SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 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
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
--------------- ---------------
Cash and cash equivalents $ 14,198,339 $ 394,701
Escrow deposits 931,208 1,928,712
Accounts and accrued interest receivable 634,941 663,602
Prepaid expenses 241,208 316,982
Deferred expenses, net of accumulated
amortization of $704,705 in 1996
and $1,167,664 in 1995 287,051 1,070,357
--------------- ---------------
16,292,747 4,374,354
--------------- ---------------
Investment in real estate:
Land 7,435,911 17,612,218
Buildings and improvements 51,304,081 118,352,136
--------------- ---------------
58,739,992 135,964,354
Less accumulated depreciation 26,810,380 55,896,633
--------------- ---------------
Investment in real estate, net of
accumulated depreciation 31,929,612 80,067,721
--------------- ---------------
$ 48,222,359 $ 84,442,075
=============== ===============
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
(Continued)
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Loans payable - affiliate $ 6,623,202
Accounts payable $ 254,460 255,150
Due to affiliates 127,765 122,609
Accrued liabilities, principally
real estate taxes 570,197 1,133,571
Security deposits 276,901 557,128
Mortgage notes payable 42,529,829 101,440,696
Mortgage notes payable - affiliate 336,872 1,852,611
--------------- ---------------
Total liabilities 44,096,024 111,984,967
--------------- ---------------
Limited Partners' capital (deficit)
(140,000 Interests issued
and outstanding) 5,212,989 (26,027,546)
General Partner's deficit (1,086,654) (1,515,346)
--------------- ---------------
Total partners' capital (deficit) 4,126,335 (27,542,892)
--------------- ---------------
$ 48,222,359 $ 84,442,075
=============== ===============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Income:
Rental and service $ 16,137,962 $ 21,110,659
Interest on short-term investments 176,578 112,715
--------------- ---------------
Total income 16,314,540 21,223,374
--------------- ---------------
Expenses:
Interest on mortgage notes payable 4,799,068 6,707,588
Interest on short-term loans from
an affiliate 49,045 460,690
Depreciation 2,195,723 2,914,461
Amortization of deferred expenses 144,485 219,772
Property operating 6,575,606 7,740,107
Real estate taxes 1,263,699 1,594,960
Property management fees 822,026 1,053,668
Administrative 601,424 726,001
--------------- ---------------
Total expenses 16,451,076 21,417,247
--------------- ---------------
Loss before gains on sales of properties,
affiliate's participation in joint
venture and extraordiary items (136,536) (193,873)
Gains on sales of properties 42,257,478 4,080,592
Affiliate's participation in income
from joint venture (755,586)
--------------- ---------------
Income before extraordinary items 42,120,942 3,131,133
--------------- ---------------
Extraordinary items:
Gain on forgiveness of debt 1,708,945 90,359
Debt extinguishment expense (960,660)
--------------- ---------------
Total extraordinary items 748,285 90,359
--------------- ---------------
Net income $ 42,869,227 $ 3,221,492
=============== ===============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
--------------- ---------------
Income before extraordinary items
allocated to General Partner $ 421,209 $ 31,311
=============== ===============
Income before extraordinary items
allocated to Limited Partners $ 41,699,733 $ 3,099,822
=============== ===============
Income before extraordinary items
per Limited Partnership Interest
(140,000 issued and outstanding) $ 297.86 $ 22.14
=============== ===============
Extraordinary items allocated
to General Partner $ 7,483 $ 904
=============== ===============
Extraordinary items allocated
to Limited Partners $ 740,802 $ 89,455
=============== ===============
Extraordinary items per Limited
Partnership Interest (140,000
issued and outstanding) $ 5.29 $ 0.64
=============== ===============
Net income allocated to General Partner $ 428,692 $ 32,215
=============== ===============
Net income allocated to Limited Partners $ 42,440,535 $ 3,189,277
=============== ===============
Net income per Limited Partnership
Interest (140,000 issued and outstanding) $ 303.15 $ 22.78
=============== ===============
Distribution to Limited Partners $ 11,200,000 None
=============== ===============
Distribution per Limited
Partnership Interest $ 80.00 None
=============== ===============
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 September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Income:
Rental and service $ 3,611,090 $ 7,004,719
Interest on short-term investments 118,452 28,705
--------------- ---------------
Total income 3,729,542 7,033,424
--------------- ---------------
Expenses:
Interest on mortgage notes payable 1,071,819 2,184,870
Interest on short-term loans from
an affiliate 128,946
Depreciation 493,967 949,472
Amortization of deferred expenses 34,667 64,831
Property operating 1,776,531 2,910,236
Real estate taxes 281,881 555,169
Property management fees 193,289 357,900
Administrative 168,875 224,130
--------------- ---------------
Total expenses 4,021,029 7,375,554
--------------- ---------------
Loss before gains on sales of properties
and extraordinary items (291,487) (342,130)
Gains on sales of properties 16,371,626 2,265,622
--------------- ---------------
Income before extraordinary items 16,080,139 1,923,492
--------------- ---------------
Extraordinary items:
Gain on forgiveness of debt 1,708,945
Debt extinguishment expense (534,366)
---------------
Total extraordinary items 1,174,579
--------------- ---------------
Net income $ 17,254,718 $ 1,923,492
=============== ===============
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 September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
--------------- ---------------
Income before extraordinary items
allocated to General Partner $ 160,801 $ 19,235
=============== ===============
Income before extraordinary items
allocated to Limited Partners $ 15,919,338 $ 1,904,257
=============== ===============
Income before extraordinary items
per Limited Partnership Interest
(140,000 issued and outstanding) $ 113.71 $ 13.60
=============== ===============
Extraordinary items allocated
to General Partner $ 11,746 None
=============== ===============
Extraordinary items allocated
to Limited Partners $ 1,162,833 None
=============== ===============
Extraordinary items per Limited
Partnership Interest (140,000
issued and outstanding) $ 8.31 None
=============== ===============
Net income allocated to General Partner $ 172,547 $ 19,235
=============== ===============
Net income allocated to Limited Partners $ 17,082,171 $ 1,904,257
=============== ===============
Net income per Limited Partnership
Interest (140,000 issued and outstanding) $ 122.02 $ 13.60
=============== ===============
Distribution to Limited Partners $ 11,200,000 None
