U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
o 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 333-63656
CORNERSTONE REALTY FUND, LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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California |
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33-0827161 |
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification No.) |
4590 MACARTHUR BLVD., SUITE 610, NEWPORT BEACH, CALIFORNIA 92660
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
949-852-1007
(ISSUER’S TELEPHONE NUMBER)
Not Applicable
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 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 ý NO o
As of October 31, 2002, the Fund had 15,559 units of membership interest issued and outstanding.
PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements |
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Cornerstone Realty Fund, LLC |
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Condensed Balance Sheets at September 30, 2002 and December 31, 2001 |
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2
CORNERSTONE REALTY FUND, LLC
(a California Limited Liability Company)
CONDENSED BALANCE SHEETS
ASSETS
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September 30, |
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December 31, |
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2002 |
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2001 |
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(Unaudited) |
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Assets |
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Cash and cash equivalents |
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$ |
1,931,139 |
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$ |
2,493,073 |
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Investments in real estate |
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Land |
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1,783,075 |
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— |
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Buildings |
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2,118,621 |
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— |
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3,901,696 |
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— |
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Other assets |
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Prepaid insurance |
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1,575 |
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— |
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Leasing commissions |
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1,633 |
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— |
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Office equipment, less accumulated depreciation of $2,410 in 2002 and $1,984 in 2001 |
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444 |
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870 |
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Total assets |
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$ |
5,836,487 |
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$ |
2,493,943 |
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LIABILITIES AND MEMBERS’ CAPITAL |
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Liabilities |
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Accounts payable and accrued liabilities |
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$ |
39,957 |
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$ |
55,559 |
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Tenant security deposits |
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48,607 |
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— |
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Advances payable to managing member |
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106,880 |
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265,106 |
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Total liabilities |
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195,444 |
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320,665 |
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Members’ capital (100,000 units authorized, 14,641 units issued and outstanding in 2002 and 6,186 units issued and outstanding in 2001) |
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5,641,043 |
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2,173,278 |
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Total liabilities and members’ capital |
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$ |
5,836,487 |
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$ |
2,493,943 |
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The accompanying notes are an integral part of these financial statements.
3
CORNERSTONE REALTY FUND, LLC
(a California Limited Liability Company)
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2002 |
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2001 |
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2002 |
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2001 |
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Revenues |
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Rental revenues |
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$ |
4,353 |
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$ |
— |
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$ |
4,353 |
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$ |
— |
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Interest and dividends |
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18,602 |
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— |
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45,022 |
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— |
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22,955 |
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— |
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49,375 |
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— |
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Expenses |
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Property taxes |
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(391 |
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— |
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(391 |
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— |
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General and administrative expenses |
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(31,404 |
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(69,869 |
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(132,454 |
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(84,167 |
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Interest expense on advances payable to managing member |
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(9,254 |
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(18,641 |
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(32,192 |
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(52,691 |
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Depreciation |
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(142 |
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(142 |
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(426 |
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(426 |
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(41,191 |
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(88,652 |
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(165,463 |
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(137,284 |
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Net loss |
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$ |
(18,236 |
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$ |
(88,652 |
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$ |
(116,088 |
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$ |
(137,284 |
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Net loss allocable to managing member |
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$ |
(1,824 |
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$ |
(88,652 |
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$ |
(11,609 |
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$ |
(137,284 |
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Net loss allocable to unitholders |
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$ |
(16,412 |
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$ |
— |
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$ |
(104,479 |
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$ |
— |
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Per share amounts: |
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Basic and diluted loss allocable to unitholders |
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$ |
(1.24 |
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$ |
— |
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$ |
(10.32 |
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$ |
— |
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Basic and diluted weighted average units outstanding |
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13,237 |
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— |
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10,125 |
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— |
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The accompanying notes are an integral part of these financial statements.
