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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, 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 June 30, 2004 and
December 31, 2003 Page 3
Consolidated Statements of Operations for the Three
And Six Months Ended June 30, 2004 and 2003 Page 4
Consolidated Statements of Cash Flows for the Six
Ended June 30, 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
June 30, Decembe 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 (13,427,432) (13,097,432)
Real Estate, net 4,495,189 4,825,189
Cash including cash investments 392,607 435,304
Escrow deposits 356,512 427,384
Prepaid Expenses 127,362 43,377
Deferred Financing Fees 68,828 80,300
TOTAL ASSETS $5,440,498 $5,811,554
LIABILITIES AND PARTNERS' EQUITY:
LIABILTIES
Mortgage and notes payable $9,996,164 $10,070,686
Note Payable to affiliates 0 0
Amounts due affiliates 1,772 2,452
Real estate taxes payable 150,498 0
Security deposits 68,322 71,944
Accounts payable & accrued expenses 110,544 319,414
Total liabilities 10,327,300 10,464,496
PARTNERS CAPITAL (DEFICIT)
Limited Partners (4,922,222) (4,690,701)
General Partner 35,420 37,759
Total Partners Capital (Deficit) (4,886,802 (4,652,942)
TOTAL LIABILITIES AND PARTNER DEFICIT $5,440,498 $5,811,554
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
March 31, June 30,
REVENUES 2004 2003 2004 2003
Rental income 590,429 645,256 1,213,001 1,327,914
Other property 16,746 16,717 32,043 31,513
Total revenues 607,175 661,973 1,245,044 1,359,427
EXPENSES
Salaries & wages 74,255 80,677 160,489 177,483
Maintenance & repairs 38,753 73,424 94,987 112,911
Utilities 49,713 54,113 103,917 108,276
Real estate taxes 75,249 75,249 150,498 150,498
General administrative 30,984 31,859 48,909 54,008
Contract services 27,368 28,152 56,071 54,470
Insurance 33,444 27,744 65,365 51,435
Interest 197,146 199,922 394,944 400,524
Depreciation and
amortization 170,736 180,736 341,472 361,472
Property management fees(a) 30,359 33,096 62,252 67,955
Total expenses 728,007 784,972 1,478,904 1,539,032
Net Income ($120,832) ($122,999) ($233,860) ($179,605)
NET INCOME PER UNIT $(10.98) $(11.18) $(21.26) $(16.33)
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,
2004 2003
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($233,860) ($179,605)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 330,000 350,000
Net Effect of changes in operating accounts
Escrow deposits 70,872 11,366
Prepaid expenses (83,985) (83,628)
Accrued real estate taxes 150,498 150,498
Security deposits (3,622) 1,937
Accounts payable (208,870) (153,513)
Other assets 11,472 11,471
Net cash provided by (used for) operating activities 32,505 108,526
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (74,522) (80,645)
Proceeds from amounts due affiliates (680) (2,337)
Net cash used for investing activities (75,202) (82,982)
NET INCREASE (DECREASE) IN CASH AND CASH (42,697) 25,544
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 435,304 214,237
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD $392,607 $239,781
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 2004 COMPARED TO SECOND QUARTER 2003
At June 30, 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 83.2% for the second quarter of 2004, as compared to
90.2% for the second quarter of 2003.
Revenue from property operations decreased $54,798, or 8.28%, for
the second quarter of 2004, as compared to the 2003-second
quarter. The decrease in rental income of $54,827 or 8.50% is
primarily due to an increase in vacancy. The increase in other
income of $29 or 0.17% 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 (54,827) 8.50%
Other property 29 0.17%
Net Increase (54,798) 8.28%
(Decrease)
Property operating expenses decreased $56,965 or 7.26%, for the
second quarter of 2004, as compared to the same period in 2003.
Maintenance & repairs decreased $34,671 or 47.22% due to
decreased extraordinary maintenance items being preformed.
Insurance increased $5,700 or 20.54% in connection with the
annual policy renewal. The following table illustrates the
components by category:
Increase Percent
(Decrease) Change
Salaries & wages (6,422) 7.96%
Maintenance & repairs (34,671) 47.22%
Utilities (4,400) 8.13%
Real estate taxes 0 0.00%
General administrative (875) 2.75%
Contract services (784) 2.78%
Insurance 5,700 20.54%
Interest (2,776) 1.39%
Depreciation and amortization (10,000) 5.53%
Property management fees (a) (2,737) 8.27%
Net Increase (Decrease) (56,965) 7.26%
SECOND QUARTER 2003 COMPARED TO SECOND QUARTER 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 (10,523) 1.56%
(Decrease)
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%
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, 2004, the Partnership had $392,607 in cash
and cash equivalents as compared to $435,304 as of December 31,
2003. The net decrease in cash of $42,697 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 June 30, 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: July 29, 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
July 29, 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 June 30, 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
July 29. 2004