SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1997
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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
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3011615
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEETS
June 30, 1997 and December 31, 1996
(UNAUDITED)
ASSETS
1997 1996
--------------- ---------------
Cash and cash equivalents $ 3,454,564 $ 1,588,218
Escrow deposits 413,063 742,334
Accounts and accrued interest receivable 7,091 194,163
Prepaid expenses 53,417
Deferred expenses, net of accumulated
amortization of $118,972 in 1997 and
$180,390 in 1996 143,252 293,887
--------------- ---------------
4,017,970 2,872,019
--------------- ---------------
Investment in real estate
Land 563,288 929,151
Buildings and improvements 6,592,720 14,693,197
--------------- ---------------
7,156,008 15,622,348
Less accumulated depreciation 3,172,089 8,269,165
--------------- ---------------
Investment in real estate, net of
accumulated depreciation 3,983,919 7,353,183
--------------- ---------------
$ 8,001,889 $ 10,225,202
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable $ 36,990 $ 45,120
Due to affiliates 50,166 53,729
Accrued liabilities, principally
real estate taxes 131,882 463,870
Security deposits 29,666 76,035
Mortgage notes payable 6,930,744 12,028,777
--------------- ---------------
Total liabilities 7,179,448 12,667,531
--------------- ---------------
Commitments and contingencies
Limited Partners' capital (deficit)
(30,005 Interests issued and
outstanding) 843,077 (2,274,026)
General Partner's deficit (20,636) (168,303)
--------------- ---------------
Total partners' capital (deficit) 822,441 (2,442,329)
--------------- ---------------
$ 8,001,889 $ 10,225,202
=============== ===============
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, 1997 and 1996
(UNAUDITED)
1997 1996
--------------- ---------------
Income:
Rental and service $ 1,926,250 $ 2,763,024
Interest on short-term investments 61,362 14,377
--------------- ---------------
Total income 1,987,612 2,777,401
--------------- ---------------
Expenses:
Interest on mortgage notes payable 553,675 721,699
Depreciation 231,604 332,052
Amortization of deferred expenses 25,170 26,918
Property operating 1,109,735 1,169,408
Real estate taxes 228,920 224,403
Property management fees 90,288 137,329
Administrative 144,826 168,152
--------------- ---------------
Total expenses 2,384,218 2,779,961
--------------- ---------------
Loss before gain on sale of
properties and extraordinary item (396,606) (2,560)
Gain on sale of properties 3,887,799
--------------- ---------------
Income (loss) before extraordinary item 3,491,193 (2,560)
Extraordinary item:
Debt extinguishment expenses (226,423)
--------------- ---------------
Net income (loss) $ 3,264,770 $ (2,560)
=============== ===============
Income (loss) before extraordinary item
allocated to General Partner $ 157,908 $ (26)
=============== ===============
Income (loss) before extraordinary item
allocated to Limited Partners $ 3,333,285 $ (2,534)
=============== ===============
Income (loss) before extraordinary item
per Limited Partnership Interest
(30,005 issued and outstanding) $ 111.09 $ (0.08)
=============== ===============
Extraordinary item allocated to
General Partner $ (10,241) None
=============== ===============
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1997 and 1996
(UNAUDITED)
(CONTINUED)
Extraordinary item allocated to
Limited Partners $ (216,182) None
=============== ===============
Extraordinary item per Limited
Partnership Interest (30,005
issued and outstanding) $ (7.20) None
=============== ===============
Net income (loss) allocated to
General Partner $ 147,667 $ (26)
=============== ===============
Net income (loss) allocated to
Limited Partners $ 3,117,103 $ (2,534)
=============== ===============
Net income (loss) per Limited
Partnership Interest
(30,005 issued and outstanding) $ 103.89 $ (0.08)
=============== ===============
Distribution to Limited Partners None $ 225,038
=============== ===============
Distribution per Limited Partnership
Interest None $ 7.50
=============== ===============
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, 1997 and 1996
(UNAUDITED)
1997 1996
--------------- ---------------
Income:
Rental and service $ 924,920 $ 1,367,646
Interest on short-term investments 24,775 8,648
--------------- ---------------
Total income 949,695 1,376,294
--------------- ---------------
Expenses:
Interest on mortgage notes payable 273,895 360,534
Depreciation 114,320 166,026
Amortization of deferred expenses 12,585 13,459
Property operating 607,348 668,231
Real estate taxes 112,952 129,280
Property management fees 39,182 66,919
Administrative 84,236 105,212
--------------- ---------------
Total expenses 1,244,518 1,509,661
--------------- ---------------
Loss before gain on sale of
properties and extraordinary item (294,823) (133,367)
Gain on sale of properties 3,887,799
--------------- ---------------
Income (loss) before extraordinary item 3,592,976 (133,367)
Extraordinary item:
Debt extinguishment expenses (226,423)
--------------- ---------------
Net income (loss) $ 3,366,553 $ (133,367)
=============== ===============
Income (loss) before extraordinary item
allocated to General Partner $ 158,926 $ (1,334)
=============== ===============
Income (loss) before extraordinary item
allocated to Limited Partners $ 3,434,050 $ (132,033)
=============== ===============
