SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-10225
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BALCOR PENSION INVESTORS-II
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(Exact name of registrant as specified in its charter)
Illinois 36-3114027
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(UNAUDITED)
ASSETS
1996 1995
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Cash and cash equivalents $ 10,249,911 $ 2,901,014
Cash and cash equivalents - Early
Investment Incentive Fund 1,188,018 308,993
Escrow deposits 208,542 113,962
Accounts and accrued interest receivable 673,796 250,265
Prepaid expenses 113,742 77,752
Deferred expenses, net of accumulated
amortization of $225,806 in 1996
and $195,352 in 1995 121,376 151,830
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12,555,385 3,803,816
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Investment in loan receivable:
Wrap-around loan receivable 11,324,000
Less:
Loan Payable - underlying mortgage 3,254,087
Allowance for potential loan losses 3,302,517
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Net investment in loan receivable 4,767,396
Real estate held for sale (net of
allowance of $767,000 in 1996
and $500,000 in 1995) 22,406,022 27,518,370
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22,406,022 32,285,766
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$ 34,961,407 $ 36,089,582
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 178,671 $ 197,880
Due to affiliates 49,466 19,370
Other liabilities 281,632 154,471
Mortgage notes payable 12,009,488 12,138,360
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Total liabilities 12,519,257 12,510,081
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Limited Partners' capital (85,010
Interests issued) 28,599,146 29,692,815
Less Interests held by Early Investment
Incentive Fund (8,079 in 1996
and 7,310 in 1995) (5,002,199) (4,725,704)
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23,596,947 24,967,111
General Partner's deficit (1,154,797) (1,387,610)
<PAGE>
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Total partners' capital 22,442,150 23,579,501
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$ 34,961,407 $ 36,089,582
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Interest on loans receivable $ 994,707 $ 1,402,772
Less interest on loans payable -
underlying mortgages 177,681 247,221
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Net interest income on loans 817,026 1,155,551
Income from operations of real estate
held for sale 1,389,302 1,804,085
Interest on short-term investments 163,266 312,726
Participation income 410,493 240,377
Recovery of loss on loan 3,302,517
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Total income 6,082,604 3,512,739
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Expenses:
Provision for potential loss on
real estate 267,000
Administrative 515,272 275,087
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Total expenses 782,272 275,087
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Income before gain on sale of loan
receivable and gain on sale of real
estate 5,300,332 3,237,652
Gain on sale of loan receivable 306,759
Gain on sale of real estate 3,731,149
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Net income $ 9,338,240 $ 3,237,652
============== ==============
Net income allocated to
General Partner $ 700,368 $ 242,824
============== ==============
Net income allocated to
Limited Partners $ 8,637,872 $ 2,994,828
============== ==============
Net income per average number of Limited
Partnership Interests outstanding
(77,524 in 1996 and 78,939 in 1995) $ 111.42 $ 37.94
============== ==============
Distributions to General Partner $ 467,555 $ 403,798
============== ==============
Distributions to Limited Partners $ 9,731,541 $ 7,734,441
============== ==============
Distributions per Limited Partnership
Interest outstanding $ 126.00 $ 98.18
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Interest on loans receivable $ 258,647 $ 368,030
Less interest on loans payable -
underlying mortgages 42,622 75,252
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Net interest income on loans 216,025 292,778
Income from operations of real estate
held for sale 190,621 574,585
Interest on short-term investments 96,178 60,035
Participation income 160,092
Recovery of loss on loan 3,302,517
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Total income 3,965,433 927,398
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Expenses:
Provision for potential loss on
real estate 267,000
Administrative 182,517 87,803
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Total expenses 449,517 87,803
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Income before gain on sale of loan
receivable 3,515,916 839,595
Gain on sale of loan receivable 306,759
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Net income $ 3,822,675 $ 839,595
============== ==============
Net income allocated to
General Partner $ 286,701 $ 62,970
============== ==============
Net income allocated to
Limited Partners $ 3,535,974 $ 776,625
============== ==============
Net income per average number of Limited
Partnership Interests outstanding
(77,182 in 1996 and 78,563 in 1995) $ 45.81 $ 9.91
============== ==============
Distribution to General Partner $ 382,545 $ 332,956
