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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 0-17556
Brauvin High Yield Fund L.P. II
(Exact name of registrant as specified in its charter)
Delaware 36-358013
(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:
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 limited partnership interests of
the registrant (the "Units") to unaffiliated investors of the
registrant during the initial offering period was $38,923,000.
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 any Units been
sold within the last 60 days prior to this filing except for Units
sold to or by the registrant pursuant to the registrant's
distribution reinvestment plan as described in the prospectus of
the registrant dated June 17, 1988, as supplemented (the
"Prospectus").
Portions of the Prospectus of the registrant dated June 17, 1988,
as supplemented July 12, 1988, March 1, 1989, April 28, 1989, and
June 7, 1989 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. II
2000 FORM 10-K ANNUAL REPORT
INDEX
PART I
Page
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . .6
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 29
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 29
PART II
Item 5. Market for the Registrant's Units and Related
Security Holder Matters . . . . . . . . . . . . . . . . . . . 30
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . 31
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . 33
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . 40
Item 8. Consolidated Financial Statements and Supplementary
Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . 40
PART III
Item 10. Directors and Executive Officers of the Partnership 41
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . 43
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . 45
Item 13. Certain Relationships and Related Transactions. . . . . . . . 45
PART IV
Item 14. Exhibits, Consolidated Financial Statement
Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 46
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
BRAUVIN HIGH YIELD FUND II
(a Delaware limited partnership)
PART I
Item 1. Business.
Brauvin High Yield Fund L.P. II (the "Partnership") is a
Delaware limited partnership formed in May 1988 for the purpose of
acquiring debt-free ownership of existing, free-standing,
income-producing retail, office or industrial real estate
properties predominantly all of which would involve "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 and sit-down restaurants, automotive service businesses and
convenience stores, as well as banks and savings and loan branches.
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 $38,923,000 of limited partnership interests
(the "Units") commencing June 17, 1988, pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933, as
amended, to the public at a price of $1,000 per Unit (the
"Offering"). The Offering closed on September 30, 1989. The
investors in the Partnership (the "Limited Partners") share in the
benefits of ownership of the Partnership's real property
investments according to the number of Units each owns. An
additional $4,059,178 of Units have been purchased by Limited
Partners investing their distributions of Operating Cash Flow in
the Partnership's distribution reinvestment plan (the "Plan")
through December 31, 2000. These Units were purchased from the
Units reserved for the Plan after termination of the Offering.
These Units were issued at the Offering price per Unit, less any
amounts per Unit of the Offering price that have been returned to
participants. Of the Units issued under the Plan as of December
31, 2000, $2,886,915 have been repurchased by the Partnership from
investors liquidating their investment and have been retired.
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
partial shelter of cash distributions for Taxable Class Limited
Partners; and (vi) the production of "passive" income to offset
"passive" losses from other investments.
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 Limited Partners 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 Partnership 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 Limited Partners
(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 Limited Partners. Consummation of such
sale, merger, exchange, or other transaction will be followed by
the orderly distribution of net liquidation proceeds to the Limited
Partners.
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 for the
Northern District of Illinois approved a bid for the sale of the
Partnership's Assets in an amount of approximately $20,242,700.
This bid was subject to certain contingencies and was subsequently
rejected by the potential purchaser.
In January, 2000, the Partnership sold the Ponderosa unit 128
located in Bloomington, Illinois for $368,727. Also, in January,
2000, the Partnership sold Chi Chi's unit 366 located in
Clarksville, Tennessee for $1,296,480.
In 2000, an affiliated entity proposed purchasing all of the
remaining Partnership's Assets for approximately $18,398,000
(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 two of the Partnership's properties. One of the
two remaining properties was sold in January 2001 to an affiliated
purchaser. The Partnership continues to conduct certain
environmental due diligence related to the last remaining property.
The Partnership intends to liquidate this asset as soon as
practical.
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 towards the acquisition of properties. Since the leases
at certain of the Partnership's properties entitled 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 landlord only and does not participate in
the operations of any of the properties discussed herein. All
properties were paid for in cash, without any financing. The
General Partners believe that the Partnership's properties 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 two of the Partnership's properties. In January
2001, an affiliated party purchased one of the remaining
properties.
The following is a summary of the real estate and improvements,
of each of the twenty Ponderosa restaurants, the two Taco Bell
restaurants, the Scandinavian Health Spa, the three Children's
World Learning Centers, the three Avis Lubes, the Hardee's
restaurant, the Blockbuster Video store, the three Chi-Chi's
restaurants, the St. Johns, Michigan property and the Albion,
Michigan property. No property had a cost basis in excess of 10%
of the gross proceeds of the Offering or had rental income in
excess of 10% of the total rental income of the Partnership.
Ponderosas:
Rockford, Illinois
Unit 112 is located at 3725 East State Street. The building,
built in 1969, consists of 5,930 square feet situated on a 31,476
square foot parcel. The building was constructed utilizing wood
siding over concrete block.
On August 7, 2000 this property was sold for approximately
$460,000 less expenses of approximately $18,300 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,300.
In June 1997, Ponderosa closed and vacated this restaurant.
Ponderosa, in accordance with the lease, continued to pay rent and
certain occupancy costs for this property. In September 1997,
Ponderosa and the Partnership agreed to sub-lease this property to
a local tenant. Ponderosa continued to remain responsible to the
Partnership for all rent and certain occupancy expenses through the
original lease term.
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 Ponderosa located in Rockford,
Illinois. 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).
Bloomington, Illinois
Unit 128 is located at 1329 East Empire Street. The building,
built in 1970, consists of 4,608 square feet situated on a 60,725
square foot parcel. The building was constructed utilizing wood
siding over concrete block.
On January 19, 2000, the Partnership sold this property to an
unaffiliated third party for a sale price of $350,000 which
resulted in a loss to the Partnership of approximately $37,600.
However, in addition to the sales price, the Partnership will
receive lease termination payments from the tenant in the amount of
approximately $45,700.
Ponderosa closed this facility on May 26, 1997, but continued
to pay rent to the Partnership per the terms of lease.
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 $121,800. 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 $141,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in
Bloomington, Illinois. 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).
Orchard Park, New York
Unit 728 is located at 3019 Union Road. The building, built in
1980, consists of 5,600 square feet situated on a 75,000 square
foot parcel. The building was constructed utilizing wood siding
over concrete block.
In July 1995, Metromedia, the parent of Ponderosa, closed the
Orchard Park, New York restaurant. In exchange for the closed
Ponderosa, the Partnership agreed to accept the building and land
underlying a Tony Roma's restaurant. The Tony Roma property is
located at 3780 Towne Crossing Boulevard in Mesquite, Texas. The
building, built in 1984, consists of 5,600 square feet situated on
a 49,810 square foot parcel of land. The Tony Roma's restaurant
provided additional base rent of approximately $2,000 per year plus
percentage rents and future rent escalations upon exercise of lease
renewals.
On August 7, 2000 the Tony Roma property was sold for
approximately $1,360,000 less expenses of approximately $42,800 to
an affiliated party. This sale resulted in a gain to the
Partnership of approximately $545,400.
Oneonta, New York
Unit 740 is located at 333 Chestnut. The building, built in
1979, consists of 5,250 square feet situated on a 61,600 square
foot parcel. The building was constructed utilizing wood siding
over concrete block and facebrick.
In March 1999, the tenant gave the Partnership notice of its
intent to purchase the property under the tenant's existing
purchase options contained within the lease. The purchase price of
the property was to be 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 $784,000. This sale resulted in a gain
to the Partnership of approximately $114,600.
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 Oneonta, 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).
Middletown, New York
Unit 779 is located at 163 Dolson Avenue. The building, built
in 1980, consists of 6,120 square feet situated on a 71,708 square
foot parcel. The building was constructed utilizing stained wood
veneer and flagstone.
In March 1999, the tenant gave the Partnership notice of its
intent to purchase the property under the tenant's existing
purchase options contained within the lease. The purchase price of
the property was to be 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 $951,000. This sale resulted in a gain
to the Partnership of approximately $27,900.
Joliet, Illinois
Unit 129 is located at 2200 West Jefferson Street. The
building, built in 1970, consists of 4,500 square feet situated on
a 57,000 square parcel. The building was constructed utilizing
brick and wood siding. This Ponderosa was received in exchange for
Ponderosa Unit 1055 in Apopka, Florida, an original purchase of the
Partnership, in December 1994.
On August 7, 2000 this property was sold for approximately
$435,000 less expenses of approximately $15,200 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $300.
In June 1995, Metromedia, the parent of Ponderosa, closed the
Joliet, Illinois Ponderosa with the intent of converting the site
into a Bennigan's restaurant. Subsequently, Metromedia changed its
position and with the approval of the Partnership subleased this
space to Texas Steakhouse, Inc. In 1998, Texas Steakhouse closed
this facility, but Ponderosa was still responsible to the
Partnership under the terms of the original lease.
In 2000, the Partnership received notice from the tenant that
they had located a potential sublessee for this facility.
During the third quarter of 1998, the Partnership recorded an
impairment of $90,000 related to an other than temporary decline in
the value of real estate for the Ponderosa located in Joliet,
Illinois. 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).
Franklin, Ohio
Unit 1071 is located at 3320 Village Drive. The building,
built in 1987, consists of 4,550 square feet situated on a 9,242
square foot parcel. The building was constructed utilizing wood
siding over concrete block.
