SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
(Amendment No. 1)
BALCOR PENSION INVESTORS-V
(Name of Subject Company)
BALCOR PENSION INVESTORS-V
(Name of Person(s) Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
Thomas E. Meador
Chairman
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
(847) 267-1600
(Name, Address and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
Copy To:
Herbert S. Wander
Lawrence D. Levin
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661-3693
(312) 902-5200
<PAGE>
This Amendment No. 1 to Schedule 14D-9 amends the Schedule 14D-9 (the
"Schedule 14D-9") filed by Balcor Pension Investors-V, an Illinois limited
partnership (the "Partnership"), filed with the Securities and Exchange
Commission on May 29, 1996. All capitalized terms used herein but not
otherwise defined shall have the meanings ascribed to such terms in the
Schedule 14D-9.
Item 9. Material to be Filed as Exhibits
Item 9 hereby is amended by removing "4. (c)(3) The Darby Valuation
Report [to be filed by amendment]" and substituting in its place "4. (c)(3)
The Darby Valuation Report"
Signature. After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: June 3, 1996 BALCOR PENSION INVESTORS-V
By: Balcor Mortgage Advisors-V, its
general partner
By: The Balcor Company, a
general partner
By: /s/Thomas E. Meador
---------------------------
Thomas E. Meador, Chairman
<PAGE>
AN APPRAISAL OF
A LIMITED PARTNERSHIP INTEREST
IN
BALCOR PENSION INVESTORS - V
SKOKIE, ILLINOIS
AS OF MARCH 31, 1996
Valuation Counselors
<PAGE>
May 8, 1996
Balcor Mortgage Advisors - V
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
Attention: Mr. John K. Powell, Jr. - First Vice President
Gentlemen:
In accordance with your request, we are pleased to submit our opinion of the
Value of a Limited Partnership Interest in:
Balcor Pension Investors - V
(an Illinois Limited Partnership)
as of March 31, 1996.
The term "Value" is defined as follows:
The amount, in dollars, which a Limited Partnership Interest in Balcor
Pension Investors - V is worth to an investor who owns the Interest with
the intention of holding it to maturity, who fully understands the
complexities of the investment, and has an interest in the potential
interest income and capital appreciation of the Limited Partnership
Interest. The valuation does not represent the amount that would be
received by a holder of a Limited Partnership Interest should he/she
decide to liquidate the Interest prior to the maturity of the Partnership.
The value is subject to the terms and limiting conditions set forth in
this report.
It is anticipated that Balcor Pension Investors - V will close by the end of
2000.
Based on our analyses and conclusions set forth in this report, the estimated
Value of a Limited Partnership Interest in Balcor Pension Investors - V, as of
March 31, 1996, was in the rounded amount of:
$287.00
=======
The Adjusted Original Capital, as of March 31, 1996, was $364.50.
Subsequently, a distribution of $9.78 per Limited Partnership Interest was made
as a Return of Capital, reducing the Adjusted Original Capital to $354.72.
For the quarter ended June 30, 1995, the value of a Limited Partnership
Interest increased $3.00 due mainly to a general increase in the value of Real
Estate Owned assets and the remaining Mortgage Loans.
<PAGE>
For the quarter ended September 30, 1995, the value of a Limited Partnership
Interest decreased $32.00 mainly due to a distribution of $8.82 per Limited
Partnership Interest as a Return of Capital in July 1995, a write-down of $2.6
million in the value of International Teleport, and an excess of $18.00 per
Limited Partnership Interest quarterly distribution declared as of June 30,
1995 but made in July, 1995.
For the quarter ended December 31, 1995, the value of a Limited Partnership
Interest declined $20.00, mainly the result of a distribution of $18.68 per
Limited Partnership Interest as a Return of Capital in October 1995.
For the quarter ended March 31, 1996, the value of a Limited Partnership
Interest decreased $1.00 due mainly to a reduction in the value of the Noland
Fashion Square mortgage loan.
It is noted that this is prior to any distributions to the Limited Partners
under the Early Investment Incentive Fund. The present value of a unit of the
Early Investment Incentive Fund, as of March 31, 1996, was in the rounded
amount of:
$17.00
======
Some of the funds received from prepayments and/or excess funds have been
invested in first mortgage loans vis-a-vis wrap-around mortgage loans. The
cash flows from these first mortgage loans are discounted at a risk rate
somewhat less than the rate used for wrap-around mortgage loans to compensate
for the lower risk.
The variable components in the total Value of a Limited Partnership Interest
and their values, as estimated by Valuation Counselors Group, Inc./Darby &
Associates Joint Venture are as follows:
Net Investment in Loans Receivable $36,880,816
Unamortized Portion of the Offering Expenses 5,068,095
Real Estate Acquired through Foreclosure 66,886,141
A copy of this report is retained in our files, together with the information
from which the report was compiled.
Respectively submitted.
Sincerely,
/s/Raymond Ghelardi /s/Clement H. Darby
Valuation Counselors Group, Inc. Darby & Associates
Raymond Ghelardi Clement H. Darby
Managing Director President
REG/CHD/ded
cc: Ms. Mary J. Mojica
Ms. Jayne Kosik
Ms. Jane Cody
Ms. Terri Thompson
<PAGE>
TABLE OF CONTENTS
Statement of Facts and Limiting Conditions
Introduction
Payments to the Limited Partners and General Partner
Early Investment Incentive Fund
Valuation of a Limited Partnership Interest
Valuation of "The Net Investment in Loans Receivable"
(1)Discussion of Risk Rates
(2)The Present Value of the Return on Funds Advanced
and the Return of Principal
(3)The Present Value of the Equity Build-up and Accrued Interest
(4)The Present Value of the "Kickers"
Conclusions of Value of the "Net Investment in Loans
Receivable"
Valuation of the "Real Estate Acquired Through
Foreclosure"
Calculation of the Unamortized Portion of the
Offering Expenses
Calculation of the Value of a Limited Partnership
Interest in Balcor Pension Investors - V
Calculation of an Interest in the Early Investment
Incentive Fund
Schedule
A Distributions to the Limited Partnership
B-1Unadjusted Balance Sheet of Balcor Pension
Investors - V as of March 31, 1996
B-2Statements of Income and Expenses for the quarters
ended March 31, 1996 and 1995
B-3Statements of Cash Flows for the quarters ended
March 31, 1996 and 1995
C Loan Portfolio Summary
D-1Real Estate Asset Summary
D-2Real Estate Appraisal Projections
E Adjusted Balance Sheet of Balcor Pension Investors
- V as of March 31, 1996
<PAGE>
STATEMENT OF FACTS AND LIMITING CONDITIONS
Valuation Counselors Group, Inc./Darby & Associates Joint Venture strives to
clearly and accurately disclose the assumptions and limiting conditions that
directly affect an appraisal analysis, opinion or conclusion. In order to
assist the reader in interpreting this report, such assumptions are set forth
as follows:
Valuation Counselors Group, Inc./Darby & Associates Joint Venture reserves the
right to make adjustments to the analysis, opinion and conclusions set forth in
the report as deemed necessary by consideration of additional or more reliable
data that subsequently may become available.
No opinion is rendered as to legal fee, property title or mortgage notes
related to the appraised assets, which are assumed to be good and marketable.
It is assumed that no opinion is intended in matters that require legal,
engineering or other professional advice which has been or will be obtained
from professional sources; the valuation report will not be used for guidance
in professional matters exclusive of the appraisal and valuation discipline.
Information furnished by others is presumed to be reliable, and where so
specified in the report, has been verified; however, no responsibility, whether
legal or otherwise, is assumed for its accuracy and cannot be guaranteed as
being certain. All facts and data set forth in the report are true and
accurate to the best of the Appraiser's knowledge and belief. No single item
of information was completely relied upon to the exclusion of other
information.
All financial data, operating histories and other data relating to income and
expenses attributed to the assets and the Partnerships have been provided by
Management or its representatives and have been accepted without further
verification except as specifically stated in the report.
It should be specifically noted that the valuation assumes the appraised assets
will be competently managed and maintained by financially sound owners over the
expected period of ownership except where noted, specifically in assets during
the period of foreclosure where Balcor may not have control. This appraisal
engagement does not entail an evaluation of management's effectiveness, nor are
we responsible for future marketing efforts and other management or ownership
actions upon which actual results will depend.
Neither the report nor any portions thereof, especially any conclusions as to
value, the identity of the appraiser or Valuation Counselors Group, Inc./Darby
& Associates Joint Venture shall be disseminated to the public through public
relations media, news media, sales media, prospectus or any other public means
of communications without the prior written consent and approval of Valuation
Counselors Group, Inc./Darby & Associates Joint Venture. The date of the
valuation to which the value estimate conclusion applies is set forth in the
report.
The preponderance of working paper support for this valuation is maintained in
the offices of management, Balcor Mortgage Advisors.
Neither the fees nor any of the terms and conditions of the appraisal
assignments given to Valuation Counselors Group, Inc./Darby & Associates Joint
Venture by Balcor Mortgage Advisors are contingent upon the values reported.
<PAGE>
No independent investigation of the fair market value of the underlying real
estate assets has been made by Valuation Counselors Group, Inc./Darby &
Associates Joint Venture. We have reviewed the real estate appraisals for
reasonableness, but have assumed the real estate appraisals obtained by Balcor
Mortgage Advisors are independent and accurate. Valuation Counselors assumes
responsibility for real estate appraisals prepared by their own staff.
No independent investigation of the terms and conditions of the mortgage loans
made by Balcor Pension Investors - V has been made. We have relied on data
furnished to us by Balcor Mortgage Advisors and the validity of the information
was assumed to be correct.
