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 June 30, 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
(Issuer'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 June 30, 1996. . . . . . . . . .4
Consolidated Statements of Operations for the
Six Months Ended June 30, 1996 and 1995. . . . . . . . . . . .5
Consolidated Statements of Operations for the
Three Months Ended June 30, 1996 and 1995. . . . . . . . . . .6
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1996 and 1995. . . . . . . . . . . .7
Notes to Consolidated Financial Statements . . . . . . . . . .8
Item 2. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . . . . . . . . 10
PART II Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 14
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . 14
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following Consolidated Balance Sheet as of June 30, 1996,
Consolidated Statements of Operations for the six and three months
ended June 30, 1996 and 1995 and Consolidated Statements of Cash
Flows for the six months ended June 30, 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)
June 30,
1996
ASSETS
Cash and cash equivalents $ 725,238
Tenant receivables (net of
allowance of $80,668) 72,799
Escrow deposits 211,217
Other assets 43,662
Investment in affiliated joint venture 972,617
2,025,533
Investment in real estate, at cost:
Land 4,035,301
Buildings 16,225,202
20,260,503
Less: accumulated depreciation (5,202,564)
Total investment in real estate, net 15,057,939
Total Assets $17,083,472
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 256,651
Security deposits 50,784
Mortgages payable 11,837,372
Total Liabilities 12,144,807
Minority interest in affiliated joint venture 589,324
Partners' Capital
General Partners (16,710)
Limited Partners (9,550 limited partnership
units issued and outstanding) 4,366,051
Total Partners' Capital 4,349,341
Total Liabilities and Partners' Capital $17,083,472
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six months Ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
INCOME
Rental $ 905,929 $ 932,023
Interest 17,386 12,870
Other, primarily tenant expense
reimbursements 126,647 88,331
Total income 1,049,962 1,033,224
EXPENSES
Interest 492,194 546,379
Depreciation 224,705 219,380
Real estate taxes 137,580 134,182
Repairs and maintenance 15,600 21,480
Operating 122,210 108,109
General and administrative 153,658 116,689
Total expenses 1,145,947 1,146,219
Equity in net income from
affiliated joint venture 39,157 56,720
Loss before minority interest's
share in affiliated
joint venture (56,828) (56,275)
Minority interest's share of
affiliated joint venture 21,166 40,853
Net Loss $ (35,662) $ (15,422)
Net Loss Per Limited Partnership
Interest (9,550 Units) $(3.70) $(1.60)
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
INCOME
Rental $431,507 $478,881
Interest 9,050 7,433
Other, primarily tenant expense
reimbursements 53,421 19,982
Total income 493,978 506,296
EXPENSES
Interest 243,476 272,809
Depreciation 114,347 110,581
Real estate taxes 67,080 66,982
Repairs and maintenance 8,172 5,518
Operating 54,799 54,541
General and administrative 85,835 62,046
Total expenses 573,709 572,477
Equity in net (loss) income from
affiliated joint venture (20,672) 4,511
Loss before minority interest's
share in affiliated
joint venture (100,403) (61,670)
Minority interest's share of
affiliated joint venture 9,298 18,599
Net Loss $(91,105) $(43,071)
Net Loss Per Limited Partnership
Interest (9,550 Units) $(9.44) $(4.47)
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
Cash Flows From Operating Activities:
Net loss $(35,662) $(15,422)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Equity in affiliated joint venture's
net loss (39,157) (56,720)
Minority interest's share of affiliated
joint venture net loss (21,166) (40,853)
Provision for doubtful accounts 36,213 6,405
Depreciation 224,705 219,380
Normalized rental revenue 4,850 2,494
Changes in operating assets and liabilities:
Decrease (increase) in tenant
receivables, net 53,434 (21,162)
Increase in escrow deposits (114,469) (52,422)
Increase in other assets (2,666) (35,499)
Decrease in due from affiliate 52,901 --
Increase in accounts payable
and accrued expenses 137,503 93,822
Increase in security deposits 7,300 4,521
Net cash provided by operating activities 303,786 104,544
Cash Flows From Investing Activities:
Capital expenditures (11,347) (16,547)
Cash distribution from affiliated
joint venture 70,500 56,400
Net cash provided by investing activities 59,153 39,853
Cash Flows From Financing Activities:
Repayment of mortgages (146,005) (68,862)
Cash used in financing activities (146,005) (68,862)
Net increase in cash and cash equivalents 216,934 75,535
Cash and cash equivalents at
beginning of period 508,304 404,347
Cash and cash equivalents at
end of period $725,238 $479,882
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 six month period ended June 30, 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 six months ended June 30, 1996 and 1995, were as
follows:
1996 1995
Management fees $62,693 $61,269
Reimbursable office expenses 52,500 50,100
Legal fees 257 281
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 $7,265 and $7,822 for legal
services, as of June 30, 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:
Six Months Ended June 30,
1996 1995
Rental income $407,191 $459,746
Interest income 1,624 1,167
408,815 460,913
Mortgage and other interest 149,987 151,140
Depreciation 67,312 67,718
Operating and
administrative expenses 108,204 121,374
325,503 340,232
Net income $ 83,312 $120,681
ITEM 2. Management's Discussion and Analysis or Plan of Operation.
