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, 1994
------------------
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 0-10225
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BALCOR PENSION INVESTORS-II
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3114027
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
--------------
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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BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(UNAUDITED)
ASSETS
1994 1993
-------------- --------------
Cash and cash equivalents $ 8,643,842 $ 4,415,435
Cash and cash equivalents - Early
Investment Incentive Fund 63,850 2,333
Escrow deposits 199,678 89,056
Escrow deposits - restricted 80,580 219,979
Accounts and accrued interest receivable 276,166 411,977
Deferred expenses, net of accumulated
amortization of $129,233 in 1994 and
$81,400 in 1993 217,949 245,549
-------------- --------------
9,482,065 5,384,329
-------------- --------------
Investment in loans receivable:
Loans receivable - wrap-around
and first mortgages 13,724,000 26,965,881
Less:
Loans payable - underlying mortgages 4,837,014 6,169,121
Allowance for potential loan losses 3,917,679 4,166,443
-------------- --------------
Net investment in loans receivable 4,969,307 16,630,317
Real estate held for sale 27,912,075 27,808,381
-------------- --------------
32,881,382 44,438,698
-------------- --------------
$ 42,363,447 $ 49,823,027
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 117,548 $ 133,141
Due to affiliates 96,674 37,131
Accrued liabilities, principally
interest and real estate taxes 289,063 7,918
Other liabilities 966,007 1,144,128
Mortgage notes payable 12,334,005 15,862,096
-------------- --------------
Total liabilities 13,803,297 17,184,414
-------------- --------------
Partners' capital (85,010 Limited
Partnership Interests issued) 32,681,569 36,394,317
Less Interests held by Early Investment
Incentive Fund (5,721 in 1994 and
4,896 in 1993) (4,121,419) (3,755,704)
-------------- --------------
28,560,150 32,638,613
-------------- --------------
$ 42,363,447 $ 49,823,027
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1994 and 1993
(UNAUDITED)
1994 1993
-------------- --------------
Income:
Interest on loans receivable $ 1,549,670 $ 2,804,034
Less interest on loans payable -
underlying mortgages 358,862 640,702
-------------- --------------
Net interest income on loans 1,190,808 2,163,332
Income from operations of real estate
held for sale 1,039,682 845,781
Interest on short-term investments 332,622 53,424
Participation income 223,610 221,337
Prepayment premium 291,000
-------------- --------------
Total income 3,077,722 3,283,874
-------------- --------------
Expenses:
Mortgage servicing fees 12,861 32,974
Administrative 474,016 414,928
-------------- --------------
Total expenses 486,877 447,902
-------------- --------------
Net income $ 2,590,845 $ 2,835,972
============== ==============
Net income allocated to General Partner $ 194,313 $ 212,698
============== ==============
Net income allocated to Limited Partners $ 2,396,532 $ 2,623,274
============== ==============
Net income per average number of Limited
Partnership Interests outstanding
(79,930 in 1994 and 80,351 in 1993) $ 29.98 $ 32.65
============== ==============
Distributions to General Partner $ 106,263 $ 115,118
============== ==============
Distributions to Limited Partners $ 6,197,330 $ 1,306,199
============== ==============
Distributions per Limited Partnership
Interest outstanding $ 77.50 $ 16.25
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1994 and 1993
(UNAUDITED)
1994 1993
-------------- --------------
Income:
Interest on loans receivable $ 441,404 $ 883,261
Less interest on loans payable -
underlying mortgages 110,139 201,557
-------------- --------------
Net interest income on loans 331,265 681,704
Income from operations of real estate
held for sale 392,180 342,081
Interest on short-term investments 104,759 20,648
-------------- --------------
Total income 828,204 1,044,433
-------------- --------------
Expenses:
Mortgage servicing fees 3,554 10,830
Administrative 195,599 104,412
-------------- --------------
Total expenses 199,153 115,242
-------------- --------------
Net income $ 629,051 $ 929,191
============== ==============
Net income allocated to General Partner $ 47,178 $ 69,689
============== ==============
