<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NUMBER 1
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999
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.)
30 North LaSalle Street, Chicago, Illinois 60602
(Address of principal executive offices) (Zip Code)
(312) 759-7660
(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 HIGH YIELD FUND L.P.
(a Delaware limited partnership)
INDEX
Page
PART I Financial Information
Item 1. Financial Statements . . . . . . . . . . . . . . . . . .3
Statements of Net Assets as of June 30,1999
(Liquidation Basis) and Balance Sheet as of
December 31, 1998 (Going Concern Basis) . . . . .. . . 4
Statement of Changes in Net Assets in Liquidation
for the period June 18, 1999 to June 30, 1999
(Liquidation Basis) . . . .. . . . . . . . . . . . . 5
Statements of Operations for the period
January 1, 1999 to June 18, 1999 and for the six
months ended June 30, 1998 (Going Concern Basis) . . . 6
Statements of Operations for the period
April 1, 1999 thru June 18, 1999 and for the three
months ended June 30, 1998 (Going Concern Basis) . . . . . . . 7
Statements of Partners' Capital for the period
January 1, 1998 to June 18, 1999
(Going Concern Basis). . . . . . . . . . . . . . . . .8
Statements of Cash Flows for the period
January 1, 1999 to June 18, 1999 and for the six
months ended June 30, 1998 (Going Concern Basis) . . . 9
Notes to Consolidated Financial Statements . . . . . . 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . 28
Item 3. Quantitative and Qualitative Disclosures about
Market Risk. . . . . . . . . . . . . . . . . . . . . . . 37
PART II Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 38
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . 38
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . 38
Item 4. Submissions of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . . .38
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . 38
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . .38
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . .39
<PAGE>
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Except for the December 31, 1998 Balance Sheet (Going Concern
Basis), the following Statements of Net Assets as of June 30, 1999
(Liquidation Basis), Statement of Changes in Net Assets in
Liquidation for the period June 18, 1999 to June 30, 1999
(Liquidation Basis), Statements of Operations for the period
January 1, 1999 to June 18, 1999 and for the six months ended June
30, 1998 (Going Concern Basis), Statements of Operations for the
period April 1, 1999 to June 18, 1999 and the three months ended
June 30, 1998 (Going Concern Basis), Statement of Partners' Capital
for the period January 1, 1998 to June 18, 1999 (Going Concern
Basis) and the Statements of Cash Flows for the period January 1,
1999 thru June 18, 1999 and for the six months ended June 30, 1998
(Going Concern Basis) 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 1998 Annual Report on Form 10-K.
<PAGE>
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENT OF NET ASSETS IN LIQUIDATION AS OF
JUNE 30, 1999 AND BALANCE SHEET DATED DECEMBER 31, 1998
(Unaudited)
(Liquidation (Going Concern
Basis) Basis)
June 30, December 31,
1999 1998
ASSETS
Land -- $ 5,425,268
Buildings and improvements -- 12,752,707
-- 18,177,975
Less: Accumulated depreciation -- (4,003,906)
Net investment in real estate -- 14,174,069
Real estate held for sale $15,373,456 --
Investment in Joint Ventures (Note 7):
Brauvin High Yield Venture 18,290 18,726
Brauvin Funds Joint Venture 2,384,873 2,413,241
Brauvin Gwinnett County Venture 506,618 534,901
Brauvin Bay County Venture 163,238 165,884
Cash and cash equivalents 1,017,887 1,478,616
Restricted cash 210,994 --
Prepaid offering costs 15,703 15,703
Other assets 17,848 1,777
Total Assets $19,708,907 $18,802,917
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 278,104 $ 268,111
Environmental remediation accrual 80,000 80,000
Rent received in advance 32,712 29,912
Deferred gain on sale of real estate 1,443,197 --
Reserve for estimated costs during
the period of liquidation 100,900 --
Tenant security deposits 51,934 51,934
Due to affiliates 2,155 2,016
Total Liabilities 1,989,002 431,973
Net Assets in Liquidation $17,719,905
PARTNERS' CAPITAL
General Partners 85,371
Limited Partners 18,285,573
Total Partners Capital 18,370,944
Total Liabilities and Partners' Capital $18,802,917
See accompanying notes to financial statements.
