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, 1996
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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 (847) 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
March 31, 1996 and December 31, 1995
(UNAUDITED)
ASSETS
1996 1995
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Cash and cash equivalents $ 609,707 $ 542,128
Escrow deposits - unrestricted 415,117 803,873
Escrow deposits - restricted 104,732 94,709
Prepaid expenses 15,394 64,199
Deferred expenses, net of accumulated
amortization of $160,688 in 1996 and
$147,229 in 1995 435,894 449,353
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1,580,844 1,954,262
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Investment in real estate:
Land 1,325,898 1,325,898
Buildings and improvements 20,518,019 20,518,019
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21,843,917 21,843,917
Less accumulated depreciation 11,628,752 11,462,726
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Investment in real estate, net of
accumulated depreciation 10,215,165 10,381,191
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$ 11,796,009 $ 12,335,453
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LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 33,572 $ 45,964
Due to affiliates 27,330 19,344
Accrued liabilities, principally
real estate taxes 143,415 551,280
Security deposits 92,591 96,931
Mortgage notes payable 15,184,160 15,212,762
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Total liabilities 15,481,068 15,926,281
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Limited Partners' deficit (30,005
Interests issued and outstanding) (3,462,322) (3,366,783)
General Partner's deficit (222,737) (224,045)
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Total partners' deficit (3,685,059) (3,590,828)
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$ 11,796,009 $ 12,335,453
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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 March 31, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Rental and service $ 1,395,378 $ 1,495,588
Interest on short-term investments 5,729 51,144
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Total income 1,401,107 1,546,732
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Expenses:
Interest on mortgage notes payable 361,165 363,893
Depreciation 166,026 160,856
Amortization of deferred expenses 13,459 13,459
Property operating 501,177 540,476
Real estate taxes 95,123 138,180
Property management fees 70,410 74,649
Administrative 62,940 62,638
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Total expenses 1,270,300 1,354,151
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Net income $ 130,807 $ 192,581
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Net income allocated to General Partner $ 1,308 $ 1,926
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Net income allocated to Limited Partners $ 129,499 $ 190,655
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Net income per Limited Partnership
Interest (30,005 issued and outstanding) $ 4.32 $ 6.35
============== ==============
Distribution to Limited Partners $ 225,038 None
============== ==============
Distribution per Limited Partnership
Interest $ 7.50 None
============== ==============
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 quarters ended March 31, 1996 and 1995
(UNAUDITED)
1996 1995
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Operating activities:
Net income $ 130,807 $ 192,581
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of properties 166,026 160,856
Amortization of deferred expenses 13,459 13,459
Net change in:
Escrow deposits - unrestricted 388,756 365,241
Escrow deposits - restricted (10,023) 3,450
Prepaid expenses 48,805
Accounts payable (12,392) (29,601)
Due to affiliates 7,986 19,721
Accrued liabilities (407,865) (398,217)
Security deposits (4,340) 2,293
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Net cash provided by operating
activities 321,219 329,783
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Financing activities:
Principal payments on mortgage notes
payable (28,602) (26,052)
Distribution to Limited Partners (225,038)
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Cash used in financing activities (253,640) (26,052)
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Net change in cash and cash equivalents 67,579 303,731
Cash and cash equivalents at beginning
of period 542,128 2,988,843
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Cash and cash equivalents at end of period $ 609,707 $ 3,292,574
============== ==============
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 quarter ended March 31,
1996, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarters ended March 31, 1996 and 1995, the Partnership incurred and
paid interest expense on mortgage notes payable of $361,165 and $363,893,
respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1996 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost $14,068 $27,330
<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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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A special distribution to Limited Partners in October 1995 of proceeds received
from the Sherwood Lakes Apartments note repayment in 1994 caused a decrease in
average cash balances during 1996 as compared to 1995, resulting in a decrease
in interest earned on short-term investments. This was the principal reason net
income decreased during the quarter ended March 31, 1996 as compared to the
same period in 1995. Further discussion of the Partnership's operations is
summarized below.
1996 Compared to 1995
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Discussions of fluctuations between 1996 and 1995 refer to the quarters ended
March 31, 1996 and 1995.
