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, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________ to ____________
Commission file number 2-85270
BALCOR EQUITY PENSION INVESTORS-I
(Exact name of registrant as specified in its charter)
Illinois 36-3240345
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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 .
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1994 and December 31, 1993
(Unaudited)
ASSETS
1994 1993
-------------- --------------
Cash and cash equivalents $ 7,745,951 $ 8,252,048
Accounts and accrued interest receivable 459,041 501,533
Prepaid expenses 129,282 97,168
Deferred expenses, net of accumulated
amortization of $387,708 in 1994 and
and $361,332 in 1993 407,291 433,667
-------------- --------------
8,741,565 9,284,416
-------------- --------------
Investment in real estate
Land 10,753,713 10,753,713
Buildings and improvements 93,198,531 92,847,535
-------------- --------------
103,952,244 103,601,248
Less accumulated depreciation 34,760,880 33,869,463
-------------- --------------
Investment in real estate, net
of accumulated depreciation 69,191,364 69,731,785
Investment in loan receivable 4,261,663 4,302,683
-------------- --------------
73,453,027 74,034,468
-------------- --------------
$ 82,194,592 $ 83,318,884
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 152,643 $ 738,476
Due to affiliates 215,720 96,979
Accrued real estate taxes 285,435 240,789
Escrow liabilities 34,992 16,416
Security deposits 528,394 520,403
-------------- --------------
Total liabilities 1,217,184 1,613,063
Affiliate's participation in joint venture 1,481,970 1,463,700
Partners' capital (359,229 Limited
Partnership Interests issued and
outstanding) 79,495,438 80,242,121
-------------- --------------
$ 82,194,592 $ 83,318,884
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------------- --------------
Income:
Rental $ 3,599,922 $ 3,495,386
Service 539,917 552,755
Interest on short-term investments 71,159 69,756
Interest on loan receivable 53,693 55,779
-------------- --------------
Total income 4,264,691 4,173,676
-------------- --------------
Expenses:
Depreciation 891,417 944,949
Amortization of deferred expenses 26,376 26,717
Property operating 2,081,891 1,476,937
Real estate taxes 354,704 380,809
Property management fees 175,357 181,066
Administrative 217,028 157,981
-------------- --------------
Total expenses 3,746,773 3,168,459
-------------- --------------
Income before participation in
joint venture 517,918 1,005,217
Affiliate's participation in loss (income)
from joint venture 21,330 (18,294)
-------------- --------------
Net income $ 539,248 $ 986,923
============== ==============
Net income allocated to General Partner $ 135,255 $ 184,870
============== ==============
Net income allocated to Limited Partners $ 403,993 $ 802,053
============== ==============
Net income per Limited Partnership
Interest (359,229 issued and outstanding) $ 1.12 $ 2.23
============== ==============
Distribution to General Partner $ 128,593 $ 166,859
============== ==============
Distribution to Limited Partners $ 1,157,338 $ 1,501,728
============== ==============
Distribution per Limited Partnership
Interest:
Taxable $ 2.50 $ 3.25
============== ==============
Tax-exempt $ 3.33 $ 4.32
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1994 and 1993
(Unaudited)
1994 1993
-------------- --------------
Operating activities:
Net income $ 539,248 $ 986,923
Adjustments to reconcile net income
to net cash provided by operating
activities:
Affiliate's participation in (loss)
income from joint venture (21,330) 18,294
Depreciation of properties 891,417 944,949
Amortization of deferred expenses 26,376 26,717
Net change in:
Accounts and accrued interest
receivable 42,492 (49,839)
Prepaid expenses (32,114) (64,676)
Accounts payable (585,833) (523,367)
Due to affiliates 118,741 31,310
Accrued real estate taxes 44,646 66,219
Escrow liabilities 18,576 (6,040)
Security deposits 7,991 (6,652)
-------------- --------------
Net cash provided by operating activities 1,050,210 1,423,838
-------------- --------------
Investing activities:
Collection of principal payments on loan
receivable 41,020 38,934
Improvements to properties (350,996)
-------------- --------------
Net cash used in or provided by investing
activities (309,976) 38,934
-------------- --------------
Financing activities:
Distribution to Limited Partners (1,157,338) (1,501,728)
Distribution to General Partner (128,593) (166,859)
Capital contributions from joint venture
partner - affiliate 39,600 41,343
-------------- --------------
Net cash used in financing activities (1,246,331) (1,627,244)
-------------- --------------
Net change in cash and cash equivalents (506,097) (164,472)
Cash and cash equivalents at beginning
of period 8,252,048 8,366,537
-------------- --------------
Cash and cash equivalents at end of period $ 7,745,951 $ 8,202,065
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
Several reclassifications have been made to the previously reported 1993
statements in order to provide comparability with the 1994 statements. 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, 1994,
and all such adjustments are of a normal and recurring nature.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1994 are:
Paid Payable
Mortgage servicing fees $ 1,604 $ 1,604
Property management fees 174,070 60,241
Reimbursement of expenses to
the General Partner, at cost:
Accounting 2,779 41,069
Data processing None 40,609
Investor communications 693 9,987
Legal 695 12,541
Portfolio management 2,767 43,947
Other 420 5,722
3. Subsequent Event:
In April 1994, the Partnership paid $1,157,338 ($2.50 per Taxable Interest and
$3.33 per Tax-exempt Interest) to the holders of Limited Partnership Interests
representing the quarterly distribution for the first quarter of 1994.
