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 June 30, 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 0-9541
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BALCOR EQUITY PROPERTIES LTD.-VIII
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(Exact name of registrant as specified in its charter)
Illinois 36-3011615
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 267-1600
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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 EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 3,356,596 $ 2,988,843
Escrow deposits - unrestricted 603,854 724,015
Escrow deposits - restricted 101,714 94,352
Accounts and accrued interest receivable 41,698 33,711
Deferred expenses, net of accumulated
amortization of $120,311 in 1995 and
$93,393 in 1994 476,271 503,189
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4,580,133 4,344,110
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Investment in real estate, at cost:
Land 1,325,898 1,325,898
Buildings and improvements 20,518,019 20,518,019
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21,843,917 21,843,917
Less accumulated depreciation 11,122,025 10,800,711
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Investment in real estate, net of
accumulated depreciation 10,721,892 11,043,206
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$ 15,302,025 $ 15,387,316
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LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 74,378 $ 77,177
Due to affiliates 4,821 49,347
Accrued liabilities, principally
real estate taxes 274,807 548,122
Security deposits 105,777 100,592
Mortgage notes payable 15,268,001 15,320,720
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Total liabilities 15,727,784 16,095,958
Partners' deficit (30,005 Limited
Partnership Interests issued and
outstanding) (425,759) (708,642)
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$ 15,302,025 $ 15,387,316
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 2,986,216 $ 2,822,497
Interest on short-term investments 99,487 14,932
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Total income 3,085,703 2,837,429
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Expenses:
Interest on mortgage notes payable 726,907 733,149
Interest on short-term loans from affiliate 5,195
Depreciation 321,314 330,877
Amortization of deferred expenses 26,918 26,918
Property operating 1,149,829 1,011,395
Real estate taxes 278,824 263,343
Property management fees 144,752 142,872
Administrative 154,276 182,395
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Total expenses 2,802,820 2,696,144
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Net income $ 282,883 $ 141,285
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Net income allocated to General Partner $ 2,829 $ 1,413
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Net income allocated to Limited Partners $ 280,054 $ 139,872
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Net income per Limited Partnership
Interest (30,005 issued and outstanding) $ 9.33 $ 4.66
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 1,490,628 $ 1,387,141
Interest on short-term investments 48,343 10,543
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Total income 1,538,971 1,397,684
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Expenses:
Interest on mortgage notes payable 363,014 366,183
Interest on short-term loans from affiliate 1,447
Depreciation 160,458 166,849
Amortization of deferred expenses 13,459 13,459
Property operating 609,353 511,108
Real estate taxes 140,644 132,981
Property management fees 70,103 70,713
Administrative 91,638 101,444
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Total expenses 1,448,669 1,364,184
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Net income $ 90,302 $ 33,500
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Net income allocated to General Partner $ 903 $ 335
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Net income allocated to Limited Partners $ 89,399 $ 33,165
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Net income per Limited Partnership
Interest (30,005 issued and outstanding) $ 2.98 $ 1.10
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 282,883 $ 141,285
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation of properties 321,314 330,877
Amortization of deferred expenses 26,918 26,918
Net change in:
Escrow deposits - unrestricted 120,161 234,056
Escrow deposits - restricted (21,362) (21,932)
Accounts and accrued interest
receivable (7,987) (14,961)
Accounts payable (2,799) (29,989)
Due to affiliates (44,526) 63,874
Accrued liabilities (273,315) (268,580)
Security deposits 5,185 (9,913)
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Net cash provided by operating activities 406,472 451,635
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Investing activity:
Additions to properties (60,134)
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Cash used in investing activity (60,134)
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Financing activities:
Repayment of loans payable - affiliate (295,371)
Principal payments on mortgage notes payable (52,719) (48,035)
Releases of escrow deposits - restricted 14,000 31,500
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Net cash used in financing activities (38,719) (311,906)
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Net change in cash and cash equivalents 367,753 79,595
Cash and cash equivalents at beginning
of period 2,988,843 591,618
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Cash and cash equivalents at end of period $ 3,356,596 $ 671,213
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the six months and quarter
ended June 30, 1995, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1995 and 1994, the Partnership incurred
and paid interest expense on notes payable of $726,907 and $733,149,
respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1995 are:
Paid
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Six Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $94,980 $94,980 $4,821
During 1994, the Partnership repaid in full short-term loans of $417,775 from
the General Partner. The Partnership incurred interest expense of $5,195 and
paid interest expense of $4,628 during the six months ended June 30, 1994.
Interest expense was computed at the American Express Company cost of funds
rate plus a spread to cover administrative costs.