============== ==============
Distribution to Limited Partners $ 8,799,137 $ 4,963,984
============== ==============
Distribution per Limited Partnership
Interest outstanding $ 114.00 $ 63.18
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Operating activities:
Net income $ 9,338,240 $ 3,237,652
Adjustments to reconcile net income to
net cash provided by operating
activites:
Gain on sale of loan receivable (306,759)
Gain on sale of real estate (3,731,149)
Recovery of loss on loan (3,302,517)
Provision for potential loss on
real estate 267,000
Amortization of deferred expenses 30,454 38,535
Net change in:
Escrow deposits (94,580) (82,250)
Escrow deposits - restricted 81,159
Accounts and accrued interest
receivable (423,531) (24,486)
Prepaid expenses (35,990) (139,677)
Accounts payable (19,209) 10,677
Due to affiliates 30,096 (60,938)
Accrued liabilities 255,711
Other liabilities 127,161 (23,155)
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Net cash provided by operating
activities 1,879,216 3,293,228
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Investing activities:
Collection of principal on
loans receivable 2,400,000
Proceeds from sale of loan receivable 9,153,755
Costs incurred in connection with sale
of loan receivable (339,500)
Improvements to real estate (327,184) (94,710)
Proceeds from sale of real estate 9,200,000
Costs incurred in connection with
sale of real estate (296,319)
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Net cash provided by investing
activities 17,390,752 2,305,290
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Financing activities:
Distributions to Limited Partners (9,731,541) (7,734,441)
Distributions to General Partner (467,555) (403,798)
Increase in cash and cash equivalents -
Early Investment Incentive Fund (879,025) (347,637)
Repurchase of Limited Partnership
Interests (276,495) (408,010)
Principal payments on underlying
loans payable (437,583) (364,738)
<PAGE>
Repayment of underlying loan payable (943,416)
Principal payments on mortgage
notes payable (128,872) (117,344)
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Net cash used in financing activities (11,921,071) (10,319,384)
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Net change in cash and cash equivalents 7,348,897 (4,720,866)
Cash and cash equivalents
at beginning of year 2,901,014 7,699,482
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Cash and cash equivalents at end of
period $ 10,249,911 $ 2,978,616
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the Partnership
incurred interest expense on mortgage notes payable on properties owned by the
Partnership of $846,311 and $857,839 and paid interest expense of $846,311 and
$851,565, 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, 1996 were:
Paid
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Nine Months Quarter Payable
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Mortgage servicing fees $ 8,011 $ 2,492 None
Reimbursement of expenses to
the General Partner, at cost 77,514 17,286 $49,466
4. Sale of Loan Receivable:
In August 1996, the Partnership sold its interest in the $11,324,000 Alzina
Office Building loan for $9,153,755. The purchaser acquired the Alzina Office
Building loan receivable subject to the existing underlying mortgage loan in
the amount of $2,816,504. From the proceeds of the sale, the Partnership paid
$339,500 in selling costs. For financial statement purposes, the Partnership
recognized a gain of $306,759 from the sale of its interest in this loan.
<PAGE>
5. Sale of Real Estate:
In June 1996, the Partnership sold the Cumberland Pines Apartments in an all
cash sale for $9,200,000. From the proceeds of the sale, the Partnership paid
$296,319 in selling costs. The basis of the property was $5,172,532. For
financial statement purposes, the Partnership recognized a gain of $3,731,149
from the sale of this property.
6. Contingency:
A proposed settlement has been reached with respect to the class action
complaint, Paul Williams and Beverly Kennedy, et al, v. Balcor Pension
Investors, et al. between counsel for the Class and counsel for the defendants.
Notice of the proposed settlement terms was sent to Class members in September
1996. A final hearing on the proposed settlement is expected to be held in
November 1996. The General Partner does not believe that the proposed
settlement will have a material adverse impact on the Partnership.
7. Subsequent Events:
(a) In October 1996, the Partnership paid $7,395,876 to the holders of Limited
Partnership Interests, representing the quarterly distribution of Cash Flow of
$6.00 per Interest for the third quarter of 1996 and special distributions of
$81.00 per Interest consisting of $29.00 per Interest from Cash Flow and $52.00
per Interest from Mortgage Reductions received in connection with the sale of
the Partnership's interest in the Alzina Office Building loan.
(b) In October 1996, the Partnership sold the Sherwood Acres - Phases I and II
apartment complexes in an all cash sale for $18,725,000. From the proceeds of
the sale, the Partnership paid $11,348,198 to the third party mortgage holder
in full satisfaction of the first mortgage loans, $426,541 in selling costs and
$453,928 in prepayment penalties. For financial statement purposes, the
Partnership will recognize a gain of approximately $3,794,000 during the fourth
quarter of 1996.
