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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, 1996
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 0-17557
Brauvin High Yield Fund L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3569428
(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 .
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BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
INDEX Page
PART I Financial Information
Item 1. Financial Statements . . . . . . . . . . . . . . . . 3
Balance Sheets at June 30, 1996 and December 31,
1995 . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations for the six months ended
June 30, 1996 and June 30, 1995. . . . . . . . . . . 5
Statements of Operations for the three months ended
June 30, 1996 and June 30, 1995. . . . . . . . . . . 6
Statements of Partners' Capital for the period
January 1, 1993 to June 30, 1996 . . . . . . . . . . 7
Statements of Cash Flows for the six months ended
June 30, 1996 and June 30, 1995. . . . . . . . . . . 8
Notes to Financial Statements. . . . . . . . . . . . 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . 19
PART II Other Information
Item 1. Legal Proceedings . 24
Item 2. Changes in Securities. . 24
Item 3. Defaults Upon Senior Securities . . . . . . . . . . 24
Item 4. Submissions of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . 24
Item 5. Other Information . 24
Item 6. Exhibits and Reports on Form 8-K . 24
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . 25
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Except for the December 31, 1995 Balance Sheet, the
following Balance Sheet as of June 30, 1996, Statements of
Operations for the six months ended June 30, 1996 and 1995,
Statements of Operations for the three months ended June 30, 1996
and 1995, Statements of Partners' Capital for the period
January 1, 1995 to June 30, 1996 and Statements of Cash Flows for
the six months ended June 30, 1996 and June 30, 1995 for Brauvin
High Yield Fund L.P. (the "Partnership") are unaudited and have not
been examined by independent public accountants 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 1995 Annual Report on Form 10-K.
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BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
BALANCE SHEETS
June 30, December 31,
1996 1995
ASSETS
Investment in real estate, at cost:
Land $ 5,768,768 $ 5,768,768
Buildings 13,554,207 13,554,207
19,322,975 19,322,975
Less: accumulated depreciation (3,045,440) (2,852,122)
Net investment in real estate 16,277,535 16,470,853
Investment in Joint Ventures (Note 5):
Brauvin High Yield Venture 33,045 33,746
Brauvin Funds Joint Venture 2,461,117 2,472,647
Brauvin Gwinnett County Venture 553,552 557,389
Cash and cash equivalents 1,353,805 1,363,085
Due from affiliates -- 358
Prepaid offering costs 15,703 16,763
Other assets 17,665 17,759
Total Assets $20,712,422 $20,932,600
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued
expenses $ 55,410 $ 10,443
Rent received in advance 83,742 86,903
Total Liabilities 139,152 97,346
PARTNERS' CAPITAL:
General Partners 118,097 124,295
Interest Holders 20,455,173 20,710,959
Total Partners' Capital 20,573,270 20,835,254
Total Liabilities and Partners' Capital $20,712,422 $20,932,600
See accompanying notes to financial statements.
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BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30,
1996 1995
INCOME:
Rental $1,211,698 $1,215,739
Interest 38,729 23,786
Other 220 138
Total income 1,250,647 1,239,663
EXPENSES:
General and administrative 187,248 70,536
Management fees 12,475 12,268
Depreciation 193,318 193,318
Total expenses 393,041 276,122
Income before equity interest in joint
ventures 857,606 963,541
Equity Interest in Joint Venture's Net Income:
Brauvin High Yield Venture 2,899 2,858
Brauvin Funds Joint Venture 145,270 145,941
Brauvin Gwinnett County Venture 24,243 23,605
Net income $1,030,018 $1,135,945
Net income allocated to the General Partners $ 20,600 $ 22,719
Net income allocated to the Interest Holders $1,009,418 $1,113,226
Net income per Unit outstanding (a) $ 0.38 $ 0.43
(a) Net income per Unit was based on the average Units outstanding
during the period since they were of varying dollar amounts and
percentages based upon the dates Interest Holders were admitted to
the Partnership and additional Units were purchased through the
distribution reinvestment plan (the "Plan").
See accompanying notes to financial statements.
