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 September 30, 1996
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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 0-11699
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BALCOR PENSION INVESTORS-IV
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(Exact name of registrant as specified in its charter)
Illinois 36-3202727
- ------------------------------- -------------------
(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 PENSION INVESTORS - IV
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(UNAUDITED)
ASSETS
1996 1995
--------------- ---------------
Cash and cash equivalents $ 11,305,192 $ 4,220,385
Cash and cash equivalents - Early
Investment Incentive Fund 5,207 148,230
Escrow deposits 958,452 838,807
Accounts and accrued interest receivable 43,606 230,107
Prepaid expenses 248,369 144,818
Deferred expenses, net of accumulated
amortization of $75,483 in 1996 and 107,210 124,107
$58,586 in 1995 --------------- ---------------
12,668,036 5,706,454
--------------- ---------------
Investment in loan receivable - first
mortgage 1,657,786
Real estate held for sale (net of allowance
of $5,209,805 in 1996 and $2,621,805
in 1995) 32,849,142 40,692,114
Investment in joint venture with affiliates 4,306,488 4,223,275
--------------- ---------------
37,155,630 46,573,175
--------------- ---------------
$ 49,823,666 $ 52,279,629
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued real estate taxes
payable $ 769,036 $ 535,761
Due to affiliates 101,029 44,376
Other liabilities (principally security
deposits) 281,100 288,363
Mortgage notes payable 10,088,123 10,419,008
--------------- ---------------
Total liabilities 11,239,288 11,287,508
--------------- ---------------
Limited Partners' capital (429,606
Interests issued and outstanding) 51,221,269 53,167,282
<PAGE>
BALCOR PENSION INVESTORS - IV
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(UNAUDITED)
(Continued)
Less Interests held by Early Investment
Incentive Fund (37,584 in 1996 and
34,915 in 1995) (8,905,577) (8,613,130)
--------------- ---------------
42,315,692 44,554,152
General Partner's deficit (3,731,314) (3,562,031)
--------------- ---------------
Total partners' capital 38,584,378 40,992,121
--------------- ---------------
$ 49,823,666 $ 52,279,629
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS - IV
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
(Restated)
--------------- ---------------
Income:
Interest on loans receivable $ 129,301 $ 175,664
Income from operations of real estate
held for sale 1,386,241 1,467,738
Participation in income of joint
venture with affiliates 300,020 283,738
Interest on short-term investments 170,494 463,387
Other income 710,155
--------------- ---------------
Total income 1,986,056 3,100,682
--------------- ---------------
Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 2,694,330 70,270
Administrative 903,558 796,057
--------------- ---------------
Total expenses 3,597,888 866,327
--------------- ---------------
(Loss) income before gain on
prepayment of loan receivable (1,611,832) 2,234,355
Gain on prepayment of loan receivable 786,766
--------------- ---------------
Net (loss) income $ (825,066) $ 2,234,355
=============== ===============
Net (loss) income allocated to
General Partner $ (61,880) $ 167,576
=============== ===============
Net (loss) income allocated to
Limited Partners $ (763,186) $ 2,066,779
=============== ===============
Net (loss) income per average number of
Limited Partnership Interests outstanding
(394,263 in 1996 and 400,251 in 1995) $ (1.94) 5.16
=============== ===============
Distributions to General Partner $ 107,403 $ 143,203
=============== ===============
Distributions to Limited Partners $ 1,182,827 $ 6,492,605
=============== ===============
Distributions per Limited Partnership
Interest $ 3.00 $ 16.24
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS - IV
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
--------------- ---------------
Income:
Interest on loans receivable $ 44,731 $ 76,333
Income from operations of real estate
held for sale 394,733 344,553
Participation in income of joint
venture with affiliates 99,077 59,287
Interest on short-term investments 64,645 109,162
--------------- ---------------
Total income 603,186 589,335
--------------- ---------------
Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 694,330 70,270
Administrative 320,305 258,633
--------------- ---------------
Total expenses 1,014,635 328,903
--------------- ---------------
(Loss) income before gain on
prepayment of loan receivable (411,449) 260,432
Gain on prepayment of loan receivable 786,766
--------------- ---------------
Net income $ 375,317 $ 260,432
=============== ===============
Net income allocated to General Partner $ 28,149 $ 19,532
=============== ===============
Net income allocated to Limited Partners $ 347,168 $ 240,900
