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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Fiscal year ended December 31, 1999
Commission file number 0-11578
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Exchange Act of 1934 (No Fee Required)
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
AMERICAN REPUBLIC REALTY FUND I
(Exact name of registrant as specified in its charter)
Wisconsin 39-1421936
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
6210 Campbell Road, Suite 140, Dallas, Texas 75248
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including area code (972) 380-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on which Registered
None None
Securities registered pursuant to Section 12 (g) of the Act:
Limited Partnership Interests
(Title of Class)
Indicated by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X . No ___.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained, to the best of Registrant's
knowledge in definitive proxy on information to statements incorporated
by reference in Part III of the Form 10-K or any amendment to this Form
10-K.
Documents Incorporated by Reference
The Definitive Prospectus of American Republic Realty Fund I dated May 2,
1983 filed pursuant to Rule 424(b) is incorporated by reference as is
the Supplement to that Prospectus filed pursuant to Rule 424(b) on May 25,
1984.
PART I
Item 1. Business
The Registrant, American Republic Realty Fund I, (the
"Partnership"), is a limited partnership organized under the
Wisconsin Uniform Limited Partnership Act pursuant to a Certificate
of Limited Partnership dated December 22, 1982. As of December 31,
1999, the Partnership consisted of an individual general partner,
Mr. Robert J. Werra, (the "General Partner") and 926 limited
partners owning 11,000 limited partnership interests at $1,000 per
interest. The distribution of limited partnership interests
commenced May 2, 1983 and ended April 17, 1984, pursuant to a
Registration Statement on Form S-11 under the Securities Act of
1933 (Registration #0-11578) as amended.
The Partnership was organized to acquire a diversified portfolio of
income-producing real properties, primarily apartments, as well as
office buildings, industrial buildings, and other similar
properties.
During 1983 and 1984, the Partnership acquired four properties:
Kenwood Gardens Apartments, a 104 unit apartment community located
in Fort Myers, Florida (acquired on September 1, 1983, subsequently
disposed of by sale during 1988), Jupiter Plaza Office/Showroom, a
131,440 rentable square foot commercial building located in
Garland, Texas (acquired on September 29, 1983, subsequently
disposed of in foreclosure during 1988), Four Winds Apartments, a
154 unit apartment community located in Orange Park, Florida (Phase
I acquired September 12, 1983 and Phase II acquired May 1, 1984)
and Forestwood Apartments (formerly Oak Creek) a 263 unit apartment
community located in Bedford, Texas (acquired December 20, 1983).
No additional properties were purchased by the Partnership and the
Partnership will not acquire additional properties in the future.
The properties remaining are described more fully in this report at
"Item 2. Properties".
Univesco, Inc.("Univesco"), a Texas corporation, eighty three
percent owned by Robert J. Werra ("Univesco") manages the affairs
of the Partnership. Univesco acts as the managing agent with
respect to the Partnership's properties. Univesco may also engage
other on-site property managers and other agents to the extent the
management considers appropriate. The General Partner has ultimate
authority regarding property management decisions.
The Partnership competes in the residential rental markets.
Univesco prepared marketing analyses for all property areas and
determined that these areas contain other like properties which are
considered competitive on the basis of location, amenities and
rental rates. It is realistic to assume that additional properties
similar to the foregoing will be constructed within their various
market areas.
No material expenditure has been made or is anticipated for either
Partnership-sponsored or consumer research and development
activities relating to the development or improvement of facilities
or services provided by the Partnership. There neither has been,
nor are any anticipated, material expenditures required to comply
with any federal, state, or local environmental provisions which
would materially affect the earnings or competitive position of the
Partnership.
The Partnership is engaged solely in the business of real estate
investments. Its business is believed by management to fall
entirely within a single industry segment. Management does not
anticipate that there will be any material seasonal effects upon
the operation of the Partnership.
Competition and Other Factors
The majority of the Properties' leases are six to twelve month
terms. Accordingly, operating income is highly susceptible to
changing market conditions. Occupancy and local market rents are
driven by general market conditions which include job creation, new
construction of single and multi-family projects, and demolition
and other reduction in net supply of apartment units.
Rents have generally been increasing in recent years due to the
generally positive relationship between apartment unit supply and
demand in the Partnership's markets. However, the properties are
subject to substantial competition from similar and often newer
properties in the vicinity in which they are located. In addition,
operating expenses and capitalized expenditures have increased as
units are updated and made more competitive in the market place.
(See Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations".)
Item 2. Properties
At December 31, 1999 the Partnership owned two properties with
approximately 416,623 net rentable square feet. Both properties are
apartment communities.
Name and Location General Description of the Property
Forestwood A fee simple interest in a 263 unit
Apartments apartment community located in
Bedford, Texas, purchased in 1983
containing 244,407 net rentable
square feet on approximately 14
acres of land.
Four Winds Apartments A fee simple interest in an 100 unit
Phase I community, located in Orange Park,
Florida, purchased in 1983,
containing approximately 110,716 net
rentable square feet on 10 acres of
land.