<PAGE>
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 thirty-three loans. Proceeds from prior loan
repayments were used to fund three additional mortgage loans. The Partnership
sold the Cumberland Pines and Sherwood Acres - Phases I and II apartment
complexes in June and October 1996, respectively, and its interest in the
Alzina Office Building loan in August 1996. Currently, the Partnership is
operating two properties acquired through foreclosure.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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The Partnership recognized a recovery of loss related to the Alzina Office
Building loan to provide for changes in the estimate of its fair value during
the third quarter of 1996, which was the primary reason for the increase in net
income during the nine months and quarter ended September 30, 1996 as compared
to the same periods in 1995. In addition, the Partnership recognized a gain on
the June 1996 sale of Cumberland Pines Apartments which further contributed to
the increase in net income during the nine months ended September 30, 1996.
Further discussion of the Partnership's operations is summarized below.
1996 Compared to 1995
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Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the nine months and quarters ended September 30, 1996 and 1995.
The repayment of the Stonegate Austin Mobile Home Park wrap-around loan in
March 1995 and the sale of the Partnership's interest in the Alzina Office
Building wrap-around loan in August 1996 resulted in a decrease in net interest
income on loans receivable during 1996 as compared to 1995.
<PAGE>
Provisions are charged to income when the General Partner believes an
impairment has occurred to the value of its properties or in a borrower's
ability to repay a loan or in the value of the collateral property.
Determinations of fair value are made periodically on the basis of performance
under the terms of the loan agreement and assessments of property operations.
Determinations of fair value represent estimations based on many variables
which affect the value of real estate, including economic and demographic
conditions. During the nine months ended September 30, 1996, the Partnership
recognized a recovery of $3,302,517 related to the Alzina Office Building loan
and recognized a provision of $267,000 related to the Hollowbrook Apartments to
provide for changes in the estimate of their fair value. The Partnership did
not recognize any provisions for potential losses related to its loans or real
estate held for sale during the nine months ended September 30, 1995.
Operations of real estate held for sale represent the net operations of those
properties acquired by the Partnership through foreclosure. At September 30,
1996, the Partnership was operating four properties. Original funds advanced by
the Partnership total approximately $11,693,000 for these four properties,
representing approximately 12% of original funds advanced. The Partnership sold
the Cumberland Pines Apartments, which had been generating income, in June
1996. In addition, repair and maintenance expense increased at the Sherwood
Acres - Phases I and II apartment complexes due to the replacement of floor
coverings and the completion of structural, asphalt and pool repairs in an
effort to prepare the property for sale. These were the primary reasons for
the decrease in income from operations of real estate held for sale during 1996
as compared to 1995.
Primarily due to lower average cash balances and lower average interest rates
on short-term interest bearing instruments, interest income on short-term
investments decreased during the nine months ended September 30, 1996 as
compared to the same period in 1995. Proceeds received from the August 1996
sale of the Partnership's interest in the Alzina Office Building loan were
invested in short-term investments prior to their distribution in October 1996
and resulted in increased interest income during the quarter ended September
30, 1996 as compared to the same period in 1995.
The Alzina Office Building loan bore interest at a contractually-fixed interest
rate. The loan also provided for participation by the Partnership in increases
in value of the collateral property when the loan was repaid or refinanced. In
addition, the loan agreement allowed the Partnership to receive a percentage of
rental income exceeding a base amount. This participation income was reflected
in the accompanying Statements of Income and Expenses when received. The
Partnership received participation income on the Alzina Office Building loan
during the nine months ended September 30, 1996 and 1995.
The Partnership incurred higher legal, consulting, printing and postage costs
in connection with its response to a tender offer and certain related
litigation during 1996. As a result, administrative expenses increased during
1996 as compared to 1995.
During the third quarter of 1996, the Partnership recognized a gain of $306,759
in connection with the sale of its interest in the Alzina Office Building loan.