=============== ===============
Net income per average number of Limited
Partnership Interests outstanding
(393,430 in 1996 and 399,531 in 1995) $ 0.88 $ 0.60
=============== ===============
Distribution to General Partner $ 35,801 $ 35,801
=============== ===============
Distribution to Limited Partners $ 393,445 $ 5,290,737
=============== ===============
Distribution per Limited Partnership
Interest $ 1.00 $ 13.24
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS - IV
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
(Restated)
--------------- ---------------
Operating activities:
Net (loss) income $ (825,066) $ 2,234,355
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Gain on prepayment of loan
receivable (786,766)
Participation in income of joint
venture with affiliates (300,020) (283,738)
Provision for potential losses on
loans and real estate 2,694,330 70,270
Amortization of deferred expenses 16,897 16,897
Net change in:
Escrow deposits (119,645) (184,105)
Accounts and accrued interest
receivable 186,501 43,358
Prepaid expenses (103,551) (213,636)
Accounts and accrued real estate 376,693
taxes payable 233,275
Due to affiliates 56,653 (79,781)
Other liabilities (7,263) 8,339
--------------- ---------------
Net cash provided by operating
activities 1,045,345 1,988,652
--------------- ---------------
Investing activities:
Distributions from joint venture
with affiliates 216,807 256,853
Collection of principal payments on
loans receivable 2,444,552 1,025,055
Additions to real estate (378,028) (140,588)
Proceeds from sale of real estate 5,750,000
Costs incurred in connection with sale
of real estate (223,330)
Costs incurred in connection with real
estate acquired through foreclosure (375,000)
--------------- ---------------
Net cash provided by investing
activities 7,810,001 766,320
--------------- ---------------
<PAGE>
BALCOR PENSION INVESTORS - IV
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(UNAUDITED)
(Continued)
Financing activities:
Distribution to Limited Partners (1,182,827) (6,492,605)
Distribution to General Partner (107,403) (143,203)
Change in cash and cash equivalents -
Early Investment Incentive Fund 143,023 (5,446)
Repurchase of Limited Partnership
Interests (292,447) (537,156)
Principal payments on mortgage notes
payable (330,885) (206,442)
Release of capital improvement escrows 23,060
--------------- ---------------
Net cash used in financing activities (1,770,539) (7,361,792)
--------------- ---------------
Net change in cash and cash equivalents 7,084,807 (4,606,820)
Cash and cash equivalents at beginning
of year 4,220,385 11,860,415
--------------- ---------------
Cash and cash equivalents at end of
period $ 11,305,192 $ 7,253,595
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-IV
(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 nine months and quarter
ended September 30, 1996 and all such adjustments are of a normal and recurring
nature.
2. Restatement:
In April 1995, the Partnership received insurance proceeds of $710,155 related
to earthquake damage at the Glendale Fashion Center. The proceeds were used to
reduce the basis of the property, which was consistent with the General
Partner's strategy at that time to redevelop the Center. During the fourth
quarter of 1995, the General Partner revised its strategy and decided to market
the Center for sale as a redevelopment project. As a result, the receipt of
insurance proceeds was recognized as other income at December 31, 1995.
Consequently, at September 30, 1995, real estate held for sale, partners'
capital and other income have been increased by $710,155 from amounts
previously reported.
3. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the Partnership
incurred interest expense on mortgage notes payable of $709,477 and $745,468
and paid interest expense of $709,888 and $745,468, respectively.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the
nine months and quarter ended September 30, 1996 are:
Paid
-----------------------
Nine Months Quarter Payable
------------ --------- ----------
Mortgage servicing fees $ 4,667 $ 1,167 None
Reimbursement of expenses to
the General Partner, at cost 146,341 25,858 $101,029
5. Investment in Joint Venture with Affiliates:
The Partnership owns a 15.37% joint venture interest in Perimeter 400 Center
Office Building. The following information has been summarized from the
financial statements of the joint venture:
<PAGE>
1996
Net investment in real estate as of September 30 $26,541,734
Total liabilities as of September 30 465,132
Total income 4,295,970
Net income 1,951,983
6. Prepayment of Loan Receivable:
In July 1996, the borrower of the Stonehaven South Apartments loan paid
$2,380,685 in full satisfaction of the loan. The loan balance at the date of
prepayment was $1,588,691. For financial statement purposes, the Partnership
recognized a gain of $786,766 from the prepayment of the loan receivable.
