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, 2001
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
2001 FORM 10-K ANNUAL REPORT
INDEX
PART I
Page
Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . .5
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 20
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 21
PART II
Item 5. Market for the Registrant's Units and Related
Security Holder Matters . . . . . . . . . . . . . . . . . . . 22
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . 23
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . 25
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . 30
Item 8. Consolidated Financial Statements and Supplementary
Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . 30
PART III
Item 10. Directors and Executive Officers of the Partnership 31
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . 32
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . . 35
Item 13. Certain Relationships and Related Transactions. . . . . . . . 35
PART IV
Item 14. Exhibits, Consolidated Financial Statement
Schedules and Reports on Form 8-K . . . . . . . . . . . . . . 36
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
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 were purchased by Limited Partners
investing their distributions of Operating Cash Flow in the
Partnership's distribution reinvestment plan (the "Plan") through
December 31, 2001. 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, 2001, $2,886,915 were 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 was 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 Partnership's
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 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 were 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. In January
2001, an affiliated party purchased one of the properties for a
contract sales price of $275,000. In December 2001, the sole
remaining property was sold to a third party for a contract sales
price of $350,000.
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.
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 properties for a
contract sales price of $275,000. In December 2001, the sole
remaining property was sold to a third party for a contract sales
price of $350,000.
The following is a summary of the real estate and improvements
formally owned by the Partnership at January 1, 1999, and
subsequent transactions related thereto.
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.
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.
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.
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 received
lease termination payments from the tenant in the amount of
approximately $45,700.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 had 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.
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.
On August 7, 2000 this property was sold for approximately
$6,250,000 less expenses of approximately $133,400 to an affiliated
party. This sale resulted in a gain to the joint venture of
approximately $1,693,000.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
In January 2001, this property was sold for approximately
$275,000 less expenses of approximately $5,000 to an affiliated
party. This sale resulted in a loss to the Partnership of
approximately $5,000.
All rental income recorded in 2001 relates to this property.
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.
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.
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.
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.
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.
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 was for 42 months and provided for annual base rent of
$55,000. The tenant did not renew the lease, and this property
remained vacant through 2001.
In December 2001, this property was sold for approximately
$350,000 less expenses of approximately $29,000 to an unaffiliated
third party. This sale resulted in a gain to the Partnership of
approximately $73,000.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Chi-Chi's:
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.
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.
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.
Joint Venture Blockbuster:
Callaway, Florida
The Partnership owned 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.
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. On
November 8, 2001, the Magistrate Judge for the United States
district Court for the Northern District of Illinois ruled on the
plaintiff's legal fee petition. As a result of this ruling the
Partnership will be required to pay the plaintiff's attorneys
approximately $220,000. However, the applicable appeal period has
not yet expired, and it is uncertain whether the amount (or a
greater or lesser amount) will actually be paid by the Partnership.
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, 2001, there were approximately 2,586 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.
The Partnership intends to make a liquidating distribution to
the Limited Partners from the net sale proceeds remaining from the
Partnership's properties after payment of all legal and operating
expenses. The Partnership may make partial distributions of the
proceeds prior to the final distribution. The timing of the
liquidating distribution has not yet been determined.
Cash distributions to Limited Partners for 2001, 2000 and 1999
were $0, $16,280,010, and $7,225,048, respectively. Included in
the cash distributions for 2000 and 1999 are return of capital
distributions of $13,474,720 and $3,652,700, 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. 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, 2001, 2000 and 1999
2001 2000 1999(e)
Selected Income Statement Data:
Rental income (a) $ 682 $2,004,169 $ 3,998,616
Interest income 234,210 289,018 82,937
Net (loss) income (149,870) 2,498,403 1,244,665
Net (loss) income
Per Unit (b) $ (3.62) $ 60.37 $ 30.08
Selected Balance Sheet Data:
Cash and cash equivalents $5,477,530 $5,315,759 $ 1,160,591
Real estate held for sale -- 589,495 23,203,800
Total Assets 5,938,099 6,380,861 24,963,925
Cash distributions to
Limited Partners (c)(d) -- 2,805,290 3,782,348
Cash distributions to Limited
Partners Per Unit (b)(d) $ -- $ 69.53 $ 93.74
(a) This includes $0, $0, and $2,777 of non-cash income related to
the change in the deferred rent receivable balance for 2001,
2000, and 1999, respectively.