Net income allocated to Limited Partners $ 581,873 $ 859,502
============== ==============
Net income per average number of Limited
Partnership Interests outstanding
(79,613 in 1994 and 80,252 in 1993) $ 7.30 $ 10.71
============== ==============
Distribution to General Partner $ 35,421 $ 35,421
============== ==============
Distribution to Limited Partners $ 1,991,338 $ 401,317
============== ==============
Distribution per Limited Partnership
Interest outstanding $ 25.00 $ 5.00
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1994 and 1993
(UNAUDITED)
1994 1993
-------------- --------------
Operating activities:
Net income $ 2,590,845 $ 2,835,972
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of real estate (23,175)
Accrued interest income due at maturity (170,996)
Collection of interest income due
at maturity 943,117
Amortization of deferred expenses 47,833 86,480
Payment of deferred interest expense
on mortgage notes payable (817,179)
Net change in:
Escrow deposits (110,622) (16,984)
Escrow deposits - restricted 139,399 50,210
Accounts and accrued interest
receivable 135,811 49,627
Accounts payable (15,593) (320,967)
Due to affiliates 59,543 3,667
Accrued liabilities 281,145 265,446
Other liabilities (178,121) 16,315
-------------- --------------
Net cash provided by operating activities 3,893,357 1,958,416
-------------- --------------
Investing activities:
Collection of principal on
loans receivable 12,050,000 150,000
Proceeds from sale of real estate 775,000
Costs incurred in connection
with sale of real estate (48,825)
Additions to real estate (103,694) (336,047)
-------------- --------------
Net cash provided by investing
activities 11,946,306 540,128
-------------- --------------
Financing activities:
Distributions to Limited Partners (6,197,330) (1,306,199)
Distributions to General Partner (106,263) (115,118)
Increase in cash and cash equivalents -
Early Investment Incentive Fund (61,517) (2,091)
Repurchase of Limited Partnership Interests (365,715) (110,185)
Principal payments on underlying loans
payable (405,440) (378,101)
Repayment of underlying loan payable (926,667)
Proceeds from refinancing of mortgage
notes payable 11,625,000
Repayment of mortgage notes payable (3,369,552) (10,296,353)
Principal payments on mortgage notes
payable (158,539) (246,943)
Payment of deferred expenses (20,233) (310,088)
-------------- --------------
Net cash used in financing activities (11,611,256) (1,140,078)
-------------- --------------
Net change in cash and cash equivalents 4,228,407 1,358,466
Cash and cash equivalents at beginning
of year 4,415,435 1,755,329
-------------- --------------
Cash and cash equivalents at end of period $ 8,643,842 $ 3,113,795
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
A reclassification has been made to the previously reported 1993 statements in
order to provide comparability with the 1994 statements. This reclassification
has not changed the 1993 results. In the opinion of management, all adjustments
necessary for a fair presentation have been made to the accompanying statements
for the nine months and quarter ended September 30, 1994, and all such
adjustments are of a normal and recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1994 and 1993, the Partnership
incurred interest expense on mortgage notes payable on properties owned by the
Partnership of $994,258 and $1,113,542 and paid interest expense of $994,258
and $1,930,721, respectively.
3. Transactions with Affiliates:
Fees and expenses, paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1994 were:
Paid
--------------------
Nine Months Quarter Payable
----------- -------- ---------
Property management fees $191,150 $66,524 $21,823
Mortgage servicing fees 10,491 2,369 2,370
Reimbursement of expenses to
the General Partner, at cost:
Accounting 48,360 31,894 22,225
Data processing 14,274 7,207 18,797
Investor communications 9,049 5,968 3,481
Legal 4,328 2,855 3,539
Portfolio management 31,027 20,464 19,079
Other 16,524 10,898 5,360
4. Loan Repayments:
(a) In March 1994, the Partnership received $3,369,762 as payment in full on
the wrap-around loan collateralized by the North Arch Village Apartments, from
which the underlying loan of $926,667 was repaid. This loan had matured in
November 1993 and the borrower and the Partnership entered into a forbearance
agreement whereby the borrower was given until March 1994 to repay the loan.