7. Sale of Real Estate:
In September 1996, the Partnership sold the Regency Club Apartments in an all
cash sale for $5,750,000. From the proceeds of the sale, the Partnership paid
$223,330 in selling costs. The basis of the property was $5,633,000. For
financial statement purposes, the Partnership recognized no gain or loss on the
sale of this property. However, the Partnership had previously established an
allowance for potential losses related to Regency Apartments against which its
remaining net investment of $106,330 was written off.
8. Contingency:
A proposed settlement has been reached with respect to the class action
complaint, Paul Williams and Beverly Kennedy, et al v. Balcor Pension
Investors, et al. between counsel for the Class and counsel for the defendants.
Notice of the proposed settlement terms was sent to class members in September
1996. A final hearing on the proposed settlement is expected to be held in
November 1996. The General Partner does not believe that the proposed
settlement will have a material adverse impact on the Partnership.
9. Subsequent Events:
(a) In October 1996, the Partnership made a distribution of $6,014,483 to the
holders of Limited Partnership Interests which represents a regular quarterly
distribution of available Cash Flow of $1.00 per Interest for the third quarter
of 1996, and a special distribution of $13.00 per Interest from Mortgage
Reductions received from the Stonehaven South Apartments loan prepayment and
the sale of the Regency Club Apartments.
(b) In October 1996, the Partnership reached a settlement with a former tenant
at the 240 East Ontario Office Building, which was sold in 1993, for rental
income owed to the Partnership pursuant to the terms of the lease. Under the
terms of the settlement, the Partnership received $600,000 in October 1996,
which will be recognized as settlement income during the fourth quarter of 1996
for financial statement purposes. An additional $75,000 is due to the
Partnership on December 31, 1996 and a final payment of $75,000 is due on June
30, 1997.
<PAGE>
(c) In October 1996, the Partnership sold the Pelican Pointe Apartments in an
all cash sale for $9,000,000. From the proceeds of the sale, the Partnership
paid $312,315 in selling costs. For financial statement purposes, the
Partnership will recognize a gain of approximately $1,264,000 from the sale of
this property during the fourth quarter of 1996.
<PAGE>
BALCOR PENSION INVESTORS-IV
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors-IV (the "Partnership") is a limited partnership formed
in 1982 to invest in wrap-around mortgage loans and, to a lesser extent, make
other junior mortgage loans and first mortgage loans. The Partnership raised
$214,803,000 through the sale of Limited Partnership Interests and utilized
these proceeds to fund thirty-eight loans. The Partnership's remaining loan,
which was collateralized by the Stonehaven South Apartments, was prepaid in
July 1996 and the Regency Club and Pelican Pointe apartment complexes were sold
in September and October 1996, respectively. Currently, the Partnership is
operating five properties held for sale and holds a minority joint venture
interest in one property.
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
- ---------------------
The Partnership recognized provisions for potential losses on real estate
totaling approximately $2,694,000 related to certain of its properties during
the second and third quarters of 1996. In addition, in April 1995, the
Partnership received insurance proceeds of $710,155 related to the Glendale
Fashion Center which were recognized as other income. These events were the
primary reasons a net loss was recognized during the nine months ended
September 30, 1996 as compared to net income for the same period in 1995. The
recognition of a gain on the July 1996 Stonehaven South Apartments loan
prepayment partially offset the decrease in net income during the nine months
and resulted in an increase in net income during the quarter ended September
30, 1996 as compared to the same period in 1995. Further discussion of the
Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the nine months and quarters ended September 30, 1996 and 1995.
The Colonial Coach Mobile Home Park loan was prepaid in September 1995. In
addition, installments due from the settlement of the remaining balance of the
Briarwood Apartments loan receivable were received and recognized as interest
income during the third quarter of 1995 and the second quarter of 1996. These
events resulted in a decrease in net interest income on loans receivable during
1996 as compared to 1995.
