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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, 2000
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,
2000, the Partnership consisted of an individual general partner,
Mr. Robert J. Werra, (the "General Partner") and 792 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, 2000 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 Apartments A fee simple interest in a 263 unit
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 Phase I A fee simple interest in a 100 unit
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 Phase II A fee simple interest in a 54 unit
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
1996 1997 1998 1999 2000
Four Winds I & II 93.3% 92.0% 95.0% 94.0% 95.0%
Forestwood 96.6% 97.0% 96.5% 96.9% 94.8%
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 2000.
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, 2000 there were approximately 792 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 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
2000 $46 0 0 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)
2000 1999 1998 1997 1996
Limited Partner Units Outstanding 11,000 11,000 11,000 11,000 11,000
Statement of Operations
Total Revenues $2797 $2,752 $2,675 $2,534 $2,458
Net Income (Loss) before (65) (137) (195) (112) 258
extraordinary items
Extraordinary Item-gain on 0 0 0 252 0
extinguishment of debt
Net Income (Loss) (65) (137) (194) 140 258
Limited Partner Net Income (5.33)(12.31)(17.53) 12.60 23.22
(Loss) per Unit - Basic
Cash Distributions to Limited 0 0 0 0 0
Partners per Unit - Basic
Balance Sheet:
Real Estate, net $6,499 $7,099 $7,639 $8,134 $8,420
Total Assets 7,613 7,941 8,426 9,092 8,645
Mortgages Payable 10,461 10,572 10,675 10,770 7,240
Notes Payable to Affiliate 0 165 399 760 2,935
Partner's Deficit (3,231)(3,166)(3,030)(2,835)(2,975)
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: 2000 VERSUS 1999 -
Revenue from Property Operations increased $44,202 or 1.6% as
compared to 1999. This increase is primarily attributed to a
$38,206 increase in rental revenue which was principally due to an
increase in rents. Interest income increased $7,107 due to a
increase in available funds for investment during 2000. The
decrease in other operating revenues of $1,111 were principally
caused by a decrease in fees from tenants and vending revenues. The
following table illustrates the increases:
Increase/
(Decrease)
Rental income $38,206
Interest 7107
Other (1,111)
Net Increase $44,202
Property operating expenses for 2000 decreased $27,423 or 0.95%.
Interest expense on note payable to affiliate decreased $22,446 due
to the payoff of the note early in 2000.Interest expense on
mortgage payable decreased $8,439 due to normal amortization.
Depreciation and amortization increased primarilly due to
improvements done to the properties. Maintenance and repairs
decreased $31,570 or 11.01% due primarily to the decreased deferred
maintenance projects needed. 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 $(22,446)
Interest Expense on Mortgages Pay (8,439)
General administrative (12,872)
Maintenance & repairs (31,570)
Utilities 14,783
Real estate taxes 13,223
Advertising and Marketing (1,036)
Depreciation and amortization 19,055
Property management fees 1,879
Administrative Service Fee 0
Net Decrease $(27,423)
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, in 1998
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 administrative 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
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, 2000, the Partnership had $442,739 in cash
and cash equivalents as compared to $116,649 as of December 31,
1999. 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, 2000. These mortgages payable have a carrying
value of $10,461,310 at December 31, 2000. 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.
