FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 33-20527
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
(Exact name of small business issuer as specified in its charter)
Delaware 31-1234157
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) BRUNNER COMPANIES INCOME PROPERTIES L.P. I
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1996
Assets
Cash:
Unrestricted $ 389
Restricted-tenant security deposits 11
Accounts receivable, net of allowance of $44 88
Escrows for taxes 112
Restricted escrows 18
Other assets 119
Investment properties:
Land $ 4,123
Buildings and related personal property 20,915
25,038
Less accumulated depreciation (5,362) 19,676
$20,413
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 9
Tenant security deposits 11
Accrued taxes 105
Other liabilities 159
Mortgage notes payable 18,982
Partners' Capital (Deficit)
General partner $ (25)
Class A Limited Partners - (552,000 units) 886
Class B Limited Partners - (61,333 units) 286 1,147
$20,413
See Accompanying Notes to Financial Statements
b) BRUNNER COMPANIES INCOME PROPERTIES L.P. I
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 683 $ 663 $ 1,361 $ 1,385
Other income 2 3 9 9
Total revenues 685 666 1,370 1,394
Expenses:
Operating 70 65 134 132
General and administrative 18 22 47 48
Depreciation 168 166 335 333
Interest 432 449 867 902
Property taxes 52 55 105 107
Total expenses 740 757 1,488 1,522
Net loss $ (55) $ (91) $ (118) $ (128)
Net loss allocated to general
partner (1%) $ -- $ (1) $ (1) $ (1)
Net loss allocated to
Class A limited partners
(89.1%) (49) (81) (105) (114)
Net loss allocated to
Class B limited Partners
(9.9%) (6) (9) (12) (13)
$ (55) $ (91) $ (118) $ (128)
Net loss per limited
partnership unit $(.09) $(.15) $ (.19) $ (.21)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
c) BRUNNER COMPANIES INCOME PROPERTIES L.P. I
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
General Limited Partners
Partner Class A Class B Total
<S> <C> <C> <C> <C>
Original capital contributions $ 1 $ 5,520 $ 613 $ 6,134
Partners' capital (deficit) at
December 31, 1995 $ (24) $ 991 $ 298 $ 1,265
Net loss for the six months
ended June 30, 1996 (1) (105) (12) (118)
Partners' capital (deficit)
at June 30, 1996 $ (25) $ 886 $ 286 $ 1,147
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
d) BRUNNER COMPANIES INCOME PROPERTIES L.P. I
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (118) $ (128)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 335 333
Amortization of loan costs and
leasing commissions 20 23
Change in accounts:
Restricted cash (3) --
Accounts receivable 38 21
Escrows for taxes (42) 82
Other assets 2 (12)
Accounts payable (2) (7)
Tenant security deposits 1 --
Accrued taxes 38 (55)
Other liabilities 55 58
Net cash provided by
operating activities 324 315
Cash flows from investing activities:
Property improvements and replacements (10) --
Deposits to restricted escrows (18) --
Net cash used in investing activities (28) --
Cash flows from financing activities:
Deposit remitted to mortgagee -- (193)
Loan extension costs paid -- (18)
Payments on mortgage notes payable (223) (120)
Net cash used in financing
activities (223) (331)
Net increase (decrease) in cash 73 (16)
Cash at beginning of period 316 540
Cash at end of period $ 389 $ 524
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 860 $ 889
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
e) BRUNNER COMPANIES INCOME PROPERTIES L.P. I
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Item 310(b)of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of the Managing General Partner (Brunner Management Limited
Partnership), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six month periods ended June 30, 1996, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in the Partnership's annual report on
Form 10-KSB for the fiscal year ended December 31, 1995.
Reclassifications
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The partnership agreement provides for payments to
affiliates for property management services based on a percentage of revenues
and for reimbursement of certain expenses incurred by affiliates on behalf of
the Partnership. Property management fees are included in operating expenses.
The following payments were made to affiliates of the Managing General Partner
during each of the six months ended June 30, 1996 and 1995:
1996 1995
(in thousands)
Property management fees $41 $42
Reimbursement for services of affiliates 17 18
Additionally, the Partnership paid $10,000 to an affiliate of the Managing
General Partner for lease commissions related to new leases at the Partnership's
commercial properties during the six months ended June 30, 1996. These lease
commissions are included in other assets and amortized over the term of the
respective leases.