<PAGE>
Operations of real estate held for sale represent the net operations of those
properties acquired by the Partnership through foreclosure. At September 30,
1996, the Partnership was operating six properties. The funds advanced for
these six properties by the Partnership total approximately $24,900,000,
representing approximately 13% of the original funds advanced. Electrical and
plumbing repair projects were completed at the Pelican Pointe Apartments
resulting in higher maintenance expense during 1996. In addition, the cost for
security contracts increased at the Del Lago Apartments. These events resulted
in a decrease in income from real estate held for sale during the nine months
ended September 30, 1996 as compared to the same period in 1995. However,
operations improved at the Colony Apartments due to increased rental income
resulting from higher rental rates and due to the completion of asphalt repairs
during the third quarter of 1995. Increased service income was received during
the third quarter of 1996 at the Palm View Apartments. These events partially
offset the decrease for the nine months and resulted in an increase in income
from real estate held for sale during the quarter ended September 30, 1996 as
compared to the same period in 1995.
Participation in income of joint venture with affiliates represents the
Partnership's 15.37% share of the operations from the Perimeter 400 Center
Office Building. Higher rental income due to improved occupancy resulted in an
increase in participation in income of joint venture with affiliates during
1996 as compared to 1995.
Lower average cash balances were available for investment due to the payment of
special distributions to Limited Partners in July and October 1995 of proceeds
received in connection with prior loan repayments and property sales. This
resulted in a decrease in interest income on short-term investments during 1996
as compared to 1995.
In April 1995, the Partnership received insurance proceeds of $710,155 related
to earthquake damage incurred at the Glendale Fashion Center which was
recognized as other income.
Provisions are charged to income when the General Partner believes an
impairment has occurred, either in a borrower's ability to repay the loan or in
the value of the collateral property. Determinations of fair value are made
periodically on the basis of performance under the terms of the loan agreement
and assessments of property operations. Determinations of fair value represent
estimations based on many variables which affect the value of real estate,
including economic and demographic conditions. During the nine months ended
September 30, 1996, the Partnership did not recognize any provisions for
potential losses related to its loan. The Partnership recognized provisions of
$2,694,330 related to the North Kent Mall and the Del Lago and Regency Club
apartment complexes during the nine months ended September 30, 1996 to provide
for the change in the estimates of the fair values of the properties. During
the third quarter of 1996, allowances of $106,330 related to the Regency Club
Apartments were written off in connection with the sale of the property. The
Partnership recognized a provision of $70,270 related to the Colonial Coach
loan during the nine months ended September 30, 1995 and wrote-off allowances
of $320,270 in connection with the prepayment of the loan at a discount.
<PAGE>
The Partnership incurred legal, consulting, printing and postage costs in
connection with its response to a tender offer and certain related litigation
during 1996. As a result, administrative expenses increased during 1996 as
compared to 1995. This increase was partially offset by lower accounting fees.
During the third quarter of 1996, the Partnership recognized a gain of $786,766
in connection with the prepayment of the Stonehaven South Apartments loan.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $7,085,000 as
of September 30, 1996 when compared to December 31, 1995 primarily due to the
Stonehaven South Apartments loan prepayment and the sale of the Regency Club
Apartments. The Partnership received cash flow of approximately $1,045,000
from its operating activities, primarily from interest income earned on its
investment in loans receivable and short-term interest bearing instruments and
cash flow generated by the Partnership's properties held for sale, net of
administrative expenses. The Partnership also received cash of approximately
$7,810,000 from its investing activities primarily due to the receipt of
proceeds totaling approximately $2,370,000 from the Stonehaven South Apartments
loan prepayment and proceeds totaling approximately $5,527,000 from the sale of
Regency Club Apartments. The Partnership used cash in its financing activities
which consisted of the payment of distributions to the Partners totaling
approximately $1,290,000, the payment of principal of approximately $331,000 on
the mortgage notes payable and repurchases of Limited Partnership Interests at
a cost of approximately $292,000. The Partnership also made a special
distribution to Limited Partners from Mortgage Reductions in October 1996 as
described below.