Income (loss) before extraordinary item
per Limited Partnership Interest
(30,005 issued and outstanding) $ 114.44 $ (4.40)
=============== ===============
Extraordinary item allocated to
General Partner $ (10,241) None
=============== ===============
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1997 and 1996
(UNAUDITED)
(CONTINUED)
Extraordinary item allocated to
Limited Partners $ (216,182) None
=============== ===============
Extraordinary item per Limited
Partnership Interest (30,005
issued and outstanding) $ (7.20) None
=============== ===============
Net income (loss) allocated to
General Partner $ 148,685 $ (1,334)
=============== ===============
Net income (loss) allocated to
Limited Partners $ 3,217,868 $ (132,033)
=============== ===============
Net income (loss) per Limited
Partnership Interest
(30,005 issued and outstanding) $ 107.24 $ (4.40)
=============== ===============
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, 1997 and 1996
(UNAUDITED)
1997 1996
--------------- ---------------
Operating activities:
Net income (loss) $ 3,264,770 $ (2,560)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Gain on sale of properties (3,887,799)
Debt extinguishment expenses 125,465
Depreciation of properties 231,604 332,052
Amortization of deferred expenses 25,170 26,918
Net change in:
Escrow deposits - unrestricted 429,271 395,924
Escrow deposits - restricted (20,824)
Accounts and accrued interest
receivable 187,072
Prepaid expenses 53,417 (92,303)
Accounts payable (8,130) (14,013)
Due to affiliates (3,563) 7,849
Accrued liabilities (331,988) (292,719)
Security deposits (46,369) (3,078)
--------------- ---------------
Net cash provided by operating activities 38,920 337,246
--------------- ---------------
Investing activities:
Proceeds from sales of real estate 7,200,000
Payment of selling costs (174,541)
Funding of escrow in connection with
sales of real estate (100,000)
---------------
Net cash provided by investing activities 6,925,459
---------------
Financing activities:
Distribution to Limited Partners (225,038)
Repayment of mortgage notes payable (5,047,923)
Principal payments on mortgage notes
payable (50,110) (57,880)
--------------- ---------------
Net cash used in financing activities (5,098,033) (282,918)
--------------- ---------------
Net change in cash and cash equivalents 1,866,346 54,328
Cash and cash equivalents at beginning
of period 1,588,218 542,128
--------------- ---------------
Cash and cash equivalents at end of period $ 3,454,564 $ 596,456
=============== ===============
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 Policies:
(a) For financial statement purposes, in previous years partners were allocated
income and loss in accordance with the provisions in the Partnership Agreement.
In order for the capital accounts of the General Partner and Limited Partners
to appropriately reflect their respective remaining economic interests as
provided for in the Partnership Agreement, the General Partner was allocated
additional income in 1997 for financial statement purposes.
(b) 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, 1997, and all such adjustments are of a normal and
recurring nature.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership sold the Greentree Village Apartments in 1996.
During June 1997, the Partnership sold the Cedar Creek-Phases I and II
Apartments. During July 1997, the Partnership sold its remaining two
properties, the Walnut Hills-Phases I and II Apartments. Available proceeds
from these property sales will be distributed to Limited Partners in August
1997. The Partnership will retain a portion of the cash from the sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees stemming from litigation involving the Partnership including,
but not limited to, the lawsuits discussed in Note 7 of Notes to the Financial
Statements. In the absence of any contingency, the reserves will be paid within
twelve months of the last property being sold. In the event a contingency
exists, reserves may be held by the Partnership for a longer period of time.
3. Interest Expense:
During the six months ended June 30, 1997 and 1996, the Partnership incurred
and paid interest expense on mortgage notes payable of $553,675 and $721,669,
respectively.
<PAGE>
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1997 are:
Paid
----------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $ 43,298 $ 32,077 $ 50,166
5. Property sales:
a) In June 1997, the Partnership sold the Cedar Creek-Phase I Apartments in an
all cash sale for $3,232,653. From the proceeds of the sale, the Partnership
paid $2,305,542 to the third party mortgage holder in full satisfaction of the
first mortgage loan, $46,111 in prepayment penalties and $78,403 in selling
costs. The basis of the property was $1,303,018, which is net of accumulated
depreciation of $2,285,616. For financial statement purposes, the Partnership
recognized a gain of $1,851,232 from the sale of this property.
b) In June 1997, the Partnership sold the Cedar Creek-Phase II Apartments in an
all cash sale for $3,967,347. From the proceeds of the sale, the Partnership
paid $2,742,381 to the third party mortgage holder in full satisfaction of the
first mortgage loan, $54,847 in prepayment penalties and $96,138 in selling
costs. The basis of the property was $1,834,642, which is net of accumulated
depreciation of $3,043,064. For financial statement purposes, the Partnership
recognized a gain of $2,036,567 from the sale of this property.