In the event that this appraisal is used as basis to set a market price for a
Limited Partnership Interest in Balcor Pension Investors - V, no responsibility
is assumed for the seller's inability to obtain a purchaser at the value
reported herein.
The reader of this valuation report should be fully conversant with the terms
and conditions of Balcor Pension Investors - V Limited Partnership as set forth
in the Prospectus, other related documents, and the prior appraisals of a
Limited Partnership Interest in Balcor Pension Investors - V.
We have discussed the current status and condition of the mortgage loans and
real estate owned with the management of Balcor Mortgage Advisors and have
accepted their comments as being factual.
<PAGE>
INTRODUCTION
Balcor Pension Investors - V ("BPI - V") is a Limited Partnership formed on
October 20, 1983, pursuant to the Uniform Limited Partnership Act of the State
of Illinois. The Partnership serves as an investment vehicle for qualified
pension, profit-sharing and other retirement trusts; bank commingled trust
funds for qualified pension and profit-sharing plans; Individual Retirement
Accounts and HR-10 (Keogh) Plans; government pension and retirement trusts; and
other entities intended to be exempt from Federal income taxation such as
certain religious, charitable, scientific, literary and educational
corporations, funds and foundations. The Limited Partnership provides for
Balcor Mortgage Advisors - V to be the General Partner. The sale of the
Limited Partnership Interests were at $500 per interest up to a maximum of
800,000 interests. The offering period, during which interests were sold by
Balcor Pension Investors - V, commenced February 8, 1984, and ran until
November 30, 1984. As of November 30, 1984, the closing date, 439,305 Limited
Partnership Interests had been sold.
The Partnership's investment objective is to make wrap-around mortgage loans,
and, to a lesser extent, make other junior mortgage loans and first mortgage
loans. As of March 31, 1996, the loan portfolio consisted of five wrap-around
and first mortgage loans (Meadow Run, Whispering Hills, Noland Fashion Square,
Seven Trails and Glen Apts.). Unfunded monies totaling $17,473,372(1) were
invested in short-term money market instruments and in demand deposit bank
accounts. In addition the Partnership owns nine properties acquired through
foreclosure [Huntington Meadows, Union Tower, Glades on Ulmerton,
International Teleport Plaza, Plantation Apartments, Waldengreen Apartments,
Granada Apartments, Villa Medici and 45 W. 45th Street (21.74%)].
On October 17, 1986, the Springcrest Apartments mortgage loan was prepaid in
the amount of $6,425,325, made up of $5,845,000 cash received and a note for
$589,326. No value has been assigned to this note. The Poplar Place mortgage
loan also was paid off on October 31, 1986, in the amount of $6,715,978. On
September 11, 1986, the principal on the High Acres mortgage loan was reduced
by $1.0 million and, on December 15, 1986, it was reduced by an additional
$500,000.
On December 23, 1986, the Windmill Village Mobile Home Park mortgage loan was
prepaid at $3,664,170. On February 10, 1987, the Oak Park Apartments mortgage
loan was prepaid in the amount of $7,859,952. On February 23, 1987, the
Cinnamon Square mortgage loan was partially prepaid in the amount of
$7,565,000. In addition a note with a balance of $138,192 secured by a
$150,000 letter of credit was taken back by the Partnership. Furthermore an
additional unsecured note for $1,090,931 was taken back. No value was assigned
to the unsecured Note, however on April 12, 1994, $600,000 was received as
payment in full on the Notes.
On May 7, 1987, the Three Fountains Phases I & II mortgage loans were prepaid
for a total amount of $5,280,382. On June 30, 1987, the High Acres mortgage
loan was paid off in the amount of $5,929,386.
Huntington Meadows Apartments was acquired through foreclosure on January 6,
1987. It was appraised at $7,225,000 as of January 31, 1990. In the quarter
ended March 31, 1996, it was valued at $10,584,466 based on its projected 1996
cash flow.
<PAGE>
The Comerica Plaza mortgage loan was acquired through foreclosure on August 4,
1987. The property was appraised at $3,300,000 as of January 29, 1989. As of
December 31, 1994, it was valued at $2,800,000. On June 30, 1995, the property
was sold in an all cash sale for $2,950,000. A partial prepayment of $800,000
was made on the Imperial Gardens mortgage loan.
The Waldengreen Apartments mortgage loan was acquired through foreclosure on
September 3, 1993. As of March 31, 1996, the property is valued at $7,609,296
based on projected 1996 cash flow.
In the four month period ended December 31, 1987, the Partnership funded a
$14,000,000 mortgage loan on International Teleport Plaza Building and
$10,850,000 on Villa Medici Apartments. On February 18, 1991, the Villa Medici
was placed in default. The borrower subsequently filed for bankruptcy on March
1, 1991, and the mortgage loan was valued at funds advanced. On March 27,
1995, the Partnership received title to the property through foreclosure. It
is now held as Real Estate Owned and is valued at $11,885,000 based on an
independent appraisal prepared in October 1995.
The Reed Hartman mortgage loan was prepaid April 19, 1988, for $5,224,700. The
Park Hill Apts. mortgage loan was prepaid May 18, 1988, for $9,513,839. The
Treetop Apts. mortgage loan was prepaid May 18, 1988, for $5,469,706. The
Sandalfoot Apartments mortgage loan was prepaid on July 18, 1988, for
$4,570,165.
On September 30, 1988, the Partnership funded $3,913,043 of a $5,000,000
commitment for a participation in a mortgage loan on 45 West 45th Street, New
York City Office Building. This commitment reflected the Partnership's portion
of a $23 million loan package that included three affiliated limited
partnerships. The Partnership's participating percentage, both in the total
loan commitment and as a minority Joint Venture affiliate, is 21.74%. The
remainder of the commitment was funded at year end. In the quarter ended
September 30, 1991, the value of the loan was reduced to $4,348,000. In the
quarter ended December 31, 1994, the mortgage loan was valued at $2,174,000
based on expected cash flow from the property. On February 2, 1995, an
affiliate of the Partnership foreclosed on the property. It is now Real Estate
Owned by the Partnership and the three affiliates and the portion owned by this
Partnership is valued at $1,821,110 based on projected 1996 cash flow.
Major structural defects were uncovered in the Whispering Hills Apartments
project. Litigation was commenced against the original owner and builder and
consultants estimated a cost of $1,500,000 to repair the property. The repairs
on the property were subsequently completed. An appraisal of the property
concluded on a value of $14 million as of August 11, 1992. This resulted in an
allocation of $3,500,000 for Balcor Pension Investors - V vs. a former estimate
of value of $3,175,000. The property was reappraised for $18.2 million as of
February 8, 1995. In addition certain funds were recapitalized into funds
advanced. The allocated appraised value, as of March 31, 1996, is $4,550,000.
It should be noted that an additional portion of this mortgage loan is in
Balcor Pension Investors - VII.
On November 1, 1988, the Partnership completed foreclosure of Union Tower. The
outstanding loan balance was $21,400,000 plus interest and expenses. The
property was valued at $12,000,000 as of January 22, 1990. As of March 31,
1996, it is valued at $14,620,988 based on its projected 1996 cash flow.
<PAGE>
In January 1989, a mortgage loan of $9,500,000 was funded as a 41%
participation in Noland Fashion Square. The income and equity kickers and
discounted accrued interest have been deleted from the valuation. On April 6,
1992, a Letter of Credit was cashed for approximately $385,000 and has been
applied against the outstanding principal balance of the loan.
On September 16, 1989, the Lake Worth MHP mortgage loan was partially prepaid
in the amount of $13,084,000 with the Partnership taking back a $5,000,000
Second Mortgage. On April 12, 1993, the Partnership received $3,150,000 in
full settlement of the $5,000,000 second mortgage note. On September 18th,
Cambridge Station mortgage loan was prepaid in the amount of $1,946,694.23.
On October 13, 1989, the Leisure MHP mortgage loan was prepaid in the amount of
$2,578,201.
On February 15, 1990, the Partnership received approximately $3,544,000 as a
result of the bankruptcy sale of the Vestavia Park South apartments.
On May 4, 1990, the Partnership received $11,725,000 as a partial prepayment of
the Springwells mortgage loan. A remaining principal amount of $900,000 is
due. There are additional notes for $2.4 million secured by second mortgages,
however no value has been assigned to them or the remaining principal amount of
$900,000.
On October 18, 1990, the borrower on the Glades on Ulmerton mortgage loan filed
for bankruptcy and the loan was valued at funds advanced. The Partnership
acquired title to the property on December 18, 1991, and the asset was valued
at $6,500,000 based on an appraisal dated December 21, 1990. As of March 31,
1996, it was valued at $7,326,180 based on its projected 1996 cash flow.
During 1993, approximately $1 million was spent on repairs and renovations.
In February 1994, the Partnership prepaid the $2,241,349 underlying mortgage.
The Northland Park mortgage loan was foreclosed and the property became Real
Estate Owned on July 18, 1990. It was valued at $15,350,000 and was sold for
that amount on January 23, 1992.
As a result of a modification in the quarter ended March 31, 1992, the Fairview
1 & 2 mortgage loan was written down $1.0 million and there was also a
prepayment of $1.6 million.
In the quarter ended December 31, 1992, the Imperial Gardens mortgage loan was
prepaid in the amount of $4,548,494. International Teleport Plaza became Real
Estate Owned and was valued at $10,905,946. As of March 31, 1996 it was valued
at $5,242,458 based on projected 1996 cash flow.
