SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1998
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
------------ ------------
Commission file number 2-85270
-------
BALCOR EQUITY PENSION INVESTORS-I
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3240345
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
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
----- -----
<PAGE>
BALCOR EQUITY PENSION INVESTORS - I
(an Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1998 and December 31, 1997
(UNAUDITED)
ASSETS
1998 1997
-------------- --------------
Cash and cash equivalents $ 2,829,740 $ 4,805,720
Accounts and accrued interest receivable 16,514 53,489
Escrow deposits - restricted 70,456
-------------- --------------
$ 2,846,254 $ 4,929,665
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 11,076 $ 23,799
Due to affiliates 66,611 38,720
-------------- --------------
Total liabilities 77,687 62,519
-------------- --------------
Commitments and contingencies
Limited Partners' capital (359,229
Interests issued and outstanding) 3,263,400 5,361,979
General Partner's deficit (494,833) (494,833)
-------------- --------------
Total partners' capital 2,768,567 4,867,146
-------------- --------------
$ 2,846,254 $ 4,929,665
============== ==============
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 nine months ended September 30, 1998 and 1997
(UNAUDITED)
1998 1997
-------------- --------------
Income:
Rental $ 1,503,517
Service 400,830
Interest on short-term investments $ 120,533 861,793
Settlement income 396,697
-------------- --------------
Total income 517,230 2,766,140
-------------- --------------
Expenses:
Depreciation 455,830
Amortization of deferred expenses 388,847
Property operating 24,133 1,632,379
Real estate taxes 111,676
Property management fees 80,828
Administrative 223,924 369,464
-------------- --------------
Total expenses 248,057 3,039,024
-------------- --------------
Income (loss) before gain on sale of
properties 269,173 (272,884)
Gain on sale of properties 15,391,870
-------------- --------------
Net income $ 269,173 $ 15,118,986
============== ==============
Net income allocated to General Partner None $ 50,979
============== ==============
Net income allocated to Limited Partners $ 269,173 $ 15,068,007
============== ==============
Net income per Limited Partnership Interest
(359,229 issued and outstanding)
- Basic and Diluted $ 0.75 $ 41.95
============== ==============
Distributions to General Partner None $ 513,679
============== ==============
Distributions to Limited Partners $ 2,367,752 $ 93,960,438
============== ==============
Distributions per Limited Partnership
Interest:
Taxable None $ 10.00
============== ==============
Tax-exempt $ 7.58 $ 299.30
============== ==============
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 September 30, 1998 and 1997
(UNAUDITED)
1998 1997
-------------- --------------
Income:
Interest on short-term investments $ 40,861 $ 140,637
-------------- --------------
Total income 40,861 140,637
-------------- --------------
Expenses:
Property operating 5,632
Administrative 47,650 106,978
-------------- --------------
Total expenses 47,650 112,610
-------------- --------------
Net (loss) income $ (6,789) $ 28,027
============== ==============
Net income allocated to General
Partner None None
============== ==============
Net (loss) income allocated to
Limited Partners $ (6,789) $ 28,027
============== ==============
Net (loss) income per Limited Partnership
Interest (359,229 issued and outstanding)
- Basic and Diluted $ (0.02) $ 0.08
============== ==============
Distribution to General Partner None None
============== ==============
Distribution to Limited Partners None $ 29,674,988
============== ==============
Distribution per Limited Partnership
Interest:
Taxable None None
============== ==============
Tax-exempt None $ 95.00
============== ==============
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 nine months ended September 30, 1998 and 1997
(UNAUDITED)
1998 1997
-------------- --------------
Operating activities:
Net income $ 269,173 $ 15,118,986
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of properties (15,391,870)
Depreciation of properties 455,830
Amortization of deferred expenses 388,847
Net change in:
Accounts and accrued interest
receivable 36,975 558,557
Escrow deposits-restricted 25,508
Prepaid expenses 126,457
Accounts payable (12,723) (266,784)
Due to affiliates 27,891 (5,982)
Security deposits (182,178)
-------------- --------------
Net cash provided by operating activities 346,824 801,863
-------------- --------------
Investing activities:
Proceeds from property sales 49,575,000
Payment of selling costs (1,330,345)
Release of escrow deposits-restricted 44,948
-------------- --------------
Net cash provided by investing activities 44,948 48,244,655
-------------- --------------
Financing activities:
Distributions to Limited Partners (2,367,752) (93,960,438)
Distributions to General Partner (513,679)
-------------- --------------
Cash used in financing activities (2,367,752) (94,474,117)
-------------- --------------
Net change in cash and cash equivalents (1,975,980) (45,427,599)
Cash and cash equivalents at beginning
of period 4,805,720 50,292,449
-------------- --------------
Cash and cash equivalents at end of period $ 2,829,740 $ 4,864,850
============== ==============
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 Policies:
(a) For financial statement purposes, the capital accounts of the General
Partner and the Limited Partners have been adjusted to appropriately reflect
their remaining economic interests as provided for in the Partnership
Agreement.
