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 March 31, 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 0-11699
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BALCOR PENSION INVESTORS-IV
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(Exact name of registrant as specified in its charter)
Illinois 36-3202727
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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 PENSION INVESTORS-IV
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1997 and December 31, 1996
(UNAUDITED)
ASSETS
1997 1996
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Cash and cash equivalents $ 7,819,616 $ 29,204,900
Cash and cash equivalents - Early
Investment Incentive Fund 2,279,904 185,167
Accounts and accrued interest receivable 366,225 1,092,340
Prepaid expenses 30,863 54,692
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10,496,608 30,537,099
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Real estate held for sale (net of allowance
of $4,023,000 in 1997 and 1996) 13,258,400 13,258,400
Investment in joint venture with affiliates 268,975 268,975
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13,527,375 13,527,375
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$ 24,023,983 $ 44,064,474
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LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued real estate taxes
payable $ 158,022 $ 533,906
Due to affiliates 137,665 145,771
Security deposits 12,489 12,489
Mortgage notes payable 3,814,098 3,883,828
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Total liabilities 4,122,274 4,575,994
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Commitments and contingencies
Limited Partners' capital (429,606
Interests issued and outstanding) 29,166,187 48,752,958
Less Interests held by Early Investment
Incentive Fund (41,330 in 1997 and 1996) (9,264,478) (9,264,478)
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19,901,709 39,488,480
General Partner's capital None None
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Total partners' capital 19,901,709 39,488,480
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$ 24,023,983 $ 44,064,474
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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 March 31, 1997 and 1996
(UNAUDITED)
1997 1996
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Income:
Interest on loan receivable $ 31,405
Interest on short-term investments $ 193,620 53,366
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Total income 193,620 84,771
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Expenses:
Loss (income) from operations of real
estate held for sale 86,415 (374,936)
Participation in loss (income) of joint
venture with affiliates 81,930 (80,728)
Administrative 181,981 156,672
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Total expenses 350,326 (298,992)
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Net (loss) income $ (156,706) $ 383,763
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Net income allocated to General
Partner None $ 28,782
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Net (loss) income allocated to Limited
Partners $ (156,706) $ 354,981
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Net (loss) income per average number of
Limited Partnership Interests outstanding
(388,276 in 1997 and 394,691 in 1996) $ (.40) $ .90
============== =============
Distribution to General Partner $ 35,801 $ 35,801
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Settlement Distribution to Limited Partners $ 16,056 None
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Distribution to Limited Partners $ 19,414,009 $ 394,691
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Distribution per Limited Partnership
Interest $ 50.00 $ 1.00
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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 quarters ended March 31, 1997 and 1996
(UNAUDITED)
1997 1996
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Operating activities:
Net (loss) income $ (156,706) $ 383,763
Adjustments to reconcile net (loss) income
to net cash provided by operating
activities:
Participation in loss (income) of
joint venture with affiliates 81,930 (80,728)
Amortization of deferred expenses 5,632
Net change in:
Escrow deposits (43,725)
Accounts and accrued interest
receivable 726,115 157,952
Prepaid expenses 23,829 94,398
Accounts and accrued real estate
taxes payable (375,884) 89,221
Due to affiliates (8,106) 16,093
Other liabilities 35,586
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Net cash provided by operating activities 291,178 658,192
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Investing activities:
Distribution from joint venture
with affiliates 1,740
Contribution to joint venture with
affiliates (81,930)
Collection of principal payments on
loan receivable 34,359
Additions to real estate (174,887)
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Net cash used in investing activities (81,930) (138,788)
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Financing activities:
Distribution to Limited Partners (19,430,065) (394,691)
Distribution to General Partner (35,801) (35,801)
Contribution by General Partner 35,801
Change in cash and cash equivalents -
Early Investment Incentive Fund (2,094,737) (49,797)
Principal payments on mortgage notes
payable (69,730) (73,791)
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Net cash used in financing activities (21,594,532) (554,080)
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<PAGE>
BALCOR PENSION INVESTORS-IV
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1997 and 1996
(UNAUDITED)
(Continued)
Net change in cash and cash equivalents (21,385,284) (34,676)
Cash and cash equivalents at beginning
of year 29,204,900 4,220,385
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Cash and cash equivalents at end of period $ 7,819,616 $ 4,185,709
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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 quarter ended March 31,
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. During 1996, the Partnership sold five properties and its minority
joint venture interest in one additional property. A majority of the proceeds
from the sales were distributed to Limited Partners in January 1997. The
Partnership has two remaining properties. The Partnership has entered into a
contract to sell the Glendale Fashion Center and is actively marketing the
North Kent Mall for sale. 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 lawsuit discussed in Note 7 of Notes to
Financial Statements. In the absence of any such contingency, the reserves will
be paid within twelve months of the last property being sold. In the event a
contingency exists, reserves may be held by the Partnership for a longer period
of time.