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS) FOR THE PERIOD
JUNE 18, 1999 TO JUNE 30, 1999
(Unaudited)
Net Assets June 18, 1999
(Going Concern Basis) $17,907,454
Adjustments to Liquidation Basis (187,549)
Net Assets in Liquidation
at June 30, 1999 $17,719,905
See accompanying notes to financial statements
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
(Going Concern Basis)
(Unaudited)
January 1, 1999 Six Months
to ended
June 18, 1999 June 30, 1998
INCOME:
Rental $1,216,421 $1,226,729
Interest 32,238 40,086
Other 7,615 187
Total income 1,256,274 1,267,002
EXPENSES:
General and administrative 116,021 126,436
Management fees (Note 4) 12,322 12,371
Transaction costs (Note 8) 142,211 62,892
Valuation fees -- 114,750
Depreciation 177,073 193,318
Total expenses 447,627 509,767
Income before equity interest in
joint ventures 808,647 757,235
Equity Interest in Joint Venture's
Net Income:
Brauvin High Yield Venture 2,615 1,333
Brauvin Funds Joint Venture 145,581 143,783
Brauvin Gwinnett County Venture 24,390 24,088
Brauvin Bay County Venture 6,953 6,529
Net income $ 988,186 $ 932,968
Net income allocated to the General
Partners $ 19,764 $ 18,659
Net income allocated to the Interest
Holders $ 968,422 $ 914,309
Net income per Unit outstanding $ 0.37 $ 0.35
(2,627,503 Units outstanding)
See accompanying notes to financial statements
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF OPERATIONS
(Going Concern Basis)
(Unaudited)
April 1, 1999 Three Months
to ended
June 18, 1999 June 30, 1998
INCOME:
Rental $ 619,248 $ 626,483
Interest 15,906 20,705
Other 3,700 102
Total income 638,854 647,290
EXPENSES:
General and administrative 73,391 86,295
Management fees (Note 4) 6,112 6,155
Transaction costs (Note 8) 70,684 36,182
Valuation fees -- 114,750
Depreciation 88,537 96,659
Total expenses 238,724 340,041
Income before equity interest in
joint ventures 400,130 307,249
Equity Interest in Joint Venture's
Net Income:
Brauvin High Yield Venture 1,399 1,255
Brauvin Funds Joint Venture 72,826 71,833
Brauvin Gwinnett County Venture 12,537 12,403
Brauvin Bay County Venture 3,511 3,229
Net income $ 490,403 $ 395,969
Net income allocated to the General
Partners $ 9,808 $ 7,919
Net income allocated to the Interest
Holders $ 480,595 $ 388,050
Net income per Unit outstanding $ 0.18 $ 0.15
(2,627,503 Units outstanding)
See accompanying notes to financial statements
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF PARTNERS' CAPITAL
For the Period January 1, 1998 to June 18, 1999
(Going Concern Basis)
(Unaudited)
General Interest
Partners Holders * Total
Balance, January 1, 1998 $174,353 $19,459,482 $19,633,835
Net income 16,335 800,401 816,736
Cash distributions (105,317) (1,974,310) (2,079,627)
Balance, December 31, 1998 85,371 18,285,573 18,370,944
Net income 19,764 968,422 988,186
Cash distributions (28,939) (1,422,737) (1,451,676)
Balance, June 18, 1999 $ 76,196 $17,831,258 $17,907,454
* Total Units outstanding at June 30, 1999 and December 31, 1998
were 2,627,503. Cash distributions to Interest Holders per Unit
were approximately $0.54 and $0.75, respectively, for the six
months ended June 30, 1999 and for the year ended December 31,
1998. Cash distributions to Interest Holders per Unit are based on
the average Units outstanding during the year 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.
<PAGE>
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENTS OF CASH FLOWS
For the period January 1, 1999 to June 18, 1999
and for the six months ended June 30, 1998
(Going Concern Basis)
(Unaudited)
1999 1998
Cash flows from operating activities:
Net income $ 988,186 $ 932,968
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 177,073 193,318
Equity interest in net income from:
Brauvin High Yield Venture (2,615) (1,333)
Brauvin Funds Joint Venture (145,581) (143,783)
Brauvin Gwinnett County Venture (24,390) (24,088)
Brauvin Bay County Venture (6,953) (6,529)
Changes in:
Restricted Cash (210,994) --
Other assets (16,071) 1,630
Accounts payable
and accrued expenses 9,993 140,815
Rents received in advance 2,800 (1,934)
Due to affiliates 139 81
Net cash provided by operating activities 771,587 1,091,145
Cash flows from investing activities:
Return of capital from Brauvin High
Yield Venture -- 7,505
Distributions from:
Brauvin High Yield Venture 3,050 3,000
Brauvin Funds Joint Venture 173,950 156,800
Brauvin Gwinnett County Venture 32,760 28,548
Brauvin Bay County Venture 9,600 7,840
Cash provided by investing activities 219,360 203,693
Cash flows from financing activities:
Cash distributions to General Partners (28,939) (88,755)
Cash distributions to Interest Holders (1,422,737) (658,339)
Cash used in financing activities (1,451,676) (747,094)
Net (decrease) increase in cash
and cash equivalents (460,729) 547,744
Cash and cash equivalents at beginning
of period 1,478,616 1,030,464
Cash and cash equivalents at end of period $1,017,887 $1,578,208
See accompanying 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. and Jerome J. Brault. Brauvin
Realty Advisors, Inc. is owned primarily by Messrs. Brault
(beneficially) (44%) and Cezar M. Froelich (44%). Mr. Froelich
resigned as a director of the Corporate General Partner in December
1994 and as an individual General Partner effective as of September
17, 1996. 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, 1999 and December 31, 1998 the
Partnership had sold $27,922,102 of Units. This total includes
$2,922,102 of Units 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 have been repurchased by the Partnership
from Interest Holders liquidating their investment in the
Partnership and have been retired as of June 30, 1999 and December
31, 1998. As of June 30, 1999, the Plan 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%,
23.4% and 16% equity interests in four joint ventures with three
entities affiliated with the Partnership. These ventures own the
land and buildings underlying six Ponderosa restaurants, a
Scandinavian Health Spa, a CompUSA store and a Blockbuster Video
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.
