UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X]Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2001
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 0-17557
Brauvin High Yield Fund L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3569428
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 North LaSalle Street, Chicago, Illinois 60602
(Address of principal executive offices) (Zip Code)
(312) 759-7660
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b)of the Exchange Act:
Title of each class Name of each exchange on
which registered
None None
Securities registered pursuant to Section 12(g)of the Exchange Act:
Depository Units representing Beneficial Assignments of Limited
Partnership Interests
(Title of class)
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 .
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K (Section 229.405 of this chapter) is
not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
The aggregate sales price of the depositary units representing
beneficial assignments of limited partnership interests of the
registrant (the "Units") to unaffiliated investors of the
registrant during the initial offering period was $25,000,000.
This does not reflect market value. This is the price at which the
Units were sold to the public during the initial offering period.
There is no current market for the Units nor have Units been sold
within the last 60 days prior to this filing.
Portions of the Prospectus of the registrant dated September 4,
1987, as supplemented November 24, 1987 and December 28, 1987 and
filed pursuant to Rule 424(b) and Rule 424(c)under the Securities
Act of 1933, as amended, are incorporated by reference into Parts
II, III and IV of this Annual Report on Form 10-K.
BRAUVIN HIGH YIELD FUND L.P.
2001 FORM 10-K ANNUAL REPORT
INDEX
PART I Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 23
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . 23
PART II
Item 5. Market for the Registrant's Units and Related
Security Holder Matters. . . . . . . . . . . . . . . . . . . . 24
Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . 25
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 27
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk. . . . . . . . . . . . . . . . . . . . . . . . . . 32
Item 8. Financial Statements and Supplementary Data. . . . . . . . . . 32
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . 32
PART III
Item 10. Directors and Executive Officers of the Partnership . . . . . 34
Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . 36
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . . . . . . . 38
Item 13. Certain Relationships and Related Transactions. . . . . . . . 38
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . 40
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
PART I
Item 1. Business.
Brauvin High Yield Fund L.P. (the "Partnership") is a Delaware
limited partnership formed in January 1987 for the purpose of
acquiring debt-free ownership of existing, free-standing,
income-producing retail, office and industrial real estate
properties predominantly subject to "triple-net" leases. It was
anticipated at the time the Partnership first offered its Units
(as defined below) that a majority of these properties would be
leased to operators of national franchise fast food restaurants,
automotive services and convenience stores, as well as banks and
savings and loans. The leases would provide for a base minimum
annual rent and increases in rent, such as through participation
in gross sales above a stated level, fixed increases on specific
dates or indexation of rent to indices such as the Consumer Price
Index. The Partnership sold $25,000,000 in depository units
representing beneficial assignments of limited partnership
interests (the "Units") commencing September 4, 1987, at $10.00
per Unit (the "Offering") pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933, as amended. The
Offering closed on May 19, 1988. An additional $2,922,102 was
raised through the sale of additional Units pursuant to the
Partnership's distribution reinvestment plan (the "Plan") through
December 31, 2001. These Units were purchased from the Units
reserved for the Plan after the termination of the Offering. As
of December 31, 2001, $1,647,070 of Units sold through the
Offering have been repurchased by the Partnership from investors
liquidating their investment and have been retired. The investors
in the Partnership (the "Interest Holders") share in the benefits
of ownership of the Partnership's real property investments
according to the number of Units each owns.
The principal investment objectives of the Partnership are: (i)
distribution of current cash flow from the Partnership's cash flow
attributable to rental income; (ii) capital appreciation; (iii)
preservation and protection of capital; (iv) the potential for
increased income and protection against inflation through
escalation in the base rent or participation and growth in the
sales of the lessees of the Partnership's properties; (v) the
production of "passive" income to offset "passive" losses from
other investments; and (vi) the partial shelter of cash
distributions for Taxable Interest Holders.
A Taxable Interest Holder is defined as: (a) an Interest Holder
who purchased Units from the Partnership during the Offering and
who at the time of such purchase was not: (i) a Qualified Plan;
(ii) an organization (other than a cooperative described in
Section 521 of the Internal Revenue Code of 1986, as amended [the
"Code"]), which is exempt from tax imposed by Chapter 1 (Normal
Taxes and Surtaxes) of the Code; or (iii) a foreign person or
entity, unless more than 50% of the gross income derived by the
foreign person or entity from the Partnership is subject to U.S.
income tax; and (b) each subsequent transferee of any Units from
an Interest Holder described in (a) above.
A Tax-Exempt Interest Holder is defined as: (a) an Interest
Holder who purchased Units from the Partnership during the
Offering and who at the time of such purchase was: (i) a
Qualified Plan; (ii) an organization (other than a cooperative
described in Section 521 of the Code) which is exempt from tax
imposed by Chapter 1 (Normal Taxes and Surtaxes) of the Code; or
(iii) a foreign person or entity, unless more than 50% of the
gross income derived by the foreign person or entity from the
Partnership is subject to U.S. income tax; (b) a Taxable Interest
Holder who elects to be treated as an investor described in (a)
above; and (c) each subsequent transferee of any Units from an
Interest Holder described in (a) and (b) above.
It was originally contemplated that the Partnership would
dispose of its properties approximately six to nine years after
their acquisition with a view towards liquidation of the
Partnership within that period.
Pursuant to the terms of an agreement and plan of merger dated
as of June 14, 1996, as amended March 24, 1997, June 30, 1997,
September 30, 1997, December 31, 1997, March 31, 1998 and June 30,
1998 (the "Merger Agreement"), the Partnership proposed to merge
with and into Brauvin Real Estate Funds, L.L.C., a Delaware
limited liability company affiliated with certain of the General
Partners (the "Purchaser") through a merger (the "Merger") of its
Units. On November 8, 1996, the Interest Holders voted on an
amendment of the Agreement allowing the Partnership to sell or
lease property to affiliates (this amendment, together with the
Merger shall be referred to herein as the "Transaction"). The
Merger will not be consummated primarily as a result of litigation
that was subsequently settled on April 13, 1999.
Pursuant to the settlement agreement the General Partners were
indemnified for all of their legal costs and expenses related to
the lawsuit, and the General Partners were released from the
claims that were alleged or could have been alleged in the class
action lawsuit. In addition the Partnership retained a third-
party commercial real estate firm which, under the supervision of
an independent special master (the "Special Master") and with the
cooperation of the General Partners, marketed the Partnerships'
properties in order to maximize the return to the Interest Holders
(the "Sale Process"). The Sale Process was designed to result in
an orderly liquidation of the Partnership, through a sale of
substantially all of the assets of the Partnership, a merger or
exchange involving the Partnership, or through another liquidating
transaction the Special Master determined was best suited to
maximize value for the Interest Holders. Consummation of such
sale, merger, exchange, or other transaction will be followed by
the orderly distribution of net liquidation proceeds to the
Interest Holders.
The General Partners agreed, as part of the settlement
agreement, to use their best efforts to continue to manage the
affairs of the Partnership in accordance with their obligations
under the Partnership Agreement, to cooperate fully with the
Special Master and to waive certain brokerage and other fees. In
consideration of this, the General Partners were released from the
claims of the class action lawsuit and indemnified for the legal
expenses they incurred related to the lawsuit.
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's assets in an amount of
approximately $13,882,300. This bid was subject to certain
contingencies and was subsequently rejected by the potential
purchaser.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's assets for approximately $12,550,000 (inclusive of
all the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. The
Partnership sold its sole remaining property to an affiliate in
January 2001 for a contract sale price of $175,000.
The terms of the transactions between the Partnership and
affiliates of the General Partners are set forth in Item 13 below.
Reference is hereby made for a description of such terms and
transactions.
The restated limited partnership agreement of the Partnership
(the "Agreement") provides that the Partnership shall terminate
December 31, 2025, unless sooner terminated pursuant to its terms.
The Partnership has no employees.
Item 2. Properties.
The Partnership was a landlord only and did not participate in
the operations of any of the properties discussed herein.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. The
Partnership sold its sole remaining property to an affiliate in
January 2001 for a contract sale price of $175,000.
The following is a summary of the real estate and improvements
owned by the Partnership at January 1, 1999 and subsequent
transactions related thereto.
Taco Bells:
Warner Robins, Georgia
Unit 1389 is located at 1998 Watson Boulevard. The building
consists of 1,288 square feet situated on a 25,000 square foot
parcel and was constructed in 1977 utilizing jumbo bricks.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $1,500. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$250,000 less expenses of approximately $12,600 to an affiliated
party, resulting in a gain of approximately $42,000.
Valdosta, Georgia
Unit 1392 is located at 2918 North Ashley Street. The building
consists of 1,288 square feet situated on a 16,222 square foot
parcel and was constructed in 1982 utilizing jumbo bricks.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $36,300. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$150,000 less expenses of approximately $10,000 to an affiliated
party, resulting in a loss of approximately $1,400.
Albany, Georgia
Unit 1450 is located at 1707 North Slappey Boulevard. The
building consists of 1,288 square feet situated on a 11,850 square
foot parcel and was constructed in 1982 utilizing jumbo bricks.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $36,000. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$130,000 less expenses of approximately $9,500 to an affiliated
party, resulting in a loss of approximately $1,500.
Alliance, Ohio
Unit 1653 is located at 110 West State Street. The building
consists of 1,584 square feet situated on a 14,400 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block with a clay tile roof.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $76,400. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$100,000 less expenses of $6,500 to an affiliated party, resulting
in a loss of approximately $1,900.
Dunedin, Florida
Unit 1835 is located at 2296 State Route 580. The building
consists of 1,584 square feet situated on a 21,021 square foot
parcel and was constructed in 1980 utilizing jumbo bricks.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $89,600. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$170,000 less expenses of approximately $10,600 to an affiliated
party, resulting in a gain of approximately $61,100.
Logansport, Indiana
Unit 1845 is located at 3419 Highway 24 East. Highway 24 East
is a two-lane east-west road. The building consists of 1,566
square feet situated on a 19,200 square foot parcel and was
constructed in 1980 utilizing stucco over concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $128,300. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$82,200 less expenses of approximately $8,100 to an affiliated
party, resulting in a loss of approximately $2,100.
Dover, Ohio
Unit 1856 is located at 718 Boulevard Avenue. Boulevard Avenue
is a four-lane northwest-southwest highway. The building consists
of 1,584 square feet situated on a 20,500 square foot parcel and
was constructed in 1980 utilizing stucco over concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $127,300. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$250,000 less expenses of approximately $13,000 to an affiliated
party, resulting in a gain of approximately $74,400.
