UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 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
Bannockburn, IL 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
PART I
Item 1. Business
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Balcor Realty Investors-84 (the "Registrant") is a limited partnership formed
in 1982 under the laws of the State of Illinois. The Registrant raised
$140,000,000 from sales of Limited Partnership Interests. The Registrant's
operations consist exclusively of investment in and operation of real property,
and all information included in this report relates to this industry segment.
The Registrant utilized the net offering proceeds to acquire twenty-three real
property investments and a minority joint venture interest in one additional
property. The Registrant has since disposed of twelve of these properties,
including the Chimney Ridge Apartments which was sold in February 1996 and the
property in which the Registrant had a minority joint venture interest. As of
December 31, 1995, the Registrant owned the thirteen properties described under
"Properties" (Item 2). The Partnership Agreement provides that the proceeds of
any sale or refinancing of the Registrant's properties will not be reinvested
in new acquisitions.
Overall, the investment real estate market saw gradual improvement over the
last year. This improvement has taken place in an environment of generally low
interest rates and little or no new supply, parameters which may not exist in
the next few years. Demand for real estate space, while projected to improve in
line with the overall economy, is also vulnerable to external forces. The major
challenges facing the real estate industry today include increased
international competition, corporate restructurings, new computer and
communications technologies, an aging population and potential revisions of
the tax code. In addition, the increased flow of capital to real estate through
new vehicles such as commercial mortgage-backed securities and REITs could spur
new construction at unsupportable levels, as well as impact existing property
values.
Operationally, existing apartment properties continued to register occupancy
percentages in the 90s, with average rents rising at an annual rate of between
3 and 4 percent. Apartments are still considered one of the top real estate
asset classes in terms of performance. However, some markets are experiencing
new construction of rental units which, if unrestrained, could impact the
performance of existing properties. Most of the new construction is aimed at
the two segments of the rental market which are growing the fastest: low-income
households and upper-income households who prefer to rent rather than own. Of
all the major asset classes, apartments typically display the least volatility
in terms of property values.
The General Partner had previously advised Limited Partners that its strategy
was to sell the Registrant's remaining assets over the next three to four
years. The General Partner also stated that the timing of the liquidation could
be lengthened or shortened due to changes in market conditions, economic
factors, interest rates and unforeseen events. Since November 1995, the General
Partner believes that the market for multifamily housing properties has become
increasingly favorable to sellers of these properties. This belief is based on
the results of the sales and marketing activities of the Registrant as
described below and based upon the similar results of such activities by
various other partnerships affiliated with the Registrant. These favorable
market conditions are in part attributable to the increasing strength of the
capital markets and the reentry of REITs into the acquisition market. Since
<PAGE>
November 1995, the Registrant has sold one of its properties. Of its remaining
twelve properties, the General Partner (i) has entered into letters of intent
to sell two additional properties; (ii) has begun or is actively marketing two
of its properties for sale; and (iii) if the market remains favorable, intends
to begin actively marketing more of the remaining properties for sale. If the
current market conditions for sales remain favorable and the General Partner
can obtain appropriate sales prices, the Registrant's liquidation strategy may
be accelerated.
The Registrant received notice of an unsolicited offer for the purchase of
Limited Partnership Interests ("tender offer") in November 1995. The tender
offer was made by Walton Street Capital Acquisition Co. L.L.C. ("Walton
Street"). Walton Street stated that their primary motive in making the offer
was to make a profit from the purchase of the interests. Walton Street acquired
7.76 % of the total interests outstanding in the Registrant and assigned the
interests to its affiliate, WIG 84 Partners. The Registrant incurred
administrative costs in responding to the tender offer.
The Registrant received notice of an unsolicited offer for the purchase of
Limited Partnership Interests ("tender offer") on March 11, 1996. The tender
offer was made by Metropolitan Acquisition VII, L.L.C. ("Metropolitan").
Metropolitan has an affiliate of Insignia Financial Group, Inc., which provides
property management services to all of the Registrant's properties.
Metropolitan stated that their primary motive in making the offer is to make a
profit from the purchase of the interests. Metropolitan is seeking to acquire
up to 30% of the total interests outstanding in the Registrant. The Registrant
will incur administrative costs in responding to the tender offer and may incur
additional costs if additional tender offers are made in the future. The
General Partner cannot predict with any certainty what impact this tender offer
or any future tender offers will have on the operations or management of the
Registrant.
The Registrant sold two properties during 1995. See Item 7. Liquidity and
Capital Resources for additional information. The Registrant sold one
additional property in 1996. See below, Other Information.
The Registrant, by virtue of its ownership of real estate, is subject to
federal and state laws and regulations covering various environmental issues.
Management of the Registrant utilizes the services of environmental consultants
to assess a wide range of environmental issues and to conduct tests for
environmental contamination as appropriate. The General Partner is not aware of
any potential liability due to environmental issues or conditions that would be
material to the Registrant.
The officers and employees of Balcor Partners-XV, the General Partner of the
Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.
<PAGE>
Other Information
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Chimney Ridge Apartments
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In June 1983, the Registrant acquired the Chimney Ridge Apartments utilizing
approximately $3,706,120 in offering proceeds. The property was acquired
subject to first mortgage financing of $6,845,000. In October 1993 the
Registrant refinanced the first mortgage loan and received $1,295,160 in excess
financing proceeds.
On February 8, 1996 ("Closing"), the Registrant sold the property for a sale
price of $13,650,000 to Sentinel Acquisitions Corp., a Delaware Corporation
(the "Purchaser"). The Purchaser took title to the property subject to the
existing first mortgage loan, which had an outstanding principal balance of
$7,242,788 as of the Closing. The remaining portion of the sale price was paid
in cash at Closing. From the sale proceeds, the Registrant paid $63,642 in
closing and other costs, $273,000 to an unaffiliated party as a sales
commission, and received the remaining $6,070,571 of sale proceeds. The General
Partner will be reimbursed by the Registrant for actual expenses incurred in
connection with the sale.
Item 2. Properties
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As of December 31, 1995, the Registrant owned the 13 properties described
below:
Location Description of Property
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Jacksonville, Florida Antlers Apartments: a 400-unit apartment complex
located on approximately 43 acres.
Chandler, Arizona Briarwood Place Apartments: a 268-unit apartment
complex located on approximately 15 acres.
Phoenix, Arizona Canyon Sands Village Apartments: a 412-unit
apartment complex located on approximately 20
acres.
Harris County, Texas Chesapeake Apartments: a 320-unit apartment
complex located on approximately 11 acres.
Fort Worth, Texas Chestnut Ridge Apartments (Phase II): a 160-unit
apartment complex located on approximately 6
acres.
Colorado Springs, Colorado *Chimney Ridge Apartments: a 280-unit apartment
complex located on approximately 9 acres.
Dade County, Florida Courtyards of Kendall Apartments: a 300-unit
apartment complex located on approximately 20
acres.
<PAGE>
Tulsa, Oklahoma Creekwood Apartments (Phase I): a 276-unit
apartment complex located on approximately 13
acres.
Oklahoma City, Oklahoma Quail Lakes Apartments: a 384-unit apartment
complex located on approximately 19 acres.
Dallas, Texas Ridgetree Apartments (Phase I): a 444-unit
apartment complex located on approximately 11
acres.
Las Vegas, Nevada Somerset Pointe Apartments: a 452-unit apartment
complex located on approximately 26 acres.
Overland Park, Kansas Sunnyoak Village Apartments: a 548-unit apartment
complex located on approximately 33 acres.
Irving, Texas Woodland Hills Apartments: a 250-unit apartment
complex located on approximately 10 acres.
* This property was sold during February 1996. See Item 1. Business and Note 15
of Notes to Financial Statements for additional information.
Each of the above properties is held subject to various forms of financing.
In the opinion of the General Partner, the Registrant has provided for adequate
insurance coverage for its real estate investment properties.
See Notes to Financial Statements for other information regarding real property
investments.
Item 3. Legal Proceedings
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Proposed class action
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On February 29, 1996, a proposed class action complaint was filed, Raymond
Masri vs. Lehman Brothers, Inc., et al., Case No. 96/103727 (Supreme Court of
the State of New York, County of New York). The Registrant, additional limited
partnerships which were sponsored by The Balcor Company, three limited
partnerships sponsored by the predecessor of Lehman Brothers, Inc. (together
with the Registrant and the affiliated partnerships, the "Defendant
Partnerships"), Lehman Brothers, Inc. and Smith Barney Holdings, Inc. are
defendants. The complaint alleges, among other things, common law fraud and
deceit, negligent misrepresentation and breach of fiduciary duty relating to
the disclosure of information in the offering of limited partnership interests
in the Defendant Partnerships. The 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; recovery from the defendants of all
profits received by them as a result of their actions relating to the Defendant
Partnerships; exemplary damages; attorneys' fees and other costs.
<PAGE>
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 Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the Limited Partners of the Registrant
during 1995.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
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Matters
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There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop; therefore, the
market value of the Limited Partnership Interests cannot reasonably be
determined.
As of December 31, 1995, the number of record holders of Limited Partnership
Interests of the Registrant was 13,402.
Item 6. Selected Financial Data
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Year ended December 31,
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1995 1994 1993 1992 1991
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Total income $ 28,134,122 $ 30,392,509$ 30,159,179 $30,525,777 $31,274,909
Loss before gains
on sale of assets
and extraordinary
items (1,166,028) (2,814,657) (3,588,955) (5,092,181) (6,901,927)
Net income (loss) 3,004,923 5,572,852 2,809,966 (5,092,181) (3,093,431)
Net income (loss)
per Limited
Partnership
Interest 21.25 39.41 19.87 (36.01) (21.88)
Total assets 84,442,075 98,385,353 117,468,061 128,763,485 132,982,864
Mortgage notes
payable 103,293,307 114,779,433 136,404,898 149,910,843 150,663,629
Item 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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Operations
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Summary of Operations
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During 1993, the Ridgetree Phase I first mortgage loan was purchased at a
discount and title to the Highland Glen apartment complex was relinquished
through foreclosure. Balcor Realty Investors-84 (the "Partnership") sold two
properties in August 1994 and repaid certain of the related loans at a
discount. The Partnership also sold two additional properties in 1995. As a
result of these transactions and the timing of their related gains, the
Partnership generated decreased net income during 1995 as compared to 1994 and
generated increased net income during 1994 as compared to 1993. Further
discussion of the Partnership's operations is summarized below.
