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 September 30, 1998
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
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
September 30, 1998 and December 31, 1997
(Unaudited)
ASSETS
1998 1997
-------------- --------------
Cash and cash equivalents $ 905,365 $ 1,002,912
Accounts and accrued interest receivable 3,973 25,094
-------------- --------------
$ 909,338 $ 1,028,006
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 7,104 $ 20,257
Due to affiliates 70,067 51,426
-------------- --------------
Total liabilities 77,171 71,683
-------------- --------------
Commitments and contingencies
Limited Partners' capital
(30,005 Interests issued and
outstanding) 852,803 976,959
General Partner's deficit (20,636) (20,636)
-------------- --------------
Total partners' capital 832,167 956,323
-------------- --------------
$ 909,338 $ 1,028,006
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1998 and 1997
(Unaudited)
1998 1997
-------------- --------------
Income:
Rental and service $ 1,926,250
Interest on short-term investments $ 37,489 118,773
-------------- --------------
Total income 37,489 2,045,023
-------------- --------------
Expenses:
Interest on mortgage notes payable 555,453
Depreciation 231,604
Amortization of deferred expenses 25,170
Property operating 30,810 1,349,301
Real estate taxes 234,376
Property management fees 95,944
Administrative 130,835 222,387
-------------- --------------
Total expenses 161,645 2,714,235
-------------- --------------
Loss before gain on sale of
properties and extraordinary item (124,156) (669,212)
Gain on sale of properties 9,635,582
-------------- --------------
(Loss) income before extraordinary item (124,156) 8,966,370
Extraordinary item:
Debt extinguishment expense (508,290)
-------------- --------------
Net (loss) income $ (124,156) $ 8,458,080
============== ==============
Income before extraordinary item
allocated to General Partner None $ 157,620
============== ==============
(Loss) income before extraordinary item
allocated to Limited Partners $ (124,156) $ 8,808,750
============== ==============
(Loss) income before extraordinary item
per Limited Partnership Interest
(30,005 issued and outstanding)
- Basic and Diluted $ (4.14) $ 293.57
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1998 and 1997
(Unaudited)
(Continued)
1998 1997
-------------- --------------
Extraordinary item allocated to General
Partner None $ (8,935)
============== ==============
Extraordinary item allocated to Limited
Partners None $ (499,355)
============== ==============
Extraordinary item per Limited
Partnership Interest (30,005
issued and outstanding)
- Basic and Diluted None $ (16.64)
============== ==============
Net income allocated to General Partner None $ 148,685
============== ==============
Net (loss) income allocated to Limited
Partners $ (124,156) $ 8,309,395
============== ==============
Net (loss) income per Limited
Partnership Interest
(30,005 issued and outstanding)
- Basic and Diluted $ (4.14) $ 276.93
============== ==============
Distribution to Limited Partners None $ 5,010,835
============== ==============
Distribution per Limited Partnership
Interest (30,005 issued and outstanding) None $ 167.00
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1998 and 1997
(Unaudited)
1998 1997
-------------- --------------
Income:
Interest on short-term investments $ 12,243 $ 57,411
-------------- --------------
Total income 12,243 57,411
-------------- --------------
Expenses:
Interest on mortgage notes payable 1,778
Property operating 239,566
Real estate taxes 5,456
Property management fees 5,656
Administrative 30,560 77,561
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Total expenses 30,560 330,017
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Loss before gain on sale of
properties and extraordinary item (18,317) (272,606)
Gain on sale of properties 5,747,783
-------------- --------------
(Loss) income before extraordinary item (18,317) 5,475,177
Extraordinary item:
Debt extinguishment expenses (281,867)
-------------- --------------
Net (loss) income $ (18,317) $ 5,193,310
============== ==============
Loss before extraordinary item
allocated to General Partner None $ (288)
============== ==============
(Loss) income before extraordinary item
allocated to Limited Partners $ (18,317) $ 5,475,465
============== ==============
(Loss) income before extraordinary item
per Limited Partnership Interest
(30,005 issued and outstanding)
- Basic and Diluted $ (0.61) $ 182.48
============== ==============
Extraordinary item allocated to General
Partner None $ 1,306
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1998 and 1997
(Unaudited)
(Continued)
1998 1997
-------------- --------------
Extraordinary item allocated to Limited
Partners None $ (283,173)
============== ==============
Extraordinary item per Limited
Partnership Interest (30,005
issued and outstanding)
- Basic and Diluted None $ (9.44)
============== ==============
Net income allocated to General Partner None $ 1,018
============== ==============
Net (loss) income allocated to Limited
Partners $ (18,317) $ 5,192,292
============== ==============
Net (loss) income per Limited
Partnership Interest
(30,005 issued and outstanding)
- Basic and Diluted $ (0.61) $ 173.04
============== ==============
Distribution to Limited Partners None $ 5,010,835
============== ==============
Distribution per Limited Partnership
Interest (30,005 issued and outstanding) None $ 167.00
