UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1996
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 small business issuer 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)
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act
during the past 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 .
INDEX
Page
PART I Financial Information
Item 1. Financial Statements . . . . . . . . . . . . . . . . . . . . .3
Consolidated Balance Sheet at March 31, 1996 . . . . . . . . .4
Consolidated Statements of Operations for the
three months ended March 31, 1996 and 1995 . . . . . . . . . .5
Consolidated Statements of Cash Flows for the
three months ended March 31, 1996 and 1995 . . . . . . . . . .6
Notes to Consolidated Financial Statements . . . . . . . . . .7
Item 2. Management's Discussion and Analysis or Plan
of Operations. . . . . . . . . . . . . . . . . . . . . . . . .9
PART II Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 12
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . 12
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . 12
Item 4. Submissions of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following Consolidated Balance Sheet as of March 31, 1996,
Consolidated Statements of Operations for the three months ended
March 31, 1996 and 1995 and Consolidated Statements of Cash Flows
for the three months ended March 31, 1996 and 1995 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 1995 Annual Report on Form 10-K.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31,
1996
ASSETS
Cash and cash equivalents $ 768,938
Tenant receivables (net of
allowance of $69,011) 60,869
Escrow deposits 153,506
Other assets 36,593
Investment in affiliated joint venture 993,289
2,013,195
Investment in real estate, at cost:
Land 4,035,301
Buildings 16,217,830
20,253,131
Less: accumulated depreciation (5,088,217)
Total investment in real estate, net 15,164,914
Total Assets $17,178,109
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 182,329
Security deposits 46,057
Mortgages payable 11,910,655
Total Liabilities 12,139,041
Minority interest in affiliated joint venture 598,622
Partners' Capital
General Partners (15,799)
Limited Partners (9,550 limited partnership
units issued and outstanding) 4,456,245
Total Partners' Capital 4,440,446
Total Liabilities and Partners' Capital $17,178,109
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1996 and 1995
(UNAUDITED)
1996 1995
INCOME
Rental $474,422 $453,142
Interest 8,336 5,437
Other, primarily tenant expense
reimbursements 73,226 68,349
Total income 555,984 526,928
EXPENSES
Interest 248,718 273,570
Depreciation 110,358 108,799
Real estate taxes 70,500 67,200
Repairs and maintenance 7,428 15,962
Operating 67,411 53,568
General and administrative 67,823 54,643
Total expenses 572,238 573,742
Equity in net income from
affiliated joint venture 59,829 52,209
Income before minority interest's
share in affiliated joint venture 43,575 5,395
Minority interest's share of
affiliated joint venture 11,868 22,254
Net Income $ 55,443 $ 27,649
Net Income Per Limited Partnership
Interest (9,550 Units) $ 5.75 $ 2.87
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(UNAUDITED)
1996 1995
Cash Flows From Operating Activities:
Net income $ 55,443 $ 27,649
Adjustments to reconcile net income
to net cash provided by operating
activities:
Equity in affiliated joint venture's
net income (59,829) (52,209)
Minority interest's share of affiliated
joint venture net loss (11,868) (22,254)
Provision for doubtful accounts 18,859 4,605
Depreciation 110,358 108,799
Normalized rental revenue (856) 780
Changes in operating assets and liabilities:
Decrease (increase) in tenant
receivables, net 88,424 (56,333)
Increase in escrow deposits (56,758) (62,455)
Decrease in other assets 4,403 6,900
Decrease in due from affiliate 52,901 --
Increase in accounts payable
and accrued expenses 63,181 61,221
Increase in security deposits 2,573 814
Net cash provided by operating activities 266,831 17,517
Cash Flows From Investing Activities:
Capital expenditures (3,975) (6,094)
Cash distribution from affiliated
joint venture 70,500 56,400
Net cash provided by investing activities 66,525 50,306
Cash Flows From Financing Activities:
Repayment of mortgages (72,722) (34,174)
Cash used in financing activities (72,722) (34,174)
Net increase in cash and cash equivalents 260,634 33,649
Cash and cash equivalents at
beginning of period 508,304 404,347
Cash and cash equivalents at
end of period $768,938 $437,996
See notes to consolidated financial statements (unaudited).
