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, 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 0-11126
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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, 1998 and December 31, 1997
(Unaudited)
ASSETS
1998 1997
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Cash and cash equivalents $ 1,477,383 $ 1,801,748
Accounts and accrued interest receivable 6,446 26,571
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$ 1,483,829 $ 1,828,319
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 20,769 $ 13,705
Due to affiliates 32,175 23,682
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Total liabilities 52,944 37,387
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Commitments and contingencies
Limited Partners' capital (37,447
Interests issued and outstanding) 1,485,297 1,832,932
General Partner's deficit (54,412) (42,000)
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Total partners' capital 1,430,885 1,790,932
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$ 1,483,829 $ 1,828,319
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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, 1998 and 1997
(Unaudited)
1998 1997
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Income:
Interest on short-term investments $ 40,185 $ 217,249
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Total income 40,185 217,249
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Expenses:
Property operating 63,737
Real estate taxes 42,742
Administrative 90,343 110,613
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Total expenses 90,343 217,092
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Net (loss) income $ (50,158) $ 157
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Net loss allocated to
General Partner $ (12,412) $ None
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Net (loss) income allocated to
Limited Partners $ (37,746) $ 157
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Net (loss) income per Limited Partnership
Interest (37,447 issued and outstanding)
- Basic and Diluted $ (1.01) $ 0.01
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Distributions to Limited Partners $ 309,889 $ 18,081,284
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Distributions per Limited Partnership
Interest $ 8.28 $ 482.85
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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, 1998 and 1997
(Unaudited)
1998 1997
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Income:
Interest on short-term investments $ 19,670 $ 43,850
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Total income 19,670 43,850
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Expenses:
Property operating 10,718
Administrative 35,216 46,448
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Total expenses 35,216 57,166
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Net loss $ (15,546) $ (13,316)
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Net loss allocated to General Partner None None
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Net loss allocated to Limited Partners $ (15,546) $ (13,316)
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Net loss per Limited Partnership
Interest (37,447 issued and outstanding)
-Basic and Diluted $ (0.42) $ (0.35)
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Distribution to Limited Partners None $ 9,655,709
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Distribution per Limited Partnership
Interest None $ 257.85
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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 CASH FLOWS
for the six months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
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Operating activities:
Net (loss) income $ (50,158) $ 157
Adjustments to reconcile net (loss)
income to net cash (used in) provided
by operating activities:
Net change in:
Accounts and accrued interest
receivable 20,125 285,445
Accounts payable 7,064 (199,819)
Due to affiliates 8,493 (29,444)
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Net cash (used in) provided by
operating activities (14,476) 56,339
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Financing activities:
Distributions to Limited Partners (309,889) (18,081,284)
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Cash used in financing activities (309,889) (18,081,284)
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Net change in cash and cash equivalents (324,365) (18,024,945)
Cash and cash equivalents at beginning
of period 1,801,748 19,824,096
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Cash and cash equivalents at end of period $ 1,477,383 $ 1,799,151
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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:
(a) For financial statement purposes, the capital accounts of the General
Partner and the Limited Partners have been adjusted to appropriately
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 six
months and quarter ended June 30, 1998, 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 has retained a portion of the cash from
the 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 the 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
lawsuits discussed in Note 4 of Notes to the Financial Statements. Due to
this litigation, the Partnership will not be dissolved and the 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. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during
the six months and quarter ended June 30, 1998 were:
Paid
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Six Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $ 7,796 $ 3,793 $ 32,175
4. Contingencies:
The Partnership is currently involved in two lawsuits whereby the
<PAGE>
Partnership and certain affiliates have been named as defendants alleging
substantially similar claims involving 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 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 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. As of June 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, which resulted in a net loss during the six months and quarter
ended June 30, 1998 and was the reason the Partnership incurred a net loss
during the quarter ended June 30, 1997. The payment of operating expenses
related to certain properties sold during 1996 also contributed to the loss
during the quarter ended June 30, 1997. The Partnership recognized net income
during the six months ended June 30, 1997 due to higher interest income earned
on short-term investments in connection with proceeds received from property
sales during the first quarter of 1997 which was offset by administrative and
operating expenses. Further discussion of the Partnership's operations is
summarized below.
1998 Compared to 1997
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Unless otherwise noted, discussion of fluctuations between 1998 and 1997 refer
to both the six months and quarters ended June 30, 1998 and 1997.
Due to higher average cash balances in 1997 as a result of the investment of
proceeds received in connection with the 1996 property sales prior to
distributions to Limited Partners in 1997, interest income on short term
investments was higher during 1997 as compared to 1998.
During 1997, the Partnership paid additional expenditures related to certain of
the properties sold during 1996. As a result, the Partnership recognized
property operating expense during 1997.
<PAGE>
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. As a result, the Partnership recognized real estate tax expense
during the six months ended June 30, 1997.
Administrative expenses decreased during 1998 as compared to 1997 primarily due
to a decrease in accounting and bank fees which were partially offset by higher
legal fees in 1998.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $324,000 as of
June 30, 1998 as compared to December 31, 1997 primarily due to a distribution
to the Limited Partners in January 1998 from remaining available Net Cash
Proceeds. The Partnership used cash of approximately $14,000 to fund its
operating activities, which consisted of the payment of administrative expenses
which were partially offset by interest income earned on short-term investments
and the collection of an accounts receivable related to a sold property. Cash
used in financing activities consisted of the payment of a distribution to the
Limited Partners of approximately $310,000.
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 has retained a portion of the cash from the 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 include legal and
other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in Note 4 of Notes to
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and the 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.
To date, Limited Partners have received distributions of Net Cash Receipts of
$70 and Net Cash Proceeds of $566.63, totaling $636.63 per $1,000 Interest, as
well as certain tax benefits. No 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 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 June 30, 1992 (Commission File No. 0-11126) are hereby
incorporated herein by reference.
(10) Material Contracts:
(a) (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 Registrant'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 Registrant'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
Registrant'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
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, is
incorporated herein by reference.
(b) (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 Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996, is incorporated herein by reference.
(iii) First Amendment to Agreement of Sale and Escrow Agreement dated October
10, 1996 reinstating the contract for the sale of DeFoors Creek Apartments,
<PAGE>
Atlanta, Georgia, previously filed as Exhibit (10)(c)(iii) to the Registrant's
Quarterly 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 Quarterly 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 Quarterly 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
Quarterly 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 Cedar
Ridge Apartments, Baytown, Texas, previously filed as Exhibit 2(i) to the
Registrant'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 Registrant'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, 1998 is attached hereto.
(b) Reports on Form 8-K: No Reports on Form 8-K were filed during the quarter
ended June 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 EQUITY PROPERTIES-XII
By: /s/ Thomas E. Meador
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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
Senior Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Partners - XII, the General Partner
Date: August 11, 1998
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<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1477
<SECURITIES> 7
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1484
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1484
<CURRENT-LIABILITIES> 53
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1431
<TOTAL-LIABILITY-AND-EQUITY> 1484
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<TOTAL-REVENUES> 40
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<TOTAL-COSTS> 0
<OTHER-EXPENSES> 90
<LOSS-PROVISION> (50)
<INTEREST-EXPENSE> 0
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<INCOME-CONTINUING> (50)
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<EPS-PRIMARY> (1.01)
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