On March 8, 1993, the Partnership received $21,834,584 in connection with the
full prepayment of the Valley West mortgage loan. The funds advanced were
$10,472,551. A special distribution of $10,433,494 to the Limited Partners was
declared as of March 31, 1993, to be paid in April 1993.
On April 2, 1993, the Partnership received title to the Plantation Apartments
as a result of a foreclosure sale on March 22, 1993. The asset is valued at
$4,278,992 as of March 31, 1996 based on projected 1996 cash flow. On August
28, 1993, the underlying mortgage matured and was paid in full.
On April 12, 1993, the Partnership received $3,150,000 in full settlement of
the $5,000,000 Lake Worth MHP second mortgage note.
<PAGE>
On June 21, 1993, the Partnership received title to the Granada Apartments as a
result of the foreclosure sale on June 8, 1993. As of March 31, 1996, the
asset was valued at $3,517,651 based on projected 1996 cash flow.
During February 1994 the Seven Trails mortgage loan was extended two years to
February 1, 1996 and the underlying mortgage of $4,689,871 was purchased by the
Partnership. In an event subsequent to March 31, 1996, the loan was repaid on
April 1, 1996. Also the Partnership prepaid the underlying mortgage on The
Glades on Ulmerton Apts. in the amount of $2,241,349.
In April 1994, $600,000 was received as settlement in full on the $1,141,771
Cinnamon Square Note Receivable. This note had not been recorded as an asset.
During September 1994, the Partnership received $250,000 representing its share
of the settlement with the seller of the Whispering Hills Apts.
In the quarter ended December 31, 1994, the Partnership was foreclosed out of
the Springwells mortgage loan so it will no longer be carried as an asset. It
had been carried at zero value.
In the quarter ended June 30, 1995, payment in full was received on three
mortgage wrap loans, Club Wildwood Mobile Home Park, Four Seasons Mobile Home
Park, and Pointe West Mobile Home Park. The proceeds were $6,376,729,
$2,824,087, and $4,672,272, respectively.
On December 22, 1995, the Fairview I & II mortgage loan was paid off in full in
the amount of $6,092,844.
The stated objectives of Balcor Pension Investors - V are as follows:
1. Preservation and protection of Limited Partners' capital;
2. Provide the Limited Partners with regular quarterly cash
distributions;
3. Provide the Limited Partners with additional cash distributions through
the receipt of deferred interest;
4. Maximize cash distributions over the life of the Partnership (estimated
to be 12 to 15 years) through the receipt of additional interest in the form of
equity participations.
For wrap-around mortgages the intent is to generate a higher total return on
investment through the "equity buildup" portion of a wrap-around mortgage
whereby there is a spread in the principal reduction between the wrap-around
mortgage and the underlying mortgage loans. Although there is a mathematical
buildup of this equity during the life of the loan, the material benefit of the
equity buildup normally is not realized until the maturity of the wraparound
loan - which usually occurs in a period of from ten to fifteen years from the
initial funding of the loan. In addition, there are potential additional
earnings available from a participation in the future gross income as well as a
participation in the appreciated value of the properties on which Balcor
Pension Investors - V has made mortgage loans to date. These potential
earnings are commonly known as "kickers."
<PAGE>
(1) Source: Balcor Pension Investors - V Balance Sheet as of March 31, 1996,
Schedule B-1. The Net Investment in Loans Receivable includes funds advanced
as well as earned equity buildup and earned accrued interest, discounted to a
present value, and miscellaneous adjustments.
<PAGE>
PAYMENTS TO THE LIMITED PARTNERS AND GENERAL PARTNER
The Limited Partnership, Balcor Pension Investors - V, is a partial self-
liquidating real estate investment fund. As of March 31, 1996, the Partners'
capital was invested in five real estate loans (Meadow Run, Whispering Hills,
Noland Fashion Square, Seven Trails and Glen Apts.) with the last loan maturing
in January 2000 and nine equity investments [Huntington Meadows, Union Tower,
Glades on Ulmerton, International Teleport Plaza, Plantation Apts., Waldengreen
Apts., Granada Apts., Villa Medici and 45 W. 45th Street]. Interest income and
amortization, as well as interests in gross income of certain properties, after
deducting the General Partners' expenses, income and reserves, is distributed
to the Limited Partners under certain formulae, terms and conditions set forth
in the Limited Partnership Agreements and described in the summary in the
previous section. The remaining Limited Partners' capital, equity buildup and
interests in the appreciation of certain properties is distributed to the
Limited Partners upon the maturity and/or the successful payoff of the loans.
The Prospectus of Balcor Pension Investors - V indicated that during the
offering period, which expired on November 30, 1984, as well as during the term
of the Partnership, distributions are to be made to the investors. The
following schedule sets forth the actual distributions made to the Partnership
to date.
<PAGE>
SCHEDULE A
DISTRIBUTIONS TO THE LIMITED PARTNERSHIP
Effective Number of Annual
Date Interests Rate Amount Paid
8/31/84 variable 8.00%
to 10.00% $3,809,765
(for period 2/8/84 to 8/31/84)
11/30/84 439,305 8.00
to 10.00 4,615,613
2/28/85 439,305 8.20 4,502,876
5/31/85 439,305 8.20 4,502,876
8/31/85 439,305 8.40 4,612,703
11/30/85 439,305 8.40 4,612,703
2/28/86 439,305 8.40 4,612,703
5/31/86 439,305 8.40 4,612,703
8/31/86 439,305 8.40 4,612,703
11/30/86 439,305 8.40 4,612,703
2/28/87 439,305 8.40 4,612,703
5/31/87 439,305 8.40 4,612,703
8/31/87 439,305 8.40 4,612,703
12/31/87 439,305 6.80 3,734,093
1/88 439,305 - 6,589,575
($15 per Interest as a Return of Capital)
3/31/88 439,305 7.01 3,734,093
6/30/88 439,305 7.42 3,953,745
9/30/88 439,305 7.42 3,953,745
12/31/88 439,305 7.42 3,953,745
3/31/89 439,305 7.42 3,953,745
6/30/89 439,305 7.42 3,953,745
7/89 439,305 - 7,072,811
($16.10 per Interest as a Return of Capital)
9/30/89 439,305 7.68 3,953,745
12/31/89 439,305 6.40 3,294,788
3/31/90 439,305 10.24 5,271,660
6/30/90 439,305 5.12 2,635,830
9/30/90 439,305 5.12 2,635,830
10/90 439,305 - 10,543,200
($24.00 per Interest as a Return of Capital)
12/31/90 439,305 5.39 2,635,830
1/91 439,305 - 2,196,525
($5.00 per Interest as a Return of Capital)
3/31/91 439,305 5.68 2,745,656
4/91 439,305 - 1,976,873
($4.50 per Interest as a Return of Capital)
6/30/91 439,305 5.74 2,745,656
7/91 439,305 - 6,589,575
($15.00 per Interest as a Return of Capital)
9/30/91 439,305 5.95 2,745,656
12/31/91 439,305 5.95 2,745,656
3/31/92 439,305 5.95 2,745,656
4/92 439,305 4.76 2,196,525
($5.00 per Interest from the sale of Northland Park)
6/30/92 439,305 5.95 2,745,656
7/92 439,305- 1,098,262
<PAGE>
Effective Number of Annual
Date Interests Rate Amount Paid
($2.50 per Interest from prior Note repayments)
9/30/92 439,305 5.98% $2,745,656
12/31/92 439,305 5.98 2,745,656
3/31/93 439,305 3.83 1,757,220
4/93 ($23.75 per Interest) 22.73 10,433,494
(Valley West Loan Payoff)
4/93 ($18.25 per Interest as a Return
Return of Capital) - 7,980,125
(Northland Park Sales Proceeds)
6/30/93 439,305 4.00 1,757,220
7/93 ($5.00 per Interest as a Return
of Capital) - 2,196,525
9/30/93 439,305 4.00 1,757,220
12/31/93 439,305 4.05 1,757,220
1/94 439,305 9.12 2,196,525
($5.00 per Interest as a Return on Capital)
3/31/94 439,305 4.05 1,757,220
4/94 439,305- 1,164,158
($2.65 per Interest as a Return of Capital)
6/30/94 439,305 4.08 1,757,220
9/30/94 439,305 4.08 1,757,220
12/31/94 439,305 4.08 1,757,220
3/31/95 439,305 5.10 2,196,525
6/30/95 439,305 23.47 10,104,015
($23.00 per Interest)
7/95 439,305 - 3,874,999
($8.82 per Interest as a Return of Capital)
9/30/95 439,305 5.22 2,197,181
($5.00 per Interest)
10/95 439,305- 8,206,217
($18.68 per Interest as a Return of Capital)
12/31/95 439,305 5.49 2,196,525
3/31/96 439,305 5.49 2,196,525
($5.00 per Interest)
4/96 439,305 - 4,296,403
($9.78 per Interest as a Return of Capital)
The Partnership Agreement provides that the General Partner will receive loan
application and loan processing fees paid by borrowers, subject to certain
limitations, when the Partnership funds mortgage loans or issues commitments to
fund mortgage loans and may receive additional loan fees paid by the
Partnership upon full specificity of the offering and the funding of all loans.
The General Partner will service the Partnership's mortgages and will receive a
mortgage servicing fee, payable not more frequently than monthly, at an annual
rate equal to 1/4 of 1% of the amounts advanced by the Partnership and
outstanding from time to time. The General Partner is also reimbursed for
certain expenses incurred in connection with the organization of and the day to
day operations of the Partnership.
