3
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, 2007 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, 2007 and
December 31, 2006 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 2007 and 2006 Page
4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2007 and 2006 Page
5
Item 2. Results of Operations and Management Discussion and
Analysis of
Financial Condition Page 7
Item 3. Quantitative and Qualitative Disclosures about Market
Risk Page 8
Item 4. Controls and Procedures Page
8
Part II
Other Information Page 9
Signatures Page 10
The statements, insofar as they relate to the period subsequent
to
December 31, 2006, are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Balance Sheets
March 31 Decembe
r 31,
2007 2006
(Unaudit
ed)
ASSETS
Real estate held-for- $ $
sale, net of depreciation 1,304,52 3,975,3
0 24
Cash including cash 220,370 143,827
investments
Escrow deposits --- 7,999
Prepaid Expenses 24,914 52,524
Deferred Financing Fees 2,873 11,470
TOTAL ASSETS $1,552,6 $4,191,
77 144
LIABILITIES AND PARTNERS' EQUITY:
LIABILIT
IES
Liabilities related to $ $9,846,
assets held-for-sale 3,583,49 686
0
Amounts due affiliates 11,054 3,638
Accounts payable & 56,762 140,837
accrued expenses
Total liabilities 3,651,30 9,991,1
6 61
PARTNERS CAPITAL (DEFICIT)
Limited Partners (2,200,4 (5,826,
31) 305)
General Partner 101,802 26,288
Total Partners Deficit (2,098,6 (5,800,
29) 017)
TOTAL LIABILITIES AND PARTNER $1,552,6 $4,191,
DEFICIT 77 144
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended
March 31,
REVENUES 2007 2006
Other $ $
3,517 527
Total revenues 3,517 527
EXPENSES
General administrative --- 2,725
Total expenses --- 2,725
Net Income (Loss) from 3,517 (2,198)
continuing operations
Gain on Sale of Asset 7,517,86 ---
4
Income (Loss) from 30,007 (74,033
Discontinued Operations )
Net Income (Loss) $7,551,3 ($76,23
88 1)
NET LOSS PER UNIT _ Basic $ $
679.62 (6.86)
Limited Partnership units 11,000 11,000
outstanding - Basic
See Notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITY
Net Income (loss) $7,551,388 ($76,231)
Adjustments to reconcile net loss to net
cash
provided by operating activities:
Depreciation and amortization 60,245 170,735
Net Effect of changes in operating
accounts
Escrow deposits 4,598 67,257
Prepaid expenses 27,610 22,144
Accrued real estate 23,499 82,440
taxes
Security deposits 1,661 2,424
Accounts payable (84,075) (202,894)
Net cash provided by operating activities 7,584,926 65,875
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Real Estate --- (15,000)
Proceeds on sale of asset (3,648,363) ---
Net cash used for investing activities (3,648,363) (15,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (17,436) (43,167)
Distributions to limited partners (3,850,000) ---
Proceeds from amounts due 7,416 894
affiliates
Net cash used for financing activities (3,860,020) (42,273)
NET INCREASE IN CASH AND CASH EQUIVALENTS 76,543 8,602
CASH AND CASH EQUIVALENTS, BEGINNING OF 143,827 178,644
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD $220,370 $187,246
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 2006 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, 2007.
Real Estate Held For Sale & Discontinued Operations
In January 2007, the Partnership entered into a purchase and
sale agreement to the sell the Partnership's final property
located in Florida to a third party for $10,450,000. As a
result, as required by Financial Accounting Standard No. 144
, "Accounting for the Impairment or Disposal of Long-Lived
Assets", the property and related assets and liabilities are
classified as held for sale on the balance sheets and the
property's operations are included in discontinued
operations in the statements of operations for each of the
periods presented. The sale is expected to close in the
second quarter of 2007. In addition, in February 2007, the
Partnership sold its property in Texas for $9,725,000
resulting in a gain of $7,517,864. The property's operations
are included in discontinued operations in the statements of
operations for each of the periods presented.
