SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13233
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BALCOR PENSION INVESTORS-V
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(Exact name of registrant as specified in its charter)
Illinois 36-3254673
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
--------------- ---------------
Cash and cash equivalents $ 18,840,430 $ 17,680,262
Escrow deposits - restricted 88,500 42,103
Accounts and accrued interest receivable 592,328 576,378
Prepaid expenses 258,981 145,027
Deferred expenses, net of accumulated
amortization of $301,559 in 1996 and
$261,244 in 1995 211,689 149,904
--------------- ---------------
19,991,928 18,593,674
--------------- ---------------
Investment in loans receivable:
Loans receivable - wrap-around
and first mortgages 11,269,229 26,421,997
Investment in acquisition loan 8,439,304
Less:
Loan payable - underlying mortgage 2,508,818 2,539,832
Allowance for potential loan losses 2,632,001 5,859,733
--------------- ---------------
Net investment in loans receivable 6,128,410 26,461,736
Real estate held for sale (net of
allowance of $5,955,000 in
1996 and $4,955,000 in 1995) 49,509,391 50,018,118
Investment in joint ventures - affiliates 4,558,649 4,606,036
--------------- ---------------
60,196,450 81,085,890
--------------- ---------------
$ 80,188,378 $ 99,679,564
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued interest payable $ 209,259 $ 265,469
Due to affiliates 102,427 49,849
Other liabilities, principally escrow
deposits and accrued real estate taxes 1,088,217 611,875
Security deposits 493,304 493,733
--------------- ---------------
Total liabilities 1,893,207 1,420,926
Limited Partners' capital
(439,305 Interests issued
and outstanding) 82,646,636 102,310,790
General Partner's deficit (4,351,465) (4,052,152)
--------------- ---------------
Total partners' capital 78,295,171 98,258,638
--------------- ---------------
$ 80,188,378 $ 99,679,564
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Income:
Interest on loans receivable and
investment in acquisition loan $ 3,344,802 $ 4,693,199
Less interest on loans payable -
underlying mortgages 151,308 203,041
--------------- ---------------
Net interest income on loans receivable 3,193,494 4,490,158
Income from operations of real estate
held for sale 3,875,433 4,420,405
Interest on short-term investments 821,938 889,962
Participation income 35,495 859,526
Prepayment premiums 315,000
Participation in income (loss) of
joint ventures-affiliates 324,516 (317,297)
Recovery of loss on loan 2,478,000
--------------- ---------------
Total income 10,728,876 10,657,754
--------------- ---------------
Expenses:
Provision for potential losses on
loans and real estate 1,511,415
Amortization of deferred expenses 40,315 185,723
Administrative 955,011 822,079
--------------- ---------------
Total expenses 2,506,741 1,007,802
--------------- ---------------
Income before equity in loss from
investment in acquisition loan 8,222,135 9,649,952
Equity in loss from investment
in acquisition loan (52,021) (52,278)
--------------- ---------------
Net income $ 8,170,114 $ 9,597,674
=============== ===============
Net income allocated to General Partner $ 817,011 $ 959,767
=============== ===============
Net income allocated to Limited Partners $ 7,353,103 $ 8,637,907
=============== ===============
Net income per Limited Partnership
Interest (439,305 issued and outstanding)$ 16.74 $ 19.66
=============== ===============
Distributions to General Partner $ 1,116,324 $ 1,561,974
=============== ===============
Distributions to Limited Partners $ 27,017,257 $ 17,932,430
=============== ===============
Distributions per Limited
Partnership Interest $ 61.50 $ 40.82
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Income:
Interest on loans receivable and
investment in acquisition loan $ 379,091 $ 1,091,281
Less interest on loans payable -
underlying mortgages 50,187 40,234
--------------- ---------------
Net interest income on loans receivable 328,904 1,051,047
Income from operations of real estate
held for sale 1,172,155 1,242,818
Interest on short-term investments 232,525 261,703
Participation income 4,651 4,285
Participation in income (loss) of
joint ventures-affiliates 106,874 (457,215)
--------------- ---------------
Total income 1,845,109 2,102,638
--------------- ---------------
Expenses:
Provision for potential losses on
loans and real estate 1,000,000
Amortization of deferred expenses 15,141 15,119
Administrative 299,670 282,406
--------------- ---------------
Total expenses 1,314,811 297,525
--------------- ---------------
Income before equity in loss from
investment in acquisition loan 530,298 1,805,113
Equity in loss from investment
in acquisition loan (13,005) (17,426)
--------------- ---------------
Net income $ 517,293 $ 1,787,687
=============== ===============
Net income allocated to General Partner $ 51,729 $ 178,769
=============== ===============
Net income allocated to Limited Partners $ 465,564 $ 1,608,918
=============== ===============
Net income per Limited Partnership
Interest (439,305 issued and outstanding)$ 1.06 $ 3.66
=============== ===============
Distribution to General Partner $ 628,206 $ 1,122,668
=============== ===============
Distribution to Limited Partners $ 18,327,804 $ 13,978,685
=============== ===============
Distribution per Limited
Partnership Interest $ 41.72 $ 31.82
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Operating activities:
Net income $ 8,170,114 $ 9,597,674
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in loss from investment
in acquisition loan 52,021 52,278
Participation in (income) loss
of joint ventures - affiliates (324,516) 317,297
Recovery of loss on loan (2,478,000)
Provision for potential losses on
loans and real estate 1,511,415
Amortization of deferred expenses 40,315 185,723
Payment of leasing commissions (102,100)
Accrued interest income
due at maturity (478,441)
Collection of interest
income due at maturity 452,768 2,591,071
Net change in:
Escrow deposits - restricted (46,397) (17,659)
Accounts and accrued
interest receivable (15,950) (277,826)
Prepaid expenses (113,954) (303,713)
Accounts and accrued
interest payable (56,210) (50,607)
Due to affiliates 52,578 (86,058)
Other liabilities 476,342 254,496
Security deposits (429) 127,696
--------------- ---------------
Net cash provided by operating activities 7,617,997 11,911,931
--------------- ---------------
Investing activities:
Proceeds from sale of acquisition loan 7,226,945
Costs incurred in connection with
the sale of acquisition loan (100,810)
Capital contributions to joint
ventures - affiliates (22,759) (142,109)
Distributions from joint
ventures - affiliates 394,663 304,918
Collection of principal
payments on loans receivable 14,700,000 9,809,272
Improvements to real estate (491,273) (412,704)
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 activites 21,706,766 11,954,090
--------------- ---------------
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
--------------- ---------------
Financing activities:
Distributions to Limited Partners $ (27,017,257) $ (17,932,430)
Distributions to General Partner (1,116,324) (1,561,974)
Principal payments on loans payable
- underlying mortgages (31,014) (290,528)
--------------- ---------------
Net cash used in financing activities (28,164,595) (19,784,932)
--------------- ---------------
Net change in cash and cash equivalents 1,160,168 4,081,089
Cash and cash equivalents at
beginning of period 17,680,262 16,045,584
Cash and cash equivalents --------------- ---------------
at end of period $ 18,840,430 $ 20,126,673
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the
nine months and quarter ended September 30, 1996 are:
Paid
-------------------------
Nine Months Quarter Payable
-------------- --------- ----------
Mortgage servicing fees $ 48,062 $ 11,367 $ 2,074
Reimbursement of expenses to
the General Partner, at cost 115,895 25,352 100,353
3. Sale of Acquisition Loan Receivable:
In August 1996, the Noland Fashion Square acquisition loan, in which the
Partnership held a 40.77% participation interest, was sold. The Partnership's
share of the sale price was $7,226,945. From the proceeds of the sale, the
Partnership paid $100,810 as its share of the selling costs. The carrying
value of the loan was $8,387,283, and the remaining loan balance of $1,261,148
was written off against the previously established allowance for losses.
