SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
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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 0-13349
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BALCOR REALTY INVESTORS-84
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(Exact name of registrant as specified in its charter)
Illinois 36-3215399
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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 REALTY INVESTORS-84
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
-------------- --------------
Cash and cash equivalents $ 12,942,275 $ 394,701
Escrow deposits 1,053,678 1,928,712
Accounts and accrued interest receivable 486,498 663,602
Prepaid expenses 397,565 316,982
Deferred expenses, net of accumulated
amortization of $808,058 in 1996
and $1,167,664 in 1995 534,245 1,070,357
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15,414,261 4,374,354
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Investment in real estate:
Land 11,651,188 17,612,218
Buildings and improvements 78,062,146 118,352,136
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89,713,334 135,964,354
Less accumulated depreciation 38,914,544 55,896,633
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Investment in real estate, net of
accumulated depreciation 50,798,790 80,067,721
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$ 66,213,051 $ 84,442,075
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LIABILITIES AND PARTNERS' DEFICIT
Loans payable - affiliate $ 6,623,202
Accounts payable $ 180,526 255,150
Due to affiliates 91,562 122,609
Accrued liabilities, principally
real estate taxes 667,404 1,133,571
Security deposits 384,939 557,128
Mortgage notes payable 64,964,392 101,440,696
Mortgage notes payable - affiliate 1,852,611 1,852,611
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Total liabilities 68,141,434 111,984,967
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Limited Partners' deficit
(140,000 Interests issued
and outstanding) (669,182) (26,027,546)
General Partner's deficit (1,259,201) (1,515,346)
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Total partners' deficit (1,928,383) (27,542,892)
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$ 66,213,051 $ 84,442,075
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Income:
Rental and service $ 12,526,872 $ 14,111,983
Interest on short-term investments 58,126 84,010
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Total income 12,584,998 14,195,993
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Expenses:
Interest on mortgage notes payable 3,727,249 4,522,718
Interest on short-term loans from
an affiliate 49,045 331,744
Depreciation 1,701,756 1,964,989
Amortization of deferred expenses 109,818 154,941
Property operating 4,799,075 4,835,914
Real estate taxes 981,818 1,039,791
Property management fees 628,737 695,768
Administrative 432,549 501,871
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Total expenses 12,430,047 14,047,736
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Income before gains on sales of properties,
affiliate's participation in joint
venture and extraordinary items 154,951 148,257
Gains on sales of properties 25,885,852 1,814,970
Affiliate's participation in income
from joint venture (755,586)
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Income before extraordinary items 26,040,803 1,207,641
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Extraordinary items:
Gain on forgiveness of debt 90,359
Debt extinguishment expense (426,294)
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Total extraordinary items (426,294) 90,359
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Net income $ 25,614,509 $ 1,298,000
============== ==============
Income before extraordinary items
allocated to General Partner $ 260,408 $ 12,076
============== ==============
Income before extraordinary items
allocated to Limited Partners $ 25,780,395 $ 1,195,565
============== ==============
Income before extraordinary items
per Limited Partnership Interest
(140,000 issued and outstanding) $ 184.14 $ 8.54
============== ==============
<PAGE>
Extraordinary items allocated
to General Partner $ (4,263) $ 904
============== ==============
Extraordinary items allocated
to Limited Partners $ (422,031) $ 89,455
============== ==============
Extraordinary items per Limited
Partnership Interest (140,000
issued and outstanding) $ (3.01) $ 0.64
============== ==============
Net income allocated to General Partner $ 256,145 $ 12,980
============== ==============
Net income allocated to Limited Partners $ 25,358,364 $ 1,285,020
============== ==============
Net income per Limited Partnership Interest
(140,000 issued and outstanding) $ 181.13 $ 9.18
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Income:
Rental and service $ 5,894,247 $ 7,094,586
Interest on short-term investments 37,547 26,971
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Total income 5,931,794 7,121,557
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Expenses:
Interest on mortgage notes payable 1,737,506 2,224,541
Interest on short-term loans from
an affiliate 149,444
Depreciation 802,534 971,365
Amortization of deferred expenses 52,724 64,136
Property operating 2,466,169 2,551,811
Real estate taxes 476,202 517,287
Property management fees 291,708 348,294
Administrative 284,324 281,544
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Total expenses 6,111,167 7,108,422
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(Loss) income before gains on sales of
properties, affiliate's participation
in joint venture and extraordinary item (179,373) 13,135
Gains on sales of properties 16,999,836
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Income before extraordinary item 16,820,463 13,135
Extraordinary item:
Debt extinguishment expense (224,144)
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Net income $ 16,596,319 $ 13,135
============== ==============
Income before extraordinary item
allocated to General Partner $ 168,205 $ 131
============== ==============
Income before extraordinary item
allocated to Limited Partners $ 16,652,258 $ 13,004
============== ==============
Income before extraordinary item
per Limited Partnership Interest
(140,000 issued and outstanding) $ 118.94 $ 0.09
============== ==============
Extraordinary item allocated
to General Partner $ (2,242) None
============== ==============
Extraordinary item allocated
to Limited Partners $ (221,902) None
============== ==============
<PAGE>
Extraordinary item per Limited
Partnership Interest (140,000
issued and outstanding) $ (1.58) None
============== ==============
Net income allocated to General Partner $ 165,963 $ 131
============== ==============
Net income allocated to Limited Partners $ 16,430,356 $ 13,004
============== ==============
Net income per Limited Partnership Interest
(140,000 issued and outstanding) $ 117.36 $ 0.09
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Operating activities:
Net income $ 25,614,509 $ 1,298,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary items:
Gain on forgiveness of debt (90,359)
Debt extinguishment expense 426,294
Gains on sales of properties (25,885,852) (1,814,970)
Affiliate's participation in income
from joint venture 755,586
Depreciation of properties 1,701,756 1,964,989
Amortization of deferred expenses 109,818 154,941
Net change in:
Escrow deposits 869,713 247,957
Accounts and accrued interest
receivable 177,104 311,756
Prepaid expenses (80,583) (569,983)
Accounts payable (74,624) (67,651)
Due to affiliates (31,047) (36,465)
Accrued liabilities (466,167) (174,930)
Security deposits (172,189) (2,460)
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Net cash provided by operating activities 2,188,732 1,976,411
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Investing activities:
Proceeds from redemption of
restricted investment 700,000
Proceeds from sales of properties 28,091,246 6,140,000
Payment of selling costs (946,973) (210,175)
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Net cash provided by investing activities 27,144,273 6,629,825
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Financing activities:
Distributions to joint venture
partner - affiliate (445,589)
Repayment of loans payable - affiliate (6,623,202) (3,055,000)
Repayment of mortgage notes payable (9,484,192) (5,058,226)
Principal payments on mortgage
notes payable (683,358) (729,327)
Principal payments on mortgage
notes payable - affiliate (57,209)
Release of financing escrows 5,321 401,171
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Net cash used in financing activities (16,785,431) (8,944,180)
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<PAGE>
Net change in cash and cash equivalents 12,547,574 (337,944)
Cash and cash equivalents at beginning
of year 394,701 1,311,019
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Cash and cash equivalents at end of period $ 12,942,275 $ 973,075
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the six months and quarter
ended June 30, 1996, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1996 and 1995, the Partnership incurred
and paid interest expense on mortgage notes payable to non-affiliates of
$3,628,907 and $4,426,699, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1996 are:
Paid
-----------------------
Six Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost: $110,820 $73,674 $91,562
During the quarter ended March 31, 1996, the Partnership repaid the entire
balance of the General Partner loan, which had an outstanding balance of
$6,623,202 at December 31, 1995, primarily with proceeds from the sale of
Chimney Ridge Apartments. (See Note 4 of Notes to Financial Statements for
additional information.) During the six months ended June 30, 1996 and 1995,
the Partnership incurred interest expense of $49,045 and $331,744 and paid
interest expense of $119,165 and $254,164 on these loans, respectively.
Interest expense was computed at the American Express Company cost of funds
rate plus a spread to cover administrative costs. The interest rate was 5.85%
at the date of the loan repayment.
As of June 30, 1996, the Partnership had junior loans outstanding from The
Balcor Company ("TBC"), an affiliate of the General Partner, relating to the
Chestnut Ridge - Phase II and Woodland Hills apartment complexes in the
aggregate amount of $1,852,611 with accrued interest payable on these loans
totaling $77,887, which is included in accrued liabilities on the balance
sheet. During the six months ended June 30, 1996 and 1995, the Partnership
incurred interest expense on these affiliate loans of $98,342 and $96,019 and
paid interest expense of $58,722 and $54,388, respectively.
<PAGE>
4. Property Sales:
(a) In February 1996, the Partnership sold the Chimney Ridge Apartments in an
all cash sale for $13,650,000. The purchaser of the Chimney Ridge Apartments
took title subject to the existing first mortgage loan in the amount of
$7,242,788. From the proceeds of the sale, the Partnership paid $609,642 in
selling costs. The basis of the property was $4,427,342, which is net of
accumulated depreciation of $3,137,301. For financial statement purposes, the
Partnership recognized a gain of $8,613,016 from the sale of this property.
(b) In May 1996, the Partnership sold the Antlers Apartments in an all cash
sale for $15,000,000. The purchaser of the Antlers Apartments took title
subject to the existing first mortgage loan in the amount of $10,108,860. From
the proceeds of the sale, the Partnership paid $86,456 in selling costs. The
basis of the property was $8,395,037, which is net of accumulated depreciation
of $5,118,659. For financial statement purposes, the Partnership recognized a
gain of $6,518,507 from the sale of this property.
