SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 10-K/A
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
Commission File Number 0-17617
LUTHERAN BROTHERHOOD REALTY FUND I, A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 94-3046442
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
625 Fourth Avenue South, Minneapolis, Minnesota 55415
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (612) 339-8091
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
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_____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this form 10-K. [ ]
2,801 of the registrant's 63,803 Limited Partnership Interests are held by
affiliates. The aggregate market value of units held by non-affiliates is not
determinable since there is no public trading market for the Limited
Partnership Interests and transfers of the Limited Partnership Interests are
subject to certain restrictions.
Exhibit Index: See Page 58
Documents Incorporated by Reference: See Page 59
PART I
ITEM 1. BUSINESS
Lutheran Brotherhood Realty Fund I, a California limited partnership (the
"Partnership") was organized on August 4, 1987, as a limited partnership under
the California Revised Limited Partnership Act. The Partnership's primary
business and only industry segment is to own, operate, and ultimately dispose
of income-producing real properties for the benefit of its Limited Partners.
The Partnership's sponsor and general partner is Lutheran Brotherhood Real
Estate Products Company, a Minnesota corporation (the "General Partner"). The
General Partner performs all of the management and administration functions of
the Partnership at the General Partner's principal office in Minneapolis. The
General Partner is an indirect wholly-owned subsidiary of Lutheran Brotherhood
("LB"), a fraternal benefit society existing and operating under the laws of
the State of Minnesota. LB, directly and through its subsidiaries, is
principally engaged in the business of marketing financial services and
individual life insurance products to its members. Other direct or indirect
wholly-owned subsidiaries of LB include Lutheran Brotherhood Securities Corp.,
which was the underwriter of the offering of the Units of the Partnership,
Lutheran Brotherhood Financial Corporation, Lutheran Brotherhood Variable
Insurance Products Company, Lutheran Brotherhood Research Corp., and four
corporations engaged in the marketing of property and casualty insurance which
are hereinafter collectively referred to as "Lutheran Trust Group."
The principal business of the Partnership is to own and operate a diversified
portfolio of income-producing residential and commercial properties in order
to: (i) preserve and protect the investors' original invested capital; (ii)
provide quarterly cash distributions, a portion of which may not represent
taxable income to taxable investors; (iii) provide gains through potential
appreciation of the properties; and (IV) diversify the Partnership's
investment in properties to reduce the Partnership's investment risks. The
Partnership has the ability to utilize a moderate amount of leverage in
connection with its business activities. The primary objective of the
Partnership is to own properties with the expectation of generating current
income. A secondary objective is to realize capital appreciation.
Since the principal business of the Partnership is to own and operate real
estate, the Partnership is subject to all of the risks incident to ownership
of real estate and interests therein, many of which relate to the illiquidity
of this type of investment. These risks include changes in general or local
economic conditions, changes in supply or demand for competing properties in
an area, changes in interest rates and availability of permanent mortgage
funds which may render the sale or refinancing of a property difficult or
unattractive, changes in real estate and zoning laws, increases in real
property tax rates and federal or local economic or rent controls. The
illiquidity of real estate investments generally impairs the ability of the
Partnership to respond promptly to changed circumstances. The Partnership
competes with numerous established companies and private investors (including
foreign investors), real estate investment trusts, limited partnerships and
other entities (many of which have greater resources than the Partnership and
broader experience than the General Partner) in connection with the
acquisition, sale, financing and leasing of properties.
The Partnership has retained working capital reserves in excess of 3% of
invested capital as required by its Amended and Restated Limited Partnership
Agreement ("the Partnership Agreement"). See Item 8, Financial Statements and
Supplementary Data, for the revenues generated by the Partnership's operations
for its last three fiscal years.
The Partnership's business is not seasonal. The Partnership's anticipated
plan of operation for 1996 is to preserve or increase gross revenues whenever
possible and to maintain or decrease property operating expenditures whenever
possible, while at the same time making whatever capital expenditures are
reasonable and required under the circumstances in order to preserve and
enhance the value of the Partnership's properties.
The Partnership does not directly employ any persons. The General Partner or
an affiliate employs persons in the operation and management of the business
of the Partnership. The Partnership reimburses affiliates of the General
Partner for certain of these expenses in accordance with the Partnership
Agreement.
Since 1990, Worthington Green has been managed by Zink Partners, Inc., an
Illinois corporation ("Zink"). Zink was formed on January 1, 1989 to manage
multiple residential properties and currently manages 18 such properties
having a total of 2,500 residential units. Zink is not affiliated with the
Partnership or the General Partner. (See disclosure regarding the nature of
the joint venture ownership of the property at Table 2, Item 2.)
Since 1989, NWDC and Minnetonka 225, 300 and 400 have been managed by Northco,
Inc., a Minnesota corporation ("Northco"). Northco is an established real
estate development and management organization and manages more than 4,000,000
square feet of space in over 40 properties, including NWDC and Minnetonka 225,
300 and 400. (See disclosure regarding the nature of the joint venture
ownership of the property at Table 2, Item 2.)
ITEM 2. DESCRIPTION OF PROPERTY
Table Nos. 1 through 3, below, summarize the Partnership's portfolio as of
December 31, 1995. Following the Tables is a brief description of the
properties in the Partnership's portfolio.
<PAGE>
<TABLE>
<CAPTION>
Table 1
-------
Name of Property Type of Property Size of Property Location of Property
- ---------------- ---------------- ---------------- --------------------
<S> <C> <C> <C>
Worthington Green Multi-family 156,460 net rent- Columbus, Ohio
residential able square feet
in 22 buildings
on 13.7 acres.
(176 apartment
units)
NWDC Bulk warehouse/ 121,225 net rent- New Hope, Minnesota
distribution able square feet
center in 2 buildings
on 7.3 acres.
Minnetonka 225 Multi-tenant 62,500 net rent- Minnetonka, Minnesota
office warehouse able square feet
in one building
on 4.2 acres.
Minnetonka 300 Multi-tenant 68,500 net rent- Minnetonka, Minnesota
office warehouse able square feet
in one building
on 3.9 acres.
Minnetonka 400 Multi-tenant 37,460 net rent- Minnetonka, Minnesota
office warehouse able square feet
in one building
on 4.4 acres.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Table 2
-------
Total
Nature of Invest- Debt
Date Interest Partnership's ment by Encumbering
Name of Property First Acquired Interest Partnership Property
- ---------------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Worthington Green Nov. 1987 19.3% interest $ 492,000* $ 0.00
in a joint
venture with
LB.
NWDC Sept. 1989 100% owned by $2,248,000 $ 0.00
Partnership
Minnetonka 225 Sept. 1989 33% interest $ 623,000* $ 0.00
in a joint
venture with
LB.
Minnetonka 300 Sept. 1989 33% interest $ 639,000* $ 0.00
in a joint
venture with
LB.
Minnetonka 400 Sept. 1989 33% interest $ 351,000* $ 0.00
in a joint
venture with
LB.
</TABLE>
*The total Partnership investment in joint ventures is $2,105,000 at December
31, 1995. The Partnership uses the equity method of accounting for its
investments in joint ventures.
<PAGE>
<TABLE>
<CAPTION>
Table 3
-------
Percentage
of Space
Percentage of in Property Percentage of
Property Leased Occupied by Space Subject to
Name of Property as of 12/31/95 Largest Tenant Renewal in 1996
- ---------------- --------------- -------------- ----------------
<S> <C> <C> <C>
Worthington Green 96% (Not Applicable 100%
to Residential
Property)
NWDC 100% 84% 0%
Minnetonka 225 100% 33% 0%
Minnetonka 300 100% 27% 13%
Minnetonka 400 78% 78% 78%
</TABLE>
Set forth below is a brief description of the assets currently held by the
Partnership or the joint ventures in which the Partnership has an interest:
Worthington Green. This 176 apartment unit complex consists of 22 apartment
buildings, a pool and accessory building and a gazebo, all located on a 13.70
acre tract at 1739 Wetherburn Road in Columbus, Ohio. The net rentable square
footage is 156,460; the property was completed in July of 1987.
The units are one story garden-type in style, built on a concrete slab. Each
building contains 8 units. Construction is wood frame, with brick veneer and
vinyl siding cover. Roofs are gable with asphalt shingles covering plywood
decking. Soffits, gutters and downspouts are aluminum. All unit interior
finishes consist of painted drywall walls, stippled drywall ceilings and wall-
to-wall carpeting, except for wall covering in the kitchens and bathrooms and
vinyl coverings on the floor in these two rooms. The kitchens are equipped
with a refrigerator, an electric range, a double bowl stainless steel sink
with disposal, a dishwasher and recessed ceiling lighting. Forty-four two
bedroom end units have brick fireplaces with a brick hearth. Each of the
units has a fold down attic stairway which leads to a storage area. Each unit
has washer and dryer hookups in close proximity to the bathroom. The units
are heated and cooled by electric heat pumps and electric forced air furnaces.
Hot water tanks are also electrically fired. The Partnership holds title to
the property as nominee of and for the benefit of the Worthington Green
Associates joint venture.
Minnetonka 225. This multi-tenant office/warehouse facility is a one-story
building of 62,500 net rentable square feet located at 15225 Minnetonka
Boulevard, an east/west thoroughfare intersecting with Interstate 494, a major
north/south highway. The property was built in 1977 using steel frame
construction on a concrete slab on grade. The property is heated by a gas
forced air furnace, and has electric air conditioning in office and finished
areas. Space heaters are used in the warehouse areas. Title to the property
will continue to be held in the name of LB which holds title as nominee of and
for the benefit of the Minnetonka 225 Associates joint venture.
Minnetonka 300. This multi-tenant office/warehouse facility consists of a
one-story building having 68,500 net rentable square feet. The property was
built in 1972 using steel frame construction on a concrete slab on grade. The
property is heated by a gas forced air furnace, with space heaters in the
warehouse. Minnetonka 300 shares parking facilities with Minnetonka 400,
described below, and has good access to local streets and Interstate 494.
Title to the property will continue to be held in the name of LB which holds
title as nominee of and for the benefit of the Minnetonka 300 & 400 Associates
joint venture.
Minnetonka 400. This office/warehouse facility, located at 15400 Minnetonka
Industrial Road, consists of a one-story building of approximately 37,460 net
rentable square feet. The property was built in 1976 using steel frame
construction on a concrete slab on grade. A gas forced air furnace heats the
property, and there is electric air conditioning in the office area, and space
heaters in the warehouse areas. This property shares parking with Minnetonka
300, described above, and has good access to local streets and Interstate 494.