Four Winds Apartments A fee simple interest in a 54 unit
Phase II apartment community located in
Orange Park, Florida, adjacent to
four Winds Apartments I, purchased
in 1984 and containing approximately
61,500 net rentable square feet on
3.73 acres of land.
Occupancy Rates
Per Cent
1995 1996 1997 1998 1999
Four Winds I & II 93.6% 93.3% 92.0% 95.0% 94.0%
Forestwood 97.8% 96.6% 97.0% 96.5% 96.9%
The Properties are encumbered by non-recourse mortgages payable.
For information regarding the encumbrances to which the properties
are subject and the status of the related mortgage loans, see
"Management's Discussion and Analysis of Financial Condition and
Results of Operating - Liquidity and Capital Resources" contained
in Item 7 hereof and Note B to the Financial Statements contained
in Item 8.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the unit holders of the
Partnership during the fourth quarter of 1999.
By virtue of its organization as a limited partnership, the
Partnership has outstanding no securities possessing traditional
voting rights. However, as provided and qualified in the Limited
Partnership Agreement, limited partners have voting rights for,
among other things, the removal of the General Partner and
dissolution of the Partnership.
PART II
Item 5. Market for the Partnership's Securities and Related Unit
Holder Matters
The Partnership's outstanding securities are in the form of Limited
Partnership Interests ("Interests"). The distribution period for
the sale of the Interests began May 2, 1983,and closed April 17,
1984. As of December 31, 1999 there were approximately 981 limited
partners owning 11,000 limited partnership interests at $1,000 per
interest. A public market for trading Interests has not developed
and none is expected to develop. In addition, transfer of an
Interest is restricted pursuant to the Limited Partnership
Agreement.
Although a public market for trading Interests has not developed,
MP Value Fund 5, LLC acquired 1,444.5 units, approximately 13.1%,
of the outstanding Interests of the partnership in during, 1999.
MP Value Fund 5 has also tendered offers to other owners, although
no additional Interests have been sold. The registrant knows of no
other activity involving the sale or acquisition of Interest.
The General Partner continues to review the Partnership's ability
to make distributions on a quarter by quarter basis, however, no
such distributions have been made and none are anticipated in the
immediate future due to the debt service requirements of the
Partnership.
An analysis of taxable income or (loss) allocated, and cash
distributed to Investors per $1,000 unit is as follows:
YEARS INCOME GAIN LOSS CASH
DISTRIBUTED
1984 $0 $0 $342 $0
1985 0 0 $291 0
1986 0 0 $271 0
1987 0 0 $279 0
1988 0 $43 $63 0
1989 0 $38 $127 0
1990 0 0 $126 0
1991 0 0 $122 0
1992 $121 0 0 0
1993 $2 $1,071 0 0
1994 $17 0 0 0
1995 0 (a) 0 0 0
1996 $45 0 0 0
1997 $0 0 $70 0
1998 $0 0 $48 0
1999 $0 0 $39 0
(a) For Federal Income Tax purposes income only was reallocated in
accordance with the regulations promulgated thereunder of the
Internal Revenue code of 1986 as amended.
Item 6: Selected Financial Data
The following table sets forth selected financial data regarding the
Partnership's results of operations and financial position as of
the dates indicated. This information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" contained in Item 7 hereof and Financial
Statements and notes thereto contained in Item 8.
Year Ended December 31.
(in thousands except unit and per
unit amounts)
1999 1998 1997 1996 1995
Limited Partner Units Outstanding 11,000 11,000 11,000 11,000 11,000
Statement of Operations
Total Revenues $2,752 $2,675 $2,534 $2,458 $2,409
Income (Loss) before (137) (194) (112) 258 248
extraordinary items
Extraordinary Item-gain on 0 0 252 0 0
extinguishment of debt
Net Income (Loss) (137) (194) 140 258 248
Limited Partner Net Income (12.31)(17.53) 12.60 23.22 22.31
(Loss) per Unit - Basic
Cash Distributions to Limited 0 0 0 0 0
Partners per Unit - Basic
Balance Sheet:
Real Estate, net $7,096 $7,639 $8,134 $8,420 $8,954
Total Assets 7,941 8,426 9,092 8,645 9,099
Mortgages Payable 10,572 10,675 10,770 7,240 7,998
Notes Payable to Affiliate 165 399 760 2,935 3,108
Partner's Deficit (3,166)(3,030)(2,835)(2,975)(3,233)
Item 7. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
This discussion should be read in conjunction with Item 6 -
"Selected Financial Data" and Item 8 - "Financial Statements and
Supplemental Information" .
Results of Operations: 1999 VERSUS 1998 -
Revenue from Property Operations increased $77,626 or 2.90% as
compared to 1998. This increase is primarily attributed to a
$66,693 increase in rental revenues which was principally due to an
increase in rents. Interest income increased $4,388 due to an
increase in available funds for investment during 1999. The
increase in other operating revenues of $6,545 were principally
caused by a increase in fees from tenants and vending revenues. The
following table illustrates the increases:
Increase/
(Decrease)
Rental income $66,693
Interest 4,388
Other 6,545
--------
Net Increase $77,626
=========
Property operating expenses for 1999 increased $19,679 or 0.7%.
