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, 1999 Commission file number 0-11578 AMERICAN REPUBLIC REALTY FUND (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, 1999 and December 31, 1998 Page 3 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 1999 and 1998 Page 4 Consolidated Statements of Cash Flows for the Nine months Ended September 30, 1999 and 1998 Page 5 Item 2. Results of Operations and Management's Discussion and Analysis of Financial Condition Page 6 Liquidity and Capital Resources Page 7 Other Information Page 8 Signatures Page 9 The statements, insofar as they relate to the period subsequent to December 31, 1998, are Unaudited. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements AMERICAN REPUBLIC REALTY FUND Condensed Consolidated Balance Sheets See notes to Condensed Consolidated Financial Statements September December 30, 31, 1999 1998 (Unaudited) ASSETS Real Estate assets, at cost Land $1,822,718 $1,822,718 Buildings and improvements 15,519,676 15,519,676 17,342,394 17,342,394 Less: Accumulated Depreciation (10,197,703) (9,702,703) Real Estate, Net 7,144,691 7,639,691 Cash including cash investments 228,306 146,358 Escrow deposits 531,051 430,820 Prepaid Expenses 32,665 14,421 Deferred Financing Fees 150,403 195,016 TOTAL ASSETS $8,087,116 $8,426,306 LIABILITIES AND PARTNERS' EQUITY: LIABILITIES Mortgage and notes payable $10,590,050 $10,675,051 Note Payable to affiliates 300,461 399,392 Amounts due affiliates 637 46,853 Real estate taxes payable 202,916 0 Security deposits 71,752 56,924 Accounts payable & accrued expenses 175,514 278,099 Total Liabilities 11,341,330 11,456,319 PARTNERS CAPITAL (DEFICIT) Limited Partners (3,307,367) (3,085,408) General Partner 53,153 55,395 Total Partners Capital (Deficit) (3,254,214) (3,030,013) TOTAL LIABILITIES & PARTNER DEFICIT $8,087,116 $8,426,306 AMERICAN REPUBLIC REALTY FUND Condensed Consolidated Statement of Operations (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, REVENUES 1999 1998 1999 1998 Rental income $668,947 $646,753 $1,990,380 $1,932,933 Other property 14,364 17,532 43,102 44,837 Total revenues 683,311 664,285 2,033,482 1,977,770 EXPENSES Salaries & wages 71,197 68,772 221,699 205,846 Maintenance & repairs 61,445 94,507 228,698 293,347 Utilities 43,058 41,442 129,635 133,111 Real estate taxes 67,916 67,500 202,916 202,500 General administrative 29,962 26,714 89,746 79,975 Contract services 28,300 29,446 83,416 85,495 Insurance 10,352 10,612 31,173 37,860 Interest 208,850 201,453 629,286 660,606 Depreciation and Amort. 179,871 174,872 539,614 524,614 Property management Fees 34,100 33,172 101,500 98,827 fees Total expenses 735,051 748,490 2,257,683 2,322,181 Net Income ($51,740)($84,205) (224,201) (344,411) NET INCOME PER UNIT $(4.70) $(7.66) $(20.38) $(31.31) AMERICAN REPUBLIC REALTY FUND Condensed Consolidated Statement of Cash Flows See Notes to Condensed Consolidated Financial Statements Unaudited Nine Months Ended September 30, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITY Net income (loss) ($224,201) ($344,411) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 495,000 480,000 Net Effect of changes in operating accounts Escrow deposits (100,231) 247,254 Prepaid expenses (18,244) (12,590) Accrued real estate taxes 202,916 202,500 Security deposits 14,828 11,014 Accounts payable (102,585) (132,323) Other assets 44,613 44,614 Net cash provided by (used for) 312,096 496,058 operating activities CASH FLOWS FROM INVESTING ACTIVITIES Repayment of mortgage notes payable (85,001) (78,583) Repayment of notes payable to affiliates (98,931) 0 Repayment of amounts due affiliates (46,216) (374,285) Net cash used for investing activities (230,148) (452,868) NET INCREASE (DECREASE) IN CASH AND 81,948 43,190 CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 146,358 16,900 CASH AND CASH EQUIVALENTS, END OF PERIOD $228,306 $60,090 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 1999 COMPARED TO THIRD QUARTER 1998 At September 30, 1999 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 96.2% for the third quarter of 1999, as compared to 95.8% for the third quarter of 1998. Revenue from property operations increased $19,026, or 2.86%, for the third quarter of 1999, as compared to the 1998 third quarter. The increase in rental income of $22,194 or 3.43% is primarily due to an increase in rental rates. The decrease in other income of $3,168 or 18.07% is primarily due to an decrease in fee income collections from the properties. The following table illustrates the components: Increase Per Cent (Decrease) Change Rental income 22,194 3.43% Other property (3,168) 18.07% Net Increase 19,026 2.86% (Decrease) Property operating expenses decreased $13,439, or 1.8%, for the third quarter of 1999, as compared to the same period in 1998, primarily due to decreases in maintenance and repairs of $33,062 or 34.98%. The decrease in maintenance and repairs is due to fewer deferred maintenance projects than in 