<PAGE>
Operations
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1995 Compared to 1994
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In August 1994, the Partnership sold the Ridgepoint Hill and Ridgepoint View
apartment complexes and repaid the first mortgage loans held by a third party.
In addition, sales proceeds were used to repay the second mortgage loans and
unsecured third mortgage loan from an affiliate of the General Partner at a
discount. The Partnership also sold the Pinebrook and Drayton Quarter apartment
complexes in February and July 1995, respectively. As a result, the Partnership
recognized gains of $4,080,592 and $5,596,294 on the sales of the properties
during 1995 and 1994, respectively, and extraordinary gains on forgiveness of
debt of $2,791,215 during 1994. These sales also resulted in decreases in
rental and service income, interest expense on mortgage notes payable,
depreciation, property operating expenses, real estate taxes and property
management fees during 1995 as compared to 1994.
All thirteen of the Partnership's remaining properties experienced improved
occupancy and/or higher rental rates in 1995 which resulted in increased rental
and service income and property management fees and partially offset the
decreases from the four property sales.
Due to higher average cash balances and higher average interest rates on
short-term interest bearing instruments, interest income on short-term
investments increased during 1995 as compared to 1994.
Due to decreases in the short term loan balance, interest expense on short-term
loans from an affiliate decreased during 1995 as compared to 1994. This
decrease was partially offset by increases in interest rates during 1995.
The March 1994 refinancing of the Chestnut Ridge Phase II mortgage loan and the
August 1994 sale of the Ridgepoint Hill and Ridgepoint View apartment complexes
resulted in the full amortization during 1994 of deferred expenses related to
the prior loans. This resulted in a decrease in amortization expense during
1995 as compared to 1994.
The gain recognized in connection with the sale of the Pinebrook Apartments
resulted in affiliate's participation in income from joint venture during 1995
as compared to a loss during 1994.
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.
1994 Compared to 1993
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In August 1994, the Partnership sold the Ridgepoint Hill and Ridgepoint View
apartment complexes as described above. During May 1993, title to the Highland
Glen apartment complex was relinquished to the mortgage holder through
foreclosure. As a result, the Partnership recognized an extraordinary gain on
foreclosure. The 1994 property sales and the 1993 foreclosure resulted in
decreases in rental and service income, interest expense on mortgage notes
payable, depreciation, property operating expenses, real estate taxes and
property management fees during 1994 as compared to 1993. These decreases were
partially or, in certain cases, fully offset by the events described below.
<PAGE>
Twelve of the Partnership's remaining properties experienced improved occupancy
and/or higher rental rates in 1994, resulting in increased rental and service
income and property management fees during 1994 as compared to 1993, which
fully offset the decreases from the property sales and foreclosure.
Due to higher average cash balances and higher market interest rates on
short-term interest bearing instruments, interest income on short-term
investments increased during 1994 as compared to 1993.
In accordance with the loan agreements, the interest rates on the Briarwood,
Canyon Sands, Somerset Pointe and Sunnyoak Village mortgage notes decreased in
1993 based on lower market rates and resulted in a decrease in interest expense
on these loans. In addition, during 1994 and 1993, the Chestnut Ridge Phase II
mortgage note and the Ridgetree Phase I and Woodland Hills mortgage notes were
refinanced at lower interest rates and reduced total principal balances. These
decreases in interest expense, as well as the decreases discussed above, were
partially offset during 1994 by interest expense recognized on the Chesapeake
mortgage note, which was obtained during June 1993, and on the Quail Lakes
loan, which had principal-only payments until June 1993 at which time the
payments increased to principal and interest. In addition, the Partnership
recognized extraordinary gains on forgiveness of debt during 1993 in connection
with the refinancings of the Ridgetree Phase I and Chimney Ridge mortgage
loans.
Due to increases in the short-term loan balance payable to an affiliate and
interest rates during 1994, interest expense on short-term loans from an
affiliate increased during 1994 as compared to 1993.
Higher costs for insurance premiums, payroll expenses, contract services and
repair and maintenance expenditures, which included roof and pavement repairs,
landscaping and replacement of floor coverings at many of the Partnership's
properties, resulted in increased property operating expense during 1994 as
compared to 1993. This increase fully offset the decrease from the property
sales and foreclosure.
Due primarily to a higher tax assessment for the Ridgetree Phase I apartment
complex, real estate taxes increased during 1994 as compared to 1993, which
fully offset the decrease from the property sales and foreclosure.
Primarily as a result of increased legal fees relating to the Pinebrook
bankruptcy settlement and increased portfolio management and data processing
expenses, administrative expenses increased during 1994 as compared to 1993.
This increase was partially offset by a decrease in accounting fees during 1994
as compared to 1993.
The Pinebrook apartment complex was owned by a joint venture consisting of the
Partnership and an affiliate. The joint venture recognized other income during
1993 in connection with the purchase of a note investment related to the
property. During 1994, default interest expense was recognized on the fourth
mortgage loan in connection with the bankruptcy plan of reorganization. These
transactions, as well as higher property operating and repairs and maintenance
expenditures at the property which had been deferred due to the bankruptcy,
resulted in an increase in affiliate's participation in loss from joint venture
during 1994 as compared to 1993.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership decreased as of December 31, 1995 as
compared to December 31, 1994. The Partnership received cash from its operating
activities which consisted primarily of cash flow generated from property
operations which were partially offset by the payment of administrative
expenses and short-term interest expense. The Partnership also received cash
from its investing activities relating to the redemption of a restricted
certificate of deposit and the sales of the Pinebrook and Drayton Quarter
apartment complexes. A portion of the proceeds from the property sales was used
in the Partnership's financing activities to repay the related mortgage notes.
The Partnership also used cash to fund its other financing activities which
consisted primarily of a partial repayment of the loan from the General Partner
and principal payments on mortgage notes payable.
The Partnership owes approximately $6,623,000 to the General Partner at
December 31, 1995 in connection with the funding of operating deficits and
borrowings needed for loan refinancings. These loans were repaid in full during
March 1996 primarily from proceeds received in connection with the sale of the
Chimney Ridge Apartments.
The General Partner may continue to provide short-term loans to the Partnership
to fund working capital needs or operating deficits, although there is no
assurance that such loans will be available. Should such borrowings be needed
and not be available either through the General Partner or third parties, the
Partnership may be required to dispose of some of its properties to satisfy its
obligations.
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 1995, twelve of the thirteen remaining properties owned by the
Partnership as of December 31, 1995 generated positive cash flow and one
generated a marginal cash flow deficit. During 1994, of these thirteen
properties, nine generated positive cash flow and four generated marginal cash
flow deficits. The Chestnut Ridge Phase II, Courtyards of Kendall and Woodland
Hills apartment complexes improved from marginal deficits during 1994 to
positive cash flow during 1995 due to increased rental and service income
resulting primarily from higher rental rates. In addition, the Pinebrook and
Drayton Quarter apartment complexes, which were sold in February and July 1995,
respectively, generated marginal deficits during 1994 and prior to their sales
in 1995. As of December 31, 1995, the occupancy rates of the Partnership's
properties ranged from 91% to 97%.
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 the refinancing of
mortgage loans, improving operating performance, and seeking rent increases
where market conditions allow.
<PAGE>
The General Partner had previously advised Limited Partners that its strategy
was to sell the Partnership's remaining assets over the next three to four
years. The General Partner also stated that the timing of the liquidation could
be lengthened or shortened due to changes in market conditions, economic
factors, interest rates and unforeseen events. Since November 1995, the General
Partner believes that the market for multifamily housing properties has become
increasingly favorable to sellers of these properties. This belief is based on
the results of the sales and marketing activities of the Partnership as
described below and based upon the similar results of such activities by
various other partnerships affiliated with the Partnership. These favorable
market conditions are in part attributable to the increasing strength of the
capital markets and the reentry of REITs into the acquisition market. Since
November 1995, the Partnership has sold one of its properties. Of its remaining
twelve properties, the General Partner (i) has entered into letters of intent
to sell two additional properties; (ii) has begun or is actively marketing two
of its properties for sale; and (iii) if the market remains favorable, intends
to begin actively marketing more of the remaining properties for sale. If the
current market conditions for sales remain favorable and the General Partner
can obtain appropriate sales prices, the Partnership's liquidation strategy may
be accelerated.
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.
The Pinebrook Apartments was owned by Pinebrook Investors, a joint venture
consisting of the Partnership and an affiliate. In February 1995, Pinebrook
Investors sold the property in a cash sale for $6,140,000. From the proceeds,
Pinebrook Investors paid $5,058,226 to the third party mortgage holders in full
satisfaction of the first, second and fourth mortgage loans. Additionally,
Pinebrook Investors paid $716,729 in full satisfaction of the third mortgage
note payable to Pinebrook Limited Partnership, a separate joint venture
consisting of the Partnership and the affiliate. Net proceeds received from
this transaction were $871,599, of which $449,484 was the Partnership's share.
See Notes 4, 9 and 11 of Notes to Financial Statements for additional
information.
In July 1995, the Partnership sold the Drayton Quarter Apartments in a cash
sale for $6,250,000. From the sale proceeds, the Partnership paid $4,775,677
to the third party mortgage holder in full satisfaction of the first mortgage
loan, as well as other closing costs. The Partnership received $1,074,318 of
net proceeds. See Note 9 of Notes to Financial Statements for additional
information.
In February 1996, the Partnership sold the Chimney Ridge Apartments in a cash
sale for $13,650,000. The purchaser of the Chimney Ridge Apartments took title
subject to the existing first mortgage loan which had a balance of $7,242,788.
