UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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 (847) 267-1600
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Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
PART I
Item 1. Business
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Balcor Equity Pension Investors-I (the "Registrant") is a limited partnership
formed in 1983 under the laws of the State of Illinois. The Registrant raised
$179,614,500 from sales of Limited Partnership Interests. The Registrant's
operations consist exclusively of holding first mortgage loans for investment
and investment in and operation of income-producing real property, and all
financial information included in this report relates to this industry segment.
The Registrant used the net offering proceeds to fund six loans and acquire
three real property investments. During 1995 one loan was prepaid. In prior
years, two loans were prepaid and the Registrant accepted deeds in lieu of
foreclosure on two loans and foreclosed on one additional loan. As a result,
the Registrant currently owns six properties as described under Item 2.
Properties and has no loans remaining.
The Partnership Agreement generally provides that the proceeds of any sale,
refinancing or other disposition of properties made by the Registrant will not
be reinvested, but will be distributed to the extent not required to meet the
Registrant's cash requirements. The Partnership Agreement also provides that
proceeds from the repayment of mortgage loans (including any sale proceeds of
properties acquired through foreclosure) within 14 years of the termination of
the offering may be used to make new mortgage loans. Any such new mortgage
loan would generally provide for repayment in full within 15 years after the
termination of the offering. The General Partner currently has no plans to
make any such new mortgage loans on behalf of the Registrant.
Overall, the investment real estate market saw gradual improvement over the
last year. This improvement has taken place in an environment of generally low
interest rates and little or no new supply, parameters which may not exist in
the next few years. Demand for real estate space, while projected to improve in
line with the overall economy, is also vulnerable to external forces. The major
challenges facing the real estate industry today include increased
international competition, corporate restructurings, new computer and
communications technologies, an aging population and potential revisions of
the tax code. In addition, the increased flow of capital to real estate through
new vehicles such as commercial mortgage-backed securities and REITs could spur
new construction at unsupportable levels, as well as impact existing property
values.
Operationally, existing apartment properties continued to register occupancy
percentages in the 90s, with average rents rising at an annual rate of between
3 and 4 percent. Apartments are still considered one of the top real estate
asset classes in terms of performance. However, some markets are experiencing
new construction of rental units which, if unrestrained, could impact the
performance of existing properties. Most of the new construction is aimed at
the two segments of the rental market which are growing the fastest: low-income
households and upper-income households who prefer to rent rather than own. Of
all the major asset classes, apartments typically display the least volatility
in terms of property values.
<PAGE>
With virtually no new construction over the past few years, the national office
market has experienced consistently rising occupancy rates and, recently,
rising rental rates. Investor interest has also returned, typically preferring
suburban buildings over their downtown counterparts. Except for properties
built for a specific tenant, the economic feasibility of new construction in
most markets is still several years away. Build-to-suit construction for large
companies currently in leased space could restrict office appreciation rates
over the next few years. In addition, increased vacancies could result from
companies who restructure their workforce in order to reduce their occupancy
costs.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. As a result,
the General Partner is exploring an acceleration of its strategy to sell the
Registrant's residential properties. Additionally, the General Partner will
explore the sale of its commercial properties over the next year if market
conditions are favorable.
Activity for the purchase of limited partnership interests ("tender offers")
has increased in real estate limited partnerships generally. Many of these
tender offers have been made by investors seeking to make a profit from the
purchase of the interests. In the event a tender offer is made for interests in
the Registrant, the General Partner will issue a response to Limited Partners
expressing the General Partner's opinion regarding the offer. Certain
administrative costs will be incurred to respond to a tender offer. The General
Partner cannot predict with any certainty what impact a tender offer will have
on the operations or management of the Registrant.
During 1995, the Registrant received a prepayment of the Fairview loan
receivable. See Item 7. Liquidity and Capital Resources for additional
information.
The Registrant, by virtue of its ownership of real estate is subject to federal
and state laws and regulations covering various environmental issues.
Management of the Registrant utilizes the services of environmental consultants
to assess a wide range of environmental issues and to conduct tests for
environmental contamination as appropriate. The General Partner is not aware
of any potential liability due to environmental issues or conditions that would
be material to the Registrant.
The officers and employees of Balcor Equity Partners-I, the General Partner of
the Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.
<PAGE>
Item 2. Properties
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As of December 31, 1995, the Registrant owned the six properties described
below:
Location Description of Property
- -------- -----------------------
McLean, Virginia 8280 Greensboro Drive Office Building: a
nine-story office building containing
approximately 197,000 square feet.
Bala Cynwyd, Pennsylvania GSB Office Building: a twelve-story office
building containing approximately 228,000 square
feet.
St. Louis County, Missouri Oxford Hills Apartments: a 480-unit apartment
complex on approximately 28 acres.
Casselberry, Florida Oxford Square Apartments: a 283-unit apartment
complex on approximately 22 acres.
Dallas, Texas * Pacific Center Office Buildings: two nine-story
office buildings containing approximately 222,000
square feet.
Maitland, Florida Park Center Office Building: a four-story office
building containing approximately 111,000 square
feet.
* Owned by the Registrant through a joint venture with an affiliate. See Note 7
of Notes to Financial Statements for additional information.
In the opinion of the General Partner, the Registrant has provided for adequate
insurance coverage for its real estate investment properties.
See Note 6 of Notes to Financial Statements for other information regarding
real property investments.
Item 3. Legal Proceedings
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The Registrant is not subject to any material pending legal proceedings, nor
were any such proceedings terminated during the fourth quarter of l995.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the Limited Partners of the Registrant
during 1995.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
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Matters
- -------
There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop. For information
regarding previous distributions, see Item 7. Liquidity and Capital Resources.
As of December 31, 1995, the number of record holders of Limited Partnership
Interests of the Registrant was 19,950.
