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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, 2000
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.)
30 North LaSalle Street, Chicago, Illinois 60602
(Address of principal executive offices) (Zip Code)
(312) 759-7660
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b)of the Exchange Act:
Title of each class Name of each exchange on
which registered
None None
Securities registered pursuant to Section 12(g)of the Exchange 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.
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.
2000 FORM 10-K ANNUAL REPORT
INDEX
PART I Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 32
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . 32
PART II
Item 5. Market for the Registrant's Units and Related
Security Holder Matters. . . . . . . . . . . . . . . . . . . . 33
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 34
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 36
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk. . . . . . . . . . . . . . . . . . . . . . . . . . 42
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . 43
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . 43
PART III
Item 10. Directors and Executive Officers of the Partnership . . . . . 44
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . 46
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . . . . 48
Item 13. Certain Relationships and Related Transactions. . . . . . . . 48
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 50
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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 $2,922,102 has
been raised through the sale of additional Units pursuant to the
Partnership's distribution reinvestment plan (the "Plan") through
December 31, 2000. These Units were purchased from the Units
reserved for the Plan after the termination of the Offering. As
of December 31, 2000, $1,647,070 of Units sold through the
Offering have been repurchased 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.
A Taxable Interest Holder is 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.
A Tax-Exempt Interest Holder is 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 an investor described in (a)
above; and (c) each subsequent transferee of any Units from an
Interest Holder described in (a) and (b) above.
It was originally contemplated that the Partnership would
dispose of its properties approximately six to nine years after
their acquisition with a view towards liquidation of the
Partnership within that period.
Pursuant to the terms of an agreement and plan of merger dated
as of June 14, 1996, as amended March 24, 1997, June 30, 1997,
September 30, 1997, December 31, 1997, March 31, 1998 and June 30,
1998 (the "Merger Agreement"), the Partnership proposed to merge
with and into Brauvin Real Estate Funds, L.L.C., a Delaware
limited liability company affiliated with certain of the General
Partners (the "Purchaser") through a merger (the "Merger") of its
Units. On November 8, 1996, the Interest Holders voted on an
amendment of the Agreement allowing the Partnership to sell or
lease property to affiliates (this amendment, together with the
Merger shall be referred to herein as the "Transaction"). The
Merger will not be consummated primarily as a result of litigation
that was subsequently settled on April 13, 1999.
Pursuant to the settlement agreement the General Partners were
indemnified for all of their legal costs and expenses related to
the lawsuit, and the General Partners were released from the
claims that were alleged or could have been alleged in the class
action lawsuit. In addition the Partnerships' retained a third-
party commercial real estate firm which, under the supervision of
an independent special master (the "Special Master") and with the
cooperation of the General Partners, marketed the Partnerships'
properties in order to maximize the return to the Interest Holders
(the "Sale Process"). The Sale Process was designed to result in
an orderly liquidation of the Partnership, through a sale of
substantially all of the assets of the Partnership, a merger or
exchange involving the Partnership, or through another liquidating
transaction which the Special Master determined was best suited to
maximize value for the Interest Holders. Consummation of such
sale, merger, exchange, or other transaction will be followed by
the orderly distribution of net liquidation proceeds to the
Interest Holders.
The General Partners have agreed, as part of the settlement
agreement, to use their best efforts to continue to manage the
affairs of the Partnership in accordance with their obligations
under the Partnership Agreement, to cooperate fully with the
Special Master and to waive certain brokerage and other fees. In
consideration of this, the General Partners will be released from
the claims of the class action lawsuit and indemnified for the
legal expenses they incurred related to the lawsuit.
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's Assets in an amount of
approximately $13,882,300. This bid was subject to certain
contingencies and was subequently rejected by the potential
purchaser.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's Assets for approximately $12,550,000 (inclusive of
all the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. The
remaining property was sold in January 2001 to an affiliated
purchaser.
The terms of the transactions between the Partnership and
affiliates of the General Partners are set forth in Item 13 below.
Reference is hereby made for a description of such terms and
transactions.
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 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 depended in part on the
ability of those lessees to compete with similar businesses in
their respective vicinities.
The Partnership has and continues to compete with various other
real estate entities for the placement of new tenants and
ultimately for the sale of the Partnership's real estate assets.
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. The last
remaining property owned as of December 31, 2000 is 100% occupied
and was paid for in cash, without any financing. The General
Partners believe that the Partnership's property are adequately
insured.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. As of
December 31, 2000 the remaining property continues to be under
contract to an affiliated purchaser. In January 2001, the
Partnership sold its last remaining property to an affiliated
purchaser.
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 was to 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
owned 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.
On August 7, 2000 this property was sold for approximately
$250,000 less expenses of approximately $12,600 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $42,000.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $1,500.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
In December 1998, the Partnership and the tenant agreed to an
additional lease term for this property to begin in October 2003
and expire in October 2013.
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.
On August 7, 2000 this property was sold for approximately
$150,000 less expenses of approximately $10,000 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,400.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $36,300.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $24,000 related to an other than temporary decline
in the value of real estate for the Taco Bell located in Warner
Robins, Georgia. This impairment has been recorded as a reduction
of the property's cost, and allocated to the land and buildings
based on the original acquisition cost allocation of 30% (land)
and 70% (building).
In December 1998, the Partnership and the tenant agreed to an
additional lease term for this property to begin in August 2002
and expire in August 2012.
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.
On August 7, 2000 this property was sold for approximately
$130,000 less expenses of approximately $9,500 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,500.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $36,000.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $64,000 related to an other than temporary decline
in the value of real estate for the Taco Bell located in Albany,
Georgia. This impairment has been recorded as a reduction of the
property's cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
In December 1998, the Partnership and the tenant agreed to an
additional lease term for this property to begin in August 2002
and expire in August 2012.
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.
On August 7, 2000 this property was sold for approximately
$100,000 less expenses of $6,500 to an affiliated party. This
sale resulted in a loss to the Partnership of approximately
$1,900.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $76,400.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
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.
On August 7, 2000 this property was sold for approximately
$170,000 less expenses of approximately $10,600 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $61,100.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $89,600.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $27,000 related to an other than temporary decline
in the value of real estate for the Taco Bell located in Dunedin,
Florida. This impairment has been recorded as a reduction of the
property's cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
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.
This property was closed in 1997 but remained current on its
rental payments per the terms of the lease.
On August 7, 2000 this property was sold for approximately
$82,200 less expenses of approximately $8,100 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,100.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $128,300.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $36,000 related to an other than temporary decline
in the value of real estate for the Taco Bell located in
Logansport, Indiana. This impairment has been recorded as a
reduction of the property's cost, and allocated to the land and
buildings based on the original acquisition cost allocation of 30%
(land) and 70% (building).
In the first quarter of 1999, the tenant gave the Partnership
notice that they intend to re-open this facility as a Blimpie's
restaurant. Subsequently, this Blimpie's facility was also closed
and remained vacant at December 31, 1999.
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.
On August 7, 2000 this property was sold for approximately
$250,000 less expenses of approximately $13,000 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $74,400.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $127,300.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $6,000 related to an other than temporary decline in
the value of real estate for the Taco Bell located in Dover, Ohio.
This impairment has been recorded as a reduction of the property's
cost, and allocated to the land and buildings based on the
original acquisition cost allocation of 30% (land) and 70%
(building).
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.
On August 7, 2000 this property was sold for approximately
$190,000 less expenses of approximately $9,900 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,600.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $21,200.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $308,000 related to an other than temporary decline
in the value of real estate for the Taco Bell located in
Greenville, North Carolina. This impairment has been recorded as
a reduction of the property's cost, and allocated to the land and
buildings based on the original acquisition cost allocation of 30%
(land) and 70% (building).
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.
In December 1998, the tenant closed and vacated this property.
However, the tenant remained current on all its lease obligations
with the Partnership.
On August 7, 2000 this property was sold for approximately
$75,000 less expenses of approximately $7,500 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,800.
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.
On August 7, 2000 this property was sold for approximately
$201,000 less expenses of approximately $11,800 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,900.
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.
On August 7, 2000 this property was sold for approximately
$115,000 less expenses of approximately $9,300 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,000.
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.
On December 13, 1999, the Partnership sold this property to an
unaffiliated third party for a sale price of approximately
$350,000. This sale resulted in a gain to the Partnership of
approximately $56,100. The former proposed Partnership purchaser
was to be allocated an additional gain of approximately $25,500
related to this sale. The amount due to the former proposed
Partnership purchaser is included in accounts payable in the
statement of net assets in liquidation at December 31, 1999.
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.
On August 7, 2000 this property was sold for approximately
$200,000 less expenses of approximately $10,700 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,700.
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.
On August 7, 2000 this property was sold for approximately
$280,000 less expenses of approximately $12,800 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $41,800.
During the third quarter of 1998, the Partnership recorded an
impairment of $5,000 related to an other than temporary decline in
the value of real estate for the Taco Bell located in Dalton,
Georgia. This impairment has been recorded as a reduction of the
property's cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
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.
On August 7, 2000 this property was sold for approximately
$150,000 less expenses of approximately $9,600 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,700.
During the third quarter of 1998, the Partnership recorded an
impairment of $1,000 related to an other than temporary decline in
the value of real estate for the Taco Bell located in Ashland,
Ohio. This impairment has been recorded as a reduction of the
property's cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
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.