6. Extraordinary item:
In June 1997, the Partnership wrote off the remaining unamortized deferred
financing fees totaling $125,465 and paid prepayment penalties totaling
$100,958 in connection with the sales of the Cedar Creek-Phases I and II
Apartments. These amounts were recognized as an extraordinary item and
classified as debt extinguishment expenses for financial statement purposes.
7. Contingency:
The Partnership is currently involved in two lawsuits whereby the Partnership
and certain affiliates have been named as defendants alleging substantially
similar claims involving certain federal securities law violations with regard
to the adequacy and accuracy of disclosures of information concerning, as well
as marketing efforts related to, the offering of the Limited Partnership
Interests of the Partnership. The defendants continue to vigorously contest
these actions. A plaintiff class has not been certified in either action and,
no determinations of the merits have been made. It is not determinable at this
time whether or not an unfavorable decision in either action would have a
material adverse impact on the financial position, operations or liquidity of
the Partnership. The Partnership believes that it has meritorious defenses to
contest the claims.
<PAGE>
8. Subsequent Events:
(a) In July 1997, the Partnership sold the Walnut Hills-Phase I Apartments
in an all cash sale for $4,528,312. The Partnership used the proceeds from the
sale and $753,849 of the proceeds from the sale of Walnut Hills-Phase II
Apartments, as described below, to repay the $5,059,440 first mortgage loan in
full and in addition, the Partnership paid a prepayment penalty of $101,189 and
$121,532 in selling costs. For financial statement purposes, the Partnership
will recognize a gain of approximately $2,672,000 from the sale of this
property during the third quarter of 1997.
(b) In July 1997, the Partnership sold the Walnut Hills-Phase II Apartments
in an all cash sale for $5,471,688. From the proceeds of the sale, the
Partnership paid $1,871,300 to the third party mortgage holder in full
satisfaction of the first mortgage loan, a prepayment penalty of $37,426 and
$146,767 in selling costs. In addition, $753,849 of the proceeds was used to
repay the first mortgage loan of the Walnut Hills-Phase I Apartments, as
described above. For financial statement purposes, the Partnership will
recognize a gain of approximately $3,076,000 from the sale of this property
during the third quarter of 1997.
<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. The Partnership
has since disposed of all thirteen of these properties. During June 1997, the
Partnership sold the Cedar Creek-Phases I and II Apartments. During July 1997,
the Partnership sold its two remaining properties, the Walnut Hills-Phases I
and II Apartments.
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 1996 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership sold two properties during the second quarter of 1997 and
recognized significant gains on these sales. As a result of these sales, the
Partnership generated income during the six months and quarter ended June 30,
1997 as compared to a net loss during the same periods in 1996. These gains
were partially offset by increased property operating expenses incurred during
1997 in connection with preparing the remaining properties for sale. Further
discussion of the Partnership's operations is summarized below.
1997 Compared to 1996
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1997 and 1996 refer
to both the six months and quarters ended June 30, 1997 and 1996.
In August 1996, the Partnership sold the Greentree Village Apartments,
resulting in a decrease in rental and service income, interest expense on
mortgage notes payable, depreciation, amortization of deferred expenses and
property management fees during 1997 as compared to 1996.
Interest income on short-term investments increased during 1997 when compared
to 1996 due to higher average cash balances resulting from proceeds retained
from the sale of the Greentree Village Apartments in 1996.
<PAGE>
Property operating expense decreased in 1997 by approximately $262,000 as a
result of the sale of Greentree Village Apartments in 1996. During 1997, the
Partnership incurred an increase in property operating expense of approximately
$215,000 at the Cedar Creek-Phases I and II and Walnut Hills-Phases I and II
apartment complexes for leasing costs, payroll, painting, decorating, floor
covering and balcony and roof repairs in connection with preparing the
properties for sale. This increase partially offset the decrease resulting from
the sale of Greentree Village Apartments in 1996. The net effect was a decrease
in property operating expense in 1997 as compared to 1996.
Real estate tax expense increased during the six months ended June 30, 1997
when compared to the same period in 1996 due to an increase in the assessed
values of the Walnut Hills-Phases I and II Apartments, which increased real
estate tax expense by approximately $28,000. This increase was partially offset
by a decrease of approximately $23,000 resulting from the sale of the Greentree
Village Apartments in 1996 and the sales of the Cedar Creek-Phases I and II
Apartments in 1997.