(b) Net income per Unit and cash distributions to Limited Partners
per Unit are based on 40,348 Units outstanding.
(c) This includes $8,815 paid to various states for income taxes on
behalf of all Limited Partners for the year 1999.
(d) Not included in cash distributions to Limited Partners and the
per Unit calculation was Return of Capital Distributions in 2000
and 1999 of $13,474,720 and $3,652,700, respectively which is
$333.97 and $90.53 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, 1998 and 1997
1998 1997
Selected Income Statement Data:
Rental income (a) $4,070,823 $ 4,239,915
Interest income 116,702 161,260
Net income 968,545 2,677,113
Net income Per Unit (b) $ 23.41 $ 65.78
Selected Balance Sheet Data:
Cash and cash equivalents $1,585,830 $ 1,198,267
Land and buildings 32,260,654 35,401,164
Total Assets 28,471,346 31,464,133
Cash distributions to
Limited Partners (c)(d) 2,552,358 4,787,596
Cash distributions to Limited
Partners Per Unit (b)(d) $ 63.26 $ 118.66
(a) This includes $67,563 and $67,561 of non-cash income related to
the change in the deferred rent receivable balance for 1998 and
1997, respectively.
(b) Net income per Unit and cash distributions to Limited Partners
per Unit are based on 40,348 Units outstanding.
(c) This includes $11,521 and $10,278 paid to various states for
income taxes on behalf of all Limited Partners for the years
1998 and 1997, respectively.
(d) Not included in cash distributions to Limited Partners and the
per Unit calculation was Return of Capital Distributions in
1998 of $1,354,535, which is $33.57 per unit.
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.
Liquidity and Capital Resources
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.
On April 13, 1999, all the parties to the litigation reached an
agreement to settle the litigation, subject to the approval of 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.
Pursuant to the settlement agreement, 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
Partnership's 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 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 were released from the
claims of the class action lawsuit and indemnified for the legal
expenses they incurred related to the two lawsuits. Part of this
indemnification and release was 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 subsequently rescinded by the potential purchaser.
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.
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 for a
contract sales price of $275,000. In December 2001, the sole
remaining property was sold to a third party for a contract sales
price of $350,000.
The Special Master approved total reserves for the Partnership
in the amount of $5.177 million or $128.31 per Unit. These
reserves will be held by the Partnership; and the length of the
reserve period and the amounts that will ultimately be distributed
to investors will depend on several factors not known at this time.
The Partnership intends to make a liquidating distribution to the
Limited Partners from the net sale proceeds remaining from the
Partnership's properties after payment of all legal and operating
expenses. The Partnership may make partial distributions of the
proceeds prior to the final distribution. The timing of the
liquidating distribution has not yet been determined.
In the third quarter of 2000, the Partnership distributed
$11,582,000 (or $287.05 per Unit) from the sale of the assets.
On November 8, 2001, the Magistrate Judge for the United States
district Court for the Northern District of Illinois ruled on the
plaintiff's legal fee petition. As a result of this ruling the
Partnership will be required to pay the plaintiff's attorneys
approximately $220,000. However, the applicable appeal period has
not yet expired, and it is uncertain whether the amount (or a
greater or lesser amount) will actually be paid by the Partnership.
Below is a table summarizing the four year historical data for
distribution rates per unit:
Distribution
Date 2001 2000(a) 1999(b) 1998 (c) 1997(d)
February 15 -- $19.8773 $24.9821 $ -- $20.1875
May 15 -- 18.0928 22.4924 21.9087 18.8614
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 were any prior period earnings including amounts
previously reserved for anticipated closing costs.
During the years ended December 31, 2001, 2000 and 1999 the
General Partners and their affiliates earned management fees of $0,
$23,424, and $39,857, 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. As of December
31, 2001, the Partnership was owed $320,569 from an affiliate
related to a bank deposit error. The amount represents the
proceeds from the sale of Rock Hill, which was wired to an
affiliate in error. In January 2002, the affiliate returned this
deposit error with interest to the Partnership.
Results of Operations - Years ended December 31, 2001 and 2000
(Liquidation 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,
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.
The Partnership had a net loss of $150,000 for the year ended
December 31, 2001 compared to net income of $2,498,000 for the year
ended December 31, 2000 a decrease in net income of $2,648,000.