Average occupancy levels decreased at four of the Partnership's five
properties, resulting in a decrease in rental and service income for 1996 when
compared to 1995. All four of these properties are located in the San Antonio,
Texas market. The phase out of the corporate suite rental program at Cedar
Creek - Phase I and II apartment complexes also contributed to the decrease in
rental and service income.
Interest income on short-term investments decreased during 1996 when compared
to 1995 due to lower average cash balances resulting from a special
distribution made to the Limited Partners in October 1995 primarily from the
Sherwood Lakes note receivable repayment.
Real estate tax expenses decreased during 1996 when compared to 1995 due to
decreases in the assessed values of the San Antonio properties, in particular,
the Walnut Hills - Phase II Apartments.
Liquidity and Capital Resources
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<PAGE>
The cash position of the Partnership increased by approximately $68,000 as of
March 31, 1996 when compared to December 31, 1995. The Partnership generated
cash flow from operating activities of approximately $321,000, primarily from
the operations of its properties, which was partially offset by the payment of
administrative expenses. The Partnership's financing activities consisted
primarily of distributions to the Limited Partners of approximately $225,000.
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 1996 and
1995, four of the Partnership's five properties generated positive cash flow.
The Walnut Hills - Phase I Apartments generated a marginal cash flow deficit
during 1996 and 1995; however, the combined property operations of the Walnut
Hills - Phase I and Phase II apartment complexes generated positive cash flow
during the same periods. As of March 31, 1996, the occupancy rates of the
Partnership's four properties located in the San Antonio market ranged from 84%
to 88%. The Greentree Village Apartments occupancy rate was 98%.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties, improving operating performance,
and seeking rent increases where market conditions allow.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. Currently,
the Partnership has entered into a contract to sell the Greentree Village
Apartments for a sale price of $8,800,000 and is actively marketing the
remaining properties in its portfolio. See Item 5. Other Information for
additional information. If current market conditions remain favorable and the
General Partner can obtain appropriate sales prices, the Partnership's
liquidation strategy may be accelerated.
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.
Quarterly distributions were suspended for the first quarter of 1996 due to
costs associated with the three unsolicited tender offers to Limited Partners
and the decrease in rental and service income experienced at the San Antonio
properties. In light of results to date and current market conditions, the
General Partner does not anticipate that investors will recover all of their
original investment.
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 sale 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 5. Other Information
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Greentree Village Apartments
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In 1980, the Partnership acquired the Greentree Village Apartments, Colorado
Springs, Colorado, utilizing approximately $2,120,000 in offering proceeds. The
property was acquired subject to an all inclusive mortgage loan ("Wrap Loan")
in the amount of approximately $3,900,000. In 1986, the Partnership made an
approximately $2,154,000 prepayment on the Wrap Loan and assumed the underlying
first mortgage loan in the principal amount of approximately $1,660,000. The
loan was refinanced in 1991 with a new first mortgage loan in the amount of
$3,150,000. The Partnership received approximately $1,089,000 in excess
refinancing proceeds.
On May 6, 1996, the Partnership contracted to sell the property for a sale
price of $8,800,000 to an unaffiliated party, Griffis/Blessing, Inc. (the
"Purchaser"), a Colorado corporation. The Purchaser is obligated to deposit
$150,000 into an escrow account as earnest money. The remainder of the purchase
price will be payable in cash at closing, expected to be August 15, 1996. From
the proceeds of the sale, the Partnership will pay the outstanding balance of
the first mortgage loan, which is expected to be approximately $3,073,000 at
closing, closing costs and $220,000 to an unaffiliated party as a brokerage
commission. Neither the General Partner nor its affiliates will receive a
brokerage commission in connection with the sale of the property. The General
Partner will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
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.
(10) Agreement of Sale and attachment thereto relating to the sale of Greentree
Village Apartments, Colorado Springs, Colorado, is attached hereto.