Greenville, North Carolina
Unit 1871 is located at 319 East Greenville Boulevard. The
building consists of 1,584 square feet situated on a 22,788 square
foot parcel and was constructed in 1980 utilizing stucco over
concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $21,200. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$190,000 less expenses of approximately $9,900 to an affiliated
party, resulting in a loss of approximately $1,600.
Palm Bay, Florida
Unit 1912 is located at 176 North Harris Avenue. Harris Avenue
is a frontage street to Palm Bay Road. The building consists of
1,584 square feet situated on a 15,250 square foot parcel and was
constructed in 1980 utilizing jumbo bricks.
On August 7, 2000 this property was sold for approximately
$75,000 less expenses of approximately $7,500 to an affiliated
party, resulting in a loss of approximately $1,800.
Sandusky, Ohio
Unit 1915 is located at 3306 Milan Road. The building consists
of 1,584 square feet situated on a 33,000 square foot parcel and
was constructed in 1980 utilizing stucco over concrete block.
On August 7, 2000 this property was sold for approximately
$201,000 less expenses of approximately $11,800 to an affiliated
party, resulting in a loss of approximately $1,900.
Mesa, Arizona
Unit 1925 is located at 531 East Southern Avenue. The building
consists of 1,584 square feet situated on a 28,000 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
On August 7, 2000 this property was sold for approximately
$115,000 less expenses of approximately $9,300 to an affiliated
party, resulting in a loss of approximately $2,000.
Zanesville, Ohio
Unit 1929 is located at 2460 North Maple Street. The building
consists of 1,584 square feet situated on a 17,934 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
On December 13, 1999, the Partnership sold this property to an
unaffiliated third party for a sale price of approximately
$350,000, resulting in a gain to the Partnership of approximately
$56,100. The former proposed Partnership purchaser was to be
allocated an additional gain of approximately $25,500 related to
this sale. The amount due to the former proposed Partnership
purchaser is included in accounts payable in the statement of net
assets in liquidation at December 31, 1999.
Ashtabula, Ohio
Unit 1937 is located at 1226 West Prospect Avenue. The building
consists of 1,584 square feet situated on a 21,049 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
On August 7, 2000 this property was sold for approximately
$200,000 less expenses of approximately $10,700 to an affiliated
party, resulting in a loss of approximately $1,700.
Dalton, Georgia
Unit 1966 is located at 1509 Walnut Avenue. The building
consists of 1,584 square feet situated on a 18,275 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
On August 7, 2000 this property was sold for approximately
$280,000 less expenses of approximately $12,800 to an affiliated
party, resulting in a gain of approximately $41,800.
Ashland, Ohio
Unit 1994 is located at 315 Claremont Avenue. The building
consists of 1,584 square feet situated on a 16,000 square foot
parcel and was constructed in 1980 utilizing stucco over concrete
block.
On August 7, 2000 this property was sold for approximately
$150,000 less expenses of approximately $9,600 to an affiliated
party, resulting in a loss of approximately $1,700.
Martinez, California
Unit 2030 is located at 11 Muir Road. The building consists of
1,584 square feet situated on a 13,940 square foot parcel and was
constructed in 1981 utilizing concrete block over wood frame.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $16,700. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$225,000 less expenses of approximately $11,600 to an affiliated
party, resulting in a loss of approximately $1,900.
Phoenix, Arizona
Unit 2069 is located at 1701 West Bell Street. The building
consists of 1,584 square feet situated on a 9,375 square foot
parcel and was constructed in 1981 utilizing stucco over concrete
block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $33,400. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$275,000 less expenses of approximately $13,300 to an affiliated
party, resulting in a gain of approximately $5,800.
Noblesville, Indiana
Unit 2132 is located at 610 West Route 32. The building
consists of 1,584 square feet situated on a 26,250 square foot
parcel and was constructed in 1982 utilizing stucco over concrete
block.
On August 7, 2000 this property was sold for approximately
$270,000 less expenses of approximately $12,200 to an affiliated
party, resulting in a loss of approximately $1,800.
Spartanburg, South Carolina
Unit 2200 is located at 800 North Pine Street. The building
consists of 1,584 square feet situated on a 24,750 square foot
parcel and was constructed in 1982 utilizing stucco over concrete
block.
In January 2001, this property was sold for approximately
$175,000 less expenses of approximately $4,000 to an affiliated
party, resulting in a loss of approximately $3,900.
All rental income recorded in 2001 relates to this property.
Winslow, Arizona
Unit 2091 is located at 1605 North Park Drive. The building
consists of 2,808 square feet situated on a 37,651 square foot
parcel and was constructed in 1982 utilizing stucco over concrete
block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $30,300. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$184,000 less expenses of approximately $11,100 to an affiliated
party, resulting in a loss of approximately $2,000.
Ponderosas:
Brandon, Florida
Unit 1061 is located at 1449 West Brandon Boulevard. The
building consists of 6,376 square feet situated on a 50,094 square
foot parcel and was constructed in 1985 utilizing wood siding over
concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $153,500. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$708,000 less expenses of approximately $27,200 to an affiliated
party, resulting in a loss of approximately $1,300.
Johnstown, New York
Unit 778 is located at Route 30-A and North Comrie Avenue. The
building consists of 5,833 square feet situated on a 50,094 square
foot parcel and was constructed in 1979 utilizing wood siding over
concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $121,500. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$657,000 less expenses of approximately $23,800 to an affiliated
party, resulting in a loss of approximately $1,900.
Indianapolis, Indiana
Unit 109 is located at 2915 South Madison Avenue. The building
consists of 7,040 square feet situated on a 79,645 square foot
parcel and was constructed in 1969 utilizing wood siding over
concrete block.
On August 7, 2000 this property was sold for approximately
$834,000 less expenses of approximately $26,000 to an affiliated
party, resulting in a loss of approximately $1,400.
Massena, New York
Unit 752 is located at St. Regis Boulevard and Main Street. The
building consists of 5,817 square feet situated on a 48,399 square
foot parcel and was constructed in 1979 utilizing wood siding over
concrete block.
In March 1999, the tenant gave the Partnership notice of its
intent to purchase the property under the tenant's existing
purchase option contained within the lease. The purchase price of
the property was based on the appraised value of the asset.
On October 15, 1999, the Partnership sold this property to the
tenant for a sale price of approximately $715,000, resulting in a
gain to the Partnership of approximately $189,600.
Chenango, New York
Unit 673 is located at 1261 Front Street. The building consists
of 5,402 square feet situated on a 32,712 square foot parcel and
was constructed in 1979 utilizing wood siding over concrete block
and face brick.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $152,700. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$646,000 less expenses of approximately $23,900 to an affiliated
party, resulting in a loss of approximately $1,900.
New Windsor, New York
Unit 782 is located at 334 Windsor Highway. The building
consists of 5,402 square feet situated on a 47,685 square foot
parcel and was constructed in 1980 utilizing wood siding over
concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $124,000. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$481,000 less expenses of approximately $18,700 to an affiliated
party, resulting in a loss of approximately $2,000.
Wadsworth, Ohio
Unit 775 is located at 135 Great Oaks Trail. The building
consists of 5,800 square feet situated on a 43,560 square foot
parcel and was constructed in 1986 utilizing stucco over concrete
block.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $90,600. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$602,000 less expenses of approximately $22,700 to an affiliated
party, resulting in a loss of approximately $1,400.
Westerville, Ohio
Unit 815 is located at 728 South State Street. The building
consists of 4,528 square feet situated on a 46,478 square foot
parcel and was constructed in 1984 utilizing facebrick with wood
siding frontage.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $140,900. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$507,000 less expenses of approximately $19,100 to an affiliated
party, resulting in a loss of approximately $1,400.
Grand Rapids, Michigan
Unit 194 is located at 308 North Drake Road. The building
consists of 5,088 square feet situated on a 95,383 square foot
parcel and was constructed in 1970 utilizing wood siding over
concrete block.
On October 6, 1999, the Partnership sold this property to an
unaffiliated third party for approximately $750,000, resulting in
a gain to the Partnership of approximately $70,800.
Buffalo, New York
Unit 667 is located at 2060 Main Street. The building consists
of 5,440 square feet situated on a 192,656 square foot parcel and
was constructed in 1980 and remodeled in 1987 utilizing wood
siding over concrete block with a sloped and shingled roof.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $150,200. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$551,000 less expenses of approximately $22,600 to an affiliated
party, resulting in a loss of approximately $1,900.
Westbourne, Ohio
Unit 409 is located at 3328 Westbourne Drive. The building
consists of 5,400 square feet situated on a 48,000 square foot
parcel and was constructed in 1974 using wood siding over wood
frame.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $128,100. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$599,000 less expenses of approximately $22,100 to an affiliated
party, resulting in a loss of approximately $1,400.
Ponderosa Joint Venture:
Louisville, Kentucky
Unit 110 is located at 4801 Dixie Highway. The building, built
in 1969, consists of 5,100 square feet situated on a 62,496 square
foot parcel. The building was constructed utilizing wood siding
over concrete block with flagstone.
Pursuant to the adoption of the liquidation basis of accounting,
the Ponderosa Joint Venture's assets were adjusted to net
realizable amounts, resulting in the Ponderosa Joint Venture
recording a reduction in the value of this property of
approximately $15,300.
On August 7, 2000 this property was sold for approximately
$565,000 less expenses of approximately $17,900 to an affiliated
party, resulting in a gain to the Ponderosa Joint Venture of
approximately $600.
Cuyahoga Falls, Ohio
Unit 268 is located at 1641 State Road. The building, built in
1973, consists of 5,587 square feet situated on a 40,228 square
foot parcel. The building was constructed utilizing wood siding
over concrete block.
On August 7, 2000 this property was sold for approximately
$589,000 less expenses of approximately $22,000 to an affiliated
party, resulting in a loss to the Ponderosa Joint Venture of
approximately $1,000.
Tipp City, Ohio
Unit 785 is located at 135 South Garber. The building, built
in 1980, consists of 6,080 square feet situated on a 53,100 square
foot parcel. The building was constructed utilizing wood siding
over concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Joint Venture Partnership's assets were adjusted to net
realizable amounts, resulting in the Ponderosa Joint Venture
recording a reduction in the value of this property of
approximately $96,700.
