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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-17557
Brauvin High Yield Fund L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3569428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 443-0922
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Depository Units representing Beneficial Assignments of Limited
Partnership Interests
(Title of class)
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 X No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate sales price of the depositary units representing
beneficial assignments of limited partnership interests of the
registrant (the "Units") to unaffiliated investors of the
registrant during the initial offering period was $25,000,000.
This does not reflect market value. This is the price at which
the Units were sold to the public during the initial offering
period. There is no current market for the Units nor have Units
been sold within the last 60 days prior to this filing except for
Units sold to or by the registrant pursuant to the registrant's
distribution reinvestment plan.
Portions of the Prospectus of the registrant dated September 4,
1987, as supplemented November 24, 1987 and December 28, 1987 and
filed pursuant to Rule 424(b) and Rule 424(c) under the
Securities Act of 1933, as amended, are incorporated by reference
into Parts II, III and IV of this Annual Report on Form 10-K.
BRAUVIN HIGH YIELD FUND L.P.
1995 FORM 10-K ANNUAL REPORT
INDEX
PART I Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . 15
PART II
Item 5. Market for the Registrant's Units and Related
Security Holder Matters. . . . . . . . . . . . . . . . . . . . 16
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 17
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 19
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . 21
Item 9. Changes in and Disagreements with Accountants
Accounting and Financial Disclosure. . . . . . . . . . . . . . 21
PART III
Item 10. Directors and Executive Officers of the Partnership . . . . . 22
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . 23
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . . . . 25
Item 13. Certain Relationships and Related Transactions. . . . . . . . 25
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 27
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
PART I
Item 1. Business.
Brauvin High Yield Fund L.P. (the "Partnership") is a Delaware
limited partnership formed in January 1987 for the purpose of
acquiring debt-free ownership of existing, free-standing,
income-producing retail, office and industrial real estate
properties predominantly subject to "triple-net" leases. It was
anticipated at the time the Partnership first offered its Units
(as defined below) that a majority of these properties would be
leased to operators of national franchise fast food restaurants,
automotive services and convenience stores, as well as banks and
savings and loans. The leases would provide for a base minimum
annual rent and increases in rent, such as through participation
in gross sales above a stated level, fixed increases on specific
dates or indexation of rent to indices such as the Consumer Price
Index. The Partnership sold $25,000,000 in depository units
representing beneficial assignments of limited partnership
interests (the "Units") commencing September 4, 1987, at $10.00
per Unit (the "Offering") pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933, as amended. The
Offering closed on May 19, 1988. An additional $2,816,104 has
been raised through the sale of additional Units pursuant to the
Partnership's distribution reinvestment plan (the "Plan") through
December 31, 1995. These Units were purchased from the Units
reserved for the Plan after the termination of the Offering. As
of December 31, 1995, $1,607,070 of Units sold through the
Offering have been purchased by the Partnership from investors
liquidating their investment and have been retired. The investors
in the Partnership (the "Interest Holders") share in the benefits
of ownership of the Partnership's real property investments
according to the number of Units each owns.
The principal investment objectives of the Partnership are: (i)
distribution of current cash flow from the Partnership's cash flow
attributable to rental income; (ii) capital appreciation; (iii)
preservation and protection of capital; (iv) the potential for
increased income and protection against inflation through
escalation in the base rent or participation and growth in the
sales of the lessees of the Partnership's properties; (v) the
production of "passive" income to offset "passive" losses from
other investments; and (vi) the partial shelter of cash
distributions for Taxable Interest Holders.
The General Partners believe that the Partnership has, to date,
met its principal investment objectives as follows: (i)
distributions of current cash flow attributable to rental income;
(ii) capital appears to be appreciating as cash flow is increasing
for individual properties (final determination cannot be made
until properties are sold); (iii) capital is being preserved and
protected through routine upkeep of properties and continued
payment of real estate taxes and insurance premiums; (iv)
participation in each lease either through escalation in the base
rent or in the sales of the lessees of the Partnership's
properties; (v) production of "passive income"; and (vi) the cash
distributions for Taxable Interest Holders have been partially
sheltered by depreciation, as explained below.
Taxable Interest Holders are defined as: (a) an Interest Holder
who purchased Units from the Partnership during the Offering and
who at the time of such purchase was not: (i) a Qualified Plan;
(ii) an organization (other than a cooperative described in
Section 521 of the Internal Revenue Code of 1986, as amended [the
"Code"]) which is exempt from tax imposed by Chapter 1 (Normal
Taxes and Surtaxes) of the Code; or (iii) a foreign person or
entity, unless more than 50% of the gross income derived by the
foreign person or entity from the Partnership is subject to U.S.
income tax; and (b) each subsequent transferee of any Units from
an Interest Holder described in (a) above.
Tax-Exempt Interest Holders are defined as: (a) an Interest
Holder who purchased Units from the Partnership during the
Offering and who at the time of such purchase was: (i) a
Qualified Plan; (ii) an organization (other than a cooperative
described in Section 521 of the Code) which is exempt from tax
imposed by Chapter 1 (Normal Taxes and Surtaxes) of the Code; or
(iii) a foreign person or entity, unless more than 50% of the
gross income derived by the foreign person or entity from the
Partnership is subject to U.S. income tax; (b) a Taxable Interest
Holder who elects to be treated as investors described in (a)
above; and (c) each subsequent transferee of any Units from an
Interest Holder described in (a) and (b) above.
Some tax shelter of cash distributions by the Partnership is
available to Taxable Interest Holders through depreciation of the
underlying properties. Taxable Interest Holders benefit from the
special allocation of all depreciation to the Units which they
acquired from the Partnership because their reduced taxable income
each year will result in a reduction in taxes due, although no
"spill-over" losses are expected. Taxable income generated by
property operations will likely be considered passive income for
federal income tax purposes because Section 469(c)(2) of the Code
states that a passive activity includes "any rental activity" and,
therefore, is available to offset losses Taxable Interest Holders
may have realized in other passive investments.
The Partnership intends to dispose of its properties
approximately six to nine years after their acquisition with a
view towards liquidation of the Partnership within that period.
The restated limited partnership agreement of the Partnership (the
"Agreement") provides that the Partnership shall terminate
December 31, 2025, unless sooner terminated pursuant to its terms.
The terms of the transactions between the Partnership and
affiliates of the General Partners of the Partnership are set
forth in Item 13 below to which reference is hereby made for a
description of such terms and transactions.
The Partnership has no employees.
Market Conditions/Competition
The Partnership has utilized its proceeds available for
investment to acquire properties. Since the leases of certain of
the Partnership's properties entitle the Partnership to
participate in gross receipts of lessees above fixed minimum
amounts, the success of the Partnership will depend in part on the
ability of those lessees to compete with similar businesses in
their respective vicinities.
The Partnership also competes with many other entities
engaged in real estate investment activities in the disposition of
property. The ability to locate purchasers for the properties
will depend primarily on the success of the operating properties
and the desirability of the location of the operating properties.
Item 2. Properties.
The Partnership is a landlord only and does not participate in
the operations of any of the properties discussed herein. All
lease payments due the Partnership are current. All properties
are 100% occupied and were paid for in cash, without any
financing. The General Partners believe that the Partnership's
properties are adequately insured.
The following information is presented for the only property
whose cost basis exceeds 10% of the gross proceeds of the
Offering.
On July 21, 1989, the Partnership and Brauvin High Yield Fund
L.P. II ("BHYF II"), an affiliated public real estate limited
partnership, formed a joint venture, Brauvin Funds Joint Venture
("Funds JV"), to purchase a Scandinavian Health Spa (the "Health
Spa") in Glendale, Arizona from an unaffiliated developer for
$5,250,000, plus closing costs. The Health Spa was constructed in
1988. The Health Spa is subject to a triple-net lease with the
lessee, Scandinavian U.S. Swim & Fitness, Inc., which is
responsible for paying all taxes, insurance premiums and
maintenance costs. The lease terminates in 2009. The rent is
payable in equal monthly installments and was increased by 11.5%
on February 1, 1994 and will increase by 11.5% every five years
thereafter. The lease is guaranteed by Bally's Health and Tennis
Corporation whose financial statements reflected a net worth of
approximately $275 million at the time of acquisition. On this
basis, the General Partners determined that no rent insurance
would be required by the Partnership.
