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 September 30, 1998
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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
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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 REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1998 and December 31, 1997
(UNAUDITED)
ASSETS
1998 1997
-------------- --------------
Cash and cash equivalents $ 1,483,192 $ 2,042,608
Accounts and accrued interest receivable 6,496 14,922
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$ 1,489,688 $ 2,057,530
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 34,848 $ 12,680
Due to affiliates 38,593 25,746
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Total liabilities 73,441 38,426
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Commitments and contingencies
Limited Partners' capital
(74,133 Interest issued and
and outstanding) 1,528,486 2,131,343
General Partner's deficit (112,239) (112,239)
-------------- --------------
Total partners' capital 1,416,247 2,019,104
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$ 1,489,688 $ 2,057,530
============== ==============
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, 1998 and 1997
(UNAUDITED)
1998 1997
-------------- --------------
Income:
Rental and service $ 644,285
Interest on short-term investments $ 61,396 105,141
Other income 13,048
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Total income 61,396 762,474
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Expenses:
Interest on mortgage notes payable 126,547
Depreciation 62,414
Amortization of deferred expenses 7,307
Property operating 366,387
Real estate taxes 8,950 64,727
Property management fees 32,133
Administrative 159,556 171,514
-------------- --------------
Total expenses 168,506 831,029
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Loss before gain on sale of
property and extraordinary item (107,110) (68,555)
Gain on sale of property 8,887,873
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(Loss) income before extraordinary item (107,110) 8,819,318
Extraordinary item:
Debt extinguishment expense (229,431)
-------------- --------------
Net (loss) income $ (107,110) $ 8,589,887
============== ==============
Income before extraordinary item
allocated to General Partner None $ 3,519,751
============== ==============
(Loss) income before extraordinary item
allocated to Limited Partners $ (107,110) $ 5,299,567
============== ==============
(Loss) income before extraordinary item
per Limited Partnership Interest
(74,133 issued and outstanding)
- Basic and Diluted $ (1.44) $ 71.49
============== ==============
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, 1998 and 1997
(UNAUDITED)
(Continued)
1998 1997
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Extraordinary item allocated to
General Partner None $ (2,294)
============== ==============
Extraordinary item allocated to
Limited Partners None $ (227,137)
============== ==============
Extraordinary item per Limited
Partnership Interest (74,133
issued and outstanding)
- Basic and Diluted None $ (3.06)
============== ==============
Net income allocated to General Partner None $ 3,517,457
============== ==============
Net (loss) income allocated to Limited
Partners $ (107,110) $ 5,072,430
============== ==============
Net (loss) income per Limited Partnership
Interest (74,133 issued and outstanding)
- Basic and Diluted $ (1.44) $ 68.43
============== ==============
Distributions to Limited Partners $ 495,747 $ 8,636,495
============== ==============
Distributions per Limited Partnership
Interest $ 6.69 $ 116.50
============== ==============
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, 1998 and 1997
(UNAUDITED)
1998 1997
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Income:
Interest on short-term investments $ 19,988 $ 29,445
Other income 13,048
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Total income 19,988 42,493
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Expenses:
Property operating 220
Administrative 41,668 40,632
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Total expenses 41,668 40,852
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Net (loss) income $ (21,680) $ 1,641
============== ==============
Net loss allocated to General
Partner None $ (8,903)
============== ==============
Net (loss) income allocated to Limited
Partners $ (21,680) $ 10,544
============== ==============
Net (loss) income per Limited Partnership
Interest (74,133 issued and outstanding)
- Basic and Diluted $ (0.29) $ 0.15
============== ==============
Distribution to Limited Partners None $ 555,998
============== ==============
Distribution per Limited Partnership
Interest None $ 7.50
============== ==============
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, 1998 and 1997
(UNAUDITED)
1998 1997
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Operating activities:
Net (loss) income $ (107,110) $ 8,589,887
Adjustments to reconcile net (loss) income
to net cash used in operating
activities:
Gain on sale of property (8,887,873)
Debt extinguishment expense 229,431
Depreciation of properties 62,414
Amortization of deferred expenses 7,307
Net change in:
Accounts and accrued interest
receivable 8,426 66,400
Escrow deposits 245,881
Prepaid expenses 23,719
Accounts payable 22,168 (38,273)
Due to affiliates 12,847 (13,280)
Accrued liabilities (310,641)
Security deposits (47,624)
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Net cash used in operating
activities (63,669) (72,652)
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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 (495,747) (8,636,495)
Principal payments on mortgage note
payable (48,660)
Funding of capital improvement escrow (16,000)
Disbursements from capital
improvement escrow 90,799
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Net cash used in financing activities (495,747) (8,610,356)
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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, 1998 and 1997
(UNAUDITED)
(Continued)
1998 1997
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Net change in cash and cash equivalents (559,416) (2,366,032)
Cash and cash equivalents at beginning
of period 2,042,608 4,440,715
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Cash and cash equivalents at end of period $ 1,483,192 $ 2,074,683
============== ==============
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) The loss allocation between the Limited Partners and the General Partner
has been adjusted for financial statement purposes in order that the capital
account balances more accurately reflect their remaining economic interests as
provided for in the Partnership Agreement.
(b) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the nine months
and quarter ended September 30, 1998, and all such adjustments are of a normal
and recurring nature.
(c) A reclassification has been made to the previously reported 1997 financial
statements in order to provide comparability with the 1998 statements. This
reclassification has not changed the 1997 results.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its remaining property. The
Partnership has retained a portion of the cash from property sales to satisfy
obligations of the Partnership as well as to establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.