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1998 and 1997
(Unaudited)
1998 1997
-------------- --------------
Operating activities:
Net (loss) income $ (124,156) $ 8,458,080
Adjustments to reconcile net (loss)
income to net cash used in operating
activities:
Gain on sale of properties (9,635,582)
Debt extinguishment expense 268,717
Depreciation of properties 231,604
Amortization of deferred expenses 25,170
Net change in:
Escrow deposits - unrestricted 742,334
Accounts and accrued interest
receivable 21,121 189,416
Prepaid expenses 53,417
Accounts payable (13,153) 34,423
Due to affiliates 18,641 (11,523)
Accrued liabilities (463,870)
Security deposits (76,035)
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Net cash used in operating activities (97,547) (183,849)
-------------- --------------
Investing activities:
Proceeds from sales of real estate 17,200,000
Payment of selling costs (442,839)
Funding of escrow in connection with the
sales of real estate (100,000)
Release of escrow in connection with the
sales of real estate 100,000
--------------
Net cash provided by investing activities 16,757,161
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Financing activities:
Distribution to Limited Partners (5,010,835)
Repayment of mortgage notes payable (11,978,663)
Principal payments on mortgage notes
payable (50,114)
--------------
Cash used in financing activities (17,039,612)
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES, LTD. - VIII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1998 and 1997
(Unaudited)
(Continued)
1998 1997
-------------- --------------
Net change in cash and cash equivalents (97,547) (466,300)
Cash and cash equivalents at beginning
of period 1,002,912 1,588,218
-------------- --------------
Cash and cash equivalents at end of period $ 905,365 $ 1,121,918
============== ==============
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) The loss allocation between the Limited Partners and the General Partner
has been adjusted for financial statement purposes in order that the capital
account balances more accurately reflect their remaining economic interests as
provided for in the Partnership Agreement.
(b) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the nine months
and quarter ended September 30, 1998, 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. During 1997, the Partnership sold its four remaining properties.
The Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as to 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 and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.
3. Interest Expense:
During the nine months ended September 30, 1997, the Partnership incurred and
paid interest expense on mortgage notes payable of $555,453.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1998 are:
Paid
-------------------------
Nine Months Quarter Payable
------------ --------- ---------
Reimbursement of expenses to
the General Partner, at cost $ 12,218 $ 4,552 $ 70,067
<PAGE>
5. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership and
certain affiliates were named as defendants alleging claims involving certain
state securities and common 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 this action. A
plaintiff class has not been certified in the action and, no determination of
the merits have been made. It is not determinable at this time whether or not
an unfavorable decision in the action would have a material adverse impact on
the financial position of the Partnership. The Partnership believes that it has
meritorious defenses to contest the claims.
<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. As of September
30, 1998, the Partnership had no properties remaining in its portfolio.
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 1997 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The operations of the Partnership in 1998 consisted primarily of administrative
expenses and operating expenses related to sold properties which were partially
offset by interest income earned on short-term investments. As a result, the
Partnership recognized a net loss for the nine months and quarter ended
September 30, 1998. The Partnership recognized gains in connection with the
sales of the Cedar Creek - Phases I and II apartment complexes in June 1997 and
the Walnut Hills Phases I and II apartment complexes in July 1997. This was the
primary reason the Partnership recognized net income during the nine months and
quarter ended September 30, 1997. Further discussion of the Partnership's
operations is summarized below.
1998 Compared to 1997
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1998 and 1997 refer
to both the nine months and quarters ended September 30, 1998 and 1997.
As a result of the 1997 sales of the Cedar Creek Phases I and II apartment
complexes and the Walnut Hills Phases I and II apartment complexes, rental and
service income, interest expense on mortgage notes payable, depreciation
expense, amortization expense, real estate tax expense and property management
fees expense ceased during 1997.
Higher average cash balances were available for investment due to proceeds
retained from the sale of the Greentree Village Apartments in 1996 for working
capital requirements during 1997 and due to proceeds received in connection
with the sales of the Cedar Creek Phases I and II and Walnut Hills Phases I and
II apartment complexes prior to distribution to Limited Partners in August
1997. As a result, interest income on short-term investments decreased during
1998 when compared to 1997.
