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 June 30, 1995
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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 0-11126
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BALCOR EQUITY PROPERTIES-XII
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(Exact name of registrant as specified in its charter)
Illinois 36-3169763
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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 (708) 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 EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 271,739 $ 203,497
Escrow deposits 1,665,778 1,772,962
Accounts and accrued interest receivable 1,051 11,597
Prepaid expenses 235,831
Deferred expenses, net of accumulated
amortization of $126,914 in 1995
and $96,606 in 1994 461,464 491,772
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2,635,863 2,479,828
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Investment in real estate, at cost:
Land 4,359,906 4,359,906
Buildings and improvements 39,058,120 39,058,120
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43,418,026 43,418,026
Less accumulated depreciation 19,343,756 18,709,661
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Investment in real estate, net
of accumulated depreciation 24,074,270 24,708,365
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$ 26,710,133 $ 27,188,193
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LIABILITIES AND PARTNERS' DEFICIT
Loan payable - affiliate $ 970,724 $ 1,025,724
Accounts payable 96,537 124,906
Due to affiliates 20,868 103,393
Accrued liabilities, principally real estate
taxes and interest 415,727 427,130
Security deposits 149,475 144,449
Mortgage notes payable 30,290,035 30,487,859
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Total liabilities 31,943,366 32,313,461
Partners' deficit
(37,447 Limited Partnership
Interests issued and outstanding) (5,233,233) (5,125,268)
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$ 26,710,133 $ 27,188,193
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 4,549,357 $ 4,266,965
Interest on short-term investments 20,854 9,844
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Total income 4,570,211 4,276,809
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Expenses:
Interest on mortgage notes payable 1,447,482 1,433,253
Interest on short - term loans 28,396
Depreciation 634,095 634,093
Amortization of deferred expenses 30,308 30,587
Property operating 1,689,430 1,739,047
Real estate taxes 420,795 465,667
Property management fees 225,375 212,557
Administrative 202,295 174,131
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Total expenses 4,678,176 4,689,335
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Net loss $ (107,965) $ (412,526)
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Net loss allocated to General Partner $ (1,080) $ (4,125)
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Net loss allocated to Limited Partners $ (106,885) $ (408,401)
============= =============
Net loss per Limited Partnership Interest
(37,447 issued and outstanding) $ (2.85) $ (10.91)
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 2,297,072 $ 2,098,844
Interest on short-term investments 6,965 4,326
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Total income 2,304,037 2,103,170
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Expenses:
Interest on mortgage notes payable 722,606 715,610
Interest on short - term loans 14,798
Depreciation 317,048 317,046
Amortization of deferred expenses 15,154 15,294
Property operating 930,582 970,759
Real estate taxes 212,455 230,605
Property management fees 113,775 106,995
Administrative 112,795 97,536
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Total expenses 2,439,213 2,453,845
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Net loss $ (135,176) $ (350,675)
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Net loss allocated to General Partner $ (1,352) $ (3,506)
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Net loss allocated to Limited Partners $ (133,824) $ (347,169)
============= =============
Net loss per Limited Partnership Interest
(37,447 issued and outstanding) $ (3.57) $ (9.27)
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net loss $ (107,965) $ (412,526)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation of properties 634,095 634,093
Amortization of deferred expenses 30,308 30,587
Net change in:
Escrow deposits (137,872) (76,320)
Accounts and accrued interest
receivable 10,546 36,548
Prepaid expenses (235,831)
Accounts payable (28,369) (167,803)
Due to affiliates (82,525) 82,570
Accrued liabilities (11,403) 110,559
Security deposits 5,026 2,089
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Net cash provided by operating activities 76,010 239,797
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Investing activities:
Improvements to properties (8,960)
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Net cash used in investing activities (8,960)
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Financing activities:
Proceeds from loan payable - affiliate 195,000
Repayment of loan payable - affiliate (250,000)
Disbursements from capital improvement
escrows 245,056
Payment of deferred expenses (52,500)