During the second quarter of 1996, the Partnership recognized a gain of
$3,731,149 in connection with the sale of Cumberland Pines Apartments.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership increased by approximately $7,349,000 as
of September 30, 1996 when compared to December 31, 1995 primarily due to the
sale of the Partnership's interest in the Alzina Office Building loan. The
Partnership generated cash flow totaling approximately $1,879,000 from its
operating activities primarily as a result of the net interest income earned on
its investment in loan receivable, the operations of its properties, and the
interest received on its short-term investments, net of the payment of
administrative expenses. The Partnership also generated cash flow from its
investing activities of approximately $17,391,000 primarily due to the receipt
of proceeds totaling approximately $8,904,000 from the sale of the Cumberland
Pines Apartments and $8,814,000 from the sale of the Partnership's interest in
the Alzina Office Building loan. The Partnership's financing activities
consisted of the payment of distributions totaling approximately $10,199,000 to
the Partners, repurchases of Limited Partnership Interests totaling
approximately $276,000 and principal payments on the underlying loan and
mortgage notes payable totaling approximately $566,000. The Partnership also
made a special distribution to Limited Partners from Cash Flow and Mortgage
Reductions in October 1996 as described below.
The Partnership defines cash flow generated from its properties as an amount
equal to the properties' revenue receipts less property related expenditures,
which include debt service payments. During the nine months ended September 30,
1996 and 1995, all four of the Partnership's remaining properties generated
positive cash flow. The Cumberland Pines Apartments, which was sold in June
1996, generated positive cash flow during the nine months ended September 30,
1995 and prior to its sale in 1996.
As of September 30, 1996, the occupancy rates of the Partnership's remaining
residential properties ranged from 94% to 97%, while the occupancy rate of the
Parkway Distribution Center was 99%. Many rental markets continue to remain
extremely competitive; therefore, the General Partner's goals are to maintain
high occupancy levels, while increasing rents where possible, and to monitor
and control operating expenses and capital improvement requirements at the
properties.
As previously reported, the Partnership is in its liquidation stage. The
General Partner believes that the market for multifamily housing properties is
favorable to sellers of these properties and the General Partner's strategy is
to sell or otherwise dispose of all assets by the end of 1996. During 1996, the
Partnership sold the Cumberland Pines and Sherwood Acres - Phases I and II
apartment complexes. Currently, the Partnership has entered into contracts to
sell the Hollowbrook Apartments and the Parkway Distribution Center for sale
prices of $3,000,000 and $6,050,000, respectively. In addition, the Partnership
sold its interest in the wrap-around loan collateralized by the Alzina Office
Building in August 1996. Proceeds will be distributed to Limited Partners upon
the sale or disposition of the remaining assets.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate.
<PAGE>
As mentioned above, during June 1996, the Partnership sold the Cumberland Pines
Apartments in an all cash sale for $9,200,000. From the proceeds of the sale,
the Partnership paid $296,319 in selling costs. The remainder of the proceeds
were distributed to the Partners in July 1996. See Note 5 of Notes to Financial
Statements for additional information.
During October 1996, the Partnership sold the Sherwood Acres - Phases I and II
apartment complexes in an all cash sale for $18,725,000. From the proceeds of
the sale, the Partnership paid $11,348,198 to the third party mortgage holder
in full satisfaction of the first mortgage loans, paid $426,541 in selling
costs, and paid $453,928 of prepayment penalties. Pursuant to the terms of the
sale, $250,000 of the proceeds will be retained by the Partnership until
February 1997. See Note 7(b) of Notes to Financial Statements for additional
information.
During August 1996, the Partnership sold its interest in the Alzina Office
Building loan for $9,153,755. The purchaser acquired the Alzina Office Building
loan receivable subject to the existing underlying mortgage loan in the amount
of $2,816,504. From the proceeds of the sale, the Partnership paid $339,500 in
selling costs. A majority of the remaining proceeds were distributed to the
Partners in October 1996. See Note 4 of the Notes to the Financial Statements
for additional information.
In October 1996, the Partnership paid $7,395,876 to the holders of Limited
Partnership Interests representing the quarterly distribution of Cash Flow of
$6.00 per Interest for the third quarter of 1996 and special distributions of
$81.00 per Interest consisting of $29.00 per Interest from Cash Flow and $52.00
per Interest from Mortgage Reductions received in connection with the sale of
the Partnership's interest in the Alzina Office Building loan. The level of the
regular quarterly distribution remained unchanged from the amount distributed
to Limited Partners during the second quarter of 1996. Including the October
1996 distribution, Limited Partners have received distributions totaling
$1,569.68 per $1,000 Interest. Of this amount $1,046.50 represents Cash Flow
from operations and $523.18 represents a return of Original Capital. In October
1996, the Partnership also paid $247,946 to the General Partner as its
distributive share of Cash Flow distributed for the third quarter of 1996 and
made a contribution to the Early Investment Incentive Fund in the amount of
$82,649.