Title to the property will continue to be held in the name of LB which holds
title as nominee of and for the benefit of the Minnetonka 300 & 400 Associates
joint venture.
NWDC. This bulk warehouse-distribution center located at 4948 Winnetka Avenue
North, consists of two buildings totaling 121,225 square feet. The property
was built in 1966 using concrete block construction with concrete floors. The
two rectangularly shaped buildings are one-story warehouses having 27 foot
clear ceiling height and 25 overhead dock doors with bay sizes of 5,000 square
feet. Suspended gas-fired space heaters provide heat to the warehouse area.
Approximately 1,225 square feet of the two buildings is office space. A
railroad spur serves the NWDC along the north side of the property, and
Winnetka Avenue and residential properties border it to the west. Title to
the property will continue to be held in the name of LB which holds title as
nominee of and for the benefit of the Partnership.
-----------------------
Minnetonka 225, Minnetonka 300, Minnetonka 400 are located in Minnetonka and
NWDC is located in New Hope, both of which are suburbs of Minneapolis/St.
Paul. According to the 1990 Census, the Twin Cities Metropolitan Statistical
Area population ranks the Twin Cities 14th largest in the nation. As the
center for this region's business, finance and industry, Minneapolis has a
stable and diverse economy which is supported by a large number of major
industries, including electronics, food processing and graphic arts.
Approximately fourteen Fortune 500 companies have headquarters in the
Minneapolis/St. Paul metropolitan area.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not a party to, nor is any of the Partnership's property
the subject of, any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED
SECURITY HOLDER MATTERS
(A) No market for the Units exists nor is one expected to develop. The
offering of the Units expired by its terms on February 11, 1989.
(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------
Units of Limited Partnership Interests 909 as of December 31, 1995
(C) Subsequent to December 31, 1993, a distribution of $64,000 relating to
the fourth quarter of 1993 was declared and distributed. An additional
$191,000 was distributed in 1994 for a combined total of $255,000. Subsequent
to December 31, 1994, a distribution of $64,000 relating to the fourth quarter
of 1994 was declared and distributed. An additional $191,000 was distributed
in 1995 for a combined total of $255,000. Subsequent to December 31, 1995, a
distribution of $64,000 relating to the fourth quarter of 1995 was declared
and distributed. Cash provided from operations in 1996 may not be sufficient
to provide distributions to the Limited Partners at the level of distributions
made to the Limited Partners in 1994 and 1995. The Partnership may borrow
funds from the General Partner to provide cash for distributions to Limited
Partners, but it is not anticipated that such borrowing will occur.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the
Partnership's financial statements and notes thereto appearing in Item 8.
<TABLE>
<CAPTION>
For the For the For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31, December 31,
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Income $ 546,000 $ 513,000 $ 478,000 $ 451,000 $ 442,000
Expenses (450,000) (328,000) (324,000) (343,000) (351,000)
--------- --------- --------- -------- ---------
Net Income (Loss)
from Operations 96,000 185,000 154,000 108,000 91,000
Income from Joint
Ventures 168,000 127,000 144,000 105,000 130,000
--------- --------- --------- -------- ---------
Net Income (Loss) $ 264,000 $ 312,000 $ 298,000 $ 213,000 $ 221,000
========= ========= ========= ========= =========
Net Income (loss)
per weighted
average Limited
Partnership Unit $ 4.14 $ 4.90 $ 4.67 $ 3.34 $ 3.46
Distributions per
weighted average
Limited Partnership
Unit $ 4.00 $ 4.00 $ 4.00 $ 4.50 $ 5.00
Weighted average
number of Limited
Partnership Units
outstanding 63,803 63,803 63,803 63,803 63,803
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
--------------------------------------------------------------------------------
Balance Sheets 1995 1994 1993 1992 1991
- -------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Total assets $ 4,706,000 $ 4,718,000 $ 4,685,000 $ 4,643,000 $ 4,716,000
Total liabilities $ 2,000 $ 23,000 $ 47,000 $ 48,000 $ 47,000
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The Partnership was formed to engage in the business of acquiring and
operating income-producing real properties and holding the properties for
investment. The Partnership's public offering commenced on December 4, 1987.
The initial $1,300,000 of contributed capital was released from impound to the
Partnership on June 2, 1988.
The offering of the Partnership's Units expired on February 11, 1989, and the
General Partner elected not to attempt to extend the offering period. The
offering raised a total of $6,365,000 in contributed capital (including the
Initial Limited Partners' contributions) from which the Partnership netted
$5,719,000 after underwriting commissions and registration expenses.
Currently, the Partnership owns a warehouse/distribution center in New Hope,
Minnesota and is a co-venturer in three joint ventures holding four other
residential and commercial properties. See Item 2 above.
The Partnership completed its start-up and investment-in-properties phases in
1989 and is currently in an operational phase with focus on efforts to
increase income through active management of the Partnership's properties. The
General Partner, however, in anticipation of the recovery of the real estate
market in which the properties are located, intends to distribute a proxy
statement to the limited partners to seek their approval, at a special meeting
of the limited partners, of a liquidation proposal to begin the process of
selling the Partnership's properties when advantageous, followed by the
dissolution and winding up of the Partnership. The General Partner has listed
the properties with real estate agencies to gauge interest in the sales of the
properties if the limited partners approve the liquidation proposal. After
such approval, depending on the success of the General Partner's efforts and
the prices offered for the properties, it is possible that all of the
properties could be sold during 1996, enabling the General Partner to
distribute to the limited partners the net property sales proceeds and wind up
the affairs of the Partnership. Even if the limited partners approve the
liquidation proposal and the General Partner actively seeks such sales, the
General Partner has no contracts on any of the properties and there can be no
assurance that the Partnership's properties can be sold during 1996 or
thereafter. The Partnership Agreement allows sales of less than substantially
all of the Partnership's properties without limited partner approval and the
General Partner may, therefore, make individual sales if the liquidation
proposal is not approved.
RESULTS OF OPERATIONS
1995 Compared to 1994
NWDC continued to be 100% occupied throughout 1995 as it has been since the
third quarter of 1992. Gross rental revenues increased to $516,000 in 1995
from $494,000 in 1994 due to a small increase in rental rates during 1995.
Interest income was sharply higher in 1995 compared to 1994 as a result of
rising short-term interest rates. Property operations expenses increased 50%
to $267,000 in 1995 compared to $178,000 in 1994 due primarily to the painting
of the exterior of the building and partial replacement of the retaining wall.
As a result of the capitalization of additional tenant improvements late in
1994, depreciation and amortization expense rose over 30% to $90,000 in 1995
compared to $67,000 in 1994.
The Partnership's share of joint venture income increased to $168,000 in 1995
compared to $127,000 in 1994 as a result of the accumulative impact of the
items discussed in the following paragraphs.
The primary reason for the overall increase in joint venture income was a
dramatic improvement in the performance of the Minnetonka 225 property. The
Partnership's share of net income increased to $54,000 in 1995 compared to
$14,000 in 1994. Gross rental revenues increased nearly 70% in 1995 compared
to 1994 due to a combination of higher occupancy rates and rental rate
increases. Occupancy rates averaged 99% in 1995 compared to approximately 70%
during 1994. Partially offsetting the increase in rental income was a 55%
increase in depreciation and amortization expense as capital improvements were
made in order to attract new tenants. In addition, real estate taxes
increased 30% in 1995. (See discussion of market conditions surrounding the
property at Item 7, LIQUIDITY AND CAPITAL RESOURCES.)
The Partnership's share of income from the Minnetonka 300/400 properties also
improved, increasing 22% in 1995 to $62,000 compared to $51,000 in 1994.
Average occupancy at the Minnetonka 300 building has increased steadily from
57% during the first quarter of 1994 to 100% during most of 1995. In
contrast, average occupancy has slipped from 100% during all of 1994 at the
Minnetonka 400 building to 78% during the last half of 1995. The net result
was a 24% increase in rental revenues in 1995 compared to 1994. However,
depreciation costs jumped over 65% in 1995 compared to 1994 due to capitalized
roof replacement costs at the Minnetonka 300 property in late 1994.
Landscaping and interior repairs also pushed operating expenses up
approximately 13% in 1995. (See discussion of market conditions surrounding
the property at Item 7, LIQUIDITY AND CAPITAL RESOURCES.)
The Partnership's share of joint venture income from the Village at
Worthington Green apartment complex declined 16% to $52,000 in 1995 from
$62,000 in 1994. Rental revenues were flat during the two years, but
operating expenses increased 20% primarily due to higher charges in 1995 for
non-capitalized property replacements such as carpeting and appliances and
interior painting.
1994 Compared to 1993
Occupancy at NWDC remained at 100% throughout 1994 as it did during 1993.
However, an increase in rental rates during the current year allowed gross
rental revenues to rise to $494,000 in 1994 from $468,000 in 1993. Interest
income increased to $19,000 in 1994 from $10,000 in 1993 due to a combination
of rising short-term interest rates and larger short-term investment balances.
Property operation expenses, depreciation and amortization charges and
administrative expenses were all relatively stable between 1994 and 1993.
The Partnership's share of joint venture income declined to $127,000 in 1994
from $144,000 in 1993 as a result of the cumulative impact of the items
discussed in the following paragraphs.
The Partnership's share of income from the Minnetonka 225 joint venture
declined to $14,000 in 1994 from $35,000 in 1993. The primary reason for this
difference relates to property tax expense. In 1993, the joint venture
received a large refund of prior years' property taxes as a result of an
appeal filed by the property's management due to valuation differences.
The Partnership's share of joint venture income from the Minnetonka 300/400
properties declined to $51,000 in 1994 compared to $59,000 in 1993. Despite
the fact that the Minnetonka 400 building was 100% occupied throughout 1994,
gross rental revenues slipped 3% in 1994 compared to 1993 due to a sharp
decline in the average occupancy level at the Minnetonka 300 building during
the current year. Occupancy recovered to 81% at Minnetonka 300 by the end of
1994. Depreciation charges were also up 19% in 1994 compared to 1993 due to
the capitalized roof replacement costs at the Minnetonka 300 building in 1994.
