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, 1995
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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.)
2355 Waukegan Road
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 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 EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 8,150,766 $ 7,207,000
Accounts and accrued interest receivable 203,055 164,885
Prepaid expenses 362,687 70,119
Deferred expenses, net of accumulated
amortization of $521,012 in 1995 and
and $467,624 in 1994 301,908 355,296
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9,018,416 7,797,300
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Investment in real estate:
Land 10,753,713 10,753,713
Buildings and improvements 93,671,997 93,613,603
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104,425,710 104,367,316
Less accumulated depreciation 39,275,703 37,467,239
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Investment in real estate, net
of accumulated depreciation 65,150,007 66,900,077
Investment in loan receivable 4,048,336 4,135,341
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69,198,343 71,035,418
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$ 78,216,759 $ 78,832,718
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 206,547 $ 211,676
Due to affiliates 12,222 102,217
Accrued real estate taxes 551,554 203,187
Escrow liabilities 51,622 16,088
Security deposits 502,476 512,606
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Total liabilities 1,324,421 1,045,774
Affiliate's participation in joint venture 1,459,078 1,482,721
Partners' capital (359,229 Limited
Partnership Interests issued and
outstanding) 75,433,260 76,304,223
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$ 78,216,759 $ 78,832,718
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental $ 7,370,882 $ 7,258,588
Service 1,022,250 1,112,194
Interest on short-term investments 224,910 151,164
Interest on loan receivable 102,420 106,845
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Total income 8,720,462 8,628,791
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Expenses:
Depreciation 1,808,464 1,782,834
Amortization of deferred expenses 53,388 52,904
Property operating 3,763,406 4,485,138
Real estate taxes 662,810 715,851
Property management fees 348,025 360,904
Administrative 329,270 401,150
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Total expenses 6,965,363 7,798,781
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Income before participation in joint venture 1,755,099 830,010
Affiliate's participation in (income) loss
from joint venture (54,200) 4,509
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Net income $ 1,700,899 $ 834,519
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Net income allocated to General Partner $ 335,071 $ 246,107
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Net income allocated to Limited Partners $ 1,365,828 $ 588,412
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Net income per Limited Partnership
Interest (359,229 issued and outstanding) $ 3.80 $ 1.64
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Distributions to General Partner $ 257,186 $ 257,186
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Distributions to Limited Partners $ 2,314,676 $ 2,314,676
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Distributions per Limited Partnership
Interest:
Taxable $ 5.00 $ 5.00
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Tax-exempt $ 6.66 $ 6.66
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental $ 3,744,887 $ 3,658,666
Service 610,806 572,277
Interest on short-term investments 112,838 80,005
Interest on loan receivable 50,926 53,152
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Total income 4,519,457 4,364,100
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Expenses:
Depreciation 904,232 891,417
Amortization of deferred expenses 26,694 26,528
Property operating 2,159,124 2,403,247
Real estate taxes 331,385 361,147
Property management fees 177,978 185,547
Administrative 189,503 184,122
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Total expenses 3,788,916 4,052,008
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Income before participation in joint venture 730,541 312,092
Affiliate's participation in income from
joint venture (21,612) (16,821)
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Net income $ 708,929 $ 295,271
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Net income allocated to General Partner $ 153,383 $ 110,852
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Net income allocated to Limited Partners $ 555,546 $ 184,419
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Net income per Limited Partnership
Interest (359,229 issued and outstanding) $ 1.54 $ 0.52
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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.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 1,700,899 $ 834,519
Adjustments to reconcile net income
to net cash provided by operating
activities:
Affiliate's participation in income
(loss) from joint venture 54,200 (4,509)
Depreciation of properties 1,808,464 1,782,834
Amortization of deferred expenses 53,388 52,904
Net change in:
Accounts and accrued interest
receivable (38,170) 242,686
Prepaid expenses (292,568) 55,798
Accounts payable (5,129) (583,934)
Due to affiliates (89,995) 170,225
Accrued real estate taxes 348,367 330,081
Escrow liabilities 35,534 40,536
Security deposits (10,130) 6,795
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Net cash provided by operating activities 3,564,860 2,927,935
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Investing activities:
Collection of principal payments on
loan receivable 87,005 82,579
Improvements to properties (58,394) (690,160)
Payment of deferred expenses (27,921)
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Net cash provided by (used in) investing
activities 28,611 (635,502)
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Financing activities:
Distributions to Limited Partners (2,314,676) (2,314,676)
Distributions to General Partner (257,186) (257,186)
Capital contributions from joint venture
partner - affiliate 45,065
Distributions to joint venture
partner - affiliate (77,843)
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Net cash used in financing activities (2,649,705) (2,526,797)
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Net change in cash and cash equivalents 943,766 (234,364)
Cash and cash equivalents at beginning
of period 7,207,000 8,252,048
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Cash and cash equivalents at end of period $ 8,150,766 $ 8,017,684
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(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 six months and quarter
ended June 30, 1995, 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 ended June 30, 1995 are:
Paid
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Six Months Quarter Payable
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Mortgage servicing fees $ 4,812 $ 2,406 $ 802
Reimbursement of expenses to
the General Partner, at cost 204,019 204,019 11,420
3. Subsequent Event:
In July 1995, the Partnership paid $809,824 ($1.75 per Taxable Interest and
$2.33 per Tax-exempt Interest) to the holders of Limited Partnership Interests
representing the quarterly distribution for the second quarter of 1995.