Total income was $247,000 for the year ended December 31, 2001
compared to $2,423,000 for the year ended December 31, 2000 a
decline of $2,176,000. The decline in rental income relates to the
Partnership's sale of its properties that occurred in August 2000
and January 2001. The decline in other income relates to the
decline in interest rates the Partnership received on its
investments.
Total expenses were $466,000 for the year ended December 31,
2001 compared to $543,000 for the year ended December 31, 2000 a
decrease of $77,000. The primary reason for the change in expenses
relates to a decline in general and administrative costs of
$214,000 as a result of the reduced activity of the Partnership.
Offsetting the decline in general and administrative expenses was
an increase in transaction costs of $157,000, which was a result of
a judge's ruling on the plaintiff's legal fees, which according to
the settlement agreement are required to be paid by the
Partnership.
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 discussed above the Partnership adopted the liquidation
basis of accounting, 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.
Comparisons between the various periods are affected by the
change in the basis of accounting, however, the significant
differences between the going concern basis of accounting and the
liquidation basis of accounting are detailed above.
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 generally accepted
accounting principles, 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 affected by the
change in the basis of accounting, however, the significant
differences between the going concern basis of accounting and the
liquidation basis of accounting are detailed above.
Impact of Inflation
Since all 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.
On November 6, 2001 the Partnership dismissed Deloitte & Touche
LLP as its independent accountant. Deloitte & Touche LLP's report
on the financial statements for either of the past two years did
not contain an adverse opinion or disclaimer of opinion and was not
modified as to uncertainty, audit scope or accounting principles.
In the Partnership's fiscal years ended 1999 and 2000 and the
subsequent interim period preceding the dismissal there were no
disagreements with Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure
or auditing scope or procedure which would have caused Deloitte &
Touche LLP to make reference to the matter in their report. There
were no reportable events as that term is described in Item
304(a)(1)(iv) of Regulation S-K.
On November 7, 2001, the Partnership engaged Altschuler,
Melvoin and Glasser LLP as its independent accountant. Neither the
Partnership (nor someone on its behalf) consulted Altschuler,
Melvoin and Glasser LLP regarding: (i) the application of
accounting principles to a specific transaction, either completed
or proposed, or the type of audit opinion that might be rendered on
the Partnership's financial statements; or (ii) any matter that was
either the subject of a disagreement or a reportable event.
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 68) 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 41) 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 35) 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 2001,
2000 or 1999.
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 original General Partners agreed to
continue the Distribution Guaranty up to the net $140,000 of
Distribution Guaranty previously paid to them. At December 31,
2001, 2000, and 1999, $140,000 was due from the original General
Partners related to the Distribution Guaranty.
An affiliate of the General Partners may provide leasing and
re-leasing services to the Partnership in connection with the
management of Partnership properties. The maximum property
management fee 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 $0,
$23,424, and $40,814 in 2001, 2000 and 1999, 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, 2001, 2000 and 1999:
2001 2000 1999
Management fees $ -- $ 20,789 $ 39,857
Reimbursable operating expenses 68,884 300,675 188,618
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
the Partnership made all payments to affiliates except for $2,635
related to management fees.
As of December 31, 2001 the Partnership was owed $320,569 from
an affiliate related to a bank deposit error. The amount
represents the proceeds from the sale of Rock Hill which was wired
to an affiliate in error. This amount was repaid to the Patnership
with interest in January, 2002.
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, 2001, 2000 and 1999, 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.
On November 6, 2001, the Fund dismissed Deloitte & Touche LLP
as its independent accountant. Additionally on November 7, 2001
the Partnership engaged Altschuler, Melvoin and Glasser LLP as its
independent accountant. This Form 8-K was dated November 6, 2001
and filed on November 14, 2001.
(c) An annual report for the fiscal year 2001 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 28, 2002
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-3
Consolidated Financial Statements:
Consolidated Statements of Net Assets in Liquidation
as of December 31, 2001 and December 31, 2000
(Liquidation Basis). . . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statement of Changes in Net Assets
in Liquidation for the year ended December 31, 2001
(Liquidation Basis). . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statement of Changes in Net Assets
in Liquidation for the year ended December 31, 2000
(Liquidation Basis). . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Operations for the year
ended December 31, 2001 (Liquidation Basis), 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) . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . F-8
Schedule III -- Real Estate and Accumulated
Depreciation, December 31, 2001. . . . . . . . . . . . . . . . . F-25
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
Partners
Brauvin High Yield Fund L.P. II
We have audited the accompanying consolidated financial statements
of Brauvin High Yield Fund L.P. II, as of December 31, 2001, and
for the year then ended 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 audit.