(b) 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, 1998, and all such adjustments are of a normal
and recurring nature.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its two remaining properties.
The Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as to establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.
3. Settlement Income:
The Pacific Center Office Buildings, which were owned by a joint venture
consisting of the Partnership and an affiliate, were sold during December 1996.
During April 1998, the Partnership received $396,697 related to a settlement of
a dispute with a former tenant at the property. This amount has been recognized
as settlement income for financial statement purposes.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1998 are:
Paid
-------------------------
Nine Months Quarter Payable
------------ --------- ---------
Reimbursement of expenses to
the General Partner, at cost $ 36,860 $16,974 $66,611
<PAGE>
5. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership, the
General Partner and certain third parties have been named as defendants seeking
damages relating to tender offers to purchase interests in the Partnership and
nine affiliated partnerships initiated by the third party defendants in 1996.
The defendants continue to vigorously contest this action. The action has been
dismissed with prejudice and plaintiffs have filed an appeal, which is pending.
It is not determinable at this time whether or not an unfavorable decision in
this action would have a material adverse impact on the Partnership's financial
position. The Partnership believes that it has meritorious defenses to contest
the claims.
<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. As of September 30, 1998, the
Partnership has no loans or properties remaining in its portfolio.
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 1997 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
Administrative and property operating expenses were higher than interest income
earned on short-term investments during 1998. However, the Partnership
recognized income related to a settlement with a former tenant at a property
during the quarter ended March 31, 1998. These were the primary reasons the
Partnership recognized net income for the nine months ended September 30, 1998,
and a net loss for the quarter ended September 30, 1998. During 1997, the
Partnership recognized gains on the sales of the GSB and the 8280 Greensboro
Drive office buildings, which was the primary reason the Partnership recognized
net income for the nine months ended September 30, 1997. During the quarter
ended September 30, 1997, interest income earned on short-term investments was
higher than property operating and administrative expenses which resulted in
net income for the period. Further discussion of the Partnership's operations
is summarized below.
1998 Compared to 1997
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1998 and 1997 refer
to both the nine months and quarters ended September 30, 1998 and 1997.
During 1997, the Partnership sold the GSB and 8280 Greensboro Drive office
buildings and recognized gain on sales totaling $15,391,870. As a result of the
sales of these properties, rental and service income, depreciation,
amortization, real estate taxes and property management fees ceased during
1997.
Higher average cash balances were available for investment during 1997 due to
proceeds received in connection with the 1996 and 1997 property sales prior to
distribution to Partners. This resulted in a decrease in interest income on
short-term investments during 1998 as compared to 1997.
<PAGE>
The Pacific Center Office Buildings, which were owned by a joint venture
consisting of the Partnership and an affiliate, were sold during December 1996.
During April 1998, the Partnership received $396,697 related to a settlement of
a dispute with a former tenant at the property. This amount has been recognized
as settlement income for financial statement purposes during 1998.
Property operating expense decreased during 1998 as compared to 1997 due to the
sales of the Partnership's two remaining properties in 1997. The Partnership
paid additional expenditures during 1998 related primarily to the GSB Office
Building, which was sold in 1997.
As a result of lower legal, accounting and professional fees and lower bank
charges, administrative expenses decreased in 1998 as compared to 1997.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $1,976,000 as
of September 30, 1998 as compared to December 31, 1997 primarily due to the
distribution of remaining available Net Cash Proceeds in January 1998 to
Tax-Exempt Limited Partners. The Partnership generated cash flow from
operations of approximately $347,000 primarily due to a settlement of a dispute
with a former tenant at the Pacific Center Office Buildings and interest income
received on short-term investments, which were partially offset by the payment
of administrative and property operating expenses. Investing activities
generated cash of approximately $45,000 from the receipt of restricted escrow
deposits associated with the GSB Office Building. The Partnership used cash in
its financing activities of approximately $2,368,000 to pay a distribution to
Tax-Exempt Limited Partners.
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its two remaining properties.
The Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.
In February 1997, the Partnership discontinued the repurchase of Interests from
Limited Partners. As of September 30, 1998, there were 11,294 Interests and
cash of $3,472,751 in the Repurchase Fund.