4
CORNERSTONE REALTY FUND, LLC
(a California Limited Liability Company)
CONDENSED STATEMENTS OF MEMBERS’ CAPITAL (DEFICIT)
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Balance, December 31, 2000 |
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$ |
(337,188 |
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Capital contributions |
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56,532 |
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Net proceeds from offering |
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2,768,602 |
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Deferred offering costs repaid to managing member |
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(123,720 |
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Distributions to unitholders |
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(4,868 |
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Net loss |
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(186,080 |
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Balance, December 31, 2001 |
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$ |
2,173,278 |
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Net proceeds from offering (unaudited) |
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3,791,110 |
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Deferred offering costs repaid to managing member (unaudited) |
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(169,100 |
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Distributions to unitholders (unaudited) |
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(38,157 |
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Net loss (unaudited) |
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(116,088 |
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Balance, September 30, 2002 (unaudited) |
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$ |
5,641,043 |
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The accompanying notes are an integral part of these financial statements.
5
CORNERSTONE REALTY FUND, LLC
(a California Limited Liability Company)
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
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Nine Months Ended |
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September 30, |
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2002 |
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2001 |
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OPERATING ACTIVITIES |
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Net Loss |
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$ |
(116,088 |
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$ |
(137,284 |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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426 |
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426 |
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Changes in operating assets and liabilities: |
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Other assets |
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(3,208 |
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— |
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Accounts payable and accrued liabilities |
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(15,602 |
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29,309 |
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Tenant security deposits |
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48,607 |
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— |
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Net cash used in operating activities |
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(85,865 |
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(107,549 |
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INVESTING ACTIVITIES |
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Purchase of real estate |
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(3,901,696 |
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— |
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(3,901,696 |
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— |
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FINANCING ACTIVITIES |
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Advances from managing member |
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38,227 |
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280,207 |
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Repayment of managing member advances |
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(196,453 |
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— |
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Net proceeds from offering |
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3,791,110 |
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— |
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Deferred offering costs repaid to managing member |
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(169,100 |
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(177,158 |
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Distributions to unitholders |
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(38,157 |
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— |
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Net cash provided by financing activities |
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3,425,627 |
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103,049 |
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Net decrease in cash |
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(561,934 |
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(4,500 |
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Cash at beginning of period |
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2,493,073 |
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4,500 |
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Cash at end of period |
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$ |
1,931,139 |
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$ |
— |
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The accompanying notes are an integral part of these financial statements.
6
CORNERSTONE REALTY FUND, LLC
(a California Limited Liability Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
1. Organization and Business
Cornerstone Realty Fund, LLC, a California limited liability company (the “Fund”) (formerly Cornerstone Multi-Tenant Industrial Business Parks Fund, LLC and Cornerstone Industrial Properties Income and Growth Fund I, LLC), was formed on October 28, 1998. The members of the Fund are Cornerstone Industrial Properties, LLC, a California limited liability company (“CIP” or “managing member”), as the managing member, Terry G. Roussel, an individual, and other various unitholders as described below. The purpose of the Fund is to acquire, operate and sell multi-tenant industrial properties. The Fund currently is issuing and selling in a public offering equity interests (“units”) in the Fund, and is admitting the new unitholders as members of the Fund.
The Fund has been dependent on the managing member providing capital contributions and advances in order for it to meet its obligations as they have come due. The managing member intends to continue providing such capital contributions and advances until the proceeds from the Fund’s public offering are sufficient for the Fund to meet its obligations as they come due. During December 2001, the Fund raised the minimum offering requirement of 6,000 units. As of October 31, 2002, the Fund has issued 15,559 units primarily to new unitholders for gross offering proceeds of $7,779,500.
Each member’s liability is limited pursuant to the provisions of the Beverly-Killea Limited Liability Company Act. The term of the Fund shall continue until December 31, 2010, unless terminated sooner pursuant to the operating agreement.
2. Summary of Significant Accounting Policies
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statement presentation. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation, have been included. Operating results for the nine-month period ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.
For further information, refer to the audited financial statements and footnotes thereto included in the Fund’s Annual Report on Form 10-K for the year ended December 31, 2001.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amount of
7
revenue and expenses during the reporting period. Actual results could differ materially from the estimates in the near term.
Cash & Cash Equivalents
Cash and cash equivalents consist primarily of interest-bearing investments with original maturities of 90 days or less at the date of purchase. Included in cash and cash equivalents is $48,607 that the Fund has appropriated to refund tenant security deposits.
Investments in Real Estate
Investments in real estate are stated at cost and include land, buildings and building improvements. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred. Significant replacements and improvements which improve or extend the useful lives of the buildings, are capitalized. Depreciation of the buildings and building improvements is computed on a straight-line basis over their estimated useful lives of 39 years.