Pursuant to the Partnership Agreement, all profits of the Partnership will be
allocated 90% to the Limited Partners and 10% to the General Partner, and all
losses of the Partnership will be allocated 99% to the Limited Partners and 1%
to the General Partner.
<PAGE>
After the termination of the offering and then to the extent that Cash Flow is
distributed, distributions will be made as follows: (I) 90% of such Cash Flow
will be distributed to the Limited Partners, (ii) 7.5% of such Cash Flow will
be distributed to the General Partner, and (iii) an additional 2.5% of such
Cash Flow will be distributed to the General Partner and shall constitute the
Early Investment Incentive Fund. Upon the liquidation of the Partnership, the
General Partner will return to the Partnership for distribution to Early
Investors amounts available in the Early Investment Incentive Fund, if
necessary for Early Investors to receive a return of their Original Capital
plus a specified Cumulative Return based on the date of investment. Subject to
certain limitations, the General Partner may repurchase Interests from existing
Limited Partners from amounts available in the Early Investment Incentive Fund.
As set forth in the Partnership Agreement, the Partnership is obligated to pay
to the purchasers of Limited Partnership Interests an amount equivalent to
interest at the initial rate of 8% per annum on the total purchase price of an
Interest. This rate may be increased or decreased at the sole discretion of
the General Partner. The amounts payable under this provision ceased to
accumulate on August 31, 1984, the termination date of the offering.
<PAGE>
EARLY INVESTMENT INCENTIVE FUND
Cash Flow available for distribution will be distributed on a quarterly basis
after the close of the first full operating quarter following the termination
of the offering. Ninety per cent of such Cash Flow will be distributed to
Limited Partners. Ten per cent of such Cash Flow will be paid to the General
Partner as its distributive share from Partnership operations, provided that
25% of the General Partner's share will be allocated to the Early Investment
Incentive Fund described below, and will be returned to the Partnership by the
General Partner at the dissolution of the Partnership if necessary to enable
Early Investors to receive a return of their Original Capital plus a Cumulative
Return determined as follows: (I) for Interests purchased on or before August
15, 1984, 15.5% per year, and (ii) for Interests purchased between August 16,
1984, and August 31, 1984, 13.5% per year. In the event that on dissolution of
the Partnership, cash available for distribution and the amounts allocated to
the Early Investment Incentive Fund are not sufficient to return to Early
Investors their Original Capital plus the Cumulative Return, the amount of any
funds in the Early Investment Incentive Fund will be distributed first to all
Early Investors until they shall have received a Cumulative Return equal to the
rate described in period (ii) above, and then to those Early Investors who
purchased Interests in period (I) above.
As noted above, 25% of the General Partner's share of Cash Flow shall be
allocated to the Early Investment Incentive Fund when and as distributions of
Cash Flow are made to the Limited Partners and the General Partner. The
amounts in the Early Investment Incentive Fund will be commingled with other
assets of the General Partner and may be utilized to repurchase Interests from
Limited Partners as set forth under "Description of the Partnership Agreement
- -- Repurchase of Interests."
<PAGE>
VALUATION OF A LIMITED PARTNERSHIP INTEREST
The methodology used in estimating the Value of a Limited Partnership Interest
in Balcor Pension Investors - V is based upon substituting the estimated value
of the mortgage loan portfolio in place of the "Net Investment in Loans
Receivable" as shown on the March 31, 1996 Balance Sheet of Balcor Pension
Investors - V. In addition, the unamortized portion of the Offering Expenses
is added to the Assets on the same Balance Sheet. The amortization is
calculated by reducing the total Offering Expenses, as set forth in the
financial statements, on a straight line basis, quarterly, to the expiration
date of the loan portfolio. For financial reporting purposes, Balcor Pension
Investors - V initially deducted the total Offering Expenses from the proceeds
of the Limited Partnership Interest. Where equities exist, they are included
in the Balance Sheet (Schedule E) at their market value based on independent
real estate appraisals or estimates based on the cash flows of the properties.
Schedules D-1 and D-2 summarize the calculations of Partnership Asset Values
for the Real Estate Acquired Through Foreclosure.
Future General Partner fees and related expenses are not present valued as an
expense because of their unpredictability but rather are taken as a charge in
the quarter incurred.
Valuation Counselors Group, Inc./Darby & Associates Joint Venture has been
retained by Balcor Mortgage Advisors - V to estimate the Value of a Limited
Partnership Interest in Balcor Pension Investors - V on a quarterly basis. In
order to accomplish this, we valued the "Net Investment in Loans Receivable" as
well as calculated the "Unamortized Portion of the Offering Expenses."
Cash and Investments in Certificates of Deposit and Marketable Securities are
considered short term investments since eventually all but a working capital
reserve will be funded in real estate loans and real estate owned or returned
to the investor. Consequently, they remain in the valuation at face value in
both Schedules B-1 and E.
A simplified version of the Balance Sheet of Balcor Pension Investors - V,
prepared by Balcor Mortgage Advisors - V, before the aforementioned
adjustments, is on the following Schedule B-1. Schedules B-2 and B-3 are
Statements of Income and Expense.
<PAGE>
SCHEDULE B-1
UNADJUSTED BALANCE SHEET
BALCOR PENSION INVESTORS - V
AS OF MARCH 31, 1996
(UNAUDITED)
Assets
Cash $ 1,227,319
Marketable Securities 16,246,053
Accounts and Accrued Interest Receivable 723,795
Prepaid Expenses 35,978
Deferred Expenses 139,869
Interest Receivable on wrap-around notes 91,860
Interest Receivable on short-term investments 62,517
Real Estate acquired through foreclosure(2) 73,723,118
Net Investments in loans receivable(1) 26,668,529
Investment in acquisition loans (Noland Fashion
Square) 9,114,892
Participation in loss from acquisition loans (695,096)
Discount on loan receivable (1,512,701)
Allowance for potential loan losses (28,757,749)
Investment in joint venture - affiliate (Whispering Hills
& 45 W. 45th St.) 4,889,419
Participation in income of joint venture - affiliate 198,142
-------------
Total Assets $ 102,155,945
=============
Liabilities
Accounts and Accrued Interest Payable $ 170,892
Security Deposits 491,563
Due to Affiliates 68,749
Other Liabilities 504,192
-------------
Total Liabilities $ 1,235,396
Partners' Capital
(439,305 Limited Partnership Interests) 100,920,549
-------------
Total Liabilities and Partners' Capital $ 102,155,945
=============
(1) Glen Apts., Meadow Run and Seven Trails.
(2) Huntington Meadows, Union Tower, Glades on Ulmerton, International
Teleport, Plantation Apts., Waldengreen Apts., Granada Apts. and Villa Medici.
<PAGE>
SCHEDULE B-2
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------------
Income:
Interest on loans receivable and
investment in acquisition loan $ 1,147,345 $ 1,590,255
Less interest on loans payable -
underlying mortgages 50,699 84,251
-------------- ---------------
Net interest income on loans receivable 1,096,646 1,506,004
Income from operations of real estate
held for sale 1,351,784 1,385,176
Interest on short-term investments 243,266 425,804
Participation income 26,316
Participation in income of
joint ventures-affiliates 104,879 62,223
Recovery of loss on loan 2,478,000
-------------- ---------------
Total income 5,300,891 3,379,207
-------------- ---------------
Expenses:
Amortization of deferred expenses 10,035 155,486
Administrative 168,854 273,373
-------------- ---------------
Total expenses 178,889 428,859
-------------- ---------------
Income before equity in loss from
investment in acquisition loan 5,122,002 2,950,348
Equity in loss from investment
in acquisition loan (19,508) (17,426)
-------------- ---------------
Net income $ 5,102,494 $ 2,932,922
============== ===============
Net income allocated to General Partner $ 510,249 $ 293,292
============== ===============
Net income allocated to Limited Partners $ 4,592,245 $ 2,639,630
============== ===============
Net income per Limited Partnership
Interest (439,305 issued and outstanding) $ 10.45 $ 6.01
============== ===============
Distribution to General Partner $ 244,059 $ 195,247
============== ===============
Distribution to Limited Partners $ 2,196,525 $ 1,757,220
============== ===============
Distribution per Limited
Partnership Interest $ 5.00 $ 4.00
============== ===============
<PAGE>
SCHEDULE B-3
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------------
Operating activities:
Net income $ 5,102,494 $ 2,932,922
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in loss from investment
in acquisition loan 19,508 17,426
Participation in income of
joint ventures - affiliates (104,879) (62,223)
Recovery of loss on loan (2,478,000)
Amortization of deferred expenses 10,035 155,486
Accrued interest income due at maturity (130,132) (253,587)
Net change in:
Escrow deposits - restricted (108,173) (120,294)
Accounts and accrued
interest receivable (301,794) (39,001)
Prepaid expenses 109,049
Accounts and accrued
interest payable (94,577) (18,053)
Due to affiliates 18,900 53,955
Other liabilities 42,593 3,919
Security deposits (2,170) 11,334
-------------- -------------
Net cash provided by operating activities 2,082,854 2,681,884
-------------- -------------
Investing activities:
Capital contributions to joint
ventures - affiliates (58,156)
Distributions from joint
ventures - affiliates 160,984
Collection of principal
payments on loans receivable 75,384
Proceeds from sale of real estate 2,570,208
Costs incurred in connection with
the sale of real estate (175,495)
-------------- -------------
Net cash provided by investing activities 160,984 2,411,941
-------------- -------------
Financing activities:
Distribution to Limited Partners (2,196,525) (1,757,220)
Distribution to General Partner (244,059) (195,247)
Principal payments on loans payable
- underlying mortgages (10,145) (121,736)
-------------- -------------
Net cash used in financing activities (2,450,729) (2,074,203)
-------------- -------------
Net change in cash and cash equivalents (206,891) 3,019,622
Cash and cash equivalents at
<PAGE>
beginning of period 17,680,262 16,045,584
-------------- -------------
Cash and cash equivalents at end of period $ 17,473,371 $ 19,065,206
============== =============
<PAGE>
VALUATION OF "THE NET INVESTMENT IN LOANS RECEIVABLE"
The value of the "Net Investment in Loans Receivable" (the loan portfolio) is
equal to the present value of the various income and equity components of the
loan portfolio, discounted at current market rates of interest, commensurate
with the risks, as of March 31, 1996.
