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, 1997
------------------
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 0-11127
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BALCOR REALTY INVESTORS LTD.-82
-------------------------------------------------------
(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
--------------
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 N0
---- ----
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1997 and December 31, 1996
(UNAUDITED)
ASSETS
1997 1996
-------------- --------------
Cash and cash equivalents $ 2,074,683 $ 4,440,715
Escrow deposits 320,680
Accounts and accrued interest receivable 9,124 75,524
Prepaid expenses 23,719
Deferred expenses, net of accumulated
amortization of $113,985 in 1996 236,738
-------------- --------------
2,083,807 5,097,376
-------------- --------------
Investment in real estate:
Land 1,914,223
Buildings and improvements 9,747,109
--------------
11,661,332
Less accumulated depreciation 5,056,537
--------------
Investment in real estate, net of
accumulated depreciation 6,604,795
-------------- --------------
$ 2,083,807 $ 11,702,171
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 8,725 $ 46,998
Due to affiliates 51,673 64,953
Accrued liabilities, principally
real estate taxes 310,641
Security deposits 47,624
Mortgage notes payable 9,161,938
-------------- --------------
Total liabilities 60,398 9,632,154
-------------- --------------
Commitments and contingencies
Limited Partners' capital
(74,133 Interest issued and
and outstanding) 2,135,648 5,699,713
General Partner's deficit (112,239) (3,629,696)
-------------- --------------
Total partners' capital 2,023,409 2,070,017
-------------- --------------
$ 2,083,807 $ 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 nine months ended September 30, 1997 and 1996
(UNAUDITED)
1997 1996
-------------- --------------
Income:
Rental and service $ 644,285 $ 5,295,058
Interest on short-term investments 105,141 112,319
Settlement income 216,750
Other income 13,048
-------------- --------------
Total income 762,474 5,624,127
-------------- --------------
Expenses:
Interest on mortgage notes payable 126,547 1,479,378
Depreciation 62,414 578,199
Amortization of deferred expenses 7,307 48,759
Property operating 366,387 1,885,013
Real estate taxes 64,727 463,825
Property management fees 32,133 251,276
Administrative 171,514 317,230
-------------- --------------
Total expenses 831,029 5,023,680
-------------- --------------
(Loss) income before gain on sale of
property and extraordinary item (68,555) 600,447
Gain on sale of property 8,887,873 5,682,819
-------------- --------------
Income before extraordinary item 8,819,318 6,283,266
Exraordinary item:
Debt extinguishment expense (229,431) (192,960)
-------------- --------------
Net income $ 8,589,887 $ 6,090,306
============== ==============
Income before extraordinary item
allocated to General Partner $ 3,519,751 $ 86,851
============== ==============
Income before extraordinary item
allocated to Limited Partners $ 5,299,567 $ 6,196,415
============== ==============
Income before extraordinary item
per Limited Partnership Interest
(74,133 issued and outstanding) $ 71.49 $ 83.59
============== ==============
Extraordinary item allocated to
General Partner $ (2,294) $ (1,930)
============== ==============
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1997 and 1996
(UNAUDITED)
(Continued)
1997 1996
-------------- -------------
Extraordinary item allocated to
Limited Partners $ (227,137) $ (191,030)
============== ==============
Extraordinary item per Limited
Partnership Interest (74,133
issued and outstanding) $ (3.06) $ (2.58)
============== ==============
Net income allocated to General Partner $ 3,517,457 $ 84,921
============== ==============
Net income allocated to Limited Partners $ 5,072,430 $ 6,005,385
============== ==============
Net income per Limited Partnership Interest
(74,133 issued and outstanding) $ 68.43 $ 81.01
============== ==============
Distributions to Limited Partners $ 8,636,495 $ 2,372,256
============== ==============
Distributions per Limited Partnership
Interest $ 116.50 $ 32.00
============== ==============
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 September 30, 1997 and 1996
(UNAUDITED)
1997 1996
-------------- --------------
Income:
Rental and service $ 1,728,316