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 an amount equal to the property's revenue
receipts less property related expenditures, which include debt service
payments, if applicable. The Del Lago and Pelican Pointe apartment complexes do
not have underlying debt. During the nine months ended September 30, 1996 and
1995, five of the Partnership's six remaining properties generated positive
cash flow while Glendale Fashion Center operated at a significant cash flow
deficit. However, significant leasing costs were incurred at North Kent Mall in
order to lease vacant space and renew existing tenant leases which were
scheduled to expire during 1996. These costs were not included in classifying
the cash flow performance of the Mall since they are non-recurring
expenditures. Had these costs been included, the Mall would have operated at a
significant deficit during 1996. The Regency Club Apartments, which was sold
in September 1996, generated positive cash flow during the nine months ended
September 30, 1995 and prior to its sale in 1996. The Perimeter 400 Center
Office Building, a property in which the Partnership holds a minority joint
venture interest, also generated positive cash flow during 1996 and 1995.
<PAGE>
As of September 30, 1996, the occupancy rates of the Partnership's residential
properties ranged from 91% to 100%. The current occupancy level of North Kent
Mall is 67%. After reviewing current market conditions, the General Partner
determined that it is in the best interest of the Partnership to sell the North
Kent Mall and therefore, is actively marketing the property for sale. The
Glendale Fashion Center is currently vacant due to the Partnership's strategy
to market the property for sale as a redevelopment project. The Partnership has
a contract to sell Glendale Fashion Center. Many rental markets continue to
remain extremely competitive; therefore, the General Partner's goals are to
maintain high occupancy levels while increasing rents where possible, and to
monitor and control operating expenses and capital improvement requirements at
the properties.
In April 1984, the Partnership funded a second mortgage loan collateralized by
the Stonehaven South Apartments. In June 1990, the borrower of the loan filed
for protection under the U.S. Bankruptcy Code and in June 1991, the Partnership
and the borrower executed a loan modification agreement which was approved by
the Bankruptcy Court in August 1991. Pursuant to the modification,
approximately $2,100,000 of the principal amount of the loan was considered a
secured claim. The remaining portion was considered an unsecured claim and was
payable from the net proceeds received by the borrower, if any, upon the sale
or refinancing of the property. In July 1996, the borrower paid $2,120,289 to
the Partnership in full satisfaction of the secured portion of the loan,
$250,000 in full satisfaction of the unsecured claim and $10,096 in full
satisfaction of the legal fees incurred in connection with the bankruptcy. See
Note 6 of Notes to Financial Statements for additional information.
In September 1996, the Partnership sold the Regency Club Apartments in an all
cash sale for $5,750,000. From the proceeds of the sale, the Partnership paid
$223,330 in selling costs. A portion of the remaining proceeds were used to
make a special distribution to the Limited Partners in October 1996. See Note
7 of Notes to Financial Statements for additional information.
In October 1996, the Partnership sold the Pelican Pointe Apartments in an all
cash sale for $9,000,000. From the proceeds of the sale, the Partnership paid
$312,315 in selling costs. See Note 9(c) of Notes to Financial Statements for
additional information.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. During 1996,
the Partnership sold the Pelican Pointe and Regency Club apartment complexes.
Currently, the Partnership has contracts to sell the Colony, Del Lago and Palm
View apartment complexes and the Glendale Fashion Center for sales prices of
$7,100,000, $2,800,000, $6,500,000 and $11,500,000, respectively. The
Partnership is actively marketing the North Kent Mall for sale. Additionally,
the General Partner is marketing for sale the commercial property in which it
holds a minority joint venture interest. The General Partner examines each
property individually by property type and market in determining the optimal
time to sell each property.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate.
<PAGE>
In October 1996, the Partnership reached a settlement with a former tenant at
the 240 East Ontario Office Building, which the Partnership sold in 1993, for
rental income owed to the Partnership pursuant to the terms of the lease.
Under the terms of the settlement, the Partnership received $600,000 in October
1996. An additional $75,000 is due to the Partnership on December 31, 1996 and
a final payment of $75,000 is due on June 30, 1997.
Certain of the Partnership's properties held for sale are 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 only one loan maturing within the next two years, a mortgage loan of
approximately $1,937,000 collateralized by the North Kent Mall. The Partnership
negotiated an extension of the maturity of the mortgage loan from July 1996 to
December 1996 and made a $100,000 principal payment on the loan as a condition
of the extension. The Partnership is marketing the property for sale to satisfy
the obligation. However, the Partnership may use Partnership reserves to repay
the loan.