Note C - Mortgage Notes Payable
On September 29, 1995, the Partnership successfully completed a loan
modification and extension for the Partnership's mortgage notes payable. A
deposit of $192,980 made in the second quarter of 1995 was applied to the
mortgage principal and an additional $157,020 was paid to reduce the outstanding
principal balance of the Georgetown note by $50,000 and the Hitchcock note by
$300,000. The maturity dates of the loans were extended from June 10, 1995, to
October 10, 1998, with all three loans requiring monthly payments to be applied
first to interest at the rate of 9.0% per annum with the remainder reducing the
outstanding principal balances. All three loans are now cross-collateralized
and cross-defaulted and are being amortized over eighteen years.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of three retail centers. The
following table sets forth the average occupancy of the properties for the six
months ended June 30, 1996 and 1995:
Average
Occupancy
1996 1995
Georgetown Landing
Georgetown, South Carolina 94% 92%
Whitehorse Plaza
Greenville, South Carolina 99% 98%
Hitchcock Plaza
Aiken, South Carolina 98% 99%
The Partnership realized a net loss of $118,000 for the six months ended June
30, 1996, compared to a net loss of $128,000 for the six months ended June 30,
1995. The Partnership realized a net loss of $55,000 for the three months ended
June 30, 1996, compared to a net loss of $91,000 for the corresponding period of
1995. The decrease in net loss for the six month period ended June 30, 1996, is
primarily due to decreased interest expense resulting from the modification of
the Partnership's mortgage notes payable in the second quarter of 1995. This
modification included the reduction of outstanding principal by $350,000.
Partially offsetting this decrease in interest expense was an increase in bad
debt expense.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
At June 30, 1996, the Partnership held unrestricted cash of $389,000 compared
to $524,000 at June 30, 1995. Net cash used in investing activities increased
due to increased deposits to restricted escrows required by the loan
modification and increased tenant improvements at Georgetown and Whitehorse.
Net cash used in financing activities decreased due to the non-recurring nature
of the 1995 deposit remitted to the mortgagee of $193,000 which was subsequently
applied to mortgage principal. This decrease was partially offset by an
increase in principal payments on the mortgage notes payable. This increase was
a result of the loan modification discussed below which increased the total
mortgage payments on each of the properties.
On September 29, 1995, the Partnership successfully completed a loan
modification and extension for the Partnership's mortgage notes payable. A
deposit of $192,980 made in the second quarter of 1995 was applied to the
mortgage principal and an additional $157,020 was paid to reduce the outstanding
principal balance of the Georgetown note by $50,000 and the Hitchcock note by
$300,000. The maturity dates of the loans were extended from June 10, 1995, to
October 10, 1998, with all three loans requiring monthly payments to be applied
first to interest at the rate of 9.0% per annum with the remainder reducing the
outstanding principal balances. All three loans are now cross-collateralized
and cross-defaulted and are being amortized over eighteen years.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and meet other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The mortgage indebtedness of $18,982,000 matures October 10, 1998, at which
time, the properties will be either refinanced or sold. Any future cash
distributions will depend on the levels of net cash generated from operations,
property sales, and the availability of cash reserves. No cash distributions
were made during fiscal year 1995 or during the first six months of 1996.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K:
None filed during the quarter ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRUNNER COMPANIES INCOME PROPERTIES L. P. I,
a Delaware limited partnership
By: Brunner Management Limited
Partnership, an Ohio Limited Partnership,
its General Partner
By: 104 Management, Inc., an Ohio corporation,
its Managing General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: August 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Brunner
Companies Income Properties LP I 1996 Second Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000830737
<NAME> BRUNNER COMPANIES INCOME PROPERTIES LP I
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 389
<SECURITIES> 0
<RECEIVABLES> 132
<ALLOWANCES> 44
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 25,038
<DEPRECIATION> 5,362
<TOTAL-ASSETS> 20,413
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 18,982
0
0
<COMMON> 0
<OTHER-SE> 1,147
<TOTAL-LIABILITY-AND-EQUITY> 20,413
<SALES> 0
<TOTAL-REVENUES> 1,370
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,488
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 867
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (118)
<EPS-PRIMARY> (.19)<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