The Partnership contributed $2,585,608 (49%) to Funds JV and
BHYF II contributed $2,691,143 (51%). Taxable income and
distributable cash flow have been and will continue to be
allocated according to the venturers' respective capital
contributions.
The following is a summary of the real estate and improvements
of each of the 20 Taco Bell restaurants, 11 Ponderosa restaurants,
the 49% interest in the Scandinavian Health Spa, the 1% interest
in 6 Ponderosa restaurants, the two Children's World Learning
Centers and the 23.4% interest in a CompUSA store purchased by the
Partnership.
Taco Bells:
Warner Robins, Georgia
Unit 1389 is located at 1998 Watson Boulevard. The building
consists of 1,288 square feet situated on a 25,000 square foot
parcel and was constructed in 1977 utilizing jumbo bricks.
Valdosta, Georgia
Unit 1392 is located at 2918 North Ashley Street. The building
consists of 1,288 square feet situated on a 16,222 square foot
parcel and was constructed in 1982 utilizing jumbo bricks.
Albany, Georgia
Unit 1450 is located at 1707 North Slappey Boulevard. The
building consists of 1,288 square feet situated on a 11,850 square
foot parcel and was constructed in 1982 utilizing jumbo bricks.
Alliance, Ohio
Unit 1653 is located at 110 West State Street. The building
consists of 1,584 square feet situated on a 14,400 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block with a clay tile roof.
Dunedin, Florida
Unit 1835 is located at 2296 State Route 580. The building
consists of 1,584 square feet situated on a 21,021 square foot
parcel and was constructed in 1980 utilizing jumbo bricks.
In February 1995, Taco Bell closed and vacated this restaurant.
Taco Bell, in accordance with the lease, continued to pay rent and
certain occupancy costs for this property. In March 1996, Taco
Bell and the Partnership agreed to sub-lease this property to a
local tenant. Taco Bell continues to remain responsible to the
Partnership for all rents and certain occupancy expenses through
the original lease term.
Logansport, Indiana
Unit 1845 is located at 3419 Highway 24 East. Highway 24 East
is a two-lane east-west road. The building consists of 1,566
square feet situated on a 19,200 square foot parcel and was
constructed in 1980 utilizing stucco over concrete block.
Dover, Ohio
Unit 1856 is located at 718 Boulevard Avenue. Boulevard Avenue
is a four-lane northwest-southwest highway. The building consists
of 1,584 square feet situated on a 20,500 square foot parcel and
was constructed in 1980 utilizing stucco over concrete block.
Greenville, North Carolina
Unit 1871 is located at 319 East Greenville Boulevard. The
building consists of 1,584 square feet situated on a 22,788 square
foot parcel and was constructed in 1980 utilizing stucco over
concrete block.
Palm Bay, Florida
Unit 1912 is located at 176 North Harris Avenue. Harris Avenue
is a frontage street to Palm Bay Road. The building consists of
1,584 square feet situated on a 15,250 square foot parcel and was
constructed in 1980 utilizing jumbo bricks.
Sandusky, Ohio
Unit 1915 is located at 3306 Milan Road. The building consists
of 1,584 square feet situated on a 33,000 square foot parcel and
was constructed in 1980 utilizing stucco over concrete block.
Mesa, Arizona
Unit 1925 is located at 531 East Southern Avenue. The building
consists of 1,584 square feet situated on a 28,000 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Zanesville, Ohio
Unit 1929 is located at 2460 North Maple Street. The building
consists of 1,584 square feet situated on a 17,934 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Ashtabula, Ohio
Unit 1937 is located at 1226 West Prospect Avenue. The building
consists of 1,584 square feet situated on a 21,049 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Dalton, Georgia
Unit 1966 is located at 1509 Walnut Avenue. The building
consists of 1,584 square feet situated on a 18,275 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Ashland, Ohio
Unit 1994 is located at 315 Claremont Avenue. The building
consists of 1,584 square feet situated on a 16,000 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
Martinez, California
Unit 2030 is located at 11 Muir Road. The building consists of
1,584 square feet situated on a 13,940 square foot parcel and was
constructed in 1981 utilizing concrete block over wood frame.
Phoenix, Arizona
Unit 2069 is located at 1701 West Bell Street. The building
consists of 1,584 square feet situated on a 9,375 square foot
parcel and was constructed in 1981 utilizing stucco over concrete
block.
Noblesville, Indiana
Unit 2132 is located at 610 West Route 32. The building
consists of 1,584 square feet situated on a 26,250 square foot
parcel and was constructed in 1982 utilizing stucco over concrete
block.
Spartanburg, South Carolina
Unit 2200 is located at 800 North Pine Street. The building
consists of 1,584 square feet situated on a 24,750 square foot
parcel and was constructed in 1982 utilizing stucco over concrete
block.
Winslow, Arizona
Unit 2091 is located at 1605 North Park Drive. The building
consists of 2,808 square feet situated on a 37,651 square foot
parcel and was constructed in 1982 utilizing stucco over concrete
block.
Ponderosas:
Brandon, Florida
Unit 1061 is located at 1449 West Brandon Boulevard. The
building consists of 6,376 square feet situated on a 50,094 square
foot parcel and was constructed in 1985 utilizing wood siding over
concrete block.
Johnstown, New York
Unit 778 is located at Route 30-A and North Comrie Avenue. The
building consists of 5,833 square feet situated on a 50,094 square
foot parcel and was constructed in 1979 utilizing wood siding over
concrete block.
Indianapolis, Indiana
Unit 109 is located at 2915 South Madison Avenue. The building
consists of 7,040 square feet situated on a 79,645 square foot
parcel and was constructed in 1969 utilizing wood siding over
concrete block.
Massena, New York
Unit 752 is located at St. Regis Boulevard and Main Street. The
building consists of 5,817 square feet situated on a 48,399 square
foot parcel and was constructed in 1979 utilizing wood siding over
concrete block.
Chenango, New York
Unit 673 is located at 1261 Front Street. The building consists
of 5,402 square feet situated on a 32,712 square foot parcel and
was constructed in 1979 utilizing wood siding over concrete block
and facebrick.
New Windsor, New York
Unit 782 is located at 334 Windsor Highway. The building
consists of 5,402 square feet situated on a 47,685 square foot
parcel and was constructed in 1980 utilizing wood siding over
concrete block.
Wadsworth, Ohio
Unit 775 is located at 135 Great Oaks Trail. The building
consists of 5,800 square feet situated on a 43,560 square foot
parcel and was constructed in 1986 utilizing stucco over concrete
block.
Westerville, Ohio
Unit 815 is located at 728 South State Street. The building
consists of 4,528 square feet situated on a 46,478 square foot
parcel and was constructed in 1984 utilizing facebrick with wood
siding frontage.
Grand Rapids, Michigan
Unit 194 is located at 308 North Drake Road. The building
consists of 5,088 square feet situated on a 95,383 square foot
parcel and was constructed in 1970 utilizing wood siding over
concrete block.
Buffalo, New York
Unit 677 is located at 2060 Main Street. The building consists
of 5,440 square feet situated on a 192,656 square foot parcel and
was constructed in 1980 and remodeled in 1987 utilizing wood
siding over concrete block with a sloped and shingled roof.
Westbourne, Ohio
Unit 409 is located at 3328 Westbourne Drive. The building
consists of 5,400 square feet situated on a 48,000 square foot
parcel and was constructed in 1974 using wood siding over wood
frame.
Joint Venture Ponderosas:
Louisville, Kentucky
Unit 110 is located at 4801 Dixie Highway. The building
consists of 5,100 square feet situated on a 62,496 square foot
parcel and was constructed in 1969 utilizing wood siding over
concrete block with flagstone.
Cuyahoga Falls, Ohio
Unit 268 is located at 1641 State Road. The building consists
of 5,587 square feet situated on a 40,228 square foot parcel and
was constructed in 1973 utilizing wood siding over concrete block.
Tipp City, Ohio
Unit 785 is located at 135 South Garber. The building consists
of 6,080 square feet situated on a 53,100 square foot parcel and
was constructed in 1980 utilizing wood siding over concrete block.
Mansfield, Ohio
Unit 850 is located at 1075 Ashland Road. The building consists
of 5,600 square feet situated on a 104,500 square foot parcel and
was constructed in 1980 utilizing wood siding over concrete block
and flagstone.
