<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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
For the transition period from to
Commission File Number 0-19219
Brauvin Income Plus L.P. III
(Exact name of registrant as specified in its charter)
Delaware 36-3639043
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
150 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 443-0922
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of class)
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 (Section 229.405 of this chapter) 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. [ X ]
The aggregate sales price of the limited partnership interests of
the registrant (the "Units") to unaffiliated investors of the
registrant during the initial offering period was $21,307,600.
This does not reflect market value. This is the price at which the
Units were sold to the public during the initial offering period,
and there is no current market for the Units nor have any Units
been sold within the last 60 days prior to this filing except for
Units sold to or by the registrant pursuant to the registrant's
distribution reinvestment plan.
Portions of the Prospectus of the registrant dated October 30, 1989
(the "Prospectus"), as supplemented December 7, 1989, December 20,
1989, April 24, 1990, December 12, 1990, August 29, 1991 and
September 17, 1991 and filed pursuant to Rule 424(b) and Rule 424
under the Securities Act of 1933, as amended, are incorporated by
reference into Parts II, III and IV of this Annual Report on Form
10-K.
<PAGE>
BRAUVIN INCOME PLUS L.P. III
1995 FORM 10-K ANNUAL REPORT
INDEX
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . .5
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of Security Holders. . . . . 11
PART II
Item 5. Market for the Registrant's Units and Related Security
Holder Matters . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 15
Item 8. Consolidated Financial Statements and Supplementary Data . . 17
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . 18
PART III
Item 10. Directors and Executive Officers of the Partnership. . . . . 19
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . 21
Item 12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . 23
Item 13. Certain Relationships and Related Transactions . . . . . . . 24
PART IV
Item 14. Exhibits, Consolidated Financial Statements and
Schedules, and Reports on Form 8-K . . . . . . . . . . . . . . . . . . 25
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
<PAGE> PART I
Item 1. Business.
Brauvin Income Plus L.P. III (the "Partnership") is a Delaware
limited partnership formed in July 1989 for the purpose of
acquiring debt-free ownership of existing, free-standing,
income-producing retail, office and industrial real estate
properties predominantly all of which would involve "triple-net"
leases. It was anticipated at the time the Partnership first
offered its Units (as defined below) that a majority of these
properties would be leased to operators of national franchise
automotive service businesses, retail stores and convenience
stores, fast food and sit-down restaurants, health and recreational
facilities, as well as banks and savings and loan branches. The
leases would provide for a base minimum annual rent and increases
in rent such as through participation in gross sales above a stated
level, fixed increases on specific dates or indexation of rent to
indices such as the Consumer Price Index. The Partnership sold
$982,070 of its limited partnership interests (the "Units")
commencing October 30, 1989 through December 31, 1989, pursuant to
a Registration Statement on Form S-11 under the Securities Act of
1933, as amended (the "Offering"). The Offering was conditioned
upon the sale of $1,200,000 in Units which was achieved on January
15, 1990. An additional $20,325,530 in Units were sold from the
period January 1, 1990 until the Offering closed on October 29,
1991, for a cumulative total of $21,307,600. An additional
$1,386,094 has been raised through the Partnership's distribution
reinvestment plan (the "Plan") through December 31, 1995. These
Units were purchased from the Units reserved for the distribution
reinvestment plan after the termination of the Offering. The
Offering was anticipated to close on October 29, 1990, but was
extended through and closed on October 29, 1991 by the General
Partners with the approval of the appropriate regulatory
authorities. As of December 31, 1995, $422,662 of Units sold
through the Offering have been purchased by the Partnership from
investors liquidating their investment and have been retired. The
investors in the Partnership (the "Limited Partners") share in the
benefits of ownership of the Partnership's real property
investments proportionally based on the number of Units owned by
each Limited Partner compared to the total number of Units sold.
The principal investment objectives of the Partnership are:
(i) preservation and protection of capital; (ii) distribution of
current cash flow from the Partnership's cash flow attributable to
rental income; (iii) capital appreciation; (iv) the potential for
increased income and protection against inflation through
escalation in the base rent or participation and growth in the
<PAGE>
sales of the lessees of the Partnership's properties; (v) the
deferral of the taxation of cash distributions for Taxable Class
Limited Partners; and (vi) the production of "passive" income to
offset "passive" losses from other investments.
The General Partners believe that the Partnership has, to
date, met its principal investment objectives as follows: (i)
distributions of current cash flow attributable to rental income;
(ii) capital appears to be appreciating as cash flow is increasing
for individual properties (final determination cannot be made until
properties are sold); (iii) capital is being preserved and
protected through routine upkeep of properties and continued
payment of real estate taxes and insurance premiums; (iv)
participation in each lease either through escalation in the base
rent or in the sales of the lessees of the Partnership's
properties; (v) production of "passive income"; and (vi) the cash
distributions for Taxable Class Limited Partners have been
partially sheltered by depreciation, as explained below.
Some tax shelter of cash distributions by the Partnership will
be available to Taxable Class Limited Partners through depreciation
of the underlying properties. Taxable Class Limited Partners will
benefit from the special allocation of all depreciation to the
Units which they acquired from the Partnership because their
reduced taxable income each year will result in a reduction in
taxes due, although no "spill-over" losses are expected. Taxable
income generated by property operations will likely be considered
passive income for federal income tax purposes because Section
469(c)(2) of the Internal Revenue Code states that a passive
activity includes "any rental activity" and, therefore, is
available to offset losses Taxable Class Limited Partners may have
realized in other passive investments.
It is anticipated that during the early years of the
Partnership the Limited Partners will receive cash distributions in
excess of their allocable share of the Partnership's income, and
substantially in excess of their tax liability thereon,
particularly for the Taxable Class Limited Partners due to the
special allocation of depreciation deductions, although the Taxable
Class Limited Partners will recognize more income from the sale of
Partnership properties.
Taxable income generated by property operations will likely be
considered passive income for federal income tax purposes and,
therefore, such income can be used to offset losses Taxable Class
Limited Partners will receive from other passive investments,
subject to certain limitations.
<PAGE>
The Partnership intends to dispose of its properties
approximately seven to ten years after their acquisition with a
view towards liquidation of the Partnership within that period.
The restated limited partnership agreement of the Partnership (the
"Agreement") provides that the Partnership shall terminate December
31, 2035, unless sooner terminated.
The terms of the transactions between the Partnership and
affiliates of the General Partners of the Partnership are set forth
in Item 13 below to which reference is hereby made for a
description of such terms and transactions.
The Partnership has no employees.
Market Conditions/Competition
Since the current leases at the Partnership's properties
entitle the Partnership to participate in gross receipts of lessees
above fixed minimum amounts, the success of the Partnership will
depend in part on the ability of those lessees to compete with
similar businesses in the vicinity.
The Partnership will compete in the disposition of property
with many other entities engaged in real estate investment
activities. The ability to locate purchasers will depend primarily
on the success of the operating properties and the desirability of
the location of the operating properties.
Item 2. Properties.
All lease payments are current pursuant to the terms of each
of the leases. The Partnership is landlord only and does not
participate in the operations of any of the properties purchased by
the Partnership. 100% of the properties are occupied, with the
exception of the Chi-Chi's in Hickory, North Carolina (as discussed
in the following summary) and all properties were paid for in cash,
without any financing. The General Partners believe that all
properties are adequately insured.
The following information is presented only for the properties
whose cost basis exceeds 10% of the gross proceeds of the Offering
or whose rental income exceeds 10% of the total rental income of
the Partnership.
On September 17, 1991, the Partnership purchased from an
entity unaffiliated with the Partnership the land and buildings
underlying two Sports Unlimited sporting goods stores (the
"Stores") for $4,350,000, plus closing costs. The Stores are
<PAGE>
located in Winter Park, Florida, a suburb of Orlando, and
Charlotte, North Carolina. The Stores are leased to and operated
by Sports and Recreation, Inc. ("SRI") and SRI Holdings, Inc.