Basis of Presentation
As a result of the settlement agreement (see Note 8) which was
approved by the United States District Court for the Northern
District of Illinois on June 18, 1999 the Partnership has begun the
liquidation process and, in accordance with generally accepted
accounting principles, the Partnership's financial statements for
periods subsequent to June 18, 1999 have been prepared on a
liquidation basis. Accordingly, the carrying value of the assets
is presented at net 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 requires
significant assumptions by management, including the estimate of
liquidation costs and the resolution of any contingent liabilities.
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 assets recorded in the statement of net assets as of June
30, 1999.
Accounting Method
The accompanying financial statements have been prepared using
the accrual method of accounting.
Rental Income
Prior to the preparation of the financial statements on a
liquidation basis, rental income was 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 were 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.
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
Prior to the conversion from the going concern basis to the
liquidation basis of accounting, the operating properties acquired
by the Partnership are stated at cost including acquisition costs,
net of an allowance for impairment. Depreciation expense is
computed on a straight-line basis over approximately 35 years.
The Partnership provides an allowance for impairment to reduce
the cost basis of real estate to its estimated fair value when the
real estate is judged to have suffered an impairment that is other
than temporary. The Partnership has 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 18, 1999 and December 31, 1998 except as described in Note 6.
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; a 23.4% equity interest in Brauvin Gwinnett County Venture,
which owns the land and building underlying a CompUSA store; and a
16% equity interest in Brauvin Bay County Venture which owns the
land and building underlying a Blockbuster Video store. The
accompanying financial statements include the investments in
Brauvin High Yield Venture, Brauvin Funds Joint Venture, Brauvin
Gwinnett County Venture and Brauvin Bay County Venture, using the
equity method of accounting.
Prepaid Offering Costs
Prepaid offering costs represent amounts in excess of the defined
percentages of the gross proceeds. Prior to the commencement of
the Partnership's proxy solicitation (see Note 8), gross proceeds
were expected to increase due to the purchase of additional Units
through the Plan and the prepaid offering costs would 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.
Restricted Cash
Per the terms of the settlement agreement (see Note 8) the
Partnership was required to establish a cash reserve that will be
restricted for the payment of the General Partners legal fees and
costs. The release of these funds to the General Partners is
subject to the certification by the Special Master that the General
Partners have been cooperative, did not breach their fiduciary
duties to the Limited Partners, did not breach the settlement
agreement or the Partnership Agreement and used their best efforts
to manage the affairs of the Partnership in such a manner as to
maximize the value and marketability of the Partnership's assets in
accordance with their obligations under the Partnership Agreement.
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, 1999 and
December 31, 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 a reasonable
estimate of fair value: cash and cash equivalents; accounts
receivable; accounts payable and accrued expenses; environmental
remediation accrual; rent received in advance; tenant security
deposits and due to affiliates.
(2) ADJUSTMENT TO LIQUIDATION BASIS
On June 18, 1999, 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. The net adjustment required to convert from the going
concern (historical cost) basis to the liquidation basis of
accounting was a decrease in assets of $187,549 which is included
in the June 30, 1999 statement of changes in net assets in
liquidation. Significant changes in the carrying value of assets
and liabilities are summarized as follows:
Increase in real estate held for sale (a) $1,376,459
Decrease in investment in Joint Ventures (5,151)
Write-off of deferred rent receivable (14,760)
Increase in deferred gain on sale
of real estate (1,443,197)
Estimated liquidation costs (100,900)
Total adjustment to liquidation basis $ (187,549)
(a) Net of estimated closing costs.
(3) 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.
(4) 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 provided securities
and real estate counsel to the Partnership.
The Partnership pays an affiliate of the General Partners an
acquisition fee in the amount of up to 4.5% of the gross proceeds
of the Partnership's offering for the services rendered in
connection with the process pertaining to the acquisition of a
property. Acquisition fees related to the properties not
ultimately purchased by the Partnership are expensed as incurred.
Fees, commissions and other expenses paid or payable to the
General Partners or its affiliates for the six months ended June
30, 1999 and June 30, 1998 were as follows:
1999 1998
Management fees $ 12,322 $ 12,371
Reimbursable operating
expenses 86,716 78,647
As of June 30, 1999 and December 31, 1998, the Partnership has
made all payments to affiliates except for $2,155 and $2,016,
respectively, related to management fees.
(5) 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 cost allocation Fee and $125,000 remains
in reserve.
(6) PROVISION FOR IMPAIRMENT
In 1998, the Partnership engaged LaSalle Partners, Inc. to
perform a valuation of the Partnership's properties. As a result
of this valuation, during the third quarter of 1998, a provision
for impairment in the total amount of $1,145,000 was recorded in
the financial statements of the Partnership. This allowance has
been recorded as a reduction of the properties' cost, and allocated
to land and buildings based on the original acquisition cost
allocation of 30%(land) and 70% (building).