3. Interest Expense:
During the quarters ended March 31, 1997 and 1996, the Partnership incurred
interest expense on mortgage notes payable of $101,847 and $240,111 and paid
interest expense of $102,443 and $240,374, respectively.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the
quarter ended March 31, 1997 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost $30,185 $137,665
The General Partner made a contribution of $35,801 in connection with the
settlement of certain litigation as further discussed in Note 6 of Notes to
Financial Statements.
<PAGE>
5. Investment in Joint Venture with Affiliates:
The Perimeter 400 Center Office Building was owned by a joint venture
consisting of the Partnership and three affiliates. The Partnership's sharing
percentage is 15.37%. In 1996, the joint venture sold the property. Pursuant
to the terms of the sale, $1,750,000 of the proceeds will be retained by the
joint venture until September 1997, of which $268,975 is the Partnership's
share.
6. Settlement of Litigation:
A settlement received final approval by the court in November 1996 in the class
action, Paul Williams and Beverly Kennedy, et. al. v. Balcor Pension Investors,
et. al. upon the terms described in the notice to class members in September
1996. The General Partner made a contribution of $35,801 to the Partnership,
from which the plaintiff's counsel was paid $3,581 pursuant to the settlement
agreement. In February 1997, the General Partner made a settlement payment of
$32,220 ($0.08 per Interest) to members of the class pursuant to the settlement
agreement. Of the total settlement amount, $16,056 was paid to original
investors who held their Limited Partnership Interests at the date of the
settlement and was recorded as a distribution to Limited Partners in the
Financial Statements. The remaining portion of the settlement of $16,164 was
paid to original investors who previously sold their Interests in the
Partnership. This amount was recorded as an administrative expense in the
Financial Statements. The settlement had no material impact on the Partnership.
7. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership, the
General Partner and certain third parties have been named as defendants seeking
damages relating to tender offers to purchase interests in the Partnership and
nine affiliated partnerships initiated by the third party defendants in 1996.
The defendants continue to vigorously contest this action. The action has been
dismissed with prejudice and plaintiffs have filed an appeal. It is not
determinable at this time whether or not an unfavorable decision in this 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.
8. Subsequent Event:
In April 1997, the Partnership made a distribution of $1,181,416 ($2.75 per
Interest) to the holders of Limited Partnership Interests which represents a
regular quarterly distribution of available Cash Flow of $1.00 per Interest for
the first quarter of 1997, and a special distribution of $1.75 per Interest
from Cash Flow received from certain 1996 property sales.
<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. As a result of the repayments,
foreclosures and write-offs of loans in prior years, the Partnership has no
loans in its portfolio as of March 31, 1997. Currently, the Partnership is
operating two properties held for sale.
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, including the 1996 sale of the Perimeter
400 Center Office Building in which the Partnership held a minority joint
venture interest, were the primary reason the Partnership recognized a net loss
during the quarter ended March 31, 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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Discussions of fluctuations between 1997 and 1996 refer to the quarters ended
March 31, 1997 and 1996.
As a result of the prepayment of the Stonehaven South Apartments loan in July
1996, interest income on loans receivable ceased in 1996.
Higher average cash balances were available for investment due to proceeds
received by the Partnership from the 1996 property sales prior to distribution
to Limited Partners in January 1997. This resulted in an increase in interest
income on short-term investments in 1997 as compared to 1996.
Operations of real estate held for sale represent the net operations of those
properties acquired by the Partnership through foreclosure. During the quarter
ended March 31, 1997, the Partnership operated two properties. The funds
advanced for these two properties by the Partnership total approximately
<PAGE>
$11,900,000, representing approximately 6% of original funds advanced. The 1996
sales of the Partnership's properties, which were generating income from
operations prior to their sales, was the primary reason the Partnership
recognized a loss from real estate held for sale during 1997 as compared to
income in 1996. The decrease in income of approximately $611,000 was partially
offset by lower repairs and tenant improvements costs of approximately $150,000
at the North Kent Mall.