Interest expense on mortgage payable decreased $8,832 due primarily
to normal amortization. Depreciation and amortization increased
primarilly due to additional costs associated with the new mortgage
loans. Interest expense on Note payable to affiliates decreased due
to the repayment of a substantial portion of the amount owed to
affiliates with cash flow from operations. Maintenance and repairs
decreased $15,809 or 5.22% due primarily to the completion of
deferred maintenance items required by the new mortgage lenders.
Property management fees are paid to an affiliated entity and
represent approximately 5% of gross revenues (see Note C to the
Financial Statements and Schedule Index contained in Item 8). The
following table illustrates the increases or (decreases):
Increase
(Decrease)
Interest Expense on N/P Affiliate $(13,552)
Interest Expense on Mortgages Pay (8,832)
General administartive 22,229
Maintenance & repairs (15,809)
Utilities (1,090)
Real estate taxes 18,681
Advertising and Marketing (209)
Depreciation and amortization 14,545
Property management fees 3,716
Administrative Service Fee 0
---------
Net Increase $19,679
=========
Results of Operations: 1998 VERSUS 1997 -
Revenue from Property Operations increased $141,574 or 5.59% as
compared to 1997. This increase is primarily attributed to a
$134,934 increase in rental revenues which was principally due to
an increase in rents and by an increase in average occupancy.
Interest income decreased $8,385 due to an decrease in available
funds for investment during 1998. The increase in other operating
revenues of $15,025 were principally caused by a increase in fees
from tenants and vending revenues. The following table illustrates
the increases:
Increase/
(Decrease)
Rental income $134,934
Interest (8,385)
Other 15,025
----------
Net Increase $141,574
============
Property operating expenses for 1998 increased $224,472 or 8.48%.
Interest expense on mortgage payable increased $363,003 due
primarily to refinancing completed in 1997. Depreciation and
amortization increased primarilly due to additional costs
associated with the new mortgage loans. Interest expense on Note
payable to affiliates decreased due to the repayment of a
substantial portion of the amount owed to affiliates with excess
proceeds from the refinancing of the mortgages payable.
Maintenance and repairs decreased $25,556 or 7.79% due primarily to
the completion of deferred maintenance items required by the new
mortgage lenders. Property management fees are paid to an
affiliated entity and represent approximately 5% of gross revenues
(see Note C to the Financial Statements and Schedule Index
contained in Item 8). The following table illustrates the increases
or (decreases):
Increase
(Decrease)
Interest Expense on N/P Affiliate $(140,851)
Interest Expense on Mortgages Pay 363,003
General administrative (9)
Maintenance & repairs (25,556)
Utilities (3,545)
Real estate taxes (11,869)
Advertising and Marketing (553)
Depreciation and amortization 37,023
Property management fees 6,829
Administrative Service Fee 0
------------
Net Increase $224,472
==============
Liquidity and Capital Resources
While it is the General Partner's primary intention to operate and
manage the existing real estate investments, the General Partner
also continually evaluates this investment in light of current
economic conditions and trends to determine if these assets should
be considered for disposal. At this time, there is no plan to
dispose of either Property.
As of December 31, 1999, the Partnership had $116,649 in cash and
cash equivalents as compared to $146,358 as of December 31, 1998.
See Note C to the Financial Statements contained in Item 8 for
information regarding related party transactions.
The properties are encumbered by two non-recourse mortgage notes as
of December 31, 1999. These mortgages payable have a carrying
value of $10,572,372 at December 31, 1999. The mortgage notes were
entered into during 1997 to refinance certain mortgage notes. (See
earlier discussion entitled "Extraordinary Item - Gain on Early
Extiguishment of Debt"). The refinancing of these mortgage notes
resulted in a gain from early extinguishment of debt.
Additionally, the general partner has provided funding to the
Partnership in the form of notes payable with balances at December
31,1999 totaling $165,346 which accrue interest at 8.25% and is due
on February 16, 2001. The general partner is not obligated to
provide additional funding to the Partnership.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments (excluding any balloon mortgage
payments), improvements and capital expenditures will be funded by
net cash from operations. The primary source of capital to fund
balloon mortgage payments will be proceeds from the sale,
financing or refinancing of the Properties.
The Partnership's required principal payments due under the stated
terms of the Partnership's mortgage notes payable and notes
payable to affiliates are $111,063, $285,478, $129,941 $140,551 and
$152,028 for each of the next five years.
Item 7a - Quantitative and Qualitative Disclosure about Market Risk
Market Risk
The Partnership is exposed to interest rate changes primarily as a
result of its real estate mortgages. The Partnerships interest
rate risk management objective is to limit the impact of interest
rate changes on earnings and cash flows and to lower its overall
borrowing costs. To achieve its objectives, the partnership
borrows primarily at fixed rates. The partnership does not enter
into derivative or interest rate transactions for any purpose.
The Partnerships' activities do not contain material risk due to
changes in general market conditions. The partnership invests only
in fully insured bank certificates of deposits, and mutual funds
investing in United States treasury obligations.
