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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 2002 Commission file number 0-11578
AMERICAN REPUBLIC REALTY FUND I
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1421936
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification
Number)
2800 N. Dallas Pkwy Suite 100
Plano, Texas 75093-4707
(Address of principal executive offices)
Registrant's telephone number, including area code: (972)836-8000.
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days.
Yes: Y No:
REGISTRANT IS A LIMITED PARTNERSHIP
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed
herewith:
Consolidated Balance Sheet as of June 30, 2002 and
December 31, 2001 Page 3
Consolidated Statements of Operations for the Six
Months Ended June 30, 2002 and 2001 Page 4
Consolidated Statements of Cash Flows for the Six months
Ended June 30, 2002 and 2001 Page 5
Item 2. Results of Operations and Managements Discussion and
Analysis of Financial Condition Page 6
Liquidity and Capital Resources Page 7
Other Information Page 8
Signatures Page 9
The statements, insofar as they relate to the period subsequent
to December 31, 2001, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
June 30 December 31,
2002 2001
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 15,886,583 15,886,583
17,709,301 17,709,301
Less: Accumulated depreciation (12,115,922) (11,765,922)
5,593,379 5,943,379
Real Estate, Net Cash
including cash investments 445,028 294,437
Escrow deposits 433,624 552,994
Prepaid Expenses 88,116 24,039
Deferred Financing Fees 114,715 126,186
TOTAL ASSETS $6,674,862 $6,941,035
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES
Mortgage and notes payable $10,266,622 $10,341,178
Amounts due affiliates 1,395 1,911
Real estate taxes payable 152,496 0
Security deposits 73,547 79,501
Accounts payable & accrued expenses 158,559 342,521
Total liabilites 10,652,619 10,765,111
PARTNERS CAPITAL (DEFICIT)
Limited Partners (4,019,518) (3,867,374)
General Partner 41,761 43,298
Total Partners Capital (Deficit) (3,977,757) (3,824,076)
TOTAL LIABILITIES AND PARTNERS DEFICIT $6,674,862 $6,941,035
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
REVENUES 2002 2001 2002 2001
Rental income 656,907 700,087 1,331,133 1,394,473
Other property 15,589 21,163 33,362 43,574
Total revenues 672,496 721,250 1,364,495 1,438,047
EXPENSES
Salaries & wages 78,209 69,091 164,420 149,795
Maintenance & repairs 59,996 72,241 115,046 139,519
Utilities 49,980 52,486 101,551 114,488
Real estate taxes 76,248 71,250 152,496 142,500
General administrative 32,775 34,568 57,029 56,429
Contract services 27,059 27,681 53,612 55,427
Insurance 21,010 13,696 38,686 26,085
Interest 202,565 205,008 405,759 410,598
Depreciation and amortization 180,736 185,736 361,472 371,472
Property management fees (a) 33,567 35,790 68,105 71,186
Total expenses 762,145 767,547 1,518,176 1,537,499
Net Income ($89,649) ($46,297) ($153,681) ($99,452)
NET INCOME PER UNIT $(8.15) $(4.21) $(13.97) $(9.04)
See Notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Cash Flows
See Notes to Condensed Consolidated Financial Statements
Unaudited
Six Months
Ended June 30,
2002 2001
CASH FLOWS FROM OPERATING
ACTIVITY
Net income (loss) ($153,681) ($99,452)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Depreciation and amortization 350,000 360,000
Net Effect of changes in
operating accounts
Escrow deposits 119,370 11,244
Prepaid expenses (64,077) (43,659)
Accrued real estate taxes 152,496 142,500
Security deposits (5,954) 6,399
Accounts payable (183,962) (124,343)
Other assets 11,471 11,471
Net cash provided by (used for)
operating activities 225,663 264,160
CASH FLOWS FROM INVESTING
ACTIVITIES
Repayment of mortgage notes payable (74,556) (68,929)
Proceeds from amounts due affiliates (516) 0
Net cash used for investing activities (75,072) (68,929)
activities
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 150,591 195,231
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 294,437 442,739
CASH AND CASH EQUIVALENTS, END OF PERIOD $445,028 $637,970
Basis of Presentation:
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Partnership believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the
Partnership's latest annual report on Form 10-K.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
SECOND QUARTER 2002 COMPARED TO SECOND QUARTER 2001
At June 30, 2002 the Partnership owned two properties with
approximately 416,623 net rentable square feet. Both
properties are apartment communities. The portfolio had an
average occupancy of 87.4% for the second quarter of 2002, as
compared to 95.9% for the second quarter of 2001.
Revenue from property operations decreased $48,754, or 6.76%,
for the second quarter of 2002, as compared to the 2001 second
quarter. The decrease in rental income of $43,180 or 6.17% is
primarily due to an increase in vacancy. The decrease in other
income of $5,574 or 26.34% is primarily due to an decrease in
Late and other fee collections from the properties. The
following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income (43,180) 6.17%
Other property (5,574) 26.34%
Net Increase (48,754) 6.76%
(Decrease)
Property operating expenses decreased $5,402or 0.70%, for the
second quarter of 2002, as compared to the same period in 2001,
primarily due to decreases in maintenance & repair expense.