Tampa, Florida
Unit 1060 is located at 4420 West Gandy Boulevard. The building
consists of 5,777 square feet situated on a 50,094 square foot
parcel and was constructed in 1986 utilizing wood siding over
concrete block.
Mooresville, Indiana
Unit 1057 is located at 499 South Indiana Street. The building
consists of 6,770 square feet situated on a 63,525 square foot
parcel and was constructed in 1981 utilizing wood siding over
concrete block.
Scandinavian Health Spa:
The Health Spa is a 36,556 square foot health club located on
a three acre parcel in Glendale, Arizona, a suburb of Phoenix.
The property is a two-story health and fitness workout facility
located within the 195,000 square foot Glendale Galleria Shopping
Center.
Children's World Learning Centers:
Troy, Michigan
The Children's World Learning Center is a 6,175 square foot
facility located at 1064 East Wattles. The single-story building
was constructed in 1985 utilizing a wood frame and a pitched roof
with asphalt shingles.
Sterling Heights, Michigan
The Children's World Learning Center is a 5,005 square foot
facility located at 35505 Schoenherr. The single-story building
was constructed in 1983 utilizing a wood frame and a pitched roof
with asphalt shingles.
CompUSA:
The Partnership owns a 23.4% interest in a joint venture with
affiliated public real estate limited partnerships that acquired
the land and building underlying a CompUSA store. The CompUSA
store is a 25,000 square foot single story building located on a
105,919 square foot parcel in Duluth, Georgia, a suburb of
Atlanta, in the Gwinnett Place Mall Shopping Area. The single
story building was completed in March 1993 utilizing a frame of
steel and concrete block.
The following table summarizes the operations of the
Partnership's properties.
BRAUVIN HIGH YIELD FUND
SUMMARY OF OPERATING DATA
DECEMBER 31, 1995
PERCENT OF 1995 1995 LEASE
PURCHASE ORIGINAL RENTAL PERCENT EXPIRATION RENEWAL
PROPERTIES PRICE UNITS SOLD INCOME OF TOTAL DATES OPTIONS
49% OF 1 SCANDINAVIAN HEALTH SPA $ 2,572,500 10.3% $ 352,819 12.1% 2009 4 FIVE YEAR OPTIONS
1% OF 6 PONDEROSA RESTAURANTS 56,850 0.2% 7,164 0.3% 2003 4 FIVE YEAR OPTIONS
23.4% OF 1 COMPUSA STORE 549,900 2.2% 59,412 2.0% 2008 4 FIVE YEAR OPTIONS
20 TACO BELL RESTAURANTS 6,770,707 27.1% 1,126,400 38.5% 2000-2006 NONE
11 PONDEROSA RESTAURANTS 10,087,611 40.3% 1,238,066 42.4% 2003 4 FIVE YEAR OPTIONS
2 CHILDREN'S WORLD LEARNING CENTERS 1,096,078 4.4% 138,289 4.7% 2003-20052 4 FIVE YEAR OPTIONS
$21,133,646 84.5% $2,922,150 100.0%
NOTE - THE FORMAT OF THIS SCHEDULE DIFFERS FROM THE INCOME STATEMENT OF THE PARTNERSHIP.
THIS SCHEDULE ALLOCATES THE PARTNERSHIP'S SHARE OF PURCHASE PRICE AND RENTAL INCOME FORM EACH JOINT VENTURE.
THE INCOME STATEMENT USES THE EQUITY METHOD OF ACCOUNTING, THEREFORE, NO RENTAL INCOME IS RECORDED IN THE RENTAL
INCOME ACCOUNTS FOR THE JOINT VENTURE.
Risks of Ownership
The possibility exists that the tenants of the
Partnership's properties may be unable to fulfill their
obligations pursuant to the terms of their leases, including
making base rent or percentage rent payments to the Partnership.
Such a default by the tenants or a premature termination of any
one of the leases could have an adverse effect on the financial
position of the Partnership. Furthermore, the Partnership may be
unable to successfully locate a substitute tenant due to the fact
that these buildings have been designed or built primarily to
house a specific operation. Thus, the properties may not be
readily marketable to a new tenant without substantial capital
improvements or remodeling. Such improvements may require
expenditure of Partnership funds otherwise available for
distribution. In addition, because in excess of 40% of the
Partnership's cash available for investment has been invested in
properties operated as Ponderosa family restaurants and in excess
of 38% of the Partnership's rental income is from properties
operated as Taco Bells restaurants, the Partnership is subject to
some risk of loss should adverse events affect Ponderosa and Taco
Bell restaurants and in turn adversely affect the lessees'
ability to pay rent to the Partnership.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Units and Related Security
Holder Matters.
At December 31, 1995, there were approximately 1,868 Interest
Holders in the Partnership. There is no established public
trading market for Units and it is not anticipated that there will
be a public market for Units. Neither the General Partners nor
the Partnership are obligated, but reserve the right, to redeem or
repurchase Units. Units may also be purchased by the Plan in
certain instances. Any Units so purchased shall be retired.
Pursuant to the terms of the partnership agreement, there are
restrictions on the ability of the Interest Holders to transfer
their Units. In all cases, the General Partners must consent to
the substitution of an Interest Holder.
Cash distributions to Interest Holders for 1995, 1994 and 1993
were $2,600,149, $2,616,758 and $2,590,902, respectively.
Distributions are paid four times per year, within 60 days
following the end of each calendar quarter. All distributions
represent cash flow from operations. No amount distributed in
1995 was a return of capital.
Item 6. Selected Financial Data.
Years Ending December 31, 1995, 1994 and 1993
1995 1994 1993
Selected Income Statement Data:
Rental Income $ 2,502,755 $ 2,494,203 $ 2,432,331
Interest and other Income 63,650 27,682 26,909
Net Income 2,367,443 2,296,122 2,189,394
Net Income Per Unit (a) $ 0.91 $ 0.87 $ 0.84
Selected Balance Sheet Data:
Cash and Cash Equivalents $ 1,363,085 $ 1,016,066 $ 857,383
Land and Buildings 19,322,975 19,322,975 19,322,975
Investment in Brauvin High
Yield Venture 33,746 34,179 36,494
Investment in Brauvin Funds
Joint Venture 2,472,647 2,494,341 2,511,957
Investment in Brauvin
Gwinnett County Venture 557,389 569,626 582,573
Total Assets 20,932,600 21,010,763 21,285,952
Cash Distributions to
General Partners 52,869 53,233 52,853
Cash Distributions to
Interest Holders (b) 2,600,149 2,616,758 2,590,902
Cash Distributions to
Interest Holders Per
Unit(a) $ 1.00 $ 1.01 $ 1.01
(a) Net income per Unit and cash distributions to Interest Holders
per Unit are based on the average Units outstanding during the year
since they were of varying dollar amounts and percentages based upon
the date Interest Holders were admitted to the Partnership and
additional Units were purchased through the Plan.
(b) This includes $9,209, $8,342 and $6,873 paid to various states
for income taxes on behalf of all Interest Holders for the
years 1995, 1994 and 1993, respectively.
The above selected financial data should be read in conjunction
with the financial statements and the related notes appearing
elsewhere in this annual report.
Item 6. Selected Financial Data - continued.
Years Ending December 31, 1992 and 1991
1992 1991
Selected Income Statement Data:
Rental Income $ 2,429,983 $ 2,347,599
Interest and other Income 32,278 53,044
Net Income 2,117,417 2,099,314
Net Income Per Unit (a) $ 0.82 $ 0.82
Selected Balance Sheet Data:
Cash and Cash Equivalents $ 1,065,360 $ 924,437
Land and Buildings 19,322,975 19,322,975
Investment in Brauvin High
Yield Venture 37,644 38,621
Investment in Brauvin Funds
Joint Venture 2,519,883 2,548,352
Investment in Brauvin
Gwinnett County Venture -- --
Total Assets 21,370,824 21,690,573
Cash Distributions to
General Partners 39,264 --
Cash Distributions to
Interest Holders (b) 2,560,503 2,438,767
Cash Distributions to
Interest Holders Per
Unit(a) $ 1.01 $ 0.97
(a) Net income per Unit and cash distributions to Interest
Holders per Unit are based on the average Units outstanding
during the year since they were of varying dollar amounts and
percentages based upon the date Interest Holders were admitted to the
Partnership and additional Units were purchased through the Plan.