(27) Financial Data Schedule of the Registrant for the quarter ending March 31,
1996 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 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 EQUITY PROPERTIES LTD.-VIII
By: /s/Thomas E. Meador
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of BRI
Partners-79, the General Partner
By: /s/Brian Parker
-----------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of BRI Partners-79, the General
Partner
Date: May 15, 1996
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<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 2 day of May, 1996, by and between
GRIFFIS/BLESSING, INC., a Colorado corporation ("Purchaser") and GREENTREE
VILLAGE PARTNERS LIMITED PARTNERSHIP, an Illinois Limited Partnership
("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Eight Million Eight Hundred Thousand and No/100 Dollars
($8,800,000.00) ("Purchase Price"), that certain property ("Property") in
Colorado Springs, Colorado, more particularly described on Exhibit A attached
hereto, which Property is known as Greentree Village Apartments. Included in
the Purchase Price is the following:
a. That certain real property ("Real Property") in Colorado Springs,
Colorado, and more particularly described on Exhibit A attached hereto,
together with improvements thereon consisting of an 18 building/216 unit
apartment complex, pool, party rooms, parking and other amenities
("Improvements"), which is known as Greentree Village Apartments;
b. All of Seller's right, title and interest in and to any and all the
personal property set forth on Exhibit B which shall be transferred to
Purchaser at Closing (as hereinafter defined) by a Bill of Sale ("Personal
Property");
c. All of Seller's right, title and interest in and to any and all
utility taps, licenses, permits, contract rights, warranties, guarantees, and
all variations thereof (except reimbursements), and in any and all other
intangible personal property associated with or related to the Real Property or
the Improvements ("Intangibles");
d. All of Seller's right, title and interest in and to any and all
contracts and all other intangible personal property associated with or related
to the Real Property and Improvements ("Service Contracts"); and
e. All tenants leases and security deposits at the Real Property
described on Exhibit K ("Leases"). The Real Property and Improvements,
Personal Property, Intangibles, Service Contracts and Leases are collectively
called the "Property".
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $150,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term is
defined in the Escrow Agreement), by and in accordance with the provisions of
the Escrow Agreement ("Escrow Agreement") attached hereto as Exhibit C;
b. On the Closing Date (as hereinafter defined), $8,800,000.00
(inclusive of all Earnest Money) adjusted in accordance with the prorations by
federally wired "immediately available" funds delivered to the Title Insurer
(as hereinafter defined) no later than 12:00 Noon Central Time on the Closing
Date. If the funds are not received by the Title Insurer by 12:00 Noon Central
Time, then, on the Closing Date, Purchaser shall pay Seller an amount equal to
any additional mortgage per diem interest costs incurred by the Seller.
<PAGE>
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit D is a title commitment dated March 4,
1996 ("Title Commitment") for an owner's standard coverage title insurance
policy ("Title Policy") issued by Lawyers Title Insurance Corporation ("Title
Insurer"). The owner's Title Policy issued at Closing will be in the amount of
the Purchase Price subject only to real estate taxes not yet due and payable,
and the special title exceptions set forth in Schedule B-Section 2, Numbers 1,
2, 6 through 16 of the Title Commitment. All of the above are herein referred
to as the "Permitted Exceptions". The Title Commitment shall be conclusive
evidence of good title as therein shown as to all matters insured by the
policy, subject only to the exceptions therein stated. On the Closing Date,
Seller shall cause the Title Insurer to issue the Title Policy or a "marked up"
commitment in conformity with the Title Commitment. Seller shall pay the costs
of the Title Policy; however, Purchaser shall pay the costs of "extended
coverage" or any special endorsements which Purchaser requires.