(c) In June 1996, the Partnership sold the Canyon Sands Apartments in an all
cash sale for $14,650,000. The purchaser of the Canyon Sands Apartments took
title subject to the existing first mortgage loan in the amount of $8,957,106.
From the proceeds of the sale, the Partnership paid $124,875 in selling costs.
The basis of the property was $6,253,071, which is net of accumulated
depreciation of $4,914,899. For financial statement purposes, the Partnership
recognized a gain of $8,272,054 from the sale of this property.
(d) In June 1996, the Partnership sold the Ridgetree - Phase I Apartments in an
all cash sale for $11,100,000. From the proceeds of the sale, the Partnership
paid $9,484,192 to the third party mortgage holder in full satisfaction of the
first and second mortgage loans, and paid $126,000 in selling costs. The basis
of the property was $8,491,725 which is net of accumulated depreciation of
$5,512,986. For financial statement purposes, the Partnership recognized a gain
of $2,482,275 from the sale of this property.
5. Extraordinary Item:
In connection with the sales of the Partnership's properties during 1996,
remaining unamortized deferred financing fees in the amount of $426,294 were
recognized as an extraordinary item and classified as debt extinguishment
expense.
6. Subsequent Events:
(a) In July 1996, the Partnership commenced distributions and paid $11,200,000
($80 per Interest) to Limited Partners, representing a special distribution of
Net Cash Proceeds received in connection with the sales of the Antlers, Canyon
Sands, and Ridgetree - Phase I apartment complexes.
(b) In July 1996, the Partnership sold the Sunnyoak Village Apartments in an
all cash sale for $22,200,000. From the proceeds of the sale, the Partnership
paid $13,598,689 to the third-party mortgage holder in full satisfaction of the
first mortgage loan, and paid $181,500 in selling costs. For financial
statement purposes, the Partnership will recognize a gain of approximately
$11,447,000 from the sale of this property during the third quarter 1996.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors-84 (the "Partnership") was formed in 1982 to invest in
and operate income-producing real property. The Partnership raised $140,000,000
from sales of Limited Partnership Interests and utilized these proceeds to
acquire twenty-three real property investments and a minority joint venture
interest in one additional property. Six of these properties were sold in prior
years and five were sold in 1996, including the Sunnyoak Village Apartments
which was sold during July 1996. Title to five properties, including the
property in which the Partnership held a minority joint venture interest, have
been relinquished through foreclosure in prior years. The Partnership continues
to operate the eight remaining properties.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership has sold four properties during the six months ended June 30,
1996 and recognized significant gains on these sales for financial statement
purposes. These gains resulted in an increase in net income during the six
months and quarter ended June 30, 1996 as compared to the same periods in 1995.
Further discussion of the Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the six months and quarters ended June 30, 1996 and 1995.
The Partnership sold the Pinebrook and Drayton Quarter apartment complexes in
February and July 1995, respectively, and the Antlers, Canyon Sands, Chimney
Ridge and Ridgetree - Phase I apartment complexes during the first six months
of 1996. As a result, the Partnership recognized gains of $1,814,970 on the
sale of Pinebrook Apartments and $25,885,852 on the 1996 sales during the six
months ended June 30, 1995 and June 30, 1996, respectively. These sales also
resulted in decreases in rental and service income, interest expense on
mortgage notes payable, depreciation, amortization, property operating
expenses, real estate taxes and property management fees during 1996 as
compared to 1995. These decreases were partially, or, in certain cases, fully
offset by the events described below.
Eight of the Partnership's nine remaining properties at June 30, 1996
experienced higher rental rates in 1996 which resulted in increased rental and
service income and property management fees and partially offset the decreases
from the six property sales.
<PAGE>
Primarily due to lower average cash balances and lower average interest rates
on short-term interest bearing instruments, interest income on short-term
investments decreased during the six months ended June 30, 1996 as compared to
the same period in 1995. Proceeds received during late May and June of 1996 in
connection with the sales of the Antlers, Canyon Sands and Ridgetree - Phase I
apartment complexes were invested in short-term investments prior to their
distribution in July 1996 and resulted in increased interest income during the
quarter ended June 30, 1996 as compared to the same period in 1995.
Due to decreases in the short-term loan balance during 1995 and its repayment
in March 1996, interest expense on short-term loans from an affiliate decreased
during 1996 as compared to 1995.
Costs were incurred for wood replacement and painting at the Sunnyoak Village
Apartments during the second quarter of 1996 in an effort to prepare the
property for sale. These costs resulted in increased property operating expense
and partially offset the decreases from the six property sales.
Due to lower accounting fees and legal fees, administrative expenses decreased
during the six months ended June 30, 1996 as compared to the same period in
1995. The Partnership incurred higher consulting, printing and postage costs in
connection with its response to a tender offer during 1996. This partially
offset the decrease for the six months and resulted in an increase in
administrative expenses during the quarter ended June 30, 1996 as compared to
the same period in 1995.
The Pinebrook apartment complex was owned by a joint venture consisting of the
Partnership and an affiliate. As a result of the property's sale in 1995,
affiliate's participation in income from joint venture ceased.
As a result of the sales of the Antlers, Canyon Sands, Chimney Ridge and
Ridgetree - Phase I apartment complexes, the remaining unamortized deferred
financing fees in the amount of $426,294 were recognized as an extraordinary
item and classified as debt extinguishment expense during 1996. During 1995,
the Partnership recognized an extraordinary gain on forgiveness of debt of
$90,359 in connection with the settlement reached with the seller of certain of
the Partnership's properties.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $12,548,000 as
of June 30, 1996 when compared to December 31, 1995 primarily due to proceeds
received from the property sales. The Partnership received cash totaling
approximately $2,189,000 from its operating activities which consisted
primarily of cash flow generated from property operations which was partially
offset by the payment of administrative expenses. The Partnership also received
cash of approximately $27,144,000 from its investing activities relating to the
sales of the Antlers, Canyon Sands, Chimney Ridge and Ridgetree - Phase I
apartment complexes. The Partnership used cash to fund its financing activities
which consisted primarily of the repayment of the $6,623,202 loan from the
General Partner, the repayment of the Ridgetree - Phase I Apartments mortgage
notes payable of approximately $9,484,000 in connection with the sale of the
property, and principal payments on mortgage notes payable of approximately
$683,000. The Partnership also made a special distribution to Limited Partners
from Net Cash Proceeds in July 1996 as described below.
<PAGE>
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. 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, which include debt service
payments. During the six months ended June 30, 1996, eight of the nine
properties owned by the Partnership at June 30, 1996 generated positive cash
flow and one generated a marginal cash flow deficit. During the same period in
1995, all nine properties generated positive cash flow. The Courtyards of
Kendall Apartments, which had generated positive cash flow during 1995,
generated a marginal cash flow deficit during 1996 as a result of slightly
higher property operating expenses. As of June 30, 1996, the occupancy rates of
the Partnership's properties ranged from 91% to 98%.
The Chimney Ridge, Antlers and Canyon Sands apartment complexes, which were
sold in February, May and June 1996, respectively, all generated positive cash
flow during 1995 and prior to their sale in 1996. The Ridgetree - Phase I
apartment complex, which was sold in June 1996, generated a marginal deficit
during 1995 and prior to its sale in 1996. The Pinebrook apartment complex,
which was sold in February 1995, generated a marginal deficit prior to its sale
in 1995 and the Drayton Quarter apartment complex, which was sold in July 1995,
generated positive cash flow during the six months ended June 30, 1995.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties, including improving operating
performance and seeking rent increases where market conditions allow.
The General Partner believes that the market for multifamily housing properties
is favorable to sellers of these properties. During 1996, the Partnership sold
the Antlers, Canyon Sands, Chimney Ridge, Ridgetree - Phase I and Sunnyoak
Village apartment complexes. Currently, the Partnership has entered into
contracts to sell the Courtyards of Kendall and Creekwood - Phase I apartment
complexes for sales prices of $11,000,000 and $8,391,300, respectively. The
Partnership is actively marketing the remaining properties in its portfolio. If
current market conditions remain favorable and the General Partner can obtain
appropriate sales prices, the Partnership's liquidation strategy will be
accelerated.
In February 1996, the Partnership sold the Chimney Ridge Apartments in an all
cash sale for $13,650,000. The purchaser of the Chimney Ridge Apartments took
title subject to the existing first mortgage loan in the amount of $7,242,788.
From the proceeds of the sale, the Partnership paid $609,642 in selling costs.
The remainder of the proceeds were used to repay a significant portion of the
remaining General Partner loans. See Note 4 of Notes to Financial Statements
for additional information.
In May 1996, the Partnership sold the Antlers Apartments in an all cash sale
for $15,000,000. The purchaser of the Antlers Apartments took title subject to
the existing first mortgage loan in the amount of $10,108,860. From the
proceeds of the sale, the Partnership paid $86,456 in selling costs. The
remainder of the proceeds were distributed in a special distribution to the
Limited Partners in July 1996. See Note 4 of Notes to Financial Statements for
additional information.
<PAGE>
In June 1996, the Partnership sold the Canyon Sands Apartments in an all cash
sale for $14,650,000. The purchaser of the Canyon Sands Apartments took title
subject to the existing first mortgage loan in the amount of $8,957,106. From
the proceeds of the sale, the Partnership paid $124,875 in selling costs.