<PAGE>
BALCOR EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Equity Properties Ltd.-VIII (the "Partnership") was formed in 1979 to
invest in and operate income-producing real property. The Partnership raised
$30,005,000 through the sale of Limited Partnership Interests and utilized
these proceeds to acquire thirteen real property investments. Eight of these
properties have been sold or relinquished through foreclosure. The Partnership
continues to operate the five remaining properties.
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.
Summary of Operations
---------------------
The Partnership received a repayment of its interest in the Sherwood Lake
Apartments wrap-around note receivable in November 1994 and invested the
proceeds in short-term investments. The increase in interest earned on
short-term investments as well as improved property operations caused net
income to increase during the six months and quarter ended June 30, 1995 as
compared to the same periods in 1994. Further discussion of the Partnership's
operations is summarized below.
1995 Compared to 1994
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Rental rates and/or average occupancy levels increased at four of the
Partnership's five properties, resulting in an increase in rental and service
income during the six months and quarter ended June 30, 1995 as compared to the
same periods in 1994.
Due to higher average cash balances resulting from the repayment of the
Sherwood Lake Apartments wrap-around note receivable and higher interest rates
earned on short-term investments, interest income on short-term investments
increased during the six months and quarter ended June 30, 1995 as compared to
the same periods in 1994.
An increase in landscaping and payroll expenses at Walnut Hills - Phase I and
Phase II and higher expenditures for painting at Greentree Village resulted in
an increase in property operating expenses during the six months and quarter
ended June 30, 1995 as compared to the same periods in 1994.
Decreased accounting fees, professional fees and data processing costs resulted
in a decrease in administrative expenses during the six months and quarter
ended June 30, 1995 as compared to the same periods in 1994.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership at June 30, 1995 increased when compared
to December 31, 1994. Operating activities consisted primarily of cash flow
generated from property operations and short-term investments which was
partially offset by the payment of administrative expenses. Financing
activities consisted of principal payments on mortgage notes payable and the
receipt of funds released from restricted escrow accounts.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit, or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit is
considered significant if it exceeds $250,000 annually or 20% of the property's
rental and service income. The Partnership defines cash flow generated from its
properties as an amount equal to the property's revenue receipts less property
related expenditures. During the six months ended June 30, 1995 and 1994, four
of the Partnership's five properties generated positive cash flow after debt
service. The Walnut Hills - Phase I Apartments generated a marginal cash flow
deficit during 1995 and 1994; however, the combined property operations of the
Walnut Hills - Phase I and Phase II apartment complexes generated positive cash
flow during the six months ended June 30, 1995 and 1994. As of June 30, 1995,
the occupancy rates of the Partnership's properties ranged from 94% to 97%.
Many rental markets continue to remain extremely competitive; therefore, the
General Partner's goals are to maintain high occupancy levels while increasing
rents where possible and to monitor and control operating expense and capital
improvement requirements at all the properties.
Each of the Partnership's properties is owned through the use of third-party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. As a result of the General
Partner's efforts to obtain refinancing of existing loans with new lenders, the
Partnership has no third-party financing which matures prior to 2002.
As of June 30, 1995, the Partnership held cash reserves of approximately
$3,357,000. The Partnership plans to make a cash distribution of approximately
$3,017,000 ($100.57 per $1,000 Interest) for the third quarter of 1995, which
will be mailed in mid October. This distribution reflects the resumption by
the Partnership of what are anticipated to be regular quarterly distributions
of $7.50 per $1,000 Interest plus a special distribution resulting primarily
from the receipt by the Partnership of the proceeds of a purchase money note
received upon the sale of the Sherwood Lakes Apartments. Assuming property
operations meet current projections, the Partnership anticipates making regular
quarterly distributions of $7.50 per $1,000 Interest from the Partnership's
continuing property operations and from any cash reserves above an amount
necessary to protect against unforeseen events. In addition to quarterly
distributions, there will be a payment of a final liquidating distribution upon
the sale of the remaining assets following the payment of all debts and
liabilities of the Partnership. There are only five of the original thirteen
properties remaining in the Partnership. It is expected that the remaining
properties will be sold in approximately the next two years and the Partnership
will be liquidated. To date, investors have received distributions of Net Cash
Receipts of $125.00 and Net Cash Proceeds of $82.50, totaling $207.50 per
$1,000 Interest, as well as certain tax benefits.
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,<PAGE>
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 EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Certificate of Limited Partnership set forth as Exhibit 4 to Amendment
No. 2 to the Registrant's Registration Statement on Form S-11 dated
February 26, 1980 (Registration No. 2-63821) 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. 0-9541)
are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 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 EQUITY PROPERTIES LTD.-VIII
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of BRI
Partners-79, the General Partner
By: /s/Brian D. Parker
-----------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of BRI Partners-79, the General
Partner
Date: August 14, 1995
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<PAGE>
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<OTHER-SE> (426)
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