b. Purchaser acknowledges receipt of a survey ("Survey") of the Property
prepared by Rocky Mountain Land Services dated February 28, 1994. Prior to the
Closing, Seller will have the Survey updated and certified to the Purchaser and
the Title Insurer. Seller shall pay the cost of the updated Survey. However,
if Purchaser requires any additional survey work, Purchaser shall pay for the
cost of such additional work. If the updated Survey discloses matters which
are not reflected on the original Survey and which would prevent the Title
Insurer from deleting the survey exception from the Title Policy ("Survey
Defects"), then upon notice delivered to Seller by Purchaser within five (5)
days after receipt of the updated Survey, Seller shall either cause the Survey
Defects to be removed from the updated Survey or cause the Title Insurer to
insure against loss or damage resulting from the Survey Defects ("Title
Indemnity"). If Seller is unwilling to (i) have the Survey Defects removed
from the updated Survey or (ii) cause the Title Insurer to issue a Title
Indemnity to Purchaser within five (5) days after receipt of notice from
Purchaser of the Survey Defects, then Purchaser shall have the right to elect
to terminate this Agreement. Purchaser shall notify Seller of its election
within three (3) days after receipt of notice from Seller that the Survey
Defects will not be removed or that the Title Insurer will not issue the Title
Indemnity. If Purchaser fails to make the election within the aforesaid three
(3) days, then it shall be conclusively presumed that Purchaser has elected to
take title to the Property subject to the Survey Defects. If Purchaser elects
to terminate this Agreement pursuant to this Paragraph, then the Earnest Money
plus all accrued interest shall be delivered to Purchaser.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple title
to the Property by Special Warranty Deed ("Deed") in recordable form subject
only to the Permitted Exceptions. If Seller is unable to convey title to the
Property subject only to the Permitted Exceptions because of the existence of
an additional title exception ("Unpermitted Exception"), then Purchaser can
elect to take title to the Property subject to the Unpermitted Exception or
terminate this Agreement. If Purchaser elects to terminate this Agreement,
then the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall equally share the
costs of the documentary stamps (if any) to be paid with reference to the Deed
and all other stamps, intangible, documentary, recording, sales tax and surtax
imposed by law with reference to any other documents delivered in connection
with this Agreement.
<PAGE>
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior to
the Closing Date and can be repaired or restored in the case of Real Property
for $100,000 or less, or in the case of Personal Property, for $10,000 or less,
then Seller shall commence the repair or restoration in an expeditious manner,
in which event the Closing Date will be extended until such date as may
reasonably be required to complete the repair or restoration in a good and
workmanlike manner. Seller shall retain all insurance proceeds. If the cost
of repair or restoration exceeds the amounts stated above, then Seller can
elect to either: (a) repair and restore same upon prior notice to Purchaser
served within twenty (20) business days of such casualty and provided Purchaser
has elected in writing to not terminate this Agreement in its sole discretion,
in which event the Closing Date will be extended until such date as may
reasonably be required to complete the repair or restoration; or (b) terminate
this Agreement upon notice to Purchaser served within twenty (20) business days
of such casualty. If Seller elects to terminate this Agreement pursuant to
this Paragraph, then Purchaser will have the option to accept the Property in
its damaged condition together with an assignment from Seller of all insurance
proceeds and receive a credit at Closing in the amount of the deductible,
provided Purchaser notifies Seller by notice served within twenty (20) days
after receipt of Seller's notice of election to terminate.
b. If condemnation proceedings ("Proceedings") are instituted against
the Property and the parties reasonably believe that such Proceedings will
result in an award in excess of $100,000.00, then Purchaser can elect to either
take the Property subject to the Proceedings and an assignment of Seller's
interest in the Proceedings or terminate this Agreement. If Purchaser elects
to terminate this Agreement, it shall be by notice to the Seller within five
(5) days after Seller notifies Purchaser of the Proceedings.
c. If the Agreement is terminated pursuant to this Paragraph, then the
Earnest Money plus all accrued interest shall be delivered to the Purchaser.