Item 6. Selected Financial Data
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Year ended December 31,
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1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
Total income $17,688,318 $17,358,359 $16,954,147 $16,933,654 $17,360,168
Provision for loan
receivable writedown None None None None 3,435,632
Provision for invest-
ment property
writedowns None None 7,300,000 6,100,000 20,000,000
Net income (loss) 2,236,014 1,205,826 (5,278,978) (1,652,405)(17,856,956)
Net income (loss)
per Limited Part-
nership Interest 4.66 2.11 (16.02) (6.30) (51.19)
Total assets 76,467,433 78,832,718 83,318,884 93,878,245 103,895,612
Distributions per
Taxable Limited
Partnership Interest(A) 8.50 10.00 10.75 13.75 16.50
Distributions per Tax-
exempt Limited Part-
nership Interest(A) 11.32 13.32 14.31 18.28 21.95
(A) No distributions of original capital were made in any of the last five
years.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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Operations
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Summary of Operations
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Lower tenant related expenditures at certain of the Balcor Equity Pension
Investors-I (the "Partnership") office buildings and lower expenditures for
interior upgrades at the Oxford Hills Apartments resulted in an increase in net
income for 1995 as compared to 1994. During 1993, the Partnership recognized an
investment property writedown which resulted in a net loss for 1993 as compared
to net income for 1994. Further discussion of the Partnership's operations are
summarized below.
1995 Compared to 1994
- ---------------------
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
investments during 1995 as compared to 1994.
In December 1995, the Fairview Plaza III loan receivable was prepaid in full.
In connection with this prepayment, the Partnership received a prepayment
premium of $187,270 which was recorded as interest income on loan receivable.
This resulted in an increase in interest on loan receivable for 1995 as
compared to 1994.
The Fairview Plaza III Office Building loan was on non-accrual status before
the loan was prepaid, 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 $356,000 and $388,000 during each of the years ended December 31,
1995 and 1994, respectively. Of the amounts received, approximately $195,000
was recorded as interest income and $161,000 as a principal reduction in 1995,
and approximately $221,000 as interest income and $167,000 as a principal
reduction in 1994. Interest income is presented net of mortgage servicing fees
in the financial statements.
As a result of the Fairview Plaza III loan prepayment, deferred fees relating
to loan application and processing were fully amortized. This resulted in an
increase in amortization of deferred expenses in 1995 as compared to 1994.
Lower tenant related expenditures at the Pacific Center, GSB and 8280
Greensboro Drive office buildings and lower expenditures for interior upgrades
at the Oxford Hills Apartments resulted in lower property operating expenses
for 1995 as compared to 1994.
A lower assessed value and tax rate in 1995 at the Oxford Hills Apartments
resulted in a decrease in real estate tax expense in 1995 as compared to 1994.
<PAGE>
In connection with the 1995 Fairview Plaza III loan prepayment, the Partnership
recognized a loss on collection of mortgage loan receivable of $228,372
representing the difference between the amount prepaid under the contractual
terms of the note and the carrying amount of the note for financial statement
purposes.
The Pacific Center Office Building generated income in 1995 due to lower tenant
related expenditures, which resulted in affiliate's minority interest in income
from the joint venture for 1995 as compared to a loss during 1994.
1994 Compared to 1993
- ---------------------
Increased rental rates and occupancy at five of the Partnership's six
properties during 1994 resulted in increased rental income in 1994 as compared
to 1993.
During 1994 real estate tax reimbursement income decreased due to a reduction
in the assessed value of the GSB Office Building. Additionally, the Partnership
received income during 1993 related to disputed prior years' billing at the
8280 Greensboro Drive Office Building. These are the primary reasons service
income decreased during 1994 as compared to 1993.
Due to higher interest rates earned on short-term investments during 1994,
interest income on short-term investments increased during 1994 as compared to
1993.
Increased insurance expense at all the properties and higher leasing costs at
8280 Greeensboro Drive Office Building, in addition to increased tenant
expenditures at the Pacific Center, Park Center and 8280 Greensboro Drive
office buildings and interior upgrades to the Oxford Hills and Oxford Square
apartment complexes resulted in an increase in property operating expense
during 1994 as compared to 1993.
The assessed real estate tax values at the GSB, 8280 Greensboro Drive and
Pacific Center office buildings were reduced in 1994 which resulted in a
decrease in real estate taxes expense for 1994 as compared to 1993.
Due to higher accounting and portfolio management fees, administrative expenses
increased during 1994 as compared to 1993.
In 1993, the Partnership determined that an impairment had occurred to the
asset value of the 8280 Greensboro Drive office building located in McLean,
Virginia. The market in which the property is located experienced a decline in
rental rates and continued high vacancy rates due to corporate downsizing,
defense industry cutbacks and a general weakening in the overall economy. The
property was written down to the Partnership's estimate of its fair value, and
a $7,300,000 provision for investment property writedown was recognized in
1993.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership increased as of December 31, 1995 as
compared to December 31, 1994 due primarily to the prepayment of the Fairview
Plaza III loan receivable. The Partnership's cash provided by operating
activities included the cash flow from 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 cash provided by investing activities consisted of
principal payments and proceeds received from the prepayment of the Fairview
Plaza III loan which was partially offset by leasing commissions paid and
improvements to properties. The net cash used in financing activities consisted
of distributions to Limited Partners, the General Partner and to a joint
venture partner affiliate.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit. 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. During 1995, five properties
generated positive cash flow as compared to all six properties during 1994.
Park Center Office Building generated a marginal cash flow deficit during 1995
as compared to positive cash flow in 1994 due to significant leasing costs.
As of December 31, 1995, the occupancy rates of the Partnership's residential
properties ranged from 92% to 98% and the commercial properties ranged from 92%
to 100%. 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.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. As a result,
the General Partner is exploring an acceleration of its strategy to sell the
Partnership's residential properties. Additionally, the General Partner will
explore the sale of its commercial properties over the next year if market
conditions are favorable.
In December 1995, the Partnership received $3,932,676 as payment in full under
the contractual terms of the Fairview Plaza III Office Building loan
receivable. The amount received consists of funds advanced of $3,745,406 and a
prepayment premium of $187,270. The Partnership recognized a loss on collection
of mortgage loan receivable of $228,372 representing the difference between the
amount repaid under the contractual terms of the note and the carrying amount
for financial statement purposes. See Note 4 of Notes to Financial Statements
for additional information.
