FORM 10-QSB.--QUARTERLY OR TRANSITIONAL 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 September 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)
September 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 317
Restricted-tenant security deposits 14
Accounts receivable, net of allowance of $61 68
Escrows for taxes 147
Restricted escrows 5
Other assets 143
Investment properties:
Land $ 4,123
Buildings and related personal property 20,921
25,044
Less accumulated depreciation (6,198) 18,846
$19,540
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 7
Tenant security deposits 14
Accrued property taxes 161
Other liabilities 111
Mortgage notes payable 18,379
Partners' Capital (Deficit)
General partner's $ (28)
Class A Limited Partners' - (552,000 units) 637
Class B Limited Partners' - (61,333 units) 259 868
$19,540
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 Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 672 $ 685 $ 2,086 $ 2,046
Other income 7 3 11 12
Total revenues 679 688 2,097 2,058
Expenses:
Operating 85 82 242 216
General and administrative 24 16 68 63
Depreciation 167 167 502 502
Interest 418 430 1,266 1,297
Property taxes 50 66 161 171
Total expenses 744 761 2,239 2,249
Net loss $ (65) $ (73) $ (142) $ (191)
Net loss allocated to general
partner (1%) $ (1) $ (1) $ (1) $ (2)
Net loss allocated to Class A
limited partners (89.1%) (58) (65) (127) (170)
Net loss allocated to Class B
limited partners (9.9%) (6) (7) (14) (19)
$ (65) $ (73) $ (142) $ (191)
Net loss per Class A limited
partnership unit $(.11) $(.12) $ (.23) $ (.31)
<FN>
See Accompanying Notes to Financial Statements
</FN>
</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 nine months
ended September 30, 1997 (1) (127) (14) (142)
Partners' (deficit) capital
at September 30, 1997 $ (28) $ 637 $ 259 $ 868
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
d) BRUNNER COMPANIES INCOME PROPERTIES L.P. I
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (142) $ (191)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 502 502
Amortization of loan costs and
leasing commissions 33 30
Change in accounts:
Restricted cash (3) (3)
Accounts receivable 51 43
Escrows for taxes (58) (61)
Other assets (35) (30)
Accounts payable (34) 1
Tenant security deposits 2 1
Accrued property taxes 61 104
Other liabilities (22) 34
Net cash provided by operating activities 355 430
Cash flows from investing activities:
Property improvements and replacements -- (10)
Deposits to restricted escrows -- (34)
Net cash used in investing activities -- (44)
Cash flows from financing activities:
Payments on mortgage notes payable (370) (338)
Net cash used in financing activities (370) (338)
Net (decrease) increase in unrestricted cash and
cash equivalents (15) 48
Unrestricted cash and cash equivalents at beginning
of period 332 316
Unrestricted cash and cash equivalents at end of period $ 317 $ 364
Supplemental disclosure of cash flow information:
Cash paid for interest $1,255 $1,286
<FN>
See Accompanying Notes to Financial Statements
</FN>
</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 nine month periods ended September 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 revenues
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 nine month periods ended September 30, 1997 and
1996 (in thousands):
1997 1996
Property management fees (included in operating
expenses) $63 $63
Reimbursement for services of affiliates (included in
general and administrative expenses) 27 25
For the period of January 1, 1996, to August 31, 1997, the Partnership insured
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 master
policy. The agent assumed the financial obligations to the affiliate of the
Managing General Partner who received 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 each of
the nine month periods ended September 30, 1997 and 1996:
Average
Occupancy
1997 1996
Hitchcock Plaza
Aiken, South Carolina 99% 98%
Whitehorse Plaza
Greenville, South Carolina 98% 100%
Georgetown Landing
Georgetown, South Carolina 94% 94%
The Partnership realized a net loss of approximately $142,000 for the nine
months ended September 30, 1997, compared to a net loss of approximately
$191,000 for the nine months ended September 30, 1996. The Partnership realized
a net loss of approximately $65,000 for the three months ended September 30,
1997, compared to a net loss of approximately $73,000 for the corresponding
period of 1996. The decrease in net loss for the nine month period ended
September 30, 1997, is primarily due to an increase in rental revenue at all of
the Partnership's properties and decreased property tax and interest expenses.
The decrease in property taxes is attributable to the new outparcel tenant at
Hitchcock Plaza being responsible for that parcel's tax liability. This parcel
was vacant throughout 1996, and thus, the Partnership was responsible for 1996
property tax expense. The reduction in interest expense was due to increased
principal payments. Partially offsetting the increase in rental
income and the decrease in property taxes and interest expense for the nine
month period was an increase in operating expenses at Hitchcock and Whitehorse
Plaza. At Hitchcock Plaza the increase is the result of an increase in legal
fees. The legal fees relate to litigation involving a former tenant who stopped
honoring its contractual lease obligations. This litigation was settled in the
Partnership's favor subsequent to September 30, 1997. The former tenant must
pay approximately $43,000 in unpaid rent, as a result. In addition, the
increase at Whitehorse Plaza is the result of an exterior painting project in
1997. During the nine months ended September 30, 1997, approximately $13,000
was spent on exterior painting at Whitehorse. No other expenditures for major
repairs and maintenance were made during the nine month periods ended September
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 is not expected to be renewed. The Managing General Partner is
currently trying to locate a new tenant to occupy this space.
At September 30, 1997, the Partnership held unrestricted cash of approximately
$317,000 compared to approximately $364,000 at September 30, 1996. Net cash
provided by operating activities decreased due to decreases in accounts payable
and accrued property taxes due 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 approximately $18,379,000 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 nine 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 September 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: November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Brunner
Companies Income Properties L.P. I 1997 Third 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 317
<SECURITIES> 0
<RECEIVABLES> 129
<ALLOWANCES> 61
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 25,044
<DEPRECIATION> 6,198
<TOTAL-ASSETS> 19,540
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 18,379
0
0
<COMMON> 0
<OTHER-SE> 868
<TOTAL-LIABILITY-AND-EQUITY> 19,540
<SALES> 0
<TOTAL-REVENUES> 2,097
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,239
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,266
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (142)
<EPS-PRIMARY> (.23)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
