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 March 31, 2006 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 March 31, 2006 and
December 31, 2005 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 2006 and 2005 Page 4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2006 and 2005 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 Page 7
Item 4. Controls and Procedures Page 7
Part II
Other Information Page 8
Signatures Page 9
The statements, insofar as they relate to the period subsequent
to December 31, 2005, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
March 31 December 31,
2006 2005
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 16,352,299 16,337,299
18,175,017 18,160,017
Less: Accumulated depreciation (14,551,239) (14,386,239)
Real Estate, net 3,623,778 3,773,778
Cash including cash investments 187,246 178,644
Escrow deposits 474,617 541,874
Prepaid Expenses 18,818 40,962
Deferred Financing Fees 28,678 34,413
TOTAL ASSETS $4,333,137 $4,569,671
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgages payable $9,711,049 $9,754,216
Amounts due affiliates 1,589 695
Real estate taxes payable 82,440 0
Security deposits 73,444 71,020
Accounts payable & accrued expenses 114,859 317,754
accrued expenses
Total liabilities 9,983,381 10,143,685
PARTNERS CAPITAL (DEFICIT)
Limited Partners (5,678,030) (5,602,562)
General Partner 27,786 28,548
Total Partners Deficit (5,650,244) (5,574,014)
TOTAL LIABILITIES AND PARTNER DEFICIT $4,333,137 $4,569,671
See notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended
March 31,
REVENUES 2006 2005
Rental income 636,927 605,598
Other property 20,723 16,108
Total revenues 657,650 621,706
EXPENSES
Salaries & wages 81,569 85,921
Maintenance & repairs 30,164 34,413
Utilities 67,751 61,186
Real estate taxes 72,750 67,149
General administrative 26,421 19,315
Contract services 29,722 27,897
Insurance 30,143 35,338
Interest 191,769 195,027
Depreciation and amortization 170,736 170,736
Property management fees 32,856 31,085
Total expenses 733,881 728,067
Net Loss ($76,231) ($106,361)
NET LOSS PER UNIT $(6.86) $(9.57)
Partnership units outstanding 11,000 11,000
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
Three Months Ended
March 31,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITY
Net loss ($76,231) ($106,361)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 170,735 170,736
Net Effect of changes in operating accounts
Escrow deposits 67,257 59,727
Prepaid expenses 22,144 27,337
Accrued real estate taxes 82,440 67,149
Security deposits 2,424 (278)
Accounts payable (202,894) (195,631)
Net cash provided by operating 65,875 22,679
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Real Estate (15,000) 0
Net cash used for investing activities (15,000) 0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (43,167) (39,908)
Proceeds from amounts due affiliates 894 2,038
Net cash used for financing activities (42,273) (37,870)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 8,602 (15,191)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 178,644 353,871
CASH AND CASH EQUIVALENTS, END OF PERIOD $187,246 $338,680
See Notes to Condensed Consolidated Financial Statements
Basis of Presentation:
The accompanying unaudited condensed consolidated financial
statements have been prepared by American Republic Realty
Fund I (the "Partnership") 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 Partnership 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 Partnership's 2005 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 March 31, 2006 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 91.2% for the first quarter of 2006, as compared to
86.9% for the first quarter of 2005.
FIRST THREE MONTHS 2006 COMPARED TO FIRST THREE MONTHS 2005
Revenue from property operations increased $35,944, or 5.78%, for
the first three months of 2006, as compared to the 2005-first
three months. The increase in rental income of $31,329 or 5.17%
is primarily due to an increase in occupancy. The increase in
other income of $4,615 or 28.65% is primarily due to an increase
in Late and other fee collections from the properties. The
following table illustrates the components:
Increae Percent
(Decrease) Change
Rental income 31,329 5.17%
Other property 4,615 28.65%
Net Increase 35,944 5.78%
Property operating expenses increased $5,814 or 0.80%, for the
first three months of 2006, as compared to the same period in
2005. Maintenance & repairs decreased $4,249 or 12.35% due to
general maintenance items. General & administrative increased
$7,106 or 36.79% due to increased locator commissions and
database management fees. Utilities increased $6,565 or 10.73%
due to higher gas prices. Insurance decreased $5,195 or 14.7%
due to a reduction in property and general liability premiums.
Real estate taxes increased $5,601 or 8.34% due to increased tax
rates. The following table illustrates the components by
category:
Increase
(Decrease)
Salaries & wages (4,352) 5.07%
Maintenance & repairs (4,249) 12.35%
Utilities 6,565 10.73%
Real estate taxes 5,601 8.34%
General & administrative 7,106 36.79%
Contract services 1,825 6.54%
Insurance (5,195) 14.70%
Interest (3,258) 1.67%
Property management fees (a) 1,771 5.70%
Net Increase 5,814 0.80%
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 March 31, 2006, the Partnership had $187,246 in cash
and cash equivalents as compared to $178,644 as of December 31,
2005. The net decrease in cash of $8,602 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, and $6,800,000 carries 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 $177,870,
and $9,576,345 for each of the next two 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
(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.
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: April 24, 2006
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
Partnership;
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 Partnership
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 Partnership 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 Partnerships
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 Partnerships
internal control over financial reporting that occurred
during the Partnerships most recent fiscal quarter that
has materially affected, or is reasonably likely to
materially affect, the Partnerships internal control
over financial reporting; and
5. I have disclosed based on my most recent evaluation of
internal control over financial reporting, to the
Partnerships 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 Partnerships 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 Partnerships internal control over financial
reporting.
/s/ Robert J. Werra
Robert J. Werra
Acting Principal Executive Officer and Chief Financial
Officer
April 24, 2006
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 Partnership") on Form 10-Q for the period
ending March 31, 2006 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 Partnership.
/s/ Robert J. Werra
Robert J. Werra
Acting Principal Executive Officer and Chief Financial
Officer
April 24, 2006