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-QSB 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 three month period ended March 31, 1996 are not
necessarily indicative of the results that may be expected for the
year ended December 31, 1996. 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, 1995.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reclassifications
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 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 their
affiliates for the three months ended March 31, 1996 and 1995, were
as follows:
1996 1995
Management fees $37,728 $32,070
Reimbursable office expenses 26,250 25,050
Legal fees 14 --
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 $7,507 and $8,103 for legal
services, as of March 31, 1996 and 1995, respectively.
(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:
Three Months Ended March 31,
1996 1995
Rental income $295,924 $281,813
Interest income 777 402
296,701 282,215
Mortgage and other interest 75,076 75,694
Depreciation 33,573 33,959
Operating and
administrative expenses 60,757 61,478
169,406 171,131
Net income $127,295 $111,084
ITEM 2. Management's Discussion and Analysis or Plan 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 at more favorable interest rates.
The occupancy level at Fortune at March 31, 1996 and March 31,
1995 was 93% as compared to 86% at December 31, 1995. The
Partnership is continuing to work to sustain the occupancy level of
Fortune. Fortune operated at a positive cash flow for the three
months ended March 31, 1996.
Raleigh operated at a positive cash flow for the three months
ended March 31, 1996. The occupancy level at Raleigh at March 31,
1996 was 72% compared to 94% at December 31, 1995 and 98% at March
31, 1995.
The decline in occupancy at Raleigh was due to a major tenant,
T.J. Maxx, vacating during the three months ended March 31, 1996.
T.J. Maxx vacated its space in January 1996 but continued to pay
rent through its lease expiration, March 31, 1996. The space is
currently being marketed both regionally and nationally and there
has been an expression of interest by a national retailer. This
prospective tenant had requested and received a lease proposal with
a set of building plans. However, this prospective tenant has
decided not to pursue this space. Due to the vacancy of this
space, which occupies 23% of the center, the Partnership
anticipates a significant decrease in cash flow. Management of the
Partnership continues to actively market this space to alleviate
this situation.
Strawberry Fields operated at a positive cash flow for the
three months ended March 31, 1996. The occupancy level at
Strawberry Fields at March 31, 1996 and December 31, 1995 was 83%
compared to 85% at March 31, 1995.
At Sabal Palm, the Partnership and its joint venture partner
are continuing to work to sustain the occupancy level, which stood
at 99% at March 31, 1996, December 31, 1995 and March 31, 1995.
Although the Sabal Palm retail market appears to be overbuilt, the
property has operated at a 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 - Three Months Ended March 31, 1996 and 1995
(Amounts rounded to 000's)
The Partnership generated net income of $55,000 for the three
months ended March 31, 1996 as compared to net income of $28,000
for the same three month period in 1995. The $27,000 increase in
net income resulted primarily from a $29,000 increase in total
income.
Total income for the three months ended March 31, 1996 was
$556,000 as compared to $527,000 for the same three month period in
1995, an increase of $29,000. The $29,000 increase resulted
primarily from a $37,000 increase in rental income at Fortune
($19,000) and Strawberry ($18,000) offset by a $16,000 decrease at
Raleigh. The increase in rental income at Fortune and Strawberry
was the result of increase rental rates at both properties while
the decrease at Raleigh was a result of the decline of the
occupancy rate since March 31, 1995.
For the three months ended March 31, 1996 total expenses were
$572,000 as compared to $574,000 for the same three month period in
1995, a decrease of $2,000. The $2,000 decrease in total expenses
was the result of a decrease in interest expense of $25,000 and a
decrease in repairs and maintenance of $9,000 which were offset by
an increase in operating expense of $14,000 and an increase in
general and administrative expenses of $13,000. The decrease in
interest expense was due primarily to a $22,000 decrease in
interest expense at Strawberry as a result of the decrease in the
interest rate from 9.0% to 7.55% on November 1, 1995 when the loan
was restructured. Operating expenses increased by $14,000 which
primarily consisted of an increase in management fees of $6,000.
General and administrative expenses increased by a total of $13,000
which was primarily due to a $14,000 increase in provision for bad
debts. Provision for bad debts increased $8,000 at Fortune and
$6,000 at Strawberry Fields.
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: May 14, 1996
BY: /s/ Thomas J. Coorsh
Thomas J. Coorsh
Chief Financial Officer and
Treasurer
DATE: May 14, 1996