The Company evaluates the carrying value for investments in real estate in accordance with FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("FAS 144"). FAS 144 requires that when events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable, companies should evaluate the need for an impairment write-down. When an impairment write-down is required, the related assets are adjusted to their estimated fair value.
Office equipment is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets. The estimated useful life of the office equipment is five years.
Rental revenues are recorded on an accrual basis as they are earned over the lives of the respective tenant leases on a straight-line basis. Rental receivables are periodically evaluated for collectibility.
Income Tax Matters
It is the intent of the Fund and its members that the Fund be treated as a partnership for income tax purposes. As a limited liability company, the Fund is subject to certain minimal taxes and fees; however, income taxes on the income or losses realized by the Fund are generally the obligation of the members.
Certain reclassifications have been made to the 2001 financial statement account balances to conform to the 2002 presentation.
3. Investments in Real Estate
On September 27, 2002, the Fund acquired an existing multi-tenant industrial park known as Normandie Business Center, located in Torrance, California for an investment of $3,901,696. Normandie Business Center consists of two single-story buildings containing a total of 48,979 leasable square feet.
Deferred offering costs advanced by the managing member for the nine months ended September 30, 2002 (unaudited) and for the year ended December 31, 2001 are as follows:
8
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Deferred Offering Costs |
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Balance, December 31, 2000 |
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$ |
399,166 |
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Costs advanced |
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225,597 |
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Costs repaid |
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(123,720 |
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Balance, December 31, 2001 |
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501,043 |
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Costs advanced |
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114,396 |
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Costs repaid |
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(169,100 |
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Balance, September 30, 2002 |
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$ |
446,339 |
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Specific incremental costs incurred in connection with the offering of membership units are advanced by the managing member. These advances bear simple interest at the prevailing prime commercial lending rate (4.75% at September 30, 2002) plus two percentage points. Reimbursement of such offering costs is limited to 4% of the gross proceeds of the related offerings. Offering costs incurred by the managing member in excess of the 4% limitation are deferred, and will be reimbursed from future offering proceeds. Any offering costs incurred by the managing member on behalf of the Fund that are not reimbursed by the Fund will be reflected as a capital contribution to the Fund by the managing member, with an offsetting expense recognized in the Fund’s statement of operations. Through September 30, 2002, the Fund has received cumulative unsecured advances from CIP of deferred offering costs in the amount of $739,159. Through September 30, 2002, the Fund has repaid CIP $292,820 in deferred offering costs.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Recent Developments
On September 27, 2002, Cornerstone Realty Fund, LLC acquired an existing multi-tenant industrial business park known as the Normandie Business Center. This property is located in Torrance, California which is part of the larger South Bay industrial sub-market of Los Angeles County. The South Bay is one of the largest and strongest industrial sub-markets in Los Angeles County accounting for 26% of all industrial sales and leasing activity in Los Angeles County as reported for the second quarter of 2002 and is considered to be an established, infill market where there is very little land available for the development of new competitive multi-tenant industrial projects. This market characteristic has historically enabled landlords to obtain significant rental increases from tenants.
The South Bay industrial market enjoys a very low overall vacancy rate of only 3.8% as reported for the second quarter of 2002. The overall Los Angeles industrial market is considered to be one of the three leading industrial markets in the United States.
The Normandie Business Center contains a total of 29 individual tenant spaces. Individual tenant spaces at the property range in size from approximately 1,200 square feet up to approximately 3,358 square feet. The average tenant space is 1,682 square feet in size and consists of approximately 1,382 square feet of warehouse space and approximately 300 square feet of office space.
As of the date of our acquisition, the property was 96.3% leased. Substantially all of the tenants have modified industrial gross leases at an average monthly rental rate of $0.85 per leasable square foot. Monthly operating expenses at the property, excluding leasing commissions, tenant improvements and reserves for future improvements are estimated at $0.20 per leasable square foot of space at the property.
The occupancy rate required at the property for a break-even cash flow, based on property level operating expenses as described above, is estimated at approximately 23.5%. This will vary based on future market conditions, rental rates and property level operating expenses.
