WASHINGTON, D.C.  20549

 

FORM 10-Q

 

 

CORNERSTONE REALTY FUND, LLC

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

 

 

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

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).  o  Yes   ý  No

 

 

PART I - FINANCIAL INFORMATION

 

Item 1.                                                           Financial Statements

 

Cornerstone Realty Fund, LLC

 

Condensed Balance Sheets at March 31, 2004 (unaudited) and December 31, 2003
Condensed Statements of Operations for the Three Months ended March 31, 2004 (unaudited) and March 31, 2003 (unaudited)
Condensed Statement of Members’ Capital for the Three Months ended March 31, 2004 (unaudited)
Condensed Statements of Cash Flows for the Three Months ended March 31, 2004 (unaudited) and March 31, 2003 (unaudited)
Notes to Condensed Financial Statements (unaudited)

 

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CORNERSTONE REALTY FUND, LLC

(a California Limited Liability Company)

 

CONDENSED BALANCE SHEETS

 

ASSETS

 

				March 31, 2004						December 31, 2003
				(unaudited)
Assets
Cash and cash equivalents				$		3,342,706				$		1,464,206
Investments in real estate
Land				4,539,400						4,539,400
Buildings and improvements, less accumulated depreciation of $178,361 in 2004 and $128,674 in 2003				7,579,166						7,605,000
Intangible asset – in place leases net of $37,552 of amortization in 2004				129,862						167,414
				12,248,428						12,311,814
Other assets
Tenant and other receivables				20,556						27,297
Receivable from Managing Member				59,839						59,839
Prepaid insurance				26,638						—
Leasing commissions, less accumulated amortization of $3,676 in 2004 and $1,974 in 2003				13,343						6,912
Office equipment, less accumulated depreciation of $2,854 in 2004 and $2,732 in 2003				—						122
Total assets				$ 15,711,510						$ 13,870,190
LIABILITIES AND MEMBERS’ CAPITAL
Liabilities
Accounts payable and accrued liabilities			$		112,459				$		89,173
Real estate taxes payable			117,275						115,325
Tenant security deposits			146,845						145,629
Total liabilities			376,579						350,127
Members’ capital (100,000 units authorized, 37,394 units issued and outstanding in 2004 and 33,012 units issued and outstanding in 2003)			15,334,931						13,520,063
Total liabilities and members’ capital			$		15,711,510				$		13,870,190

 

The accompanying notes are an integral part of these financial statements.

 

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CORNERSTONE REALTY FUND, LLC

(a California Limited Liability Company)

 

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

		Three Months Ended March 31,
		2004			2003
					(restated)
Revenues
Rental revenues, net of $37,552 of in-place lease amortization in 2004		$	264,240		$	194,367
Tenant reimbursements and other income		37,263			29,804
Interest, dividends and other income		343			2,924
		301,846			227,095
Expenses
Property operating and maintenance		70,659			28,976
Property taxes		59,292			37,690
General and administrative		33,539			45,327
Interest on advances payable to managing member		—			1,442
Depreciation and amortization		51,511			27,699
		215,001			141,134
Net income		$	86,845		$	85,961
Net income allocable to managing member		$	8,685		$	8,596
Net income allocable to unitholders		$	78,160		$	77,365
Per unit amounts:
Basic and diluted income allocable to unitholders		$	2.25		$	4.04
Basic and diluted weighted average units outstanding		34,813			19,135

 

The accompanying notes are an integral part of these financial statements.

 

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CORNERSTONE REALTY FUND, LLC

(a California Limited Liability Company)

 

CONDENSED STATEMENT OF MEMBERS’ CAPITAL

(Unaudited)

 

Balance, December 31, 2003		$	13,520,063
Net proceeds from offering		2,005,033
Deferred offering costs repaid to managing member		(89,640		)
Distributions to unitholders		(187,370		)
Net income		86,845
Balance, March 31, 2004		$	15,334,931

 

The accompanying notes are an integral part of these financial statements.

 

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CORNERSTONE REALTY FUND, LLC

(a California Limited Liability Company)

 

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

		Three Months Ended March 31,
		2004			2003
					(restated)
OPERATING ACTIVITIES
Net income		$	86,845		$	85,961
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		89,063			27,699
Changes in operating assets and liabilities:
Other assets		(28,030		)	(8,061		)
Accounts payable, accrued liabilities and security deposits		23,286			(43,304		)
Real estate taxes payable		1,950			(14,637		)
Tenant security deposits		1,216			—
Net cash provided by operating activities		174,330			47,658
INVESTING ACTIVITIES
Investments in real estate		(23,853		)	—
FINANCING ACTIVITIES
Advances from managing member		—			3,056
Net proceeds from offering		2,005,033			1,046,255
Deferred offering costs repaid to managing member		(89,640		)	(46,760		)
Distributions to unitholders		(187,370		)	—
Net cash provided by financing activities		1,728,023			1,002,551
Net increase in cash		1,878,500			1,050,209
Cash and cash equivalents – beginning of period		1,464,206			1,062,947
Cash and cash equivalents – end of period		$	3,342,706		$	2,113,156

 

The accompanying notes are an integral part of these financial statements.