1998 as then required by the new mortgage notes. General and administrative increased $3,248 or 12.16% primarily due to costs incurred contesting real estate tax valuations. The following table illustrates the components by category: Increase Per Cent (Decrease) Change Salaries & wages 2,425 3.53% Maintenance & repairs (33,062) 34.98% Utilities 1,616 3.90% Real estate taxes 416 0.62% General & Administrative 3,248 12.16% Contract services (1,146) 3.89% Insurance (260) 2.45% Interest 7,397 3.67% Depreciation and amortization 4,999 2.86% Property management fees 928 2.80% Net Increase (Decrease) (13,439) 1.80% (Decrease) FIRST NINE MONTHS 1999 COMPARED TO FIRST NINE MONTHS 1998 Revenue from property operations increased $55,712or 2.82%, for the first nine months of 1999, as compared to the 1998 first nine months. The increase in rental income of $57,447 or 2.97% is primarily due to an increase in rental rates. The decrease in other income of $1,735 or 3.87% is primarily due to reductions of fee income from the properties. The following table illustrates the components: Increase Per Cent (Decrease) Change Rental income 57,447 2.97% Other property (1,735) 3.87% Net Increase (Decrease) 55,712 2.82% Property operating expenses decreased $64,498, or 2.78%, for the first nine months of 1999, as compared to the same period in 1998, primarily due to decreases in maintenance & repairs and interest. The decrease in maintenance and repairs is due to fewer deferred maintenance projects than in 1998 as then required by the new mortgage notes The decrease in interest is primarily due to the refinancing of both properties at lower interest rates. General and administrative increased $9,771 or 12.22% primarily due to costs incurred contesting real estate tax valuations. Insurance costs decreased $6,687 or 17.66% primarily due to lower rates as a result of better than expected loss claims. The following table illustrates the components by category: Increase Per Cent (Decrease) Change Salaries & wages 15,853 7.70% Maintenance & repairs (64,649) 22.04% Utilities (3,476) 2.61% Real estate taxes 416 0.21% General administrative 9,771 12.22% Contract services (2,079) 2.43% Insurance (6,687) 17.66% Interest (31,320) 4.74% Depreciation and amortization 15,000 2.86% Property management fees 2,673 2.70% Net Increase (Decrease) (64,498) 2.78% 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, 1999, the Partnership had $228,306 in cash and cash equivalents as compared to $146,358 as of December 31, 1998. The net increase in cash of $81,948 is principally due to operating cash flow . 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. 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 $120,132, for each of the next three years. 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 $300,461 at September 30, 1999. 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 31,1998 totaling $399,392 which accrue interest at rates ranging from prime plus 2%; to 8.25% 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. Year 2000 The Partnership and Management Company have replaced all data processing systems with the last three years within year 2000 compliant hardware and software. The Partnership and Management Company has completed testing of its data processing systems. While no certainty can not be assured, the systems tested to date are compliant. Surveys of financial institutions and vendors used by the Partnership and Management Company also indicates compliance. The Partnership and Management Company have prepared contingency plans. These include redundant back-ups and paper copies of all system reports through 1999. The Partnership anticipates that it will not incur any costs associated with its computers and building operating systems as it relates to the conversion to the year 2000. 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.2-81074 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 (B) Reports on Form 8-K for the quarter ended September 30, 1999. 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 a Wisconsin limited partnership By: /s/ Robert J. Werra Robert J. Werra, General Partner Date: October 20, 1999 [ARTICLE] 5 [LEGEND] THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH THE September 30, 1999 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-31-1999 [PERIOD-END] SEP-30-1999 [CASH] 228,306 [SECURITIES] 0 [RECEIVABLES] 0 [ALLOWANCES] 0 [INVENTORY] 0 [CURRENT-ASSETS] 0 [PP&E] 17,342,394 [DEPRECIATION] 10,197,703 [TOTAL-ASSETS] 8,087,116 [CURRENT-LIABILITIES] 0 [BONDS] 10,590,050 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 0 [OTHER-SE] (3,254,214) [TOTAL-LIABILITY-AND-EQUITY] 8,087,116 [SALES] 0 [TOTAL-REVENUES] 683,311 [CGS] 0 [TOTAL-COSTS] 0 [OTHER-EXPENSES] 526,201 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 208,850 [INCOME-PRETAX] 0 [INCOME-TAX] 0 [INCOME-CONTINUING] 0 [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] (51,740) [EPS-BASIC] (4.70) [EPS-DILUTED] 0