The Partnership made four distributions to Limited Partners totaling $8.50,
$10.00 and $10.75 per Interest in each of 1995, 1994 and 1993, respectively,
for the Taxable Investors and four distributions totaling $11.32, $13.32 and
$14.31 per Interest in each of 1995, 1994 and 1993, respectively, for the
Tax-Exempt Investors. Cash flow decreased in 1995 as compared to 1994 due to
capital improvement programs undertaken at several of the Partnership's
properties and significant leasing costs incurred at two of the Partnership's
office buildings. Cash flow decreased in 1994 as compared to 1993 due to
<PAGE>
significant leasing costs incurred at several of the Partnership's office
buildings. See Statement of Partners' Capital for additional information.
In January 1996, 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 fourth quarter of 1995. In addition, during January 1996,
the Partnership paid $67,485 to the General Partner as its distributive share
of the Net Cash Receipts distributed for the fourth quarter of 1995 and made a
contribution of $22,495 to the Repurchase Fund. The level of this distribution
is consistent with that of the prior quarter. Including the January 1996
distribution, Limited Partners have received distributions aggregating
approximately $229 per $500 Taxable Interest, of which $216 represents Net Cash
Receipts and $13 represents Net Cash Proceeds and $323 per $500 Tax-exempt
Interest, of which $287 represents Net Cash Receipts and $36 represents Net
Cash Proceeds. The General Partner expects that the cash flow from property
operations should enable the Partnership to continue making quarterly
distributions to Limited Partners.
During 1995, the General Partner used amounts placed in the Repurchase Fund to
repurchase 647 Interests from Limited Partners at a cost of $176,469.
In 1995, the Financial Accounting Standards Board issued Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of" which established accounting standards for impairment of
long-lived assets and long-lived assets to be disposed of. This statement has
been adopted by the Partnership as of January 1, 1995, and did not have a
material impact on the financial position or results of operations of 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.
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
See Index to Financial Statements and Financial Statement Schedule in this
Form 10-K.
The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.
<PAGE>
The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
December 31, 1995 December 31, 1994
----------------------- -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
----------- ------------ ----------- ------------
Total assets $76,467,433 $121,136,136 $78,832,718 $128,365,768
Partners' capital
(deficit) accounts:
General Partner (302,421) (51,020) (427,353) (351,960)
Limited Partners 74,471,189 119,065,499 76,731,576 120,732,643
Net income:
General Partner 562,077 738,085 448,802 629,735
Limited Partners 1,673,937 2,267,180 757,024 1,369,199
Per Limited Partner-
ship Interest 4.66 (A) 2.11 (A)
(A) The net income is $5.98 per Tax-exempt Interest and $8.50 per Taxable
Interest for 1995 and $2.89 per Tax-exempt Interest and $10.00 per Taxable
Interest for 1994.
Item 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
- --------------------
On September 14, 1995 the Registrant approved the engagement of Coopers &
Lybrand L.L.P. as its independent accountants for the fiscal year ending
December 31, 1995 to replace the firm of Ernst & Young LLP, who were dismissed
as auditors of the Registrant effective September 14, 1995. The General Partner
of the Registrant approved the change in auditors.
The reports of Ernst & Young LLP on the Registrant's financial statements for
the past two fiscal years did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles.
In connection with the audits of the Registrant's financial statements for each
of the two fiscal years ended December 31, 1994, and in the subsequent interim
period, there were no disagreements with Ernst & Young LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope and procedures which, if not resolved to the satisfaction of Ernst &
Young LLP would have caused Ernst & Young LLP to make reference to the matter
in their report.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
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(a) Neither the Registrant nor Balcor Equity Partners-I, its General Partner,
has a Board of Directors.
(b, c & e) The names, ages and business experience of the executive officers
and significant employees of the General Partner of the Registrant are as
follows:
TITLE OFFICERS
----- --------
Chairman, President and Chief Thomas E. Meador
Executive Officer
Senior Vice President Alexander J. Darragh
Senior Vice President Josette V. Goldberg
Senior Vice President Alan G. Lieberman
Senior Vice President, Chief Brian D. Parker
Financial Officer, Treasurer
and Assistant Secretary
Senior Vice President John K. Powell, Jr.
Thomas E. Meador (July 1947) joined Balcor in July 1979. He is Chairman,
President and Chief Executive Officer and has responsibility for all ongoing
day-to-day activities at Balcor. He is a Director of The Balcor Company. He is
also Senior Vice President of American Express Company and is responsible for
its real estate operations worldwide. Prior to joining Balcor, Mr. Meador was
employed at the Harris Trust and Savings Bank in the commercial real estate
division where he was involved in various lending activities. Mr. Meador
received his M.B.A. degree from the Indiana University Graduate School of
Business.
Alexander J. Darragh (February 1955) joined Balcor in September 1988 and is
responsible for due diligence analysis and real estate advisory services for
Balcor and American Express Company. He also has supervisory responsibility for
Balcor's environmental matters. Mr. Darragh received masters' degrees in Urban
Geography from Queen's University and in Urban Planning from Northwestern
University.
Josette V. Goldberg (April 1957) joined Balcor in January 1985 and has primary
responsibility for all human resources matters. In addition, she has
supervisory responsibility for Balcor's MIS functions. Ms. Goldberg has been
designated as a Senior Human Resources Professional (SHRP).
Alan G. Lieberman (June 1959) joined Balcor in May 1983 and is responsible for
Balcor's property sales and capital markets functions. Mr. Lieberman is a
Certified Public Accountant.
Brian D. Parker (June 1951) joined Balcor in March 1986 and, as Chief Financial
Officer and Chief Accounting Officer, is responsible for Balcor's financial,
legal and treasury functions. He is a Director of The Balcor Company. Mr.
