-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LJU+/yrkUEAj+x7lGcEbpD4Q1OZJrJBrQtvoW5AvLqSH/Kfnn+ri057dP5RCo2EX yT4gLnI1jP/YqWv+g6HoOw== 0000878657-96-000007.txt : 19960928 0000878657-96-000007.hdr.sgml : 19960928 ACCESSION NUMBER: 0000878657-96-000007 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960821 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRAUVIN CORPORATE LEASE PROGRAM IV L P CENTRAL INDEX KEY: 0000878657 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363800611 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21536 FILM NUMBER: 96618463 BUSINESS ADDRESS: STREET 1: 150 S WACKER DR STREET 2: STE 3200 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124430922 MAIL ADDRESS: STREET 1: 150 S WACKER DR STREET 2: SUITE 3200 CITY: CHICAGO STATE: IL ZIP: 60606 10-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K AMENDMENT NO. 2 [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1995 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 0-21536 Brauvin Corporate Lease Program IV L.P. (Exact name of registrant as specified in its charter) Delaware 36-3800611 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 South Wacker Drive, Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) (312) 443-0922 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered None None Securities registered pursuant to Section 12(g) of the Act: 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 limited partnership interests of the registrant (the "Units") to unaffiliated investors of the registrant was $16,008,310 at December 31, 1993. 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 any Units been sold within the last 60 days prior to this filing except for Units sold to or by the registrant pursuant to the registrant's distribution reinvestment plan, as described in the prospectus of the registrant dated December 12, 1991 (the "Prospectus") as supplemented March 25, 1992 and June 17, 1993 and filed pursuant to Rule 424(b) and Rule 424(c) under the Securities Act of 1933, as amended. Portions of the Prospectus are incorporated by reference into Parts II, III and IV of this Annual Report on Form 10-K. 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 CORPORATE LEASE PROGRAM IV L.P. BY: Brauvin Realty Advisors IV, 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/ James L. Brault James L. Brault Executive Vice President and Secretary By: /s/ B. Allen Aynessazian B. Allen Aynessazian Chief Financial Officer and Treasurer INDIVIDUAL GENERAL PARTNERS /s/ Jerome J. Brault Jerome J. Brault DATED: August 20, 1996 Cezar M. Froelich BRAUVIN CORPORATE LEASE PROGRAM IV L.P. (a Delaware limited partnership) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE Page Independent Auditors' Report. . . . . . . . . . . . . . . . . . . F-2 Consolidated Financial Statements: Consolidated Balance Sheets, December 31, 1995 and 1994 . . F-3 Consolidated Statements of Operations, for the years ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . F-4 Consolidated Statements of Partners' Capital, for the years ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . F-5 Consolidated Statements of Cash Flows, for the years ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . F-6 Notes to Consolidated Financial Statements. . . . . . . . . F-8 Schedule III - Real Estate and Accumulated Depreciation, December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . F-17 All schedules provided for in Item 14(a)(2) of Form 10-K are either not required, not applicable or immaterial. INDEPENDENT AUDITORS' REPORT To the Partners Brauvin Corporate Lease Program IV L.P. Chicago, Illinois We have audited the accompanying consolidated balance sheets of Brauvin Corporate Lease Program IV L.P. (a limited partnership) and subsidiary as of December 31, 1995 and 1994, and the related consolidated statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedule listed in the Index to Consolidated Financial Statements and Schedule on page F-1. These consolidated financial statements and the financial statement schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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 consolidated financial statements present fairly, in all material respects, the financial position of Brauvin Corporate Lease Program IV