(b) This includes $5,934, and $7,840 paid to various states for
income taxes on behalf of all Interest Holders for the years 1992 and
1991, respectively.
The above selected financial data should be read in conjunction
with the financial statements and the related notes appearing
elsewhere in this annual report.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
The Partnership commenced an offering to the public on September
4, 1987 of 1,500,000 Units which was subsequently increased to
2,500,000 Units. The offering closed on May 19, 1988 after 2,500,000
Units were sold. The Partnership purchased the land and buildings
underlying seven Taco Bell restaurants in 1987. In 1988, the
Partnership purchased 13 Taco Bell restaurants, nine Ponderosa
restaurants and an interest in a joint venture which purchased six
Ponderosa restaurants. In 1989, the Partnership purchased the land
and building underlying a Ponderosa restaurant, an interest in a
joint venture which purchased a Scandinavian Health Spa, the land and
buildings underlying two Children's World Learning Centers and the
land and building underlying an additional Ponderosa restaurant.
On November 9, 1993, the Partnership purchased 23.4% interest in
a joint venture with affiliated public real estate limited
partnerships (the "Venture"). The Venture acquired the land and
building underlying a 25,000 square foot CompUSA computer superstore
from an unaffiliated seller.
The Partnership raised $25,000,000 through its initial offering and
an additional $2,816,104, as of December 31, 1995, through Units
purchased by certain Interest Holders investing their distributions
of Operating Cash Flow in additional Units through the Plan. As of
December 31, 1995, Units valued at $1,607,070 have been purchased by
the Partnership from Interest Holders liquidating their original
investment and have been retired. The Partnership has no funds
available to purchase additional property, excluding those raised
through the Plan.
Below is a table summarizing the five year historical data for
distribution rates per annum:
Distribution
Date 1996 1995 1994 1993 1992 1991
February 15 10.0% 10.0% 10.0% 10.0% 10.0% 9.5%
May 15 10.0 10.0 10.0 10.0 9.625
August 15 10.0 10.0 10.0 10.125 9.75
November 15 (a) 10.0 10.5 10.5 10.25 9.75
(a) The November 15, 1994, 1993 and 1992 quarterly distributions
were made at a rate of 10% per annum and second bonus distributions
were made at a rate of .50%, 0.50% and .25%, respectively, per
annum.
Future increases in the Partnership's distributions will largely
depend on increased sales at the Partnership's properties resulting
in additional percentage rent and, to a lesser extent, on rental
increases, which will occur due to increases in receipts from
certain leases based upon increases in the Consumer Price Index or
scheduled increases of base rent.
Since the distribution to Limited Partners had been at least 10%
per annum during 1995, 1994 and 1993, the General Partners and its
affiliates collected a management fee of $24,998, $25,596 and
$24,969, respectively and received $52,869, $53,233 and $52,853 in
Operating Cash Flow distributions in 1995, 1994 and 1993,
respectively. This is anticipated to continue in 1996.
The Partnership has engaged an independent third party to perform
valuations of the Partnership's investments in real estate as of
December 31, 1995.
Results of Operations - 1995
Results of operations for 1995 reflected net income of
$2,367,443. Net income for 1995 increased by approximately $71,000
over 1994 due primarily to increased interest income of
approximately $36,000 which is a result of the Partnership's
accumulating cash reserves for the possible acquisition of an
additional property. Net income also increased due to a decrease
in the amortization of deferred organization costs and other assets
of approximately $24,000, which was the result of the full
amortization of these items in 1994.
Results of Operations - 1994
Results of operations for 1994 reflected net income of
$2,296,122. Net income for 1994 increased by approximately $107,000
over 1993 due primarily to increased percentage rent revenue of
approximately $58,000 and an increase in the equity interest in
Brauvin Gwinnett County Venture's net income of approximately
$45,000.
Results of Operations - 1993
Results of operations for 1993 reflected net income of
$2,189,394. Net income for 1993 increased by approximately $72,000
over 1992 due primarily to an increase in the equity interest in
Brauvin Funds Joint Venture's net income of approximately $64,000.
Other information
On March 15, 1989, Mr. David M. Strosberg resigned as an employee
of Brauvin Advisory Services, Inc. Currently, Mr. Strosberg remains
an Individual General Partner of the Partnership. The remaining
General Partners do not believe that Mr. Strosberg's resignation has
had an adverse effect, and should not in the future have any adverse
effect, on the operations of the Partnership.
Impact of Inflation
The Partnership anticipates that the operations of the
Partnership will not be significantly impacted by inflation. To
offset any potential adverse effects of inflation, the Partnership
has entered into "triple-net" leases with the tenant being
responsible for all operating expenses, insurance and real estate
taxes. In addition, several of the leases require escalations of
rent based upon increases in the Consumer Price Index, scheduled
increases of base rents, or tenant sales.
Item 8. Financial Statements and Supplementary Data.
See Index of Financial Statements and Schedule on Page F-1 of
this Annual Report on Form 10-K for financial statements and
financial statement schedules, where applicable.
The supplemental financial information specified in Item 302 of
Regulation S-K is not applicable.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
During the Partnership's two most recent fiscal years, there has
been no changes in, or disagreements with, the accountants.
PART III
Item 10. Directors and Executive Officers of the Partnership.
The General Partners of the Partnership are:
Brauvin Realty Advisors, Inc., an Illinois corporation
Mr. Jerome J. Brault, individually
Mr. Cezar M. Froelich, individually
Mr. David M. Strosberg, individually
Brauvin Realty Advisors, Inc. was formed under the laws of the
State of Illinois in 1986, with its issued and outstanding shares
being owned by Messrs. Jerome J. Brault (beneficially) (44%), Cezar
M. Froelich (44%) and David Strosberg (12%).
The principal officers and directors of the Corporate General
Partner are:
Mr. Jerome J. Brault . . . .Chairman of the Board of Directors,
President, Chief Executive Officer
and Director
Mr. Thomas J. Coorsh. . . . Treasurer and Chief Financial
Officer
Mr. James L. Brault . . . . Vice President and Secretary
The business experience during the past five years of the General
Partners, officers and directors is as follows:
Mr. Jerome J. Brault (age 62) is Director, Chairman of the Board
and President of Brauvin Properties, Inc., Brauvin Realty
Properties, Inc., Brauvin Realty Partners, Inc., Brauvin Ventures,
Inc., Brauvin Associates, Inc., Brauvin 6, Inc., Brauvin Advisory
Services, Inc., Brauvin Securities, Inc. and Brauvin Restaurant
Properties, Inc. He is Director, President, Chairman of the Board,
Chief Executive Officer and Secretary of Brauvin Realty Services,
Inc., Brauvin Management Company and Brauvin Financial, Inc. He is
President and Director of Brauvin, Inc. He is also Director,
President, Chairman of the Board and Chief Executive Officer of
Brauvin Chili's Inc., Brauvin Realty Advisors, Inc., Brauvin Realty
Advisors II, Inc., Brauvin Realty Advisors III, Inc., Brauvin Realty
Advisors IV, Inc., Brauvin Realty Advisors V, LLC and Brauvin Net
Lease V, Inc. as well as an individual general partner in seven
other affiliated public limited partnerships. Prior to Mr. Brault's
affiliation with the Brauvin organization, he was the Chief
Operating Officer of Burton J. Vincent, Chesley & Company, a New
York Stock Exchange member firm. He is the father of James L.
Brault, an officer of certain affiliated Brauvin entities.
Mr. Cezar M. Froelich (age 50) is a principal with the Chicago law
firm of Shefsky Froelich & Devine Ltd., which acts as counsel to the
General Partners, the Partnership and certain of their affiliates.
His practice has been primarily in the fields of securities and real
estate and he has acted as legal counsel to various public and
private real estate limited partnerships, mortgage pools and real
estate investment trusts. Mr. Froelich is an individual general
partner in seven other affiliated public limited partnerships and a
shareholder in Brauvin Management Company and Brauvin Financial Inc.
Mr. Froelich resigned as a director of the corporate general partner
in December 1994.