On August 7, 2000 this property was sold for approximately
$225,000 less expenses of approximately $11,600 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,900.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $16,700.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $9,000 related to an other than temporary decline in
the value of real estate for the Taco Bell located in Martinez,
California. This impairment has been recorded as a reduction of
the property's cost, and allocated to the land and buildings based
on the original acquisition cost allocation of 30% (land) and 70%
(building).
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.
On August 7, 2000 this property was sold for approximately
$275,000 less expenses of approximately $13,300 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $5,800.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $33,400.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $19,000 related to an other than temporary decline
in the value of real estate for the Taco Bell located in Phoenix,
Arizona. This impairment has been recorded as a reduction of the
property's cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
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.
On August 7, 2000 this property was sold for approximately
$269,560 less expenses of approximately $12,200 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,800.
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.
On January 5, 2001 this property was sold to an affiliated party
for $175,000.
During the third quarter of 1998, the Partnership recorded an
impairment of $7,000 related to an other than temporary decline in
the value of real estate for the Taco Bell located in Spartanburg,
South Carolina. This impairment has been recorded as a reduction
of the property's cost, and allocated to the land and buildings
based on the original acquisition cost allocation of 30% (land)
and 70% (building).
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.
On August 7, 2000 this property was sold for approximately
$184,000 less expenses of approximately $11,100 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,000.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $30,300.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
In March 1999, the Partnership agreed to an assignment of the
tenant's lease for this property to Desert De Oro Foods, Inc.
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.
On August 7, 2000 this property was sold for approximately
$708,000 less expenses of approximately $27,200 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,300.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $153,500.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
In connection with the previously proposed Merger, the
Partnership undertook environmental studies of potentially
affected properties. The Brandon property was identified by the
environmental study as having a potential environmental issue. A
remedial investigation and feasibility study was completed, and
the results of that study were forwarded to the appropriate
authorities. The study indicated a range of viable remedial
approaches, but agreement was not reached with the authorities on
the final remediation approach. The Partnership accrued its best
estimate of the costs that would be incurred to complete the
environmental remediation at this property, which was estimated to
be $80,000.
In connection with the purchase of the above property by the
Partnership, the Partnership was to be reimbursed by the former
owner for environmental clean-up. The Partnership therefore
sought reimbursement of the costs from this former owner. No
estimate of the collectibility of this reimbursement can be made
at this time.
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.
On August 7, 2000 this property was sold for approximately
$657,000 less expenses of approximately $23,800 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,900.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $121,500.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
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.
On August 7, 2000 this property was sold for approximately
$834,000 less expenses of approximately $26,000 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,400.
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.
In March 1999, the tenant gave the Partnership notice of its
intent to purchase the property under the tenant's existing
purchase option contained within the lease. The purchase price of
the property was based on the appraised value of the asset.
On October 15, 1999, the Partnership sold this property to the
tenant for a sale price of approximately $715,000. This sale
resulted in a gain to the Partnership of approximately $189,600.
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 face brick.
On August 7, 2000 this property was sold for approximately
$646,000 less expenses of approximately $23,900 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,900.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $152,700.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $125,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in Chenango,
New York. This impairment has been recorded as a reduction of the
property's cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
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.
On August 7, 2000 this property was sold for approximately
$481,000 less expenses of approximately $18,700 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,000.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $124,000.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $89,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in New
Windsor, New York. This impairment has been recorded as a
reduction of the property's cost, and allocated to the land and
buildings based on the original acquisition cost allocation of 30%
(land) and 70% (building).
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.
On August 7, 2000 this property was sold for approximately
$602,000 less expenses of approximately $22,700 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,400.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $90,600.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $32,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in
Wadsworth, Ohio. This impairment has been recorded as a reduction
of the property's cost, and allocated to the land and buildings
based on the original acquisition cost allocation of 30% (land)
and 70% (building).
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.
On August 7, 2000 this property was sold for approximately
$507,000 less expenses of approximately $19,100 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,400.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $140,900.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
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.
During the third quarter of 1998, the Partnership recorded an
impairment of $108,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in Grand
Rapids, Michigan. This impairment has been recorded as a
reduction of the property's cost, and allocated to the land and
buildings based on the original acquisition cost allocation of 30%
(land) and 70% (building).
On October 6, 1999, the Partnership sold this property to an
unaffiliated third party for approximately $750,000. This sale
resulted in a gain to the Partnership of approximately $70,800.
Buffalo, New York
Unit 667 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.
Ponderosa closed this facility on May 27, 1997, but continued
to pay rent to the Partnership per the terms of the lease.
On August 7, 2000 this property was sold for approximately
$551,000 less expenses of approximately $22,600 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,900.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $150,200.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $222,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in Buffalo,
New York. This impairment has been recorded as a reduction of the
property's cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
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.
On August 7, 2000 this property was sold for approximately
$599,000 less expenses of approximately $22,100 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $1,400.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $128,100.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
During the third quarter of 1998, the Partnership recorded an
impairment of $63,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in
Westbourne, Ohio. This impairment has been recorded as a
reduction of the property's cost, and allocated to the land and
buildings based on the original acquisition cost allocation of 30%
(land) and 70% (building).
Ponderosa Joint Venture:
Louisville, Kentucky
Unit 110 is located at 4801 Dixie Highway. The building, built
in 1969, consists of 5,100 square feet situated on a 62,496 square
foot parcel. The building was constructed utilizing wood siding
over concrete block with flagstone.
On August 7, 2000 this property was sold for approximately
$565,000 less expenses of approximately $17,900 to an affiliated
party. This sale resulted in a gain to the Ponderosa Joint
Venture of approximately $600.
Pursuant to the adoption of the liquidation basis of accounting,
the Ponderosa Joint Venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the
Ponderosa Joint Venture recording a reduction in the value of this
property of approximately $15,300.
Cuyahoga Falls, Ohio
Unit 268 is located at 1641 State Road. The building, built in
1973, consists of 5,587 square feet situated on a 40,228 square
foot parcel. The building was constructed utilizing wood siding
over concrete block.
In September 1997, Ponderosa and the Ponderosa Joint Venture
agreed to sub-lease this property to a local franchisee.
Ponderosa continues to remain responsible to the Ponderosa Joint
Venture for all rent and certain occupancy expenses through the
original lease term.
On August 7, 2000 this property was sold for approximately
$589,000 less expenses of approximately $22,000 to an affiliated
party. This sale resulted in a loss to the Ponderosa Joint
Venture of approximately $1,000.
During the third quarter of 1998, the Ponderosa Joint Venture
recorded an impairment of $8,000 related to an other than
temporary decline in the value of real estate for the Ponderosa
located in Cuyahoga Falls, Ohio. This impairment has been
recorded as a reduction of the property's cost, and allocated to
the land and buildings based on the original acquisition cost
allocation of 30% (land) and 70% (building).
Tipp City, Ohio
Unit 785 is located at 135 South Garber. The building, built
in 1980, consists of 6,080 square feet situated on a 53,100 square
foot parcel. The building was constructed utilizing wood siding
over concrete block.
Ponderosa closed this facility on June 1, 1997, but continues
to pay rent to the Partnership per the terms of lease.
In April of 1999, the property was subleased to an operator of
a sports bar concept through the remaining term of the original
lease. The original tenant remains fully liable under the terms
of the original lease through maturity.
On August 7, 2000 this property was sold for approximately
$517,000 less expenses of approximately $17,800 to an affiliated
party. This sale resulted in a gain to the Ponderosa Joint
Venture of approximately $600.
Pursuant to the adoption of the liquidation basis of accounting,
the Joint Venture Partnership's assets were adjusted to net
realizable amounts. This adjustment process resulted in the
Ponderosa Joint Venture recording a reduction in the value of this
property of approximately $96,700.
During the third quarter of 1998, the Ponderosa Joint Venture
recorded an impairment of $130,000 related to an other than
temporary decline in the value of real estate for the Ponderosa
located in Tipp City, Ohio. This impairment has been recorded as
a reduction of the property's cost, and allocated to the land and
buildings based on the original acquisition cost allocation of 30%
(land) and 70% (building).
Mansfield, Ohio
Unit 850 is located at 1075 Ashland Road. The building, built
in 1980, consists of 5,600 square feet situated on a 104,500
square foot parcel. The building was constructed utilizing wood
siding over concrete block and flagstone.
In January 1998, the Ponderosa Joint Venture sold this closed
property to an unaffiliated third party for approximately
$750,000. This sale resulted in an immaterial loss to the joint
venture.
Tampa, Florida
Unit 1060 is located at 4420 West Gandy. The building, built
in 1986, consists of 5,777 square feet situated on a 50,094 square
foot parcel. The building was constructed utilizing wood siding
over concrete block.
On August 7, 2000 this property was sold for approximately
$736,000 less expenses of approximately $24,100 to an affiliated
party. This sale resulted in a gain to the Ponderosa Joint
Venture of approximately $400.
Pursuant to the adoption of the liquidation basis of accounting,
the Ponderosa Joint Venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the
Ponderosa Joint Venture recording a reduction in the value of this
property of approximately $69,500.
Mooresville, Indiana
Unit 1057 is located at 499 South Indiana Street. The building,
built in 1981, consists of 6,770 square feet situated on a 63,525
square foot parcel. The building was constructed utilizing wood
siding over concrete block.