Interest on short-term investments $ 29,445 33,910
Other income 13,048
-------------- --------------
Total income 42,493 1,762,226
-------------- --------------
Expenses:
Interest on mortgage notes payable 478,917
Depreciation 187,229
Amortization of deferred expenses 16,253
Property operating 220 692,984
Real estate taxes 136,244
Property management fees 77,903
Administrative 40,632 102,348
-------------- --------------
Total expenses 40,852 1,691,878
-------------- --------------
Income before gain on sale of
property and extraordinary item 1,641 70,348
Gain on sale of property 5,682,819
-------------- --------------
Income before extraordinary item 1,641 5,753,167
Extraordinary item:
Debt extinguishment expense (192,960)
-------------- --------------
Net income $ 1,641 $ 5,560,207
============== ==============
(Loss) income before extraordinary item
allocated to General Partner $ (8,903) $ 60,346
============== ==============
Income before extraordinary item
allocated to Limited Partners $ 10,544 $ 5,692,821
============== ==============
Income before extraordinary item
per Limited Partnership Interest
(74,133 issued and outstanding) $ 0.15 $ 76.79
============== ==============
Extraordinary item allocated to
General Partner None $ (1,930)
============== ==============
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1997 and 1996
(UNAUDITED)
(Continued)
1997 1996
-------------- --------------
Extraordinary item allocated to
Limited Partners None $ (191,030)
============== ==============
Extraordinary item per Limited
Partnership Interest (74,133
issued and outstanding) None $ (2.58)
============== ==============
Net (loss) income allocated
to General Partner $ (8,903) $ 58,416
============== ==============
Net income allocated to Limited Partners $ 10,544 $ 5,501,791
============== ==============
Net income per Limited Partnership
Interest (74,133 issued and outstanding) $ 0.15 $ 74.22
============== ==============
Distribution to Limited Partners $ 555,998 $ 1,779,192
============== ==============
Distribution per Limited Partnership
Interest $ 7.50 $ 24.00
============== ==============
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 nine months ended September 30, 1997 and 1996
(UNAUDITED)
1997 1996
-------------- --------------
Operating activities:
Net income $ 8,589,887 $ 6,090,306
Adjustments to reconcile net income
to net cash (used in) or provided
by operating activities:
Gain on sale of propery (8,887,873) (5,682,819)
Debt extinguishment expense 229,431 192,960
Depreciation of properties 62,414 578,199
Amortization of deferred expenses 7,307 48,759
Net change in:
Accounts and accrued interest
receivable 66,400 (28,684)
Escrow deposits 284,574 321,452
Prepaid expenses 23,719 (8,888)
Accounts payable (38,273) 317,148
Due to affiliates (13,280) 24,033
Accrued liabilities (310,641) (193,893)
Security deposits (47,624) (27,293)
-------------- --------------
Net cash (used in) or provided
by operating activities (33,959) 1,631,280
-------------- --------------
Investing activities:
Proceeds from redemption of
restricted investment 1,230,000
Proceeds from sale of real estate 6,686,722 3,684,501
Payment of selling costs (369,746) (362,421)
-------------- --------------
Net cash provided by investing activities 6,316,976 4,552,080
-------------- --------------
Financing activities:
Distributions to Limited Partners (8,636,495) (2,372,256)
Principal payments on mortgage notes
payable (48,660) (303,445)
Funding of capital improvement escrows (16,000) (120,033)
Disbursements from capital
improvement escrows 52,106 322,577
-------------- --------------
Net cash used in financing activities (8,649,049) (2,473,157)
-------------- --------------
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1997 and 1996
(UNAUDITED)
(Continued)
1997 1996
-------------- --------------
Net change in cash and cash equivalents (2,366,032) 3,710,203
Cash and cash equivalents at beginning
of period 4,440,715 1,585,311
-------------- --------------
Cash and cash equivalents at end of period $ 2,074,683 $ 5,295,514
============== ==============
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 nine months
and quarter ended September 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 remaining economic
interests as provided for in the Partnership Agreement, the income (loss)
allocations between partners have been adjusted for financial statement
purposes in 1997.