Pursuant to the terms of the sale, $500,000 of the proceeds will be retained by
the Partnership until October 1996. The remainder of the proceeds were
distributed in a special distribution to the Limited Partners in July 1996. See
Note 4 of Notes to Financial Statements for additional information.
In June 1996, the Partnership sold the Ridgetree Phase I Apartments in an all
cash sale for $11,100,000. From the proceeds of the sale, the Partnership paid
$9,484,192 to the third party mortgage holder in full satisfaction of the first
and second mortgage loans, and paid $126,000 in selling costs. Pursuant to the
terms of the sale, $500,000 of the proceeds will be retained by the Partnership
until October 1996. The remainder of the proceeds were distributed in a special
distribution to the Limited Partners in July 1996. See Note 4 of Notes to
Financial Statements for additional information.
In July 1996, the Partnership sold the Sunnyoak Village Apartments in an all
cash sale for $22,200,000. From the proceeds of the sale, the Partnership paid
$13,598,689 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $181,500 in selling costs. Pursuant to the terms
of the sale, $500,000 of the proceeds will be retained by the Partnership until
October 1996. The remainder of the proceeds will be distributed in a special
distribution to the Limited Partners in October 1996. See Note 6 of Notes to
Financial Statements for additional information.
Each of the Partnership's properties is owned through the use of third-party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. As a result of the General
Partner's efforts to obtain loan refinancings, as well as the repayment of
certain loans with proceeds from property sales and cash reserves, the
Partnership has no third party financing which matures prior to 1997.
During July 1996, the Partnership commenced distributions and paid a special
distribution of $11,200,000 ($80 per Interest) to Limited Partners from the Net
Cash Proceeds received in connection with the sales of the Antlers, Canyon
Sands and Ridgetree - Phase I apartment complexes. As the remaining properties
are sold, the Partnership will distribute the sale proceeds to Limited
Partners. Additionally, the Partnership will distribute the cash flow from
property operations. The General Partner, however, does not anticipate that
investors will recover a substantial portion of their original investment.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- --------------------------
Courtyards of Kendall Apartments
- --------------------------------
As previously reported, on June 6, 1996 the Partnership contracted to sell the
Courtyards of Kendall Apartments, Dade County, Florida for a sale price of
$11,000,000 to an unaffiliated party and the closing was scheduled to occur
July 15, 1996. On June 17, 1996 the agreement of sale was amended pursuant to
which the closing was postponed until September 25, 1996.
Creekwood I Apartments
- ----------------------
In 1983, the Partnership acquired the Creekwood I Apartments, Tulsa, Oklahoma,
utilizing approximately $3,514,620 in offering proceeds. The property was
acquired subject to first mortgage financing of approximately $6,655,000. In
1994, the mortgage loan was refinanced with a new mortgage loan in the amount
of $5,700,000. The Partnership received excess proceeds of approximately
$327,809.
As previously reported, on May 31, 1996 the Partnership contracted to sell the
Creekwood I Apartments, Tulsa, Oklahoma to an unaffiliated party, Mid-America
Apartments, L.P., a Tennessee limited partnership for a sale price of
$8,466,000. On June 18, 1996 the Purchaser exercised its option to terminate
the agreement of sale and a closing of the sale will not occur. Pursuant to the
agreement of sale, the $84,660 in earnest money previously deposited and
interest accrued thereon will be returned to the Purchaser.
Subsequently, on July 18, 1996, the Partnership contracted to sell the property
for a sale price of $8,391,300 to an unaffiliated party, Sentinel Acquisitions
Corp. (the "Purchaser"), a Delaware corporation. The Purchaser has deposited
$100,000 into an escrow account as earnest money and will pay the remaining
$8,291,300 at closing, which is scheduled for August 30, 1996. The Purchaser
will pay all closing costs relating to the sale, except that the Partnership
will pay one-half of specified title costs. From the proceeds of the sale, the
Partnership will repay the first mortgage loan which is expected to have an
outstanding balance of $5,604,985 at closing, and $104,891 to an unaffiliated
party as a brokerage commission. An affiliate of the third party providing
property management services for the property will receive a fee of $83,913 for
services in connection with the sale. Neither the General Partner nor any
affiliate will receive a brokerage commission in connection with the sale of
the property. The General Partner will be reimbursed by the Partnership for
actual expenses incurred in connection with the sale.
An affiliate of the General Partner has simultaneously contracted to sell an
adjacent property, Creekwood II Apartments, Tulsa, Oklahoma, to the Purchaser.
If the Purchaser terminates this or the agreement of sale for the adjacent
property, the other agreement of sale will also be deemed terminated.
<PAGE>
The closing is subject to the satisfaction of numerous terms and conditions,
including the closing of the sale of the adjacent property. There can be no
assurance that all of the terms and conditions will be complied with and,
therefore, it is possible the sale of the property may not occur.
Quail Lakes Apartments
- ----------------------
As previously reported, on May 31, 1996, 1996 the Partnership contracted to
sell the Quail Lakes Apartments, Oklahoma City, Oklahoma for a sale price of
$10,500,000. On June 18, 1996 the Purchaser exercised its option to terminate
the agreement of sale and a closing of the sale will not occur. Pursuant to the
agreement of sale, the $105,000 in earnest money previously deposited and
interest accrued thereon will be returned to the Purchaser.
Sunnyoak Village Apartments
- ---------------------------
As previously reported, on April 23, 1996, the Partnership contracted to sell
Sunnyoak Village Apartments, Overland Park, Kansas, to an unaffiliated party,
ERP Operating Limited Partnership, for a sale price of $22,200,000. The sale
closed on July 2, 1996. From the proceeds of the sale, the Partnership paid the
outstanding balance of the first mortgage loan in the amount of $13,598,689,
legal fees of approximately $15,000 and a $166,500 fee to an affiliate of the
third party providing property management services for the property for
services rendered in connection with the sale. Pursuant to the agreement of
sale, the Purchaser paid all closing costs relating to the sale. The
Partnership received approximately $8,420,000 representing the remaining
proceeds. Of such proceeds, $500,000 will be retained by the Partnership and
not be available until 120 days after closing. Neither the General Partner nor
any affiliate will receive a brokerage commission in connection with the sale
of the property. The General Partner will be reimbursed by the Partnership for
its actual expenses incurred in connection with the sale.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- ---------------------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement, previously filed as Exhibit 4.1 to
Amendment No. 1 to the Registrant's Registration Statement on Form S-11 dated
December 16, 1983 (Registration No. 2-86317) 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. 0-13349)
are incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachments thereto relating to the sale of
the Canyon Sands Village Apartments, Phoenix, Arizona previously filed as
Exhibit (2)(b) to the Partnership's Current Report on Form 8-K dated April 23,
1996 is incorporated herein by reference.
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
the Canyon Sands Apartments, Phoenix, Arizona and Ridgetree Apartments, Phase
I, Dallas, Texas previously filed as Exhibit (2)(a)(i) to the Partnership's
Current Report on Form 8-K dated May 31, 1996 is incorporated herein by
reference.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of the Canyon Sands Apartments, Phoenix, Arizona and Ridgetree Apartments,
Phase I, Dallas, Texas previously filed as Exhibit (2)(a)(ii) to the
Partnership's Current Report on Form 8-K dated May 31, 1996 is incorporated
herein by reference.
(b)(i) Agreement of Sale and attachments thereto relating to the sale of
Ridgetree Apartments, Phase I, Dallas, Texas previously filed as Exhibit (2)(c)
to the Partnership's Current Report on Form 8-K dated April 23, 1996 is
incorporated herein by reference.
(c) Agreement of Sale and attachments thereto relating to the sale of the
Sunnyoak Village Apartments, Overland Park, Kansas previously filed as Exhibit
(2)(d) to the Partnership's Current Report on Form 8-K dated April 23, 1996 is
incorporated herein by reference.
(d)(i) Agreement of Sale and attachments thereto relating to the sale of
Creekwood Apartments, Phase I, Tulsa, Oklahoma to Mid-America Apartments, L.P.,
previously filed as Exhibit (2)(c) to the Partnership's Current Report on Form
8-K dated May 31, 1996 is incorporated herein by reference.
(ii) Letter of termination relating to the sale of Creekwood Apartments, Phase
I, Tulsa, Oklahoma to Mid-America Apartments, L.P., is attached hereto.
(e)(i) Agreement of Sale and attachments thereto relating to the sale of Quail
Lakes Apartments, Oklahoma City, Oklahoma previously filed as Exhibit (2)(d) to
the Partnership's Current Report on Form 8-K dated May 31, 1996 is incorporated
herein by reference.
(ii) Letter of termination relating to the sale of Quail Lakes Apartments,
Oklahoma City, Oklahoma is attached hereto.
<PAGE>
(f)(i) Agreement of Sale relating to the sale of Antlers Apartments,
Jacksonville, Florida previously filed as Exhibit (2) to the Partnership's
Current Report on Form 8-K dated April 2, 1996 is incorporated by reference.
(ii) Letter Agreements dated March 29, 1996, May 2, 1996 and May 3, 1996,
respectively, amending the Agreement of Sale relating to Antlers Apartments,
Jacksonville, Florida are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the quarter ending June 30,
1996, is attached hereto.
(99)(a)(i) First Amendment to Agreement of Sale and Escrow Agreement relating
to the sale of the Courtyards of Kendall Apartments, Miami, Florida is attached
hereto.
(ii) Second Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the Courtyards of Kendall Apartments, Miami, Florida is attached
hereto.
(iii) Third Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the Courtyards of Kendall Apartments, Miami, Florida is attached
hereto.