On August 7, 2000 this property was sold for approximately
$517,000 less expenses of approximately $17,800 to an affiliated
party, resulting in a gain to the Ponderosa Joint Venture of
approximately $600.
Tampa, Florida
Unit 1060 is located at 4420 West Gandy. The building, built
in 1986, consists of 5,777 square feet situated on a 50,094 square
foot parcel. The building was constructed utilizing wood siding
over concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Ponderosa Joint Venture's assets were adjusted to net
realizable amounts, resulting in the Ponderosa Joint Venture
recording a reduction in the value of this property of
approximately $69,500.
On August 7, 2000 this property was sold for approximately
$736,000 less expenses of approximately $24,100 to an affiliated
party, resulting in a gain to the Ponderosa Joint Venture of
approximately $400.
Mooresville, Indiana
Unit 1057 is located at 499 South Indiana Street. The building,
built in 1981, consists of 6,770 square feet situated on a 63,525
square foot parcel. The building was constructed utilizing wood
siding over concrete block.
Pursuant to the adoption of the liquidation basis of accounting,
the Ponderosa Joint Venture's assets were adjusted to net
realizable amounts, resulting in the Ponderosa Joint Venture
recording a reduction in the value of this property of
approximately $93,400.
On August 7, 2000 this property was sold for approximately
$665,000 less expenses of approximately $20,900 to an affiliated
party, resulting in a loss to the Ponderosa Joint Venture of
approximately $400.
Scandinavian Health Spa:
Glendale, Arizona
The Partnership has a 49% interest in a joint venture with an
affiliated real estate limited partnership that purchased the
Scandinavian Health Spa. The Health Spa is a 36,556 square foot
health club located on a three acre parcel in Glendale, Arizona,
a suburb of Phoenix. The property is a two-story health and
fitness workout facility located within the 195,000 square foot
Glendale Galleria Shopping Center.
Pursuant to the adoption of the liquidation basis of accounting,
the joint venture partnership's assets were adjusted to net
realizable amounts, resulting in the joint venture partnership
recording a reduction in the value of this property of
approximately $9,100.
On August 7, 2000 this property was sold for approximately
$6,250,000 less expenses of approximately $133,400 to an
affiliated party, resulting in a gain to the joint venture of
approximately $1,693,300.
Children's World Learning Centers:
Troy, Michigan
The Children's World Learning Center is a 6,175 square foot
facility located at 1064 East Wattles. The single-story building
was constructed in 1985 utilizing a wood frame and a pitched roof
with asphalt shingles.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $126,900. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$263,000 less expenses of approximately $14,600 to an affiliated
party, resulting in a loss of approximately $2,400.
Sterling Heights, Michigan
The Children's World Learning Center is a 5,005 square foot
facility located at 35505 Schoenherr. The single-story building
was constructed in 1983 utilizing a wood frame and a pitched roof
with asphalt shingles.
Pursuant to the adoption of the liquidation basis of accounting,
the Partnership's assets were adjusted to net realizable amounts,
resulting in a reduction in the value of this property of
approximately $135,600. This adjustment has been recorded as part
of the adjustment to liquidation basis on the Partnership's
statement of operations for the period June 19, 1999 to December
31, 1999.
On August 7, 2000 this property was sold for approximately
$142,000 less expenses of approximately $10,300 to an affiliated
party, resulting in a loss of approximately $2,200.
CompUSA:
Duluth, Georgia
The Partnership owned a 23.4% interest in a joint venture with
affiliated public real estate limited partnerships that acquired
the land and building underlying a CompUSA store. The CompUSA
store is a 25,000 square foot single story building located on a
105,919 square foot parcel in Duluth, Georgia, a suburb of
Atlanta, in the Gwinnett Place Mall Shopping Area. The single
story building was completed in March 1993 utilizing a frame of
steel and concrete block.
On December 30, 1999, a majority of the interests in the joint
venture were merged. The purchaser of the other interests also
offered to purchase the Partnership's 23.4% interest in the joint
venture. Upon receiving approval from the Special Master the
Partnership sold its interest in the joint venture for
approximately $498,200.
Blockbuster Video:
Callaway, Florida
The Partnership owned a 16.0% interest in a joint venture with
affiliated public real estate limited partnerships that acquired
the land and building underlying a Blockbuster Video store. The
property is located at 123 N. Tydall Parkway on the major arterial
in the Panama City, Florida area. The property contains a 6,466
square foot building located on a 40,075 square foot parcel of
land.
On December 30, 1999, a majority of the interests in the joint
venture were merged. The purchaser of the other interests also
offered to purchase the Partnership's 16% interest in the joint
venture. Upon receiving approval from the Special Master the
Partnership sold its interest in the joint venture for
approximately $143,100.
Item 3. Legal Proceedings.
Two legal actions, as hereinafter described, against the General
Partners of the Partnership and affiliates of such General
Partners, as well as against the Partnership on a nominal basis in
connection with the Merger, have been settled. On April 13, 1999,
all the parties to the litigation reached an agreement to settle
the litigation, subject to the approval by the United States
District Court for the Northern District of Illinois. This
approval was obtained on June 18, 1999. The terms of the
settlement agreement, along with a Notice to the Class, were
forwarded to the Interest Holders in the second quarter of 1999.
One additional legal action, which was dismissed on January 28,
1998 had also been brought against the General Partners of the
Partnership and affiliates of such General Partners, as well as
the Partnership on a nominal basis in connection with the Merger.
With respect to these actions the Partnership and the General
Partners and their named affiliates denied all allegations set
forth in the complaints and vigorously defended against such
claims. On November 8, 2001, the Magistrate Judge for the United
States district Court for the Northern District of Illinois ruled
on the plaintiff's legal fee petition. As a result of this ruling
the Partnership will be required to pay to plaintiff's attorneys
approximately $191,000. However, the applicable appeal period has
not expired, and it is uncertain whether the amount (or a greater
or lesser amount) will actually be paid by the Partnership.
ITEM 4. Submission Of Matters To a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Units and Related Security
Holder Matters.
At December 31, 2001, there were approximately 1,794 Interest
Holders in the Partnership. There is no established public
trading market for Units and it is not anticipated that there will
be a public market for Units. Neither the General Partners nor
the Partnership are obligated, but reserve the right, to redeem or
repurchase Units. Units may also be purchased by the Plan in
certain instances. Any Units so purchased shall be retired.
Pursuant to the terms of the Agreement, there are restrictions
on the ability of the Interest Holders to transfer their Units.
In all cases, the General Partners must consent to the
substitution of an Interest Holder.
The Partnership intends to make a liquidating distribution to
Interest Holders from the net sale proceeds remaining from the
Partnership's properties after payment of all legal and operating
expenses. The Partnership may make partial distributions of the
proceeds prior to the final distribution. The timing of the
liquidating distribution has not yet been determined.
Cash distributions to Interest Holders for 2001, 2000 and 1999
were $0, $9,985,104, and $4,418,735, respectively. Prior to the
commencement of the Partnership's proxy solicitation in August
1996, distributions were paid four times per year, within 60 days
following the end of each calendar quarter. Included in the 2000
and 1999 distributions is a return of capital distribution of
$8,041,249 and $1,675,981, respectively, all remaining
distributions represent cash flow from operations.
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
(Not Covered By Independent Auditor's Report)
Item 6. Selected Financial Data.
Years Ended December 31, 2001, 2000 and 1999
2001 2000 1999(c)
Selected Income Statement Data:
Rental income $ 3,713 $1,317,733 $ 2,410,629
Interest and other income 208,436 221,612 82,896
Net (loss) income (120,226) 633,009 145,413
Net (loss) income Per Unit (a) $ (0.04) $ 0.24 $ 0.06
Selected Balance Sheet Data:
Cash and cash equivalents $ 4,880,885 $ 4,744,948 $ 1,681,705
Real estate held for sale -- 171,937 10,998,886
Land and buildings -- -- --
Investment in Brauvin High
Yield Venture -- -- 15,543
Investment in Brauvin Funds
Joint Venture -- -- 2,177,679
Total Assets 4,880,885 5,154,780 15,102,008
Cash distributions to
General Partners -- -- 55,603
Cash distributions to
Interest Holders (b) -- 9,985,104 4,418,735
Cash distributions to
Interest Holders per
Unit(a) $ -- $ 3.80 $ 1.68
(a) Net (loss) income per Unit and cash distributions to Interest
Holders per Unit are based on 2,627,503 Units outstanding.
(b) This includes $6,683 paid to various states for income taxes
on behalf of all Interest Holders for 1999. Also included in
the 2000 amount is a return of capital distribution of
$8,041,249. The 1999 amount also includes a return of capital
distribution of $1,675,981.
(c) Information in this column reflects results on a going
concern basis of accounting from January 1, 1999 to June 19,
1999 and on the liquidation basis of accounting from June 20,
1999 to December 31, 1999.
The above selected financial data should be read in conjunction
with the financial statements and the related notes appearing
elsewhere in this annual report.
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
(Not Covered By Independent Auditor's Report)
Item 6. Selected Financial Data - continued.
Years Ended December 31, 1998 and 1997
1998 1997
Selected Income Statement Data:
Rental income $ 2,483,451 $ 2,514,561
Interest and other income 81,257 137,130
Net income 816,736 2,006,768
Net income Per Unit (a) $ 0.30 $ 0.75
Selected Balance Sheet Data:
Cash and cash equivalents $ 1,478,616 $ 1,030,464
Land and buildings 18,177,975 19,322,975
Investment in Brauvin High
Yield Venture 18,726 31,007
Investment in Brauvin Funds
Joint Venture 2,413,241 2,431,037
Investment in Brauvin
Gwinnett County Venture 534,901 543,333
Investment in Brauvin
Bay County Venture 165,884 166,329
Total Assets 18,802,917 19,917,525
Cash distributions to
General Partners 105,317 --
Cash distributions to
Interest Holders (b) 1,974,310 3,753,547
Cash distributions to
Interest Holders per
Unit(a) $ 0.75 $ 1.43
(a) Net income per Unit and cash distributions to Interest Holders
per Unit are based on 2,627,503 Units outstanding.
(b) This includes $8,340 and $1,989 paid to various states for
income taxes on behalf of all Interest Holders for 1998 and
1997, respectively.
