment. Depreciation and amortization are
recorded on a straight-line basis over the estimated economic lives
of the properties, which approximate 31.5 years, and the term of
the applicable leases, respectively. All of the Partnership's
properties are subject to liens under first mortgages (see Note 3).
In 1995, the Partnership adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS 121). In conjunction with the adoption of SFAS 121, the
Partnership performed an analysis of its long-lived assets, and the
Partnership's management determined that there were no events or
changes in circumstances that indicated that the carrying amount of
the assets may not be recoverable at June 30, 1998 and December 31,
1997. Accordingly, no impairment loss has been recorded in the
accompanying financial statements for the six months ended June 30,
1998 and the year ended December 31, 1997.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt
instruments with an original maturity within three months from date
of purchase.
Estimated Fair Value of Financial Instruments
Disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosure About Fair
Value of Financial Instruments." The estimated fair value amounts
have been determined by using available market information and
appropriate valuation methodologies. However, considerable
judgement is necessarily required in interpreting market data to
develop estimates of fair value.
The fair value estimates presented herein are based on
information available to management as of June 30, 1998, but may
not necessarily be indicative of the amounts that the Partnership
could realize in a current market exchange. The use of different
assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
The carrying amounts of the following items are reasonable
estimates of fair value: cash and cash equivalents; rent
receivable; escrow deposits; accounts payable and accrued
expenses; tenant security deposits; and due to/from affiliates.
(2) PARTNERSHIP AGREEMENT
The Partnership Agreement (the "Agreement") provides that 99% of
the net profits and losses from operations of the Partnership for
each fiscal year shall be allocated to the Limited Partners and 1%
of net profits and losses from operations shall be allocated to the
General Partners. The net profit of the Partnership from the sale
or other disposition of a Partnership property shall be allocated
as follows: first, there shall be allocated to the General
Partners the greater of: (i) 1% of such net profits; or (ii) the
amount distributable to the General Partners as Net Sale Proceeds
from such sale or other disposition, as defined in the Partnership
Agreement; and second, all remaining profits shall be allocated to
the Limited Partners. The net loss of the Partnership from any
sale or other disposition of a Partnership property shall be
allocated as follows: 99% of such net loss shall be allocated to
the Limited Partners and 1% of such net loss shall be allocated to
the General Partners.
The Agreement provides that distributions of Operating Cash Flow,
as defined in the Agreement, shall be distributed 99% to the
Limited Partners and 1% to the General Partners. The receipt by
the General Partners of such 1% of Operating Cash Flow shall be
subordinated to the receipt by the Limited Partners of Operating
Cash Flow equal to a 10% per annum, cumulative, non-compounded
return on Adjusted Investment, as such term is defined in the
Agreement (the "Preferential Distribution"). In the event the full
Preferential Distribution is not made in any year (herein referred
to as a "Preferential Distribution Deficiency") and Operating Cash
Flow is available in following years in excess of the Preferential
Distribution for said years, then the Limited Partners shall be
paid such excess Operating Cash Flow until they have paid any
unpaid Preferential Distribution Deficiency from prior years. Net
Sale Proceeds, as defined in the Agreement, received by the
Partnership shall be distributed as follows: (a) first, to the
Limited Partners until such time as the Limited Partners have been
paid an amount equal to the amount of their Adjusted Investment;
(b) second, to the Limited Partners until such time as the Limited
Partners have been paid an amount equal to any unpaid Preferential
Distribution Deficiency; and (c) third, 85% of any remaining Net
Sale Proceeds to the Limited Partners, and the remaining 15% of the
Net Sale Proceeds to the General Partners. The Preferential
Distribution Deficiency at June 30, 1998 equaled $10,334,382.
(3) MORTGAGES NOTES PAYABLE
Mortgages payable at June 30, 1998 consist of the following:
Interest Date
1998 Rate Due
Crown Point Shopping
Center (a) $3,088,631 7.55% 1/03
Sabal Palm Square
Shopping Center (b) 3,162,558 8.93% 3/02
$6,251,189
Each shopping center serves as collateral under its respective
nonrecourse debt obligation.
