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, 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 0-11805
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BALCOR REALTY INVESTORS-83
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(Exact name of registrant as specified in its charter)
Illinois 36-3189175
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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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-83
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
-------------- --------------
Cash and cash equivalents $ 6,709,324 $ 5,950,452
Restricted investment 700,000
Escrow deposits 983,209 1,560,542
Accounts and accrued interest receivable 152,054 97,846
Prepaid expenses 36,266 36,266
Deferred expenses, net of accumulated
amortization of $673,296 in 1995 and
$631,300 in 1994 693,882 597,642
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8,574,735 8,942,748
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Investment in real estate, at cost:
Land 10,560,405 10,560,405
Buildings and improvements 66,665,695 66,665,695
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77,226,100 77,226,100
Less accumulated depreciation 31,359,921 30,862,686
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Investment in real estate, net of
accumulated depreciation 45,866,179 46,363,414
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$ 54,440,914 $ 55,306,162
============== ==============
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 183,075 $ 214,310
Due to affiliates 118,397 74,058
Accrued liabilities, principally real
estate taxes 391,960 1,241,718
Security deposits 292,426 288,826
Mortgage note payable - affiliate 772,896 772,896
Mortgage notes payable 55,475,203 55,475,305
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Total liabilities 57,233,957 58,067,113
Partners' deficit (75,005 Limited Partnership
Interests issued and outstanding) (2,793,043) (2,760,951)
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$ 54,440,914 $ 55,306,162
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-83
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 4,018,697 $ 3,932,958
Interest on short-term investments 114,147 76,576
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Total income 4,132,844 4,009,534
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Expenses:
Interest on mortgage notes payable 1,141,547 1,235,114
Depreciation 497,235 496,955
Amortization of deferred expenses 41,996 45,908
Property operating 1,488,877 1,542,656
Real estate taxes 366,369 369,783
Property management fees 200,980 195,982
Administrative 131,062 165,883
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Total expenses 3,868,066 4,052,281
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Income (loss) before extraordinary item 264,778 (42,747)
Extraordinary item:
Gain on forgiveness of debt 40,653 1,400,400
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Net income $ 305,431 $ 1,357,653
============== ==============
Income (loss) before extraordinary item
allocated to General Partner $ 13,239 $ (2,137)
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Income (loss) before extraordinary item
allocated to Limited Partners $ 251,539 $ (40,610)
============== ==============
Income (loss) before extraordinary item
per Limited Partnership Interest
(75,005 issued and outstanding) $ 3.36 $ (.54)
============== ==============
Extraordinary item allocated
to General Partner $ 2,033 $ 70,020
============== ==============
Extraordinary item allocated
to Limited Partners $ 38,620 $ 1,330,380
============== ==============
Extraordinary item per Limited
Partnership Interest (75,005
issued and outstanding) $ 0.51 $ 17.74
============== ==============
Net income allocated
to General Partner $ 15,272 $ 67,883
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<PAGE>
Net income allocated
to Limited Partners $ 290,159 $ 1,289,770
============== ==============
Net income per Limited
Partnership Interest (75,005
issued and outstanding) $ 3.87 $ 17.20
============== ==============
Distribution to Limited Partners $ 337,523 $ 337,523
============== ==============
Distribution per Limited
Partnership Interest (75,005
issued and outstanding) $ 4.50 $ 4.50
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-83
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 305,431 $ 1,357,653
Adjustments to reconcile net income
to net cash provided by operating
activities:
Gain on forgiveness of debt (40,653) (1,400,400)
Depreciation of properties 497,235 496,955
Amortization of deferred expenses 41,996 45,908
Net change in:
Escrow deposits 577,333 729,559
Accounts and accrued interest
receivable (54,208) (31,418)
Prepaid expenses 75,258
Accounts payable (31,235) (103,073)
Due to affiliates 44,339 65,790
Accrued liabilities (849,758) (843,480)
Security deposits 3,600 1,743
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Net cash provided by operating activities 494,080 394,495
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Investing activity:
Redemption of restricted investment 700,000
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Cash provided by investing activity 700,000
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Financing activities:
Distribution to Limited Partners (337,523) (337,523)
Proceeds from issuance of
mortgage note payable 7,180,000
Repayment of mortgage note payable (6,939,000)
Principal payments on mortgage notes payable (200,449) (1,135,900)
Payment of deferred expenses (138,236) (69,226)
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Net cash used in financing activities (435,208) (1,542,649)
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Net change in cash and cash equivalents 758,872 (1,148,154)
Cash and cash equivalents at beginning
of period 5,950,452 8,151,524
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Cash and cash equivalents at end of period $ 6,709,324 $ 7,003,370
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-83
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
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,
1995, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarter ended March 31, 1995 and 1994, the Partnership incurred and
paid interest expense on mortgage notes payable to non-affiliates of $1,120,519
and $1,211,638.
