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 September 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 September 30, 1996 . . . . . . . 4
Consolidated Statements of Operations for the
Nine Months Ended September 30, 1996 and 1995. . . . . . . . . 5
Consolidated Statements of Operations for the
Three Months Ended September 30, 1996 and 1995 . . . . . . . . 6
Consolidated Statements of Cash Flows for the
Nine Months Ended September 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. . . . . . . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following Consolidated Balance Sheet as of September 30, 1996,
Consolidated Statements of Operations for the nine and three months
ended September 30, 1996 and 1995 and Consolidated Statements of
Cash Flows for the nine months ended September 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
September 30, 1996
(Unaudited)
ASSETS
Cash and cash equivalents $ 293,724
Tenant receivables (net of allowance of $16,452) 81,623
Escrow deposits 193,315
Other assets 94,879
Due from affiliates 5,880
Investment in affiliated joint venture 588,151
1,257,572
Investment in real estate, at cost:
Land 2,411,849
Buildings 9,737,955
12,149,804
Less: Accumulated depreciation (2,681,647)
Total investment in real estate, net 9,468,157
Total Assets $10,725,729
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable and accrued expenses $ 168,180
Security deposits 40,985
Mortgages payable 6,318,972
Total Liabilities 6,528,137
Minority interest in affiliated joint venture 947,593
Partners' Capital
General Partners (33,343)
Limited Partners (9,914.5 limited partnership
units issued and outstanding) 3,283,342
Total Partners' Capital 3,249,999
Total Liabilities and Partners' Capital $10,725,729
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Rental $ 995,316 $1,230,385
Interest 5,953 6,685
Other, primarily tenant expense
reimbursements 118,063 239,802
Total income 1,119,332 1,476,872
EXPENSES
Interest 418,005 473,174
Depreciation 201,826 201,494
Real estate taxes 101,768 219,840
Repairs and maintenance 19,681 52,663
Operating 114,083 177,159
General and administrative 148,402 348,790
Provision for investment
property impairment -- 2,702,083
Total expenses 1,003,765 4,175,203
Equity in net loss from
affiliated joint venture (22,337) (65,719)
Income (loss) before minority
interest's share in affiliated
joint ventures 93,230 (2,764,050)
Minority interest's share of
Sabal Palm's net income (39,982) (53,436)
Minority interest's share of
Annex's net income -- (231,115)
Income (loss) before
extraordinary item 53,248 (3,048,601)
Extraordinary gain on
extinguishment of Annex debt -- 3,177,788
Net Income $ 53,248 $ 129,187
Net Income Per Limited Partnership
Interest (9,914.5 Units) $ 5.32 $ 12.90
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Rental $280,611 $315,117
Interest 3,532 2,208
Other, primarily tenant expense
reimbursements 41,885 41,589
Total income 326,028 358,914
EXPENSES
Interest 138,998 153,968
Depreciation 67,386 16,519
Real estate taxes 33,063 31,350
Repairs and maintenance 7,556 29,080
Operating 33,373 34,923
General and administrative 50,850 225,964
Provision for investment
property impairment -- 53,037
Total expenses 331,226 544,841
Equity in net loss from
affiliated joint venture (1,172) (24,867)
Loss before minority interest's share
in affiliated joint ventures (6,370) (210,794)
Minority interest's share of
Sabal Palm's net (income) loss (825) 3,284
Loss before extraordinary item (7,195) (207,510)
Extraordinary gain on
extinguishment of Annex debt -- 156,022
Net Loss $ (7,195) $(51,488)
Net Loss Per Limited Partnership
Interest (9,914.5 Units) $ (0.72) $ (5.14)
See notes to consolidated financial statements (unaudited).