For financial statement purposes, the Partnership recognized gains totaling
$3,887,799 during 1997 in connection with sales of the Cedar Creek-Phases I and
II Apartments.
During 1997, the Partnership wrote off the remaining unamortized deferred
financing fees in connection with the sales of the Cedar Creek-Phases I and II
Apartments totaling $125,465, and paid prepayment penalties in connection with
the sales totaling $100,958. These amounts were recognized as an extraordinary
item and classified as debt extinguishment expenses for financial statement
purposes.
Administrative expenses decreased in 1997 as compared to 1996 primarily due to
printing, postage and investor processing costs incurred during 1996 in
connection with a tender offer.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $1,866,000 as
of June 30, 1997, when compared to December 31, 1996 primarily due to the net
proceeds received from the sales of the Cedar Creek-Phases I and II Apartments.
Cash flow of approximately $39,000 was provided by operating activities
consisting of cash flow from the operations of the Partnership's properties and
interest income on short-term investments, which were partially offset by the
payment of administrative expenses. The Partnership received cash of
approximately $6,925,000 from investing activities consisting of net proceeds
received from the sales of the Cedar Creek-Phases I and II Apartments. The
Partnership used cash in financing activities of approximately $5,098,000
consisting primarily of the repayment of mortgage notes payable in connection
with the sales of the Cedar Creek-Phases I and II Apartments.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit, or a significant deficit, each after
<PAGE>
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. The Walnut
Hills-Phase II Apartments generated positive cash flow during each of 1997 and
1996. The Walnut Hills-Phase I Apartments generated a marginal cash flow
deficit during each of 1997 and 1996; however, the combined property operations
of Walnut Hills-Phases I and II Apartments generated positive cash flow during
each of 1997 and 1996. The Cedar Creek-Phases I and II Apartments generated
marginal cash flow deficits during 1996 and prior to their sales in 1997. The
Greentree Village Apartments, which was sold in August 1996, generated positive
cash flow during 1996. As of June 30, 1997, the occupancy rate was 92% at the
Walnut Hills-Phase I Apartments and 90% at the Walnut Hills-Phase II
Apartments. These properties were sold in July 1997.
The Partnership sold the Greentree Village Apartments in 1996. During June
1997, the Partnership sold the Cedar Creek-Phases I and II Apartments. During
July 1997, the Partnership sold its remaining two properties, the Walnut
Hills-Phases I and II Apartments. Available proceeds from these property sales
will be distributed to Limited Partners in August 1997. The Partnership will
retain a portion of the cash from the sales to satisfy obligations of the
Partnership as well as establish a reserve for contingencies. The timing of the
termination of the Partnership and final distribution of cash will depend upon
the nature and extent of liabilities and contingencies which exist or may
arise. Such contingencies may include legal and other fees stemming from
litigation involving the Partnership including, but not limited to, the
lawsuits discussed in Note 7 of Notes to Financial Statements. In the absence
of any such contingency, the reserves will be paid within twelve months of the
last property sale. In the event a contingency continues to exist or arises,
reserves may be held by the Partnership for a longer period of time.
In June 1997, the Partnership sold the Cedar Creek-Phase I Apartments in an all
cash sale for $3,232,653. From the proceeds of the sale, the Partnership paid
$2,305,542 to the third party mortgage holder in full satisfaction of the first
mortgage loan, a prepayment penalty of $46,111 and $78,403 in selling costs.
The remaining available proceeds less the escrow funds as described below, are
expected to be distributed to the Limited Partners in August 1997. See Note 5
of Notes to Financial Statements for additional information.
In June 1997, the Partnership sold the Cedar Creek-Phase II Apartments in an
all cash sale for $3,967,344. From the proceeds of the sale, the Partnership
paid $2,742,381 to the third party mortgage holder in full satisfaction of the
first mortgage loan, a prepayment penalty of $54,847 and $96,138 in selling
costs. The remaining available proceeds less the escrow funds described below,
are expected to be distributed to the Limited Partners in August 1997. See Note
5 of Notes to Financial Statements for additional information.
At the closing of the Cedar Creek-Phases I and II, Apartments, a total of
$100,000 was placed in escrow, $44,898 of which was allocated to Phase I and
$55,102 of which was allocated to Phase II. The escrow funds were not to be
<PAGE>
disbursed until the later of the settlement of any claims which have been made
by the purchaser or August 1, 1997. Of the escrow amount, approximately $8,500
has been disbursed to the purchaser for claims presented by the purchaser and
approximately $37,500 is expected to be disbursed to the Partnership in August
1997. The remaining $54,000 will remain in the escrow account pending the
resolution of additional claims which have been presented by the purchaser.
