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, 1998 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) 6210 Campbell Road Suite 140 Dallas, Texas 75248 (Address of principal executive offices) Registrant's telephone number, including area code: (972) 380-8000. 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: REGISTRANT IS A LIMITED PARTNERSHIP TABLE OF CONTENTS Item 1. Financial Statements The following Unaudited financial statements are filed herewith: Consolidated Balance Sheet as of September 30, 1998 and December 31, 1997 Page 3 Consolidated Statements of Operations for the Six Months Ended September 30, 1998 and 1997 Page 4 Consolidated Statements of Cash Flows for the Nine months Ended September 30, 1998 and 1997 Page 5 Item 2. Results of Operations and Management's Discussion and Analysis of Financial Condition Page 6 Liquidity and Capital Resources Page 8 Other Information Page 9 Signatures Page 10 The statements, insofar as they relate to the period subsequent to December 31, 1997, are Unaudited. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Balance Sheets September December 31, 30 1998 1997 (Unaudited) ASSETS Real Estate assets, at cost Land $1,822,718 $1,822,718 Buildings and improvements 15,348,507 15,348,507 17,171,225 17,171,225 Less: Accumulated depreciation (9,517,393) (9,037,393) Real Estate Net 7,653,832 8,133,832 Cash including cash investments 60,090 16,900 Escrow deposits 455,701 702,955 Prepaid Expenses 33,276 20,686 Deferred Financing Fees 173,344 217,958 TOTAL ASSETS $8,376,243 $9,092,331 LIABILITIES AND PARTNERS'EQUITY: LIABILITES Mortgage and notes payable $10,691,394 $10,769,977 Note Payable to affiliates 430,414 759,788 Amounts due affiliates 324 45,235 Real estate taxes payable 202,500 0 Security deposits 57,605 46,591 Accounts payable & 173,707 306,030 accrued expenses Total liabilities 11,555,944 11,927,621 PARTNERS CAPITAL (DEFICIT) Limited Partners (3,233,599) (2,892,632) General Partner 53,898 57,342 Total Partners Capital (DEFICIT) (3,179,701) (2,835,290) TOTAL LIABILITES AND $8,376,243 $9,092,331 PARTNER DEFICIT See notes to Condensed Consolidated Financial Statements AMERICAN REPUBLIC REALTY FUND I Condensed Consolidated Statement of Operations (Unaudited) Three Months Ended Nine Months Ended September30, September 30, REVENUES 1998 1997 1998 1997 Rental income $646,753 $606,530 $1,932,933 $1,842,164 Other property 17,532 15,812 44,837 39,802 Total revenues 664,285 622,342 1,977,770 1,881,966 EXPENSES Salaries & wages 68,772 67,875 205,846 208,513 Maintenance & repairs 94,507 206,704 293,347 318,222 Utilities 41,442 40,825 133,111 133,836 Real estate taxes 67,500 66,900 202,500 200,700 General administrative 26,714 28,665 79,975 58,086 Contract services 29,446 29,282 85,495 88,747 Insurance 10,612 15,227 37,860 40,974 Interest 201,453 387,527 660,606 513,794 Depreciation and 174,872 165,871 524,614 467,871 amortization Property management fees (a) 33,172 31,029 98,827 93,983 Total expenses 748,490 1,039,905 2,322,181 2,124,726 NET INCOME before ($84,205) ($417,563) ($344,411) ($242,760) extraordinary item Extraordinary Item - Gain 0 348,836 0 348,836 on Debt Extinguish Net Income ($84,205) ($68,727) (344,411) 106,076 NET INCOME PER UNITS $(7.66) $(6.25) $(31.31) $ 9.64 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, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITY Net income (loss) ($344,411) ($242,760) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 480,000 453,000 Extraordinary Item - Gain 0 348,836 on Extinguish of Debt Net Effect of changes in operating accounts Esccrow deposits 247,254 (516,831) Prepaid expenses (12,590) (239,257) Accrued real estate taxes 202,500 200,056 Security deposits 11,014 5,235 Accounts payable (132,323) 53,529 Other assets 44,614 0 Net cash provided by (used for) _______ _______ operating activities 496,058 61,808 CASH FLOWS FROM INVESTING ACTIVITIES Repayment of mortgage notes payable (78,583) 3,545,408 Repayment of notes payable to affiliates (329,374) Proceeds from amounts due (44,911) (2,352,607) Repayment of amounts due affiliates 0 (1,275,739) Net cash used for investing activities (452,868) (82,938) NET INCREASE (DECREASE) IN CASH 43,190 (21,130) AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, 16,900 23,211 BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF $60,090 $2,081 PERIOD Basis of Presentation: Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Partnership believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Partnership's latest annual report on Form 10-K. Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION THIRD QUARTER 1998 COMPARED TO THIRD QUARTER 1997 At September 30, 1998 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 95.8% for the third quarter of 1998, as compared to 93.8% for the third quarter of 1997. Revenue from property operations increased $41,943, or 6.74%, for the third quarter of 1998, as compared to the 1997 third quarter. The increase in rental income of $40,223 or 6.63% is primarily due to an increase in occupancy and rental rates. The following table illustrates the components: Increase Per Cent (Decrease) Change Rental income 40,223 6.63% Other property 1,720 10.88% Net Increase (Decrease) 41,943 6.74% Property operating expenses decreased $291,415, or 28.02%, for the third quarter of 1998, as compared to the same period in 1997, primarily due to decreases in interest expense and maintenance & repairs. The decrease in interest expense is due to principal payoffs in 1997. Maintenance and repairs decreased $112,197 or 54.28% primarily due to roof replacements done in 1997. The following table illustrates the components by category: Increase (Decrease) Salaries & wages 897 1.32% Maintenance & repairs (112,197) 54.28% Utilities 617 1.51% Real estate taxes 600 0.90% General admisistrative (1,951) 6.81% Contract services 164 0.56% Insurance (4,615) 30.31% Interest (186,074) 48.02% Depreciation and amortization 9,001 5.43% Property management fees (a) 2,143 6.91% Net Increase (Decrease) (291,415) 28.02% FIRST NINE MONTHS 1998 COMPARED TO FIRST NINE MONTHS 1997 At September 30, 1998 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 95.5% for the first nine months of 1998,as compared to 93.7% for the first nine months of 1997. Revenue from property operations increased $95,804, or 5.09%, for the first nine months of 1998, as compared to the 1997first nine months. The increase in other income of $5,035 or 12.65% is primarily due to a increase in late and returned check charges over the prior year. The increase in rental income of $90,769 or 4.93% is primarily due to an increase in occupancy and rental rates. The following table illustrates the components: Increase Per Cent (Decrease) Change Rental income 90,769 4.93% Other property 5,035 12.65% Net Increase (Decrease) 95,804 5.09% Property operating expenses increased $197,455 or 9.29%, for the first nine months of 1998, as compared to the same period in 1997, primarily due to increases in interest expense. The increase in interest expense is due to the refinancing of the properties within the fund. Maintenance and repairs decreased $24,875 or 7.82% primarily due to roof being replaced in 1997. General and administrative costs increased $21,889 or 37.68% primarily due to higher administrative costs associated with the refinancing. The following table illustrates the components by category: Increase (Decrease) Salaries & wages (2,667) 1.28% Maintenance & repairs (24,875) 7.82% Utilities (725) 0.54% Real estate taxes 1,800 0.90% General administrative 21,889 37.68% Contract services (3,252) 3.66% Insurance (3,114) 7.60% Interest 146,812 28.57% Depreciation and amortization 56,743 12.13% Property management fees (a) 4,844 5.15% Net Increase (Decrease) 197,455 9.29% 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, 1998, the Partnership had $60,090 in cash and cash equivalents as compared to $16,900 as of December 31, 1997 . The net increase in cash of $43,190 is principally due to the properties operations. 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. Net proceeds from the refinancing were used to reduce the notes payable to affiliates. During July, 1997 payments of $3,500,000 were made to reduce the debt to affiliates. This together with interest on the debt reduced the amounts due affiliates to $430,414 at September 30, 1998. A gain on retirement of debt arose with the note refinancing being triggered by the early retirement of the debt. The recognized gain of $348,836, was the difference between the carrying value of the debt and the funds necessary to retire the debt. Additionally, the general partner has provided funding to the Partnership in the form of notes payable with balances at December 31,1997 totaling $759,788 which accrue interest at prime plus 2% and are due on June 30, 2001, or upon demand. The general partner is not obligated to provide additional funding to the Partnership. 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. The Partnership's required principal payments due under the stated terms of the Partnership's mortgage notes payable and notes payable to affiliates are $102,678, $111,063 and $120,131 for each of the next three years. Other Information Item 1. Legal Proceedings 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- 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 (B) Reports on Form 8-K for the quarter ended September 30,1998. 1 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 9, 1998 [ARTICLE] 5 [LEGEND] THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH THE SEPTEMBER 30, 1998 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. [/LEGEND] [CIK] 0000711512 [NAME] AMERICAN REPUBLIC REALTY FUND I [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] DEC-31-1998 [PERIOD-END] SEP-30-1998 [CASH] 60,090 [SECURITIES] 0 [RECEIVABLES] 0 [ALLOWANCES] 0 [INVENTORY] 0 [CURRENT-ASSETS] 0 [PP&E] 17,171,225 [DEPRECIATION] 9,517,393 [TOTAL-ASSETS] 8,376,243 [CURRENT-LIABILITIES] 0 [BONDS] 10,691,394 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 0 [OTHER-SE] (3,179,701) [TOTAL-LIABILITY-AND-EQUITY] 8,376,394 [SALES] 0 [TOTAL-REVENUES] 664,285 [CGS] 0 [TOTAL-COSTS] 0 [OTHER-EXPENSES] 547,037 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 201,453 [INCOME-PRETAX] 0 [INCOME-TAX] 0 [INCOME-CONTINUING] 0 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] (84,205) [EPS-PRIMARY] (7.66) [EPS-DILUTED] 0