L.P. and its subsidiary at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /S/ Deloitte & Touche LLP Chicago, Illinois February 9, 1996 BRAUVIN CORPORATE LEASE PROGRAM IV L.P. (a Delaware limited partnership) CONSOLIDATED BALANCE SHEETS December 31, December 31, 1995 1994 ASSETS Investment in real estate, at cost: Land $ 4,315,540 $ 4,315,540 Buildings and improvements 9,993,090 9,993,090 14,308,630 14,308,630 Less: Accumulated depreciation (638,479) (374,342) Net investment in real estate 13,670,151 13,934,288 Cash and cash equivalents 711,167 569,244 Tenant receivables -- 40,587 Deferred rent receivable 241,119 143,488 Due from affiliates 7,627 14,130 Prepaid offering costs 175,983 179,223 Organization costs (net of accumulated amortization: 1995-$22,000;1994-$16,000) 8,000 14,000 Other assets 36,901 550 Total Assets $14,850,948 $14,895,510 LIABILITIES AND PARTNERS' CAPITAL LIABILITIES: Accounts payable and accrued expenses $ 33,660 $ 103,361 Rent received in advance 67,205 50,006 Due to affiliates -- 802 Total Liabilities 100,865 154,169 MINORITY INTERESTS IN BRAUVIN GWINNETT COUNTY VENTURE 711,056 726,640 PARTNERS' CAPITAL: General Partners 10,794 10,794 Limited Partners 14,028,233 14,003,907 Total Partners' Capital 14,039,027 14,014,701 Total Liabilities and Partners' Capital $14,850,948 $14,895,510 See accompanying notes to consolidated financial statements. BRAUVIN CORPORATE LEASE PROGRAM IV L.P. (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended December 31, 1995, 1994 and 1993 1995 1994 1993 INCOME: Rental (Note 4) $1,643,736 $1,571,077 $639,565 Interest 31,777 37,754 124,814 Other 22,938 13,865 -- Total income 1,698,451 1,622,696 764,379 EXPENSES: Acquisition fees not capitalized -- 97,334 113,224 General and administrative 146,480 164,081 45,650 Management fees (Note 3) 16,428 14,996 6,770 Amortization of organization costs 6,000 6,000 6,000 Depreciation 264,137 254,972 102,314 Total expenses 433,045 537,383 273,958 Income before minority interests in joint venture 1,265,406 1,085,313 490,421 Minority interests' share in Brauvin Gwinnett County Venture's net(income) loss (61,896) (55,032) 2,196 Net income $1,203,510 $1,030,281 $ 492,617 Net income allocated to the General Partners $ -- $ -- $ 9,852 Net income allocated to the Limited Partners $1,203,510 $1,030,281 $ 482,765 Net income per Unit outstanding (a) $ 0.74 $ 0.64 $ 0.42 (a) Net income per Unit was based on the average Units outstanding during the year since they were of varying dollar amounts and percentages based upon the dates Limited Partners were admitted to the Partnership and additional Units were purchased through the Plan. See accompanying notes to consolidated financial statements. BRAUVIN CORPORATE LEASE PROGRAM IV L.P. (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL For the years ended December 31, 1995, 1994 and 1993 General Limited Partners Partners* Total Balance, January 1, 1993 $942 $5,973,122 $5,974,064 Contributions -- 9,299,798 9,299,798 Subscription receivables -- (78,500) (78,500) Selling commissions and other offering costs -- (1,115,998) (1,115,998) Net income 9,852 482,765 492,617 Cash distributions -- (495,347) (495,347) Balance, December 31, 1993 10,794 14,065,840 14,076,634 Contributions, net -- 92,094 92,094 Subscription receivables -- 78,500 78,500 Selling commissions and other offering costs -- (18,072) (18,072) Net income -- 1,030,281 1,030,281 Cash distributions -- (1,244,736) (1,244,736) Balance, December 31, 1994 10,794 14,003,907 14,014,701 Contributions, net -- 136,937 136,937 Selling commissions and other offering costs -- (19,395) (19,395) Net income -- 1,203,510 1,203,510 Cash distributions -- (1,296,726) (1,296,726) Balance, December 31, 1995 $10,794 $14,028,233 $14,039,027 * Total Units outstanding, including those raised through the Plan, at December 31, 1995, 1994 and 1993 were 1,631,872, 1,617,478 and 1,609,009, respectively. Cash distributions to Limited Partners per Unit were $0.80, $0.77 and $0.43 for the years ended December 31, 1995, 1994 and 1993, respectively. Cash distributions to Limited Partners per Unit are based on the average Units outstanding during the year since they were of varying dollar amounts and percentages based upon the dates Limited Partners were admitted to the Partnership and additional