Risk Associated with Forward-Looking Statements Included in
this Form 10-K This Form 10-K contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created
thereby. These statements include the plans and objectives of
management for future operations, including plans and objectives
relating to capital expenditures and rehabilitation costs on the
Properties. The forward-looking statements included herein are
based on current expectations that involve numerous risks and
uncertainties. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions,
all of which are difficult or impossible to predict accurately and
many of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-
looking statements are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this Form 10-K will prove to
be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the
Company will be achieved.
AMERICAN REPUBLIC REALTY FUND I
COMBINED FINANCIAL STATEMENTS
AND INDEPENDENT AUDITORS' REPORTS
December 31, 1999 and 1998
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditors' Reports 1
Combined Financial Statements
Balance Sheets as of December 31, 1999 and 1998 3
Statements of Operations for the years ended
December 31, 1999, 1998 and 1997 4
Statements of Partners' Equity (Deficit) for the years ended
December 31, 1999, 1998, and 1997 5
Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 6
Notes to Financial Statements 7
Schedule III - Real Estate and Accumulated Depreciation 14
All other schedules have been omitted because they are not
applicable, not required or the information has been supplied
in the financial statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
To the General Partner and Limited Partners of
American Republic Realty Fund I
We have audited the accompanying combined balance sheets of
American Republic Realty Fund I and subsidiary, a Wisconsin
limited partnership (the "Partnership") as of December 31, 1999
and 1998, and the related combined statements of operations,
partners' equity (deficit), and cash flows for the years then
ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits 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 presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present
fairly, in all material respects, the financial position of
American Republic Realty Fund I as of December 31, 1999 and 1998,
and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. Schedule III for
the year ended December 31, 1999 and 1998 is presented for the
purpose of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic
financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
January 21, 2000
Dallas, Texas
INDEPENDENT AUDITORS' REPORT
To the General Partner
and Limited Partners of
American Republic Realty Fund I
Dallas, Texas
We have audited the accompanying combined statements of
operations, partners' equity (deficit) and cash flows of American
Republic Realty Fund I and subsidiary (a Wisconsin limited
partnership) (the "Partnership") for the year ended December 31,
1997. The combined financial statements are the responsibility
of the Partnership's management. Our responsibility is to
express an opinion on the combined financial statements based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the combined financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall combined financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such combined financial statements present
fairly, in all material respects, the results of operations and
cash flows of the Partnership for the year ended
December 31, 1997, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 23, 1998
AMERICAN REPUBLIC REALTY FUND I
COMBINED BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
1999 1998
Investments in real estate at cost
Land $1,822,718 $1,822,718
Buildings, improvements and furniture and
fixtures 15,656,616 15,519,676
----------------------------------
17,479,334 17,342,394
Accumulated depreciation (10,382,557) (9,702,703)
7,096,777 7,639,691
Cash and cash equivalents 116,649 146,358
Escrow deposits 542,074 430,820
Deferred financing costs, net of accumulated
amortization of $57,358 and $34,414, respectively 172,072 195,016
Prepaid expenses 14,067 14,421
-----------------------------------
TOTAL ASSET 7,941,639 8,426,306
LIABILITIES AND PARTNERS' DEFICIT
Mortgages payable 10,572,372 10,675,051
Notes payable to affiliates 165,346 399,392
Amounts due affiliates 4,490 46,853
Accounts payable and accrued expenses 297,610 278,099
Security deposits 68,610 56,924
------------------------------------
TOTAL LIABILITIES 11,108,428 11,456,319
PARTNERS' DEFICIT (3,166,789) (3,030,013)
------------------------------------
TOTAL LIABILITIES AND PARTNERS' DEFICIT $7,941,639 $8,426,306
AMERICAN REPUBLIC REALTY FUND I
COMBINED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997
----------------------------------------
INCOME
Rentals $2,681,389 $2,614,696 $2,479,762
Other 63,262 56,717 41,692
Interest 8,346 3,958 12,343
----------------------------------------
Total income 2,752,997 2,675,371 2,533,797
OPERATING EXPENSES
Interest expense on mortgages payable 836,393 845,225 482,222
Depreciation and amortization 702,798 688,253 651,230
General and administrative 410,987 388,758 388,767
Maintenance and repairs 286,787 302,596 328,152
Real estate taxes 263,714 245,033 256,902
Utilities 176,806 177,896 181,441
Property management fee to affiliate 137,375 133,659 126,830
Advertising and marketing 40,284 40,493 41,046
Interest expense on notes payable to affiliates
24,621 38,173 179,024
Administrative service fee to general partner
10,008 10,008 10,008
-----------------------------------------
Total operating expenses 2,889,773 2,870,094 2,645,622
-----------------------------------------
NET LOSS BEFORE
EXTRAORDINARY GAIN (136,776) (194,723) (111,825)
Extraordinary gain - gain on early
extinguishment of debt --- --- 251,785
-----------------------------------------