4. Contingency:
A proposed settlement has been reached with respect to the class action
complaint, Paul Williams and Beverly Kennedy, et al, v. Balcor Pension
Investors, et al. between counsel for the Class and counsel for the defendants.
Notice of the proposed settlement terms was sent to class members in September
1996. A final hearing on the proposed settlement is expected to be held in
November 1996. The General Partner does not believe that the proposed
settlement will have a material adverse impact on the Partnership.
5. Subsequent Events:
a) In October 1996, the Partnership made a distribution of $9,071,648 ($20.65
per Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of Cash Flow of $5.00 per Interest for the third
quarter of 1996, and a special distribution of $15.65 per Interest from the
proceeds received from the sale of the Noland Fashion Square acquisition loan.
<PAGE>
b) The 45 West 45th Street Office Building was owned by a joint venture
consisting of the Partnership and three affiliates. The Partnership held a
participating percentage in the joint venture of 21.74%. In November 1996, the
joint venture sold the property in an all cash sale for $10,300,000. From the
proceeds of the sale, the joint venture paid $579,075 in selling costs. For
financial statement purposes, the joint venture will recognize a gain of
approximately $2,935,000 from the sale of this property during the fourth
quarter of 1996, of which $638,000 will be the Partnership's share.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors-V (the "Partnership") is a limited partnership formed
in 1983 to invest in wrap-around mortgage loans, first mortgage loans and, to a
lesser extent, junior mortgage loans. The Partnership raised $219,652,500 from
sales of Limited Partnership Interests and utilized these proceeds to fund
thirty-four loans. The Seven Trails Apartments loan was repaid in April 1996,
the Noland Fashion Square acquisition loan was sold in August 1996 and the 45
West 45th Street Office Building in which the Partnership had a joint venture
interest was sold in November 1996. There are currently two loans outstanding
in the Partnership's portfolio, and the Partnership is operating eight
properties acquired through foreclosure and owns one investment in joint
venture with affiliate.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
- ---------------------
The Partnership recognized decreases in net interest income from loans
receivable, participation income and prepayment premiums in 1996 due to four
loan repayments in 1995, a decrease in income from operations of real estate
held for sale in 1996 and provisions for potential losses on loans and real
estate held for sale during the second and third quarters of 1996. For the
nine months ending September 30, 1996, the decreases were offset by the
recognition of a recovery of losses on loans in the second quarter of 1996.
The net effect of these events resulted in a decrease in net income for the
nine months and quarter ended September 30, 1996 as compared to the same
periods in 1995. Further discussion of the Partnership's operations is
summarized below.
1996 Compared to 1995
- ---------------------
Discussions of fluctuations between 1996 and 1995 refer to both the nine months
and quarters ended September 30, 1996 and 1995.
Net interest income on loans receivable decreased in 1996 as compared to 1995
due primarily to the 1995 repayments of the Club Wildwood, Four Seasons and
Point West mobile home parks and the Fairview Plaza I and II loans.
<PAGE>
Income from operations of real estate held for sale represents net property
operations generated by the properties the Partnership has acquired through
foreclosure. Original funds advanced by the Partnership totaled approximately
$69,545,000 for these properties. Income from operations of real estate held
for sale decreased in 1996 as compared to the same period in 1995 due to lower
occupancy at the Harbor Bay Office Building and increased tenant related
expenditures at the Union Tower Office Building.
Due to higher average cash balances in 1995 resulting from the loan repayments
in 1995, interest on short-term investments decreased during 1996 as compared
to 1995.
The Partnership's loans generally bear interest at contractually-fixed interest
rates. Some loans also provide for additional interest in the form of
participations, usually consisting of either a share in the capital
appreciation of the property collateralizing the Partnership's loan and/or a
share in the increase of the gross income of the property above a certain
level. Participation income was recognized during 1995 in connection with the
prepayment of the Club Wildwood, Four Seasons and Point West mobile home parks
loans. Additionally, participation income was recognized on the Glen and Meadow
Run Apartments loans during 1996 and 1995.
Prepayment premiums were received in 1995 in connection with the prepayments on
the Club Wildwood, Four Seasons and Point West mobile home park loans.
Participation in joint ventures with affiliates represents the Partnership's
share of the property operations at the Whispering Hills Apartments and the 45
West 45th Street Office Building. Primarily as a result of the recognition of a
provision for losses related to a change in the estimate of the fair value of
the 45 West 45 Street Office Building in the third quarter of 1995, the
Partnership recognized participation in income of joint ventures with
affiliates during 1996 as compared to participation in loss during 1995.
Provisions are charged to income when the General Partner believes an
impairment has occurred to the value of its properties or in a borrower's
ability to repay a loan or in the value of the collateral property.
Determinations of fair value are made periodically on the basis of performance
under the terms of the loan agreement and assessments of property operations.
Determinations of fair value represent estimations based on many variables
which affect the value of real estate, including economic and demographic
conditions. During 1996, the Partnership recognized a provision of $511,415
related to the Noland Fashion Square loan and provisions of $1,000,000 related
to its real estate held for sale to provide for changes in the estimate of the
fair value of certain properties in the Partnership's portfolio. The
Partnership also recognized a recovery of $2,478,000 related to the Seven
Trails Apartments loan during the nine months ended September 30, 1996. The
Partnership did not recognize any provisions during the nine months ended
September 30, 1995 related to its loans receivable or real estate held for
sale.
As a result of the sale of the Comerica Office Building in 1995 and the full
amortization of the related deferred expenses, amortization expense decreased
during the nine months ended September 30, 1996 as compared to the same period
in 1995.
<PAGE>
The Partnership incurred higher consulting, legal, postage and printing costs
in connection with its response to a tender offer and related litigation during
1996. As a result, administrative expenses increased during 1996 as compared
to 1995. This increase was partially offset by a decrease in legal fees
related to the 1995 foreclosure of the 45 West 45th Street Office Building.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $1,160,000 as
of September 30, 1996 as compared to December 31, 1995. The Partnership's cash
flow provided by operating activities of approximately $7,618,000 was generated
primarily by net interest income from the Partnership's loans receivable, net
interest income on short-term investments and cash flow from the operation of
the Partnership's properties held for sale which was partially offset by the
payment of administrative expenses. The Partnership's investing activities
generated cash flow of approximately $21,707,000 primarily from the Seven
Trails Apartments loan repayment and the Noland Fashion Square acquisition loan
sale proceeds. Cash of approximately $28,165,000 was used in financing
activities consisting primarily of distributions to partners.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit. 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. None of the properties have any
underlying debt. During 1996 and 1995, all of the Partnership's properties
generated positive cash flow. In addition, the properties in which the
Partnership holds minority joint venture interests with affiliates, the
Whispering Hills Apartments and the 45 West 45th Street Office Building,
generated positive cash flow during 1996 and 1995. However, significant
leasing costs were incurred at the 45 West 45th Street Office Building in 1995.