Units were purchased through the distribution reinvestment plan. See accompanying notes to consolidated financial statements. BRAUVIN CORPORATE LEASE PROGRAM IV L.P. (a Delaware limited partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 1995, 1994 and 1993 1995 1994 1993 Cash flow from operating activities: Net income $1,203,510 $1,030,281 $ 492,617 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 270,137 260,972 108,314 Acquisition fees not capitalized -- 97,334 113,224 Minority interests in Brauvin Gwinnett County Venture's net income (loss) 61,896 55,032 (2,196) Decrease (increase) in tenant receivable 40,587 (40,587) -- Increase in deferred rent receivable (97,631) (124,377) (19,111) Decrease (increase) in due from affiliates 6,503 (9,601) (3,578) (Increase) decrease in other assets (36,351) 37,022 (8,034) (Decrease) increase in accounts payable and accrued expenses (69,701) (62,809) 86,589 Increase in rent received in advance 17,199 44,006 6,000 (Decrease)increase in due to affiliates (802) (16,499) 17,301 Net cash provided by operating activities 1,395,347 1,270,774 791,126 Cash flow from investing activities: Purchase of real estate -- (4,242,122) (7,869,777) Rescission of prior year purchase -- -- 1,890,000 Acquisition fees not capitalized -- (97,334) (113,224) Net cash used in investing activities -- (4,339,456) (6,093,001) Cash flow from financing activities: Sale of Units, net of liquidations, selling commissions and other offering costs 120,782 155,534 8,290,900 Organization costs and offering costs -- (4,701) (101,752) Cash distributions to Limited Partners (1,296,726)(1,244,736) (495,347) Cash distribution to minority interest in Brauvin Gwinnett County Venture (77,480) (71,521) -- Net cash (used in) provided by financing activities (1,253,424)(1,165,424) 7,693,801 Net increase (decrease) in cash and cash equivalents 141,923 (4,234,106) 2,391,926 Cash and cash equivalents at beginning of year 569,244 4,803,350 2,411,424 Cash and cash equivalents at end of year $ 711,167 $ 569,244 $4,803,350 See accompanying notes to consolidated financial statements. Supplemental Notes to Statements of Cash Flows: Amounts due to affiliates of $112,857 at December 31, 1992 relating to the purchase of real estate were paid in 1993. See accompanying notes to consolidated financial statements BRAUVIN CORPORATE LEASE PROGRAM IV L.P. (a Delaware limited partnership) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 1995, 1994 and 1993 (1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Brauvin Corporate Lease Program IV L.P. (the "Partnership") is a Delaware limited partnership formed on August 7, 1991 for the purpose of acquiring debt-free ownership of existing, income-producing retail and other commercial properties predominantly all of which will be subject to "triple-net" leases. It is anticipated that these properties will be leased primarily to corporate lessees of national and regional retail businesses, service providers and other users consistent with "triple-net" lease properties. The leases will 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 General Partners of the Partnership are Brauvin Realty Advisors IV, Inc., Jerome J. Brault and Cezar M. Froelich. Brauvin Realty Advisors IV, Inc. is owned by Messrs. Brault (beneficially)(50%) and Froelich (50%). Brauvin Securities, Inc., an affiliate of the General Partners, is the selling agent of the Partnership. The Partnership filed a Registration Statement on Form S-11 with the Securities and Exchange Commission which was declared effective on December 12, 1991. Per the terms of the Restated Limited Partnership Agreement of the Partnership (the "Agreement"), the minimum of $1,200,000 of limited partnership interests of the Partnership (the "Units") necessary for the Partnership to commence operations was achieved on April 27, 1992. The Partnership's offering was anticipated to close on December 11, 1992 but the Partnership obtained an extension until December 11, 1993. A total of 1,600,831 Units were sold to the public through the offering at $10 per Unit ($16,008,310). Through December 31, 1995, 1994 and 1993, the Partnership has sold $16,402,428, $16,240,804 and $16,090,204 of Units, respectively. These totals include $394,118, $232,494 and $81,494 of Units, respectively, raised