(iv) Fourth Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the Courtyards of Kendall Apartments, Miami, Florida is attached
hereto.
(b) Agreement of Sale and attachments thereto relating to the sale of Creekwood
Apartments, Phase I, Tulsa, Oklahoma to Sentinel Acquisitions Corp. is attached
hereto.
(b) Reports on Form 8-K
(i) A Current Report on Form 8-K dated April 2, 1996 was filed reporting the
contract to sell the Antlers Apartments in Jacksonville, Florida.
(ii) A Current Report on Form 8-K dated April 23, 1996 was filed reporting each
of the contracts to sell the Briarwood Place, Canyon Sands Village, Ridgetree -
Phase I and Sunnyoak Village apartment complexes in Chandler, Arizona, Phoenix,
Arizona, Dallas, Texas and Overland Park, Kansas, respectively.
(iii) A Current Report on Form 8-K dated May 31, 1996 was filed reporting each
of the closings of the sales of Antlers, Canyon Sands and Ridgetree - Phase I
apartment complexes in Jacksonville, Florida, Phoenix, Arizona and Dallas,
Texas, respectively; the termination of the contract to sell Briarwood Place
Apartments in Chandler, Arizona; and each of the contracts to sell Creekwood -
Phase I, Quail Lakes and Courtyards of Kendall apartment complexes in Tulsa,
Oklahoma, Oklahoma City, Oklahoma and Dade County, Florida, respectively.
<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 REALTY INVESTORS-84
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-XV, the General Partner
By: /s/Brian D. Parker
-----------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XV, the General
Partner
Date: August 20, 1996
----------------------------
<PAGE>
LAW OFFICES
APPERSON, CRUMP, DUZANE & MAXWELL, PLC
1755 KIRBY PARKWAY, SUITE 100
MEMPHIS, TENNESSEE 38120-4376
901/756-6300
June 18, 1996
VIA FACSIMILE (847) 317-4482
AND CERTIFIED MAIL
Ilona Adams
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, IL 60015
Re: The Balcor Company and Related Entities Agreements of Sale to Mid-
America Apartments, L.P.
Dear Ms. Adams:
This will advise you that pursuant to paragraph 7(c) of the Agreements of Sale
dated as of May 31, 1996 relating to the properties listed on the attached
schedule ("Contracts"), Mid-America Apartments, L.P. hereby exercises its right
to terminate the Contracts effective immediately. On behalf of my client, I
have requested from Lawyers Title Insurance Corporation a return of the Earnest
Money deposited therewith and any interest earned thereon.
If anything remains to be done or if you have any questions, please do not
hesitate to give me a call.
Yours sincerely,
/s/ John B. Maxwell
John B. Maxwell, Jr.
JBM/sh
Enclosure
cc: Don Aldridge (via facsimile and hand delivery)
Alan Lieberman (via facsimile and certified U.S. Mail)
Daniel J. Perlman (via facsimile and certified U.S. Mail)
Kathleen S. Campbell (via facsimile and certified U.S. Mail)
<PAGE>
BALCOR PROPERTIES
1. Sun Ridge Apartments, Oklahoma City, Oklahoma
2. Heather Ridge Apartments, Oklahoma City, Oklahoma
3. Creekwood I Apartments, Tulsa, Oklahoma
4. Creekwood II Apartments, Tulsa, Oklahoma
5. Steeplechase Apartments, Lexington, Kentucky
6. Quail Lakes Apartments, Oklahoma City, Oklahoma
7. Marbrisa Apartments, Tampa, Florida
8. Shoal Run Apartments, Birmingham, Alabama
<PAGE>
LAW OFFICES
APPERSON, CRUMP, DUZANE & MAXWELL, PLC
1755 KIRBY PARKWAY, SUITE 100
MEMPHIS, TENNESSEE 38120-4376
901/756-6300
June 18, 1996
VIA FACSIMILE (847) 317-4482
AND CERTIFIED MAIL
Ilona Adams
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, IL 60015
Re: The Balcor Company and Related Entities Agreements of Sale to Mid-
America Apartments, L.P.
Dear Ms. Adams:
This will advise you that pursuant to paragraph 7(c) of the Agreements of Sale
dated as of May 31, 1996 relating to the properties listed on the attached
schedule ("Contracts"), Mid-America Apartments, L.P. hereby exercises its right
to terminate the Contracts effective immediately. On behalf of my client, I
have requested from Lawyers Title Insurance Corporation a return of the Earnest
Money deposited therewith and any interest earned thereon.
If anything remains to be done or if you have any questions, please do not
hesitate to give me a call.
Yours sincerely,
/s/John B. Maxwell
John B. Maxwell, Jr.
JBM/sh
Enclosure
cc: Don Aldridge (via facsimile and hand delivery)
Alan Lieberman (via facsimile and certified U.S. Mail)
Daniel J. Perlman (via facsimile and certified U.S. Mail)
Kathleen S. Campbell (via facsimile and certified U.S. Mail)
<PAGE>
BALCOR PROPERTIES
1. Sun Ridge Apartments, Oklahoma City, Oklahoma
2. Heather Ridge Apartments, Oklahoma City, Oklahoma
3. Creekwood I Apartments, Tulsa, Oklahoma
4. Creekwood II Apartments, Tulsa, Oklahoma
5. Steeplechase Apartments, Lexington, Kentucky
6. Quail Lakes Apartments, Oklahoma City, Oklahoma
7. Marbrisa Apartments, Tampa, Florida
8. Shoal Run Apartments, Birmingham, Alabama
<PAGE>
FIRST AMENDMENT TO AGREEMENT
OF SALE AND ESCROW AGREEMENT
This First Amendment ("First Amendment") to Agreement of Sale and Escrow
Agreement is entered into as of June 17, 1996, by and between BH COURTYARDS OF
KENDALL L.P., an Iowa Limited Partnership, as Purchaser, COURTYARDS OF KENDALL
LIMITED PARTNERSHIP, an Illinois Limited Partnership, as Seller, and CHARTER
TITLE COMPANY, as Escrow Agent.
RECITALS
A. Purchaser and Seller hereto have entered into an Agreement of Sale
("Agreement") dated June 5, 1996 for the purchase and sale of the apartment
project known as Courtyards of Kendall Apartments and also a related Escrow
Agreement ("Escrow Agreement") with Escrow Agent.
B. Purchaser, Seller and Escrow Agent now wish to amend the Agreement
and Escrow Agreement.
NOW, THEREFORE, the Agreement and Escrow Agreement are amended as follows:
1. The Approval Period as shown in Paragraph 16 of the Agreement is
hereby extended to the close of business (5:00 P.M. Central Daylight Time) on
July 8, 1996.
2. The Closing Date as shown in Paragraph 8 of the Agreement is hereby
changed from July 15, 1996 to August 15, 1996.
3. The Disapproval Date shown in Paragraph 1 of the Escrow Agreement is
hereby changed to July 8, 1996.
4. The date of July 15, 1996 contained in Paragraph 2 of the Escrow
Agreement is hereby changed to August 15, 1996.
5. Except as modified herein, all other terms and conditions of the
Agreement and Escrow Agreement remain in full force and effect.
6. All capitalized terms used herein shall have the same meaning as in
the Agreement and Escrow Agreement.
7. This First Amendment may be executed in multiple facsimile
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER:
BH COURTYARDS OF KENDALL L.P., an
Iowa Limited Partnership
By: BH EQUITIES, INC., an Iowa
corporation, the general partner
By: /s/ Harry Bookey
--------------------------------
Harry Bookey, President
SELLER:
COURTYARDS OF KENDALL LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Partners-XV, an Illinois general
partnership, its general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Phillip Schechter
-------------------------------
Phillip Schechter
Authorized Agent
ESCROW AGENT:
CHARTER TITLE COMPANY
By:
-------------------------------
<PAGE>
SECOND AMENDMENT TO AGREEMENT
OF SALE AND ESCROW AGREEMENT
This Second Amendment ("Second Amendment") to Agreement of Sale and Escrow
Agreement is entered into as of July 2, 1996, by and between BH COURTYARDS OF
KENDALL L.P., an Iowa Limited Partnership, as Purchaser, COURTYARDS OF KENDALL
LIMITED PARTNERSHIP, an Illinois Limited Partnership, as Seller, and CHARTER
TITLE COMPANY, as Escrow Agent.
RECITALS
A. Purchaser and Seller hereto have entered into an Agreement of Sale
("Agreement") dated June 5, 1996 for the purchase and sale of the apartment
project known as Courtyards of Kendall Apartments and also a related Escrow
Agreement ("Escrow Agreement") with Escrow Agent. The Agreement and Escrow
Agreement were amended on June 17, 1996.
B. Purchaser, Seller and Escrow Agent now wish to further amend the
Agreement and Escrow Agreement.
NOW, THEREFORE, the Agreement and Escrow Agreement are amended as follows:
1. The Approval Period as shown in Paragraph 16 of the Agreement is
hereby extended to the close of business (5:00 P.M. Central Daylight Time) on
July 23, 1996.
2. The Disapproval Date shown in Paragraph 1 of the Escrow Agreement is
hereby changed to July 23, 1996.
3. Except as modified herein, all other terms and conditions of the
Agreement and Escrow Agreement as modified by the First Amendment remain in
full force and effect.
4. All capitalized terms used herein shall have the same meaning as in
the Agreement and Escrow Agreement.