On August 7, 2000 this property was sold for approximately
$556,000 less expenses of approximately $21,400 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 $40,500. 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.
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 Ponderosa located in Franklin,
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).
Herkimer, New York
Unit 665 is located at the corner of State and King Streets.
The building, built in 1979 and remodeled in 1988, consists of
5,817 square feet situated on a 44,932 square foot parcel. The
building was constructed using wood siding over concrete block and
face brick.
On August 7, 2000 this property was sold for approximately
$517,000 less expenses of approximately $20,800 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $3,200.
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 $33,600. 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.
Sweden, New York
Unit 876 is located at 6460 Brockport-Spencerport Road. The
building, built in 1981 and remodeled in 1987, consists of 5,400
square feet situated on a 47,500 square foot parcel. The building
was constructed using wood paneling over concrete block.
During the first quarter of 1998, the Partnership recorded an
impairment of $130,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in Sweden,
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).
On October 31, 1996, the Partnership's property was damaged by
a fire. As a result of this casualty, Ponderosa terminated its
lease at this property as of December 31, 1996. The Partnership
contested this lease termination. Subsequent to the lease
termination, no rents were received for this property.
The Partnership received $199,452 in initial insurance proceeds
to repair the fire damaged property. In addition, the Partnership
received, in the first quarter of 1999, $50,000 in additional
insurance proceeds.
In April 1998, Ponderosa unit 876 was sold by the Partnership.
This closed property was sold to an unaffiliated third party for
approximately $425,000. In addition, as a result of the sale, the
Partnership transferred the undisbursed insurance proceeds of
$199,452 from its reserve account to its general cash account. The
sale resulted in a loss to the Partnership of approximately
$130,000, which was recognized as an impairment during the first
quarter of 1998.
Appleton, Wisconsin
Unit 182 is located at 130 South Bluemond Road. The building,
built in 1969 and renovated in 1986, is a one-story, 5,400 square
foot building constructed with stucco and painted concrete block
with wood trim over wood frame on an approximately 54,450 square
foot site.
In March 1999, the tenant gave the Partnership notice of its
intent to purchase the property under the tenant's existing
purchase options contained within the lease. The purchase price of
the property was to be 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 $756,000. This sale resulted in a gain
to the Partnership of approximately $199,200.
During the third quarter of 1998, the Partnership recorded an
impairment of $202,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in Appleton,
Wisconsin. 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).
Dublin, Ohio
Unit 347 is located at 1671 East Dublin-Granville Road. The
building, built in 1973 and renovated in 1987, is a one-story,
5,360 square foot building constructed with wood siding over wood
frame on an approximately 47,000 square foot site.
On August 7, 2000 this property was sold for approximately
$590,000 less expenses of approximately $21,600 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,300.
In June 1997, Ponderosa closed and vacated this restaurant.
Ponderosa, in accordance with the lease, continued to pay rent and
certain occupancy costs for this property. In October 1997,
Ponderosa and the Partnership agreed to sub-lease this property to
a local tenant.
In July 1999, a fire occurred at this property. Substantial
damage was caused and the sublease was terminated.
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 $61,300. 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.
Penfield, New York
Unit 755 is located at 1610 Penfield Road. The building, built
in 1981 and renovated in 1987, is a one-story, 5,400 square foot
building constructed with vinyl siding over wood frame on an
approximately 54,900 square foot site.
On August 7, 2000 this property was sold for approximately
$652,000 less expenses of approximately $24,100 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,700.
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 $106,500. 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.
Pendleton Pike, Indiana
Unit 816 is located at 8502 Pendleton Pike. The building,
built in 1984 and renovated in 1987, is a one-story, 5,400 square
foot building constructed with a prefab stucco facade with an
atrium front and wood panels on the sides of the building on an
approximately 95,000 square foot site.
During the first quarter of 1999, Ponderosa closed this
facility, but remained current on all of its lease obligations.
On August 7, 2000 this property was sold for approximately
$713,000 less expenses of approximately $23,600 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,700.
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 $145,000. 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 $127,000 related to an other than temporary decline
in the value of real estate for the Ponderosa located in Pendelton
Pike, 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).
Eureka, Missouri
Unit 857 is located at 80 Hilltop Village Center. The
building, built in 1981 and renovated in 1986, is a one-story,
5,360 square foot building constructed with wood over wood frame on
an approximately 71,400 square foot site.
In March 1999, the tenant gave the Partnership notice of its
intent to purchase the property under the tenant's existing
purchase options contained within the lease. The purchase price of
the property was to be 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 $985,000. This sale resulted in a gain
to the Partnership of approximately $157,100.
Ponderosa Joint Venture:
The Partnership had a 99% interest in a joint venture with an
affiliated public real estate limited partnership that acquired the
following six Ponderosas (the "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 Joint Venture of
approximately $600.
Pursuant to the adoption of the liquidation basis of
accounting, the Joint Venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the Joint
Venture recording a reduction in the value of this property of
approximately $15,300. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Joint Venture's
statement of operations for the period June 19, 1999 to December
31, 1999.
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 Joint Venture agreed to
sub-lease this property to a local franchisee. Ponderosa continued
to remain responsible to the Joint Venture for all rent and certain
occupancy expenses through the original lease term.
During the third quarter of 1998, the 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).
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 Joint Venture of
approximately $1,000.
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.
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 Joint Venture of
approximately $600.
Ponderosa closed this facility on June 1, 1997, but continued
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 remained fully liable under the terms
of the original lease through maturity.
Pursuant to the adoption of the liquidation basis of
accounting, the Joint Venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the Joint
Venture recording a reduction in the value of this property of
approximately $93,400. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Joint Venture's
statement of operations for the period June 19, 1999 to December
31, 1999.
During the third quarter of 1998, the 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 Joint Venture sold this closed property to
an unaffiliated third party for approximately $750,000. This sale
resulted in a loss to the Joint Venture of approximately $112,000.
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 Joint Venture of
approximately $400.
Pursuant to the adoption of the liquidation basis of
accounting, the Joint Venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the Joint
Venture recording a reduction in the value of this property of
approximately $69,500. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Joint Venture's
statement of operations for the period June 19, 1999 to December
31, 1999.
During the third quarter of 1998, the Joint Venture recorded an
impairment of $58,000 related to an other than temporary decline in
the value of real estate for the Ponderosa located in Tampa,
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).
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 Joint Venture of
approximately $400.
Pursuant to the adoption of the liquidation basis of
accounting, the Joint Venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the Joint
Venture recording a reduction in the value of this property of
approximately $93,400. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Joint Venture's
statement of operations for the period June 19, 1999 to December
31, 1999.
During the third quarter of 1998, the 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).
Taco Bell:
Lansing, Michigan
Unit 1848 is located at 4238 West Saginaw on the outskirts of
Lansing, Michigan. The building, built in 1979, consists of 1,566
square feet situated on a 21,186 square foot parcel. The building
was constructed utilizing painted brick on a concrete foundation.
On August 7, 2000 this property was sold for approximately
$175,000 less expenses of approximately $10,900 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,000.
Scandinavian Health Spa
The Partnership has a 51% interest in a joint venture with an
affiliated public real estate limited partnership that purchased
the Scandinavian Health Spa. The Scandinavian Health Spa is a
36,556 square foot health club located on a three-acre parcel in
Glendale, Arizona, a suburb of Phoenix. The Health Spa 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 Partnership of
approximately $1,693,000.
Pursuant to the adoption of the liquidation basis of
accounting, the joint venture's assets were adjusted to net
realizable amounts. This adjustment process resulted in the joint
venture recording a reduction in the value of this property of
approximately $7,900. This adjustment has been recorded as part of
the adjustment to liquidation basis on the joint venture's
statement of operations for the period June 19, 1999 to December
31, 1999.
Children's World Learning Centers:
Livonia, Michigan
The Children's World Learning Center is located at 38880 West
Six Mile Road in Livonia, Michigan, approximately 12 miles west of
downtown Detroit. The 6,095 square foot, single-story building was
built in 1984 utilizing concrete block and has a pitched roof with
asphalt shingles.
On August 7, 2000 this property was sold for approximately
$303,000 less expenses of approximately $15,600 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 $31,500. 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.
Farmington Hills, Michigan
The Children's World Learning Center is located at 29047 13
Mile Road in Farmington Hills, Michigan, approximately 26 miles
northwest of Detroit. The 6,175 square foot, single-story building
was built in 1989 utilizing a wood frame and has a pitched roof
with asphalt shingles.
On August 7, 2000 this property was sold for approximately
$469,000 less expenses of approximately $21,200 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $3,100.
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 $66,000. 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.
Waterford, Michigan
The Children's World Learning Center is located at 3100 Dixie
Highway in Waterford, Michigan, approximately 35 miles northwest of
Detroit. The 6,175 square foot, single-story building was built in
1988 utilizing a wood frame and has a pitched roof with asphalt
shingles.
On August 7, 2000 this property was sold for approximately
$520,000 less expenses of approximately $22,200 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $2,500.
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 $81,000. 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.
Avis Lubes:
Orlando, Florida
The Avis Lube is located at 2699 Delaney Street across the
street from a 91,000 square foot shopping center anchored by Publix
and Woolworths. The building, built in 1989, consists of 1,532
square feet situated on a 12,150 square foot parcel. The building
was constructed using concrete block and has two oil change bays.