The amount received consists of the face amount of the loan of $2,350,000,
accrued interest due at maturity of $943,117 and additional interest of
$76,645.
(b) In January 1994, the Partnership received $10,064,858 as payment in full on
the first mortgage loan collateralized by the Tudor Heights Apartments. The
amount received consists of the original funds advanced of $9,700,000, a
prepayment premium of $291,000 and $73,858 of basic interest. Additionally,
$248,764 of interest income that had been accrued and included in the loan
balance, was written off against the previously established allowance for
potential loan losses.
5. Settlement of Litigation:
A principal of the former owner of the Interstate Office Building commenced
legal proceedings in 1990 against the Partnership alleging that it was entitled
to recover from the Partnership approximately $630,000 representing the amount
the former owner paid to the first mortgage holder as a principal reduction of
the first mortgage loan. These payments had been made prior to the
Partnership's foreclosure of the property and had increased the Partnership's
equity in the wrap-around loan. In March 1993, a judgment of approximately
$780,000 was entered against the Partnership, which included the amount sought
plus accrued interest thereon. The Partnership appealed, but the judgment was
upheld in September 1994. The judgment amount plus additional interest of
approximately $116,000 was paid during November 1994. A potential litigation
loss of $780,000 was recognized by the Partnership in 1992 and is included in
other liabilities on the balance sheet as of September 30, 1994. The payment of
the additional $116,000 will be recorded against the allowance for potential
loan losses.
6. Subsequent Event:
In October 1994, the Partnership made a distribution of $425,050 ($5.00 per
Interest) to the holders of Limited Partnership Interests, representing the
quarterly distribution of available Cash Flow for the third quarter of 1994.
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors-II (the "Partnership") is a limited partnership formed
in 1981 to invest in wrap-around mortgage loans and, to a lesser extent, other
junior mortgage loans and first mortgage loans. The Partnership raised
$85,010,000 through the sale of Limited Partnership Interests and used these
proceeds to originally fund a total of thirty-three loans. In addition,
proceeds from prior loan repayments were used to fund three additional mortgage
loans. To date, Limited Partners have received distributions totaling $1,253.50
per $1,000 Interest. As of September 30, 1994, the Partnership is operating
five properties acquired through foreclosure and has two loans outstanding 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 1993 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
A decrease in net interest income on loans receivable due to 1994 and 1993 loan
repayments was partially offset by improved operations at most of the
Partnership's properties, increased interest income on short-term investments,
and additional income resulting from the prepayment premium received in
connection with the Tudor Heights Apartments loan repayment in January 1994.
This resulted in a decrease in net income during the nine months and quarter
ended September 30, 1994 as compared to the same periods in 1993. Further
discussion of the Partnership's operations is summarized below.
1994 Compared to 1993
- ---------------------
The repayments of the wrap-around loans collateralized by the Pheasant Run and
North Arch Village apartment complexes in October 1993 and March 1994,
respectively, resulted in a decrease in interest income on loans receivable and
a corresponding decrease in interest expense on loans payable and mortgage
servicing fees during the nine months and quarter ended September 30, 1994 as
compared to the same periods in 1993. The January 1994 repayment of the Tudor
Heights Apartments first mortgage loan also contributed significantly to the
decreases in interest income on loans receivable and mortgage servicing fees.
In addition, a prepayment premium of $291,000 was received in January 1994 in
connection with the Tudor Heights Apartments loan repayment.
The Partnership currently has the loan collateralized by the Stonegate Austin
Mobile Home Park located in Austin, Texas on non-accrual status. For
non-accrual loans, income is recorded only as cash payments are received from
the borrower. The Austin, Texas rental market for mobile home parks continues
to experience adverse economic conditions. The funds advanced by the
Partnership for this loan totaled approximately $1,272,000. During the nine
months ended September 30, 1994, the Partnership received cash payments of net
interest income on this loan of approximately $137,000. The Partnership was
entitled to receive approximately $179,000 of net interest income under the
original terms of the loan agreement.