7. AS-IS CONDITION.
a. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspection and investigations of the Property
and that Purchaser will be purchasing the Property "AS IS" and "WITH ALL
FAULTS" based upon the condition of the Property as of the date of this
Agreement, subject to reasonable wear and tear and loss by fire or other
casualty or condemnation from the date of this Agreement until the Closing
Date. Without limiting the foregoing, Purchaser acknowledges that, except as
may otherwise be specifically set forth elsewhere in this Agreement or the
Deed, neither Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements, the existence or nonexistence of
asbestos, lead in water, lead in paint, radon, underground or above ground
storage tanks, petroleum, toxic waste or any Hazardous Materials or Hazardous
Substances (as such terms are defined below), the tenants of the Property or
the leases affecting the Property, economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning, environmental or building laws, rules or regulations
affecting the Property. Seller makes no representation that the Property
<PAGE>
complies with Title III of the Americans With Disabilities Act or any fire
codes or building codes. Purchaser hereby releases Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and Purchaser hereby agrees not to assert any claims, for damage, loss,
compensation, contribution, cost recovery or otherwise, against Seller, whether
in tort, contract, or otherwise, relating directly or indirectly to the
existence of asbestos or Hazardous Materials or Hazardous Substances on, or
environmental conditions of, the Property, or arising under the Environmental
Laws (as such term is hereinafter defined), or relating in any way to the
quality of the indoor or outdoor environment at the Property. This release
shall survive the Closing. As used herein, the term "Hazardous Materials" or
"Hazardous Substances" means (i) hazardous wastes, hazardous materials,
hazardous substances, hazardous constituents, toxic substances or related
materials, whether solids, liquids or gases, including but not limited to
substances defined as "hazardous wastes," "hazardous materials," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 1101 et seq.; the
Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum,
(B) refined petroleum products, (C) waste oil, (D) waste aviation or motor
vehicle fuel, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon,
(H) Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller from any liability with respect
to such historical information.
<PAGE>
8. CLOSING. The closing ("Closing") of this transaction shall be on
August 15, 1996 ("Closing Date"), at the office of Lawyers Title Insurance
Corporation, 555 East Pikes Peak Avenue, Suite 120, Colorado Springs, Colorado
80903, phone number 719/636-5091, at which time Seller shall deliver possession
of the Property to Purchaser.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an executed
closing statement, the balance of the Purchase Price, and such other documents
as may be reasonably required in order to consummate the transaction as set
forth in this Agreement.
b. On the Closing Date, Seller shall deliver to Purchaser possession of
the Property; the Deed (in the form of Exhibit E attached hereto) subject to
the Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
an inventory of the Personal Property and a Bill of Sale for the same (in the
form of Exhibit F attached hereto); an executed closing statement; an executed
assignment and assumption of all Service Contracts (in the form of Exhibit G
attached hereto); an executed assignment and assumption of all leases and
security deposits (in the form of Exhibit H attached hereto); updated and
certified rent roll; a notice to the tenants of the transfer of title and the
assumption by Purchaser of the landlord's obligations under the leases and the
obligation to refund the security deposits (in the form of Exhibit I attached
hereto); a non-foreign affidavit (in the form of Exhibit J attached hereto); an
executed Assignment of Intangibles (in the form of Exhibit M attached hereto);
and such other documents as may be reasonably required by the Title Insurer in
order to consummate the transaction as set forth in this Agreement.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. SUBJECT TO PARAGRAPHS AND WITH RESPECT TO THE APPROVAL
PERIOD AND MORTGAGE CONTINGENCY DATE CONTINGENCIES, IN THE EVENT OF A MATERIAL
DEFAULT OF THE PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER SHALL
RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT
TO DAMAGES OR ANY OTHER REMEDY. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL
DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE
PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RIGHT TO RECOVER ACTUAL THIRD
PARTY COSTS IN AN AMOUNT NOT TO EXCEED $150,000.00 AND THE RETURN OF ALL
EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT
SHALL TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER
AT LAW OR IN EQUITY. HOWEVER, IF SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER
THE DEED AND THE OTHER DOCUMENTS REQUIRED TO BE DELIVERED AT CLOSING, THEN
PURCHASER MAY SUE FOR SPECIFIC PERFORMANCE.
<PAGE>
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); refundable security deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing); water and other
utility charges; fuels; prepaid operating expenses; management fees in the
amount of 5% of collections; real and personal property taxes; and other
similar items shall be adjusted ratably as of 11:59 P.M. on the day before
Closing Date ("Proration Date"), and credited or debited to the balance of the
cash due at Closing. If for any reason the Proration Date is earlier than the
Closing Date, then for the period from the Proration Date through the Closing
Date, Purchaser shall be entitled to the benefit of all of the income from the
Property and shall bear the burden of all of the operating expenses of the
Property, including, but not limited to, insurance, service contracts, employee
wages and benefits, management fees, utility costs and interest on the existing
mortgages encumbering the Property (if any). If the amount of any of the items
to be prorated is not then ascertainable, the adjustment thereof shall be on
the basis of the most recent ascertainable data. All prorations will be final
except as to Delinquent Rents referred to in b below. If special assessments
have been levied against the Property for completed improvements, then the
amount of any installments which are due prior to the Closing Date shall be
paid by the Seller; and the amount of installments which are due after the
Closing Date shall be paid by the Purchaser. All assessments for incomplete
improvements shall be paid by Purchaser.