(7) INVESTMENT IN JOINT VENTURES
The Partnership owns equity interests in the Brauvin High Yield
Venture, Brauvin Funds Joint Venture, Brauvin Gwinnett County
Venture and Brauvin Bay 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, Brauvin Gwinnett County Venture and Brauvin Bay County
Venture:
BRAUVIN HIGH YIELD VENTURE
(Liquidation (Going Concern
Basis) Basis)
June 30, 1999 December 31, 1998
Land and buildings, net $ -- $3,695,748
Real estate held for sale 3,694,680 --
Other assets 14,942 12,634
$3,709,622 $3,708,382
Other liabilities $ 30,633 $ 30,644
Deferred gain on the sale
of real estate 44,781
Total liabilities 75,414
Net assets $3,634,208
Partners' capital 3,677,738
$3,708,382
GOING CONCERN BASIS
January 1, 1999 January 1, 1998
to to
June 18,1999 June 30, 1998
Rental and other income $316,090 $304,778
Expenses:
Depreciation 45,848 50,434
Management fees 3,084 2,993
Operating and
administrative 5,688 3,414
54,620 56,841
Net income before
loss on sale of property 261,470 247,937
Loss on the sale
of property -- (114,604)
Net Income $261,470 $133,333
BRAUVIN FUNDS JOINT VENTURE
(Liquidation (Going Concern
Basis) Basis)
June 30, 1999 December 31, 1998
Land and buildings, net $ -- $4,486,212
Real estate held for sale 6,176,966 --
Other assets 13,203 497,008
$6,190,169 $4,983,220
Other liabilities $ 4,999 $ 4,991
Deferred gain on the
sale of real estate 1,745,276
Total liabilities 1,750,275
Net assets $4,439,894
Partners' capital 4,978,229
$4,983,220
GOING CONCERN BASIS
January 1, 1999 January 1, 1998
to to
June 18,1999 June 30, 1998
Rental and other income $357,294 $357,909
Expenses:
Depreciation 55,048 55,048
Management fees 3,616 3,298
Operating and
administrative 1,525 6,128
60,189 64,474
Net income $297,105 $293,435
BRAUVIN GWINNETT COUNTY VENTURE
(Liquidation (Going Concern
Basis) Basis)
June 30, 1999 December 31, 1998
Land and buildings, net $ -- $2,239,254
Real estate held for sale 2,194,362 --
Other assets 8,679 85,048
$2,203,041 $2,324,302
Liabilities $ 24,634 $ 25,029
Net assets $2,178,407
Partners' capital 2,299,273
$2,324,302
GOING CONCERN BASIS
January 1, 1999 January 1, 1998
to to
June 18,1999 June 30, 1998
Rental and other income $137,199 $137,877
Expenses:
Depreciation 22,876 21,163
Management fees 1,319 1,324
Operating and
administrative 8,775 12,449
32,970 34,936
Net income $104,229 $102,941
BRAUVIN BAY COUNTY VENTURE
(Liquidation (Going Concern
Basis) Basis)
June 30, December 31,
1999 1998
Land and buildings, net $ -- $1,033,942
Real estate held for sale 1,028,651 --
Other assets 18,210 17,330
$1,046,861 $1,051,272
Liabilities $ 16,427 $ 4,296
Net assets in liquidation $1,030,434
Partners' capital 1,046,976
$1,051,272
GOING CONCERN BASIS
January 1, 1999 January 1, 1998
to to
June 18,1999 June 30, 1998
Rental and other income $54,625 $54,714
Expenses:
Depreciation 8,823 8,823
Management fees 794 582
Operating and
administrative 1,550 4,503
11,167 13,908
Net income $43,458 $40,806
(8) MERGER AND LITIGATION
Merger
Pursuant to the terms of an agreement and plan of merger dated
as of June 14, 1996, as amended March 24, 1997, June 30, 1997 and
September 30, 1997, December 31, 1997, March 31, 1998 and June 30,
1998 (the "Merger Agreement"), the Partnership proposed to merge
with and into Brauvin Real Estate Funds L.L.C., a Delaware limited
liability company (the "Purchaser"), affiliated with certain of the
General Partners through a merger (the "Merger") of its Units.
Although the Merger will not be consummated, the following text
describes the transaction. Promptly upon consummation of the
Merger, the Partnership would have ceased to exist and the
Purchaser, as the surviving entity, would succeed to all of the
assets and liabilities of the Partnership. The Interest Holders
holding a majority of the Units voted on the Merger on November 8,
1996. The Interest Holders also voted on an amendment to the
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").