3. Transactions with affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1995 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost None $118,397
As of March 31, 1995, the Partnership has a $772,896 unsecured third loan
outstanding to Balcor Real Estate Holdings, Inc. ("BREHI"), an affiliate of the
General Partner. This loan relates to the Walnut Ridge - Phase II Apartments.
During the quarters ended March 31, 1995 and 1994, the Partnership incurred
interest expense on the BREHI loan of $21,028 and $23,476, respectively. The
Partnership paid interest expense of $14,040 during the quarter ended March 31,
1995 while no interest expense was paid during the same period in 1994.
Interest expense of $13,976 was payable as of March 31, 1995 and is included in
accrued liabilities on the balance sheet.
4. Loan Refinancing:
In January 1995 the Eagle Crest - Phase I Apartments first mortgage loan was
refinanced. The interest rate increased from 9.025% to 9.621%, the maturity
date was extended from November 1994 to February 2002 and the monthly payments
increased from $52,187 to $61,008. A portion of the proceeds from the new
$7,180,000 first mortgage loan were used to repay the existing first mortgage
loan of $6,939,000.
5. Subsequent Event:
In April 1995, the Partnership made a distribution of $337,523 ($4.50 per
Interest) to the holders of Limited Partnership Interests for the first quarter
of 1995.
<PAGE>
BALCOR REALTY INVESTORS-83
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors-83 (the "Partnership") is a limited partnership formed
in 1981 to invest in and operate income-producing real property. The
Partnership raised $75,005,000 from sales of Limited Partnership Interests and
utilized these proceeds to acquire eleven real property investments and a
minority joint venture interest in one additional real property. To date, three
properties and the property in which the Partnership held a minority joint
venture interest have been sold or relinquished through foreclosure to the
lenders. The Partnership continues to operate its eight 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
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In connection with the February 1994 refinancing of the North Cove Apartments
mortgage loan, the lender forgave deferred interest and a portion of the
principal due on the loan resulting in the recognition of an extraordinary gain
on forgiveness of debt for the quarter ended March 31, 1994. This is the
primary reason the Partnership generated lower net income for the quarter ended
March 31, 1995 when compared to the same period in 1994. Further discussion of
the Partnership's operations is summarized below.
1995 Compared to 1994
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Higher rental and/or occupancy rates at several of the Partnership's properties
during the quarter ended March 31, 1995 resulted in increases in rental and
service income and, correspondingly, property management fees compared to the
same period in 1994.
Due to higher interest rates, interest income on short-term investments
increased for the quarter ended March 31, 1995 as compared to the same period
in 1994.
In February 1994, the first mortgage loan collateralized by North Cove
Apartments was refinanced, and the lender forgave deferred interest and a
portion of the principal. In connection with this transaction, the Partnership
recognized an extraordinary gain on forgiveness of debt. In addition, this
repayment of debt was the primary reason for the decrease in interest expense
on mortgage notes payable during the quarter ended March 31, 1995 when compared
to the same period in 1994.
<PAGE>
As a result of legal fees incurred during 1994 in connection with the
bankruptcy proceedings relating to North Cove Apartments, administrative
expenses decreased during the quarter ended March 31, 1995 as compared to the
same period in 1994.
During 1995, the Partnership recognized an extraordinary gain on forgiveness of
debt of $40,653 in connection with the settlement reached with the seller of
certain of the Partnership's properties.
Liquidity and Capital Resources
- - -------------------------------
The cash position of the Partnership increased slightly at March 31, 1995 as
compared to December 31, 1994. The Partnership's operating activities during
the first quarter of 1995 consisted primarily of cash flow generated from the
operation of the properties and interest income on short-term investments,
which were partially offset by the payment of administrative expenses.