Principal payments on mortgage notes payable (197,824) (217,487)
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Net cash used in financing activities (7,768) (269,987)
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Net change in cash and cash equivalents 68,242 (39,150)
Cash and cash equivalents at beginning
of period 203,497 254,442
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Cash and cash equivalents at end of period $ 271,739 $ 215,292
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
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, 1995, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1995 and 1994, the Partnership incurred
and paid interest expense on mortgage notes payable to non-affiliates of
$1,447,482 and $1,343,898, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1995 were:
Paid
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Six Months Quarter Payable
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Property management fees $ 39,770 None None
Reimbursement of expenses to
the General Partner, at cost 122,727 $122,727 $6,070
During August 1994, the $1,692,596 second mortgage loan from an affiliate of
the General Partner, which was collateralized by the Sandridge - Phase I
apartment complex, was retired and replaced with an unsecured General Partner
loan. Prior to retirement of the loan, the Partnership incurred interest
expense of $89,355 and paid interest expense of $37,521 during the six months
ended June 30, 1994. During the six months ended June 30, 1995, the General
Partner made additional net advances of $55,000 to the Partnership. The
Partnership incurred interest expense of $28,396 and paid interest expense of
$22,742 on the General Partner loan during this period. As of June 30, 1995,
the General Partner loan had a balance of $970,724, plus accrued interest
payable of $14,798. Interest expense on the General Partner loan is computed at
the American Express Company cost of funds rate plus a spread to cover
administrative costs. As of June 30, 1995, this rate was 6.542%.
<PAGE>
BALCOR EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Equity Properties-XII (the "Partnership") was formed in 1981 to invest
in and operate income-producing real property. The Partnership raised
$37,447,000 through the sale of Limited Partnership Interests and utilized
these proceeds to acquire seven real property investments and a minority joint
venture interest in one additional real property. During 1988, the Partnership
sold two of these properties, and in February 1992, the property in which the
Partnership held a minority joint venture interest was also sold. The
Partnership continues to operate its five remaining properties.
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 1994 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
---------------------
Increased rental income at all of the properties due to higher rental and/or
occupancy rates resulted in a decrease in the net loss for the Partnership
during the six months and quarter ended June 30, 1995 as compared to the same
periods in 1994. Further discussion of the Partnership's operations is
summarized below.
1995 Compared to 1994
---------------------
As a result of higher rental and/or occupancy rates at all of the Partnership's
properties, rental income increased for the six months and quarter ended June
30, 1995 when compared to the same periods in 1994.
Primarily as a result of higher interest rates, interest income on short-term
investments increased during the six months and quarter ended June 30, 1995 as
compared to the same periods in 1994.
The September 1994 refinancing of the Brierwood Apartments resulted in a higher
outstanding principal balance for the first mortgage loan and increased
interest expense on mortgage notes payable during the six months and quarter
ended June 30, 1995 as compared to the same periods in 1994. This increase was
partially offset by the retirement of the Sandridge-Phase I Apartments second
mortgage loan in 1994 as described below.
Due to the retirement and replacement of the Sandridge - Phase I Apartments'
second mortgage loan with an unsecured General Partner loan, the Partnership
recognized interest on short-term loans during the six months and quarter ended
June 30, 1995.
<PAGE>
A lower property assessment at the DeFoors Creek Apartments caused real estate
tax expense to decrease during the six months and quarter ended June 30, 1995
when compared to the same periods in 1994. This decrease was partially offset
by an increase in real estate taxes at the Somerset Village Apartments due to a
higher property assessment and a higher tax rate.
As a result of increased accounting fees, administrative expenses increased
during the six months and quarter ended June 30, 1995 when compared to the same
periods in 1994.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership increased as of June 30, 1995 when
compared to December 31, 1994. The Partnership's cash flow provided by
operating activities was generated primarily by cash flow from the properties,
which was partially offset by administrative expenses. This cash was used in
net financing activities, which consisted of principal payments on the
Partnership's mortgage notes payable, borrowing and repayment activity related
to the loan payable-affiliate and disbursements from capital improvement
escrows.