The redemption price to be paid to the Interest Holders in
connection with the Merger was based on the fair market value of
the properties of the Partnership (the "Assets"). Cushman &
Wakefield Valuation Advisory Services ("Cushman & Wakefield"), an
independent appraiser, the largest real estate valuation and
consulting organization in the United States, was engaged by the
Partnership to prepare an appraisal of the Assets, to satisfy the
Partnership's requirements under the Employee Retirement Income
Security Act of 1974, as amended. Cushman & Wakefield determined
the fair market value of the Assets to be $23,198,450, or $8.83 per
Unit, as of April 1, 1996. Subsequently, the Partnership purchased
a 16% interest in Brauvin Bay County Venture. Based on the terms
of the Merger Agreement, the fair market value of the Assets will
be increased by the amount of the investment in Brauvin Bay County
Venture, and correspondingly, the Partnership's cash holdings were
reduced by the same amount and, therefore, the total redemption
amount would remain unchanged. The redemption price of $9.31 per
Unit also included all remaining cash of the Partnership, less net
earnings of the Partnership from and after August 1, 1996 through
December 31, 1996, less the Partnership's actual costs incurred and
accrued through the effective time at the filing of the certificate
of merger, 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. Of the original cash redemption amount,
approximately $0.48 was distributed to Interest Holders in the
December 31, 1997 distribution.
The General Partners were not to receive any payment in
exchange for the redemption of their general partnership interests
nor would they have received 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, were to have a minority ownership interest in the
Purchaser.
The Merger was not completed primarily due to certain
litigation, as described below, that was still pending at March 31,
1999. The General Partners believe that these lawsuits are without
merit and, therefore, continue to vigorously defend against them.
Because of the August 12, 1998 rulings of the District Court in
the Christman litigation, as described below, it is not possible
for the Merger to be consummated.
Distributions of the Partnership's net earnings for the periods
January 1, 1998 to March 31, 1998, April 1, 1998 to June 30, 1998,
July 1, 1998 to September 30, 1998 and October 1, 1998 to December
31, 1998, were made to Interest Holders on May 8, 1998, August 15,
1998, November 15, 1998 and February 15, 1999, respectively in the
amounts of approximately $650,000, $504,000, $812,000 and $762,000.
Distributions of the Partnership's net earnings for the periods
January 1, 1999 to March 31, 1999 and April 1, 1999 to June 30,
1999, were made to Interest Holders on May 17, 1999 and August
15,1999, respectively in the amounts of approximately $654,000 and
$630,000.
As detailed in "Litigation" by agreement of the Partnership and
the General Partners and pursuant to a motion of the General
Partners the District Court entered an order preventing the
Partnership and the General Partners from completing the Merger or
otherwise disposing of all or substantially all of the
Partnership's assets until further order of the Court.
Litigation
Two legal actions, as hereinafter described, against the General
Partners of the Partnership and affiliates of such General
Partners, as well as against the Partnership on a nominal basis in
connection with the Merger, have been settled. On April 13, 1999,
all the parties to the litigation reached an agreement to settle
the litigation, subject to the approval by the United States
District Court for the Northern District of Illinois. This
approval was obtained on June 18, 1999. Management believes that
the settlement will not have a material financial impact on the
Partnership. The terms of the settlement agreement, along with a
Notice to the Class, were forwarded to the Interest Holders in the
second quarter. One additional legal action, which was dismissed
on January 28, 1998 had also been brought against the General
Partners of the Partnership and affiliates of such General
Partners, as well as the Partnership on a nominal basis in
connection with the Merger. With respect to these actions the
Partnership and the General Partners and their named affiliates
denied all allegations set forth in the complaints and vigorously
defended against such claims.
(9) RESERVE FOR ENVIRONMENTAL REMEDIATION
In connection with the Merger (see Note 8), the Partnership has
undertaken environmental studies of potentially affected
properties. One of the Partnership's properties has been
identified by the environmental study as having a potential
environmental issue. A remedial investigation and feasibility
study has been completed, and the results of that study have been
forwarded to the appropriate authorities. The study indicates a
range of viable remedial approaches, but agreement has not yet been
reached with the authorities on the final remediation approach.
The Partnership has accrued its best estimate of the costs that
will be incurred to complete the environmental remediation at this
property.
In connection with the purchase of the above property by the
Partnership, the Partnership was to be reimbursed by the former
owner for environmental clean-up. The Partnership will therefore
seek reimbursement of the costs from this former owner. No
estimate of the collectibility of this reimbursement can be made at
this time.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
General
Certain statements in this Quarterly 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
The "Year 2000" problem concerns the inability of computer
technology systems to correctly identify and process date sensitive
information beyond December 31, 1999. Many computers
automatically add the "19" prefix to the last two digits the
computer reads for the year when date information is needed in
computer software programs. Thus when a date beginning on January
1, 2000 is entered into a computer, the computer may interpret this
date as the year "1900" rather than "2000".
The Partnership's computer information technology systems
consists of a network of personal computers linked to a server
built using hardware and software from mainstream suppliers. The
Partnership does not own any equipment that contains embedded
microprocessors, which may also pose a potential Year 2000 problem.
Additionally, the Partnership has no internally generated software
coding to correct as all of the Partnership's software is purchased
and licensed from external providers. These external providers
have assured management that their systems are, or will be, Year
2000 compliant.
The Partnership has two main software packages that contain date
sensitive information, (i) accounting and (ii) investor relations.