=============== ===============
Distribution per Limited
Partnership Interest $ 80.00 None
=============== ===============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Operating activities:
Net income $ 42,869,227 $ 3,221,492
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary items:
Gain on forgiveness of debt (1,708,945) (90,359)
Debt extinguishment expense 960,660
Gains on sales of properties (42,257,478) (4,080,592)
Affiliate's participation in income
from joint venture 755,586
Depreciation of properties 2,195,723 2,914,461
Amortization of deferred expenses 144,485 219,771
Net change in:
Escrow deposits 976,433 83,472
Accounts and accrued interest
receivable 28,661 312,084
Prepaid expenses 75,774 (488,715)
Accounts payable 37,577 (55,693)
Due to affiliates 5,156 (107,889)
Accrued liabilities (546,089) 188,348
Security deposits (280,227) (22,711)
--------------- ---------------
Net cash provided by operating activities 2,500,957 2,849,255
--------------- ---------------
Investing activities:
Proceeds from redemption of
restricted investment 700,000
Proceeds from sales of properties 63,377,646 12,390,000
Payment of selling costs (1,486,536) (610,180)
--------------- ---------------
Net cash provided by investing activities 61,891,110 12,479,820
--------------- ---------------
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
Financing activities:
Distribution to Limited Partners (11,200,000)
Distributions to joint venture
partner - affiliate (445,589)
Repayment of loans payable - affiliate (6,623,202) (5,210,000)
Proceeds from issuance of mortgage note
payable - affiliate 137,654
Repayment of mortgage notes payable (31,761,649) (9,833,903)
Principal payments on mortgage
notes payable (840,464) (1,084,835)
Principal payments on mortgage
notes payable - affiliate (114,600)
Release of financing escrows 21,071 416,948
Payment of prepayment penalties (321,839)
--------------- ---------------
Net cash used in financing activities (50,588,429) (16,271,979)
--------------- ---------------
Net change in cash and cash equivalents 13,803,638 (942,904)
Cash and cash equivalents at beginning
of year 394,701 1,311,019
--------------- ---------------
Cash and cash equivalents at end of period $ 14,198,339 $ 368,115
=============== ===============
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 nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the Partnership
incurred and paid interest expense on mortgage notes payable to non-affiliates
of $4,666,970 and $6,567,196, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 are:
Paid
-----------------------
Nine Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost: $ 132,300 $ 21,480 $ 127,765
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 nine months ended September 30, 1996 and
1995, the Partnership incurred interest expense of $49,045 and $460,690 and
paid interest expense of $119,165 and $490,948 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 September 30, 1996, the Partnership had a $336,872 junior loan
outstanding from The Balcor Company ("TBC"), an affiliate of the General
Partner, relating to the Woodland Hills Apartments with accrued interest
payable on this loan totaling $2,948, which is included in accrued liabilities
on the balance sheet. In September 1996, the junior loan outstanding from TBC
relating to Chestnut Ridge - Phase II Apartments was increased by $137,654 in
order to provide the minimum net proceeds required from the sale of this
property. Subsequently, this $1,653,393 loan, along with accrued interest of
$55,552 was forgiven in connection with the sale. See Notes 4 and 5 of Notes to
Financial Statements for additional information. During the nine months ended
September 30, 1996 and 1995, the Partnership incurred interest expense on these
affiliate loans of $132,098 and $140,392 and paid interest expense of $111,865
and $155,554, 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.
(e) 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. The basis of the
property was $10,571,735, which is net of accumulated depreciation of
$7,676,011. For financial statement purposes, the Partnership recognized a gain
of $11,446,765 from the sale of this property.
(f) In September 1996, the Partnership sold the Creekwood - Phase I Apartments
in an all cash sale for $8,389,800. From the proceeds of the sale, the
Partnership paid $5,604,985 to the third party mortgage holder in full
satisfaction of the first mortgage loan, $192,581 in selling costs and $168,150
in prepayment penalties. The basis of the property was $4,284,091, which is net
of accumulated depreciation of $2,758,600. For financial statement purposes,
the Partnership recognized a gain of $3,913,128 from the sale of this property.
<PAGE>
(g) In September 1996, the Partnership sold the Chestnut Ridge - Phase II
Apartments in an all cash sale for $4,696,600. From the proceeds of the sale,
the Partnership paid $3,073,783 to the third party mortgage holder in full
satisfaction of the first loan, $165,482 in selling costs and $153,689 in
prepayment penalties. The Partnership received net proceeds of $1,303,646 from
the sale. However, the terms of the 1994 refinancing of this property provided
that minimum net proceeds of $1,441,300 were to be received from the sale of
this property. As a result, $137,654 was contributed to the Partnership through
an increase to the balance of the junior loan outstanding from TBC. The basis
of the property was $3,519,385, which is net of accumulated depreciation of
$2,163,522. For financial statement purposes, the Partnership recognized a gain
of $1,011,733 from the sale of this property.
5. Extraordinary Items:
(a) In connection with the sales of the Chestnut Ridge - Phase II and the
Creekwood Phase I apartment complexes during 1996, the Partnership paid
$321,839 of loan prepayment penalties. In addition, the Partnership fully
amortized the remaining deferred financing fees in the amount of $638,821 as a
result of the sales of the Partnership's properties during 1996. These amounts
were recognized as extraordinary items and classified as debt extinguishment
expense.
(b) In connection with the sale of the Chestnut Ridge - Phase II Apartments,
the junior loan due to TBC, which had an outstanding balance of $1,708,945,
including accrued interest of $55,552, was forgiven which resulted in an
extraordinary gain on forgiveness of debt for financial statement purposes.
6. Subsequent Events:
(a) In October 1996, the Partnership paid $11,200,000 ($80.00 per Interest) to
Limited Partners representing an initial quarterly distribution of Net Cash
Receipts of $4.00 per Interest for the third quarter of 1996 and a special
distribution of Net Cash Proceeds of $76.00 per Interest from proceeds received
in connection with the sales of the Canyon Sands, Ridgetree - Phase I, Sunnyoak
Village and Creekwood - Phase I apartment complexes.