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 $174,000. 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.
Orlando, Florida
The Avis Lube is located at 1625 South Conway Road across the
street from a 123,000 square foot shopping center anchored by
Publix and Eckard Drugs. The building, built in 1989, consists of
1,947 square feet situated on a 24,939 square foot parcel. The
building was constructed using concrete block and has three oil
change bays.
On August 7, 2000 this property was sold for approximately
$325,000 less expenses of approximately $15,400 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 $133,000. 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.
The lessee of the two Orlando Avis Lubes defaulted on its
payment obligations under the lease in 1991 and in January 1992
vacated the properties. The Partnership continued to receive rent
payments from the lessee, which Avis Lube, Inc. guaranteed to the
Partnership until the lease expired in June 1996. Avis Lube, Inc.
subleased the properties until June 1996 to an unaffiliated
sublessee, Florida Express Lubes, Inc. The Partnership signed new
leases with the sublessee to operate the properties, as lessee,
which commenced on June 1, 1996. The leases were for a 14 year
term. Base annual rent at 2699 Delaney Street is $48,000 and at
1625 South Conway Road was $54,000.
Rock Hill, Missouri
The Avis Lube is located at 9725 Manchester Road, two miles
west of the St. Louis, Missouri city limits. The building, built
in 1988, consists of 2,940 square feet situated on a 21,143 square
foot parcel. The building was constructed using brick veneer and
has four oil change bays, two with service pit work access and two
with ground level work access.
The lessee of the Rock Hill, Missouri property defaulted on
its payment obligations and vacated the property in April 1994.
The Partnership had continued to receive rent payments from the
guarantor, Avis Lube, Inc. Avis Lube, Inc. subleased the property
through March 1996 to an unaffiliated sublessee, FOCO, Inc., an
auto/oil repair operator. The Partnership signed a new lease with
the sublessee to operate the property effective March 26, 1996.
The lease is for 42 months and provides for annual base rent of
$55,000.
The tenant did not renew the lease, and this property is now
vacant.
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 $216,000. 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.
Hardee's:
Newcastle, Oklahoma
The restaurant is an outparcel of a 67,500 square foot shopping
center located on the 400 & 500 block of N.W. 32nd. The 3,300
square foot, single-story building was built on a 35,200 square
foot parcel in 1990 utilizing a wood frame with brick facing. This
restaurant is currently being operated as a Carl's Jr. restaurant.
On August 7, 2000 this property was sold for approximately
$350,000 less expenses of approximately $15,900 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 $49,000. 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.
St. Johns, Michigan
The restaurant is an outparcel of a 70,000 square foot Wal-Mart
department store located at the corner of U.S. 27 and Townsend
Road. The 3,300 square foot, single-story building was built on a
47,200 square foot parcel in 1990 utilizing a wood frame with brick
facing.
On August 7, 2000 this property was sold for approximately
$125,000 less expenses of approximately $10,000 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $100,000.
During the fourth quarter of 1994, the Partnership executed a
lease with a Dairy Queen franchisee. The lease was for a five year
term and commenced February 1, 1995. Base rent was $2,500 per
month with monthly percentage rent of 5% due after monthly sales
exceed $37,500. The lease provided an option to renew for one five
year period.
During the third quarter of 1998, the Partnership recorded an
impairment of $30,000 related to an other than temporary decline in
the value of real estate for the Hardee's located in St. Johns,
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).
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 $224,000. 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.
Albion, Michigan
The restaurant is located at 118 E. Michigan Avenue. The 3,034
square foot, single-story building was built on a 32,670 square
foot parcel in 1990 utilizing a wood frame with brick facing.
On June 18, 1999, the Partnership sold this property to an
unaffiliated third party for approximately $210,000. This sale
resulted in a gain to the Partnership of approximately $25,100.
During the third quarter of 1994, the Partnership recorded a
provision for impairment of $500,000 related to an other than
temporary decline in the value of real estate for the St. Johns,
Michigan and Albion, Michigan properties. This impairment has been
recorded as a reduction of the properties' cost, and allocated to
the land and building based on the original acquisition cost
allocation of 30% (land) and 70% (building).
In 1996, the Partnership engaged Cushman & Wakefield to prepare
an appraisal of the Partnership's properties. As a result of this
appraisal, the Partnership recorded an additional impairment of
$550,000 related to an other than temporary decline in real estate
for the St. Johns, Michigan and Albion, Michigan properties during
the fourth quarter of 1996. This impairment has been recorded as
a reduction of the properties' cost, and allocated to the land and
building based on the original acquisition cost allocation of 30%
(land) and 70% (building).
During the third quarter of 1998, the Partnership recorded an
impairment of $162,000 related to an other than temporary decline
in the value of real estate for the Hardee's located in Albion,
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).
Blockbuster Video:
South Orange, New Jersey
The video store is located at 57 South Orange Avenue in
downtown South Orange. The 6,705 square foot brick building was
completely renovated in 1990 and consists of a primary level, a
mezzanine level plus a full basement for storage.
On August 7, 2000 this property was sold for approximately
$625,000 less expenses of approximately $23,600 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 $7,000. 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.
Chi-Chi's:
During 1995, Chi-Chi's, the sub-tenant under a master lease
with Foodmaker, closed each of its three restaurants owned by the
Partnership because they were not profitable. Under the terms of
the three leases, Foodmaker, the master tenant and guarantor, is
continuing to pay rent for the properties, while actively seeking
subtenants. In February 1995, the Chi-Chi's restaurant in
Clarksville, Tennessee closed. During the third quarter of 1995
the Chi-Chi's restaurants in Charlotte, North Carolina and
Richmond, Virginia were closed.
Foodmaker owns, operates and franchises Jack In The Box, a
chain of fast-food restaurants located principally in the western
and southwestern United States. Until January 27, 1994, Foodmaker
also owned Chi-Chi's, a chain of full-service, casual Mexican
restaurants located primarily in the Midwestern and Midatlantic
United States.
Richmond, Virginia
Unit 353 is located at 9135 West Broad Street in Richmond and
consists of a 7,270 square foot restaurant with a seating capacity
of 280. The property was built in January 1990 and is situated on
approximately one acre of land.
On August 7, 2000 this property was sold for approximately
$1,692,000 less expenses of approximately $86,400 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $533,000.
In April 1996, a sub-tenant executed a second sub-lease with
Chi-Chi's for the Richmond, Virginia property. This new sub-tenant
(Sino-American of Richmond, Virginia) began occupying this facility
in September 1997. Foodmaker continues as the guarantor under the
terms of the second sub-lease.
Charlotte, North Carolina
Unit 373 is located at 2522 Sardis Road North at the
intersection of Independence Boulevard. The property is situated
on a 1.5 acre parcel and consists of a 7,270 square foot restaurant
with a seating capacity for 280. The property opened in May 1990.
On August 7, 2000 this property was sold for approximately
$1,702,000 less expenses of approximately $82,600 to an affiliated
party. This sale resulted in a gain to the Partnership of
approximately $572,300.
In March 1996, a sub-tenant executed a second sub-lease with
Chi-Chi's for the Charlotte, North Carolina property. This new
sub-tenant (Carolina Country BBQ of Charlotte, North Carolina)
occupied the facility in June 1996. Foodmaker continues to be the
guarantor under terms of the second sub-lease.
Clarksville, Tennessee
Unit 366 is located in Governor's Square Shopping Center at
2815 Guthrie Road in Clarksville. The property consists of a 5,678
square foot restaurant with seating for 180 people and is situated
on an approximately 50,000 square foot parcel of land. The
property opened in May 1990.
On January 21, 2000 the Partnership sold this property to an
unaffiliated third party for a sale price of $900,000.
Additionally, the Partnership received approximately $415,900 as a
lease buyout from Chi-Chi's.
In October 1996, a sub-tenant executed a second sub-lease with
Chi-Chi's for the Clarksville, Tennessee property. This new sub-
tenant (Loco Lupe of Clarksville, Tennessee) opened to the public
on February 17, 1997. Foodmaker continued as the guarantor under
terms of the second sub-lease.
In January 1998, Loco Lupe of Clarksville, Tennessee was
closed. However, Chi-Chi's continued to pay rent to the
Partnership per the terms of lease.
Joint Venture Blockbuster:
Callaway, Florida
The Partnership owns a 26.0% 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 North 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 interest's in the joint
venture were Merged into an affiliated entity. The purchaser of
the other interests also offered to purchase the Partnership's 26%
interest in the joint venture. Upon receiving approval from the
Special Master the Partnership sold its interest in the joint
venture for approximately $232,500.
The following table summarizes the operations of the
Partnership's properties.