The Partnership received $6,070,571 of net proceeds. See Note 15 of Notes to
Financial Statements for additional information.
A certificate of deposit of $700,000 had been pledged as additional collateral
for the mortgage loan relating to the Canyon Sands Apartments. In March 1995,
the certificate was released to the Partnership.
<PAGE>
In 1995 the Financial Accounting and Standards Board issued Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of" which establishes accounting standards for impairment of
long-lived assets and long-lived assets to be disposed of. This statement has
been adopted by the Partnership as of January 1, 1995 and did not have a
material impact on the financial position or results of operations of the
Partnership.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
Item 8. Financial Statements and Supplementary Data
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See Index to Financial Statements and Financial Statement Schedule in this
Form 10-K.
The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.
The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
December 31, 1995 December 31, 1994
------------------------- -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
---------- --------- ---------- ---------
Total assets $84,442,075 $55,195,888 $98,385,353 $67,625,335
Partners' capital
accounts (deficit):
General Partner (1,515,346) (11,049,547) (1,545,395) (11,230,881)
Limited Partners(26,027,546) (45,083,915) (29,002,420) (49,329,122)
Net income:
General Partner 30,049 181,334 55,728 7,623,711
Limited Partners 2,974,874 4,245,205 5,517,124 1,520,090
Per Limited Part-
nership Interest 21.25 30.32 39.41 10.86
Item 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
- --------------------
There have been no changes in or disagreements with accountants on any matter
of accounting principles, practices or financial statement disclosure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
(a) Neither the Registrant nor Balcor Partners-XV, its General Partner, has a
Board of Directors.
(b, c & e) The names, ages and business experience of the executive officers
and significant employees of the General Partner of the Registrant are as
follows:
TITLE OFFICERS
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Chairman, President and Chief Thomas E. Meador
Executive Officer
Senior Vice President Alexander J. Darragh
Senior Vice President Josette V. Goldberg
Senior Vice President Alan G. Lieberman
Senior Vice President, Chief Brian D. Parker
Financial Officer, Treasurer
and Assistant Secretary
Senior Vice President John K. Powell, Jr.
Thomas E. Meador (July 1947) joined Balcor in July 1979. He is Chairman,
President and Chief Executive Officer and has responsibility for all ongoing
day-to-day activities at Balcor. He is a Director of The Balcor Company. He is
also Senior Vice President of American Express Company and is responsible for
its real estate operations worldwide. Prior to joining Balcor, Mr. Meador was
employed at the Harris Trust and Savings Bank in the commercial real estate
division where he was involved in various lending activities. Mr. Meador
received his M.B.A. degree from the Indiana University Graduate School of
Business.
Alexander J. Darragh (February 1955) joined Balcor in September 1988 and is
responsible for due diligence analysis and real estate advisory services for
Balcor and American Express Company. He also has supervisory responsibility for
Balcor's environmental matters. Mr. Darragh received masters' degrees in Urban
Geography from Queen's University and in Urban Planning from Northwestern
University.
Josette V. Goldberg (April 1957) joined Balcor in January 1985 and has primary
responsibility for all human resources matters. In addition, she has
supervisory responsibility for Balcor's MIS functions. Ms. Goldberg has been
designated as a Senior Human Resources Professional (SHRP).
Alan G. Lieberman (June 1959) joined Balcor in May 1983 and is responsible for
Balcor's property sales and capital markets functions. Mr. Lieberman is a
Certified Public Accountant.
Brian D. Parker (June 1951) joined Balcor in March 1986 and, as Chief Financial
Officer and Chief Accounting Officer, is responsible for Balcor's financial,
legal and treasury functions. He is a Director of The Balcor Company. Mr.
Parker is a Certified Public Accountant and holds an M.S. degree in Accountancy
from DePaul University.
<PAGE>
John K. Powell Jr. (June 1950) joined Balcor in September 1985 and is
responsible for portfolio and asset management matters relating to Balcor's
partnerships. Mr. Powell also has supervisory responsibility for Balcor's risk
management and investor services functions. He received a Master of Planning
degree from the University of Virginia. Mr. Powell has been designated a
Certified Real Estate Financier by the National Society for Real Estate Finance
and is a full member of the Urban Land Institute.
(d) There is no family relationship between any of the foregoing officers.
(f) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1995.
Item 11. Executive Compensation
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The Registrant has not paid and does not propose to pay any remuneration to the
executive officers and directors of the General Partner. Certain of these
officers receive compensation from The Balcor Company (but not from the
Registrant) for services performed for various affiliated entities, which may
include services performed for the Registrant. However, the General Partner
believes that any such compensation attributable to services performed for the
Registrant is immaterial to the Registrant. See Note 8 of Notes to Financial
Statements for the information relating to transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
(a) The following entity is the sole Limited Partner which owns beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant:
Name and Amount and
Address of Nature of Percent
Beneficial Beneficial of
Title of Class Owner Ownership Class
- ---------------------------------------------------------
Limited WIG 84 10,869 7.76%
Partnership Partners Limited
Interests Chicago, Partnership
Illinois Interests
(b) Balcor Partners-XV and its officers and partners own as a group the
following Limited Partnership Interests of the Registrant:
Amount
Beneficially
Title of Class Owned Percent of Class
-------------- ------------- ----------------
Limited Partnership
Interests 116 Interests Less than 1%
<PAGE>
Relatives and affiliates of the partners and officers of the General Partner
own 83 additional Interests.
(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 3 of Notes to Financial Statements for information relating to
the Partnership Agreement and the allocation of distributions and profits and
losses.
See Note 8 of Notes to Financial Statements for information relating to
transactions with affiliates.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
- -------------------------------------------------------------------------
(a)
(1 & 2) See Index to Financial Statements and Financial Statement Schedule in
this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement of Limited Partnership and Amended and
Restated Certificate of Limited Partnership, previously filed as Exhibits 3 and
4.1 to Amendment No. 1 to the Registrant's Registration Statement on Form S-11
dated December 16, 1983 (Registration No. 2-86317) are incorporated herein by
reference.
(4) Form of Confirmation regarding Interests in the Registrant set forth as
Exhibit 4.2 to the Registrant's Report on Form 10-Q for the quarter ended
June 30, 1992 (Commission File No. 0-13349) are incorporated herein by
reference.
(27) Financial Data Schedule of the Registrant for 1995 is attached hereto.
(b) Reports on Form 8-K: No Reports on Form 8-K were filed during the quarter
ended December 31, 1995.
(c) Exhibits: See Item 14(a)(3) above.
(d) Financial Statement Schedules: See Index to Financial Statements and
Financial Statement Schedule in this Form 10-K.
(99) Agreement of Sale and attachment thereto relating to the sale of the
Chimney Ridge apartment complex.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, 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/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: March 29, 1996
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ---------------------- ------------------------------- ------------
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Partners-XV,
/s/Thomas E. Meador the General Partner March 29, 1996
- ---------------------- --------------
Thomas E. Meador
Senior Vice President, and Chief
Financial Officer (Principal
Accounting and Financial
Officer) of Balcor Partners-XV,
/s/Brian D. Parker the General Partner March 29, 1996
- ---------------------- --------------
Brian D. Parker
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants
Financial Statements:
Balance Sheets, December 31, 1995 and 1994
Statements of Partners' Deficit, for the years ended December 31, 1995, 1994
and 1993
Statements of Income and Expenses, for the years ended December 31, 1995, 1994
and 1993
Statements of Cash Flows, for the years ended December 31, 1995, 1994 and 1993
Notes to Financial Statements
Financial Statement Schedule:
III - Real Estate and Accumulated Depreciation, as of December 31, 1995
Financial Statement Schedules, other than that listed, are omitted for the
reason that they are inapplicable or equivalent information has been included
elsewhere herein.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Balcor Realty Investors-84:
We have audited the financial statements and the financial statement schedule
of Balcor Realty Investors-84 (An Illinois Limited Partnership) as listed in
the index of this Form 10-K. These financial statements and the financial
statement schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Balcor Realty Investors-84 at
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedule referred to above, when considered in
relation to the basic financial statements taken as a whole, presents fairly,
in all material respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 27, 1996
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
1995 1994
--------------- --------------
Cash and cash equivalents $ 394,701 $ 1,311,019
Certificate of deposit - restricted 700,000
Escrow deposits 1,928,712 2,501,015
Accounts and accrued interest receivable 663,602 880,932
Prepaid expenses 316,982 33,795
Deferred expenses, net of accumulated
amortization of $1,167,664 in 1995
and $952,643 in 1994 1,070,357 1,353,111
--------------- --------------
4,374,354 6,779,872
--------------- --------------
Investment in real estate:
Land 17,612,218 18,397,507
Buildings and improvements 118,352,136 130,982,523
--------------- --------------
135,964,354 149,380,030
Less accumulated depreciation 55,896,633 57,774,549
--------------- --------------
Investment in real estate, net of
accumulated depreciation 80,067,721 91,605,481
--------------- --------------
$ 84,442,075 $ 98,385,353
=============== ==============
LIABILITIES AND PARTNERS' DEFICIT
Loans payable - affiliate $ 6,623,202 $ 12,153,202
Accounts payable 255,150 328,647
Due to affiliates 122,609 197,822
Accrued liabilities, principally
real estate taxes 1,133,571 1,201,714
Security deposits 557,128 582,347
Mortgage notes payable 101,440,696 112,812,222
Mortgage notes payable - affiliate 1,852,611 1,967,211
--------------- --------------
Total liabilities 111,984,967 129,243,165
--------------- --------------
Affiliate's participation in joint venture (309,997)
--------------
Limited Partners' deficit
(140,000 Interests issued
and outstanding) (26,027,546) (29,002,420)
General Partner's deficit (1,515,346) (1,545,395)
--------------- --------------
Total partners' capital (27,542,892) (30,547,815)
--------------- --------------
$ 84,442,075 $ 98,385,353
=============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
STATEMENTS OF PARTNERS' DEFICIT
for the years ended December 31, 1995, 1994 and 1993
Partners' Deficit Accounts
-------------- -------------- --------------
General Limited
Total Partner Partners (A)
-------------- -------------- --------------
Balance at
December 31, 1992 $ (38,930,633) $ (1,629,223) $ (37,301,410)
Net income for the year
ended December 31, 1993 2,809,966 28,100 2,781,866
-------------- -------------- --------------
Balance at
December 31, 1993 (36,120,667) (1,601,123) (34,519,544)
Net income for the year
ended December 31, 1994 5,572,852 55,728 5,517,124
-------------- -------------- --------------
Balance at
December 31, 1994 (30,547,815) (1,545,395) (29,002,420)
Net income for the year
ended December 31, 1995 3,004,923 30,049 2,974,874
-------------- -------------- --------------
Balance at
December 31, 1995 $ (27,542,892) $ (1,515,346) $ (26,027,546)
============== ============== ==============
(A) Includes a $110,000 investment by the General Partner, which is
treated on the same basis as the other Limited Partnership Interests.