On August 7, 2000 this property was sold for approximately
$665,000 less expenses of approximately $20,900 to an affiliated
party. This sale resulted in a loss to the Ponderosa Joint
Venture of approximately $400.
Pursuant to the adoption of the liquidation basis of accounting,
the Ponderosa Joint Venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the
Ponderosa Joint Venture recording a reduction in the value of this
property of approximately $93,400.
During the third quarter of 1998, the Ponderosa Joint Venture
recorded an impairment of $68,000 related to an other than
temporary decline in the value of real estate for the Ponderosa
located in Mooresville, Indiana. This impairment has been
recorded as a reduction of the property's cost, and allocated to
the land and buildings based on the original acquisition cost
allocation of 30% (land) and 70% (building).
Scandinavian Health Spa:
Glendale, Arizona
The Partnership has a 49% interest in a joint venture with an
affiliated real estate limited partnership that purchased the
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.
On August 7, 2000 this property was sold for approximately
$6,250,000 less expenses of approximately $133,400 to an
affiliated party. This sale resulted in a gain to the joint
venture of approximately $1,693,300.
Pursuant to the adoption of the liquidation basis of accounting,
the joint venture partnership's assets were adjusted to net
realizable amounts. This adjustment process resulted in the joint
venture partnership recording a reduction in the value of this
property of approximately $9,100.
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.
On August 7, 2000 this property was sold for approximately
$263,000 less expenses of approximately $14,600 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,400.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $126,900.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
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.
On August 7, 2000 this property was sold for approximately
$142,000 less expenses of approximately $10,300 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,200.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts.
This adjustment process resulted in the Partnership recording a
reduction in the value of this property of approximately $135,600.
This adjustment has been recorded as part of the adjustment to
liquidation basis on the Partnership's statement of operations for
the period June 19, 1999 to December 31, 1999.
CompUSA:
Duluth, Georgia
The Partnership owned 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.
On December 30, 1999, a majority of the interests in the joint
venture were Merged. The purchaser of the other interests also
offered to purchase the Partnership's 23.4% interest in the joint
venture. Upon receiving approval from the Special Master the
Partnership sold its interest in the joint venture for
approximately $498,200.
Blockbuster Video:
Callaway, Florida
The Partnership owned a 16.0% interest in a joint venture with
affiliated public real estate limited partnerships that acquired
the land and building underlying a Blockbuster Video store. The
property is located at 123 N. Tydall Parkway on the major arterial
in the Panama City, Florida area. The property contains a 6,466
square foot building located on a 40,075 square foot parcel of
land.
On December 30, 1999, a majority of the interests in the joint
venture were Merged. The purchaser of the other interests also
offered to purchase the Partnership's 16% interest in the joint
venture. Upon receiving approval from the Special Master the
Partnership sold its interest in the joint venture for
approximately $143,100.
The following table summarizes the operations of the
Partnership's properties.
BRAUVIN HIGH YIELD FUND
SUMMARY OF OPERATING DATA
DECEMBER 31, 2000
2000
PERCENT OF 2000 PERCENT LEASE
PURCHASE ORIGINAL RENTAL OF RENTAL EXPIRATION RENEWAL
PROPERTIES (A) PRICE UNITS SOLD INCOME INCOME DATES OPTIONS
49% OF 1 SCANDINAVIAN HEALTH SPA $ 2,572,500 10.3% $ 211,912 13.7% 2009 4 FIVE YEAR OPTIONS
1% OF 6 PONDEROSA RESTAURANTS (B) 56,850 0.2% 3,861 0.2% 2003 4 FIVE YEAR OPTIONS
23.4% OF 1 COMPUSA STORE (C) 549,900 2.2% 0 0.0% 2008 4 FIVE YEAR OPTIONS
20 TACO BELL RESTAURANTS (D) 6,770,707 27.1% 618,318 39.8% 2000-2006 NONE
11 PONDEROSA RESTAURANTS (E) 10,087,611 40.4% 611,844 39.5% 2003 4 FIVE YEAR OPTIONS
2 CHILDREN'S WORLD LEARNING CENTERS 1,096,078 4.4% 90,390 5.8% 2003-2005 4 FIVE YEAR OPTIONS
16.0% of 1 BLOCKBUSTER
VIDEO STORE (F) 162,213 .6% 15,682 1.0% 2006 3 FIVE YEAR OPTIONS
$21,295,859 85.2% $1,552,007 100.0%
GENERAL 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 FROM 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 VENTURES.
Note (A) - ON AUGUST 7, 2000, ALL OF THE PARTNERSHIP PROPERTIES WERE SOLD, WITH THE EXCEPTION OF ONE TACO BELL
LOCATED IN SPARTANBURG AND THE PROPERTIES THAT WERE PREVIOUSLY SOLD AS DETAILED BELOW.
(B) - IN JANUARY 1998, ONE OF THE JOINT VENTURE PROPERTIES WAS SOLD.
(C) - IN DECEMBER 1999, THE PARTNERSHIP SOLD ITS INTEREST IN THIS JOINT VENTURE.
(D) - IN DECEMBER 1999, THE PARTNERSHIP SOLD ONE OF ITS TACO BELL PROPERTIES.
(E) - IN THE LAST QUARTER OF 1999, THE PARTNERSHIP SOLD TWO OF ITS PONDEROSA PROPERTIES.
(F) - IN DECEMBER 1999, THE PARTNERSHIP SOLD ITS INTEREST IN THIS JOINT VENTURE.
Risks of Ownership
Prior to the sale of the Partnership's properties the
possibility existed that the tenants may have been 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 had an adverse
effect on the financial position of the Partnership. Furthermore,
the Partnership may have been 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 have been readily marketable to a new
tenant without substantial capital improvements or remodeling.
Such improvements may have required expenditure of Partnership
funds otherwise available for distribution.
Item 3. Legal Proceedings.
Two legal actions, as hereinafter described, against the General
Partners of the Partnership and affiliates of such General
Partners, as well as against the Partnership on a nominal basis in
connection with the Merger, have been settled. On April 13, 1999,
all the parties to the litigation reached an agreement to settle
the litigation, subject to the approval by the United States
District Court for the Northern District of Illinois. This
approval was obtained on June 18, 1999. The terms of the
settlement agreement, along with a Notice to the Class, were
forwarded to the Interest Holders in the second quarter of 1999.
One additional legal action, which was dismissed on January 28,
1998 had also been brought against the General Partners of the
Partnership and affiliates of such General Partners, as well as
the Partnership on a nominal basis in connection with the Merger.
With respect to these actions the Partnership and the General
Partners and their named affiliates denied all allegations set
forth in the complaints and vigorously defended against such
claims.
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, 2000, there were approximately 1,821 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 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 2000, 1999 and 1998
were $9,985,104, $4,418,735, and $1,974,310, respectively. Prior
to the commencement of the Partnership's proxy solicitation in
August 1996, distributions were paid four times per year, within
60 days following the end of each calendar quarter. See Item 7.
Included in the 2000 and 1999 distributions is a return of capital
distribution of $8,041,249 and $1,675,981, respectively, all
remaining distributions represent cash flow from operations.
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
(Not Covered By Independent Auditor's Report)
Item 6. Selected Financial Data.
Years Ended December 31, 2000, 1999 and 1998
2000 1999(c) 1998
Selected Income Statement Data:
Rental Income $ 1,317,733 $2,410,629 $ 2,483,451
Interest and other 221,612 82,896 81,257
Net Income 633,009 145,413 816,736
Net Income Per Unit (a) $ 0.24 $ 0.06 $ 0.30
Selected Balance Sheet Data:
Cash and Cash Equivalents $ 4,744,948 $ 1,681,705 $ 1,478,616
Real estate held for sale 171,937 10,998,886 --
Land and Buildings -- -- 18,177,975
Investment in Brauvin High
Yield Venture -- 15,543 18,726
Investment in Brauvin Funds
Joint Venture -- 2,177,679 2,413,241
Investment in Brauvin
Gwinnett County Venture -- -- 534,901
Investment in Brauvin Bay
County Venture -- -- 165,884
Total Assets 5,154,780 15,102,008 18,802,917
Cash Distributions to
General Partners -- 55,603 105,317
Cash Distributions to
Interest Holders (b) 9,985,104 4,418,735 1,974,310
Cash Distributions to
Interest Holders Per
Unit(a) $ 3.80 $ 1.68 $ 0.75
(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 $6,683 and $8,340, paid to various states for
income taxes on behalf of all Interest Holders for the years
1999 and 1998, respectively. Also included in the 2000 amount
is a return of capital distribution of $8,041,249. The 1999
amount also includes a return of capital distribution of
$1,675,981.
(c) Information in this column reflects results on the Going
Concern Basis of accounting from January 1, 1999 to June 19,
1999 and on the Liquidation basis of accounting from June 20,
1999 to December 31, 1999.
The above selected financial data should be read in conjunction
with the financial statements and the related notes appearing
elsewhere in this annual report.
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
(Not Covered By Independent Auditor's Report)
Item 6. Selected Financial Data - continued.