In July 1997, the Partnership sold the Walnut Hills-Phase I Apartments in an
all cash sale for $4,528,312. The Partnership used the proceeds from the sale
and $753,849 of the proceeds from the sale of Walnut Hills-Phase II Apartments,
as described below, to repay the $5,059,440 first mortgage loan in full and in
addition, the Partnership paid a prepayment penalty of $101,189 and $121,532 in
selling costs. See Note 8 of Notes to Financial Statements for additional
information.
In July 1997, the Partnership sold the Walnut Hills-Phase II Apartments in an
all cash sale for $5,471,688. From the proceeds of the sale, the Partnership
paid $1,871,300 to the third party mortgage holder in full satisfaction of the
first mortgage loan, a prepayment penalty of $37,426 and $146,767 in selling
costs. In addition, $753,849 of the proceeds was used to repay the first
mortgage loan of the Walnut Hills-Phase I Apartments, as described above. The
remaining available proceeds are expected to be distributed to the Limited
Partners in August 1997. See Note 8 of Notes to Financial Statements for
additional information.
In August 1997, the Partnership expects to make a distribution to the holders
of Limited Partnership Interests representing a special distribution of the
available Net Cash Proceeds from the sales of the Cedar Creek-Phases I and II
and Walnut Hills-Phases I and II apartment complexes. To date, Limited Partners
have received cash distributions totaling $455.57 per $1,000 Interest as well
as certain tax benefits. Of this amount, $173.33 has been Net Cash Receipts and
$282.24 represents Net Cash Proceeds. Investors will not 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
- --------------------------
Walnut Hills-Phase I Apartments
- --------------------------------
As previously reported, on March 31, 1997, the Partnership contracted to sell
Walnut Hills-Phase I Apartments, San Antonio, Texas ("Phase I_), to an
unaffiliated party, Michael P. Morrison, for a sale price of $4,800,000. The
Partnership and the purchaser subsequently agreed to reduce the sale price to
$4,528,312. In addition, the purchaser assigned its rights under the agreement
of sale to an affiliate, W/M Investors I, L. P., and the sale closed on July 1,
1997. From the proceeds of the sale, the Partnership paid $101,189 as a
prepayment penalty on the first mortgage loan, as described below, $90,566 as a
brokerage commission to an affiliate of the third party providing property
management services for Phase I and $30,966 in closing costs. The Partnership
utilized the remaining proceeds from the sale of Phase I of $4,406,780 and
$753,849 from the sale of Walnut Hills-Phase II Apartments, as described below,
towards the repayment of the outstanding balance of $5,059,440 for the first
mortgage loan collateralized by Phase I.
Walnut Hills-Phase II Apartments
- ---------------------------------
As previously reported, on March 31, 1997, the Partnership contracted to sell
Walnut Hills-Phase II Apartments, San Antonio, Texas ("Phase II"), to an
unaffiliated party, Michael P. Morrison, for a sale price of $5,800,000. The
Partnership and the purchaser subsequently agreed to reduce the sale price to
$5,471,688. In addition, the purchaser assigned its rights under the agreement
of sale to an affiliate, W/M Investors I, L.P., and the sale closed on July 1,
1997. From the proceeds of the sale, the Partnership repaid the outstanding
balance of the first mortgage loan collateralized by Phase II of $1,871,300,
paid a prepayment penalty of $37,426, $109,434 as a brokerage commission to an
affiliate of the third party providing property management services for Phase
II and $37,333 in closing costs. The Partnership received the remaining sale
proceeds of approximately $3,416,000. Of such amount, $753,849 was utilized
towards the repayment of the outstanding balance of the first mortgage loan
collateralized by Walnut Hills-Phase I Apartments, as described above.
Cedar Creek-Phases I and II Apartments
- ----------------------------------------
As previously reported, on April 30, 1997, the Partnership contracted to sell
Cedar Creek-Phases I and II Apartments, San Antonio, Texas, to an unaffiliated
party, Ambassador VIII, L.P., a Delaware limited partnership, for a sale price
<PAGE>
of $7,200,000. For accounting purposes, $3,232,653 of the sale price has been
allocated to Phase I and $3,967,347 of the sale price has been allocated to
Phase II. The purchaser subsequently assigned its rights under the agreement of
sale to an affiliate, Ambassador II, L.P., a Delaware limited partnership. The
closing was extended and the sale closed on June 27, 1997. From the proceeds of
the sale, the Partnership repaid the total of the outstanding balances of the
first mortgage loans collateralized by the property of $5,047,923, paid
$100,958 in prepayment penalties and $144,000 as a brokerage commission to an
affiliate of the third party providing property management services for the
property and $30,541 in closing costs. In addition, $100,000 was placed in
escrow and was not to be disbursed to the Partnership until the later of the
settlement of any claims by the purchaser or August 1, 1997. Of the escrow
amount, $44,898 has been allocated to Phase I and $55,102 has been allocated to
Phase II. The Partnership received the remaining sale proceeds of approximately
$1,877,000.