Our total acquisition cost was $3,901,696 which equates to approximately $80 per square foot of leasable space. The current estimated cost to replace the land, buildings and improvements at the Normandie Business Center as of our date of acquisition is calculated at approximately $5,600,000. This estimated replacement cost equates to approximately $115 per square foot. Our acquisition price for the Normandie Business Center equates to an approximate 30% discount from the estimated cost of building this property new.
Including the Normandie Business Center, there are approximately thirteen multi-tenant industrial projects in the immediate local area of the South Bay marketplace which are believed to be the most competitive in attracting tenants similar to those at the Normandie Business Center. As of the date of the most recent competitive market analysis, the average vacancy rate for the thirteen projects deemed to be most competitive totaled approximately 5.5%. With a 3.7% vacancy rate as of the date of our acquisition, the Normandie Business Center had a lower overall vacancy rate than eight of the thirteen projects deemed to be most directly competitive in the market.
The property was built in 1989, and is in good physical condition. The business plan for the Normandie Business Center is to make modest repairs and improvements over the next few years for which we have budgeted approximately $150,000, and aggressively re-mix the tenant type as the leases expire to increase the overall value of the property.
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Material Changes in Financial Resources
As of October 31, 2002, the Fund has received $7,779,500 of gross proceeds from the sale of membership units, which have been registered for sale under the Securities Act of 1933, as amended, and under various state securities laws. Prior to the closing of the sale of the minimum offering of 6,000 units in December 2001, the Fund’s organizational activities were financed through advances from the managing member. A portion of those advances has been reimbursed from the proceeds received by the Fund from the offering. The Fund will continue to incur organizational and offering expenses until it has completed the sales of its membership units.
The Fund has been dependent on the managing member providing capital contributions and advances in order for it to meet its obligations as they have come due. The managing member intends to continue providing such capital contributions and advances until the proceeds from the Fund’s public offering are sufficient for the Fund to meet its obligations as they come due. If necessary, the terms of the managing member’s operating agreement indicate that its members may be asked to make additional contributions; however, its members are not committed by any contract to make such additional contributions or provide any other financial assistance. In the event its members choose not to make such additional contributions, its managing member would be entitled to look to a third party to fund any shortfall and may reduce the percentage interest of its non-contributing members.
The Fund will not reimburse the managing member for any amounts advanced for organizational expenses which exceed the amounts and percentages set forth in the prospectus for the offering. Any such expenses incurred by the managing member on behalf of the Fund, that are not reimbursed by the Fund, will be reflected as a capital contribution to the Fund by the managing member with an offsetting expense recognized in the Fund’s statement of operations.
The Fund intends to use the net proceeds from the sale of its units to acquire additional multi-tenant industrial properties and for capital improvement, operating and other reserves. As of September 30, 2002, the Fund has made its initial property purchase, the Normandie Business Center property. The Fund expects to generate revenue from rents from the Normandie Business Center property, which is expected to exceed the cost of property operations. These excess funds are expected to provide an additional source of liquidity for the Fund.
Material Changes in Results of Operations
The Fund is in the organizational stage even with the purchase of the first property on September 27, 2002. The Fund's net loss for the nine months ended September 30, 2002 decreased $21,196 from the same period of 2001 primarily because the Fund had not yet sold the minimum number of units by September 2001, had incurred expenses including interest on advances of $137,284, and had no operating revenues. For the nine months ended September 30, 2002, the Fund's operating expenses totaled $165,463 including interest on advances, which represents an increase of $28,179 over 2001, offset by rental revenues of $4,353 due to the acquisition of its first investment property and $45,022 of interest earned on the proceeds from the sale of its units. Organizational and other start-up expenses and associated losses are expected to continue until the organization of the Fund is completed. The Fund will continue to have losses until rental revenues from properties acquired exceed operating and other expenses of the Fund.
Forward Looking Statements
The Private Securities Litigation Reform Act provides a “safe harbor” for certain forward-looking statements. Certain matters discussed in this filing could be characterized as forward-looking statements such as statements relating to plans for future expansion, as well as other capital spending, financing sources and effects of regulation and competition. Such forward-looking statements involve important
11
risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Fund invests its cash and cash equivalents in FDIC insured savings accounts which, by their nature, are not subject to interest rate fluctuations.
As of September 30, 2002, the Fund had $106,880 in advances payable to its managing member. The advances are related to loans from affiliates which, by their nature, are not subject to interest rate fluctuations.
