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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 September 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 (IRS Employer
incorporation or organization 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 September 30, 2003 and
December 31, 2002 Page 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2003 and 2002
Page 4
Consolidated Statements of Cash Flows for the Three and
Nine months Ended September 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 10
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
September 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 (12,971,239) (12,446,239)
Real Estate, net 4,857,486 5,382,486
Cash including cash investments 267,621 214,237
Escrow deposits 670,868 572,601
Prepaid Expenses 83,901 32,194
Deferred Financing Fees 86,036 103,242
TOTAL ASSETS $5,965,912 $6,304,760
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $10,094,884 $10,211,238
Amounts due affiliates 1,446 1,725
Real estate taxes payable 225,747 0
Security deposits 74,992 75,028
Accounts payable & accrued expenses 188,121 333,000
Total liabilities 10,585,190 10,620,991
PARTNERS CAPITAL
(DEFICIT)
Limited Partners (4,657,374) (4,357,357)
General Partner 38,096 41,126
Total Partners Capital (Deficit) (4,619,278) (4,316,231)
TOTAL LIABILITIES AND PARTNER DEFICIT $5,965,912 $6,304,760
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 2003 2002 2003 2002
Rental income 647,493 673,311 1,975,407 2,004,444
Other property 16,648 17,253 48,161 50,615
Total revenues 664,141 690,564 2,023,568 2,055,059
EXPENSES
Salaries & wages 98,811 96,086 276,294 260,506
Maintenance & repairs 59,158 91,062 172,069 206,108
Utilities 49,903 52,170 158,179 153,721
Real estate taxes 75,249 75,915 225,747 228,411
General administrative 30,167 25,238 84,175 82,267
Contract services 29,119 25,978 83,589 79,590
Insurance 31,921 23,691 83,356 62,377
Interest 199,227 201,923 599,751 607,682
Depreciation and amortization 180,736 180,735 542,208 542,207
Property management fees (a) 33,292 34,522 101,247 102,627
Total expenses 787,583 807,320 2,326,615 2,325,496
Net Income ($123,442) ($116,756) ($303,047) ($270,437)
NET INCOME PER UNIT $(11.22) $(10.61) $(27.55) $(24.59)
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
Nine Months Ended
September 30,
2003 2002
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($303,047) ($270,437)
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 525,000 525,000
Net Effect of changes in operating accounts
Escrow deposits (98,267) (6,839)
Prepaid expenses (51,707) (40,386)
Accrued real estate taxes 225,747 228,411
Security deposits (36) 527
Accounts payable (144,879) (178,547)
Other assets 17,206 17,208
Net cash provided by (used for) operating activities 170,017 274,937
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (116,354) (107,569)
Distributions to limited partners 0 (275,000)
Proceeds from amounts due affiliates (279) 891
Net cash used for investing activities (116,633) (381,678)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 53,384 (106,741)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 214,237 294,437
CASH AND CASH EQUIVALENTS, END OF PERIOD $267,621 $187,696
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
THIRD QUARTER 2003 COMPARED TO THIRD QUARTER 2002
At September 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 90.9% for the third quarter of 2003, as compared to
88.3% for the third quarter of 2002.
Revenue from property operations decreased $26,423, or 3.83%, for
the third quarter of 2003, as compared to the 2002 third quarter.
The decrease in rental income of $25,818 or 3.83% is primarily
due to a decrease in rental rates. The decrease in other income
of $605 or 3.51% is primarily due to an decrease in Late and
other fee collections from the properties. The following table
illustrates the components:
Three Month
Increase Percent
(Decrease) Change
Rental income (25,818) 3.83%
Other property (605) 3.51%
Net Increase (26,423) 3.83%
(Decrease)
Property operating expenses decreased $19,737 or 2.44%, for the
third quarter of 2003, as compared to the same period in 2002.
Maintenance & repairs decreased $31,904 or 35.04% due to reduced
property exterior construction projects. Insurance increased
$8,230 or 34.74% in connection with the annual policy renewal.
The increase in general & administrative is due to increased
professional fees and banks charges. The following table
illustrates the components by category:
Increase Percent
(Decrease) Change
Salaries & wages 2,725 2.84%
Maintenance & repairs (31,904) 35.04%
Utilities (2,267) 4.35%
Real estate taxes (666) 0.88%
General administrative 4,929 19.53%
Contract services 3,141 12.09%
Insurance 8,230 34.74%
Interest (2,696) 1.34%
Depreciation and amortization 1 0.00%
Property management fees (a) (1,230) 3.56%
Net Increase (19,737) 2.44%
(Decrease)
THIRD QUARTER 2002 COMPARED TO THIRD QUARTER 2001
At September 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 88.3% for the third quarter of 2002, as compared to
96.5% for the third quarter of 2001.
Revenue from property operations decreased $38,648, or 5.30%, for
the third quarter of 2002, as compared to the 2001 third quarter.
The decrease in rental income of $33,718 or 4.77% is primarily
due to an increase in vacancy. The decrease in other income of
$4,930 or 22.22% 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 (33,718) 4.77%
Other property (4,930) 22.22%
Net Increase (38,648) 5.30%
(Decrease)
Property operating expenses increased $39,235 or 5.11%, for the
third quarter of 2002, as compared to the same period in 2001,
primarily due to increases in maintenance & repair expense. The
increase in maintenance & repairs expense of $30,999 or 51.61% is
associated with turnover and other make ready costs. Insurance
increased $8,600 or 56.99% in connection with the annual policy
renewal. Salaries increased $9,934 or 11.53% primarily due to
increased on site maintenance. The following table illustrates
the components by category:
Increase Percent
(Decrease) Change
Salaries & wages 9,934 11.53%
Maintenance & repairs 30,999 51.61%
Utilities (3,569) 6.40%
Real estate taxes 4,665 6.55%
General administrative (1,748) 6.48%
Contract services (430) 1.63%
Insurance 8,600 56.99%
Interest (2,494) 1.22%
Depreciation and amortization (5,001) 2.69%
Property management fees (a) (1,721) 4.75%
Net Increase 39,235 5.11%
(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 September 30, 2003, the Partnership had $267,621 in
cash and cash equivalents as compared to $214,237 as of December
31, 2002. The net increase in cash of $53,384 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.2-81074
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
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.
(B) Reports on Form 8-K for the quarter ended September 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: October 31, 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
October 31, 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 September 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
October 31, 2003