BRAUVIN HIGH YIELD FUND L.P. II
SUMMARY OF OPERATING DATA
DECEMBER 31, 2000
2000
PERCENT OF 2000 PERCENT OF LEASE
PURCHASE ORIGINAL RENTAL RENTAL EXPIRATION RENEWAL
PROPERTIES (A) PRICE UNITS SOLD INCOME INCOME DATES OPTIONS
51% OF 1 SCANDINAVIAN HEALTH SPA $ 2,677,500 6.9% $ 220,561 12.3% 2009 4 FIVE YEAR OPTIONS
99% OF 6 PONDEROSA RESTAURANTS (B) 5,628,150 14.5% 382,252 21.4% 2003 4 FIVE YEAR OPTIONS
TACO BELL RESTAURANT-LANSING, MI 381,200 1.0% 37,453 2.1% 2003 NONE
TACO BELL RESTAURANT-
SCHOFIELD, WI (C) 246,300 0.6% -- -- -- NONE
14 PONDEROSA RESTAURANTS (D)(H) 12,269,992 31.5% 540,728 30.2% 2003-2004 2 FIVE YEAR OPTIONS
3 CHILDREN'S WORLD LEARNING CENTERS 2,368,922 6.1% 197,949 11.1% 2004-2009 2 FIVE YEAR OPTIONS
3 AVIS LUBE OIL CHANGE CENTERS 1,539,964 4.0% 76,967 4.3% 2010 2 TEN YEAR OPTIONS
HARDEE'S RESTAURANT-ST. JOHNS, MI(E) 897,348 2.3% 18,759 1.0% 2010 NONE
HARDEE'S RESTAURANT -
ALBION, MI PROPERTY (F) 883,477 2.3% -- -- -- NONE
HARDEE'S RESTAURANT -
NEWCASTLE, OK 479,025 1.2% 35,895 2.0% 2010 2 TEN YEAR OPTIONS
BLOCKBUSTER VIDEO RENTAL 1,100,000 2.8% 98,014 5.5% 2010 2 TEN YEAR OPTIONS
3 CHI-CHI'S RESTAURANTS (H) 3,369,000 8.6% 179,818 10.1% 2011 4 FIVE YEAR OPTIONS
26% OF 1 BLOCKBUSTER VIDEO STORE -
CALLAWAY, FL (G) 263,596 0.7% -- 0.0% 2006 3 FIVE YEAR OPTIONS
$32,104,474 82.5% $1,788,396 100.0%
NOTE - THE FORMAT OF THIS SCHEDULE DIFFERS FROM THE INCOME STATEMENT OF THE PARTNERSHIP.
THIS SCHEDULE ALLOCATES THE PARTNERSHIP'S SHARE OF PURCHASE PRICE AND RENTAL INCOME FROM EACH JOINT VENTURE.
(A) ON AUGUST 7, 2000, ALL OF THE PARTNERSHIP PROPERTIES WERE SOLD, WITH THE EXCEPTION OF TWO OF THE AVIS LUBES AND THE
PROPERTIES THAT WERE SOLD PREVIOUSLY (AS DETAILED BELOW).
(B) IN JANUARY 1998, THE JOINT VENTURE PARTNERSHIP SOLD PONDEROSA UNIT 850 LOCATED IN MANSFIELD, OH
(C) SOLD FEBRUARY 18, 1994
(D) IN APRIL 1998, THE PARTNERSHIP SOLD PONDEROSA UNIT 876 LOCATED IN SWEDEN, NEW YORK. IN OCTOBER 1999, THE PARTNERSHIP
SOLD FOUR PONDEROSA UNITS LOCATED IN APPLETON, WISCONSIN; ONEONTA, NEW YORK; MIDDLETOWN, NEW YORK AND EUREKA, MISSOURI.
(E) RELEASED TO DAIRY QUEEN FRANCHISEE. LEASE COMMENCED FEBRUARY 1, 1995.
(F) IN JUNE 1999, THE PARTNERSHIP SOLD THIS PROPERTY
(G) IN DECEMBER 1999, THE PARTNERSHIP SOLD ITS JOINT VENTURE INTEREST.
(H) IN JANUARY 2000, THE PARTNERSHIP SOLD ONE CHI-CHI'S PROPERTY AND ONE PONDEROSA PROPERTY.
Risks of Ownership
Prior to the disposition of the Partnership's property the
possibility existed that the tenants were unable to fulfill their
obligations pursuant to the terms of their leases, including making
base 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. In addition, the Partnership may have been unable to
successfully locate substitute tenants due to the fact that various
buildings had been designed or built primarily to house a specific
operation. Thus the Partnership 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 Limited Partners 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 2,639 Limited
Partners 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 Corporate General
Partner nor the Partnership are obligated, but reserve the right,
to redeem or repurchase the Units. Units may also be purchased by
the Plan. Any Units so redeemed or repurchased shall be retired.
Pursuant to the terms of the Agreement, there are restrictions
on the ability of the Limited Partners to transfer their Units. In
all cases, the General Partners must consent to the substitution of
a Limited Partner.
Cash distributions to Limited Partners for 2000, 1999 and 1998
were $16,280,010, $7,225,048, and $3,906,893, respectively.
Included in the cash distributions for 2000, 1999 and 1998 are
return of capital distributions of $13,474,720, $3,652,700 and
$1,354,535, respectively. Prior to the commencement of the
Partnership's proxy solicitation in August 1996, distributions were
paid four times per year, within 60 days after the end of each
calendar quarter. See Item 7. Since the Transaction was not
consummated the General Partners decided to distribute part of the
net earnings earned during the time period after August 1996 to the
Limited Partners. Included in the February 15, 1999 distribution
was approximately $184,000 related to this time period.
Item 6. Selected Financial Data.
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
(not covered by Independent Auditors' Report)
Years Ended December 31, 2000, 1999 and 1998
2000 1999(e) 1998
Selected Income Statement Data:
Rental Income (a) $2,004,169 $3,998,616 $4,070,823
Interest Income 289,018 82,937 116,702
Net Income 2,498,403 1,244,665 968,545
Net Income Per Unit (b) $ 60.68 $ 30.08 $ 23.41
Selected Balance Sheet Data:
Cash and Cash Equivalents $5,315,759 $ 1,160,591 $1,585,830
Land and Buildings -- 32,260,654
Real estate held for sale 589,495 23,203,800
Total Assets 6,380,861 24,963,925 28,471,346
Cash Distributions to
Limited Partners (c)(d) 2,805,290 3,782,348 2,552,358
Cash Distributions to Limited
Partners Per Unit (b)(d) $ 69.53 $ 93.75 $ 63.26
(a) This includes $0, $2,777, and $67,563 of non-cash income
related to the change in the deferred rent receivable balance for
2000, 1999 and 1998, respectively.
(b) Net income per Unit and cash distributions to Limited Partners
per Unit are based on the average Units outstanding during the
year since they were of varying dollar amounts and percentages
based upon the dates Limited Partners were admitted to the
Partnership and additional Units were purchased through the
Plan.
(c) This includes $8,815 and $11,521 paid to various states for
income taxes on behalf of all Limited Partners for the years
1999 and 1998, respectively.
(d) Not included in cash distributions to Limited Partners and
the per Unit calculation was Return of Capital Distributions in
2000, 1999 and 1998 of $13,474,720, $3,652,700 and $1,354,535,
respectively which is $333.97, $90.53 and $33.57 per unit,
respectively.
(e) 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 consolidated financial statements and the related notes
appearing elsewhere in this annual report.
Item 6. Selected Financial Data - continued.
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
(not covered by Independent Auditors' Report)
Years Ended December 31, 1997 and 1996
1997 1996
Selected Income Statement Data:
Rental Income (a) $4,239,915 $4,130,302
Interest Income 161,260 93,923
Net Income 2,677,113 1,824,011
Net Income Per Unit (b) $ 65.78 $ 45.23
Selected Balance Sheet Data:
Cash and Cash Equivalents $1,198,267 $2,413,914
Land and Buildings 35,401,164 35,401,164
Total Assets 31,464,133 33,290,582
Cash Distributions to
Limited Partners (c) 4,787,596 1,814,767
Cash Distributions to Limited
Partners Per Unit (b) $ 118.66 $ 45.00
(a) This includes $67,561 and $67,561 of non-cash income related
to the change in the deferred rent receivable balance for 1997 and
1996, respectively.
(b) Net income per Unit and cash distributions to Limited Partners
per Unit are based on the average Units outstanding during the
year since they were of varying dollar amounts and percentages
based upon the dates Limited Partners were admitted to the
Partnership and additional Units were purchased through the
Plan.
(c) This includes $10,278 and $9,060 paid to various states for
income taxes on behalf of all Limited Partners for the years
1997 and 1996, respectively.
The above selected financial data should be read in conjunction
with the consolidated 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 June 17,
1988 of 25,000 Units (subject to increase to 40,000 units). The
offering was anticipated to close on June 16, 1989 but was extended
and closed on September 30, 1989. A total of $38,923,000 of Units
were subscribed and issued between June 17, 1988 and September 30,
1989, pursuant to the public offering.
Until the November 6, 1996 proxy solicitation process began,
the Plan raised $4,059,178, from Limited Partners investing their
distributions of Operating Cash Flow in additional Units. As of
December 31, 2000, Units valued at $2,886,915 have been repurchased
by the Partnership from Limited Partners liquidating their
investment in the Partnership and have been retired.
The Partnership purchased the land and buildings underlying
seven Ponderosa restaurants in 1988, and owned a 99% equity
interest in an affiliated joint venture formed in 1988 which
purchased the land and buildings underlying six Ponderosa
restaurants. In 1989, the Partnership purchased the land and
buildings underlying two Taco Bell restaurants, formed a 51% equity
interest in an affiliated joint venture which purchased a
Scandinavian Health Spa and purchased the land and buildings
underlying seven additional Ponderosa restaurants. In 1990, the
Partnership purchased the land and buildings underlying three
Children's World Learning Centers, three Hardee's restaurants, one
Blockbuster video store and three Avis Lubes. The Partnership
purchased three Chi-Chi's restaurants in 1991.