Parker is a Certified Public Accountant and holds an M.S. degree in Accountancy
from DePaul University.
<PAGE>
John K. Powell Jr. (June 1950) joined Balcor in September 1985 and is
responsible for portfolio and asset management matters relating to Balcor's
partnerships. Mr. Powell also has supervisory responsibility for Balcor's risk
management and investor services functions. He received a Master of Planning
degree from the University of Virginia. Mr. Powell has been designated a
Certified Real Estate Financier by the National Society for Real Estate Finance
and is a full member of the Urban Land Institute.
(d) There is no family relationship between any of the foregoing officers.
(f) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1995.
Item 11. Executive Compensation
- -------------------------------
The Registrant has not paid and does not propose to pay any remuneration to the
executive officers and directors of the General Partner. Certain of these
officers receive compensation from The Balcor Company (but not from the
Registrant) for services performed for various affiliated entities, which may
include services performed for the Registrant. However, the General Partner
believes that any such compensation attributable to services performed for the
Registrant is immaterial to the Registrant. See Note 9 of Notes to Financial
Statements for the information relating to transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
(a) No person owns of record or is known by the Registrant to own beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant.
(b) Balcor Equity Partners-I (principally through the Repurchase Fund) and its
officers and partners own as a group the following Limited Partnership
Interests of the Registrant:
Amount
Beneficially
Title of Class Owned Percent of Class
-------------- ------------- ----------------
Limited Partnership
Interests 10,097 Interests 2.81%
Relatives and affiliates of the officers and partners of the General Partner do
not own any Interests.
(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.
<PAGE>
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 9 of Notes to Financial Statements for additional information
relating to transactions with affiliates.
See Note 3 of Notes to Financial Statements for information relating to the
Partnership Agreement and the allocation of distributions and profits and
losses.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- ------------------------------------------------------------------------
(a)
(1 & 2) See Index to Financial Statements and Financial Statement Schedule in
this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement of Limited Partnership and Amended and
Restated Certificate of Limited Partnership, previously filed as Exhibits 3 and
4.1, respectively, to Amendment No. 2 to the Registrant's Registration
Statement on Form S-11 dated October 4, 1983 (Registration No. 2-85270), are
incorporated herein by reference.
(4) 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) is incorporated herein by
reference.
(16) Letter from Ernst & Young LLP dated September 19, 1995 regarding the
change in the Registrant's certifying accountant previously filed as Exhibit 16
to the Registrant's Report on Form 8-K/A dated October 27, 1995 (Commission
File No. 2-85270) is hereby incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for 1995 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K/A dated October 27, 1995,
amending the Current Report on Form 8-K dated September 19, 1995 reporting a
change in the Registrant's certifying accountant, was filed (Commission File
No. 2-85270).
(c) Exhibits: See Item 14(a)(3) above.
(d) Financial Statement Schedules: See Index to Financial Statements and
Financial Statement Schedule in this Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/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: March 29, 1996
---------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ---------------------- ------------------------------- ------------
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Equity
/s/Thomas E. Meador Partners-I, the General Partner March 29, 1996
- -------------------- --------------
Thomas E. Meador
Senior Vice President, and Chief
Financial Officer (Principal
Accounting and Financial
Officer) of Balcor Equity Partners-I,
/s/Brian D. Parker the General Partner March 29, 1996
- -------------------- --------------
Brian D. Parker
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants
Report of Independent Auditors
Financial Statements:
Balance Sheets, December 31, 1995 and 1994
Statements of Partners' Capital for the years ended December 31, 1995, 1994 and
1993
Statements of Income and Expenses, for the years ended December 31, 1995, 1994
and 1993
Statements of Cash Flows, for the years ended December 31, 1995, 1994 and 1993
Notes to Financial Statements
Financial Statement Schedule:
III - Real Estate and Accumulated Depreciation, as of December 31, 1995
Financial Statement Schedules, other than that listed, are omitted for the
reason that they are inapplicable or equivalent information has been included
elsewhere herein.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the partners of
Balcor Equity Pension Investors-I:
We have audited the accompanying balance sheet and the financial statement
schedule of Balcor Equity Pension Investors-I (An Illinois Limited Partnership)
as of December 31, 1995 and the related statements of partners' capital
(deficit), income and expenses, and cash flows for the year then ended. These
financial statements and the financial statement schedule are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and the financial statement
schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Balcor Equity Pension
Investors-I at December 31, 1995 and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 27, 1996
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Balcor Equity Pension Investors-I:
We have audited the accompanying balance sheet of Balcor Equity Pension
Investors-I (An Illinois Limited Partnership) as of December 31, 1994 and the
related statements of partners' capital, income and expenses and cash flows for
each of the two years in the period ended December 31, 1994. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Balcor Equity Pension
Investors-I at December 31, 1994 and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 6, 1995
<PAGE>
BALCOR EQUITY PENSION INVESTORS - I
(An Illinois Limited Partnership)
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
1995 1994
--------------- --------------
Cash and cash equivlants $ 11,305,552 $ 7,207,000
Accounts and accrued interest receivable 436,233 164,885
Prepaid expenses 208,240 70,119
Deferred expenses, net of accumulated
amortization of $610,552 in 1995
and $467,624 in 1994 447,989 355,296
--------------- --------------
12,398,014 7,797,300
--------------- --------------
Investment in real estate:
