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, 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
September 30, 1994 and December 31, 1993
(Unaudited)
ASSETS
1994 1993
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Cash and cash equivalents $ 7,918,273 $ 8,252,048
Accounts and accrued interest receivable 261,169 501,533
Prepaid expenses 125,864 97,168
Deferred expenses, net of accumulated
amortization of $440,930 in 1994 and
and $361,332 in 1993 381,990 433,667
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8,687,296 9,284,416
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Investment in real estate
Land 10,753,713 10,753,713
Buildings and improvements 93,585,969 92,847,535
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104,339,682 103,601,248
Less accumulated depreciation 36,543,714 33,869,463
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Investment in real estate, net
of accumulated depreciation 67,795,968 69,731,785
Investment in loan receivable 4,177,999 4,302,683
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71,973,967 74,034,468
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$ 80,661,263 $ 83,318,884
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 174,957 $ 738,476
Due to affiliates 195,315 96,979
Accrued real estate taxes 752,073 240,789
Escrow liabilities 78,912 16,416
Security deposits 515,138 520,403
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Total liabilities 1,716,395 1,613,063
Affiliate's participation in joint venture 1,475,933 1,463,700
Partners' capital (359,229 Limited
Partnership Interests issued and
outstanding) 77,468,935 80,242,121
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$ 80,661,263 $ 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 nine months ended September 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental $ 11,079,531 $ 10,577,356
Service 1,555,463 1,706,435
Interest on short-term investments 246,258 211,457
Interest on loan receivable 159,453 165,794
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Total income 13,040,705 12,661,042
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Expenses:
Depreciation 2,674,251 2,839,279
Amortization of deferred expenses 79,598 80,150
Property operating 7,105,719 5,323,584
Real estate taxes 1,056,613 1,138,120
Property management fees 543,143 544,659
Administrative 511,607 420,233
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Total expenses 11,970,931 10,346,025
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Income before participation in joint venture 1,069,774 2,315,017
Affiliate's participation in loss (income)
from joint venture 14,833 (39,174)
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Net income $ 1,084,607 $ 2,275,843
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Net income allocated to General Partner $ 352,453 $ 486,516
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Net income allocated to Limited Partners $ 732,154 $ 1,789,327
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Net income per Limited Partnership
Interest (359,229 issued and outstanding) $ 2.04 $ 4.98
============== ==============
Distributions to General Partner $ 385,779 $ 424,045
============== ==============
Distributions to Limited Partners $ 3,472,014 $ 3,816,404
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Distributions per Limited Partnership
Interest:
Taxable $ 7.50 $ 8.25
============== ==============
Tax-exempt $ 9.99 $ 10.98
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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 September 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental $ 3,820,943 $ 3,511,140
Service 443,269 488,104
Interest on short-term investments 95,094 72,284
Interest on loan receivable 52,608 54,746
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Total income 4,411,914 4,126,274
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Expenses:
Depreciation 891,417 949,381
Amortization of deferred expenses 26,694 26,717
Property operating 2,620,581 1,901,366
Real estate taxes 340,762 370,110
Property management fees 182,239 178,243
Administrative 110,457 142,418
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Total expenses 4,172,150 3,568,235
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Income before participation in joint venture 239,764 558,039
Affiliate's participation in loss (income)
from joint venture 10,324 (224)
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Net income $ 250,088 $ 557,815
============== ==============
Net income allocated to General Partner $ 106,346 $ 142,358
============== ==============
Net income allocated to Limited Partners $ 143,742 $ 415,457
============== ==============
Net income per Limited Partnership
Interest (359,229 issued and outstanding) $ 0.40 $ 1.16
============== ==============
Distribution to General Partner $ 128,593 $ 128,593
============== ==============
Distribution to Limited Partners $ 1,157,338 $ 1,157,338
============== ==============
Distribution per Limited Partnership
Interest
Taxable $ 2.50 $ 2.50
============== ==============
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 nine months ended September 30, 1994 and 1993
(Unaudited)
1994 1993
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Operating activities:
Net income $ 1,084,607 $ 2,275,843
Adjustments to reconcile net income
to net cash provided by operating
activities:
Affiliate's participation in (loss)
income from joint venture (14,833) 39,174
Depreciation of properties 2,674,251 2,839,279
Amortization of deferred expenses 79,598 80,150
Net change in:
Accounts and accrued interest