We conducted our audit 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 audit provides a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Brauvin High Yield Fund L.P. II and subsidiaries, at
December 31, 2001, and the results of their operations and their
cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ Altschuler, Melvoin and Glasser LLP
Chicago, Illinois
January 28, 2002
REPORT OF INDEPENDENT AUDITORS
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 and 1999 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 and 1999 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 (LIQUIDATION
BASIS) AS OF DECEMBER 31, 2001 AND DECEMBER 31, 2000
December 31, 2001 December 31,2000
ASSETS
Real estate held for sale $ -- $ 589,495
Cash and cash equivalents 5,477,530 5,315,759
Restricted cash -- 326,057
Rent receivable -- 9,550
Due from an affiliate(Note 4) 320,569 --
Due from General Partners (Note 4) 140,000 140,000
Total Assets 5,938,099 6,380,861
LIABILITIES
Accounts payable and accrued
expenses 248,407 444,861
Due to an affiliate (Note 4) -- 23,262
Deferred gain on sale of property -- 72,060
Reserve for estimated liquidation
costs 174,200 174,200
Tenant security deposits -- 1,116
Total Liabilities 422,607 715,499
Net Assets in Liquidation $ 5,515,492 $ 5,665,362
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS) FOR THE YEAR ENDED DECEMBER 31, 2001
Net Assets in Liquidation
at January 1, 2001 $ 5,665,362
Loss from operations (218,326)
Gain on sale of property 68,456
Net Assets in Liquidation
at December 31, 2001 $ 5,515,492
See accompanying notes to financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS) FOR THE YEAR ENDED DECEMBER 31, 2000
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 $69.5280 per Unit.
(b) Return of capital distributions are approximately $333.9657 per
Unit.
See accompanying notes to financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Going
(Liquidation Basis) Concern Basis)
Year Ended Year Ended June 19, 1999 January 1,
December 31, December 31, to December 1999 to June
2001 2000 31, 1999 18, 1999
INCOME
Rental $ 682 $2,004,169 $1,985,016 $2,013,600
Interest 234,210 289,018 47,468 35,469
Other 12,335 129,688 706 67,075
Total income 247,227 2,422,875 2,033,190 2,116,144
EXPENSES
General and administrative 235,533 449,385 80,229 193,806
Management fees (Note 4) -- 20,789 19,129 20,728
Amortization of deferred
organization costs and
other assets -- -- -- 1,306
Depreciation -- -- -- 317,477
Transaction costs (Note 6) 230,020 73,244 69,399 187,552
Total expenses 465,553 543,418 168,757 720,869
(Loss) income before gain on
sale of property and minority
interest and equity interests'
share in net income (218,326) 1,879,457 1,864,433 1,395,275
Gain on sale of property 68,456 3,881,003 498,713 25,108
(Loss) income before minority
interest and equity interest's
share in net income (149,870) 5,760,460 2,363,146 1,420,383
Minority interest's share
in Joint Venture
net loss (income):
Brauvin High Yield Venture -- 598 (353) (2,615)
Brauvin Funds Joint Venture -- (1,039,779) 65,093 (145,581)
Total minority interest's share
in net loss (income) -- (1,039,181) 64,740 (148,196)
Equity interest in:
Brauvin Bay County Venture's
net (loss) income -- -- (19,983) 11,299
(Loss) income before adjustment
to liquidation basis (149,870) 4,721,279 2,407,903 1,283,486
Adjustment to
liquidation basis -- (2,222,876) (2,446,724) -
Net (loss) income $(149,870)$ 2,498,403 $ (38,821) $1,283,486
Net (loss) income allocated to:
General Partners $ (3,747)$ 62,460 $ (970) $ 32,087
Limited Partners $(146,123)$ 2,435,943 $ (37,851) $1,251,399
Net (loss) income per
Unit outstanding (a) $ (3.62)$ 60.37 $ (0.94) $ 31.02
(a) Net income per Unit is based on 40,348 Units outstanding.
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2001, 2000 and 1999
(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, was the
selling agent of the Partnership.
The Partnership was formed on May 4, 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, 2001, 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, 2001. As
of December 31, 2001, 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 for a
contract sales price of $275,000. In December 2001, the sole
remaining property was sold to a third party for a contract sales
price of $350,000.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
Basis of Presentation
As a result of the settlement agreement (see Note 6) 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 generally accepted
accounting principles, the Partnership's financial statements for
periods subsequent to June 18, 1999 have been prepared on a
liquidation basis. Accordingly, the carrying values of the assets
are 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, 2001.
