UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1995 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 0-13402 Brauvin Real Estate Fund L.P. 4 (Exact name of registrant as specified in its charter) Delaware 36-3304339 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 South Wacker Drive, Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) (312) 443-0922 (Registrant's telephone number, including area code) 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 X No . BRAUVIN REAL ESTATE FUND L.P. 4 INDEX Page PART I Financial Information Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets at June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statements of Operations for the Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . 5 Consolidated Statements of Operations for the Three Months Ended June 30,1995 and 1994. . . . . . . . . . . 6 Consolidated Statement of Partners' Capital for the Period January 1, 1995 to June 30, 1995 . . . . . . . . . 7 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . 8 Notes to Consolidated Financial Statements. . . . . . . . . . 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . 11 PART II Other Information Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 13 Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . 13 Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . 13 Item 4. Submissions of Matters to a Vote of Security Holders. . . 13 Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 13 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 13 SIGNATURES 14 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Except for the December 31, 1994 Consolidated Balance Sheet, the following Consolidated Balance Sheet as of June 30, 1995, Consolidated Statements of Operations for the six and three months ended June 30, 1995 and 1994, Consolidated Statement of Partners' Capital for the period January 1, 1995 to June 30, 1995 and Consolidated Statements of Cash Flows for the six months ended June 30, 1995 and 1994 for Brauvin Real Estate Fund L.P. 4 (the "Partnership") are unaudited but reflect, in the opinion of the management, all adjustments necessary to present fairly the information required. All such adjustments are of a normal recurring nature. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's 1994 Annual Report on Form 10-K. BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED BALANCE SHEETS June 30, 1995 December 31, 1994 (Unaudited) (Audited) ASSETS Cash and cash equivalents $ 479,882 $ 404,347 Tenant receivables (net of allowance of $21,276 and $19,204, respectively) 58,242 45,979 Escrow and other deposits 200,410 147,988 Other assets 92,421 56,922 Investment in affiliated joint venture 1,020,095 1,019,775 1,851,050 1,675,011 Investment in real estate, at cost: Land 4,035,301 4,035,301 Buildings 16,211,777 16,195,230 20,247,078 20,230,531 Less: accumulated depreciation (4,756,291) (4,536,911) Total investment in real estate, net 15,490,787 15,693,620 Total Assets $17,341,837 $17,368,631 LIABILITIES AND PARTNERS' CAPITAL Liabilities Accounts payable and accrued expenses $ 218,410 $ 124,588 Security deposits 44,534 40,013 Mortgages payable 12,086,165 12,155,027 Total Liabilities 12,349,109 12,319,628 Minority interest in affiliated joint venture 671,326 712,179 Partners' Capital General Partners (16,989) (16,835) Limited Partners (9,550 limited partnership units issued and outstanding) 4,338,391 4,353,659 Total Partners' Capital 4,321,402 4,336,824 Total Liabilities and Partners' Capital $17,341,837 $17,368,631 See notes to consolidated financial statements (unaudited). BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 1995 and 1994 (UNAUDITED) 1995 1994 INCOME Rental $ 932,023 $ 969,029 Interest 12,870 2,673 Other, primarily expense reimbursements 88,331 142,994 Total income 1,033,224 1,114,696 EXPENSES Mortgage and other interest 546,379 550,585 Depreciation 219,380 231,502 Real estate taxes 134,182 139,200 Repairs and maintenance 21,480 25,720 Other property operating 108,109 113,657 General and administrative 116,689 117,921 Total expenses 1,146,219 1,178,585 Loss before participation in affiliated joint ventures (112,995) (63,889) Equity in net income from affiliated joint venture 56,720 44,398 Minority interest's share of affiliated joint venture net loss 40,853 38,328 Net (Loss) Income $ (15,422) $ 18,837 Net (Loss) Income Per Limited Partnership Interest (9,550 Units): $(1.60) $1.95 See notes to consolidated financial statements (unaudited). BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended June 30, 1995 and 1994 (UNAUDITED) 1995 1994 INCOME Rental $ 478,881 $ 519,806 Interest 7,433 2,020 Other, primarily expense reimbursements 19,982 80,255 Total income 506,296 602,081 EXPENSES Mortgage and other interest 272,809 287,055 Depreciation 110,581 115,988 Real estate taxes 66,982 69,600 Repairs and maintenance 5,518 11,279 Other property operating 54,541 55,340 General and