Item 4. Controls and Procedures
As of November 11, 2002, an evaluation of the effectiveness of the design and operation of the Fund’s disclosure controls and procedures was performed under the supervision and with the participation of the Fund’s management, including the Chief Executive Officer and Chief Financial Officer of Cornerstone Ventures, Inc., the managing member of the Fund’s managing member. Based on that evaluation, the Fund’s management, including the Chief Executive Officer and Chief Financial Officer of Cornerstone Ventures, Inc., the managing member of the Fund’s managing member, concluded that the Fund’s disclosure controls and procedures were effective as of the date of the evaluation. There were no significant changes in the Fund’s internal controls or in other factors that could significantly affect the internal controls subsequent to the date of the evaluation.
PART II - OTHER INFORMATION
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Item 1. |
Legal Proceedings. |
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Not applicable. |
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Item 2. |
Changes in Securities and Use of Proceeds. |
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Not applicable. |
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Item 3. |
Defaults Upon Senior Securities. |
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Not applicable. |
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Item 4. |
Submission of Matters to a Vote of Security Holders. |
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Not applicable. |
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Item 5. |
Other Information. |
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Not applicable. |
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12
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Item 6. |
Exhibits and Reports on Form 8-K. |
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(a) |
Exhibits |
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None. |
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(b) |
Reports on Form 8-K |
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The Registrant filed Form 8-K on October 12, 2002, to report the acquisition of its initial multi-tenant industrial property on September 27, 2002. |
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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November 14, 2002 |
CORNERSTONE REALTY FUND, LLC |
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By: |
CORNERSTONE INDUSTRIAL PROPERTIES, LLC |
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Its Managing Member |
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By: |
CORNERSTONE VENTURES, INC. |
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Its Manager |
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By: |
/s/ TERRY G. ROUSSEL |
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Terry G. Roussel, President |
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(Principal Executive Officer) |
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By: |
/s/ TRACY A. THOMSON |
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Tracy A. Thomson, Chief Financial Officer |
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(Principal Financial Officer and Principal Accounting Officer) |
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CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Terry G. Roussel, certify that
1. I have reviewed this quarterly report of Cornerstone Realty Fund, LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this Report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons fulfilling the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect
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internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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Date: November 14, 2002 |
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/s/ TERRY G. ROUSSEL |
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Terry G. Roussel |
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Chief Executive Officer (Principal Executive Officer) of Cornerstone Venture, Inc., Managing Member of |
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Cornerstone Industrial Properties, LLC, the Managing |
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Member of Cornerstone Realty Fund, LLC |
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CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Tracy A. Thomson, certify that
1. I have reviewed this quarterly report of Cornerstone Realty Fund, LLC;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this Report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons fulfilling the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect
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internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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Date: November 14, 2002 |
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/s/ TRACY A. THOMSON |
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Tracy A. Thomson |
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Chief Financial Officer (Principal Financial Officer) of |
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Cornerstone Venture, Inc., Managing Member of |
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Cornerstone Industrial Properties, LLC, the Managing |
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Member of Cornerstone Realty Fund, LLC |
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CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Terry G. Roussel, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge the Quarterly Report of Cornerstone Realty Fund, LLC on Form 10-Q for the quarterly period ended September 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Cornerstone Realty Fund, LLC.
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Date: November 14, 2002 |
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/s/ Terry G. Roussel |
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Terry G. Roussel |
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Chief Executive Officer (Principal Executive Officer) of |
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Cornerstone Venture, Inc., Managing Member of |
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Cornerstone Industrial Properties, LLC, the Managing |
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Member of Cornerstone Realty Fund, LLC |
I, Tracy A. Thomson, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge the Quarterly Report of Cornerstone Realty Fund, LLC on Form 10-Q for the quarterly period ended September 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Cornerstone Realty Fund, LLC.
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Date: November 14, 2002 |
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/s/ Tracy A. Thomson |
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Tracy A. Thomson |
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Chief Financial Officer (Principal Financial Officer) of |
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Cornerstone Venture, Inc., Managing Member of |
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Cornerstone Industrial Properties, LLC, the Managing |
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Member of Cornerstone Realty Fund, LLC |
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