Years Ended December 31, 1997 and 1996
1997 1996
Selected Income Statement Data:
Rental Income $ 2,514,561 $ 2,447,036
Interest and other Income 137,130 88,582
Net Income 2,006,768 1,836,063
Net Income Per Unit (a) $ 0.75 $ 0.69
Selected Balance Sheet Data:
Cash and Cash Equivalents $ 1,030,464 $ 2,231,481
Land and Buildings 19,322,975 19,322,975
Investment in Brauvin High
Yield Venture 31,007 32,374
Investment in Brauvin Funds
Joint Venture 2,431,037 2,450,861
Investment in Brauvin
Gwinnett County Venture 543,333 550,625
Investment in Brauvin
Bay County Venture 166,329 171,433
Total Assets 19,917,525 21,553,997
Cash Distributions to
General Partners -- 26,798
Cash Distributions to
Interest Holders (b) 3,753,547 1,321,381
Cash Distributions to
Interest Holders Per
Unit(a) $ 1.43 $ 0.50
(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 $1,989 and $8,682 paid to various states
income taxes on behalf of all Interest Holders for the
years 1997 and 1996, 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.
General
Certain statements in this Annual Report that are not historical
fact constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Discussions
containing forward-looking statements may be found in this section
and in the section entitled "Business." Without limiting the
foregoing, words such as "anticipates," "expects," "intends,"
"plans" and similar expressions are intended to identify forward-
looking statements. These statements are subject to a number of
risks and uncertainties. Actual results could differ materially
from those projected in the forward-looking statements. The
Partnership undertakes no obligation to update these forward-
looking statements to reflect future events or circumstances.
Year 2000
The "Year 2000" problem concerns the inability of computer
technology systems to correctly identify and process date sensitive
information beyond December 31, 1999. Many computers
automatically add the "19" prefix to the last two digits the
computer reads for the year when date information is needed in
computer software programs. Thus when a date beginning on January
1, 2000 is entered into a computer, the computer may interpret this
date as the year "1900" rather than "2000".
The computer information technology systems which support the
Partnership consists of a network of personal computers linked to
a server built using hardware and software from mainstream
suppliers. These systems do not have equipment that contain
embedded microprocessors, which may also pose a potential Year 2000
problem. Additionally, there is no internally generated software
coding to correct as all of the software is purchased and licensed
from external providers.
The Partnership utilizes two main software packages that contain
date sensitive information, (i) accounting and (ii) investor
relations. In 1997, a program was initiated and completed to
convert from the existing accounting software to a new software
program that is Year 2000 compliant. In 1998, the investor
relations software was also updated to a new software program that
is Year 2000 compliant. Management has determined that the Year
2000 issue will not pose significant operational problems for its
remaining computer software systems. All costs associated with
these conversions were expensed by the Partnership as incurred, and
were not material. Management does not believe that any further
expenditures will be necessary for the systems to be Year 2000
compliant. However, additional personal computers may be purchased
from time to time to replace existing machines.
Also in 1997, management of the Partnership initiated formal
communications with all of its significant third party vendors,
service providers and financial institutions to determine the
extent to which the Partnership is vulnerable to those third
parties failure to remedy their own Year 2000 issue. There can be
no guarantee that the systems of these third parties will be timely
converted and would not have an adverse effect on the Partnership.
The most reasonably likely worst case scenario for the
Partnership with respect to the Year 2000 issue would be the
inability of certain tenants to timely make their rental payments
beginning in January 2000. This could result in the Partnership
temporarily suffering a depletion of the Partnership's cash
reserves as expenses will need to be paid while the cash flows from
revenues are delayed. The Partnership has no formal Year 2000
contingency plan.
The Partnership has not experienced any material adverse impact
on its operations or its relationships with tenants, vendors or
others.
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 a 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.
On October 31, 1996, the Partnership purchased a 16.0% interest
in a joint venture with affiliated public real estate limited
partnerships (the "Bay County Venture"). The Bay County Venture
purchased real property upon which a newly constructed Blockbuster
Video store is operated. The property contains a 6,466 square foot
building located on a 40,075 square foot parcel of land.
The Partnership raised $25,000,000 through its initial offering
and an additional $2,922,102, as of December 31, 2000, through
Units purchased by certain Interest Holders investing their
distributions of Operating Cash Flow in additional Units through
the Plan, which process continued until the proxy solicitation
process began. As of December 31, 2000, Units valued at $1,647,070
have been repurchased 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 four year historical data for
distribution rates per unit:
Distribution
Date 2000(a) 1999(b) 1998 (c) 1997(d) 1996
February 15 $.2291 $.2898 $ -- $.2274 $.2500
May 15 .2074 .2490 .2473 .2013 .2500
August 15 .1578 .2398 .1920 .2745 --
November 15 .1275 .2626 .3088 .7245 --
(a) The February 15, 2000 distribution does not include a return of
capital of $0.3730 per Unit. The August 15, 2000 distribution does
not include a return of capital distribution of $2.6873 per unit.
(b) The 1999 distributions were made on May 17, 1999, August 15,
1999, November 15, 1999 and February 15, 2000. In addition not
included above was a $0.6379 per Unit return of capital distribution
on November 15, 1999.
(c) The 1998 distributions were made on May 8, 1998, August 15,
1998, November 15, 1998, and February 15, 1999.
(d) The 1997 distributions were made on March 31, 1997, July 15,
1997, October 22, 1997, and December 31, 1997.
Per the terms of the cash out Merger, the Partnership's net
earnings from April 1996 through July 1996 were to be distributed
to the Interest Holders in conjunction with the closing of the
Merger. However, because of the lengthy delay and the uncertainty
of the ultimate closing date, the General Partners decided to make
a significant distribution on December 31, 1997 of the Partnership's
earnings. Included in the December 31, 1997 distribution was any
prior period earnings including amounts previously reserved for
anticipated closing costs.
During the years ended December 31, 2000, 1999 and 1998, the
General Partners and their affiliates earned management fees of
$13,138, $24,322, and $25,119, respectively, and received $0,
$55,603, and $105,317 in Operating Cash Flow distributions for the
years ended December 31, 2000, 1999 and 1998, respectively. In
January 1998, the Partnership paid the General Partners
approximately $75,500 as an operating cash flow distribution for the
year ended December 31, 1997.
Pursuant to the terms of an agreement and plan of merger dated as
of June 14, 1996, as amended March 24, 1997, June 30, 1997,
September 30, 1997, December 31, 1997, March 31, 1998 and June 30,
1998 (the "Merger Agreement"), the Partnership proposed to merge
with and into Brauvin Real Estate Funds, L.L.C., a Delaware limited
liability company affiliated with certain of the General Partners
(the "Purchaser") through a merger (the "Merger") of its Units. On
November 8, 1996, the Interest Holders voted on an amendment of the
Agreement allowing the Partnership to sell or lease property to
affiliates (this amendment, together with the Merger shall be
referred to herein as the "Transaction"). The Merger will not be
consummated primarily as a result of litigation that was
subsequently settled on April 13, 1999.
Pursuant to the settlement agreement the General Partners were
indemnified for all of their legal costs and expenses related to the
lawsuit, and the General Partners were released from the claims that
were alleged or could have been alleged in the class action lawsuit.
In addition the Partnerships' retained a third-party commercial real
estate firm which, under the supervision of an independent special
master (the "Special Master") and with the cooperation of the
General Partners, marketed the Partnerships' properties in order to
maximize the return to the Interest Holders (the "Sale Process").
The Sale Process was designed to result in an orderly liquidation
of the Partnership, through a sale of substantially all of the
assets of the Partnership, a merger or exchange involving the
Partnership, or through another liquidating transaction which the
Special Master determined was best suited to maximize value for the
Interest Holders. Consummation of such sale, merger, exchange, or
other transaction will be followed by the orderly distribution of
net liquidation proceeds to the Interest Holders.
The General Partners have agreed, as part of the settlement
agreement, to use their best efforts to continue to manage the
affairs of the Partnership in accordance with their obligations
under the Partnership Agreement, to cooperate fully with the Special
Master and to waive certain brokerage and other fees. In
consideration of this, the General Partners will be released from
the claims of the class action lawsuit and indemnified for the legal
expenses they incurred related to the lawsuit.
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's Assets in an amount of
approximately $13,882,300. This bid was subject to certain
contingencies and was subsequently rejected by the potential
purchaser.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's Assets for approximately $12,550,000 (inclusive of all
the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. The
remaining property was sold in January 2001 to an affiliated
purchaser.
Results of Operations - Year ended December 31, 2000 (Liquidation
Basis) and the period June 19, 1999 to December 31, 1999
(Liquidation Basis) and the period January 1, 1999 to June 18, 1999
(Going Concern Basis)
As a result of the settlement agreement that was approved by the
United States District Court for the Northern District of Illinois
on June 18, 1999 the Partnership has begun the liquidation process
and, in accordance with accounting principles generally accepted in
the United States of America, the Partnership's financial statements
for periods subsequent to June 18, 1999 have been prepared on a
liquidation basis.
Prior to the adoption of the liquidation basis of accounting
depreciation was recorded on a straight line basis over the
estimated economic lives of the properties. Upon the adoption of
the liquidation basis of accounting, real estate held for sale was
adjusted to estimated net realizable value and no depreciation
expense has been recorded.
Further complicating comparisons between the various periods is
the August 7, 2000 sale of all but one of the Partnership's
properties.