Operations of real estate held for sale represents the net property operations
of those properties acquired by the Partnership through foreclosure. Rental
income increased at the Sherwood Acres - Phases I and II and Cumberland Pines
apartment complexes due to higher average occupancy levels and rental rates,
respectively, and at the Parkway Distribution Center due to leasing activity
during the latter part of 1993 which resulted in increased average occupancy
levels. The cessation of interest expense on the Hollowbrook and Cumberland
Pines apartment complexes' mortgage notes payable due to the 1994 repayments of
the mortgage notes and the 1993 sale of the 205 Armstrong Industrial/Office
Park which operated at a loss also contributed to improved operations. These
events were the primary reasons for an increase in income from operations of
real estate held for sale during the nine months and quarter ended September
30, 1994 as compared to the same periods in 1993. However, higher repair and
maintenance expenditures, including significant painting costs, at the Sherwood
Acres-Phases I and II Apartments partially offset the improvements.
The proceeds received from the 1993 and 1994 loan repayments were the primary
reasons for the increase in funds available for short-term investments. This
increase in invested funds generated higher interest income on short-term
investments during the nine months and quarter ended September 30, 1994 as
compared to the same periods in 1993.
The Partnership's loans generally bear interest at contractually-fixed interest
rates. Some loans also provide for additional interest in the form of
participations, which usually consist of either a share in the capital
appreciation of the property securing the Partnership's loan and/or a share in
the cash flow or gross income of the property above a certain level. The
Partnership received participation income on the Alzina Office Building loan
during the nine months ended September 30, 1994 and 1993.
The allowance for potential losses provides for potential loan losses and is
based upon loan loss experience for similar loans and for the industry, upon
prevailing economic conditions and the General Partner's analysis of specific
loans in the Partnership's portfolio. No provision for potential losses was
recognized during the nine months ended September 30, 1994 or 1993. While
actual losses may vary from time to time because of changes in circumstances
(such as occupancy rates, rental rates, and other economic factors), the
General Partner believes that adequate recognition has been given to loss
exposure in the portfolio at September 30, 1994.
Higher accounting and portfolio management fees resulted in an increase in
administrative expenses during the nine months and quarter ended September 30,
1994 as compared to the same periods in 1993. Also, legal fees relating to the
Interstate Office Building litigation (see Liquidity and Capital Resources)
contributed significantly to the increase in administrative expenses during the
quarter ended September 30, 1994.
Liquidity and Capital Resources
- -------------------------------
The operating activities of the Partnership reflect the cash flow from
operations of the properties, net cash flow from loans receivable and interest
income on short-term investments, less administrative costs. The cash flow
provided by operating activities during 1994 also reflects the collection of a
prepayment premium and interest income due at maturity in connection with the
Tudor Heights and North Arch Village Apartments loan repayments, respectively.
The net cash flow from investing activities reflects the proceeds received from
the repayments of the Tudor Heights and North Arch Village Apartments loans
receivable. This net cash flow was partially used in financing activities to
repay the North Arch Village Apartments underlying loan payable. In addition,
the net cash flow from investing activities and cash reserves of the
Partnership were used in financing activities for distributions to partners,
including special distributions of Mortgage Reductions to Limited Partners in
April and July 1994, the repayment of the Hollowbrook and Cumberland Pines
apartment complexes' mortgage notes payable and principal payments on
underlying and mortgage notes payable. The remaining cash reserves are being
retained to meet future working capital needs of the Partnership. The
Partnership's cash or near cash position fluctuates during each quarter,
initially decreasing with the payment of Partnership distributions for the
previous quarter, and then gradually increasing each month in the quarter as
cash flow from mortgage payments and property operations is received.
