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, 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 June 30, 2007 and
December 31, 2006 Page 3
Consolidated Statements of Operations for the Three and Six
Months Ended June 30, 2007 and 2006 Page 4
Consolidated Statements of Cash Flows for the Three and Six
Months Ended June 30, 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
June 30 December 31,
2007 2006
(Unaudited)
ASSETS
Real estate held-for-sale,
net of depreciation $ --- $ 3,975,324
Cash including cash
investments 6,750,139 143,827
Escrow deposits --- 7,999
Prepaid Expenses 36,026 52,524
Deferred Financing Fees --- 11,470
TOTAL ASSETS $ 6,786,165 $ 4,191,144
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Liabilities related to
asset held-for-sale $ --- $ 9,846,686
Amounts due affiliates 3,800 3,638
Accounts payable & accrued
expenses 11,700 140,837
Total liabilities 15,500 9,991,161
PARTNERS CAPITAL (DEFICIT)
Limited Partners 6,580,170 (5,826,305)
General Partner 190,495 26,288
Total Partners Capital (Deficit) 6,770,665 (5,800,017)
TOTAL LIABILITIES AND PARTNERS $ 6,786,165 $ 4,191,144
CAPITAL(DEFICIT)
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
REVENUES
Other property 2,355 811 5,872 1,960
Total revenues 2,355 811 5,872 1,960
EXPENSES
General administrative 27,910 2,338 27,910 6,182
Total expenses 27,910 2,338 27,910 6,182
Net Income (Loss) from (25,555) (1,527) (22,038) (4,222)
continuing operations
Extraordinary Item:
Gain on sale of assets 8,824,547 --- 6,342,411 ---
Income (loss) from
discontinued operations 70,303 (61,491) 100,310 (135,027)
NET INCOME (LOSS) $8,869,295 ($63,018) $16,420,683 ($139,249)
Net income (loss) per Limited
Partnership unit outstanding - $798.24 $(5.67) $1,477.86 $(12.53)
Basic
Limited Partnership units 11,000 11,000 11,000 11,000
outstanding
See Notes to Condensed Consolidated Financial Statements
AMERICAN REPUBLIC REALTY FUND I
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended
June 30,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITY
Net Income (loss) $16,420,683 ($139,249)
Adjustments to reconcile net loss to net
cash
provided by operating activities:
Depreciation and amortization 59,303 341,471
Gain on Sale of Asset (16,342,411) ---
Net Effect of changes in operating
accounts
Escrow deposits 155,218 100,099
Prepaid expenses 24,497 (82,930)
Accrued real estate --- 155,189
taxes
Security deposits (34,143) 7,854
Accounts payable (127,895) (196,827)
Net cash provided by operating activities 55,252 185,607
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Real Estate (9,004) (33,000)
Proceeds on sale of asset 10,350,783 ---
Net cash provided by (used) for investing 10,341,779 (33,000)
activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (40,881) (87,190)
Distributions to limited partners (3,850,000) ---
Proceeds from amounts due 162 6,064
affiliates
Net cash used for financing activities (3,890,719) (81,126)
NET INCREASE (IN CASH AND CASH 6,606,312 71,481
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 143,827 78,644
PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD $6,750,139 $250,125
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 with the
sale closing on June 29, 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. 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.
Real estate held-for-sale includes the following:
June December
30, 31,
2007 2006
Property at net book value $ --- $ 3,353,779
Escrow deposits --- 621,545
Real estate held-for-sale, $ --- $ 3,975,324
net of depreciation
Liabilities relating to assets held-for-sale include:
June December
30, 31,
2007 2006
Mortgage payable $ --- $ 9,576,346
Real estate taxes payable --- 188,970
Security deposits --- 81,370
Liabilities related to $ --- $ 9,846,686
assets held-for-sale
The operations of the properties for the three months ending
June 30, 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 revenues 318,021 $ 688,515
Operating expenses 178,765 558,808
Operating income (loss) 139,256 129,707
Other income (expense) (68,953) (191,198)
Net income (loss) from $ 70,303 $ (61,491)
discontinued operations
The operations of the properties for the six months ending
June 30, 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 revenue $ 870,233 $ 1,345,016
Operating expenses 552,901 1,097,360
Operating income (loss) 317,332 247,656
Other income (expense) (217,022) (382,683)
Net income (loss) from $ 100,310 $ (135,027)
discontinued operations
Item 2. RESULTS OF OPERATIONS AND MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
As of June 30, 2007 the partnership had sold all of its apartment
communities and held only cash as well as prepaid expenses and
payables relating to Four Winds Apartments.
FIRST SIX MONTHS 2007 COMPARED TO FIRST SIX MONTHS 2006
Revenue from continuing operations increased $3,912 or 200%, for
the first six months of 2007, as compared to the first six 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:
Increase Percent
(Decrease) Change
Interest income 3,912 200%
Net Increase 3,912 200%
Other operating expenses increased $21,728 or 352%, for the first
six months of 2007, as compared to the same period in 2006. The
increase resulted from increase in legal fees relating to the
sales of the properties. The following table illustrates the
components by category:
Increase
(Decrease)
General and administrative 21,728 352%
Net Increase 21,728 352%
SECOND QUARTER 2007 COMPARED TO SECOND QUARTER 2006
Revenue from continuing operations increased $1,544 or 124.66%,
for the second quarter of 2007, as compared to the second quarter
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:
Increase Change
(Decrease)
Interest income 1,544 190%
Net Increase 1,544 190%
(Decrease)
Other operating expenses increased $25,572 or 92%, for the second
quarter of 2007, as compared to the same period in 2006. The
increase resulted from increase in legal fees relating to the
sales of the properties. The following table illustrates the
components by category:
Increase Percent
(Decrease) Change
General and administrative 25,572 92%
Net Increase 25,572 92%
(Decrease)
LIQUIDITY AND CAPITAL RESOURCES
On June 29, 2007, the Registrant sold Four Winds Apartments
located in Orange Park Florida. The sales price of the property
was $10,450,000, less closing costs including a credit of $2,850
for an updated survey and a $200,000 credit toward roof
replacement with a resulting gain on the sale of $8,824,547.
As of June 30, 2007, the Partnership had $6,750,139 in cash
and cash equivalents as compared to $143,827 as of December 31,
2006. The net increase in cash of $6,606,312 was due to the sale
of Four Winds Apartments.
The partnership subsequent to quarter end distributed $605
per limited partnership unit for a total distribution of
$6,655,000. The partnership has retained approximately $50,000
for contingencies.
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 its 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
as of the end of the period covered by this report, 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: August 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
August 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 June 30, 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
August 14, 2007