In October 1996, the Partnership paid a distribution of $6,014,483 ($14.00 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of Cash Flow of $1.00 per Interest for the third
quarter of 1996 and a special distribution of $13.00 per Interest from Mortgage
Reductions received from the Stonehaven South Apartments loan prepayment and
the sale of Regency Club Apartments. The level of the regular quarterly
distribution is consistent with the amount distributed for the second quarter
of 1996. Including the October 1996 distribution, Limited Partners have
received cash distributions totaling $589.23 per $500 Interest. Of this amount,
$325.10 represents Cash Flow from operations and $264.13 represents a return of
Original Capital. In October 1996, the Partnership also paid $35,801 to the
General Partner as its distributive share of Cash Flow distributed for the
third quarter of 1996 and made a contribution to the Early Investment Incentive
Fund of $11,934.
The Partnership expects to continue making quarterly cash distributions;
however, the level of such future distributions will be dependent upon the cash
flow generated by the operations of the Partnership's properties held for sale,
less administrative expenses. The General Partner believes the Partnership has
retained an appropriate amount of working capital to meet current cash or
liquidity requirements which may occur.
During the nine months ended September 30, 1996, the General Partner on behalf
of the Partnership used amounts placed in the Early Investment Incentive Fund
to repurchase 2,669 Interests from Limited Partners at a total cost of
$292,447.
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 PENSION INVESTORS-IV
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- -------------------------
Colony Apartments
- -----------------
As previously reported, on September 26, 1996, the Partnership contracted to
sell Colony Apartments, Chapel Hill, North Carolina, to an unaffiliated party,
Colony Apartments/Chapel Hill Limited Partnership, a Maryland limited
partnership, for a sale price of $7,100,000. Pursuant to an agreement between
the Partnership and the purchaser, the closing date has been extended to the
later of (i) three business days after receipt from the holder of the first
mortgage loan of written approval to the sale of the property and the
prepayment of the loan or (ii) November 25, 1996. The purchaser has deposited
an additional $50,000 in earnest money for a total of $150,000.
Del Lago Apartments
- -------------------
As previously reported, on August 29, 1996, the Partnership contracted to sell
Del Lago Apartments, Tampa, Florida, to an unaffiliated party, Alliance
Holdings, L.L.C., an Illinois limited liability company. The sale price is
$2,800,000. The purchaser has exercised its option to extend the closing date
to December 30, 1996 and has deposited an additional $75,000 in earnest money
which amount is non-refundable in the event the sale does not close, except in
the event of a default by the Partnership. The total earnest money deposit is
$250,000.
Pelican Pointe Apartments
- -------------------------
As previously reported, on August 30, 1996, the Partnership contracted to sell
Pelican Pointe Apartments, Pompano Beach, Florida, to an unaffiliated person,
David Morrow. The sale price is $9,000,000. The purchaser assigned his rights
under the agreement of sale to an affiliate, Pointe Pelican Corporation, a
Florida corporation, and the sale closed on October 31, 1996. From the proceeds
of the sale, the Partnership paid $157,500 as a brokerage commission to an
unaffiliated party, $90,000 to an affiliate of the third party providing
property management services for the property as a fee for services rendered in
connection with the sale of the property and $64,815 in closing costs. The
purchaser received proration credits of $100,000 for corrective work resulting
from the purchaser's due diligence review. The Partnership received the
remaining $8,587,685 of sale proceeds.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a)(3) Exhibits:
<PAGE>
(4) Form of Confirmation regarding Interests in the Registrant set forth as
Exhibit 4 to the Registrant's Report on Form 10-Q for the quarter ended June
30, 1992 (Commission File No. 0-11699) is incorporated herein by reference.
(10)(a) Agreement of Sale and attachment thereto relating to the sale of
Regency Club Apartments, Evansville, Indiana, previously filed as Exhibit (2)
to the Partnership's Current Report on Form 8-K dated August 13, 1996, are
incorporated herein by reference.
(b)(i) Agreement of Sale and attachment thereto relating to the sale of Pelican
Pointe Apartments, Pompano Beach, Florida, previously filed as Exhibit (2) to
the Partnership's Current Report on Form 8-K dated August 29, 1996, are
incorporated herein by reference.