The income and equity components of the loan portfolio are as follows:
(1) The present value of the average annual rate of return on funds
advanced (cash received) over the life of the loans,
(2) The present value of the funds advanced, due at maturity,
(3) The present value of the equity buildup on wrap-around mortgage loans
and accrued interest, and
(4) The present value of the "kicker" income, i.e., a share in the future
gross income and the appreciated value, "equity kickers," in certain
properties.
(1) Discussion of Risk Rates
The discount rate applied to the cash flow mathematically expresses risk. Risk
represents the uncertainty related to achievement of the prospective cash
flows. The primary components of risk exposure in fixed income securities are
interest rate risk, inflation risk, market risk, liquidity risk and risk of
default. As previously discussed, the valuation of the assets in question have
been predicated upon the present valuing of the components of the loan
portfolio. Therefore, determination of an appropriate risk rate is essential
in the valuation of the net investment in loans receivable.
Financial theory dictates the necessity of incremental return resulting from
incremental risk. Accordingly, the typical risk/return tradeoff indicates that
investors should demand greater rates of return as the perceived riskiness of
the asset or security increases. In examining an investment situation, a
hypothetical investor would weigh the perceived level of risk against the
return expected from the subject investment. In determining the required rate
of return or discount rate on a particular asset or investment, the
hypothetical investor would also consider returns available from alternative
investment opportunities such as government securities, corporate bonds,
mortgages, real estate and common stock, if applicable.
The subject assets consist of a self-liquidating real estate investment fund
with investments in both real estate loans with varying maturities and real
estate assets. Accordingly, in determining an appropriate risk rate associated
with the subject assets, we have considered alternative and comparable rates of
return in the lending and real estate marketplace as indicated by such sources
as the Wall Street Journal, Real Estate Research Corporation Real Estate
Report, Investment Dealers Digest, Corporate Financing Week, American Council
of Life Insurance Investment Bulletin and the National Association of Real
Estate Investment Trusts.
The following table presents yield rates associated with various types of
government and corporate securities as indicated by the March 29,1996 and
January 3, 1996 Wall Street Journals.
<PAGE>
Yield Rates as Indicated by the Wall Street Journal
Security First Quarter 1996 Fourth Quarter 1995
Three Month U.S. Treasury Bills 4.99% 5.04%
Six Month U.S. Treasury Bills 4.97% 5.03%
Prime Rate 8.25% 8.50%
Ten Year U.S. Treasury Bonds 6.60% 5.64%
Twenty Year U.S. Treasury Bonds 6.90% 6.02%
Corporate Bonds
Aaa, Aa 6.72% to 7.60% 6.02% to 6.96%
A, Baa 6.95% to 7.91% 6.23% to 7.31%
Ba, C 9.8% 9.7%
Collateralized Mortgage
Obligations
10 Year 7.90% 6.94%
20 year 8.05% 7.17%
Additionally, information from Moody's Corporate Bond Survey and the Investment
Dealer's Digest indicates the corporate original issue Real Estate Mortgage
Investment Conduit (REMIC) yields from 1988 to 1995 ranged from 7% to 11.3% for
obligations with terms in excess of ten years. A yield difference of one to
three points was exhibited within multiple class REMIC issues where accrued
interest payments did not commence on the (higher yielding) security until
senior class notes were paid in full. A short term issuance collateralized by
elderly living properties exhibited a four point yield differential between
classes.
According to information from the Mortgage-Based Securities Letter, REMIC
issuances in 1994 have decreased substantially from the levels exhibited during
1992 and 1993. Reportedly, many REMIC underwriters and investors incurred
losses due to price corrections in the derivative mortgage securities market.
The price decline was believed to be attributable to several factors including
rising interest rates, increased volatility, average-life extension and lack of
liquidity. According to the Wall Street Journal, new issues of mortgage-backed
securities were down 57% in 1994 as compared to the prior year.
In addition to the previously noted yields on various market securities, we
have also considered mortgage rates associated with various types of commercial
real estate properties. This data is relevant in that it provides an
indication of rates of return associated with similar types of investments.
These statistics have been extracted from the December 29, 1995 and October 1,
1995 editions of the Investment Bulletin published by the American Council of
Life Insurance, is as follows:
<PAGE>
Averages
Contract Interest
Rate
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.83% 8.23%
Apartment 7.64% 8.13%
Office Building 7.98% 8.23%
Retail 7.79% 8.17%
Industrial 7.84% 8.21%
Other Commercial 7.73% 8.47%
Yield With
Fees
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.85% 8.24%
Apartment 7.67% 8.15%
Office Building 8.00% 8.24%
Retail 7.81% 8.18%
Industrial 7.85% 8.22%
Other Commercial 7.74% 8.51%
Maturity
(Years/Months)
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 11/06 11/02
Apartment 10/11 10/09
Office Building 10/0 09/07
Retail 13/05 13/06
Industrial 10/08 10/00
Other Commercial 11/04 12/02
Additionally, we have considered expected capitalization rates and internal
rates of return extracted from "Korpacz Real Estate Investor Surveys, First
Quarter 1996". For comparative purposes, we have also presented similar data
extracted from "Korpacz Real Estate Investor Surveys, Fourth Quarter 1995".
<PAGE>
National Market Indicators: First Quarter 1996
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.50% 10.00%-15.00% 12.10%
Free and Clear Equity Cap
Rate 6.25%-11.00% 8.11% 8.00%-12.50% 9.58%
Terminal Cap Rate 7.00%-11.00% 8.56% 8.25%-12.00% 9.62%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.90% 9.00%-14.00% 11.27%
Free and Clear Equity Cap
Rate 8.00%-11.00% 9.47% 7.25%-13.00% 9.29%
Terminal Cap Rate 8.50%-12.00% 9.68% 8.00%-11.00% 9.51%
National
Apartment
Range Average
Free and Clear Equity IRR 10.50%-13.00% 11.38%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.97%
Terminal Cap Rate 8.00%-11.00% 9.29%
<PAGE>
National Market Indicators: Fourth Quarter 1995
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.55% 10.00%-15.00% 12.15%
Free and Clear Equity Cap
Rate 6.25%-11.00% 7.86% 7.50%-12.50% 9.52%
Terminal Cap Rate 7.00%-11.00% 8.45% 8.25%-12.00% 9.63%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-15.00% 12.04% 9.00%-14.00% 11.31%
Free and Clear Equity Cap
Rate 8.00%-11.50% 9.57% 7.25%-13.00% 9.36%
Terminal Cap Rate 8.50%-12.00% 9.75% 8.00%-11.00% 9.58%
National
Apartment
Range Average
Free and Clear Equity IRR 10.00%-13.00% 11.50%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.99%
Terminal Cap Rate 8.00%-11.00% 9.31%
Our discount rates have been selected based upon the returns exhibited on
alternative securities and real estate properties as previously presented, in
conjunction with the attributes of the subject assets.
<PAGE>
Risk Measurement in Real Estate
As previously discussed, the primary components of risk exposure for fixed
income securities include interest rate risk, inflation risk, market risk,
liquidity risk and default risk. For real estate, these risks are similar and
can be segmented into two categories. The first is systematic risk which
includes all risks external to the property. The remaining risks can be
categorized as nonsystematic risk and includes all risks directly related to
the property. Generally, systematic risk affects the overall market as a whole
and is often referred to as market risk. However, nonsystematic risk is
generally more attributable to the property specifics. Nonsystematic risk can
be further broken down into risk relative to the immediate neighborhood or
local market with the residual risks being unique to the property.
When viewing an investment in a single property, the systematic overall market
risk, the nonsystematic local market risk and the nonsystematic unique property
risks must be weighed in the derivation of an appropriate risk rate (discount
rate) to be applied to anticipated cash flows. The overall market risks would
include such factors which effect the market as a whole. Among these factors
would be the level of interest rates, the economic condition of the nation,
federal tax incentives related to real estate and the expected inflation rate.
Each of these factors can have a direct effect on real estate throughout the
nation.
Nonsystematic local market risks are those that effect a regional area or
neighborhood and are not part of the overall market risk. There are many types
of possible local market risks. Some examples of local market risk include
fluctuations in the local economy, changes in transportation systems, local
crime rates and over building. These local market risks may be severe enough
to override the effects of the overall market risk.
Property unique risks are those which effect the subject property in a manner
more specific than the local market risks. Many of the property unique risks
are similar to the local market risks but are more significant for the subject
property. Some examples of property specific risks would include dependence on
single industries or tenants, crime frequency on the property, changes in
immediate traffic patterns, changes in adjacent zoning or adjacent property
conditions and unanticipated capital improvement requirements. These property
specific risks may have a material impact on the property but may not be
reflected in the local market risks.