Accounting Method
The accompanying financial statements have been prepared using
the accrual method of accounting.
Federal Income Taxes
Under the provisions of the Internal Revenue Code, the
Partnership's income and losses are reportable by the partners on
their respective income tax returns. Accordingly, no provision is
made for Federal income taxes in the financial statements.
However, in certain instances, the Partnership has been required
under applicable state law to remit directly to the tax authorities
amounts representing withholding from distributions paid to
partners.
Investment in Real Estate
Prior to the 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 adjustments. Depreciation expense was computed on a
straight-line basis over approximately 35 years.
The Partnership records an impairment adjustment 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(see Notes 2 and 7).
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 6) the
Partnership was required to establish a cash reserve that was
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.
In November 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, 2001 and
December 31, 2000, 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 and affiliates; 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 were required to be
adopted by the Partnership effective January 1, 2001. The adoption
of SFAS 133 and SFAS 138 did not have an impact on the financial
position, results of operations and cash flows of the Partnership.
In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 141, "Business Combinations" ("SFAS 141"). SFAS 141
requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method. In July 2001, the FASB issued
Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"), which is effective January
1, 2002. SFAS 142 requires, among other things, the discontinuance
of goodwill amortization. In addition, the standard includes
provisions for the reclassification of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of
existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill and the
identification of reporting units for purposes of assessing
potential future impairments of goodwill.
In June 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations"
("SFAS 143"), which is effective for years beginning after June 15,
2002. SFAS 143 requires recognition of a liability and associated
asset for the fair value of costs arising from legal obligations
associated with the retirement of tangible long-lived assets. The
asset is to be allocated to expense over its estimated useful life.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), which is effective for fiscal
years beginning after December 15, 2001. SFAS 144 supersedes FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS
144 retains the recognition and measurement requirements of SFAS
121, but resolves significant SFAS 121 implementation issues. In
addition, it applies to a segment of a business accounted for as a
discontinued operation (which was formerly covered by portions of
Accounting Principles Board Opinion No. 30).
The Partnership does not believe that the adoption of SFAS 141,
142, 143 and 144 will have a significant impact on its financial
statements.
(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.
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's assets in an amount of
$20,242,693 which sale was not consummated.
In January, 2000, the Partnership sold 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 a result, the Partnership further adjusted its investment
in real estate. 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. The
Partnership sold one of the two remaining properties to an
affiliate in January 2001. The Partnership sold its sole remaining
property to an unaffiliated third party in December 2001.
(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 managed 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 owed the Partnership $140,000 at
December 31, 2001 and December 31, 2000, relating to the
Distribution Guaranty Reserve.
The Partnership previously paid affiliates of the General
Partners selling commissions of 8-1/2% of the capital contributions
received for Units sold by the affiliates.
The Partnership previously paid 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,
2001, 2000 and 1999 were as follows:
2001 2000 1999
Management fees $ -- $ 20,789 $ 39,857
Reimbursable operating
expenses 68,884 300,675 188,618
As of December 31, 2000 the Partnership owed an affiliated entity
$23,262 related to real estate tax prorations.
As of December 31, 2001 the Partnership was owed $320,569 from
an affiliate related to a bank deposit error. The amount
represents the proceeds from the sale of Rock Hill which was wired
to an affiliate in error. The amount was received in January 2002.
(5) WORKING CAPITAL RESERVES
The Partnership had 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 did not generate
sufficient Operating Cash Flow to fully support the distributions
to Limited Partners in 1990.
In order to continue to maintain the 9.25% per annum distribution
through December 31, 1990, the original General Partners agreed to
continue their Distribution Guaranty up to the net amount of
$140,000. At December 31, 2001, 2000 and 1999, $140,000 was due
from the original General Partners related to the Distribution
Guaranty.
(6) 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 which was affiliated with certain of the General
Partners (the "Purchaser"). Promptly upon consummation of the
merger, the Partnership would have ceased to exist and the
Purchaser, as the surviving entity, would have succeeded to all of
the assets and liabilities of the Partnership. The Limited
Partners holding a majority of the Units voted on the merger on
November 8, 1996. The Limited Partners voted on an amendment of
the Merger 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 was not completed primarily due to certain litigation,
as described below. The General Partners believed that these
lawsuits were without merit.