(ii) First Amendment dated September 30, 1996 to Agreement of Sale relating to
the sale of Pelican Pointe Apartments, Pompano Beach, Florida, previously filed
as Exhibit (99)(b) to the Partnership's Current Report on Form 8-K dated
September 16, 1996, is incorporated herein by reference.
(c)(i) Agreement of Sale dated October 10, 1996 and attachment thereto relating
to the sale of Glendale Fashion Center, Glendale, California previously filed
as Exhibit (2) to the Partnership's Current Report on Form 8-K dated September
16, 1996, are incorporated herein by reference.
(ii) First Amendment to Agreement of Purchase and Sale dated November 8, 1996
relating to the sale of Glendale Fashion Center, Glendale, California is
attached hereto.
(27) Financial Data Schedule of the Registrant for the nine months ended
September 30, 1996 is attached hereto.
(99)(a) First Amendment dated October 25, 1996 to Agreement of Sale relating to
the sale of Colony Apartments, Chapel Hill, North Carolina is attached hereto.
(b) Letter Agreement dated October 23, 1996 relating to the sale of Del Lago
Apartments, Tampa, Florida is attached hereto.
(b) Reports on Form 8-K:
(i) A Current Report on Form 8-K dated August 13, 1996 reporting the contract
to sell the Regency Club Apartments, Evansville, Indiana.
(ii) A Current Report on Form 8-K dated August 29, 1996 reporting each of the
contracts to sell the Pelican Pointe Apartments, Pompano Beach, Florida and Del
Lago Apartments, Tampa, Florida.
(iii) A Current Report on Form 8-K dated September 16, 1996 reporting each of
the contracts to sell the Glendale Fashion Center, Glendale, California; Palm
View Apartments, St. Petersburg, Florida; and Colony Apartments, Chapel Hill,
North Carolina; and the modifications to each of the contracts to sell the Del
Lago Apartments, Tampa, Florida and Pelican Pointe Apartments, Pompano Beach,
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 PENSION INVESTORS-IV
By: /s/ Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of
Balcor Mortgage Advisors-III, the General
Partner
By: /s/ Jayne A. Kosik
------------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Mortgage Advisors-III, the General Partner
Date: November 13, 1996
----------------------------
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
DATED OCTOBER 10, 1996
BY AND BETWEEN
VESTAR DEVELOPMENT CO., an Arizona corporation, ("PURCHASER")
and
GLENDALE FASHION CENTER LIMITED PARTNERSHIP,
an Illinois limited partnership ("SELLER")
RECITALS
A. The parties have entered into the above-described Agreement of
Purchase and Sale ("Agreement").
B. The parties now wish to amend their agreement in the manner set forth
below.
NOW, THEREFORE, the parties agree as follows:
1. The reference to "5:00 p.m. Chicago time on November 8, 1996" in
the second line of Section 7.1 of the Agreement is deleted and "4:00 p.m.
Chicago time on November 26, 1996" is substituted therefor.
2. Except as modified herein, the Agreement, as amended by this
Amendment, shall remain in full force and effect.
3. The effective date of this Amendment is November 8, 1996.
SELLER: GLENDALE FASHION CENTER
LIMITED PARTNERSHIP, an Illinois limited
partnership
By: /s/ James E. Mendelson
-------------------------------------------
Name: James E. Mendelson
--------------------------------------------
Its: Authorized Representative
--------------------------------------------
PURCHASER: VESTAR DEVELOPMENT CO.,
an Arizona corporation
By: /s/ Richard J. Kuhle
-----------------------------------------------
Name: Richard J. Kuhle
-----------------------------------------------
Its: Senior Vice President
-----------------------------------------------
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE
THIS FIRST AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is entered
into as of the 25th day of October, 1996, by and between COLONY
APARTMENTS/CHAPEL HILL LIMITED PARTNERSHIP, a Maryland limited partnership
("Purchaser"), and COLONY LIMITED PARTNERSHIP, an Illinois limited partnership
("Seller").
W I T N E S S E T H:
R-1. Purchaser and Seller are parties to that certain Agreement of Sale
dated as of September 26, 1996 (the "Contract"), with respect to the purchase
and sale of that certain parcel of real property and the improvements situated
thereon known as Colony Apartments located at 1250 Ephesus Church Road, Chapel
Hill, North Carolina, as more particularly described in the Contract.
