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, 2005 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 75093-5994
(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:
Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).
Yes: No: N
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange
Act).
Yes: No: N
REGISTRANT IS A LIMITED PARTNERSHIP
TABLE OF CONTENTS
Part I
Item 1. Financial Statements
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of September 30, 2005 and
December 31, 2004 Page 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2005 and 2004 Page 4
Consolidated Statements of Cash Flows for the Three and Nine
Months Ended September 30, 2005 and 2004 Page 5
Item 2. Results of Operations and Management Discussion and
Analysis of Financial Condition Page 6
Item 3. Quantitative and Qualitative Disclosures about Market
Risk Liquidity and Capital Resources Page 8
Item 4. Controls and Procedures Other Information Page 8/9
Part II Other Information Page 9
Signatures Page 10
The statements, insofar as they relate to the period subsequent
to December 31, 2004, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
September 30, December 31,
2005 2004
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 16,258,276 16,164,861
18,080,994 17,987,579
Less: Accumulated depreciation (14,234,447) (13,739,447)
Real Estate, net 3,846,547 4,248,132
Cash including cash investments 189,473 353,871
Escrow deposits 534,235 452,842
Prepaid Expenses 79,674 48,020
Deferred Financing Fees 40,149 57,357
TOTAL ASSETS $4,690,078 $5,160,222
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $9,796,544 $9,918,658
Amounts due affiliates 3,029 1,256
Real estate taxes payable 209,727 0
Security deposits 68,879 66,196
Accounts payable & accrued expenses 138,542 312,974
Total liabilities 10,216,721 10,299,084
PARTNERS CAPITAL (DEFICIT)
Limited Partners (5,555,664) (5,171,762)
General Partner 29,021 32,900
Total Partners Capital (Deficit) (5,526,643) (5,138,862)
TOTAL LIABILITIES AND
PARTNER DEFICIT $4,690,078 $5,160,222
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 2005 2004 2005 2004
Rental income 631,776 593,423 1,849,549 1,806,424
Other property 23,989 24,092 60,599 56,135
Total revenues 655,765 617,515 1,910,148 1,862,559
EXPENSES
Salaries & wages 92,627 96,724 260,733 257,213
Maintenance & repairs 67,191 72,463 190,503 167,450
Utilities 56,432 57,549 176,730 161,466
Real estate taxes 69,016 72,549 203,314 223,047
General administrative 31,929 34,813 86,370 83,722
Contract services 29,747 26,412 88,023 82,483
Insurance 35,143 35,338 101,919 100,703
Interest 193,430 196,564 582,695 591,508
Depreciation and amortization 170,735 170,735 512,207 512,207
Property management fees (a) 32,758 30,876 95,435 93,128
Total expenses 779,008 794,023 2,297,929 2,272,927
Net Income ($123,243)($176,508) ($387,781) ($410,368)
NET INCOME PER UNIT $(11.09) $(15.89) $(34.90) $(36.93)
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,
2005 2004
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($387,781) ($410,368)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 512,208 512,207
Net Effect of changes in operating accounts
Escrow deposits (81,393) 20,593
Prepaid expenses (31,654) (48,648)
Accrued real estate taxes 209,727 223,047
Security deposits 2,683 (4,543)
Accounts payable (174,432) (193,756)
Net cash provided by (used for) operating
activities 49,358 98,532
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Real Estate (93,415) 0
Net cash used by investing activities (93,415) 0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (122,114) (112,895)
Distributions to limited partners 0 0
Proceeds from amounts due affiliates 1,773 (2,375)
Net cash used for financing activities (120,341) (115,270)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (164,398) (16,738)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 353,871 435,304
CASH AND CASH EQUIVALENTS, END OF PERIOD $189,473 $418,566
Basis of Presentation:
The accompanying unaudited condensed consolidated
financial statements have been prepared by American Republic
Realty Fund I (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission. The
financial statements reflect all adjustments that are, in
the opinion of management, necessary to fairly present such
information. All such adjustments are of a normal recurring
nature. Although the Company believes that the disclosures
are adequate to make the information presented not
misleading, certain information and footnote disclosures,
including a description of significant accounting policies
normally included in financial statements prepared in
accordance with accounting principles generally accepted in
the United States of America, have been condensed or omitted
pursuant to such rules and regulations.
These financial statements should be read in conjunction
with the financial statements and notes thereto included in
the Company's 2004 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of
operations for interim periods are not necessarily
indicative of the results for any subsequent quarter or the
entire fiscal year ending December 31, 2005.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
At September 30, 2005 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 89.9% for the third quarter of 2005, as compared to
84.2% for the third quarter of 2004.
FIRST NINE MONTHS 2005 COMPARED TO FIRST NINE MONTHS 2004
Revenue from property operations increased $47,589, or 2.56%, for
the first nine months of 2005, as compared to the 2004-first nine
months. The increase in rental income of $43,125 or 2.39% is
primarily due to a increase in occupancy. The increase in other
income of $4,464 or 7.95% 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 43,125 2.39%
Other property 4,464 7.95%
Net Increase (Decrease) 47,589 2.56%
Property operating expenses increased $25,002 or 1.10%, for the
first nine months of 2005, as compared to the same period in
2004. Maintenance & repairs increased $23,053 or 13.77% due to
exterior painting. Utilities increased $15,264 or 9.45% due to
higher gas prices. Real estate taxes decreased $19,733 or 8.85%
due to successful property assessment appeals. The following
table illustrates the components by category:
Increase
(Decrease)
Salaries & wages 3,520 1.37%
Maintenance & repairs 23,053 13.77%
Utilities 15,264 9.45%
Real estate taxes (19,733) 8.85%
General administrative 2,648 3.16%
Contract services 5,540 6.72%
Insurance 1,216 1.21%
Interest (8,813) 1.49%
Depreciation and amortization 0 0.00%
Property management fees (a) 2,307 2.48%
Net Increase (Decrease) 25,002 1.10%
THIRD QUARTER 2005 COMPARED TO THIRD QUARTER 2004
Revenue from property operations increased $38,353, or 6.19%, for
the third quarter of 2005, as compared to the 2004-third quarter.