Results of Operations - For the period January 1, 1999 to June 18,
1999 (Going Concern Basis) and the period June 19, 1999 to December
31, 1999 (Liquidation Basis) and the year ended December 31, 1998
(Going Concern Basis)
As discussed above the Partnership adopted the liquidation basis
of accounting, and in accordance with accounting principles
generally accepted in the United States of America, the
Partnership's financial statements for periods subsequent to June
19, 1999 have been prepared on a liquidation basis.
Comparisons between the various periods are complicated by the
change in the basis of the financial statements, however,
significant changes between the going concern basis of accounting
and the liquidation basis of accounting are detailed above.
Results of Operations - Years ended December 31, 1998 and 1997
Results of operations for the year ended December 31, 1998
reflected net income of $816,736 as compared to net income of
$2,006,768 for the year ended December 31, 1997, a decrease of
approximately $1,190,000. The decrease in net income is primarily
associated with a loss on impairment for an other than temporary
decline in value of the partnerships real estate in the amount of
$1,145,000.
Total income for the year ended December 31, 1998 was $2,564,708
as compared to $2,651,691 for the year ended December 31, 1997, a
decrease of approximately $87,000. The decrease in total income was
primarily a result of a 1997 one-time settlement of outstanding
issues with a major tenant of the Partnership which increased rental
income in 1997. Additionally, total income decreased as a result
of a decrease in interest income which was the result of decreased
funds invested during 1998.
Total expenses for the year ended December 31, 1998 were
$2,102,291 as compared to $997,660 for the year ended December 31,
1997, an increase of approximately $1,105,000. The increase in
expenses was primarily due to a loss on impairment recorded in 1998
in the amount of $1,145,000. Further increasing expenses between
1998 and 1997 was an increase in valuation fees of $135,000 which
was paid to the Financial Advisors. Partially offsetting increases
in expenses between 1998 and 1997 was a decrease in Transaction
costs and environmental remediation of approximately $75,600 and
$80,000, respectively.
Impact of Inflation
Since all but one of the Partnership's original property holdings
have been sold, the Partnership has some nominal risk associated
with inflation. This risk is the result of the timing of the final
distribution to the Limited Partners.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Partnership does not engage in any hedge transactions or
derivative financial instruments.
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 schedule, 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
have 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
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 M. 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. James L. Brault . . . . Vice President and Secretary
Mr. Thomas E. Murphy . . . . Treasurer and Chief Financial
Officer
The business experience during the past five years of the General
Partners and the principal officers and directors of the Corporate
General Partner are as follows:
MR. JEROME J. BRAULT (age 67) chairman of the board of directors,
president and chief executive officer of the Corporate General
Partner, as well as a principal shareholder of the Corporate General
Partner. He is a member and manager of Brauvin Real Estate Funds,
L.L.C. He is a member of Brauvin Capital Trust L.L.C. Since 1979,
he has been a shareholder, president and a director of
Brauvin/Chicago, Ltd. He is an officer, director and one of the
principal shareholders of various Brauvin entities which act as the
general partners of four other publicly registered real estate
programs. He is an officer, director and one of the principal
shareholders of Brauvin Associates, Inc., Brauvin Management
Company, Brauvin Advisory Services, Inc. and Brauvin Securities,
Inc., Illinois companies engaged in the real estate and securities
businesses. He is a director, president and chief executive officer
of Brauvin Net Lease V, Inc. He is the chief executive officer of
Brauvin Capital Trust, Inc. Mr. Brault received a B.S. in Business
from DePaul University, Chicago, Illinois in 1959.
MR. JAMES L. BRAULT (age 40) is a vice president and secretary
and is responsible for the overall operations of the Corporate
General Partner and other affiliates of the Corporate General
Partner. He is an officer of various Brauvin entities which act as
the general partners of four other publicly registered real estate
programs. Mr. Brault is executive vice president and assistant
secretary and is responsible for the overall operations of Brauvin
Management Company. He is also an executive vice president and
secretary of Brauvin Net Lease V, Inc. He is a manager of Brauvin
Real Estate Funds, L.L.C., Brauvin Capital Trust, L.L.C. and
BA/Brauvin L.L.C. He is the president of Brauvin Capital Trust,
Inc. Prior to joining the Brauvin organization in May 1989, he was
a Vice President of the Commercial Real Estate Division of the First
National Bank of Chicago ("First Chicago"), based in their
Washington, D.C. office. Mr. Brault joined First 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 million. Mr. Brault received a
B.A. in Economics from Williams College, Williamstown, Massachusetts
in 1983 and an M.B.A. in Finance and Investments from George
Washington University, Washington, D.C. in 1987. Mr. Brault is the
son of Mr. Jerome J. Brault.
MR. THOMAS E. MURPHY (age 34) is the treasurer and chief
financial officer of the Corporate General Partner and other
affiliates of the Corporate General Partner. He is the chief
financial officer of various Brauvin entities which act as the
general partners of four other publicly registered real estate
programs. Mr. Murphy is also the chief financial officer of Brauvin
Management Company, Brauvin Financial, Inc., Brauvin Securities,
Inc. and Brauvin Net Lease V, Inc. He is the treasurer, chief
financial officer and secretary of Brauvin Capital Trust, Inc. He
is responsible for the Partnership's accounting and financial
reporting to regulatory agencies. He joined the Brauvin
organization in July 1994. Prior to joining the Brauvin
organization he was in the accounting department of Zell/Merrill
Lynch and First Capital Real Estate Funds where he was responsible
for the preparation of the accounting and financial reporting for
several real estate limited partnerships and corporations. Mr.
Murphy received a B.S. in Accounting from Northern Illinois
University in 1988. Mr. Murphy is a Certified Public Accountant and
is a member of the Illinois Certified Public Accountants Society.
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 3 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 in 2000, 1999 or 1998.
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 Interest Holders of a 10% non-cumulative,
non-compounded annual return on Adjusted Investment. In 2000, 1999
and 1998, the Partnership paid management fees of $14,699, $24,777
and $25,278, 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 their affiliates
for the years ended December 31, 2000, 1999 and 1998:
2000 1999 1998
Management fees $ 13,138 $ 24,322 $ 25,119
Reimbursable operating expenses 239,625 148,516 137,597
As of December 31, 2000, 1999 and 1998, the Partnership has made
all payments to affiliates except for $0, $1,561 and $2,016,
respectively, related to management fees. As of December 31, 2000,
the Partnership owed $3,812, to an affiliate for real estate tax
prorations.
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 former Individual General Partners of the
Partnership purchased $5,000 of the Units. No officers or
directors of the Corporate General Partner own any Units.
Amount and
Title Nature of Percentage
of Name and Address Beneficial Of
Class of Beneficial Owners Ownership Class
Units David M. Strosberg $5,000 0.02%
320 W. Illinois #C-221
Chicago, IL 60610
(c) Other than as described in the Proxy, 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,
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, a former Individual General Partner and a
shareholder of the Corporate General Partner, is a principal of the
law firm of Shefsky & Froelich Ltd., which firm acted as securities
and real estate counsel to the Partnership and certain of its
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.
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) Form 8-K.
None.
(c) An annual report for the fiscal year 2000 will be sent to the
Interest Holders subsequent to this filing.
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.
The following exhibits are incorporated by reference to the
Registrant's definitive proxy statement dated August 23, 1996 (File
No. 0-17557):
Exhibit No. Description
(10)(c) Merger Agreement.
The following exhibit is incorporated by reference to the
Registrant's fiscal year ended December 31, 1996 Form 10-K (File No.
0-17557):
(10)(d) First Amendment and Waiver to Agreement and Plan
of Merger.
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 E. Murphy
Thomas E. Murphy
Chief Financial Officer and Treasurer
By:/s/ James L. Brault
James L. Brault
Vice President and Secretary
INDIVIDUAL GENERAL PARTNER
/s/ Jerome J. Brault
Jerome J. Brault
DATED: March 30, 2001
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Financial Statements:
Statement of Net Assets in Liquidation
as of December 31, 2000 and December 31, 1999
(Liquidation Basis). . . . . . . . . . . . . . . . . . . . . . . F-3
Statement of Changes in Net Assets
in Liquidation for the year ended December 31, 2000
(Liquidation Basis) . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Operations for the year ended December 31,
2000 (Liquidation Basis), for the period June 19, 1999
to December 31, 1999 (Liquidation Basis), for the period
January 1, 1999 to June 18, 1999 (Going Concern Basis)
and the year ended December 31, 1998
(Going Concern Basis) . . . . . . . . . . . . . . . . . . . . . F-5
Statements of Cash Flows for the year ended
December 31, 1998 (Going Concern Basis) . . . . . . . . . . . . F-6
Notes to Consolidated Financial Statements . . . . . . . . . . . F-7
Schedule III -- Real Estate and Accumulated
Depreciation, December 31, 2000. . . . . . . . . . . . . . . . F-27
All other schedules provided for in Item 14(a)(2) of Form 10-K are
either not required, or are inapplicable, or not material.
INDEPENDENT AUDITORS' REPORT
To the Partners
Brauvin High Yield Fund L.P.