In 1997, the Partnership initiated and completed the conversion
from its existing accounting software to a new software program
that is Year 2000 compliant. In 1998, the investor relations
software was also updated to a new software program that is Year
2000 compliant. Management has determined that the Year 2000 issue
will not pose significant operational problems for its remaining
computer software systems. All costs associated with these
conversions are expensed as incurred, and are not material.
Management does not believe that any further expenditures will be
necessary for the Partnership to be Year 2000 compliant. However,
existing personal computers may be replaced from time to time with
newer machines.
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.
The most reasonably likely worst case scenario for the
Partnership with respect to the Year 2000 issue would be the
inability of certain tenants to timely make their rental payments
beginning in January 2000. This could result in the Partnership
temporarily suffering a depletion of the Partnership's cash
reserves as expenses will need to be paid while the cash flows from
revenues are delayed. The Partnership has no formal Year 2000
contingency plan.
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 six
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.
On November 9, 1993, the Partnership purchased a 23.4% interest
in a joint venture with affiliated public real estate limited
partnerships (the "Venture"). The Venture acquired the land and
building underlying a 25,000 square foot CompUSA computer
superstore from an unaffiliated seller.
On October 31, 1996, the Partnership purchased a 16.0% interest
in a joint venture with affiliated public real estate limited
partnerships (the "Bay County Venture"). The Bay County Venture
purchased real property upon which a newly constructed Blockbuster
Video store is operated. The property contains a 6,466 square foot
building located on a 40,075 square foot parcel of land.
The Partnership raised $25,000,000 through its initial offering
and an additional $2,922,102, as of June 30, 1999, through Units
purchased by certain Interest Holders investing their distributions
of Operating Cash Flow in additional Units through the Plan, which
process continued until the proxy solicitation process began. As
of June 30, 1999, Units valued at $1,647,070 have been repurchased
by the Partnership from Interest Holders liquidating their original
investment and have been retired. The Partnership has no funds
available to purchase additional property, excluding those raised
through the Plan.
Below is a table summarizing the four year historical data for
distribution rates per unit:
Distribution
Date 1999 (a) 1998 (b) 1997 1996
February 15 $.2898 $ -- $.2274 $.2500
May 15 .2490 .2473 .2013 .2500
August 15 .2398 .1920 .2745 --
November 15 -- .3088 .7245 --
(a) The 1999 distributions were made on May 17, 1999 and August
15,1999.
(b) The 1998 distributions were made on May 8, 1998, August 15,
1998, November 15, 1998, and February 15, 1999.
Per the terms of the cash out Merger, the Partnership's net
earnings from April 1996 through July 1996 were to be distributed
to the Interest Holders in conjunction with the closing of the
Merger. However, because of the lengthy delay and the uncertainty
of the ultimate closing date, the General Partners decided to make
a significant distribution on December 31, 1997 of the Partnership's
earnings. Included in the December 31, 1997 distribution was any
prior period earnings including amounts previously reserved for
anticipated closing costs.
Based on the August 12, 1998, ruling of the District Court in
the Christman litigation, it is not possible for the Merger to be
consummated. The reserves will be re-established by the Partnership
as soon as a definitive sale process has been determined and the
associated costs and reserves can be identified.
During the period January 1, 1999 to June 18, 1999 and the six
months ended June 30, 1998, the General Partners and their
affiliates earned management fees of $12,322 and $12,371,
respectively, and received $28,939, and $105,317 in Operating Cash
Flow distributions for the period January 1, 1999 to June 18, 1999
and the year ended December 31, 1998, respectively. In January
1998, the Partnership paid the General Partners approximately
$75,500 as an operating cash flow distribution for the year ended
December 31, 1997.
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.
Although the Merger Agreement will not be consummated, the
following text describes the Transaction. Pursuant to the terms of
the Merger Agreement the Interest Holders would have received
approximately $9.31 per Unit in cash (of this amount approximately
$0.48 has already been distributed to the Interest Holders).
Promptly upon consummation of the Merger, the Partnership would have
ceased to exist and the Purchaser, as the surviving entity, would
have succeeded to all of the assets and liabilities of the
Partnership.
The Partnership drafted a proxy statement, which required prior
review and comment by the Commission, to solicit proxies for use at
the Special Meeting originally scheduled to be held at the offices
of the Partnership on September 24, 1996. As a result of various
legal issues, as described in "Legal Proceedings", the Special
Meeting was adjourned to November 8, 1996 at 9:00 a.m. The purpose
of the Special Meeting was to vote upon the Merger and certain other
matters as described in the Proxy.
By approving the Merger, the Interest Holders also would have
approved an amendment to the 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"). 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. Because the Agreement did not address this matter, at
the Special Meeting, Interest Holders holding a majority of the
Units were also asked to approve the adoption of an amendment to the
Agreement to allow the majority vote of the Interest Holders to
determine the outcome of the transaction with the Purchaser without
the vote of the General Partners. Neither the Act nor the Agreement
provides the Interest Holders not voting in favor of the Transaction
with dissenters' appraisal rights.