administrative 62,046 60,181 Total expenses 572,477 599,443 (Loss) income before participation in affiliated joint ventures (66,181) 2,638 Equity in net income from affiliated joint venture 4,511 892 Minority interest's share of affiliated joint venture net loss 18,599 14,573 Net (Loss) Income $ (43,071) $ 18,103 Net (Loss) Income Per Limited Partnership Interest (9,550 Units): $(4.47) $1.87 See notes to consolidated financial statements (unaudited). BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL For the Period January 1, 1995 to June 30, 1995 (UNAUDITED) General Limited Partners Partners Total BALANCE at January 1, 1995 $(16,835) $4,353,659 $4,336,824 Net loss (154) (15,268) (15,422) BALANCE at June 30, 1995 $(16,989) $4,338,391 $4,321,402 See notes to consolidated financial statements (unaudited). BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1995 and 1994 (UNAUDITED) 1995 1994 Cash Flows From Operating Activities: Net (loss) income $(15,422) $18,837 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Equity in net income from affiliated joint venture (56,720) (44,398) Minority interest's share of affiliated joint venture net loss (40,853) (38,328) Provision for doubtful accounts 6,405 12,350 Depreciation 219,380 231,502 Normalized rental revenue 2,494 (6,216) Changes in operating assets and liabilities: Increase in tenant receivables (21,162) (7,830) Increase in escrow and other deposits (52,422) (74,020) Increase in other assets (35,499) (7,316) Increase in accounts payable and accrued expenses 93,822 43,233 Increase (decrease) in security deposits 4,521 (2,021) Net cash provided by operating activities 104,544 125,793 Cash Flows From Investing Activities: Capital expenditures (16,547) (24,120) Cash distribution from affiliated joint venture 56,400 76,845 Net cash provided by investing activities 39,853 52,725 Cash Flows From Financing Activities: Repayment of mortgages (68,862) (92,406) Contribution from minority partner of affiliated joint venture -- 16,800 Net cash used in financing activities (68,862) (75,606) Net increase in cash and cash equivalents 75,535 102,912 Cash and cash equivalents at beginning of period 404,347 276,652 Cash and cash equivalents at end of period $479,882 $379,564 See notes to consolidated financial statements (unaudited). BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended June 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 1994. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reclassifications Certain amounts in the 1994 financial statements have been reclassified to conform to the 1995 presentation. This has not affected the previously reported results of operations. (3) TRANSACTIONS WITH AFFILIATES Fees and other expenses paid to the General Partners or its affiliates for the six months ended June 30, 1995 and 1994, were as follows: 1995 1994 Management fees $64,588 $67,850 Reimbursable office expenses 42,000 42,156 Legal fees 281 609 The Partnership believes the amounts paid to affiliates are representative of amounts which would have been paid to independent parties for similar services. The Partnership had made all payments to affiliates, except for $7,822 for legal services, as of June 30, 1995. (4) INVESTMENT IN AFFILIATED JOINT VENTURE The Partnership owns a 47% interest in Sabal Palm and accounts for its investment under the equity method. The following are condensed income statements for Sabal Palm: INCOME STATEMENTS: Six Months Ended June 30, 1995 1994 Rental income $459,746 $420,231 Interest income 1,167 1,059 460,913 421,290 Mortgage and other interest 151,140 152,606 Depreciation 67,718 67,652 Operating and administrative expenses 121,374 106,569 340,232 326,827 Net income $120,681 $ 94,463 BRAUVIN REAL ESTATE FUND L.P. 4 (a Delaware limited partnership) ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources The Partnership intends to satisfy its short-term liquidity needs through cash flow from the properties. Long-term liquidity needs are expected to be satisfied through modification of the mortgages. In November 1991, the Partnership reached an agreement with the lender to modify the terms of the Fortune mortgage loan in a manner which has allowed the property to operate at a break-even or positive cash flow level (the "Second Loan Modification"). Pursuant to the Second Loan Modification, the annual interest rate was reduced from 11.875% to 3% effective as of July 1, 1991. The Partnership makes monthly principal and interest payments based upon a 15-year amortization schedule plus 50% of available cash flow for the period from July 1, 1993 through July 1, 1997. Fortune is currently operating at a slight negative cash flow level and the Partnership is current on its mortgage payments for the Fortune loan. The lender had the option to accelerate the loan maturity beginning on July 1, 1994, and each anniversary thereafter, if the property is not: (i) in good condition and