In contrast, other operating expenses declined in 1994 compared to 1993,
primarily because of non capitalizable roof repair expenses incurred in 1993
on the Minnetonka 400 building.
The Partnership's share of joint venture income from Worthington Green rose
24% to $62,000 in 1994 compared to $50,000 in 1993. Gross rental revenues
rose over 4% in 1994 compared to 1993 due to a modest increase in occupancy
rates. In addition, depreciation expense dropped significantly in 1994
compared to 1993 because several tenant improvements were fully depreciated at
December 31, 1993.
INFLATION
During 1995 inflation remained at moderate levels and had little effect on the
Partnership's operations. It is anticipated that during 1996, inflation will
continue at a moderate level and that the Partnership's operations will not be
significantly influenced by inflation.
LIQUIDITY AND CAPITAL RESOURCES
As discussed previously, the Partnership owns interests in three joint
ventures. All three joint ventures have been profitable since their
inception. The Partnership's share of net joint venture income after
depreciation for the years 1995, 1994 and 1993 was $168,000, $127,000, and
$144,000, respectively. The Partnership's share of depreciation, a non-cash
item, was $133,000, $101,000, and $113,000, respectively. During 1995, the
Partnership received cash distributions of $57,000, $48,000 and $54,000 from
the Worthington Green Associates, Minnetonka 225 Associates and Minnetonka 300
and 400 Associates joint ventures respectively. Comments follow relating to
the four properties included in the joint ventures as well as Northwest
Distribution Center, which is owned 100% by the Partnership. See also Item 2.
Description of Property.
Northwest Distribution Center
The property continues to be 100% occupied by two tenants. The next lease
expiration will not be until June of 1997 when 20,000 square feet or 17% of
the property comes up for renewal. During 1995, the property's largest tenant
was purchased by a wholly-owned subsidiary of The Dial Corp., a national
company, known as ExhibitGroup, Inc. This tenant will continue to
manufacture, warehouse and distribute their exhibiting stages and materials
from the NWDC location. The demand for bulk warehouse facilities such as NWDC
continues to outpace supply, with vacancy less than 4% for such buildings
within the Twin Cities. High demand and short supply contributed greatly to
rising rental rates during 1995. During 1995, the property was painted and
the retaining wall and dock enclosures replaced at a cost of approximately
$76,000. During 1996, it may be necessary to complete parking lot work at the
property at an estimated cost of $15,000.
Minnetonka Industrial Properties
Occupancy and rental rates for office/warehouse buildings such as the
Minnetonka properties continued to rise throughout 1995, driven by steady
demand and a quickly diminishing supply of available space. Rental rates were
increased on all new leases and rollovers during 1995 at the Minnetonka
properties.
Minnetonka 225 averaged 99% occupancy during 1995. The next lease expiration,
during January of 1996 for 9,072 square feet, has been renewed for a two-year
term, which places the next lease expiration in December 1997, for 5,120
square feet (8% of property). During 1995, the roof of the property required
replacement, and the work was 90% complete at year-end. The balance of work
was completed during January of 1996 and no additional capital projects are
anticipated at this property during 1996.
Minnetonka 300 averaged 94% occupancy during 1995 with the addition of a major
tenant in May. Approximately 13% of the property comes up for renewal during
1996.
Minnetonka 400 averaged 87% occupancy during 1995. The next scheduled lease
expiration is in December of 1996 for 78% of the property. Management is
currently in discussion with this tenant regarding a long-term lease.
Replacement of the building's roof was begun in 1995 and is expected to be
complete by the end of February, 1996. While no additional capital projects
are expected for 1996, we do anticipate a significant tenant improvement cost
in the range of $150,000-$275,000 in connection with the pending lease renewal
of a major tenant as noted above or a potential re-leasing of this building.
Village at Worthington Green Apartments
Occupancy at the Village at Worthington Green apartments averaged in excess of
95% throughout 1995. The Columbus market area continues to experience steady
population, employment and housing growth. One new project in the Worthington
market area was introduced during 1995, and much land remains available within
a five mile radius of the Village for further housing development.
Worthington continues to build infrastructure (schools, libraries, roadway
expansions) in order to accommodate future population growth. During 1995,
two of twenty-two roofs were replaced with a new 35 year shingle system. The
replacements were begun in 1995 and will continue for the next four to seven
years until all roofs have been replaced. Also, a partial overlay of the
parking areas was completed in 1995, with phase two of this project scheduled
for 1996 and the third and final phase in 1997.
----------------------
Cash provided by operations during 1995 was $333,000. Cash and cash
equivalents increased from $521,000 at December 31, 1994 to $610,000 at
December 31, 1995. Distributions to the Limited Partners totaled $255,000.
The Partnership has sufficient cash and cash equivalents to meet its 3%
required reserve.
Cash provided by operations in 1996 is expected to be sufficient to satisfy
substantially all of the Partnership's working capital and normal capital
expenditure needs, which include anticipated capital expenditures of $139,000.
However, cash provided from operations in 1996 may not be sufficient to
provide distributions to the Limited Partners at the level of distributions
paid to Limited Partners in 1994 and 1995. The Partnership may borrow funds
from the General Partner to provide cash for distributions to Limited
Partners, but it is not anticipated that such borrowing will occur.
The Partnership will not acquire additional properties or interests in joint
ventures which own properties. During the holding period of the Partnership's
properties, cash flow from operations is expected to contribute to the
liquidity of the Partnership and generate current income. The General
Partner, however, intends to seek limited partner approval of a liquidation
proposal to begin the process of selling the Partnership's properties and
winding up the Partnership during 1996. The General Partner has listed the
Partnership's properties with real estate agencies to test the feasibility of
such sales. There can be no assurance, however, that following limited
partner approval of the liquidation proposal, the General Partner will be able
to accomplish such sales during 1996 or thereafter.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Index to Financial Statements Number
- ----------------------------- ------
Lutheran Brotherhood Realty Fund I
- ----------------------------------
Report of Price Waterhouse LLP, Independent Accountants 15
Balance Sheet as of December 31, 1995 and 1994 16
Statement of Operations for the Years Ended
December 31, 1995, 1994 and 1993 17
Statement of Partners' Equity for the
Years Ended December 31, 1995, 1994 and 1993 18
Statement of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 19
Notes to Financial Statements 20
Minnetonka 225 Associates Joint Venture
- ---------------------------------------
Report of Price Waterhouse LLP, Independent Accountants 25
Balance Sheet as of December 31, 1995 and 1994 26
Statement of Operations for the Years Ended
December 31, 1995, 1994 and 1993 27
Statement of Partners' Equity for the
Years Ended December 31, 1995, 1994 and 1993 28
Statement of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 29
Notes to Financial Statements 30
Minnetonka 300/400 Associates Joint Venture
- -------------------------------------------
Report of Price Waterhouse LLP, Independent Accountants 33
Balance Sheet as of December 31, 1995 and 1994 34
Statement of Operations for the Years Ended
December 31, 1995, 1994 and 1993 35
Statement of Partners' Equity for the
Years Ended December 31, 1995, 1994 and 1993 36
Statement of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 37
Notes to Financial Statements 38
Worthington Green Associates Joint Venture
- ------------------------------------------
Report of Price Waterhouse LLP, Independent Accountants 41
Balance Sheet as of December 31, 1995 and 1994 42
Statement of Operations for the Years Ended
December 31, 1995, 1994 and 1993 43
Statement of Partners' Equity for the
Years Ended December 31, 1995, 1994 and 1993 44
Statement of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 45
Notes to Financial Statements 46
Schedule X - Supplementary Statement of Operations
Information 48
Schedule XI - Real Estate and Accumulated Depreciation 49
All other schedules are omitted because they are not required, are not
applicable or the financial information required is included in the financial
statements or the notes thereto.
<PAGE>
3100 Multifoods Tower Telephone 612-332-7000
33 South Sixth Street Telecopier 612-332-6711
Minneapolis, MN 55402-3795
Price Waterhouse LLP [LOGO OMMITTED]
Report of Independent Accountants
To the Partners of
Lutheran Brotherhood Realty Fund I
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Lutheran
Brotherhood Realty Fund I at December 31, 1995 and 1994, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Minneapolis, Minnesota
February 23, 1996
<PAGE>
LUTHERAN BROTHERHOOD REALTY FUND I
BALANCE SHEET
(in thousands)
December 31
-----------
ASSETS 1995 1994
- ------ ---- ----
Real estate investments:
Land $ 636 $ 636
Buildings 1,612 1,612
------ ------
2,248 2,248
Less: Accumulated depreciation (319) (268)
------ ------
1,929 1,980
Investments in joint ventures 2,105 2,095
Cash and cash equivalents 610 521
Receivable from affiliates 6
Deferred charges (net) and other assets 56 122
------ ------
Total assets $4,706 $4,718
====== ======
LIABILITIES AND PARTNERS' EQUITY
Payable to affiliates $ $ 23
Other liabilities 2
------ ------
Total liabilities 2 23
------ ------
Partners' equity:
Limited Partners - 63,803 units
outstanding in 1995 and 1994 4,693 4,687
General Partner 11 8
------ ------
Total partners' equity 4,704 4,695
------ ------
Total liabilities and partners' equity $4,706 $4,718
====== ======
The accompanying notes are an integral part of the financial statements.
<PAGE>
LUTHERAN BROTHERHOOD REALTY FUND I
STATEMENT OF OPERATIONS
(in thousands)
For the years ended December 31,
--------------------------------
1995 1994 1993
---- ---- ----
Revenue:
Rental $516 $494 $468
Interest 30 19 10
Equity in joint venture earnings 168 127 144
---- ---- ----
Total revenue 714 640 622
---- ---- ----
Expenses:
Property operations 267 178 174
Depreciation and amortization 90 67 69
Administrative 93 83 81
---- ---- ----
Total expenses 450 328 324
---- ---- ----
Net income $264 $312 $298
==== ==== ====
Net income per weighted
average number of limited
partnership units
outstanding $4.14 $4.90 $4.67
===== ===== =====
Distributions per weighted
average limited partnership
units outstanding $4.00 $4.00 $4.00
===== ===== =====
The accompanying notes are an integral part of the financial statements.