The redemption price to be paid to the Interest Holders in
connection with the Merger was based on the fair market value of the
properties of the Partnership (the "Assets"). Cushman & Wakefield
Valuation Advisory Services ("Cushman & Wakefield"), an independent
appraiser, the largest real estate valuation and consulting
organization in the United States, was engaged by the Partnership
to prepare an appraisal of the Assets, to satisfy the Partnership's
requirements under the Employee Retirement Income Security Act of
1974, as amended. Cushman & Wakefield determined the fair market
value of the Assets to be $23,198,450, or $8.83 per Unit. The
redemption price of $9.31 per Unit also included all remaining cash
of the Partnership, less net earnings of the Partnership from and
after August 1, 1996 through December 31, 1996, less the
Partnership's actual costs incurred and accrued through the
effective time at the filing of the certificate of merger, 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. Of the total
redemption price stated above approximately $0.48 was distributed
to Interest Holders in the December 31, 1997 distribution.
Cushman & Wakefield subsequently provided an opinion as to the
fairness of the Transaction to the Interest Holders from a financial
point of view. In its opinion, Cushman & Wakefield advised that the
price per Unit reflected in the Transaction was fair, from a
financial point of view, to the Interest Holders. Cushman &
Wakefield's determination that a price is "fair" does not mean that
the price was the highest price which might be obtained in the
marketplace, but rather that based on the appraised values of the
Assets, the price reflected in the Transaction was believed by
Cushman & Wakefield to be reasonable.
Mr. Jerome J. Brault is the Managing General Partner of the
Partnership and Brauvin Realty Advisors, Inc. is the Corporate
General Partner. On April 23, 1997, Mr. David M. Strosberg resigned
as an Individual General Partner of the Partnership. Mr. Cezar M.
Froelich resigned his position as an Individual General Partner of
the Partnership effective as of September 17, 1996. The General
Partners were not to receive any payment in exchange for the
redemption of their general partnership interests nor were they to
receive any fees from the Partnership in connection with the
Transaction. The remaining General Partners do not believe that Mr.
Strosberg's or Mr. Froelich's lack of involvement has had an adverse
effect, and should not in the future have any adverse effect, on the
operations of the Partnership.
The Managing General Partner and his son, James L. Brault, an
executive officer of the Corporate General Partner, were to have a
minority ownership interest in the Purchaser. Therefore, the
Messrs. Brault had an indirect economic interest in consummating the
Transaction that was in conflict with the economic interests of the
Interest Holders. Messrs. Froelich and Strosberg have no
affiliation with the Purchaser.
Although the Special Meeting was held and an affirmative vote of
the majority of the Interest Holders was received, the District
Court in the Christman Litigation ruled on August 12, 1998 in favor
of the plaintiffs motion for summary judgement, holding that the
Agreement did not allow the Interest Holders to vote in favor or
against the Transaction by proxy.
As discussed in "Legal Proceedings", all the parties to the
litigation reached an agreement to settle the litigation, subject
to the approval by the United States District Court for the Northern
District of Illinois. Unfortunately, however, the delay caused by
the litigation has had an adverse effect on the Partnership today
as well as on future prospects.
The 1999 and 1998 distributions were based on the net earnings of
the Partnership in 1999 and 1998. These distributions were lower
than prior distributions because the Partnership incurred
significant valuation fees and legal costs to defend against the
lawsuits. In addition, the remaining term of the Partnership's
properties' leases continue to shrink. This fact is causing the
Partnership to potentially face the risks and costs of lease
rollover. This heightened degree of risk may also have an adverse
effect on the ultimate value of the Assets. Further, the
Partnership's most significant tenant, Ponderosa, has recently
closed and vacated four of the Partnership's properties. (The
Partnership owns one of them directly and has a joint venture
interest in the other three.) The General Partners are working to
remedy this situation. In January 1998, the Brauvin High Yield
Venture partnership sold one of these assets to a third party not
related to either the Purchaser or the Partnership. Although the
closing of the restaurants should not have a significant short term
effect, it could materially affect the Assets' long term prospects.
Unfortunately, these recent developments are some of the exact risks
and costs the Partnership was seeking to avoid with the successful
completion of the Merger.
On January 16, 1998, by agreement of the Partnership and the
General Partner and pursuant to a motion of the General Partner, the
District Court entered an order preventing the Partnership and the
General Partners from completing the Merger, or otherwise disposing
of all or substantially all of the Partnership's assets, until
further order from the Court.
On January 28, 1998, the District Court entered an Order of
Reference to Special Master, designating a Special Master and
vesting the Special Master with authority to resolve certain aspects
of the lawsuit subject to the District Court's review and
confirmation. The Special Master has been empowered to determine
how the assets of the Partnership should be sold or disposed of in
a manner which allows the Interest Holders to maximize their
financial return in the shortest practicable time frame. In
addition, early in the second quarter of 1998, the Special Master
retained a financial advisor (the "Financial Advisor"), at the
expense of the Partnership to assist the Special Master. The
Financial Advisor was engaged to perform a valuation of the
properties of the Partnership as well as a valuation of the
Affiliated Partnership's. The cost to the Partnership for the
services of the Financial Advisor was $135,000.