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 to be significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. During the nine months ended September
30, 1994 and 1993, the Cumberland Pines and Sherwood Acres - Phases I and II
apartment complexes and Parkway Distribution Center generated positive cash
flow. The Hollowbrook Apartments generated a marginal cash flow deficit during
1993, which was a result of low rental rates due to a weak Orlando rental
market. An increase in rental rates and the cessation of debt service payments
due to the February 1994 prepayment of the mortgage loan resulted in positive
cash flow at this property during 1994.
The General Partner is continuing its efforts to maintain high occupancy
levels, while increasing rents where possible, and to monitor and control
operating expenses and capital improvement requirements at the properties. The
General Partner will also examine the terms of any mortgage loans
collateralized by its properties, and may refinance or, in certain instances,
use Partnership reserves to repay such loans. In February 1994, the Partnership
used working capital reserves to prepay the first mortgage loan collateralized
by the Hollowbrook Apartments. This mortgage loan was due to mature in December
1994, bore interest at 8.75% and had an outstanding balance of $1,105,658 at
the time of the prepayment. Also, in June 1994, the Partnership used additional
working capital reserves to prepay the first mortgage loan collateralized by
the Cumberland Pines Apartments. This loan was due to mature in February 1996,
bore interest at 8.5% and had an outstanding balance of $2,263,894 at the time
of prepayment.
Certain borrowers have failed to make payments due to the Partnership for more
than ninety days and, accordingly, these loans have been placed on non-accrual
status (income is recorded only as cash payments are received). The General
Partner has negotiated with some of these borrowers regarding modifications of
the loan terms and has instituted foreclosure proceedings under certain
circumstances. Such foreclosure proceedings may be delayed by factors beyond
the General Partner's control such as bankruptcy filings by borrowers and state
law procedures regarding foreclosures. Further, certain loans made by the
Partnership have been restructured to defer and/or reduce interest payments
where the properties collateralizing the loans were generating insufficient
cash flow to support property operations and debt service. In the case of most
loan restructurings, the Partnership receives concessions, such as increased
participations or additional interest accruals, in return for modifications,
such as deferral or reduction of basic interest payments. There can be no
assurance, however, that the Partnership will receive actual benefits from the
concessions.
In March 1994, the Partnership received $3,369,762 as payment in full on the
wrap-around loan collateralized by the North Arch Village Apartments, from
which the underlying loan of $926,667 was repaid. This loan had matured in
November 1993 and the borrower and the Partnership entered into a forbearance
agreement whereby the borrower was given until March 1994 to repay the loan.
The net amount received consists of the funds advanced of $940,258, the
difference between the original and current principal balance due on the
underlying loan of $483,075, accrued interest due at maturity of $943,117 and
additional interest of $76,645. The funds advanced by the Partnership represent
the difference between the wrap-around loan receivable balance of $2,350,000
and the original balance of the underlying loan of $1,409,742.
In January 1994, the Partnership received $10,064,858 as payment in full on the
first mortgage loan collateralized by the Tudor Heights Apartments. The amount
received consists of the original funds advanced of $9,700,000, a prepayment
premium of $291,000 and $73,858 of basic interest. Additionally, $248,764 of
interest income that had been accrued and included in the loan balance, was
written off against the previously established allowance for potential loan
losses.
A principal of the former owner of the Interstate Office Building commenced
legal proceedings in 1990 against the Partnership alleging that it was entitled
to recover from the Partnership approximately $630,000 representing the amount
the former owner paid to the first mortgage holder as a principal reduction of
the first mortgage loan. These payments had been made prior to the
Partnership's foreclosure of the property and had increased the Partnership's
equity in the wrap-around loan. In March 1993, a judgment of approximately
$780,000 was entered against the Partnership, which included the amount sought
plus accrued interest thereon. The Partnership appealed, but the judgment was
upheld by the Appellate Court, First District of Illinois in September 1994.