Maturities of the mortgages payable are as follows:
1998 $ 59,913
1999 128,086
2000 137,877
2001 150,124
2002 3,138,289
Thereafter 2,636,900
$6,251,189
(a) On December 28, 1995, the acquisition loan balance was paid
in full when Crown Point Shopping Center ("Crown Point") was
refinanced by NationsBanc Mortgage Capital Corporation (the
"Successor Lender"). The refinancing resulted in a $3,275,000 non-
recourse loan with a fixed interest rate of 7.55%, and amortization
based on a twenty year term with a maturity of January 1, 2003.
As a precondition to the new financing, the Successor Lender
required that ownership of the property reside in a single purpose
entity ("SPE"). To accommodate the lender's requirements,
ownership of the property was transferred to the SPE, Brauvin/Crown
Point L.P., which is owned 99% by the Partnership and 1% by an
affiliate of the General Partners. Distributions of Brauvin/Crown
Point L.P. are subordinated to the Partnership which effectively
precludes any distributions from the SPE to affiliates of the
General Partners. The creation of Brauvin/Crown Point L.P. did not
affect the Partnership's economic ownership of Crown Point.
Furthermore, this change in ownership structure had no material
effect on the financial statements of the Partnership.
The carrying value of Crown Point at June 30, 1998 was
approximately $4,217,000.
(b) On February 19, 1987, the Partnership and its joint venture
partner obtained a first mortgage loan secured by the Sabal Palm
Shopping Center ("Sabal Palm") in the amount of $3,200,000 from an
unaffiliated lender. The loan was payable with interest only at
9.5% per annum until February 1992 and then required payments of
principal and interest based on a 30-year amortization schedule
with a balloon mortgage payment in February 1997. Prior to the
scheduled maturity of this loan, the lender granted Sabal Palm an
extension until April 1, 1997. On March 31, 1997, Sabal Palm
obtained a new first mortgage loan in the amount of $3,200,000 (the
"First Mortgage Loan") secured by its real estate, from NationsBanc
Mortgage Capital Corporation. The First Mortgage Loan bears
interest at the rate of 8.93% per annum, is amortized over a 25-
year period, requires monthly payments of principal and interest of
approximately $26,700 and matures on March 26, 2002. A portion of
the proceeds of the First Mortgage Loan, approximately $3,077,000,
was used to retire Sabal Palm's existing mortgage from Lincoln
National Pension Insurance Company. The outstanding mortgage
balance encumbered by the property is $3,162,558 at June 30, 1998.
In the first quarter of 1998, the Partnership became aware that
both Winn-Dixie and Walgreens may vacate their respective spaces at
Sabal Palm prior to their lease termination dates. In the second
quarter of 1998, the Partnership was given official notice that the
Winn-Dixie had vacated its space at the center. Walgreens has not
given official notice that they will vacate their space prior to
their lease termination, the General Partners, however, believe
that there is a likelihood that this tenant will vacate. The
General Partners are working with these tenants to determine the
most beneficial steps to be taken by the Partnership. Winn-Dixie
remains liable for rental payments under its lease at Sabal Palm
until April 2005.
The carrying value of Sabal Palm approximated $4,784,000 at June
30, 1998.
(4) TRANSACTIONS WITH AFFILIATES
Fees and other expenses paid or payable to the General Partners
or its affiliates for the six months ended June 30, 1998 and 1997
were as follows:
1998 1997
Management fees $52,601 $40,020
Reimbursable office
expenses 46,200 45,079
Legal fees -- 377
The Partnership believes the amounts paid to affiliates are
representative of amounts which would have been paid to independent
parties for similar services. As of June 30, 1998, the Partnership
had made all payments to affiliates, except for management fees of
$9,346 and legal fees of $1,761. An amount of $35,700 due from
affiliates at June 30, 1998 represented an advance made to
Strawberry Fields.
(5) EQUITY INVESTMENT
The Partnership owns a 42% interest in Strawberry Fields Joint
Venture, located in West Palm Beach, Florida, and accounts for its
investment under the equity method. The following are condensed
financial statements for Strawberry Fields Joint Venture:
June 30,
1998
Land, building and personal
property, net $5,346,974
Other assets 127,512
$5,474,486
Mortgage note payable $5,546,544
Other liabilities 278,036
5,824,580
Partners' capital (350,094)
$5,474,486
For the six months ended June 30,
1998 1997
Rental income $ 390,838 $402,374
Other income 68,865 42,289
459,703 444,663
Mortgage and other interest 252,754 217,543
Depreciation 94,650 101,519
Loss on value impairment 1,564,101 --
Operating and
administrative expenses 176,570 156,352
2,088,075 475,414
Net loss $(1,628,372) $(30,751)
ITEM 2. Management's Discussion and Analysis or Plan of
Operation.