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
Cash Flows From Operating Activities:
Net income $ 53,248 $ 129,187
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for investment property impairment -- 2,702,083
Extraordinary gain on extinguishment of
Annex debt -- (3,177,788)
Equity in net loss from affiliated joint venture 22,337 65,719
Minority interest's share of Sabal Palm's
net income 39,982 53,436
Minority interest's share of the Annex's
net income -- 231,115
Provision for doubtful accounts 11,822 4,861
Depreciation 201,826 201,494
Normalized rental revenue 7,123 4,636
Changes in operating assets and liabilities:
Decrease (increase) in tenant receivables, net 36,703 (26,498)
(Increase) decrease in escrow deposits (97,766) 12,172
Decrease (increase) in other assets 14,387 (23,055)
(Increase) decrease in due from affiliates (58,613) 193,095
Increase (decrease) in accounts payable
and accrued expenses 88,799 (48,465)
Increase in due to affiliates -- 26,008
Increase in security deposits -- 3,586
Net cash provided by operating activities 319,848 351,586
Cash Flows From Investing Activities:
Capital expenditures (3,003) (11,500)
Cash distribution to Minority Partner-Sabal Palm (96,350) (82,250)
Cash used in investing activities (99,353) (93,750)
Cash Flows From Financing Activities:
Repayment of mortgages (69,091) (204,177)
Cash used in financing activities (69,091) (204,177)
Net increase in cash and cash equivalents 151,404 53,659
Cash and cash equivalents at beginning of period 142,320 106,289
Cash and cash equivalents at end of period $293,724 $ 159,948
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 nine month period ended September 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 nine months ended September 30, 1996 and 1995,
were as follows:
1996 1995
Management fees $69,808 $74,576
Reimbursable office expenses 63,025 70,605
Legal fees 4,746 1,084
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 $2,728 for legal
services, as of September 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:
Nine Months Ended September 30,
1996 1995
Rental and other income $644,797 $ 584,631
Interest income 420 540
645,217 585,171
Interest expense 337,029 411,211
Depreciation 150,186 149,523
Operating and
administrative expenses 211,186 180,912
698,401 741,646
Net loss $(53,184) $(156,475)
(5) SABAL PALM'S MORTGAGE PAYABLE
The Sabal Palm's mortgage loan matures on February 1, 1997.
The General Partners are currently working with third party lenders
to refinance this loan when it matures. There is no assurance that
the General Partners will be successful in their refinancing
efforts in which case the Partnership would sustain a loss upon
foreclosure.
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 September 30, 1996 and
at December 31, 1995 was 98% as compared to 95% at September 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 nine months ended September 30, 1996.
At Sabal Palm the occupancy level at September 30, 1996 was
91% as compared to 99% at December 31, 1995 and at September 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 Sabal Palm's mortgage loan matures on
February 1, 1997. The General Partners are currently working with
third party lenders to refinance this loan when it matures. There
is no assurance that the General Partners will be successful in
their refinancing efforts in which case the Partnership would
sustain a loss upon foreclosure.
Strawberry Fields operated at a positive cash flow for the
nine months ended September 30, 1996. The occupancy level at
Strawberry Fields at September 30, 1996 was 90% as compared to 83%
at December 31, 1995 and at September 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-Nine Months Ended September 30, 1996 and 1995
(Amounts rounded to 000's)
The Partnership generated net income of $53,000 for the nine
months ended September 30, 1996 as compared to net income of
$129,000 for the same nine month period in 1995. The $76,000
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 nine months ended September 30, 1996 was
$1,119,000 as compared to $1,477,000 for the same nine month period
in 1995, a decrease of $358,000. The $358,000 decrease resulted
primarily from the foreclosure of the Annex on May 15, 1995. Total
income for the Annex for the nine months ended September 30, 1995
was $343,000. Total income for the remaining properties for the
nine months ended September 30, 1995 was $1,134,000 as compared to
the total income for the nine months ended September 30, 1996 of
$1,119,000, a decrease of $15,000. The decrease of $15,000 in
total income was mainly due to a $5,000 decrease in rental income
and a $11,000 decrease in tenant expense reimbursements. Total
income at Crown Point increased $39,000 and Sabal Palm's total
income decreased $52,000. The $39,000 increase in total income at
Crown Point consisted primarily of a $22,000 increase in rental
income and a $15,000 increase in tenant expense reimbursements.
Crown Point's $22,000 increase in rental income was a result of
rent increases implemented in 1996. The $15,000 increase in Crown
Point's tenant expense reimbursements for the nine months ended
September 30, 1996 as compared to the nine months ended September
30, 1995 occurred because the estimate of tenant expense
reimbursements at nine months ended September 30, 1995 was lower
than the actual tenant expense reimbursements incurred at December
31, 1995. The $52,000 decrease in total income at Sabal Palm
consisted primarily of a $27,000 decrease in rental income and a
$26,000 decrease in tenant expense reimbursements. Sabal Palm's
$27,000 decrease in rental income was a result of occupancy
decreasing from 99% at September 30, 1995 to 91% at September 30,
1996. The $26,000 decrease in Sabal Palm's tenant expense
reimbursements for the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995 was a result
of a $35,000 adjustment for 1995 tenant expense reimbursements
being made in 1996.