by Limited Partners who utilized their distributions of Operating Cash Flow to purchase additional Units through the Partnership's distribution reinvestment plan (the "Plan"). Units valued at $83,706, $58,540 and $184 have been purchased by the Partnership from Limited Partners liquidating their investment in the Partnership and have been retired as of December 31, 1995, 1994, and 1993, respectively. As of December 31, 1995, the Plan participants own Units which approximate 2% of the total Units sold. The Partnership has acquired the land and buildings underlying a Steak n Shake restaurant, a Children's World Learning Center, two Chuck E. Cheese's restaurants, a Mrs. Winner's Chicken and Biscuit restaurant, a House of Fabrics store, a Volume ShoeSource store, an East Side Mario's Restaurant, a Blockbuster Video Store, and a Walden Books Store. In addition, the Partnership has acquired a 70.2% equity interest in a joint venture with two entities affiliated with the Partnership. This venture owns the land and building underlying a CompUSA store. 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. Accounting Method The accompanying financial statements have been prepared using the accrual method of accounting. Rental Income Rental income is recognized on a straight-line basis over the life of the related leases. Differences between rental income earned and amounts due per the respective lease agreements are credited or charged, as applicable, to deferred rent receivable. 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 consolidated 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. Consolidation of Joint Venture The Partnership owns a 70.2% equity interest in a joint venture, which owns the land and the buildings underlying one CompUSA store. The accompanying financial statements have consolidated 100% of the assets, liabilities, operations and partners' capital of Brauvin Gwinnett County Venture. All significant intercompany accounts have been eliminated. Investment in Real Estate The operating properties acquired by the Partnership are stated at cost including acquisition costs. Depreciation expense is computed on a straight-line basis over approximately 39 years. In 1995, the Partnership adopted Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets" (SFAS 121). In conjunction with the adoption of SFAS 121, the Partnership performed an analysis of its long-lived assets, and the Partnership's management determined that there were no events or changes in circumstances that indicated that the carrying amount of the assets may not be recoverable. Accordingly, no impairment loss has been recorded in the accompanying financial statements. Organization and Offering Costs Organization costs represent costs incurred in connection with the organization and formation of the Partnership. Organization costs are amortized over a period of five years using the straight-line method. Offering costs represent costs incurred in selling Units, such as the printing of the Prospectus and marketing materials have been recorded as a reduction of Limited Partners' capital. Prepaid offering costs represent amounts in excess of the defined percentages of the gross proceeds. Subsequently, gross proceeds are expected to increase due to the purchase of additional Units through the Plan and the prepaid offering costs will be transferred to offering costs and treated as a reduction in Partners' Capital. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid debt instruments with an original maturity within three months from date of purchase. 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, 1995 and 1994, 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. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date, and current estimates of fair value may differ significantly from amounts presented herein. The carrying amounts of the following items are a reasonable estimate of fair value: cash and cash equivalents; due from affiliates; accounts payable and accrued expenses; rent received in advance; and due to affiliates. (2) PARTNERSHIP AGREEMENT Distributions All Operating Cash Flow, as defined in the Partnership Agreement (the "Agreement"), during the period commencing with the date the Partnership accepts subscriptions for Units totaling $1,200,000 and terminating on the Termination Date, as defined in the Prospectus, shall be distributed to the Limited Partners on a quarterly basis. Distributions of Operating Cash Flow, if available, shall be made within 45 days following the end of each calendar quarter or are paid monthly within 15 days of the end of the month, depending upon the Limited Partner's preference, commencing with the first quarter following the Termination Date. Operating Cash Flow during such period shall be distributed as follows: (a) first, to the Limited Partners until the Limited Partners receive an amount equal to a 9% non-cumulative, non-compounded annual return on Adjusted Investment, as defined in the Agreement, commencing on the last day of the calendar quarter in which the Unit was purchased (the "Current Preferred Return"); and (b) thereafter, any remaining amounts will be distributed 98% to the Limited Partners (on a pro rata basis) and 2% to the General Partners. The net proceeds of a sale or refinancing of a Partnership property shall be distributed as follows: first, pro rata to the Limited Partners until each Limited Partner has received an amount equal to a 10% cumulative, non-compounded, annual return of Adjusted Investment (the "Cumulative Preferred Return"); second, to the Limited Partners until each Limited Partner has received an amount equal to the amount of his Adjusted Investment, apportioned pro rata based on the amount of the Adjusted Investment; and thereafter, 95% to the Limited Partners (apportioned pro rata based on Units) and 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 to each Partner in the same ratio as the cash distributions received by such Partner attributable to that period bears to the total cash distributed by the Partnership. In the event that there are no cash distributions, net profits and losses from operations of the Partnership (computed without regard to any allowance for depreciation or cost recovery deductions under the Code) shall be allocated 99% to the Limited Partners and 1% 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 Class A Investors, 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 Limited Partners until the Capital Account balances of the Limited Partners are equal to any unpaid Cumulative Preferred Return as of such date; (c) third, to the Limited Partners until the Capital Account balances of the Limited Partners are equal to the sum of the amount of their Adjusted Investment plus any unpaid Cumulative Preferred Return; (d) fourth, to the General Partners until their Capital Account balances are equal to any previously subordinated fees; and (e) thereafter, 95% to the Limited Partners 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, 95% to the Limited Partners and 5% to the General Partners. (3) TRANSACTIONS WITH RELATED PARTIES The Partnership pays an affiliate of the General Partners an acquisition fee in the amount of up to 5% of the gross proceeds of the Partnership's offering for the services rendered in connection with the process pertaining to the acquisition of a property. Acquisition fees related to the properties not ultimately purchased by the Partnership are expensed as incurred. The Partnership paid an affiliated entity a non-accountable selling expense allowance in an amount equal to 2% of the gross proceeds of the Partnership's offering, a portion of which may be reallowed to participating dealers. In the event that the Partnership does not use more than 2% of the gross proceeds of the offering for the payment of legal, accounting, escrow, filing and other fees incurred in connection with the organization or formation of the Partnership, the Partnership may pay the General Partners any unused portion of the 2% of the gross proceeds of the offering allowed for organization and offering expenses, not to exceed 1/2% of the gross proceeds of the offering. The General Partners will use such funds to pay certain expenses of the offering incurred by them not covered by the definition of organization and offering expenses. An affiliate of the General Partners provides leasing and re-leasing services to the Partnership in connection with the management of Partnership properties. The property management fee payable to an affiliate of the General Partners is 1% of the