On October 31, 1996, the Partnership purchased a 26% equity
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's acquisition process is now completed.
As contemplated in the Prospectus, the distributions prior to
full property specification exceeded the amount of Operating Cash
Flow, as such term is defined in the Agreement, available for
distribution. As described in Footnote 8 to the section of the
Prospectus on pages 8 and 9 entitled "Estimated Use of Proceeds of
Offering", the Partnership set aside 1% of the gross proceeds of
the Offering in a reserve (the "Distribution Guaranty Reserve").
The Distribution Guaranty Reserve was structured so as to enable
the Partnership to make quarterly distributions of Operating Cash
Flow equal to at least 9.25% per annum on Adjusted Investment
during the period from the Escrow Termination Date (February 28,
1989), as such term is defined in Section H.3 of the Agreement,
through the earlier of: (i) the first anniversary of the Escrow
Termination Date (February 28, 1990); or (ii) the expenditure of
95% of the proceeds available for investment in properties, which
date was July 26, 1989. The General Partners guaranteed payment of
any amounts in excess of the Distribution Guaranty Reserve and were
entitled to receive any amounts of the Distribution Guaranty
Reserve not used to fund distributions.
The Partnership's acquisition process was not completed until
March 1991 due to an unusually high number of properties being
declined during the due diligence process because of the General
Partners' unwillingness to lower the Partnership's investment
standards. As a result, the Partnership had a substantial amount
of cash invested in short-term investments, as opposed to
properties, and during 1990 did not generate sufficient Operating
Cash Flow to fully support the distributions to Limited Partners.
In order to continue to maintain the 9.25% per annum
distribution through December 31, 1990, the General Partners agreed
to continue the Distribution Guaranty up to the net $140,000 of
Distribution Guaranty Reserve previously paid to them. At December
31, 2000, 1999 and 1998, $140,000 was due from the original General
Partners related to the Distribution Guaranty.
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 $19.8773 $24.9821 $ -- $20.1875 $22.3597
May 15 18.0928 22.4924 21.9087 18.8614 22.3597
August 15 14.9522 19.5858 14.7020 22.8662 --
November 15 16.6057 21.3147 26.3634 56.6001 --
(a) The August 15, 2000 distribution does not include a return of
capital of approximately $287.0484 per unit. The May 15, 2000
distribution does not include a return of capital of approximately
$41.3160 per Unit. The February 15, 2000 distribution does not
include a return of capital of approximately $5.6013 per Unit.
(b) The May 1999 distribution was made on May 17, 1999. In addition
the August 15, 1999 amount does not include a return of capital
distribution of approximately $5.2048 per Unit, and the November 15,
1999 amount does not include a return of capital distribution of
approximately $85.3273 per Unit.
(c) The 1998 distributions were made on May 8, 1998, August 15, 1998,
November 15, 1998, and February 15, 1999 respectively, and the amounts
indicated above do not include return of capital distributions of
approximately $18.4152, $15.1571, $0.00, and $0.00 per Unit,
respectively.
(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 Limited Partners 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
$23,424, $39,857, and $40,657, respectively. In January 1999, the
Partnership paid the General Partners approximately $19,800 as an
Operating Cash Flow distribution for the year ended December 31,
1998. As a result of the August 7, 2000 sale the General Partners
were paid a distribution in the amount of $109,535.
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 Limited Partners 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 Limited Partners
(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 Limited Partners. Consummation of such
sale, merger, exchange, or other transaction will be followed by
the orderly distribution of net liquidation proceeds to the Limited
Partners.
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 for the
Northern District of Illinois approved a bid for the sale of the
Partnership's Assets in an amount of approximately $20,242,700.
This bid was subject to certain contingencies and was subsequently
rejected by the potential purchaser.
In January, 2000, the Partnership sold the Ponderosa unit 128
located in Bloomington, Illinois for $368,727. Also, in January,
2000, the Partnership sold Chi Chi's unit 366 located in
Clarksville, Tennessee for $1,296,480.
In 2000, an affiliated entity proposed purchasing all of the
remaining Partnership's Assets for approximately $18,398,000
(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 two of the Partnership's properties. One of the
two remaining properties was sold in January 2001 to an affiliated
purchaser. The Partnership continues to conduct certain
environmental due diligence related to the last remaining property.
The Partnership intends to liquidate this asset as soon as
practical.
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 generally accepted accounting principles,
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, the
Partnership recorded rental income on a straight line basis over
the life of the related leases. Differences between rental income
earned and amounts due per the respective lease agreements were
credited or charged, as applicable, to deferred rent receivable.
Upon adoption of the liquidation basis of accounting, the
Partnership wrote off the remaining deferred rent receivable and
ceased recording credits or charges to rental income to reflect
straight lining of the related leases.
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 two 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
18, 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 $968,545 compared to net income of
$2,677,113 for the year ended December 31, 1997, a decrease of
$1,708,568. The decrease in net income is primarily due to the
$1,306,000 impairment for an other than temporary decline in the
value of the partnerships properties.
Total income for the year ended December 31, 1998 was
$4,191,659 compared to $4,410,859 for the year ended December 31,
1997, a decrease of $219,200. The decrease in total income was a
result of a 1997 one-time settlement of outstanding issues with a
major tenant of the Partnership which increased rental income.
Further, rental income also declined as a result of the 1998
property sales. Additionally, total income declined as a result of
decreased interest income which is a result of decreased funds
invested during 1998.
Total expenses for the year ended December 31, 1998 were
$2,842,462 compared to $1,459,974 for the year ended December 31,
1997, an increase of approximately $1,382,500. The increase in
total expenses was primarily due to the impairment for an other
than temporary decline in the value of real estate of approximately
$1,306,000, which was recorded in 1998. Depreciation expense in
1998 was $667,467 compared to $708,742 in 1997, a decrease of
$41,275, due primarily to the impairment for an other than
temporary decline in the value of real estate and the two 1998
property sales. In addition, total expenses increased as a result
of an increase in valuation fees of $184,500 in 1998. Partially
offsetting these increases in expenses was a decrease in
Transaction costs of approximately $56,324 in 1998 as compared to
1997.
Impact of Inflation
Since all but two 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. Consolidated Financial Statements and Supplementary
Data.
See Index to Consolidated Financial Statements and Schedule on
Page F-1 of this Annual Report on Form 10-K for consolidated
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 II, Inc., an Illinois corporation
Mr. Jerome J. Brault, individually
Brauvin Realty Advisors II, Inc. (the "Corporate General
Partner") was formed under the laws of the State of Illinois in
1988, 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 and Chief
Executive Officer
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, 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 a manager of Brauvin Real Estate Funds, L.L.C.,
Brauvin Capital Trust, L.L.C. and BA/Brauvin L.L.C. 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 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 worked 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. degree 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 10 to 12
of the Partnership's Prospectus, as supplemented, and the sections
of the Agreement entitled "Distribution 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-10 to A-15 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 4 of the Notes to the Consolidated
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 designated and 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 6% of
the gross proceeds of the Offering. No amounts were paid in 2000,
1999 or 1998.
As described in Item 7, the General Partners were also entitled
to receive any portion of the 1% of the gross proceeds of the
Offering placed in the Distribution Guaranty Reserve not utilized
to pay the Distribution Guaranty through the Distribution Guaranty
Termination Date. The General Partners received approximately
$140,000 in consideration for providing such guaranty to the
Partnership through the Distribution Guaranty Termination date of
July 28, 1989. However, in order to continue to maintain the 9.25%
per annum distribution through December 31, 1990, the General
Partners agreed to continue the Distribution Guaranty up to the net
$140,000 of Distribution Guaranty previously paid to them. At
December 31, 2000, 1999, and 1998, $140,000 was due from the
General Partners related to the Distribution Guaranty.
An affiliate of the General Partners provides leasing and
re-leasing services to the Partnership in connection with the
management of Partnership properties. The maximum property
management fee payable 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 fee by the General Partners or their affiliates is
subordinated to the receipt by the Limited Partners of a 9%
non-cumulative, non-compounded annual return on Adjusted
Investment. An affiliate of the General Partners received $23,424,
$40,814, and $40,477 in 2000, 1999 and 1998, respectively, for
providing such services to the Partnership.
(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 $ 20,789 $ 39,857 $ 40,657
Reimbursable operating expenses 300,675 188,618 161,072
As of December 31, 2000, the Partnership has made all payments
to affiliates except for $23,262 related to real estate taxes to be
reimbursed to the affiliated purchaser. As of December 31, 1999
and 1998 the Partnership made all payments to affiliates except for
$2,635 and $3,592, respectively related to management fees.
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) None of the officers and directors of the Corporate
General Partner purchased Units.
(c) Other than as described in the Proxy, the
Partnership is not aware of any arrangements which
may result in a change in control of the
Partnership.
No officer or director of the Corporate General Partner
possesses a right to acquire beneficial ownership of Units. 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 sections of the
Partnership's Prospectus, as supplemented, entitled
"Compensation Table" and "Conflicts of Interest" at pages
10 to 15 and the section of the Agreement entitled
"Rights, Duties and Obligations of General Partners" at
pages A-17 to A-20 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, the General
Partners and certain of its affiliates.