These costs were not included in classifying the cash flow performance of the
property in 1995 since they were nonrecurring expenditures. Had these costs
been included, the 45 West 45th Street Office Building would have generated a
significant cash flow deficit for the nine months ended September 30, 1995.
As of September 30, 1996, the occupancy rates of the Partnership's residential
properties ranged from 92% to 100%, and the occupancy rates of the Harbor Bay
Office Building and the Union Tower Office Building were 84% and 88%,
respectively. Many rental markets continue to remain extremely competitive;
therefore, the General Partner's goals are to maintain high occupancy levels,
while increasing rents where possible, and to monitor and control operating
expenses and capital improvement requirements at the properties.
<PAGE>
The General Partner believes that the market for multifamily housing and office
properties has become increasingly favorable to sellers of these properties.
During November 1996, the General Partner sold the 45 West 45th Street Office
Building in which it held a minority joint venture interest. Currently, the
Partnership has entered into contracts to sell the Glades on Ulmerton
Apartments, Granada Apartments, Plantation Apartments, Huntington Meadows
Apartments, Waldengreen Apartments, Union Tower office building and the Villa
Medici Apartments for sales prices of $6,500,000, $2,300,000, $3,000,000,
$9,300,000, $6,590,000, $15,350,000 and $13,100,000 respectively. The
Partnership also is actively marketing the remaining property in its portfolio.
The General Partner examines each property individually by property type and
market in determining the optimal time to sell each property.
The 45 West 45th Street Office Building was owned by a joint venture consisting
of the Partnership and three affiliates. In November 1996, the joint venture
sold the property in an all cash sale for $10,300,000. From the proceeds of
the sale, the joint venture paid $579,075 in selling costs. The net proceeds
of the sale were $9,720,925, of which $2,113,329 was the Partnership's share.
Pursuant to the terms of the sale, $500,000 of the proceeds will be retained by
the joint venture until April 1997. See Note 5 of Notes to Financial Statements
for additional information.
The Partnership funded a $14,700,000 loan collateralized by a wrap-around
mortgage on the Seven Trails Apartments which wrapped around an underlying
first mortgage of $6,714,692, resulting in funds advanced by the Partnership of
$7,985,308. In March 1994, the underlying first mortgage loan was purchased by
the Partnership at face value for $4,689,871 which increased the funds advanced
to $12,675,179. The wrap-around mortgage loan matured in February 1996. The
Partnership extended the loan until April 1, 1996 to allow the borrower
additional time to secure alternate financing. The loan was repaid in full in
April 1996. The Partnership received proceeds of $16,473,402 consisting of
funds advanced of $12,675,179, equity buildup related to principal payments of
$2,024,821 made by the Partnership on the underlying loan and additional
interest income of $1,773,402.
The Meadow Run Apartments first mortgage loan matured in July 1996. The
Partnership negotiated an extension of the loan until December 1996 to allow
the borrower additional time to secure alternate financing.
In August 1996, the Noland Fashion Square acquisition loan, in which the
Partnership held a 40.77% participating interest, was sold. The Partnership's
share of the sale price was $7,226,945. From the proceeds of the sale, the
Partnership paid $100,810 as its share of selling costs. Pursuant to the terms
of the sale, $101,932 of the proceeds will be held in an escrow account until
November 22, 1996. A majority of the remaining proceeds were distributed as a
special distribution to the Limited Partners in October 1996. See Note 3 of
Notes to Financial Statements for additional information.
The Noland Fashion Square Shopping Center loan was recorded by the Partnership
as an investment in an acquisition loan. The Partnership has recorded its share
of the property's operations as equity in loss from investment in acquisition
loan. The Partnership's share of operations has no effect on the cash flow of
the Partnership. Amounts representing contractually required debt service are
recorded as interest income.
<PAGE>
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate. Lower interest rates
may increase the probability that borrowers' may seek prepayment of the
Partnership's loan whereas rising interest rates decrease the yields on the
loans and make prepayment less likely.
In October 1996, the Partnership paid a distribution of $9,071,648 ($20.65 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of Cash Flow of $5.00 per Interest for the third
quarter of 1996 and a special distribution of $15.65 per Interest from the
Noland Fashion Square acquisition loan sale proceeds. The level of the regular
quarterly Cash Flow distribution was consistent with the prior quarter.
Including the October 1996 distribution, Limited Partners have received cash
distributions totaling $599.90 per $500 Interest. Of this amount, $410.12 has
been Cash Flow from operations and $189.78 represents a return of Original
Capital. In October 1996, the Partnership also paid $183,044 to the General
Partner as its distributive share of Cash Flow for the third quarter of 1996
and made a contribution to the Early Investment Incentive Fund of $61,015.
During 1996 the General Partner used amounts placed in the Early Incentive Fund
to repurchase 4,062 Interests from Limited Partners at a total cost of
$944,088.
The Partnership expects to continue making quarterly cash distributions to
Limited Partners. The level of future distributions is dependent on cash flow
from property operations and property sales less fees to the General Partner
and administrative expenses. The General Partner, on behalf of the Partnership,
has retained what it believes is an appropriate amount of working capital to
meet current cash or liquidity requirements which may occur.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Proposed Class and Derivative Action Lawsuits
- ---------------------------------------------
On June 14, 1996, a proposed class and derivative action complaint was filed,
Dee vs. Walton Street Capital Acquisition II, LLC (Circuit Court of Cook
County, Illinois, County Department, Chancery Division ("Chancery Court"), Case
No. 96 CH 06283) (the "Dee Case"), naming the General Partner and the general
partners (the "Balcor Defendants") of nine other limited partnerships sponsored
by The Balcor Company (together with the Partnership, the "Affiliated
Partnerships"), as well as the Affiliated Partnerships, as defendants.
Additional defendants were Insignia Management Group ("Insignia") and Walton
Street Capital Acquisition II, LLC ("Walton") and certain of their affiliates
and principals (collectively, the "Walton and Insignia Defendants"). The
complaint alleged, among other things, that the tender offers for the purchase
of limited partnership interests in the Affiliated Partnerships made by a joint
venture consisting of affiliates of Insignia and Walton were coercive and
unfair.
On July 1, 1996, another proposed class action complaint was filed in the same
court, Anderson vs. Balcor Mortgage Advisors (Case No. 96 CH 06884) (the
"Anderson Case"). An amended complaint consolidating the Dee and Anderson
Cases (the "Dee/Anderson Case") was filed on July 25, 1996.
The complaint seeks to assert class and derivative claims again the Walton and
Insignia Defendants and alleges that, in connection with the tender offers, the
Walton and Insignia Defendants misused the Balcor Defendants' and Insignia's
fiduciary positions and knowledge in breach of the Walton and Insignia
Defendants' fiduciary duty and in violation of the Illinois Securities and
Consumer Fraud Acts. The plaintiffs amended their complaint on October 8, 1996,
adding additional claims. The plaintiffs request certification as a class and
derivative action, unspecified compensatory damages and rescission of the
tender offers. Each of the defendants have filed motions to dismiss the
complaint. The court has not yet ruled on these motions.
The Balcor Defendants intend to vigorously contest this action. No class has
been certified as of this date. Management of each of the Balcor Defendants
believes they have meritorious defenses to contest the claims. It is not
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the Partnership.
<PAGE>
Item 5. Other Information
- --------------------------
Waldengreen Apartments
- ----------------------
As previously reported, on August 29, 1996, the Partnership contracted to sell
Waldengreen Apartments, Orlando, Florida to an unaffiliated party, Southern
Properties Fund, Inc., a Florida corporation, for a sale price of $7,100,000.
