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 March 31, 1996
---------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
------------ ------------
Commission file number 0-11126
-------
BALCOR EQUITY PROPERTIES-XII
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3169763
- ------------------------------- -------------------
(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 No
----- -----
<PAGE>
BALCOR EQUITY PROPERTIES - XII
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
-------------- --------------
Cash and cash equivalents $ 235,117 $ 146,052
Escrow deposits 1,434,734 1,626,624
Accounts and accrued interest receivable 171,169 87,969
Prepaid expenses 23,525 95,080
Deferred expenses, net of accumulated
amortization of $172,374 in 1996 and
$157,220 in 1995 416,004 431,158
-------------- --------------
2,280,549 2,386,883
-------------- --------------
Investment in real estate:
Land 4,359,906 4,359,906
Buildings and improvements 39,176,170 39,176,170
-------------- --------------
43,536,076 43,536,076
Less accumulated depreciation 20,301,628 19,982,851
-------------- --------------
Investment in real estate, net of
accumulated depreciation 23,234,448 23,553,225
-------------- --------------
$ 25,514,997 $ 25,940,108
============== ==============
LIABILITIES AND PARTNERS' DEFICIT
Loan payable - affiliate $ 460,724 $ 705,724
Accounts payable 148,310 127,828
Due to affiliates 34,404 21,406
Accrued real estate taxes 269,167 516,588
Security deposits 157,735 157,920
Mortgage notes payable 29,975,733 30,082,916
-------------- --------------
Total liabilities 31,046,073 31,612,382
-------------- --------------
Limited Partners' deficit (37,447
Interests issued and outstanding) (4,931,715) (5,071,501)
General Partner's deficit (599,361) (600,773)
-----------------------------
Total partners' deficit (5,531,076) (5,672,274)
-------------- --------------
$ 25,514,997 $ 25,940,108
============== ==============
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 March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Income:
Rental and service $ 2,438,263 $ 2,252,285
Interest on short-term investments 41,125 13,889
-------------- --------------
Total income 2,479,388 2,266,174
-------------- --------------
Expenses:
Interest on mortgage notes payable 720,164 724,876
Interest on short-term loan - affiliate 8,953 13,598
Depreciation 318,777 317,047
Amortization of deferred expenses 15,154 15,154
Property operating 890,314 758,848
Real estate taxes 184,119 208,340
Property management fees 118,708 111,600
Administrative 82,001 89,500
-------------- --------------
Total expenses 2,338,190 2,238,963
-------------- --------------
Net income $ 141,198 $ 27,211
============== ==============
Net income allocated to General Partner $ 1,412 $ 272
============== ==============
Net income allocated to Limited Partners $ 139,786 $ 26,939
============== ==============
Net income per Limited Partnership Interest
(37,447 issued and outstanding) $ 3.73 $ 0.72
============== ==============
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 quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Operating activities:
Net income $ 141,198 $ 27,211
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation of properties 318,777 317,047
Amortization of deferred expenses 15,154 15,154
Net change in:
Escrow deposits 191,890 102,758
Accounts and accrued interest
receivable (83,200) (1,627)
Prepaid expenses 71,555
Accounts payable 20,482 10,001
Due to affiliates 12,998 (11,207)
Accrued liabilities (247,421) (147,453)
Security deposits (185) (848)
-------------- --------------
Net cash provided by operating activities 441,248 311,036
-------------- --------------
Financing activities:
Repayment of loan payable - affiliate (245,000) (250,000)
Proceeds from the release of capital
improvement escrow 14,056
Principal payments on mortgage notes
payable (107,183) (97,777)
-------------- --------------
Net cash used in financing activities (352,183) (333,721)
-------------- --------------
Net change in cash and cash equivalents 89,065 (22,685)
Cash and cash equivalents at beginning
of period 146,052 203,497
-------------- --------------
Cash and cash equivalents at end of period $ 235,117 $ 180,812
============== ==============
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 quarter ended March 31,
1996, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarters ended March 31, 1996 and 1995, the Partnership incurred and
paid interest expense on mortgage notes payable of $720,164 and $724,876,
respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1996 were:
Paid Payable
------------ ---------
Reimbursement of expenses to
the General Partner, at cost $16,388 $ 31,736
During the quarter ended March 31, 1996, the Partnership made a repayment of
$245,000 on the loan from the General Partner. The Partnership incurred
interest expense of $8,953 and paid interest expense of $9,172 on the loan
during this period. As of March 31, 1996, the loan had a balance of $460,724,
with accrued interest payable of $2,668 on this loan. 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 March 31, 1996, this
rate was 5.85%.