For the nine months ended September 30, 1996, total expenses
were $1,004,000 as compared to $4,175,000 for the same nine month
period in 1995, a decrease of $3,171,000. The $3,171,000 decrease
in total expenses resulted primarily from the $2,702,000 provision
for investment property impairment for the Annex in 1995. Total
expenses for the Annex for the nine months ended September 30, 1995
were $372,000. Total expenses for the remaining properties for the
nine months ended September 30, 1995 was $1,101,000 as compared to
the total expenses for the nine months ended September 30, 1996 of
$1,004,000, a decrease of $97,000. The $97,000 decrease in total
expense primarily resulted from a $42,000 decrease in interest
expense, $26,000 decrease in repairs and maintenance and a $24,000
decrease in general and administrative expense.
The $42,000 decrease in interest expense was primarily a
result of a $41,000 decrease in interest expense at Crown Point.
This $41,000 decrease at Crown Point was a direct result of the
refinancing of the mortgage loan on December 28, 1995 when the
interest rate decreased from 9.69% to 7.55%.
Repairs and maintenance decreased $26,000 when comparing the
nine months ended September 30, 1995 (excluding the Annex) with
the nine months ended September 30, 1996. This $26,000 decrease
resulted mainly from a $17,000 decrease in parking lot repairs at
Crown Point.
The $24,000 decrease in general and administrative expense was
mainly attributed to the decrease in the Partnership's
administrative expenses that were associated with the Annex
bankruptcy.
Results of Operations-Three Months Ended September 30, 1996 and
1995 (Amounts rounded to 000's)
The Partnership generated net loss of $7,000 for the three
months ended September 30, 1996 as compared to a net loss of
$51,000 for the same three month period in 1995. The $44,000
increase in net income resulted primarily from the decrease of
$54,000 in total expenses (excludes the Annex's expenses of
$160,000) and a $22,000 decrease in the Partnership's minority
share of Strawberry's net loss. These decreases were offset by a
decrease in total income (excludes the Annex's total income of
$4,000) of $29,000.
Total income for the three months ended September 30, 1996 was
$326,000 as compared to $359,000 for the same three month period in
1995, a decrease of $33,000. The $33,000 decrease in total income
resulted primarily from a $34,000 decrease in rental income. The
$34,000 decrease in rental income was a result of a $13,000
decrease in rental income at Sabal Palm and a decrease of $21,000
in rental income at Crown Point. The $13,000 decrease in rental
income at Sabal Palm was due to the occupancy rate decreasing from
98% at September 30, 1995 to 91% at September 30, 1996 while the
$21,000 decrease in rental income at Crown Point was due to
percentage rent decreasing $27,000. The $27,000 decrease in
percentage rent was mainly due to the timing of the percentage rent
calculations for 1995 and 1996. Percentage rent was billed during
the second quarter in 1996 and was billed during the third quarter
in 1995.
For the three months ended September 30, 1996, total expenses
were $331,000 as compared to $545,000 for the same three month
period in 1995, a decrease of $214,000. The $214,000 decrease in
total expenses consisted of $160,000 in total expenses for the
Annex and $54,000 in total expenses for the remaining properties.
The $54,000 decrease in total expenses for the remaining properties
was mainly due to a $15,000 decrease in interest expense, a $22,000
decrease in repairs and maintenance and a $14,000 decrease in
general and administrative expenses.
The $15,000 decrease in interest expense was primarily due to
a $14,000 decrease in interest expense at Crown Point. 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.
Repairs and maintenance decreased $22,000 when comparing the
three months ended September 30, 1996 to the three months ended
September 30, 1995. This $22,000 decrease in repairs and
maintenance was primarily due to a $17,000 decrease in parking lot
repairs at Crown Point.
The $14,000 decrease in general and administrative expenses
was mainly attributed to the decrease in the Partnership's
administrative expenses that were associated with the Annex
bankruptcy.
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: November 13, 1996
BY: /s/ B. Allen Aynessazian
B. Allen Aynessazian
Chief Financial Officer
and Treasurer
DATE: November 13, 1996