(collectively, the "Tenant"). The leases are for 20 years maturing
in September 2011, with two ten-year renewal options. The Tenant
is obligated to pay base minimum rent each month in the amount of
$41,688. The base rent will increase in the third lease year
effective January 1, 1994, the seventh lease year and every three
years thereafter in accordance with increases in the Consumer Price
Index, not to exceed 4% per annum. Pursuant to the triple-net
lease, the Tenant is responsible for all obligations and expenses
incident to the operation and maintenance of the Stores including
all taxes, insurance premiums and structural repairs. The Tenant,
based on the February 3, 1991 consolidated financial statements,
had sufficient net worth and, accordingly, the General Partners
determined that lease insurance, although not presently available,
would not be required for these acquisitions.
The following is a demographic summary of the five Ponderosa
restaurants, two Chi-Chi's restaurants, one International House of
Pancakes restaurant, one Applebee's restaurant, two Sports
Unlimited stores, one Chili's restaurant, three Steak n Shake
restaurants and one CompUSA store:
Ponderosas:
Kissimmee, Florida
Unit 1005 is located at 4042 West Vine Street. The structure,
built in 1980, is a one-story, 5,360 square foot building
constructed with wood trim over wood frame on an approximately
60,000 square foot site.
Waukegan, Illinois
Unit 164 is located at 2915 Belvidere Road. The structure,
built in 1970 and renovated in 1986, is a one-story, 4,700 square
foot building constructed with wood and painted concrete block with
wood trim over wood frame on an approximately 49,300 square foot
site.
Elmhurst, Illinois
Unit 173 is located at 856 North York Road. The structure,
built in 1969, is a one-story, 4,700 square foot building
constructed with painted stucco and wood trim over wood frame on an
approximately 41,000 square foot site.
<PAGE>
Dayton, Ohio
Unit 856 is located at 726 Miller Lane. The structure, built
in 1985 and renovated in 1986, is a one-story, 6,060 square foot
building constructed with stucco over wood frame on an
approximately 116,800 square foot site.
In August 1995, Metromedia, the parent of Ponderosa, closed
the Dayton, Ohio restaurant and subsequently reopend it as a Bennigan's
restaurant in January, 1996. Per the terms of the lease, Metromedia
continued to make all rent and certain occupancy payments to the
Partnership.
Kansas City, Missouri
Unit 1069 is located at 7210 Northeast 43rd Street. The
structure, built in 1987, is a one-story, 5,400 square foot
building constructed with stucco over wood frame on an
approximately 61,420 square foot site.
Chi-Chi's:
Buffalo, New York
Unit 360 is located at the intersection of Nile Strip and
McKinley Parkway at the entrance to a regional mall. The
restaurant is situated on a 1.5 acre site and contains 7,270 square
feet with a seating capacity of 280 people. The property opened in
January 1990.
Hickory, North Carolina
Unit 401 is located at 2060 Highway 70 Southeast in Hickory,
adjacent to the Valley Hill Mall, a 625,000 square foot regional
shopping center. The property was built in 1990 and consists of a
5,678 square foot restaurant located on an approximately 50,000
square foot land parcel.
During 1995 Chi-Chi's, the sub-tenant under the Foodmaker
master lease, closed its Hickory, North Carolina restaurant because
it was not profitable. Under the terms of the lease, Foodmaker,
the master tenant and guarantor, is continuing pay rent for this
property.
Chi-Chi's has undertaken to re-lease the closed restaurant.
In March 1996, a potential sub-tenant executed a second sub-lease
with Chi-Chi's for the Hickory, North Carolina property. This
sub-lease is currently being reviewed by both Foodmaker and the
<PAGE>
Partnership and must be accepted by all three parties before it becomes
effective. Foodmaker will continue to be the guarantor under terms of
the second sub-lease.
International House of Pancakes:
Denver, Colorado
The I-HOP property consists of a 4,500 square foot building on
approximately one acre of land. The property is positioned on an
outparcel of a 350,000 square foot shopping mall located on
Highway 285, a major east/west traffic route in Denver. The
restaurant opened in March 1989.
Applebee's:
St. Charles, Missouri
The Applebee's property consists of a 4,140 square foot building on a
66,516 square foot parcel of land. The building is a square-shaped,
one-story, wood-framed and brick-faced structure which was completed in
December 1990. The dining area seated 159 patrons, but was expanded in
1992 to add another 38 seats at a cost to the Partnership of $79,974,
and has a U-shaped bar.
Sports Unlimited:
Orlando, Florida
This property is located at 2075 Semoran Blvd. in Winter Park, Florida,
a suburb of Orlando, and consists of a 40,000 square foot building on 3.8
acres of land. The building is single-story concrete construction with a
flat, built-up composition roof over metal decking supported by steel bar
joists. The building was completed in 1988.
Charlotte, North Carolina
This property is located at 7300 E. Independence Blvd and consists of a
30,000 square foot building on 2.5 acres of land. The building is
single-story concrete construction completed in 1987.
Chili's:
Midland, Texas
<PAGE>
The Partnership owns a 99.5% interest in a joint venture, with an
affiliated public real estate limited partnership, that acquired the
Chili's property. This property is located at 4610 N. Garfield Street
in Midland, Texas. The property consists of a 6,213 square foot building
situated on a 45,540 square foot site as an out-parcel at a shopping center
complex consisting of five buildings. The property is single-story
construction framed in a combination of steel, wood and brick. The
property was completed in 1984.
Steak n Shake:
Collinsville, Illinois
The property is located approximately 10 miles east of St. Louis,
Missouri. The property contains 3,560 square feet on a 38,770 square
foot parcel of land. The single-story property was constructed in 1991.
Indianapolis, Indiana
This property is located at 1501 E. 86th Street on a corner lot at
the intersection of Westfield Boulevard and 86th Street. The property
contains 4,760 square feet on a 1.27 acre site. The single-story
property was constructed in 1974.
Indianapolis, Indiana
This property is located at 8460 N. Michigan Road as an outparcel
of a K-Mart anchored shopping center. The property contains 3,860
square feet on a 0.918 acre site. The single-story property was
constructed in 1989.
CompUSA:
The Partnership owns a 6.4% interest in a joint venture, with
affiliated public real estate limited partnerships, that acquired the
CompUSA store. The CompUSA store is a 25,000 square foot single story
building located on a 105,919 square foot parcel in Duluth, Georgia, a
suburb of Atlanta, in the Gwinnett Place Mall Shopping area. The single
story building was completed in March 1993 utilizing a frame of steel
and concrete block.
The following table summarizes the operations of the Partnership's
properties.
<PAGE>
<TABLE>
BRAUVIN INCOME PLUS L.P. III
SUMMARY OF OPERATING DATA
DECEMBER 31, 1995
<CAPTION>
PERCENT OF 1995 1995 LEASE
PURCHASE ORIGINAL RENTAL PERCENT EXPIRATION RENEWAL
PROPERTIES PRICE UNITS SOLD INCOME OF TOTAL DATES OPTIONS
<S> <C> <C> <C> <C> <C> <C>
5 PONDEROSA RESTAURANTS $ 5,266,155 24.7% $ 657,117 29.1% 2003 4 FIVE YEAR OPTIONS
2 CHI CHI'S RESTAURANTS 2,280,400 10.7% 291,203 12.9% 2011 4 FIVE YEAR OPTIONS
1 IHOP RESTAURANT 645,000 3.0% 102,629 4.5% 2009 2 FIVE YEAR OPTIONS
1 APPLEBEE'S RESTAURANT
& EXPANSION 1,229,974 5.8% 188,592 8.3% 2011 2 TEN YEAR OPTIONS
1 ORLANDO SPORTS UNLIMITED
STORE 1,900,000 8.9% 297,162 13.1% 2011 2 TEN YEAR OPTIONS
1 CHARLOTTE SPORTS
UNLIMITED STORE 2,450,000 11.5% 230,452 10.2% 2011 2 TEN YEAR OPTIONS
1 CHILI'S RESTAURANT 950,000 4.5% 141,449 6.2% 2004 2 FIVE YEAR OPTIONS
3 STEAK N' SHAKE
RESTAURANTS 2,525,000 11.9% 340,843 15.0% 2010 2 TEN YEAR OPTIONS
6.4% OF 1 COMPUSA 150,400 0.7% 16,049 0.7% 2008 4 FIVE YEAR OPTIONS
$17,396,929 81.7% $2,265,496 100.0%
<FN>
<F1>
NOTE - THE FORMAT OF THIS SCHEDULE DIFFERS FROM THE INCOME STATEMENT OF THE PARTNERSHIP. THIS SCHEDULE ALLOCATES THE
PARTNERSHIP'S SHARE OF PURCHASE PRICE AND RENTAL INCOME FROM EACH JOINT VENTURE. THE INCOME STATEMENT USES THE EQUITY
METHOD OF ACCOUNTING, THEREFORE, NO RENTAL INCOME IS RECORDED IN THE RENTAL INCOME ACCOUNTS FOR THE JOINT VENTURE.