On August 4, 1998, the Special Master filed a Report and
Recommendation with the District Court expressing the Special
Master's recommendation that the Partnership's properties be
disposed of in an auction conducted by the Financial Advisor under
the direction of the Special Master. The District Court accepted
this Report and Recommendation. On November 4, 1998, the Special
Master filed an additional Report and Recommendation with the
District Court, requesting that the Court withdraw its Order of
Reference to Special Master on the grounds it would be impossible
to effect the sale of the Partnership's properties in a manner that
maximizes the financial return to Limited Partners in a short time
frame, unless certain litigation issues are resolved. The District
Court has accepted this Report and Recommendation.
As a result of the settlement agreement that was approved by the
United States District Court for the Northern District of Illinois
on June 18, 1999 the Partnership has begun the liquidation process.
The settlement agreement gave the Special Master authority to
liquidate the assets of the Partnership in an orderly manner, to
this end the Special Master has retained the services of the
Financial Advisor who is actively marketing the properties for sale.
Results of Operations - For the period January 1, 1999 to June 18,
1999 and the six months ended June 30, 1998
Results of operations for the period January 1, 1999 to June 18,
1999 reflected net income of $988,186 compared to $932,968 for the
six months ended June 30, 1998, an increase of approximately
$55,200.
Total income for the period January 1, 1999 to June 18, 1999 was
$1,256,274 as compared to $1,267,002 for the six months ended June
30, 1998, a decrease of approximately $10,800. The decrease in
total income was primarily a result of a $10,800 decrease in
percentage rental income caused by lower sales of several tenants.
Total expenses for the period January 1, 1999 to June 18, 1999
were $447,627 as compared to $509,767 for the six months ended June
30, 1998, a decrease of approximately $62,100. The decrease in
expenses was mainly due to a decrease in valuation fees between the
two periods of $114,800 and a decrease in depreciation of
approximately $16,200. Partially offsetting these declines in
expense was an increase of $79,300 in transaction costs related to
the professional fees associated with the settlement of the class
action lawsuit.
Results of Operations - For the period April 1, 1999 to June 18,
1999 and the three months ended June 30, 1998
Results of operations for the period April 1, 1999 to June 18,
1999 reflected net income of $490,403 compared to $395,969 for the
three months ended June 30, 1998, an increase of approximately
$94,500.
Total income for the period April 1, 1999 to June 18, 1999 was
$638,854 as compared to $647,290 for the three months ended June 30,
1998, a decrease of approximately $8,500. The decrease in total
income was primarily a result of a $7,200 decrease in percentage
rental income caused by lower sales of several tenants.
Total expenses for the period April 1, 1999 to June 18, 1999 were
$238,724 as compared to $340,041 for the three months ended June 30,
1998, a decrease of approximately $101,300. The decrease in
expenses was mainly due to a decrease in valuation fees between the
two periods of $114,800 and a decrease in depreciation of
approximately $8,100. Partially offsetting these declines in
expense was an increase of $34,500 in transaction costs related to
the professional fees associated with the settlement of the class
action lawsuit.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Partnership does not engage in any hedge transactions or
derivative financial instruments.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Two legal actions, as hereinafter described, against the General
Partners of the Partnership and affiliates of such General Partners,
as well as against the Partnership on a nominal basis in connection
with the Merger, have been settled. On April 13, 1999, all the
parties to the litigation reached an agreement to settle the
litigation, subject to the approval by the United States District
Court for the Northern District of Illinois. This approval was
obtained on June 18, 1999. Management believes that the settlement
will not have a material financial impact on the Partnership. The
terms of the settlement agreement, along with a Notice to the Class,
were forwarded to the Interest Holders in the second quarter. One
additional legal action, which was dismissed on January 28, 1998 had
also been brought against the General Partners of the Partnership
and affiliates of such General Partners, as well as the Partnership
on a nominal basis in connection with the Merger. With respect to
these actions the Partnership and the General Partners and their
named affiliates denied all allegations set forth in the complaints
and vigorously defended against such claims.
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
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 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 19, 1999
BY: /s/ Thomas E. Murphy
Thomas E. Murphy
Chief Financial Officer and Treasurer
DATE: August 19, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 1,017,887
<SECURITIES> 3,073,019 <F1>
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 15,373,456 <F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,708,907
<CURRENT-LIABILITIES> 545,805
<BONDS> 0 <F3>
0
0
<COMMON> 17,719,905 <F4>
<OTHER-SE> 0
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<CGS> 0
<TOTAL-COSTS> 447,627 <F6>
<OTHER-EXPENSES> (179,539) <F7>
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<INCOME-TAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 988,186
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<FN>
<F1> "SECURITIES" REPRESENTS INVESTMENT IN JOINT VENTURE
<F2> "PP&E" REPRESENTS REAL ESTATE HELD FOR SALE
<F3> "BONDS" REPRESENTS MINORITY INTEREST IN JOINT VENTURE
<F4> "COMMON" REPRESENTS NET ASSETS IN LIQUIDATION
<F5> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER
INCOME
<F6> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES
<F7> "OTHER EXPENSES" REPRESENTS MINORITY INTEREST AND JOINT
VENTURES' NET INCOME/LOSS
</FN>
</TABLE>