Chicago, Illinois
We have audited the accompanying financial statements of Brauvin High
Yield Fund L.P., as of December 31, 2000, and for the years ended
December 31, 2000, 1999 and 1998 as listed in the index to financial
statements. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. 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, 2000, and the results of its operations for the
years ended December 31, 2000, 1999 and 1998 and its cash flows for
the year ended December 31, 1998 in conformity with accounting
principles generally accepted in the United States of America.
/s/ Deloitte & Touche
Chicago, Illinois
February 16, 2001
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENT OF NET ASSETS IN LIQUIDATION AS OF
DECEMBER 31, 2000 AND DECEMBER 31, 1999
December 31, 2000 December 31,1999
ASSETS
Real estate held for sale $ 171,937 $10,998,886
Investment in Joint Ventures
(Note 7):
Brauvin High Yield Venture -- 15,543
Brauvin Funds Joint Venture -- 2,177,679
Cash and cash equivalents 4,744,948 1,681,705
Restricted cash 237,895 226,799
Prepaid offering costs -- --
Other assets -- 1,396
Total Assets $ 5,154,780 $15,102,008
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and
accrued expenses $ 328,107 $ 322,472
Environmental remediation accrual -- 80,000
Rent received in advance 2,937 25,105
Deferred gain on sale of
real estate -- 453,247
Reserve for estimated costs during
the period of liquidation 130,000 130,000
Tenant security deposits -- 47,604
Due to affiliates 3,812 1,561
Total Liabilities 464,856 1,059,989
Net Assets in Liquidation $ 4,689,924 $14,042,019
See accompanying notes to financial statements.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS) FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE
PERIOD JUNE 19, 1999 TO DECEMBER 31, 1999
Net Assets June 19, 1999 $17,907,454
Income from operations 1,058,442
Gain on sale of property 316,558
Equity interest in Joint
Venture's net loss (84,246)
Interest Holder operating
distributions (a) (1,320,017)
General Partner operating
distributions (26,664)
Return of capital distributions
to Interest Holders (b) (1,675,981)
Adjustment to liquidation basis (2,133,527)
Net Assets in Liquidation
at January 1, 2000 14,042,019
Income from operations 1,048,351
Gain on sale of property 239,146
Equity interest in Joint
Venture's net income 1,039,181
Interest Holder operating
distributions (a) (1,943,855)
Return of capital distributions
to Interest Holders (b) (8,041,249)
Adjustment to liquidation basis (1,693,669)
Net Assets in Liquidation
at December 31, 2000 $ 4,689,924
(a) Operating distributions are approximately $0.5024 per Unit.
(b) Return of capital distributions are approximately $0.6379 per
Unit.
(c) Operating distributions are approximately $0.7398 per Unit.
(d) Return of capital distributions are approximately $3.0602 per
Unit.
See accompanying notes to financial statements.
STATEMENTS OF OPERATIONS
(Liquidation Basis) (Going Concern Basis)
Year ended June 19, 1999 January 1, Year ended
December 31, to December 31, 1999 to December 31,
2000 1999 June 18,1999 1998
INCOME
Rental $1,317,733 $1,194,208 $1,216,421 $2,483,451
Interest and other 221,612 43,043 39,853 81,257
Total income 1,539,345 1,237,251 1,256,274 2,564,708
EXPENSES
General and administrative 380,446 113,273 116,021 206,755
Management fees (Note 4) 13,138 12,000 12,322 25,119
Transaction costs (Note 8) 97,410 53,536 142,211 211,904
Valuation fees -- -- -- 135,000
Depreciation -- -- 177,073 378,513
Impairment (Note 6) -- -- -- 1,145,000
490,994 178,809 447,627 2,102,291
Income before gain on sale of
property and equity interest
in joint ventures 1,048,351 1,058,442 808,647 462,417
Gain on sale of property 239,146 316,558 -- --
Income before equity interest
in joint ventures 1,287,497 1,375,000 808,647 462,417
Equity Interest in Joint
Ventures' net (loss) income:
Brauvin High Yield Venture (598) 353 2,615 1,424
Brauvin Funds Joint Venture 1,039,779 (65,093) 145,581 290,904
Brauvin Gwinnett County
Venture -- (7,209) 24,390 48,196
Brauvin Bay County Venture -- (12,297) 6,953 13,795
Total Joint Venture
net income (loss) 1,039,181 (84,246) 179,539 354,319
Income before adjustment
to liquidation basis 2,326,678 1,290,754 988,186 816,736
Adjustment to liquidation
basis (1,693,669) (2,133,527) -- --
Net income (loss) $ 633,009 $ (842,773) $ 988,186 $ 816,736
Net income (loss) allocated to:
General Partners $ 12,660 $ (16,855) $ 19,764 $ 16,335
Interest Holders $ 620,349 $ (825,918) $ 968,422 $ 800,401
Net income (loss) per
Unit outstanding (a) $ 0.24 $ (0.31) $ 0.37 $ 0.30
(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 distribution reinvestment plan (the "Plan").
See accompanying notes to financial statements.
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1998
Cash Flows From Operating Activities:
Net income $816,736
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 378,513
Impairment 1,145,000
Equity interest in net income from:
Brauvin High Yield Venture (1,424)
Brauvin Funds Joint Venture (290,904)
Brauvin Gwinnett County Venture's (48,196)
Brauvin Bay County Venture (13,795)
Changes in:
Other assets 293
Accounts payable and accrued expenses 149,229
Due to affiliates (159)
Rent received in advance (787)
Net cash provided by operating activities 2,134,506
Cash Flows From Investing Activities:
Return of capital- Brauvin High Yield Venture 7,505
Distributions from:
Brauvin High Yield Venture 6,200
Brauvin Funds Joint Venture 308,700
Brauvin Gwinnett County Venture 56,628
Brauvin Bay County Venture 14,240
Net cash provided by investing activities 393,273
Cash Flows From Financing Activities:
Cash distributions to General Partners (105,317)
Cash distributions to Interest Holders (1,974,310)
Net cash used in financing activities (2,079,627)
Net increase in cash and cash equivalents 448,152
Cash and cash equivalents at beginning
of year 1,030,464
Cash and cash equivalents at end
of year $1,478,616
See accompanying notes to financial statements.
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. and Jerome J. Brault. Brauvin Realty
Advisors, Inc. is owned primarily by Messrs. Brault (beneficially)
(44%) and Cezar M. Froelich (44%). Mr. Froelich resigned as a
director of the Corporate General Partner in December 1994 and as
an individual General Partner effective as of September 17, 1996.
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, 2000, 1999 and 1998 the Partnership had sold
$27,922,102 of Units. This total includes $2,922,102 of Units
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
$1,647,070 have been repurchased by the Partnership from Interest
Holders liquidating their investment in the Partnership and have
been retired as of December 31, 2000, 1999 and 1998. As of December
31, 2000, the Plan participants have acquired Units under the Plan
which approximate 10% of total Units outstanding.
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%,
23.4% and 16% equity interests in four joint ventures with three
entities affiliated with the Partnership. These ventures own the
land and buildings underlying six Ponderosa restaurants, a
Scandinavian Health Spa, a CompUSA store and a Blockbuster Video
store, respectively.
In 1999, the Partnership sold one of its Taco Bell units. In
addition, a Ponderosa restaurant was sold in 1999 by the joint
venture partnership. The Partnership also sold in 1999 its joint
venture interest in the CompUSA store and the Blockbuster Video
Store.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. As of
December 31, 2000 the one remaining property continues to be under
contract to an affiliated purchaser. In January 2001, the
Partnership sold its last remaining property to an affiliated
purchaser.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America 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.
Basis of Presentation
As a result of the settlement agreement (see Note 8) which was
approved by the United States District Court for the Northern
District of Illinois on June 18, 1999 the Partnership began the
liquidation process and, in accordance with accounting principles
generally accepted in the United States of America, the
Partnership's financial statements for periods subsequent to June
18, 1999 have been prepared on a liquidation basis. Accordingly,
the carrying value of the assets is presented at estimated net
realizable amounts and all liabilities are presented at estimated
settlement amounts, including estimated costs associated with
carrying out the liquidation. Preparation of the financial
statements on a liquidation basis requires significant assumptions
by management, including the estimate of liquidation costs and the
resolution of any contingent liabilities. There may be differences
between the assumptions and the actual results because events and
circumstances frequently do not occur as expected. Those
differences, if any, could result in a change in the net assets
recorded in the statement of net assets as of December 31, 2000.
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.
Investment in Real Estate
Prior to the conversion from the going concern basis of accounting
to the liquidation basis of accounting, the operating properties
acquired by the Partnership were stated at cost including
acquisition costs, net of impairment. Depreciation expense was
computed on a straight-line basis over approximately 35 years.
The Partnership records an impairment to reduce the cost basis of
real estate to its estimated fair value when the real estate is
judged to have suffered an impairment that is other than temporary.
The Partnership has 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 at December 31, 2000,
except as described in Notes 2, 6 and 10.
Investment in Joint Ventures
Prior to August 7, 2000 the Partnership owned a 1% equity interest
in Brauvin High Yield Venture, which owns the land and building
underlying five Ponderosa restaurants and a 49% equity interest in
Brauvin Funds Joint Venture, which owned the land and building
underlying a Scandinavian Health Spa. On December 30, 1999, the
Partnership sold its 23.4% joint venture equity interest in Brauvin
Gwinnett County Venture, and its 16% equity interest in Brauvin Bay
County Venture, which owns the land and building underlying a
CompUSA store and the land and building underlying a Blockbuster
Video store, respectively. The accompanying financial statements
include the investments in Brauvin High Yield Venture, Brauvin Funds
Joint Venture, Brauvin Gwinnett County Venture and Brauvin Bay
County Venture, using the equity method of accounting.