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in arrears
("Delinquent Rent"), then any Delinquent Rent received by Purchaser within
thirty (30) days of Closing shall be paid to Seller. All other Delinquent Rent
shall remain property of the Purchaser. This subparagraph of this Agreement
shall survive the Closing and the delivery and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of recording
by Purchaser shall be an act of default hereunder by Purchaser and shall be
subject to the provisions of Paragraph .
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph . Seller hereby consents to an
assignment to an entity, the ownership and control of which is held by the same
persons owning and controlling Purchaser, provided such assignment is effected
prior to the expiration of the Mortgage Contingency Date.
15. BROKER.
a. The parties hereto acknowledge that CB Commercial Real Estate Group,
Inc. ("Broker") is the only real estate broker involved in this transaction.
Seller agrees to pay Broker a commission or fee ("Fee") pursuant to a listing
agreement between Seller and Broker. However, this Fee is due and payable only
from the proceeds of the Purchase Price received by Seller. Purchaser has not
paid and will not pay before, at or after the Closing any fees, commissions or
compensation to any person directly or indirectly on account of this Agreement,
its negotiation or the sale contemplated hereby which would exceed 3.5% in the
aggregate of the gross Purchase Price. Purchaser agrees to indemnify, defend
and hold harmless the Seller and any partner, affiliate, parent of Seller, and
all shareholders, employees, officers and directors of Seller or Seller's
partner, parent or affiliate (each of the above is individually referred to as
a "Seller Indemnitee") from all claims, including attorneys' fees and costs
<PAGE>
incurred by a Seller Indemnitee as a result of anyone's claiming by or through
Purchaser any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated. Purchaser does now and shall at
all times consent to a Seller Indemnitee's selection of defense counsel.
Seller agrees to indemnify, defend and hold harmless the Purchaser and all
shareholders, employees, officers and directors of Purchaser or Purchaser's
parent or affiliate (each of the above is individually referred to as a
"Purchaser Indemnitee") from all claims, including attorneys' fees and costs
incurred by a Purchaser Indemnitee as a result of anyone's claiming by or
through Seller any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated. Seller does now
and shall at all times consent to a Purchaser Indemnitee's selection of defense
counsel.
b. Seller acknowledges that Purchaser and/or its principals are real
estate brokers licensed in the states of Colorado and/or California. Seller
also acknowledges that certain principals of Purchaser are affiliated with (as
agents or brokers) the Broker. Seller also acknowledges that Purchaser and/or
principals of Purchaser have no agency relationship or fiduciary duty to
Seller.
16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered (or will make available) to Purchaser copies of
the most recent available tax bills, rent rolls, Survey, Leases (which are
available for inspection and copying at the Property), insurance premiums,
Service Contracts, and all of Seller's books and records pertaining to the
operation and management of the Property (which are available for inspection
and copying at the Property) (collectively the "Documents"). All of the
Documents shall be subject to approval by Purchaser by the close of business
(5:00 P.M. Central Time) on May 31, 1996 ("Approval Period"). During the
Approval Period, upon reasonable notice to the Seller, the Purchaser shall have
the right to inspect and approve the condition of the Property, including the
interior of the apartments, during normal business hours. Purchaser, its
engineers, architects, employees, contractors and agents shall maintain public
liability insurance policies insuring against claims arising as a result of the
inspections of the Property being conducted by Purchaser. Prior to commencing
any tests, studies and investigations, Purchaser shall deliver to Seller a
certificate of insurance evidencing the existence of the aforesaid policies and
naming Seller as an additional insured. Purchaser agrees to indemnify, defend,
protect and hold Seller harmless from any and all loss, costs, including
attorneys' fees, liability or damages which Seller may incur or suffer as a
result of Purchaser's conducting its inspection and investigation of the
Property including the entry of Purchaser, its employees or agents and its
lender onto the Property, including without limitation, liability for
mechanics' lien claims.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
<PAGE>
c. If Purchaser disapproves the Documents or the condition of the
Property, which disapproval may be in its sole discretion, it must be by a
notice ("Notice of Disapproval") delivered to Seller and the Escrow Agent prior
to the expiration of the Approval Period. The Notice of Disapproval delivered
to Seller shall be accompanied with copies of all reports ("Reports") which
Purchaser has received during the Approval Period. Upon receipt of the Notice
of Disapproval and copies of the Reports, the Earnest Money plus the interest
accrued thereon shall be returned to the Purchaser. If Purchaser does not
deliver a Notice of Disapproval and copies of the Reports to Seller, then it
shall be conclusively presumed that Purchaser has approved the Documents and
the condition of the Property and all Earnest Money plus the interest accrued
thereon shall belong to Seller unless Seller is in default hereunder or unless
Purchaser is unable to obtain a mortgage loan pursuant to Paragraph below.