The purchaser exercised its option to terminate the sale; however, the
agreement of sale was subsequently reinstated. Pursuant the reinstatement, the
purchaser has deposited an additional $150,000 into the escrow account. The
Partnership and the purchaser also agreed to reduce the sale price to
$6,590,000 and the closing date has been extended from October 26, 1996 to
December 15, 1996. In connection with the extension of the closing date, the
purchaser is obligated to deposit an additional $100,000 into the escrow
account.
Villa Medici Apartments
- -----------------------
In 1987, the Partnership funded a $10,850,000 first mortgage loan,
collateralized by the Villa Medici Apartments, Overland Park, Kansas. In March
1995, the Partnership obtained title to the property through foreclosure.
On October 29, 1996, the Partnership contracted to sell the property for a sale
price of $13,100,000 to an unaffiliated party, Heow, Inc., a Wisconsin
corporation. The purchaser is obligated to deposit $75,000 into an escrow
account as earnest money, on or before November 22, 1996. The remainder of the
sale price will be payable in cash at closing, scheduled to occur December 2,
1996. From the proceeds of the sale, the Partnership will pay $262,000 to an
unaffiliated party as a brokerage commission. An affiliate of the third party
providing property management services for the property will receive a fee for
services rendered in connection with the sale of the property of up to $98,250.
The Partnership will receive the remaining proceeds of approximately
$12,739,750, less closing costs. Neither the General Partner nor any affiliate
will receive a brokerage commission in connection with the sale of the
property. The General Partner will be reimbursed by the Partnership for actual
expenses incurred in connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
Granada Apartments
- ------------------
As previously reported, on September 17, 1996, the Partnership contracted to
sell the Granada Apartments, Tampa, Florida, to an unaffiliated party, Housing
Systems, Incorporated, a Georgia corporation, for a sale price of $2,850,000.
Pursuant to an amendment, the purchase price has been reduced to $2,300,000.
<PAGE>
Plantation Apartments
- ---------------------
As previously reported, on September 17, 1996, the Partnership contracted to
sell the Plantation Apartments, Tampa, Florida, to an unaffiliated party,
Housing Systems, Incorporated, a Georgia corporation, for a sale price of
$3,550,000. Pursuant to an amendment, the purchase price has been reduced to
$3,000,000.
45 West 45th Street
- -------------------
As previously reported, on July 29, 1996, a limited partnership (the "Limited
Partnership") in which the Partnership and three affiliates hold interests and
which owns the 45 West 45th Street Office Building, New York City, New York,
contracted to sell the property to an unaffiliated party, Olmstead Properties,
Inc., a New York corporation, for a sale price of $10,300,000. The sale closed
November 6, 1996. From the proceeds of the sale, the Limited Partnership paid
$257,500 to an unaffiliated party as a brokerage commission and closing costs
of $321,575. The Limited Partnership received the remaining $9,720,925 of
proceeds. Of such amount, $500,000 will be retained by the Limited Partnership
and will not be available for use or distribution by the Limited Partnership
until 150 days after closing. The Partnerships' share of the total net proceeds
is $2,113,329.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
dated January 16, 1984 to the Registrant's Registration Statement on Form S-11
(Registration No. 2-87662) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended September 31, 1992 (Commission File No. 0-13233) are
incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachments thereto relating to the sale of
the Granada Apartments, Tampa, Florida previously filed as Exhibit (2)(a)(i) to
the Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the Granada
Apartments, Tampa, Florida previously filed as Exhibit (2)(a)(ii) to the
Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the
Granada Apartments, Tampa, Florida previously filed as Exhibit (99)(b) to the
Partnerships Current Report on Form 8-K dated October 3, 1996 is incorporated
herein by reference.
(iv) Second Amendment to Agreement of Sale relating to the sale of Granada
Apartments, Tampa, Florida is attached hereto.
<PAGE>
(b)(i) Agreement of Sale and attachments thereto relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (2)(b)(i) to
the Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (2)(b)(ii) to
the Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (99)(c) to
the Partnerships Current Report on Form 8-K dated October 3, 1996 is
incorporated herein by reference.
(iv) Second Amendment to Agreement of Sale relating to the sale of Plantation
Apartments, Tampa, Florida is attached hereto.
(c)(i) Agreement of Sale and attachments thereto relating to the sale of the
The Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(2)(c)(i) to the Partnerships Current Report on Form 8-K dated September 17,
1996 is incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the The
Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(2)(c)(ii) to the Partnerships Current Report on Form 8-K dated September 17,
1996 is incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the The
Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(99)(d) to the Partnerships Current Report on Form 8-K dated October 3, 1996 is
incorporated herein by reference.
(d)(i) Agreement of Sale and attachments thereto relating to the sale of the
Union Tower office building, Lakewood, Colorado previously filed as Exhibit (2)
to the Partnerships Current Report on Form 8-K dated October 10, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the Union
Tower office building, Lakewood, Colorado is attached hereto.
(99)(a)(i) Agreement of Sale and attachments thereto relating to the sale of
the Waldengreen Apartments, Orlando, Florida previously filed as Exhibit
(99)(a) to the Partnerships Current Report on Form 8-K dated August 29, 1996 is
incorporated herein by reference.
(ii) Reinstatement of, and First Amendment to Agreement of Sale and Escrow
Agreement relating to the sale of Waldengreen Apartments, Orlando, Florida is
attached hereto.
(iii) Letter agreement dated September 26, 1996 relating to the sale of
Waldengreen Apartments, Orlando, Florida is attached hereto.
(iv) Letter agreement dated November 5, 1996 relating to the sale of
Waldengreen Apartments, Orlando, Florida is attached hereto.
<PAGE>
(b) First Amendment to Agreement of Sale relating to the sale of the 45 W.
45th Street Office Building, New York City, New York previously filed as
Exhibit (99)(b) to the Partnerships Current Report on Form 8-K dated August 29,
1996 is incorporated herein by reference.
(c) Agreement of Sale and attachments thereto relating to the sale of the
Huntington Meadow Apartments, Arlington, Texas previously filed as Exhibit
(99)(a) to the Partnerships Current Report on Form 8-K dated October 3, 1996 is
incorporated herein by reference.
(d)(i) Agreement of Sale and attachments thereto relating to the sale of the
Villa Medici Apartments, Overland Park, Kansas is attached hereto.
(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the Villa Medici Apartments, Overland Park, Kansas is attached hereto.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1996 is attached hereto.
(b) Reports on form 8-K:
(i) A Current Report on Form 8-K dated August 29, 1996 was filed relating to
the contracts for the sale of the Noland Fashion Square loan and the
Waldengreen Apartments, Orlando, Florida and the 45 W. 45th Street Office
Building, New York City, New York.
(ii) A Current Report on Form 8-K dated September 17, 1996 was filed relating
to the contracts for the sale of Granada Apartments, Tampa, Florida, Plantation
Apartments, Tampa, Florida, and The Glades on Ulmerton Apartments, Largo,
Florida.
(iii) A Current Report on Form 8-K dated October 3, 1996 was filed relating to
the contracts for the sale of Huntington Meadows Apartments, Arlington, Texas,
Granada Apartments, Tampa, Florida, Plantation Apartments, Tampa, Florida, and
The Glades on Ulmerton Apartments, Largo, Florida.