Financing activities consisted of distributions to Limited Partners, principal
payments on mortgage notes payable, and activity associated with the
refinancing of the Eagle Crest - Phase I Apartments mortgage loan.
The Partnership classifies the cash flow performance 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 being equal to the property's revenue receipts
less property related expenditures, which include debt service payments. During
the quarters ended March 31, 1995 and 1994, seven of the Partnership's eight
properties generated positive cash flow, while North Cove Apartments generated
a marginal cash flow deficit.
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 refinancing of mortgage
loans, improving property operating performance, and seeking rent increases
where market conditions allow. As of March 31, 1995, the occupancy rates of the
Partnership's properties ranged from 85% 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 interests 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 for
the assets originally described in the prospectus. The General Partner examines
the operations of each property and each local market individually when
determining the optimal time to sell each of the Partnership's properties.
Although an affiliate of the General Partner has, in certain circumstances,
provided loans for certain properties of the Partnership, there can be no
assurance that loans of these types will be available from either an affiliate
or the General Partner in the future.
<PAGE>
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. During the remainder of 1995,
approximately $4,305,000 of mortgage loan financing collateralized by the Deer
Oaks apartment complex matures and the Partnership expects to refinance this
loan prior to its maturity.
During January 1995, the Eagle Crest - Phase I Apartments first mortgage loan
was refinanced. See Note 4 of Notes to Financial Statements for additional
information.
A restricted deposit in the amount of $700,000 was pledged as additional
collateral related to the mortgage loan on the Desert Sands Apartments. The
amount pledged as collateral was invested in short-term instruments pursuant to
the terms of the pledge agreement with the lending institution and interest
earned on this amount accumulated to the benefit of the Partnership. In March
1995, this restricted deposit was released and the accumulated interest was
paid to the Partnership.
On April 24, 1995, the Partnership contracted to sell the North Cove Apartments
for a sale price of $10,750,000, subject to the underlying mortgage loan. The
closing is subject to the satisfaction of numerous terms and conditions. There
can be no assurance that all of the terms and conditions will be complied with
and, therefore, it is possible the sale of the property may not occur.
During April 1995, the Partnership made a distribution of $337,523 ($4.50 per
Interest) to the holders of Limited Partnership Interests for the first quarter
of 1995. The level of this distribution was consistent with the amount
distributed for the fourth quarter of 1994. To date, investors have received
distributions of Net Cash Receipts of $62 and Net Cash Proceeds of $100,
totaling $162 per $1,000 interest, as well as certain tax benefits. The General
Partner expects to continue quarterly distributions to Limited Partners based
on the current performance of the Partnership's properties. However, the level
of future distributions will depend on cash flow from the Partnership's
remaining properties, the successful refinancing of certain mortgage loans and
proceeds from future property sales, as to all 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 depending on general
or local economic conditions. In the long-term, inflation will increase
operating costs and replacement costs and may lead to increased rental revenues
and real estate values. The timing of the long-term effects of inflation on
real estate may be dictated by general or local economic conditions.
<PAGE>
BALCOR REALTY INVESTORS-83
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Amended and Restated Certificate of Limited Partnership set forth as
Exhibit 4.1 to Amendment No. 1 to Registrant's Registration Statement on
Form S-11 dated December 10, 1982 (Registration No. 2-79043) 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. 0-11805) are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the three month period
ending March 31, 1995 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated April 24, 1995 was
filed reporting the contract to sell the North Cove Apartments in Houston,
Texas.
<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-83
By: \s\Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-XIII, the General Partner
By: \s\Brian Parker
------------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XIII, the
General Partner
Date: May 11, 1995
--------------------------
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 6709
<SECURITIES> 0
<RECEIVABLES> 152
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7881
<PP&E> 77226
<DEPRECIATION> 31360
<TOTAL-ASSETS> 54441
<CURRENT-LIABILITIES> 986
<BONDS> 56248
<COMMON> 0
0
0
<OTHER-SE> (2793)
<TOTAL-LIABILITY-AND-EQUITY> 54441
<SALES> 0
<TOTAL-REVENUES> 4133
<CGS> 0
<TOTAL-COSTS> 2056
<OTHER-EXPENSES> 670
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1142
<INCOME-PRETAX> 265
<INCOME-TAX> 0
<INCOME-CONTINUING> 265
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<EXTRAORDINARY> 40
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<NET-INCOME> 305
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