General
Certain statements in this Annual Report that are not historical
fact constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Without
limiting the foregoing, words such as "anticipates", "expects",
"intends", "plans" and similar expressions are intended to identify
forward-looking statements. These statements are subject to a
number of risks and uncertainties. Actual results could differ
materially from those projected in the forward-looking statements.
The Partnership undertakes no obligation to update these forward-
looking statements to reflect future events or circumstances.
Year 2000
In 1997, the Partnership initiated the conversion from its
existing accounting software to a program that is year 2000
compliant. Management has determined that the year 2000 issue will
not pose significant operational problems for its computer system.
All costs associated with this conversion are being expensed as
incurred, and are not material.
Also in 1997, management of the Partnership initiated formal
communications with all of its significant third party vendors,
service providers and financial institutions to determine the
extent to which the Partnership is vulnerable to those third
parties failure to remedy their own year 2000 issue. There can be
no guarantee that the systems of these third parties will be timely
converted and would not have an adverse effect on the Partnership.
Liquidity and Capital Resources
The Partnership intends to satisfy its short-term liquidity needs
through cash flow from the properties. Long-term liquidity needs
are expected to be satisfied through refinancing of the mortgages
when they mature.
The anchor tenant at Crown Point is Food City. The overall
occupancy level at Crown Point remained at 100% at June 30, 1998,
December 31, 1997 and June 30, 1997. The Partnership is working to
sustain the occupancy level of Crown Point.
The occupancy level at Strawberry Fields at June 30, 1998 was
87%, compared to 86% at December 31, 1997 and 88% at June 30, 1997.
Strawberry had a negative cash flow for the six months ended June
30, 1998.
On September 18, 1995, the Strawberry Fields Joint Venture
notified the Lutheran Brotherhood (the "Strawberry Lender") that it
would exercise its option to extend the term of the Strawberry
Fields loan from the original maturity of November 1, 1995 to
December 1, 1998. The terms of the extension called for all
provisions of the loan to remain the same except for an additional
monthly principal payment of $12,500. Effective November 1, 1995,
the Strawberry Fields Joint Venture and the Strawberry Lender
agreed to modify the loan by reducing the interest rate to 7.5% for
November 1, 1995 through October 31, 1997 and by reducing the
monthly principal payment to $12,000. As of November 1, 1997 and
through the maturity date, December 1, 1998, the interest rate
reverted to the original 9.0% rate.
At Sabal Palm, the Partnership and its joint venture partner are
working to improve the occupancy level of Sabal Palm which stood at
96% as of June 30, 1998. Although the Sabal Palm retail market
appears to be overbuilt, the occupancy level of the building has
stayed relatively constant and it has generated positive cash flow
since its acquisition in 1986.
In addition, in the first quarter of 1998, the Partnership
became aware that both Winn-Dixie and Walgreens may vacate their
respective spaces at Sabal Palm prior to their lease termination
dates. In the second quarter of 1998, the Partnership was given
official notice that the Winn-Dixie had vacated its space at the
center. Walgreens has not given official notice that they will
vacate their space prior to their lease termination, the General
Partners, however, believe that there is a likelihood that this
tenant will vacate. The General Partners are working with these
tenants to determine the most beneficial steps to be taken by the
Partnership. Winn-Dixie remains liable for rental payments under
its lease at Sabal Palm until April 2005.
Sabal Palm was required to make a balloon mortgage payment in
February 1997. Prior to the scheduled maturity of the First
Mortgage Loan, the lender granted Sabal Palm an extension until
April 1, 1997. On March 31, 1997, Sabal Palm obtained a first
mortgage loan in the amount of $3,200,000 (the "First Mortgage
Loan"), secured by its real estate, from NationsBanc Mortgage
Capital Corporation. The First Mortgage Loan bears interest at the
rate of 8.93% per annum, is amortized over a 25-year period,
requires monthly payments of principal and interest of
approximately $26,700 and matures on March 26, 2002. A portion of
the proceeds of the First Mortgage Loan, approximately $3,077,000,
was used to retire Sabal Palm's existing mortgage from Lincoln
National Pension Insurance Company.
