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
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
------------ ------------
Commission file number 0-9198
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BALCOR PENSION INVESTORS
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-2943462
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
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
----- -----
<PAGE>
BALCOR PENSION INVESTORS
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------- -------------
Cash and cash equivalents $ 7,609,130 $ 5,159,556
Accounts and accrued interest receivable 211,001 245,402
------------- -------------
7,820,131 5,404,958
------------- -------------
Investment in loans receivable:
Loans receivable - wrap-around and
first mortgages 30,708,107 30,443,927
Less:
Loan payable - underlying mortgage 21,547,919 21,547,919
Allowance for potential loan loss 4,853,336 4,853,336
------------- -------------
Net investment in loans receivable 4,306,852 4,042,672
Real estate held for sale (net of
allowance of $300,000 in 1995) 5,763,025
------------- -------------
4,306,852 9,805,697
------------- -------------
$ 12,126,983 $ 15,210,655
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 69,019 $ 69,002
Due to affiliates 147,050 42,885
Other liabilities, principally real estate
taxes and security deposits 147,277
Mortgage note payable 575,301
------------- -------------
Total liabilities 216,069 834,465
------------- -------------
Limited Partners' capital (71,675
Partnership Interests issued
and outstanding) 12,098,690 14,561,840
General Partner's deficit (187,776) (185,650)
------------- -------------
Total partners' capital 11,910,914 14,376,190
------------- -------------
$ 12,126,983 $ 15,210,655
============= =============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Interest on loans receivable $ 166,578 $ 1,984,873
Less interest on loans payable -
underlying mortgages 123,667 1,250,129
------------- -------------
Net interest income on loans receivable 42,911 734,744
Income from operations of real estate
held for sale 281,510 421,290
Interest on short-term investments 209,106 225,518
Recovery of loss on real estate 300,000
------------- -------------
Total income 833,527 1,381,552
------------- -------------
Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 575,301 1,726,547
Participation expense related to sale
of real estate 473,394
General Partner management fees 135,806 64,885
Administrative 399,261 483,484
------------- -------------
Total expenses 1,583,762 2,274,916
------------- -------------
Loss before gain on sales of
real estate and extraordinary item (750,235) (893,364)
Gain on sales of real estate 1,471,200
------------- -------------
Income (loss) before extraordinary item 720,965 (893,364)
Extraordinary item:
Gain on forgiveness of debt 575,301
------------- -------------
Net income (loss) $ 1,296,266 $ (893,364)
============= =============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
Income (loss) before extraordinary item
allocated to General Partner $ 7,210 $ (8,934)
============= =============
Income (loss) before extraordinary item
allocated to Limited Partners $ 713,755 $ (884,430)
============= =============
Income (loss) before extraordinary item
per Limited Partnership Interest
(71,675 issued and outstanding) $ 9.96 $ (12.34)
============= =============
Extraordinary item allocated to General
Partner $ 5,753 None
============= =============
Extraordinary item allocated to Limited
Partners $ 569,548 None
============= =============
Extraordinary item per Limited
Partnership Interest (71,675 issued
and outstanding) $ 7.94 None
============= =============
Net income (loss) allocated to
General Partner $ 12,963 $ (8,934)
============= =============
Net income (loss) allocated to
Limited Partners $ 1,283,303 $ (884,430)
============= =============
Net income (loss) per Limited Partnership
Interest (71,675 issued and outstanding) $ 17.90 $ (12.34)
============= =============
Distributions to General Partner $ 15,089 $ 14,900
============= =============
Distributions to Limited Partners $ 3,746,453 $ 2,304,352
============= =============
Distributions per Limited Partnership
Interest $ 52.27 $ 32.15
============= =============
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 September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Interest on loans receivable $ 3,523 $ 661,624
Less interest on loans payable -
underlying mortgages 414,527
------------- -------------
Net interest income on loans receivable 3,523 247,097
Interest on short-term investments 99,013 55,668
------------- -------------
Total income 102,536 302,765
------------- -------------
Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 1,726,547
Loss (income) from operations of
real estate held for sale 77,785 (93,389)
General Partner management fees 90,537 15,090
Administrative 104,269 134,397
------------- -------------
Total expenses 272,591 1,782,645
------------- -------------
Loss before gain on sales of
real estate (170,055) (1,479,880)
Gain on sales of real estate 1,400,431
------------- -------------
Net income (loss) $ 1,230,376 $ (1,479,880)
============= =============
Net income (loss) allocated to
General Partner $ 12,304 $ (14,799)
============= =============
Net income (loss) allocated to
Limited Partners $ 1,218,072 $ (1,465,081)
============= =============
Net income (loss) per Limited Partnership
Interest (71,675 issued and outstanding) $ 16.99 $ (20.44)
============= =============
Distribution to General Partner $ 7,545 $ 8,676
============= =============
Distribution to Limited Partners $ 2,145,950 $ 1,713,033
============= =============
Distribution per Limited Partnership
Interest $ 29.94 $ 23.90
============= =============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Operating activities:
Net income (loss) $ 1,296,266 $ (893,364)
Adjustments to reconcile net income
(loss) to net cash (used in) or
provided by operating activities:
Gain on forgiveness of debt (575,301)
Gain on sales of real estate (1,471,200)
Participation expense related to
sale of real estate 473,394
Provision for potential losses on loans,
real estate and accrued interest
receivable 575,301 1,726,547
Recovery of loss on real estate (300,000)
Net change in:
Accounts and accrued interest
receivable 34,401 468,122
Accounts and accrued interest payable 17 (126,428)
Due to affiliates 104,165 (46,200)
Other liabilities (147,277) 80,290
------------- -------------
Net cash (used in) or provided
by operating activities (10,234) 1,208,967
------------- -------------
Investing activities:
Proceeds from sales of real estate 6,604,620
Distribution of proceeds to Second
Mortgagee (167,194)
Costs incurred in connection with
sales of real estate (216,076)
-------------
Net cash provided by investing activities 6,221,350
-------------
Financing activities:
Distributions to Limited Partners (3,746,453) (2,304,352)
Distributions to General Partner (15,089) (14,900)
Principal payments on underlying loans (380,249)
------------- -------------
Net cash used in financing activities (3,761,542) (2,699,501)
------------- -------------
Net change in cash and cash equivalents 2,449,574 (1,490,534)
Cash and cash equivalents at beginning
of period 5,159,556 6,226,192
------------- -------------
Cash and cash equivalents at end of period $ 7,609,130 $ 4,735,658
============= =============
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:
A reclassification has been made to the previously reported 1995 financial
statements to conform with the classifications used in 1996. This
reclassification has not changed the 1995 results. In the opinion of
management, all adjustments necessary for a fair presentation have been made to
the accompanying statements for the nine months and quarter ended September 30,
1996, and all such adjustments are of a normal and recurring nature.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 are:
Paid
-----------------------
Nine Months Quarter Payable
------------ --------- ----------
Mortgage servicing fees $ 7,620 $ 2,540 $ 847
General Partner management fees 60,359 30,179 90,537
Reimbursement of expenses to
the General Partner, at cost 72,196 9,564 55,666
3. Sales of Real Estate:
(a) During May 1996, the Partnership sold the Huntington Plaza Shopping Center
for $2,400,000, consisting of cash of $2,093,800 and $306,200 in the form of a
purchase money note collateralized by a junior mortgage on the property. The
Partnership assigned the $306,200 note and paid $167,194 to the holder of a
second mortgage on the property as part of an agreement which allowed the
Partnership to take title to the property in 1993. These expenses, which total
$473,394, have been classified as participation expense on the income
statement. The Partnership also paid $3,088 of other selling costs related to
the sale. The basis of the property was $2,326,143. For financial statement
purposes, the Partnership recognized a gain of $70,769 from the sale of the
property.
(b) During July 1996, the Partnership sold the Nob Hill Apartments - Phase I
for $4,775,000, consisting of cash of $4,510,820 and $264,180 in the form of a
promissory note. From the proceeds of the sale, the Partnership paid $212,988
in selling costs. The basis of the property was $3,161,581. For financial
statement purposes, the Partnership recognized a gain of $1,400,431 from the
sale of the property.