Prepaid Offering Costs
Prepaid offering costs represent amounts in excess of the defined
percentages of the gross proceeds. Prior to the commencement of the
Partnership's proxy solicitation (see Note 8), gross proceeds were
expected to increase due to the purchase of additional Units through
the Plan and the prepaid offering costs would be transferred to
offering costs and treated as a reduction in Partners' Capital.
Upon the adoption of the liquidation basis of accounting the
remaining prepaid offering costs were written off (see Note 2).
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt
instruments with an original maturity within three months of
purchase.
Restricted Cash
Per the terms of the settlement agreement (see Note 8) the
Partnership was required to establish a cash reserve that will be
restricted for the payment of the General Partners' legal fees and
costs. The release of these funds to the General Partners is
subject to the certification by the Special Master that the General
Partners have been cooperative, did not breach their fiduciary
duties to the Interest Holders, did not breach the settlement
agreement or the Partnership Agreement and used their best efforts
to manage the affairs of the Partnership in such a manner as to
maximize the value and marketability of the Partnership's assets in
accordance with their obligations under the Partnership Agreement.
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, 2000 and 1999, 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.
The carrying amounts of the following items are a reasonable
estimate of fair value: cash and cash equivalents; accounts payable
and accrued expenses; environmental remediation accrual; rent
received in advance; tenant security deposits and due to affiliates.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"), which requires that all derivatives be recognized as
assets and liabilities in the balance sheet and be measured at fair
value. SFAS 133 also requires changes in fair value of derivatives
to be recorded each period in current earnings or comprehensive
income depending on the intended use of the derivatives. In June,
2000, the FASB issued SFAS 138, which amends the accounting and
reporting standards of SFAS 133 for certain derivatives and certain
hedging activities. SFAS 133 and SFAS 138 are required to be
adopted by the Partnership effective January 1, 2001. The adoption
of SFAS 133 and SFAS 138 did not have a material impact on the
financial position, results of operations and cash flows of the
Partnership.
(2) ADJUSTMENT TO LIQUIDATION BASIS
On June 18, 1999, in accordance with the liquidation basis of
accounting, assets were adjusted to estimated net realizable value
and liabilities were adjusted to estimated settlement amounts,
including estimated costs associated with carrying out the
liquidation. The net adjustment required to convert from the going
concern (historical cost) basis to the liquidation basis of
accounting was a decrease in assets of $2,133,527 which is included
in the December 31, 1999 statement of changes in net assets in
liquidation. Significant changes in the carrying value of assets
and liabilities are summarized as follows:
Increase in real estate held for sale (a) $ 453,247
Decrease in value of real estate (1,987,824)
Write-off prepaid offering costs (15,703)
Increase in deferred gain on sale
of real estate (453,247)
Estimated liquidation costs (130,000)
Total adjustment to liquidation basis $(2,133,527)
(a) Net of estimated closing costs.
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's Assets in an amount of
approximately $13,882,300. At the time that this offer was approved
the Partnership adjusted the real estate held for sale to this
contract price less all the estimated closing costs. This offer was
subsequently rescinded by the potential purchaser.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's Assets for approximately $12,550,000 (inclusive of all
the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid. As a result of the approval in May the Partnership adjusted
its investment in real estate by reducing real estate held for sale
and the deferred gain on the sale by $232,390, and in addition
further reduced the value of real estate held for sale by
$1,693,669.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. As of
December 31, 2000 the one remaining property continues to be under
contract to an affiliated purchaser. In January 2001, the
Partnership sold its last remaining property to an affiliated
purchaser.
(3) 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.
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.
(4) 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 former General Partners provided
securities and real estate counsel to the Partnership.
The Partnership pays an affiliate of the General Partners an
acquisition fee in the amount of up to 4.5% of the gross proceeds
of the Partnership's offering for the services rendered in
connection with the process pertaining to the acquisition of a
property. Acquisition fees related to the properties not ultimately
purchased by the Partnership are expensed as incurred.
Fees, commissions and other expenses paid or payable to the
General Partners or its affiliates for the years ended December 31,
2000, 1999 and 1998 were as follows:
2000 1999 1998
Management fees $ 13,138 $ 24,322 $ 25,119
Reimbursable operating
expenses 239,625 148,516 137,597
As of December 31, 2000 and 1999, the Partnership has made all
payments to affiliates except for $0, and $1,561, respectively,
related to management fees. As of December 31, 2000, the
Partnership owed an affiliate $3,812 for real estate tax prorations.
(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
cost allocation Fee and $125,000 remains in reserve.
(6) IMPAIRMENT
In 1998, the Partnership engaged LaSalle Partners, Inc. to perform
a valuation of the Partnership's properties. As a result of this
valuation, during the third quarter of 1998, an impairment in the
total amount of $1,145,000 was recorded in the financial statements
of the Partnership. This impairment has been recorded as a
reduction of the properties' cost, and allocated to land and
buildings based on the original acquisition cost allocation of
30%(land) and 70% (building).
(7) INVESTMENT IN JOINT VENTURES
Prior to August 7, 2000, the Partnership owned equity interests
in Brauvin High Yield Venture and Brauvin Funds Joint Venture and
reported its investments using the equity method. On August 7,
2000, the Partnership sold its joint venture equity interest to an
affiliated party.
Prior to December 30, 1999, the Partnership also owned an equity
interest in Brauvin Gwinnett County Venture and Brauvin Bay County
Venture, which were also accounted for using the equity method. On
December 30, 1999, the Partnership sold to an affiliated party its
23.4% joint venture equity interest in Brauvin Gwinnett County
Venture for approximately $498,200, and its 16% equity interest in
Brauvin Bay County Venture for approximately $143,100, which owns
the land and building underlying a CompUSA store and the land and
building underlying a Blockbuster Video store, respectively.
The following are condensed financial statements for the Brauvin
High Yield Venture, Brauvin Funds Joint Venture, Brauvin Gwinnett
County Venture and Brauvin Bay County Venture:
BRAUVIN HIGH YIELD VENTURE
December 31,
1999
Real estate held for sale $3,553,335
Other assets 17,391
$3,570,726
Liabilities $ 32,873
Deferred gain on the sale
of real estate 178,351
Total liabilities 211,224
Net assets in liquidation $3,359,502
Liquidation Basis Going Concern Basis
Year June 19, January 1, Year
Ended 1999 to 1999 to Ended
December December June 18, December
31, 2000 31, 1999 1999 31, 1998
Rental and other income $393,412 $316,167 $316,090 $632,815
Expenses:
Depreciation -- -- 45,848 98,134
Management fees 3,747 3,206 3,084 6,292
Operating and
administrative 43,795 2,750 5,688 7,366
Impairment -- -- -- 264,000
Loss on sale
of property -- -- -- 114,604
47,542 5,956 54,620 490,396
Net income before gain
on sale of property 345,870 310,211 261,470 142,419
Gain on sale of property 215 -- -- --
Net income before adjustment
to liquidation basis 346,085 310,211 261,470 142,419
Adjustment to
liquidation basis (405,909) (274,916) -- --
Net (loss) income $(59,824) $ 35,295 $261,470 $142,419
BRAUVIN FUNDS JOINT VENTURE
December 31,
1999
Real estate held for sale $4,423,306
Other assets 80,715
$4,504,021
Liabilities $ 6,532
Net assets in liquidation $4,497,489
Liquidation Basis Going Concern Basis
Year June 19, January 1, Year
Ended 1999 to 1999 to Ended
December December June 18, December
31, 2000 31, 1999 1999 31, 1998
Rental and other income $ 435,534 $ 361,929 $357,294 $717,858
Expenses:
Depreciation -- -- 55,048 110,096
Management fees 4,292 3,693 3,616 6,626
Operating and
administrative 2,504 2,782 1,525 7,454
6,796 6,475 60,189 124,176
Net income before gain
on sale 428,738 355,454 297,105 593,682
Gain on sale of
property 1,693,260 -- -- --
Net income before
adjustment to liquidation
basis 2,121,998 355,454 297,105 593,682
Adjustment to
liquidation basis -- (488,299) -- --
Net income $2,121,998 $(132,845) $297,105 $593,682
BRAUVIN GWINNETT COUNTY VENTURE
Liquidation Basis Going Concern Basis
June 19, 1999 January 1, Years Ended
to December 30, 1999 to December 31,
1999 June 18, 1999 1998
Rental and other income $ 129,298 $137,199 $275,753
Expenses:
Depreciation -- 22,876 45,752
Management fees 1,298 1,319 2,640
Operating and
administrative 11,443 8,775 21,394
12,741 32,970 69,786
Net income before adjustment
to liquidation basis 116,557 104,229 205,967
Adjustment to
liquidation basis (147,363) -- --
Net (loss) income $ (30,806) $104,229 $205,967
BRAUVIN BAY COUNTY VENTURE
Liquidation Basis Going Concern Basis
June 19, 1999 January 1, Years Ended
to December 30, 1999 to December 31,
1999 June 18, 1999 1998
Rental and other income $ 56,473 $54,625 $110,782
Expenses:
Depreciation -- 8,823 17,646
Management fees 501 794 1,079
Operating and
administrative 2,042 1,550 5,838
Loss on sale
of property 130,788 -- --
133,331 11,167 24,563
Net (loss) income $(76,858) $43,458 $ 86,219
(8) MERGER AND LITIGATION
Merger
Pursuant to the terms of an agreement and plan of merger dated as
of June 14, 1996, as amended March 24, 1997, June 30, 1997 and
September 30, 1997, December 31, 1997, March 31, 1998 and June 30,
1998 (the "Merger Agreement"), the Partnership proposed to merge
with and into Brauvin Real Estate Funds L.L.C., a Delaware limited
liability company (the "Purchaser"), affiliated with certain of the
General Partners through a merger (the "Merger") of its Units.