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. In December 1996, the joint venture sold the property. During
1997, the Partnership paid its share of additional expenses related to the
joint venture's period of ownership. The combined effect of these events
resulted in participation in loss of joint venture with affiliates in 1997 as
compared to income in 1996.
During February 1997, the General Partner made a payment relating to the
settlement of certain litigation to original investors who previously sold
their Interests in the Partnership, which was recorded as an administrative
expense. See Note 6 of Notes to Financial Statements for additional
information. In addition, the Partnership incurred printing and postage costs
in connection with its response to a January 1997 tender offer. As a result,
administrative expenses increased by approximately $49,000 during 1997 as
compared to 1996. During 1996, the Partnership incurred additional legal and
portfolio management fees related to sold properties, which partially offset
the increase by approximately $38,000.
Liquidity and Capital Resources
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The cash position of the Partnership as of March 31, 1997 decreased by
approximately $21,385,000 when compared to December 31, 1996 primarily due to
the payment of a special distribution to Limited Partners in January 1997 of
proceeds from the 1996 property sales. The Partnership received cash flow of
approximately $291,000 from its operating activities, primarily from interest
income earned on short-term interest bearing instruments, collection of
receivables related to properties sold in 1996, net of administrative expenses.
The Partnership used cash in its investing activities to make a contribution to
the joint venture with affiliates of approximately $82,000. The Partnership's
financing activities consisted of the payment of distributions to the Partners
totaling approximately $19,466,000, an increase in restricted cash and cash
equivalents of approximately $2,095,000, a contribution by the General Partner
of approximately $36,000, and the payment of principal of approximately $70,000
on the mortgage notes payable.
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
<PAGE>
payments. During 1997 and 1996, North Kent Mall generated positive cash flow.
However, significant leasing costs were incurred in 1996 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 in 1996 since they were non-recurring
expenditures. Had these non-recurring expenditures been included, the property
would have operated at a significant cash flow deficit during 1996. During 1997
and 1996, Glendale Fashion Center operated at a significant cash flow deficit.
The Colony, Del Lago, Palm View, Pelican Pointe and Regency Club apartment
complexes, which were sold in 1996, generated positive cash flow during the
first quarter of 1996. In addition, the Perimeter 400 Center Office Building,
the property in which the Partnership held a minority joint venture interest,
was sold in December 1996 and generated a positive cash flow during the first
quarter of 1996.
The Partnership's remaining assets are two shopping centers, one located in
Glendale, California and one in Grand Rapids, Michigan. Currently, Glendale
Fashion Center has no tenants in occupancy. The property continues to proceed
through the local government entitlement process as part of the sale and
redevelopment plan. This property is currently under contract for a sale price
of $10,700,000 and the sale is scheduled to close in May 1997. North Kent Mall
was impacted by a number of tenant bankruptcies in 1996 that led to the
departure of several major tenants. Occupancy as of March 31, 1997 for North
Kent Mall was 52%. 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.
During 1996, the Partnership sold five properties and its minority joint
venture interest in one additional property. A majority of the proceeds from
the sales were distributed to Limited Partners in January 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 Partnership
has two remaining properties as discussed above. 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 lawsuit discussed
in Note 7 of Notes to Financial Statements. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency exists, reserves may be held by
the Partnership for a longer period of time.
The Partnership has one loan maturing within the next two years, a mortgage
loan of approximately $1,753,000 collateralized by North Kent Mall. In March
1997, the Partnership and the lender executed an agreement effective as of
January 1, 1997, pursuant to which, the maturity date of the loan was extended
to September 1, 1997. If the property is sold prior to September 1, 1997, the
Partnership is obligated to pay all amounts due pursuant to the loan terms plus
an additional amount equal to 10% of the net sale proceeds, as defined by the
agreement. In the event the property is not sold prior to September 1, 1997,
title to the property will be conveyed to the lender pursuant to a deed in lieu
of foreclosure on such date, and the Partnership will have no further
obligations under the loan and no further interest in the property. The
Partnership is marketing the property for sale to satisfy the obligation.
<PAGE>
Pursuant to the sale agreement for the Regency Club Apartments, $250,000 of the
sale proceeds was retained by the Partnership and was unavailable for
distribution until January 1997, at which time the holdback was released in
full.