<PAGE>
4. Extraordinary Item:
A foreclosure sale of the remaining building in Normandy Mall took place in
March 1996 and the underlying lender made a successful bid and obtained title
to the building in April 1996. In connection with the foreclosure, the
Partnership recognized an extraordinary gain on forgiveness of debt of
$575,301. In addition, the Partnership recognized a provision for losses equal
to the carrying value of the building of $575,301 during the quarter ended
March 31, 1996. The Partnership has no further interest in Normandy Mall.
5. Contingency:
A proposed settlement has been reached with respect to the class action
complaint, Paul Williams and Beverly Kennedy, et al, v. Balcor Pension
Investors, et al. between counsel for the Class and counsel for the defendants.
Notice of the proposed settlement terms was sent to class members in September
1996. A final hearing on the proposed settlement is expected to be held in
November 1996. The General Partner does not believe that the proposed
settlement will have a material adverse impact on the Partnership.
6. Subsequent Event:
In October 1996, the Partnership paid a distribution of $3,870,452 to the
holders of Limited Partnership Interests representing the quarterly
distribution of available Cash Flow of $5.00 per Interest for the third quarter
of 1996 and special distributions of $25.00 per Interest from Cash Flow and
$24.00 per Interest from Mortgage Reductions in connection with the sale of Nob
Hill Apartments - Phase I.
<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. The Partnership sold the Huntington Plaza Shopping Center and
Nob Hill Apartments - Phase I in May and July 1996, respectively. Currently,
the Partnership has one loan 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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
During 1995, the Partnership recognized a provision for a potential loan loss
of $1,726,547 related to the North Capitol Office Building loan. In addition,
the Partnership recognized gains related to the sales of the Nob Hill
Apartments - Phase I and the Huntington Plaza Shopping Center during 1996.
These events were the primary reasons for the recognition of net income during
the nine months and quarter ended September 30, 1996 as compared to a net loss
during the same periods in 1995. Participation expense recognized in
connection with the sale of the Huntington Plaza Shopping Center and the
receipt of less interest income on the North Capitol Office Building loan
during 1996 than in 1995 partially offset the increase in net income. Further
discussion of the Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the nine months and quarters ended September 30, 1996 and 1995.
The North Capitol Office Building wrap-around loan was placed on non-accrual
status in December 1995 when the borrower did not make the payment due upon the
maturity of the loan. For non-accrual loans, income is recorded only as cash
payments are received from the borrower. In March 1996, the borrower
discontinued the monthly payments required on the wrap-around loan pursuant to
a forbearance agreement and subsequently filed for bankruptcy protection. This
resulted in a decrease in net interest income on the loan receivable during
1996 when compared to 1995.
Operations of real estate held for sale represent the net operations of those
properties acquired by the Partnership through foreclosure. The Partnership
sold its remaining properties, the Huntington Plaza Shopping Center and the Nob
Hill Apartments - Phase I, in May 1996 and July 1996, respectively. The timing
of the sales resulted in a decrease in income from real estate held for sale
<PAGE>
during the nine months ended September 30, 1996 as compared to the same period
in 1995 and the recognition of a loss from operations of real estate held
during the quarter ended September 30, 1996 as compared to income during the
same period in 1995 due to the payment of expenses related to the period prior
to the sale.
Proceeds received in connection with the July 1996 sale of Nob Hill Apartments
- - Phase I were invested in short-term investments prior to their distribution
to Limited Partners in October 1996. As a result, interest income on
short-term investments increased during the quarter ended September 30, 1996
when compared to the same period in 1995.
Provisions are charged to income when the General Partner believes an
impairment has occurred to the value of its properties or in a borrower's
ability to repay a loan or in the value of the collateral property.
Determinations of fair value are made periodically on the basis of 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. During the nine months ended September 30, 1996, the Partnership
recognized a provision of $575,301 in connection with the foreclosure of the
remaining building to which the Partnership held title in Normandy Mall and a
recovery of $300,000 related to the Huntington Plaza Shopping Center to provide
for changes in the estimate of its fair value. The Partnership recognized a
provision for potential losses of $1,726,547 related to the North Capitol
Office Building loan during the quarter ended September 30, 1995.