NET INCOME (LOSS) $(136,776) $(194,723) $139,960
=========================================
NET INCOME PER LIMITED PARTNERSHIP
UNIT - BASIC
Net loss before extraordinary gain $(12.31) $(17.53) $(10.06)
Extraordinary gain - gain on early extinguishment
of debt --- --- 22.66
-----------------------------------------
Net income (loss) per unit - basic $(12.31) $(17.53) $12.60
=========================================
LIMITED PARTNERSHIP UNITS
OUTSTANDING - BASIC 11,000 11,000 11,000
=========================================
AMERICAN REPUBLIC REALTY FUND I
COMBINED STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended December 31, 1999, 1998 and 1997
General Limited
Partner Partners Total
-----------------------------------------
Balance, January 1, 1997 $55,942 $(3,031,192) $(2,975,250)
Net income 1,400 138,560 139,960
-----------------------------------------
Balance, December 31, 1997 57,342 (2,892,632) (2,835,290)
Net loss (1,947) (192,776) (194,723)
-----------------------------------------
Balance, December 31, 1998 55,395 (3,085,408) (3,030,013)
Net loss (1,368) (135,408) (136,776)
-----------------------------------------
Balance, December 31, 1999 $54,027 $(3,220,816) $(3,166,789)
=========================================
AMERICAN REPUBLIC REALTY FUND I
COMBINED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999, 1998 and 1997
1999 1998 1997
------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(136,776) $(194,723) $139,960
Adjustments to reconcile net income (loss) to
net cash provided by operations:
Extraordinary gain on early extinguishment
of debt --- --- (251,785)
Depreciation and amortization 702,798 688,252 651,230
Change in assets and liabilities:
Prepaid expenses 354 6,265 (1,072)
Escrow deposits (46,796) 295,249 (91,894)
Accounts payable and accrued expenses 19,511 (27,931) 188,828
Security deposits 11,686 10,333 845
-------------------------------------------
Net cash provided by operating activities
550,777 777,445 636,112
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate (136,940) (171,169) (353,998)
Net payments to reserve for replacement (64,458) (23,114) (428,095)
-------------------------------------------
Net cash used for investing activities (201,398) (194,283) (782,093)
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to mortgages payable --- --- 10,800,000
Deferred financing costs --- --- (229,430)
Payments on mortgages payable (102,679) (94,926) (7,017,917)
Payments on notes payable to affiliates
(234,046) (360,396) (2,175,522)
Proceeds (payments) on amounts due affiliates
(42,363) 1,618 (1,237,461)
-------------------------------------------
Net cash provided by (used for) financing
activities (379,088) (453,704) 139,670
-------------------------------------------
Net increase (decrease) in cash and cash
equivalents (29,709) 129,458 (6,311)
Cash and cash equivalents at beginning of period
146,358 16,900 23,211
-------------------------------------------
Cash and cash equivalents at end of period
$116,649 $146,358 $ 16,900
===========================================
Supplemental disclosure of cash flow information:
Cash paid during the year for interest
$837,067 $856,672 $1,775,590
===========================================
Extraordinary gain on early
extinguishment of debt $ --- $ --- $(251,785)
===========================================
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
American Republic Realty Fund I (the "Partnership"), a
Wisconsin limited partnership, was formed on December 22,
1982, under the laws of the state of Wisconsin, for the
purpose of acquiring, maintaining, developing, operating,
and selling buildings and improvements. The Partnership
operates rental apartments in Texas and Florida. The
Partnership will be terminated by December 31, 2012,
although this date can be extended if certain events occur.
The general partner is Mr. Robert J. Werra.
An aggregate of 20,000 units is authorized, of which 11,000
were outstanding for each of the three years ended December
31, 1999. Under the terms of the offering, no additional
units will be offered.
Allocation of Net Income (Loss) and Cash
Net income and net operating cash flow, as defined in the
limited partnership agreement, are allocated first to the
limited partners in an amount equal to a variable
distribution preference on capital contributions from the
first day of the month following their capital contribution
and, thereafter, 10% to the general partner and 90% to the
limited partners. Net loss is allocated 1% to the general
partner and 99% to the limited partners.
Net income from the sale of property is allocated first, to
the extent there are cumulative net losses, 1% to the
general partner and 99% to the limited partners; second, to
the limited partners in an amount equal to their
distribution preference; and, thereafter, 15% to the general
partner and 85% to the limited partners.
Cash proceeds from the sale of property or refinancing are
allocated first to the limited partners to the extent of
their capital contributions and their distribution
preference and, thereafter, 15% to the general partner and
85% to the limited partners.
Basis of Accounting
The Partnership maintains its books on the basis of
accounting used for federal income tax reporting purposes.
Memorandum entries have been made to present the
accompanying financial statements in accordance with
generally accepted accounting principles.
Investments in Real Estate and Depreciation
Buildings, improvements, and furniture and fixtures are
recorded at cost and depreciated using the straight-line
method over the estimated useful lives of the assets ranging
from 5 to 27.5 years.
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Income Taxes
No provision for income taxes has been made since the
partners report their respective share of the results of
operations on their individual income tax return.