(iv) A Current Report on Form 8-K dated October 10, 1996 was filed relating to
the contract for the sale of Union Tower office building, Lakewood, Colorado.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR PENSION INVESTORS-V
By: /s/Thomas E. Meador
----------------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-V, the General Partner
By: /s/Jayne A. Kosik
----------------------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Mortgage Advisors-V, the General Partner
Date: November 14, 1996
------------------------------
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF SALE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of this 24th day of October, 1996, by and between GRD Limited
Partnership, an Illinois limited partnership ("Seller") and Housing Systems,
Incorporated, a Georgia corporation ("Purchaser").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated September 17, 1996, as amended by that certain First Amendment to
Agreement of Sale, dated September 23, 1996 ("Agreement"), pursuant to which
Purchaser has agreed to purchase and Seller has agreed to sell certain Property
(as defined in the Agreement) legally described and depicted on Exhibit A
attached to the Agreement.
B. Seller and Purchaser desire to amend the Agreement in accordance with
the terms of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The Purchase Price as referenced in Paragraph 1 of the Agreement is hereby
changed from the price of Two Million Eight Hundred Fifty Thousand and No/100
Dollars ($2,850,000.00) to the price of Two Million Three Hundred Thousand and
No/100 Dollars ($2,300,000.00).
4. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
5. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
HOUSING SYSTEMS, INCORPORATED, a Georgia corporation
By: /s/ Russell A. Greer
-------------------------------------
Name: Russell A. Greer
-------------------------------------
Its: Executive Vice President
-------------------------------------
SELLER:
GRD LIMITED PARTNERSHIP, an Illinois limited
partnership
By: GRD Limited Partners, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
---------------------------------------
Name: James E. Mendelson
---------------------------------------
Its: Authorized Representative
---------------------------------------
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF SALE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of this 24th day of October, 1996, by and between PNT Partners
Limited Partnership, an Illinois limited partnership ("Seller") and Housing
Systems, Incorporated, a Georgia corporation ("Purchaser").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated September 17, 1996, as amended by that certain First Amendment to
Agreement of Sale, dated September 23, 1996 ("Agreement"), pursuant to which
Purchaser has agreed to purchase and Seller has agreed to sell certain Property
(as defined in the Agreement) legally described and depicted on Exhibit A
attached to the Agreement.
B. Seller and Purchaser desire to amend the Agreement in accordance with
the terms of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The Purchase Price as referenced in Paragraph 1 of the Agreement is hereby
changed from the price of Three Million Five Hundred Fifty Thousand and No/100
Dollars ($3,550,000.00) to the price of Three Million and No/100 Dollars
($3,000,000.00).
3. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
4. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
HOUSING SYSTEMS, INCORPORATED, a Georgia corporation
By: /s/ Russell A. Greer
---------------------------------
Name: Russell A. Greer
---------------------------------
Its: Executive Vice President
---------------------------------
SELLER:
PNT PARTNERS LIMITED PARTNERSHIP,
an Illinois limited partnership
By: PNT Partners, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
-------------------------------
Name: James E. Mendelson
-------------------------------
Its: Authorized Representative
-------------------------------
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE
THIS FIRST AMENDMENT TO AGREEMENT OF SALE (this "Amendment"), is entered
into as of the 8th day of November, 1996, by and between Transwestern
Investment Company, L.L.C., ("Purchaser"), and Union Tower Limited Partnership,
an Illinois Limited Partnership ("Seller").
W I T N E S S E T H:
A. Purchaser and Seller have heretofore entered into a certain Agreement
of Sale dated October 10, 1996 ("Agreement") for the purchase and sale of the
property commonly known as Union Tower, located in Lakewood, Colorado.
B. Purchaser and Seller now desire to amend the Agreement to change the
Closing Date and extend the Inspection Period (as those terms are defined in
the Agreement).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. The Closing Date, as defined in Paragraph 8 of the Agreement, is
hereby changed to December 16, 1996.
2. The expiration of the Insepction Period (as defined in Paragraph 7.1
of the Agreement) is hereby extended to 2:00 p.m. Chicago time on November 15,
1996.
3. Except as specifically modified herein, the terms and conditions of
the Agreement shall remain unchanged and in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.
PURCHASER:
TRANSWESTERN INVESTMENT COMPANY, L.L.C.
By: /s/ Stephen R. Quazzo
---------------------------------
Name: Stephen R. Quazzo
---------------------------------
Its: Managing Director
---------------------------------
SELLER:
UNION TOWER LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Union Tower Partners, Inc.,
its general partner
By: /s/ James E. Mendelson
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
<PAGE>
REINSTATEMENT OF, AND FIRST AMENDMENT TO,
AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS REINSTATEMENT OF, AND FIRST AMENDMENT TO, AGREEMENT OF SALE AND
ESCROW AGREEMENT (this "First Amendment"), is entered into as of the ____ day
of October, 1996, by and between GREENWALD PARTNERS LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller"), SOUTHERN PROPERTIES FUND, INC., a
Florida corporation (the "Purchaser"), and FIRST AMERICAN TITLE INSURANCE
COMPANY (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Purchaser and Seller entered into that certain Agreement of Sale
dated as of August 29, 1996 (the "Agreement"), for the purchase and sale of
certain real property located in Orlando, Florida and commonly known as Walden
Green Apartments (the "Property").
WHEREAS, Purchaser, Seller and Escrow Agent entered into that certain
Escrow Agreement dated as of September 6, 1996 (the "Escrow Agreement"), which
provided for the holding and disposition of the Earnest Money deposited by
Purchaser pursuant to the Agreement by Escrow Agent.
WHEREAS, Purchaser has heretofore delivered to Seller and Escrow Agent a
Due Diligence Termination Notice dated September 26, 1996 (the "Termination
Notice"), terminating the Agreement.
WHEREAS, Purchaser and Seller desire to reinstate and amend the Agreement
upon the terms and conditions more fully set forth herein.
WHEREAS, Purchaser and Seller desire to reinstate the Escrow Agreement to
provide for the holding and disposition of the Earnest Money heretofore
deposited by Purchaser with Escrow Agent.
WHEREAS, Escrow Agent has agreed to enter into this First Amendment to
acknowledge its continuing obligations to hold and distribute the Earnest Money
in accordance with the terms and provisions of the Escrow Agreement as modified
hereby.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereby as
agree as follows:
1. The Agreement is hereby reinstated and shall remain in full force and
effect as if the Termination Notice had not been delivered, except that the
Agreement shall be modified by the terms and conditions hereinafter set forth.
2. Purchaser hereby acknowledges that the Inspection Period has expired
and hereby waives its right to terminate the Agreement pursuant to Paragraph
7.1 thereof.
3. The reference to "Seven Million One Hundred Thousand and No/100
Dollars ($7,100,000.00)" contained in the second line of Paragraph 1 is hereby
deleted and inserted in lieu thereof is the following: "Six Million Five
Hundred Ninety Thousand and No/100 Dollars ($6,590,000.00)".
<PAGE>
4. Paragraph 2.2 of the Agreement is hereby deleted in its entirety and
the following is inserted in lieu thereof: "Upon the reinstatement of this
Agreement in accordance with that certain Reinstatement of, and First Amendment
to, Agreement of Sale and Escrow Agreement by and among Purchaser, Seller and
First American Title Insurance Company (the "First Amendment"), the sum of One
Hundred Fifty Thousand and No/100 Dollars ($150,000.00) (the "Additional
Earnest Money", and together with the Initial Earnest Money, the "Earnest
Money"), to be held in escrow by and in accordance with the provisions of the
Escrow Agreement, as amended by the First Amendment."