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 receipt of property cash flow, less the payment of
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.
During the nine months ended September 30, 1996, the General Partner on behalf
of the Partnership used amounts placed in the Early Investment Incentive Fund
to repurchase 769 Interests from Limited Partners at a total cost of $276,495.
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.
<PAGE>
BALCOR PENSION INVESTORS-II
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Proposed Class and Derivative Action Lawsuits
- ---------------------------------------------
On June 14, 1996, a proposed class and derivative action complaint was filed,
Dee vs. Walton Street Capital Acquisition II, LLC (Circuit Court of Cook
County, Illinois, County Department, Chancery Division ("Chancery Court"), Case
No. 96 CH 06283) (the "Dee Case"), naming the General Partner and the general
partners (the "Balcor Defendants") of nine other limited partnerships sponsored
by The Balcor Company (together with the Partnership, the "Affiliated
Partnerships"), as well as the Affiliated Partnerships, as defendants.
Additional defendants were Insignia Management Group ("Insignia") and Walton
Street Capital Acquisition II, LLC ("Walton") and certain of their affiliates
and principals (collectively, the "Walton and Insignia Defendants"). The
complaint alleged, among other things, that the tender offers for the purchase
of limited partnership interests in the Affiliated Partnerships made by a joint
venture consisting of affiliates of Insignia and Walton were coercive and
unfair.
On July 1, 1996, another proposed class action complaint was filed in the same
court, Anderson vs. Balcor Mortgage Advisors (Case No. 96 CH 06884) (the
"Anderson Case"). An amended complaint consolidating the Dee and Anderson
Cases (the "Dee/Anderson Case") was filed on July 25, 1996.
The complaint seeks to assert class and derivative claims again the Walton and
Insignia Defendants and alleges that, in connection with the tender offers, the
Walton and Insignia Defendants misused the Balcor Defendants' and Insignia's
fiduciary positions and knowledge in breach of the Walton and Insignia
Defendants' fiduciary duty and in violation of the Illinois Securities and
Consumer Fraud Acts. The plaintiffs amended their complaint on October 8, 1996,
adding additional claims. The plaintiffs request certification as a class and
derivative action, unspecified compensatory damages and rescission of the
tender offers. Each of the defendants have filed motions to dismiss the
complaint. The court has not yet ruled on these motions.
The Balcor Defendants intend to vigorously contest this action. No class has
been certified as of this date. Management of each of the Balcor Defendants
believes they have meritorious defenses to contest the claims. It is not
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the Partnership.
<PAGE>
Item 5. Other Information
- --------------------------
Sherwood Acres Apartments, Phases I and II
- ------------------------------------------
As previously reported, on October 14, 1996, the Partnership contracted to sell
Sherwood Acres Apartments, Phases I and II, to an unaffiliated party, New Plan
Realty Trust, a Massachusetts business trust, for a sale price of $18,875,000.
The Partnership and purchaser agreed to reduce the sale price to $18,725,000.
The purchaser assigned its rights under the agreement of sale to an affiliate,
New Plan Realty of Louisiana, Inc., a Delaware corporation, and the sale closed
on October 31, 1996. The purchaser received a $308,693 credit against the sale
price relating to fire damage at the property. The Partnership retains all
rights to any insurance proceeds relating to the damage.
From the proceeds of the sale, the Partnership paid the total outstanding
balances of the two first mortgage loans collateralized by the property of
$11,348,198, along with prepayment penalties of $453,928. In addition, the
Partnership paid $234,062 to an unaffiliated party as a brokerage commission,
$140,438 to an affiliate of the third party providing property management
services for the property as a fee for services rendered in connection with the
sale of the property, and other selling costs totaling $52,041. The Partnership
received the remaining $6,496,333 of sale proceeds. Of such proceeds, $250,000
will be retained by the Partnership and will not be available for use or
distribution by the Partnership until 120 days after closing.
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 September 30, 1992 (Commission File No.
0-10225) are incorporated herein by reference.
(10) (i)(a) Agreement of Sale and attachment thereto relating to the sale of
Cumberland Pines Apartments, Atlanta, Georgia, previously filed as Exhibit (10)
to the Registrant's Report on Form 10-Q for the quarter ended March 31, 1996,
is incorporated herein by reference.
(b) First, Second and Third Amendments to Agreement of Sale and Escrow Trust
Instructions relating to the sale of Cumberland Pines Apartments, Atlanta,
Georgia, previously filed as Exhibits (99)(a)(b) and (c) to the Registrant's
Report on Form 8-K dated June 28, 1996, is incorporated herein by reference.
