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 end June 30, 1997
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-11127
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BALCOR REALTY INVESTORS LTD.-82
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(Exact name of registrant as specified in its charter)
Illinois 36-3139801
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(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 REALTY INVESTORS LTD. - 82
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
ASSETS
1997 1996
------------- -------------
Cash and cash equivalents $ 2,652,849 $ 4,440,715
Escrow deposits 320,680
Accounts and accrued interest receivable 16,928 75,524
Prepaid expenses 23,719
Deferred expenses, net of accumulated
amortization of $113,985 in 1996 236,738
------------- -------------
2,669,777 5,097,376
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Investment in real estate:
Land 1,914,223
Buildings and improvements 9,747,109
-------------
11,661,332
Less accumulated depreciation 5,056,537
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Investment in real estate, net of
accumulated depreciation 6,604,795
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$ 2,669,777 $ 11,702,171
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 39,394 $ 46,998
Due to affiliates 52,617 64,953
Accrued liabilities, principally
real estate taxes 310,641
Security deposits 47,624
Mortgage notes payable 9,161,938
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Total liabilities 92,011 9,632,154
Commitments and contingencies
Limited Partners' capital
(74,133 Interests issued
and outstanding) 2,681,102 5,699,713
General Partner's (deficit) (103,336) (3,629,696)
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Total Partners' capital 2,577,766 2,070,017
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$ 2,669,777 $ 11,702,171
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS LTD. - 82
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
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Income:
Rental and service $ 644,285 $ 3,566,742
Interest on short-term investments 75,696 78,409
Settlement income 216,750
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Total income 719,981 3,861,901
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Expenses:
Interest on mortgage notes payable 126,547 1,000,461
Depreciation 62,414 390,970
Amortization of deferred expenses 7,307 32,506
Property operating 366,167 1,192,029
Real estate taxes 64,727 327,581
Property management fees 32,133 173,373
Administrative 130,882 214,882
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Total expenses 790,177 3,331,802
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(Loss) income before gain on sale of (70,196) 530,099
property and extraordinary item
Gain on sale of property 8,887,873
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Income before extraordinary item 8,817,677 530,099
Exraordinary item:
Debt extinguishment expense (229,431)
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Net income $ 8,588,246 $ 530,099
============= =============
Income before extraordinary item
allocated to General Partner $ 3,528,654 $ 26,505
============= =============
Income before extraordinary item
allocated to Limited Partners $ 5,289,023 $ 503,594
============= =============
Income before extraordinary item
per Limited Partnership Interest
(74,133 issued and outstanding) $ 71.34 $ 6.80
============= =============
<PAGE>
BALCOR REALTY INVESTORS LTD. - 82
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1997 and 1996
(Unaudited)
(Continued)
Extraordinary item allocated to
General Partner $ (2,294) None
============= =============
Extraordinary item allocated to
Limited Partners $ (227,137) None
============= =============
Extraordinary item per Limited
Partnership Interest (74,133
issued and outstanding) $ (3.06) None
============= =============
Net income allocated to General Partner $ 3,526,360 $ 26,505
============= =============
Net income allocated to Limited Partners $ 5,061,886 $ 503,594
============= =============
Net income per Limited Partnership
Interest (74,133 issued and outstanding) $ 68.28 $ 6.80
============= =============
Distributions to Limited Partners $ 8,080,497 $ 593,064
============= =============
Distributions per Limited Partnership
Interest $ 109.00 $ 8.00
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS LTD. - 82
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1997 and 1996
(Unaudited)
1997 1996
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Income:
Rental and service $ 1,785,394
Interest on short-term investments $ 44,083 34,481
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Total income 44,083 1,819,875
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Expenses:
Interest on mortgage notes payable 499,087
Depreciation 195,485
Amortization of deferred expenses 16,253
Property operating 46,924 597,265
Real estate taxes 156,894
Property management fees 86,128
Administrative 62,513 130,894
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Total expenses 109,437 1,682,006
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Net (loss) income $ (65,354) $ 137,869
============= =============
Net (loss) income allocated to General Partner None $ 6,893
============= =============
Net (loss) income allocated to Limited Partners$ (65,354) $ 130,976
============= =============
Net (loss) income per Limited Partnership
Interest (74,133 issued and outstanding) $ (0.88) $ 1.77
============= =============
Distribution to Limited Partners $ 4,077,315 $ 296,532