The above selected financial data should be read in conjunction
with the financial statements and the related notes appearing
elsewhere in this annual report.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
General
Certain statements in this Annual Report that are not historical
fact constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Discussions
containing forward-looking statements may be found in this section
and in the section entitled "Business." Without limiting the
foregoing, words such as "anticipates," "expects," "intends,"
"plans" and similar expressions are intended to identify forward-
looking statements. These statements are subject to a number of
risks and uncertainties. Actual results could differ materially
from those projected in the forward-looking statements. The
Partnership undertakes no obligation to update these forward-
looking statements to reflect future events or circumstances.
Liquidity and Capital Resources
Pursuant to the terms of an agreement and plan of merger dated
as of June 14, 1996, as amended March 24, 1997, June 30, 1997,
September 30, 1997, December 31, 1997, March 31, 1998 and June 30,
1998 (the "Merger Agreement"), the Partnership proposed to merge
with and into Brauvin Real Estate Funds, L.L.C., a Delaware limited
liability company affiliated with certain of the General Partners
(the "Purchaser") through a merger (the "Merger") of its Units. On
November 8, 1996, the Interest Holders voted on an amendment of the
Partnership Agreement allowing the Partnership to sell or lease
property to affiliates (this amendment, together with the Merger
shall be referred to herein as the "Transaction"). The Merger
would not be consummated primarily as a result of litigation that
was subsequently settled on April 13, 1999.
On April 13, 1999, all the parties to the litigation reached an
agreement to settle the litigation, subject to the approval of the
United States District Court for the Northern District of Illinois.
This approval was obtained on June 18, 1999. The terms of the
settlement agreement, along with a Notice to the Class, were
forwarded to the Interest Holders in the second quarter of 1999.
Pursuant to the settlement agreement, the Partnership retained
a third-party commercial real estate firm which, under the
supervision of an independent special master (the "Special Master")
and with the cooperation of the General Partners, marketed the
Partnership's properties in order to maximize the return to the
Interest Holders (the "Sale Process"). The Sale Process was
designed to result in an orderly liquidation of the Partnership,
through a sale of substantially all of the assets of the
Partnership, a merger or exchange involving the Partnership, or
through another liquidating transaction which the Special Master
determined was best suited to maximize value for the Interest
Holders. Consummation of such sale, merger, exchange, or other
transaction will be followed by the orderly distribution of net
liquidation proceeds to the Interest Holders.
The General Partners agreed, as part of the settlement agreement,
to use their best efforts to continue to manage the affairs of the
Partnership in accordance with their obligations under the
Partnership Agreement, to cooperate fully with the Special Master
and to waive certain brokerage and other fees. In consideration of
this, the General Partners were released from the claims of the
class action lawsuit and indemnified for the legal expenses they
incurred related to the two lawsuits. Part of this indemnification
and release was contingent on the issuance of a certification by
the Special Master stating that the General Partners fully
cooperated and complied with certain other conditions.
On November 19, 1999, the United States District Court for the
Northern District of Illinois approved a bid for the sale of the
Partnership's assets in an amount of approximately $13,882,300.
This bid was subsequently rescinded by the potential purchaser.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's assets for approximately $12,550,000 (inclusive of
all the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties resulting in
net proceeds to the Partnership of approximately $11,681,000. The
Partnership sold its sole remaining property to an affiliate in
January 2001 for a contract price of $175,000.
The Special Master approved total reserves for the Partnership
in the amount of $4.62 million or $1.758 per Unit. These reserves
will be held by the Partnership; and the length of the reserve
period and the amounts that will ultimately be distributed to
investors will depend on several factors not known at this time.
The Partnership intends to make a liquidating distribution to
Interest Holders from the net sale proceeds remaining from the
Partnership's properties after payment of all legal and operating
expenses. The Partnership may make partial distributions of the
proceeds prior to the final distribution. The timing of the
liquidating distribution has not yet been determined.
In the third quarter of 2000, the Partnership distributed
$7,061,000 (or $2.687 per Unit) from the sale of the assets.
On November 8, 2001, the Magistrate Judge for the United States
District Court for the Northern District of Illinois ruled on the
plaintiff's legal fee petition. As a result of this ruling the
Partnership will pay the plaintiff's attorneys approximately
$191,000. However, the applicable appeal period has not yet run,
and it is uncertain whether the amount (or a greater or lesser
amount) will actually be paid by the Partnership.
Below is a table summarizing the four year historical data for
distribution rates per unit:
Distribution
Date 2001 2000(a) 1999(b) 1998(c) 1997(d)
February 15 $ -- $.2291 $.2898 $ -- $.2274
May 15 -- .2074 .2490 .2473 .2013
August 15 -- .1578 .2398 .1920 .2745
November 15 -- .1275 .2626 .3088 .7245
(a) The February 15, 2000 distribution does not include a return of
capital of $0.3730 per Unit. The August 15, 2000 distribution does
not include a return of capital distribution of $2.6873 per unit.
(b) The 1999 distributions were made on May 17, 1999, August 15,
1999, November 15, 1999 and February 15, 2000. In addition not
included above was a $0.6379 per Unit return of capital distribution
on November 15, 1999.
(c) The 1998 distributions were made on May 8, 1998, August 15,
1998, November 15, 1998, and February 15, 1999.
(d) The 1997 distributions were made on March 31, 1997, July 15,
1997, October 22, 1997, and December 31, 1997.
Per the terms of the Merger, the Partnership's net earnings from
April 1996 through July 1996 were to be distributed to the Interest
Holders in conjunction with the closing of the Merger. However,
because of the lengthy delay and the uncertainty of the ultimate
closing date, the General Partners decided to make a significant
distribution on December 31, 1997 of the Partnership's earnings.
Included in the December 31, 1997 distribution was any prior period
earnings including amounts previously reserved for anticipated
closing costs.
During the years ended December 31, 2001, 2000 and 1999, the
General Partners and their affiliates earned management fees of $0,
$13,138, and $24,322, respectively, and received $0, $0, and $55,603
in operating cash flow distributions for the years ended December
31, 2001, 2000 and 1999, respectively.
Results of Operations - Years ended December 31, 2001 and 2000
(Liquidation Basis)
As a result of the settlement agreement that was approved by the
United States District Court for the Northern District of Illinois
on June 18, 1999 the Partnership has begun the liquidation process
and, in accordance with generally accepted accounting principles,
the Partnership's financial statements for periods subsequent to
June 18, 1999 have been prepared on the liquidation basis of
accounting.
Prior to the adoption of the liquidation basis of accounting,
depreciation was recorded on a straight line basis over the
estimated economic lives of the properties. Upon the adoption of
the liquidation basis of accounting, real estate held for sale was
adjusted to estimated net realizable value and no depreciation
expense has been recorded.
The Partnership had a net loss of $120,000 for the year ended
December 31, 2001 compared to a net income of $633,000 for the year
ended December 31, 2000, a decrease in net income of $753,000. The
decrease in net income is primarily the result of the adjustment to
liquidation basis of $1,694,000 that was recorded during 2000,
offset by a joint venture's net income of $1,039,000 recorded in the
same period, net of the change in operating income as discussed in
the following paragraphs.
Total income was $212,000 for the year ended December 31, 2001
compared to $1,539,000 for the year ended December 31, 2000, a
decline of $1,327,000. The decline in rental income relates to the
Partnership's sale of its properties that occurred in August 2000
and January 2001. The decline in other income relates to the
decline in interest rates the Partnership received on its
investments.
Total expenses were $328,000 for the year ended December 31, 2001
compared to $491,000 for the year ended December 31, 2000, a
decrease of $163,000. The primary reason for the change in expenses
relates to a decline in general and administrative costs of $253,000
as a result of the limited activity of the Partnership offset by an
increase of $103,000 in transaction costs. Transaction costs
increased as a result of a judges ruling on the plaintiff's legal
fees, which according to the settlement agreement are required to
be paid by the Partnership.
Results of Operations - Year ended December 31, 2000 (Liquidation
Basis) and the period June 19, 1999 to December 31, 1999
(Liquidation Basis) and the period January 1, 1999 to June 18, 1999
(Going Concern Basis)
As discussed above the Partnership adopted the liquidation basis
of accounting, and in accordance with generally accepted accounting
principles, the Partnership's financial statements for periods
subsequent to June 19, 1999 have been prepared on a liquidation
basis.
Comparisons between the various periods are complicated by the
change in the basis of the financial statements, however,
significant changes between the going concern basis of accounting
and the liquidation basis of accounting are detailed above.
Further complicating comparisons between the various periods is
the August 7, 2000 sale of all but one of the Partnership's
properties.
Results of Operations - For the period January 1, 1999 to June 18,
1999 (Going Concern Basis) and the period June 19, 1999 to December
31, 1999 (Liquidation Basis) and the year ended December 31, 1998
(Going Concern Basis)
As discussed above the Partnership adopted the liquidation basis
of accounting, and in accordance with generally accepted accounting
principles, the Partnership's financial statements for periods
subsequent to June 19, 1999 have been prepared on a liquidation
basis.
Comparisons between the various periods are complicated by the
change in the basis of the financial statements, however,
significant changes between the going concern basis of accounting
and the liquidation basis of accounting are detailed above.
Impact of Inflation
Since all of the Partnership's original property holdings have
been sold, the Partnership has some nominal risk associated with
inflation. This risk is the result of the timing of the final
distribution to the Interest Holders.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
The Partnership does not engage in any hedge transactions or
derivative financial instruments.
Item 8. Financial Statements and Supplementary Data.
See Index of Financial Statements and Schedule on Page F-1 of
this Annual Report on Form 10-K for financial statements and
financial statement schedule, where applicable.
The supplemental financial information specified in Item 302 of
Regulation S-K is not applicable.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
On November 6, 2001 the Partnership dismissed Deloitte & Touche
LLP as its independent accountant. Deloitte & Touche LLP's report
on the financial statements for either of the past two years did not
express an adverse opinion or disclaimer of opinion and was not
modified as to uncertainty, audit scope or accounting principles.
In the Partnership's fiscal years ended 1999 and 2000 and the
subsequent interim period preceding the dismissal there were no
disagreements with Deloitte & Touche LLP on any matter of accounting
principles or practices, financial statement disclosure or auditing
scope or procedure that would have caused Deloitte & Touche LLP to
make reference to the matter in their report. There were no
reportable events as that term is described in Item 304(a)(1)(iv)(B)
of Regulation S-B.