Mr. Thomas J. Coorsh (age 46) is the Treasurer and Chief Financial
Officer of Brauvin Chili's, Inc., Brauvin Properties, Inc., Brauvin
Realty Properties, Inc., Brauvin Realty Partners, Inc., Brauvin
Ventures, Inc., Brauvin 6, Inc., Brauvin Realty Advisors, Inc.,
Brauvin Realty Advisors II, Inc., Brauvin Realty Advisors III, Inc.,
Brauvin Realty Advisors IV, Inc., Brauvin Realty Advisors V, LLC.,
Brauvin Net Lease V, Inc., Brauvin Management Company, Brauvin
Financial, Inc., Brauvin Securities, Inc., Brauvin Inc., Brauvin
Associates, Inc., Brauvin Advisory Services, Inc., and Brauvin
Restaurant Properties, Inc. He is responsible for the overall
financial management of Brauvin Management Company, Brauvin
Financial, Inc. and related partnerships. He is responsible for
partnership accounting and financial reporting to regulatory
agencies. From May 1992 until joining Brauvin in November of 1993,
Mr. Coorsh was self-employed as a business consultant. Between 1990
and 1992, Mr. Coorsh was the senior vice president of finance and
chief accounting officer for Lexington Homes, an Illinois-based
homebuilder. In 1990 Mr. Coorsh left The Balcor Company, a major
real estate syndicator, property manager and lender to join
Lexington Homes. Mr. Coorsh began work at The Balcor Company in
1985 and his most recent position was first vice president -
finance. Mr. Coorsh's responsibilities at Balcor included property
management accounting and finance; treasury; and financial and
strategic planning. Before joining Balcor, Mr. Coorsh held
financial positions with several large, public corporations
headquartered in the Chicago metropolitan area. Mr. Coorsh is a
Certified Public Accountant.
Mr. James L. Brault (age 35) is a Vice President and Secretary of
Brauvin Chili's, Inc., Brauvin Properties, Inc., Brauvin Realty
Properties, Inc., Brauvin Realty Partners, Inc., Brauvin Ventures,
Inc., Brauvin 6, Inc., Brauvin Realty Advisors, Inc., Brauvin Realty
Advisors II, Inc., Brauvin Realty Advisors III, Inc., Brauvin
Associates Inc., Brauvin Inc., Brauvin Securities, Inc. and Brauvin
Restaurant Properties, Inc. He is Executive Vice President and
Secretary of Brauvin Advisory Services, Inc. He is also Executive
Vice President, Secretary and Director of Brauvin Realty Advisors
IV, Inc. and Brauvin Realty Advisors V, LLC., and Brauvin Net Lease
V, Inc. Additionally, he is the Executive Vice President and
Assistant Secretary of Brauvin Management Company and Brauvin
Financial, Inc., as well as a Director of Brauvin Financial, Inc.
Prior to joining the Brauvin organization in May 1989, he was a Vice
President of the Commercial Loan Division of the First National Bank
of Chicago, based in their Washington, D.C. office. Mr. Brault
joined the First National Bank of Chicago in 1983 and his
responsibilities included the origination and management of
commercial real estate loans, as well as the direct management of
a loan portfolio in excess of $150,000,000. Mr. Brault is a son of
Mr. Jerome J. Brault, the managing general partner of the
Partnership.
Item 11. Executive Compensation.
(a & b)The Partnership is required to pay certain fees, make
distributions and allocate a share of the profits and losses of the
Partnership to the Corporate General Partner and its affiliates as
described under the caption "Compensation Table" on pages 11 to 13
of the Partnership's Prospectus, as supplemented, and the
sections of the Agreement entitled "Distributions of Operating Cash
Flow," "Allocation of Profits, Losses and Deductions," "Distribution
of Net Sale or Refinancing Proceeds" and "Compensation of General
Partners and Their Affiliates" on pages A-12 to A-17 of the
Agreement attached as Exhibit A to the Prospectus. The relationship
of the Corporate General Partner (and its directors and officers)
to its affiliates is set forth above in Item 10. Reference is also
made to Note 2 of the Notes to the Financial Statements filed with
this annual report for a description of such distributions and
allocations.
The General Partners are entitled to receive Acquisition Fees for
services rendered in connection with the selection, purchase,
construction or development of any property by the Partnership
whether designated as real estate commissions, acquisition fees,
finders' fees, selection fees, development fees, construction fees,
non-recurring management fees, consulting fees or any other similar
fees or commissions, however treated for tax or accounting purposes.
Aggregate Acquisition Fees payable to all persons in connection with
the purchase of Partnership properties may not exceed such
compensation as is customarily charged in arm's-length transactions
by others rendering similar services as an ongoing public activity
in the same geographic locale and for comparable properties. The
aggregate Acquisition Fees to be paid to the General Partners and
their affiliates shall not exceed 4-1/2% of the gross proceeds of
the Offering. In addition, an additional Acquisition Fee may be
paid to the General Partners and its affiliates to the extent of
excess working capital reserves (as defined). No Acquisition Fees
were paid after 1989 as the Partnership was fully specified in 1989
except for, an additional Acquisition Fee of $125,000 paid to an
affiliate of the General Partners in 1990 as a reduction of the
working capital reserve.
An affiliate of the General Partners may provide leasing and
re-leasing services to the Partnership in connection with the
management of Partnership properties. The maximum property
management fee to the General Partners or their affiliates shall be
equal to 1% of the gross revenues of each Partnership property or
interest therein; however, the receipt of such property management
fees by the General Partners or their affiliates is subordinated to
the receipt by the Limited Partners of a 10% non-cumulative,
non-compounded annual return on Adjusted Investment. Amounts
previously accrued had been reversed in 1990 as it was not the
intention of the affiliate of the General Partners to collect such
fees for that period. In 1995, 1994 and 1993, the Partnership's
distribution was at least 10% per annum; therefore, management fees
of $24,998, $25,596 and $24,969 were paid in 1995, 1994 and 1993,
respectively, to affiliates of the General Partners.
(c, d, e & f) Not applicable.
(g) The Partnership has no employees and pays no
employee or director compensation.
(h & i) Not applicable.
(j) Compensation Committee Interlocks and Insider
Participation. Since the Partnership has no employees, it did not
have a compensation committee and is not responsible for the payment
of any compensation.
(k) Not applicable.
(l) Not applicable.
The following is a summary of all fees, commissions and other
expenses paid or payable to the General Partners or its affiliates
for the years ended December 31, 1995, 1994 and 1993:
1995 1994 1993
Selling commissions $34,935 $33,388 $32,501
Management fees 24,998 25,596 24,969
Reimbursable operating expenses 69,808 74,400 73,998
Legal fees 349 4,370 3,643
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) No person or group is known by the Partnership to own
beneficially more than 5% of the outstanding Units of the
Partnership.
(b) One of the Individual General Partners of the Partnership
purchased $5,000 of the Units. No other officers and directors of
the Corporate General Partners own any Units.
Amount
Title Nature of Percentage
of Beneficial of
Class Name and Address Ownership Class
Units David M. Strosberg $5,000 0.02%
320 W. Illinois #C-221
Chicago, IL 60610
(c) The Partnership is not aware of any arrangement, the
operations of which may result in a change of control of the
Partnership.
No officer or director of the Corporate General Partner possesses
a right to acquire beneficial ownership of Units of the Partnership.
The General Partners will share in the profits, losses and
distributions of the Partnership as outlined in Item 11, "Executive
Compensation."
Item 13. Certain Relationships and Related Transactions.
(a & b) The Partnership is entitled to engage in various
transactions involving affiliates of the Corporate General Partner
of the Partnership, as described in the section of the Partnership's
Prospectus, as supplemented, entitled "Compensation Table" and
"Conflicts of Interest" at pages 11 to 16 and the section of the
Agreement entitled "Rights, Duties and Obligations of General
Partners" at pages A-19 to A-25 of the Agreement. The
relationship of the Corporate General Partner to its affiliates is
set forth in Item 10. Cezar M. Froelich is an individual general
partner of the Partnership and is also principal of the law firm of
Shefsky Froelich & Devine Ltd., which firm acts as securities and
real estate counsel to the Partnership and certain of their
respective affiliates.
(c) No management persons are indebted to the Partnership.
(d) There have been no transactions with promoters.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) The following documents are filed as part of this report:
(1) (2) Financial Statements and Schedule indicated in Part II,
Item 8 "Financial Statements and Supplementary Data." (See Index
to Financial Statements and Schedule on page F-1 of Form 10-K).
