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, 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 0-11126
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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 (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 EQUITY PROPERTIES - XII
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
ASSETS
1997 1996
--------------- ---------------
Cash and cash equivalents $ 1,799,151 $ 19,824,096
Accounts and accrued interest
receivable 29,743 315,188
--------------- ---------------
$ 1,828,894 20,139,284
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 15,000 $ 214,819
Due to affiliates 45,482 74,926
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Total liabilities 60,482 289,745
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Commitments and contingencies
Limited Partners' capital (37,447
Interests issued and outstanding) 1,810,412 19,891,539
General Partner's deficit (42,000) (42,000)
--------------- ---------------
Total partners' capital 1,768,412 19,849,539
--------------- ---------------
$ 1,828,894 $ 20,139,284
=============== ===============
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, 1997 and 1996
(Unaudited)
1997 1996
--------------- ---------------
Income:
Rental and service $ 4,869,608
Interest on short-term investments $ 217,249 71,000
--------------- ---------------
Total income 217,249 4,940,608
--------------- ---------------
Expenses:
Interest on mortgage notes payable 1,437,836
Interest on short-term loan
- affiliate 16,981
Depreciation 637,553
Amortization of deferred expenses 30,307
Property operating 63,737 1,874,136
Real estate taxes 42,742 345,436
Property management fees 240,367
Administrative 110,613 195,368
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Total expenses 217,092 4,777,984
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Net income $ 157 $ 162,624
=============== ===============
Net income allocated to
General Partner None $ 1,626
=============== ===============
Net income allocated to
Limited Partners $ 157 $ 160,998
=============== ===============
Net income per Limited Partnership
Interest (37,447 issued and
outstanding) $ 0.01 $ 4.30
=============== ===============
Distributions to Limited Partners $ 18,081,284 None
=============== ===============
Distributions per Limited Partnership
Interest $ 482.85 None
=============== ===============
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, 1997 and 1996
(Unaudited)
1997 1996
--------------- ---------------
Income:
Rental and service $ 2,431,345
Interest on short-term investments $ 43,850 29,875
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Total income 43,850 2,461,220
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Expenses:
Interest on mortgage notes payable 717,672
Interest on short-term loan
- affiliate 8,028
Depreciation 318,776
Amortization of deferred expenses 15,153
Property operating 10,718 983,822
Real estate taxes 161,317
Property management fees 121,659
Administrative 46,448 113,367
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Total expenses 57,166 2,439,794
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Net (loss) income $ (13,316) $ 21,426
=============== ===============
Net income allocated to General
Partner None $ 214
=============== ===============
Net (loss) income allocated to
Limited Partners $ (13,316) $ 21,212
=============== ===============
Net (loss) income per Limited
Partnership Interest (37,447
issued and outstanding) $ (0.35) $ 0.57
=============== ===============
Distribution to Limited Partners $ 9,655,709 None
=============== ===============
Distribution per Limited
Partnership Interest $ 257.85 None
=============== ===============
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, 1997 and 1996
(Unaudited)
1997 1996
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Operating activities:
Net income $ 157 $ 162,624
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation of properties 637,553
Amortization of deferred
expenses 30,307
Net change in:
Escrow deposits 86,108
Accounts and accrued
interest receivable 285,445 (95,861)
Prepaid expenses (148,958)
Accounts payable (199,819) 21,139
Due to affiliates (29,444) 16,751
Accrued liabilities (82,679)
Security deposits 1,238
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Net cash provided by operating
activities 56,339 628,222
--------------- ---------------
Financing activities:
Distributions to Limited
Partners (18,081,284)
Repayment of loan payable
- affiliate (265,000)
Proceeds from the release of
capital improvement escrows 52,894
Principal payments on mortgage
notes payable (216,856)
--------------- ---------------
Net cash used in financing
activities (18,081,284) (428,962)
--------------- ---------------
Net change in cash and cash
equivalents of period (18,024,945) 199,260
Cash and cash equivalents at
beginning of period 19,824,096 146,052
--------------- ---------------
Cash and cash equivalents at
end of period $ 1,799,151 $ 345,312
=============== ===============
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:
(a) 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 no income or loss in 1997.
(b) 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.
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. The Partnership sold all of its remaining properties in 1996. The
Partnership distributed a majority of the proceeds from the sales in 1996 and
1997. The Partnership has retained a portion of the proceeds from the 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 lawsuits discussed in Note 5 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
continues to exist or arises, reserves may be held by the Partnership for a
longer period of time.
3. Interest Expense:
During the six months ended June 30, 1996, the Partnership incurred and paid
interest expense on mortgage notes payable of $1,437,836.