Although the Merger will not be consummated, the following text
describes the transaction. Promptly upon consummation of the
Merger, the Partnership would have ceased to exist and the
Purchaser, as the surviving entity, would succeed to all of the
assets and liabilities of the Partnership. The Interest Holders
holding a majority of the Units voted on the Merger on November 8,
1996. The Interest Holders also voted on an amendment to the
Agreement allowing the Partnership to sell or lease property to
affiliates (this amendment, together with the Merger shall be
referred to herein as the "Transaction").
The redemption price to be paid to the Interest Holders in
connection with the Merger was based on the fair market value of the
properties of the Partnership (the "Assets"). Cushman & Wakefield
Valuation Advisory Services ("Cushman & Wakefield"), an independent
appraiser, the largest real estate valuation and consulting
organization in the United States, was engaged by the Partnership
to prepare an appraisal of the Assets, to satisfy the Partnership's
requirements under the Employee Retirement Income Security Act of
1974, as amended. Cushman & Wakefield determined the fair market
value of the Assets to be $23,198,450, or $8.83 per Unit, as of
April 1, 1996. Subsequently, the Partnership purchased a 16%
interest in Brauvin Bay County Venture. Based on the terms of the
Merger Agreement, the fair market value of the Assets was to be
increased by the amount of the investment in Brauvin Bay County
Venture, and correspondingly, the Partnership's cash holdings were
reduced by the same amount and, therefore, the total redemption
amount would remain unchanged. The redemption price of $9.31 per
Unit also included all remaining cash of the Partnership, less net
earnings of the Partnership from and after August 1, 1996 through
December 31, 1996, less the Partnership's actual costs incurred and
accrued through the effective time at the filing of the certificate
of merger, including reasonable reserves in connection with: (i)
the proxy solicitation; (ii) the Transaction (as detailed in the
Merger Agreement); and (iii) the winding up of the Partnership,
including preparation of the final audit, tax return and K-1s
(collectively, the "Transaction Costs") and less all other
Partnership obligations. Of the original cash redemption amount,
approximately $0.48 was distributed to Interest Holders in the
December 31, 1997 distribution.
The General Partners were not to receive any payment in exchange
for the redemption of their general partnership interests nor would
they have received any fees from the Partnership in connection with
the Transaction. The Managing General Partner and his son, James
L. Brault, an executive officer of the Corporate General Partner,
were to have a minority ownership interest in the Purchaser.
The Merger was not completed primarily due to certain litigation,
as described below. The General Partners believe that these
lawsuits were without merit and, therefore, continued to vigorously
defend against them.
By agreement of the Partnership and the General Partners and
pursuant to a motion of the General Partners the District Court
entered an order preventing the Partnership and the General Partners
from completing the Merger or otherwise disposing of all or
substantially all of the Partnership's assets until further order
of the Court.
Because of the rulings of the District Court in the Christman
litigation, as described below, it was not possible for the Merger
to be consummated.
Litigation
Two legal actions, as hereinafter described, against the General
Partners of the Partnership and affiliates of such General Partners,
as well as against the Partnership on a nominal basis in connection
with the Merger, have been settled. On April 13, 1999, all the
parties to the litigation reached an agreement to settle the
litigation, subject to the approval by the United States District
Court for the Northern District of Illinois. This approval was
obtained on June 18, 1999. The terms of the settlement agreement,
along with a Notice to the Class, were forwarded to the Interest
Holders in the second quarter of 1999. One additional legal action,
which was dismissed on January 28, 1998 had also been brought
against the General Partners of the Partnership and affiliates of
such General Partners, as well as the Partnership on a nominal basis
in connection with the Merger. With respect to these actions the
Partnership and the General Partners and their named affiliates
denied all allegations set forth in the complaints and vigorously
defended against such claims.
(9) RESERVE FOR ENVIRONMENTAL REMEDIATION
In connection with the Merger (see Note 8), the Partnership has
undertaken environmental studies of potentially affected properties.
Two of the Partnership's properties have been identified by the
environmental studies as having a potential environmental issue.
On both of the sites a remedial investigation and feasibility study
has been completed, and the results of the studies have been
forwarded to the appropriate authorities. The studies indicate a
range of viable remedial approaches, but agreement has not yet been
reached with the authorities on the final remediation approach. The
Partnership has accrued its best estimate of the costs that will be
incurred to complete the environmental remediation at one of the
properties. The second site requires further review and at this
time the Partnership is unable to estimate the potential costs to
complete the environmental remediation.
In connection with its purchase of one of the above properties
by the Partnership, the Partnership was to be reimbursed by the
former owner for environmental clean-up. The Partnership will
therefore seek reimbursement of the costs from this former owner.
No estimate of the collectibility of this reimbursement can be made
at this time.
(10) SALE OF PARTNERSHIP ASSETS
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's Assets in an amount of
approximately $13,882,300. At the time that this offer was approved
the Partnership adjusted the real estate held for sale to this
contract price less all the estimated closing costs. This offer was
subsequently rescinded by the potential purchaser.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's Assets for approximately $12,550,000 (inclusive of all
the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. The one
remaining property was sold to an affiliated purchaser on January
5, 2001.
(11) LEASES
The Partnership's rental income was principally obtained from
tenants through rental payments provided under triple-net
noncancellable operating leases.
The Partnership sold its sole remaining property to an affiliate
in January 2001, therefore, a presentation of a five year minimum
rent schedule is inappropriate.
(12) SUBSEQUENT EVENT
Property Sale:
In January, 2001 an affiliated party purchased the Taco Bell Unit
#2200 located in Spartanburg for $175,000.
Release of Restricted Cash:
Pursuant to the settlement agreement on November 29, 2000, the
General Partners received certification from the Special Master and
subsequently in January, 2001 the restricted cash was released to
the General Partners.
SCHEDULE III
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Gross Amount at Which Carried
Initial Cost (a) at Close of Period (b)
Buildings, Buildings, Real
Personal Cost of Personal Estate
Property and Subsequent Property and Held for Accumulated Date
Description Encumbrances(c) Land Improvements Improvements Land Improvements Sale Depreciation Acquired
Taco Bells $0 $2,245,312 $5,239,062 $0 $2,093,512 $ 4,884,862 $ 171,937 $1,696,083 12/87-2/88
Ponderosas 0 3,167,168 7,390,057 0 2,975,468 6,942,757 0 2,229,935 9/88-11/89
Children's World
Learning Centers 0 356,288 831,338 0 356,288 831,338 0 227,948 7/89
Unallocated additional
Acquisition Fee 0 0 93,750 0 0 93,750 0 27,013 11/90-12/90
Adjustment to liquidation
basis of accounting(d) 0 0 0 0 (5,425,268)(12,752,707) 0 (4,180,979)
$0 $5,768,768 $13,554,207 $0 $ 0 $ 0 $ 171,937 $ 0
NOTES:
(a) The cost of this real estate is $19,322,975 for tax purposes (unaudited). The buildings are depreciated over
approximatel 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 2000 1999 1998
Balance at beginning of year $10,998,886 $18,177,975 $19,322,975
Adjustment to liquidation basis of accounting (d) (1,693,669) (5,558,852) -
Property sales (9,133,280) (1,620,237) -
Subtractions-land, buildings and improvements(e) -- (1,145,000)
Balance at end of year $ 171,937 $10,998,886 $18,177,975
Accumulated depreciation 2000 1999 1998
Balance at beginning of year $-- $ 4,003,906 $ 3,625,393
Provision for depreciation -- 177,073 378,513
Adjustment to liquidation basis of accounting -- (4,180,979) --
Balance at end of year $-- $ -- $ 4,003,906
(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.
(d) On June 18, 1999, the Partnership adopted the liquidation basis of accounting. In conjunction with the adoption to
the liquidation basis of accounting the carrying value of the assets were recorded at net realizable amounts
(estimated sales price less all costs associated with the sale of the properties) and the designation of land and
building have been combined into real estate held for sale.
(e) The 1998 amount reflects an impairment on land of $343,500 & building of $801,500(Taco Bell & Ponderosas)
EXHIBITS
TO
BRAUVIN HIGH YIELD FUND L.P.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2000
EXHIBIT INDEX
Exhibit (21) Subsidiaries of the Registrant
Exhibit 21
Name of Subsidiary State of Formation
Brauvin High Yield Venture Illinois
Brauvin Funds Joint Venture Illinois
Brauvin Gwinnett County Venture Illinois
Brauvin Bay County Venture Illinois