SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-9198
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BALCOR PENSION INVESTORS
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(Exact name of registrant as specified in its charter)
Illinois 36-2943462
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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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
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<PAGE>
BALCOR PENSION INVESTORS
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 6,128,152 $ 6,226,192
Accounts and accrued interest receivable 831,377 748,024
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6,959,529 6,974,216
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Investment in loans receivable:
Loans receivable - wrap-around mortgages 33,466,592 33,466,592
Less:
Loans payable - underlying mortgages 23,644,001 23,768,581
Allowance for potential loan losses 2,222,781 2,222,781
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Net investment in loans receivable 7,599,810 7,475,230
Real estate held for sale 6,063,025 6,063,025
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13,662,835 13,538,255
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$ 20,622,364 $ 20,512,471
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LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued interest payable $ 193,160 $ 323,430
Due to affiliates 111,928 85,232
Other liabilities, principally real
estate taxes and escrow deposits 191,353 146,918
Mortgage note payable 575,301 575,301
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Total liabilities 1,071,742 1,130,881
Partners' capital (71,675 Limited
Partnership Interests issued and
outstanding) 19,550,622 19,381,590
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$ 20,622,364 $ 20,512,471
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Interest on loans receivable $ 661,625 $ 797,864
Less interest on loans payable -
underlying mortgages 418,880 427,149
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Net interest income on loans receivable 242,745 370,715
Income from operations of real estate
held for sale 220,307 223,754
Interest on short-term investments 85,059 44,445
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Total income 548,111 638,914
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Expenses:
General Partner management fees 9,808 9,808
Administrative 133,875 129,055
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Total expenses 143,683 138,863
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Net income $ 404,428 $ 500,051
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Net income allocated to General Partner $ 4,044 $ 5,001
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Net income allocated to Limited Partners $ 400,384 $ 495,050
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Net income per Limited Partnership
Interest (71,675 issued and outstanding) $ 5.59 $ 6.91
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Distribution to General Partner $ 2,452 $ 2,452
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Distribution to Limited Partners $ 232,944 $ 232,944
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Distribution per Limited Partnership
Interest $ 3.25 $ 3.25
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 404,428 $ 500,051
Adjustments to reconcile net income
to net cash provided by operating
activities:
Net change in:
Accounts and accrued interest
receivable (83,353) (78,347)
Accounts and accrued interest
payable (130,270) (52,249)
Due to affiliates 26,696 50,435
Other liabilities 44,435 53,214
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Net cash provided by
operating activities 261,936 473,104
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Financing activities:
Distribution to Limited Partners (232,944) (232,944)
Distribution to General Partner (2,452) (2,452)
Principal payments on underlying
loan (124,580) (156,860)
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Cash used in financing activities (359,976) (392,256)
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Net change in cash and cash equivalents (98,040) 80,848
Cash and cash equivalents at beginning
of period 6,226,192 5,184,665
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Cash and cash equivalents at end
of period $ 6,128,152 $ 5,265,513
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
Mortgage servicing fees have been reclassified and are included in
administrative expenses during 1995. This reclassification has also been the
made to the previously reported 1994 statements in order to conform with the
classification used in 1995. This reclassification has not changed the 1994
results. In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the quarter
ended March 31, 1995, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the quarter ended March 31, 1995, the Partnership did not incur or pay
interest expense on mortgage notes payable. During the quarter ended March 31,
1994, the Partnership incurred interest expense on mortgage notes payable of
$64,759 and paid interest expense of $44,716.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1995 are:
Paid Payable
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Mortgage servicing fees $ 3,481 $ 1,162
General Partner management fees 9,808 9,808
Reimbursement of expenses to
the General Partner, at cost: None 100,958
4. Subsequent Event:
In April 1995, the Partnership paid a distribution of $358,375 ($5.00 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of available Cash Flow for the first quarter of
1995.
<PAGE>
BALCOR PENSION INVESTORS
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors (the "Partnership") was formed in 1977 to invest in
wrap-around mortgage loans and, to a lesser extent, in other junior mortgage
loans and first mortgage loans. The Partnership raised $71,675,000 through the
sale of Limited Partnership Interests and utilized these proceeds to fund
thirty-six loans. Currently, the Partnership has two loans and two properties
in its portfolio.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1994 for a more complete understanding of
the Partnership's financial position.
Operations
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1995 Compared to 1994
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Net interest income on loans receivable decreased during the quarter ended
March 31, 1995 as compared to the same period in 1994 primarily due to reduced
payments on the Waterford/Ferndale Centers loan which is on non-accrual status.
For non-accrual loans, income is recorded only as cash payments are received
from borrowers. The funds advanced by the Partnership for this loan are
approximately $1,500,000. The loan matured in November 1993 and the borrower
did not make the payment due. See Liquidity and Capital Resources, below, for
additional information.
Primarily as a result of higher interest rates earned on short-term
investments, interest income on short-term investments increased during the
quarter ended March 31, 1995 as compared to the same period in 1994.