17. MORTGAGE CONTINGENCY. Purchaser's obligations to consummate the
acquisition of the Property is subject to and conditioned upon Purchaser's
obtaining, in Purchaser's sole and reasonable discretion, a non-recourse
mortgage loan in the amount of $6,600,000.00 with an interest rate not to
exceed 8% and with an amortization period not less than 25 years.
Simultaneously with its submission of an application for a mortgage loan
commitment to a lender, Purchaser shall deliver a copy of that application to
the Seller. Upon receipt of a written response to any application for a
mortgage, Purchaser shall deliver a copy of that response to Seller. If
Purchaser is unable to obtain a satisfactory mortgage loan commitment on or
before July 1, 1996 ("Mortgage Contingency Date"), then upon a Mortgage
Contingency Notice (Exhibit A-1 in the Escrow Agreement) delivered to Seller
and Escrow Agent no later than 5:00 P.M. Central Time on July 1, 1996,
Purchaser can elect to terminate this Agreement. In such event, the Earnest
Money plus all accrued interest thereon shall be returned to Purchaser.
18. SURVIVAL OF PURCHASER'S INDEMNITY. Notwithstanding anything in this
Agreement to the contrary, Purchaser's obligation to indemnify, defend and hold
Seller harmless under various provisions of this Agreement shall forever
survive the termination of this Agreement or the Closing and delivery and
recording of the Deed.
19. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. Any reference herein to Seller's knowledge, representation, warranty
or notice of any matter or thing, shall only mean such knowledge or notice that
has actually been received by Phillip Schechter and Gregg Handrich (the asset
manager), and any representation or warranty of the Seller is based upon those
matters of which Phillip Schechter or Gregg Handrich has actual knowledge. Any
knowledge or notice given, had or received by any of Seller's agents, servants
or employees shall not be imputed to Seller or the individual partners or the
general partner of Seller.
b. Subject to the limitations set forth in subparagraph a above, Seller
hereby makes the following representations, warranties and covenants, all of
which are made to the best of Seller's knowledge, and which shall survive the
Closing and delivery of the Deed for a period of ninety (90) days:
i. The present use and occupancy of the Property conform with
applicable building and zoning laws and Seller has received no written notice
that any such laws, rules or regulations are being violated.
<PAGE>
ii. The rent roll ("Rent Roll") attached hereto as Exhibit K which
will be updated as of the Closing Date is true and accurate.
iii. Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the Property.
iv. Seller has not received any written notice from any governmental
authority that the Property contains Hazardous Materials or Hazardous
Substances.
v. Attached hereto as Exhibit N is a list of all Service Contracts
affecting the Property.
c. Seller covenants that:
i. The management, operation, leasing and maintenance of the
Property, as presently conducted by the Seller, shall continue until the
Closing Date.
d. If on or prior to the Closing Date, Seller discovers that a
representation or warranty is untrue, then upon receipt of notice from Seller,
Purchaser can elect to terminate this Agreement or take title to the Property
subject to the untrue representation or warranty.
20. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit L is a list
of reports ("Reports") of the Property, which Seller has delivered to
Purchaser, at Purchaser's request. Seller makes no representation or warranty
that the Reports are accurate or complete. Purchaser hereby releases Seller
from any liability whatsoever with respect to the Reports, including, without
limitation, the matters set forth in the Reports or the accuracy and/or
completeness of the Reports.