(ii) Purchase and Sale Agreement regarding the sale of the Partnership's
interest in the Alzina Office Building loan, previously filed as Exhibit (10)
(iii) to the Registrant's Report on Form 10-Q for the quarter ended June 30,
1996, is incorporated herein by reference.
(iii)(a)Agreement of Sale and attachment thereto and Amendment to Agreement of
Sale and Escrow Agreement relating to the sale of Parkway Commerce Center, Fort
Lauderdale, Florida, previously filed as Exhibits 2(a) and 2(b) to the
<PAGE>
Registrant's Current Report on Form 8-K dated August 13, 1996, are incorporated
herein by reference.
(b) Second Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Parkway Commerce Center, Fort Lauderdale, Florida, previously filed as
Exhibit (99) to the Registrant's Report on Form 8-K dated September 17, 1996,
is incorporated herein by reference.
(iv)(a) Agreement of Sale and attachment thereto and First Amendment to
Agreement of Sale relating to the sale of Hollowbrook Apartments, Orlando,
Florida, previously filed as Exhibits 2(a) and 2(b) to the Registrant's Current
Report on Form 8-K dated September 17, 1996, are incorporated herein by
reference.
(b) Letter Agreement relating to the sale of Hollowbrook Apartments, Orlando,
Florida, previously filed as Exhibit (99) to the Registrant's Current Report on
Form 8-K dated October 14, 1996, is incorporated herein by reference.
(v)(a) Agreement of Sale and attachment thereto relating to the sale of
Sherwood Acres Apartments, Phases I and II, Baton Rouge, Louisiana, previously
filed as Exhibit (2) to the Registrant's Current Report on Form 8-K dated
October 14, 1996, is incorporated herein by reference.
(b) First Amendment to Agreement of Sale relating to the sale of Sherwood Acres
Apartments, Phases I and II, Baton Rouge, Louisiana, is attached hereto.
(c) Second Amendment to Agreement of Sale relating to the sale of Sherwood
Acres Apartments, Phases I and II, Baton Rouge, Louisiana, is attached hereto.
(27) Financial Data Schedule of the Registrant for the nine-month period ended
September 30, 1996 is attached hereto.
(b) Reports on Form 8-K:
(i) A Current Report on Form 8-K dated June 28, 1996, was filed reporting a
contract to sell Sherwood Acres Apartments, Phases I and II, Baton Rouge,
Louisiana, which was subsequently terminated, and the closing of the sale of
Cumberland Pines Apartments, Atlanta, Georgia.
(ii) A Current Report on Form 8-K dated August 13, 1996 was filed reporting the
contract to sell Parkway Commerce Center, Fort Lauderdale, Florida and the
termination of the contract to sell Sherwood Acres Apartments, Phases I and II,
Baton Rouge, Louisiana.
(iii) A Current Report on Form 8-K dated September 17, 1996 reporting the
contract to sell Hollowbrook Apartments (formerly known as Curry Ford
Apartments), Orlando, Florida; the amendment to the contract to sell Parkway
Commerce Center, Fort Lauderdale, Florida; and the closing of the sale of the
Partnership's interest in the Alzina Office Building loan.
(iv) A Current Report on Form 8-K dated October 14, 1996, was filed reporting a
contract to sell Sherwood Acres Apartments, Phases I and II, Baton Rouge,
Louisiana, and a letter agreement relating to Hollowbrook Apartments, Orlando,
Florida.
<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 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/Jayne A. Kosik
----------------------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Mortgage Advisors, the General Partner
Date: November 13, 1996
-------------------------------
<PAGE>
FIRST AMENDMENT TO
AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS FIRST AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is made and entered into as of this 24th day of October, 1996, by
and between SHERWOOD PARTNERS LIMITED PARTNERSHIP, an Illinois limited
partnership ("Seller"), NEW PLAN REALTY TRUST, a Massachusetts business trust
("Purchaser"), and COMMONWEALTH LAND TITLE INSURANCE COMPANY ("Escrow Agent").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated October 14, 1996 (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 Exhibits A-1 and A-2
attached to the Agreement.
B. Seller, Purchaser and Escrow Agent are parties to that certain Escrow
Agreement, dated October 14, 1996 (the "Escrow Agreement"), pursuant to which
Purchaser has deposited funds in escrow to be held by Escrow Agent in
accordance with the terms of the Escrow Agreement.