(b) In November 1996, the Partnership sold the Quail Lakes Apartments in an all
cash sale for $10,500,000. From the proceeds of the sale, the Partnership paid
$6,683,238 to the third party mortgage holder in full satisfaction of the first
mortgage loan, $350,201 in selling costs and $267,330 in prepayment penalties.
For financial statement purposes, the Partnership will recognize a gain of
approximately $4,053,000 from the sale of this property during the fourth
quarter of 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 eight were sold in 1996, including the Quail Lakes Apartments which
was sold in November 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 five 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 sold seven properties during the nine months ended September
30, 1996 and recognized significant gains on these sales for financial
statement purposes. As a result of these gains, the Partnership generated
substantially higher net income during the nine months and quarter ended
September 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 nine months and quarters ended September 30, 1996 and 1995.
The Partnership sold the Pinebrook and Drayton Quarter apartment complexes in
1995 and the Antlers, Canyon Sands, Chestnut Ridge - Phase II, Chimney Ridge,
Creekwood - Phase I, Ridgetree - Phase I and Sunnyoak Village apartment
complexes in 1996. As a result, the Partnership recognized gains of $4,080,592
on the 1995 sales and $42,257,478 on the 1996 sales during the nine months
ended September 30, 1995 and September 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 offset by the events described
below.
<PAGE>
Five of the Partnership's six remaining properties at September 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 nine property sales.
Proceeds received during the second and third quarters of 1996 in connection
with the sales of the Antlers, Canyon Sands, Chestnut Ridge - Phase II,
Creekwood - Phase I, Ridgetree - Phase I and Sunnyoak Village apartment
complexes were invested in short-term interest bearing investments prior to
their distribution to Limited Partners in July and October 1996 and resulted in
increased interest income on short-term investments during 1996 as compared to
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 the nine months ended September 30, 1996 as compared to the same period
in 1995 and ceased during the quarter ended September 30, 1996.
Costs were incurred for repair and maintenance expenditures, which included
structural repairs, landscaping and replacement of floor coverings, at certain
of the Partnership's six remaining properties at September 30, 1996. These
costs resulted in increased property operating expense and partially offset the
decrease from the nine property sales.
Due to lower accounting fees and legal fees, administrative expenses decreased
during 1996 as compared to 1995. This decrease was partially offset by higher
consulting, printing and postage costs incurred in connection with the
Partnership's response to a tender offer during 1996.
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 during 1996.
Due to the 1996 property sales, remaining unamortized deferred financing fees
in the amount of $638,821 were fully amortized. In addition, in connection with
the sales of the Chestnut Ridge - Phase II and the Creekwood - Phase I
apartment complexes, the Partnership paid $321,839 of loan prepayment
penalties. These amounts were recognized as an extraordinary item and
classified as debt extinguishment expense during 1996.
As a result of the sale of the Chestnut Ridge - Phase II Apartments, the
Partnership recognized an extraordinary gain on forgiveness of debt of
$1,708,945 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 $13,804,000 as
of September 30, 1996 when compared to December 31, 1995 primarily due to
proceeds received from the sales of the Chestnut Ridge - Phase II, Creekwood -
Phase I and Sunnyoak Village apartment complexes. The Partnership received cash
<PAGE>
totaling approximately $2,501,000 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 $61,891,000 from its investing activities relating to the
sales of the Antlers, Canyon Sands, Chestnut Ridge - Phase II, Chimney Ridge,
Creekwood - Phase I, Ridgetree - Phase I, and Sunnyoak Village apartment
complexes. The Partnership used cash to fund its financing activities which
consisted primarily of the payment of a distribution totaling $11,200,000 to
Limited Partners; the repayment of the $6,623,202 loan from the General
Partner; the repayment of the mortgage notes payable of approximately
$31,762,000 and the payment of loan prepayment penalties of approximately
$322,000 in connection with the sales of the Chestnut Ridge - Phase II,
Creekwood - Phase I, Ridgetree - Phase I, and Sunnyoak Village apartment
complexes; and principal payments on mortgage notes payable of approximately
$840,000. The Partnership also made a special distribution to Limited Partners
from Net Cash Proceeds in October 1996 as described below.
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 nine months ended September 30, 1996, five of the six
properties owned by the Partnership at September 30, 1996 generated positive
cash flow and one generated a marginal cash flow deficit. During the same
period in 1995, all six 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 September 30, 1996, the occupancy
rates of the Partnership's properties ranged from 94% to 99% except for the
Briarwood Apartments which had an occupancy rate of 89%.
The Antlers, Canyon Sands, Chestnut Ridge - Phase II, Chimney Ridge, Creekwood
- - Phase I and Sunnyoak Village apartment complexes, which were sold in 1996,
all generated positive cash flow during 1995 and prior to their sales 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 prior to its
sale.
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 and has accelerated the
Partnership's liquidation strategy. During 1996, the Partnership sold the
<PAGE>
Antlers, Canyon Sands, Chestnut Ridge - Phase II, Chimney Ridge, Creekwood -
Phase I, Quail Lakes, Ridgetree - Phase I and Sunnyoak Village apartment
complexes. Currently, the Partnership has entered into contracts to sell the
Chesapeake, Courtyards of Kendall, Somerset Pointe and Woodland Hills apartment
complexes for sales prices of $7,950,000, $11,310,000, $18,833,333 and
$7,500,000, respectively.
The timing of the termination of the Partnership and final distribution of cash
will depend upon the nature and extent of liabilities and contingencies which
exist or may arise. Such contingencies may include legal and other fees
stemming from litigation involving the Partnership. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency arises, reserves may be held by
the Partnership for a longer period of time.
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.
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, the Partnership was required to holdback
$500,000 of the proceeds until October 1996. The full amount of the holdback
was released in 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, the Partnership was required to holdback $500,000 of the
proceeds until October 1996. The full amount of the holdback was released in
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.
<PAGE>
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, the Partnership was required to holdback $500,000 of the proceeds
until October 1996. The full amount of the holdback was released in October
1996. The remainder of the proceeds were distributed in a special distribution
to the Limited Partners in October 1996. See Note 4 of Notes to Financial
Statements for additional information.