5. The first sentence of Paragraph 8 of the Agreement is hereby deleted
in its entirety and the following is inserted in lieu thereof: "Subject to the
provisions contained in this Agreement, the closing of this transaction (the
"Closing") shall be held on November 15, 1996 (the "Closing Date"), at the
office of Title Agent, at which time Seller shall deliver the Deed and all
other closing documents, as well as possession of the Property, to Purchaser;
provided, however, that Purchaser shall have the right to extend the Closing
Date to a date on or before December 15, 1996 by providing written notice to
Seller and Escrow Agent on or before 5:00 p.m. on November 5, 1996. In the
event that Purchaser elects to extend the Closing Date, Purchaser shall deliver
to Escrow Agent the sum of One Hundred Thousand and No/100 Dollars
($100,000.00) as an additional earnest money deposit to be credited against the
Purchase Price at Closing."
6. The third sentence of Paragraph 21 of the Agreement is deleted in its
entirety and the following is inserted in lieu thereof: "Seller agrees not to
enter into any other service contracts affecting the Property which cannot be
terminated on thirty (30) days' prior written notice without a termination
fee."
7. Paragraph 2 of the Escrow Agreement is hereby deleted in its
entirety.
8. Paragraph 3 of the Escrow Agreement is hereby deleted in its entirety
and the following is inserted in lieu thereof: "Upon the reinstatement of this
Agreement in accordance with that certain Reinstatement of, and First Amendment
to, Agreement of Sale and Escrow Agreement by and among Purchaser, Seller and
First American Title Insurance Company (the "First Amendment"), Purchaser shall
deliver to Escrow Agent the sum of One Hundred Fifty Thousand and No/100
Dollars ($150,000.00) (the "Additional Earnest Money", and together with the
Initial Earnest Money, the "Earnest Money"); provided, however, that Purchaser
shall have the right to extend the Closing Date to a date on or before December
15, 1996 by providing written notice to Seller and Escrow Agent on or before
5:00 p.m. on November 5, 1996. In the event that Purchaser elects to extend
the Closing Date, Purchaser shall deliver to Escrow Agent the sum of One
Hundred Thousand and No/100 Dollars ($100,000.00) as an additional earnest
money deposit to be credited against the Purchase Price at Closing."
9. The first sentence of Paragraph 4 of the Escrow Agreement is hereby
deleted in its entirety and the following is inserted in lieu thereof: "On
November 15, 1996 or at such other date as Seller and Purchaser may, in
writing, advise Escrow Agent is the applicable closing date (the "Closing
Date"), Escrow Agent shall deliver all funds then held in the escrow to
Seller."
<PAGE>
10. Except as amended and modified hereby, each of the Agreement and the
Escrow Agreement shall be and remain unmodified and in full force and effect in
accordance with its terms, and each and every one of its provisions, as amended
and modified by this First Amendment, are hereby adopted, ratified and
affirmed. In the event of any conflict between the Agreement or the Escrow
Agreement and this First Amendment, the terms, conditions and provisions hereof
shall govern.
11. This First Amendment may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which, when taken
together, shall constitute one and the same instrument.
12. All defined terms used but not otherwise defined in this First
Amendment shall have the meanings ascribed thereto in the Agreement and/or the
Escrow Agreement, as applicable.
13. All references in this First Amendment to "this Agreement" or "this
Escrow Agreement shall include this First Amendment, as applicable.
[EXECUTION PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed by their authorized representatives as of the day and year first
above written.
PURCHASER:
SOUTHERN PROPERTIES FUND, INC., a Florida
corporation
By:
-------------------------------------
Name:
-------------------------------------
Its:
-------------------------------------
SELLER:
GREENWALD PARTNERS LIMITED PARTNERSHIP, an
Illinois limited partnership
By: Greenwald Partners, Inc., an Illinois
corporation
By:
---------------------------------
Name:
---------------------------------
Its:
---------------------------------
ESCROW AGENT:
FIRST AMERICAN TITLE INSURANCE
COMPANY
By:
--------------------------
Name:
--------------------------
Its: Authorized Agent
<PAGE>
September 26, 1996
VIA FACSIMILE AND CERTIFIED MAIL
RETURN RECEIPT NO. F 862-737-750
Mr. Alan Lieberman
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, IL 60015
Ms. Mary Lou Kennedy
First American Title
Insurance Company
30 North LaSalle Street
Suite 310
Chicago, IL 60602
Re: Escrow Agreement by and among Greenwald Partners Limited Partnership
("Seller"), Southern Properties Fund, Inc. ("Purchaser"), and First American
Title Insurance Company ("Escrow Agent"), dated September 6, 1996 ("Agreement")
Dear Mr. Lieberman and Ms. Kennedy:
Pursuant to Section 2 of the Agreement, we are delivering, on behalf of
our client, the Due Diligence Termination Notice (as defined in the Agreement).
In this regard, pursuant to Paragraph 7.1 of the Agreement of Sale between
Seller and Purchaser dated August 28, 1996, my client hereby elects to
terminate the Agreement of Sale and, hereafter, neither party shall have any
right, obligation, or liability thereunder, except for any rights, obligations
or liabilities which survive termination.
Pursuant to Section 7.1 of the Agreement, my client will be delivering
forthwith to Seller under separate cover copies of all studies reports, and
other investigations obtained by Purchaser in connection with its due diligence
during the Inspection Period (as defined in the Agreement of Sale).
While my client has terminated the Agreement of Sale pursuant to the
attached Due Diligence Termination Notice and is entitled to an immediate
refund of the Initial Earnest Money (as defined in the Agreement) together with
all interest earned thereon, we request that the Escrow Agent does not
immediately return the Initial Earnest Money as Purchaser and Seller are
currently negotiating a possible reduction in the Purchase Price (as defined in
the Agreement of Sale) and may revive the terminated Agreement of Sale within
the next few days.
Mr. Alan Lieberman
Ms. Mary Lou Kennedy
September 26, 1996
<PAGE>
Page 2
Please advise me immediately if there is any question as to the validity
of the Due Diligence Termination Notice, the termination of the Agreement of
Sale, or Escrow Agent's ability to maintain the Initial Earnest Money while the
parties proceed with their negotiations.
We thank you in advance for your anticipated cooperation in this matter.
Please call me with any questions or comments you may have regarding the
foregoing.
Sincerely,
/s/ Steven W. Zalkowitz
Steven W. Zalkowitz
SWZ/mas
177006
enclosure
cc: Mr. Michael D. Wohl
Mr. Ken Endelson (via facsimile)
Mr. Richard Finkelstein (via facsimile)
Ferdinand J. Gallo, III, Esq. (via facsimile)
Daniel J. Perlman, Esq. (via facsimile)
Stephen J. Helfman, Esq.
<PAGE>
Schedule 1
AFFIDAVIT OF DUE DILIGENCE TERMINATION NOTICE
State of Florida )
) SS.
County of Date )
The undersigned, having been first duly sworn, does hereby affirm, depose
and state that Southern Properties Fund, Inc., as Purchaser under that certain
Agreement of Sale dated August 28, 1996, providing for the sale of property
located in Orlando, Florida and known as Walden Green Apartments has terminated
the Agreement of Sale pursuant to Paragraph 7.1 thereof.