The Pacific Center Office Buildings, which were owned by a joint venture
consisting of the Partnership and an affiliate, were sold during December 1996.
The Partnership received $396,697 related to a settlement of a dispute with a
former tenant at the property in April 1998.
<PAGE>
In March 1997, the Partnership sold the GSB Office Building. At closing,
$70,456 of the sale proceeds was placed in escrow until certain tenant
reimbursement issues were resolved. During May 1998, the escrow was released
and the Partnership received $48,946, which included $3,998 of interest income.
The buyer of the property received the remaining escrow amount of $25,508 to
settle other outstanding tenant issues.
To date, Limited Partners have received distributions totaling $244.35 per $500
Taxable Interest (of which $231.36 represents Net Cash Receipts and $12.99
represents Net Cash Proceeds) and $680.35 per $500 Tax-exempt Interest (of
which $307.78 represents Net Cash Receipts and $372.57 represents Net Cash
Proceeds). Taxable Limited Partners will not receive aggregate distributions
from the Partnership equal to their original investment. However, Taxable
Limited Partners will receive a distribution from amounts allocated to the
Repurchase Fund. No additional distributions are anticipated to be made prior
to the termination of the Partnership. However, after paying final partnership
expenses, any remaining cash reserves will be distributed in accordance with
the Partnership Agreement. Amounts allocated to the Repurchase Fund will also
be distributed at that time.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) Exhibits:
(4) Certificate of Limited Partnership set forth as Exhibit 4.1 to Amendment
No. 2 to the Registrant's Registration Statement on Form S-11 dated October 4,
1983 (Registration No. 2-85270) and Form of Confirmation regarding Interests in
the Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q
for the quarter ended June 30, 1992 (Commission File No. 2-85270) are
incorporated herein by reference.
(10) Material Contracts:
(a) (i) Agreement of Sale and attachment thereto relating to the sale of GSB
Office Building, Bala Cynwyd, Pennsylvania, previously filed as Exhibit (2) to
the Registrant's Current Report on Form 8-K dated December 2, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the GSB
Office Building, Bala Cynwyd, Pennsylvania, previously filed as Exhibit (99)(a)
to the Registrant's Current Report on Form 8-K dated January 6, 1997 is
incorporated herein by reference.
(iii) Second Amendment to Agreement of Sale relating to the sale of the GSB
Office Building, Bala Cynwyd, Pennsylvania, previously filed as Exhibit (99)(b)
to the Registrant's Current Report on Form 8-K dated January 6, 1997 is
incorporated herein by reference.
(iv) Letter dated January 30, 1997 relating to the sale of the GSB Office
Building, Bala Cynwyd, Pennsylvania, previously filed as Exhibit (10)(c)(iv) to
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1996 is incorporated herein by reference.
(b) (i) Agreement of Sale dated March 11, 1997 and attachment thereto relating
to the sale of the 8280 Greensboro Drive Office Building, McLean, Virginia,
previously filed as Exhibit (10)(d)(iii) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1996 is incorporated herein by
reference.
(ii) Letter Agreement dated March 12, 1997 relating to the sale of the 8280
Greensboro Drive Office Building, McLean, Virginia, previously filed as Exhibit
(10)(d)(iv) to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996 is incorporated herein by reference.
(iii) Second Amendment to Agreement of Sale relating to the sale of the 8280
Greensboro Drive Office Building, McLean, Virginia, previously filed as Exhibit
(10)(d)(v) to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1996 is incorporated herein by reference.
<PAGE>
(iv) Third Amendment to Agreement of Sale relating to the sale of the 8280
Greensboro Drive Office Building, McLean, Virginia, previously filed as Exhibit
(10)(d)(iv) to the Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1997 is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the nine months ending
September 30, 1998, is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 30, 1998.
<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/Jayne A. Kosik
------------------------------
Jayne A. Kosik
Senior Managing Director and Chief
Financial Officer (Principal Accounting
Officer) of Balcor Equity Partners-I,
the General Partner
Date: November 12, 1998
-----------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2830
<SECURITIES> 0
<RECEIVABLES> 17
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2846
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2846
<CURRENT-LIABILITIES> 78
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2769
<TOTAL-LIABILITY-AND-EQUITY> 2846
<SALES> 0
<TOTAL-REVENUES> 517
<CGS> 0
<TOTAL-COSTS> 24
<OTHER-EXPENSES> 224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 269
<INCOME-TAX> 0
<INCOME-CONTINUING> 269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 269
<EPS-PRIMARY> .75
<EPS-DILUTED> .75
</TABLE>
