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 September 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
September 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 3,634,603 $ 2,988,843
Escrow deposits - unrestricted 608,663 724,015
Escrow deposits - restricted 101,542 94,352
Accounts and accrued interest receivable 10,533 33,711
Prepaid insurance 105,155
Deferred expenses, net of accumulated
amortization of $133,770 in 1995 and
$93,393 in 1994 462,812 503,189
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4,923,308 4,344,110
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Investment in real estate, at cost:
Land 1,325,898 1,325,898
Buildings and improvements 20,518,019 20,518,019
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21,843,917 21,843,917
Less accumulated depreciation 11,283,280 10,800,711
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Investment in real estate, net of
accumulated depreciation 10,560,637 11,043,206
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$ 15,483,945 $ 15,387,316
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LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 54,015 $ 77,177
Due to affiliates 21,466 49,347
Accrued liabilities, principally
real estate taxes 414,104 548,122
Security deposits 102,804 100,592
Mortgage notes payable 15,240,704 15,320,720
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Total liabilities 15,833,093 16,095,958
Partners' deficit (30,005 Limited
Partnership Interests issued
and outstanding) (349,148) (708,642)
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$ 15,483,945 $ 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 nine months ended September 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 4,481,962 $ 4,289,399
Interest on short-term investments 149,178 21,019
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Total income 4,631,140 4,310,418
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Expenses:
Interest on mortgage notes payable 1,088,233 1,098,760
Interest on short-term loans
from affiliate 5,773
Depreciation 482,569 490,441
Amortization of deferred expenses 40,377 40,377
Property operating 1,795,161 1,752,887
Real estate taxes 418,121 396,323
Property management fees 215,252 215,512
Administrative 231,933 258,237
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Total expenses 4,271,646 4,258,310
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Net income $ 359,494 $ 52,108
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Net income allocated to General Partner $ 3,595 $ 521
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Net income allocated to Limited Partners $ 355,899 $ 51,587
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Net income per Limited Partnership
Interest (30,005 issued and outstanding) $ 11.86 $ 1.72
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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 September 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 1,495,746 $ 1,467,453
Interest on short-term investments 49,691 5,536
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Total income 1,545,437 1,472,989
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Expenses:
Interest on mortgage notes payable 361,326 365,911
Interest on short-term loans
from affiliate 578
Depreciation 161,255 159,564
Amortization of deferred expenses 13,459 13,459
Property operating 645,332 741,192
Real estate taxes 139,297 132,980
Property management fees 70,500 72,640
Administrative 77,657 75,842
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Total expenses 1,468,826 1,562,166
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Net income (loss) $ 76,611 $ (89,177)
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Net income (loss) allocated to
General Partner $ 766 $ (892)
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Net income (loss) allocated to
Limited Partners $ 75,845 $ (88,285)
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Net income (loss) per Limited
Partnership Interest (30,005 issued
and outstanding) $ 2.53 $ (2.94)
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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 nine months ended September 30, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 359,494 $ 52,108
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of properties 482,569 490,441
Amortization of deferred expenses 40,377 40,377
Net change in:
Escrow deposits - unrestricted 115,352 111,806
Escrow deposits - restricted (32,090) (33,036)
Accounts and accrued interest
receivable 23,178 (86,066)
Prepaid insurance (105,155)
Accounts payable (23,162) (13,840)
Due to affiliates (27,881) 52,452
Accrued liabilities (134,018) (132,716)
Security deposits 2,212 (9,430)
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Net cash provided by operating activities 700,876 472,096
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Investing activities:
Additions to properties (60,134)
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Cash used in investing activities (60,134)
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Financing activities:
Repayment of loans payable - affiliate (417,775)
Principal payments on mortgage notes
payable (80,016) (72,886)
Releases of escrow deposits - restricted 24,900 140,982
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Net cash used in financing activities (55,116) (349,679)
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Net change in cash and cash equivalents 645,760 62,283
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 $ 3,634,603 $ 653,901
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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:
Several reclassifications have been made to the previously reported 1994
statements to conform with the classifications used in 1995. These
reclassifications have 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 nine months and quarter ended September 30,
1995, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1995 and 1994, the Partnership
incurred and paid interest expense on notes payable to non-affiliates of
$1,088,233 and $1,098,760, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1995 are:
Paid
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Nine Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $110,348 $15,368 $21,466
During 1994, the Partnership repaid in full short-term loans of $417,775 from
the General Partner. The Partnership incurred interest expense of $5,773 and
paid interest expense of $7,801 during the nine months ended September 30,
1994. Interest expense was computed at the American Express Company cost of
funds rate plus a spread to cover administrative costs.