The judgment amount plus additional interest of approximately $116,000 was paid
during November 1994. A potential litigation loss of $780,000 was recognized by
the Partnership in 1992 and is included in other liabilities on the balance
sheet as of September 30, 1994. The payment of the additional $116,000 will be
recorded against the allowance for potential loan losses.
In October 1994, the Partnership paid a distribution of $425,050 ($5.00 per
Interest) to the holders of Limited Partnership Interests, $35,421 to the
General Partner and $11,807 to the Early Investment Incentive Fund,
representing the quarterly distribution of available Cash Flow for the third
quarter of 1994. The level of this distribution is consistent with the regular
distribution paid during the first and second quarters of 1994. To date,
Limited Partners have received distributions totaling $1,253.50 per $1,000
Interest, of which $883.50 represents Cash Flow from operations and $370.00
represents a return of original capital. The Partnership expects to continue
making cash distributions; however, the level of such future distributions will
be dependent upon the Cash Flow generated by the receipts of mortgage payments
and property cash flow, less payments on the underlying loans, mortgage
servicing fees and administrative expenses. The General Partner believes it has
retained, on behalf of the Partnership, an appropriate amount of working
capital to meet cash or liquidity requirements which may occur.
On November 4, 1994, The Balcor Company completed the sale of the assets of
Allegiance Realty Group, Inc. to an unaffiliated company, Insignia Allegiance
Management, Inc. ("Insignia"), which is based in Greenville, South Carolina. As
a result of this transaction, Insignia has assumed the management of the
Partnership's properties. This transaction is not expected to result in any
material change to the property management fees paid by the Partnership.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values. The Partnership's use of
participations for loans receivable is intended to provide a hedge against the
impact of inflation; sharing in cash flow or rental income and/or the capital
appreciation of the properties collateralizing the loans should result in
increases in the total yields on the loans as inflation rates rise.
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- -------------------------
Williams proposed class action
- ------------------------------
With respect to the proposed class action lawsuit filed in the U. S. District
Court, Northern District of Illinois (Paul Williams and Beverly Kennedy, et al.
vs. Balcor Pension Investors, et al., Case No. 90-C-0726), against the
Partnership and certain affiliated entities, in May 1993, the Court issued an
opinion and order denying the plaintiffs' motion for class certification based
in part on the inadequacy of the individual plaintiffs representing the
proposed class. Further, the Court granted the defendants' motion for certain
sanctions against plaintiffs' counsel and ordered the plaintiffs' counsel to
pay the defendants' attorneys' fees incurred with the class certification
motion. The defendants filed a petition for reimbursement of their fees and
costs from plaintiff's counsel which remains pending. A motion previously filed
by the plaintiffs seeking to dismiss the defendants' counterclaim for fraud was
denied on August 18, 1994.
In July 1993, the Court gave plaintiffs leave to retain new counsel and to
propose new individual class representatives. The plaintiffs retained new
counsel and proposed three new individual class representatives. The defendants
conducted discovery regarding the proposed new class representatives and, in
February 1994, filed a response to the plaintiffs' latest motion for class
certification. On July 29, 1994, the Court indicated an intent to certify a
class relating to the plaintiffs' securities fraud claims, but gave leave for
the defendants to file a further motion opposing class certification. On August
26, 1994, the defendants filed a motion which has been briefed. The motion
remains pending.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement previously filed as Exhibit 4(a) to
Amendment No. 1 to the Registrant's Registration Statement on Form S-11 dated
May 7, 1981 (Registration No. 2-70841) 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. 0-10225)
are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1994 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 30, 1994.
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 PENSION INVESTORS-II
By: /s/Thomas E. Meador
---------------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors, the General Partner
By: /s/Allan Wood
-------------------------------------------
Allan Wood
Executive Vice President, and Chief
Accounting and Financial Officer (Principal
Accounting and Financial Officer) of Balcor
Mortgage Advisors, the General Partner
Date: November 10, 1994
-------------------------------
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<EPS-PRIMARY> 29.98
<EPS-DILUTED> 29.98
</TABLE>