</FN>
</TABLE>
<PAGE>
Risk of Ownership
The possibility exists that the tenants of the Partnership's
properties may be unable to fulfill their obligations pursuant to the
terms of their leases, including making base rent or percentage rent
payments to the Partnership. Such a default by the tenants or a
premature termination of any one of the leases could have an adverse
effect on the financial position of the Partnership. Furthermore,
the Partnership may be unable to successfully locate a substitute
tenant due to the fact that these buildings, except the Sports
Unlimited and CompUSA sites, have been designed or built primarily
to house particular restaurant operations. Thus, the properties may
not be readily marketable to a new tenant without substantial capital
improvements or remodeling. Such improvements may require
expenditure of Partnership funds otherwise available for
distribution.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
PART II
Item 5. Market for the Registrant's Units and Related Security
Holder Matters.
At December 31, 1995, there were approximately 1,636 Limited
Partners in the Partnership. There is no established public trading
market for Units and it is not anticipated that there will be a
public market for Units. Neither the General Partners nor the
Partnership are obligated, but reserve the right, to redeem or
repurchase Units. Units may also be purchased by the Plan in certain
instances. Any Units so purchased shall be retired.
Pursuant to the terms of the Agreement, there are restrictions on
the ability of the Limited Partners to transfer their Units. In all
cases, the General Partners must consent to the substitution of a
Limited Partner.
Cash distributions to Limited Partners for 1995, 1994 and 1993 were
$2,060,581, $2,007,702 and $1,973,921, respectively. Distributions
are paid four times per year, within 60 days following the end of
each calendar quarter or are paid monthly within 15 days of the end
of the month, depending upon the Limited Partner's preference. All
distributions represent cash flow from operations. No amount
distributed in 1995 was a return of capital.
<PAGE>
Item 6. Selected Financial Data.
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
(not covered by Independent Auditors' Report)
Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993
Selected Income Statement Data:
Rental Income $ 2,249,447 $ 2,157,975 $ 2,121,744
Interest Income 22,397 27,246 6,086
Net Income 1,756,847 1,668,247 1,614,428
Net Income Per Unit (a) $ 0.78 $ 0.76 $ 0.73
Selected Balance Sheet Data:
Cash and Cash Equivalents $ 1,069,555 $ 925,719 $ 579,340
Land, Buildings and
Improvements 18,308,792 18,308,792 18,308,792
Investment in Brauvin
Gwinnett County Venture 153,668 157,014 160,556
Total Assets 17,780,591 18,027,140 18,066,905
Cash Distributions to
General Partners 44,237 5,500 --
Cash Distributions to
Limited Partners (b) 2,060,581 2,007,702 1,973,921
Cash Distributions to
Limited Partners
Per Unit (a) $ 0.93 $ 0.91 $ 0.91
(a) Net income per Unit and cash distributions per Unit are based on
the average Units outstanding during the year since they were of
varying dollar amounts and percentages based upon the dates Limited
Partners were admitted to the Partnership and additional Units were
purchased through the Plan.
(b) This includes $17,867, $19,933 and $17,705 paid to various
states for income taxes on behalf of all Limited Partners for the
years 1995, 1994 and 1993, respectively.
The above selected financial data should be read in conjunction
with the consolidated financial statements and the related notes
appearing elsewhere in this annual report.
<PAGE>
Item 6. Selected Financial Data (Continued).
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
(not covered by Independent Auditors' Report)
Years Ended December 31, 1992 and 1991
1992 1991
Selected Income Statement Data:
Rental Income $ 1,978,171 $ 1,120,686
Interest Income 49,654 286,350
Net Income 1,439,149 869,546
Net Income Per Unit (a) $ 0.65 $ 0.50
Selected Balance Sheet Data:
Cash and Cash Equivalents $ 380,001 $ 4,122,377
Land, Buildings and Improvements 18,308,792 14,462,299
Total Assets 18,075,034 18,402,008
Cash Distributions to General
Partners -- --
Cash Distributions to Limited
Partners (b) 1,958,231 1,345,657
Cash Distributions to Limited
Partners per Unit (a) $ 0.91 $ 0.79
(a) Net Income per Unit and cash distributions per Unit are based
on the average Units outstanding during the year since they were of
varying dollar amounts and percentages based upon the dates Limited
Partners were admitted to the Partnership and additional Units were
purchased through the Plan.
(b) This includes $7,856 and $10,323 paid to various states for
income taxes on behalf of all Limited Partners for the years 1992 and
1991, respectively.
The above selected financial data should be read in conjunction
with the consolidated financial statements and the related notes
appearing elsewhere in this annual report.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
The Partnership commenced an offering to the public on October 30,
1989 of 2,500,000 Units. The offering was anticipated to close on
October 29, 1990 but was extended by the General Partners with the
necessary regulatory approval to October 29, 1991. The Offering was
conditioned upon the sale of $1,200,000, which was achieved on
January 15, 1990. The Offering closed on October 29, 1991 with the
Partnership raising a cumulative total of $21,307,600. The
Partnership continues to raise additional funds through the Plan.
The Plan raised $1,386,094 through December 31, 1995 from Limited
Partners investing their distributions of Operating Cash Flow in
additional Units. As of December 31, 1995, Units valued at $422,662
have been purchased by the Partnership from Limited Partners
liquidating their investment in the Partnership and have been
retired.
The Partnership purchased the land, buildings and improvements
underlying five Ponderosa restaurants on January 19, 1990, February
16, 1990, March 19, 1990, April 24, 1990 and June 4, 1990,
respectively. In addition, the Partnership closed on the land,
buildings and improvements underlying two Chi-Chi's restaurants; the
first closed on March 12, 1991 and the second closed on March 27,
1991. The land, buildings and improvements underlying an IHOP
restaurant were purchased on April 26, 1991, an Applebee's restaurant
on June 5, 1991 (which was expanded in 1992), two Sports Unlimited
sporting goods stores on September 17, 1991, a Chili's restaurant on
February 7, 1992 and three Steak n Shake restaurants on April 16,
1992.
On February 7, 1992, the Partnership purchased a 99.5% equity
interest in a joint venture with an affiliate, Brauvin Chili's
Limited Partnership, which owns one Chili's restaurant.
On November 9, 1993, the Partnership purchased a 6.4% interest in
a joint venture with affiliated public real estate limited
partnerships (the "Venture"). The Venture acquired the land and
building underlying a 25,000 square foot CompUSA computer superstore
from an unaffiliated seller.
The Partnership is fully invested in properties with the exception
of funds raised through the Plan. These operating properties are
expected to generate cash flow for the Partnership after deducting
certain operating and general and administrative expenses from
<PAGE>
their rental income. The Partnership has no funds available to
purchase additional property, excluding those raised through the
Plan.