Investments in individual property would reflect three groups of risks
including the systematic overall market risks, the nonsystematic local market
risks and the nonsystematic property unique risks. However, modern portfolio
theory recognizes that through investment diversification, the nonsystematic
risks associated with the local market and the unique attributes of the
property can be reduced. Furthermore, with sufficient diversification, a
portfolio can virtually eliminate nonsystematic risk.
The benefits of portfolio diversification are reflected in the improvement of
the portfolio's return-risk ratio. The return-risk ratio measures the return
of the investment relative to the volatility of the return. Generally, the
volatility of return is measured by the standard deviation of the return over a
period of time. Therefore, the return-risk ratio is simply the return of the
investment divided by the standard deviation of the return.
<PAGE>
As an example of the application of this ratio, assume that portfolio A invests
in only one type of property in one local market and experiences an average
annual return of 13% over fifteen years with a standard deviation of return of
17%. The return-risk ratio is computed to be 0.76 (13% divided by 17%).
Portfolio A's risk-return ratio can then be compared to the ratio of other
portfolios to evaluate the level of return relative to the risk taken.
To illustrate, assume portfolio B invests in a wide variety of property types
in a numerous geographical regions and only generated an annual return of 12%
over fifteen years. However, the standard deviation of return was only 13%.
The return-risk ratio is computed to be 0.86 (12% divided by 13%). Even though
portfolio A's return exceeded portfolio B's return, the superior return was not
enough to offset the increase in risk. Therefore, an investor would likely
prefer an investment in Portfolio B.
It should be noted, however, that with the reduction in the volatility of
returns, modern portfolio theory also recognizes that there is a reduction in
the level of potential return. This is because that volatility generally
provides the opportunity for added returns. This is the basis for the axiom
that greater risk equals greater reward. However, an investor generally
requires that the increase in risk is offset by an increase in potential
return. Conversely, if an investor is looking for a lower risk, the investor
would expect lower returns.
In the instant case, the discount rates selected for the appraisal of
individual properties which are expected to be sold in the near future reflect
all the systematic and nonsystematic risks associated with each individual
property. The discount rates are derived considering overall market factors,
local market factors and property unique factors. However, for those
properties which are valued as real estate investments on the basis of their
cash flows, the discount rate applied reflects the benefits of reduced
nonsystematic risks through portfolio diversification. These benefits include
the offsetting of local market risks and property unique risks of each property
with the local market risks and property unique risks of the other properties
in the portfolio. As a result, the volatility of returns for each property is
offset by the volatility of returns of the other properties in the portfolio.
The discount rates applied to the latter category of properties are derived
from market data on portfolio returns, which reflect the dichotomies described
above.
<PAGE>
(2) The Present Value of the Return on Funds Advanced and the Return of
Principal
Schedule C lists the five mortgage loans (Meadow Run, Whispering Hills, Noland
Fashion Square, Seven Trails and Glen Apts.) funded as of March 31, 1996, with
total funds advanced of $32,629,672.
In order to determine the present value of the return on funds advanced, the
interest due in each loan in each year to maturity was calculated on the basis
of the average annual rate of return on funds advanced. This interest was
discounted to a current present value at a market rate of interest. After
reviewing various market rates in effect as of March 31, 1996, including those
set forth in (1) Discussion of Risk Rates, as well as others, and recognizing
the present rates of similar new mortgage loans, we have concluded that a rate
of 10.25% is commensurate for the risk of the first mortgage loans in this Fund
and 11.00% for second mortgage loans and wrap-around mortgage loans.
The present value of the funds advanced is the present value of the principal
of each loan at maturity, discounted to a present value at 10.25% and 11.00% as
indicated. Each loan is summarized in Schedule C, which follows a later
section of this report.
The total present value of the principal and interest on the mortgage loans in
this Partnership, as of March 31, 1996, is:
$31,159,101
===========
<PAGE>
(3) The Present Value of the Equity Buildup and Accrued Interest
The value of the equity buildup for the wrap-around mortgage loans and accrued
interest is the present value of a known contract amount of monies to be
received at a specific future date. As the loans begin to mature, there is an
increasing amount of equity buildup and accrued interest actually earned and
less equity buildup and accrued interest still to be earned in the future. The
area of judgment in valuing the equity buildup and accrued interest is in the
selection of the discount rates commensurate with the risks. Because equity
buildup and accrued interest are contract amounts to be received the same as
cash interest received and repayment of principal, the same discount rate
applies to all items, i.e., 10.25% for first mortgage loans and 11.00% for
second mortgage loans and wrap-around mortgage loans.
Schedule C, which follows, includes summaries of the present value of the
equity buildup and accrued interest, by loan, as of March 31, 1996. They
indicate the total amount of funds advanced for each loan, the equity buildup
and accrued interest discounted at 11.00% for wrap-around and second mortgage
loans and 10.25% for first mortgage loans. In addition any adjustments to the
value of specific mortgage loans are indicated on Schedule C.
In certain loans the accrued interest payment is effected by the income kicker
wherein the loan agreement calls for the kicker income first to be applied
against accrued interest. The net effect is an increase in the present value
of the accrued interest of the loan as a result of the accelerated payment of
the accrued interest instead of payment at maturity.
In certain mortgage loans equity buildup and additional accrued interest have
been deleted from the values as indicated in Schedule C.
The totals are summarized as follows:
Present Value of the Equity Buildup $2,095,507
Present Value of the Accrued Interest 3,626,207
----------
Total $5,721,714
==========
<PAGE>
(4) The Present Value of the Income and Equity Kickers
On most of the loans Balcor Mortgage Advisors - V initially negotiated kickers,
or additional payments to Balcor Pension Investors - V, contingent upon the
achievement of certain levels of gross income and/or market value. In some
cases Balcor Pension Investors - V is to receive a percentage of the gross
income over a specified amount of gross income to be achieved in the future.
There is no assurance that the achievement levels will be attained, nor is
there any assurance that the payments due will be received in whole and on a
timely basis. In other more predictable cases, the percentage share of gross
income may be collected on next year's revenues. Other kickers include
situations where Balcor Pension Investors - V is to receive a percentage of the
proceeds in a sale or refinancing of the property over a stated market or
appraised value.
In estimating the present value of the income kickers where they exist we have
taken the estimated 1991 gross income for each loan subject to an income kicker
and projected the gross income at a compound rate of 4% to the maturity date of
the mortgage loan unless a particular set of circumstances on a mortgage loan
dictate a lower growth rate. The annual projected gross income was compared
with the terms and conditions of the income kicker provision of each loan and,
where payments were due in future years, those amounts were discounted at 18%
for wrap-around and second mortgage loans and 15% for first mortgage loans.
The risk rates of 15% and 18% are commensurate with the ability of the
properties to achieve their income goals and for Balcor Pension Investors - V
to receive payment.
A different valuation methodology was used to determine the present value of
the equity kickers where they exist. Income was increased at 4% on the
properties unless a particular set of circumstances on a mortgage loan dictate
a lower growth rate. Taxes, insurance, utilities and other expenses were
increased at 4%. To compute the value of the property the resultant net cash
flow from each property was capitalized at 10.25%. The resultant values were
discounted at 15% and 18% to a present value. This risk rates represent the
degree of risk of the properties to achieve their projected market values and
for Balcor Pension Investors - V to receive payment.
When the mortgage loans were initially underwritten, many of them included
income and equity kickers. Over a period of time we have deleted the values of
the kickers from problem loans and those in foreclosure. Consequently, the
value of the remaining kickers is not material in comparison to the total value
of the loan portfolio.
For the quarter ended March 31, 1996, the kickers have not been ascribed any
value.