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 years ended December 31, 1995, 1994 and 1993
1995 1994 1993
-------------- -------------- --------------
Income:
Rental and service $ 28,010,225 $ 30,283,700 $ 29,915,125
Interest on short-term
investments 123,897 108,809 76,829
Other Income 167,225
-------------- -------------- --------------
Total income 28,134,122 30,392,509 30,159,179
-------------- -------------- --------------
Expenses:
Interest on mortgage
notes payable 8,828,989 10,764,902 12,047,956
Interest on short-term
loans from an affiliate 568,140 635,617 484,932
Depreciation 3,838,532 4,461,058 4,617,794
Amortization of deferred
expenses 282,754 455,911 471,567
Property operating 10,411,317 12,034,798 11,292,951
Real estate taxes 2,146,633 2,535,394 2,492,324
Property management fees 1,393,102 1,502,309 1,481,954
Administrative 1,075,097 1,049,594 923,660
-------------- -------------- --------------
Total expenses 28,544,564 33,439,583 33,813,138
-------------- -------------- --------------
Loss before gains on sales
of properties, affiliate's
participation in
joint venture and
extraordinary items (410,442) (3,047,074) (3,653,959)
Gains on sales of properties 4,080,592 5,596,294
Affiliate's participation in
(income) loss from joint
venture (755,586) 232,417 65,004
-------------- -------------- --------------
Income (loss) before
extraordinary items 2,914,564 2,781,637 (3,588,955)
-------------- -------------- --------------
Extraordinary items:
Gains on forgiveness
of debt 90,359 2,791,215 2,058,078
Gain on foreclosure
of property 4,340,843
-------------- -------------- --------------
Total extraordinary items 90,359 2,791,215 6,398,921
-------------- -------------- --------------
Net income $ 3,004,923 $ 5,572,852 $ 2,809,966
============== ============== ==============
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 years ended December 31, 1995, 1994 and 1993
(Continued)
1995 1994 1993
-------------- -------------- --------------
Income (loss) before
extraordinary items
allocated to General
Partner $ 29,145 $ 27,816 $ (35,890)
============== ============== ==============
Income (loss) before
extraordinary items
allocated to Limited
Partners $ 2,885,419 $ 2,753,821 $ (3,553,065)
============== ============== ==============
Income (loss) before
extraordinary items per
Limited Partnership
Interest (140,000 issued
and outstanding) $ 20.61 $ 19.67 $ (25.38)
============== ============== ==============
Extraordinary items
allocated to General
Partner $ 904 $ 27,912 $ 63,989
============== ============== ==============
Extraordinary items
allocated to Limited
Partners $ 89,455 $ 2,763,303 $ 6,334,932
============== ============== ==============
Extraordinary items per
Limited Partnership
Interest (140,000 issued
and outstanding) $ 0.64 $ 19.74 $ 45.25
============== ============== ==============
Net income allocated
to General Partner $ 30,049 $ 55,728 $ 28,100
============== ============== ==============
Net income allocated
to Limited Partners $ 2,974,874 $ 5,517,124 $ 2,781,866
============== ============== ==============
Net income per Limited
Partnership Interest
(140,000 issued and
outstanding) $ 21.25 $ 39.41 $ 19.87
============== ============== ==============
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 years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Operating activities: -------------- -------------- --------------
Net income $ 3,004,923 $ 5,572,852 $ 2,809,966
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Extraordinary items:
Gains on forgiveness
of debt (90,359) (2,791,215) (2,058,078)
Gain on foreclosure
of property (4,340,843)
Gains on sales of
properties (4,080,592) (5,596,294)
Affiliate's
participation in
income (loss) from
joint venture 755,586 (232,417) (65,004)
Depreciation of
properties 3,838,532 4,461,058 4,617,794
Amortization of
deferred expenses 282,754 455,911 471,567
Amortization of
discount on note (112,816)
receivable
Deferred interest on
note receivable (131,475) (424,168)
Net change in:
Escrow deposits 155,355 295,653 (1,083,694)
Accounts and accrued
interest receivable 217,330 735,033 (926,249)
Prepaid expenses (283,187) (33,795)
Accounts payable (73,497) (711,561) 72,914
Due to affiliates (75,213) (9,622) (10,263)
Accrued liabilities (68,143) (241,377) 1,365,981
Security deposits (25,219) (17,488) (13,309)
-------------- -------------- --------------
Net cash provided by
operating activities 3,558,270 1,755,263 303,798
-------------- -------------- --------------
Investing activities:
Proceeds from redemption
of restricted
investments 700,000 100,000
Additions to properties (48,774)
Proceeds from sales of
properties 12,390,000 18,659,285
Payment of selling costs (610,180) (250,816)
-------------- -------------- --------------
Net cash provided by
investing activities 12,479,820 18,408,469 51,226
-------------- -------------- --------------
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 years ended December 31, 1995, 1994 and 1993
(Continued)
1995 1994 1993
-------------- -------------- --------------
Financing activities:
Capital contribution by
joint venture partner -
affiliate $ 4,953
Distributions to joint
venture partner -
affiliate $ (445,589) (22,802) $ (23,780)
Proceeds from loan payable
- affiliate 764,128 5,918,837
Repayment of loan payable
- affiliate (5,530,000) (1,218,432) (7,164,610)
Proceeds from issuance of
mortgage notes payable 8,828,700 27,532,897
Repayment of mortgage
notes payable (9,833,903) (20,626,168) (21,205,963)
Repayment of mortgage
notes payable-affiliate (5,668,638) (1,912,948)
Principal payments on
mortgage notes payable (1,447,264) (1,574,407) (1,579,971)
Principal payments on
mortgage notes payable -
affiliate (114,600) (133,699) (7,675)
Payment of deferred
expenses (198,136) (967,631)
Payment of financing
escrows (113,250) (896,083)
Release of financing
escrows 416,948 368,609 32,228
-------------- -------------- --------------
Net cash used in
financing activities (16,954,408) (19,589,142) (274,699)
-------------- -------------- --------------
Net change in cash and cash
equivalents (916,318) 574,590 80,325
Cash and cash equivalents
at beginning of year 1,311,019 736,429 656,104
-------------- -------------- --------------
Cash and cash equivalents
at end of year $ 394,701 $ 1,311,019 $ 736,429
============== ============== ==============
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. Balcor Realty Investors-84 (the "Partnership") is engaged principally in the
operation of residential real estate located in various markets within the
United States.
2. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could vary from those estimates.
(b) Depreciation expense is computed using straight-line and accelerated
methods. Rates used in the determination of depreciation are based upon the
following estimated useful lives:
Buildings and improvements 20 to 30 years
Furniture and fixtures 5 to 7 years
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements are charged to the related asset account.
Interest incurred while properties were under construction was capitalized.
As properties are sold, the related costs and accumulated depreciation are
removed from the respective accounts. Any gain or loss on disposition is
recognized in accordance with generally accepted accounting principles.
(c) Effective January 1, 1995 the Partnership adopted Statement of Financial
Accounting Standards, No. 121 (SFAS 121), ("Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of"). Under SFAS 121,
the Partnership records its investments in real estate at the lower of cost or
fair value, and periodically assesses, but not less than on an annual basis,
possible impairment to the value of its properties. The General Partner
estimates the fair value of its properties by dividing the property's expected
net operating income by a risk adjusted rate of return which considers economic
and demographic conditions in the market. In the event the General Partner
determines an impairment in value has occurred, and the carrying amount of the
real estate asset will not be recovered, a provision is recorded to reduce the
carrying basis of the property to its estimated fair value. The General Partner
considers the method referred to above to result in a reasonable measurement of
a property's fair value, unless other factors affecting the property's value
indicate otherwise.
(d) Deferred expenses consist of financing fees which are amortized over the
terms of the respective agreements.
<PAGE>
(e) The Financial Accounting Standard Board's Statement No. 107, "Disclosures
About Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments for which it is practicable to estimate
that value. Since quoted market prices are not available for the Partnership's
financial instruments, fair values have been based on estimates using present
value techniques. These techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, may not
be realized in immediate settlement of the instrument. Statement No. 107 does
not apply to all balance sheet items and excludes certain financial instruments
and all non-financial instruments such as real estate from its disclosure
requirements.
(f) Cash and cash equivalents include all unrestricted, highly liquid
investments with an original maturity of three months or less.
(g) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership income or loss in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
(h) Revenue is recognized on an accrual basis in accordance with generally
accepted accounting principles.
(i) Reclassifications have been made to the previously reported 1994 and 1993
financial statements to conform with the classification used in 1995. These
reclassifications have not changed the 1994 or 1993 results.
3. Partnership Agreement:
The Partnership was organized in September 1982. The Partnership Agreement
provides for Balcor Partners-XV to be the General Partner and for the admission
of Limited Partners through the sale of up to 150,000 Limited Partnership
Interests at $1,000 per Interest, 140,000 of which were sold on or prior to
June 27, 1984, the termination date of the offering.