During the second quarter of 1996, the Partnership recognized participation
expense of $473,394 in connection with the sale of Huntington Plaza Shopping
Center. See Liquidity and Capital Resources for additional information.
As a result of a special distribution of Cash Flow made in October 1996,
General Partner management fees increased during 1996 when compared to 1995.
Legal fees incurred in 1995 relating to litigation for the Normandy Mall
resulted in a decrease in administrative expense during 1996 when compared to
1995.
During 1996, the Partnership recognized gains of $70,769 and $1,400,431 in
connection with the sales of the Huntington Plaza Shopping Center and the Nob
Hill Apartments - Phase I, respectively.
During the first quarter of 1996, the Partnership recognized an extraordinary
gain on forgiveness of debt of $575,301 in connection with the foreclosure of
the one building that it retained title to in Normandy Mall. See Liquidity and
Capital Resources for additional information.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $2,450,000 as
of September 30, 1996 when compared to December 31, 1995. The Partnership used
cash of approximately $10,000 to fund its operating activities. The revenue
generated primarily by the Partnership's properties was offset by the payment
of administrative expenses. The Partnership generated cash flow of
approximately $6,221,000 from its investing activities resulting from the sales
of the Huntington Plaza Shopping Center and Nob Hill Apartments - Phase I. The
<PAGE>
Partnership's financing activities consisted of the payment of distributions
totaling approximately $3,762,000 to the Partners. The Partnership also made a
special distribution to Limited Partners from Cash Flow and Mortgage Reductions
in October 1996 as described below.
The Partnership defines cash flow generated from its properties as an amount
equal to the property's revenue receipts less property related expenditures.
The Huntington Plaza Shopping Center, which was sold in May 1996, and the Nob
Hill Apartments - Phase I, which was sold in July 1996, both generated positive
cash flow during the nine months ended September 30, 1995, and prior to their
sales in 1996.
In December 1995, the North Capitol Office Building wrap-around loan matured
and the borrower failed to make the principal payment due. Pursuant to a
forbearance agreement dated January 24, 1996, the Partnership agreed not to
exercise its rights against the borrower through March 1, 1996. The borrower
continued to make monthly interest only payments on the loan while negotiations
with the Partnership for repayment continued. The borrower did not make the
March 1996 payment and the loan was placed in default on March 7, 1996. On
March 22, 1996, the borrower commenced proceedings under Chapter 11 of the U.S.
Bankruptcy Code. The General Partner is reviewing the borrower's bankruptcy
filing and will take such actions as are necessary to protect the Partnership's
interests.
As previously reported, the Partnership is now in its liquidation stage.
During May 1996 and July 1996, the Partnership sold the Huntington Plaza
Shopping Center and Nob Hill Apartments - Phase I for $2,400,000 and
$4,775,000, respectively. While it is the Partnership's intent to complete the
disposition of its remaining assets and be terminated by the end of 1996, the
bankruptcy of the borrower on the North Capitol Building loan may prevent the
loan from being repaid and may make it impossible for the Partnership to sell
its interest in the loan until the bankruptcy action is resolved. The timing of
the termination of the Partnership and final distribution of cash will also
depend upon the nature and extent of liabilities and contingencies which exist
or may arise. Such contingencies may include legal and other fees stemming
from litigation involving the Partnership. In the event a contingency arises,
reserves may be held by the Partnership for a longer period of time.
In 1991, the Partnership obtained title to the Normandy Mall and Norwood Plaza
shopping centers and in 1993, title to the properties, with the exception of
one building (the "Building") in Normandy Mall, was relinquished to the first
mortgage holder pursuant to a settlement agreement. The first mortgage loan
collateralized by the Building was held by a different third party lender, Gulf
Life Insurance Company ("Gulf Life"), who commenced foreclosure proceedings in
January 1995. Gulf Life subsequently sold the loan to American Mortgage
Acquisition Corporation ("American"). A foreclosure sale of the Building took
place in March 1996 and American made a successful bid and obtained title to
the Building in April 1996. The Partnership has no further interest in the
Building or the remainder of Normandy Mall.