<PAGE>
BALCOR PENSION INVESTORS V SCHEDULE C
LOAN PORTFOLIO SUMMARY
AS OF: 31-Mar-96
DISCOUNT RATES: WRAPS
FIRSTS
DATE DATE DISCOUNTING CURRENT
LOAN OF OF TERM FUNDS
DEAL TYPE FUNDING MATURITY (IN QUARTERS) ADVANCED
-----------------------------------------------------------------------
MEADOW RUN FIRST 14-Jun-84 01-Jul-96 1.00 3,900,000
1,2WHISPERING HILLS FIRST 23-Jun-87 01-Jul-99 13.00 4,809,359
1,4NOLAND FASHION SQ FIRST 31-Jan-89 31-Jan-2000 16.00 9,115,175
5 SEVEN TRAILS FIRST 13-Sep-84 17-Apr-96 0.00 12,674,905
3 GLEN APTS. WRAP 21-Feb-86 31-Dec-97 7.00 2,130,233
-----------
32,629,672
1. Value is less than the amount of Funds Advanced.
2. Valued at allocated appraised value of $4,550,000. 25% in BPI-V
and 75% in BPI-VII
3. Delete Income and Equity Kickers.
4. Letter of Credit cashed reducing Funds Advanced by $384,825.
5. Modified
DISCOUNT RATES: WRAPS 11.00% 11.00% 11.00% 11.00%
FIRSTS 10.25% 10.25% 10.25% 10.25%
DISCOUNTED DISCOUNTED DISCOUNTED
FUNDS DEBT EQUITY DISCOUNTED
DEAL ADVANCED SERVICE BUILD-UP NOTES
------------------ -----------------------------------------------
MEADOW RUN 3,707,553 166,897 0 0
WHISPERING HILLS 4,550,000 0 0 0
NOLAND FASHION SQ 7,746,300 0 0 0
SEVEN TRAILS 12,674,905 187,833 2,025,094 0
GLEN APTS. 1,761,791 443,661 303,247 0
-----------------------------------------------
30,440,549 798,391 2,328,341 0
LESS: GP 10% SHARE 79,839 232,834 0
LESS: GP 5% SHARE
(on Loans Valued
at Funds Outstanding) 0
-----------------------------------------------
NET TO LIMITED PARTNERS 30,440,549 718,552 2,095,507 0
===============================================
<PAGE>
DISCOUNT RATES: WRAPS 11.00% 18.00% 18.00%
FIRSTS 10.25% 15.00% 15.00%
DISCOUNTED DISCOUNTED DISCOUNTED TOTAL
ACCRUED INCOME EQUITY CURRENT
DEAL INTEREST KICKERS KICKERS VALUATION
------------------ -----------------------------------------------
MEADOW RUN 1,880,177 0 0 5,754,628
WHISPERING HILLS 0 0 0 4,550,000
NOLAND FASHION SQ 0 0 0 7,746,300
SEVEN TRAILS 1,773,402 0 0 16,661,234
GLEN APTS. 375,540 0 0 2,884,239
-----------------------------------------------
4,029,119 0 0 37,596,401
LESS: GP 10% SHARE 402,912 0 0 715,585
LESS: GP 5% SHARE
(on Loans Valued
at Funds Outstanding) 0
-----------------------------------------------
NET TO LIMITED PARTNERS 3,626,207 0 0 36,880,816
===============================================
<PAGE>
CONCLUSIONS OF VALUE OF THE "NET INVESTMENT IN LOANS RECEIVABLE"
The value of the "Net Investment in Loans Receivable" is the sum of the present
values of the various components of the loans described in the foregoing
sections of this report. Our conclusions are summarized as follows:
(1) The Present Value of the Return on Funds
Advanced and Return of Principal $31,159,101
(2) The Present Value of the Equity Buildup
and Accrued Interest 5,721,714
(3) The Present Value of the Income and
Equity Kickers 0
----------
Total Value of the "Net Investment in
Loans Receivable" as of March 31, 1996 $36,880,816
===========
<PAGE>
VALUATION OF THE "REAL ESTATE ACQUIRED THROUGH FORECLOSURE"
Balcor Pension Investors - V began in 1984 as a Limited Partnership with an
investment objective to make mortgage loans. Because of the general decline in
the real estate market over the past several years, it was necessary for the
Partnership to acquire a number of the assets, secured by the mortgage loans,
through foreclosure or accepting the deed in lieu of foreclosure. As of March
31, 1996, the Partnership owned nine Real Estate Assets Acquired Through
Foreclosure.
In the quarter ended March 31, 1995, Comerica Plaza was sold and Villa Medici
and 45 W. 45th Street (21.74%) were acquired through foreclosure.
In arriving at an estimate of the value of each asset a number of factors were
considered. Important to the analysis was the Partnership's policy on the
assets as to whether an asset would be retained until the maturity of the
Partnership or sold in the near-term. The decision to sell in the near-term
might be on the basis that there is no long-term potential for the asset to
materially increase in value or that substantial dollars might be necessary to
renovate and repair the asset. Also, the Partnership may have received an
offer to purchase the property for a price that would be difficult to refuse,
based on the factors known at this time. The decision to hold an asset until
the maturity of the Partnership indicates it is to be considered as an
investment with the assumption that the asset will grow in value.
Schedule D-1 lists the nine Real Estate Assets in Balcor Pension Investors - V
presently owned by the Partnership. The first column indicates the Asset
Present Value without regard to potential payments to the General Partner. The
remaining columns set forth the calculations to determine if there is Excess
Value, and, if so, what amount is due the General Partner. The last column is
the Partnership Asset Value, which is equal to the Asset Present Value minus
the General Partner Share of Excess. The Partnership Asset Value includes the
Underlying Mortgage, where applicable, since the Underlying Mortgage is
deducted later in Schedule E - Liabilities.
Schedule D-2 is a summary of the calculations of the Asset Present Value for
each real estate asset in Balcor Pension Investors - V. With the exception of
the Villa Medici property, the value of which is based on an appraisal, all of
the assets are valued as real estate investments on the basis of their 1996
projected cash flows. The projected cash receipts up to the projected sale
date are discounted at 10.00% to a present value. The final years' net cash
receipts are capitalized at 9% and the residual is discounted at 10.50% to a
present value. There is a sales cost allowance of 2.50% on the gross price.
<PAGE>
The valuation methodology of the Real Estate Assets Acquired Through
Foreclosure represents a procedure modification commencing with the quarterly
valuation as of December 31, 1992. Prior to that date the valuation relied
heavily on independent appraisals which, by the very nature of the ever
changing real estate market, quickly became obsolete. In addition, it is noted
that, in many cases, when Balcor took over the management of the assets, there
was a marked improvement in the cash flow. In those funds where it is expected
that the assets may be held to maturity to maximize their value, the assets are
generally valued on the basis of each asset's predicted cash flows. These cash
flows and the residual values are discounted at rates more related to holding
the asset to its maturity rather than forcing a sale in today's market. As
previously stated, where the intention is to sell the asset in the near-term,
an independent appraisal or an internal estimate of value predicated on a
near-term sale may be more appropriate.
It should be noted that, as the modifications in the valuation procedures were
made, there were significant changes in the asset value of some of the
individual Real Estate Assets Acquired Through Foreclosure, however, the
overall value of the portfolio did not change substantially. It is believed
that individual values arrived as a result of the revised procedures would
better represent their current asset values based on the assumptions set forth
herein.
<PAGE>
SCHEDULE D-1
Real Estate Asset Summary
BALCOR PENSION INVESTORS V
ASSET
PRESENT LESS: LESS:
VALUE UNDERLYING FUNDS EXCESS
PROPERTY 31-Mar-96 MORTGAGE OUTSTANDING VALUE
- --------------------------------------------------------------------------
Huntington Meadows 10,704,962 0 9,500,000 1,204,962
Union Tower 14,620,988 0 21,400,000 (6,779,012)
Glades on Ulmerton 7,489,055 0 5,860,301 1,628,754
International Teleport 5,242,458 0 14,000,000 (8,757,542)
Plantation Apartments 4,354,435 0 3,600,000 754,435
Granada Apartments 3,559,784 0 3,138,455 421,329
Waldengreen Apartments 7,609,296 0 7,944,576 (335,280)
Villa Medici 12,000,000 0 10,850,000 1,150,000
45 W.45th Street (21.74%) 1,821,110 0 5,000,000 (3,178,890)
------------------------------------------------
67,402,089 0 81,293,332 (13,891,243)
GENERAL
PARTNER
SHARE OF NET PARTNERSHIP
EXCESS EXCESS ASSET VALUE
PROPERTY AT 10% VALUE 31-Mar-96
- -------------------------------------------------------------
Huntington Meadows 120,496 1,084,466 10,584,466
Union Tower 0 (6,779,012) 14,620,988
Glades on Ulmerton 162,875 1,465,879 7,326,180
International Teleport 0 (8,757,542) 5,242,458
Plantation Apartments 75,444 678,992 4,278,992
Granada Apartments 42,133 379,196 3,517,651
Waldengreen Apartments 0 (335,280) 7,609,296
Villa Medici 115,000 1,035,000 11,885,000
45 W. 45th Street (21.74%) 0 (3,178,890) 1,821,110
-----------------------------------
515,948 (14,407,191) 66,886,141
<PAGE>
SCHEDULE D-2
Real Estate Appraisal Projections
BALCOR PENSION INVESTORS V
REO - Discounted Cash Flow Analysis as of: 31-Mar-96
PROJECTION SOURCE: APPRAISAL PROJECTIONS and BALCOR PROJECTIONS
DISCOUNT RATES:
Net Cash Receipts 10.00%
Residual Value 10.50%
Sales Commission 2.50%(on Gross Price)
Quarter Factor (for formula reference) 1
ACTUAL ACTUAL ACTUAL ACTUAL
1992 1993 1994 1995
Net Cash Receipts --------------------------------------------
Reo Investments
Huntington Meadows
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 810,487 889,645 911,734
TI/LC/Capital 0 143,396 154,641 329,316
--------------------------------------------
Net Cash Receipts 0 667,091 735,004 582,418
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Union Tower
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 1,270,821 1,150,468 1,375,298
TI/LC/Capital 0 574,077 474,019 294,006
--------------------------------------------
Net Cash Receipts 0 696,744 676,449 1,081,292
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Glades on Ulmerton
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 319,679 425,600 611,246
TI/LC/Capital 0 1,129,859 143,914 142,880
--------------------------------------------
Net Cash Receipts 0 (810,180) 281,686 468,366
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Harbor Bay (International Teleport)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 582,532 1,181,361 1,297,919
TI/LC/Capital 0 24,316 1,135,146 225,418
--------------------------------------------
Net Cash Receipts 0 558,216 46,215 1,072,501
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
<PAGE>
Plantation Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 254,470 350,344 376,415
TI/LC/Capital 0 240,116 257,258 130,029
--------------------------------------------
Net Cash Receipts 0 14,354 93,086 246,385
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Granada Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 103,371 267,298 292,886
TI/LC/Capital 0 87,866 150,891 94,835
--------------------------------------------
Net Cash Receipts 0 15,505 116,407 198,051
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Waldengreen Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 650,849 627,449
TI/LC/Capital 0 0 238,213 516,191