The General Partners expect to distribute proceeds from operating
cash flow, 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 refinancing 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 - Six months Ended June 30, 1998 and 1997
(Amounts rounded to 000's)
The Partnership generated net loss of $590,000 for the six months
ended June 30, 1998 as compared to net income of $64,000 for the
same six month period in 1997. The $654,000 decrease resulted
primarily from the Partnership's equity interest in the Strawberry
Fields Joint Venture.
Total income for the six months ended June 30, 1998 was $834,000
as compared to $811,000 for the same six month period in 1997, an
increase of $23,000. The $23,000 increase resulted primarily from
an increase in the occupancy rate at Sabal Palm from 92% at March
31, 1997 to 96% at June 30, 1998. Also contributing to the
increase in rental income was increased percentage rents earned at
Sabal Palm.
For the six months ended June 30, 1998, total expenses were
$690,000 as compared to $700,000 for the same six month period in
1997, a decrease of $10,000. The $10,000 decrease in total
expenses resulted primarily from a decrease in general and
administrative expense which is a result of lower insurance
expenses at the Partnership's properties.
The Partnership's equity interest in the Strawberry Joint Venture
net loss contributed heavily to the decline in the Partnership's
net income for the six months ended June 30, 1998 when compared to
the same six month period in 1997. In the second quarter of 1998
the Strawberry Fields Joint venture recorded a provision for
impairment on an other than temporary decline in the value of real
estate of approximately $1,564,000. The Partnership's share of
this item is approximately $657,000.
Results of Operations - Three months Ended June 30, 1998 and 1997
(Amounts rounded to 000's)
The Partnership generated net loss of $659,000 for the three
months ended June 30, 1998 as compared to net income of $16,000 for
the same three month period in 1997. The $675,000 decrease
resulted primarily from the Partnership's equity interest in the
Strawberry Fields Joint Venture.
Total income for the three months ended June 30, 1998 was
$348,000 as compared to $358,000 for the same three month period in
1997, a decrease of $10,000. The $10,000 decrease resulted
primarily from a decrease in the tenant reimbursements earned at
Sabal Palm.
For the three months ended June 30, 1998, total expenses were
$340,000 as compared to $346,000 for the same three month period in
1997, a decrease of $6,000. The $6,000 decrease in total expenses
resulted primarily from a decrease in general and administrative
expense which is a result of lower insurance expenses at the
Partnership's properties.
The Partnership's equity interest in the Strawberry Joint Venture
net loss contributed heavily to the decline in the Partnership's
net income for the six months ended June 30, 1998 when compared to
the same six month period in 1997. In the second quarter of 1998
the Strawberry Fields Joint venture recorded a provision for
impairment on an other than temporary decline in the value of real
estate of approximately $1,564,000. The Partnership's share of
this item is approximately $657,000.
<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.
Exhibit 27. Financial Data Schedule
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant 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: August 14, 1998
BY: /s/ Thomas E. Murphy
Thomas E. Murphy
Chief Financial Officer
And Treasurer
DATE: August 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 722,927
<SECURITIES> 0 <F1>
<RECEIVABLES> 83,706
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,155,434 <F2>
<DEPRECIATION> 3,154,770
<TOTAL-ASSETS> 10,201,549
<CURRENT-LIABILITIES> 262,740
<BONDS> 6,251,189 <F3>
0
0
<COMMON> 2,719,639 <F4>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,201,549
<SALES> 0
<TOTAL-REVENUES> 833,621 <F5>
<CGS> 0
<TOTAL-COSTS> 414,947 <F6>
<OTHER-EXPENSES> 734,127 <F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 274,636
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (590,089)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> "SECURITIES" REPRESENTS INVESTMENT IN JOINT VENTURE
<F2> "PP&E" REPRESENTS INVESTMENT IN REAL ESTATE [LAND AND
BUILDING]
<F3> "BONDS" REPRESENTS MORTGAGES PAYABLE
<F4> "COMMON" REPRESENTS TOTAL PARTNERS CAPITAL
<F5> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER
INCOME
<F6> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES LESS INTEREST
EXPENSE
<F7> "OTHER EXPENSES" REPRESENTS INTEREST IN JOINT VENTURES' NET
INCOME/LOSS
</FN>
</TABLE>