The Partnership Agreement provides that the General Partner generally will be
allocated 1% of the profits and losses. One hundred percent of "Net Cash
Receipts" available for distribution shall be distributed to the holders of
Interests in proportion to their participating percentages as of the record
date for such distributions. In addition, there shall be accrued for the
benefit of the General Partner as its distributive share from operations an
amount equivalent to approximately 1% of the total Net Cash Receipts being
distributed, which will be paid only out of Net Cash Proceeds.
Under certain circumstances, the General Partner may also participate in the
Net Cash Proceeds of the sale or refinancing of Partnership properties. When
and as the Partnership sells or refinances its properties, the Net Cash
Proceeds resulting therefrom, which are available for distribution, will be
distributed only to holders of Interests until such time as holders of
Interests have received an amount equal to their Original Capital plus certain
levels of return as specified by the Partnership Agreement. Only after such
returns are made to the Limited Partners will the General Partner receive 15%
of further distributed Net Cash Proceeds, which will include the accrued
distributive share of Net Cash Receipts, subject to increase by an amount equal
<PAGE>
to certain acquisition fees the General Partner would otherwise have been
entitled to pursuant to the Partnership Agreement.
4. Mortgage Notes Payable:
Mortgage notes payable at December 31, 1995 and 1994 consisted of the
following:
Carrying Carrying Current Final
Property Amount of Amount of Inter- Matur- Current Estimated
Pledged as Notes at Notes at est ity Monthly Balloon
Collateral 12/31/95 12/31/94 Rate Date Payment Payment
- --------------- ---------- ---------- ------ ------ -------- ----------
Mortgage Notes Payable - Non-affiliates:
Apartment Complexes:
Antlers $10,161,114 $10,309,549 8.25% 1998 $82,787 $9,731,000
Briarwood Place 6,018,798 6,137,179 6.498% 1998 43,961 5,606,000
Canyon Sands
Village 9,055,999 9,265,525 6.498% 1998 66,130 8,460,000
Chesapeake 5,108,001 5,140,624 7.875% 2028 36,357 None
Chimney Ridge(A) 7,249,103 7,321,840
Chestnut Ridge
(Phase II) (B) 3,090,142 3,112,914 9.02% 2001 25,219 2,934,000
Courtyards of
Kendall (C) 8,990,100 9,137,019 9.50% 1997 83,906 9,014,000
Creekwood (D) 5,635,134 5,677,152 8.88% 1999 45,372 5,465,000
Drayton Quarter (E) 4,796,013
Pinebrook (F) 5,068,603
Quail Lakes (G) 6,743,445 6,801,164 8.25% 2001 51,295 6,350,000
Ridgetree(Phase I) 9,506,559 9,569,351 10.05% 2000 85,139 9,157,000
Somerset Pointe 11,221,088 11,473,744 6.498% 1998 80,531 10,501,000
Sunnyoak Village 13,711,573 14,008,532 7.33% 2015 106,091 None
Woodland Hills 4,949,640 4,993,013 8.54% 1998 39,009 4,828,000
----------- -----------
Subtotal 101,440,696 112,812,222
----------- -----------
Mortgage Notes Payable - Affiliates:
Apartment Complexes:
Chestnut Ridge (H) 1,515,739 1,515,739 10.50% 2002 (H) 1,516,000
Woodland Hills (I) 336,872 451,472 10.50% 1999 (I) 451,000
----------- -----------
Subtotal 1,852,611 1,967,211
----------- -----------
Total $103,293,307$114,779,433
============ ===========
(A) In February 1996, this property was sold. The mortgage maturity amount is
included in the 1996 maturity schedule amount below. See Note 15 of Notes to
Financial Statements for additional information.
<PAGE>
(B) In March 1994, this loan was refinanced. The interest rate decreased from
9.75% to 9.02%, the maturity date was changed from January 2002 to April 2001
and the monthly payments increased from $24,073 to $25,219. Proceeds from the
new $3,128,700 first mortgage loan were used to repay the existing $2,841,601
first mortgage loan as well as $287,099 of the secured loan from The Balcor
Company ("TBC"), an affiliate of the General Partner as successor to Balcor
Real Estate Holdings, Inc. ("BREHI") loan.
(C) The Partnership is obligated to pay the lender (upon the earlier of
maturity or the sale or refinancing of the property) additional interest equal
to the lesser of: (i) 25% of the amount by which the agreed upon value of the
property at maturity or upon sale or refinancing exceeds $10,100,000, or (ii)
interest which would have accrued on the loan from June 1, 1992 through the
earlier of maturity or the sale or refinancing of the property at a rate of 15%
per annum.
(D) In May 1994, this loan was refinanced. The interest rate changed from a
floating rate to a fixed rate of 8.88%, the maturity date was extended from
September 1994 to June 1999, and the monthly payments decreased from $49,953 to
$45,372. Proceeds from the new $5,700,000 first mortgage loan were used to
repay the existing first mortgage loan of $5,246,568.
(E) In July 1995, this property was sold. See Note 9 of Notes to Financial
Statements for additional information.
(F) In December 1992, Pinebrook Investors, the joint venture which owned the
property filed for protection under the U.S. Bankruptcy Code. In 1994, a plan
of reorganization was approved by the Bankruptcy Court. Under the plan, the
wrap-around features of the various mortgage notes were eliminated and the
notes became first, second, third and fourth mortgage notes upon which the
joint venture made monthly payments totaling $40,761, a portion of which would
be deferred based on availability of cash flow, at interest rates ranging from
8.875% to 10%. Under the plan of reorganization, the new first, second and
fourth mortgage loan balances became $2,294,722, $1,712,135 and $1,006,029,
respectively. The third mortgage note payable was eliminated, along with its
monthly payments, through consolidation of the financial statements. In
February 1995, Pinebrook Investors sold the property. See Notes 9 and 11 of
Notes to Financial Statements for additional information.
(G) In March 1994, this loan was modified. Effective February 1994, the
interest rate increased from 6.745% to 8.25%, the maturity date was extended
from March 1995 to March 2001 and the monthly payments increased from $44,612
to $51,295.
(H) This note represents a subordinate nonrecourse loan of $1,315,739 payable
to TBC and a preferred limited partnership interest of $200,000 in the
subsidiary partnership which holds title to the property. During 1994, $287,099
of the proceeds from the new first mortgage loan were used to repay a portion
of the $414,897 deferred interest on the previous junior loans from affiliates.
In addition, as a requirement of the first mortgage loan, of the remaining
balances of the junior loans and deferred interest, $1,441,300 was retired and
replaced with a General Partner loan and the remainder was retired and replaced
with the current notes and preferred limited partnership interest. The contract
rate on the TBC loan remains unchanged at 10.5%, which is the rate of return
earned on the preferred limited partnership interest as well. The interest pay
rate on the TBC loan is the lower of the contract rate or the net cash flow
from the property. Any deferred interest on the TBC loan will be payable at
<PAGE>
maturity. The Limited Partners' position is unaffected by this conversion of a
portion of the junior loans to an equity position as Limited Partners' equity
is subordinate to the preferred interest just as it was subordinate to the
junior loans prior to the recharacterization.
(I) This note represents a second mortgage loan payable to TBC. Repayment of
the TBC loan is subordinated to a payment to the Partnership from sale or
refinancing proceeds from this property of $1,800,000. The interest pay rate is
the lower of the contract rate or the net cash flow from the property, after
payment of interest on the first mortgage loan, limited to a maximum annual
deficit of $62,500. Deferred interest on the second mortgage loan is
accumulated and bears interest at the contract rate.
The Partnership's mortgage loans payable to non-affiliates described above
require current monthly payments of principal and interest. During the years
ended December 31, 1995, 1994 and 1993, the Partnership incurred interest
expense on mortgage notes payable to non-affiliates of $8,605,824, $10,132,223
and $10,882,258, respectively. The Partnership paid interest expense of
$8,611,797 in 1995, $10,140,419 in 1994, and $10,655,057 in 1993. See Note 8 of
Notes to Financial Statements for interest paid and incurred on loans payable
to affiliates.
Real estate held for investment with an aggregate carrying value of $80,067,721
at December 31, 1995 was pledged as collateral for repayment of mortgage loans.
Future annual maturities of the mortgage notes payable - non-affiliates and
mortgage note payable - affiliates during each of the next five years are
approximately as follows:
1996 $ 8,702,000
1997 10,225,000
1998 40,397,000
1999 6,431,000
2000 9,724,000
5. Management Agreements:
As of December 31, 1995, all of the properties owned by the Partnership are
under management agreements with a third-party management company. These
management agreements provide for annual fees of 5% of gross operating
receipts.
6. Affiliate's Participation in Joint Venture:
The Pinebrook apartment complex was purchased by Pinebrook Investors, a joint
venture between the Partnership and an affiliated partnership. Profits and
losses were allocated 51.57% to the Partnership and 48.43% to the affiliate.
All assets, liabilities, income and expenses of the joint venture were included
in the financial statements of the Partnership with the appropriate adjustment
for profit or loss for each affiliate's participation. Net distributions of
$445,589, $17,849 and $23,780 were made to the joint venture partner in 1995,
1994 and 1993, respectively.
<PAGE>
7. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder and existing interpretations
thereof. The accompanying financial statements which are prepared in accordance
with generally accepted accounting principles will differ from the tax returns
due to the different treatment of various items as specified in the Internal
Revenue Code. The net effect of these accounting differences is that the net
income for 1995 in the financial statements is $1,421,616 less than the tax
income of the Partnership for the same period.
8. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/95 12/31/94 12/31/93
----------------- -------------------- -------------------
Paid Payable Paid Payable Paid Payable
-------- -------- ---------- --------- --------- ---------
Property manage-
ment fees None None $1,401,854 None $1,477,069 $135,884
Reimbursement
of expenses to
General Partner
at cost:
Accounting $ 56,140 $ 4,699 119,390 $39,870 64,346 5,325
Data processing 60,314 5,838 102,770 20,814 57,699 10,401
Investor
communications 6,984 None 12,677 4,234 10,210 845
Legal 65,226 9,053 35,233 11,767 27,006 2,235
Other 8,920 370 43,319 14,467 32,012 2,649
Portfolio mgmt. 217,759 32,529 127,397 38,107 118,754 9,356
The Partnership participates in an insurance deductible program with other
affiliated partnerships in which the program pays claims up to the amount of
the deductible under the master insurance policies for its properties. The
program is administered by an affiliate of the General Partner who receives no
fee for administering the program; however, the General Partner is reimbursed
for program expenses. The Partnership paid premiums to the deductible insurance
program of $192,179, $310,984, and $208,938 for 1995, 1994 and 1993,
respectively.
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed the
Partnership's properties until the affiliate was sold to a third party in
November 1994.
During 1994, $1,441,300 of an unsecured affiliate loan relating to the Chestnut
Ridge Phase II Apartments was retired and replaced with a General Partner loan
as a result of the March 1994 refinancing of that property. In addition, the
Partnership borrowed an additional $764,128 during 1994 to meet working capital
requirements. The Partnership repaid $5,530,000 of these loans from the General
Partner during 1995. As of December 31, 1995, the Partnership had outstanding
short-term loans totaling $6,623,202 from the General Partner with accrued
interest payable on these loans totaling $70,120. The Partnership repaid the
balance outstanding at December 31, 1995 during March 1996 primarily with
<PAGE>
proceeds from the sale of Chimney Ridge Apartments. (See Note 15 of Notes to
Financial Statements for additional information.) During 1995, 1994 and 1993,
the Partnership incurred interest expense of $568,140, $635,617 and $484,932
and paid interest expense of $566,583, $607,803 and $511,973 on these loans,
respectively. Interest expense is computed at the American Express Company cost
of funds rate plus a spread to cover administrative costs. As of December 31,
1995, this rate was 6.307%.
In March 1994, the Partnership refinanced the Chestnut Ridge Phase II mortgage
loans payable, including a second mortgage loan previously outstanding to TBC,
an affiliate of the General Partner, and the unsecured loan described above.
See Note 4 of Notes to Financial Statements for additional information.
In August 1994, the Partnership repaid the Ridgepoint Hill and Ridgepoint View
TBC loans at a discount in connection with the sale of these properties. See
Note 9 of Notes to Financial Statements for additional information.
As of December 31, 1995, the Partnership had junior loans outstanding from TBC
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 $38,267. See Note 4 of Notes to Financial Statements for
additional information. During 1995, 1994 and 1993, the Partnership incurred
interest expense of $223,165, $632,679 and $1,165,698 and paid interest expense
of $214,521, $913,199 and $770,479 on these affiliated mortgage loans,
respectively.
The General Partner may continue to make arrangements to provide short-term
loans to the Partnership to fund future working capital needs or operating
deficits, although there is no assurance that such loans will be available.
Should borrowings be needed and not be available either through the General
Partner or third parties, the Partnership may be required to dispose of some of
its properties to satisfy its obligations.
9. Property Sales:
The Pinebrook Apartments, which was owned by a joint venture consisting of the
Partnership and an affiliate, and the Drayton Quarter Apartments were sold
during 1995 and the Ridgepoint Hill and Ridgepoint View apartment complexes
were sold during 1994 in separate all cash sales totaling $12,390,000 and
$18,659,285, respectively.
From the proceeds of the sales, $9,833,903 and $12,658,037, which included
accrued interest, was paid to the third party mortgage holders in full
satisfaction of the underlying mortgage loans, respectively, as well as
brokerage commissions and other closing costs. The remaining $1,945,917 of 1995
sale proceeds were used to repay loans from the General Partner. The remaining
$5,381,539 of 1994 sales proceeds were paid to an affiliate of the General
Partner in full satisfaction of the second mortgage loan and an unsecured third
mortgage loan. This represented a discount of $2,791,215 from the outstanding
balance of the affiliate loans and accrued interest. The Partnership did not
receive any proceeds from the 1994 sale of the properties.
The bases of these properties totaled $7,699,228 and $12,812,175 which is net
of accumulated depreciation of $5,716,448 and $6,249,032, respectively. For
financial statement purposes, the Partnership recognized gains totaling
$4,080,592 and $5,596,294 from the sales of these properties during 1995 and
<PAGE>
1994, respectively, of which $780,279 was the affiliate minority joint venture
partner's share relating to Pinebrook Apartments.
10. Restricted Investments:
As of December 31, 1993, a certificate of deposit of $700,000 was pledged as
additional collateral related to the Canyon Sands mortgage loan. This amount
was invested in short-term instruments pursuant to the terms of the agreement
with the lending institution. Interest earned on the collateral accumulated to
the benefit of the Partnership. In March 1995, the certificate was released to
the Partnership.
In addition, an affiliate of the General Partner had been providing a guarantee
against a letter of credit in the amount of $250,000 posted as additional
collateral for the funding of capital improvements on the Courtyards of Kendall
apartment complex. During 1994, the letter of credit was cashed and applied to
the principal balance of the underlying mortgage loan.
11. Net Investment in Note Receivable:
The Pinebrook apartment complex was owned by Pinebrook Investors, a joint
venture consisting of the Partnership and an affiliate, and was financed with a
$5,185,000 wrap-around mortgage note payable to Lexington Associates, the
seller of the property ("Lexington"), which wrapped two underlying mortgage
notes payable to Pinebrook Limited Partnership, a separate joint venture
consisting of the Partnership and the affiliate. These notes in turn wrapped a
mortgage note payable to Tates Creek Place ("Tates Creek"). As of December 31,
1993, the Partnership's net investment in the notes was $914,040, consisting of
the wrap-around notes receivable from Lexington of $4,885,918, offset by the
mortgage note payable to Tates Creek of $3,971,878. In December 1992, Pinebrook
Investors filed for protection under the U.S. Bankruptcy Code and a plan of
reorganization was approved by the Bankruptcy Court and made effective in May
1994. Under the plan of reorganization, the wrap-around features of the various
mortgage notes were eliminated and the mortgage notes payable by Pinebrook
Investors to third parties became first, second and fourth mortgage notes. The
net investment of $914,040 described above was recharacterized as a third
mortgage note payable by Pinebrook Investors to Pinebrook Limited Partnership.
The operations of these joint ventures have been consolidated within the
Partnership's financial statements, and the related intercompany mortgage notes
transactions have been eliminated. In February 1995, the Partnership sold the
Pinebrook apartment complex. See Note 9 of Notes to Financial Statements for
additional information.
12. Extraordinary Items:
(a) 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 the Canyon Sands Village, Somerset Pointe and Sunnyoak Village
apartment complexes.
(b) During 1994, the Ridgepoint Hill and Ridgepoint View apartment complexes
were sold. In connection with the sale, the Partnership repaid the second
mortgage loans and an unsecured third mortgage loan due to an affiliate of the
General Partner at a discount. This transaction resulted in an extraordinary
gain on forgiveness of debt of $2,791,215 during 1994 for financial statement
purposes. See Note 9 of Notes to Financial Statements for additional
information.
<PAGE>
(c) During 1993, the Ridgetree Phase I and the Chimney Ridge mortgage notes
were refinanced. The mortgage notes which had outstanding balances totaling
$18,322,426, including accrued interest, were repaid for $16,264,348. These
transactions resulted in extraordinary gains on forgiveness of debt totaling
$2,058,078 during 1993 for financial statement purposes.
(d) During 1993, title to the Highland Glen Apartments was relinquished through
foreclosure. The Partnership wrote-off the property basis of $10,613,575, net
of accumulated depreciation of $4,252,309, a mortgage loan balance of
$14,918,362 and accrued real estate taxes of $36,056. The Partnership
recognized an extraordinary gain on foreclosure of property of $4,340,843
during 1993 for financial statement purposes.
13. Contingency:
The Briarwood apartment complex is located in the path of a planned expansion
of a road, which is adjacent to the property. Discussions for this expansion
have been ongoing, and the General Partner has been attending the public
hearings due to its opposition to this expansion. If the current plans are
approved, approximately 68 of the complex's 268 units would be condemned, which
would have a significant impact on the property's value. Currently it is
unclear whether the future approvals for the expansion and funding for the road
project will be obtained and, if obtained, what compensation the Partnership
would receive for the units or when the work would begin.
14. Fair Value of Financial Instruments:
The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1995 are as follows:
The carrying values of cash and cash equivalents, accounts and accrued interest
receivable, accounts and accrued interest payable approximate fair value.
Mortgage notes payable: Based on borrowing rates available to the Partnership
at the end of 1995 for mortgage loans with similar terms and maturities, the
fair value of the mortgage notes payable approximate the carrying value.
15. Subsequent Events:
(a) In February 1996, the Partnership sold the Chimney Ridge Apartments in an
all cash sale for $13,650,000. The purchaser took title subject to the existing
first mortgage loan which had a balance of $7,242,788. From the proceeds of the
sale, the Partnership paid $336,642 in closing costs, and received $6,070,571
of net sale proceeds. The basis of the property was $4,427,342, net of
accumulated depreciation of $3,137,301. The Partnership will recognize a gain
of $8,886,016 in its 1996 financial statements.
<PAGE>
(b) On February 29, 1996, a proposed class action complaint was filed, Raymond
Masri vs. Lehman Brothers, Inc., et al., Case No. 96/103727 (Supreme Court of
the State of New York, County of New York). The Partnership, additional limited
partnerships which were sponsored by The Balcor Company, three limited
partnerships sponsored by the predecessor of Lehman Brothers, Inc. (together
with the Partnership and the affiliated partnerships, the "Defendant
Partnerships"), Lehman Brothers, Inc. and Smith Barney Holdings, Inc. are
defendants. The complaint alleges, among other things, common law fraud and
deceit, negligent misrepresentation and breach of fiduciary duty relating to
the disclosure of information in the offering of limited partnership interests
in the Defendant Partnerships. The 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; recovery from the defendants of all
profits received by them as a result of their actions relating to the Defendant
Partnerships; exemplary damages; 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 Registrant.