 

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CORNERSTONE REALTY FUND, LLC

(a California limited liability company)

 

NOTES TO 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, as the Managing Member (“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.  As of April 21, 2004, the Fund has issued 39,173 units to unitholders for gross offering proceeds of $19,586,500.

 

The unaudited condensed financial statements of the Fund have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission.  The condensed financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.  The condensed financial statements included herein should be read in conjunction with the Fund’s Annual Report on Form 10-K for the year ended December 31, 2003.

 

The interim condensed financial statements have been prepared in accordance with the Fund’s customary accounting practices.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a presentation in accordance with accounting principles generally accepted in the United States have been included.  Operating results for the three months ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

 

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.

 

The operating agreement, as amended and restated, provides, among other things, for the following:

 

The Managing Member generally has complete and exclusive discretion in the management and control of the Fund; however, unitholders holding the majority of all outstanding and issued units have certain specified voting rights which include the removal and replacement of the Managing Member.

 

Net Cash Flow from Operations, as defined, will be distributed 90% to the unitholders and 10% to the Managing Member until the unitholders have received either an 8% or 12% cumulative, non-compounded annual return on their Invested Capital Contributions, as defined. The 12% return applies to specified early investors for the twelve-month period subsequent to the date of their Invested Capital Contributions and is in lieu of the 8% return during that period.

 

Net Sales Proceeds, as defined, will be distributed first, 100% to the unitholders in an amount equal to their Invested Capital Contributions; then, 90% to the unitholders and 10% to the Managing Member until the unitholders have received an amount equal to the unpaid balance of

 

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their aggregate cumulative, non-compounded annual return on their Invested Capital Contributions; and thereafter, 50% to the unitholders and 50% to the Managing Member.

 

Net Income, as defined, is allocated first, 10% to the Managing Member and 90% to the unitholders until Net Income allocated equals cumulative Net Losses, as defined, previously allocated in such proportions; second, in proportion to and to the extent of Net Cash Flow from Operations and Net Sales Proceeds previously distributed to the members, exclusive of distributions representing a return of Invested Capital Contributions; and then 50% to the Managing Member and 50% to the unitholders.

 

Net Loss is allocated first, 50% to the Managing Member and 50% to the unitholders, until Net Loss allocated equals cumulative Net Income previously allocated in such proportions; then remaining Net Loss is allocated 10% to the Managing Member and 90% to the unitholders.

 

All allocations and distributions to the unitholders are to be pro rata in proportion to their share of the allocations and distributions.

 

2.                                      Restatement

 

During the fourth quarter of 2003, the Managing Member reevaluated its practice of charging the Fund interest on unreimbursed offering costs.  Accordingly, the Fund has restated its previously issued financial statements.

 

As a result of the restatement, at March 31, 2004 and December 31, 2003, the Fund has recorded a receivable from the Managing Member of $59,839.  The following summarizes the impact of this restatement on net income from amounts previously reported for the three months ended March 31, 2003:

 

Net income, as previously reported		$	78,199
Adjustment		7,762
Net income, as restated		$	85,961

 

3.                                      Summary of Significant Accounting Policies

 

Use of Estimates

 

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 revenue and expenses during the reporting periods.  Actual results could differ materially from the estimates in the near term.

 

Cash and 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 at March 31, 2004 is $146,845 related to tenant security deposits.

 

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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, betterments and tenant 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.  Tenant improvements are depreciated over the related lease term.

 

The Fund evaluates the carrying value for investments in real estate in accordance with Financial Accounting Standards Board (“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.

 

In June 2001 the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No. 141 and No. 142 require the Fund to record at acquisition an intangible asset or liability for the value attributable to in-place leases.  The requirements are applicable to all acquisitions subsequent to July 1, 2001.  As of March 31, 2004, the Fund has recorded $129,862, net of $37,552 of amortization, as an intangible asset attributable to the value of the leases in place as of the date of acquisition.

 

Office Equipment and Leasing Commissions

 

Office equipment is stated at cost and is depreciated on a straight-line basis over the estimated useful lives of the related assets, typically five years.  Leasing commissions are stated at cost and amortized on a straight-line basis over the related lease term.

 

Revenue Recognition

 

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.

 

Fair Value of Financial Instruments

 

The Fund believes that the recorded values of all financial instruments approximate their current values.

 

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.