Real estate held-for-sale includes the following:
March December
31, 31,
2007 2006
Property at net book value $ 1,153, $ 3,353,77
900 9
Escrow deposits 150,62 621,545
0
Real estate held-for-sale, $ 1,304, $ 3,975,32
net of depreciation 520 4
Liabilities relating to assets held-for-sale include:
March December
31, 31,
2007 2006
Mortgage payable $ 3,524, $ 9,576,34
187 6
Real estate taxes payable 23,499 188,970
Security deposits 35,804 81,370
Liabilities related to $ 3,583, $ 9,846,68
assets held-for-sale 490 6
The operations of the properties for the three months ending
March 31, 2007 and 2006 are included in discontinued
operations in the statements of operations. The following
table summarizes the revenue and expense information for the
discontinued operations:
2007 2006
Rents and other property $ 552,21 $ 656,839
revenues 2
Operating expenses 374,13 539,387
6
Operating income (loss) 178,07 117,452
6
Other income (expense) (148,0 (191,485
69) )
Net income (loss) from $ 30,007 $ (74,033)
discontinued operations
Item 2. RESULTS OF OPERATIONS AND MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
At March 31, 2007 the Partnership owned one property with
approximately 172,460 net rentable square feet. The property is
an apartment community. The portfolio had an average occupancy
of 92.9% for the first quarter of 2007, as compared to 95.5% for
the first quarter of 2006.
FIRST THREE MONTHS 2007 COMPARED TO FIRST THREE MONTHS 2006
Revenue from property operations increased $2,990 or 567%, for
the first three months of 2007, as compared to the first three
months of 2006. Interest income accounted for all of the increase
due to higher interest rates and higher invested balances. The
following table illustrates the components:
Increas Percen
e t
(Decrea Change
se)
Other property 2,990 567%
Net Increase 567%
2,990
Property operating expenses decreased $2,725 or 100%, for the
first three months of 2007, as compared to the same period in
2006. The decrease was entirely from decreased partnership
mailing costs. The following table illustrates the components by
category:
Increas
e
(Decrea
se)
General and administrative (2,725) 100%
Net Increase (2,725) 100%
LIQUIDITY AND CAPITAL RESOURCES
On March 16, 2007, the Registrant entered into a purchase
and sale agreement with Four Winds Holdings LLC, a Florida
limited liability company, to sell the Registrant's Four Winds
Apartments Phase I and Phase II property located in Orange Park,
Florida. The sale price of the property is $10,450,000, less (a)
a credit in an amount not greater than $3,500 for the purchaser
to obtain an updated survey and (b) a payment to the purchaser of
$200,000 for reimbursement of the purchaser's closing and due
diligence costs and expenses and credit toward roof replacement.
The Registrant is not making any representations and warranties
relating to the property.
The purchaser has made a $50,000 earnest money payment and
an additional earnest money payment of $100,000. The earnest
money is non-refundable to the purchaser unless the Registrant
does not own marketable title to the property, the updated survey
depicts a materially adverse change from the prior survey, a
materially adverse environmental condition exists on the property
or the property is subject to material damage or condemnation.
In the event of damage to the property prior to closing by
fire or other casualty in an amount of $100,000 or less, then the
purchaser will be obligated to close the purchase and sale and
receive an assignment of insurance proceeds and a credit against
the purchase price of the insurance deductible amount. In the
event of casualty damage of more than $100,000 or a condemnation
of a material portion of the property, then the purchaser or the
Registrant each has the option to terminate the agreement, and if
neither terminates the agreement, then the purchase and sale of
the property will close with the purchaser receiving an
assignment of the insurance proceeds (and credit against the
purchase price of the insurance deductible amount) or the
condemnation award.
The agreement contains customary representations and
covenants of the parties and proration at the closing of rents,
taxes, utilities and operating expenses. The closing is scheduled
on or before May 16, 2007, and may be extended by the purchaser
for 30 days upon a non-refundable payment of $50,000 which will
be applied to the purchase price. If the purchaser breaches the
agreement or fails to close the purchase and sale, the
Registrant's exclusive remedy will be termination of the
agreement and receipt of the purchaser's earnest money. The
Registrant will pay a brokerage commission fee of $155,000 at
closing.
As of March 31, 2007, the Partnership had $220,370 in cash
and cash equivalents as compared to $143,827 as of December 31,
2006. The net increase in cash of $76,543 is principally due to
cash flow from operating activities.
Four Winds Apartments refinanced its debt during July 1997.
The note comes due August 2007. The Partnerships required
principal payments due under the stated terms of the Partnerships
mortgage notes payable are $3,524,187 for the next year.
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.2-81074effective
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: May 14, 2007
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
May 14, 2007
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, 2007 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
May 14, 2007