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BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30,
1996 1995
INCOME:
Rental $626,821 $615,316
Interest 19,276 15,120
Other 123 (86)
Total income 646,220 630,350
EXPENSES:
General and administrative 110,595 44,506
Management fees 6,342 6,240
Depreciation 96,659 96,660
Total expenses 213,596 147,406
Income before equity interest in joint
ventures 432,624 482,944
Equity Interest in Joint Venture's Net Income:
Brauvin High Yield Venture 1,480 1,444
Brauvin Funds Joint Venture 72,279 72,971
Brauvin Gwinnett County Venture 11,803 12,072
Net income $518,186 $569,431
Net income allocated to the General
Partners $ 10,364 $ 11,389
Net income allocated to the Interest
Holders $507,822 $558,042
Net income per Unit outstanding (a) $ 0.19 $ 0.22
(a) Net income per Unit was based on the average Units outstanding
during the period since they were of varying dollar amounts and
percentages based upon the dates Interest Holders were admitted to
the Partnership and additional Units were purchased through the
Plan.
See accompanying notes to financial statements.
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BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF PARTNERS' CAPITAL
For the Period January 1, 1995 to June 30, 1996
General Interest
Partners Holders* Total
Balance, January 1, 1995 $129,815 $20,631,058 $20,760,873
Contributions, net -- 399,001 399,001
Selling commissions and
other offering costs (Note 1) -- (39,045) (39,045)
Net income 47,349 2,320,094 2,367,443
Cash distributions (52,869) (2,600,149) (2,653,018)
Balance, December 31, 1995 124,295 20,710,959 20,835,254
Contributions, net -- 65,998 65,998
Selling commissions and
other offering costs (Note 1) -- (10,070) (10,070)
Net income 20,600 1,009,418 1,030,018
Cash distributions (26,798) (1,321,132) (1,347,930)
Balance, June 30, 1996 $118,097 $20,455,173 $20,573,270
*Total Units sold at June 30, 1996 and December 31, 1995 were 2,627,503
and 2,620,903 respectively. Cash distributions to Interest Holders per
Unit were $0.50 and $1.00 for the six months ended June 30, 1996 and the
year ended December 31, 1995. Cash distributions to Interest Holders per
Unit are based on the average Units outstanding during the period since
they were of varying dollar amounts and percentages based upon the dates
Interest Holders were admitted to the Partnership and additional Units
were purchased through the Plan.
See accompanying notes to financial statements.
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BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30,
1996 1995
Cash flows from operating activities:
Net income $1,030,018 $1,135,945
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 193,318 193,318
Equity interest in Brauvin High Yield
Venture's net income (2,899) (2,858)
Equity interest in Brauvin Funds Joint
Venture's net income (145,270) (145,941)
Equity interest in Brauvin Gwinnett County
Venture's net income (24,243) (23,605)
Repayment from affiliate 358 --
Decrease in other assets 94 19
Increase in due from affiliates -- (745)
Increase in accounts payable and accrued
expenses 44,967 6,392
Increase in due to affiliates -- 320
Decrease in rent received in advance (3,161) (162,998)
Net cash provided by operating activities 1,093,182 999,847
Cash flows from investing activities:
Distributions from Brauvin High
Yield Venture 3,600 2,900
Distributions from Brauvin Funds
Joint Venture 156,800 156,800
Distributions from Brauvin Gwinnett
County Venture 28,080 31,590
Cash provided by investing activities 188,480 191,290
Cash flows from financing activities:
Sale of Units, net of liquidations, selling
commissions and other offering costs 56,988 172,647
Cash distributions to General Partners (26,798) (26,263)
Cash distributions to Interest Holders (1,321,132) (1,296,347)
Net cash used in financing activities (1,290,942) (1,149,963)
Net (decrease) increase in cash and cash
equivalents (9,280) 41,174
Cash and cash equivalents at beginning
of period 1,363,085 1,016,066
Cash and cash equivalents at end of period $1,353,805 $1,057,240
See accompanying notes to financial statements.
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BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
BRAUVIN HIGH YIELD FUND L.P. (the "Partnership") is a Delaware
limited partnership organized for the purpose of acquiring debt-free
ownership of existing, free-standing, income-producing retail,
office and industrial real estate properties predominantly subject
to "triple-net" leases. The General Partners of the Partnership are
Brauvin Realty Advisors, Inc., Jerome J. Brault, Cezar M. Froelich
and David M. Strosberg. Brauvin Realty Advisors, Inc. is owned
primarily by Messrs. Brault (beneficially)(44%) and Froelich (44%).