============= =============
Distribution per Limited Partnership Interest $ 55.00 $ 4.00
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS LTD. - 82
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
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Operating activities:
Net income $ 8,588,246 $ 530,099
Adjustments to reconcile net income
to net cash (used in) or provided
by operating activities:
Gain on sale of property (8,887,873)
Debt extinguishment expense 229,431
Depreciation of properties 62,414 390,970
Amortization of deferred expenses 7,307 32,506
Net change in:
Accounts and accrued
interest receivable 58,596 1,748
Escrow deposits 284,574 240,746
Prepaid expenses 23,719 (95,115)
Accounts payable (7,604) (10,071)
Due to affiliates (12,336) 11,967
Accrued liabilities (310,641) (176,767)
Security deposits (47,624) (2,792)
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Net cash (used in) or provided by
operating activities (11,791) 923,291
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Investing activities:
Proceeds from sale of real estate 6,686,722
Payment of selling costs (369,746)
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Net cash provided by investing activities 6,316,976
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Financing activities:
Distributions to Limited Partners (8,080,497) (593,064)
Principal payments on mortgage
notes payable (48,660) (216,062)
Funding of capital improvement escrows (16,000) (87,162)
Disbursements from capital
improvement escrows 52,106 135,581
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Net cash used in financing activities (8,093,051) (760,707)
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Net change in cash and cash equivalents (1,787,866) 162,584
Cash and cash equivalents at beginning
of period 4,440,715 1,585,311
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Cash and cash equivalents at end of period $ 2,652,849 $ 1,747,895
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
(a) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the six months
and quarter ended June 30, 1997, and all such adjustments are of a normal and
recurring nature.
(b) For financial statement purposes, in previous years partners were allocated
income and loss in accordance with the profit and loss percentages in the
Partnership Agreement. In order for the capital accounts of the General Partner
and Limited Partners to appropriately reflect their respective remaining
economic interests as provided for in the Partnership Agreement, the General
Partner was allocated additional income during the first quarter of 1997 for
financial statement purposes.
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 1996, the Partnership sold the Songbird Phase I & II
Apartments and the Eagles Pointe Apartments and during 1997, sold its remaining
property, the Balcones Woods Apartments. The Partnership has retained a portion
of the cash from property sales to satisfy obligations of the Partnership as
well as establish a reserve for contingencies. The timing of the termination of
the Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exist or may arise. Such
contingencies may include legal and other fees stemming from litigation
involving the Partnership including, but not limited to, the lawsuit discussed
in Note 7 of Notes to the Financial Statements. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property sale. In the event a contingency arises, reserves may be held by the
Partnership for a longer period of time.
3. Interest Expense:
During the six months ended June 30, 1997 and 1996, the Partnership incurred
interest expense on non-affiliated mortgage notes payable of $126,547 and
$1,000,461, and paid interest expense on non-affiliated mortgage notes payable
of $147,831 and $1,000,461, respectively.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1997 are:
<PAGE>
Paid
-------------------------
Six Months Quarter Payable
------------ --------- ---------
Reimbursement of expenses to
the General Partner, at cost $ 41,532 $ 30,050 $ 52,617
5. Property Sale:
In March 1997, the Partnership sold the Balcones Woods Apartments for
$15,800,000. The purchaser of the property took title subject to the existing
first mortgage loan in the amount of $9,113,278, which represents a noncash
transaction to the Partnership. Accordingly, the noncash aspect of this
transaction is not presented in the partnership's Statement of Cash Flows. From
the proceeds of the sale, the Partnership paid $369,746 in selling costs. The
basis of the property was $6,542,381, which is net of accumulated depreciation
of $5,118,951. For financial statement purposes, the Partnership recognized a
gain of $8,887,873 from the sale of this property.
6. Extraordinary Item:
In March 1997, the Partnership sold the Balcones Woods Apartments. In
connection with the sale, the Partnership wrote-off the remaining unamortized
deferred financing fees in the amount of $229,431. This amount was recognized
as an extraordinary item and classified as a debt extinguishment expense.
7. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership and
certain affiliates have been named as defendants alleging certain federal
securities law violations with regard to the adequacy and accuracy of
disclosures of information concerning, as well as the 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 yet been certified, and no determination of the merits have been made. 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's financial
position, results of operations or liquidity. The Partnership believes it has
meritorious defenses to contest the claims.