Allowances are charged to income when the General Partner believes an
impairment has occurred, either in a borrower's ability to repay the loan or in
the value of the collateral property. Determinations of fair value are made
periodically on the basis or performance under the terms of the loan agreement
and assessments of property operations. Determinations of fair value represent
estimations based on many variables which affect the value of real estate,
including economic and demographic conditions. The Partnership recognized no
provision for potential losses during the quarter ended March 31, 1995 and
1994. While actual losses may vary from time to time because of changes in
circumstances (such as occupancy rates, rental rates, and other economic
factors), the General Partner believes that adequate recognition has been given
to loss exposure in the portfolio at March 31, 1995.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership decreased as of March 31, 1995 when
compared to December 31, 1994. Operating activities included cash flow from the
operations of the Partnership's real estate held for sale and net interest
income earned on its loans receivable and short-term investments, which were
partially offset by the payment of administrative expenses. Financing
activities included the payment of regular quarterly distributions to the
Limited Partners and the General Partner, and the payment of principal on the
underlying loan.
The Partnership defines cash flow generated from its properties as an amount
equal to the property's revenue receipts less property related expenditures,
which include debt service payments. During the quarters ended March 31, 1995
and 1994, the Nob Hill Apartments - Phase I and Huntington Plaza shopping
center generated positive cash flow. Emerald Ridge Apartments generated
positive cash flow during the quarter ended March 31, 1994 prior to being sold
in April 1994. The General Partner is continuing its efforts to maintain high
occupancy levels, while increasing rents where possible, and to monitor and
control operating expenses and capital improvement requirements at the
properties. As of March 31, 1995, the occupancy rates were 90% and 82% at the
Nob Hill Apartments - Phase I and Huntington Plaza, respectively.
The Waterford/Ferndale Centers wrap-around loan matured in November 1993. The
borrowers failed to make the payment due and one of the borrowers filed for
protection under the U.S. Bankruptcy Code. The Partnership continues to
negotiate for a resolution of the outstanding matters, which may include a sale
of the loan to a third party.
Because of the weak real estate markets in certain cities and regions of the
country, attributable to local and regional market conditions such as
overbuilding and recessions in local economies and specific industry segments,
certain borrowers have requested that the Partnership allow prepayment of
mortgage loans. The Partnership has allowed some of these borrowers to prepay
such loans, in some cases without assessing prepayment penalties, under
circumstances where the General Partner believed that refusing to allow such
prepayment would ultimately prove detrimental to the Partnership because of the
likelihood that the properties would not generate sufficient revenues to keep
loan payments current.
Distributions to Limited Partners can be expected to fluctuate for various
reasons. Generally, distributions are made from Cash Flow generated by interest
and other payments made by borrowers under the Partnership's mortgage loans and
Cash Flow from property operations. Loan prepayments and repayments can
initially cause Cash Flow to increase as prepayment premiums and participations
are paid; however, thereafter prepayments and repayments will have the effect
of reducing Cash Flow. When such proceeds and property sale proceeds are
distributed, Limited Partners will receive a return of capital and the dollar
amount of Cash Flow available for distribution thereafter can be expected to
decrease. Distribution levels can also vary as loans are placed on non-accrual
status, modified or restructured.
<PAGE>
In April 1995, the Partnership paid a distribution of $358,375 ($5.00 per
Interest) to the holders of Limited Partnership Interests representing the
quarterly distribution of available Cash Flow for the first quarter of 1995. In
addition, during April 1995, the Partnership paid $3,772 to the General Partner
as its distributive share of Cash Flow distributed for the first quarter of
1995. The level of the regular quarterly distribution increased from the amount
distributed for the fourth quarter of 1994. To date, Limited Partners have
received cumulative distributions of $1,679.91 per $1,000 Interest, of which
$1,144.91 represents cash flow from operations and $535 represents a return of
original capital.
The Partnership expects to continue making cash distributions from the Cash
Flow generated by the receipt of mortgage payments and property operations less
payments on the underlying loans and mortgage loans, fees to the General
Partner and administrative expenses. The General Partner believes it has
retained, on behalf of the Partnership, an appropriate amount of working
capital to meet cash or liquidity requirements which may occur. It is
anticipated that the Partnership will be terminated within the next twelve to
eighteen months.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR PENSION INVESTORS
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 3(c) to Amendment No. 2
to the Registrant's Registration Statement on Form S-11 dated December 15, 1977
(Registration No. 2-60478) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended June 30, 1992 (Commission File No. 0-9198) are incorporated
herein by reference.
(10) Agreement of sale relating to Emerald Ridge Apartments, previously filed
as Exhibit (2) to the Registrant's Current Report on Form 8-K dated January 28,
1994, is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the three month period
ending March 31, 1995 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR PENSION INVESTORS
By: /s/Thomas E. Meador
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors, the General Partner
By: /s/Brian Parker
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Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Mortgage Advisors, the
General Partner
Date: May 8, 1995
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<PAGE>
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<OTHER-SE> 19550
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