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
<CAPTION>
Col. A Col. B Col. C Col. D
- --------------------- -------- -------------------- ---------------------------------
Initial Cost Cost Adjustments
to Partnership Subsequent to Acquisition
-------------------- ---------------------------------
Buildings Carrying Reduction
Encum- and Im- Improve- Costs of Basis
Description brances Land provements ments (b) (c)
- --------------------- ------- -------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Antlers Apts., 400
units in Jackson-
ville, FL (a) $2,601,798 $9,945,202 None $2,161,742 $(1,195,047)
Briarwood Place
Apts., 268 units
in Chandler, AZ (a) 1,100,000 5,966,000 None 581,947 None
Canyon Sands Village
Apts., 412 units
in Phoenix, AZ (a) 1,142,000 9,368,000 None 971,625 (313,655)
Chesapeake Apts.,
320 units in
Harris Cty., TX (a) 1,350,000 7,691,000 $48,774 703,107 (1,081,825)
Chestnut Ridge
Apts. II, 160
units in Fort
Worth, TX (a) 1,058,000 4,294,000 None 482,300 (151,393)
Chimney Ridge Apts.,
280 units in Colo-
rado Springs, CO (a) 730,875 6,444,625 None 905,445 (516,301)
Courtyards of
Kendall Apts.,
300 units in
Dade County, FL (a) 1,000,000 10,180,000 175,361 21,775 (1,114,788)
Creekwood Apts.,
276 units in
Tulsa, OK (a) 1,460,000 5,555,000 None 676,095 (648,404)
Quail Lakes Apts.,
384 units in
Oklahoma City, OK (a) 1,043,580 9,630,670 220,851 891,563 (911,756)
Ridgetree Apts. I,
444 units in
Dallas, TX (a) 1,778,000 10,712,000 None 1,514,711 None
Somerset Pointe
Apts., 452 units
in Las Vegas, NV (a) 1,992,000 11,695,000 15,800 1,081,592 (69,353)
Sunnyoak Village
Apts., 548 units
in Overland Park,
KS (a) 1,866,000 14,878,000 None 1,700,433 (196,687)
Woodland Hills Apts.,
250 units in
Irving, TX (a) 1,745,000 5,795,000 None 1,030,017 (2,041,325)(d)
----------- ----------- -------- ----------- ------------
Total $18,867,253 $112,154,497 $460,786 $12,722,352 $ (8,240,534)
=========== ============ ======== =========== ============
</TABLE>
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
<CAPTION>
Col. A Col. E Col. F Col. G Col. H Col. I
- ------------------- -------------------------------- -------- -------- ------ --------------
Gross Amounts at Which Life Upon
Carried at Close of Period Which Depre-
-------------------------------- ciation in
Buildings Accumulated Date Date Latest Income
and Im- Total Deprecia- of Con- Acq- Statement
Description Land provements (e)(f) tion(f) struction uired is Computed
- ------------------- -------- ---------- ----------- --------- --------- ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Antlers Apts., 400
units in Jackson-
ville, FL $ 2,385,335 $ 11,128,360 $ 13,513,695 $ 4,985,605 1985 12/83 (g)
Briarwood Place
Apts.,268 units
in Chandler, AZ 1,101,549 6,546,398 7,647,947 3,068,387 1983 3/83 (g)
Canyon Sands Village
Apts., 412 units
in Phoenix, AZ 1,111,675 10,056,295 11,167,970 4,779,791 1983 11/82 (g)
Chesapeake Apts.,
320 units in
Harris Cty., TX 1,188,811 7,522,245 8,711,056 3,589,316 1983 1/83 (g)
Chestnut Ridge
Apts. II, 160
units in Fort
Worth, TX 1,032,620 4,650,287 5,682,907 2,057,773 1984 8/83 (g)
Chimney Ridge Apts.,
280 units in Colo-
rado Springs, CO 684,989 6,879,655 7,564,644 3,115,941 1984 6/83 (g)
Courtyards of
Kendall Apts.,
300 units in
Dade County, FL 902,287 9,360,061 10,262,348 6,061,504 1970 3/84 (g)
Creekwood Apts.,
276 units in
Tulsa, OK 1,335,226 5,707,465 7,042,691 2,639,365 1984 5/83 (g)
Quail Lakes Apts.,
384 units in
Oklahoma City, OK 955,116 9,919,792 10,874,908 4,524,871 1984 3/83 (g)
Ridgetree Apts. I,
444 units in
Dallas, TX 1,779,031 12,225,680 14,004,711 5,354,929 1984 2/83 (g)
Somerset Pointe
Apts., 452 units
in Las Vegas, NV 1,986,250 12,728,789 14,715,039 5,702,273 1984 7/83 (g)
Sunnyoak Village
Apts., 548 units
in Overland Park,
KS 1,847,432 16,400,314 18,247,746 7,428,392 1984 7/83 (g)
Woodland Hills Apts.,
250 units in
Irving, TX 1,301,897 5,226,795 6,528,692 2,588,486 1984 1/83 (g)
----------- ----------- ----------- -----------
Total $17,612,218 $118,352,136 $135,964,354 $55,896,633
=========== ============ ============ ===========
</TABLE>
<PAGE>
BALCOR REALTY INVESTORS-84
(An Illinois Limited Partnership)
NOTES TO SCHEDULE III
(a) See description of mortgage notes payable in Note 4 of Notes to Financial
Statements.
(b) Consists of legal fees, appraisal fees, title costs, other related
professional fees and capitalized construction period interest.
(c) Guaranteed income earned on properties under the terms of certain
management and guarantee agreements was recorded by the Partnership as a
reduction of the basis of the property to which the guaranteed income related.
(d) A reduction of basis was made to write down the property to its December
31, 1988 mortgage liability balance.
(e) The aggregate cost of land for Federal income tax purposes is $18,674,642
and the aggregate cost of buildings and improvements for Federal income tax
purposes is $112,035,345. The total of these is $130,709,987.
(f) Reconciliation of Real Estate
-----------------------------
1995 1994 1993
------------- ------------ ------------
Balance at beginning of year $149,380,030 $168,441,237 $183,258,347
Additions during year:
Improvements None None 48,774
Deductions during year
Foreclosure of investment
properties None None (14,865,884)
Cost of real estate sold (13,415,676) (19,061,207) None
------------ ------------ ------------
Balance at close of year $135,964,354 $149,380,030 $168,441,237
============ ============ ============
Reconciliation of Accumulated Depreciation
------------------------------------------
1995 1994 1993
---------- ---------- ----------
Balance at beginning of year $57,774,549 $59,562,523 $ 59,197,038
Depreciation expense for
the year 3,838,532 4,461,058 4,617,794
Accumulated depreciation
of foreclosed investment
properties None None (4,252,309)
Accumulated depreciation
of real estate sold (5,716,448) (6,249,032) None
------------ ------------ ------------
Balance at close of year $55,896,633 $ 57,774,549 $ 59,562,523
============ ============ ============
(g) Depreciation expense is computed based upon the following estimated useful
lives:
Years
-----
Buildings and improvements 20 to 30
Furniture and fixtures 5 to 7
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 8 day of December, 1995, by and
between SENTINEL ACQUISITIONS CORP., a Delaware Corporation ("Purchaser") and
CHIMNEY RIDGE INVESTORS, an Illinois Limited Partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Thirteen Million Six Hundred-Fifty Thousand and No/100 Dollars
($13,650,000.00) ("Purchase Price"), that certain property ("Property") in
Colorado Springs, Colorado, more particularly described on Exhibit A attached
hereto, which Property is known as Chimney Ridge 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 280 apartment units on approximately 8.9 acres, consisting of 216
one-bedroom apartments and 64 two-bedroom apartments, and a clubhouse, 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 $150,000.00
("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;
b. By taking title to the Property subject to the existing first
mortgage ("First Mortgage") to the benefit of Berkshire Mortgage Finance
Limited Partnership ("Lender"), which secures a note to the benefit of Lender
in the original principal amount of $7,400,000.00 ("First Note"). The unpaid
principal balance on the First Note as of the Closing Date (as hereinafter
defined) will be approximately $7,250,000.00; and
c. On the Closing Date (as hereinafter defined), $6,400,000.00
(inclusive of all Earnest Money and the interest accrued thereon) 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. The cash due at Closing will be adjusted to
reflect any increase or decrease in the amount of the principal balance due on
the First Note as of the Closing Date.
3. UNDERLYING OBLIGATIONS. Copies of the First Note and First Mortgage are
attached hereto as Exhibit D and are sometimes hereinafter referred to as the
"Existing Note" and "Existing Encumbrance". If the First Mortgage documents
require that the Lender consent to the conveyance provided for in this
Agreement, then the parties' obligations hereunder are subject to receipt of
the consent ("Consent") and an Estoppel Certificate (as hereinafter defined).
The Purchaser agrees to execute the documents required by the Lender in order
to obtain Lender's Consent, provided that, except for the limited personal
liability provisions presently contained in the First Mortgage documents,
Purchaser will not assume any personal liability for the indebtedness and the
Consent shall not require a change in the interest rate or a change in the
maturity date of the loan. If the Consent is not received by Seller within
<PAGE>
five (5) days prior to the Closing Date, then either party shall have the right
upon notice to the other party delivered not less than three (3) days prior to
the Closing Date to terminate this Agreement. In the event of termination of
this Agreement, all the Earnest Money plus all accrued interest shall be
delivered to the Purchaser.
4. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit E is a title commitment dated November 2,
1995 ("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 not yet due and
payable, the general printed exceptions contained in the policy, the First
Mortgage documents set forth in Schedule B-Section 1, items c and d, and the
special title exceptions set forth in Schedule B-Section 2, Numbers 1, 2, 3 and
6 through 16 inclusive 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, including a Form 9 Endorsement and a
Zoning Endorsement (if available). Seller shall pay the cost of the Title
Policy; however, Purchaser shall pay the costs of "extended coverage" or any
special endorsements which Purchaser requires.
b. Purchaser acknowledges receipt of a survey ("Survey") of the Property
prepared by C.R. Moore Land Surveying, dated August 4, 1993, and Purchaser
approves all of the matters set forth on the Survey. Prior to the Closing,
Seller will have the Survey updated and 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. If the updated
Survey discloses matters which are not reflected on the original Survey and
which would prevent the Title Insurer from deleting the survey exception from
the Title Policy ("Survey Defects"), then upon notice delivered to Seller by
Purchaser within three (3) days after receipt of the updated Survey, Seller
shall either cause the Survey Defects to be removed from the updated Survey or
cause the Title Insurer to insure against loss or damage resulting from the
Survey Defects ("Title Indemnity"). If Seller is unwilling to (i) have the
Survey Defects removed from the updated Survey or (ii) cause the Title Insurer
to issue a Title Indemnity to Purchaser within five (5) days after receipt of
notice from Purchaser of the Survey Defects, then Purchaser shall have the
right to elect to terminate this Agreement. Purchaser shall notify Seller of
its election within three (3) days after receipt of notice from Seller that the
Survey Defects will not be removed or that the Title Insurer will not issue the
Title Indemnity. If Purchaser fails to make the election within the aforesaid
three (3) days, then it shall be conclusively presumed that Purchaser has
elected to take title to the Property subject to the Survey Defects. If
Purchaser elects to terminate this Agreement pursuant to this Paragraph, then
the Earnest Money plus all accrued interest shall be delivered to Purchaser.
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,
<PAGE>
then the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
6. PAYMENT OF CLOSING COSTS. Purchaser shall pay 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.
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
determined pursuant to Paragraph d 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 d 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 e 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.
<PAGE>
g. This Paragraph 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,
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
"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
<PAGE>
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 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.
9. CLOSING. The closing ("Closing") of this transaction shall be on January
23, 1996 ("Closing Date"), at the office of the Purchaser's attorney, at which
time Seller shall deliver possession of the Property to Purchaser.
10. 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 or cause to be delivered to
Purchaser possession of the Property; the Deed (in the form of Exhibit F
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 G attached hereto); a
Beneficiary Statement ("Estoppel Certificate") and the Consent from the Lender
(including assumption documents required by Lender); an executed closing
statement; an executed assignment and assumption of all service contracts (in
the form of Exhibit H attached hereto); an executed assignment and assumption
of all leases and security deposits (in the form of Exhibit I attached hereto);
an executed assignment of escrows, if any, (in the form of Exhibit J attached
hereto), held by the Lender (which will be credited to Seller at Closing);
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 K attached
hereto); a non-foreign affidavit (in the form of Exhibit L attached hereto); an
assignment of intangibles (in the form of Exhibit M 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; warranties and guarantees (if any is in Seller's
possession); and such other documents as may be reasonably required by the
<PAGE>
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.
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 $200,000.00 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.
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); prorata share of
advance payment received by Seller on cable TV or laundry leases (if any);
escrow and/or impounds held by the Lender (which will be assigned to Purchaser
and credited to Seller); interest on the First Note; 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 for any reason the Proration
Date is earlier than the Closing Date, then for the period from the Proration
Date through the Closing Date, Purchaser shall be entitled to the benefit of
all of the income from the Property and shall bear the burden of all of the
operating expenses of the Property, including, but not limited to, insurance,
service contracts, employee wages and benefits, management fees, utility costs
and interest on the existing mortgage encumbering the Property. 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 b 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. 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.
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
<PAGE>
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 10 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 .
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 . 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, provided such
assignment is effected in sufficient time to obtain Lender's Consent. However,
Purchaser shall remain liable for all of the Purchaser's obligations and
undertakings set forth in this Agreement and the exhibits attached hereto.
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 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
(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
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.
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
1994 and year-to-date 1995 operating statements, and service contracts, 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
<PAGE>
"Documents"). All of the Documents shall be subject to approval by Purchaser
by the close of business (5:00 P.M. Central Time) on January 8, 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
whatseover. 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
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 Gregg Handrich (the asset
manager), and any representation or warranty of the Seller is based upon those
matters of which Phillip Schechter or Gregg Handrich 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.
<PAGE>
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 the best of 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 N which will
be updated as of the Closing Date is true and accurate.
iii. Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the
Property.
iv. Seller has not, by any act of omission or commission, caused the
Lender to accelerate the indebtedness and this shall be true on and as of
the Closing Date.
v. 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.
vi. 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.
vii. Seller is the owner of good title to the Personal Property, free from
all security interests, liens and encumbrances, other than the lien of the
First Mortgage and any liens to be satisfied at Closing.
viii. The First Mortgage documents which Seller has previously
delivered to Purchaser are complete and accurate and no modifications have
been made to any terms or provisions thereof and are the only mortgage
documents which will be binding on the Property after the Closing.
ix. 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.
x. 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.
xi. Seller is not a party to any contract or other agreement with any
governmental authority controlling, restricting or imposing income
<PAGE>
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. Section 1437, et. seq.
xii. Seller has not received any written notice from the insurance company
that Seller is in default under the insurance policy for the Property.
xiii. All service contracts ("Service Contracts") affecting the
Property as of the date of this Agreement are identified on Exhibit O
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.
xiv. 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. Notwithstanding anything to the contrary in this Agreement, if prior
to the Closing Date, Purchaser has actual knowledge of any event or
circumstance which would make any representation or warranty of Seller set
forth in Paragraph false ("Breach") and Purchaser elects to close, then
Purchaser shall be deemed to have waived all claims with respect to such
Breach.
e. If after the Closing Date, Purchaser discovers that there has been a
Breach by Seller, 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 $200,000.00; 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 P are the
following reports ("Environmental Reports") of the Property which Seller is
delivering to Purchaser, at Purchaser's request:
a. Phase I Environmental Assessment dated March 13, 1992 prepared by
Project Resources Inc.;
b. Phase I Environmental Assessment Property Log dated March 13, 1992
prepared by Project Resources Inc.; and
c. Phase I Environmental Assessment Report No. 008-1093 dated August 25,
1993 prepared by Astex.
<PAGE>
Seller makes no representation or warranty that the Environmental Reports are
accurate or complete. Purchaser hereby releases Seller from any liability
whatsoever with respect to the Environmental Reports, including, without
limitation, the matters set forth in the Environmental Reports or the accuracy
and/or completeness of the Environmental Reports.
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 AND FINANCIAL STATEMENTS.
a. 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.
b. After the execution of this Agreement, Purchaser shall deliver to
Lender all of the documents required by Lender in order to obtain Lender's
Consent.
23. TIME OF ESSENCE. Time is of the essence of this Agreement.
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
<PAGE>
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
TO PURCHASER: Robert Kass
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
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 three
(3) 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 fill in the Approval
Period date and the Closing Date (with Purchaser's attorney's approval of such
dates) and 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.
<PAGE>
26. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Colorado.
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>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
December 7, 1995.
SENTINEL ACQUISITIONS CORP., a
Delaware corporation
By: /s/Robert Kass
------------------------------------
Executed by Seller on SELLER:
December 8, 1995.
CHIMNEY RIDGE INVESTORS, an Illinois
limited partnership
By: Chimney Ridge of Illinois, Inc.,
an Illinois corporation, general partner
By:/s/Philip Schechter
------------------------------------
Authorized Agent
<PAGE>
Chimney Ridge
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: /s/Mathew D. Lawton
---------------------------------------
Senior Vice President
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - First Note and First Mortgage Documents
E - Title Commitment
F - Deed
G - Bill of Sale
H - Assignment of Service Contracts
I - Assignment of Leases and Security Deposits
J - Assignment of Escrows
K - Notice to Tenants
L - Non-Foreign Affidavit
M - Assignment of Intangibles
N - Rent Roll
O - List of Service Contracts
P - Environmental Report
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE
This First Amendment ("First Amendment") to Agreement of Sale is entered into
as of January 4, 1996, by and between Sentinel Acquisitions Corp., as
Purchaser, and Chimney Ridge Investors, as Seller.
RECITALS
A. The parties hereto have entered into an Agreement of Sale ("Agreement")
dated December 8, 1995 for the purchase and sale of the apartment project known
as Chimney Ridge Apartments.
B. Purchaser and Seller now wish to amend the Agreement.
NOW, THEREFORE, the Agreement is amended as follows:
1. Seller guarantees that on the Closing Date at least 266 apartment
units will be occupied. If there are less than 266 occupied apartment units
("Unoccupied Unit(s)"), then Purchaser shall receive a credit at Closing in the
amount of $1,233.00 for each Unoccupied Unit.
2. Except as modified herein, all other terms and conditions of the
Agreement remain in full force and effect.
3. All capitalized terms used herein shall have the same meaning as in
the Agreement.
4. 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:
SENTINEL ACQUISITIONS CORP., a Delaware
corporation
By: /s/Rpbert Kass
----------------------------
SELLER:
CHIMNEY RIDGE INVESTORS, an Illinois limited
partnership
By: Chimney Ridge of Illinois, Inc., an Illinois
corporation, general partner
By: /s/Al Lieberman
----------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 395
<SECURITIES> 0
<RECEIVABLES> 664
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3304
<PP&E> 135964
<DEPRECIATION> 55897
<TOTAL-ASSETS> 84442
<CURRENT-LIABILITIES> 8692
<BONDS> 103293
0
0
<COMMON> 0
<OTHER-SE> (27543)
<TOTAL-LIABILITY-AND-EQUITY> 84442
<SALES> 0
<TOTAL-REVENUES> 31459
<CGS> 0
<TOTAL-COSTS> 13951
<OTHER-EXPENSES> 5196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9397
<INCOME-PRETAX> 2915
<INCOME-TAX> 0
<INCOME-CONTINUING> 2915
<DISCONTINUED> 0
<EXTRAORDINARY> 90
<CHANGES> 0
<NET-INCOME> 3005
<EPS-PRIMARY> 21.25
<EPS-DILUTED> 21.25
</TABLE>