Brauvin Securities, Inc., an affiliate of the General Partners, was
the selling agent of the Partnership. The Partnership is managed
by an affiliate of the General Partners.
The Partnership was formed on January 6, 1987 and filed a
Registration Statement on Form S-11 with the Securities and Exchange
Commission which became effective on September 4, 1987. The sale
of the minimum of $1,200,000 of depository units representing
beneficial assignments of limited partnership interests of the
Partnership (the "Units") necessary for the Partnership to commence
operations was achieved on November 18, 1987. The Partnership's
offering closed on May 19, 1988. A total of $25,000,000 of Units
were subscribed for and issued between September 4, 1987 and May 19,
1988, pursuant to the Partnership's public offering. Through June
30, 1996 and December 31, 1995, the Partnership had sold $27,922,102
and $27,816,104, of Units, respectively. These totals include
$2,922,102, and $2,816,104 of Units, respectively, purchased by
Interest Holders who utilized their distributions of Operating Cash
Flow to purchase additional Units through the distribution
reinvestment plan (the "Plan"). Units valued at $1,647,070 and
$1,607,070 have been purchased by the Partnership from Interest
Holders liquidating their investment in the Partnership and have
been retired as of June 30, 1996 and December 31, 1995,
respectively. As of June 30, 1996 the Participants have acquired
Units under the Plan which approximate 10% of total Units
outstanding.
The Partnership has acquired the land and buildings underlying 20
Taco Bell restaurants, 11 Ponderosa restaurants and two Children's
World Learning Centers. The Partnership also acquired 1%, 49% and
23.4% equity interests in three joint ventures with three entities
affiliated with the Partnership. These ventures own the land and
buildings underlying six Ponderosa restaurants, a Scandinavian
Health Spa and a CompUSA store, respectively.
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 these estimates.
Accounting Method
The accompanying financial statements have been prepared using the
accrual method of accounting.
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. However,
in certain instances, the Partnership has been required under
applicable state law to remit directly to the tax authorities
amounts representing withholding from distributions paid to
partners.
Investment in Real Estate
The operating properties acquired by the Partnership are stated
at cost including acquisition costs. Depreciation expense is
computed on a straight-line basis over approximately 35 years.
In 1995, the Partnership adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets" (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. Accordingly, no impairment
loss has been recorded in the accompanying financial statements.
Investment in Joint Ventures
The Partnership owns a 1% equity interest in Brauvin High Yield
Venture, which owns the land and building underlying six Ponderosa
restaurants; a 49% equity interest in Brauvin Funds Joint Venture,
which owns the land and building underlying a Scandinavian Health
Spa; and a 23.4% equity interest in Brauvin Gwinnett County Venture,
which owns the land and building underlying a CompUSA store. The
accompanying financial statements include the investments in Brauvin
High Yield Venture, Brauvin Funds Joint Venture and Brauvin Gwinnett
County Venture using the equity method of accounting.
Organization Costs and Prepaid Offering Costs
Organization costs represent costs incurred in connection with the
organization and formation of the Partnership. Organization costs
were amortized over a period of five years using the straight-line
method.
Gross proceeds of the offering are expected to increase due to the
purchase of additional Units through the Plan and the prepaid
offering costs will be transferred to offering costs and treated as
a reduction in Partners' Capital.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt
instruments with an original maturity within three months 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, "Disclosures 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, 1996 and December 31, 1995,
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. Although
management is not aware of any factors that would significantly
affect the estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements
since that date, and current estimates of fair value may differ
significantly from amounts presented herein.
The carrying amounts of the following items are a reasonable
estimate of fair value: cash and cash equivalents; due from
affiliates; accounts payable and accrued expenses; and rent received
in advance.
(2) PARTNERSHIP AGREEMENT
Distributions
All Operating Cash Flow, as defined in the Partnership Agreement
(the "Agreement"), shall be distributed: (a) first, to the Interest
Holders until the Interest Holders receive an amount equal to their
10% Current Preferred Return, as such term is defined in the
Agreement; and (b) thereafter, any remaining amounts will be
distributed 98% to the Interest Holders and 2% to the General
Partners.