Below is a table summarizing the five year historical data for
distribution rates per annum:
Distribution
Date 1996 1995 1994 1993 1992 1991
February 15 9.25% 9.25% 9.00% 9.00% 9.25% 9.25%
May 15 9.25 9.00 9.00 9.25 9.25
August 15 9.25 9.00 9.00 9.00 9.25
November 15 9.25 9.25 9.00 9.00 9.25
Future increases in the Partnership's distributions will largely
depend on increased sales at the Partnership's properties resulting
in additional percentage rent and, to a lesser extent, on rental
increases, which will occur due to increases in receipts from
certain leases based upon increases in the Consumer Price Index or
scheduled increases of base rent.
As a result of the distributions to Limited Partners having been at
least 9.25% since the November 15, 1994 distribution and during all
of 1995, the General Partners and its affiliates collected management
fees of $29,539 and $5,105 and received $44,237 and $5,500 in
operating cash flow distributions in 1995 and 1994, respectively.
This is anticipated to continue in 1996.
The Partnership has engaged an independent third party to perform
valuations of the Partnership's investments in real estate as of
December 31, 1995.
Results of Operations - 1995
Results of operations reflected net income of $1,756,847 for the
year ended December 31, 1995 compared to $1,668,247 for the year
ended December 31, 1994, an increase of $88,600. The increase in net
income is mainly due to an increase in rental income of approximately
$91,000 which was a result of the Partnership's earning additional
rent based on the sales performance at several of the properties.
<PAGE>
Results of Operations - 1994
Results of operations reflected net income of $1,668,247 in 1994 as
compared to $1,614,428 for 1993. The increase of approximately
$54,000 is due to an increase in rental income of approximately
$36,000 as a result of base rental increases based upon increases in
the Consumer Price Index and fixed rate increases based upon the
original lease terms, an increase in interest income of approximately
$21,000, an increase in other income of approximately $17,000 and an
increase in equity interest income of approximately $12,000. These
increases in income were slightly offset by an increase in management
fees of $5,105 and an increase of general and administrative expenses
of approximately $26,000.
Results of Operations - 1993
Results of operations reflected net income of $1,614,428 in 1993 as
compared to $1,439,149 for 1992. The increase of approximately
$175,000 was primarily due to an increase in total income of
approximately $103,000 as a result of reflecting a full year of
operations for properties acquired during 1992, a decrease in
management fees of approximately $10,000 as a result of the
distribution rate falling below 9.25% and disallowing the payment of
management fees and a decrease in acquisition fee expense of
approximately $60,000 due to the Partnership fully investing during
1992.
Impact of Inflation
The Partnership anticipates that the operations of the Partnership
will not be significantly impacted by inflation. To offset any
potential adverse effects of inflation, the Partnership has entered
into "triple-net" leases with the tenant being responsible for all
operating expenses, insurance and real estate taxes. In addition,
several of the leases require escalations of rent based upon
increases in the Consumer Price Index, scheduled increases of base
rents, or tenant sales.
Item 8. Consolidated Financial Statements and Supplementary Data
See Index to Consolidated Financial Statements and Schedule on Page
F-1 of this Annual Report on Form 10-K for consolidated financial
statements and financial statement schedule, where applicable.
<PAGE>
The supplemental financial information specified in Item 302 of
Regulation S-K is not applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
During the Partnership's two most recent fiscal years, there has
been no changes in, or disagreements with, the accountants.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Partnership.
The General Partners of the Partnership are:
Brauvin Realty Advisors III, Inc., an Illinois corporation
Mr. Jerome J. Brault, individually
Mr. Cezar M. Froelich, individually
Brauvin Realty Advisors III, Inc. (the "Corporate General
Partner"), was formed under the laws of the State of Illinois in
1989, with its issued and outstanding shares being owned by Messrs.
Jerome J. Brault (beneficially)(50%) and Cezar M. Froelich (50%).
The principal officers and directors of the Corporate General
Partner are:
Mr. Jerome J. Brault . . . . . . Chairman of the Board of
Directors, President, Chief
Executive Officer and Director
Mr. Thomas J. Coorsh . . . . . . Treasurer and Chief Financial Officer
Mr. James L. Brault. . . . . . . Vice President and Secretary
The business experience during the past five years of the
principal officers and directors of the Corporate General Partner and
the General Partners are as follows:
Mr. Jerome J. Brault (age 62) is Director, Chairman of the Board
and President of Brauvin Properties, Inc., Brauvin Realty Properties,
Inc., Brauvin Realty Partners, Inc., Brauvin Ventures, Inc., Brauvin
Associates, Inc., Brauvin 6, Inc., Brauvin Advisory Services, Inc.,
Brauvin Securities, Inc. and Brauvin Restaurant Properties, Inc. He
is Director, President, Chairman of the Board, Chief Executive
Officer and Secretary of Brauvin Realty Services, Inc., Brauvin
Management Company and Brauvin Financial, Inc. He is President and
Director of Brauvin, Inc. He is also Director, President, Chairman
of the Board and Chief Executive Officer of Brauvin Chili's Inc.,
Brauvin Realty Advisors, Inc., Brauvin Realty Advisors II, Inc.,
Brauvin Realty Advisors III, Inc., Brauvin Realty Advisors IV, Inc.,
Brauvin Realty Advisors V, LLC., and Brauvin Net Lease V, Inc. as
well as an individual general partner in seven other affiliated
<PAGE>
public limited partnerships. Prior to Mr. Brault's affiliation with
the Brauvin organization, he was the Chief Operating Officer of
Burton J. Vincent, Chesley & Company, a New York Stock Exchange
member firm. He is the father of James L. Brault, an officer of
certain affiliated Brauvin entities.
Mr. Cezar M. Froelich (age 50) is a principal with the Chicago law
firm of Shefsky Froelich & Devine Ltd., which acts as counsel to the
General Partners, the Partnership and certain of their affiliates.
His practice has been primarily in the fields of securities and real
estate and he has acted as legal counsel to various public and
private real estate limited partnerships, mortgage pools and real
estate investment trusts. Mr. Froelich is an individual general
partner in seven other affiliated public limited partnerships and a
shareholder in Brauvin Management Company and Brauvin Financial Inc.
Mr. Froelich resigned as a director of the corporate general partner
in December 1994.
Mr. Thomas J. Coorsh (age 46) is the Treasurer and Chief Financial
Officer of Brauvin Chili's, Inc., Brauvin Properties, Inc., Brauvin
Realty Properties, Inc., Brauvin Realty Partners, Inc., Brauvin
Ventures, Inc., Brauvin 6, Inc., Brauvin Realty Advisors, Inc.,
Brauvin Realty Advisors II, Inc., Brauvin Realty Advisors III, Inc.,
Brauvin Realty Advisors IV, Inc., Brauvin Realty Advisors V, LLC,
Brauvin Net Lease V, Inc., Brauvin Management Company, Brauvin
Financial, Inc., Brauvin Securities, Inc., Brauvin Inc., Brauvin
Associates, Inc., Brauvin Advisory Services, Inc. and Brauvin
Restaurant Properties, Inc. He is responsible for the overall
financial management of Brauvin Management Company, Brauvin
Financial, Inc. and related partnerships. He is responsible for
partnership accounting and financial reporting to regulatory
agencies. From May 1992 until joining Brauvin in November of 1993,
Mr. Coorsh was self-employed as a business consultant. Between 1990
and 1992, Mr. Coorsh was the senior vice president of finance and
chief accounting officer for Lexington Homes, an Illinois-based
homebuilder. In 1990, Mr. Coorsh left The Balcor Company, a major
real estate syndicator, property manager and lender to join Lexington
Homes. Mr. Coorsh began work at The Balcor Company in 1985 and his
most recent position was first vice president - finance. Mr.
Coorsh's responsibilities at Balcor included property management
accounting and finance; treasury; and financial and strategic
planning. Before joining Balcor, Mr. Coorsh held financial positions
with several large, public corporations headquartered in the Chicago
metropolitan area. Mr. Coorsh a Certified Public Accountant.