<PAGE>
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 were:
Paid
----------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $21,690 $11,894 $45,482
During 1996, the Partnership repaid the General Partner loan with proceeds from
the sale of the Brierwood Apartments. During the six months ended June 30,
1996, the Partnership incurred interest expense of $16,981 and paid interest
expense of $17,050 on the loan. Interest expense on the General Partner loan
was computed at the American Express Company cost of funds rate plus a spread
to cover administrative costs. As of June 30, 1996, this rate was 5.911%.
5. Contingencies:
The Partnership is currently involved in two lawsuits whereby the Partnership
and certain affiliates have been named as defendants alleging substantially
similar claims involving certain federal securities law violations with regard
to the adequacy and accuracy of disclosures of information concerning, as well
as marketing efforts related to, the offering of the Limited Partnership
Interests of the Partnership. The defendants continue to vigorously contest
these actions. A plaintiff class has not been certified in either action and,
no determinations of the merits have been made. It is not determinable at this
time whether or not an unfavorable decision in either action would have a
material adverse impact on the financial position, operations and liquidity of
the Partnership. The Partnership believes it has meritorious defenses to
contest the claims.
<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. Prior to 1997, all properties
were disposed of, including the property in which the Partnership held a
minority joint venture interest.
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
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The 1996 sales of the Partnership's properties, which were generating income
from operations prior to their sales were the primary reason net income
decreased during the six months ended June 30, 1997 as compared to the same
period in 1996. Higher interest income earned on short-term investments and
lower administrative expenses during 1997 partially offset the decrease and
were the primary reasons a net loss was generated for the quarter ended June
30, 1997 as compared to net income for the same period in 1996. Further
discussion of the Partnership's operations is summarized below.
1997 Compared to 1996
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Unless otherwise noted, discussion of fluctuations between 1997 and 1996 refer
to the six months and quarters ended June 30, 1997 and 1996.
As a result of the 1996 sales of the Brierwood, Cedar Ridge, DeFoors Creek,
Sandridge - Phase I and Somerset Village apartment complexes, rental and
service income, interest expense on mortgage notes payable, depreciation,
amortization of deferred expenses and property management fees ceased during
1996.
Due to higher average cash balances resulting from the investment of net
proceeds received in connection with the 1996 property sales prior to
distribution to Limited Partners in January and April 1997, interest income on
short-term investments increased during 1997 as compared to 1996.
<PAGE>
During 1996, the Partnership incurred interest on short-term loan - affiliate.
The loan was repaid in 1996 with proceeds from the sale of the Brierwood
Apartments and interest expense ceased.
As a result of the 1996 property sales, property operating expense decreased
during 1997 as compared to 1996. During 1997, the Partnership paid expenses
related to properties sold in 1996.
As a result of the 1996 property sales, real estate tax expense decreased
during 1997 as compared to 1996. During 1997, the Partnership paid additional
real estate taxes as a result of an increase in the assessed value of the
DeFoors Creek Apartments, which was sold in 1996.
The Partnership incurred higher investor processing, printing and postage costs
in connection with a tender offer response during the first quarter of 1996,
which resulted in a decrease in administrative expenses during 1997 as compared
to 1996. In addition, higher portfolio management fees incurred in 1996
contributed to the above decrease.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership as of June 30, 1997 decreased by
approximately $18,025,000 as compared to December 31, 1996 primarily due to the
1997 distributions to Limited Partners of proceeds received in connection with
the 1996 property sales. Cash of approximately $56,000 was provided by
operating activities consisting of interest income on short-term investments
and the collection of accounts receivable relating to escrow and insurance
refunds which were offset by the payment of administrative expenses and
expenses related to properties sold in 1996. Cash used in financing activities
consisted of the payment of distributions to Limited Partners of approximately
$18,081,000.
The Partnership sold all of its remaining properties during 1996. A majority of
the proceeds from the property sales was distributed to Limited Partners in
October 1996, and in January and April 1997. The Partnership has retained a
portion of the cash 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 lawsuits discussed
in Note 5 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 continues to exist or arises,
reserves may be held by the Partnership for a longer period of time.
To date, investors have received distributions of Net Cash Receipts of $70 and
Net Cash Proceeds of $558.35, totaling $628.35 per $1,000 Interest, as well as
certain tax benefits. Since all of the Partnership's properties have been sold,
no additional quarterly distributions are expected. Investors will not recover
all of their original investment.
<PAGE>
BALCOR EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(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 September 30, 1992 (Commission File No. 0-11126) are hereby
incorporated herein by reference.