The net proceeds of a sale or refinancing of a Partnership
property shall be distributed as follows:
first, to the Interest Holders until each Interest Holder has
been paid an amount equal to the 10% Cumulative Preferred
Return, as defined in the Agreement;
second, to the Interest Holders until each Interest Holder has
been paid an amount equal to his Adjusted Investment, as
defined in the Agreement;
third, to the General Partners until they have been paid an
amount equal to a 2% preferred return; and
fourth, 95% of any remaining Net Sale or Refinancing Proceeds,
as such term is defined in the Agreement, to the Interest
Holders and the remaining 5% to the General Partners.
Profits and Losses
Net profits and losses from operations of the Partnership
[computed without regard to any allowance for depreciation or cost
recovery deductions under the Internal Revenue Code of 1986, as
amended (the "Code")] for each taxable year of the Partnership shall
be allocated 98% to the Interest Holders and 2% to the General
Partners. Notwithstanding the foregoing, all depreciation and cost
recovery deductions allowed under the Code shall be allocated 2% to
the General Partners and 98% to the Taxable Interest Holders, as
defined in the Agreement.
The net profit of the Partnership from any sale or other
disposition of a Partnership property shall be allocated (with
ordinary income being allocated first) as follows: (a) first, an
amount equal to the aggregate deficit balances of the Partners'
Capital Accounts, as such term is defined in the Agreement, shall
be allocated to each Partner who or which has a deficit Capital
Account balance in the same ratio as the deficit balance of such
Partner's Capital Account bears to the aggregate of the deficit
balances of all Partners' Capital Accounts; (b) second, to the
Interest Holders until the Interest Holders have been allocated
profits equal to their 10% Cumulative Preferred Return; (c) third,
to the Interest Holders until the Interest Holders have been
allocated an amount of profit equal to the amount of their Adjusted
Investment; (d) fourth, to the General Partners until such time as
they have been allocated profits equal to a 2% preferred return; and
(e) thereafter, 95% to the Interest Holders and 5% to the General
Partners. The net loss of the Partnership from any sale or other
disposition of a Partnership property shall be allocated as follows:
(a) first, an amount equal to the aggregate positive balances in the
Partners' Capital Accounts, to each Partner in the same ratio as the
positive balance in such Partner's Capital Account bears to the
aggregate of all Partners' positive Capital Accounts balances;
and(b) thereafter, 98% to the Interest Holders and 2% to the General
Partners.
(3) TRANSACTIONS WITH RELATED PARTIES
An affiliate of the General Partners manages the Partnership's
real estate properties for an annual management fee equal to up to
1% of gross revenues derived from the properties. The property
management fee is subordinated, annually, to receipt by the Interest
Holders of an annual 10% non-cumulative, non-compounded return on
Adjusted Investment (as defined).
The Partnership pays affiliates of the General Partners selling
commissions of 8-1/2% of the capital contributions received for
Units sold by the affiliates.
An affiliate of one of the General Partners provides securities
and real estate counsel to the Partnership.
Fees, commissions and other expenses paid or payable to the
General Partners or its affiliates for the six months ended June 30,
1996 and 1995 were as follows:
1996 1995
Selling commissions $ 9,010 $17,153
Management fees 12,475 12,268
Reimbursable operating
expenses 43,200 36,000
Legal fees 1,799 --
(4) WORKING CAPITAL RESERVES
The Partnership set aside 1% of the gross proceeds of its Offering
as a working capital reserve. At any time two years subsequent to
the termination of the Partnership's offering (May 19, 1990), it
became permissible to reduce the working capital reserve to an
amount equal to not less than 1/2% of the proceeds of the Offering
($125,000) if the General Partners believed such reduction to be in
the best interests of the Partnership and the Interest Holders. As
a result thereof, $125,000 was paid to an affiliate of the General
Partners in the fourth quarter of 1990 as an additional Acquisition
Fee and $125,000 remains in reserve.