<PAGE>
Mr. James L. Brault (age 35) is a Vice President and Secretary of
Brauvin Chili's, Inc., Brauvin Properties, Inc., Brauvin Realty
Properties, Inc., Brauvin Realty Partners, Inc., Brauvin Ventures,
Inc., Brauvin 6, Inc., Brauvin Realty Advisors, Inc., Brauvin Realty
Advisors II, Inc., Brauvin Realty Advisors III, Inc., Brauvin
Associates, Inc., Brauvin Inc., Brauvin Securities, Inc. and Brauvin
Restaurant Properties, Inc. He is Executive Vice President and
Secretary of Brauvin Advisory Services, Inc. He is also Executive
Vice President, Secretary and Director of Brauvin Realty Advisors IV,
Inc. and Brauvin Realty Advisors V, LLC, and Brauvin Net Lease V,
Inc. Additionally, he is the Executive Vice President and Assistant
Secretary of Brauvin Management Company and Brauvin Financial, Inc.,
as well as a Director of Brauvin Financial, Inc. Prior to joining
the Brauvin organization in May 1989, he was a Vice President of the
Commercial Loan Division of the First National Bank of Chicago, based
in their Washington, D.C. office. Mr. Brault joined the First
National Bank of Chicago in 1983 and his responsibilities included
the origination and management of commercial real estate loans, as
well as the direct management of a loan portfolio in excess of
$150,000,000. Mr. Brault is a son of Mr. Jerome J. Brault, the
managing general partner of the Partnership.
Item 11. Executive Compensation.
(a & b) The Partnership is required to pay certain fees, make
distributions and allocate a share of the profits and losses of the
Partnership to the Corporate General Partner or its affiliates as
described under the caption "Compensation Table" on pages 10 to 12 of
the Partnership's Prospectus and "Summary of Limited Partnership
Agreement - Allocations and Distribution to the Limited Partners" on
page 70 of the Partnership's Prospectus, as supplemented, and the
sections of the Restated Limited Partnership Agreement (the
"Agreement") of the Partnership entitled "Distributions of Operating
Cash Flow," "Allocation of Profits, Losses and Deductions,"
"Distribution of Net Sales or Refinancing Proceeds" and "Compensation
of General Partners and Their Affiliates" located on pages A-8 to
A-13 of the Agreement, attached as Exhibit A to the Prospectus. The
relationship of the Corporate General Partner (and its directors and
officers) to its affiliates is set forth above in Item 10. Reference
is also made to Note 2 of the Notes to Consolidated Financial
Statements filed with this Annual Report on Form 10-K for a
description of such distributions and allocations.
<PAGE>
The General Partners received Acquisition Fees for services
rendered in connection with the selection, purchase, construction or
development of any property by the Partnership whether designated as
real estate commissions, acquisition fees, finders' fees, selection
fees, development fees, non-recurring management fees, consulting
fees, payments for covenants not to compete, guarantee fees,
financing fees or any other similar fees or commissions, however
designated and however treated for tax or accounting purposes. Such
Acquisition Fees may not exceed such compensation as is customarily
charged in arm's-length transactions by others rendering similar
services as an ongoing public activity in the same geographic locale
and for comparable properties. In addition, unaffiliated real estate
brokers and other parties engaged by the seller of a Partnership
property received fees or commissions for their services from the
seller in connection with the purchase of a property by the
Partnership, in an amount of up to 1/2% of the gross proceeds of the
Offering. Such fee was not paid with any of the gross proceeds of
the Offering. In the event real estate brokers or other parties
receive such fees which would be considered Acquisition Fees, the
total Acquisition Fees paid to all parties by all parties will not
exceed 5-1/2% of the gross proceeds of the Offering. The aggregate
Acquisition Fees to be paid to an affiliate of the General Partners
shall not exceed 5% of the gross proceeds of the Offering. No
acquisition fees were paid in 1993, 1994 or 1995.
Up to a maximum of 1% of the gross proceeds of the Offering was set
aside for the Partnership's Distribution Reserve which, if not
utilized to pay the Limited One Year Guaranty Return of 9-1/4% per
annum on Adjusted Investment, may be paid to an affiliate of the
General Partners at the sole discretion of the General Partners on
the earlier of: (i) October 29, 1991; or (ii) the expenditure of 95%
of the proceeds of the Offering available for Investment in
Properties (the "Distribution Reserve Termination"). No such amounts
were paid to the General Partners since the Distribution Reserve was
fully used to fund distributions to the Limited Partners.
An affiliate of the General Partners may provide leasing and
re-leasing services to the Partnership in connection with the
management of Partnership properties. The maximum property
management fee paid to an affiliate of the General Partners shall be
equal to 1% of the gross revenues of each Partnership property,
however, the receipt of such property management fees by the
affiliate of the General Partners is subordinate to receipt by the
Limited Partners of the 9-1/4% non-cumulative, non-compounded annual
return on Adjusted Investment (the "Current Preferred Return"). No
<PAGE>
property management fees were paid in 1993 since the Limited
Partners did not receive a 9-1/4% non-cumulative, non-compounded annual
return for 1993. In the fourth quarter of 1994, the Partnership paid
property management fees of $5,105 as a result of the Limited
Partners receiving a 9-1/4% non-cumulative, non-compounded return for
the third quarter of 1994. During 1995 the Partnership paid $29,539
for property management fees.
(c, d, e & f) Not applicable.
(g) The Partnership has no employees and pays no
employee or director compensation.
(h & i) Not applicable.
(j) Compensation Committee Interlocks and Insider
Participation. Since the Partnership has no
employees, it did not have a compensation committee
and is not responsible for the payment of any compensation.
(k) Not applicable.
(l) Not applicable.
The following is a summary of all fees, commissions and other
expenses paid or payable to the General Partners or its affiliates
for the years ended December 31, 1995, 1994 and 1993:
1995 1994 1993
Selling commissions $27,592 $26,309 $25,249
Management fees 29,539 5,105 --
Reimbursable operating expenses 64,679 74,400 73,998
Legal fees 5,022 31,352 3,987
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) No person or group is known by the Partnership to own
beneficially more than 5% of the outstanding Units of the
Partnership.
(b) None of the officers and directors of the Corporate
General Partner of the Partnership purchased Units.
<PAGE>
(c) The Partnership is not aware of any arrangements which may
result in a change in the control of the Partnership.
No officer or director of the Corporate General Partner possesses
a right to acquire beneficial ownership of Units of the
Partnership. The General Partners of the Partnership will share in
the profits, losses and distributions of the Partnership as outlined
in Item 11, "Executive Compensation."
Item 13. Certain Relationships and Related Transactions.
(a & b) The Partnership is entitled to engage in various
transactions involving affiliates of the Corporate General Partner of
the Partnership, as described under the sections "Compensation Table"
and "Conflicts of Interest" on pages 11 to 14 and 14 to 16,
respectively, of the Partnership's Prospectus, as supplemented, and
the section of the Agreement entitled "Rights, Duties and Obligations
of General Partners" on pages A-15 to A-18. The relationship of the
Corporate General Partner to its affiliates is set forth in Item 10.
Cezar M. Froelich is an individual general partner of the Partnership
and is also a principal of the law firm of Shefsky Froelich & Devine
Ltd., which firm acts as securities and real estate counsel to the
Partnership, the General Partners and certain of their respective
affiliates.
(c) No management persons are indebted to the Partnership.
(d) There have been no significant transactions with
promoters.
<PAGE>
PART IV
Item 14. Exhibits, Consolidate Financial Statements and Schedules,
and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(1) (2) Consolidated Financial Statements and Schedule
indicated in Part II, Item 8 "Consolidated Financial Statements and
Supplementary Data." (See Index to Consolidated Financial Statements
and Schedule on page F-1 of Form 10-K).
(3) Exhibits required by the Securities and Exchange
Commission Regulation S-K, Item 601.
