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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, 2003 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

incorporation or organization

(IRS Employer

Identification Number)

2800 N. Dallas Pkwy Suite 100

Plano, Texas 75093-5994

(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, 2003 and

December 31, 2002 Page 3

Consolidated Statements of Operations for the Three and Six

Months Ended June 30, 2003 and 2002 Page 4

Consolidated Statements of Cash Flows for the Three and

Six months Ended June 30, 2003 and 2002 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, 2002, are Unaudited.

 

 

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

 

AMERICAN REPUBLIC REALTY FUND I

Condensed Consolidated Balance Sheets

June 30

December 31,

2003

2002

(Unaudited)

ASSETS

Real Estate assets, at cost

Land

$1,822,718

$1,822,718

Buildings and improvements

16,006,007

16,006,007

17,828,725

17,828,725

Less: Accumulated depreciation

(12,796,239)

(12,446,239)

Real Estate, net

5,032,486

5,382,486

Cash including cash investments

239,781

214,237

Escrow deposits

561,235

572,601

Prepaid Expenses

115,822

32,194

Deferred Financing Fees

91,771

103,242

TOTAL ASSETS

$6,041,095

$6,304,760

LIABILITIES AND PARTNERS' EQUITY:

LIABILITIES

Mortgage and notes payable

$10,130,593

$10,211,238

Amounts due affiliates

(612)

1,725

Real estate taxes payable

150,498

0

Security deposits

76,965

75,028

Accounts payable & accrued expenses

179,487

333,000

Total liabilities

10,536,931

10,620,991

PARTNERS CAPITAL (DEFICIT)

Limited Partners

(4,535,166)

(4,357,357)

General Partner

39,330

41,126

Total Partners Capital (Deficit)

(4,495,836)

(4,316,231)

TOTAL LIABILITIES AND PARTNER DEFICIT

$6,041,095

$6,304,760

 

 

 

AMERICAN REPUBLIC REALTY FUND I

Condensed Consolidated Statement of Operations

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

REVENUES

2003

2002

2003

2002

Rental income

645,256

656,907

1,327,914

1,331,133

Other property

16,717

15,589

31,513

33,362

Total revenues

661,973

672,496

1,359,427

1,364,495

EXPENSES

Salaries & wages

80,677

78,209

177,483

164,420

Maintenance & repairs

73,424

59,996

112,911

115,046

Utilities

54,113

49,980

108,276

101,551

Real estate taxes

75,249

76,248

150,498

152,496

General administrative

31,859

32,775

54,008

57,029

Contract services

28,152

27,059

54,470

53,612

Insurance

27,744

21,010

51,435

38,686

Interest

199,922

202,565

400,524

405,759

Depreciation and amortization

180,736

180,736

361,472

361,472

Property management fees (a)

33,096

33,567

67,955

68,105

Total expenses

784,972

762,145

1,539,032

1,518,176

Net Income

($122,999)

($89,649)

($179,605)

($153,681)

NET INCOME PER UNIT

$ (11.18)

$ (8.15)

$ (16.33)

$ (13.97)

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,

2003

2002

CASH FLOWS FROM OPERATING ACTIVITY

Net income (loss)

($179,605)

($153,681)

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Depreciation and amortization

350,000

350,000

Net Effect of changes in operating accounts

Escrow deposits

11,366

119,370

Prepaid expenses

(83,628)

(64,077)

Accrued real estate taxes

150,498

152,496

Security deposits

1,937

(5,954)

Accounts payable

(153,513)

(183,962)

Other assets

11,471

11,471

Net cash provided by (used for) operating activities

108,526

225,663

CASH FLOWS FROM INVESTING ACTIVITIES

Repayment of mortgage notes payable

(80,645)

(74,556)

Proceeds from amounts due affiliates

(2,337)

(516)

Net cash used for investing activities

(82,982)

(75,072)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

25,544

150,591

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

214,237

294,437

CASH AND CASH EQUIVALENTS, END OF PERIOD

$239,781

$445,028

 

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 2003 COMPARED TO SECOND QUARTER 2002

At June 30, 2003 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 90.2% for the second quarter of 2003, as compared to 87.4% for the second quarter of 2002.

Revenue from property operations decreased $10,523, or 1.56%, for the second quarter of 2003, as compared to the 2002 second quarter. The decrease in rental income of $11,651 or 1.77% is primarily due to a decrease in rental rates. The increase in other income of $1,128 or 7.24% 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

(11,651)

1.77%

Other property

1,128

7.24%

Net Increase (Decrease)

(10,523)

1.56%

Property operating expenses increased $22,827 or 3.00%, for the second quarter of 2003, as compared to the same period in 2002. Insurance increased $6,734 or 32.05% in connection with the annual policy renewal. The increase in maintenance & repairs expense of $13,428 or 22.38% is represents pool repairs completed in the quarter. Utilities increased $4,133 or 8.27% primarily due to increased gas and electrical costs. The following table illustrates the components by category:

Increase

Percent

(Decrease)

Change

Salaries & wages

2,468

3.16%

Maintenance & repairs

13,428

22.38%

Utilities

4,133

8.27%

Real estate taxes

(999)

1.31%

General administrative

(916)

2.79%

Contract services

1,093

4.04%

Insurance

6,734

32.05%

Interest

(2,643)

1.30%

Depreciation and amortization

0

0.00%

Property management fees (a)

(471)

1.40%

Net Increase (Decrease)

22,827

3.00%

 

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 (Decrease)

(48,754)

6.76%

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 (Decrease)

(5,402)

0.70%

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, 2003, the Partnership had $239,781 in cash and cash equivalents as compared to $214,237 as of December 31, 2002. The net increase in cash of $25,544 is principally due to cash flow from operations.

On September 30, 2002 the partnership distributed $25.00 per limited partnership unit to units of record September 30, 2002. This distribution was made from excess cash on hand from cash flow from operations.

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 are $140,551 $152,028, and $164,442 for each of the next three years.

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.2-81074effective 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

31.1 Certification Pursuant to Rules 13a-14 and 15d-14 Under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
    1. Reports on Form 8-K for the quarter ended June 30, 2003.
    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, 2003

 

Exhibit 31.1

CERTIFICATION PURSUANT TO RULES 13a-14 AND 15d-14 UNDER

THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I Robert J. Werra, Acting Principal Executive Officer and Chief Financial Officer of American Republic Realty Fund I ("the Company"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Company;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the company and its consolidated subsidiaries is made known to me by others within those entities, particularly for the periods presented in this quarterly report;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

c. evaluated the effectiveness of the Companys disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

 

CERTIFICATION PURSUANT TO RULES 13a-14 AND 15d-14 UNDER

THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - continued

 

d. disclosed in this report any change in the Companys internal control over financial reporting that occurred during the Companys most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting; and

 

5. I have disclosed based on my most recent evaluation of internal control over financial reporting, to the Companys auditors and Audit Committee of the Board of Directors (or persons fulfilling the equivalent function):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Companys ability to record, process, summarize, and report financial data; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Companys internal control over financial reporting.

 

 

 

/s/ Robert J. Werra

 

Robert J. Werra

Acting Principal Executive Officer and Chief Financial Officer

August 1, 2003

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of American Republic Realty Fund I ("the Company") on Form 10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof ("the Report"), I, Robert J. Werra, Acting Principal Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that:

      1. The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

      2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

/s/ Robert J. Werra

 

Robert J. Werra

Acting Principal Executive Officer and Chief Financial Officer

August 1, 2003