gross revenues of each Partnership property. An affiliate of the General Partners or the General Partners will receive a real estate brokerage commission in connection with the disposition of Partnership properties. Such commission will be in an amount equal to the lesser of: (i) 3% of the sale price of the property; or (ii) 50% of the real estate commission customarily charged for similar services in the locale of the property being sold; provided, however, that receipt by the General Partners or one of their affiliates of such commission is subordinated to receipt by the Limited Partners of their Current Preferred Return. An affiliate of one of the General Partners provides securities and real estate counsel to the Partnership. Fees, commissions and other expenses paid or payable to the General Partners or its affiliates for the years ended December 31, 1995, 1994 and 1993 were as follows: 1995 1994 1993 Acquisition fees $ -- $244,503 $377,340 Selling commissions 16,155 15,060 178,905 Management fees 16,428 14,996 6,770 Reimbursable operating expense 61,973 57,835 --- Legal fees 4,885 46,955 54,910 Non-accountable selling expenses -- --- 96,917 (4) LEASES The Partnership's rental income is principally obtained from tenants through rental payments provided under triple-net noncancelable operating leases. The leases provide for a base minimum annual rent and increases in rent such as through participation in gross sales above a stated level. The following is a schedule of noncancelable future minimum rental payments due to the Partnership under operating leases of Partnership properties as of December 31, 1995: Year Ending December 31: 1996 $ 1,382,887 1997 1,373,608 1998 1,391,902 1999 1,443,065 2000 1,458,158 Thereafter 11,803,210 $ 18,852,830 Additional rent based on percentages of tenant sales increases was $21,620 and $11,175 in 1995 and 1994, respectively. SCHEDULE III BRAUVIN CORPORATE LEASE PROGRAM IV L.P. (a Delaware limited partnership) REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995
Gross Amount at Which Carried Initial Cost at Close of Period Buildings Cost of Buildings Encumbrances and Subsequent and Accumulated Date Description (c) Land Improvements Improvements Land Improvements Total(a) Depreciation (b) Acquired Steak n' Shake $0 $ 427,872 $ 618,525 $0 $ 427,872 $ 618,525 $ 1,046,397 $ 64,348 5/92 Children's World Learning Center 0 123,962 325,827 0 123,962 325,827 449,789 43,926 8/92 Chuck E. Cheese's 0 224,335 976,601 0 224,335 976,601 1,200,936 64,679 4/93 Chuck E. Cheese's 0 153,722 864,307 0 153,722 864,307 1,018,029 73,083 4/93 Mrs. Winner's Chicken & Biscuit 0 278,340 363,983 0 278,340 363,983 642,323 26,819 5/93 House of Fabrics 0 344,393 1,167,573 0 344,393 1,167,573 1,511,966 72,475 7/93 Volume Shoesource Store 0 766,724 954,704 0 766,724 954,704 1,721,428 56,248 9/93 CompUSA Store 0 663,681 1,811,959 0 663,681 1,811,959 2,475,640 99,129 11/93 East Side Mario's 0 538,257 976,254 0 538,257 976,254 1,514,511 48,274 1/94 Blockbuster Video Store 0 248,168 708,162 0 248,168 708,162 956,330 32,782 2/94 Walden Books Store 0 546,086 1,225,195 0 546,086 1,225,195 1,771,281 56,716 2/94 $0 $4,315,540 $9,993,090 $0 $4,315,540 $9,993,090 $14,308,630 $638,479 NOTES: (a) The cost of this real estate is $14,308,630 for tax purposes (unaudited). The buildings are depreciated over approximately 35 years using the straight line method. The properties were constructed between 1969 and 1993. (b) The following schedule summarizes the changes in the Partnership's real estate and accumulated depreciation balances: Real estate 1995 1994 1993 Balance at beginning of year $14,308,630 $10,066,508 $ 3,454,263 Deductions - 1992 Purchase rescinded in 1993 -- -- (1,958,077) Additions - land and buildings 0 4,242,122 8,570,322 Balance at end of year $14,308,630 $14,308,630 $ 10,066,508 Accumulated depreciation 1995 1994 1993 Balance at beginning of year $ 374,342 $ 119,370 $ 17,056 Provision for depreciation 264,137 254,972 102,314 Balance at end of year $ 638,479 $ 374,342 $ 119,370 (c) Encumbrances - Brauvin Corporate Lease Program L.P. IV did not borrow cash in order to purchase its properties. 100% of the land and buildings were paid for with funds contributed by the Limited Partners.
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