3. Interest Expense:
During the nine months ended September 30, 1997, the Partnership incurred
interest expense of $126,547 and paid interest expense of $147,831 on the
mortgage note payable.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1998 are:
Paid
-------------------------
Nine Months Quarter Payable
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<PAGE>
Reimbursement of expenses to
the General Partner, at cost $ 15,789 $ 6,914 $ 38,593
5. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership and
certain affiliates have been named as defendants alleging certain state
securities and common law violations with regard to the property acquisition
process of the Partnership, and 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. This action was dismissed without prejudice by the
trial court on September 24, 1998 for failure to state a cause of action. It is
not determinable at this whether of not an unfavorable decision in this action
would have a material adverse impact on the financial position of the
Partnership. The Partnership believes that it has meritorious defenses to
contest the claim.
<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. As of September 30, 1998, the Partnership has no properties
remaining in its portfolio.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1997 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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Administrative expenses were higher than interest income earned on short-term
investments during the nine months and quarter ended September 30, 1998. This
was the primary reason the Partnership recognized a net loss for the nine
months and quarter ended September 30, 1998. During March 1997, the
Partnership recognized a gain on the sale of the Balcones Woods Apartments,
which was the primary reason the Partnership recognized net income for the nine
months ended September 30, 1997. The Partnership received a refund of a prior
year insurance premium during the quarter ended September 30, 1997 related to
the Partnership's properties. This was the primary reason the Partnership
recognized net income during the quarter ended September 30, 1997. Further
discussion of the Partnership's operations is summarized below.
1998 Compared to 1997
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1998 and 1997 refer
to both the nine months and quarters ended September 30, 1998 and 1997.
During 1997, the Partnership sold the Balcones Woods Apartments and recognized
a gain on sale of $8,887,873. As a result of the sale of this property, rental
and service income, interest expense on mortgage note payable, depreciation,
amortization, property operating and property management fees ceased in 1997.
Higher average cash balances were available for investment during 1997 due to
the proceeds received in connection with the 1996 and 1997 property
sales prior to distribution to Limited Partners in 1997 and January 1998. This
resulted in a decrease in interest income on short-term investments during 1998
as compared to 1997.
<PAGE>
The Partnership recognized other income during the quarter ended September 30,
1997 in connection with a refund of a prior year insurance premium relating to
the Partnership's properties.
Real estate taxes ceased during 1997 due to the sale of the Balcones Woods
Apartments in March 1997. The Partnership paid additional 1997 real estate
taxes related to the property during 1998.
Primarily as a result of lower accounting and portfolio management fees,
administrative expenses decreased during the nine months ended September 30,
1998 as compared to the same period of 1997. This decrease was partially
offset by an increase in accrued legal fees related to the litigation discussed
in Note 5 of Notes to the Financial Statements which resulted in an increase in
administration expenses for the quarter ended September 30, 1998 as compared to
the same period in 1997.
During 1997, the Partnership wrote-off the remaining unamortized deferred
expenses of $229,431 in connection with the sale of the Balcones Woods
Apartments. This amount was recognized as debt extinguishment expense and
classified as an extraordinary item for financial statements purposes.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $559,000 as of
September 30, 1998 when compared to December 31, 1997 primarily due to the
distribution of remaining available Net Cash Proceeds in January 1998. The
Partnership used cash of approximately $64,000 in its operating activities to
pay administrative expenses and real estate taxes related to the Balcones Woods
Apartments, which were partially offset by interest income earned on short-term
investments. The Partnership used cash in its financing activities of
approximately $496,000 to pay a distribution to Limited Partners.
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its remaining property. 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 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusions of these contingencies.
To date, Limited Partners have received distributions of Net Cash Receipts of
$46.90 and Net Cash Proceeds of $555.69, totaling $602.59 per $1,000 Interest,
as well as certain tax benefits. No additional distributions are anticipated to
be made prior to the termination of the Partnership. However, after paying
final partnership expenses, any remaining cash reserves will be distributed.
Limited Partners will not recover all of their original investment.
<PAGE>
BALCOR REALTY INVESTORS LTD.-82
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Klein et al. vs. Lehman Brothers, Inc., et al.
- ----------------------------------------------
With regard to the proposed complaint, Lenore Klein, et al. vs. Lehman
Brothers, Inc. et al. (Superior Court of New Jersey, Law Division, Union
County, Docket No. Unn-L-5162-96), on June 9, 1998 the defendants filed a
motion to dismiss the complaint for failure to state a cause of action. The
motion was briefed by all parties and oral argument was heard by the court on
August 21, 1998. On September 24, 1998, the judge issued a letter opinion
granting the defendant's motion to dismiss the complaint, and on October 23,
1998, the judge announced that he would enter an order dismissing the complaint
without prejudice.
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) Material Contracts:
(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.
(27) Financial Data Schedule of the Registrant for the nine months ending
September 30, 1998 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR 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
Senior Managing Director and Chief
Financial Officer (Principal Accounting
Officer) of Balcor Partners-XI, the
General Partner
Date: November 11, 1998
--------------------------
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1483
<SECURITIES> 6
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1489
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1489
<CURRENT-LIABILITIES> 73
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1416
<TOTAL-LIABILITY-AND-EQUITY> 1489
<SALES> 0
<TOTAL-REVENUES> 61
<CGS> 0
<TOTAL-COSTS> 9
<OTHER-EXPENSES> 159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (107)
<INCOME-TAX> 0
<INCOME-CONTINUING> (107)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107)
<EPS-PRIMARY> (1.44)
<EPS-DILUTED> (1.44)
</TABLE>