In 1993, the Partnership acquired title to the Huntington Plaza Shopping Center
through foreclosure. Prior to the foreclosure, this property had been
encumbered by a second mortgage loan which was subordinate to the Partnership's
loan. In order for the holder of the second mortgage not to contest the
Partnership's foreclosure actions, the Partnership and the holder of the second
mortgage executed an agreement which stated that the net proceeds from the sale
of the property would be distributed to both the Partnership and the second
<PAGE>
mortgage holder pursuant to an agreed upon formula. In May 1996, the
Partnership sold the Huntington Plaza Shopping Center for $2,400,000,
consisting of $306,200 in the form of a purchase money note collateralized by a
junior mortgage on the property and cash totaling $2,093,800. From the
proceeds, $167,194 was paid to the second mortgage holder. In addition, the
second mortgage holder agreed to accept the $306,200 purchase money note as
full settlement of the agreement. Net proceeds received by the Partnership from
this transaction were $1,923,518. See Note 3 of Notes to Financial Statements
for additional information.
In July 1996, the Partnership sold the Nob Hill Apartments - Phase I for
$4,775,000, consisting of $264,180 in the form of a promissory note which
matures in December 1996 and cash totaling $4,510,820. Net proceeds of
$4,297,832 were received by the Partnership. See Note 3(b) of Notes to
Financial Statements for additional information.
In October 1996, the Partnership paid a distribution of $3,870,452 to the
holders of Limited Partnership Interests representing the regular quarterly
distribution of available Cash Flow of $5.00 per Interest for the third quarter
of 1996 and special distributions of $25.00 per Interest from Cash Flow and
$24.00 per Interest from Mortgage Reductions in connection with the sale of Nob
Hill Apartments - Phase I. The level of the regular quarterly distribution
remained unchanged from the amount distributed to Limited Partners during the
second quarter of 1996. Including the October 1996 distribution, Limited
Partners have received cumulative distributions of $1,815.08 per $1,000
Interest, of which $1,211.41 represents Cash Flow from operations and $603.67
represents a return of Original Capital.
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.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate.
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
- -----------------------------------------
(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)(a)(i) Agreement of Sale and attachment thereto; First Amendment to
Agreement of Sale; Form of Junior Mortgage and Security Agreement; Form of
Principal Note; and Satisfaction and Release, relating to the sale of
Huntington Plaza, Huntington, Indiana, previously filed as Exhibits (2)(a),
(b), (c), (d) and (e) to the Registrant's Current Report on Form 8-K dated
April 26, 1996 are incorporated herein by reference.
(ii) Second Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Huntington Plaza, Huntington, Indiana, previously filed as Exhibit
(10)(b) to the Registrant's Report on Form 10-Q for the quarter ended March 31,
1996, is incorporated herein by reference.
(b) Agreement of Sale and attachment thereto relating to the sale of Nob Hill
Apartments - Phase I, previously filed as Exhibit 2(a) to the Registrant's
Current Report on Form 8-K dated June 4, 1996, is incorporated herein by
reference.
(27) Financial Data Schedule of the Registrant for the nine month period ended
September 30, 1996 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended September 30, 1996.
<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
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors, the General Partner
By: /s/Jayne A. Kosik
------------------------------
Jayne A. Kosik
Vice President, and Chief Financial
Officer (Principal Accounting
Officer) of Balcor Mortgage
Advisors, the General Partner
Date: November 13, 1996
---------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7609
<SECURITIES> 0
<RECEIVABLES> 4518
<ALLOWANCES> 4853
<INVENTORY> 0
<CURRENT-ASSETS> 7820
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 12127
<CURRENT-LIABILITIES> 216
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11911
<TOTAL-LIABILITY-AND-EQUITY> 12127
<SALES> 0
<TOTAL-REVENUES> 2304
<CGS> 0
<TOTAL-COSTS> 473
<OTHER-EXPENSES> 535
<LOSS-PROVISION> 575
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 721
<INCOME-TAX> 0
<INCOME-CONTINUING> 721
<DISCONTINUED> 0
<EXTRAORDINARY> 575
<CHANGES> 0
<NET-INCOME> 1296
<EPS-PRIMARY> 17.90
<EPS-DILUTED> 17.90
</TABLE>