(10) Material Contracts:
(a) Agreement of Sale relating to the sale of Somerset Village Apartments,
Tempe, Arizona previously filed as Exhibit 10 to the Registrant's Report on
Form 10-Q for the quarter ending June 30, 1996 is incorporated herein by
reference.
(b)(i) Agreement of Sale and attachment thereto relating to the sale of
Sandridge Apartments - Phase I, Pasadena, Texas, previously filed as Exhibit
2(a) to the Partnership's Current Report on Form 8-K dated August 27, 1996 is
incorporated herein by reference.
(ii) Modification Agreement relating to the sale of Sandridge Apartments -
Phase I, Pasadena, Texas, previously filed as Exhibit 2(b) to the Partnership's
Current Report on Form 8-K dated August 27, 1996 is incorporated herein by
reference.
(iii) Second Modification Agreement relating to the sale of Sandridge
Apartments - Phase I, Pasadena, Texas, previously filed as Exhibit 99 to the
Partnership's Current Report on Form 8-K dated September 25, 1996, is
incorporated herein by reference.
(iv) Letter Agreement relating to the sale of Sandridge Apartments - Phase I,
Pasadena, Texas, previously filed as Exhibit (c)(ii) to the Registrant's Report
on Form 10-Q for the quarter ended September 30, 1996, is incorporated herein
by reference.
(c)(i) Agreement of Sale and attachment thereto relating to the sale of DeFoors
Creek Apartments, Atlanta, Georgia, previously filed as Exhibit 2 to the
Partnership's Current Report on Form 8-K dated September 9 1996 is incorporated
herein by reference.
(ii) Letter dated October 2, 1996 relating to the termination of the contract
for the sale of DeFoors Creek Apartments, Atlanta, Georgia, previously filed as
Exhibit (10)(c)(ii) to the Registrant's Report on Form 10-Q for the quarter
ended September 30, 1996, is incorporated herein by reference.
<PAGE>
(iii) First Amendment to Agreement of Sale and Escrow Agreement dated October
10, 1996 reinstating the contract for the sale of DeFoors Creek Apartments,
Atlanta, Georgia, previously filed as Exhibit (10)(c)(iii)to the Registrant's
Report on Form 10-Q for the quarter ended September 30, 1996, is incorporated
herein by reference.
(iv) Second Amendment to Agreement of Sale and Escrow Agreement dated October
17, 1996 relating to the sale of DeFoors Creek Apartments, Atlanta, Georgia,
previously filed as Exhibit (10)(c)(iv) to the Registrant's Report on Form 10-Q
for the quarter ended September 30, 1996, is incorporated herein by reference.
(v) Letter dated October 23, 1996 relating to the termination of the contract
for the sale of DeFoors Creek Apartments, Atlanta, Georgia, previously filed as
Exhibit (10)(c)(v) to the Registrant's Report on Form 10-Q for the quarter
ended September 30, 1996, is incorporated herein by reference.
(vi) Third Amendment of Agreement of Sale and Escrow Agreement dated October
31, 1996 reinstating the contract for the sale of DeFoors Creek Apartments,
Atlanta, Georgia, previously filed as Exhibit (10)(c)(vi) to the Registrant's
Report on Form 10-Q for the quarter ended September 30, 1996, is incorporated
herein by reference.
(d)(i) Agreement of Sale and attachment thereto relating to the sale of Cedar
Ridge Apartments, Baytown, Texas, previously filed as Exhibit 2(i) to the
Partnership's Current Report on Form 8-K dated September 25, 1996 is
incorporated herein by reference.
(ii) Letter Agreement relating to the sale of Cedar Ridge Apartments, Baytown,
Texas, previously filed as Exhibit 2 (ii) to the Partnership's Current Report
on Form 8-K dated September 25, 1996 is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six months ending June
30, 1997 is incorporated herein by reference.
(b) Reports on Form 8-K: No Reports on Form 8-K were filed 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 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/ Jayne A. Kosik
------------------------------
Jayne A. Kosik
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Partners - XII, the General Partner
Date: August 7, 1997
-----------------
<PAGE>
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<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1799
<SECURITIES> 0
<RECEIVABLES> 30
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1829
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1829
<CURRENT-LIABILITIES> 60
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1769
<TOTAL-LIABILITY-AND-EQUITY> 1829
<SALES> 0
<TOTAL-REVENUES> 217
<CGS> 0
<TOTAL-COSTS> 106
<OTHER-EXPENSES> 111
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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<EPS-PRIMARY> .01
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</TABLE>