In February 1997, the General Partner made a settlement payment of $32,220
($.08 per Interest) to members of the class pursuant to the settlement approved
by the court in November 1996 in the Paul Williams and Beverly Kennedy, et.
al., v. Balcor Pension Investors, et. al. class action lawsuit. The General
Partner made a contribution of $35,801 to the Partnership, from which the
plaintiffs' counsel was paid $3,581 pursuant to the settlement agreement. Of
the total settlement amount, $16,056 was paid to the original investors who
held their Limited Partnership Interests at the date of the settlement and was
recorded as a distribution to Limited Partners in the Financial Statements. The
remaining portion of the settlement of $16,164 was paid to original investors
who previously had sold their Interests in the Partnership. This amount was
recorded as an administrative expense in the Financial Statements.
In February 1997, the Partnership discontinued the repurchase of Interests from
Limited Partners.
In April 1997, the Partnership paid a distribution of $1,181,416 ($2.75 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of Cash Flow of $1.00 per Interest for the first
quarter of 1997 and a special distribution of $1.75 per Interest from Cash Flow
received from the 1996 property sales. The level of the regular quarterly
distribution is consistent with the amount distributed for the fourth quarter
of 1996. Including the April 1997 distribution, Limited Partners have received
cash distributions totaling $641.98 per $500 Interest. Of this amount, $328.85
represents Cash Flow from operations and $313.13 represents a return of
Original Capital. In April 1997, the Partnership also paid $98,451 to the
General Partner as its distributive share of Cash Flow distributed for the
first quarter of 1997, and made a contribution to the Early Investment
Incentive Fund of $32,817. Future distributions will be made from available
sale proceeds from the Partnership's remaining properties, as to which there
can be no assurances.
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.
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
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Glendale Fashion Center
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As previously reported, on October 10, 1996, the Partnership entered into a
contract to sell the Glendale Fashion Center, Glendale, California, to an
unaffiliated party, Vestar Development Co., an Arizona corporation. The sale
price is $10,700,000. Pursuant to an agreement between the purchaser and the
Partnership, the purchaser has the option to extend the originally scheduled
closing date of March 31, 1997 for up to four 30 day periods upon three
business days' advance notice to the Partnership and the deposit of
additional earnest money. The purchaser has exercised options to extend the
closing date to May 30, 1997 and has deposited $150,000 as additional
earnest money.
Item 6. Exhibits and Reports on Form 8-K
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(a)(3) Exhibits:
(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) Material Contracts:
(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.
(b)(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.
<PAGE>
(c)(ii) First Amendment to Agreement of Purchase and Sale dated November 8,
1996 relating to the sale of Glendale Fashion Center, Glendale, California
previously filed as Exhibit (10)(c)(ii) to the Partnership's Report on Form
10-Q for the quarter ended September 30, 1996 is incorporated herein by
reference.
(c)(iii) Second Amendment to Agreement of Purchase and Sale relating to the
sale of Glendale Fashion Center, Glendale, California, previously filed as
Exhibit (10)(c)(iii) to the Partnership's Report in Form 10-K for the year
ended December 31, 1996 is incorporated herein by reference.
(c)(iv) Third Amendment to Agreement of Purchase and Sale relating to the sale
of Glendale Fashion Center, Glendale, California, previously filed as Exhibit
(10)(c)(iv) to the Partnership's Report in Form 10-K for the year ended
December 31, 1996 is incorporated herein by reference.
(c)(v) Fourth Amendment to Agreement of Purchase and Sale relating to the sale
of Glendale Fashion Center, Glendale, California, previously filed as Exhibit
(10)(c)(v) to the Partnership's Report in Form 10-K for the year ended December
31, 1996 is incorporated herein by reference.
(c)(vi) Fifth Amendment to Agreement of Purchase and Sale relating to the sale
of Glendale Fashion Center, Glendale, California, previously filed as Exhibit
(10)(c)(vi) to the Partnership's Report in Form 10-K for the year ended
December 31, 1996 is incorporated herein by reference.
(c)(vii) Sixth Amendment to Agreement of Purchase and Sale relating to the sale
of Glendale Fashion Center, Glendale, California, previously filed as Exhibit
(10)(c)(vii) to the Partnership's Report in Form 10-K for the year ended
December 31, 1996 is incorporated herein by reference.
