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 March 31, 1998
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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 (847) 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
March 31, 1998 and December 31, 1997
(UNAUDITED)
ASSETS
1998 1997
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Cash and cash equivalents $ 2,426,956 $ 4,805,720
Accounts and accrued interest receivable 412,055 53,489
Escrow deposits - restricted 70,456 70,456
Prepaid expenses 2,373
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$ 2,911,840 $ 4,929,665
=============== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 35,038 $ 23,799
Due to affiliates 48,199 38,720
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Total liabilities 83,237 62,519
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Commitments and contingencies
Limited Partners' capital (359,229
Partnership Interests issued and
outstanding) 3,323,436 5,361,979
General Partner's deficit (494,833) (494,833)
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Total partners' capital 2,828,603 4,867,146
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$ 2,911,840 $ 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 quarters ended March 31, 1998 and 1997
(UNAUDITED)
1998 1997
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Income:
Rental $ 1,317,073
Service 378,463
Interest on short-term investments $ 39,022 272,318
Other income 396,697
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Total income 435,719 1,967,854
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Expenses:
Depreciation 417,091
Amortization of deferred expenses 312,338
Property operating 1,548,540
Real estate taxes 96,098
Property management fees 67,323
Administrative 106,510 126,748
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Total expenses 106,510 2,568,138
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Income (loss) before gain on sale of
property 329,209 (600,284)
Gain on sale of property 5,888,095
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Net income $ 329,209 $ 5,287,811
=============== =============
Net income allocated to General Partner None $ 64,501
=============== =============
Net income allocated to Limited Partners $ 329,209 $ 5,223,310
=============== =============
Net income per Limited Partnership
Interest (359,229 issued and
outstanding) - Basic and Diluted $ 0.92 $ 14.54
=============== =============
Distribution to General Partner None $ 513,679
=============== =============
Distribution to Limited Partners $ 2,367,752 $ 42,419,669
=============== =============
Distribution per Limited Partnership
Interest:
Taxable None $ 10.00
=============== =============
Tax-exempt $ 7.58 $ 134.30
=============== =============
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 quarters ended March 31, 1998 and 1997
(UNAUDITED)
1998 1997
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Operating activities:
Net income $ 329,209 $ 5,287,811
Adjustments to reconcile net income to
net cash used in or provided by
operating activities:
Gain on sale of property (5,888,095)
Depreciation of properties 417,091
Amortization of deferred expenses 312,338
Net change in:
Accounts and accrued interest
receivable (358,566) 212,230
Prepaid expenses (2,373) 121,393
Accounts payable 11,239 (80,145)
Due to affiliates 9,479 (4,832)
Accrued real estate taxes 50,820
Security deposits (131,602)
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Net cash used in or provided by
operating activities (11,012) 297,009
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Investing activities:
Proceeds from sale of property 19,575,000
Payment of selling costs (638,495)
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Net cash provided by investing
activities 18,936,505
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Financing activities:
Distribution to Limited Partners (2,367,752) (42,419,669)
Distribution to General Partner (513,679)
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Cash used in financing activities (2,367,752) (42,933,348)
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Net change in cash and cash
equivalents (2,378,764) (23,699,834)
Cash and cash equivalents at
beginning of year 4,805,720 50,292,449
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Cash and cash equivalents at
end of period $ 2,426,956 $ 26,592,615
=============== =============
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 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 quarter
ended March 31, 1998, and all such adjustments are of a normal and recurring
nature.
(c) A reclassification has been made to the previously reported 1997 financial
statements in order to provide comparability with the 1998 statements. This
reclassification has not changed the 1997 results.
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 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 4 of Notes to the
Financial Statements. In the absence of any such contingencies, the reserves
will be paid within twelve months of the last property being sold. In the event
a contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1998 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost $11,229 $48,199
4. 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.
<PAGE>
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, results of operations or liquidity. The Partnership believes that it
has meritorious defenses to contest the claims.
5. Other 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 other income for financial statement purposes during the first quarter of
1998.
<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 March 31, 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
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Summary of Operations
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During 1998, the Partnership recognized other income related to a settlement
with a former tenant at a sold property, which was the primary reason the
Partnership recognized net income for the quarter ended March 31, 1998. During
1997, the Partnership recognized a gain on the sale of the GSB Office Building
which was the primary reason the Partnership recognized higher net income for
the quarter ended March 31, 1997 as compared to 1998. Further discussion of the
Partnership's operations is summarized below.
1997 Compared to 1996
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Discussions of fluctuations between 1998 and 1997 refer to the quarters ended
March 31, 1998 and 1997, unless otherwise noted.
During 1997, the Partnership sold the GSB and 8280 Greensboro Drive office
buildings. As a result of the sales of these properties, rental and service
income, depreciation, amortization, property operating, real estate taxes and
property management fees ceased in 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.
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 other income for financial statement purposes during the first quarter of
1998.
<PAGE>
As a result of lower legal, accounting and other professional fees,
administrative expenses decreased in 1998 as compared to 1997.
In March 1997, the Partnership sold the GSB Office Building and recognized a
gain on sale of $5,888,095.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $2,379,000 as
of March 31, 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 used cash of approximately $11,000
in its operating activities to pay administrative expenses, which were
partially offset by interest income earned on short-term investments. 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 4 of Notes to the
Financial Statements. In the absence of any such contingencies, the reserves
will be paid within twelve months of the last property being sold. In the event
a contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.
In February 1997, the Partnership discontinued the repurchase of Interests from
Limited Partners. As of March 31, 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. This amount has been recognized as other income.
In March 1997, the Partnership sold the GSB Office Building. At closing,
$70,456 of the sale proceeds was placed in escrow and is not expected to be
distributed until certain tenant reimbursement issues are resolved.
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). In accordance with the Partnership Agreement, Net Cash Proceeds were
allocated first to the Tax-exempt Limited Partners. Taxable and Tax-exempt
Limited Partners received quarterly distributions from Net Cash Receipts. Net
<PAGE>
Cash Receipts distributions were discontinued beginning with the first quarter
of 1997. 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.
<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 September 30, 1992 (Commission File No. 2-85270) are
incorporated herein by reference.
(10) Material Contracts:
(a) Agreement of Sale and attachment thereto relating to the sale of Oxford
Square Apartments, Casselberry, Florida, previously filed as Exhibit (2) to the
Registrant's Current Report on Form 8-K dated July 5, 1996 is incorporated
herein by reference.
(b) Agreement of Sale and attachment thereto relating to the sale of Oxford
Hills Apartments, St. Louis County, Missouri, previously filed as Exhibit (2)
to the Registrant's Current Report on Form 8-K dated October 16, 1996 is
incorporated herein by reference.
(c) (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.
(d) (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.
<PAGE>
(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.
(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 quarter ending March 31,
1998, is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated January 15, 1998
was filed reporting the status of certain proposed class action litigation to
which the Registrant was a party.
<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: May 11, 1998
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 2427
<SECURITIES> 0
<RECEIVABLES> 412
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2912
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2912
<CURRENT-LIABILITIES> 83
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2829
<TOTAL-LIABILITY-AND-EQUITY> 2912
<SALES> 0
<TOTAL-REVENUES> 436
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 107
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 329
<INCOME-TAX> 0
<INCOME-CONTINUING> 329
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 329
<EPS-PRIMARY> .92
<EPS-DILUTED> .92
</TABLE>