--------------------------------------------
Net Cash Receipts 0 0 412,636 111,257
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Villa Medici
Appraised Value 10/95
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
--------------------------------------------
Net Cash Receipts 0 0 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
45 W. 45th Street (21.74%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 79,514
TI/LC/Capital 0 0 0 58,698
--------------------------------------------
Net Cash Receipts 0 0 0 20,816
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
TOTAL NCR FROM INVESTMENTS 0 1,141,730 2,361,483 3,781,086
<PAGE>
Budget Pro-ject Pro-ject Pro-ject
1996 1997 1998 1999
--------------------------------------------
Huntington Meadows
Balcor Internal Projections
NOI B4 TI/LC/Capital 933,976 970,617 1,009,442 1,049,820
TI/LC/Capital 172,131 171,250 87,500 87,500
--------------------------------------------
Net Cash Receipts 761,845 799,367 921,942 962,320
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Union Tower
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,464,119 1,343,306 1,439,313 1,498,238
TI/LC/Capital 563,039 291,403 268,579 155,126
--------------------------------------------
Net Cash Receipts 901,080 1,051,903 1,170,734 1,343,112
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Glades on Ulmerton
Balcor Internal Projections
NOI B4 TI/LC/Capital 662,455 692,844 724,811 758,206
TI/LC/Capital 152,000 121,600 152,000 152,000
--------------------------------------------
Net Cash Receipts 510,454 571,244 572,811 606,206
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 8,421,139
Harbor Bay (International Teleport)
Balcor Internal Projections
NOI B4 TI/LC/Capital 668,085 559,836 536,908 0
TI/LC/Capital 739,518 71,753 0 0
--------------------------------------------
Net Cash Receipts (71,433) 488,083
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 5,816,503
Plantation Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 386,283 403,659 421,878 440,898
TI/LC/Capital 97,612 50,400 63,000 63,000
--------------------------------------------
Net Cash Receipts 288,671 353,259 358,878
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 4,713,395
<PAGE>
Granada Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 316,426 330,840 345,889 361,604
TI/LC/Capital 85,264 44,000 55,000 55,000
--------------------------------------------
Net Cash Receipts 231,162 286,840 290,889
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 3,862,377
Waldengreen Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 667,945 697,859 729,303 762,128
TI/LC/Capital 151,253 110,000 123,750 123,750
--------------------------------------------
Net Cash Receipts 516,692 587,859 605,553 638,378
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Villa Medici
Appraised Value 10/95
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
--------------------------------------------
Net Cash Receipts 0 0 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
45 W. 45th Street (21.74%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 209,504 187,216 169,771 180,197
TI/LC/Capital 134,999 50,122 46,878 14,128
--------------------------------------------
Net Cash Receipts 74,505 137,093 122,893 166,068
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 2,099,758
TOTAL NCR FROM INVESTMENTS 3,212,976 4,275,648 4,043,700 3,716,084
<PAGE>
Pro-ject Pro-ject Pro-ject Pro-ject
2000 2001 2002 2003
--------------------------------------------
Huntington Meadows
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,091,812 1,135,485 0 0
TI/LC/Capital 176,321 183,374 0 0
--------------------------------------------
Net Cash Receipts 915,492
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 12,117,714
Union Tower
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,566,429 1,616,572 0 0
TI/LC/Capital 349,964 639,866 0 0
--------------------------------------------
Net Cash Receipts 1,216,465
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 16,872,997
Glades on Ulmerton
Balcor Internal Projections
NOI B4 TI/LC/Capital 793,091 0 0 0
TI/LC/Capital 170,680 0 0 0
--------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Harbor Bay (International Teleport)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
--------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Plantation Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
--------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
<PAGE>
Granada Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
--------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Waldengreen Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 796,393 832,162 0 0
TI/LC/Capital 212,163 219,589 0 0
--------------------------------------------
Net Cash Receipts 584,230
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 8,795,499
Villa Medici
Appraised Value 10/95
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
--------------------------------------------
Net Cash Receipts 0 0 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 0
45 W. 45th Street (21.74%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 194,249 193,486 0 0
TI/LC/Capital 4,610 17,786 0 0
--------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
TOTAL NCR FROM INVESTMENTS 2,716,187 0 0 0
<PAGE>
Asset PV as of
31-Mar-96
-----------
Huntington Meadows
Balcor Internal Projections
NOI B4 TI/LC/Capital 3,170,526 NCR Present Value
TI/LC/Capital 7,534,436 Residual Present Value
-----------
Net Cash Receipts 10,704,962 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Union Tower
Balcor Internal Projections
NOI B4 TI/LC/Capital 4,129,857 NCR Present Value
TI/LC/Capital 10,491,131 Residual Present Value
-----------
Net Cash Receipts 14,620,988 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Glades on Ulmerton
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,703,258 NCR Present Value
TI/LC/Capital 5,785,797 Residual Present Value
-----------
Net Cash Receipts 7,489,055 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Harbor Bay (International Teleport)
Balcor Internal Projections
NOI B4 TI/LC/Capital 362,918 NCR Present Value
TI/LC/Capital 4,879,540 Residual Present Value
-----------
Net Cash Receipts 5,242,458 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Plantation Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 776,038 NCR Present Value
TI/LC/Capital 3,578,397 Residual Present Value
-----------
Net Cash Receipts 4,354,435 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
<PAGE>
Granada Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 627,478 NCR Present Value
TI/LC/Capital 2,932,306 Residual Present Value
-----------
Net Cash Receipts 3,559,784 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Waldengreen Apartments
Balcor Internal Projections
NOI B4 TI/LC/Capital 2,140,515 NCR Present Value
TI/LC/Capital 5,468,782 Residual Present Value
-----------
Net Cash Receipts 7,609,296 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Villa Medici
Appraised Value 10/95
NOI B4 TI/LC/Capital 0 NCR Present Value
TI/LC/Capital 12,000,000 Funds Advanced
-----------
Net Cash Receipts 12,000,000 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
45 W. 45th Street (21.74%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 378,458 NCR Present Value
TI/LC/Capital 1,442,652 Residual Present Value
-----------
Net Cash Receipts 1,821,110 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
TOTAL NCR FROM INVESTMENTS
Total Net Cash Receipts PV 13,289,048 Total NCR PV
Total Residual Value PV 54,113,041 Total Residual PV
-----------
TOTAL PRESENT VALUES 67,402,089 TOTAL PRESENT VALUES
<PAGE>
CALCULATION OF THE UNAMORTIZED PORTION OF THE OFFERING
EXPENSES
The unamortized portion of the offering expenses of Balcor Pension Investors -
V as of March 31, 1996, is calculated on a straight line basis over the life of
the mortgage loan portfolio as follows:
Total Offering Expenses through March 31, 1996 - $20,272,377
-----------
Quarterly Amortization based on 60 quarters - $337,873
--------
Unamortized Portion as of March 31, 1996 = $20,272,377 - 15,204,282
$5,068,095
==========
(15 Remaining Quarters)
<PAGE>
CALCULATION OF THE VALUE OF A LIMITED PARTNERSHIP INTEREST
IN BALCOR PENSION INVESTORS - V
The calculation of the Value of a Limited Partnership Interest in Balcor
Pension Investors - V calls for the substitution of the value of the assets
appraised for the related accounting numbers. The following Schedule E, which
is Schedule B-1 modified for the values of the appraised assets, summarizes the
calculations.
SCHEDULE E
ADJUSTED BALANCE SHEET
BALCOR PENSION INVESTORS - V
AS OF MARCH 31, 1996
(UNAUDITED)
Assets
Cash $ 1,227,319
Marketable Securities 16,246,053
Accounts and Accrued Interest Receivable 723,795
Deferred Expenses 139,869
Prepaid Expenses 35,978
Interest Receivable on Wrap-around Notes 91,860
Interest Receivable on Short-term Investments 62,517
Real Estate acquired through Foreclosure 66,886,141(2)
Net Investment in Loans Receivable 36,880,816(1)
Unamortized Portion of Offering Expenses 5,068,095
------------
Total Assets $127,362,443
============
Liabilities
Total Liabilities $ 1,235,396
Partners' Capital, adjusted for Value
(439,305 Limited Partnership Interests) 126,127,047
------------
Total Liabilities and Partners' Capital $127,362,443
============
(1) From Schedule C.
(2) From Schedule D-1.
<PAGE>
The Value of a Limited Partnership Interest in Balcor Pension Investors - V as
of March 31, 1996=
Partners' Capital, Adjusted for Value of the Assets
--------------------------------------------------- =
Number of Partnership Interests
$126,127,047
------------- = $287.11
439,305 =======
Rounded $287.00
=======
<PAGE>
CALCULATION OF AN INTEREST IN THE EARLY INVESTMENT
INCENTIVE FUND ("FUND")
As described in an earlier section of this report, the Partnership Agreement
provides that, under certain terms and conditions, 2.5% of the cash flow
distributed be set aside in the Early Incentive Investment Fund for payment, on
the dissolution of the Partnership, to two classes of investors who purchased
Interests (1) on or before August 15, 1984 and (2) between August 16, 1984 and
August 31, 1984. For the purpose of this valuation, 435,246 Interests
qualified for level 1 under the Early Investment Incentive Fund and none for
level 2.
The valuation is based on the sum of (1) the present value of the Early
Investors' 25% share in the General Partners' 10% share of certain designated
earnings of the Partnership, (2) the Early Investors Capital as of March 31,
1996, and (3) the present value of the future earnings from repurchased
interests.
General Partners' 10% Share of 3/31/96 Valuation $ 715,585
Early Investor 25% Share 178,896
Early Investor Capital @ 3/31/96 6,945,025
Present Value of Future Earnings on Repurchased
Shares 339,338
----------
$7,463,259
==========
Value per unit $17.15
======
Rounded Value per unit $17.00
======