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 and costs 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 exists, reserves may be held by the
Partnership for a longer period of time.
3. Interest Expense:
During the nine months ended September 30, 1997 and 1996, the Partnership
incurred interest expense on mortgage notes payable of $126,547 and $1,479,378,
and paid interest expense on mortgage notes payable of $147,831 and $1,479,378,
respectively.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1997 are:
<PAGE>
Paid
-------------------------
Nine Months Quarter Payable
------------ --------- ---------
Reimbursement of expenses to
the General Partner, at cost $ 52,885 $ 11,353 $ 51,673
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 expenses in the amount of $229,431. This amount was recognized as an
extraordinary item and classified as 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.
<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
- ----------
Summary of Operations
- ---------------------
The Partnership recognized a higher gain in connection with the sale of the
Balcones Woods Apartments during March 1997 as compared to the gain recognized
in connection with the sale of the Songbird - Phases I & II Apartments during
September 1996. This resulted in an increase in net income during the nine
months ended September 30, 1997 as compared to the same period in 1996. The
gain recognized in connection with the Songbird - Phases I & II Apartments sale
in September 1996 resulted in decreased net income during the quarter ended
September 30, 1997 as compared to 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 nine months and quarters ended September 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. During 1997 and 1996, the Partnership
recognized gains in connection with the sales of Balcones Woods and Songbird
apartment complexes of $8,887,873 and $5,682,819, respectively.
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.
<PAGE>
The Partnership recognized other income during 1997 in connection with a refund
of a prior year insurance premium relating to the Partnership's properties.
The Partnership incurred higher legal, printing, postage and investor
processing costs in connection with responses to tender offers during the first
quarter of 1996. In addition, portfolio management and accounting 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.
During 1997 and 1996, the Partnership wrote off the remaining unamortized
deferred expenses in connection with the sales of the Balcones Woods and
Songbird - Phases I & II apartment complexes of $229,431 and $192,960,
respectively. These amounts were recognized as extraordinary items and
classified as debt extinguishment expense for financial statement purposes.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $2,366,000 as
of September 30, 1997 as compared to December 31, 1996 primarily due to the
payment of special distributions to Limited Partners in 1997, which was
partially offset by net proceeds received in connection with the sale of the
Balcones Woods Apartments in 1997. Cash of approximately $34,000 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 $8,649,000
consisted of special distributions of $8,636,000 to the Limited Partners and
principal payments on mortgage notes payable offset by net disbursements
received from capital improvement escrows.
During 1996, the Partnership sold the Songbird - Phases 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 and costs 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 exists, reserves may be held by the
Partnership for a longer period of time.
Pursuant to the sale agreement for the Songbird - Phases 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 full.
<PAGE>
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 in full. 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.
Since all of the Partnership's properties have been sold, no additional
distributions are expected. To date, 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.
<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 nine month period ending
September 30, 1997 is attached hereto.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter ended September 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: October 31, 1997
-----------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 2075
<SECURITIES> 0
<RECEIVABLES> 9
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2084
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2084
<CURRENT-LIABILITIES> 60
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2024
<TOTAL-LIABILITY-AND-EQUITY> 2084
<SALES> 0
<TOTAL-REVENUES> 9650
<CGS> 0
<TOTAL-COSTS> 463
<OTHER-EXPENSES> 241
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127
<INCOME-PRETAX> 8819
<INCOME-TAX> 0
<INCOME-CONTINUING> 8819
<DISCONTINUED> 0
<EXTRAORDINARY> (229)
<CHANGES> 0
<NET-INCOME> 8590
<EPS-PRIMARY> 68.43
<EPS-DILUTED> 68.43
</TABLE>
