FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from.........to.........
Commission file number 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)
(864) 239-1000
(Issuer's telephone number)
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, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 310
Restricted-tenant security deposits 17
Accounts receivable, net of allowance of $51 96
Escrows for taxes 122
Restricted escrows 5
Other assets 119
Investment properties:
Land $ 4,123
Buildings and related personal property 20,921
25,044
Less accumulated depreciation (6,031) 19,013
$19,682
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 1
Tenant security deposits 17
Accrued property taxes 110
Other liabilities 116
Mortgage notes payable 18,505
Partners' Capital (Deficit)
General partner's $ (28)
Class A Limited Partners' - (552,000 units) 696
Class B Limited Partners' - (61,333 units) 265 933
$19,682
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,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 696 $ 683 $ 1,414 $ 1,361
Other income 1 2 4 9
Total revenues 697 685 1,418 1,370
Expenses:
Operating 90 70 157 134
General and administrative 19 18 44 47
Depreciation 168 168 335 335
Interest 423 432 848 867
Property taxes 55 52 111 105
Total expenses 755 740 1,495 1,488
Net loss $ (58) $ (55) $ (77) $ ( 118)
Net loss allocated to general
partner (1%) $ (1) $ (1) $ (1) $ (1)
Net loss allocated to Class A
limited partners (89.1%) (51) (49) (68) (105)
Net loss allocated to Class B
limited partners (9.9%) (6) (5) (8) (12)
$ (58) $ (55) $ (77) $ (118)
Net loss per Class A limited
partnership unit $(.09) $(.09) $ (.12) $ (.19)
<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)
<TABLE>
<CAPTION>
General Limited Partners'
Partner's Class A Class B Total
<S> <C> <C> <C> <C>
Original capital contributions $ 1 $ 5,520 $ 613 $ 6,134
Partners' (deficit) capital at
December 31, 1996 $ (27) $ 764 $ 273 $ 1,010
Net loss for the six months
ended June 30, 1997 (1) (68) (8) (77)
Partners' (deficit) capital
at June 30, 1997 $ (28) $ 696 $ 265 $ 933
<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,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (77) $ (118)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 335 335
Amortization of loan costs and
leasing commissions 23 20
Change in accounts:
Restricted cash (6) (3)
Accounts receivable 23 38
Escrows for taxes (33) (42)
Other assets (1) 2
Accounts payable (40) (2)
Tenant security deposits 5 1
Accrued property taxes 10 38
Other liabilities (17) 55
Net cash provided by operating activities 222 324
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:
Payments on mortgage notes payable (244) (223)
Net cash used in financing activities (244) (223)
Net (decrease) increase in unrestricted cash and
cash equivalents (22) 73
Unrestricted cash and cash equivalents at beginning
of period 332 316
Unrestricted cash and cash equivalents at end of period $ 310 $ 389
Supplemental disclosure of cash flow information:
Cash paid for interest $ 839 $ 860
<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 for Brunner Companies Income
Properties L.P. I (the "Partnership") 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 104 Management, Inc. (the "Managing General Partner"), an Ohio
corporation, 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, 1997, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1997. 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, 1996.
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 revenue and
for reimbursement of certain expenses incurred by affiliates on behalf of the
Partnership. The following payments were made to affiliates of the Managing
General Partner for each of the six month periods ended June 30, 1997 and 1996
(in thousands):
1997 1996
Property management fees (included in
operating expenses) $43 $41
Reimbursement for services of affiliates
(included in general and administrative expenses) 16 17
The Partnership insures its properties under a master policy through an agency
and insurer unaffiliated with the Managing General Partner. An affiliate of the
Managing General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which was later acquired by the
agent who placed the current year's master policy. The current agent assumed
the financial obligations to the affiliate of the Managing General Partner who
receives payments on these obligations from the agent. The amount of the
Partnership's insurance premiums accruing to the benefit of the affiliate of the
Managing General Partner by virtue of the agent's obligations is not
significant.
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
month periods ended June 30, 1997 and 1996:
Average
Occupancy
1997 1996
Hitchcock Plaza
Aiken, South Carolina 99% 98%
White Horse Plaza
Greenville, South Carolina 100% 99%
Georgetown Landing
Georgetown, South Carolina 90% 94%
The decrease in occupancy at Georgetown Landing resulted from the move out of a
tenant who occupied 7,200 square feet in late 1996. The negative effect of
this vacancy was mitigated by Food Lion's expansion into 3,480 square feet of
the vacated space.
The Partnership realized a net loss of approximately $77,000 for the six months
ended June 30, 1997 compared to a net loss of approximately $118,000 for the
six months ended June 30, 1996. The Partnership's net loss for the three
months ended June 30, 1997 was approximately $58,000 compared to a net loss of
approximately $55,000 for the three months ended June 30, 1996. The decrease
in net loss for the six month period is due primarily to an increase in rental
income. The rental income increase resulted from additional rent collections
from an anchor tenant at White Horse Plaza, as its lease has provisions that
allows the Partnership to collect additional rent when its sales exceed certain
levels. Also contributing to the decrease in net loss for the six month period
was a reduction in interest expense due to increased principal payments.
Partially offsetting these changes was an increase in operating expenses.
During the six months ended June 30, 1997, $12,000 was spent on exterior
painting at White Horse. No other expenditures for major repairs and
maintenance were made during the six month periods ended June 30, 1997 or 1996.
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 expense 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.
Hitchcock Plaza has a tenant who currently occupies 20,000 square feet, or
approximately 9% of the total square feet. This tenant's lease matures January
31, 1998 and it is not expected to be renewed. The Managing General Partner is
currently trying to locate a new tenant to occupy this space.
At June 30, 1997 the Partnership held unrestricted cash and cash equivalents of
approximately $310,000 compared to $389,000 at June 30, 1996. Net cash provided
by operating activities decreased primarily due to a decrease in accounts
payable and other liabilities related to the timing of payments. Net cash used
in investing activities decreased due to no deposits to restricted escrows being
required and no property improvements and replacements in 1997. Net cash used
in financing activities increased due to increased principal payments on
mortgage notes payable.
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 $18,505,000 matures October 10, 1998. 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 1996 or during the first six months
of 1997.
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, 1997.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BRUNNER COMPANIES INCOME PROPERTIES L.P. I
By: Brunner Management Limited Partnership
Its General Partner
By: 104 Management, Inc.
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 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Brunner
Companies Income Properties L.P. I 1997 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 L.P. I
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 310
<SECURITIES> 0
<RECEIVABLES> 147
<ALLOWANCES> 51
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 25,044
<DEPRECIATION> 6,031
<TOTAL-ASSETS> 19,682
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 18,505
0
0
<COMMON> 0
<OTHER-SE> 933
<TOTAL-LIABILITY-AND-EQUITY> 19,682
<SALES> 0
<TOTAL-REVENUES> 1,418
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,495
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 848
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77)
<EPS-PRIMARY> (.12)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
