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 June 30, 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 June 30, 2006 and
December 31, 2005 Page 3
Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 2006 and 2005 Page 4
Consolidated Statements of Cash Flows for the Three
Months Ended June 30, 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 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, 2005, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
June 30 December 31,
2006 2005
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,822,718 $1,822,718
Buildings and improvements 16,370,299 16,337,299
18,193,017 18,160,017
Less: Accumulated depreciation (14,716,239) (14,386,239)
Real Estate, net 3,476,778 3,773,778
Cash including cash investments 250,125 178,644
Escrow deposits 441,775 541,874
Prepaid Expenses 123,892 40,962
Deferred Financing Fees 22,942 34,413
TOTAL ASSETS $4,315,512 $4,569,671
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage payable $9,667,026 $9,754,216
Amounts due affiliates 6,759 695
Real estate taxes payable 155,189 0
Security deposits 78,874 71,020
Accounts payable & accrued expenses 120,927 317,754
Total liabilities 10,028,775 10,143,685
PARTNERS CAPITAL (DEFICIT)
Limited Partners (5,740,418) (5,602,562)
General Partner 27,155 28,548
Total Partners Deficit (5,713,263) (5,574,014)
TOTAL LIABILITIES AND $4,315,512 $4,569,671
PARTNER DEFICIT
See notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
REVENUES 2006 2005 2006 2005
Rental income 668,027 612,175 1,304,954 1,217,773
Other property 21,299 20,502 42,022 36,610
Total revenues 689,326 632,677 1,346,976 1,254,383
EXPENSES
Salaries & wages 95,523 82,185 177,092 168,106
Maintenance & repairs 40,122 88,899 70,286 123,312
Utilities 52,513 59,112 120,264 120,298
Real estate taxes 72,750 67,149 145,500 134,298
General administrative 33,604 35,126 60,025 54,441
Contract services 29,593 30,379 59,315 58,276
Insurance 32,167 31,438 62,310 66,776
Interest 190,914 194,238 382,683 389,265
Depreciation and amortization 170,736 170,736 341,472 341,472
Property management fees 34,422 31,592 67,278 62,677
Total expenses 752,344 790,854 1,486,225 1,518,921
Net Loss ($63,018)($158,177) ($139,249) ($264,538)
NET LOSS PER UNIT (5.67) (14.24) (12.53) (23.81)
Partnership units
outstanding 11,000 11,000 11,000 11,000
See Notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Cash Flows
"Unaudited"
Six Months Ended
June 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITY
Net loss ($139,249) ($264,538)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 341,472 341,472
Net Effect of changes in operating
accounts
Escrow deposits 100,099 60,184
Prepaid expenses (82,930) (61,797)
Accrued real estate taxes 155,189 140,711
Security deposits 7,854 1,184
Accounts payable (196,826) (185,291)
Net cash provided by operating
activities 185,607 31,925
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Real Estate (33,000) 0
Net cash used for investing activities (33,000) 0
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (87,190) (80,608)
Proceeds from amounts due affiliates 6,064 (1,573)
Net cash used for financing activities (81,126) (82,181)
NET INCREASE (DECREASE) IN CASH AND 71,481 (50,256)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING 178,644 353,871
OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD $250,125 $303,615
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 June 30, 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 92.0% for the second quarter of 2006, as compared to
89.4% for the second quarter of 2005.
FIRST SIX MONTHS 2006 COMPARED TO FIRST SIX MONTHS 2005
Revenue from property operations increased $92,593, or 7.38%, for
the first six months of 2006, as compared to the first six months
of 2005. The increase in rental income of $87,181 or 7.16% is
primarily due to an increase in occupancy. The increase in other
income of $5,412 or 14.78% 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 87,181 7.16%
Other property 5,412 14.78%
Net Increase 92,593 7.38%
Property operating expenses decreased $32,696 or 2.15%, for the
first six months of 2006, as compared to the same period in 2005.
Maintenance & repairs decreased $53,026 or 43.0% due to one-time
expenses in 2005. General and administrative increased $5,584 or
10.26% due to increased advertising. Real estate taxes
increased $11,202 or 8.34% due to increased property valuation.
The following table illustrates the components by category:
Increase
(Decrease)
Salaries & wages 8,986 5.35%
Maintenance & repairs (53,026) 43.00%
Utilities (34) 0.03%
Real estate taxes 11,202 8.34%
General administrative 5,584 10.26%
Contract services 1,039 1.78%
Insurance (4,466) 6.69%
Interest (6,582) 1.69%
Property management fees 4,601 7.34%
Net Decrease (32,696) 2.15%
SECOND QUARTER 2006 COMPARED TO SECOND QUARTER 2005
Revenue from property operations increased $56,649, or 8.95%, for
the second quarter of 2006, as compared to the 2005-second
quarter. The increase in rental income of $55,852 or 9.12% is
primarily due to an increase in occupancy. The increase in other
income of $797 or 3.89% 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 55,852 9.12%
Other property 797 3.89%
Net Increase 56,649 8.95%
Property operating expenses decreased $38,510 or 4.87%, for the
second quarter of 2006, as compared to the same period in 2005.
Maintenance & repairs decreased $48,777 or 54.87% due to exterior
painting in the prior year. Utilities decreased $6,599 or 11.16%
due to conservation efforts. Real estate taxes increased $5,601
or 8.34% due to higher assessed values. Salaries and wages
increased $13,338 or 16.23% due to additional maintenance
employees. The following table illustrates the components by
category:
Increase Percent
(Decrease) Change
Salaries & wages 13,338 16.23%
Maintenance & repairs (48,777) 54.87%
Utilities (6,599) 11.16%
Real estate taxes 5,601 8.34%
General administrative (1,522) 4.33%
Contract services (786) 2.59%
Insurance 729 2.32%
Interest (3,324) 1.71%
Property management fees 2,830 8.96%
Net Decrease (38,510) 4.87%
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 June 30, 2006, the Partnership had $250,125 in cash
and cash equivalents as compared to $178,644 as of December 31,
2005. The net increase in cash of $71,481 is principally due to
cash flow from 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 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, a 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: July 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
July 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 June 30, 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
July 24, 2006