Land 10,753,713 10,753,713
Buildings and improvements 94,459,569 93,613,603
--------------- --------------
105,213,282 104,367,316
Less accumulated depreciation 41,143,863 37,467,239
--------------- --------------
Investment in real estate, net
of accumulated depreciation 64,069,419 66,900,077
Investment in loan receivable 4,135,341
--------------- --------------
64,069,419 71,035,418
--------------- --------------
$ 76,467,433 $ 78,832,718
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 238,377 $ 211,676
Due to affiliates 27,398 102,217
Accrued real estate taxes 204,076 203,187
Escrow liabilities 16,088
Security deposits 491,955 512,606
--------------- --------------
Total liabilities 961,806 1,045,774
Affiliate's minority interest in
joint venture 1,336,859 1,482,721
Limited Partners' capital (359,229
Partnership Interests issued and
outstanding) 74,471,189 76,731,576
General Partner's deficit (302,421) (427,353)
--------------- --------------
Total Partners capital 74,168,768 76,304,223
--------------- --------------
$ 76,467,433 $ 78,832,718
=============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS - I
(An Illinois Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
for the years ended December 31, 1995, 1994 and 1993
Partners' Capital (Deficit) Accounts
-----------------------------------------
General Limited
Total Partner Partners
------------- ------------- -------------
Balance at December 31, 1992 $ 91,047,479 $ (283,638) $ 91,331,117
Cash distributions (A) (5,526,380) (552,638) (4,973,742)
Net income (loss) for the year
ended December 31, 1993 (5,278,978) 474,493 (5,753,471)
------------- ------------- -------------
Balance at December 31, 1993 80,242,121 (361,783) 80,603,904
Cash distributions (A) (5,143,724) (514,372) (4,629,352)
Net income for the year
ended December 31, 1994 1,205,826 448,802 757,024
------------- ------------- -------------
Balance at December 31, 1994 76,304,223 (427,353) 76,731,576
Cash distributions (A) (4,371,469) (437,145) (3,934,324)
Net income for the year
ended December 31, 1995 2,236,014 562,077 1,673,937
------------- ------------- -------------
Balance at December 31, 1995 $ 74,168,768 $ (302,421) $ 74,471,189
============= ============= =============
(A) Summary of cash distributions paid per Limited Partnership Interest:
1995 1994 1993
Taxable -------------- ------------- ------------
--------
First Quarter $ 2.50 $ 2.50 $ 3.25
Second Quarter 2.50 2.50 2.50
Third Quarter 1.75 2.50 2.50
Fourth Quarter 1.75 2.50 2.50
Tax-exempt
----------
First Quarter 3.33 3.33 4.32
Second Quarter 3.33 3.33 3.33
Third Quarter 2.33 3.33 3.33
Fourth Quarter 2.33 3.33 3.33
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 years ended December 31, 1995, 1994 and 1993
1995 1994 1993
------------- ------------- -------------
Income:
Rental $ 15,051,128 $ 14,844,273 $ 14,137,070
Service 1,768,853 1,949,797 2,309,972
Interest on short-term
investments 472,431 352,782 287,086
Interest on loan receivable 395,906 211,507 220,019
------------- ------------- -------------
Total income 17,688,318 17,358,359 16,954,147
------------- ------------- -------------
Expenses:
Depreciation 3,676,624 3,597,776 3,787,347
Amortization of deferred
expenses 142,928 106,292 106,867
Property operating 8,900,522 9,723,304 8,288,415
Real estate taxes 1,146,044 1,358,958 1,460,464
Property management fees 689,037 721,850 718,119
Administrative 656,146 655,733 594,579
Provision for investment
property writedowns 7,300,000
Loss on collection of
mortgage loan receivable 228,372
------------- ------------- -------------
Total expenses 15,439,673 16,163,913 22,255,791
------------- ------------- -------------
Income (loss) before partici-
pation in joint venture 2,248,645 1,194,446 (5,301,644)
Affiliate's minority interest in
(income) loss from joint
venture (12,631) 11,380 22,666
------------- ------------- -------------
Net income (loss) $ 2,236,014 $ 1,205,826 $ (5,278,978)
============= ============= =============
Net income allocated to
General Partner $ 562,077 $ 448,802 $ 474,493
============= ============= =============
Net income (loss) allocated to
Limited Partners $ 1,673,937 $ 757,024 $ (5,753,471)
============= ============= =============
Net income (loss) per Limited
Partnership Interest (359,229
issued and outstanding) $ 4.66 $ 2.11 $ (16.02)
============= ============= =============
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 years ended December 31, 1995, 1994 and 1993
1995 1994 1993
------------- ------------- -------------
Operating activities:
Net income (loss) $ 2,236,014 $ 1,205,826 $ (5,278,978)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Affiliate's minority
interest in income (loss)
from joint venture 12,631 (11,380) (22,666)
Depreciation of properties 3,676,624 3,597,776 3,787,347
Amortization of deferred
expenses 142,928 106,292 106,867
Provision for investment
property writedown 7,300,000
Loss on collection of
mortgage loan receivable 228,372
Payment of deferred
expenses (235,621) (27,921)
Net change in:
Accounts and accrued
interest receivable (271,348) 336,648 (306,723)
Prepaid expenses (138,121) 27,049 (4,790)
Accounts payable 26,701 (526,800) 118,267
Due to affiliates (74,819) 5,238 12,560
Accrued real estate taxes 889 (37,602) 3,044
Escrow liabilities (16,088) (328) (24,840)
Security deposits (20,651) (7,797) 17,586
------------- ------------- -------------
Net cash provided by
operating activities 5,567,511 4,667,001 5,707,674
------------- ------------- -------------
Investing activities:
Collection of principal pay-
ments on loan receivable 3,906,969 167,342 158,831
Improvements to properties (845,966) (766,068) (596,660)
------------- ------------- -------------
Net cash provided by or used
in investing activities 3,061,003 (598,726) (437,829)
------------- ------------- -------------
Financing activities:
Distributions to Limited
Partners (3,934,324) (4,629,352) (4,973,742)
Distributions to General
Partner (437,145) (514,372) (552,638)
Contributions from joint ven-
ture partner - affiliate 48,400 177,784
Distributions to joint venture
partner - affiliate (158,493) (17,999) (35,738)
------------- ------------- -------------
Net cash used in financing
activities (4,529,962) (5,113,323) (5,384,334)
------------- ------------- -------------
Net change in cash and
cash equivalents 4,098,552 (1,045,048) (114,489)
Cash and cash equivalents
at beginning of year 7,207,000 8,252,048 8,366,537
------------- ------------- -------------
Cash and cash equivalents
at end of year $ 11,305,552 $ 7,207,000 $ 8,252,048
============= ============= =============
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. Nature of the Partnership's Business:
Balcor Equity Pension Investors-I is engaged principally in the operation of
residential and commercial real estate located in various markets within the
United States and to a lesser extent, investment in first mortgage loans.
2. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could vary from those estimates.
(b) Depreciation expense is computed using the straight-line method. Rates
used in the determination of depreciation are based upon the following
estimated useful lives:
Years
-----
Buildings and improvements 20 to 35
Furniture and fixtures 5
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements are capitalized to the related asset account.
(c) Interest income on the loan receivable consisted of monthly payments
received from the borrower, which were recorded in the period they were earned
as determined by the terms of the loan agreement. The accrual of interest was
discontinued when a loan became ninety days contractually delinquent or sooner,
when in the opinion of the General Partner, an impairment had occurred in the
value of the collateral property securing the loan.
Once a loan has been placed on non-accrual status, income is recorded only as
cash payments are received from the borrower until such time as the borrower
has demonstrated an ability to make regular payments under the terms of the
original or renegotiated loan agreement. The Partnership received a prepayment
of it's last mortgage loan receivable in December 1995.
For loans on which the Partnership has agreed to a modification of terms as a
result of financial difficulties experienced by the borrower, interest income
payments earned subsequent to the date of modification for which payment is
deferred to a later date are recorded only as they are received from the
borrower.
<PAGE>
(d) Effective January 1, 1995 the Partnership adopted Statement of Financial
Accounting Standards, No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of". Under SFAS 121, the
Partnership records its investments in real estate at the lower of cost or fair
value, and periodically assesses, but not less than on an annual basis,
possible impairment to the value of its properties. The General Partner
estimates the fair value of its properties by dividing the property's expected
net operating income by a risk adjusted rate of return or by applying a
discounted cash flow analysis both of which consider economic and demographic
conditions in the market. In the event the General Partner determines an
impairment in value has occurred, and the carrying amount of the real estate
asset will not be recovered, a provision is recorded to reduce the carrying
basis of the property to its estimated fair value. The General Partner
considers the methods referred to above to result in a reasonable measurement
of a property's fair value, unless other factors affecting the property's value
indicate otherwise.
Loan losses on mortgage notes receivable were charged to income when the
General Partner believed the loan balance would not be recovered. The General
Partner assessed the collectibility of each loan on a periodic basis through a
review of the collateral property operations, the property value and the
borrower's ability to repay the loan. Upon foreclosure, the loan balance was
transferred to real estate, after the fair value of the property less costs of
disposal was assessed. Upon the transfer to real estate, a new basis in the
property was established. Consistent with the Partnership's investment
objectives to own income producing real property to be held for long-term
appreciation, real estate acquired through foreclosure is recorded as
investment in real estate.
(e) Deferred expenses consist of loan application and processing fees and
mortgage brokerage fees which are amortized over the terms of the respective
agreements, and leasing commissions which are amortized over the life of each
respective lease.
(f) The Financial Accounting Standard Board's Statement No. 107, "Disclosures
About Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments for which it is practicable to estimate
that value. Statement No. 107 does not apply to all balance sheet items and
excludes certain financial instruments and all non-financial instruments such
as real estate and investment in joint ventures from its disclosure
requirements.
(g) Cash and cash equivalents include all highly liquid investments with a
maturity of three months or less when purchased. Cash and cash equivalents are
primarily held with four issuers of commercial paper, approximately 70% of
which are with two issuers.
(h) Revenue is recognized on an accrual basis in accordance with generally
accepted accounting principles. Income from operating leases with significant
abatements and/or scheduled rent increases is recognized on a straight line
basis over the respective lease term. Service income includes reimbursements
from operating costs such as real estate taxes, maintenance and insurance and
is recognized as revenue in the period the applicable costs are incurred.
<PAGE>
(i) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership income or loss in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
(j) A reclassification has been made to the previously reported 1994 and 1993
financial statements to conform with the classification used in 1995. This
reclassification has not changed the 1994 and 1993 results.
3. Partnership Agreement:
The Partnership was organized in July 1983. The Partnership Agreement provides
for Balcor Equity Partners-I to be the General Partner and for the admission of
Limited Partners through the sale of up to 800,000 Limited Partnership
Interests at $500 per Interest, 359,229 of which were sold on or prior to
February 24, 1984, the termination date of the offering.
Operating Income of the Partnership will be allocated 10% to the General
Partner and 90% to the Limited Partners; however, certain components are
specially allocated as described in the Partnership Agreement. Operating
Losses and certain other components will be allocated 1% to the General Partner
and 99% to the Limited Partners pursuant to the provisions of the Partnership
Agreement.
Net Cash Receipts available for distribution will be distributed as follows:
90% to all Limited Partners; 7 1/2% to the General Partner as its distributive
share from Partnership operations; and 2 1/2% to the General Partner for
allocation to the Repurchase Fund which may be utilized to repurchase Interests
from Limited Partners pursuant to the provisions of the Partnership Agreement.
Amounts placed in the Repurchase Fund may, at the sole discretion of the
General Partner and subject to certain limitations, as set forth in the
Partnership Agreement, be used to repurchase Interests from existing Limited
Partners. During 1995, the General Partner used amounts placed in the
Repurchase Fund to repurchase 647 Interests from Limited Partners at a cost of
$176,469. All repurchases of Interests have been made at 90% of the then
current valuation of such Limited Partnership Interests at the previous quarter
end less any distributions made after the previous quarter end. Distributions
pertaining to repurchased Interests will be paid to the Repurchase Fund. To the
extent that amounts in the Repurchase Fund are not utilized to repurchase
Interests, such amounts are invested in short-term interest-bearing instruments
with earnings thereon credited to the Repurchase Fund. An amount not to exceed
the amount originally allocated to the Repurchase Fund will be returned to the
Partnership at liquidation which will be accounted for as a capital
contribution from the General Partner, if necessary to permit payment to the
Limited Partners of their Original Capital plus any deficiency in their
Liquidation Preference.