<PAGE>
LUTHERAN BROTHERHOOD REALTY FUND I
STATEMENT OF PARTNERS' EQUITY
FROM DECEMBER 31, 1992 THROUGH DECEMBER 31, 1995
(in thousands)
Total
General Limited Partners'
Partner Partners Equity
------- -------- --------
Balance at December 31, 1992 2 4,593 4,595
Net income 3 295 298
Distributions to Limited Partners (255) (255)
------- ------ ------
Balance at December 31, 1993 5 4,633 4,638
Net income 3 309 312
Distributions to Limited Partners (255) (255)
------- ------ ------
Balance at December 31, 1994 8 4,687 4,695
Net income 3 261 264
Distributions to Limited Partners (255) (255)
------- ------ ------
Balance at December 31, 1995 $ 11 $4,693 $4,704
======= ====== ======
The accompanying notes are an integral part of the financial statements.
<PAGE>
LUTHERAN BROTHERHOOD REALTY FUND I
STATEMENT OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(in thousands)
For the years ended December 31,
--------------------------------
1995 1994 1993
---- ---- ----
Net income $264 $312 $298
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 90 67 69
Distributions from joint ventures 158 163 289
Equity in joint venture earnings (168) (127) (144)
Changes in assets and liabilities:
Receivable from affiliates 6
Other assets (5) (8)
Payables to affiliates (23) (9) 3
Property taxes payable (12)
Other liabilities 2 (3) (4)
---- ---- ----
Net cash provided by operating activities 324 383 511
---- ---- ----
Cash flows from investing activities:
Capital improvements (3) (89) (22)
Tenant reimbursements 23
Capital infusion to Mtka 300/400 (80)
---- ---- ----
Net cash provided by (used in) investing
activities 20 (169) (22)
---- ---- ----
Cash flows from financing activities:
Distributions to partners (255) (255) (255)
---- ---- ----
Net cash used in financing activities (255) (255) (255)
---- ---- ----
Net increase (decrease) in cash
and cash equivalents 89 (41) 234
Cash and cash equivalents at beginning
of period 521 562 328
---- ---- ----
Cash and cash equivalents at end of
period $610 $521 $562
==== ==== ====
The accompanying notes are an integral part of the financial statements.
<PAGE>
LUTHERAN BROTHERHOOD REALTY FUND I
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 1. ORGANIZATION
Lutheran Brotherhood Realty Fund I, a California limited partnership (the
"Partnership") was organized on August 4, 1987 to acquire and operate or
invest in commercial and residential properties. Lutheran Brotherhood Real
Estate Products Company (the "General Partner") is an indirect wholly-owned
subsidiary of Lutheran Brotherhood ("LB"). The General Partner made a $1,000
capital contribution to the Partnership and the initial Limited Partners,
Robert P. Gandrud and the General Partner, contributed a combined $100,000 for
the purchase of 1,000 Limited Partnership units. The Partnership's offering
expired on February 11, 1989 having raised a total of $6,365,000 in
contributed capital (including Initial Limited Partner's Contributions) from
which the Partnership netted $5,719,000 after underwriting commissions and
registration expenses. The Partnership owns an interest in three (3) joint
ventures and directly owns one property.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real estate investments
Real estate investments are recorded at cost. The building is depreciated for
financial reporting purposes using the straight-line method over the estimated
useful life of 31.5 years. Asset and accumulated depreciation accounts are
relieved for dispositions and resulting gains or losses are reflected in the
results of operations.
Investments in joint ventures
Investments in joint ventures are accounted for by the equity method of
accounting. The cost of the investments is adjusted by the Partnership's
share of the joint ventures' results of operations and reduced by
distributions received by the Partnership.
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents include
$110,000 of cash on hand and $500,000 of short-term investments. Short-term
investments consist primarily of repurchase agreements collateralized by US
Government-backed obligations.
Deferred charges and other assets
Deferred charges primarily represents lease commissions paid and specific
tenant improvements which are amortized over the term of the related lease.
Rental revenue
The Partnership leases the space in its commercial property under operating
leases with durations from one to five years. The Partnership expects that in
the normal course of business these leases will be renewed or replaced by
other leases. Rental income which includes base rent and reimbursed operating
expenses is recognized in accordance with the lease agreements.
Income taxes
No provision for Federal or state income taxes is necessary in the financial
statements of the partnership because, as a partnership, it is not subject to
Federal income tax; the effect of its activities accrues to the partners.
Net income per limited partnership unit
Net income per limited partnership unit is computed by dividing net income
allocated to the Limited Partners by the weighted average number of Limited
Partnership Units outstanding. Per unit information has been computed based
on 63,803 weighted average units outstanding in 1995, 1994 and 1993,
respectively.
Partnership allocations
The Partnership agreement provides for net income and net losses from
operations for both financial and tax reporting purposes and distributable
cash from operations and surplus funds to be allocated 99% to the Limited
Partners and 1% to the General Partner.
Distributions
The Partnership has declared and paid distributions to the Limited Partners
since the second quarter of 1988. Distributions paid by the Partnership in
1995, 1994 and 1993 were $255,000 for all years. Subsequent to December 31,
1995, a distribution of $63,803 relating to the fourth quarter of 1995 was
declared and distributed.
NOTE 3. INVESTMENTS IN JOINT VENTURES
At December 31, 1995 and 1994, the assets and liabilities of the joint
ventures were as follows (in thousands):
<TABLE>
<CAPTION>
Minnetonka Minnetonka Worthington
225 300 & 400 Green
---------- ---------- -----------
1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Land $ 369 $ 369 $ 687 $ 687 $ 837 $ 837
Property less
depreciation 1,398 1,213 1,836 1,954 4,032 4,260
Deferred charges (net) and other
assets 236 283 497 314 943 738
------ ----- ------ ----- ------ -----
2,003 1,865 3,020 2,955 5,812 5,835
Liabilities (135) (12) (51) (12) (47) (50)
------ ----- ------ ------ ------ -----
Net assets $1,868 $1,853 $2,969 $2,943 $5,762 $5,785
====== ====== ====== ====== ====== ======
</TALBE>
Revenues and expenses of the joint ventures for the years ending December 31,
1995, 1994 and 1993 were as follows (in thousands):
Minnetonka 225 Minnetonka 300/400 Worthington Green
Associates Associates Associates
------------------------ ------------------------ ------------------------
1995 1994 1993 1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ---- ---- ---- ----
Revenues $ 437 $ 260 $ 284 $ 630 $ 510 $ 526 $1,150 $1,116 $1,068
Property taxes (121) (93) (46) (136) (135) (130) (137) (125) (98)
Management fee (19) (13) (14) (27) (25) (25) (42) (45) (40)
Other operating expenses (57) (60) (52) (110) (97) (108) (438) (365) (348)
Depreciation (79) (51) (66) (169) (101) (85) (262) (261) (324)
------ ----- ------ ------ ------ ------ ----- ------ ------
Net income 161 43 106 188 152 178 271 320 258
Partnership interest 33.3% 33.3% 33.3% 33.3% 33.3% 33.3% 19.3% 19.3% 19.3%
------ ----- ------ ----- ------ ------ ----- ------ ------
Partnership income $ 54 $ 14 $ 35 $ 62 $ 51 $ 59 $ 52 $ 62 $ 50
------ ------ ------ ------ ------ ----- ------ ------ ------
LB is the co-venturer in each of the three joint ventures.
NOTE 4. RELATED PARTY TRANSACTIONS
In addition to the joint venture transactions with Lutheran Brotherhood, the
Partnership has entered into the following related party transactions:
Partnership management fee
The General Partner will receive a partnership management fee not to exceed 9%
of actual distributions to the Limited Partners of distributable cash from
operations as defined in the Partnership Agreement.
Reimbursement of administrative expenses
Pursuant to the Partnership Agreement, the General Partner and its affiliates
are reimbursed for costs incurred in connection with administration of
Partnership activities.
Subordinated incentive compensation
The General Partner may also receive subordinated incentive compensation equal
to 14% of the sum of surplus funds plus this fee, after all Limited Partners
have received a return on their invested capital and their priority return of
10% on their capital contributions.
These related party transactions can be summarized by year as follows (in
thousands):
1995 1994 1993
---- ---- ----
Partnership management fee $ 23 $ 23 $ 23
Partnership administrative expenses 33 26 27
----- ----- -----
Total affiliate compensation $ 56 $ 49 $ 50
===== ===== =====
Lutheran Brotherhood occupied 5,000 square feet of NWDC for general
warehousing space through June 14, 1993, at which point an existing tenant
expanded into the space. The Partnership recognized $9,284 in rental income
from Lutheran Brotherhood on this space in 1993. The rentals paid by Lutheran
Brotherhood for this space were at market rates.
At December 31, 1995 and 1994, the following amounts were receivable from
(payable to) affiliates (in thousands):
1995 1994
------ --------
General Partner:
Bank deposit error $ 40 $
Administrative expenses (11)
Partnership management fee (23) (23)
------ --------
$ 6 $ (23)
NOTE 5. LEASES
The Partnership leases the space in its commercial property to tenants under
operating leases that expire at various dates over the next four years. The
Partnership expects that the leases will be renewed or replaced by other
leases.
Minimum future rentals to be received on the noncancelable operating leases at
NWDC as of December 31, 1995 are as follows (in thousands):
1996 $ 312
1997 257
1998 257
1999 129
------
$ 955
======
NOTE 6. INCOME TAXES
The Partnership reports certain transactions differently for tax and financial
statement purposes. The tax basis of real estate and joint venture
investments for Federal income tax purposes at December 31, 1995 and 1994 was
as follows (in thousands):
1995 1994
---- ----
Tax basis of property owned directly by
the Partnership:
Northwest Distribution Center $ 2,059 $ 2,135
======= =======
Tax basis of investments in Joint Ventures:
Minnetonka 225 Associates $ 660 $ 647
Minnetonka 300 & 400 Associates 1,059 1,021
Worthington Green Associates 1,049 1,048
------- -------
$ 2,768 $ 2,716
======= =======
A reconciliation between the financial statement net income and the income for
tax purposes follows (in thousands):
1995 1994 1993
---- ---- ----
Net income per statement
of operations $ 264 $ 312 $ 298
Difference in depreciation 34 12 16
Joint venture income 43 2 22
------ ------ ------
Estimated taxable income $ 341 $ 326 $ 336
====== ====== ======
The differences between the results from operations for tax and financial
statement purposes are due to different depreciation methods and different
periods for recognizing joint venture and prepaid rental income.