<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. Three properties have been
disposed of, including the property in which the Partnership held a minority
joint venture interest. 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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
Increased rental income at several of the properties due to higher rental rates
resulted in higher net income for the Partnership during the quarter ended
March 31, 1996 as compared to the same period in 1995. Further discussion of
the Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
Discussions of fluctuations between 1996 and 1995 refer to the quarters ended
March 31, 1996 and 1995.
Primarily as a result of higher rental rates at the Brierwood, DeFoors Creek
and Somerset Village Apartments, rental income increased for 1996 when compared
to 1995.
As a result of higher interest rates and slightly higher average cash balances,
interest income on short-term investments increased for 1996 when compared to
1995.
The repayment of a portion of the General Partner loan resulted in a decrease
in interest on short-term loan-affiliate for 1996 when compared to 1995.
Higher repair and maintenance expenditures, which included roof and structural
repairs, as well as higher utility expenses at the DeFoors Creek and Brierwood
Apartments were the primary reasons property operating expenses increased
during 1996 when compared to 1995.
The estimate of 1995 real estate taxes at the Brierwood Apartments was higher
than what was paid in 1996 causing real estate tax expense to decrease during
1996 when compared to 1995.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $89,000 as of
March 31, 1996 when compared to December 31, 1995. The Partnership generated
cash flow totaling approximately $441,000 from its operating activities which
primarily represented the operations of its properties, net of the payment of
administrative expenses. The Partnership's financing activities consisted of
the repayment of a portion of loan payable - affiliate of $245,000 and
principal payments on mortgage notes payable of approximately $107,000.
The Partnership owes $460,724 to the General Partner at March 31, 1996. 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. 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. 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 first quarters of 1996 and 1995, four of the Partnership's
five properties generated positive cash flow. The Brierwood Apartments incurred
a marginal deficit in 1996 as compared to positive cash flow in 1995 primarily
as a result of increased repair and maintenance expenditures and higher utility
expenses. As of March 31, 1996, the occupancy rates of the Partnership's
properties ranged from 94% to 98%.
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
performance and seeking rent increases where market conditions allow.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. The
Partnership is currently preparing to market two of its properties for sale, is
actively marketing two additional properties, and has entered into a contract
to sell the Brierwood Apartments for a sales price of $5,400,000. If current
market conditions remain favorable and the General Partner can obtain
appropriate sales prices, the Partnership's liquidation strategy may be
accelerated.
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. The Partnership has no third
party financing which matures prior to 1998.
<PAGE>
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, the repayment of the General
Partner loan, and proceeds from future property sales, as to all of which there
can be no assurances. The General Partner does not anticipate that investors
will recover all of their original investment.
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.
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 quarter ending March 31,
1996 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated April 23, 1996,
was filed reporting a contract to sell Brierwood Apartments located in
Jacksonville, Florida.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR 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: May 14, 1996
--------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 235
<RECEIVABLES> 171
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1865
<PP&E> 43536
<DEPRECIATION> 20302
<TOTAL-ASSETS> 25515
<CURRENT-LIABILITIES> 1070
<BONDS> 29976
0
0
<COMMON> 0
<OTHER-SE> (5531)
<TOTAL-LIABILITY-AND-EQUITY> 25515
<SALES> 0
<TOTAL-REVENUES> 2479
<CGS> 0
<TOTAL-COSTS> 1193
<OTHER-EXPENSES> 416
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 729
<INCOME-PRETAX> 141
<INCOME-TAX> 0
<INCOME-CONTINUING> 141
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141
<EPS-PRIMARY> 3.73
<EPS-DILUTED> 3.73
</TABLE>