C. Seller and Purchaser desire to amend the Agreement and the Escrow
Agreement in accordance with the terms of this Amendment.
AGREEMENT
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 first two (2) grammatical sentences of Paragraph 16a of the Agreement
are deleted in their entirety and replaced with the following:
"a. Seller has delivered to Purchaser copies of the most recent available
tax bills, rent rolls, insurance premiums, and service contracts (collectively
the "Documents"). All of the Documents and other matters to be reviewed by
Purchaser shall be subject to review by Purchaser by the close of business
(5:00 P.M. Central Daylight Time) on October 28, 1996 ("Approval Period")."
3. The reference to the date "October 24, 1996" in Paragraph 1 of the Escrow
Agreement is hereby deleted and the date "October 28, 1996" is hereby inserted
in lieu thereof.
4. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
5. 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.
<PAGE>
6. This Amendment and all documents, agreements, understandings and
arrangements relating to this transaction have been negotiated, executed and
delivered on behalf of Purchaser by the trustees or officers thereof in their
representative capacity under the Amended and Restated Declaration of Trust of
New Plan Realty Trust dated as of January 15, 1996 and not individually, and
bind only the trust estate of Purchaser, and no trustee, officer, employee,
agent or shareholder of Purchaser shall be bound or held to any personal
liability or responsibility in connection with the agreements, obligations and
undertakings of Purchaser thereunder, and any person or entity dealing with
Purchaser in connection therewith shall look solely to the trust estate for the
payment of any claim or for the performance of any agreement, obligation or
undertaking thereunder. Seller acknowledges and agrees that each agreement and
other document executed by Purchaser in accordance with or in respect of this
transaction shall be deemed and treated to include in all respects and for all
purposes the foregoing exculpatory provision.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
NEW PLAN REALTY TRUST, a Massachusetts business trust
By: /s/Robert M. Horwitch
----------------------------------
Name: Robert M. Horwitch
----------------------------------
Its: Attorney
----------------------------------
SELLER:
SHERWOOD PARTNERS LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Sherwood Partners, Inc., an Illinois corporation,
its general partner
By: /s/James E. Mendelson
------------------------------------
Name: James E. Mendelson
------------------------------------
Its: Authorized Representative
------------------------------------
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: /s/Brian S. Nagy
-----------------------------------
Name: Brian S. Nagy
-----------------------------------
Its: Vice President
-----------------------------------
<PAGE>
SECOND AMENDMENT TO
AGREEMENT OF SALE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of the 30th day of October, 1996, by and between SHERWOOD
PARTNERS LIMITED PARTNERSHIP, an Illinois limited partnership ("Seller"), and
NEW PLAN REALTY TRUST, a Massachusetts business trust ("Purchaser").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated October 14, 1996 (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 Exhibits A-1 and A-2
attached to the Agreement.
B. Seller, Purchaser and Escrow Agent are parties to that certain Escrow
Agreement, dated October 14, 1996 (the "Escrow Agreement"), pursuant to which
Purchaser has deposited funds in escrow to be held by Escrow Agent in
accordance with the terms of the Escrow Agreement.
C. Seller, Purchaser and Escrow Agent are parties to that certain First
Amendment to Agreement of Sale and Escrow Agreement dated as of October 24,
1996, which changed the "Approval Period" (as defined in the Agreement).
D. Seller and Purchaser desire to further amend the Agreement in
accordance with the terms of this Amendment.
AGREEMENT:
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 reference to Eighteen Million Eight Hundred Seventy-five Thousand and
No/100 Dollars ($18,875,000.00) contained in the second and third lines of
Paragraph 1 of the Agreement is hereby deleted in its entirety and replaced
with the following: "Eighteen Million Seven Hundred Twenty-Five Thousand and
No/100 Dollars ($18,725,000.00)".
3. The reference to "$18,875,000.00" contained in the first line of Paragraph
2(b) of the Agreement is hereby deleted in its entirety and replaced with the
following: "$18,725,000.00".
4. The reference to "October 30, 1996" contained in the first sentence of
Paragraph 8 of the Agreement is hereby deleted in its entirety and replaced
with the following: "October 31, 1996".