Of the escrow amount, described above, approximately $8,500 has been disbursed
to the purchaser for claims presented by the purchaser and approximately
$37,500 is expected to be disbursed to the Partnership in August 1997. The
remaining $54,000 will remain in the escrow account pending resolution of
additional claims which have been presented by the purchaser.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(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 September 30, 1992 (Commission File No.
0-9541) are incorporated herein by reference.
(10) Material Contracts:
(a)(i) Agreement of Sale and attachment thereto related to the sale of the
Walnut Hills-Phase I Apartments, San Antonio, Texas, previously filed as
Exhibit (2)(a) to the Registrant's Report on Form 8-K dated March 31, 1997 is
incorporated herein by reference.
(a)(ii) First Amendment to Agreement of Sale relating to the sale of Walnut
Hills-Phase I Apartments, San Antonio, Texas, is attached hereto.
b)(i) Agreement of Sale and attachment thereto related to the sale of the
Walnut Hills-Phase II Apartments, San Antonio, Texas, previously filed as
Exhibit (2)(b) to the Registrant's Report on Form 8-K dated March 31, 1997 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of Walnut
Hills-Phase II Apartments, San Antonio, Texas, is attached hereto.
<PAGE>
(c) Agreement of Sale and attachment thereto relating to the sale of Greentree
Village Apartments, Colorado Springs, Colorado, previously filed as Exhibit
(10) to the Registrant's Report on Form 10-Q dated June 30, 1996, is
incorporated herein by reference.
(d)(i) Agreement of Sale and attachment thereto related to the sale of Cedar
Creek-Phases I and II Apartments, San Antonio, Texas, previously filed as
Exhibit (10)(d)(i) to the Registrant's Report on Form 10-Q dated March 31,
1997, is incorporated herein by reference.
(ii) Escrow Agreement related to the Sale of Cedar Creek-Phases I and II
Apartments, San Antonio, Texas, previously filed as Exhibit (10)(a)(ii) to the
Registrant's Report on Form 10-Q dated March 31, 1997, is incorporated herein
by reference.
(iii) First Amendment to Agreement of Sale related to the sale of Cedar
Creek-Phases I and II Apartments, San Antonio, Texas, previously filed as
Exhibit (10)(d)(iii) to the Registrant's Report on Form 10-Q dated March 31,
1997, is incorporated herein by reference.
(iv) Second Amendment to Agreement of Sale related to the sale of Cedar
Creek-Phases I and II Apartments, San Antonio, Texas, previously filed as
Exhibit (10)(d)(iv) to the Registrant's Report on Form 10-Q dated March 31,
1997, is incorporated herein by reference.
(v) Third Amendment to Agreement of Sale relating to the sale of Cedar
Creek-Phases I and II Apartments, San Antonio, Texas, is attached hereto.
(vi) Fourth Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Cedar Creek-Phases I and II Apartments, San Antonio, Texas, is attached
hereto.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1997 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1997.
<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/ Jayne A. Kosik
-----------------------------
Jayne A. Kosik
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
BRI Partners-79, the General Partner
Date: August 14, 1997
--------------------
<PAGE>
First Amendment to
Agreement of Sale
(Walnut Hills I)
This Amendment is made and entered into this third day of June, 1997 by
and between Michael P. Morrison ("Purchaser") and Walnut Hills I Partners
Limited Partnership, an Illinois limited partnership ("Seller").
On March 31, 1997, Purchaser and Seller entered into an Agreement of Sale
("Agreement") for the purchase and sale of real property commonly known as
Walnut Hills I Apartments, San Antonio, Texas and legally described in Exhibit
A hereto ("Property").
For good and valuable consideration, receipt of which is hereby
acknowledged, Purchaser and Seller agree that the Purchase Price in Paragraph 1
of the Agreement is reduced from $4,800,000 to $4,528,312.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
/s/ Michael P. Morrison
-------------------------------------
Michael P. Morrison
SELLER:
WALNUT HILLS I PARTNERS LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Walnut Hills I Partners, Inc., an Illinois
corporation, its general partner
By: /s/ Michael J. Becker
---------------------------------
Name: Michael J. Becker
---------------------------------
Its: Managing Director
---------------------------------
<PAGE>
First Amendment to
Agreement of Sale
(Walnut Hills II)
This Amendment is made and entered into this third day of June, 1997 by
and between Michael P. Morrison ("Purchaser") and Walnut Hills II Partners
Limited Partnership, an Illinois limited partnership ("Seller").
On March 31, 1997, Purchaser and Seller entered into an Agreement of Sale
("Agreement") for the purchase and sale of real property commonly known as
Walnut Hills II Apartments, San Antonio, Texas and legally described in Exhibit
A hereto ("Property").