NOTE 7. COMMITMENTS
Pursuant to the Partnership Agreement, the Partnership is required to maintain
reasonable reserves for normal repairs, replacements, working capital, and
contingencies in an amount equal to at least 3% of capital contributions. In
the event expenditures are made from these reserves, a portion of the cash
generated from operating revenue shall be allocated to such reserves to the
extent necessary to maintain the foregoing level. Reserves, including cash on
hand and money market funds at December 31, 1995 and 1994 were in excess of 3%
of capital contributions.
The terms of the Partnership Agreement also provide that the General Partner
and/or affiliates are entitled to receive certain fees and reimbursements,
which are more fully described in Note 4.
NOTE 8. SIGNIFICANT TENANTS
The Partnership received rental revenue in excess of 10% of total revenue from
two tenants in 1995 and 1994 and three tenants in 1993. The rental revenue
from these tenants constituted approximately $435,000 and $90,200 of total
revenue for the year ending 1995, and $359,000 and $76,000 of total revenue
for the year ended December 31, 1994 and $293,000, $76,000 and $71,000 of
total revenue for the year ended December 31, 1993.
NOTE 9. PENDING LITIGATION
The Partnership is not a party to, nor is any of the Partnership's property
the subject of, any material legal proceedings.
<PAGE>
3100 Multifoods Tower Telephone 612-332-7000
33 South Sixth Street Telecopier 612-332-6711
Minneapolis, MN 55402-3795
Price Waterhouse LLP [LOGO OMMITTED]
Report of Independent Accountants
To the Venturers of
Minnetonka 225 Associates Joint Venture
In our opinion, the accompanying balance sheet and the related statements of
operations, of venturers' equity and of cash flows present fairly, in all
material respects, the financial position of Minnetonka 225 Associates Joint
Venture at December 31, 1995 and 1994, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Venturers; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Minneapolis, Minnesota
February 23, 1996
<PAGE>
MINNETONKA 225 ASSOCIATES JOINT VENTURE
BALANCE SHEET
(in thousands)
December 31,
1995 1994
---- ----
ASSETS
- ------
Real estate investments:
Land $ 369 $ 369
Buildings 1,686 1,455
------ ------
2,055 1,824
Less: Accumulated depreciation (288) (242)
------ ------
1,767 1,582
Cash and cash equivalents 89 156
Deferred charges (net) and other assets 147 127
------ ------
Total assets $2,003 $1,865
====== ======
LIABILITIES AND VENTURERS' EQUITY
- ---------------------------------
Payable to affiliates $ 135
Other liabilities $ 12
------- ------
Total liabilities 135 12
------- ------
Venturers' equity 1,868 1,853
------- ------
Total liabilities and venturers' equity $ 2,003 $1,865
======= ======
<PAGE>
MINNETONKA 225 ASSOCIATES JOINT VENTURE
STATEMENT OF OPERATIONS
(in thousands)
For the Years
Ended December 31,
---------------------
1995 1994 1993
---- ---- ----
Revenue:
Rental $ 429 $ 252 $ 280
Interest 8 8 4
----- ----- -----
Total revenue 437 260 284
----- ----- -----
Expenses:
Property operations 197 166 112
Depreciation and amortization 79 51 66
----- ----- -----
Total expenses 276 217 178
----- ----- -----
Net income $ 161 $ 43 $ 106
===== ===== =====
<PAGE>
MINNETONKA 225 ASSOCIATES JOINT VENTURE
STATEMENT OF CHANGES IN VENTURERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1992 THROUGH DECEMBER 31, 1995
(in thousands)
Lutheran
Brotherhood Total
Lutheran Realty Venturers'
Brotherhood Fund I Equity
----------- ------ ------
Balance at December 31, 1992 $1,214 $ 607 $1,821
Net income 71 35 106
Distributions to Venturers (19) (9) (28)
------ ------- -----
Balance at December 31, 1993 1,266 633 1,899
Net income 29 14 43
Distributions to Venturers (59) (30) (89)
------ ------- -----
Balance at December 31, 1994 1,236 617 1,853
Net income 107 54 161
Distributions to Venturers (98) (48) (146)
------ ------- -----
Balance at December 31, 1995 $1,245 $ 623 $1,868
====== ======= ======
<PAGE>
MINNETONKA 225 ASSOCIATES JOINT VENTURE
STATEMENT OF CASH FLOWS
(in thousands)
For the Years
Ended December 31,
-------------------------
1995 1994 1993
---- ---- ----
Net income $ 161 $ 43 $ 106
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 79 51 66
Changes in assets and liabilities:
Payables to affiliates 135
Other assets and liabilities, net (14) 1 3
----- ----- -----
Net cash provided by operating activities 361 95 175
----- ----- -----
Cash flows from investing activities:
Capital improvements (231) (4)
Tenant reimbursements (10) (103) (11)
Leasing commissions (41) (26)
----- ----- -----
Net cash provided by (used in) investing
activities (282) (133) (11)
----- ----- -----
Cash flows from financing activities:
Distributions to venturers (146) (89) (28)
----- ----- -----
Net cash used in financing activities (146) (89) (28)
----- ----- -----
Net increase (decrease) in cash and cash
equivalents (67) (127) 136
Cash and cash equivalents at beginning of period 156 283 147
----- ----- -----
Cash and cash equivalents at end of period $ 89 $ 156 $ 283
===== ===== =====
<PAGE>
MINNETONKA 225 ASSOCIATES JOINT VENTURE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 1 - ORGANIZATION
Minnetonka 225 Associates Joint Venture (the "Venture") is a joint venture
formed under a Joint Venture Agreement (the "Agreement") dated June 30, 1989
by and between Lutheran Brotherhood ("LB") and Lutheran Brotherhood Realty
Fund I ("RFI"), collectively referred to as the Venturers. The purpose of the
venture is to own and operate an industrial warehouse located in Minneapolis,
Minnesota.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real Estate Investments
Real estate investments are recorded at cost. The building is depreciated for
financial reporting purposes using the straight-line method over the estimated
useful life of 31.5 years. Asset and accumulated depreciation accounts are
relieved for dispositions and resulting gains or losses
are reflected in the results of operations.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents consist of
investments in money market mutual funds.
Deferred Charges and Other Assets
Deferred charges primarily represents lease commissions paid and specific
tenant improvements which are amortized over the term of the related lease.
Rental Revenue
The Venture leases the space in its commercial property under operating leases
with durations from three to nine years. The Venture expects that in the
normal course of business these leases will be renewed or replaced by other
leases. Rental income which includes base rent and reimbursed operating
expenses is recognized in accordance with the lease agreements.
Income Taxes
No provision for Federal or state income taxes is necessary in the financial
statements of the Venture because, as a joint venture, it is not subject to
Federal income tax; the effect of its activities accrues to the Venturers.
Venture Allocations
The Agreement provides for net income and net losses from operations for both
financial and tax reporting purposes and distributable cash from operations
and surplus funds to be allocated 66 2/3% to LB and 33 1/3% to RFI.
NOTE 3 - MANAGEMENT AGREEMENT
The Venture has entered into a management agreement with Northco Real Estate
Services ("Northco") to operate and manage the industrial warehouse. In
consideration for these services, the Venture pays Northco monthly management
fees equal to a percentage of gross monthly collections as defined by the
management agreement. The percentage was 4% from May 1, 1995 to December 31,
1995 and 5% prior thereto. During 1995, 1994 and 1993, management fees were
$19,000, $13,000 and $14,000, respectively.
NOTE 4 - LEASES
The Venture leases the space in its commercial property to tenants under
operating leases that expire at various dates over the next five years. The
Venture expects that the leases will be renewed or replaced by other leases.
Minimum future rentals to be received on the noncancelable operating leases as
of December 31, 1995 are as follows (in thousands):
1996 $ 273
1997 273
1998 208
1999 87
2000 99
------
$1,040
======
NOTE 5 - INCOME TAXES
The Venture reports certain transactions differently for tax and financial
statement purposes.
The tax basis of real estate and deferred charges for Federal income tax
purposes at December 31, 1995 and 1994 was $2,022,000 and $1,796,000,
respectively.
A reconciliation between the financial statement net income and the income for
tax purposes follows (in thousands):
1995 1994 1993
---- ---- ----
Net income per statement of operations $ 161 $ 43 $ 106
Difference in depreciation 23 2 17
Bad debt expense (45)
----- ----- -----
Estimated taxable income $ 184 $ 45 $ 78
===== ===== =====
The differences between the results from operations for tax and financial
statement purposes are due to different depreciation methods and different
periods for recognizing bad debt expense.
NOTE 6 - SIGNIFICANT TENANTS
The Venture received rental revenue in excess of 10% of total revenue from
four tenants in 1995, 1994 and 1993. The rental revenue from these tenants
constituted approximately $360,000 and 85% of total revenue for the year ended
December 31, 1995, $211,000 and 76% of total revenue for the year ended
December 31, 1994 and $213,000 and 75% of total revenue for the year ended
December 31, 1993.