(5) EQUITY INVESTMENTS
The Partnership owns equity interests in the Brauvin High Yield
Venture, Brauvin Funds Joint Venture and Brauvin Gwinnett County
Venture and reports its investments on the equity method. The
following are condensed financial statements for the Brauvin High
Yield Venture, Brauvin Funds Joint Venture and Brauvin Gwinnett
County Venture:
BRAUVIN HIGH YIELD VENTURE
June 30, December 31,
1996 1995
Land and buildings, net $5,102,958 $5,163,083
Other assets 10,245 21,792
Total Assets $5,113,203 $5,184,875
Liabilities $ 3,523 $ 5,126
Partners' capital 5,109,680 5,179,749
Total Liabilities and
Partners Capital $5,113,203 $5,184,875
For the six months ended June 30,
1996 1995
Rental income $356,545 $352,224
Expenses:
Depreciation 60,125 60,125
Management fees 3,751 3,502
Operating and administrative 2,739 2,839
Net income $289,930 $285,758
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BRAUVIN FUNDS JOINT VENTURE
June 30, December 31,
1996 1995
Land and buildings, net $4,761,452 $4,816,500
Other assets 313,281 284,969
Total Assets $5,074,733 $5,101,469
Liabilities $ (1,201) $ 2,004
Partners' capital 5,075,934 5,099,465
Total Liabilities and
Partners' Capital $5,074,733 $5,101,469
For the six months ended June 30,
1996 1995
Rental income $357,251 $357,666
Expenses:
Depreciation 55,048 55,048
Management fees 3,375 3,406
Operating and administrative 2,359 1,374
Net income $296,469 $297,838
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BRAUVIN GWINNETT COUNTY VENTURE
June 30, December 31,
1996 1995
Land and buildings, net $2,353,634 $2,376,510
Other assets 26,396 41,567
Total Assets $2,380,030 $2,418,077
Liabilities $ 1,050 $ 22,702
Partners' capital 2,378,980 2,395,375
Total Liabilities and
Partners' Capital $2,380,030 $2,418,077
For the six months ended June 30,
1996 1995
Rental income $130,494 $124,978
Expenses:
Depreciation 22,876 22,876
Management fees 1,242 1,229
Operating and administrative 2,772 --
Net income $103,604 $100,873
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
The Partnership commenced an offering to the public on September
4, 1987 of 1,500,000 Units which was subsequently increased to
2,500,000 Units. The offering closed on May 19, 1988 after
2,500,000 Units were sold. The Partnership purchased the land and
buildings underlying seven Taco Bell restaurants in 1987. In 1988,
the Partnership purchased 13 Taco Bell restaurants, nine Ponderosa
restaurants and an interest in a joint venture which purchased nine
Ponderosa restaurants. In 1989, the Partnership purchased the land
and building underlying a Ponderosa restaurant, an interest in a
joint venture which purchased a Scandinavian Health Spa, the land
and buildings underlying two Children's World Learning Centers and
the land and building underlying an additional Ponderosa restaurant.
In 1993, the Partnership purchased a 23.4% interest in a joint
venture which purchased a CompUSA store.
The Partnership raised $25,000,000 through its initial offering
and an additional $2,922,102 as of June 30, 1996, through Units
purchased by certain Interest Holders investing their distributions
of Operating Cash Flow in additional Units through the distribution
reinvestment plan (the "Plan"). As of June 30, 1996, Units valued
at $1,647,070 have been purchased by the Partnership from Interest
Holders liquidating their original investment and retired. The
Partnership has no funds available to purchase additional property,
excluding those raised through the Plan.
Below is a table summarizing the historical data for
distributions per Unit:
Distribution
Date 1996 1995 1994 1993 1992 1991
February 15 $.2500 $.2500 $.2500 $.2500 $.2500 $.2375
May 15 .2500 .2500 .2500 .2500 .2500 .2406
August 15 .2500 .2500 .2500 .2563 .2438
November 15 .2625 .2625 .2563 .2438 .2375
Future increases in the Partnership's distributions will largely
depend on increased sales at the Partnership's properties resulting
in additional percentage rent and, to a lesser extent on rental
increases, which will occur due to increases in receipts from
certain leases based upon increases in the Consumer Price Index or
scheduled increases of base rent.
Since the distribution to Limited Partners had been at least 10%
per annum during the six months ended June 30, 1996 and the year
ended December 31, 1995 the General Partners and its affiliates
collected a management fee of $12,475 and $18,643, respectively and
received $26,798 and $39,467 in Operating Cash Flow distributions
for the six months ended June 30, 1996 and the year ended December
31, 1995, respectively. This is anticipated to continue throughout
1996.