5. This Second Amendment may be executed in multiple facsimile
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER:
BH COURTYARDS OF KENDALL L.P., an
Iowa Limited Partnership
By: BH EQUITIES, INC., an Iowa
corporation, the general partner
By: /s/Harry Bookey
---------------------------------
Harry Bookey, President
SELLER:
COURTYARDS OF KENDALL LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Partners-XV, an Illinois general
partnership, its general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Phillip Schechter
---------------------------------
Phillip Schechter
Authorized Agent
ESCROW AGENT:
CHARTER TITLE COMPANY
By:
------------------------------
<PAGE>
THIRD AMENDMENT TO AGREEMENT
OF SALE AND ESCROW AGREEMENT
This Third Amendment ("Third Amendment") to Agreement of Sale and Escrow
Agreement is entered into as of August 1, 1996, by and between BH COURTYARDS OF
KENDALL L.P., an Iowa Limited Partnership, as Purchaser, COURTYARDS OF KENDALL
LIMITED PARTNERSHIP, an Illinois Limited Partnership, as Seller, and CHARTER
TITLE COMPANY, as Escrow Agent.
RECITALS
A. Purchaser and Seller hereto have entered into an Agreement of Sale
("Agreement") dated June 5, 1996 for the purchase and sale of the apartment
project known as Courtyards of Kendall Apartments and also a related Escrow
Agreement ("Escrow Agreement") with Escrow Agent. The Agreement and Escrow
Agreement were amended on June 17, 1996 and further amended on July 2, 1996.
B. Purchaser, Seller and Escrow Agent now wish to further amend the
Agreement and Escrow Agreement.
NOW, THEREFORE, the Agreement and Escrow Agreement are amended as follows:
1. The Approval Period as shown in Paragraph 16 of the Agreement is
hereby extended to the close of business (5:00 P.M. Central Daylight Time) on
August 14, 1996.
2. The Disapproval Date shown in Paragraph 1 of the Escrow Agreement is
hereby changed to August 14, 1996.
3. The Closing Date shall be September 25, 1996.
4. Except as modified herein, all other terms and conditions of the
Agreement and Escrow Agreement as modified by the First Amendment and Second
Amendment remain in full force and effect.
5. All capitalized terms used herein shall have the same meaning as in
the Agreement and Escrow Agreement.
6. This Third Amendment may be executed in multiple facsimile
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER:
BH COURTYARDS OF KENDALL L.P., an
Iowa Limited Partnership
By: BH EQUITIES, INC., an Iowa
corporation, the general partner
By: /s/ Harry Bookey
--------------------------------
Harry Bookey, President
SELLER:
COURTYARDS OF KENDALL LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Partners-XV, an Illinois general
partnership, its general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Phillip A. Schechter
----------------------------------
Phillip A. Schechter
Authorzied Agent
ESCROW AGENT:
CHARTER TITLE COMPANY
By:
---------------------------------
<PAGE>
FOURTH AMENDMENT TO AGREEMENT
OF SALE AND ESCROW AGREEMENT
This Fourth Amendment ("Fourth Amendment") to Agreement of Sale and Escrow
Agreement is entered into as of August 12, 1996, by and between BH COURTYARDS
OF KENDALL L.P., an Iowa Limited Partnership, as Purchaser, COURTYARDS OF
KENDALL LIMITED PARTNERSHIP, an Illinois Limited Partnership, as Seller, and
CHARTER TITLE COMPANY, as Escrow Agent.
RECITALS
A. Purchaser and Seller hereto have entered into an Agreement of Sale
("Agreement") dated June 5, 1996 for the purchase and sale of the apartment
project known as Courtyards of Kendall Apartments and also a related Escrow
Agreement ("Escrow Agreement") with Escrow Agent. The Agreement and Escrow
Agreement were amended on June 17, 1996, July 2, 1996 and August 1, 1996.
B. Purchaser, Seller and Escrow Agent now wish to further amend the
Agreement and Escrow Agreement.
NOW, THEREFORE, the Agreement and Escrow Agreement are amended as follows:
1. The Approval Period as shown in Paragraph 16 of the Agreement is
hereby extended to the close of business (5:00 P.M. Central Daylight Time) on
August 16, 1996.
2. The Disapproval Date shown in Paragraph 1 of the Escrow Agreement is
hereby changed to August 16, 1996.
3. Except as modified herein, all other terms and conditions of the
Agreement and Escrow Agreement as modified by the First Amendment, Second
Amendment and Third Amendment remain in full force and effect.
4. All capitalized terms used herein shall have the same meaning as in
the Agreement and Escrow Agreement.
5. This Fourth Amendment may be executed in multiple facsimile
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER:
BH COURTYARDS OF KENDALL L.P., an
Iowa Limited Partnership
By: BH EQUITIES, INC., an Iowa
corporation, the general partner
By: /s/Harry Bookey
-------------------------------
Harry Bookey, President
SELLER:
COURTYARDS OF KENDALL LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Partners-XV, an Illinois general
partnership, its general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Phillip Schechter
---------------------------------
Phillip Schechter
Authorized Agent
ESCROW AGENT:
CHARTER TITLE COMPANY
By:
--------------------------------
<PAGE>
Creekwood I Apartments
Tulsa, Oklahoma
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 12th day of July, 1996, by and
between SENTINEL ACQUISITIONS CORP., a Delaware Corporation ("Purchaser") and
CREEKWOOD I LIMITED PARTNERSHIP, an Illinois limited partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Eight Million Three Hundred Ninety One Thousand Three
Hundred and No/100 Dollars ($8,391,300.00) ("Purchase Price"), that certain
property ("Property") in Tulsa, Oklahoma, more particularly described on
Exhibit A attached hereto, which Property is known as Creekwood I Apartments.
Included in the Purchase Price is all of the following: (a) the personal
property set forth on Exhibit B, which shall be transferred to Purchaser at
Closing (as hereinafter defined) by a Bill of Sale, including, without
limitation, the fixtures and equipment (however, excluding computer hardware
and software) (collectively, "Personal Property"); and (b) the buildings,
structures and other facilities, including 276 apartment units on approximately
13.67 acres, consisting of 192 one-bedroom apartments and 84 two-bedroom
apartments, and other facilities and parking, as more completely described on
the Survey (as hereinafter defined), collectively referred to as the
"Improvements".
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $100,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term is
defined in the Escrow Agreement), by and in accordance with the provisions of
the Escrow Agreement ("Escrow Agreement") attached hereto as Exhibit C; and
b. On the Closing Date (as hereinafter defined), the balance of the
Purchase Price adjusted in accordance with the prorations by federally wired
"immediately available" funds delivered to the Title Insurer (as hereinafter
defined) no later than 2:00 P.M. Eastern Time on the Closing Date.
3. INTENTIONALLY DELETED.
4. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit D is a title commitment dated May 31, 1996
("Title Commitment") for an owner's standard coverage ALTA 1987 title insurance
policy ("Title Policy") issued by Lawyers Title Insurance Company ("Title
Insurer"). The owner's Title Policy issued at Closing will be in the amount of
the Purchase Price subject only to real estate taxes and assessments not yet
due and payable, the general printed exceptions contained in the policy matters
caused by Purchaser, matters shown on the Survey, and the special title
exceptions set forth in Schedule B-Section 2, Numbers 1 through 13 inclusive
and 15 through 17 inclusive of the Title Commitment. All of the above are
<PAGE>
herein referred to as the "Permitted Exceptions". On the Closing Date, Seller
shall cause the Title Insurer to issue the Title Policy or a "marked up"
commitment in conformity with the Title Commitment. Seller and Purchaser shall
each pay for one-half of the cost of the Title Policy; however, Purchaser shall
pay the costs of "extended coverage" or any special endorsements which
Purchaser requires. The obligation of Purchaser to pay various costs set forth
in Paragraph 4 and 6 herein shall survive the termination of this Agreement.
b. Purchaser acknowledges receipt of a survey ("Survey") of the Property
prepared by Tulsa Engineering & Planning Assoc., Inc. dated June 6, 1996, and
Purchaser approves all of the matters set forth on the Survey. Prior to the
Closing, Seller will have the Survey certified to the Purchaser and the Title
Insurer. However, if Purchaser requires any additional survey work, Purchaser
shall pay for the cost of such additional work.
5. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed ("Deed") in recordable form
subject only to the Permitted Exceptions. If Seller is unable to convey title
to the Property subject only to the Permitted Exceptions because of the
existence of an additional title exception ("Unpermitted Exception"), then
Purchaser can elect to take title to the Property subject to the Unpermitted
Exception or terminate this Agreement. If Purchaser elects to terminate this
Agreement, then the Earnest Money plus all accrued interest shall be delivered
to the Purchaser.
6. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall each pay for
one-half of the costs of the documentary stamps (if any) to be paid with
reference to the Deed and all other stamps, intangible, documentary, recording,
sales tax and surtax imposed by law with reference to any other documents
delivered in connection with this Agreement. Purchaser and Seller shall each
pay for one-half of any personal property taxes imposed in connection with the
conveyance of the Personal Property from Seller to Purchaser.