On November 7, 2001, the Partnership engaged Altschuler, Melvoin
and Glasser LLP as its independent accountant. Neither the
Partnership (nor someone on its behalf) consulted Altschuler,
Melvoin and Glasser LLP regarding: (i) the application of accounting
principles to a specific transaction, either completed or proposed,
or the type of audit opinion that might be rendered on the
Partnership's financial statements; or (ii) any matter that was
either the subject of a disagreement or a reportable event.
PART III
Item 10. Directors and Executive Officers of the Partnership.
The General Partners of the Partnership are:
Brauvin Realty Advisors, Inc., an Illinois corporation
Mr. Jerome J. Brault, individually
Brauvin Realty Advisors, Inc. was formed under the laws of the
State of Illinois in 1986, with its issued and outstanding shares
being owned by Messrs. Jerome J. Brault (beneficially) (44%), Cezar
M. Froelich (44%) and David M. Strosberg (12%).
The principal officers and directors of the Corporate General
Partner are:
Mr. Jerome J. Brault . . . . Chairman of the Board of
Directors, President, Chief
Executive Officer and Director
Mr. James L. Brault . . . . Vice President and Secretary
Mr. Thomas E. Murphy . . . . Treasurer and Chief Financial
Officer
The business experience during the past five years of the General
Partners and the principal officers and directors of the Corporate
General Partner are as follows:
MR. JEROME J. BRAULT (age 68) chairman of the board of directors,
president and chief executive officer of the Corporate General
Partner, as well as a principal shareholder of the Corporate General
Partner. He is a member and manager of Brauvin Real Estate Funds,
L.L.C. He is a member of Brauvin Capital Trust L.L.C. Since 1979,
he has been a shareholder, president and a director of
Brauvin/Chicago, Ltd. He is an officer, director and one of the
principal shareholders of various Brauvin entities which act as the
general partners of four other publicly registered real estate
programs. He is an officer, director and one of the principal
shareholders of Brauvin Associates, Inc., Brauvin Management
Company, Brauvin Advisory Services, Inc. and Brauvin Securities,
Inc., Illinois companies engaged in the real estate and securities
businesses. He is a director, president and chief executive officer
of Brauvin Net Lease V, Inc. He is the chief executive officer of
Brauvin Capital Trust, Inc. Mr. Brault received a B.S. in Business
from DePaul University, Chicago, Illinois in 1959.
MR. JAMES L. BRAULT (age 41) is a vice president and secretary
and is responsible for the overall operations of the Corporate
General Partner and other affiliates of the Corporate General
Partner. He is an officer of various Brauvin entities which act as
the general partners of four other publicly registered real estate
programs. Mr. Brault is executive vice president and assistant
secretary and is responsible for the overall operations of Brauvin
Management Company. He is also an executive vice president and
secretary of Brauvin Net Lease V, Inc. He is a manager of Brauvin
Real Estate Funds, L.L.C., Brauvin Capital Trust, L.L.C. and
BA/Brauvin L.L.C. He is the president of Brauvin Capital Trust,
Inc. Prior to joining the Brauvin organization in May 1989, he was
a Vice President of the Commercial Real Estate Division of the First
National Bank of Chicago ("First Chicago"), based in their
Washington, D.C. office. Mr. Brault joined First Chicago in 1983
and his responsibilities included the origination and management of
commercial real estate loans, as well as the direct management of
a loan portfolio in excess of $150 million. Mr. Brault received a
B.A. in Economics from Williams College, Williamstown, Massachusetts
in 1983 and an M.B.A. in Finance and Investments from George
Washington University, Washington, D.C. in 1987. Mr. Brault is the
son of Mr. Jerome J. Brault.
MR. THOMAS E. MURPHY (age 35) is the treasurer and chief
financial officer of the Corporate General Partner and other
affiliates of the Corporate General Partner. He is the chief
financial officer of various Brauvin entities which act as the
general partners of four other publicly registered real estate
programs. Mr. Murphy is also the chief financial officer of Brauvin
Management Company, Brauvin Financial, Inc., Brauvin Securities,
Inc. and Brauvin Net Lease V, Inc. He is the treasurer, chief
financial officer and secretary of Brauvin Capital Trust, Inc. He
is responsible for the Partnership's accounting and financial
reporting to regulatory agencies. He joined the Brauvin
organization in July 1994. Prior to joining the Brauvin
organization he was in the accounting department of Zell/Merrill
Lynch and First Capital Real Estate Funds where he was responsible
for the preparation of the accounting and financial reporting for
several real estate limited partnerships and corporations. Mr.
Murphy received a B.S. in Accounting from Northern Illinois
University in 1988. Mr. Murphy is a Certified Public Accountant and
is a member of the Illinois Certified Public Accountants Society.
Item 11. Executive Compensation.
(a & b)The Partnership is required to pay certain fees, make
distributions and allocate a share of the profits and losses of the
Partnership to the Corporate General Partner and its affiliates as
described under the caption "Compensation Table" on pages 11 to 13
of the Partnership's Prospectus, as supplemented, and the sections
of the Agreement entitled "Distributions of Operating Cash Flow,"
"Allocation of Profits, Losses and Deductions," "Distribution of Net
Sale or Refinancing Proceeds" and "Compensation of General Partners
and Their Affiliates" on pages A-12 to A-17 of the Agreement
attached as Exhibit A to the Prospectus. The relationship of the
Corporate General Partner (and its directors and officers) to its
affiliates is set forth above in Item 10. Reference is also made
to Note 3 of the Notes to the Financial Statements filed with this
annual report for a description of such distributions and
allocations.
The General Partners are entitled to receive Acquisition Fees for
services rendered in connection with the selection, purchase,
construction or development of any property by the Partnership
whether designated as real estate commissions, acquisition fees,
finders' fees, selection fees, development fees, construction fees,
non-recurring management fees, consulting fees or any other similar
fees or commissions, however treated for tax or accounting purposes.
Aggregate Acquisition Fees payable to all persons in connection with
the purchase of Partnership properties may not exceed such
compensation as is customarily charged in arm's-length transactions
by others rendering similar services as an ongoing public activity
in the same geographic locale and for comparable properties. The
aggregate Acquisition Fees to be paid to the General Partners and
their affiliates shall not exceed 4-1/2% of the gross proceeds of
the Offering. In addition, an additional Acquisition Fee may be
paid to the General Partners and its affiliates to the extent of
excess working capital reserves (as defined). No acquisition fees
were paid in 2001, 2000 or 1999.
An affiliate of the General Partners may provide leasing and
re-leasing services to the Partnership in connection with the
management of Partnership properties. The maximum property
management fee to the General Partners or their affiliates shall be
equal to 1% of the gross revenues of each Partnership property or
interest therein; however, the receipt of such property management
fees by the General Partners or their affiliates is subordinated to
the receipt by the Interest Holders of a 10% non-cumulative,
non-compounded annual return on Adjusted Investment. In 2001, 2000
and 1999, the Partnership paid management fees of $0, $14,699 and
$24,777, respectively, to affiliates of the General Partners.
(c, d, e & f) Not applicable.
(g) The Partnership has no employees and pays no
employee or director compensation.
(h & i) Not applicable.
(j) Compensation Committee Interlocks and Insider
Participation. Since the Partnership has no
employees, it did not have a compensation committee
and is not responsible for the payment of any
compensation.
(k) Not applicable.
(l) Not applicable.
The following is a summary of all fees, commissions and other
expenses paid or payable to the General Partners or their affiliates
for the years ended December 31, 2001, 2000 and 1999:
2001 2000 1999
Management fees $ -- $ 13,138 $ 24,322
Reimbursable operating expenses 73,425 239,625 148,516
As of December 31, 2001, 2000 and 1999, the Partnership has made
all payments to affiliates except for $0, $0 and $1,561,
respectively, related to management fees. As of December 31, 2000,
the Partnership owed $3,812 to an affiliate for real estate tax
prorations.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) No person or group is known by the Partnership to own
beneficially more than 5% of the outstanding Units of the
Partnership.
(b) One of the former Individual General Partners of the
Partnership purchased $5,000 of the Units. No officers or
directors of the Corporate General Partner own any Units.
Amount and
Title Nature of Percentage
of Name and Address Beneficial Of
Class of Beneficial Owners Ownership Class
Units David M. Strosberg $5,000 0.02%
320 W. Illinois #C-221
Chicago, IL 60610
(c) Other than as described in the Proxy, the Partnership is
not aware of any arrangement, the operations of which may
result in a change of control of the Partnership.
No officer or director of the Corporate General Partner possesses
a right to acquire beneficial ownership of Units of the Partnership.
The General Partners will share in the profits, losses and
distributions of the Partnership as outlined in Item 11, "Executive
Compensation."
Item 13. Certain Relationships and Related Transactions.
(a & b) The Partnership is entitled to engage in various
transactions involving affiliates of the Corporate General Partner,
as described in the section of the Partnership's Prospectus, as
supplemented, entitled "Compensation Table" and "Conflicts of
Interest" at pages 11 to 16 and the section of the Agreement
entitled "Rights, Duties and Obligations of General Partners" at
pages A-19 to A-25 of the Agreement. The relationship of the
Corporate General Partner to its affiliates is set forth in Item 10.
Cezar M. Froelich, a former Individual General Partner and a
shareholder of the Corporate General Partner, is a principal of the
law firm of Shefsky & Froelich Ltd., which firm acted as securities
and real estate counsel to the Partnership and certain of its
affiliates.
(c) No management persons are indebted to the Partnership.
(d) There have been no transactions with promoters.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) The following documents are filed as part of this report:
(1) (2) Financial Statements and Schedule indicated in Part II,
Item 8 "Financial Statements and Supplementary Data."
(See Index to Financial Statements and Schedule on page
F-1 of Form 10-K).
(3) Exhibits required by the Securities and Exchange
Commission Regulation S-K Item 601:
(21) Subsidiaries of the Registrant.
The following exhibits are incorporated by reference from the
Registrant's Registration Statement (File No. 33-11899) on Form S-11
filed under the Securities Act of 1933:
Exhibit No. Description
3.(a) Restated Limited Partnership Agreement
3.(b) Articles of Incorporation of Brauvin
Realty Advisors, Inc.
3.(c) By-Laws of Brauvin Realty Advisors, Inc.
3.(d) Amendment to the Certificate of Limited
Partnership of the Partnership
10.(a) Escrow Agreement
(b) Form 8-K.
On November 6, 2001, the Fund dismissed Deloitte & Touche LLP
as its independent accountant. Additionally on November 7, 2001 the
Partnership engaged Altschuler, Melvoin and Glasser LLP as its
independent accountant. This Form 8-K was dated November 6, 2001
and filed on November 14, 2001.