In September 1996, the Partnership sold the Creekwood - Phase I Apartments in
an all cash sale for $8,389,800. From the proceeds of the sale, the Partnership
paid $5,604,985 to the third party mortgage holder in full satisfaction of the
first mortgage loan, $192,581 in selling costs and $168,150 of prepayment
penalties. The remainder of the proceeds were distributed in a special
distribution to the Limited Partners in October 1996. See Note 4 of Notes to
Financial Statements for additional information.
In September 1996, the Partnership sold the Chestnut Ridge - Phase II
Apartments in an all cash sale for $4,696,600. From the proceeds of the sale,
the Partnership paid $3,073,783 to the third party mortgage holder in full
satisfaction of the first mortgage loan, $165,482 in selling costs and $153,689
of prepayment penalties. The Partnership received net proceeds of $1,303,646
from the sale. However, the terms of the 1994 refinancing of this property
provided that minimum net proceeds of $1,441,300 were to be received from the
sale of this property. As a result, $137,654 was contributed to the Partnership
through an increase to the balance of the junior loan outstanding from TBC. The
entire balance of this junior loan was then forgiven by TBC. Pursuant to the
terms of the sale, $250,000 of the proceeds will be retained by the Partnership
until December 1996. The proceeds will be distributed in a special distribution
to the Limited Partners in January 1997. See Note 4 of Notes to Financial
Statements for additional information.
In November 1996, the Partnership sold the Quail Lakes Apartments in an all
cash sale for $10,500,000. From the proceeds of the sale, the Partnership paid
$6,683,238 to the third party mortgage holder in full satisfaction of the first
mortgage loan, $350,201 in selling costs and $267,330 of prepayment penalties.
A majority of the proceeds will be distributed in a special distribution to the
Limited Partners in January 1997. See Note 6 of Notes to Financial Statements
for additional information.
Each of the Partnership's remaining 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. With the exception of the
loan collateralized by the Courtyards of Kendall Apartments, which matures in
June 1997, the Partnership has no third party financing which matures prior to
1998. As previously mentioned, this property is currently under contract to be
sold.
<PAGE>
During October 1996, the Partnership paid $11,200,000 ($80.00 per Interest) to
Limited Partners representing an initial quarterly distribution of Net Cash
Receipts of $4.00 per Interest for the third quarter of 1996 and a special
distribution of Net Cash Proceeds of $76.00 per Interest from proceeds received
in connection with the sales of the Canyon Sands, Ridgetree - Phase I, Sunnyoak
Village and Creekwood - Phase I apartment complexes. Including the October 1996
distribution, Limited Partners have received cumulative distributions totaling
$160.00 per $1,000 Interest, of which $4.00 represents Cash Flow from
operations and $156.00 represents a return of Original Capital. 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 1. Legal Proceedings
- --------------------------
Proposed class action
- ---------------------
On August 30, 1996, a proposed class action complaint was filed, Lenore Klein
vs. Lehman Brothers, Inc., et al. (Superior Court of New Jersey, Law Division,
Union County, Docket No. Unn-L-5162-96). The Partnership, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnerships"), American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by the predecessor of
Lehman Brothers, Inc. (together with the Partnership and the Affiliated
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the action. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
things, common law fraud and deceit, negligent misrepresentation, breach of
contract, breach of fiduciary duty and violation of certain New Jersey statutes
relating to the disclosure of information in the offering of limited
partnership interests in the Defendant Partnerships. The amended complaint
seeks judgment for compensatory damages equal to the amount invested in the
Defendant Partnerships by the proposed class plus interest accrued thereon;
general damages for injuries arising from the defendants' actions; equitable
relief, including rescission, on certain counts; punitive damages; treble
damages on certain counts; recovery from the defendants of all profits received
by them as a result of their actions relating to the Defendant Partnerships;
attorneys' fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims. It is not determinable at this
time whether or not an unfavorable decision in this action would have a
material adverse impact on the Partnership.
Item 5. Other Information
- -------------------------
Quail Lakes Apartments
- ----------------------
As previously reported, on October 21, 1996, the Partnership contracted to sell
the Quail Lakes Apartments, Oklahoma City, Oklahoma to an unaffiliated party,
NCH Corporation, an Arizona corporation, for a sale price of $10,500,000. The
sale closed on November 1, 1996. From the proceeds of the sale, the Partnership
repaid the outstanding balance of the first mortgage loan in the amount of
$6,683,238, prepayment penalties of $267,330, closing costs of $35,201, and
$210,000 to an unaffiliated party as a brokerage commission. An affiliate of
the third party providing property management services for the property
received a fee of $105,000 for services rendered in connection with the sale of
the property. The Partnership received approximately $3,199,231, representing
the net proceeds.
<PAGE>
Somerset Pointe Apartments
- --------------------------
In 1983, the Partnership acquired Somerset Pointe Apartments, Las Vegas,
Nevada, utilizing approximately $8,188,580 of offering proceeds. The property
was acquired subject to first mortgage financing of $12,187,000.
In September 1996, the Partnership contracted to sell the property to an
unaffiliated party AIMCO Properties, L.P., a Delaware limited partnership
("AIMCO"), for a sale price of $18,720,655. AIMCO was obligated under the
agreement of sale to deposit $321,937 into an escrow account as earnest money
upon completion of its due diligence review. AIMCO failed to make the deposit
and, as a result, the sale of the property to AIMCO was not consummated.
On November 5, 1996, the Partnership contracted to sell the property for a sale
price of $18,833,333 to an unaffiliated party, DKS Associates. The purchaser
has deposited $321,937 into an escrow account as earnest money. The remainder
of the sale price will be payable in cash at closing, scheduled for December
16, 1996. Upon notice to the other party, no later than December 9, 1996, the
Partnership and purchaser each have the right to extend the closing to January
9, 1997. From the proceeds of the sale, the Partnership will repay the
outstanding balance of the first mortgage loan, which is expected to be
approximately $10,759,000 at closing, and $188,333 to an unaffiliated party as
a brokerage commission. The Partnership will receive the remaining proceeds of
approximately $7,886,000, less closing costs. Of such proceeds, $321,937 will
be retained by the Partnership and will not be available for use or
distribution by the Partnership until 90 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.