(c)(viii) Seventh Amendment to Agreement of Purchase and Sale relating to the
sale of Glendale Fashion Center, Glendale, California, previously filed as
Exhibit (10)(c)(viii) to the Partnership's Report in Form 10-K for the year
ended December 31, 1996 is incorporated herein by reference.
(c)(ix) Eighth Amendment to Agreement of Purchase and Sale relating to the sale
of Glendale Fashion Center, Glendale, California, is attached hereto.
(c)(x) Extension Letter dated April 25, 1997 relating to the sale of Glendale
Fashion Center, Glendale, California, is attached hereto.
(d) Agreement of Sale and attachment thereto relating to the sale of Perimeter
400 Center, Fulton County, Georgia, previously filed as Exhibit (2) to the
Partnership's Report on Form 8-K dated December 2, 1996, is incorporated herein
by reference.
(27) Financial Data Schedule of the Registrant for the quarter ended March 31,
1997 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended March 31, 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 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
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Mortgage Advisors-III, the General
Partner
Date: May 9, 1997
---------------
<PAGE>
EIGHTH AMENDMENT TO AGREEMENT OF SALE
AND ESCROW AGREEMENT
THIS EIGHTH AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Eight Amendment") is made and entered into as of the 28th day of March, 1997,
among VESTAR DEVELOPMENT CO., an Arizona corporation ("Purchaser"), GLENDALE
FASHION CENTER LIMITED PARTNERSHIP, an Illinois limited partnership ("Seller"),
and NEAR NORTH NATIONAL TITLE COMPANY ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale entered into as of October 10, 1996 (as heretofore amended and as amended
hereby, the "Agreement"), pursuant to which Seller agreed to sell to Purchaser,
and Purchaser agreed to purchase from Seller, the "Property" (as defined in the
Agreement);
WHEREAS, Seller, Purchaser and Escrow Agent are parties to that certain
Escrow Agreement entered into as of October 10, 1996 (as amended, the "Escrow
Agreement");
WHEREAS, Seller and Purchaser now desire to amend the Agreement and the
Escrow Agreement pursuant to the terms and provisions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements contained herein, the payment of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller, Purchaser and Escrow Agent hereby agree as
follows:
1. All capitalized terms used in this Eighth Amendment, to the extent
not otherwise expressly defined herein, shall have the same meanings ascribed
to such terms in the Agreement or the Escrow Agreement.
2. The first sentence of Paragraph 8 of the Agreement is hereby deleted
in its entirety and the following is hereby inserted in lieu thereof: "The
closing of this transaction (the "Closing") shall be on March 31, 1997 at the
office of the Title Insurer, Los Angeles, California at which time Seller shall
deliver possession of the Property to Purchaser, provided, however, that
Purchaser may elect to extend the Closing in accordance with the provisions of
Paragraph 30 of this Agreement,".
3. The text of Paragraph 16.5 of the Agreement is hereby deleted in its
entirety and the following is hereby inserted in lieu thereof: "The parties
agree that the representations contained herein shall survive Closing but shall
expire upon the earlier to occur of (a) the date which is one hundred and
eighty (180) days following the Closing, and (b) December 1, 1997 (i.e., the
claiming party shall have no right to make any claims against the other party
for a breach of a representation or warranty after the earlier to occur of (a)
the date which is one hundred and eighty (180) days following the Closing, and
(b) December 1, 1997).
4. The following is hereby added as Paragraph 30 of the Agreement:
<PAGE>
"30. EXTENSION OF CLOSING. Purchaser shall have the option to extend
the date of Closing for up to four consecutive thirty (30) day periods subject
to the provisions of this Paragraph. In the event that Purchaser elects to
exercise its option pursuant to this Paragraph, Purchaser shall provide Seller
and Escrow Agent with three business days' advance written notice from the
date of the Closing of its intention to extend the Closing Date. Such notice,
in each instance, shall be accompanied by a check made out to the Escrow Agent
(or an electronic fund transfer into the account of the Escrow Agent) in the
following amounts: first thirty (30) day extension $75,000; second thirty (30)
day extension, an additional $75,000; third thirty (30) day extension, an
additional $100,000; and fourth (30) day extension, an additional $100,000. In
the event that Purchaser exercises any or all of its extensions options
pursuant to the terms of this Paragraph, the amounts deposited as set forth in
the preceding sentence shall be held in accordance with the Escrow Agreement
and shall be non refundable except in the case of Seller default under this
Agreement. In the event the transaction contemplated herein Closes, all
amounts deposited into Escrow pursuant to this Paragraph, if any, shall be
credited against the purchase price at Closing. Purchaser shall have no right
to extend the Closing beyond July 29, 1997."