 

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Concentration of Credit Risk

 

The Fund maintains some of its cash in money market accounts which, at times, exceeds federally insured limits.  No losses have been experienced related to such amounts.

 

Impact of New Accounting Pronouncements

 

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, as amended in December 2003 (“Interpretation No. 46”), which applies immediately to arrangements created after January 31, 2003.  Interpretation No. 46 applies to arrangements created before February 1, 2003 beginning no later than March 31, 2004.  The initial adoption of Interpretation No. 46 did not have a material impact on the Fund’s financial position or results of operations.

 

4.                                      Investments in Real Estate

 

On September 27, 2002, the Fund acquired an existing multi-tenant industrial business 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 48,711 leasable square feet.

 

On December 27, 2002, the Fund acquired an existing multi-tenant industrial business park known as the Sky Harbor Business Park, located in Northbrook, Illinois for an investment of $2,553,996.  Sky Harbor Business Park consists of a single-story building containing a total of 41,422 leasable square feet.

 

On December 10, 2003, the Fund acquired an existing multi-tenant industrial park known as Arrow Business Center located in Irwindale, California for an investment of $5,910,579.  The property consists of three single-story buildings containing a total of 69,592 leasable square feet.

 

Industrial space in the properties is generally leased to tenants under lease terms that provide for the tenants to pay increases in operating expenses in excess of specified amounts.

 

5.                                      Deferred Offering Costs Advanced by Managing Member

 

Unrecovered offering costs incurred by the Managing Member for the three months ended March 31, 2004 are as follows:

 

Balance, December 31, 2003		$	595,528
Costs incurred		15,753
Costs paid		(89,640		)
Balance, March 31, 2004		$	521,641

 

Specific incremental costs in connection with the offering of membership units are incurred by the Managing Member.  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

 

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Managing Member 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 March 31, 2004, the Managing Member has incurred $521,641 of unrecovered offering costs.

 

6.                                      Related Party Transactions

 

In order to fund its initial operating costs, the Fund has received, from its Managing Member, cumulative unsecured advances and related interest totaling $476,227 through December 31, 2003.  Through December 31, 2003, the Fund has fully repaid this $476,227.

 

During the three months ended March 31, 2003, the Managing Member funded $101,079 to the Fund’s unitholders related to a 5% annual return on their Invested Capital Contributions, which will not be reimbursed to the Managing Member by the Fund.

 

The Managing Member and/or its affiliates are entitled to receive various fees, compensation and reimbursements as specified in the Fund’s operating agreement, including commissions of 9% of the first $3,000,000 of gross proceeds from the offering of units and 7% thereafter, marketing fees of 2% of gross proceeds from the offering of units less $60,000, and expense allowances of 1.5% of gross proceeds from the offering of units.  During the three months ended March 31, 2004 and 2003, the total fees, compensation and reimbursements were $235,620 and $122,745, respectively.

 

The Fund is to reimburse the Managing Member for deferred offering costs incurred by its Managing Member in the amount of 4% of the gross proceeds from the offering of units.  During the three months ended March 31, 2004 and 2003, the Fund reimbursed $89,640 and $46,760, respectively, of these costs to the Managing Member.

 

The Fund paid the Managing Member $2,890 in property management fees during the three months ended March 31, 2003.

 

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Item 2.                         Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Fund’s financial statements and notes thereto contained elsewhere in this report.  Certain statements in this section and elsewhere contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements may relate to risks and other factors that may cause the Fund’s future results of operations to be materially different than those expressed or implied herein.  Some of these risks and other factors include, but are not limited to:  (i) no assurance that Fund properties will continue to experience minimal or no vacancy; (ii) tenants may not be able to meet their financial obligations; (iii) rental revenues from the properties may not be sufficient to meet the Fund’s cash requirements for operations, capital requirements and distributions; (iv) suitable investment properties may not continue to be available; and (v) adverse changes to the general economy may disrupt operations.

 

Critical Accounting Policies

 

The Fund’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States.  The preparation of these financial statements 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 revenue and expenses during the reporting period.  Actual results could differ materially from the estimates in the near term.

 

Revenue Recognition

 

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.

 

Investments in Real Estate

 

The Fund evaluates the carrying value for investments in real estate in accordance with Financial Accounting Standards Board (“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.

 

In June 2001 the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets.  SFAS No. 141 and No. 142 require the Fund to record at acquisition an intangible asset or liability for the value attributable to in-place leases.  The requirements are applicable to all acquisitions subsequent to July 1, 2001.  As of March 31, 2004, the Fund has recorded $129,862 net of $37,552 of amortization as an intangible asset attributable to the value of the leases in place as of the date of acquisition.

 

Off-balance Sheet Financings and Liabilities

 

Other than lease commitments and legal contingencies incurred in the normal course of business, the Fund does not have any off-balance sheet financing arrangements or liabilities.  The Fund does not have any majority-owned subsidiaries or any interests in, or relationships with, any special-purpose entities.