The purchaser has simultaneously contracted to purchase two properties adjacent
to the property, one of which is owned by an affiliate of the General Partner
(the "Affiliate") and one of which is owned by an unaffiliated party. A default
by the purchaser, the Partnership or any other seller under any agreement of
sale will be considered a default under all three agreements. If the agreements
are terminated due to a default by the Partnership or another seller, the
purchaser will be entitled to receive a return of its earnest money and
interest accrued thereon plus additional damages in an amount equal to the
earnest money deposits. If the agreements are terminated due to a default by
the purchaser, the Partnership and other sellers will retain all earnest money
and interest accrued thereon. In the event the purchaser terminates any
agreement, other than by a default, the other agreements will also be
terminated, and the purchaser will receive a return of all earnest money
previously deposited plus interest accrued thereon.
If the agreements are terminated due to a default by the unaffiliated seller,
such seller is obligated to reimburse the Partnership and the Affiliate for any
damages paid by them to the purchaser arising from the termination. If the
agreements are terminated due to a default by the Partnership or Affiliate,
such sellers are obligated to reimburse the unaffiliated seller for any damages
paid to the purchaser arising from the termination.
<PAGE>
The closing is subject to the satisfaction of numerous terms and conditions.
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.
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 are 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 are
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 are
incorporated herein by reference.
(d)(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 herein 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 previously filed as Exhibit 10(vi) to the Partnership's
Report on Form 10-Q for the quarter ended March 31, 1996 are incorporated
herein by reference.
<PAGE>
(e)(i) Agreement of Sale and attachments thereto relating to the sale of the
Woodland Hills Apartments, Irving, Texas, previously filed as Exhibit (2)(i) to
the Partnership's Current Report on Form 8-K dated August 27, 1996, are
incorporated herein by reference.
(ii) Letter dated September 9, 1996, relating to the sale of the Woodland Hills
Apartments, Irving, Texas, previously filed as Exhibit (2)(ii) to the
Partnership's Current Report on Form 8-K dated August 27, 1996, is incorporated
herein by reference.
(iii) Letter agreement dated September 12, 1996 relating to the sale of the
Woodland Hills Apartments, Irving, Texas, previously filed as Exhibit 99(c) to
the Partnership's Current Report on Form 8-K dated August 30, 1996, is
incorporated herein by reference.
(f) (i) Agreement of Sale and attachments thereto, dated September 25, 1996,
relating to the sale of the Somerset Pointe Apartments, Las Vegas, Nevada,
previously filed as Exhibit (2) to the Partnership's Current Report on Form 8-K
dated September 24, 1996, are incorporated herein by reference.
(ii) Agreement of Sale and attachments thereto, dated November 9, 1996,
relating to the sale of the Somerset Pointe Apartments, Las Vegas, Nevada, is
attached hereto.
(g)(i) Agreement of Sale and attachments thereto relating to the sale of the
Chesapeake Apartments, Harris County, Texas, previously filed as Exhibit
(2)(a)(i) to the Partnership's Current Report on Form 8-K dated October 18,
1996, are incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the
Chesapeake Apartments, Harris County, Texas, previously filed as Exhibit
(2)(a)(ii) to the Partnership's Current Report on Form 8-K dated October 18,
1996, is incorporated herein by reference.
(h) Agreement of Sale and attachments thereto relating to the sale of the Quail
Lakes Apartments, Oklahoma City, Oklahoma, previously filed as Exhibit (2)(b)
to the Partnership's Current Report on Form 8-K dated October 18, 1996, are
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the quarter ending September
30, 1996, is attached hereto.
(b) Reports on Form 8-K
(i) A Current Report on Form 8-K dated August 27, 1996 was filed reporting the
contract to sell the Woodland Hills Apartments in Irving, Texas, and the
termination of the contract to sell Courtyards of Kendall Apartments in Dade
County, Florida.
<PAGE>
(ii) A Current Report on Form 8-K dated August 30, 1996 was filed reporting the
contract to sell the Chestnut Ridge Apartments, Phase II, in Fort Worth, Texas,
the amendment and closing of the sale of Creekwood Apartments, Phase I in
Tulsa, Oklahoma, and the agreement to extend the closing of the sale of
Woodland Hills Apartments in Irving, Texas.
(iii) A Current Report on Form 8-K dated September 24, 1996 was filed reporting
the contract to sell the Somerset Pointe Apartments in Las Vegas, Nevada.
(iv) A Current Report on Form 8-K dated October 18, 1996 was filed reporting
each of the contracts to sell Chesapeake, Quail Lakes and Courtyards of Kendall
apartment complexes in Harris County, Texas; Oklahoma City, Oklahoma; and Dade
County, Florida, respectively and the letter agreement and closing of the sale
of Chestnut Ridge Apartments, Phase II, in Fort Worth, Texas.
<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/ Jayne A. Kosik
-----------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Partners-XV, the General Partner
Date: November 13, 1996
----------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 5th day of November, 1996, by and
between DKS ASSOCIATES ("Purchaser") and WESTWOOD INVESTORS, an Illinois
Limited Partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Eighteen Million Eight Hundred Thirty-Three Thousand Three
Hundred Thirty-Three and No/100 Dollars ($18,833,333.00) ("Purchase Price"),
that certain property consisting of 452 condominium apartment units located at
5141 Indian River Drive, Las Vegas, Nevada, more particularly described on
Exhibit A attached hereto ("Property"), which Property is known as Somerset
Pointe Apartments. Included in the Purchase Price is all of the personal
property set forth on Exhibit B, which shall be transferred to Purchaser at
Closing (as hereinafter defined) by a Bill of Sale. Computer hardware and
software are not included in the personal property.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $321,937.00
("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;
b. On the Closing Date (as hereinafter defined), $18,833,333.00
(inclusive of all Earnest Money) adjusted in accordance with the
prorations by federally wired "immediately available" funds delivered to
the Title Insurer (as hereinafter defined) no later than 12:00 Noon
Pacific Time on the Closing Date. If the funds are not received by 12:00
Noon Pacific Time, then, on the Closing Date, Purchaser shall pay Seller
an amount equal to any additional mortgage per diem interest costs
incurred by the Seller and prorations shall be as of 11:59 P.M. on the
Closing Date.