<PAGE>
3100 Multifoods Tower Telephone 612-332-7000
33 South Sixth Street Telecopier 612-332-6711
Minneapolis, MN 55402-3795
Price Waterhouse LLP [LOGO OMMITTED]
Report of Independent Accountants
To the Venturers of
Minnetonka 300/400 Associates Joint Venture
In our opinion, the accompanying balance sheet and the related statements of
operations, of venturers' equity and of cash flows present fairly, in all
material respects, the financial position of Minnetonka 300/400 Associates
Joint Venture at December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Venturers; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Minneapolis, Minnesota
February 23, 1996
<PAGE>
MINNETONKA 300/400 ASSOCIATES JOINT VENTURE
BALANCE SHEET
(in thousands)
December 31,
1995 1994
---- ----
ASSETS
- ------
Real estate investments:
Land $ 687 $ 687
Buildings 2,308 2,300
------ ------
2,995 2,987
Less: Accumulated depreciation (472) (346)
------ ------
2,523 2,641
Cash and cash equivalents 252 238
Deferred charges (net) and other assets 245 76
------ ------
Total assets $3,020 $2,955
====== ======
LIABILITIES AND VENTURERS' EQUITY
- ---------------------------------
Payable to affiliates $ 31 $ 12
Other liabilities 20
------ ------
Total liabilities 51 12
------ ------
Venturers' equity 2,969 2,943
------ ------
Total liabilities and venturers' equity $3,020 $2,955
====== ======
<PAGE>
MINNETONKA 300/400 ASSOCIATES JOINT VENTURE
STATEMENT OF OPERATIONS
(in thousands)
For the Years
Ended December 31,
--------------------
1995 1994 1993
---- ---- ----
Revenue:
Rental $ 600 $ 500 $ 520
Interest 30 10 6
----- ----- -----
Total revenue 630 510 526
----- ----- -----
Expenses:
Property operations 273 257 263
Depreciation and amortization 169 101 85
----- ----- -----
Total expenses 442 358 348
----- ----- -----
Net income $ 188 $ 152 $ 178
===== ===== =====
<PAGE>
MINNETONKA 300/400 ASSOCIATES JOINT VENTURE
STATEMENT OF CHANGES IN VENTURERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1992 THROUGH DECEMBER 31, 1995
(in thousands)
Lutheran
Brotherhood Total
Lutheran Realty Venturers'
Brotherhood Fund I Equity
----------- ------ ------
Balance at December 31, 1992 $1,805 $ 903 $2,708
Net income 119 59 178
Distributions to Venturers (115) (58) (173)
------ ------- ------
Balance at December 31, 1993 1,809 904 2,713
Net income 101 51 152
Distributions to Venturers (108) (54) (162)
Capital contribution 160 80 240
------ ------- ------
Balance at December 31, 1994 1,962 981 2,943
Net income 125 63 188
Distributions to Venturers (108) (54) (162)
------ ------- ------
Balance at December 31, 1995 $1,979 $ 990 $2,969
====== ======= ======
<PAGE>
MINNETONKA 300/400 ASSOCIATES JOINT VENTURE
STATEMENT OF CASH FLOWS
(in thousands)
For the Years
Ended December 31,
--------------------
1995 1994 1993
---- ---- ----
Net income $ 188 $ 152 $ 178
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 169 101 85
Changes in assets and liabilities:
Payables to affiliates 31 (1)
Other assets and liabilities, net 7 3 2
---- ---- ----
Net cash provided by operating activities 395 256 264
---- ---- ----
Cash flows from investing activities:
Capital improvements (64) (246) (68)
Tenant reimbursements (155) (56) (27)
---- ---- ----
Net cash provided by (used in)
investing activities (219) (302) (95)
---- ---- ----
Cash flows from financing activities:
Capital contribution 240
Distributions to venturers (162) (162) (173)
---- ---- ----
Net cash used in financing activities (162) 78 (173)
---- ---- ----
Net increase (decrease) in cash and cash equivalents 14 32 (4)
Cash and cash equivalents at beginning of period 238 206 210
---- ---- ----
Cash and cash equivalents at end of period $ 252 $ 238 $ 206
===== ===== =====
<PAGE>
MINNETONKA 300/400 ASSOCIATES JOINT VENTURE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 1 - ORGANIZATION
Minnetonka 300/400 Associates Joint Venture (the "Venture") is a joint venture
formed under a Joint Venture Agreement (the "Agreement") dated June 30, 1989
by and between Lutheran Brotherhood ("LB") and Lutheran Brotherhood Realty
Fund I ("RFI"), collectively referred to as the Venturers. The purpose of the
venture is to own and operate two industrial warehouses located in
Minneapolis, Minnesota.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real Estate Investments
Real estate investments are recorded at cost. The building is depreciated for
financial reporting purposes using the straight-line method over the estimated
useful life of 31.5 years. Asset and accumulated depreciation accounts are
relieved for dispositions and resulting gains or losses are reflected in the
results of operations.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents consist of
investments in money market mutual funds.
Deferred Charges and Other Assets
Deferred charges primarily represents lease commissions paid and specific
tenant improvements which are amortized over the term of the related lease.
Rental Revenue
The Venture leases the space in its commercial properties under operating
leases with durations from three to seven years. The Venture expects that in
the normal course of business these leases will be renewed or replaced by
other leases. Rental income which includes base rent and reimbursed operating
expenses is recognized in accordance with the lease agreements.
Income Taxes
No provision for Federal or state income taxes is necessary in the financial
statements of the Venture because, as a joint venture, it is not subject to
Federal income tax; the effect of its activities accrues to the Venturers.
Venture Allocations
The Agreement provides for net income and net losses from operations for both
financial and tax reporting purposes and distributable cash from operations
and surplus funds to be allocated 66 2/3% to LB and 33 1/3% to RFI.
NOTE 3 - MANAGEMENT AGREEMENT
The Venture has entered into a management agreement with Northco Real Estate
Services ("Northco") to operate and manage the industrial warehouses. In
consideration for these services, the Venture pays Northco monthly management
fees equal to a percentage of gross monthly collections as defined by the
management agreement. The percentage was 4% from May 1, 1995 to December 31,
1995 and 5% prior thereto. During 1995, 1994 and 1993, management fees were
$27,000, $25,000 and $26,000, respectively.
NOTE 4 - LEASES
The Venture leases the space in its commercial property to tenants under
operating leases that expire at various dates over the next five years. The
Venture expects that the leases will be renewed or replaced by other leases.
Minimum future rentals to be received on the noncancelable operating leases as
of December 31, 1995 are as follows (in thousands):
1996 $ 359
1997 217
1998 168
1999 139
2000 88
-----
$ 971
=====
NOTE 5 - INCOME TAXES
The Venture reports certain transactions differently for tax and financial
statement purposes. The tax basis of real estate and deferred charges for
Federal income tax purposes at December 31, 1995 and 1994 was $2,972,000 and
$2,834,000, respectively.
A reconciliation between the financial statement net income and the income for
tax purposes follows (in thousands):
1995 1994 1993
Net income per statement of operations $ 188 $ 152 $ 178
Difference in depreciation 89 28 17
----- ----- -----
Estimated taxable income $ 277 $ 180 $ 195
===== ===== =====
The differences between the results from operations for tax and financial
statement purposes are due to different depreciation methods and different
periods for recognizing prepaid rental income.
NOTE 6 - SIGNIFICANT TENANTS
The Venture received rental revenue in excess of 10% of total revenue from
four tenants in 1995 and two tenants in 1994 and 1993. The rental revenue
from these tenants constituted approximately $393,000 and 67% of total revenue
for the year ended December 31, 1995, $184,000 and 38% of total revenue for
the year ended December 31, 1994 and $180,000 and 36% of total revenue for the
year ended December 31, 1993.
<PAGE>
3100 Multifoods Tower Telephone 612-332-7000
33 South Sixth Street Telecopier 612-332-6711
Minneapolis, MN 55402-3795
Price Waterhouse LLP [LOGO OMMITTED]
Report of Independent Accountants
To the Venturers of
Worthington Green Associates Joint Venture
In our opinion, the accompanying balance sheet and the related statements of
operations, of venturers' equity and of cash flows present fairly, in all
material respects, the financial position of Worthington Green Associates
Joint Venture at December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Venturers; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Minneapolis, Minnesota
February 23, 1996
<PAGE>
WORTHINGTON GREEN ASSOCIATES JOINT VENTURE
BALANCE SHEET
(in thousands)
December 31,
1995 1994
---- ----
ASSETS
- ------
Real estate investments:
Land $ 837 $ 837
Buildings 5,519 5,485
Property and equipment 462 462
------ ------
6,818 6,784
Less: Accumulated depreciation (1,949) (1,687)
------ ------
4,869 5,097
Cash and cash equivalents 941 727
Deferred charges (net) and other assets 2 11
------ ------
Total assets $5,812 $5,835
====== ======
LIABILITIES AND VENTURERS' EQUITY
- ---------------------------------
Payable to affiliates $ 7
Other liabilities $ 47 43
------ ------
Total liabilities 47 50
------ ------
Venturers' equity 5,765 5,785
------ ------
Total liabilities and venturers' equity $5,812 $5,835
====== ======
<PAGE>
WORTHINGTON GREEN ASSOCIATES JOINT VENTURE
STATEMENT OF OPERATIONS
(in thousands)
For the Years
Ended December 31,
--------------------------
1995 1994 1993
---- ---- ----
Revenue:
Rental $ 1,110 $ 1,096 $ 1,053
Interest 40 20 15
------- ------- -------
Total revenue 1,150 1,116 1,068
------- ------- -------
Expenses:
Property operations 617 535 486
Depreciation and amortization 262 261 324
------- ------- -------
Total expenses 879 796 810
------- ------- -------
Net income $ 271 $ 320 $ 258
====== ====== ======
<PAGE>
WORTHINGTON GREEN ASSOCIATES JOINT VENTURE
STATEMENT OF CHANGES IN VENTURERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1992 THROUGH DECEMBER 31, 1995
(in thousands)
Lutheran
Brotherhood Total
Lutheran Realty Venturers'
Brotherhood Fund I Equity
----------- ------ ------
Balance at December 31, 1992 $5,641 $ 1,121 $6,762
Net income 208 50 258
Distributions to Venturers (1,119) (28) (1,147)
------ ------- ------
Balance at December 31, 1993 4,730 1,143 5,873
Net income 258 62 320
Distributions to Venturers (329) (79) (408)
------ ------- ------
Balance at December 31, 1994 4,659 1,126 5,785
Net income 219 52 271
Distributions to Venturers (234) (57) (291)
------ ------- ------
Balance at December 31, 1995 $4,644 $ 1,121 $5,765
====== ======= ======
<PAGE>
WORTHINGTON GREEN ASSOCIATES JOINT VENTURE
STATEMENT OF CASH FLOWS
(in thousands)
For the Years
Ended December 31,
----------------------
1995 1994 1993
---- ---- ----
Net income $ 271 $ 320 $ 258
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 262 261 324
Changes in assets and liabilities:
Receivable from affiliates 56 (56)
Payables to affiliates (7) 7
Other assets and liabilities, net 9 (5) 29
----- ---- ----
Net cash provided by operating activities 535 639 555
----- ---- ----
Cash flows from investing activities:
Capital improvements (30)
----- ---- ----
Net cash provided by (used in) investing activities (30)
----- ---- ----
Cash flows from financing activities:
Distributions to venturers (291) (408) (1,147)
----- ---- ----
Net cash used in financing activities (293) (408) (1,147)
----- ---- ----
Net increase (decrease) in cash and cash equivalents 214 231 (592)
Cash and cash equivalents at beginning of period 727 496 1,088
----- ---- ----
Cash and cash equivalents at end of period $ 941 $ 727 $ 496
====== ====== ======
<PAGE>
WORTHINGTON GREEN ASSOCIATES JOINT VENTURE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 1 - ORGANIZATION
Worthington Green Associates Joint Venture (the "Venture") is a joint venture
formed under a Joint Venture Agreement (the "Agreement") dated June 30, 1989
and amended December 1, 1989 by and between Lutheran Brotherhood ("LB") and
Lutheran Brotherhood Realty Fund I ("RFI"), collectively referred to as the
Venturers. The purpose of the venture is to own and operate the Village at
Worthington Green Apartments located in Columbus, Ohio.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Real Estate Investments
Real estate investments are recorded at cost. The building and property and
equipment are depreciated for financial reporting purposes using the straight-
line method over the estimated useful life of 31.5 years and 5 years,
respectively. Asset and accumulated depreciation accounts are relieved for
dispositions and resulting gains or losses are reflected in the results of
operations.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents consist of
cash on hand and investments in money market mutual funds.