The Partnership has entered into an agreement and plan of merger
dated as of June 14, 1996 (the "Merger Agreement") with Brauvin Real
Estate Funds L.L.C., a Delaware limited liability company (the
"Purchaser"). Pursuant to the terms of the Merger Agreement, the
Partnership proposes to merge with and into the Purchaser through
a merger (the "Merger") of its limited partnership interests. In
connection with the Merger, the beneficial owners (the "Limited
Partners") of the limited partnership interests of the Partnership
(the "Units") will receive approximately $9.31 per Unit in cash.
Promptly upon consummation of the Merger, the Partnership will cease
to exist and the Purchaser, as the surviving entity will succeed to
all of the assets and liabilities of the Partnership. The
affirmative vote of the Limited Partners holding a majority of the
Units is necessary to approve the Merger.
The Partnership is currently in the process of drafting a proxy
statement, which will require prior review and comment by the
Securities and Exchange Commission (the "Commission"), to solicit
proxies for use at a special meeting of the Limited Partners (the
"Special Meeting") to be held at the offices of the Partnership at
a date in the near future. The purpose of the Special Meeting is
to vote upon the Merger and certain other matters as described
herein. The preliminary proxy materials of the Partnership have
been filed with the Commission
By approving the Merger, the Limited Partners will also be
approving an amendment of the Restated Limited Partnership Agreement
of the Partnership, as amended (the "Partnership Agreement")
allowing the Partnership to sell or lease property to affiliates
(this amendment, together with the Merger shall be referred to
herein as the "Transaction"). In addition, the Delaware Revised
Uniform Limited Partnership Act (the "Act") provides that a merger
must also be approved by the general partners of a partnership,
unless the limited partnership agreement provides otherwise. The
Partnership Agreement does not address this matter. Therefore, the
Limited Partners will be asked to adopt an amendment (the
"Amendment") to the Partnership Agreement which specifically
provides that the general partners of the Partnership (the "General
Partners") will not be required to approve the Transaction. If the
Amendment is approved, the vote of the Limited Partners holding a
majority of the Units will be the only vote necessary to approve the
Transaction. Neither the Act nor the Partnership Agreement provide
the Limited Partners not voting in favor of the Transaction with
dissenters' appraisal rights.
The actual redemption price will be based on the fair market
value of the properties of the Partnership (the "Assets") as
determined by an independent appraiser at such time as is specified
in the certificate of merger (the "Effective Time"), plus all
remaining cash of the Partnership (which will not include earnings
after July 31, 1996, whcih due to the wind up costs of the
Partnership are expected to be nominal), less the Partnership's
actual costs incurred and accrued through the Effective Time,
including reasonable reserves in connection with: (i) the proxy
solicitation; (ii) the Transaction (as detailed in the Merger
Agreement); and (iii) the winding up of the Partnership, including
preparation of the final audit, tax return and K-1s (collectively,
the "Transaction Costs") and less all other Partnership obligations.
Cushman & Wakefield Valuation Advisory Services ("Cushman &
Wakefield"), the largest real estate valuation and consulting
organization in the United States, was engaged by the Partnership
to prepare an appraisal of the Assets. Cushman & Wakefield was
subsequently engaged to provide an opinion as to the fairness of the
Transaction to the Limited Partners from a financial point of view.
Cushman & Wakefield has preliminarily determined that the fair
market value of the Assets of the Partnership is $23,198,450, which
is approximately $8.83 per Unit. In addition, Cushman & Wakefield
is finalizing its opinion as to the fairness of the Transaction to
the Limited Partners from a financial point of view.
The General Partners are Jerome J. Brault, the managing general
partner of the Partnership (the "Managing General Partner"), Brauvin
Realty Advisors I, Inc., the corporate general partner of the
Partnership (the "Corporate General Partner"), Cezar M. Froelich and
David M. Strosberg. Mr. Froelich gave notice of his intent to
resign as a General Partner of the Partnership on May 23, 1996.
Pursuant to the terms of the Partnership Agreement, Mr. Froelich's
resignation will become effective on the 90th day following notice
to the Limited Partners. The General Partners will not receive any
payment in exchange for the redemption of their general partnership
interests nor will they receive any fees from the Partnership in
connection with the Transaction.
The Managing General Partner and his son, James L. Brault, an
executive officer of the Corporate General Partner, will have a
minority ownership interest in the Purchaser. Therefore, the
Braults have an indirect economic interest in consummating the
Transaction that is in conflict with the economic interests of the
Limited Partners. Messrs. Froelich and Strosberg have no
affiliation with the Purchaser.