The undersigned demands return of all earnest money deposited under the
Agreement of Sale pursuant to its right therein.
IN WITNESS WHEREOF, the undersigned has executed this Affidavit on this
26th day of September 26, 1996.
SOUTHERN PROPERTIES FUND, INC.
a Florida corporation
/s/ Michael D. Wohl
By: -------------------------
Michael D. Wohl
Name:------------------------
President
Its: ------------------------
Subscribed and sworn to before
me, a Notary Public in and for said
County and State, by Michael D. Wohl,
president of Southern Properties Fund, Inc.
who is personally known to me.
/s/Steven W. Zelkowitz
- -----------------------------------
Notary Public
STEVEN W. ZELKOWITZ
<PAGE>
November 5, 1996
VIA FACSIMILE AND U. S. MAIL
Ms. Illona Adams
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, IL 60015
Ms. Mary Lou Kennedy
First American Title Insurance
Company
30 North LaSalle Street
Suite 310
Chicago, IL 60602
Re: Agreement of Sale by and between Southern Properties Fund, Inc., as
Purchaser, and Greenwald Partners Limited Partnership, as Seller, dated August
28, 1996 (the "Agreement")
Dear Mses. Adams and Kennedy:
Pursuant to Section 8 of the Reinstatement of, and First Amendment to,
Agreement of Sale and Escrow Agreement, on behalf of our client, we are hereby
providing notice of our client's election to extend the Closing Date (as
defined in the Agreement) to a date on or before December 15, 1996. Our client
will deliver the additional earnest money deposit in the amount of One Hundred
Thousand and 00/100 Dollars ($100,000.00) to the Escrow Agent (as defined in
the Agreement) on or before November 15, 1996. Such additional earnest money
deposit is to be credited against the Purchase Price (as defined in the
Agreement) at closing.
Very truly yours,
/s/ Stephen J. Helfman
----------------------------------
Stephen J. Helfman
SWZ:mas:347,001
cc: Mr. Alan Lieberman
Daniel J. Perlman, Esq.
Ferdinand J. Gallo, III, Esq.
Mr. Michael Wohl
Mr. Ken Endelson
Mr. Richard Finkelstein
Stephen J. Helfman, Esq.
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 29th day of October, 1996, by and
between HEOW, INC., a Wisconsin corporation ("Purchaser") and VILLA MEDICI
LIMITED PARTNERSHIP, an Illinois Limited Partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Thirteen Million One Hundred Thousand and No/100 Dollars
($13,100,000.00) ("Purchase Price"), that certain property ("Property") in
Overland Park, Kansas, more particularly described on Exhibit A attached
hereto, which Property is known as Villa Medici Apartments. Included in the
Purchase Price is all of the personal property set forth on Exhibit B, which
shall be transferred to Purchaser at Closing (as hereinafter defined) by a Bill
of Sale.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $75,000.00
("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. On the Closing Date (as hereinafter defined), $13,100,000.00
(inclusive of all Earnest Money) adjusted in accordance with the prorations by
federally wired "immediately available" funds delivered to the Title Insurer
(as hereinafter defined) no later than 12:00 Noon Central Time on the Closing
Date.
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit D is a title commitment dated
September 18, 1996 ("Title Commitment") for an owner's standard coverage title
insurance policy ("Title Policy") issued by Chicago 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 and the special
title exceptions set forth in Schedule B, Numbers 8 through 15 inclusive of the
Title Commitment. All of the above are herein referred to as the "Permitted
Exceptions". The Title Commitment shall be conclusive evidence of good title
as therein shown as to all matters insured by the policy, subject only to the
exceptions therein stated. 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. Purchaser shall pay the costs of the Title Policy,
including the costs of "extended coverage" and any special endorsements which
Purchaser requires.
<PAGE>
b. Purchaser acknowledges receipt of a survey ("Survey") of the
Property prepared by Shafer, Kline & Warren, P.A. If Purchaser requires an
updated Survey, then Purchaser shall immediately order and pay for same. If
the updated Survey discloses matters that are not on the original Survey and
such matters are reasonably objectionable by Purchaser ("Survey Defects"), then
Purchaser shall notify Seller of the Survey Defects prior to the expiration of
the Approval Period (as hereinafter defined). Seller shall then have ten (10)
days to advise Purchaser whether or not Seller will cure the Survey Defects by
obtaining a title indemnity insuring over loss or damage that may occur as a
result of the Survey Defects. If Seller is unable to obtain the aforesaid
title indemnity, then Purchaser can elect to either terminate this Agreement or
take title to the Property subject to the Survey Defects. If Purchaser elects
to terminate this Agreement it shall be by notice to Seller within five (5)
days after receipt of notice from Seller that Seller is unable to obtain the
title indemnity. If this Agreement is terminated pursuant to this Paragraph,
then the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed ("Deed") in recordable form
subject only to the Permitted Exceptions. If Seller is unable to convey title
to the Property subject only to the Permitted Exceptions because of the
existence of an additional title exception ("Unpermitted Exception"), then
Purchaser can elect to take title to the Property subject to the Unpermitted
Exception or terminate this Agreement. If Purchaser elects to terminate this
Agreement, then the Earnest Money plus all accrued interest shall be delivered
to the Purchaser.
5. 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.
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of real
property for $100,000 or less, or in the case of Personal Property, for $10,000
or less, then Seller shall commence the repair or restoration in an expeditious
manner, in which event the Closing Date will be extended until such date as may
reasonably be required to complete the repair or restoration. Seller shall
retain all insurance proceeds. If the cost of repair or restoration exceeds
that amount, then either party can elect to terminate this Agreement upon
notice to the other party served within twenty (20) business days of such
casualty. If Seller elects to terminate this Agreement and Purchaser does not
elect to terminate this Agreement pursuant to this Paragraph, then Purchaser
shall accept the Property in its damaged condition together with an assignment
from Seller of all insurance proceeds and receive a credit at Closing in the
amount of the deductible.
b. If condemnation proceedings ("Proceedings") are instituted
against the Property and the parties reasonably believe that such Proceedings
will result in an award in excess of $100,000.00, then Purchaser can elect to
either take the Property subject to the Proceedings and an assignment of
Seller's interest in the Proceedings or terminate this Agreement. If Purchaser
<PAGE>
elects to terminate this Agreement, it shall be by notice to the Seller within
five (5) days after Seller notifies Purchaser of the Proceedings.
c. If the Agreement is terminated pursuant to this Paragraph, then
the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
7. AS-IS CONDITION.
a. Seller acquired title to the Property by virtue of a deed in
lieu of foreclosure, and therefore, Seller cannot make any representations as
to the condition of the Property upon which Purchaser can rely. Any
information which Seller has as to the leases is based solely upon information
which Seller obtained subsequent to its acquisition of the Property. Purchaser
is not relying on Seller having made any inquiry as to the condition of the
Property or the leases. 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
<PAGE>
Planning and Community Right-to-Know Act, 42 U.S.C. Section 1101 et seq.; the
Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011 et seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum,
(B) refined petroleum products, (C) waste oil, (D) waste aviation or motor
vehicle fuel, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon,
(H) Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller from any liability with respect
to such historical information.