(c) The original General Partners owe the Partnership, at
December 31, 2000, 1999 and 1998, approximately $140,000.
(d) There have been no transactions with promoters.
PART IV
Item 14. Exhibits, Consolidated Financial Statement Schedules, and
Reports on Form 8-K.
(a) The following documents are filed as part of this report:
(1) (2) Consolidated Financial Statements and Schedule indicated
in Part II, Item 8 "Consolidated Financial Statements and
Supplementary Data." (See Index to Consolidated 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. 33-21928) 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 II, Inc.
3.(c) By-Laws of Brauvin Realty Advisors II, 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
Limited Partners subsequent to this filing.
The following exhibits are incorporated by references to the
Registrant's fiscal year ended December 31, 1995 Form 10-K (File
No. 0-17756):
Exhibit No. Description
(10)(b)(1) Management Agreement
(19)(a) Amendment to Distribution Reinvestment Plan
(28) Pages 8-15 of the Partnership's Prospectus
dated June 17, 1988 as supplemented, and pages
A-10 to A-15 and A-17 to A-20 of the Agreement.
The following exhibits are incorporated by reference to the
Registrant's definitive proxy statement dated August 23, 1997 (File
No. 0-17557):
Exhibit No. Description
(10)(c) Merger Agreement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BRAUVIN HIGH YIELD FUND L.P. II
BY: Brauvin Realty Advisors II, Inc.
Corporate General Partner
By:/s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of Directors,
President and Chief Executive
Officer and Director
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
By:/s/ Jerome J. Brault
Jerome J. Brault
DATED: March 30, 2001
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Consolidated Financial Statements:
Consolidated Statements of Net Assets in Liquidation
as of December 31, 2000 (Liquidation Basis) and
December 31, 1999 (Liquidation Basis). . . . . . . . . . . . . . F-3
Consolidated Statement of Changes in Net Assets
in Liquidation for the year ended December 31, 2000
(Liquidation Basis). . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated 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
Consolidated 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-26
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. II
Chicago, Illinois
We have audited the accompanying consolidated financial statements
of Brauvin High Yield Fund L.P. II, as of December 31, 2000, and
for the years ended December 31, 2000, 1999 and 1998 as listed in
the index to consolidated financial statements. These consolidated
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 consolidated financial statements present
fairly, in all material respects, the financial position of Brauvin
High Yield Fund L.P. II and subsidiaries, at December 31, 2000, and
the results of their operations for the years ended December 31,
2000, 1999 and 1998 and their 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
CONSOLIDATED STATEMENTS 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 $ 589,495 $23,203,800
Cash and cash equivalents 5,315,759 1,160,591
Restricted cash 326,057 310,785
Rent receivable 9,550 148,749
Due from General Partners (Note 4) 140,000 140,000
Total Assets $ 6,380,861 $24,963,925
LIABILITIES
Accounts payable and accrued
expenses $ 444,861 $ 400,573
Rent received in advance -- 36,968
Due to an affiliate (Note 4) 23,262 2,635
Deferred gain on sale of property 72,060 2,541,216
Reserve for estimated liquidation
costs 174,200 174,200
Tenant security deposits 1,116 58,607
Total Liabilities 715,499 3,214,199
MINORITY INTEREST:
Brauvin High Yield Venture -- 15,543
Brauvin Funds Joint Venture -- 2,177,679
Net Assets in Liquidation $ 5,665,362 $19,556,504
See accompanying notes to consolidated financial statements.
CONSOLIDATED 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 $24,898,268
Income from operations 1,864,433
Gain on sale of property 498,713
Minority interest share of
loss from Joint Ventures 64,740
Equity interest in Brauvin
Bay County Venture net loss (19,983)
Limited Partners operating
distributions (a) (1,650,243)
Return of capital distributions
to Limited Partners (b) (3,652,700)
Adjustment to liquidation basis (2,446,724)
Net Assets in Liquidation
at January 1, 2000 19,556,504
Income from operations 1,879,457
Gain on sale of property 3,881,003
Minority interest in share of
income from Joint Ventures (1,039,181)
Operating distributions to Limited
Partners (a) (2,805,290)
Operating distributions to General
Partners (109,535)
Return of capital distributions
to Limited Partners (b) (13,474,720)
Adjustment to liquidation basis (2,222,876)
Net Assets in Liquidation
at December 31, 2000 $ 5,665,362
(a) Operating distributions are approximately $40.9013 per Unit.
(b) Return of capital distributions are approximately $90.5321 per
Unit.
(c) Operating distributions are approximately $69.5280 per Unit.
(d) Return of capital distributions are approximately $333.9657 per
Unit.
See accompanying notes to financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Liquidation Basis) (Going Concern Basis)
Year Ended June 19, 1999 January 1, For the year
December 31, to December 1999 to Ended December
2000 31, 1999 June 18, 1999 31, 1998
INCOME
Rental $2,004,169 $1,985,016 $2,013,600 $4,070,823
Interest 289,018 47,468 35,469 116,702
Other 129,688 706 67,075 4,134
Total income 2,422,875 2,033,190 2,116,144 4,191,659
EXPENSES
General and administrative 449,385 80,229 193,806 349,764
Management fees (Note 4) 20,789 19,129 20,728 40,657
Amortization of deferred
organization costs and
other assets -- -- 1,306 5,089
Depreciation -- -- 317,477 667,467
Transaction costs (Note 7) 73,244 69,399 187,552 288,985
Valuation fees -- -- -- 184,500
Impairment(Note 6) -- -- -- 1,306,000
Total expenses 543,418 168,757 720,869 2,842,462
Income before gain (loss) on
sale of property and minority
interest and equity interests'
share of net income 1,879,457 1,864,433 1,395,275 1,349,197
Gain(loss)on sale of
property 3,881,003 498,713 25,108 (110,741)
Income before minority interest
and equity interest's share in
net income 5,760,460 2,363,146 1,420,383 1,238,456
Minority interest's share
in Joint Venture
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)
Total minority interest's share
in net (income)
loss (1,039,181) 64,740 (148,196) (292,328)
Equity interest in:
Brauvin Bay County Venture's
net (loss) income -- (19,983) 11,299 22,417
Income before adjustment
to liquidation basis 4,721,279 2,407,903 1,283,486 968,545
Adjustment to
liquidation basis (2,222,876) (2,446,724) -- --
Net income (loss) $ 2,498,403 $ (38,821) $1,283,486 $ 968,545
Net income (loss) allocated to:
General Partners $ 62,460 $ (970) $ 32,087 $ 24,214
Limited Partners $ 2,435,943 $ (37,851) $1,251,399 $ 944,331
Net (loss) income per
Unit outstanding (a) $ 60.68 $ (0.94) $ 31.02 $ 23.41
(a) Net income per Unit is based on the average Units outstanding
during the year since they were of varying dollar amounts and
percentages based upon the dates Limited Partners were admitted to the
Partnership and additional units were purchased through the distribution
reinvestment plan (the "Plan").
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31, 1998
(Going Concern Basis)
Cash Flows From Operating Activities:
Net income $968,545
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 672,556
Provision for impairment 1,306,000
Loss on sale of property 110,741
Minority interest's share of income:
Brauvin High Yield Venture 1,424
Brauvin Funds Joint Venture 290,904
Equity interest share of income
from Brauvin Bay County Venture (22,417)
Changes in:
Rent receivable 3,352
Deferred rent receivable (67,563)
Other assets 3
Accounts payable and accrued expenses 211,783
Rent received in advance (14,984)
Due to affiliate 180
Tenant security deposits (2,089)
Net cash provided by operating activities 3,458,435
Cash Flows From Investing Activities:
Proceeds from sale of property 1,354,538
Change in undisbursed insurance proceeds (199,452)
Distributions from Brauvin Bay County Venture 23,140
Net cash provided by investing activities 1,178,226
Cash Flows From Financing Activities:
Return of capital to Limited Partners (1,354,535)
Cash distributions to Limited Partners (2,552,358)
Cash distribution to General Partners (19,800)
Return of capital to minority interest
Brauvin High Yield Venture (7,505)
Cash distribution to minority interest:
Brauvin High Yield Venture (6,200)
Brauvin Funds Joint Venture (308,700)
Net cash used in financing activities (4,249,098)
Net increase in cash and cash equivalents 387,563
Cash and cash equivalents at beginning of year 1,198,267
Cash and cash equivalents at end of year $1,585,830
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2000, 1999 and 1998
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
BRAUVIN HIGH YIELD FUND L.P. II (the "Partnership") is a
Delaware limited partnership organized for the purpose of acquiring
debt-free ownership of existing, free-standing, income-producing
retail, office or industrial real estate properties predominantly
all of which are subject to "triple-net" leases. The General
Partners of the Partnership are Brauvin Realty Advisors II, Inc.
and Jerome J. Brault. Brauvin Realty Advisors II, Inc. is owned
primarily by Messrs. Brault (beneficially) (44%) and Cezar M.
Froelich (44%). Mr. Froelich resigned as a director of Brauvin
Realty Advisors II, Inc. in December 1994 and as an Individual
General Partner effective as of September 17, 1996. Brauvin
Securities, Inc., an affiliate of the General Partners, is the
selling agent of the Partnership.