(27) Financial Data Schedule
The following exhibits are incorporated by reference from the
Registrant's Registration Statement (File No. 33-28577) on Form S-11
filed under the Securities Act of 1933:
Exhibit No. Description
3.(a) Restated Limited Partnership Agreement
3.(b) Articles of Incorporation of Brauvin Realty Advisors III, Inc.
3.(c) By-Laws of Brauvin Realty Advisors III, Inc.
3.(d) Amendment to the Certificate of Limited Partnership of
the Partnership
10.(a) Escrow Agreement
(b) No reports on Form 8-K were filed by the Partnership during the
fourth quarter of 1995.
(c) An annual report for the fiscal year 1995 will be sent to the
Limited Partners subsequent to this filing and the Partnership will
furnish copies of such report to the Securities and Exchange
Commission at that time.
<PAGE>
The following exhibits are incorporated by reference to the
Registrant's fiscal year ended 1994 Form 10-K (File No. 0-19219):
Exhibit No. Description
(10)(b)(1) Management Agreement
(19)(a) Amendment to Distribution Reinvestment Plan.
(28) Pages 11-16, 40, 41 and 70 of the Partnership's
Prospectus dated October 30, 1989, as supplemented,
pages A-8 to A-13 and A-15 to A-18 of the Agreement
and portions of Supplements #4 and #5.
<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.
BRAUVIN INCOME PLUS L.P. III
BY:Brauvin Realty Advisors III, Inc.
Corporate General Partner
By: /s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of
Directors, President and
Chief Executive Officer
By: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer and Treasurer
By: /s/ James L. Brault
James L. Brault
Vice President and Secretary
INDIVIDUAL GENERAL PARTNERS
/s/ Jerome J. Brault
Jerome J. Brault
/s/ Cezar M. Froelich
DATED: March 29, 1996 Cezar M. Froelich
<PAGE>
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 1995 and 1994 . . . . . . F-3
Consolidated Statements of Operations, for the years
ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . F-4
Consolidated Statements of Partners' Capital, for
the years ended December 31, 1995, 1994 and 1993 . . . . . . . . . F-5
Consolidated Statements of Cash Flows, for the years
ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements. . . . . . . . . . . . . F-7
Schedule III--Real Estate and Accumulated Depreciation,
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . F-17
All other schedules provided for in Item 14(a)(2) of Form 10-K
are either not required, not applicable or immaterial.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Brauvin Income Plus L. P. III
Chicago, Illinois
We have audited the accompanying consolidated balance sheets of
Brauvin Income Plus L. P. III (a limited partnership) and subsidiary
as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' capital, and cash flows for the
each of the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedule listed in the
Index to Consolidated Financial Statements and Schedule on page F-1.
These consolidated financial statements and the financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated
financial statements and the financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Brauvin
Income Plus L. P. III and its subsidiary at December 31, 1995 and
1994, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 9, 1996
<PAGE>
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
1995 1994
ASSETS
Investment in real estate, at cost:
Land $ 7,845,528 $ 7,845,528
Buildings and improvements 10,463,264 10,463,264
18,308,792 18,308,792
Less: accumulated depreciation (1,869,626) (1,486,513)
Net investment in real estate 16,439,166 16,822,279
Investment in Brauvin Gwinnett
County Venture (Note 5) 153,668 157,014
Cash and cash equivalents 1,069,555 925,719
Rent receivable -- 13,755
Deferred rent receivable 36,572 27,943
Due from affiliates 7,301 2,352
Prepaid offering costs 72,270 78,078
Other assets 2,059 --
Total Assets $17,780,591 $18,027,140
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued expenses $ 311,553 $ 298,738
Rent received in advance 83,800 144,944
Due to affiliates -- 10,421
Total Liabilities 395,353 454,103
MINORITY INTEREST IN BRAUVIN CHILI'S
LIMITED PARTNERSHIP (514) (382)
PARTNERS' CAPITAL:
General Partners 70,772 79,872
Limited Partners 17,314,980 17,493,547
Total Partners' Capital 17,385,752 17,573,419
Total Liabilities and Partners'
Capital $17,780,591 $18,027,140
See accompanying notes to consolidated financial statements.
<PAGE>
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1995, 1994 and 1993
1995 1994 1993
INCOME:
Rental $2,249,447 $2,157,975 $2,121,744
Interest 22,397 27,246 6,086
Other 3,379 20,426 3,353
Total income 2,275,223 2,205,647 2,131,183
EXPENSES:
General and administrative 118,448 150,726 124,802
Management fees (Note 3) 29,539 5,105 --
Amortization of deferred
organization costs -- 6,000 6,000
Depreciation 383,113 386,842 384,979
Total expenses 531,100 548,673 515,781
Income before minority interests and
equity interest in joint ventures 1,744,123 1,656,974 1,615,402
Minority interest share in Brauvin
Chili's Limited Partnership's
net income (569) (546) (502)
Equity interest in Brauvin Gwinnett
County Venture's net income (loss) 13,293 11,819 (472)
Net income $1,756,847 $1,668,247 $1,614,428
Net income allocated to the
General Partners $ 35,137 $ -- $ 32,289
Net income allocated to the
Limited Partners $1,721,710 $1,668,247 $1,582,139
Net income per Unit outstanding (a) $ 0.78 $ 0.76 $ 0.73
(a) Net income per Unit is based on the average Units outstanding during the
year since they were of varying dollar amounts and percentages based upon the
dates Limited Partners were admitted to the Partnership and additional Units
were purchased through the Plan.
See accompanying notes to consolidated financial statements.
<PAGE>
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994 and 1993
General Limited
Partners Partners* Total
Balance, January 1, 1993 $53,083 $17,892,408 $17,945,491
Contributions, net -- 249,281 249,281
Selling commissions and other
offering costs -- (30,564) (30,564)
Net income 32,289 1,582,139 1,614,428
Cash distributions -- (1,973,921) (1,973,921)
Balance, December 31, 1993 85,372 17,719,343 17,804,715
Contributions, net -- 145,507 145,507
Selling commissions and other
offering costs -- (31,848) (31,848)
Net income -- 1,668,247 1,668,247
Cash distributions (5,500) (2,007,702) (2,013,202)
Balance, December 31, 1994 79,872 17,493,547 17,573,419
Contributions, net -- 193,705 193,705
Selling commissions and other
offering costs -- (33,401) (33,401)
Net income 35,137 1,721,710 1,756,847
Cash distributions (44,237) (2,060,581) (2,104,818)
Balance, December 31, 1995 $ 70,772 $17,314,980 $17,385,752
* Total Units outstanding at December 31, 1995, 1994 and 1993 were 2,227,103,
2,208,472, and 2,193,182, respectively. Cash distributions to Limited
Partners per Unit were $0.93, $0.91 and $0.91 for the years ended
December 31, 1995, 1994 and 1993, respectively. Cash distributions to
Limited Partners per Unit are based on the average Units outstanding during
the year since they were of varying dollar amounts and percentages based upon
the dates Limited Partners were admitted to the Partnership and additional
Units were purchased through the distribution reinvestment plan.
See accompanying notes to consolidated financial statements.