 

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Impact of New Accounting Pronouncements

 

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, as amended in December 2003 (“Interpretation No. 46”), which applies immediately to arrangements created after January 31, 2003.  Interpretation No. 46 applies to arrangements created before February 1, 2003 beginning no later than March 31, 2004.  The initial adoption of Interpretation No. 46 did not have a material impact on the Fund’s financial position or results of operations.

 

Results of Operations

 

As of March 31, 2004, the Fund has purchased three multi-tenant industrial business park properties in two different major metropolitan areas.  The properties were purchased from the proceeds from the sale of membership units, without debt financing. The properties were purchased in the latter parts of September 2002, December 2002 and December 2003, respectively. As a result of the dates of purchase, Fund operations for 2003 reflect the net income from only two properties.  For the three months ended March 31, 2004, Fund operations reflect operations for the three properties purchased.

 

The Fund’s net income for the three months ended March 31, 2004 and 2003 was $86,845 and $85,961, respectively.  The increases in the operating results from the properties by the addition of Arrow Business Center was an offset by the amortization of the intangible asset attributed to in-place leases and the loss of a significant tenant at Sky Harbor Business Park in July 2003.

 

With greater deployment of the Fund’s assets in real estate, rental revenues and tenant reimbursements increased from a combined $224,171 in 2003 to $339,005 in 2004.  For financial statement presentation, the $339,005 in 2004 was reduced by the $37,552 amortization of the value of in-place leases to $301,503.

 

With the significantly greater level of real estate operations in 2004, related property operating expenses, including property taxes and depreciation, increased from $95,807 in 2003 to $181,462 in 2004.

 

The Fund’s general and administrative expenses declined from $45,327 in 2003 to $33,539 in 2004, primarily due to lower legal and accounting fees as operations moved further from the initial organization and start-up phase.  Additional general and administrative expenses are expected to continue until the capitalization and organization of the Fund is complete.  Interest expense on costs incurred by the Managing Member reflect the reduction of the amount the Fund owed in 2003.

 

Liquidity and Capital Resources

 

As of April 21, 2004, the Fund has received $19,586,500 of gross proceeds from the sale of membership units, $109,979 as a capital contribution from the Managing Member, and paid out $2,832,918 for offering costs.  The Fund has $4,057,517 in cash and cash equivalents as of April 24, 2004.

 

The Fund intends to continue offering membership units for sale and use the net proceeds from the sale of units for the acquisition of additional multi-tenant industrial business park properties, capital improvements to the properties, and for operating expenses and reserves.

 

The Fund expects to meet its short-term liquidity requirements from net cash generated by operations, which we believe will be adequate to meet operating costs of the properties and the Fund, and allow for cash distributions to the unitholders.

 

The Fund’s offering and organizational activities have been financed by the Managing Member.  A portion of those costs have been reimbursed to the Managing Member at the rate of 4% of gross

 

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proceeds of the Fund’s unit sales pursuant to the prospectus for the offering.  The Fund will continue to incur organizational and offering expenses and the Managing Member, although not obligated, intends to continue providing advances for offering and organizational expenses until the sale of membership units is completed.  The Managing Member must raise funds through the sale of its own debt or equity securities to obtain the cash necessary to provide these advances.  There can be no assurance as to the amount or timing of the Managing Member’s receipt of funds.  The Fund will not reimburse the Managing Member for any amounts advanced by it for offering and 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.

 

Contractual Obligations

 

As of March 31, 2004, the Fund had no significant contractual obligations or commercial commitments.

 

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.

 

Item 4.                    Controls and Procedures

 

The Fund’s disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that the Fund files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. The Chief Executive Officer and the Chief Financial Officer of Cornerstone Ventures, Inc., the manager of the managing member of the Fund, have reviewed the effectiveness of the Fund’s disclosure controls and procedures as of the end of the period covered by this report and have concluded that the disclosure controls and procedures are effective. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated.

 

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met.  In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.  Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

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PART II - OTHER INFORMATION

 

Item 6.	Exhibits and Reports on Form 8-K.
	(a)	Exhibits
		31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	(b)	Reports on Form 8-K
		None.

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized this 11^th day of May 2004.

 

		CORNERSTONE REALTY FUND, LLC
		By:	CORNERSTONE INDUSTRIAL PROPERTIES, LLC its Managing Member
			By:	CORNERSTONE VENTURES, INC. its Manager
				By:		/s/ TERRY G. ROUSSEL
						Terry G. Roussel, President
						(Principal Executive Officer)
				By:		/s/ GARY W. NIELSON
						Gary W. Nielson,
						Chief Financial Officer
						(Principal Financial Officer and Principal Accounting Officer)

 

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