The Partnership was formed on May 3, 1988 and filed a
Registration Statement on Form S-11 with the Securities and
Exchange Commission which became effective on June 17, 1988. The
minimum of $1,200,000 of limited partnership interests of the
Partnership (the "Units") necessary for the Partnership to commence
operations was achieved on July 26, 1988. The offering was
anticipated to close on June 16, 1989 but was extended until and
closed on September 30, 1989. A total of $38,923,000 of Units were
subscribed for and issued between June 17, 1988 and September 30,
1989, pursuant to the Partnership's public offering. Through
December 31, 2000, the Partnership has sold $42,982,178 of Units.
This total includes $4,059,178 of Units, purchased by Limited
Partners who utilized their distributions of Operating Cash Flow to
purchase Units through the distribution reinvestment plan (the
"Plan"). Units valued at $2,886,915 have been repurchased by the
Partnership from Limited Partners liquidating their investment in
the Partnership and have been retired as of December 31, 2000. As
of December 31, 2000, the Plan participants have acquired Units
under the Plan which approximate 9% of the total Units outstanding.
The Partnership acquired the land and buildings underlying 14
Ponderosa restaurants, two Taco Bell restaurants, three Children's
World Learning Centers, three Hardee's restaurants, one Blockbuster
Video store, three Avis Lube Oil Change Centers and three Chi-Chi's
restaurants. Also acquired were 99%, 51% and 26% equity interests
in three joint ventures with affiliated entities, which ventures
purchased the land and buildings underlying six Ponderosa
restaurants, a Scandinavian Health Spa and a Blockbuster Video
store, respectively. In 1995, the Partnership and Metromedia, the
parent of Ponderosa Restaurants, exchanged one of the Ponderosa
restaurants for a Tony Roma's restaurant.
In February 1994, the Partnership sold the Taco Bell Restaurant
located in Schofield, Wisconsin. In January 1998, the joint
venture partnership sold Ponderosa unit 850 located in Mansfield,
Ohio. In April 1998, the Partnership sold Ponderosa unit 876
located in Sweden, New York. In June 1999, the Partnership sold the
former Hardee's property located in Albion, Michigan. In October
1999, the Partnership sold four Ponderosa units located in
Appleton, Wisconsin; Oneonta, New York; Middletown, New York and
Eureka, Missouri. In December 1999, the Partnership sold its joint
venture interest in the Blockbuster Video Store to an affiliated
entity.
In January, 2000, the Partnership sold the Ponderosa Unit 128
located in Bloomington, Illinois and the Chi Chis Unit 366 located
in Clarksville, Tennessee.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but two of the Partnership's properties. In January
2001, an affiliated party purchased one of the properties. The
Partnership continues to conduct certain environmental studies
related to the Partnership's remaining property.
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 7) 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.
Rental Income
Prior to the preparation of the financial statements on a
liquidation basis, rental income was recognized on a straight line
basis over the life of the related leases. Differences between
rental income earned and amounts due per the respective lease
agreements were credited or charged, as applicable, to deferred
rent receivable.
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 preparation of the financial statements on a
liquidation basis, the operating properties acquired by the
Partnership were stated at cost including acquisition costs and 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 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 8.
Consolidation of Joint Ventures
Prior to August 7, 2000, the Partnership owned a 99% equity
interest in a joint venture, Brauvin High Yield Venture, which
owned five Ponderosa restaurants, and a 51% equity interest in
another joint venture, Brauvin Funds Joint Venture, which owned a
Scandinavian Health Spa. The accompanying financial statements
have consolidated 100% of the assets, liabilities, operations and
partners' capital of these ventures. All significant intercompany
accounts have been eliminated.
Investment in Joint Venture
Prior to December 30, 1999, the Partnership owned a 26% equity
interest in a joint venture, Brauvin Bay County Venture, which
owned one Blockbuster Video Store. On December 30, 1999, the
Partnership sold its equity interest in this joint venture to an
affiliated entity. The accompanying financial statements include
the investment in Brauvin Bay County Venture using the equity
method of accounting.
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 7) 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 Limited Partners, 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.
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.
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
December 31, 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; rent
receivable; due from General Partners; accounts payable and accrued
expenses; rent received in advance; due to an affiliate; and tenant
security deposits.
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 net assets of $2,446,724 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) $2,541,216
Decrease in value of real estate (1,773,678)
Write-off deferred rents receivable (480,440)
Write-off prepaid offering costs (18,406)
Increase in deferred gain on sale
of real estate (2,541,216)
Estimated liquidation costs (174,200)
Total adjustment to liquidation basis $(2,446,724)
(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 $20,242,693. 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 January, 2000, the Partnership sold the Ponderosa unit 128
located in Bloomington, Illinois for $368,727 resulting in a
decrease in the real estate held for sale in the amount $386,801
and a loss on sale of property in the amount of $26,277. Also, in
January, 2000, the Partnership sold Chi Chi's unit 366 located in
Clarksville, Tennessee for $1,296,480 resulting in a decrease in
the real estate held for sale in the amount of $1,264,217, a gain
on the sale of property of $499,978, and a reduction in deferred
gain of $506,177.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's Assets for approximately $18,398,000 (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 of June 30, 2000, the Partnership adjusted its investment in
real estate to the offer that was presented to the Special Master
less all estimated closing costs. The effect of this adjustment
was a reduction in the real estate held for sale of $693,115, an
increase in the deferred gain on the sale of real estate of
$1,562,998 and the recording of a further adjustment to the
liquidation basis of accounting of $2,222,876.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but two of the Partnership's properties. In January
2001, an affiliated party purchased one of the properties. The
Partnership continues to conduct certain environmental studies
related to the Partnership's remaining property.
(3) PARTNERSHIP AGREEMENT
Distributions
All Operating Cash Flow, as defined in the Partnership Agreement
(the "Agreement"), shall be distributed: (a) first, to the Limited
Partners until the Limited Partners 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 97.5% to the Limited Partners and 2.5% to the General
Partners. The net proceeds of a sale or refinancing of a
Partnership property shall be distributed as follows:
first, to the Limited Partners until the Limited Partners have
received an amount equal to the 10% Cumulative Preferred Return,
as such term is defined in the Agreement;
second, to the Limited Partners until the Limited Partners have
received an amount equal to the amount of their Adjusted
Investment, as such term is defined in the Agreement; and
third, 95% to the Limited Partners and 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 between the Limited Partners and the General
Partners in accordance with the ratio of aggregate distributions of
Operating Cash Flow attributable to such tax year, although if no
distributions are made in any year, net losses (computed without
regard to any allowance for depreciation or cost recovery
deductions under the Code) shall be allocated 99% to the Limited
Partners and 1% to the General Partners. Notwithstanding the
foregoing, all depreciation and cost recovery deductions allowed
under the Code shall be allocated 2.5% to the General Partners and
97.5% to the Taxable Class Limited Partners, 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
Limited Partners until the Limited Partners have been allocated an
amount of profits equal to their 10% Cumulative Preferred Return as
of such date; (c) third, to the Limited Partners until the Limited
Partners have been allocated an amount of profit equal to the
amount of their Adjusted Investment; and (d) thereafter, 95% to the
Limited Partners 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 Account balances; and (b) thereafter,
95% to the Limited Partners and 5% 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 property 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 Limited Partners of a 9% non-cumulative, non-compounded return
on their Adjusted Investment.
The original General Partners owe the Partnership $140,000 at
December 31, 2000 and December 31, 1999, relating to the
Distribution Guaranty Reserve.
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.
The Partnership pays an affiliate of the General Partners an
acquisition fee in the amount of up to 6% 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.
An affiliate of one of the General Partners provided securities
and real estate counsel to the Partnership.
Fees, commissions and other expenses paid or payable to the
General Partners or its affiliates for the years ended December 31,
2000, 1999 and 1998 were as follows:
2000 1999 1998
Management fees $ 20,789 $ 39,857 $ 40,657
Reimbursable operating
expenses 300,675 188,618 161,072
As of December 31, 2000 the Partnership owed an affiliated entity
$23,262 related to real estate tax prorations. As of December 31,
1999 and 1998, the Partnership made all payments to affiliates
except for $2,635 and $3,592 respectively, related to management
fees.
(5) WORKING CAPITAL RESERVES
As contemplated in the Prospectus, the distributions prior to
full property specification exceeded the amount of Operating Cash
Flow, as such term is defined in the Agreement, available for
distribution. The Partnership set aside 1% of the gross proceeds
of its offering in a reserve (the "Distribution Guaranty Reserve").
The Distribution Guaranty Reserve was structured so as to enable
the Partnership to make quarterly distributions of Operating Cash
Flow equal to at least 9.25% per annum on Adjusted Investment
during the period from the Escrow Termination Date (February 28,
1989), as such term is defined in Section H.3 of the Agreement,
through the earlier of: (i) the first anniversary of the Escrow
Termination Date (February 28, 1990); or (ii) the expenditure of
95% of the proceeds available for investment in properties, which
date was July 26, 1989. The original General Partners guaranteed
payment of any amounts in excess of the Distribution Guaranty
Reserve and were entitled to receive any amounts of the
Distribution Guaranty Reserve not used to fund distributions.