Rental Revenue
The Venture leases the space in its commercial property under operating leases
with durations from three to nine years. The Venture expects that in the
normal course of business these leases will be renewed or replaced by other
leases. Rental income is recognized in accordance with the lease agreements.
Income Taxes
No provision for Federal or state income taxes is necessary in the financial
statements of the Venture because, as a joint venture, it is not subject to
Federal income tax; the effect of its activities accrues to the Venturers.
Venture Allocations
The Agreement provides for net income and net losses from operations for both
financial and tax reporting purposes and distributable cash from operations
and surplus funds to be allocated 80.7% to LB and 19.3% to RFI.
NOTE 3 - MANAGEMENT AGREEMENT
The Venture has entered into a management agreement with Zinc Partners, Inc.
to operate and manage the apartment complex. In consideration for these
services, the Venture pays Zinc Partners monthly management fees equal to 3.8%
of gross monthly collections as defined by the management agreement. During
1995, 1994 and 1993, management fees were $42,000, $45,000 and $40,000,
respectively.
NOTE 4 - LEASES
The Venture leases the space in its residential property to tenants under
operating leases that expire at various dates over the next year. The Venture
expects that the leases will be renewed or replaced by other leases.
NOTE 5 - INCOME TAXES
The Venture reports certain transactions differently for tax and financial
statement purposes. The tax basis of real estate and deferred charges for
Federal income tax purposes at December 31, 1995 and 1994 was $5,464,000 and
$5,673,000, respectively.
A reconciliation between the financial statement net income and the income for
tax purposes follows (in thousands):
1995 1994 1993
---- ---- ----
Net income per statement of operations $ 271 $ 320 $ 258
Difference in depreciation 3 (6) 59
Investment income (40) (20) (15)
Repairs and maintenance expenses 77 101
Other (6) 1 1
----- ----- -----
Estimated taxable income $ 305 $ 295 $ 404
===== ===== =====
The differences between the results from operations for tax and financial
statement purposes are due to different depreciation methods and different
periods for recognizing investment income and repairs and maintenance expense.
<PAGE>
LUTHERAN BROTHERHOOD REALTY FUND I
Schedule X - Supplementary Statement of Operations Information
For the Years Ended December 31, 1995, 1994 and 1993
Charged to Costs
Item and Expenses
- ---- ---------------------------------
1995 1994 1993
---- ---- ----
1. Maintenance and repairs $ 80,208 $ 21,000 $ 15,000
2. Taxes, other than payroll and
income taxes (real estate) $128,000 $126,000 $129,000
3. Advertising costs $ 100 $ 100 --
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD REALTY FUND I
Schedule XI - Real Estate and Accumulated Depreciation
Year Ended December 31, 1995
Gross Amount at
Initial Cost Which Carried at Close of Year
------------ -------------------------------
Net Costs
Written Off Accumu- Depreci-
Related Buildings Subsequent Buildings lated Date Of ation
Encum- & Improve- To Acquisi- & Improve- Deprecia- Construc- Date Lives
Description brances Land ments tion Land ments Total tion tion Acquired (years)
- ----------- -------- ---- ---------- ------------- ---- ---------- ----- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest
Distribution
Center
New Hope,
Minnesota $636,000 $1,613,000 ($1,000) $636,000 $1,612,000 $2,248,000 $319,000 1966 9/89 5-31.5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LUTHERAN BROTHERHOOD REALTY FUND I
Schedule XI - Real Estate and Accumulated Depreciation
Year Ended December 31, 1994
Gross Amount at
Initial Cost Which Carried at Close of Year
------------ -------------------------------
Net Costs
Written Off Accumu- Depreci-
Related Buildings Subsequent Buildings lated Date Of ation
Encum- & Improve- To Acquisi- & Improve- Deprecia- Construc- Date Lives
Description brances Land ments tion Land ments Total tion tion Acquired (years)
- ----------- -------- ---- ---------- ------------- ---- ---------- ----- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest
Distribution
Center
New Hope,
Minnesota $636,000 $1,613,000 ($1,000) $636,000 $1,612,000 $2,248,000 $268,000 1966 9/89 5-31.5
</TABLE>
<PAGE>
LUTHERAN BROTHERHOOD REALTY FUND I
Notes to Schedule XI
Real Estate Investments and Accumulated Depreciation
Changes in real estate and accumulated depreciation for the three years ended
(in thousands):
December 31, December 31, December 31,
1995 1994 1993
------------ ------------ ------------
Real estate investments:
Balance, real estate investments
at beginning of year $2,248 $2,248 $2,248
Write Off Building Improvements ------ ------ ------
Balance, real estate investments
at end of year $2,248 (1) $2,248 (1) $2,248 (1)
====== ====== ======
Accumulated depreciation:
Balance, accumulated depreciation
of real estate investments, at
beginning of year $ 268 $ 217 $ 166
Depreciation of property 52 51 51
------ ------ ------
Balance, accumulated depreciation
of real estate investments,
at end of year $ 320 $ 268 $ 217
====== ====== ======
(1) The aggregate cost at the end of the calendar year for federal income tax
purposes is:
1995 $2,394,000
1994 $2,414,000
1993 $2,325,000
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATE GENERAL PARTNER OF
THE REGISTRANT
The Partnership, as an entity, does not have any directors or officers. The
directors and executive officers of the General Partner, their ages and their
principal occupation and affiliations during the last five years or more, are
listed below.
Name and Position, Age, Other Principal Occupations and Other Directorships
During the Past 5 Years
Robert P. Gandrud
Chairman of the Board
of Directors of
the General Partner
53
Mr. Gandrud has been President of Lutheran Brotherhood since 1987 and Chief
Executive Officer of Lutheran Brotherhood since 1988. Mr. Gandrud joined
Lutheran Brotherhood in 1965 after receiving a BA from the University of
Minnesota. Mr. Gandrud, a Fellow in the Society of Actuaries, also completed
the University of Minnesota Executive Program and the Harvard School of
Business Advanced Management Program. Mr. Gandrud is also the Chairman of the
Board of Directors, President and Chief Executive Officer of Lutheran
Brotherhood Financial Corporation, the Chairman of the Board of Directors,
President and Chief Executive Officer of Lutheran Brotherhood Variable
Insurance Products Company, a stock life insurance company offering variable
insurance products to persons eligible for membership in Lutheran Brotherhood,
the Chairman of the Board of Directors of Lutheran Brotherhood Research Corp.,
a registered investment adviser which provides investment management to seven
mutual funds sponsored by Lutheran Brotherhood (the "Lutheran Brotherhood
Mutual Funds") the Chairman of the Board of Lutheran Brotherhood Securities
Corp., and the Chairman of the Board of the Lutheran Trust Group.
Rolf F. Bjelland
Member of the Board
of Directors of
the General Partner
57
Mr. Bjelland has been an Executive Vice President of Lutheran Brotherhood
since 1983, in charge of its Investment Division. Lutheran Brotherhood's
Investment Division manages Lutheran Brotherhood's assets, which on December
31, 1995, totalled more than $10.9 billion. Within the Investment Division is
the Mortgage Loan and Real Estate Department which manages mortgage loans and
real estate investments totalling approximately $2.5 billion on December 31,
1995. Prior to 1983, Mr. Bjelland was an Executive Vice President of National
City Bank of Minneapolis, Minnesota, where he was responsible for all of the
real estate related activities of the bank. Mr. Bjelland is also a member of
the Board of Directors and President of Lutheran Brotherhood Research Corp., a
member of the Boards of Directors of Lutheran Brotherhood Securities Corp.,
Lutheran Brotherhood Financial Corporation, Lutheran Brotherhood Variable
Products Company, the Lutheran Trust Group, and Chairman of the Board of
Directors and Trustees and President of the Lutheran Brotherhood Mutual Funds.
Bruce J. Nicholson
Member of the Board
of Directors of
the General Partner
49
Mr. Nicholson rejoined Lutheran Brotherhood in May, 1990, as Executive Vice
President and Chief Financial Officer and is responsible for all financial and
administrative services including the actuarial, controllers, management
information systems and internal audit functions. Mr. Nicholson originally
joined Lutheran Brotherhood in 1968 after receiving his BA from St. Olaf
College. Mr. Nicholson left Lutheran Brotherhood in 1975 to become the chief
actuary at Minister's Life and Casualty Co., ultimately becoming its senior
vice president with responsibilities for the actuarial, marketing, policy
administration and personnel functions. In 1984, Mr. Nicholson joined the
consulting staff of Towers, Perrin, Foster & Crosby, which acquired the
Tillinghast insurance consulting company in 1986. Mr. Nicholson transferred to
the Tillinghast Group and was named a principal of that firm in 1987, serving
as its national practice leader for financial reporting. Mr. Nicholson is a
Fellow in the Society of Actuaries and is a member of the American Academy of
Actuaries. Mr. Nicholson is also a member of the Boards of Directors of
Lutheran Brotherhood Financial Corporation, Lutheran Brotherhood Variable
Insurance Products Company, Lutheran Brotherhood Research Corp., Lutheran
Brotherhood Securities Corp., and Lutheran Trust Group.