(3) Exhibits required by the Securities and Exchange
Commission Regulation S-K Item 601:
(21) Subsidiaries of the Registrant.
(27) Financial Data Schedule
The following exhibits are incorporated by reference from the
Registrant's Registration Statement (File No. 33-11899) on Form S-11
filed under the Securities Act of 1933:
Exhibit No. Description
3.(a) Restated Limited Partnership Agreement
3.(b) Articles of Incorporation of Brauvin
Realty Advisors,Inc.
3.(c) By-Laws of Brauvin Realty Advisors, Inc.
3.(d) Amendment to the Certificate of Limited
Partnership of the Partnership
10.(a) Escrow Agreement
(b) The Partnership did not file any report on Form 8-K during the
fourth quarter of 1995.
(c) An annual report for the fiscal year 1995 will be sent to the
Interest Holders subsequent to this filing and the Partnership
will furnish copies of such report to the Securities and Exchange
Commission at that time.
The following exhibits are incorporated by reference to the
Registrant's fiscal year ended December 31,1994 Form 10-K (File
No. 0-17557):
Exhibit No. Description
(10)(b)(1) Management Agreement
(28) Pages 9-16 of the Partnership's Prospectus dated
September 4, 1987 as supplemented, and pages A-12
to A-17 and A-19 to A-25 of the Agreement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BRAUVIN HIGH YIELD FUND L.P.
BY: Brauvin Realty Advisors, Inc.
Corporate General Partner
By:/s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of Directors,
President and Chief Executive Officer
By:/s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer and Treasurer
By:/s/ James L. Brault
James L. Brault
Vice President and Secretary
INDIVIDUAL GENERAL PARTNERS
/s/ Jerome J. Brault
Jerome J. Brault
/s/ Cezar M. Froelich
Cezar M. Froelich
David M. Strosberg
DATED: MARCH 29, 1996
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Financial Statements:
Balance Sheets, December 31, 1995 and 1994 . . . . . . . . . . F-3
Statements of Operations, for the years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . F-4
Statements of Partners' Capital, for the years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . F-5
Statements of Cash Flows, for the years ended
December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . F-6
Notes to Financial Statements. . . . . . . . . . . . . . . . . F-7
Schedule III -- Real Estate and Accumulated
Depreciation, December 31, 1995. . . . . . . . . . . . . . . . F-19
All other schedules provided for in Item 14(a)(2) of Form 10-K are
either not required, or are inapplicable, or immaterial.
INDEPENDENT AUDITORS' REPORT
To the Partners
Brauvin High Yield Fund L.P.
Chicago, Illinois
We have audited the accompanying balance sheets of Brauvin High
Yield Fund L.P. (a limited partnership) as of December 31, 1995 and 1994,
and the related statements of operations, partners' capital, and cash
flows for each of the three years in the period ended December 31,
1995. Our audits also included the financial statement schedule
listed in the Index to Financial Statements and Schedule on page F-1.
These financial statements and the financial statement schedule are
the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements
and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of Brauvin High Yield Fund
L.P. at December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule,
when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information
set forth therein.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 9, 1996
BALANCE SHEETS
December 31, December 31,
1995 1994
ASSETS
Investment in real estate, at cost:
Land $ 5,768,768 $ 5,768,768
Buildings 13,554,207 13,554,207
19,322,975 19,322,975
Less: Accumulated depreciation (2,852,122) (2,465,487)
Net investment in real estate 16,470,853 16,857,488
Investment in Joint Ventures (Note 6):
Brauvin High Yield Venture 33,746 34,179
Brauvin Funds Joint Venture 2,472,647 2,494,341
Brauvin Gwinnett County Venture 557,389 569,626
Cash and cash equivalents 1,363,085 1,016,066
Due from affiliates 358 12,151
Prepaid offering costs 16,763 20,873
Other assets 17,759 6,039
Total Assets $20,932,600 $21,010,763
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued
expenses $ 10,443 $ 14,652
Due to affiliates -- 2,859
Rent received in advance 86,903 232,379
Total Liabilities 97,346 249,890
PARTNERS' CAPITAL:
General Partners 124,295 129,815
Interest Holders 20,710,959 20,631,058
Total Partners' Capital 20,835,254 20,760,873
Total Liabilities and
Partners' Capital $20,932,600 $21,010,763
See accompanying notes to financial statements
STATEMENTS OF OPERATIONS
For the years ended December 31,
1995 1994 1993
INCOME
Rental $2,502,755 $2,494,203 $2,432,331
Interest and other 63,650 27,682 26,909
Total income 2,566,405 2,521,885 2,459,240
EXPENSES
General and administrative 133,805 129,068 129,761
Management fees (Note 3) 24,998 25,596 24,969
Amortization of deferred
organization costs and
other assets -- 24,345 23,281
Depreciation 386,635 386,636 386,635
Total expenses 545,438 565,645 564,646
Income before equity interest
in joint ventures 2,020,967 1,956,240 1,894,594
Equity Interest in Joint
Ventures' Net Income (Loss):
Brauvin High Yield Venture 5,967 5,585 5,550
Brauvin Funds Joint Venture 291,906 291,084 290,974
Brauvin Gwinnett County
Venture 48,603 43,213 (1,724)
Net Income $2,367,443 $2,296,122 $2,189,394
Net income allocated to the
General Partners $ 47,349 $ 45,922 $ 43,788
Net income allocated to the
Interest Holders $2,320,094 $2,250,200 $2,145,606
Net income per
Unit outstanding (a) $ 0.91 $ 0.87 $ 0.84
(a) Net income per Unit was based on the average Units outstanding
during the year since they were of varying dollar amounts and
percentages based upon the dates Interest Holders were admitted to
the Partnership and additional Units were purchased through the Plan.
See accompanying notes to financial statements
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 1995, 1994 and 1993
General Interest
Partners Holders * Total
BALANCE at January 1, 1993 $ 146,191 $21,171,823 $21,318,014
Contributions, net -- 281,434 281,434
Selling commissions and other
offering costs (Note 1) -- (36,324) (36,324)
Net income 43,788 2,145,606 2,189,394
Cash distributions (52,853) (2,590,902) (2,643,755)
Balance, December 31, 1993 137,126 20,971,637 21,108,763
Contributions, net -- 63,295 63,295
Selling commissions and
other offering costs (Note 1) -- (37,316) (37,316)
Net income 45,922 2,250,200 2,296,122
Cash distributions (53,233) (2,616,758) (2,669,991)
Balance, December 31, 1994 129,815 20,631,058 20,760,873
Contributions, net -- 399,001 399,001
Selling commissions and other
offering costs (Note 1) -- (39,045) (39,045)
Net income 47,349 2,320,094 2,367,443
Cash distributions (52,869) (2,600,149) (2,653,018)
Balance, December 31, 1995 $ 124,295 $20,710,959 $20,835,254
* Total Units outstanding at December 31, 1995, 1994 and 1993 were
2,620,903, 2,581,003 and 2,574,675, respectively. Cash distributions
to Interest Holders per Unit were $1.00, $1.01 and $1.01 for the
years ended December 31, 1995, 1994 and 1993, respectively. Cash
distributions to Interest Holders per Unit are based on the average
Units outstanding during the year since they were of varying dollar
amounts and percentages based upon the dates Interest Holders were
admitted to the Partnership and additional Units were purchased
through the distribution reinvestment plan.