Litigation
Two legal actions, against the Partnership, 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, were commenced and 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 and
affiliates, as well as the Partnership on a nominal basis in
connection with the merger. The Partnership, the General Partners
and their named affiliates denied all allegations set forth in the
complaints.
On November 8, 2001, the Magistrate Judge for the United States
district Court for the Northern District of Illinois ruled on the
plaintiff's legal fee petition. As a result of this ruling the
Partnership will be required to pay the plaintiff's attorneys
approximately $220,000. However, the applicable appeal period has
not yet expired, and it is uncertain whether the amount (or a
greater or lesser amount) will actually be paid by the Partnership.
(7) SALE OF PARTNERSHIP ASSETS
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's assets in an amount of
approximately $20,242,693 which sale was not consummated.
In January, 2000, the Partnership sold 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.
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 for a
contract sales price of $275,000. In December 2001, the sole
remaining property was sold to a third party for a contract sales
price of $350,000.
In conjunction with the sale, the Special Master approved total
reserves for the Partnership in the amount of $5,177,092. These
reserves are to be held by the Partnership, and after payment of
all legal and operating expenses, the balance is to be distributed.
(8) 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:
Liquidation Basis Going Concern Basis
June 19, 1999 January 1,
to December 30, 1999
1999 June 18, 1999
Rental and other income $ 56,473 $54,625
Expenses:
Depreciation -- 8,823
Management fees 501 794
Operating and
administrative 2,042 1,550
Loss on sale
of property 130,788 --
133,331 11,167
Net (loss) income $(76,858) $43,458
(9) 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 sole remaining property to a third party
in December 2001, therefore, a presentation of a five year minimum
rent schedule is not relevent.
SCHEDULE III
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
Gross Amount at Which Carried
Initial Cost(a) at Close of Period
Buildings Cost of Buildings
and Subsequent and Accumulated Date
Description Encumbrances (c) Land Improvements Improvements Land Improvements
Depreciation(b) Acquired
Ponderosas - BHYF II $0 $ 3,907,384 $9,117,233 $0 $3,420,437 $7,981,017
$2,470,027 9/88-11/89
Ponderosas - BHYV 0 1,810,770 4,225,129 0 1,413,165 3,297,387
1,060,653 9/88
Taco Bell 0 128,236 299,218 0 128,236 299,218 89,349
1/89
Scandinavian
Health Spa-BFJV 0 1,657,861 3,868,342 0 1,657,861 3,868,342
1,095,039 7/89
Children's World
Learning Centers 0 771,140 1,799,327 0 771,140 1,799,327 461,797
1/90-9/90
Hardee's Restaurants 0 729,798 1,702,861 0 265,219 618,845 219,296
5/90-7/90
Avis Lubes 0 507,620 1,184,448 0 507,620 1,184,448 304,347
6/90-8/90
Blockbuster Video Store 0 354,644 827,501 0 354,644 827,501 209,999
9/90
Chi-Chi's Restaurants 0 1,408,671 2,150,981 0 1,408,671 2,150,981
649,718 3/91
Adjustment to
liquidation basis
and property sales 0 0 0 0 (9,926,993)(22,027,066) (6,560,225)
$0 $11,276,124 $25,175,040 $0 $ 0 $ 0 $ 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 2001 2000 1999
Balance at beginning of year $ 589,495 $23,203,800 $32,260,654
Adjustment to liquidation basis -- (2,222,876) (1,779,679)
Property sales (589,495) (20,391,429) (7,277,175)
Balance at end of year $ -- $ 589,495 $23,203,800
Accumulated depreciation
Balance at beginning of year $-- $-- $ 6,364,451
Property sales -- -- (121,703)
Provision for depreciation -- -- 317,477
Adjustment to liquidation basis -- -- (6,560,225)
Balance at end of year $-- $-- $ --
(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.
EXHIBITS
TO
BRAUVIN HIGH YIELD FUND L.P. II
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2001
EXHIBIT INDEX
BRAUVIN HIGH YIELD FUND L.P. II
FORM 10-K
For the fiscal year ended December 31, 2001
Exhibit (21) Subsidiaries of the Registrant
Exhibit 21
Name of Subsidiary State of Formation
Brauvin High Yield Venture Illinois
Brauvin Funds Joint Venture Illinois