(c) An annual report for the fiscal year 2001 will be sent to the
Interest Holders subsequent to this filing.
The following exhibits are incorporated by reference to the
Registrant's fiscal year ended December 31, 1994 Form 10-K (File No.
0-17557):
Exhibit No. Description
(10)(b)(1) Management Agreement
(28) Pages 9-16 of the Partnership's Prospectus dated
September 4, 1987 as supplemented, and pages A-12
to A-17 and A-19 to A-25 of the Agreement.
The following exhibits are incorporated by reference to the
Registrant's definitive proxy statement dated August 23, 1996 (File
No. 0-17557):
Exhibit No. Description
(10)(c) Merger Agreement.
The following exhibit is incorporated by reference to the
Registrant's fiscal year ended December 31, 1996 Form 10-K (File No.
0-17557):
(10)(d) First Amendment and Waiver to Agreement and Plan
of Merger.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BRAUVIN HIGH YIELD FUND L.P.
BY: Brauvin Realty Advisors, Inc.
Corporate General Partner
By:/s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of Directors,
President and Chief Executive Officer
By:/s/ Thomas E. Murphy
Thomas E. Murphy
Chief Financial Officer and Treasurer
By:/s/ James L. Brault
James L. Brault
Vice President and Secretary
INDIVIDUAL GENERAL PARTNER
/s/ Jerome J. Brault
Jerome J. Brault
DATED: March 28, 2002
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Page
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-2
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-3
Financial Statements:
Statement of Net Assets in Liquidation
as of December 31, 2001 and December 31, 2000
(Liquidation Basis). . . . . . . . . . . . . . . . . . . . . . . F-4
Statement of Changes in Net Assets
in Liquidation for the year ended December 31, 2001
(Liquidation Basis) . . . . . . . . . . . . . . . . . . . . . . F-5
Statement of Changes in Net Assets
in Liquidation for the year ended December 31, 2000
(Liquidation Basis) . . . . . . . . . . . . . . . . . . . . . . F-6
Statements of Operations for the year ended December 31,
2001 (Liquidation Basis), for the year ended December 31,
2000 (Liquidation Basis), for the period June 19, 1999
to December 31, 1999 (Liquidation Basis), for the period
January 1, 1999 to June 18, 1999 (Going Concern Basis) . . . . . F-7
Notes to Financial Statements . . . . . . . . . . . . . . . . . F-8
Schedule III -- Real Estate and Accumulated
Depreciation, December 31, 2001. . . . . . . . . . . . . . . . F-25
All other schedules provided for in Item 14(a)(2) of Form 10-K are
either not required, or are inapplicable, or not material.
INDEPENDENT AUDITORS' REPORT
Partners
Brauvin High Yield Fund L.P.
We have audited the accompanying financial statements of Brauvin High
Yield Fund L.P., as of December 31, 2001, and for the year then ended
as listed in the index to financial statements. These financial
statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Brauvin
High Yield Fund L.P. at December 31, 2001, and the results of its
operations for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
Altschuler, Melvoin and Glasser LLP
Chicago, Illinois
January 25, 2002
INDEPENDENT AUDITORS' REPORT
To the Partners
Brauvin High Yield Fund L.P.
Chicago, Illinois
We have audited the accompanying financial statements of Brauvin High
Yield Fund L.P., as of December 31, 2000, and for the years ended
December 31, 2000 and 1999 as listed in the index to financial
statements. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the financial position of Brauvin High Yield Fund
L.P. at December 31, 2000, and the results of its operations for the
years ended December 31, 2000 and 1999 in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche
Chicago, Illinois
February 16, 2001
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
STATEMENT OF NET ASSETS IN LIQUIDATION AS OF
DECEMBER 31, 2001 AND DECEMBER 31, 2000
December 31, 2001 December 31,2000
ASSETS
Real estate held for sale $ -- $ 171,937
Cash and cash equivalents 4,880,855 4,744,948
Restricted cash -- 237,895
Total Assets 4,880,855 5,154,780
LIABILITIES
Accounts payable and
accrued expenses 212,357 328,107
Rent received in advance -- 2,937
Reserve for estimated costs during
the period of liquidation 98,800 130,000
Due to affiliates -- 3,812
Total Liabilities 311,157 464,856
Net Assets in Liquidation $ 4,569,698 $4,689,924
See accompanying notes to financial statements.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS) FOR THE YEAR ENDED DECEMBER 31, 2001
Net Assets in Liquidation
at January 1, 2001 $4,689,924
Loss from operations (116,301)
Loss on sale of property (3,925)
Net Assets in Liquidation
at December 31, 2001 $4,569,698
See accompanying notes to financial statements.
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(LIQUIDATION BASIS) FOR THE YEAR ENDED DECEMBER 31, 2000
Net Assets in Liquidation
at January 1, 2000 $14,042,019
Income from operations 1,048,351
Gain on sale of property 239,146
Equity interest in Joint
Venture's net income 1,039,181
Interest Holder operating
distributions (a) (1,943,855)
Return of capital distributions
to Interest Holders (b) (8,041,249)
Adjustment to liquidation basis (1,693,669)
Net Assets in Liquidation
at December 31, 2000 $ 4,689,924
(a) Operating distributions are approximately $0.7398 per Unit.
(b) Return of capital distributions are approximately $3.0602 per
Unit.
See accompanying notes to financial statements.
STATEMENTS OF OPERATIONS
(Going
Concern
(Liquidation Basis) Basis)
Year ended Year ended June 19,1999 January 1,
December 31, December 31, to December 1999 to
2001 2000 1999 June 18, 1999
INCOME
Rental $ 3,713 $1,317,733 $1,194,208 $1,216,421
Interest and other 208,436 221,612 43,043 39,853
Total income 212,149 1,539,345 1,237,251 1,256,274
EXPENSES
General and administrative 127,467 380,446 113,273 116,021
Management fees (Note 4) -- 13,138 12,000 12,322
Transaction costs (Note 7) 200,983 97,410 53,536 142,211
Depreciation -- -- -- 177,073
328,450 490,994 178,809 447,627
(Loss) income before gain on
sale of property and equity
interest in joint ventures (116,301) 1,048,351 1,058,442 808,647
(Loss) gain on sale of
property (3,925) 239,146 316,558 --
(Loss) income before equity
interest in joint ventures (120,226) 1,287,497 1,375,000 808,647
Equity Interest in Joint
Ventures' net (loss) income:
Brauvin High Yield Venture -- (598) 353 2,615
Brauvin Funds Joint Venture -- 1,039,779 (65,093) 145,581
Brauvin Gwinnett County
Venture -- -- (7,209) 24,390
Brauvin Bay County Venture -- -- (12,297) 6,953
Total Joint Venture
net income (loss) -- 1,039,181 (84,246) 179,539
(Loss) income before
adjustment to liquidation
basis (120,226) 2,326,678 1,290,754 988,186
Adjustment to liquidation
basis -- (1,693,669) (2,133,527) --
Net (loss) income $ (120,226) $ 633,009 $ (842,773) $ 988,186
Net (loss) income allocated to:
General Partners $ (2,405) $ 12,660 $ (16,855) $ 19,764
Interest Holders $ (117,821) $ 620,349 $ (825,918) $ 968,422
Net (loss) income per
Unit outstanding (a) $ (0.04) $ 0.24 $ (0.31) $ 0.37
(a) Net (loss) income per Unit and cash distributions to Interest Holders per
Unit are based on 2,627,503 Units outstanding.
See accompanying notes to financial statements.
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
BRAUVIN HIGH YIELD FUND L.P. (the "Partnership") is a Delaware
limited partnership organized for the purpose of acquiring debt-free
ownership of existing, free-standing, income-producing retail,
office and industrial real estate properties predominantly subject
to "triple-net" leases. The General Partners of the Partnership are
Brauvin Realty Advisors, Inc. and Jerome J. Brault. Brauvin Realty
Advisors, Inc. is owned primarily by Messrs. Brault (beneficially)
(44%) and Cezar M. Froelich (44%). Mr. Froelich resigned as a
director of the Corporate General Partner in December 1994 and as
an individual General Partner effective as of September 17, 1996.
Brauvin Securities, Inc., an affiliate of the General Partners, was
the selling agent of the Partnership. The Partnership is managed
by an affiliate of the General Partners.
The Partnership was formed on January 6, 1987 and filed a
Registration Statement on Form S-11 with the Securities and Exchange
Commission which became effective on September 4, 1987. The sale
of the minimum of $1,200,000 of depository units representing
beneficial assignments of limited partnership interests of the
Partnership (the "Units") necessary for the Partnership to commence
operations was achieved on November 18, 1987. The Partnership's
offering closed on May 19, 1988. A total of $25,000,000 of Units
were subscribed for and issued between September 4, 1987 and May 19,
1988, pursuant to the Partnership's public offering. Through
December 31, 2001, 2000 and 1999 the Partnership had sold
$27,922,102 of Units. This total includes $2,922,102 of Units
purchased by Interest Holders who utilized their distributions of
Operating Cash Flow to purchase additional Units through the
distribution reinvestment plan (the "Plan"). Units valued at
$1,647,070 have been repurchased by the Partnership from Interest
Holders liquidating their investment in the Partnership and have
been retired as of December 31, 2001, 2000 and 1999. As of December
31, 2001, the Plan participants have acquired Units under the Plan
which approximate 10% of total Units outstanding.
The Partnership acquired the land and buildings underlying 20 Taco
Bell restaurants, 11 Ponderosa restaurants and two Children's World
Learning Centers. The Partnership also acquired 1%, 49%, 23.4% and
16% equity interests in four joint ventures with three entities
affiliated with the Partnership. These ventures owned the land and
buildings underlying six Ponderosa restaurants, a Scandinavian
Health Spa, a CompUSA store and a Blockbuster Video store,
respectively.
Prior to 1999, the Partnership sold its interest in one Ponderosa
owned through a Joint Venture. In 1999, the Partnership sold one
of its Taco Bell units. In addition, two Ponderosa restaurants were
sold in 1999 by the Partnership, and the Partnership also sold its
joint venture interests in the CompUSA store and the Blockbuster
Video Store.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's remaining properties
resulting in net proceeds to the Partnership of approximately
$11,681,000. The Partnership sold its sole remaining property to
an affiliate in January 2001 for a contract price of $175,000.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from these estimates.