The Transaction is one of a series of related transactions
whereby the Purchaser seeks to acquire the Assets of the Partnership
and the assets, through purchase or merger, of Brauvin High Yield
Fund L.P. II, Brauvin Income Plus L.P. III and Brauvin Corporate
Lease Program IV L.P., Delaware limited partnerships affiliated with
the Partnership.
The General Partners have temporarily suspended all distributions
to Limited Partners and liquidations until there is a vote on the
Transaction.
Results of Operations - Six months ended June 30, 1996 and 1995.
Results of operations for the Partnership for the six months
ended June 30, 1996 reflected net income of $1,030,018 as compared
to $1,135,945 for the six months ended June 30, 1995 a decrease of
approximately $105,900. The decrease in net income is a result of
an increase in general and administrative expense, which was
partially offset by an increase in interest income.
Total income for the six months ended June 30, 1996 was
$1,250,647 as compared to $1,239,663 for the six months ended June
30, 1995, an increase of approximately $11,000. The increase in
total income was due to an increase in interest income of
approximately $14,900 as a result of more funds invested during
1996.
Total expenses for the six months ended June 30, 1996 were
$393,041 as compared to $276,122 for the six months ended June 30,
1995, an increase of approximately $116,900. The increase in
expenses is primarily the result of an increase in general and
administrative expense due to the Partnership hiring an independent
real estate company to conduct property valuations. General and
administrative expense also increased in 1996 compared to 1995 as
a result of legal and other professional fees paid as a result of
the Transaction.
Results of Operations - Three months ended June 30, 1996 and 1995
Results of operations for the Partnership for the three months
ended June 30, 1996 reflected net income of $518,186 as compared to
$569,431 for the three months ended June 30, 1995, a decrease of
approximately $51,200. The decrease in net income is a result of
an increase in expenses, which was partially offset by an increase
in rental income.
Total income for the three months ended June 30, 1996 was
$646,220 as compared to $630,350 for the three months ended June 30,
1995, an increase of approximately $15,900. The increase in total
income was due to an increase in rental income of approximately
$11,500 as a result of certain properties paying increased amounts
of percentage rents during 1996.
Total expenses for the three months ended June 30, 1996 were
$213,596 as compared to $147,406 for the three months ended June 30,
1995, an increase of approximately $66,200. The increase in expenses
is primarily the result of an increase in general and administrative
expense due to the Partnership hiring an independent real estate
company to conduct property valuations. General and administrative
expense also increased in 1996 compared to 1995 as a result of legal
and other professional fees paid as a result of the Transaction.
<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
Form 8-K. Notificaction to the partners of
the resignation of Mr. Cezar M.
Froelich as a General Partner of the
Parntership and the resignation of
Mr. Thomas Coorsh as Treasurer and
Chief Financial Officer. This Form 8-K
was dated May 23, 1996 and filed on
June 21, 1996 and amended on July 24, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
BY: Brauvin Realty Advisors, Inc. Corporate
General Partner of Brauvin High Yield
Fund L.P.
BY: /s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of Directors,
President and Chief Executive Officer
DATE: August 14, 1996
BY: /s/ B. Allen Aynessazian
B. Allen Aynessazian
Chief Financial Officer and Treasurer
DATE: August 14, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,353,805
<SECURITIES> 3,047,714 <F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 19,322,975 <F2>
<DEPRECIATION> 3,045,440
<TOTAL-ASSETS> 20,712,422
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 20,573,270 <F3>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20,712,422
<SALES> 0
<TOTAL-REVENUES> 1,250,647 <F4>
<CGS> 0
<TOTAL-COSTS> 393,041 <F5>
<OTHER-EXPENSES> (172,412)<F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,030,018
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> "SECURITIES" REPRESENTS INVESTMENTS IN JOINT VENTURE
<F2> "PP&E" REPRESENTS INVESTMENT IN REAL ESTATE [LAND AND
BUILDING]
<F3> "COMMON" REPRESENTS TOTAL PARTNERS CAPITAL
<F4> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER
INCOME
<F5> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES
<F6> "OTHER EXPENSES" REPRESENTS EQUITY INTEREST IN JOINT
VENTURES' NET INCOME
</FN>
</TABLE>