See accompanying notes to financial statements
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Cash Flows From Operating Activities:
Net income $2,367,443 $2,296,122 $2,189,394
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 386,635 410,981 409,916
Equity interest in Brauvin High
Yield Venture's net income (5,967) (5,585) (5,550)
Equity interest in Brauvin Funds Joint
Venture's net income (291,906) (291,084) (290,974)
Equity interest in Brauvin Gwinnett
County Venture's net (income) loss (48,603) (43,213) 1,724
Repayment from (advances to)affiliates 11,793 (11,633) 36,960
Increase in other assets (11,720) (2,282) (308)
(Decrease) increase in accounts payable
and accrued expenses (4,209) (46,141) 7,983
(Decrease) increase in due to affiliates (2,859) (1,286) 4,145
(Decrease) increase in rent received
in advance (145,476) 120,128 112,251
Net cash provided by operating
activities 2,255,131 2,426,007 2,465,541
Cash Flows From Investing Activities:
Distributions from Brauvin High
Yield Venture 6,400 7,900 6,700
Distributions from Brauvin Funds
Joint Venture 313,600 308,700 298,900
Investment in Brauvin Gwinnett
County Venture -- -- (584,297)
Distributions from Brauvin Gwinnett
County Venture 60,840 56,160 --
Net cash provided by (used in) investing
activities 380,840 372,760 (278,697)
Cash Flows From Financing Activities:
Sale of Units, net of liquidations, selling
commissions and other offering costs 364,066 29,907 248,934
Cash distributions to General Partners (52,869) (53,233) (52,853)
Cash distributions to Interest Holders (2,600,149) (2,616,758) (2,590,902)
Net cash used in financing activities (2,288,952) (2,640,084) (2,394,821)
Net increase (decrease)in cash and cash
equivalents 347,019 158,683 (207,977)
Cash and cash equivalents at beginning
of year 1,016,066 857,383 1,065,360
Cash and cash equivalents at end
of year $1,363,085 $1,016,066 $ 857,383
See accompanying notes to financial statements
NOTES TO FINANCIAL STATEMENTS
For the years ended December 31, 1995, 1994 and 1993
(1) ORGANIZATION
BRAUVIN HIGH YIELD FUND L.P. (the "Partnership") is a Delaware
limited partnership organized for the purpose of acquiring debt-free
ownership of existing, free-standing, income-producing retail,
office and industrial real estate properties predominantly subject
to "triple-net" leases. The General Partners of the Partnership are
Brauvin Realty Advisors, Inc., Jerome J. Brault, Cezar M. Froelich
and David M. Strosberg. Brauvin Realty Advisors, Inc. is owned
primarily by Messrs. Brault (beneficially)(44%) and Froelich (44%).
Brauvin Securities, Inc., an affiliate of the General Partners, was
the selling agent of the Partnership. The Partnership is managed
by an affiliate of the General Partners.
The Partnership was formed on January 6, 1987 and filed a
Registration Statement on Form S-11 with the Securities and Exchange
Commission which became effective on September 4, 1987. The sale
of the minimum of $1,200,000 of depository units representing
beneficial assignments of limited partnership interests of the
Partnership (the "Units") necessary for the Partnership to commence
operations was achieved on November 18, 1987. The Partnership's
offering closed on May 19, 1988. A total of $25,000,000 of Units
were subscribed for and issued between September 4, 1987 and May 19,
1988, pursuant to the Partnership's public offering. Through
December 31, 1995, 1994 and 1993 the Partnership had sold
$27,816,104, $27,410,356 and $27,017,568 of Units, respectively.
These totals include $2,816,104, $2,410,356 and $2,017,568 of Units,
respectively, purchased by Interest Holders who utilized their
distributions of Operating Cash Flow to purchase additional Units
through the distribution reinvestment plan (the "Plan"). Units
valued at $1,607,070, $1,595,070 and $1,265,563 have been purchased
by the Partnership from Interest Holders liquidating their
investment in the Partnership and have been retired as of December
31, 1995, 1994 and 1993, respectively. As of December 31, 1995 the
Participants have acquired Units under the Plan which approximate
10% of total Units outstanding.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
The Partnership has acquired the land and buildings underlying 20
Taco Bell restaurants, 11 Ponderosa restaurants and two Children's
World Learning Centers. The Partnership also acquired 1%, 49% and
23.4% equity interests in three joint ventures with three entities
affiliated with the Partnership. These ventures own the land and
buildings underlying six Ponderosa restaurants, a Scandinavian
Health Spa and a CompUSA store, respectively.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from these estimates.
Accounting Method
The accompanying financial statements have been prepared using the
accrual method of accounting.
Federal Income Taxes
Under the provisions of the Internal Revenue Code, the
Partnership's income and losses are reportable by the partners on
their respective income tax returns. Accordingly, no provision is
made for Federal income taxes in the financial statements. However,
in certain instances, the Partnership has been required under
applicable state law to remit directly to the tax authorities
amounts representing withholding from distributions paid to
partners.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
Investment in Real Estate
The operating properties acquired by the Partnership are stated
at cost including acquisition costs. Depreciation expense is
computed on a straight-line basis over approximately 35 years.
In 1995, the Partnership adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets" (SFAS 121). In conjunction with the adoption of SFAS 121,
the Partnership performed an analysis of its long-lived assets, and
the Partnership's management determined that there were no events
or changes in circumstances that indicated that the carrying amount
of the assets may not be recoverable. Accordingly, no impairment
loss has been recorded in the accompanying financial statements.
Investment in Joint Ventures
The Partnership owns a 1% equity interest in Brauvin High Yield
Venture, which owns the land and building underlying six Ponderosa
restaurants; a 49% equity interest in Brauvin Funds Joint Venture,
which owns the land and building underlying a Scandinavian Health
Spa; and a 23.4% equity interest in Brauvin Gwinnett County Venture,
which owns the land and building underlying a CompUSA store. The
accompanying financial statements include the investments in Brauvin
High Yield Venture, Brauvin Funds Joint Venture and Brauvin Gwinnett
County Venture using the equity method of accounting.
Organization Costs and Prepaid Offering Costs
Organization costs represent costs incurred in connection with the
organization and formation of the Partnership. Organization costs
were amortized over a period of five years using the straight-line
method.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
The General Partners have guaranteed payment of any organization
and offering costs that exceed defined percentages of the gross
proceeds. Subsequently, gross proceeds of the offering are expected
to increase due to the purchase of additional Units through the Plan
and the prepaid offering costs will be transferred to offering costs
and treated as a reduction in Partners' Capital.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt
instruments with an original maturity within three months of
purchase.
Estimated Fair Value of Financial Instruments
Disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments." The estimated fair value amounts
have been determined by using available market information and
appropriate valuation methodologies. However, considerable
judgement is necessarily required in interpreting market data to
develop estimates of fair value.
The fair value estimates presented herein are based on information
available to management as of December 31, 1995 and 1994, but may
not necessarily be indicative of the amounts that the Partnership
could realize in a current market exchange. The use of different
assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts. Although management is
not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been
comprehensively revalued for purposes of these financial statements
since that date, and current estimates of fair value may differ
significantly from amounts presented herein.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
The carrying amounts of the following items are a reasonable
estimate of fair value: cash and cash equivalents; due from
affiliates; accounts payable and accrued expenses; due to
affiliates; and rents received in advance.
(2) PARTNERSHIP AGREEMENT
Distributions
All Operating Cash Flow, as defined in the Partnership Agreement
(the "Agreement"), shall be distributed: (a) first, to the Interest
Holders until the Interest Holders receive an amount equal to their
10% Current Preferred Return, as such term is defined in the
Agreement; and (b) thereafter, any remaining amounts will be
distributed 98% to the Interest Holders and 2% to the General
Partners.
The net proceeds of a sale or refinancing of a Partnership
property shall be distributed as follows:
first, to the Interest Holders until each Interest Holder has
been paid an amount equal to the 10% Cumulative Preferred Return,
as defined in the Agreement;
second, to the Interest Holders until each Interest Holder has
been paid an amount equal to his Adjusted Investment, as defined in
the Agreement;
third, to the General Partners until they have been paid an
amount equal to a 2% preferred return; and
fourth, 95% of any remaining Net Sale or Refinancing Proceeds,
as such term is defined in the Agreement, to the Interest Holders
and the remaining 5% to the General Partners.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
Profits and Losses
Net profits and losses from operations of the Partnership
[computed without regard to any allowance for depreciation or cost
recovery deductions under the Internal Revenue Code of 1986, as
amended (the "Code")] for each taxable year of the Partnership shall
be allocated 98% to the Interest Holders and 2% to the General
Partners. Notwithstanding the foregoing, all depreciation and cost
recovery deductions allowed under the Code shall be allocated 2% to
the General Partners and 98% to the Taxable Interest Holders, as
defined in the Agreement.