<PAGE>
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. 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, 1995, 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 1994 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Net Income
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Reduced tenant related expenditures at several of the Partnership's commercial
properties during the first six months of 1995 resulted in decreased property
operating expenses. This is the primary reason net income increased during the
six months and quarter ended June 30, 1995 as compared to the same periods in
1994.
1995 Compared to 1994
---------------------
A decrease in common area maintenance reimbursements from tenants at Park
Center and Pacific Center office buildings resulted in lower service income for
the six months ended June 30, 1995 as compared to the same period in 1994.
However, for the quarter ended June 30, 1995 service income increased as
compared to the same period in 1994 as a result of higher common area
maintenance reimbursements from tenants at the GSB and 8280 Greensboro Drive
office buildings.
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, 1995 and 1994. Of the amounts received,
approximately $107,000 was recorded as interest income and $87,000 as a
principal reduction in 1995, and approximately $111,000 as interest income and
$83,000 as a principal reduction in 1994. Interest income is presented net of
mortgage servicing fees in the financial statements.
Increased cash available for short-term investment and higher average interest
rates were the primary reasons for an increase in interest income on short-term
<PAGE>
investments during the six months and quarter ended June 30, 1995 as compared
to the same periods in 1994.
Decreased tenant related expenditures at the Pacific Center and GSB office
buildings and lower exterior painting costs at the Oxford Square Apartments
along with reduced common area repairs at the Park Center Office Building
resulted in lower property operating expenses for the six months and quarter
ended June 30, 1995 as compared to the same periods in 1994.
Primarily due to a decrease in portfolio management fees, administrative
expense decreased for the six months ended June 30, 1995 as compared to the
same period in 1994.
The Pacific Center Office Building generated income in 1995 due to lower tenant
related expenditures which resulted in affiliated participation in income from
joint venture for the six months ended June 30, 1995 as compared to a loss
during the same period in 1994. For the quarter ended June 30, 1995, the
Pacific Center Office Building generated increased income due to lower tenant
related expenditures which resulted in an increase in affiliate participation
in income from joint venture for the quarter ended June 30, 1995 as compared to
the same period in 1994.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership increased at June 30, 1995 when compared
to December 31, 1994. The Partnership's cash flow provided by operating
activities during 1995 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 were partially offset by the payment of
administrative expenses. The cash provided by investing activities consisted
of the collection of principal payments on the Partnership's note receivable
which was partially offset by improvements to the Park Center Office Building.
Financing activities consisted of distributions to Limited Partners and the
General Partner and distributions to a joint venture with an affiliate.
The Partnership defines cash flow generated from its properties as an amount
equal to the property's revenue receipts less property related expenditures.
During the first six months of 1995 and 1994, 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. As of June 30, 1995, the occupancy rates of the Partnership's
residential properties ranged from 90% to 95% and the commercial properties
ranged from 89% to 100%.
In July 1995, the Partnership paid $809,824 ($1.75 per Taxable Interest and
$2.33 per Tax-exempt Interest) to Limited Partners, representing the quarterly
distribution for the second quarter of 1995. In addition, during July 1995, the
Partnership paid $67,485 to the General Partner as its distributive share of
the cash flow distributed for the second quarter of 1995 and made a
contribution of $22,495 to the Repurchase Fund. The level of this distribution
decreased as compared to the first quarter of 1995. Capital improvement
programs are planned for several of the Partnership's properties and
significant leasing costs are expected to be incurred at two of the
Partnership's office buildings, which resulted in the General Partner
<PAGE>
temporarily decreasing the regular quarterly distribution level in order to
meet the capital requirements of the Partnership's assets. To date, Limited
Partners have received distibutions aggregating approximately $226 per $500
Taxable Interest and $318 per $500 Tax-exempt Interest, including the July 1995
distribution. The General Partner expects that the 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.
During the six months ended June 30, 1995, the General Partner used amounts
placed in the Repurchase Fund to repurchase 245 Interests from Limited Partners
at a cost of $68,029.
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 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 six month period ending
June 30, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1995.
<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 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/Brian D. Parker
------------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Equity Partners-I, the
General Partner
Date: August 14, 1995
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 8151
<SECURITIES> 0
<RECEIVABLES> 203
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8717
<PP&E> 104426
<DEPRECIATION> 39276
<TOTAL-ASSETS> 78217
<CURRENT-LIABILITIES> 1324
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 75433
<TOTAL-LIABILITY-AND-EQUITY> 78217
<SALES> 0
<TOTAL-REVENUES> 8720
<CGS> 0
<TOTAL-COSTS> 4828
<OTHER-EXPENSES> 2191
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1701
<INCOME-TAX> 0
<INCOME-CONTINUING> 1701
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1701
<EPS-PRIMARY> 3.80
<EPS-DILUTED> 3.80
</TABLE>