<PAGE>
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Cash flows from operating activities:
Net income $1,756,847 $1,668,247 $1,614,428
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 383,113 392,842 390,979
Minority interest's share of income from
Brauvin Chili's Limited Partnership 569 546 502
Equity interest in Brauvin Gwinnett
County Venture's net (income) loss (13,293) (11,819) 472
Decrease (increase) in rent receivable 13,755 (4,963) (8,792)
Increase in deferred rent receivable (8,629) (10,129) (17,814)
Increase in due from affiliates (4,949) (688) (1,664)
Increase in other assets (2,059) -- --
Increase (decrease) in accounts payable
and accrued expenses 12,815 170,784 (1,629)
(Decrease) increase in rent received
in advance (61,144) 17,604 127,340
(Decrease) increase in due to affiliates (10,421) 3,337 7,084
Net cash provided by operating
activities 2,066,604 2,225,761 2,110,906
Cash flows from investing activities:
Cash distribution to minority interest -
Brauvin Chili's Limited Partnership (701) (740) (650)
Investment in Brauvin Gwinnett
County Venture -- -- (161,028)
Distributions from Brauvin Gwinnett
County Venture 16,639 15,361 --
Net cash provided by (used in)
investing activities 15,938 14,621 (161,678)
Cash flows from financing activities:
Sale of Units, net of liquidations and
selling commissions 166,112 119,199 224,032
Cash distributions to Limited Partners (2,060,581)(2,007,702)(1,973,921)
Cash distributions to General Partners (44,237) (5,500) --
Net cash used in financing activities (1,938,706)(1,894,003)(1,749,889)
Net increase in cash and
cash equivalents 143,836 346,379 199,339
Cash and cash equivalents at beginning
of year 925,719 579,340 380,001
Cash and cash equivalents at end of year $1,069,555 $ 925,719 $ 579,340
See accompanying notes to consolidated financial statements.
<PAGE>
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1995, 1994 and 1993
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
BRAUVIN INCOME PLUS L.P. III (the "Partnership") is a Delaware
limited partnership organized for the purpose of acquiring
debt-free ownership of existing, free-standing, income-producing
retail, office or industrial real estate properties predominantly
subject to "triple-net" leases. The General Partners of the
Partnership are Brauvin Realty Advisors III, Inc., Jerome J. Brault
and Cezar M. Froelich. Brauvin Realty Advisors III, Inc. is owned
by Messrs. Brault (beneficially)(50%) and Froelich (50%). Brauvin
Securities, Inc., an affiliate of the General Partners, was the
selling agent for the Partnership. The Partnership is managed by
an affiliate of the General Partners.
The Partnership was formed on July 31, 1989 and filed a
Registration Statement on Form S-11 with the Securities and
Exchange Commission which was declared effective on October 30,
1989. The sale of the minimum of $1,200,000 of limited partnership
interests of the Partnership (the "Units") necessary for the
Partnership to commence operations was achieved on January 15,
1990. The Partnership's offering was originally expected to close
on October 29, 1990 but the Partnership, with the receipt of the
necessary regulatory approval, extended the offering until it
closed on October 29, 1991. Through December 31, 1995, 1994, and
1993, the Partnership has sold $22,693,694, $22,084,729 and
$21,948,281 of Units, respectively. These totals include
$1,386,094, $1,096,388 and $819,447 of Units, respectively, raised
by Limited Partners who utilized their distributions of Operating
Cash Flow to purchase additional Units through the distribution
reinvestment plan (the "Plan"). Units valued at $422,662, $321,667
and $195,225 have been purchased by the Partnership from Limited
Partners liquidating their investment in the Partnership and have
been retired as of December 31, 1995, 1994 and 1993, respectively.
As of December 31, 1995, the Plan participants have acquired Units
under the Plan which approximate 6% of the total Units outstanding.
<PAGE>
The Partnership has acquired the land and buildings underlying
five Ponderosa restaurants, two Chi-Chi's restaurants, one
International House of Pancakes restaurant, one Applebee's
restaurant, two Sports Unlimited stores, and three Steak n Shake
restaurants. The Partnership also acquired 99.5% and 6.4% equity
interests in two joint ventures with entities affiliated with the
Partnership. These ventures own the land underlying a Chili's
restaurant and a CompUSA store, respectively.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Accounting Method
The accompanying financial statements have been prepared using
the accrual method of accounting.
Rental Income
Rental income is recognized on a straight-line basis over the
life of the related leases. Differences between rental income
earned and amounts due per the respective lease agreements are
credited or charged as applicable to deferred rent receivable.
<PAGE>
Federal Income Taxes
Under the provisions of the Internal Revenue Code, the
Partnership's income and losses are reportable by the partners on
their respective income tax returns. Accordingly, no provision is
made for Federal income taxes in the consolidated financial
statements. However, in certain instances, the Partnership has
been required under applicable state law to remit directly to the
tax authorities amounts representing withholding from distributions
paid to partners.
Consolidation of Joint Venture
The Partnership owns a 99.5% equity interest in a joint venture,
Brauvin Chili's Limited Partnership, which owns one Chili's
restaurant. The accompanying financial statements have
consolidated 100% of the assets, liabilities, operations and
partners' capital of Brauvin Chili's Limited Partnership. All
significant intercompany accounts have been eliminated.
Investment in Joint Venture
The Partnership owns a 6.4% equity interest in a joint venture,
Brauvin Gwinnett County Venture, which owns one CompUSA store. The
accompanying financial statements include the investment in Brauvin
Gwinnett County Venture using the equity method of accounting.
Investment in Real Estate
The operating properties acquired by the Partnership are stated
at cost including acquisition costs. Depreciation expense is
computed on a straight-line basis over approximately 35 years.
In 1995, the Partnership adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
<PAGE>
Long-Lived Assets" (SFAS 121). In conjunction with the
adoption of SFAS 121, the Partnership performed an analysis of its
long-lived assets, and the Partnership's management determined that
there were no events or changes in circumstances that indicated
that the carrying amount of the assets may not be recoverable.
Accordingly, no impairment loss has been recorded in the
accompanying financial statements.
Organization and Offering Costs
Organization costs represent costs incurred in connection with
the organization and formation of the Partnership. Organization
costs were amortized over a period of five years using the
straight-line method. Offering costs represent costs incurred in
selling Units, such as the printing of the Prospectus and marketing
materials. Offering costs have been recorded as a reduction of
Limited Partners' Capital.
The General Partners have guaranteed payment of any organization
and offering costs that exceed defined percentages of the gross
proceeds of the offering. Prepaid offering costs represent amounts
in excess of the defined percentages of the gross proceeds.
Subsequently, gross proceeds are expected to increase due to the
purchase of additional Units through the Plan and the prepaid
offering costs will be transferred to offering costs and treated as
a reduction in Partners' Capital.
Cash and Cash Equivalents
Cash equivalents include all highly liquid debt instruments with
an original maturity within three months of purchase.
Estimated Fair Value of Financial Instruments
Disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of
<PAGE>
Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments." The estimated fair value
amounts have been determined by using available market information
and appropriate valuation methodologies. However, considerable
judgement is necessarily required in interpreting market data to
develop estimates of fair value.
The fair value estimates presented herein are based on
information available to management as of December 31, 1995 and
1994, but may not necessarily be indicative of the amounts that the
Partnership could realize in a current market exchange. The use of
different assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts. Although
management is not aware of any factors that would significantly
affect the estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements
since that date, and current estimates of fair value may differ
significantly from amounts presented herein.
The carrying amounts of the following items are a reasonable
estimate of fair value: cash and cash equivalents; due from
affiliates; accounts payable and accrued expenses; rents received
in advance; and due to affiliates.
(2) PARTNERSHIP AGREEMENT
Distributions
All Operating Cash Flow, as defined in the Partnership Agreement
(the "Agreement") shall be distributed: (a) first, to the Limited
Partners until the Limited Partners receive an amount equal to a
9-1/4% non-cumulative, non-compounded, annual return on Adjusted
Investment, as such term is defined in the Agreement, commencing on
the last day of the calendar quarter in which the Unit was
purchased (the "Current Preferred Return"); and (b) thereafter, any
<PAGE>
remaining amounts will be distributed 98% to the Limited Partners
(on a pro rata basis) and 2% to the General Partners.
The net proceeds of a sale or refinancing of a Partnership
property shall be distributed as follows:
first, pro rata to the Limited Partners until each Limited
Partner has received an amount equal to a 10.5% cumulative,
non-compounded, annual return of Adjusted Investment (the
"Cumulative Preferred Return");
second, to the Limited Partners until each Limited Partner has
been paid an amount equal to his Adjusted Investment, as defined in
the Agreement, apportioned pro rata among the Limited Partners
based on the amount of the Adjusted Investment; and
thereafter, 95% to the Limited Partners (apportioned pro rata
based on Units) and 5% to the General Partners.
