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 0-14481
Brauvin Real Estate Fund L.P. 5
(Exact name of small business issuer as specified
in its charter)
Delaware 36-3432071
(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. . . . . . . . . . . . . . . . . . . . . . 13
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . 13
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . 13
Item 4. Submission 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
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. 5 (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 $ 270,759
Tenant receivables (net of
allowance of $26,903) 85,547
Escrow deposits 156,078
Other assets 103,101
Due from affiliates 5,880
Investment in affiliated joint venture 589,324
1,210,689
Investment in real estate, at cost:
Land 2,411,849
Buildings 10,038,514
12,450,363
Less: accumulated depreciation (2,914,821)
Total investment in real estate, net 9,535,542
Total Assets $10,746,231
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 130,979
Security deposits 40,985
Mortgages payable 6,344,455
Total Liabilities 6,516,419
Minority interest in affiliated joint venture 972,617
Partners' Capital
General Partners (33,272)
Limited Partners (9,914.5 limited
partnership units issued and outstanding) 3,290,467
Total Partners' Capital 3,257,195
Total Liabilities and Partners' Capital $10,746,231
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 $714,706 $ 915,268
Interest 2,421 4,477
Other, primarily tenant expense
reimbursements 76,178 198,213
Total income 793,305 1,117,958
EXPENSES
Interest 279,007 319,206
Depreciation 134,440 184,974
Real estate taxes 68,705 188,490
Repairs and maintenance 12,124 23,584
Operating 80,711 142,236
General and administrative 97,553 122,825
Provision for investment
property impairment -- 2,649,046
Total expenses 672,540 3,630,361
Equity in net loss from
affiliated joint venture (21,166) (40,853)
Income (loss) before minority
interest's share in affiliated
joint ventures 99,599 (2,553,256)
Minority interest's share of
Sabal Palm's net income (39,157) (56,720)
Minority interest's share of
Annex's net income -- (231,115)
Income (loss) before
extraordinary item 60,442 (2,841,091)
Extraordinary gain on
extinguishment of Annex debt -- 3,021,766
Net Income $ 60,442 $ 180,675
Net Income Per Limited Partnership
Interest (9,914.5 Units) $6.04 $18.04
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 $310,649 $ 391,186
Interest 1,497 2,369
Other, primarily tenant expense
reimbursements 6,332 83,707
Total income 318,478 477,262
EXPENSES
Interest 138,726 153,279
Depreciation 67,303 83,547
Real estate taxes 32,850 33,790
Repairs and maintenance 7,069 19,818
Operating 34,476 70,449
General and administrative 48,233 70,349
Provision for investment
property impairment -- 2,649,046
Total expenses 328,657 3,080,278
Equity in net loss from
affiliated joint venture (9,298) (18,599)
Loss before minority interest's
share in affiliated
joint ventures (19,477) (2,621,615)
Minority interest's share of
Sabal Palm's net loss (income) 20,672 (4,511)
Minority interest's share of
Annex's net income -- (233,753)
Income(loss) before extraordinary
item 1,195 (2,859,879)
Extraordinary gain on
extinguishment of Annex debt -- 3,021,766
Net Income $ 1,195 $ 161,887
Net Income Per Limited Partnership
Interest (9,914.5 Units) $0.12 $16.16
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 income $ 60,442 $ 180,675
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for investment property impairment -- 2,649,046
Extraordinary gain on extinguishment
of Annex debt -- (3,021,766)
Equity in affiliated joint venture's
net loss 21,166 40,853
Minority interest's share of Sabal Palm's
net income 39,157 56,720
Minority interest's share of the Annex's
net income -- 231,115
Provision for doubtful accounts 8,217 3,061
Depreciation 134,440 184,974
Normalized rental revenue 5,625 1,130
Changes in operating assets and liabilities:
Decrease (increase) in tenant receivables, net 37,883 (10,007)
(Increase) decrease in escrow deposits (60,529) 100,946
Decrease in other assets 6,165 2,888
(Increase) decrease in due from affiliates (5,880) 36,258
Increase (decrease) in accounts payable
and accrued expenses 51,598 (108,234)
Decrease in due to affiliates (52,733) (20,102)
Increase in security deposits -- 3,586
Net cash provided by operating activities 245,551 331,143
Cash Flows From Investing Activities:
Capital expenditures (3,003) (11,500)
Cash distribution to Minority Partner-
Sabal Palm (70,500) (56,400)
Cash used in investing activities (73,503) (67,900)
Cash Flows From Financing Activities:
Repayment of mortgages (43,609) (186,585)
Cash used in financing activities (43,609) (186,585)
Net increase in cash and cash equivalents 128,439 76,658
Cash and cash equivalents at beginning
of period 142,320 106,289
Cash and cash equivalents at end of period $270,759 $182,947
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 $49,387 $53,525
Reimbursable office expenses 38,400 48,105
Legal fees 4,723 382
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 $2,193 and $3,028 for legal
services, as of June 30, 1996 and 1995, respectively.