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit D is a title commitment with an
effective date of July 26, 1996 ("Title Commitment") for an owner's standard
coverage title insurance policy ("Title Policy") issued by First American Title
Company of Nevada, agent for First American Title Insurance Company ("Title
Insurer"). The owner's Title Policy issued at Closing will be an ALTA policy
in the amount of the Purchase Price subject only to real estate taxes not yet
due and payable, the general printed exceptions set forth in Schedule B-Section
2 (Part I) as Numbers 7, 8 and 9 and the special title exceptions set forth in
Schedule B-Section 2 (Part II) Numbers 4 through 16, 21, 22 and 23 (modified as
to tenants only, as shown on the rent roll) of the Title Commitment. All of
the above are 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, subject only to
the Permitted Exceptions. Seller shall pay the costs of the Title Policy;
including the costs of "extended coverage". Purchaser shall pay for any
special endorsements which Purchaser requires.
<PAGE>
b. Purchaser acknowledges receipt of a survey ("Survey") of the
Property prepared by SEA Incorporated and dated January 25, 1996, and Purchaser
approves all of the matters set forth on the Survey. Prior to the Closing,
Seller (at Seller's cost) will have the Survey updated and re-certified to the
Purchaser, the Title Insurer and Purchaser's lender (if any). However, if
Purchaser requires any additional survey work, Purchaser shall pay for the cost
of such additional work.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Grant, Bargain, Sale 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. Seller shall be obligated to remove all
liens, judgments and encumbrances of a definite and ascertainable amount. If
Purchaser elects to terminate this Agreement in accordance with the provisions
of this Paragraph, then the Earnest Money plus all accrued interest shall be
delivered to the Purchaser, and Purchaser shall be entitled to recover its
actual non-reimbursed third party expenses in an amount not to exceed the
amount of Earnest Money then on deposit with the Escrow Agent.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall equally share
the costs of the documentary stamps to be paid with reference to the Deed and
all recording costs.
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of real
property for $250,000 or less, or in the case of Personal Property, for $25,000
or less, then Purchaser can elect (upon notice to Seller served within 20
business days of such casualty) to either: (i) require Seller to commence the
repair or restoration in an expeditious manner, in which event the Closing Date
will be extended until such date as may reasonably be required to complete the
repair or restoration (in which case, Seller shall retain all insurance
proceeds); or (ii) accept the Property in its damaged condition together with
an assignment from Seller of all insurance proceeds and receive a credit at
Closing in the amount of the deductible. If the cost of repair or restoration
exceeds that amount, then Purchaser can elect to either: (i) require the Seller
to repair and restore same, in which event the Closing Date will be extended
until such date as may reasonably be required to complete the repair or
restoration; or (ii) accept the Property in its damaged condition together with
an assignment from Seller of all insurance proceeds and receive a credit at
Closing in the amount of the deductible; or (iii) terminate this Agreement upon
notice to Seller served within twenty (20) business days of such casualty. If
Seller repairs or restores the Property in accordance with the provisions of
this Paragraph, then Seller agrees to consult with Purchaser and comply with
any reasonable requests of Purchaser, provided that they do not unduly delay
the completion of the repair or restoration, and provided that they do not
increase the cost of the repair or restoration.
<PAGE>
b. If condemnation proceedings ("Proceedings") are instituted
against the Property and the parties reasonably believe that such Proceedings
will result in an award in excess of $100,000.00, then Purchaser can elect to
either take the Property subject to the Proceedings and an assignment of
Seller's interest in the Proceedings or terminate this Agreement. If the
parties reasonably believe that the Proceedings will result in an award less
than $100,000.00, then Seller will assign to Purchaser all of its right, title
and interest in the Proceedings, and Purchaser shall take the Property subject
to the Proceedings. If Purchaser elects to terminate this Agreement, it shall
be by notice to the Seller within five (5) days after Seller notifies Purchaser
of the Proceedings.
c. If the Agreement is terminated pursuant to this Paragraph, then
the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
7. AS-IS CONDITION.
a. Purchaser acknowledges and agrees that except as may otherwise
be specifically set forth elsewhere in this Agreement with reference to a
representation, warranty or covenant made by the Seller, Purchaser 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 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 with reference to a representation, warranty or covenant made
by the Seller, 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, 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. This release
shall survive the Closing. As used herein, the term "Hazardous Materials" or
<PAGE>
"Hazardous Substances" means (i) hazardous wastes, hazardous materials,
hazardous substances, hazardous constituents, toxic substances or related
materials, whether solids, liquids or gases, including but not limited to
substances defined as "hazardous wastes," "hazardous materials," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Emergency
Planning and Community Right-to-Know Act, 42 U.S.C. Section 1101 et seq.; the
Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum,
(B) refined petroleum products, (C) waste oil, (D) waste aviation or motor
vehicle fuel, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon,
(H) Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
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. Except as may otherwise be specifically set forth elsewhere in this
Agreement with reference to a representation, warranty or covenant made by the
Seller, 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.
8. CLOSING.
a. The closing ("Closing") of this transaction shall be on December
16, 1996 ("Closing Date"), at the office of the Purchaser's attorney, at which
time Seller shall deliver possession of the Property to Purchaser.
b. Purchaser shall have the right to take an inventory of the
Personal Property (other than the Personal Property located in the interior of
the apartments) on the Closing Date. Seller may have its agent accompany the
Purchaser while the inventory is being taken. Purchaser shall receive a credit
for missing items of Personal Property.