When and as the Partnership sells its real properties, the Net Cash Proceeds
resulting therefrom which are available for distribution will be distributed
only to holders of Interests until such time as they have received an amount
equal to their Original Capital plus 6% per annum, non-compounded, on Adjusted
Original Capital (Liquidation Preference). Net Cash Proceeds will be
distributed among the Taxable and Tax-exempt Limited Partners in accordance
with the Partnership Agreement. Thereafter, the General Partner will receive
10% of further distributed Net Cash Proceeds, which shall be returned to the
Partnership if necessary to permit payment to the Limited Partners of any
deficiency in the return of their Original Capital and their Preferential
<PAGE>
Cumulative Distribution on Adjusted Original Capital in amounts ranging from
10% to 16% per annum (depending on the type of investor and the month and year
in which Interests were purchased).
The Partnership Agreement provides for different allocations of profits and
losses and Net Cash Receipts and Net Cash Proceeds distributions to Limited
Partners depending on whether the investor originally acquiring the Interest
was a taxable or tax-exempt entity.
4. Investment in Loan Receivable:
In December 1995, the Partnership received $3,932,676 as payment in full under
the contractual terms of the Fairview Plaza III Office Building mortgage loan.
The amount received consists of funds advanced of $3,745,406 and a prepayment
premium of $187,270. The Partnership recognized a loss on collection of
mortgage loan receivable of $228,372 representing the difference between the
amount repaid under the contractual terms of the note and the carrying amount
for financial statement purposes.
The Fairview Plaza III Office Building mortgage loan had been classified as a
non-accrual loan as a result of delinquency and other noncompliance with the
terms of the loan agreement and was therefore considered an impaired loan.
Under the terms of the original loan agreement, the Partnership would have
received interest income of approximately $1,100,000 during 1995 and $1,200,000
during 1994 and 1993, respectively. The Partnership recorded interest income on
this loan of approximately $195,000 (cash basis) during 1995, $221,000 (cash
basis) during 1994 and $230,000 during 1993. The average recorded investment in
impaired loans during the year ended December 31, 1995 and 1994 was
approximately $4,054,709 and $4,219,012, respectively.
5. Management Agreements:
As of December 31, 1995, all of the properties owned by the Partnership are
under management agreements with a third-party management company. These
management agreements provide for annual fees of 5% of gross operating receipts
for the residential properties and 3% to 6% of gross operating receipts for the
commercial properties.
6. Provision for Investment Property Writedown:
The Partnership determined that an impairment to the asset value of the 8280
Greensboro Drive office building located in McLean, Virginia had occurred. The
market in which the property is located experienced a decline in rental rates
and continued high vacancy rates due to corporate downsizing, defense industry
cutbacks and a general weakening in the overall economy. As a result, the
property was written down by $7,300,000 to approximately $22,058,000 in 1993
representing the Partnership's estimate of the property's fair value.
7. Affiliate's Minority Interest in Joint Venture:
The Pacific Center Office Buildings are owned by a joint venture between the
Partnership and an affiliate. All assets, liabilities, income and expenses of
the joint venture are included in the financial statements of the Partnership
with the appropriate adjustment of profit or loss for the affiliate's
participation in the joint venture. Profits, losses and distributions are
allocated 77.09% to the Partnership and 22.91% to the affiliate. Distributions
<PAGE>
were made to the joint venture partner of $158,493 in 1995, and net
contributions of $30,401 and $142,046 were received from the joint venture
partner in 1994 and 1993, respectively.
8. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder and existing interpretations
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles ("GAAP"), will differ
from the tax returns due to the different treatment of various items as
specified in the Internal Revenue Code. The net effect of these accounting
differences is that the net income for 1995 in the financial statements is
$769,251 less than the tax income of the Partnership for the same period
resulting primarily from differences in the commercial property capitalization
policy for tax and GAAP which was partially offset by higher tax basis
depreciation.
9. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/95 12/31/94 12/31/93
-------------- -------------- --------------
Paid Payable Paid Payable Paid Payable
------ ------- ------ ------- ------ -------
Mortgage servicing fees $9,625 $ 569 $ 9,625 $ 802 $ 9,625 $ 802
Property management fees None None 663,299 None 719,636 58,954
Reimbursement of expenses
to the General Partner,
at cost:
Accounting 69,227 5,662 87,470 30,226 79,315 6,610
Data processing 29,559 2,201 57,714 13,007 74,578 19,731
Investor communi-
cations 10,066 None 30,605 8,983 21,629 1,649
Legal 28,821 2,350 25,026 12,774 19,834 1,653
Portfolio management 133,190 16,552 114,105 28,793 78,983 6,582
Other 10,561 64 11,024 7,632 11,979 998
The Partnership participates in an insurance deductible program with other
affiliated partnerships in which the program pays claims up to the amount of
the deductible under the master insurance policies for its properties. The
program is administered by an affiliate of the General Partner who receives no
fee for administering the program; however, the General Partner is reimbursed
for program expenses. The Partnership paid premiums to the deductible insurance
program of $98,265, $116,846 and $77,368 for 1995, 1994 and 1993, respectively.
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed all
six of the Partnership's properties until the affiliate was sold to a
third-party in November 1994.
<PAGE>
10. Rentals under Operating Leases:
The Partnership receives rental income from the leasing of office space under
operating leases. The minimum future rentals (excluding amounts representing
executory costs such as taxes, maintenance and insurance) to be received by the
Partnership for the GSB, Pacific Center, Park Center and 8280 Greensboro Drive
office buildings based on operating leases held at December 31, 1995 are
approximately as follows:
1996 $ 9,557,000
1997 9,048,000
1998 7,855,000
1999 5,977,000
2000 3,902,000
Thereafter 5,949,000
------------
$ 42,288,000
============
Minimum rentals do not include amounts which may be received from certain
tenants based upon a percentage of their gross sales in excess of stipulated
minimums. Percentage rentals were not significant during 1995, 1994 and 1993.
