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, 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
June 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
--------------- ---------------
Cash and cash equivalents $ 596,456 $ 542,128
Escrow deposits - unrestricted 407,949 803,873
Escrow deposits - restricted 115,533 94,709
Prepaid expenses 156,502 64,199
Deferred expenses, net of accumulated
amortization of $174,147 in 1996 and
$147,229 in 1995 422,435 449,353
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1,698,875 1,954,262
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Investment in real estate
Land 1,325,898 1,325,898
Buildings and improvements 20,518,019 20,518,019
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21,843,917 21,843,917
Less accumulated depreciation 11,794,778 11,462,726
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Investment in real estate, net of
accumulated depreciation 10,049,139 10,381,191
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$ 11,748,014 $ 12,335,453
=============== ===============
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 31,951 $ 45,964
Due to affiliates 27,193 19,344
Accrued liabilities, principally
real estate taxes 258,561 551,280
Security deposits 93,853 96,931
Mortgage notes payable 15,154,882 15,212,762
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Total liabilities 15,566,440 15,926,281
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Limited Partners' deficit (30,005
Interests issued and outstanding (3,594,355) (3,366,783)
General Partner's deficit (224,071) (224,045)
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Total partners' deficit (3,818,426) (3,590,828)
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$ 11,748,014 $ 12,335,453
=============== ===============
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, 1996 and 1995
(Unaudited)
1996 1995
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Income:
Rental and service $ 2,763,024 $ 2,986,216
Interest on short-term investments 14,377 99,487
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Total income 2,777,401 3,085,703
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Expenses:
Interest on mortgage notes payable 721,699 726,907
Depreciation 332,052 321,314
Amortization of deferred expenses 26,918 26,918
Property operating 1,169,408 1,149,829
Real estate taxes 224,403 278,824
Property management fees 137,329 144,752
Administrative 168,152 154,276
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Total expenses 2,779,961 2,802,820
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Net (loss) income $ (2,560) $ 282,883
=============== ===============
Net (loss) income allocated to
General Partner $ (26) $ 2,829
=============== ===============
Net (loss) income allocated to
Limited Partners $ (2,534) $ 280,054
=============== ===============
Net (loss) income per Limited
Partnership Interest
(30,005 issued and outstanding) $ (0.08) $ 9.33
=============== ===============
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 INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Income:
Rental and service $ 1,367,646 $ 1,490,628
Interest on short-term investments 8,648 48,343
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Total income 1,376,294 1,538,971
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Expenses:
Interest on mortgage notes payable 360,534 363,014
Depreciation 166,026 160,458
Amortization of deferred expenses 13,459 13,459
Property operating 668,231 609,353
Real estate taxes 129,280 140,644
Property management fees 66,919 70,103
Administrative 105,212 91,638
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Total expenses 1,509,661 1,448,669
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Net (loss) income $ (133,367) $ 90,302
=============== ===============
Net (loss) income allocated to
General Partner $ (1,334) $ 903
=============== ===============
Net (loss) income allocated to
Limited Partners $ (132,033) $ 89,399
=============== ===============
Net (loss) income per Limited
Partnership Interest
(30,005 issued and outstanding) $ (4.40) $ 2.98
=============== ===============
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, 1996 and 1995
(UNAUDITED)
1996 1995
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Operating activities:
Net (loss) income $ (2,560) $ 282,883
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities
Depreciation of properties 332,052 321,314
Amortization of deferred expenses 26,918 26,918
Net change in:
Escrow deposits - unrestricted 395,924 120,161
Escrow deposits - restricted (20,824) (21,362)
Accounts and accrued interest
receivable (7,987)
Prepaid expenses (92,303)
Accounts payable (14,013) (2,799)
Due to affiliates 7,849 (44,526)
Accrued liabilities (292,719) (273,315)
Security deposits (3,078) 5,185
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Net cash provided by operating
activities 337,246 406,472
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Financing activities:
Distribution to Limited Partners (225,038)
Principal payments on mortgage notes (57,880) (52,719)
payable
Releases of escrow deposits -
restricted 14,000
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Net cash used in financing activities (282,918) (38,719)
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Net change in cash and cash equivalents 54,328 367,753
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 $ 596,456 $ 3,356,596
=============== ===============
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, 1996, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1996 and 1995, the Partnership incurred
and paid interest expense on mortgage notes payable of $721,699 and $726,907,
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, 1996 are:
Paid
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Six Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $ 45,068 $ 31,000 $ 27,193
<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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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. 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. These
were the principal reasons a net loss was recognized during the six months and
quarter ended June 30, 1996 as compared to net income during the same periods
in 1995. Further discussion of the Partnership's operations is summarized
below.
1996 Compared to 1995
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Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the quarters ended June 30, 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 properties are experiencing increased competition from new
construction of single and multi-family housing. 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.
<PAGE>
The Partnership incurred higher printing and postage costs in connection with
its response to a tender offer during the first quarter of 1996. As a result,
administrative expenses increased during 1996 as compared to 1995.
Liquidity and Capital Resources
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The cash position of the Partnership increased by approximately $54,000 as of
June 30, 1996 when compared to December 31, 1995. The Partnership generated
cash flow from operating activities of approximately $337,000, 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 two of
the Partnership's five properties generated positive cash flow, and during 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. The Cedar Creek - Phase I and II apartment complexes
generated marginal cash flow deficits during 1996 and positive cash flow during
1995. The decrease is due to reduced occupancy and rental rates at these
apartment complexes. The San Antonio market has experienced an increase in
construction of new single and multi-family housing that has increased
competition for tenants. The average occupancy rate for this market is
currently 91%. As of June 30, 1996, the occupancy rates of the Partnership's
four properties located in the San Antonio market ranged from 80% to 93%. The
Greentree Village Apartments occupancy rate was 99%.
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 Partnership has entered into a contract to sell the Greentree Village
Apartments for a sale price of $8,800,000, but currently is not actively
marketing the remaining properties in its portfolio due to weakness in the San
Antonio market.
<PAGE>
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. Distributions will commence when the Partnership has appropriate
cash reserves to meet cash or liquidity requirements which may occur. 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 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 incorporated herein by
reference.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1996 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the six
months ended June 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 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
-----------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of BRI Partners-79, the General
Partner
Date: August 13, 1996
--------------------
<PAGE>
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