Paul R. Ramseth
Member of the Board
of Directors of
the General Partner
53
Mr. Ramseth has been an Executive Vice President of Lutheran Brotherhood since
January of 1992, in charge of its Member Services Division. Lutheran
Brotherhood's Member Services Division manages all of Lutheran Brotherhood's
insurance underwriting, policy service and claims functions, and, in addition,
oversees Lutheran Brotherhood's fraternal activities and the broker-dealer
operations of Lutheran Brotherhood Securities Corp. Mr. Ramseth joined
Lutheran Brotherhood in 1981 in its marketing operations and became the head
of Marketing in 1984. Mr. Ramseth is also a member of the Board of Directors
of Lutheran Brotherhood Financial Corporation, Lutheran Brotherhood Research
Corp., Lutheran Brotherhood Securities Corp., Lutheran Brotherhood Variable
Insurance Products Company, and Lutheran Trust Group. Mr. Ramseth received a
MA from the University of Minnesota in 1968.
William H. Reichwald
Member of the Board
of Directors of
the General Partner
48
Mr. Reichwald joined Lutheran Brotherhood in 1971 after receiving his BS from
the University of Wisconsin. After becoming one of Lutheran Brotherhood's
perennial leaders in sales, Mr. Reichwald was appointed a General Agent for
Lutheran Brotherhood in 1982, and came in to Lutheran Brotherhood Home Office
in 1987 as Senior Vice President and Director of Marketing. Mr. Reichwald was
named Executive Vice President of Marketing in 1990 and oversees the marketing
of all Lutheran Brotherhood products and the recruitment, training and
supervision of Lutheran Brotherhood's field force. Mr. Reichwald is the
President of Lutheran Brotherhood Securities Corp. and also a member of the
Boards of Directors of Lutheran Brotherhood Financial Corporation, Lutheran
Brotherhood Variable Insurance Products Company, Lutheran Brotherhood Research
Corp., Lutheran Brotherhood Securities Corp., and Lutheran Trust Group.
Mitchell F. Felchle
President of the
General Partner
48
Mr. Felchle, a Vice President of Lutheran Brotherhood, is also Vice President
of Lutheran Brotherhood Securities Corp. Mr. Felchle has been employed by
Lutheran Brotherhood since 1972.
Otis F. Hilbert
Vice President and
Secretary of the
General Partner
59
Mr. Hilbert, a Vice President - Law of Lutheran Brotherhood, is also the
Secretary of Lutheran Brotherhood Research Corp. and Vice President and the
Secretary of Lutheran Brotherhood Securities Corp., and Lutheran Trust Group.
Mr. Hilbert is a Vice President and Secretary of Lutheran Brotherhood Mutual
Funds. Mr. Hilbert has been employed by Lutheran Brotherhood since 1970.
James R. Olson
Vice President of
the General Partner
53
Mr. Olson, a Vice President of Lutheran Brotherhood, is also a Vice President
of Lutheran Brotherhood Securities Corp. Mr. Olson has been employed by
Lutheran Brotherhood since 1979.
Cliff W. Habeck
Assistant Vice President of
the General Partner
48
Mr. Habeck is an Assistant Vice President of Lutheran Brotherhood. Mr. Habeck
is a Real Property Administrator, certified by the Building Owners and
Managers Association and has been employed in the Investment Property
Management Department of Lutheran Brotherhood since 1977. Mr. Habeck, a
Certified Public Accountant, has been employed by Lutheran Brotherhood since
1974. Since 1977, Mr. Habeck has engaged in the acquisition and supervision of
a number of Lutheran Brotherhood investment properties including multiple
residential, commercial and light industrial properties. Mr. Habeck is also
the manager of Lutheran Brotherhood's home office building.
Paul A. Larson
Assistant Vice President
of the General Partner
49
Mr. Larson is an Assistant Vice President of Lutheran Brotherhood and has been
employed in the Mortgage Loan and Real Estate Department of the Investment
Division of Lutheran Brotherhood since 1977. Mr. Larson's responsibilities
have included a variety of real estate activities including appraisal of
properties for acquisition by Lutheran Brotherhood, management of such
properties including the engagement of independent managers of such
properties, and the disposition of such properties. Mr. Larson's
responsibilities for Lutheran Brotherhood include mortgage lending
negotiations and the supervision of mortgage lending transactions.
ITEM 11. EXECUTIVE COMPENSATION
No direct compensation was paid or payable by the Partnership to directors or
officers (since it does not have any directors or officers) for its year ended
December 31, 1995, nor was any direct compensation paid or payable by the
Partnership to directors or officers of the General Partner and Sponsor for
the year ended December 31, 1995. The Partnership has no plans to pay any
such remuneration to any directors or officers of the General Partner in the
future.
See Note 4 to the Financial Statements for amounts of compensation paid by the
Partnership to the General Partner and its Affiliates.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person owns of record or as beneficiary more than five percent (5%) of
the Units.
(b) The General Partner owns less than 1% of the Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and officers of the General Partner and Sponsor of the
Partnership are also directors, officers and/or employees of one or more
affiliated companies which have, during the previous fiscal year, engaged in
transactions with the Partnership and may continue to engage in transactions
with the Partnership in the future. See Item 10. The Partnership and LB are
co-venturers in three joint ventures. See Item 1.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(A) The following documents are filed as part of this report:
1. Financial Statements
Report of Price Waterhouse LLP, Independent Accountants
Balance Sheets as of December 31, 1995 and 1994
Statements of Operations for the Years Ended December 31, 1995, 1994
and 1993
Statements of Partners' Equity for the Years Ended December 31, 1995,
1994 and 1993
Statements of Cash Flows for the Years Ended December 31, 1995, 1994
and 1993
Notes to Financial Statements
2. Schedules
Schedule X - Supplementary Statement of Operations Information
Schedule XI - Real Estate and Accumulated Depreciation
All other schedules are omitted because they are not required, are
not applicable or the financial information is included in the
financial statements or notes thereto.
3. Exhibits
S-K Reference Sequential
Number Document Description Page Number
- ------------- -------------------- ------------
3 Certificate of Limited Partnership N/A
(Incorporated by reference to
Registration Statement of Registrant
(File No. 33-16882) filed December 4,
1987, as amended to date)
4 Registrant's Amended and Restated Limited N/A
Partnership Agreement (Incorporated by
reference to Registration Statement of
Registrant (File No. 33-16882) filed
December 4, 1987, as amended to date)
9 N/A N/A
10.1 Property Management Agreement (Multi- N/A
Family Properties and Commercial
Industrial Properties) (Incorporated by
reference to Registration Statement of
Registrant (File No. 33-16882) filed
December 4, 1987, as amended to date)
10.2 Underwriting Agreement (Incorporated by N/A
reference to Registration Statement of
Registration Statement of Registrant
(File No. 33-16882) filed December 4,
1987, as amended to date)
10.3 Marketing Support Agreement (Incorporated N/A
by reference to Registration Statement of
Registrant (File No. 33-16882) filed
December 4, 1987, as amended to date)
10.4 General Services Agreement (Incorporated N/A
by reference to Registration Statement of
Registrant (File No. 33-16882) filed
December 4, 1987, as amended to date)
10.5 Worthington Green Associates Joint Venture N/A
Agreement dated June 30, 1989, by and
between the Registrant and LB (Incorporated
by reference to Form 8-K of Registrant
(File No. 0-17617) filed Oct. 16, 1989)
10.6 Minnetonka 225 Associates Joint Venture N/A
Agreement dated June 30, 1989, by and
between the Registrant and LB (Incorporated
by reference to Form 8-K of Registrant
(File No. 0-17617) filed Oct. 16, 1989)
10.7 Minnetonka 300 & 400 Associates Joint N/A
Venture Agreement dated June 30, 1989, by
and between the Registrant and LB
(Incorporated by reference to Form 8-K of
Registrant (File No. 0-17617) filed
Oct. 16, 1989)
10.8 NWDC Purchase Agreement dated June 30, N/A
1989, by and between the Registrant and LB
(Incorporated by reference to Form 8-K of
Registrant (File No. 0-17617) filed Oct. 16,
1989)
10.9 Assignment dated June 30, 1989 of NWDC N/A
Purchase Agreement dated June 30, 1989, by
and between LBREPCO, as assignor, and the
Registrant, as assignee. (Incorporated by
reference to Form 8-K of Registrant (File No.
0-17617) billed Oct. 16, 1989)
11 N/A N/A
12 N/A N/A
13 N/A N/A
18 N/A N/A
19 N/A N/A
22 N/A N/A
23 N/A N/A
24 N/A N/A
25 N/A N/A
28 N/A N/A
29 N/A N/A
(B) Reports on Form 8-K
There were no reports on Form 8-K filed during 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
LUTHERAN BROTHERHOOD REALTY FUND I,
a California limited partnership
By: LUTHERAN BROTHERHOOD REAL
ESTATE PRODUCTS COMPANY,
Its General Partner
Dated: April 30, 1996 By: /s/MITCHELL F. FELCHLE
-----------------------------
Mitchell F. Felchle,
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons as officers and
directors of the General Partner, Lutheran Brotherhood Real Estate Products
Company, on behalf of the Registrant on the date indicated.
Signature Title Date
/s/ROBERT P. GANDRUD Chairman of the Board of April 30, 1996
- -------------------- Directors of General
Robert P. Gandrud Partner
/s/ROLF F. BJELLAND Director of General Partner April 30, 1996
- -------------------
Rolf F. Bjelland
/s/BRUCE J. NICHOLSON Director of General Partner April 30, 1996
- ---------------------
Bruce J. Nicholson
/s/PAUL R. RAMSETH Director of General Partner April 30, 1996
- ------------------
Paul R. Ramseth
/s/WILLIAM H. REICHWALD Director of General Partner April 30, 1996
- -----------------------
William H. Reichwald
<PAGE>
INDEX TO EXHIBIT
PAGE IN
REGISTRATION
EXHIBIT NUMBER STATEMENT
27 Financial Data Schedule
10k-396a.doc
{PAGE}
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Lutheran
Brotherhood Realty Fund I Form 10-K for the year ended December 31, 1995 and
is qualified in its entirety by reference to such Form 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 610
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 610
<PP&E> 2,248
<DEPRECIATION> 319
<TOTAL-ASSETS> 4,706
<CURRENT-LIABILITIES> 2
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,704
<TOTAL-LIABILITY-AND-EQUITY> 4,706
<SALES> 516
<TOTAL-REVENUES> 714
<CGS> 357
<TOTAL-COSTS> 357
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 264
<INCOME-TAX> 0
<INCOME-CONTINUING> 264
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 264
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