Profits and Losses
Net profits and losses from operations of the Partnership
[computed without regard to any allowance for depreciation or cost
recovery deductions under the Internal Revenue Code of 1986, as
amended (the "Code")] for each taxable year of the Partnership
shall be allocated to each Partner in the same ratio as the cash
distributions received by such Partner attributable to that period
bears to the total cash distributed by the Partnership. In the
event that there are no cash distributions, net profits and losses
from operations of the Partnership (computed without regard to any
allowance for depreciation or cost recovery deductions under the
Code) shall be allocated 99% to the Limited Partners and 1% to the
General Partners. Notwithstanding the foregoing, all depreciation
and cost recovery deductions allowed under the Code shall be
allocated 2% to the General Partners and 98% to the Taxable Class
Limited Partners, as defined in the Agreement.
<PAGE>
The net profit of the Partnership from any sale or other
disposition of a Partnership property shall be allocated (with
ordinary income being allocated first) as follows: (a) first, an
amount equal to the aggregate deficit balances of the Partners'
Capital Accounts, as such term is defined in the Agreement, shall
be allocated to each Partner who or which has a deficit Capital
Account balance in the same ratio as the deficit balance of such
Partner's Capital Account bears to the aggregate of the deficit
balances of all Partners' Capital Accounts; (b) second, to the
Limited Partners until the Capital Account balances of the Limited
Partners are equal to any unpaid Cumulative Preferred Return, as of
such date; (c) third, to the Limited Partners until the Capital
Account balances of the Limited Partners are equal to the sum of
the amount of their Adjusted Investment plus any unpaid Cumulative
Preferred Return; (d) fourth, to the General Partners until their
Capital Account balances are equal to any previously subordinated
fees; and (e) thereafter, 95% to the Limited Partners and 5% to the
General Partners. The net loss of the Partnership from any sale or
other disposition of a Partnership property shall be allocated as
follows: (a) first, an amount equal to the aggregate positive
balances in the Partners' Capital Accounts, to each Partner in the
same ratio as the positive balance in such Partner's Capital
Account bears to the aggregate of all Partners' positive Capital
Accounts balances; and (b) thereafter, 95% to the Limited Partners
and 5% to the General Partners.
(3) TRANSACTIONS WITH RELATED PARTIES
The Partnership pays an affiliate of the General Partners an
annual property management fee equal to up to 1% of gross revenues
derived from Partnership properties managed by such affiliate. The
property management fee is subordinated to receipt by the Limited
Partners of distributions of Operating Cash Flow in an amount equal
to the Current Preferred Return.
<PAGE>
An affiliate of one of the General Partners provides securities
and real estate counsel to the Partnership.
Fees, commissions and other expenses paid or payable to the
General Partners or its affiliates for the years ended December 31,
1995, 1994 and 1993 were as follows:
1995 1994 1993
Selling commissions $27,592 $26,309 $25,249
Management fees 29,539 5,105 --
Reimbursable operating expenses 64,679 74,400 73,998
Legal fees 5,022 31,352 3,987
(4) LEASES
The Partnership's rental income is principally obtained from
tenants through rental payments provided under triple-net
noncancelable operating leases. The leases provide for a base
minimum annual rent and increases in rent such as through
participation in gross sales above a stated level. The following is
a schedule of noncancelable future minimum rental payments due to
the Partnership under operating leases of Partnership properties as
of December 31, 1995:
Year Ending December 31:
1996 $ 2,108,877
1997 2,108,357
1998 2,108,357
1999 2,115,857
2000 2,118,357
Thereafter 16,218,198
$26,778,003
<PAGE>
Additional rent based on percentages of tenant sales increases
was $142,179, $58,684 and $62,957 in 1995, 1994 and 1993,
respectively.
(5) EQUITY INVESTMENT
The Partnership owns an equity interest in the Brauvin
Gwinnett County Venture and reports its investment on the equity
method. The following are condensed financial statements for the
Brauvin Gwinnett County Venture:
<PAGE>
BRAUVIN GWINNETT COUNTY VENTURE
December 31, 1995 December 31, 1994
Land and buildings, net $2,376,510 $2,422,262
Other assets 41,567 45,198
$2,418,077 $2,467,460
Liabilities $ 22,702 $ 19,792
Partners' capital 2,395,375 2,447,668
$2,418,077 $2,467,460
Period From
November 9, 1993
Year Ended Year Ended (inception) to
December 31, December 31, December 31,
1995 1994 1993
Rental income $264,248 $241,451 $35,216
Expenses:
Depreciation 45,752 45,752 7,625
Management fees 2,497 2,520 198
Operating and administrative 8,292 8,510 34,762
56,541 56,782 42,585
Net income (loss) $207,707 $184,669 $(7,369)
<PAGE>
<TABLE>
SCHEDULE III
BRAUVIN INCOME PLUS L.P. III
(a Delaware limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<CAPTION> Gross Amount at Which Carried
Initial Cost at Close of Period
Buildings, Buildings,
Personal Cost of Personal
Property and Subsequent Property and Accumulated Date
Description Encumbrances (c) Land Improvements Improvements Land Improvements Total Depreciation(b) Acquired
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ponderosas $0 $2,500,751 $ 3,052,809 $0 $2,500,751 $ 3,052,809 $ 5,553,560 $ 794,399 11/90-6/90
Chi Chi's Restaurant 0 865,252 1,530,299 0 865,252 1,530,299 2,395,551 260,607 3/91
IHOP 0 297,951 394,958 0 297,951 394,958 692,909 53,229 4/91
Applebee's & Expansion 0 442,625 786,889 83,631 442,625 870,520 1,313,145 147,752 6/91 & 4/92
Sports Unlimited 0 2,194,992 2,395,773 0 2,194,992 2,395,773 4,590,765 373,821 9/91
Chili's Restaurant 0 247,257 788,593 0 247,257 788,593 1,035,850 87,634 2/92
Steak N'Shake 0 1,296,700 1,430,312 0 1,296,700 1,430,312 2,727,012 152,184 3/92
$0 $7,845,528 $10,379,633 $83,631 $7,845,528 $10,463,264 $18,308,792 $2,852,122
<FN>
<F1>
NOTES:
(a) The cost of this real estate is $18,308,792 for tax purposes (unaudited). The buildings are depreciated over
approximately 35 years using the straight line method. The properties were constructed between 1969 and 1986.
(b) The following schedule summarizes the changes in the Partnership's real estate and accumulated depreciation balances:
</FN>
<CAPTION>
Real estate 1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of year $18,308,792 $18,308,792 $18,308,792
Additions-land, buildings and improvements 0 0 0
Balance at end of year $18,308,792 $18,308,792 $18,308,792
Accumulated depreciation 1995 1994 1993
Balance at beginning of year $ 1,486,513 $ 1,099,671 $ 714,692
Provision for depreciation 383,113 386,842 384,979
Balance at end of year $ 1,869,626 $ 1,486,513 $ 1,099,671
<FN>
<F2>
(c) Encumbrances - Brauvin Income Plus L.P. III did not borrow cash in order to purchase its properties. 100% of the land and
buildings were paid for with funds contributed by the Interest Holders.
</FN>
</TABLE>
<PAGE> EXHIBIT
TO
BRAUVIN INCOME PLUS L.P. III
FORM 10-K ANNUAL REPORT
FOR THE PERIOD ENDED
DECEMBER 31, 1995
<PAGE> EXHIBIT INDEX
BRAUVIN INCOME PLUS L.P. III
FORM 10-K
For the fiscal year ended December 31, 1995
Exhibit (21) Subsidiaries of the Registrant
Exhibit (27) Financial Data Schedule
<PAGE>
(Exhibit 21)
Name of Subsidiary State of Formation
Brauvin Chili's Limited Partnership Delaware
Brauvin Gwinnett County Venture Illinois
<PAGE>