7. DAMAGE, CASUALTY AND CONDEMNATION.
a. If prior to the Closing, there shall occur any proposed taking
("Taking") of the Property (or any part thereof) by eminent domain, which
taking would have a value reasonably estimated by Seller to be in excess of
$100,000.00 or which Taking would close any material right of access to the
Property or eliminate any parking spaces which would cause the Property to be
out of conformity with zoning laws, then Purchaser shall have the right and
option to terminate this Agreement by giving Seller written notice to such
effect within ten (10) days after actual receipt of written notification of any
such occurrence or occurrences. If Purchaser does not exercise its right of
termination, then this Agreement shall remain in full force and effect, the
Purchase Price for the Property shall not be abated and Seller shall assign all
right, title, interest in and to the condemnation award (and deliver any
portion of that award received by Seller prior to Closing) to Purchaser at
Closing.
b. If prior to Closing there shall occur any damage or destruction to
the Improvements by fire or other casualty that shall not have been restored to
its pre-existing condition and the cost to restore the Improvements (as
<PAGE>
determined pursuant to Paragraph 7d below) shall exceed 2% of the Purchase
Price, Purchaser shall have the right to terminate this Agreement within 15
days after receipt of the determination of the cost to restore. If Purchaser
does not exercise its right to terminate this Agreement, then the Agreement
shall remain in full force and effect.
c. If prior to Closing there shall occur any damage or destruction to
the Improvements by fire or other casualty and the cost to restore the
Improvements (as determined pursuant to Paragraph 7d below) shall be less than
two percent (2%) of the Purchase Price, then this Agreement shall remain in
full force and effect, the Purchase Price shall be abated by the cost to
restore and Seller shall be entitled to all of the insurance proceeds arising
from that casualty, except rental insurance proceeds as provided in 7e below.
d. The cost to restore the Improvements to a condition having the
design, specifications and equipment of the Improvements at the time of the
casualty shall be determined by obtaining a fixed price bid for that work by a
contractor having at least five years' experience in the construction of
multifamily housing, selected by Seller and approved by Purchaser (such
approval not to be unreasonably withheld or delayed).
e. If Purchaser shall elect or be obligated to purchase the Property,
the rental insurance proceeds payable under Seller's insurance policies shall
be prorated as of the Closing Date as and when such proceeds are received.
f. The Closing shall be adjourned for a reasonable time (however, not to
exceed thirty days) as may be required to obtain the information and make the
decisions described above.
g. This Paragraph 7 is an express provision with respect to destruction
and eminent domain and is intended to supersede any applicable statute
regarding risk of loss.
8. AS-IS CONDITION.
a. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspection and investigations of the Property
and that Purchaser will be purchasing the Property "AS IS" and "WITH ALL
FAULTS" based upon the condition of the Property as of the date of this
Agreement, subject to reasonable wear and tear and loss by fire or other
casualty or condemnation from the date of this Agreement until the Closing
Date. Without limiting the foregoing, Purchaser acknowledges that, except as
may otherwise be specifically set forth elsewhere in this Agreement, neither
Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements, the existence or nonexistence of
asbestos, lead in water, lead in paint, radon, underground or above ground
storage tanks, petroleum, toxic waste or any Hazardous Materials or Hazardous
Substances (as such terms are defined below), the tenants of the Property or
the leases affecting the Property, economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
<PAGE>
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning, environmental or building laws, rules or regulations
affecting the Property. Seller makes no representation that the Property
complies with Title III of the Americans With Disabilities Act or any fire
codes or building codes. Purchaser hereby releases Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and Purchaser hereby agrees not to assert any claims, for damage, loss,
compensation, contribution, cost recovery or otherwise, against Seller, whether
in tort, contract, or otherwise, relating directly or indirectly to the
existence of asbestos or Hazardous Materials or Hazardous Substances on, or
environmental conditions of, the Property, or arising under the Environmental
Laws (as such term is hereinafter defined), or relating in any way to the
quality of the indoor or outdoor environment at the Property. As used herein,
"Environmental Laws" means all federal, state and local statutes, codes,
regulations, rules, ordinances, orders, standards, permits, licenses, policies
and requirements (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preservation, remediation or
conservation of the environment or worker health or safety, all as amended or
reauthorized, or as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.,
the Emergency Planning and Community Right-to-Know Act ("Right-to-Know Act"),
42 U.S.C. Section 11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C. Section
7401 et seq., the Federal Water Pollution Control Act ("Clean Water Act"), 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq., the Safe Drinking Water Act ("Safe Drinking Water
Act"), 42 U.S.C. Section 300f et seq., the Atomic Energy Act ("AEA"), 42 U.S.C.
Section 2011 et seq., the Occupational Safety and Health Act ("OSHA"),
29 U.S.C. Section 651 et seq., and the Hazardous Materials Transportation Act
(the "Transportation Act"), 49 U.S.C. Section 1802 et seq. As used herein,
"Hazardous Materials" means: (1) "hazardous substances," as defined by CERCLA;
(2) "hazardous wastes," as defined by RCRA; (3) any radioactive material
including, without limitation, any source, special nuclear or by-product
material, as defined by AEA; (4) asbestos in any form or condition; (5)
polychlorinated biphenyls; and (6) any other material, substance or waste to
which liability or standards of conduct may be imposed under any Environmental
Laws. Notwithstanding anything contained herein to the contrary, the terms of
this Paragraph 8a. shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as may otherwise be
specifically set forth elsewhere in this Agreement, Seller makes no
representation or warranty that such material is complete or accurate or that
Purchaser will achieve similar financial or other results with respect to the
operations of the Property, it being acknowledged by Purchaser that Seller's
operation of the Property and allocations of revenues or expenses may be vastly
different than Purchaser may be able to attain. Purchaser acknowledges that it
is a sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller from any liability with respect
to such historical information.
<PAGE>
9. CLOSING. The closing ("Closing") of this transaction shall be on
August 30, 1996 ("Closing Date"), at the office of Title Insurer, Tulsa,
Oklahoma, at which time Seller shall deliver possession of the Property to
Purchaser. This transaction shall be closed through an escrow with Title
Insurer, in accordance with the general provisions of the usual and customary
form of deed and money escrow for similar transactions in Oklahoma, or at the
option of either party, the Closing shall be a "New York style" closing at
which the Purchaser shall wire the Purchase Price to Title Insurer on the
Closing Date and prior to the release of the Purchase Price to Seller,
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing. All closing and escrow fees shall be divided equally between
the parties hereto.
10. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser and Seller shall deliver to one
another a joint closing statement. In addition, Purchaser shall deliver to
Seller the balance of the Purchase Price, the assumption of the Assignment of
Intangible Property, the assumption of the Assignment of Leases and Security
Deposits (as said are hereinafter defined) and such other documents as may be
reasonably required in order to consummate the transaction as set forth in this
Agreement.
b. On the Closing Date, Seller shall deliver or cause to be delivered to
Purchaser possession of the Property; the Deed (in the form of Exhibit E
attached hereto) subject to the Permitted Exceptions and those Unpermitted
Exceptions waived by Purchaser; an inventory of the Personal Property and a
Bill of Sale for the same (in the form of Exhibit F attached hereto); an
executed assignment and assumption of all service contracts and intangibles (in
the form of Exhibit G attached hereto) ("Assignment of Intangible Property");
an executed assignment and assumption of all leases and security deposits (in
the form of Exhibit H attached hereto) ("Assignment of Leases and Security
Deposits"); updated rent roll; a notice to the tenants of the transfer of title
and the assumption by Purchaser of the landlord's obligations under the leases
and the obligation to refund the security deposits (in the form of Exhibit I
attached hereto); a non-foreign affidavit (in the form of Exhibit J attached
hereto); original tenant lease files located at the Property; original service
contracts (or copies if originals are not available); permits and licenses (if
any); certificates of occupancy (if any is in Seller's possession); warranties
and guarantees (if any is in Seller's possession); and such other documents as
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
11. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT OF ANY DEFAULT OF THE
PURCHASER UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF
THE EARNEST MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR
ANY OTHER REMEDY. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
<PAGE>
PURCHASER AND SELLER AGREE THAT A DEFAULT BY PURCHASER UNDER ANY OF THE
TERMS OR CONDITIONS OF THE COMPANION CONTRACT (AS HEREINAFTER DEFINED) SHALL BE
DEEMED A DEFAULT OF PURCHASER UNDER THIS AGREEMENT. IN ADDITION, PURCHASER AND
SELLER AGREE THAT A DEFAULT BY PURCHASER UNDER THIS AGREEMENT SHALL BE DEEMED A
DEFAULT OF PURCHASER UNDER THE COMPANION CONTRACT. IF THE TRANSACTION
CONTEMPLATED BY THE COMPANION CONTRACT FAILS TO CLOSE FOR ANY REASON
WHATSOEVER, PURCHASER SHALL NOT BE ENTITLED TO ANY RIGHTS OF SETOFF UNDER THIS
AGREEMENT IN CONNECTION WITH ANY LIABILITY ARISING UNDER THE COMPANION
CONTRACT.
12. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RIGHT TO SEEK RECOVERY OF ACTUAL
DAMAGES IN AN AMOUNT NOT TO EXCEED $125,000.00 AND THE RETURN OF ALL EARNEST
MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL
TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER AT LAW
OR IN EQUITY. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL BE
ENTITLED TO SUE FOR SPECIFIC PERFORMANCE, PROVIDED THAT AT THE TIME OF THE
FILING OF THE COMPLAINT, PURCHASER SHALL DEPOSIT WITH THE ESCROW AGENT THE
AMOUNT OF THE PURCHASE PRICE INCLUSIVE OF THE EARNEST MONEY. PURCHASER AND
SELLER AGREE THAT A DEFAULT BY CREEKWOOD ASSOCIATES UNDER ANY OF THE TERMS OR
CONDITIONS OF THE COMPANION CONTRACT SHALL BE DEEMED A DEFAULT OF SELLER UNDER
THIS AGREEMENT. IN ADDITION, SELLER AND PURCHASER AGREE THAT A DEFAULT BY
SELLER UNDER THIS AGREEMENT SHALL BE DEEMED A DEFAULT OF CREEKWOOD ASSOCIATES
UNDER THE COMPANION CONTRACT.
13. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); refundable security deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing); pro rata share of
advance payment received by Seller on cable TV or laundry leases (if any);
water and other utility charges; fuels; prepaid operating expenses; real and
personal property taxes; and other similar items shall be adjusted ratably as
of 11:59 P.M. on the day prior to the Closing Date ("Proration Date"), and
credited or debited to the balance of the cash due at Closing. If the funds
are not received by the Title Insurer by 2:00 P.M. Eastern Time, then
prorations shall be adjusted ratably as of 11:59 P.M. on the Closing Date. If
the amount of any of the items to be prorated is not then ascertainable, the
adjustment thereof shall be on the basis of the most recent ascertainable data.
All prorations will be final except as to Delinquent Rents referred to in 13b
below. However, notwithstanding the aforesaid, real estate and personal
property taxes will be reprorated when the final tax bills become available if
they were not available at Closing, but in no event shall the real and personal
property taxes be prorated later than December 1, 1996. If special assessments
have been levied against the Property for completed improvements, then the
amount of any installments which are due prior to the Closing Date shall be
paid by the Seller; and the amount of installments which are due after the
Closing Date shall be paid by the Purchaser. All assessments for incomplete
improvements shall be paid by Purchaser. In addition, Seller shall give
Purchaser a credit at Closing (in the amount determined below) for each
residential unit which has been vacant for ten (10) days or more prior to the
Closing Date if said units are not "rent ready." Representatives of the
parties shall conduct a walk-through of the Property two (2) business days
prior to Closing of the applicable vacant units. Based on the walk-through,
Purchaser and Seller shall mutually determine, in good faith, the cost to make
any applicable vacant units "rent ready." The parties agree that the typical
cost to make a vacant unit "rent ready" shall be $200.00.
<PAGE>
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in arrears
("Delinquent Rent") for the calendar month in which the Closing occurs, then
the first rent collected by Purchaser will be delivered to Seller for the
Delinquent Rent. If Delinquent Rent is in arrears for a period prior to the
calendar month in which the Closing occurs, then rents collected by Purchaser
shall first be applied to current rent and then to Delinquent Rent. Purchaser
shall deliver Seller's pro rata share within 40 days of Purchaser's receipt of
that Delinquent Rent. This subparagraph of this Agreement shall survive the
Closing and the delivery and recording of the Deed.
14. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph 11.
15. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller.
Any assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 11. Seller hereby consents to an
assignment to an entity, the ownership and control of which is held directly or
indirectly by the same persons owning and controlling Purchaser. However,
Purchaser shall remain liable for all of the Purchaser's obligations and
undertakings set forth in this Agreement and the exhibits attached hereto. If
any assignee of Purchaser under this Agreement petitions or applies for relief
in bankruptcy or Assignee is adjudicated as a bankrupt or insolvent, or
Assignee files any petition, application for relief or answer-seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other statute, law, code or regulation relating to
bankruptcy, insolvency, or other relief for debtors (collectively, a
"Bankruptcy Filing") on or before the Closing Date, said Bankruptcy Filing
shall be a default under this Agreement and Purchaser shall indemnify Seller
for all costs, attorney's fees and expenses of Seller resulting from Seller's
efforts to obtain the Earnest Money as liquidated damages and to clear title to
the Property from any encumbrance resulting from the Bankruptcy Filing.\
16. BROKER. The parties hereto acknowledge that CB Commercial Real
Estate Group, Inc. ("Broker") is the only real estate broker involved in this
transaction. Seller agrees to pay Broker a commission or fee ("Fee") pursuant
to a listing agreement between Seller and Broker. However, this Fee is due and
payable only upon the Closing of the transaction contemplated herein.
Purchaser agrees to indemnify, defend and hold harmless the Seller and any
partner, affiliate, parent of Seller, and all shareholders, employees, officers
and directors of Seller or Seller's partner, parent or affiliate (each of the
above is individually referred to as a "Seller Indemnitee") from all claims
(except a claim from the Broker), including attorneys' fees and costs incurred
by a Seller Indemnitee as a result of anyone's claiming by or through Purchaser
any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated. Purchaser does now and shall at
all times consent to a Seller Indemnitee's selection of defense counsel.
Seller agrees to indemnify, defend and hold harmless the Purchaser and all
shareholders, employees, officers and directors of Purchaser or Purchaser's
parent or affiliate (each of the above is individually referred to as a
"Purchaser Indemnitee") from all claims, including attorneys' fees and costs
<PAGE>
incurred by a Purchaser Indemnitee as a result of anyone's claiming by or
through Seller (including Broker) any fee, commission or compensation on
account of this Agreement, its negotiation or the sale hereby contemplated.
Seller does now and shall at all times consent to a Purchaser Indemnitee's
selection of defense counsel. The provisions of this Paragraph 16 will survive
the Closing and the delivery of the Deed.
17. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered to Purchaser copies of the most recent available
tax bills, rent rolls, insurance premiums, utility account numbers, year-end
1995 and year-to-date 1996 operating statements, service contracts, the Title
Commitment and Survey and shall make available to Purchaser, to the extent that
they are in Seller's possession at the site or at Seller's home office in
Bannockburn, Illinois, rent rolls, the leases, occupancy agreements and other
written agreements with tenants, the rental applications, the move-in and
move-out reports and the other records relating to the leases for all
apartments (collectively the "Documents"). All of the Documents shall be
subject to approval by Purchaser by the close of business (5:00 P.M. Central
Time) on August 9, 1996 ("Approval Period"). During the Approval Period, upon
reasonable notice to the Seller, the Purchaser shall have the right to inspect
and approve the condition of the Property including the interior of the
apartments, during normal business hours and shall have access to the records
maintained by Seller at the Property. Purchaser, its engineers, architects,
employees, contractors and agents shall maintain public liability insurance
policies insuring against claims arising as a result of the inspections of the
Property being conducted by Purchaser. Prior to commencing any tests, studies
and investigations, Purchaser shall deliver to Seller a certificate of
insurance evidencing the existence of the aforesaid policies and naming Seller
as an additional insured. Purchaser agrees to indemnify, defend, protect and
hold Seller harmless from any and all loss, costs, including attorneys' fees,
liability or damages which Seller may incur or suffer as a result of
Purchaser's conducting its inspection and investigation of the Property
including the entry of Purchaser, its employees or agents and its lender onto
the Property, including without limitation, liability for mechanics' lien
claims.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
c. Purchaser shall have the right, in its sole discretion, to disapprove
the Documents or the condition of the Property for any reason or no reason
whatsoever. If Purchaser disapproves the Documents or the condition of the
Property, it must be by a notice ("Notice of Disapproval") delivered to Seller
and the Escrow Agent prior to the expiration of the Approval Period. The
Notice of Disapproval delivered to Seller shall be accompanied with copies of
all reports and the Documents (collectively, "Reports") which Purchaser has
received from the Seller. Upon receipt of the Notice of Disapproval and the
Reports, the Earnest Money plus the interest accrued thereon shall be returned
<PAGE>
to the Purchaser. If Purchaser does not deliver a Notice of Disapproval and
the Reports to Seller, then it shall be conclusively presumed that Purchaser
has approved the Documents and the condition of the Property and all Earnest
Money plus the interest accrued thereon shall belong to Seller unless Seller is
in default hereunder.
18. SURVIVAL OF PURCHASER'S INDEMNITY. Notwithstanding anything in this
Agreement to the contrary, Purchaser's obligation to indemnify, defend and hold
Seller harmless under various provisions of this Agreement shall forever
survive the termination of this Agreement or the Closing and delivery and
recording of the Deed.
19. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. Any reference herein to Seller's knowledge, representation, warranty
or notice of any matter or thing, shall only mean such knowledge or notice that
has actually been received by Phillip Schechter and Beth Goldstein (the asset
manager), and any representation or warranty of the Seller is based upon those
matters of which Phillip Schechter or Beth Goldstein has actual knowledge. Any
knowledge or notice given, had or received by any of Seller's agents, servants
or employees shall not be imputed to Seller or the individual partners or the
general partner of Seller.
b. Subject to the limitations set forth in subparagraph a above, Seller
hereby makes the following representations, warranties and covenants, all of
which are made to Seller's knowledge, which shall survive the Closing and
delivery of the Deed for a period of one hundred thirty-five (135) days:
i. The present use and occupancy of the Property conform with
applicable building and zoning laws and Seller has received no written
notice that any such laws, rules or regulations are being violated.
ii. The rent roll ("Rent Roll") attached hereto as Exhibit K which
will be updated as of the Closing Date is true and accurate as of the date
thereon.
iii. Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the
Property.
iv. Seller is a limited partnership, duly organized and validly
existing and in good standing under or by virtue of the laws of the state
of its creation, has qualified as a foreign limited partnership in the
state in which the Property is located, and has duly authorized the
execution and performance of this Agreement; and the execution and
performance of this Agreement will not violate any term of Seller's
partnership agreement, or any other agreement, judicial decree, statute or
regulation to which it is a party or by which it may be bound or affected.
v. No party (including without limitation any tenant) has any
option to purchase or first refusal rights with respect to the Property or
any part thereof.