8. Subsequent Event:
In July 1997, the Partnership made a distribution of $555,998 to the holders of
Limited Partnership Interests representing a special distribution of $7.50 per
Interest primarily from Net Cash Proceeds received in connection with the sale
of the Balcones Woods Apartments.
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors Ltd.-82 (the "Partnership") is a limited partnership
formed in 1981 to invest in and operate income-producing real property. The
Partnership raised $74,133,000 through the sale of Limited Partnership
Interests and utilized these proceeds to acquire fourteen real property
investments. From 1984 through 1996, thirteen of these properties were sold or
relinquished through foreclosure. During March 1997, the Partnership sold its
remaining property, Balcones Woods Apartments.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1996 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
- ---------------------
The Partnership recognized a gain on the sale of Balcones Woods Apartments
during 1997, which was the primary reason the Partnership recognized an
increase in net income for the six months ended June 30, 1997 as compared to
the same period in 1996. Due to the sales of all of the Partnership's
properties, which were generating income prior to the second quarter of 1997,
the Partnership recognized a net loss during the quarter ended June 30, 1997 as
compared to net income during the same period in 1996. Further discussion of
the Partnership's operations is summarized below.
1997 Compared to 1996
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1997 and 1996 refer
to both the six months and quarters ended June 30, 1997 and 1996.
Rental and service income, interest expense on mortgage notes payable,
depreciation expense, amortization expense, property operating expense, real
estate tax expense and property management fees decreased in 1997 as compared
to 1996 due to the sales of the Songbird Phases I & II Apartments, the Eagles
Pointe Apartments, and the Balcones Woods Apartments in September 1996, October
1996, and March 1997, respectively. The decrease in property operating expense
was partially offset by the payment of expenses during the quarter ended June
30, 1997 related to certain of the sold properties. During 1997, the
Partnership recognized a gain of $8,887,873 in connection with the sale of
Balcones Woods Apartments.
Interest income on short-term investments increased during the quarter ended
June 30, 1997 as compared to the same period in 1996 due to higher average cash
<PAGE>
balances available for investment resulting from the investment of the
remaining proceeds received in connection with the sale in March 1997 of the
Balcones Woods Apartments. Proceeds from the sale were distributed to Limited
Partners in April and July, 1997.
In February 1996, the Partnership reached a settlement with the seller
regarding the original purchase of the Balcones Woods Apartments and recognized
$216,750 of settlement income relating primarily to amounts due from the seller
under the management and guarantee agreement as well as construction defects at
the property.
The Partnership incurred higher printing, postage and investor processing costs
in connection with responses to tender offers during the first quarter of 1996.
In addition, portfolio management fees decreased during 1997 due to the sales
of the Partnership's properties. As a result, administrative expenses decreased
in 1997 as compared to 1996.
In connection with the sale of the Balcones Woods Apartments, the Partnership
wrote off the remaining unamortized deferred expenses in the amount of
$229,431. This amount was recognized as an extraordinary item and classified as
debt extinguishment expense in 1997.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $1,788,000 as
of June 30, 1997 as compared to December 31, 1996 primarily due to special
distributions totaling $8,080,497 made to Limited Partners in 1997. Cash of
approximately $12,000 was used in operating activities to pay administrative
expenses which was partially offset by cash generated from property operations
and interest on short-term investments. Cash provided by investing activities
of approximately $6,317,000 consisted of net proceeds received from the sale of
the Balcones Woods Apartments. Cash used in financing activities of
approximately $8,093,000 consisted of special distributions of $8,080,497 to
the Limited Partners and principal payments on mortgage notes payable offset by
net disbursements received from capital improvement escrows.
In March 1997, the Partnership sold the Balcones Woods Apartments for
$15,800,000. The purchaser of the property took title subject to the existing
first mortgage loan in the amount of $9,113,278. From the proceeds of the sale,
the Partnership paid $369,746 in selling costs. Pursuant to the terms of the
sale, $200,000 of the proceeds was retained by the Partnership and was
unavailable for distribution until May 1997 at which time the funds were
released. The remainder of the available proceeds were distributed to the
Limited Partners in April and July 1997. See Note 5 of Notes to Financial
Statements for additional information.
Pursuant to the sale agreement for the Songbird Phase I & II Apartments,
$500,000 of the sale proceeds was retained by the Partnership and was
unavailable for distribution until January 1997, at which time the funds were
released.