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 June 30, 1996 was 96% as
compared to 86% at December 31, 1995 and 93% at June 30, 1995. The
Partnership is continuing to work to sustain the occupancy level of
Fortune. Fortune operated at a positive cash flow for the six
months ended June 30, 1996.
Raleigh operated at a positive cash flow for the six months
ended June 30, 1996. The occupancy level at Raleigh at June 30,
1996 was 75% compared to 94% at December 31, 1995 and 98% at June
30, 1995.
The decline in occupancy at Raleigh was due to a major tenant,
T.J. Maxx, vacating during the first quarter of 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. There has been an
expression of interest by a health group for approximately 37% of
the T.J. Maxx space. A proposal has been received from this
prospective tenant and in return has received a lease for approval.
A carpet store has expressed an interest in the remaining portion
of the T. J. Maxx space but no agreement has been reached at this
time. Due to the vacancy of this space, which occupies 21% 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 six
months ended June 30, 1996. The occupancy level at Strawberry
Fields at June 30, 1996 was 90% as compared to 83% at December 31,
1995 and 82% at June 30, 1995.
At Sabal Palm, the Partnership and its joint venture partner
are continuing to work to sustain the occupancy level, which stood
at 97% at June 30, 1996 as compared to 99% at December 31, 1995 and
June 30, 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 - Six months Ended June 30, 1996 and 1995
(Amounts rounded to 000's)
The Partnership generated a net loss of $36,000 for the six
months ended June 30, 1996 as compared to a net loss of $15,000 for
the six months ended June 30, 1995. The $21,000 increase in net
loss resulted primarily from a $18,000 decrease in the
Partnership's equity interest in Sabal Palm's net income.
Total income for the six months ended June 30, 1996 was
$1,050,000 as compared to $1,033,000 for the same six month period
in 1995, an increase of $17,000. The $17,000 increase resulted
primarily from a $39,000 increase in other tenant reimbursements
which was offset by a $26,000 decrease in rental income. The
$39,000 increase in other tenant reimbursements was mainly
attributed to an increase of $45,000 at Raleigh. The decrease of
$26,000 in rental income was mainly attributed to a decrease of
$75,000 at Raleigh which was offset by an increase at Fortune
($16,000) and Strawberry ($33,000). The increase in rental income
at Fortune and Strawberry was the result of increased rental rates
at both properties while the decrease at Raleigh was a result of
T.J. Maxx vacating its space in the first quarter of 1996. This
space occupies approximately 21% of the center.
For the six months ended June 30, 1996 total expenses were
$1,146,000 as compared to the same for the six months ended June
30, 1995. Although total expenses for the six months ended June
30, 1996 and 1995 stayed constant interest expense decreased
$54,000 and repairs and maintenance decreased $5,000. These
decreases were partially offset by an increase in operating expense
of $14,000 and an increase in general and administrative expenses
of $37,000. The decrease in interest expense was due primarily to
a $49,000 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. General and administrative
expenses increased by a total of $37,000 which was primarily due to
a $30,000 increase in provision for bad debts. Provision for bad
debts increased $7,000 at Raleigh, $8,000 at Fortune and $15,000 at
Strawberry Fields.
Results of Operations - Three months Ended June 30, 1996 and 1995
(Amounts rounded to 000's)
The Partnership generated a net loss of $91,000 for the three
months ended June 30, 1996 as compared to a net loss of $43,000 for
the three months ended June 30, 1995. The $48,000 increase in net
loss resulted primarily from a $26,000 decrease in the
Partnership's equity interest in Sabal Palm's net income.
Total income for the three months ended June 30, 1996 was
$494,000 as compared to $506,000 for the three months ended June
30, 1995, a decrease of $12,000. The $12,000 decrease was a result
of a decrease of $47,000 in rental income offset by an increase in
tenant reimbursables of $33,000. The $47,000 decrease in rental
income was attributable to a $59,000 decrease in Raleigh's rental
income due to the T.J. Maxx vacant space. The decrease in Raleigh's
rental income was offset by a $15,000 increase in rental income at
Strawberry. The $33,000 increase in tenant reimbursables resulted
from a $36,000 increase at Raleigh and $3,000 decrease at
Strawberry.
For the three months ended June 30, 1996 total expenses were
$574,000 as compared to $572,000 for the same three month period in
1995, an increase of $2,000. The $2,000 increase in total expenses
was the result of a decrease in interest expense of $30,000 which
was offset by an increase in general and administrative expenses of
$24,000, an increase of repairs and maintenance of $3,000 and an
increase of $4,000 in depreciation expense. The decrease in
interest expense was due primarily to a $27,000 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. General and administrative expenses increased by
a total of $24,000 which was primarily due to a $16,000 increase in
provision for bad debts. Provision for bad debts increased $7,000
at Fortune and $8,000 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: August 13, 1996
BY: /s/ B. Allen Aynessazian
B. Allen Aynessazian
Chief Financial Officer
and Treasurer
DATE: August 13, 1996