The decrease in maintenance & repairs expense of $12,245 or
16.95% is preventive maintenance projects being completed in
2001 Insurance increased $7.314 or 53.4% in connection with the
annual policy renewal. Salaries increased $9,118 or 13.20%
primarily due to increased on site maintenance. The following
table illustrates the components by category:
Increase Percent
(Decrease) Change
Salaries & wages 9,118 13.20%
Maintenance & repairs (12,245) 16.95%
Utilities (2,506) 4.77%
Real estate taxes 4,998 7.01%
General administrative (1,793) 5.19%
Contract services (622) 2.25%
Insurance 7,314 53.40%
Interest (2,443) 1.19%
Depreciation and amortization (5,000) 2.69%
Property management fees (a) (2,223) 6.21%
Net Increase (5,402) 0.70%
(Decrease)
SECOND QUARTER 2001 COMPARED TO SECOND QUARTER 2000
At June 30, 2001 the Partnership owned two properties with
approximately 416,623 net rentable square feet. Both
properties are apartment communities. The portfolio had an
average occupancy of 96.0% for the second quarter of 2001, as
compared to 94.3% for the second quarter of 2000.
Revenue from property operations increased $29,305, or 4.24%,
for the second quarter of 2001, as compared to the 2000-second
quarter. The increase in rental income of $22,668 or 3.35% is
primarily due to an increase in rental rates. The increase in
other income of $6,617 or 45.49% is primarily due to an
increase in Late and other fee collections from the properties.
The following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income 22,688 3.35%
Other property 6,617 45.49%
Net Increase 29,305 4.24%
(Decrease)
Property operating expenses increased $60,026, or 8.48%, for
the second quarter of 2001, as compared to the same period in
2000, primarily due to increases in utilities expense. The
increase in utilities expense is due to significantly higher
gas bills. Maintenance and repairs increased $14,673 or 25.49%
primarily due to exterior building maintenance. Salaries &
Wages increased $5,327 or 8.35%due to high salaries. Insurance
increased $2,322 or 20.41% in connection with the annual policy
renewal. The following table illustrates the components by
category:
Increase Percent
(Decrease) Change
Salaries & wages 5,327 8.35%
Maintenance & repairs 14,673 25.49%
Utilities 23,762 82.73%
Real estate taxes 2,502 3.64%
General administrative 886 2.63%
Contract services 1,674 6.44%
Insurance 2,322 20.41%
Interest (2,262) 1.09%
Depreciation and amortization 10,000 5.69%
Property management fees (a) 1,142 3.30%
Net Increase 60,026 8.48%
(Decrease)
LIQUIDITY AND CAPITAL RESOURCES
While it is the General Partners 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
this asset should be considered for disposal. At this time,
there is no plan to dispose of either property.
As of June 30, 2002, the Partnership had $445,028 in cash
and cash equivalents as compared to $294,437 as of December 31,
2001. The net increase in cash of $150,591 is principally due
to cash flow from operations.
During the first quarter of 2000 ending March 31, the
partnership paid off the remaining balance owned to the general
partner of $165,346. The payment was made with operating cash
flow from the partnership.
Each asset of the fund refinanced its debt during July
1997. The fund retired debt with a face value of $6,500,000
and replaced with debt of $10,800,000. The new mortgages in
the amounts of $4,000,000, $6,800,000 carry interest rates of
7.8% and 7.92% respectively. The notes come due August, 2007.
The Partnerships required principal payments due under the
stated terms of the Partnerships mortgage notes payable and
notes payable to affiliates are $120,132 $129,941, and $140,551
for each of the next three years.
Net proceeds from the refinancing were used to reduce the
notes payable to affiliates. During July, 1997 payments of
$3,500,000 were made to reduce the debt to affiliates.
A gain on retirement of debt arose with the note
refinancing being triggered by the early retirement of the
debt. The recognized gain of $348,836, was the difference
between the carrying value of the debt and the funds necessary
to retire the debt.
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 future Partnership acquisitions and balloon
mortgage payments will be proceeds from the sale, financing or
refinancing of the Properties.
Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibit and Reports on Form 8-K
(A)The following documents are filed herewith or
incorporated herein by reference as indicated as
Exhibits:
Exhibit Designation Document Description
2 Certificate of Limited partnership, as
amended, incorporated by reference to
Registration Statement No.2-81074
effective May 2, 1983.
Limited Partnership Agreement,
incorporated by reference to
Registration Statement No.2-81074
effective May 2,1983.
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
20 Not Applicable
23 Not Applicable
24 Not Applicable
25 Power of Attorney, incorporated by
reference to Registration Statement
No. 2-81074 effective May 2, 1983.
28 None
(B) Reports on Form 8-K for the quarter ended June 30, 2002.
1 None
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
AMERICAN REPUBLIC REALTY FUND I
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: August 1, 2002