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Equity Pension Investors-I (the "Partnership") is a limited partnership
formed in 1983 to make first mortgage loans and to invest in and operate
income-producing real property. The Partnership raised $179,614,500 from sales
of Limited Partnership Interests and utilized these proceeds to fund six loans
and acquire three real property investments. From 1986 to 1990, the
Partnership accepted deeds in lieu of foreclosure on two of the loans, acquired
one of its collateral properties at a foreclosure sale, and accepted
prepayments on two additional loans. As of March 31, 1994, the Partnership has
one loan and operates six 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 1993 for a more complete understanding of
the Partnership's financial position.
Operations
Summary of Net Income
Higher leasing and utility costs at several of the Partnership's properties
during the first quarter of 1994 resulted in an increase in property operating
expenses. This is the primary reason net income decreased during the quarter
ended March 31, 1994 as compared to the same period in 1993. Further discussion
of the Partnership's operations is summarized below.
1994 Compared to 1993
The Fairview Plaza III Office Building loan is on non-accrual status, whereby
income is recorded only as cash payments are received from the borrower.
Pursuant to the terms of the January 1992 modification of the loan, the
Partnership received payments totaling approximately $97,000 during each of the
quarters ended March 31, 1994 and 1993. Of the amounts received, approximately
$56,000 was recorded as interest income and $41,000 as a principal reduction in
1994, and approximately $58,000 as interest income and $39,000 as a principal
reduction in 1993. Interest income is presented net of mortgage servicing fees
in the financial statements.
During the first quarter of 1994, expenditures for interior upgrades at the
Oxford Hills Apartments and increased leasing and electricity costs at the
Pacific Center and 8280 Greensboro Drive office buildings resulted in an
increase in property operating expenses during the quarter ended March 31, 1994
as compared to the same period in 1993. The Pacific Center Office Buildings
operated at a loss as a result of the higher property operating expenses, and
correspondingly, the affiliated joint venture partner recognized its
participation in the loss of the joint venture during the first quarter of 1994
as compared to income during the same period in 1993.
Due to an increase in accounting and portfolio management fees, administrative
expenses increased during the quarter ended March 31, 1994 as compared to the
same period in 1993.
Liquidity and Capital Resources
The Partnership's cash flow provided by operating activities during the quarter
ended March 31, 1994 was generated from the operation of the Partnership's
properties and from interest income received on the Fairview Plaza III loan and
short-term investments, which was partially offset by the payment of
administrative expenses. The Partnership used the cash flow provided by
operating activities and a portion of cash reserves to fund investing
activities, which consisted primarily of improvements to properties, and to
fund financing activities which consisted primarily of distributions to Limited
Partners and the General Partner. The cash or near cash position of the
Partnership decreased at March 31, 1994 when compared to December 31, 1993. The
Partnership's cash or near cash position fluctuates during each quarter,
initially decreasing with the payment of Partnership distributions for the
previous quarter, and then gradually increasing each month as mortgage payments
and property operating income are received.
During the quarter ended March 31, 1994, five of the Partnership's six
properties generated positive cash flow while the Pacific Center Office
Buildings generated a marginal cash flow deficit primarily due to increased
leasing costs. During the quarter ended March 31, 1993, all six of the
Partnership's properties generated positive cash flow. 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 1994, the Partnership paid $1,157,338 ($2.50 per Taxable Interest and
$3.33 per Tax-exempt Interest) to Limited Partners, representing the quarterly
distribution for the first quarter of 1994. The level of this distribution was
consistent with the amount distributed for the fourth quarter of 1993. The
General Partner expects that cash flow from property operations and debt
service payments on the funded mortgage loan should enable the Partnership to
continue making quarterly distributions to Limited Partners. However, the level
of future distributions will be dependent on the amount of cash flow generated
from property operations and the receipts from the mortgage loan, as to 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 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.
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(4) Certificate of Limited Partnership set forth as Exhibit 4.1 to Amendment
No. 2 to the Registrant's Registration Statement on Form S-11 dated October 4,
1983 (Registration No. 2-85270) 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. 2-85270) are
incorporated herein by reference.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR EQUITY PENSION INVESTORS-I
By: /s/ Thomas E. Meador
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Equity Partners-I, the General Partner
By: /s/ Allan Wood
Allan Wood
Executive Vice President, and Chief
Accounting and Financial Officer (Principal
Accounting and Financial Officer) of Balcor
Equity Partners-I, the General Partner
Date: May 12, 1994