Revenue Recognition
The Partnership has leased substantially all of its rental
apartments under cancelable leases for periods generally
less than one year. Rental revenue is recognized on a
monthly basis as earned.
Deferred Financing Costs
Costs incurred to obtain mortgage financing are being
amortized over the life of the mortgage using the straight-
line method.
Combination
The financial statements include the accounts of the
Partnership and a wholly owned entity. All intercompany
amounts have been eliminated.
Cash and Cash Equivalents
The Partnership considers all highly liquid instruments with
a maturity of three months or less to be cash equivalents.
Long-Lived Assets
In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting For the Impairment
of Long-Lived Assets and For Long-Lived Assets to be
Disposed Of", the Partnership records impairment losses on
long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the
assets' carrying amount. SFAS No. 121 also addresses the
accounting for long-lived assets that are expected to be
disposed of. Based on current estimates, management does
not believe impairment of operating properties is present.
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Computation of Earnings Per Unit
The Partnership has adopted Statement of Financial
Accounting Standards ("SFAS") No.128, "Earnings per Share".
Basic earnings per unit is computed by dividing net income
(loss) attributable to the limited partners' interests by
the weighted average number of units outstanding. Earnings
per unit assuming dilution would be computed by dividing net
income (loss) attributable to the limited partners'
interests by the weighted average number of units and
equivalent units outstanding. The Partnership has no
equivalent units outstanding for any period presented.
Concentration of Credit Risk
Financial instruments which potentially subject the
Partnership to concentrations of credit risk consist
primarily of cash. The Partnership places its cash with
various financial institutions. The Partnership's exposure
to loss should any of these financial institutions fail
would be limited to any amount in excess of the amount
insured by the Federal Deposit Insurance Corporation.
Management does not believe significant credit risk exists
at December 31, 1999.
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 that reporting period. Actual results
could differ from those estimates.
Environmental Remediation Costs
The Partnership accrues for losses associated with
environmental remediation obligations when such losses are
probable and reasonably estimable. Accruals for estimated
losses from environmental remediation obligations generally
are recognized no later than completion of the remedial
feasibility study. Such accruals are adjusted as further
information develops or circumstances change. Costs of
future expenditures for environmental remediation
obligations are not discounted to their present value.
Recoveries of environmental remediation costs from other
parties are recorded as assets when their receipt is deemed
probable. Project management is not aware of any
environmental remediation obligations that would materially
affect the operations, financial position or cash flows of
the Project.
Comprehensive Income
Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income, (SFAS 130), requires that
total comprehensive income be reported in the financial
statements. For the years ended December 31, 1999, December
31, 1998, and December 31, 1997, the Partnership's
comprehensive income (loss) was equal to its net income
(loss) and the Partnership does not have income meeting the
definition of other comprehensive income.
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Segment Information
The Partnership is in one business segment, the real estate
investments business, and follows the requirements of FAS
131, "Disclosures about Segments of an Enterprise and
Related Information."
NOTE B - MORTGAGES PAYABLE
Mortgages payable at December 31, 1999 and 1998, consisted
of the following:
1999 1998
---------------------------------
Mortgage note, original face value of
$6,800,000, payable in monthly
installments of principal and interest
of $49,517, bears interest at a rate of
7.92% and matures August 1, 2007, at
which time a lump-sum payment of
approximately $5,945,187 is due. This
mortgage note is secured by real estate
assets with a net book value of
approximately $4,518,218 $6,657,897 $6,722,016
Mortgage note, original face value of
$4,000,000, payable in monthly
installments of principal and interest
of $28,795 bears interest at a rate of
7.8% and matures August 1, 2007, at
which time a lump-sum payment of
approximately $3,488,279 is due. This
mortgage note is secured by real estate
assets with a net book value of
approximately $2,578,559 3,914,475 3,953,035
---------------------------------
$10,572,372 $10,675,051
=================================
At December 31, 1999, required principal payments due under
the stated terms of the Partnership's mortgage notes payable
and notes payable to affiliates are as follows
2000 $ 111,063
2001 285,478
2002 129,941
2003 140,551
2004 152,028
Thereafter 9,918,657
----------
$10,737,718
==========
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE C - RELATED PARTY TRANSACTIONS
The Partnership agreement specifies that certain fees be
paid to the general partner or his designee. An affiliate
of the general partner receives a property management fee
that is 5% of the Partnership's gross receipts.
Additionally, the Partnership reimburses the affiliate for
administrative expenditures. The following fees and
reimbursements earned by an affiliate of the general partner
in 1999, 1998 and 1997:
1999 1998 1997
-----------------------------------------
Property management fee $137,375 $133,659 $126,830
Administrative service fee 10,008 10,008 10,008
The general partner held a $1,300,000 promissory note of the
Partnership, bearing interest at a rate of 10%, scheduled to
mature on June 30, 2001. This note was paid off in July
1997 with excess funds from the refinancing of mortgage
notes payable. Interest expense incurred on this note was
$65,000 for the year ended December 31, 1997.