<PAGE>
vi. Seller is the owner of good title to the Personal Property, free
from all security interests, liens and encumbrances, other than the
Permitted Exceptions and any liens to be satisfied at Closing.
vii. Except as set forth on the Rent Roll, no tenant has been given
free rent or any concession in the payment of rent or any abatement in the
payment of rent any of which would take effect after the Closing. Under
the terms of its lease, no tenant has the right to terminate its lease
upon payment of a sum of money. Except as set forth on the Rent Roll, no
apartment has been rented furnished.
viii.The leases to the tenants listed on the Rent Roll are in force.
Seller has not received written notice of any default of the landlord
under the leases; and no tenant is in default under its lease, except as
set forth on the delinquency report affixed to the Rent Roll.
ix. Seller is not a party to any contract or other agreement with
any governmental authority controlling, restricting or imposing income
qualifications with respect to any of the units or any of the tenants of
the Property and Seller does not receive, and has not received, any form
of rental assistance payments on behalf of any tenant as provided in 42
U.S.C. e1437, et seq.
x. Seller has not received any written notice from the insurance
company that Seller is in default under the insurance policy for the
Property.
xi. All service contracts ("Service Contracts") affecting the
Property as of the date of this Agreement are identified on Exhibit L
attached hereto and copies have been delivered to Purchaser. Seller is
not in default under any of the Service Contracts which will not be cured
as of the Closing Date.
xii. The Documents which Seller has delivered to Purchaser are copies
of the same ones which Seller relies upon when reporting to its investors
or filing tax returns with the governmental authorities.
c. From the date of this Agreement to the Closing Date, Seller shall:
i. Continue to manage, operate, lease and maintain the Property, as
presently conducted by the Seller.
ii. Continue to maintain its present insurance of the Property.
iii. Not enter into any other Service Contracts affecting the
Property which are not terminable on 30 days' prior notice without the
prior written consent of Purchaser.
d. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose said information to the other party
hereto. Provided the party making the representation or warranty did not take
<PAGE>
any deliberate actions or inactions to cause the representation or warranty in
question to become untrue in any material respect, said party shall not be in
default under this Agreement and the sole remedy of the other party shall be to
terminate this Agreement. Notwithstanding anything contained herein to the
contrary, if the status of any of the tenancies changes from the date of the
rent roll attached hereto and the date of the rent roll delivered at Closing,
provided the change in status is not caused by a breach of Seller's covenants
contained in Paragraph 16c herein, then Purchaser shall not have the right to
terminate this Agreement or make any claim for a breach of a representation or
warranty hereunder involving the rent roll or tenancies thereunder. Purchaser
and Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party has actual knowledge of prior to the Closing.
e. If after the Closing Date, Purchaser discovers that there has been a
breach by Seller of a representation or warranty contained in Paragraph 19,
then Purchaser shall be entitled to receive the amount of its actual damages
plus reasonable attorneys' fees and costs in an amount not to exceed
$125,000.00 in the aggregate; provided, however, that Purchaser must assert its
claim by notice to the Seller within one hundred and thirty-five (135) days
after the Closing Date.
20. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit M is the
following report ("Environmental Report") of the Property which Seller is
delivering to Purchaser, at Purchaser's request: Report dated March 8, 1994
prepared by H+GCL, Inc. Seller makes no representation or warranty that the
Environmental Report is accurate or complete. Purchaser hereby releases Seller
from any liability whatsoever with respect to the Environmental Report,
including, without limitation, the matters set forth in the Environmental
Report or the accuracy and/or completeness of the Environmental Report.
21. LIMITATION OF SELLER'S LIABILITY. No limited partner of Seller, nor
any of its respective beneficiaries, shareholders, partners, officers, agents,
employees, heirs, successors or assigns shall have any personal liability of
any kind or nature for or by reason of any matter or thing whatsoever under, in
connection with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Purchaser hereby waives for itself and
anyone who may claim by, through or under Purchaser any and all rights to sue
or recover on account of any such alleged personal liability.
22. PURCHASER'S ORGANIZATIONAL DOCUMENTS. At least ten (10) days prior
to the Closing Date, Purchaser and Seller will provide the other party's
attorney with copies of its organizational documents, including a certified
copy of its recorded certificate of limited partnership and a true copy of its
Partnership Agreement or a certified copy of its Articles of Incorporation and
corporate resolutions authorizing the transaction, whichever is applicable.
23. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
24. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
708/267-1600
708/317-4462 (FAX)
and
Daniel J. Perlman
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661
312/902-5532
312/902-1061 (FAX)
TO PURCHASER: Anita Breslin
Sentinel Real Estate
666 Fifth Ave.
New York, New York 10103-2698
212/408-2900
212/603-4962 (FAX)
with a copy to: Shane O'Neill
Hutton, Ingram, Yuzek, Gainen,
Carroll and Bertolotti
250 Park Ave.
Sixth Floor
New York, New York 10177
212/907-9605
212/907-9681/2 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, or on the 4th
<PAGE>
business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
25. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
two (2) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution. When the Agreement and Escrow
Agreement have been executed by Seller, Seller's attorney will fax signature
pages to Purchaser's attorney along with a copy of the letter of transmittal to
the Escrow Agent. Seller will forward the following to the Escrow Agent:
a. Two (2) original fully executed Agreements; and
b. Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement. Within one (1)
business day after Purchaser's attorney receives the fax'd signature pages,
Purchaser will wire transfer the Earnest Money to the Escrow Agent. Upon
receipt of the Earnest Money by Escrow Agent, Escrow Agent shall deliver a
fully executed copy of the Escrow Agreement to the Purchaser's attorney and the
Seller's attorney, and shall deliver to Purchaser's attorney an original fully
executed Agreement.
26. GOVERNING LAW. The provisions of this Agreement shall be governed by
the laws of the State of Oklahoma.
27. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
28. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
29. CAPTIONS. Paragraph titles or captions contained herein are inserted
as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or any provision hereof.
30. MISCELLANEOUS. If the day for performance of any action described in
this Agreement shall fall on a Saturday, Sunday or a day on which the banks are
closed in the state in which the Property is located, the time for such action
shall be extended to the second business day after such Saturday, Sunday or day
in which the banks are closed.
<PAGE>
31. COMPANION PROPERTY. Notwithstanding anything contained in this
Agreement to the contrary, it is a condition precedent to Seller's and
Purchaser's obligations to perform under this Agreement that Purchaser acquire
that certain property commonly known as the Creekwood II Apartments (the "Other
Property") in accordance with the terms of that certain Agreement of Sale (the
"Companion Contract") by and between Creekwood Associates, an Illinois limited
partnership, an affiliate of Seller, and Purchaser of even date herewith for
the sale of the Other Property to Purchaser. If this Agreement is terminated
pursuant to Paragraph 17 hereof or pursuant to any other section of this
Agreement, then the Companion Contract shall also be deemed terminated.
Similarly, if the Companion Contract is terminated pursuant to Paragraph 17
thereof or pursuant to any other paragraph of the Companion Contract, then this
Agreement shall also be deemed terminated. Nothing contained in this Paragraph
31 shall be deemed to circumvent the terms of Paragraph 11 if this Agreement is
terminated as a result of a default of Purchaser and nothing in this Paragraph
31 shall be deemed to circumvent the terms of Paragraph 12 if this Agreement is
terminated as a result of a default of Seller.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hands and seals as
of the date set forth above.
Executed by Purchaser PURCHASER:
on July 15, 1996.
SENTINEL ACQUISITIONS CORP., a Delaware
corporation
By: /s/ Anita Breslin
-----------------------------------
Anita Breslin
Vice President
SELLER:
Executed by Seller
on July 18, 1996. CREEKWOOD I LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Creekwood I, Inc., an Illinois corporation,
its general partner
By: /s/ Phillip A. Schechter
--------------------------------------
Name: Phillip A. Schechter
--------------------------------------
Its: Authorzied Agent
--------------------------------------
<PAGE>
CB Commercial Real Estate Group, Inc. ("Broker") executes this Agreement in its
capacity as a real estate broker and acknowledges that the fee or commission
("Fee") due to it as a result of the transaction described in this Agreement is
the amount as set forth in the listing agreement between Broker and Seller.
Broker also acknowledges that payment of the aforesaid Fee is conditioned upon
the Closing and the receipt of the Purchase Price by the Seller. Broker agrees
to deliver a receipt to the Seller at the Closing for the Fee and a release
stating that no other fees or commissions are due to Broker from Seller or
Purchaser.
CB COMMERCIAL REAL ESTATE GROUP, INC.
By:
-------------------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Intangible Property
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Rent Roll
L - List of Service Contracts
M - Environmental Report
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 12942
<SECURITIES> 0
<RECEIVABLES> 486
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14880
<PP&E> 89713
<DEPRECIATION> 38915
<TOTAL-ASSETS> 66213
<CURRENT-LIABILITIES> 1324
<BONDS> 66817
0
0
<COMMON> 0
<OTHER-SE> (1928)
<TOTAL-LIABILITY-AND-EQUITY> 66213
<SALES> 0
<TOTAL-REVENUES> 38471
<CGS> 0
<TOTAL-COSTS> 6410
<OTHER-EXPENSES> 2244
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3776
<INCOME-PRETAX> 26041
<INCOME-TAX> 0
<INCOME-CONTINUING> 26041
<DISCONTINUED> 0
<EXTRAORDINARY> (427)
<CHANGES> 0
<NET-INCOME> 25615
<EPS-PRIMARY> 181.13
<EPS-DILUTED> 181.13
</TABLE>