20-A See page 20-1 attached hereto and incorporated herein.
21. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability. The provisions of this Paragraph shall also apply
to the Assignment of Leases (Exhibit H) notwithstanding that it has been
omitted therefrom.
22. PURCHASER'S ORGANIZATIONAL DOCUMENTS. At least ten (10) days prior to the
Closing Date, Purchaser will provide Seller's attorney with copies of its
organizational documents, including a certified copy of its recorded
certificate of limited partnership and a true copy of its Partnership Agreement
or a certified copy of its Articles of Incorporation, corporate resolutions
authorizing the transaction, and an incumbency certificate, whichever is
applicable.
23. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
24. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
<PAGE>
20-A. SELLER'S COOPERATION - 1031 EXCHANGES. Seller agrees to cooperate with
Purchaser to affect one or more IRS Code Section 1031 tax deferred exchanges,
provided there shall be no added cost, liability or delay hereunder to Seller
as a result of such cooperation.
- 20-1 -
<PAGE>
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
847/267-1600
847/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
TO PURCHASER: Ian C. Griffis
Griffis/Blessing
102 N. Cascade Ave.
Fifth Floor
Colorado Springs, Colorado 80903
719/520-1234
719/520-1204 (FAX)
with a copy to: Gilbert G. Weiskopf
Braden, Frindt, Stinar & Stageman L.L.C.
102 N. Cascade
Suite 350
Colorado Springs, Colorado 80903
719/635-4200
719/635-2493 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before 5:00 P.M. Central Time
or the next day if sent by facsimile after 5:00 P.M. Central Time, or on the
4th business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
<PAGE>
25. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute three
(3) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent. Seller will forward one (1) copy of the executed
Agreement to Purchaser and will forward the following to the Escrow Agent:
a. Earnest Money;
b. One (1) fully executed copy of this Agreement; and
c. Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to the Purchaser and the Seller.
26. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of Colorado.
27. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
28. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
29. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of the
date set forth above.
Executed by Purchaser on PURCHASER:
May 2, 1996.
GRIFFIS/BLESSING, INC., a Colorado
corporation
By: /s/Ian C. Griffis Co-Chair
-------------------------------
Executed by Seller on SELLER:
May 6, 1996.
GREENTREE VILLAGE PARTNERS LIMITED
PARTNERSHIP, an Illinois limited
partnership
By: BRI Partners-79, an Illinois general
partnership, the general partner
By: RGF-Balcor Associates, an Illinois
general partnership, a partner
By: The Balcor Company, a Delaware
corporation, a partner
By: /s/Phillip Schechter
---------------------------------
Authorized agent
Greentree Village
CB Commercial Real Estate Group, Inc. ("Broker") executes this Agreement in its
capacity as a real estate broker and acknowledges that the fee or commission
("Fee") due to it as a result of the transaction described in this Agreement is
the amount as set forth in the listing agreement between Broker and Seller.
Broker also acknowledges that payment of the aforesaid Fee is conditioned upon
the Closing and the receipt of the Purchase Price by the Seller. Broker agrees
to deliver a receipt to the Seller at the Closing for the Fee and a release
stating that no other fees or commissions are due to Broker from Seller or
Purchaser.
CB COMMERCIAL REAL ESTATE GROUP,
INC.
By: ___________________________________
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Rent Roll
L - Reports
M - Assignment of Intangibles
N - List of Service Contracts
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 610
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1145
<PP&E> 21844
<DEPRECIATION> (11629)
<TOTAL-ASSETS> 11796
<CURRENT-LIABILITIES> 297
<BONDS> 15184
0
0
<COMMON> 0
<OTHER-SE> (3685)
<TOTAL-LIABILITY-AND-EQUITY> 11796
<SALES> 0
<TOTAL-REVENUES> 1401
<CGS> 0
<TOTAL-COSTS> 667
<OTHER-EXPENSES> 242
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 361
<INCOME-PRETAX> 131
<INCOME-TAX> 0
<INCOME-CONTINUING> 131
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131
<EPS-PRIMARY> 4.32
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