During 1996, the Partnership received advances from the
general partner under a note agreement bearing interest at
prime plus 2%. These advances of $208,866, including
accrued interest of $30,768, were paid off with excess funds
from refinancing of mortgage notes payable in July 1997.
Notes payable to affiliates at December 31, 1999 and 1998,
consisted of the following:
1999 1998
-----------------------------
Note payable to an affiliate of the
general partner, bearing interest at
8.25%, principal and accrued interest due
and payable on or before February 16,
2001. Interest expense of $21,690,
$24,788 and $31,904 was incurred on the
note for each of the years ended December
31, 1999, 1998 and 1997, respectively.
Accrued interest of $1,705 and $43,567 at
December 31, 1999 and 1998, respectively,
is included in amounts due affiliates. $165,346 $300,461
Note payable to the general partner,
bearing interest of prime plus 2%,
principal and accrued interest due and
payable on June 30, 2001 or upon demand.
Interest expense of $1,226, $29,604 and
$66,996 was incurred on the note for each
of the years ended December 31, 1999,
1998 and 1997, respectively. There is no
accrued interest payable at December 31,
1999 and 1998. The note was paid in 1999. --- 98,931
------------------------------
165,346 399,392
==============================
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE D - COMMITMENTS
The Partnership will pay a real estate commission to the
general partner or his affiliates in an amount not exceeding
the lessor of 50% of the amounts customarily charged by
others rendering similar services or 3% of the gross sales
price of a property sold by the Partnership, provided that
the limited partners have received their original capital
plus preferential interest, as defined.
NOTE E - RECONCILIATION OF BOOK TO TAX LOSS (UNAUDITED)
If the accompanying financial statements had been prepared
in accordance with the accrual income tax basis of
accounting rather than generally accepted accounting
principals ("GAAP"), the excess of revenues over expenses
for 1999 would have been as follows:
Net loss per accompanying financial statements $(136,776)
Add - book basis depreciation using 679,854
straight-line method
Add - difference in expense recognized by GAAP 36,384
Deduct - income tax basis depreciation expense using
ACRS method (146,970)
------------------
Excess of revenues over expenses,
accrual income tax basis $432,492
==================
NOTE F - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value amounts have been
determined using available market information or other
appropriate valuation methodologies that require
considerable judgement in interpreting market data and
developing estimates. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that
the Partnership could realize in a current market exchange.
The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated
fair value amounts.
The fair value of financial instruments that are short-term
or reprice frequently and have a history of negligible
credit losses is considered to approximate their carrying
value. These include cash and cash equivalents, accounts
payable and other liabilities.
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE F - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
Management has reviewed the carrying values of its mortgages
payable and notes payable to related parties in connection
with interest rates currently available to the Partnership
for borrowings with similar characteristics and maturities
and has determined that their estimated fair value would
approximate their carrying value as of December 31, 1999 and
1998.
The fair value information presented herein is based on
pertinent information available to management. 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
therefore, current estimates of fair value may differ
significantly from the amounts presented herein.
AMERICAN REPUBLIC REALTY FUND I
Schedule III - Real Estate and Accumulated Depreciation
December 31, 1999
Initial Cost
to Partnership
Description Encumb Land Building Total Subseq
rances and Improv quent to
ments Acquisition
26 two-story
apartment
buildings of
concrete block
construction
with stucco
and cedar
exterior and
gabled roofs
located in
in Jacksonville,
Florida (b) $583,000 $5,686,771 $310,767
37 two-story
apartment
buildings of
concrete block
construction
with brick
veneer, stucco
and wood
siding exterior,
and composition,
shingled roofs
located in Bedford,
Texas (b) 1,239,718 8,679,421 979,657
-----------------------------------------------
$1,822,718 $14,366,192 $1,290,424
Gross Amounts at Which
Carried at Close of Year
---------------------------------------
Land Buildings and Total Accumulated Date of Date Life on
Improvements (c)(d) Depreciation Construc Acquired Which
(c) tion Depre
ciation
is
Computed
$583,000 $5,997,538 $6,580,538 $4,001,980 Phase I
complete
at date
acquired; 9/12/83 (a)
Phase II
complete
at date
acquired 5/01/84 (a)
1,239,718 9,659,078 10,898,796 6,380,577 Complete
at date
acquired 12/20/83 (a)
- ------------------------------------------------------------------------
$1,822,718 $15,656,616 $17,479,334 $10,382,557
========================================================================
See notes to Schedule III.
AMERICAN REPUBLIC REALTY FUND I
Schedule III - Real Estate and Accumulated Depreciation (Continued)
December 31, 1999
NOTES TO SCHEDULE III:
(a) See Note A to financial statements outlining depreciation methods
and lives.
(b) See description of mortgages and notes payable in Note B to the
financial statements.
(c) The reconciliation of investments in real estate and accumulated
depreciation for the years ended December 31, 1999, 1998 and 1997
is as follows:
Investments Accumulated
in Real Estate Depreciation
------------------------------------------
Balance, January 1, 1997 $16,817,227 $8,397,635
Acquisitions 353,998 ---
Depreciation expense --- 639,758
------------------------------------------
Balance, December 31, 1997 17,171,225 9,037,393
Acquisitions 171,169 ---
Depreciation expense --- 665,310
------------------------------------------
Balance, December 31, 1998 17,342,394 9,702,703
Acquisitions 136,940 ---
Depreciation expense --- 679,854
------------------------------------------
Balance, December 31, 1999 $17,479,334 $10,382,557
===========================================
(d) Aggregate cost for federal income tax purposes is $17,361,634.