The net profit of the Partnership from any sale or other
disposition of a Partnership property shall be allocated (with
ordinary income being allocated first) as follows: (a) first, an
amount equal to the aggregate deficit balances of the Partners'
Capital Accounts, as such term is defined in the Agreement, shall
be allocated to each Partner who or which has a deficit Capital
Account balance in the same ratio as the deficit balance of such
Partner's Capital Account bears to the aggregate of the deficit
balances of all Partners' Capital Accounts; (b) second, to the
Interest Holders until the Interest Holders have been allocated
profits equal to their 10% Cumulative Preferred Return; (c) third,
to the Interest Holders until the Interest Holders have been
allocated an amount of profit equal to the amount of their Adjusted
Investment; (d) fourth, to the General Partners until such time as
they have been allocated profits equal to a 2% preferred return; and
(e) thereafter, 95% to the Interest Holders and 5% to the
General Partners. The net loss of the Partnership from any sale or
other disposition of a Partnership property shall be allocated as
follows: (a) first, an amount equal to the aggregate positive
balances in the Partners' Capital Accounts, to each Partner in the
same ratio as the positive balance in such Partner's Capital Account
bears to the aggregate of all Partners' positive Capital Accounts
balances; and
(b) thereafter, 98% to the Interest Holders and 2% to the General
Partners.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
(3) TRANSACTIONS WITH RELATED PARTIES
An affiliate of the General Partners manages the Partnership's
real estate properties for an annual management fee equal to up to
1% of gross revenues derived from the properties. The property
management fee is subordinated, annually, to receipt by the Interest
Holders of an annual 10% non-cumulative, non-compounded return on
Adjusted Investment (as defined).
The Partnership pays affiliates of the General Partners selling
commissions of 8-1/2% of the capital contributions received for
Units sold by the affiliates.
An affiliate of one of the General Partners provides securities
and real estate counsel to the Partnership.
Fees, commissions and other expenses paid or payable to the
General Partners or its affiliates for the years ended December 31,
1995, 1994 and 1993 were as follows:
1995 1994 1993
Selling commissions $34,935 $33,388 $32,501
Management fees 24,998 25,596 24,969
Reimbursable operating
expenses 69,808 74,400 73,998
Legal fees 349 4,370 3,643
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
(4) LEASES
The Partnership's rental income is principally obtained from
tenants through rental payments provided under triple-net
noncancelable operating leases. The leases provide for a base
minimum annual rent and increases in rent such as through
participation in gross sales above a stated level.
The following is a schedule of noncancelable future minimum
rental payments due to the Partnership under operating leases of
Partnership properties as of December 31, 1995:
Year ending December 31:
1996 $2,148,445
1997 2,148,445
1998 2,148,445
1999 2,148,445
2000 2,115,856
Thereafter 5,279,355
$15,988,991
Additional rent based on percentages of tenant sales increases
was $354,310, $347,616 and $289,522, in 1995, 1994 and 1993,
respectively.
Approximately 42% and 39% of the Partnership's rental income is
from properties operated as Ponderosa and Taco Bell restaurants,
respectively. The Partnership is subject to some risk of loss
should adverse events affect those Ponderosa and Taco Bell
restaurants and, in turn, adversely affect the lesees' ability to
pay rent to the Partnership.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
(5) WORKING CAPITAL RESERVES
The Partnership set aside 1% of the gross proceeds of its
Offering as a working capital reserve. At any time two years
subsequent to the termination of the Partnership's offering (May 19,
1990), it became permissible to reduce the working capital reserve
to an amount equal to not less than 1/2% of the proceeds of the
Offering ($125,000) if the General Partners believed such reduction
to be in the best interests of the Partnership and the Interest
Holders. As a result thereof, $125,000 was paid to an affiliate of
the General Partners in the fourth quarter of 1990 as an additional
Acquisition Fee and $125,000 remains in reserve.
(6) EQUITY INVESTMENTS
The Partnership owns equity interests in the Brauvin High Yield
Venture, Brauvin Funds Joint Venture and Brauvin Gwinnett County
Venture and reports its investments on the equity method. The
following are condensed financial statements for the Brauvin High
Yield Venture, Brauvin Funds Joint Venture and Brauvin Gwinnett
County Venture:
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
BRAUVIN HIGH YIELD VENTURE
December 31, December 31,
1995 1994
Land and buildings, net $5,163,083 $5,283,334
Other assets 21,792 9,096
$5,184,875 $5,292,430
Liabilities $ 5,126 $ 69,363
Partners' capital 5,179,749 5,223,067
$5,184,875 $5,292,430
Years Ended December 31,
1995 1994 1993
Rental and other income $728,839 $690,061 $688,257
Expenses:
Depreciation 120,251 120,250 120,250
Management fees 7,133 7,055 6,990
Operating and
Administrative 4,772 4,223 6,040
132,156 131,528 133,280
Net Income $596,683 $558,533 $554,977
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
BRAUVIN FUNDS JOINT VENTURE
December 31, December 31,
1995 1994
Land and buildings, net $4,816,500 $4,926,596
Other assets 284,969 217,144
$5,101,469 $5,143,740
Liabilities $ 2,004 $ --
Partners' capital 5,099,465 5,143,740
$5,101,469 $5,143,740
Year Ended December 31,
1995 1994 1993
Rental and other income $720,088 $714,588 $714,588
Expenses:
Depreciation 110,096 110,096 110,096
Management fees 6,838 6,763 6,159
Operating and
Administrative 7,429 3,682 4,508
124,363 120,541 120,763
Net Income $595,725 $594,047 $593,825
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the years ended December 31, 1995, 1994 and 1993
BRAUVIN GWINNETT COUNTY VENTURE
December 31, December 31,
1995 1994
Land and buildings, net $2,376,510 $2,422,262
Other assets 41,567 45,198
$2,418,077 $2,467,460
Liabilities $ 22,702 $ 19,792
Partners' capital 2,395,375 2,447,668
$2,418,077 $2,467,460
Period From
November 9, 1993
(inception)
Year Ended Year Ended through
December 31, December 31, December 31,
1995 1994 1993
Rental and other income $264,248 $241,451 $ 35,216
Expenses:
Depreciation 45,752 45,752 7,625
Management fees 2,497 2,520 198
Operating and
Administrative 8,292 8,510 34,762
56,541 56,782 42,585
Net Income (Loss) $207,707 $184,669 $ (7,369)
SCHEDULE III
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
Gross Amount at Which Carried
Initial Cost (a) at Close of Period (b)
Buildings, Buildings,
Personal Cost of Personal
Property and Subsequent Property and Accumulated Date
Description Encumbrances(c) Land Improvements Improvements Land Improvements Total(a) Depreciation Acquired
Taco Bells $0 $2,245,312 $5,239,062 $0 $2,245,312 $ 5,239,062$ 7,484,374 $1,185,256 12/87-2/88
Ponderosas 0 3,167,168 7,390,057 0 3,167,168 7,390,057 10,557,225 1,506,459 9/88-11/89
Children's World
Learning Centers 0 356,288 831,338 0 356,288 831,338 1,187,626 145,058 7/89
Unallocated additional
Acquisition Fee 0 0 93,750 0 0 93,750 93,750 15,349 11/90-12/90
$0 $5,768,768 $13,554,207 $0 $5,768,768 $13,554,207 $19,322,975 $2,852,122
NOTES:
(a) The cost of this real estate is $19,322,975 for tax purposes (unaudited). The buildings are depreciated over
approximately 35 years using the straight line method. The properties were constructed between 1969 and 1986.
(b) The following schedule summarizes the changes in the Partnership's real estate and accumulated depreciation balances:
Real estate 1995 1994 1993
Balance at beginning of year $19,322,975 $19,322,975 $19,322,975
Additions-land, buildings and improvements 0 0 0
Balance at end of year $19,322,975 $19,322,975 $19,322,975
Accumulated depreciation 1995 1994 1993
Balance at beginning of year $ 2,465,487 $ 2,078,851 $ 1,692,216
Provision for depreciation 386,635 386,636 386,635
Balance at end of year $ 2,852,122 $ 2,465,487 $ 2,078,851
(c) Encumbrances - Brauvin High Yield Fund L.P. did not borrow cash in order to purchase its properties. 100% of the land
and buildings were paid for with funds contributed by the Interest Holders.
EXHIBITS
TO
BRAUVIN HIGH YIELD FUND L.P.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 1995
EXHIBIT INDEX
Exhibit (21) Subsidiaries of the Registrant
Exhibit (27) Financial Data Schedule
Exhibit 21
Name of Subsidiary State of Formation
Brauvin High Yield Venture Illinois
Brauvin Funds Joint Venture Illinois
Brauvin Gwinnett County Venture Illinois