5. Per a prior verbal agreement, the parties hereto acknowledge that
Seller agreed to pay certain legal fees for legal services rendered from the
firms of Cox, Castle & Nicholson and Latham & Watkins related to the ground
lease underlying the Property and FEMA issues related thereto. Notwithstanding
said prior agreement, Seller shall not be liable for any portion of the legal
fees referenced in the prior sentence incurred after March 31, 1997.
6. Except as amended herein, the terms and conditions of the Agreement
and the Escrow Agreement shall continue in full force and effect and are hereby
ratified in their entirety.
7. This Eighth Amendment may be executed in multiple counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
8. The parties hereto agree and acknowledge that a facsimile copy of any
party's signature on this Eighth Amendment shall be enforceable against such
party as an original. The parties hereto further agree that this Eighth
Amendment shall be enforceable by and between the Purchaser and Seller prior to
the execution of this Eighth Amendment by Escrow Agent.
<PAGE>
Executed as of the date first written above.
PURCHASER:
VESTAR DEVELOPMENT CO., an Arizona corporation
By: /s/ Lee T. Hanley
---------------------------------
Name: Lee T. Hanley
---------------------------------
Its: President
---------------------------------
SELLER:
GLENDALE FASHION CENTER LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Glendale Fashion Center Partners, Inc., an
Illinois corporation, its general partner
By: /s/ James E. Mendelson
----------------------------------
Name:
----------------------------------
Its: Sr. V.P.
----------------------------------
ESCROW AGENT:
NEAR NORTH NATIONAL TITLE COMPANY
By: /s/ Michael Bench
--------------------------------------
Name: MICHAEL BENCH
--------------------------------------
Its: ESCROW OFFICER
--------------------------------------
<PAGE>
Vestar
April 25, 1997 Writer's direct line (602) 533-2644
Ms. Ilona Adams Mr. James Mendelson
The Balcor Company The Balcor Company
2355 Waukegan Road, Suite A-200 2355 Waukegan Road, Suite A-200
Bannockburn, IL 60015 Bannockburn, IL 60015
(847) 317-4462 (847) 317-4462
Mr. Michael Bench Steven Levy, Esq.
Near North National Title Corporation Katten Muchin & Zavis
222 N. LaSalle Street 525 W. Monroe Street, Suite 1600
Chicago, IL 60601 Chicago, IL 60661-3693
(312) 419-0569 (312) 902-1061
Re: Sale and Escrow Agreement Among Vestar Development Co., Glendale
Fashion Center Limited Partnership and Near North National Title Company
Escrow No. N942501A
Pursuant to paragraph 30 of the Sale Agreement as set forth in paragraph 4 of
the Eight Amendment, Purchaser hereby provides written notice of its election
to exercise the option to extend the closing date for a 30-day period through
and including May 30, 1997. The $75,000 extension payment will be wired to
Near North National Title Company today. This shall also serve as Near North's
authorization to deposit such $75,000 in the same investment with the same
maturity as the existing escrow funds.
If anyone has any questions concerning this, please contact me.
Sincerely,
/s/ Allan J. Kasen
Allan J. Kasen
AJK/ss
cc:
Alan G. Lieberman, via facimile (847) 317-4462
Jay B. Newman, via facsimile (213) 955-7999
Edward Krasnove, via facsimile (310) 792-4620
Lee T. Hanley
Richard J. Kuhle
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 10100
<SECURITIES> 0
<RECEIVABLES> 366
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10497
<PP&E> 13258
<DEPRECIATION> 0
<TOTAL-ASSETS> 24024
<CURRENT-LIABILITIES> 308
<BONDS> 3814
0
0
<COMMON> 0
<OTHER-SE> 19902
<TOTAL-LIABILITY-AND-EQUITY> 24024
<SALES> 0
<TOTAL-REVENUES> 193
<CGS> 0
<TOTAL-COSTS> 168
<OTHER-EXPENSES> 182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (157)
<INCOME-TAX> 0
<INCOME-CONTINUING> (157)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (157)
<EPS-PRIMARY> (0.40)
<EPS-DILUTED> (0.40)
</TABLE>
