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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 March 31, 2004 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 March 31, 2004 and
December 31, 2003 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 2004 and 2003 Page 4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2004 and 2003 Page 5
Item 2. Results of Operations and Management 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, 2003, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
March 31 December 31,
2004 2003
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 16,099,903 16,099,903
17,922,621 17,922,621
Less: Accumulated depreciation (13,262,432) (13,097,432)
Real Estate, net 4,660,189 4,825,189
Cash including cash investments 413,219 435,304
Escrow deposits 412,687 427,384
Prepaid Expenses 19,456 43,377
Deferred Financing Fees 74,564 80,300
TOTAL ASSETS $5,580,115 $5,811,554
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $10,021,330 $10,070,686
Amounts due affiliates 4,468 2,452
Real estate taxes payable 75,249 0
Security deposits 69,388 71,944
Accounts payable & accrued expenses 175,650 319,414
Total liabilities 10,346,085 10,464,496
PARTNERS CAPITAL (DEFICIT)
Limited Partners (4,802,599) (4,690,701)
General Partner 36,629 37,759
Total Partners Capital (Deficit) (4,765,970) (4,652,942)
TOTAL LIABILITIES AND PARTNER DEFICIT $5,580,115 $5,811,554
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months
Ended March 31,
REVENUES 2004 2003
Rental income 622,572 682,658
Other property 15,297 14,796
Total revenues 637,869 697,454
EXPENSES
Salaries & wages 86,234 96,806
Maintenance & repairs 56,234 39,487
Utilities 54,204 54,163
Real estate taxes 75,249 75,249
General administrative 17,925 22,149
Contract services 28,703 26,318
Insurance 31,921 23,691
Interest 197,798 200,602
Depreciation and amortization 170,736 180,736
Property management fees (a) 31,893 34,859
Total expenses 750,897 754,060
Net Income ($113,028) ($56,606)
NET INCOME PER UNIT $(10.28) $(5.15)
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
Three Months Ended
March 31,
2004 2003
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($113,028) ($56,606)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 165,000 175,000
Net Effect of changes in
operating accounts
Escrow deposits 14,697 65,838
Prepaid expenses 23,921 15,691
Accrued real estate taxes 75,249 75,249
Security deposits (2,556) 348
Accounts payable (143,764) (160,290)
Other assets 5,736 5,735
Net cash provided by (used for)
operating activities 25,255 120,965
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (49,356) (45,630)
Proceeds from amounts due affiliates 2,016 (897)
Net cash used for investing activivties (47,340) (46,527)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (22,085) 74,438
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 435,304 214,237
CASH AND CASH EQUIVALENTS, END OF
PERIOD $413,219 $288,675
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
FIRST QUARTER 2004 COMPARED TO FIRST QUARTER 2003
At March 31, 2004 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 85.2% for the first quarter of 2004, as compared to
90.5% for the first quarter of 2003.
Revenue from property operations decreased $59,585, or 8.54%, for
the first quarter of 2004, as compared to the 2003 first quarter.
The decrease in rental income of $60,086 or 8.80% is primarily
due to an increase in vacancy. The increase in other income of
$501 or 3.39% 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 (60,086) 8.80%
Other property 501 3.39%
Net Increase (Decrease) (59,585) 8.54%
Property operating expenses decreased $3,163 or 0.42%, for the
first quarter of 2004, as compared to the same period in 2003.
Maintenance & repairs increased $16,747 or 42.41% due to exterior
painting of Forestwood.. Insurance increased $8,230 or 34.74% in
connection with the annual policy renewal. The decrease in
general & administrative is due to decreased advertising. The
following table illustrates the components by category:
Increase
(Decrease)
Salaries & wages (10,572) 10.92%
Maintenance & repairs 16,747 42.41%
Utilities 41 0.08%
Real estate taxes 0 0.00%
General administrative (4,224) 19.07%
Contract services 2,385 9.06%
Insurance 8,230 34.74%
Interest (2,804) 1.40%
Depreciation and amortization (10,000) 5.53%
Property management fees (a) (2,966) 8.51%
Net Increase (Decrease) (3,163) 0.42%
FIRST QUARTER 2003 COMPARED TO FIRST QUARTER 2002
At March 31, 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 90.5% for the first quarter of 2003, as compared to
89.5% for the first quarter of 2002.
Revenue from property operations increased $5,455, or 0.79%, for
the first quarter of 2003, as compared to the 2002 first quarter.
The increase in rental income of $8,432 or 1.25% is primarily due
to an decrease in vacancy. The decrease in other income of
$2,977 or 16.75% 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 8,432 1.25%
Other property (2,977) 16.75%
Net Increase (Decrease) 5,455 0.79%
Property operating expenses decreased $1,971 or 0.26%, for the
first quarter of 2003, as compared to the same period in 2002.
Insurance increased $6,015 or 34.03% in connection with the
annual policy renewal. The decrease in maintenance & repairs
expense of $15,563 or 28.27% is represents decreased turnover and
related costs. Salaries increased $10,595 or 12.29% primarily
due to increased on site maintenance. The following table
illustrates the components by category:
Increase Percent
(Decrease) Change
Salaries & wages 10,595 12.29%
Maintenance & repairs (15,563) 28.27%
Utilities 2,592 5.03%
Real estate taxes (999) 1.31%
General administrative (2,105) 8.68%
Contract services (235) 0.89%
Insurance 6,015 34.03%
Interest (2,592) 1.28%
Depreciation and amortization 0 0.00%
Property management fees (a) 321 0.93%
Net Increase (Decrease) (1,971) 0.26%
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 March 31, 2004, the Partnership had $413,219 in cash
and cash equivalents as compared to $435,304 as of December 31,
2003. The net increase in cash of $22,085 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 $152,028,
$164,442 and $177,870 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 March 31, 2004.
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: May 6, 2004
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
May 6, 2004
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 March 31, 2004 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