SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 2002 Commission file number 0-11578
AMERICAN REPUBLIC REALTY FUND I
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1421936
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification Number)
2800 N. Dallas Pkwy Suite 100
Plano, Texas 75093-4707
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 836-8000.
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: Y No:
REGISTRANT IS A LIMITED PARTNERSHIP
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of September 30, 2002 and
December 31, 2001 Page 3
Consolidated Statements of Operations for the Six
Months Ended September 30, 2002 and 2001 Page 4
Consolidated Statements of Cash Flows for the Six months
Ended September 30, 2002 and 2001 Page 5
Item 2. Results of Operations and Managements Discussion and
Analysis of Financial Condition Page 6
Liquidity and Capital Resources Page 7
Other Information Page 8
Signatures Page 9
The statements, insofar as they relate to the period subsequent
to December 31, 2001, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
September 30, December 31,
2002 2001
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 15,886,583 15,886,583
17,709,301 17,709,301
Less: Accumulated (12,290,922) (11,765,922)
depreciation
Real Estate, net 5,418,379 5,943,379
Cash including cash 187,696 294,437
investments
Escrow deposits 559,833 552,994
Prepaid Expenses 64,425 24,039
Deferred Financing Fees 108,978 126,186
TOTAL ASSETS $6,339,311 $6,941,035
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes $10,233,609 $10,341,178
payable
Amounts due affiliates 2,802 1,911
Real estate taxes payable 228,411 0
Security deposits 80,028 79,501
Accounts payable & 163,974 342,521
accrued expenses
Total iabilities 10,708,824 10,765,111
PARTNERS CAPITAL (DEFICIT)
Limited Partners (4,410,107) (3,867,374)
General Partner 40,594 43,298
Total Partners Capital (Deficit) (4,369,513) (3,824,076)
TOTAL LIABILITIES AND PARTNER DEFICIT $6,339,311 $6,941,035
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 2002 2001 2002 2001
Rental income 673,311 707,029 2,004,444 2,101,502
Other property 17,253 22,183 50,615 65,757
Total revenues 690,564 729,212 2,055,059 2,167,259
EXPENSES
Salaries & wages 96,086 86,152 260,506 235,947
Maintenance & repairs 91,062 60,063 206,108 199,582
Utilities 52,170 55,739 153,721 170,227
Real estate taxes 75,915 71,250 228,411 213,750
General administrative 25,238 26,986 82,267 83,415
Contract services 25,978 26,408 79,590 81,835
Insurance 23,691 15,091 62,377 41,176
Interest 201,923 204,417 607,682 615,015
Depreciation and amortization 180,735 185,736 542,207 557,208
Property management fees (a) 34,522 36,243 102,627 107,429
Total expenses 807,320 768,085 2,325,496 2,305,584
Net Income ($116,756) ($38,8737) ($270,425) ($138,325)
NET INCOME PER UNIT $(10.61) $(3.53) $(24.59) $(12.58)
See Notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Cash Flows
See Notes to Condensed Consolidated Financial Statements
Unaudited
Nine Months Ended
September 30,
2002 2001
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($270,437) ($138,325)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 525,000 540,000
Net Effect of changes in operating accounts
Escrow deposits (6,839) (42,425)
Prepaid expenses (40,386) (27,811)
Accrued real estate taxes 228,411 213,750
Security deposits 527 9,352
Accounts payable (178,547) (128,233)
Other assets 17,208 17,207
Net cash provided by (used for) 274,937 443,515
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (107,569) (99,449)
Proceeds from amounts due affiliates 891 0
Distributions to limited partners -275,000 0
Net cash used for investing activities (381,678) (99,449)
NET INCREASE (DECREASE) IN CASH (106,741) 344,066
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, 294,437 442,739
BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD $187,696 $786,805
Basis of Presentation:
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Partnership believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the
Partnership's latest annual report on Form 10-K.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
THIRD QUARTER 2002 COMPARED TO THIRD QUARTER 2001
At September 30, 2002 the Partnership owned two properties with
approximately 416,623 net rentable square feet. Both
properties are apartment communities. The portfolio had an
average occupancy of 88.3% for the third quarter of 2002, as
compared to 96.5% for the third quarter of 2001.
Revenue from property operations decreased $38,648, or 5.30%,
for the third quarter of 2002, as compared to the 2001 third
quarter. The decrease in rental income of $33,718 or 4.77% is
primarily due to an increase in vacancy. The decrease in other
income of $4,930 or 22.22% is primarily due to an decrease in
Late and other fee collections from the properties. The
following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income (33,718) 4.77%
Other property (4,930) 22.22%
Net Increase (Decrease) (38,648) 5.30%
Property operating expenses increased $39,235 or 5.11%, for the
third quarter of 2002, as compared to the same period in 2001,
primarily due to increases in maintenance & repair expense.
The increase in maintenance & repairs expense of $30,999 or
51.61% is associated with turnover and other make ready costs.