<PAGE>
c. Upon Notice delivered to the other party no later than
December 9, 1996, Purchaser or Seller shall have the right to extend the
Closing Date to January 9, 1997 ("Extended Closing Date"). Thereafter, all
references herein to the Closing Date shall mean the Extended Closing Date.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, 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 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 assignment to Purchaser's designee executed by A.G. Spanos and
Faye Spanos of Declarant's rights under the condominium documents (in the form
of Exhibit M attached hereto); a quitclaim assignment executed by Seller of
Declarant's rights under the condominium documents (in the form of Exhibit M-1
attached hereto); an inventory of the Personal Property and a Bill of Sale for
the same (in the form of Exhibit F attached hereto); an executed closing
statement; an executed assignment and assumption of all service contracts (in
the form of Exhibit G attached hereto); an executed assignment and assumption
of all leases and security deposits (in the form of Exhibit H attached hereto);
the leases (to be delivered at the Property); updated rent roll (certified by
Seller to be true and correct to the best of Seller's knowledge); 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); an executed assignment of
intangibles which assignment shall include all assignable warranties and
guarantees and Seller's right, title and interest, if any, in the use of the
name Somerset Pointe Apartments and Seller's assignable rights to the telephone
number of the Property (in the form of Exhibit N attached hereto); an executed
assignment of guarantees, warranties, permits, licenses and approvals (in the
form of Exhibit N-1 attached hereto); the written appointment (in the form of
Exhibit O attached hereto) by A.G. Spanos and Faye Spanos of all new members to
the Architectural Committee, which new members will be designated by the
Purchaser; a quit-claim deed from A.G. Spanos and Faye Spanos conveying to
Purchaser all of their right, title and interest in the mineral rights; the
original tenant lease files (to be delivered at the Property); 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.
10. 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 INCLUDING ITS OBLIGATIONS TO MAKE ALL
DEPOSITS ON OR BEFORE THE DATES PROVIDED FOR HEREIN. IF THE PURCHASER FAILS TO
MAKE ITS DEPOSITS INTO THE ESCROW ON OR BEFORE THE DATE SUCH DEPOSIT IS DUE AS
PROVIDED FOR HEREIN, OR IN THE EVENT OF ANY OTHER DEFAULT OF THE PURCHASER
UNDER THE PROVISIONS OF THIS AGREEMENT, THEN SELLER SHALL RETAIN ALL OF THE
EARNEST MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY
<PAGE>
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.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RIGHT TO RECOVER ACTUAL THIRD
PARTY UNREIMBURSED COSTS IN AN AMOUNT NOT TO EXCEED THE AMOUNT OF EARNEST MONEY
THEN ON DEPOSIT WITH THE ESCROW AGENT, PLUS 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 AND THE DOCUMENTS WHICH SELLER IS
REQUIRED TO DELIVER ON THE CLOSING DATE, 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.
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); security and cleaning deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing); water and other
utility charges; fuels; prepaid operating expenses; real and personal property
taxes; and other similar items shall be adjusted ratably as of 12:01 A.M. on
the Closing Date ("Proration Date"), and credited or debited to the balance of
the cash due at Closing. 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. The parties shall reprorate for omissions or
errors in calculation thirty (30) days after the Closing Date. 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.
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 30 days after the Closing. Any
Delinquent Rent received subsequent to thirty (30) days after the Closing shall
be remitted to Seller within ten (10) days after receipt thereof. This
subparagraph of this Agreement shall survive the Closing and the delivery and
recording of the Deed.
13. RECORDING. Except as may be required by Nevada law in order to
enable Purchaser to exercise its remedies under Paragraph herein, 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.
<PAGE>
14. 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 . Seller hereby consents to an
assignment to an entity, the ownership or control of which is held by Dan K.
Shaw and/or Ken Woolley, provided such assignment is effected no later than ten
(10) business days prior to the Closing Date. However, Purchaser shall remain
liable for all of the Purchaser's obligations and undertakings set forth in
this Agreement and the exhibits attached hereto.
15. 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 from the proceeds of the Purchase Price received by Seller.
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,
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 incurred by a Purchaser Indemnitee as a
result of anyone's claiming by or through Seller 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.
16. 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, service contracts and
other documents (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 November 29, 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. 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
<PAGE>
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. If Purchaser disapproves the Documents or the condition of the
Property or the transaction for any reason whatsoever, 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 ("Reports") which
Purchaser has received during the Approval Period. Upon receipt of the Notice
of Disapproval and copies of the Reports, the Earnest Money plus the interest
accrued thereon shall be returned to the Purchaser. If Purchaser does not
deliver a Notice of Disapproval and copies of 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.
d. If at any time prior to the Closing Date, Purchaser discovers
any fact or circumstance which would cause a representation or warranty of
Seller to be untrue or misleading, or with the passage of time would become
untrue or misleading and Purchaser fails to notify Seller of such fact or
circumstance, then Purchaser shall be deemed to have waived its right to seek
damages or termination of this Agreement.
17. SURVIVAL OF INDEMNITIES. Notwithstanding anything in this Agreement
to the contrary, the parties' obligations to indemnify, defend and hold each
other 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.
18. 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 Mark Van De Hey, and any
representation or warranty of the Seller is based upon those matters of which
Mark Van De Hey 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 (unless otherwise indicated thereon) are made to the best of
Seller's knowledge and which shall survive the Closing and delivery of the Deed
for a period of ninety (90) days:
<PAGE>
i. (a) The present use and occupancy of the Property conform
with applicable building and zoning laws.
(b) Seller has actual knowledge that it has not received
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.
iii. Except as set forth on Exhibit P attached hereto, Seller
has no knowledge of any pending or threatened litigation, claim, cause of
action or administrative proceeding concerning the Property.
iv. The general partner of Seller has the authority to convey
the Property without first obtaining the consent of any other party.
(This representation is based on actual knowledge and not to the best of
Seller's knowledge.)
v. Seller has not received written notice from any
governmental authority that the Property contains Hazardous Materials or
Hazardous Substances. This representation is based on actual knowledge.
vi. The financial information which Seller has provided to
Purchaser is the same information which Seller relies upon when it issues
reports to its investors and when Seller files its tax returns. This
representation is based on actual knowledge.
vii. Seller has no employees at the Property. This
representation is based on actual knowledge.
viii. Except as may be set forth on the Rent Roll, no tenant
is entitled to free rent after the Closing Date.
c. Seller's Covenants:
i. The management, operation, leasing and maintenance of the
Property, as presently conducted by the Seller, shall continue until the
Closing Date.
ii. Seller shall cause the present management agreement to be
terminated as of the Closing Date.
iii. On the Closing Date, Seller will assign to Purchaser all of
Seller's right, title and interest, if any, in all warranties and
guaranties which are assignable by Seller.
iv. Seller shall request the utility company to read all of the
meters on the Closing Date. To the extent that any of the meters has not
been read on the Closing Date, then those utilities will be prorated based
upon the amount of the meter reading for that particular meter for the
prior billing period.