Basis of Accounting
As a result of the settlement agreement (see Note 7), which was
approved by the United States District Court for the Northern
District of Illinois on June 18, 1999, the Partnership began the
liquidation process and, in accordance with generally accepted
accounting principles, the Partnership's financial statements for
periods subsequent to June 18, 1999 have been prepared on the
liquidation basis of accounting. Accordingly, the carrying values
of assets are presented at estimated net realizable amounts and
liabilities are presented at estimated settlement amounts, including
estimated costs associated with carrying out the liquidation.
Preparation of the financial statements on a liquidation basis
requires significant assumptions by management, including the
estimate of liquidation costs and the resolution of any contingent
liabilities. There may be differences between the assumptions and
the actual results because events and circumstances frequently do
not occur as expected. Those differences, if any, could result in
a change in the net assets recorded in the statement of net assets
as of December 31, 2001.
Accounting Method
The accompanying financial statements have been prepared using the
accrual method of accounting.
Federal Income Taxes
Under the provisions of the Internal Revenue Code, the
Partnership's income and losses are reportable by the partners on
their respective income tax returns. Accordingly, no provision is
made for Federal income taxes in the financial statements. However,
in certain instances, the Partnership has been required under
applicable state law to remit directly to the tax authorities
amounts representing withholding from distributions paid to
partners.
Investment in Real Estate
Prior to the conversion to the liquidation basis of accounting,
the operating properties acquired by the Partnership were stated at
cost including acquisition costs, net of impairment adjustments.
Depreciation expense was computed on a straight-line basis over
approximately 35 years.
The Partnership records an impairment change to reduce the cost
basis of real estate to its estimated fair value when the real
estate is judged to have suffered an impairment that is other than
temporary (see Notes 2 and 8).
Investment in Joint Ventures
Prior to August 7, 2000 the Partnership owned a 1% equity interest
in Brauvin High Yield Venture, which owned the land and building
underlying five Ponderosa restaurants and a 49% equity interest in
Brauvin Funds Joint Venture, which owned the land and building
underlying a Scandinavian Health Spa. Previously, on December 30,
1999, the Partnership sold its 23.4% joint venture equity interest
in Brauvin Gwinnett County Venture, and its 16% equity interest in
Brauvin Bay County Venture, which owned the land and building
underlying a CompUSA store and the land and building underlying a
Blockbuster Video store, respectively. The accompanying financial
statements include the investments in Brauvin High Yield Venture,
Brauvin Funds Joint Venture, Brauvin Gwinnett County Venture and
Brauvin Bay County Venture, using the equity method of accounting.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt
instruments with an original maturity within three months of
purchase.
Restricted Cash
Per the terms of the settlement agreement (see Note 7) the
Partnership was required to establish a cash reserve that was
restricted for the payment of the General Partners' legal fees and
costs. The release of these funds to the General Partners was
subject to the certification by the Special Master that the General
Partners have been cooperative, did not breach their fiduciary
duties to the Limited Partners, did not breach the settlement
agreement or the Partnership Agreement and used their best efforts
to manage the affairs of the Partnership in such a manner as to
maximize the value and marketability of the Partnership's assets in
accordance with their obligations under the Partnership Agreement.
In November 2000, the General Partners received certification from
the Special Master and subsequently in January 2001 that the
restricted cash was released to the General Partners.
Estimated Fair Value of Financial Instruments
Disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments." The estimated fair value amounts
have been determined by using available market information and
appropriate valuation methodologies. However, considerable
judgement is necessarily required in interpreting market data to
develop estimates of fair value.
The fair value estimates presented herein are based on information
available to management as of December 31, 2001 and 2000, but may
not necessarily be indicative of the amounts that the Partnership
could realize in a current market exchange. The use of different
assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
The carrying amounts of the following items are a reasonable
estimate of fair value: cash and cash equivalents; accounts payable
and accrued expenses; rent received in advance and due to
affiliates.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"), which requires that all derivatives be recognized as
assets and liabilities in the balance sheet and be measured at fair
value. SFAS 133 also requires changes in fair value of derivatives
to be recorded each period in current earnings or comprehensive
income depending on the intended use of the derivatives. In June,
2000, the FASB issued SFAS 138, which amends the accounting and
reporting standards of SFAS 133 for certain derivatives and certain
hedging activities. SFAS 133 and SFAS 138 were required to be
adopted by the Partnership effective January 1, 2001. The adoption
of SFAS 133 and SFAS 138 did not have an impact on the financial
position, results of operations and cash flows of the Partnership.
In July 2001, the FASB issued Statement of Financial Accounting
Standards No. 141, "Business Combinations" ("SFAS 141"). SFAS 141
requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-
interests method. In July 2001, the FASB issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), which is effective January 1, 2002.
SFAS 142 requires, among other things, the discontinuance of
goodwill amortization. In addition, the standard includes
provisions for the reclassification of certain existing recognized
intangibles as goodwill, reassessment of the useful lives of
existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill and the
identification of reporting units for purposes of assessing
potential future impairments of goodwill.
In June 2001, the FASB issued Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations"
("SFAS 143"), which is effective for years beginning after June 15,
2002. SFAS 143 requires recognition of a liability and associated
asset for the fair value of costs arising from legal obligations
associated with the retirement of tangible long-lived assets. The
asset is to be allocated to expense over its estimated useful life.
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"), which is effective for fiscal years
beginning after December 15, 2001. SFAS 144 supersedes FASB
Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of" ("SFAS 121"). SFAS
144 retains the recognition and measurement requirements of SFAS
121, but resolves significant SFAS 121 implementation issues. In
addition, it applies to a segment of a business accounted for as a
discontinued operation (which was formerly covered by portions of
Accounting Principles Board Opinion No. 30).
The Partnership does not believe that the adoption of SFAS 141,
142, 143 and 144 will have a significant impact on its financial
statements.
(2) ADJUSTMENT TO LIQUIDATION BASIS
On June 18, 1999, in accordance with the liquidation basis of
accounting, assets were adjusted to estimated net realizable value
and liabilities were adjusted to estimated settlement amounts,
including estimated costs associated with carrying out the
liquidation. The net adjustment required to convert from the going
concern (historical cost) basis to the liquidation basis of
accounting was a decrease in assets of $2,133,527.
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's assets in an amount of
approximately $13,882,300 which sale was not consummated.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's assets for approximately $12,550,000 (inclusive of all
the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid. As a result the Partnership further adjusted its investment
in real estate to decrease the value of real estate held for sale
by $1,693,669.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. In January
2001, the Partnership sold its last remaining property to another
affiliated purchaser.
(3) PARTNERSHIP AGREEMENT
Distributions
All Operating Cash Flow, as defined in the Partnership Agreement
(the "Agreement"), shall be distributed: (a) first, to the Interest
Holders until the Interest Holders receive an amount equal to their
10% Current Preferred Return, as such term is defined in the
Agreement; and (b) thereafter, any remaining amounts will be
distributed 98% to the Interest Holders and 2% to the General
Partners. The net proceeds of a sale or refinancing of a
Partnership property shall be distributed as follows:
* first, to the Interest Holders until each Interest Holder has
been paid an amount equal to the 10% Cumulative Preferred
Return, as defined in the Agreement;
* second, to the Interest Holders until each Interest Holder has
been paid an amount equal to his Adjusted Investment, as
defined in the Agreement;
* third, to the General Partners until they have been paid an
amount equal to a 2% preferred return; and
* fourth, 95% of any remaining Net Sale or Refinancing Proceeds,
as such term is defined in the Agreement, to the Interest
Holders and the remaining 5% to the General Partners.
Profits and Losses
Net profits and losses from operations of the Partnership
(computed without regard to any allowance for depreciation or cost
recovery deductions under the Internal Revenue Code of 1986, as
amended (the "Code")) for each taxable year of the Partnership shall
be allocated 98% to the Interest Holders and 2% to the General
Partners. Notwithstanding the foregoing, all depreciation and cost
recovery deductions allowed under the Code shall be allocated 2% to
the General Partners and 98% to the Taxable Interest Holders, as
defined in the Agreement.
The net profit of the Partnership from any sale or other
disposition of a Partnership property shall be allocated (with
ordinary income being allocated first) as follows: (a) first, an
amount equal to the aggregate deficit balances of the Partners'
Capital Accounts, as such term is defined in the Agreement, shall
be allocated to each Partner who or which has a deficit Capital
Account balance in the same ratio as the deficit balance of such
Partner's Capital Account bears to the aggregate of the deficit
balances of all Partners' Capital Accounts; (b) second, to the
Interest Holders until the Interest Holders have been allocated
profits equal to their 10% Cumulative Preferred Return; (c) third,
to the Interest Holders until the Interest Holders have been
allocated an amount of profit equal to the amount of their Adjusted
Investment; (d) fourth, to the General Partners until such time as
they have been allocated profits equal to a 2% preferred return; and
(e) thereafter, 95% to the Interest Holders and 5% to the General
Partners. The net loss of the Partnership from any sale or other
disposition of a Partnership property shall be allocated as follows:
(a) first, an amount equal to the aggregate positive balances in the
Partners' Capital Accounts, to each Partner in the same ratio as the
positive balance in such Partner's Capital Account bears to the
aggregate of all Partners' positive Capital Accounts balances;
and(b) thereafter, 98% to the Interest Holders and 2% to the General
Partners.
(4) TRANSACTIONS WITH RELATED PARTIES
An affiliate of the General Partners managed the Partnership's
real estate properties for an annual management fee equal to up to
1% of gross revenues derived from the properties. The property
management fee was subordinated, annually, to receipt by the
Interest Holders of an annual 10% non-cumulative, non-compounded
return on Adjusted Investment (as defined).
The Partnership paid affiliates of the General Partners selling
commissions of 8-1/2% of the capital contributions received for
Units sold by the affiliates.
An affiliate of one of the former General Partners provided
securities and real estate counsel to the Partnership.
The Partnership paid an affiliate of the General Partners an
acquisition fee in the amount of up to 4.5% of the gross proceeds
of the Partnership's offering for the services rendered in
connection with the process pertaining to the acquisition of
properties. Acquisition fees related to the properties not
ultimately purchased by the Partnership were expensed as incurred.