The increase in rental income of $38,353 or 6.46% is primarily
due to a increase in occupancy. The decrease in other income of
$103 or 0.43% 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 38,353 6.46%
Other property (103) 0.43%
Net Increase (Decrease) 38,250 6.19%
Property operating expenses decreased $15,015 or 1.89%, for the
third quarter of 2005, as compared to the same period in 2004.
Contract service increased $3,335 or 12.63% due to increased pest
control and rubbish expense. Real estate taxes decreased $3,533
or 4.87% due to successful property assessment appeals. General
and administrative increased $2,884 or 8.28% primarily due to
decreased legal expenses. The following table illustrates the
components by category:
Increase Percent
(Decrease) Change
Salaries & wages (4,097) 4.24%
Maintenance & repairs (5,272) 7.28%
Utilities (1,117) 1.94%
Real estate taxes (3,533) 4.87%
General administrative (2,884) 8.28%
Contract services 3,335 12.63%
Insurance (195) 0.55%
Interest (3,134) 1.59%
Depreciation and amortization 0 0.00%
Property management fees (a) 1,882 6.10%
Net Increase (Decrease) (15,015) 1.89%
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, 2005, the Partnership had $189,473 in
cash and cash equivalents as compared to $353,871 as of December
31, 2004. The net decrease in cash of $164,398 is principally due
to cash used for operating activities.
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 are $164,442,
$177,870, and $9,576,345 for each of the next three years.
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.
Item 3 - Quantitative and Qualitative Disclosure about Market
Risk
The Partnership is exposed to interest rate changes
primarily as a result of its real estate mortgages. The
Partnerships interest rate risk management objective is to limit
the impact of interest rate changes on earnings and cash flows
and to lower it's overall borrowing costs. To achieve its
objectives, the Partnership borrows primarily at fixed rates.
The Partnership does not enter into derivative or interest rate
transactions for any purpose.
The Partnerships' activities do not contain material risk
due to changes in general market conditions. The partnership
invests only in fully insured bank certificates of deposits, and
mutual funds investing in United States treasury obligations.
Item 4 - Controls and Procedures
Based on their most recent evaluation, which was completed
within 90 days of the filing of this Form 10-Q, our Acting
Principal Executive Officer and Chief Financial Officer, believe
our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) are effective. There were not any
significant changes in internal controls or in other factors that
could significantly affect these controls subsequent to the date
of their evaluation, and there has not been any corrective action
with regard to significant deficiencies and material weaknesses.
Part II. Other Information
Item 1. Legal Proceedings
None
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
31.1 Certification Pursuant to
Rules 13a-14 and 15d-14 Under
the Securities Exchange Act of
1934, as Adopted Pursuant to
Section 302 of the Sarbanes-
Oxley Act of 2002, filed
herewith.
32.1 Certification Pursuant to 18
U.S.C. Section 1350, as
Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act
of 2002, filed herewith.
(B) Reports on Form 8-K for the quarter ended June 30, 2005.
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 2, 2005
Exhibit 31.1
CERTIFICATION PURSUANT TO RULES 13a-14 AND 15d-14 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I Robert J. Werra, Acting Principal Executive Officer and Chief
Financial Officer of American Republic Realty Fund I ("the
Company"), certify that:
1. I have reviewed this quarterly report on Form 10-Q of the
Company;
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. I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the Company and
have:
a. designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under my supervision, to ensure that material
information relating to the company and its consolidated
subsidiaries is made known to me by others within those
entities, particularly for the periods presented in this
quarterly report;
b. designed such internal control over financial reporting,
or caused such internal control over financial reporting
to be designed under my supervision, to provide
reasonable assurance regarding the reliability of
financial reporting and the preparation of financial
statements for external purposes in accordance with
generally accepted accounting principles.
c. evaluated the effectiveness of the Companys disclosure
controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
CERTIFICATION PURSUANT TO RULES 13a-14 AND 15d-14 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - continued
d. disclosed in this report any change in the Companys
internal control over financial reporting that occurred
during the Companys most recent fiscal quarter that has
materially affected, or is reasonably likely to
materially affect, the Companys internal control over
financial reporting; and
5. I have disclosed based on my most recent evaluation of
internal control over financial reporting, to the
Companys auditors and Audit Committee of the Board of
Directors (or persons fulfilling the equivalent
function):
a. all significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the Companys ability to record,
process, summarize, and report financial data; and
b. any fraud, whether or not material, that involves
management or other employees who have a significant
role in the Companys internal control over financial
reporting.
/s/ Robert J. Werra
Robert J. Werra
Acting Principal Executive Officer and Chief Financial
Officer
November 2, 2005
Exhibit 32.1
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 I ("the Company") on Form 10-Q for the period
ending September 30, 2005 as filed with the Securities and
Exchange Commission on the date hereof ("the Report"), I,
Robert J. Werra, Acting Principal Executive Officer and Chief
Financial Officer 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
Robert J. Werra
Acting Principal Executive Officer and Chief Financial
Officer
November 2, 2005