For good and valuable consideration, receipt of which is hereby
acknowledged, Purchaser and Seller agree that the Purchase Price in Paragraph 1
of the Agreement is reduced from $5,800,000 to $5,471,688.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
/s/ Michael P. Morrison
-------------------------------------
Michael P. Morrison
SELLER:
WALNUT HILLS II PARTNERS LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Walnut Hills II Partners, Inc., an Illinois
corporation, its general partner
By: /s/ Michael J. Becker
---------------------------------
Name: Michael J. Becker
---------------------------------
Its: Managing Director
---------------------------------
<PAGE>
THIRD AMENDMENT TO AGREEMENT OF SALE
THIS THIRD AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of this 4 day of June, 1997, by and between AMBASSADOR II,
L.P., a Delaware limited partnership ("Purchaser") and CEDAR CREEK PARTNERS I
LIMITED PARTNERSHIP, an Illinois limited partnership and CEDAR CREEK PARTNERS
II LIMITED PARTNERSHIP, an Illinois limited partnership (together "Seller").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser (as successor-in-interest to Ambassador
VIII, L.P. ("Ambassador VIII"), by means of that certain Assignment and
Assumption Agreement dated May 20, 1997 (the "Assignment"), by and between
Ambassador VIII and Purchaser) are parties to that certain Agreement of Sale,
dated as of April 30, 1997, that certain First Amendment to Agreement of Sale,
dated as of May 6, 1997 and that certain Second Amendment to Agreement of Sale,
dated as of May 13, 1997 (as amended, the "Agreement"), pursuant to which
Purchaser has agreed to purchase and Seller has agreed to sell certain Property
(as defined in the Agreement) legally described and depicted on Exhibit A
attached to the Agreement; and
WHEREAS, Seller and Purchaser desire to amend the Agreement in accordance
with the terms of this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The Closing Date for this transaction shall be extended to June 11, 1997.
3. Purchaser acknowledges that Seller has an outstanding first mortgage on
the Property (the "Loan"). In consideration for Seller agreeing to extend the
Closing Date, Purchaser hereby agrees to cooperate with Seller to negotiate a
payoff arrangement with Seller's first mortgage lender (the "Lender") that is
reasonably satisfactory to Seller, provided that:
(a) Seller shall bear the costs of interest and principal (if any)
accruing under the Loan from June 2, 1997 (the "Original Closing Date")
through, but not including, the Closing Date; and
(b) Purchaser shall bear the costs of any interest and principal (if any)
accruing under the Loan on and after the Closing Date (the "Interest Charges").
Seller agrees to payoff the Loan at the earliest commercially reasonable payoff
date and in accordance with the payoff arrangement negotiated with Lender
pursuant to the terms of this paragraph.
<PAGE>
4. Purchaser agrees to deposit $100,000.00 with the Escrow Agent as
additional earnest money concurrently herewith. Such sum shall be included
within the definition of Earnest Money for which Purchaser shall receive a
credit at Closing.
5. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
6. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument. To facilitate the execution of this Amendment, Seller
and Purchaser may execute and exchange by telephone facsimile counterparts of
the signature pages, with each facsimile being deemed an "original" for all
purposes.
[EXECUTION PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
AMBASSADOR II, L.P., a Delaware limited partnership
By: Ambassador II, Inc., a Delaware corporation
By: /s/ Thomas J. Coorsh
-------------------------------------
Name: Thomas J. Coorsh
-------------------------------------
Its: Sr. Vice President
-------------------------------------
SELLER:
CEDAR CREEK PARTNERS I LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Cedar Creek Partners - I, Inc.,
an Illinois corporation, its general
partner
By: /s/ Michael J. Becker
-------------------------------------
Name: Michael J. Becker
-------------------------------------
Its: Managing Director
-------------------------------------
CEDAR CREEK PARTNERS II LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Cedar Creek Partners - II, Inc.,
an Illinois corporation, its general
partner
By: /s/ Michael J. Becker
-------------------------------------
Name: Michael J. Becker
-------------------------------------
Its: Managing Director
-------------------------------------
<PAGE>
FOURTH AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS FOURTH AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is made and entered into as of this 11th day of June, 1997, by and
between AMBASSADOR II, L.P., a Delaware limited partnership ("Purchaser") and
CEDAR CREEK PARTNERS I LIMITED PARTNERSHIP, an Illinois limited partnership and
CEDAR CREEK PARTNERS II LIMITED PARTNERSHIP, an Illinois limited partnership
(together "Seller").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser (as successor-in-interest to Ambassador
VIII, L.P. ("Ambassador VIII"), by means of that certain Assignment and
Assumption Agreement dated May 20, 1997 (the "Assignment"), by and between
Ambassador VIII and Purchaser) are parties to that certain Agreement of Sale,
dated as of April 30, 1997, that certain First Amendment to Agreement of Sale,
dated as of May 6, 1997, that certain Second Amendment to Agreement of Sale,
dated as of May 13, 1997 and that certain Third Amendment to Agreement of Sale,
dated as of June 4, 1997 (as amended, the "Agreement"), pursuant to which
Purchaser has agreed to purchase and Seller has agreed to sell certain Property
(as defined in the Agreement) legally described and depicted on Exhibit A
attached to the Agreement;
WHEREAS, Seller and Purchaser entered into that certain Escrow Agreement
dated as of April 30, 1997 (the "Escrow Agreement") with respect to the
transaction contemplated by the Agreement; and
WHEREAS, Seller and Purchaser desire to amend the Agreement and the Escrow
Agreement in accordance with the terms of this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. All references to the term "Closing Date" in the Agreement shall mean July
15, 1997, or any earlier date designated by Purchaser upon no less than five
(5) business days prior written notice to Seller; provided, however, that in
the event that Purchaser designates a Closing Date prior to July 1, 1997, then
Paragraphs 4, 5 and 6 of this Amendment shall be deleted and the references to
the dates contained therein shall remain as originally stated in the Agreement
and the Escrow Agreement, respectively.