R-2. Purchaser and Seller now desire to amend the Contract as more
particularly set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and/or other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:
1. Incorporation of Recitals; Capitalized Terms. The Recitals set forth
above are hereby incorporated herein to the same extent as if fully set forth
herein. Any capitalized term not otherwise defined herein shall have the
meaning ascribed to it in the Contract.
2. Additional Earnest Money. Section 2.2 of the Contract is hereby
amended to provided that the $50,000 Additional Earnest Money shall be payable
by Purchaser to Escrow Agent on or before October 30, 1006.
3. Closing Date. Section 8.1 of the Contract is hereby amended to
provide that Closing shall be on the later to occur of (i) November 25, 1996 or
(ii) three (3) business days after receipt from the Federal Housing
Commissioner of written approval to the sale of the Property and the prepayment
of the existing financing encumbering the Property (the "Closing Date").
4. Ratification of Contract. Except as modified by this Amendment, all
of the terms and provisions of the Contract are hereby ratified and confirmed
by Seller and Purchaser and shall remain in full force and effect.
5. Counterparts. To facilitate execution, this Amendment may be executed
in as many counterparts as may be required; and it shall not be necessary that
the signature of each party, or that the signatures of all persons required to
bind any party, appear on each counterpart; but it shall be sufficient that the
signature of each party, or that the signatures of the persons required to bind
any party, appear on one or more or such counterparts. All counterparts shall
collectively constitute a single agreement.
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
parties have duly executed this Amendment under seal on the dates indicate
below beneath their respective signatures.
WITNESS: SELLER:
- --------------------------- COLONY LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Colony Partners, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
---------------------------------
Name: James E. Mendelson
---------------------------------
Its: Authorized Representative
---------------------------------
PURCHASER
COLONY APARTMENTS/CHAPEL HILL LIMITED
PARTNERSHIP, a Maryland limited partnership
By: Tarheel Investments, LLC, a Maryland
limited liability company
By: /s/ Mike Brody
--------------------------------
Name: Mike Brody
--------------------------------
Its: Managing Member
--------------------------------
<PAGE>
October 23, 1996
Via Facsimile (847) 317-4662 Via Facsimile (312) 992-1061
Balcor Pension Investors-IV Katten Muchin & Zavis
c/o The Balcor Company 525 West Monroe Street
2355 Waukegan Road Suite 1600
Suite A-200 Chicago, Illinois 60661-3693
Bannockburn, Illinois 60015 Attention: Daniel J. Perlman
Via Facsimile (847) 317-4462
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
Re: Agreement of Sale dated August 29, 1996, by and between Alliance
Holdings, L.L.C. and Balcor Pension Investors-IV for Del
Lago Apartments, Tampa, Florida ("Agreement")
Notice is hereby tendered that Purchaser has elected to extend the Closing
Date under the above-referenced Agreement to December 30, 1996, in accordance
with the terms of Section 8 of the Agreement (as modified by that certain
Second Modification Agreement dated October 2, 1996).
The Seventy Five Thousand Dollar ($75,000.00) payment required by the
Modification Agreement will be wired to the Escrow Agent on or before October
25, 1996.
Alliance Holdings, L.L.C.
By: /s/ David O'Keefe
-----------------------------------
Its: Attorney in Fact
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 11310
<SECURITIES> 0
<RECEIVABLES> 44
<ALLOWANCES> 5210
<INVENTORY> 0
<CURRENT-ASSETS> 12561
<PP&E> 32849
<DEPRECIATION> 0
<TOTAL-ASSETS> 49824
<CURRENT-LIABILITIES> 1151
<BONDS> 10088
0
0
<COMMON> 0
<OTHER-SE> 38585
<TOTAL-LIABILITY-AND-EQUITY> 49824
<SALES> 0
<TOTAL-REVENUES> 2773
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 904
<LOSS-PROVISION> 2694
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (825)
<INCOME-TAX> 0
<INCOME-CONTINUING> (825)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (825)
<EPS-PRIMARY> (1.94)
<EPS-DILUTED> (1.94)
</TABLE>