4. Subsequent Event:
In October 1995, the Partnership made a distribution of $3,017,603 ($100.57 per
Interest) to the holders of Limited Partnership Interests. This distribution
represents the resumption of regular quarterly distributions of $7.50 per
Interest from Net Cash Receipts, a special distribution of $59.74 per Interest
from Net Cash Proceeds related to the Sherwood Lakes Apartments loan repayment
and a special distribution of $33.33 per Interest from Net Cash Receipts
reserves.
<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.
Operations
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Summary of Operations
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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 nine months and quarter ended September 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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Unless otherwise noted, discussions of fluctuations between 1994 and 1995 refer
to both the quarter and nine months ended September 30, 1995 and 1994.
Rental rates and/or average occupancy levels increased at three of the
Partnership's five properties, resulting in an increase in rental and service
income for 1995 as compared to 1994.
Interest income on short-term investments increased for 1995 as compared to
1994 due to higher average cash balances resulting from the repayment of the
Sherwood Lake Apartments wrap-around note receivable in November 1994 and
higher interest rates earned in 1995 on short-term investments.
Property operating expenses decreased during the quarter ended September 30,
1995 as compared to the same period in 1994 due to roofing repairs performed at
Walnut Hills-Phase I and Phase II during 1994.
Administrative expenses decreased during the nine months ended September 30,
1995 as compared to the same period in 1994 due to a decrease in accounting
fees.
Liquidity and Capital Resources
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<PAGE>
The cash position of the Partnership at September 30, 1995 increased when
compared to December 31, 1994 primarily due to improved cash flow from property
operations.
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, which include debt service payments. During the nine
months ended September 30, 1995 and 1994, four of the Partnership's five
properties generated positive cash flow. 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 same periods.
While operations at certain of the Partnership's properties have improved, the
General Partner continues to pursue a number of actions aimed at improving the
cash flow of the Partnership's properties, including the refinancing of
mortgage loans, improving operating performance, and seeking rent increases
where market conditions allow. As of September 30, 1995, occupancy rates
ranged from 87% to 96%. 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.
In October 1995, the Partnership made a distribution of $3,017,603 ($100.57 per
Interest) to the holders of Limited Partnership Interests. This distribution
reflects the resumption by the Partnership of regular quarterly distributions
of $7.50 per Interest, a special distribution of $59.74 per Interest from Net
Cash Proceeds related to the receipt by the Partnership of the proceeds of a
purchase money note received upon the sale of the Sherwood Lakes Apartments and
a special distribution of $33.33 per Interest from Net Cash Receipts reserves.
Including the October 1995 distribution, investors have received distributions
of Net Cash Receipts of $165.83 and Net Cash Proceeds of $142.24, totaling
$308.07 per $1,000 Interest, as well as certain tax benefits.
The General Partner expects to continue quarterly distributions to Limited
Partners. However, the level of future distributions will depend on cash flow
from the Partnership's remaining five properties 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. It is expected that the remaining
properties will be sold in approximately the next two years and the Partnership
will be liquidated.
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 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 nine month period ending
September 30, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 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 Parker
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Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of BRI Partners-79, the General
Partner
Date: November 13, 1995
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<PAGE>
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