SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1994
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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 2-85270
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BALCOR EQUITY PENSION INVESTORS-I
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(Exact name of registrant as specified in its charter)
Illinois 36-3240345
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1994 and December 31, 1993
(Unaudited)
ASSETS
1994 1993
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Cash and cash equivalents $ 8,017,684 $ 8,252,048
Accounts and accrued interest receivable 258,847 501,533
Prepaid expenses 41,370 97,168
Deferred expenses, net of accumulated
amortization of $414,236 in 1994 and
and $361,332 in 1993 408,684 433,667
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8,726,585 9,284,416
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Investment in real estate:
Land 10,753,713 10,753,713
Buildings and improvements 93,537,695 92,847,535
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104,291,408 103,601,248
Less accumulated depreciation 35,652,297 33,869,463
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Investment in real estate, net
of accumulated depreciation 68,639,111 69,731,785
Investment in loan receivable 4,220,104 4,302,683
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72,859,215 74,034,468
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$ 81,585,800 $ 83,318,884
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 154,542 $ 738,476
Due to affiliates 267,204 96,979
Accrued real estate taxes 570,870 240,789
Escrow liabilities 56,952 16,416
Security deposits 527,198 520,403
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Total liabilities 1,576,766 1,613,063
Affiliate's participation in joint venture 1,504,256 1,463,700
Partners' capital (359,229 Limited
Partnership Interests issued and
outstanding) 78,504,778 80,242,121
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$ 81,585,800 $ 83,318,884
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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 six months ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental $ 7,258,588 $ 7,066,216
Service 1,112,194 1,218,331
Interest on short-term investments 151,164 139,173
Interest on loan receivable 106,845 111,048
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Total income 8,628,791 8,534,768
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Expenses:
Depreciation 1,782,834 1,889,898
Amortization of deferred expenses 52,904 53,433
Property operating 4,485,138 3,422,218
Real estate taxes 715,851 768,010
Property management fees 360,904 366,416
Administrative 401,150 277,815
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Total expenses 7,798,781 6,777,790
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Income before participation in joint venture 830,010 1,756,978
Affiliate's participation in loss (income)
from joint venture 4,509 (38,950)
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Net income $ 834,519 $ 1,718,028
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Net income allocated to General Partner $ 246,107 $ 344,158
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Net income allocated to Limited Partners $ 588,412 $ 1,373,870
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Net income per Limited Partnership
Interest (359,229 issued and outstanding) $ 1.64 $ 3.82
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Distributions to General Partner $ 257,186 $ 295,452
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Distributions to Limited Partners $ 2,314,676 $ 2,659,066
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Distributions per Limited Partnership
Interest:
Taxable $ 5.00 $ 5.75
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Tax-exempt $ 6.66 $ 7.65
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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 June 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental $ 3,658,666 $ 3,570,830
Service 572,277 665,576
Interest on short-term investments 80,005 69,417
Interest on loan receivable 53,152 55,269
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Total income 4,364,100 4,361,092
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Expenses:
Depreciation 891,417 944,949
Amortization of deferred expenses 26,528 26,716
Property operating 2,403,247 1,945,281
Real estate taxes 361,147 387,201
Property management fees 185,547 185,350
Administrative 184,122 119,834
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Total expenses 4,052,008 3,609,331
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Income before participation in joint venture 312,092 751,761
Affiliate's participation in income from
joint venture (16,821) (20,656)
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Net income $ 295,271 $ 731,105
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Net income allocated to General Partner $ 110,852 $ 159,288
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Net income allocated to Limited Partners $ 184,419 $ 571,817
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Net income per Limited Partnership
Interest (359,229 issued and outstanding) $ 0.52 $ 1.59
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Distribution to General Partner $ 128,593 $ 128,593
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Distribution to Limited Partners $ 1,157,338 $ 1,157,338
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Distribution per Limited Partnership
Interest:
Taxable $ 2.50 $ 2.50
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Tax-exempt $ 3.33 $ 3.33
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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 six months ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Operating activities:
Net income $ 834,519 $ 1,718,028
Adjustments to reconcile net income
to net cash provided by operating
activities:
Affiliate's participation in (loss)
income from joint venture (4,509) 38,950
Depreciation of properties 1,782,834 1,889,898
Amortization of deferred expenses 52,904 53,433
Net change in:
Accounts and accrued interest
receivable 242,686 (307,607)
Prepaid expenses 55,798 31,134
Accounts payable (583,934) (400,106)
Due to affiliates 170,225 12,207
Accrued real estate taxes 330,081 369,869
Escrow liabilities 40,536 15,919
Security deposits 6,795 8,426
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Net cash provided by operating activities 2,927,935 3,430,151
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Investing activities:
Collection of principal payments on
loan receivable 82,579 78,378
Improvements to properties (690,160) (271,902)
Payment of deferred expenses (27,921)
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Net cash used in investing activities (635,502) (193,524)
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Financing activities:
Distributions to Limited Partners (2,314,676) (2,659,066)
Distributions to General Partner (257,186) (295,452)
Capital contributions from joint venture
partner - affiliate 45,065 177,784
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Net cash used in financing activities (2,526,797) (2,776,734)
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Net change in cash and cash equivalents (234,364) 459,893
Cash and cash equivalents at beginning
of period 8,252,048 8,366,537
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Cash and cash equivalents at end of period $ 8,017,684 $ 8,826,430
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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 six months and quarter ended
June 30, 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
six months and quarter ended June 30, 1994 are:
Paid
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Six Months Quarter Payable
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Mortgage servicing fees $ 4,812 $ 3,208 $ 802
Property management fees 356,327 182,257 63,531
Reimbursement of expenses to
the General Partner, at cost:
Accounting 22,309 19,530 52,067
Data processing None None 55,924
Investor communications 5,568 4,875 12,470
Legal 5,579 4,884 17,562
Portfolio management 22,215 19,448 57,949
Other 3,369 2,949 6,899
3. Subsequent Event:
In July 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 second 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 June 30, 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
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Summary of Net Income
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Higher tenant and upgrade expenditures at several of the Partnership's
properties during the first six months of 1994 resulted in an increase in
property operating expenses. This is the primary reason net income decreased
during the six months and quarter ended June 30, 1994 as compared to the same
periods in 1993. Further discussion of the Partnership's operations is
summarized below.
1994 Compared to 1993
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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 $194,000 during each of
the six months ended June 30, 1994 and 1993. Of the amounts received,
approximately $111,000 was recorded as interest income and $83,000 as a
principal reduction in 1994, and approximately $116,000 as interest income and
$78,000 as a principal reduction in 1993. Interest income is presented net of
mortgage servicing fees in the financial statements.
During the first half of 1994, expenditures for interior upgrades at the Oxford
Hills Apartments, increased tenant expenditures at the Pacific Center Office
Buildings and expenditures for common area upgrades at the 8280 Greensboro
Drive and Park Center office buildings resulted in an increase in property
operating expenses during the six months and quarter ended June 30, 1994 as
compared to the same periods 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 six months of
1994 as compared to income during the same period in 1993.
Due to higher accounting and portfolio management fees, administrative expenses
increased during the six months and quarter ended June 30, 1994 as compared to
the same periods in 1993.
Liquidity and Capital Resources
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The Partnership's cash flow provided by operating activities during the six
months ended June 30, 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 the GSB Office
Building, 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 June 30, 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 six months ended June 30, 1994 and 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.
During the six months ended June 30, 1994, the General Partner, on behalf of
the Partnership, used amounts placed in the Repurchase Fund to repurchase 311
Interests from Limited Partners at a total cost of $83,380.
In July 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 second quarter of 1994. The level of this distribution was
consistent with the amount distributed for the first quarter of 1994. The
General Partner expects that cash flow from property operations and debt
service payments on the 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
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(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 June 30, 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
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Equity Partners-I, the General Partner
By: /s/Allan Wood
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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: August 11, 1994
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