<PAGE>
Property operating expenses decreased during 1998 as compared to 1997 due to
the sale of the Partnership's four remaining properties in 1997. During 1998,
the Partnership paid additional expenditures related to three of the properties
sold in 1997.
Primarily as a result of lower legal, accounting, portfolio management, data
processing and bank fees, administrative expenses decreased during 1998 as
compared to 1997.
The Partnership sold the Cedar Creek - Phases I and II apartment complexes in
June 1997 and sold the Walnut Hills Phases I and II apartment complexes in July
1997 and recognized gains in connection with the sales totaling $9,635,582 for
financial statement purposes.
In 1997, the Partnership wrote off the remaining unamortized deferred financing
fees totaling $268,717, and paid prepayment penalties totaling $239,573 in
connection with the sales of the Cedar Creek - Phases I and II and the Walnut
Hills - Phases I and II apartment complexes. These amounts were recognized as
extraordinary items and classified as debt extinguishment expense for financial
statement purposes.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $98,000 as of
September 30, 1998 as compared to December 31, 1997 due to cash used in
operating activities for the payment of administrative expenses and property
operating expenses related to sold properties, which were partially offset by
interest income received on short-term investments.
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. During 1997, the Partnership sold its four remaining properties.
The Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as to 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 and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.
To date, Limited Partners have received distributions of Net Cash Receipts of
$173.33 and Net Cash Proceeds of $449.24, totaling $622.57 per $1,000 Interest,
as well as certain tax benefits. No distributions are anticipated to be made
prior to the termination of the Partnership. However, after paying final
partnership expenses, any remaining cash reserves will be distributed. Limited
Partners will not recover all of their original investment.
<PAGE>
BALCOR EQUITY PROPERTIES LTD.-VIII
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(3) Exhibits:
(3) The Amended and Restated Agreement of Limited Partnership previously filed
as Exhibit 2(a) to Amendment No. 5 to the Registrant's Registration Statement
on Form S-11 dated July 16, 1980 (Registration No. 2-63821) is incorporated
herein by reference.
(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) 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 Current 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, previously filed as Exhibit
(10)(a)(ii) to the Registrant's Quarterly Report on Form 10-Q dated June 30,
1997 is incorporated herein by reference.
(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 Current Report on Form 8-K dated March 31,
1997 is incorporated herein by reference.
(b)(ii) First Amendment to Agreement of Sale relating to the sale of Walnut
Hills - Phase II Apartments, San Antonio, Texas, previously filed as Exhibit
(10)(b)(ii) to the Registrant's Quarterly Report on Form 10-Q dated June 30,
1997 is incorporated herein by reference.
(c)(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 Quarterly Report on Form 10-Q dated
March 31, 1997, is incorporated herein by reference.
(c)(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
<PAGE>
Registrant's Quarterly Report on Form 10-Q dated March 31, 1997, is
incorporated herein by reference.
(c)(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 Quarterly Report on Form 10-Q dated
March 31, 1997, is incorporated herein by reference.
(c)(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 Quarterly Report on Form 10-Q dated
March 31, 1997, is incorporated herein by reference.
(c)(v) Third Amendment to Agreement of Sale relating to the sale of Cedar Creek
- - Phases I and II Apartments, San Antonio, Texas, previously filed as Exhibit
(10)(d)(v) to the Registrant's Quarterly Report on Form 10-Q dated June 30,
1997 is incorporated herein by reference.
(c)(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,
previously filed as Exhibit (10)(d)(vi) to the Registrant's Quarterly Report on
Form 10-Q dated June 30, 1997 is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the nine months ending
September 30, 1998 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended on September 30, 1998.
<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
Senior Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
BRI Partners-79, the General Partner
Date: November 11, 1998
--------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 905
<SECURITIES> 0
<RECEIVABLES> 4
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 909
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 909
<CURRENT-LIABILITIES> 77
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 832
<TOTAL-LIABILITY-AND-EQUITY> 909
<SALES> 0
<TOTAL-REVENUES> 37
<CGS> 0
<TOTAL-COSTS> 31
<OTHER-EXPENSES> 131
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (124)
<INCOME-TAX> 0
<INCOME-CONTINUING> (124)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (124)
<EPS-PRIMARY> (4.14)
<EPS-DILUTED> (4.14)
</TABLE>