Fees, commissions and other expenses paid or payable to the
General Partners or their affiliates for the years ended December
31, 2001, 2000 and 1999 were as follows:
2001 2000 1999
Management fees $ -- $ 13,138 $ 24,322
Reimbursable operating
expenses 73,425 239,625 148,516
As of December 31, 2001 and 2000, the Partnership has made all
payments to affiliates related to management fees. As of December
31, 2001, the Partnership owed an affiliate $3,812 for real estate
tax prorations.
(5) WORKING CAPITAL RESERVES
The Partnership had set aside 1% of the gross proceeds of its
public offering as a working capital reserve, which was subsequently
reduced to 1/2% ($125,000) which is included in Cash and cash
equivalents at December 31, 2001 and 2000.
(6) INVESTMENT IN JOINT VENTURES
Prior to August 7, 2000, the Partnership owned equity interests
in Brauvin High Yield Venture and Brauvin Funds Joint Venture and
reported its investments using the equity method. On August 7,
2000, the Partnership sold its joint venture equity interest to an
affiliated party.
Prior to December 30, 1999, the Partnership also owned an equity
interest in Brauvin Gwinnett County Venture and Brauvin Bay County
Venture, which were also accounted for using the equity method. On
December 30, 1999, the Partnership sold to an affiliated party its
23.4% joint venture equity interest in Brauvin Gwinnett County
Venture for approximately $498,200, and its 16% equity interest in
Brauvin Bay County Venture for approximately $143,100, which owns
the land and building underlying a CompUSA store and the land and
building underlying a Blockbuster Video store, respectively.
The following are condensed financial statements for the Brauvin
High Yield Venture, Brauvin Funds Joint Venture, Brauvin Gwinnett
County Venture and Brauvin Bay County Venture:
BRAUVIN HIGH YIELD VENTURE
Going
Concern
Liquidation Basis Basis
January 1, June 19, January 1,
2000 to 1999 to 1999 to
August 7, December June 18,
2000 31, 1999 1999
Rental and other income $393,412 $316,167 $316,090
Expenses:
Depreciation -- -- 45,848
Management fees 3,747 3,206 3,084
Operating and
administrative 43,795 2,750 5,688
47,542 5,956 54,620
Net income before gain
on sale of property 345,870 310,211 261,470
Gain on sale of property 215 -- --
Net income before adjustment
to liquidation basis 346,085 310,211 261,470
Adjustment to
liquidation basis (405,909) (274,916) --
Net (loss) income $(59,824) $ 35,295 $261,470
BRAUVIN FUNDS JOINT VENTURE
Going Concern
Liquidation Basis Basis
January 1, June 19, January 1,
2000 to 1999 to 1999 to
August 7, December June 18,
2000 31, 1999 1999
Rental and other income $ 435,534 $ 361,929 $357,294
Expenses:
Depreciation -- -- 55,048
Management fees 4,292 3,693 3,616
Operating and
administrative 2,504 2,782 1,525
6,796 6,475 60,189
Net income before gain
on sale 428,738 355,454 297,105
Gain on sale of
property 1,693,260 -- --
Net income before
adjustment to liquidation
basis 2,121,998 355,454 297,105
Adjustment to
liquidation basis -- (488,299) --
Net income $2,121,998 $(132,845) $297,105
BRAUVIN GWINNETT COUNTY VENTURE
Liquidation Basis Going Concern Basis
June 19, 1999 January 1,
to December 30, 1999 to June
1999 18, 1999
Rental and other income $ 129,298 $137,199
Expenses:
Depreciation -- 22,876
Management fees 1,298 1,319
Operating and
administrative 11,443 8,775
12,741 32,970
Net income before adjustment
to liquidation basis 116,557 104,229
Adjustment to
liquidation basis (147,363) --
Net (loss) income $ (30,806) $104,229
BRAUVIN BAY COUNTY VENTURE
Liquidation Basis Going Concern Basis
June 19, 1999 January 1,
to December 30, 1999 to
1999 June 18, 1999
Rental and other income $ 56,473 $54,625
Expenses:
Depreciation -- 8,823
Management fees 501 794
Operating and
administrative 2,042 1,550
Loss on sale
of property 130,788 --
133,331 11,167
Net (loss) income $(76,858) $43,458
(7) MERGER AND LITIGATION
Merger
Pursuant to the terms of an agreement and plan of merger dated as
of June 14, 1996, as amended March 24, 1997, June 30, 1997 and
September 30, 1997, December 31, 1997, March 31, 1998 and June 30,
1998 (the "Merger Agreement"), the Partnership proposed to merge
with and into Brauvin Real Estate Funds L.L.C., a Delaware limited
liability company (the "Purchaser"), which was affiliated with
certain of the General Partners. Promptly upon consummation of the
merger, the Partnership would have ceased to exist and the
Purchaser, as the surviving entity, would have succeeded to all of
the assets and liabilities of the Partnership. The Interest Holders
holding a majority of the Units voted on the merger on November 8,
1996. The Interest Holders also voted on an amendment to the
Agreement allowing the Partnership to sell or lease property to
affiliates.
The merger was not completed primarily due to certain litigation,
as described below. The General Partners believed that these
lawsuits were without merit.
By agreement of the Partnership and the General Partners and
pursuant to a motion of the General Partners, the District Court
entered an order preventing the Partnership and the General Partners
from completing the merger or otherwise disposing of all or
substantially all of the Partnership's assets until further order
of the Court.
Litigation
Two legal actions against the Partnership, the General Partners
and affiliates of such General Partners, in connection with the
merger have been settled. On April 13, 1999, all the parties to the
litigation reached an agreement to settle the litigation, subject
to the approval by the United States District Court for the Northern
District of Illinois. This approval was obtained on June 18, 1999.
The terms of the settlement agreement, along with a Notice to the
Class, were forwarded to the Interest Holders in the second quarter
of 1999. One additional legal action, which was dismissed on
January 28, 1998 had also been brought against the General Partners
and affiliates of such General Partners, as well as the Partnership
on a nominal basis in connection with the merger. The Partnership,
the General Partners and their named affiliates denied all
allegations set forth in the complaints.
On November 8, 2001, the Magistrate Judge for the United States
district Court for the Northern District of Illinois ruled on the
plaintiff's legal fee petition. As a result of this ruling the
Partnership will be required to pay to plaintiff's attorneys
approximately $191,000. However, the applicable appeal period has
not expired, and it is uncertain whether the amount (or a greater
or lesser amount) will actually be paid by the Partnership.
(8) SALE OF PARTNERSHIP ASSETS
On November 19, 1999, the United States District Court approved
a bid for the sale of the Partnership's Assets in an amount of
approximately $13,882,300 which sale was not consummated.
In 2000, an affiliated entity proposed purchasing all of the
Partnership's assets for approximately $12,550,000 (inclusive of all
the joint venture interests). In May 2000, the Special Master
approved this proposal and recommended that the United States
District Court for the Northern District of Illinois approve this
bid.
In conjunction with the sale, the Special Master approved total
reserves for the Partnership in the amount of $4,620,228. These
reserves are to be held by the Partnership and after payment of all
legal and operating expenses, the balance is to be distributed the
Interest Holders.
Pursuant to the approval of the Special Master and the United
States District Court, on August 7, 2000, an affiliated entity
purchased all but one of the Partnership's properties. The
Partnership sold its sole remaining property to an affiliate in
January 2001 for a contract sale price of $175,000.
(9) LEASES
The Partnership's rental income was principally obtained from
tenants through rental payments provided under triple-net
noncancellable operating leases.
The Partnership sold its sole remaining property to an affiliate
in January 2001.
SCHEDULE III
BRAUVIN HIGH YIELD FUND L.P.
(a Delaware limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 2001
Gross Amount at Which Carried
Initial Cost (a) at Close of Period (b)
Buildings, Buildings, Real
Personal Cost of Personal Estate
Property and Subsequent Property and Held for Accumulated
Date
Description Encumbrances(c) Land Improvements Improvements Land Improvements
Sale Depreciation Acquired
Taco Bells $0 $2,245,312 $5,239,062 $0 $2,093,512 $ 4,884,862 $ 0
$1,696,083 12/87-2/88
Ponderosas 0 3,167,168 7,390,057 0 2,975,468 6,942,757 0
2,229,935 9/88-11/89
Children's World
Learning Centers 0 356,288 831,338 0 356,288 831,338 0
227,948 7/89
Unallocated additional
Acquisition Fee 0 0 93,750 0 0 93,750 0 27,013
11/90-12/90
Adjustment to
liquidation basis of
accounting and property
dispositions (d) 0 0 0 0 (5,425,268)(12,752,707) 0 (4,180,979)
$0 $5,768,768$13,554,207 $0 $ 0 $ 0 $ 0 $ 0
NOTES:
(a) The cost of this real estate is $19,322,975 for tax purposes (unaudited). The buildings
are depreciated over
approximately 35 years using the straight line method. The properties were constructed
between 1969 and 1986.
(b) The following schedule summarizes the changes in the Partnership's real estate and
accumulated depreciation balances:
Real estate 2001 2000 1999
Balance at beginning of year $ 171,937 $10,998,886 $18,177,975
Adjustment to liquidation basis of accounting (d) -- (1,693,669) (5,558,852)
Property sales (171,937) (9,133,280) (1,620,237)
Balance at end of year $ 0 $ 171,937 $10,998,886
Accumulated depreciation 2001 2000 1999
Balance at beginning of year $-- $-- $ 4,003,906
Provision for depreciation -- -- 177,073
Adjustment to liquidation basis of accounting -- -- (4,180,979)
Balance at end of year $-- $-- $ --
(c) Encumbrances - Brauvin High Yield Fund L.P. did not borrow cash in order to
purchase its properties.
100% of the land and buildings were paid for with funds contributed by the Interest
Holders.
(d) On June 18, 1999, the Partnership adopted the liquidation basis of accounting. In
conjunction with
the adoption to the liquidation basis of accounting the carrying value of the assets were
recorded at
net realizable amounts (estimated sales price less all costs associated with the sale of the
properties)
and the designation of land and building were classified as into real estate held for sale.
EXHIBITS
TO
BRAUVIN HIGH YIELD FUND L.P.
FORM 10-K ANNUAL REPORT
FOR THE YEAR ENDED
DECEMBER 31, 2001
EXHIBIT INDEX
Exhibit (21) Subsidiaries of the Registrant
Exhibit 21
Name of Subsidiary State of Formation
Brauvin High Yield Venture Illinois
Brauvin Funds Joint Venture Illinois
Brauvin Gwinnett County Venture Illinois
Brauvin Bay County Venture Illinois