3. Purchaser agrees to deposit $100,000.00 with the Escrow Agent as
additional earnest money concurrently herewith. Such sum shall be included
within the definition of Earnest Money for which Purchaser shall receive a
credit at Closing. Moreover, Seller and Purchaser hereby direct Escrow Agent
to immediately release $137,500.00 of the currently existing Earnest Money to
<PAGE>
Seller pursuant to wiring instructions to be provided by Seller. After the
release of such $137,500.00 and the deposit of the additional $100,000.00 by
Purchaser, the total Earnest Money for this transaction will be $375,000.00
($237,500.00 held by Escrow Agent and $137,500.00 released to Seller).
Purchaser shall receive a credit at Closing for the entire Earnest Money and
all interest thereon. Notwithstanding anything to the contrary contained in
the Agreement, if Purchaser is entitled to a return of the Earnest Money, all
of the Earnest Money (regardless of who holds it) will be paid to Purchaser.
4. All references to "July 31, 1997" in Paragraph 12.3 and Paragraph 16.4 of
the Agreement and Paragraphs 7, 8 and 9 in the Escrow Agreement shall change to
"September 1, 1997."
5. All references to "August 1, 1997" in Paragraph 7 of the Escrow Agreement
shall change to "September 2, 1997."
6. All references to "August 11, 1997" in Paragraph 10 in the Escrow
Agreement shall change to "September 12, 1997."
7. Except as amended hereby, the Agreement and the Escrow Agreement shall be
and remain unchanged and in full force and effect in accordance with their
terms.
8. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument. To facilitate the execution of this Amendment, Seller
and Purchaser may execute and exchange by telephone facsimile counterparts of
the signature pages, with each facsimile being deemed an "original" for all
purposes.
[EXECUTION PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
AMBASSADOR II, L.P., a Delaware limited partnership
By: Ambassador II, Inc., a Delaware corporation
By: /s/ Debra A. Cafaro
-------------------------------------
Name: Debra A. Cafaro
-------------------------------------
Its: President
-------------------------------------
SELLER:
CEDAR CREEK PARTNERS I LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Cedar Creek Partners - I, Inc.,
an Illinois corporation, its general partner
By: /s/ Michael J. Becker
-------------------------------------
Name: Michael J. Becker
-------------------------------------
Its: Managing Director
-------------------------------------
CEDAR CREEK PARTNERS II LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Cedar Creek Partners - II, Inc.,
an Illinois corporation, its general partner
By: /s/ Michael J. Becker
-------------------------------------
Name: Michael J. Becker
-------------------------------------
Its: Managing Director
-------------------------------------
ACKNOWLEDGED AND ACCEPTED BY
ESCROW AGENT:
NEAR NORTH NATIONAL TITLE CORPORATION
By:
--------------------------------
Its: Authorized Agent
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3455
<SECURITIES> 0
<RECEIVABLES> 7
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3875
<PP&E> 7156
<DEPRECIATION> 3172
<TOTAL-ASSETS> 8002
<CURRENT-LIABILITIES> 249
<BONDS> 6931
0
0
<COMMON> 0
<OTHER-SE> 822
<TOTAL-LIABILITY-AND-EQUITY> 8002
<SALES> 0
<TOTAL-REVENUES> 5875
<CGS> 0
<TOTAL-COSTS> 1429
<OTHER-EXPENSES> 401
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 554
<INCOME-PRETAX> 3491
<INCOME-TAX> 0
<INCOME-CONTINUING> 3491
<DISCONTINUED> 0
<EXTRAORDINARY> (226)
<CHANGES> 0
<NET-INCOME> 3265
<EPS-PRIMARY> 103.89
<EPS-DILUTED> 103.89
</TABLE>