The Partnership is subject to the usual business risks regarding the collection
of these rentals.
11. Fair Value of Financial Instruments:
The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1995 are as follows:
The carrying value of cash and cash equivalents, accounts and accrued interest
receivable and accounts payable approximates fair value.
12. Subsequent Event:
In January 1996, 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 fourth quarter of 1995.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
<CAPTION>
Col. A Col. B Col. C Col. D
- ---------------------- --------- --------------------- ----------------------------------
Initial Cost Cost Adjustments
to Partnership Subsequent to Acquisition
-------------------- ----------------------------------
Buildings Carrying Reduction
Encum- and Im- Improve- Costs of Basis
Description brances Land provements ments (a) (b)
- --------------------- ------- -------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
8280 Greensboro Drive
Office Building,
197,000 sq. ft.,
McLean, VA None $4,595,052 $32,581,745$1,182,041 $(13,423,952)
GSB Office Building,
228,000 sq. ft.,
Bala Cynwyd, PA None 1,417,000 20,078,955 5,220,207 $55,968
Oxford Hills Apts.,
480 units, St. Louis
County, MO None 1,920,000 17,442,935 44,999
Oxford Square Apts.,
283 units,
Casselberry, FL None 1,202,242 10,182,623
Pacific Center
Office Buildings,
222,000 sq. ft.,
Dallas, TX None 5,060,000 32,440,000 728,364 37,560 (23,550,000)
Park Center Office
Building,
111,000 sq. ft.,
Maitland, FL None 1,946,175 8,184,878 1,666,490 (3,800,000)
----------- ------------ --------- -------- ------------
Total $16,140,469 $120,911,136$8,797,102 $138,527 $(40,773,952)
=========== ============ ========= ======== ============
</TABLE>
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
(Continued)
<CAPTION>
Col. A Col. E Col. F Col. G Col. H Col. I
- -------------------- ------------------------------- ----------- -------- ------ --------------
Gross Amounts at Which Life Upon
Carried at Close of Period Which Depre-
------------------------------- ciation in
Buildings Accumulated Date Date Latest Income
and Im- Total Deprecia- of Con- Acq- Statement
Description Land provements (c)(d) tion(d) struction uired is Computed
- ------------------- -------- ---------- ---------- --------- --------- ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
8280 Greensboro Drive
Office Building,
197,000 sq. ft.,
McLean, VA $2,977,313 $21,957,573 $24,934,886 $4,239,963 1987 12/90(e) (f)
GSB Office Building,
228,000 sq. ft.,
Bala Cynwyd, PA 1,420,694 25,351,436 26,772,130 13,002,280 1959 7/84 (f)
Oxford Hills Apts.,
480 units, St. Louis
County, MO 1,924,464 17,483,470 19,407,934 10,281,432 1969 6/84 (f)
Oxford Square Apts.,
283 units,
Casselberry, FL 1,202,242 10,182,623 11,384,865 3,274,651 1986 12/86(g) (f)
Pacific Center
Office Buildings,
222,000 sq. ft.,
Dallas, TX 1,924,959 12,790,965 14,715,924 8,023,406 (h) 11/84 (f)
Park Center Office
Building,
111,000 sq. ft.,
Maitland, FL 1,304,041 6,693,502 7,997,543 2,322,131 1984 12/86(g) (f)
----------- ----------- ------------ -----------
Total $10,753,713 $94,459,569 $105,213,282 $41,143,863
=========== =========== ============ ===========
</TABLE>
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
NOTES TO SCHEDULE III
(a) Consists of legal fees, appraisal fees, title costs and other related
professional fees.
(b) The carrying basis of the 8280 Greensboro Drive office building was reduced
in 1991 and 1993, the Pacific Center office building was reduced in 1991 and
1992 and the Park Center office building was reduced in 1991 due to a permanent
impairment in the value of these properties. In addition, amounts held in
escrow on behalf of the borrower of the 8280 Greensboro Drive Office Building
were used in 1991 to reduce the basis of this property.
(c) The aggregate cost of land for Federal income tax purposes is $16,168,508
and the aggregate cost of buildings and improvements for Federal income tax
purposes is $134,886,577. The total of these is $151,055,085.
(d) Reconciliation of Real Estate
-----------------------------
1995 1994 1993
---------- ---------- ----------
Balance at beginning of year $104,367,316 $103,601,248 $110,304,588
Additions during year:
Improvements 845,966 766,068 596,660
Reductions during year:
Investment property
writedowns (7,300,000)
------------ ------------ ------------
Balance at end of year $105,213,282 $104,367,316 $103,601,248
============ ============ ============
Reconciliation of Accumulated Depreciation
------------------------------------------
1995 1994 1993
---------- ---------- ----------
Balance at beginning of year $37,467,239 $33,869,463 $30,082,116
Depreciation expense for
the year 3,676,624 3,597,776 3,787,347
----------- ----------- -----------
Balance at end of year $41,143,863 $37,467,239 $33,869,463
=========== =========== ===========
(e) During 1990, this property was acquired at a foreclosure sale.
(f) Depreciation expense is computed based upon the following estimated useful
lives:
Years
-----
Buildings and improvements 20 to 35
Furniture and fixtures 5
(g) During 1986, these properties were acquired through acceptance of deeds in
lieu of foreclosure.
(h) These office buildings were completed in two phases in 1983 and 1984.
<PAGE>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 11306
<SECURITIES> 0
<RECEIVABLES> 436
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11950
<PP&E> 105213
<DEPRECIATION> 41144
<TOTAL-ASSETS> 76467
<CURRENT-LIABILITIES> 962
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0
0
<COMMON> 0
<OTHER-SE> 74169
<TOTAL-LIABILITY-AND-EQUITY> 76467
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<TOTAL-REVENUES> 17688
<CGS> 0
<TOTAL-COSTS> 10748
<OTHER-EXPENSES> 4704
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 2236
<INCOME-TAX> 0
<INCOME-CONTINUING> 2236
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<EPS-PRIMARY> 4.66
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