receivable 240,364 (296,985)
Prepaid expenses (28,696) (83,996)
Accounts payable (563,519) (567,921)
Due to affiliates 98,336 9,966
Accrued real estate taxes 511,284 531,095
Escrow liabilities 62,496 37,880
Security deposits (5,265) 6,271
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Net cash provided by operating activities 4,138,623 4,870,756
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Investing activities:
Collection of principal payments on loan
receivable 124,684 118,343
Improvements to properties (738,434) (271,902)
Payment of deferred expenses (27,921)
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Net cash used in investing activities (641,671) (153,559)
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Financing activities:
Distributions to Limited Partners (3,472,014) (3,816,404)
Distributions to General Partner (385,779) (424,045)
Capital contributions from joint venture
partner - affiliate 45,065 177,784
Distributions to joint venture partner -
affiliate (17,999) (21,959)
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Net cash used in financing activities (3,830,727) (4,084,624)
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Net change in cash and cash equivalents (333,775) 632,573
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 $ 7,918,273 $ 8,999,110
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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 nine months and quarter ended
September 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
nine months and quarter ended September 30, 1994 are:
Paid
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Nine Months Quarter Payable
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Mortgage servicing fees $ 6,417 $ 1,605 $ 1,604
Property management fees 541,665 185,338 60,432
Reimbursement of expenses to
the General Partner, at cost:
Accounting 70,845 48,536 31,936
Data processing 14,308 14,308 44,704
Investor communications 17,680 12,112 8,511
Legal 17,716 12,137 11,705
Portfolio management 70,549 48,334 29,165
Other 10,700 7,331 7,258
3. Subsequent Event:
In October 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 third 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 September 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 expenditures at several of the Partnership's properties during
the first nine months of 1994 resulted in an increase in property operating
expenses. This is the primary reason net income decreased during the nine
months and quarter ended September 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 $291,000 during each of
the nine months ended September 30, 1994 and 1993. Of the amounts received,
approximately $166,000 was recorded as interest income and $125,000 as a
principal reduction in 1994, and approximately $173,000 as interest income and
$118,000 as a principal reduction in 1993. Interest income is presented net of
mortgage servicing fees in the financial statements.
Due to higher interest rates earned on short-term investments during 1994,
interest income on short-term investments increased during the nine months and
quarter ended September 30, 1994 as compared to the same periods in 1993.
During the first nine months of 1994, expenditures for interior upgrades at the
Oxford Hills Apartments and increased tenant expenditures at the Pacific
Center, GSB and 8280 Greensboro Drive office buildings resulted in an increase
in property operating expenses during the nine months and quarter ended
September 30, 1994 as compared to the same periods in 1993. For financial
statement purposes, 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 a participation in the loss of the
joint venture during the nine months and quarter ended September 30, 1994 as
compared to income during the same periods in 1993.
Due to higher accounting and portfolio management fees, administrative expenses
increased during the nine months ended September 30, 1994 as compared to the
same period in 1993.
Liquidity and Capital Resources
- -------------------------------
The Partnership's cash flow provided by operating activities during the nine
months ended September 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 September 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 each of the nine months ended September 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 nine months ended September 30, 1994, the General Partner, on behalf
of the Partnership, used amounts placed in the Repurchase Fund to repurchase
423 Interests from Limited Partners at a total cost of $114,393.
In October 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 third quarter of 1994. The level of this
distribution was consistent with the amount distributed for the second 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.
On November 4, 1994, The Balcor Company completed the sale of the assets of
Allegiance Realty Group, Inc. to an unaffiliated company, Insignia Allegiance
Management, Inc. ("Insignia"), which is based in Greenville, South Carolina. As
a result of this transaction, Insignia has assumed the management of the
Partnership's properties. This transaction is not expected to result in any
material change to the property management fees paid by the Partnership.
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.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1994 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 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
-----------------------------
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: November 10, 1994
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