The Partnership's acquisition process was not completed until
March 1991 due to an unusually high number of properties being
declined during the due diligence process because of the General
Partners' unwillingness to lower the Partnership's investment
standards. As a result, the Partnership had a substantial amount
of cash invested in short-term investments, as opposed to
properties and during 1990 did not generate sufficient Operating
Cash Flow to fully support the distributions to Limited Partners.
In order to continue to maintain the 9.25% per annum distribution
through December 31, 1990, the original General Partners agreed to
continue the Distribution Guaranty up to the net $140,000 of
Distribution Guaranty previously paid to them. At December 30,
2000, 1999 and 1998, $140,000 was due from the original General
Partners related to the Distribution Guaranty.
(6) IMPAIRMENT
During the first quarter of 1998, the Partnership recorded an
impairment of $130,000 related to an other than temporary decline
in the value of the real estate for the Ponderosa located in
Sweden, 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).
During the fourth quarter of 1998, the Partnership recorded an
impairment of $984,000 related to an other than temporary decline
in real estate for Ponderosa properties in various locations. An
impairment of $192,000 related to an other than temporary decline
in real estate was also recorded for Hardee's properties located in
Michigan. These impairments were recorded as a reduction of the
properties' cost, and allocated to the land and buildings based on
the original acquisition cost allocation of 30% (land) and 70%
(building).
(7) 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,
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 Limited Partners 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 Limited Partners
(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 Limited Partners. Consummation of such
sale, merger, exchange, or other transaction will be followed by
the orderly distribution of net liquidation proceeds to the Limited
Partners.
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. Part of this
indemnification and release will be contingent on the issuance of
a certification by the Special Master stating that the General
Partners fully cooperated with him and complied with certain other
conditions.
On November 19, 1999, the United States District Court for the
Northern District of Illinois approved a bid for the sale of the
Partnership's Assets in an amount of approximately $20,242,700.
This bid was subject to certain contingencies and was subsequently
rejected by the potential purchaser.
In January, 2000, the Partnership sold the Ponderosa unit 128
located in Bloomington, Illinois for $368,727. Also, in January,
2000, the Partnership sold Chi Chi's unit 366 located in
Clarksville, Tennessee for $1,296,480.
In 2000, an affiliated entity proposed purchasing all of the
remaining Partnership's Assets for approximately $18,398,000
(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 two of the Partnership's properties. One of the
two remaining properties was sold in January 2001 to an affiliated
purchaser. The Partnership continues to conduct certain
environmental due diligence related to the last remaining property.
The Partnership intends to liquidate this asset as soon as
practical.
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 Limited Partners 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.
(8) SALE OF PARTNERSHIP ASSETS
In January, 2000, the Partnership sold the Ponderosa unit 128
located in Bloomington, Illinois for a net amount of approximately
$369,000 resulting in a decrease in the real estate held for sale
in the amount of approximately $387,000 and a loss on sale of
property in the amount of approximately $26,000. Also, in January,
2000, the Partnership sold Chi Chi's unit 366 located in
Clarksville, Tennessee for a net amount of approximately $1,296,000
resulting in a decrease in the real estate held for sale in the
amount of approximately $1,264,000, a gain on the sale of property
of approximately $500,000, and a reduction in deferred gain of
approximately $506,000.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's Assets for approximately $18,398,000 (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 of June 30, 2000, the Partnership adjusted its investment in
real estate to the offer that was presented to the Special Master
less all estimated closing costs. The effect of this adjustment
was a reduction in the real estate held for sale of $693,115, an
increase in the deferred gain on the sale of real estate of
$1,562,998 and the recording of a further adjustment to the
liquidation basis of accounting of $2,222,876.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but two of the Partnership's properties. One of the
two remaining properties continues to be under contract to the
affiliated purchaser. The proposed purchaser continues to conduct
certain environmental due diligence related to this property.
(9) INVESTMENT IN JOINT VENTURE
The Partnership owned an equity interest in the Brauvin
Bay County Venture, which it sold to an affiliated entity on
December 30, 1999 for approximately $232,500 and reported its
investment on the equity method.
The following are condensed financial statements for the Brauvin
Bay County Venture:
BRAUVIN BAY COUNTY VENTURE
December 31, December 31,
1999 1998
Land and buildings, net -- $1,033,942
Other assets -- 17,330
-- $1,051,272
Liabilities -- $4,296
Partners' capital -- 1,046,976
-- $1,051,272
Liquidation Basis Going Concern Basis
June 19, 1999 January 1, Years Ended
to December 30, 1999 to December 31,
1999 June 18, 1999 1998 1999
Rental and other income $ 56,473 $54,625 $110,782 $109,985
Expenses:
Depreciation -- 8,823 17,646 17,689
Management fees 501 794 1,079 1,178
Operating and
administrative 2,042 1,550 5,838 20,014
Loss on sale
of property 130,788 -- -- --
133,331 11,167 24,563 38,881
Net (loss) income $(76,858) $43,458 $ 86,219 $ 71,104
(10) ENVIRONMENTAL REMEDIATION EXPENSE
In connection with the Merger (see Note 7), the Partnership has
undertaken environmental studies of potentially affected
properties. Three of the Partnership's properties have been
identified by the environmental study as having a potential
environmental issue. On all of the sites a remedial investigation
and feasibility study has been completed, and the results of that
study have been forwarded to the appropriate authorities. The
study indicates 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 other two
sites requires further review and at this time the Partnership is
unable to estimate the potential costs to complete the
environmental remediation.
(11) LEASES
The Partnership's rental income is principally obtained from
tenants through rental payments provided under triple-net
noncancellable operating leases.
The Partnership sold its remaining property under lease to an
affiliate in January 2001, therefore, a presentation of a five year
minimum rent schedule is inappropriate.
(12) SUBSEQUENT EVENTS
Property Sale:
In January, 2001 an affiliated party purchased the Avis Lube
located in Conway for $275,000.
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. II
(a Delaware limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2000
Gross Amount at Which Carried
Initial Cost at Close of Period
Real
Buildings Cost of Buildings Estate
and Subsequent and Held for Accumulated Date
Description Encumbrances (c) Land Improvements Improvements Land Improvements Sale Depreciation (b) Acquired
Ponderosas - BHYF II $0 $ 3,907,384 $9,117,233 $0 $3,420,437 $7,981,017 $ 0 $2,470,027 9/88-11/89
Ponderosas - BHYV 0 1,810,770 4,225,129 0 1,413,165 3,297,387 0 1,060,653 9/88
Taco Bell 0 128,236 299,218 0 128,236 299,218 0 89,349 1/89
Scandinavian
Health Spa-BFJV 0 1,657,861 3,868,342 0 1,657,861 3,868,342 0 1,095,039 7/89
Children's World
Learning Centers 0 771,140 1,799,327 0 771,140 1,799,327 0 461,797 1/90-9/90
Hardee's Restaurants 0 729,798 1,702,861 0 265,219 618,845 0 219,296 5/90-7/90
Avis Lubes 0 507,620 1,184,448 0 507,620 1,184,448 589,495 304,347 6/90-8/90
Blockbuster Video Store 0 354,644 827,501 0 354,644 827,501 0 209,999 9/90
Chi-Chi's Restaurants 0 1,408,671 2,150,981 0 1,408,671 2,150,981 0 649,718 3/91
Adjustment to
liquidation basis 0 0 0 0 (9,926,993)(22,027,066) 0 (6,560,225)
$0 $11,276,124 $25,175,040 $0 $ 0 $ 0 $589,495 $ 0
NOTES:
(a) The cost of this real estate is $34,616,656 for tax purposes (unaudited). The buildings are depreciated over
approximately 35 years using the straight line method. The properties were constructed between 1969 and 1990.
(b) The following schedule summarizes the changes in the Partnership's real estate and accumulated depreciation
balances:
SCHEDULE III - continued
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
Real estate 2000 1999 1998
Balance at beginning of year $23,203,800 $32,260,654 $35,401,164
Adjustment to liquidation basis (2,222,876) (1,779,679) -
Property sales (20,391,429) (7,277,175) (1,834,510)
Subtractions - land and buildings(d) -- (1,306,000)
Balance at end of year $ 589,495 $23,203,800 $32,260,654
Accumulated depreciation 2000 1999 1998
Balance at beginning of year $-- $ 6,364,451 $ 6,066,215
Property sales -- (121,703) (369,231)
Provision for depreciation -- 317,477 667,467
Adjustment to liquidation basis (6,560,225) -
Balance at end of year $-- $ -- $ 6,364,451
(c) Encumbrances - Brauvin High Yield Fund L.P. II did not borrow cash in order to purchase its properties.
100% of the land and buildings were paid for with funds contributed by the Limited Partners.
(d) The 1998 amount reflects a provision for impairment of land of $391,800 and buildings of $914,200, related to
Ponderosas, Brauvin High Yield Fund Ponderosas, and Hardee's.
EXHIBITS
TO
BRAUVIN HIGH YIELD FUND L.P. II
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2000
EXHIBIT INDEX
BRAUVIN HIGH YIELD FUND L.P. II
FORM 10-K
For the fiscal year ended December 31, 2000
Exhibit (21) Subsidiaries of the Registrant
Exhibit 21
Name of Subsidiary State of Formation
Brauvin High Yield Venture Illinois
Brauvin Funds Joint Venture Illinois