repair; (ii) occupied at a rate that is equal to the prevailing occupancy rate for similar properties in the same locale; and (iii) leased at rental rates which are at least 90% of the prevailing rate for similar properties in the same locale. The Partnership believes that the property currently meets these standards and will continue to meet these standards. In November 1992, the Partnership negotiated a modification of the terms of the mortgage on Raleigh Springs Marketplace with the lender (the "Modified Loan"). In October 1992, the interest rate was reduced from 12.75% to 10.00%. Since November 1992 and through September 1999, principal and interest payments are based on a 25-year amortization schedule. The Modified Loan capitalized the August, September and October 1992 mortgage payments with the final payment due on October 1, 1999. The Partnership is current on its mortgage payments for the Raleigh Springs loan. The occupancy level at Fortune at June 30, 1995 was 93% as compared to 79% at December 31, 1994. The Partnership is continuing to work to sustain the occupancy level of Fortune. Fortune operated at a slight negative cash flow for the six months ended June 30, 1995. Raleigh continued to generate positive cash flow for the six months ended June 30, 1995. The occupancy level at Raleigh at June 30, 1995 was 98% compared to 92% at December 31, 1994. Strawberry Fields continued to generate positive cash flow for the six months ended June 30, 1995. The occupancy level at Strawberry Fields at June 30, 1995 was 82% compared to 78% at December 31, 1994. At Sabal Palm, the Partnership and its joint venture partner are continuing to work to sustain the occupancy level, which stood at 99% at June 30, 1995 and at December 31, 1994. Although the Sabal Palm retail market appears to be overbuilt, the property has continued to generate positive cash flow since its acquisition in 1986. The General Partners of the Partnership expect to distribute proceeds from operations, if any, and from the sale of real estate, to Limited Partners in a manner that is consistent with the investment objectives of the Partnership. Management of the Partnership believes that cash needs may arise from time to time which will have the effect of reducing distributions to Limited Partners to amounts less than would be available from refinancings or sale proceeds. These cash needs include, among other things, maintenance of working capital reserves in compliance with the partnership agreement as well as payments for major repairs, tenant improvements and leasing commissions in support of real estate operations. Results of Operations - Six Months Ended June 30, 1995 and 1994 (Amounts rounded to 000's) The Partnership generated a net loss of $15,000 in the first six months of 1995, as compared to a net income of $19,000 in 1994. The $34,000 decrease in net income resulted primarily from a decrease in rental and other income for Strawberry Fields and Raleigh Springs. Total income was $1,033,000 for the six months ended June 30, 1995, as compared to $1,115,000 in 1994, a decrease of $82,000. The $82,000 decrease in total income resulted primarily from a decrease in rental income at Raleigh Springs and Strawberry Fields. Rental income should increase during the third quarter, as a result of the increase in occupancy rates for in the six month ended June 30, 1995. Expenses were $1,146,000 for the six months ended June 30, 1995, as compared to $1,179,000 in 1994, a decrease of $33,000. This decrease was a result of the steady decrease of expenses at all properties. Results of Operations - Three Months Ended June 30, 1995 and 1994 (Amounts rounded to 000's) The Partnership generated a net loss of $43,000 for the three months ended June 30, 1995, as compared to a net income of $18,000 in 1994. The $61,000 decrease in net income resulted primarily from a $96,000 decrease in total income. For the three months ended June 30, 1995, total income was $506,000 in 1995, as compared to $602,000 in 1994, a decrease of $96,000. The $96,000 decrease in total income resulted primarily from a $48,000 decrease in accrued tenant reimbursables at Raleigh Springs and a $45,000 decrease in rental income at Raleigh Springs and Strawberry Fields. For the three months ended June 30, 1995, total expenses were $572,000 in 1995 as compared to $599,000 in 1994, a decrease of $27,000. This decrease was also a result of the steady decrease of expenses at all properties. 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. Exhibits and Reports On Form 8-K. Exhibit 27. Financial Data Schedule. 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. BY: Brauvin Ventures, Inc. Corporate General Partner of Brauvin Real Estate Fund L.P. 4 BY: /s/ Jerome J. Brault Jerome J. Brault Chairman of the Board of Directors and President DATE: August 11, 1995 BY: /s/ Thomas J. Coorsh Thomas J. Coorsh Chief Financial Officer and Treasurer DATE: August 11, 1995