During 1994, the Sandridge - Phase I Apartments' second mortgage loan of
$1,692,596 from an affiliate of the General Partner was retired and replaced
with an unsecured General Partner loan. The Partnership has partially repaid
the loan and owes $970,724 to the General Partner at June 30, 1995. This loan
is expected to be repaid from available cash flow from future property
operations, and from proceeds received from the disposition or refinancing of
the Partnership's real estate investments, prior to any distributions to
Limited Partners.
Although an affiliate of the General Partner has, in certain circumstances,
provided mortgage loans for certain properties to the Partnership, there can be
no assurance that loans of this type will be available from either an affiliate
or the General Partner in the future. The General Partner may continue to
provide additional short-term loans to the Partnership or to fund working
capital needs or property operating deficits, although there is no assurance
that such loans will be available. Should such short-term loans not be
available, the General Partner will seek alternative third party sources of
financing working capital. However, the current economic environment and its
impact on the real estate industry make it unlikely that the Partnership would
be able to secure financing from third parties to fund working capital needs or
operating deficits. Should additional borrowings be needed and not be available
either through the General Partner or third parties, the Partnership may be
required to dispose of some of its properties to satisfy these obligations.
The Partnership classifies the cash flow of its properties as either positive,
a marginal deficit or a significant deficit, each after consideration of debt
service payments unless otherwise indicated. A deficit is considered to be
significant if it exceeds $250,000 annually or 20% of the property's rental and
service income. The Partnership defines cash flow generated from its properties
as an amount equal to the property's revenue receipts less property related
expenditures, which include debt service payments. During the six months ended
June 30, 1995 and 1994, the Brierwood, Defoors Creek, Sandridge - Phase I and
Somerset Village apartment complexes generated positive cash flow. The Cedar
Ridge Apartments generated positive cash flow during the six months ended June
<PAGE>
30, 1995 as compared to a marginal cash flow deficit for the same period in
1994, primarily due to increased rental income and decreased plumbing and roof
repairs in 1995.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties including improving property
operating performance and seeking rent increases where market conditions allow.
As of June 30, 1995, the occupancy rates of the Partnership's properties ranged
from 94% to 98%. Despite improvements in the local economies and rental markets
where certain of the Partnership's properties are located, the General Partner
believes that continued ownership of many of the properties is in the best
interest of the Partnership in order to maximize potential returns to Limited
Partners. As a result, the Partnership will continue to own these properties
for longer than the holding period of the assets originally described in the
prospectus.
Each of the Partnership's properties is owned through the use of third-party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. As a result of the General
Partner's efforts to obtain loan modifications as well as refinancings of many
existing loans, the Partnership has no third party financing which matures
prior to 1998.
To date, investors have received distributions of Net Cash Receipts of $70 and
Net Cash Proceeds of $60.50 totaling $130.50 per $1,000 Interest, as well as
certain tax benefits. Future distributions will depend on improved cash flow
from the Partnership's remaining properties and proceeds from future property
sales, as to both of which there can be no assurances.
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 EQUITY PROPERTIES-XII
(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 the
Registrant's Registration Statement on Form S-11 dated July 2, 1982
(Registration No. 2-76947) 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. 0-11126) are hereby
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1995.
<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 EQUITY PROPERTIES-XII
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-XII, the General Partner
By: /s/Brian D. Parker
------------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XII, the General
Partner
Date: August 10, 1995
--------------------------
<PAGE>
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<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 272
<SECURITIES> 0
<RECEIVABLES> 1
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2174
<PP&E> 43418
<DEPRECIATION> 19344
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<COMMON> 0
0
0
<OTHER-SE> (5233)
<TOTAL-LIABILITY-AND-EQUITY> 26710
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<TOTAL-REVENUES> 4570
<CGS> 0
<TOTAL-COSTS> 2336
<OTHER-EXPENSES> 867
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1476
<INCOME-PRETAX> (108)
<INCOME-TAX> 0
<INCOME-CONTINUING> (108)
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<CHANGES> 0
<NET-INCOME> (108)
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