(4) INVESTMENT IN AFFILIATED JOINT VENTURE
The Partnership owns a 42% interest in Strawberry Fields and
accounts for its investment under the equity method. The following
are condensed statements of operations for Strawberry Fields:
STATEMENTS OF OPERATIONS:
Six Months Ended June 30,
1996 1995
Rental income $420,825 $398,406
Interest income 174 79
420,999 398,485
Interest 225,219 274,140
Depreciation 100,074 99,682
Operating and
administrative expenses 146,101 121,931
471,394 495,753
Net loss $(50,395) $(97,268)
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 Crown Point at June 30, 1996 and
December 31, 1995 was 98% as compared to 95% at June 30, 1995. The
Partnership is continuing to work to sustain the occupancy level of
Crown Point. Crown Point operated at a positive cash flow for the
six months ended June 30, 1996.
At Sabal Palm the occupancy level at June 30, 1996 was 97% as
compared to 99% at June 30, 1995 and December 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.
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.
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 net income of $60,000 for the six
months ended June 30, 1996 as compared to net income of $180,000
for the same six month period in 1995. The $120,000 decrease in
net income resulted primarily from the decrease in the
Partnership's share of the Annex income due to its foreclosure on
May 15, 1995.
Total income for the six months ended June 30, 1996 was
$793,000 as compared to $1,118,000 for the same six month period in
1995, a decrease of $325,000. The $325,000 decrease resulted
primarily from the foreclosure of the Annex on May 15, 1995. Total
income for the Annex for the six months ended June 30, 1995 was
$340,000. This $340,000 decrease in the Annex income was offset by
a $68,000 increase in total income at Crown Point and a $52,000
decrease in total income at Sabal Palm. The increase at Crown
Point was primarily due to a $43,000 increase in rental income
which was a result of the occupancy rate increasing from 95% at
June 30, 1995 to 98% at June 30, 1996. The $52,000 decrease in
total income at Sabal was a result of a $39,000 decrease in tenant
reimbursables. The $39,000 decrease was the result of an adjustment
from a prior period. Due to the slight decrease in occupancy at
Sabal, rental income decreased $13,000.
For the six months ended June 30, 1996, total expenses were
$673,000 as compared to $3,630,000 for the same six month period in
1995, a decrease of $2,957,000. The $2,957,000 decrease in total
expenses resulted primarily from the $2,649,000 provision for
investment property impairment for the Annex in 1995. Total
expenses for the Annex for the six months ended June 30, 1995 were
$266,000. The total expenses at the remaining properties for the
six months ended June 30, 1996 held constant with the total
expenses for the same six month period in 1995.
Interest expense at Crown Point decreased $26,000 due to the
decrease of the interest rate from 9.69% to 7.55% as a result of
the refinancing of its mortgage loan on December 28, 1995. This
decrease in interest expense at Crown Point was offset by slight
increases in real estate taxes, operating expenses and general and
administrative expenses.
Results of Operations - Three Months Ended June 30, 1996 and 1995
(Amounts rounded to 000's)
The Partnership generated net income of $1,000 for the three
months ended June 30, 1996 as compared to net income of $162,000
for the same three month period in 1995. The $161,000 decrease in
net income resulted primarily from the decrease in the
Partnership's share of the Annex income due to its foreclosure on
May 15, 1995.
Total income for the three months ended June 30, 1996 was
$318,000 as compared to $477,000 for the same three month period in
1995, a decrease of $159,000. The $159,000 decrease resulted
primarily from the foreclosure of the Annex on May 15, 1995. Total
income for the Annex for the period April 1, 1995 to May 15, 1995
was $146,000. This decrease in the Annex income was partially
offset by a $34,000 increase in rental income at Crown Point. The
increase at Crown Point was primarily due to the occupancy rate
increasing from 95% at June 30, 1995 to 98% at June 30, 1996.
For the three months ended June 30, 1996, total expenses were
$329,000 as compared to $3,080,000 for the same three month period
in 1995, a decrease of $2,751,000. The $2,751,000 decrease in
total expenses resulted primarily from the $2,649,000 provision for
investment property impairment for the Annex in 1995. All expenses
decreased for the three months ended June 30, 1996 as compared to
the three months ended June 30, 1995 due to the foreclosure of the
Annex on May 15, 1995. Total expenses for the Annex for the period
April 1, 1995 to May 15, 1995 was $66,000. General and
administrative expenses decreased $22,000 for the three months
ended June 30, 1996 as compared to the three months ended June 30,
1995. This decrease was due to the $20,000 decrease in
administrative costs associated with the foreclosure of the Annex
in 1995.
Interest expense at Crown Point decreased $14,000 due to the
decrease of the interest rate from 9.69% to 7.55% as a result of
the refinancing of its mortgage loan on December 28, 1995. This
decrease in interest expense at Crown Point was offset by slight
increases in operating and repairs and maintenance expenses.
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. 5
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