In July 1997, the Partnership made a distribution of $555,998 to the holders of
<PAGE>
Limited Partnership Interests representing a special Net Cash Proceeds
distribution of $7.50 per Interest primarily from the remaining proceeds
received in connection with the sale of Balcones Woods Apartments in March
1997. Since all of the Partnership's properties have been sold, no additional
quarterly distributions are expected. Including the July 1997 distribution,
investors have received distributions of Net Cash Receipts of $46.90 and Net
Cash Proceeds of $549.00, totaling $595.90 per $1,000 Interest, as well as
certain tax benefits. Investors will not recover all of their original
investment.
During 1996, the Partnership sold the Songbird Phase I & II Apartments and the
Eagles Pointe Apartments, and during 1997, sold its remaining property, the
Balcones Woods Apartments. 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. The Partnership has
retained a portion of the cash from property sales to satisfy obligations of
the Partnership as well as establish a reserve for contingencies. Such
contingencies may include legal and other fees stemming from litigation
involving the Partnership including, but not limited to, the lawsuit discussed
in Note 7 of Notes to Financial Statements. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property sale. In the event a contingency arises, reserves may be held by the
Partnership for a longer period of time.
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
- -------------
(4) Certificate of Limited Partnership set forth as Exhibit 4.1 to Amendment
No. 1 to the Registrant's Registration Statement on Form S-11 dated December
11, 1981 (Registration No. 2-74358), 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. 0-11127)
are incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachments there to relating to the sale of
the Eagles Pointe Apartments, Norcross, Georgia previously filed as Exhibit
(2)(a) to the Registrant's Current Report on Form 8-K dated July 22, 1996, is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of Eagles
Pointe Apartments, Norcross, Georgia, previously filed as Exhibit (10)(a)(ii)
to the Registrant's Report on Form 10-Q for the quarter ended September 30,
1996, is incorporated herein by reference.
(b)(i) Agreement of sale relating to the sale of the Songbird Apartments, Phase
I and Phase II, San Antonio, Texas, previously filed as Exhibit (2)(b) to the
Registrant's Current Report on Form 8-K dated July 22, 1996, is incorporated
herein by reference.
(ii) Letter Agreements relating to the sale of the Songbird Apartments,
Phase I and Phase II, San Antonio, Texas, dated August 15, 1996, August 20,
1996, and August 26, 1996, previously filed as Exhibit (10)(b)(ii) to the
Registrant's Report on Form 10-Q for the quarter ended September 30, 1996, are
incorporated herein by reference.
(c)(i) Agreement of Sale and attachment thereto relating to the sale of the
Balcones Woods Apartments, Austin, Texas, previously filed as Exhibit (2) to
the Registrant's Current Report on Form 8-K dated February 11, 1997, is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of Balcones
Woods Apartments, Austin, Texas, previously filed as Exhibit (10)(c)(ii) to the
Registrant's Report on Form 10-K for the year ended December 31, 1996, is
incorporated herein by reference.
(iii) Letter Agreements dated February 24, 1997 and February 26, 1997 relating
to the sale of Balcones Woods Apartments, Austin, Texas, previously filed as
Exhibit (10)(c)(iii) to the Registrant's Report on Form 10-K for the year ended
December 31, 1996, is incorporated herein by reference.
<PAGE>
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1997 is attached hereto.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended June 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR REALTY INVESTORS LTD.-82
By: /s/ Thomas E. Meador
-----------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-XI, the General Partner
By: /s/ Jayne A. Kosik
-----------------------------
Jayne A. Kosik
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Partners-XI, the General
Partner
Date: August 7, 1997
--------------------------
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 2653
<SECURITIES> 0
<RECEIVABLES> 17
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2670
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2670
<CURRENT-LIABILITIES> 92
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2578
<TOTAL-LIABILITY-AND-EQUITY> 2670
<SALES> 0
<TOTAL-REVENUES> 9608
<CGS> 0
<TOTAL-COSTS> 463
<OTHER-EXPENSES> 201
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127
<INCOME-PRETAX> 8817
<INCOME-TAX> 0
<INCOME-CONTINUING> 8817
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<EXTRAORDINARY> (229)
<CHANGES> 0
<NET-INCOME> 8588
<EPS-PRIMARY> 68.28
<EPS-DILUTED> 68.28
</TABLE>