The general partner had provided funding to the Partnership in
the form of notes payable that were paid off during 2000. During
February 2000, the Partnership repaid the $165,346 remaining to
the general partner. 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 $120,132, $129,941, $140,551
$152,028 and $164,442 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, 2000 and 1999
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditors' Reports 1
Combined Financial Statements
Balance Sheets as of December 31, 2000 and 1999 3
Statements of Operations for the years ended
December 31, 2000, 1999 and 1998 4
Statements of Partners' Equity (Deficit) for the years ended
December 31, 2000, 1999, and 1998 5
Statements of Cash Flows for the years ended
December 31, 2000, 1999 and 1998 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, 2000
and 1999, and the related combined statements of operations,
partners' equity (deficit), and cash flows for the years ended
December 31, 2000, 1999 and 1998. 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, 2000 and 1999,
and the results of its operations and its cash flows for the
years ended December 31, 2000, 1999 and 1998 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, 2000 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 29, 2001
Dallas, Texas
AMERICAN REPUBLIC REALTY FUND I
COMBINED BALANCE SHEETS
December 31, 2000 and 1999
ASSETS
2000 1999
Investments in real estate at cost
Land $1,822,718 $1,822,718
Buildings, improvements and furniture 15,757,931 15,656,616
and fixtures
17,580,649 17,479,334
Accumulated depreciation (11,081,467) (10,382,557)
6,499,182 7,096,777
Cash and cash equivalents 442,739 116,649
Escrow deposits 505,202 542,074
Deferred financing costs, net of accumulated
amortization of $80,301 and $57,358,
respectively 149,129 172,072
Prepaid expenses 16,835 14,067
TOTAL ASSETS 7,613,087 7,941,639
LIABILITIES AND PARTNERS' DEFICIT
Mortgages payable 10,461,310 10,572,372
Notes payable to affiliates --- 165,346
Amounts due affiliates --- 4,490
Accounts payable and accrued expenses 310,272 297,610
Security deposits 73,445 68,610
TOTAL LIABILITIES 10,845,027 11,108,428
PARTNERS' DEFICIT (3,231,940) (3,166,789)
TOTAL LIABILITIES AND PARTNERS' DEFICIT $7,613,087 $7,941,639
AMERICAN REPUBLIC REALTY FUND I
COMBINED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
INCOME
Rentals $2,719,595 $ 2,681,389 $2,614,696
Other 62,151 63,262 56,717
Interest 15,453 8,346 3,958
Total income 2,797,199 2,752,997 2,675,371
OPERATING EXPENSES
Interest expense on mortgages payable 827,954 836,393 845,225
Depreciation and amortization 721,853 702,798 688,253
General and administrative 398,115 410,987 388,758
Maintenance and repairs 255,217 286,787 302,596
Real estate taxes 276,937 263,714 245,033
Utilities 191,589 176,806 177,896
Property management fee to affiliate 139,254 137,375 133,659
Advertising and marketing 39,248 40,284 40,493
Interest expense on notes payable to
affiliates 2,175 24,621 38,173
Administrative service fee to general
partner 10,008 10,008 10,008
Total operating expenses 2,862,350 2,889,773 2,870,094
NET LOSS $(65,151) $(136,776) $(194,723)
NET LOSS PER LIMITED PARTNERSHIP
UNIT - BASIC
Net loss per unit - basic $(5.33) $(12.31) $(17.53)
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, 2000, 1999 and 1998
General Limited
Partner Partners Total
Balance, January 1, 1998 $57,342 $(2,892,632) $(2,835,290)
Net income (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)
Net loss (6,515) (58,636) (65,151)
Balance, December 31, 2000 $47,512 $(3,279,452) $(3,231,940)
AMERICAN REPUBLIC REALTY FUND I
COMBINED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2000, 1999 and 1998
2000 1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(65,151) $(136,776) $(194,723)
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation and amortization 721,853 702,798 688,253
Change in assets and liabilities:
Prepaid expenses (2,768) 354 6,264
Escrow deposits (18,500) (46,796) 295,249
Accounts payable and accrued expenses 12,661 19,511 (27,931)
Security deposits 4,836 11,686 10,333
Net cash provided by operating activities 652,931 550,777 777,445
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate (101,315) (136,940) (171,169)
Net proceeds (payments) to reserve
for replacement 55,372 (64,458) (23,114)
Net cash used for investing activities (45,943) (201,398) (194,283)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on mortgages payable (111,062) (102,679) (94,926)
Payments on notes payable to affiliates (165,346) (234,046) (360,396)
Proceeds (payments) on amounts due
affiliates (4,490) (42,363) 1,618
Net cash used for financing activities (280,898) (379,088) (453,704)
Net increase (decrease) in cash and cash
equivalents 326,090 (29,709) 129,458
Cash and cash equivalents at beginning of
period 116,649 146,358 16,900
Cash and cash equivalents at end of
period $442,739 $116,649 $146,358
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $828,683 $837,067 $ 856,672
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 2000 and 1999
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, 2000. 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, 2000 and 1999
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, 2000 and 1999
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, 2000.