5. Paragraph 7(c) of the Agreement is hereby deleted in its entirety and
replaced with the following:
<PAGE>
" c. Purchaser acknowledges that there has been a recent fire at the
Property which affected approximately eight (8) units (the "Fire Damage"). At
Closing, Seller shall give to Purchaser a credit against the Purchase Price in
the amount of Three Hundred Eight Thousand Six Hundred Ninety-Three and No/100
Dollars ($308,693.00). The aforesaid credit shall be in complete and full
satisfaction of any claims of Purchaser against Seller as a consequence of such
Fire Damage, except for third party claims arising from the occurrence of the
Fire Damage to the Closing Date with respect to claims for personal injury and
property damage. As between Purchaser and Seller, Seller shall retain all
rights to any insurance proceeds paid as a consequence of the Fire Damage
(including, without limitation, all rights to any rental loss insurance).
Purchaser acknowledges that it will be acquiring the Property subject to the
Fire Damage. Purchaser hereby covenants and agrees to allow for a period of
120 days after the Closing date Seller and Seller's insurers reasonable access
to the Property (at reasonable times and upon prior notice) in connection with
the resolution of any of Seller's insurance claims relating to the Fire Damage.
Seller acknowledges that Purchaser shall have the right at any time to
demolish the portion of the Property which was affected by the Fire Damage.
Purchaser agrees to endorse to Seller any checks which are payable to Purchaser
from any of Seller's insurers arising in connection with the Fire Damage. Any
sums received by Purchaser from any of Seller's insurers in connection with the
Fire Damage shall be promptly remitted to Seller and shall be held in trust by
Purchaser for the benefit of Seller. The terms of this Paragraph 7(c) shall
survive the Closing and the delivery of the Deed."
6. The final grammatical sentence of Section 9(b) of the Agreement is hereby
deleted in its entirety.
7. The third grammatical sentence of Section 14 of the Agreement is hereby
deleted in its entirety and replaced with the following: "Seller hereby
consents to an assignment to any corporation or limited partnership which
directly or indirectly is owned or controlled by Purchaser, provided such
assignment is effected prior to the Closing Date."
8. The reference to "October 30, 1996" contained in the first line of
Paragraph 2 of the Escrow Agreement is hereby deleted and replaced with the
following: "October 31, 1996".
9. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
10. 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.
11. This Amendment and all documents, agreements, understandings and
arrangements relating to this transaction have been negotiated, executed and
delivered on behalf of Purchaser by the trustees or officers thereof in their
representative capacity under the Amended and Restated Declaration of Trust of
New Plan Realty Trust dated as of January 15, 1996 and not individually, and
<PAGE>
bind only the trust estate of Purchaser, and no trustee, officer, employee,
agent or shareholder of Purchaser shall be bound or held to any personal
liability or responsibility in connection with the agreements, obligations and
undertakings of Purchaser thereunder, and any person or entity dealing with
Purchaser in connection therewith shall look solely to the trust estate for the
payment of any claim or for the performance of any agreement, obligation or
undertaking thereunder. Seller acknowledges and agrees that each agreement and
other document executed by Purchaser in accordance with or in respect of this
transaction shall be deemed and treated to include in all respects and for all
purposes the foregoing exculpatory provision.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
NEW PLAN REALTY TRUST, a Massachusetts business trust
By: /s/Robert M. Horwitch
------------------------------------
Name: Robert M. Horwitch
------------------------------------
Its: Vice President
------------------------------------
SELLER:
SHERWOOD PARTNERS LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Sherwood Partners, Inc., an Illinois corporation,
its general partner
By: /s/James E. Mendelson
--------------------------------------
Name: James E. Mendelson
--------------------------------------
Its: Authorized Representative
--------------------------------------
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: /s/Deborah A. Payne
-----------------------------------
Name: Deborah A. Payne
-----------------------------------
Its: National Accounts Administrator
-----------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 11438
<SECURITIES> 0
<RECEIVABLES> 674
<ALLOWANCES> 500
<INVENTORY> 0
<CURRENT-ASSETS> 12434
<PP&E> 22406
<DEPRECIATION> 0
<TOTAL-ASSETS> 34961
<CURRENT-LIABILITIES> 510
<BONDS> 12009
0
0
<COMMON> 0
<OTHER-SE> 22442
<TOTAL-LIABILITY-AND-EQUITY> 34961
<SALES> 0
<TOTAL-REVENUES> 10121
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 515
<LOSS-PROVISION> 267
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9338
<INCOME-TAX> 0
<INCOME-CONTINUING> 9338
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9338
<EPS-PRIMARY> 111.42
<EPS-DILUTED> 111.42
</TABLE>
