10-K 1 hy1.txt BRAUVIN HIGH YIELD FUND 12/31/01 10K 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

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

BRAUVIN HIGH YIELD FUND L P 10-K