Insurance increased $8,600 or 56.99% in connection with the
annual policy renewal. Salaries increased $9,934 or 11.53%
primarily due to increased on site maintenance. The following
table illustrates the components by category:
Increase Percent
(Decrease) Change
Salaries & wages 9,934 11.53%
Maintenance & repairs 30,999 51.61%
Utilities (3,569) 6.40%
Real estate taxes 4,665 6.55%
General administrative (1,748) 6.48%
Contract services (430) 1.63%
Insurance 8,600 56.99%
Interest (2,494) 1.22%
Depreciation and amortization (5,001) 2.69%
Property management fees (a) (1,721) 4.75%
Net Increase (Decrease) 39,235 5.11%
THIRD QUARTER 2001 COMPARED TO THIRD QUARTER 2000
At September 30, 2001 the Partnership owned two properties with
approximately 416,623 net rentable square feet. Both
properties are apartment communities. The portfolio had an
average occupancy of 96.5% for the third quarter of 2001, as
compared to 96.4% for the third quarter of 2000.
Revenue from property operations increased $25,607, or 3.64%,
for the third quarter of 2001, as compared to the 2000-third
quarter. The increase in rental income of $22,545 or 3.29% is
primarily due to an increase in rental rates. The increase in
other income of $3,062 or 16.01% is primarily due to an
increase in Late and other fee collections from the properties.
The following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income 22,545 3.29%
Other property 3,062 16.01%
Net Increase (Decrease) 25,607 3.64%
Property operating expenses increased $5,865, or 0.77%, for the
third quarter of 2001, as compared to the same period in 2000,
primarily due to increases in utilities expense. Insurance
increased $2,702 or 21.81% in connection with the annual policy
renewal. The increase in utilities expense is due to
significantly higher gas bills. General & Administrative
decreased $14,386 or 34.77% due to decreased legal fees.
Maintenance and repairs decreased $6,513 or 9.78% primarily due
to exterior building maintenance. Salaries & Wages increased
$7,418 or 9.42%due to higher salaries. The following table
illustrates the components by category:
Increase Percent
(Decrease) Change
Salaries & wages 7,418 9.42%
Maintenance & repairs (6,513) 9.78%
Utilities 6,210 12.54%
Real estate taxes 1,668 2.40%
General administrative (14,386) 34.77%
Contract services (226) 0.85%
Insurance 2,702 21.81%
Interest (2,303) 1.11%
Depreciation and amortization 10,001 5.69%
Property management fees (a) 1,294 3.70%
Net Increase (Decrease) 5,865 0.77%
LIQUIDITY AND CAPITAL RESOURCES
While it is the General Partners primary intention to
operate and manage the existing real estate investments, the
General Partner also continually evaluates this investment in
light of current economic conditions and trends to determine if
this asset should be considered for disposal. At this time,
there is no plan to dispose of either property.
As of September 30, 2002, the Partnership had $187,696 in
cash and cash equivalents as compared to $294,437 as of
December 31, 2001. The net decrease in cash of $106,741 is
principally due to a distribution made September 30, 2002.
On September 30, 2002 the partnership distributed $25.00
per limited partnership unit to units of record September 30,
2002. This distribution was made from excess cash on hand from
cash flow from operations.
During the first quarter of 2000 ending March 31, the
partnership paid off the remaining balance owned to the general
partner of $165,346. The payment was made with operating cash
flow from the partnership.
Each asset of the fund refinanced its debt during July
1997. The fund retired debt with a face value of $6,500,000
and replaced with debt of $10,800,000. The new mortgages in
the amounts of $4,000,000, $6,800,000 carry interest rates of
7.8% and 7.92% respectively. The notes come due August, 2007.
The Partnerships required principal payments due under the
stated terms of the Partnerships mortgage notes payable and
notes payable to affiliates are $120,132 $129,941, and $140,551
for each of the next three years.
Net proceeds from the refinancing were used to reduce the
notes payable to affiliates. During July, 1997 payments of
$3,500,000 were made to reduce the debt to affiliates.
A gain on retirement of debt arose with the note
refinancing being triggered by the early retirement of the
debt. The recognized gain of $348,836, was the difference
between the carrying value of the debt and the funds necessary
to retire the debt.
For the foreseeable future, the Partnership anticipates
that mortgage principal payments (excluding any balloon
mortgage payments), improvements and capital expenditures will
be funded by net cash from operations. The primary source of
capital to fund future Partnership acquisitions and balloon
mortgage payments will be proceeds from the sale, financing or
refinancing of the Properties.
Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibit and Reports on Form 8-K
(A)The following documents are filed herewith or
incorporated herein by reference as indicated as
Exhibits:
Exhibit Designation Document Description
2 Certificate of Limited partnership, as
amended, incorporated by reference to
Registration Statement No.2-81074
effective May 2, 1983.
Limited Partnership Agreement,
incorporated by reference to
Registration Statement No.2-81074
effective May 2,1983.
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
20 Not Applicable
23 Not Applicable
24 Not Applicable
25 Power of Attorney, incorporated by
reference to Registration Statement
No. 2-81074 effective May 2, 1983.
28 None
(B) Reports on Form 8-K for the quarter ended September 30, 2002.
1 None
SIGNATURES
Pursuant to the requirements 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.
AMERICAN REPUBLIC REALTY FUND I
a Wisconsin limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: November 1, 2002
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of American Republic
Realty Fund (the Company) on Form 10-Q for the period
ending September 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the Report), I,
Robert J Werra, Principal Executive Officer and Paul M.
Ivanoff Treasurer of the Company, certify, pursuant to 18
U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended; and
(2) The information contained in the Report fairly presents,
in all material respects, the financial condition and results
of operations of the Company.
/s/ Robert J. Werra /s/ Paul M. Ivanoff
Robert J. Werra Paul M. Ivanoff
CEO Univesco, Inc. Treasurer Univesco, Inc.
Management Agent Management Agent
November 1, 2002