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure
On November 6, 1998, an 8-K was filed to disclose the change in
auditors. No financial statements were issued in conjunction
with this filing. The Registrant has not been involved in any
disagreements on accounting and financial disclosure.
PART III
Item 10. Directors and Executive Officer of the Partnership
The Partnership itself has no officers or directors. Robert J.
Werra is the General Partner of the Partnership.
Robert J. Werra, 60, the General Partner, Mr. Werra joined Loewi &
Co., Incorporated ("Loewi") in 1967 as a Registered Representative.
In 1971, he formed the Loewi real estate department, and was
responsible for its first sales of privately placed real estate
programs. Loewi Realty was incorporated in 1974, as a wholly owned
subsidiary of Loewi & Co., with Mr. Werra as President. In 1980, Mr.
Werra, along with three other individuals, formed Amrecorp Inc. to
purchase the stock of Loewi Real Estate Inc., and Loewi Realty. In
1991 Univesco, Inc. became the management agent for the Partnership.
Limited Partners have no right to participate in management of the
Partnership.
Item 11. Management Remuneration and Transactions
As stated above, the Partnership has no officers or directors.
Pursuant to the terms of the Limited Partnership Agreement, the
General Partner receives 1% of Partnership income and loss and up to
15% of Net Proceeds received from sale or refinancing of
Partnership properties (after return of Limited Partner capital
contributions and payment of a 6% Current Distribution Preference
thereon).
Univesco, Inc., an affiliate of the General Partner, is entitled
to receive a management fee with respect to properties actually
managed of 5% of the actual gross receipts from a property or an
amount competitive in price or terms for comparable services available
from non-affiliated persons. The Partnership is also permitted to
engage in various transactions involving affiliates of the General
Partner as described under the caption "Compensation and Fees" at
pages 6-8, "Management" at page 17 and "Allocation of Net Income and
Losses and Cash Distributions" at pages 34-36 of the Prospectus as
supplemented, incorporated in the Form S-11 Registration Statement
which was filed with the Securities and Exchange Commission and made
effective on May 2, 1983.
For the years ended December 31, 1999, 1998, 1997 and, property
management fees earned totaled $137,375, $133,659, and 126,830,
respectively. An additional administration service fee was paid to
the General Partner of $10,008, $10,008 and $10,008 for the years
ended December 31, 1999 1998, and 1997 respectively.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No one except as listed in item (b) below, owns of
record, and the General Partner knows of no one who owns beneficially,
more than five percent of the Interests in the Partnership, the only
class of securities outstanding.
Amount and Nature
Title Name of of Beneficial Percent
of Class Beneficial Owner Ownership of Interest
Limited M.P. Valu Fund IV L.L.C. 1,444.5 13.10%
Partnership
Interests
(b) By virtue of its organization as a limited partnership,
the Partnership has no officers or directors. Persons performing
functions similar to those of officers and directors of the
Partnership, beneficially own, the following Units of the Partnership
as of March 1, 1999.
Amount and Nature
Title Name of of Beneficial Percent
of Class Beneficial Owner Ownership of Interest
Limited Robert J. Werra 566 5.14%
Partnership
Interests
No Selling Commissions were paid in connection with the purchase of
these Units.
(c) There is no arrangement, known to the Partnership,
which may, at a subsequent date, result in a change in control of the
Partnership.
Item 13. Certain Relationships and Related Transactions
None other than discussed in Item 11 and Note C to the financial
statements at Item 8 elsewhere in this 10-K.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(A) 1. See accompanying Financial Statements Index
2. Additional financial information required
to be furnished:
Schedule III - Real Estate and Accumulate Depreciation.
3. Exhibits
None.
(B) Reports on Form 8-K for the quarter ended December 31, 1999.
November 6, 1998, an 8-K was filed to disclose the change
in auditors. No financial statements were issued in conjunction
with this filing.
(C) Exhibits
3. Certificate of Limited Partnership, incorporated by
reference to Registration Statement No. 0-11578 effective May 2, 1983.
4. Limited Partnership Agreement, incorporated by
reference to Registration Statement No. 0-11578 effective May 2, 1983.
9. Not Applicable
1O. Not Applicable
11. Not Applicable
12. Not Applicable
13. Reports to security holders, incorporated by reference
from Registrant's Quarterly Reports on Form 1O-Q, dated September 30,
1998.
18. Not Applicable
19. Not Applicable
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. Power of Attorney, incorporated by reference to
Registration Statement No. 0-11578 effective May 2, 1983.
28. None
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.
AMERICAN REPUBLIC REALTY FUND I
ROBERT J. WERRA, GENERAL PARTNER
/s/ Robert J. Werra
March 29, 2000