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.
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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, 2000, December
31, 1999, and December 31, 1998, 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.
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, 2000 and 1999, consisted
of the following:
2000 1999
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 $4,120,546 $6,588,513 $6,657,897
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 $2,378,636 $3,872,797 $3,914,475
$10,461,310 $10,572,372
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE B - MORTGAGES PAYABLE - CONTINUED
At December 31, 2000, required principal payments due under
the stated terms of the Partnership's mortgage notes payable
and notes payable to affiliates are as follows
2001 $ 120,132
2002 129,941
2003 140,551
2004 152,028
2005 164,442
Thereafter 9,754,216
$10,461,310
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 2000, 1999 and 1998:
2000 1999 1998
Property management fee $139,254 $137,375 $133,659
Administrative service fee 10,008 10,008 10,008
Notes payable to affiliates at December 31, 2000 and 1999,
consisted of the following:
2000 1999
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 $2,175,
$21,690, and $24,788 was incurred on the
note for each of the years ended December
31, 2000, 1999, 1998, respectively.
Accrued interest of $1,705 at December
31, 1999 is included in amounts due
affiliates. The note was paid in 2000.
--- $165,346
--- $165,346
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 2000 and 1999
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 2000 would have been as follows:
Net loss per accompanying financial statements $(65,151)
Add - book basis depreciation using
straight-line method 698,910
Add - difference in expense recognized 2,175
by GAAP
Deduct - income tax basis depreciation
expense using
ACRS method (125,228)
Excess of revenues over expenses,
accrual income tax basis $510,706
AMERICAN REPUBLIC REALTY FUND I
NOTES TO COMBINED FINANCIAL STATEMENTS
December 31, 2000 and 1999
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.
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, 2000 and
1999.
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, 2000
Initial Cost
to Partnership Total Cost
Building & Subsequent to
Description Encumbrances Land Improvements Aquisition
26 two-story apartment
buildings of concrete
block construction
with stucco and cedar
exterior and gabled
roofs located in
Jacksonville, Florida (b) $583,000 $5,686,771 $369,037
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 1,022,702
1,822,718 14,366,192 1,391,739
Gross Amounts at Which
Carried at Close
Description Buildings
And Accumulated
Land Improvements Total Depreciation
(c)(d) (c)
26 two-story apartment
buildings of concrete
block construction
with stucco and cedar
exterior and gabled
roofs located in
Jacksonville, Florida $583,000 $6,055,808 $6,638,808 $4,260,172
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 1,239,718 9,702,123 10,941,841 6,821,295
1,822,718 15,757,931 17,580,649 11,081,467
Life on Which
Date of Date Depreciation
Construction Acquired Is Computed
26 two-story apartment
buildings of concrete
block construction
with stucco and cedar Phase I completed at
exterior and gabled date acquired; 09/12/83 (a)
roofs located in Phase II completed at
Jacksonville, Florida date acquired 05/01/84 (a)
37 two-story apartment
buildings of concrete
block construction
with brick veneer,
stucco and wood siding
exterior, and composition,
shingled roofs located Complete at
in Bedford, Texas Date acquired 12/20/83 (a)
See notes to Schedule III.
AMERICAN REPUBLIC REALTY FUND I
Schedule III - Real Estate and Accumulated Depreciation (Continued)
December 31, 2000
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, 2000, 1999 and 1998 is
as follows:
Investments in Accumulated
Real Estate Depreciation
Balance, January 1, 1998 $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
Acquisitions 101,315 ---
Depreciation expense --- 698,910
Balance, December 31, 2000 $17,580,649 $11,081,467
(d) Aggregate cost for federal income tax purposes is $17,462,950.
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, 2000, 1999, 1998, and, property
management fees earned totaled $139,254, $137,375, and $133,659,
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, 2000 1999, and 1998 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. Value 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 December 31, 2000.
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, 2000.
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, 2001