<PAGE>
v. Immediately after the expiration of the Approval Period,
Seller shall send out notices of termination with reference to all of the
service contracts listed on Exhibit Q except Prime Cable. Seller shall
send copies of the notices of termination to Purchaser.
19. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit L are
the following reports (collectively, "Environmental Report") of the Property,
which Seller is delivering to Purchaser, at Purchaser's request:
a. Phase I Environmental Site Assessment dated October 16, 1995
prepared by Western Technologies Inc.;
b. Letters from Nevada Power Company dated October 13, 1995 and
October 26, 1995.
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.
20. LIMITATION OF SELLER'S LIABILITY. No general or 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.
21. ORGANIZATIONAL DOCUMENTS. On the Closing Date, Purchaser and Seller
will provide each other'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, corporate resolutions authorizing the transaction,
and an incumbency certificate, whichever is applicable. No later than ten (10)
business days prior to the Closing Date, Purchaser shall deliver to the Seller
a copy of its signature block.
22. TIME OF ESSENCE. Time is of the essence of this Agreement.
23. CROSS DEFAULT/OTHER AGREEMENTS. Simultaneously with the execution of
this Agreement, the Purchaser has entered into two other agreements ("Other
Agreements") with Westwood Pointe Associates and Springs Pointe Investors to
acquire Westwood Pointe Apartments, Las Vegas, Nevada and Springs Pointe
Apartments, Las Vegas, Nevada, respectively. Each party hereto acknowledges
that it would not have entered into this Agreement if Purchaser and the sellers
under the Other Agreements had not executed the Other Agreements. A default by
the Purchaser under either of the Other Agreements shall be a default by
Purchaser under this Agreement. A default by a seller under either of the
Other Agreements shall be a default by Seller under this Agreement. If
Purchaser exercises its right of termination under this Agreement, then the
<PAGE>
Other Agreements shall automatically be terminated without further action by
either party. In such event, unless this Agreement is terminated because of a
default by Purchaser, the Earnest Money plus the interest accrued thereon shall
be returned to Purchaser. If there is a termination of this Agreement and the
Other Agreements because of a default by a seller, then any cost recoverable by
Purchaser which was incurred for all of the properties shall be prorated among
all of them.
24. DISTRIBUTIONS. For a period of ninety (90) days after the Closing
Date, Seller shall not distribute $321,937.00 to its partners from the proceeds
of the net cash received from the Purchaser. If Purchaser alleges a claim for
damage against Seller after the Closing Date but prior to the expiration of the
aforesaid ninety (90) day period ("Claim"), then the Seller shall continue to
withhold distribution of the funds in an amount equal to the lesser of (i) the
amount of the Claim, or (ii) $321,937.00, until the Claim is resolved. The
Claim shall specify the exact representation, warranty or covenant which was
breached and the amount of damages the Purchaser alleges it has sustained. If
Seller fails to withhold the amount of the distribution of the funds in
accordance with the provisions of this Agreement, then the general partner
shall have personal liability in an amount equal to the lesser of (i) the
amount of the Claim or (ii) $321,937.00.
25. 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: James Mendelson
847/267-1600
847/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
<PAGE>
TO PURCHASER: Dan K. Shaw
DKS Associates
4435 S. Eastern Avenue
Las Vegas, Nevada 89119
702/737-7166
702/737-1490 (FAX)
with copy to: Barry Goold
Goold, Patterson, DeVore & Rondeau
4496 South Pecos Road
Las Vegas, Nevada 89121
702/436-2600
702/436-2650 (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
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.
26. Intentionally Deleted.
27. LAUNDRY LEASE. As of the Closing Date, Seller will have cancelled
the Web laundry lease.
28. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent. Seller will forward one (1) copy of the executed
Agreement to Purchaser and will forward the following to the Escrow Agent:
a. Earnest Money;
b. One (1) fully executed copy of this Agreement; and
c. Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller.
29. Intentionally Deleted.
30. GOVERNING LAW. The provisions of this Agreement shall be governed by
the laws of the State of Nevada.
31. 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.
<PAGE>
32. 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.
33. 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.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
November 5, 1996.
DKS ASSOCIATES
By: /s/ Dan K. Shaw
----------------------------------
Executed by Seller on SELLER:
_______________, 1996.
WESTWOOD INVESTORS, an Illinois
limited partnership
By: BALCOR PARTNERS-XV, an Illinois
general partnership, a general partner
By: RGF-BALCOR ASSOCIATES-II, an
Illinois general partnership, a partner
By: THE BALCOR COMPANY, a Delaware
corporation, a partner
By: /s/ James E. Mendelson
----------------------------------
<PAGE>
Somerset Pointe
CB Commercial Real Estate Group ("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
By:
------------------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Rent Roll
L - Environmental Report
M - Assignment of Declarant's Rights
M-1 - Quitclaim Assignment of Declarant's Rights
N - Assignment of Intangibles
N-1 - Assignment of Guarantees, Warranties, Permits, Licenses and Approvals
O - Appointment of Members to Architectural Committee
P - Litigation
Q - Service Contracts
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 14198
<SECURITIES> 0
<RECEIVABLES> 635
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16006
<PP&E> 58740
<DEPRECIATION> 26810
<TOTAL-ASSETS> 48222
<CURRENT-LIABILITIES> 1229
<BONDS> 42867
0
0
<COMMON> 0
<OTHER-SE> 4126
<TOTAL-LIABILITY-AND-EQUITY> 48222
<SALES> 0
<TOTAL-REVENUES> 58572
<CGS> 0
<TOTAL-COSTS> 8661
<OTHER-EXPENSES> 2942
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4848
<INCOME-PRETAX> 42121
<INCOME-TAX> 0
<INCOME-CONTINUING> 42121
<DISCONTINUED> 0
<EXTRAORDINARY> 748
<CHANGES> 0
<NET-INCOME> 42869
<EPS-PRIMARY> 303.15
<EPS-DILUTED> 303.15
</TABLE>