8. CLOSING. The closing ("Closing") of this transaction shall be on
December 2, 1996 ("Closing Date"), at the office of the Purchaser's attorney,
at which time Seller shall deliver possession of the Property to Purchaser.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such other
documents as may be reasonably required in order to consummate the transaction
as set forth in this Agreement.
b. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property; the Deed (in the form of Exhibit E attached hereto)
subject to the Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser; an inventory of the Personal Property and a Bill of Sale for the
same (in the form of Exhibit F attached hereto); an executed closing statement;
an executed assignment and assumption of all service contracts (in the form of
Exhibit G attached hereto); an executed assignment and assumption of all leases
and security deposits (in the form of Exhibit H attached hereto); updated rent
roll; a notice to the tenants of the transfer of title and the assumption by
Purchaser of the landlord's obligations under the leases and the obligation to
refund the security deposits (in the form of Exhibit I attached hereto); a
non-foreign affidavit (in the form of Exhibit J attached hereto); an executed
assignment and assumption of intangibles (in the form of Exhibit K attached
<PAGE>
hereto); and such other documents as may be reasonably required by the Title
Insurer in order to consummate the transaction as set forth in this Agreement.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. 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.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON AND LIQUIDATED DAMAGES IN THE AMOUNT
OF $75,000.00, AND THIS AGREEMENT SHALL TERMINATE AND THE PARTIES SHALL HAVE NO
FURTHER LIABILITY TO EACH OTHER AT LAW OR IN EQUITY. THE PARTIES HAVE AGREED
THAT PURCHASER'S ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY THE SELLER WOULD
BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING
THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT $75,000.00 HAS BEEN AGREED
UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF PURCHASER'S
DAMAGES. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED AND THE OTHER DOCUMENTS
REQUIRED TO BE DELIVERED AT CLOSING, THEN PURCHASER WILL BE ENTITLED TO SUE FOR
SPECIFIC PERFORMANCE, PROVIDED THAT AT THE TIME OF THE FILING OF THE COMPLAINT,
PURCHASER SHALL DEPOSIT WITH THE ESCROW AGENT THE AMOUNT OF THE PURCHASE PRICE
INCLUSIVE OF THE EARNEST MONEY.
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); refundable security deposits (which will be assigned to and
assumed by Purchaser and credited to Purchaser at Closing); water and other
utility charges; fuels; prepaid operating expenses; real and personal property
taxes; and other similar items shall be adjusted ratably as of 11:59 P.M. on
the Closing Date ("Proration Date"), and credited or debited to the_balance of
the cash due at Closing. 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 mortgages encumbering the Property (if any). 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. 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 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
<PAGE>
shall first be applied to current rent and then to Delinquent Rent. Purchaser
shall deliver Seller's pro rata share within 30 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.
13. 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 10.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller.
Any assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph . Seller hereby consents to an
assignment to an entity, the ownership and control of which is held by the same
persons owning and controlling Purchaser, provided such assignment is effected
prior to the expiration of the Approval Period. However, Purchaser shall
remain liable for all of the Purchaser's obligations and undertakings set forth
in this Agreement and the exhibits attached hereto.
15. BROKER. The parties hereto acknowledge that Paine Webber Real Estate
Group ("Broker") and Cohen-Esrey Real Estate Services Inc. ("Co-Broker") are
the only real estate brokers involved in this transaction. Purchaser has not
paid and will not pay at any time before, at or after the Closing, any fee,
commission or compensation whatsoever to any person whomsoever directly or
indirectly on account of this Agreement, its negotiation, or the sale hereby
contemplated. Seller agrees to pay Broker a commission or fee ("Fee") and
Co-Broker a commission or fee ("Co-Fee") pursuant to listing agreements with
Broker and Co-Broker. However, the Fee and Co-Fee are due and payable only
from the proceeds of the Purchase Price received by Seller. The foregoing does
not apply to any fee which may be paid by Seller to any affiliate of Seller as
a result of this transaction. Purchaser agrees to indemnify, defend and hold
harmless the Seller and any partner, affiliate, parent of Seller, and all
shareholders, employees, officers and directors of Seller or Seller's partner,
parent or affiliate (each of the above is individually referred to as a "Seller
Indemnitee") from all claims, including attorneys' fees and costs incurred by a
Seller Indemnitee as a result of anyone's claiming by or through Purchaser any
fee, commission or compensation on account of this Agreement, its negotiation
or the sale hereby contemplated. Purchaser does now and shall at all times
consent to a Seller Indemnitee's selection of defense counsel. Seller agrees
to indemnify, defend and hold harmless the Purchaser and all shareholders,
employees, officers and directors of Purchaser or Purchaser's parent or
affiliate (each of the above is individually referred to as a "Purchaser
Indemnitee") from all claims, including attorneys' fees and costs incurred by a
Purchaser Indemnitee as a result of anyone's claiming by or through Seller any
fee, commission or compensation on account of this Agreement, its negotiation
or the sale hereby contemplated. Seller does now and shall at all times
consent to a Purchaser Indemnitee's selection of defense counsel.
16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered to Purchaser copies of the most recent
available tax bills, rent rolls, insurance premiums, and service contracts
(collectively the "Documents"). All of the Documents shall be subject to
approval by Purchaser by the close of business (5:00 P.M. Central Time) on
November 22, 1996 ("Approval Period"). During the Approval Period, upon
reasonable notice to the Seller, the Purchaser shall have the right to inspect
<PAGE>
and approve the condition of the Property including the interior of the
apartments, during normal business hours. Purchaser, its engineers,
architects, employees, contractors and agents shall maintain public liability
insurance policies insuring against claims arising as a result of the
inspections of the Property being conducted by Purchaser. Prior to commencing
any tests, studies and investigations, Purchaser shall deliver to Seller a
certificate of insurance evidencing the existence of the aforesaid policies and
naming Seller as an additional insured. Purchaser agrees to indemnify, defend,
protect and hold Seller harmless from any and all loss, costs, including
attorneys' fees, liability or damages which Seller may incur or suffer as a
result of Purchaser's conducting its inspection and investigation of the
Property including the entry of Purchaser, its employees or agents and its
lender onto the Property, including without limitation, liability for
mechanics' lien claims.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
c. If Purchaser disapproves the Documents or the condition of the
Property, it must be by a notice ("Notice of Disapproval") delivered to Seller
and the Escrow Agent prior to the expiration of the Approval Period. The
Notice of Disapproval delivered to Seller shall be accompanied with copies of
all reports ("Reports") which Purchaser has received during the Approval
Period. Upon receipt of the Notice of Disapproval and copies of the Reports,
the Earnest Money plus the interest accrued thereon shall be returned to the
Purchaser. If Purchaser does not deliver a Notice of Disapproval and copies of
the Reports to Seller, then it shall be conclusively presumed that Purchaser
has approved the Documents and the condition of the Property and all Earnest
Money plus the interest accrued thereon shall belong to Seller unless Seller is
in default hereunder.
d. If at any time prior to the Closing Date, Purchaser discovers
any fact or circumstance which would cause a representation or warranty of
Seller to be untrue or misleading, or with the passage of time would become
untrue or misleading and Purchaser fails to notify Seller of such fact or
circumstance, then Purchaser shall be deemed to have waived its right to seek
damages or termination of this Agreement.
17. SURVIVAL OF 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.
18. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing, shall only mean such knowledge or
notice that has actually been received by James E. Mendelson, and any
representation or warranty of the Seller is based upon those matters of which
James E. Mendelson 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, none of which shall
survive the Closing and delivery of the Deed:
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 L
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. The management, operation, leasing and maintenance of the
Property, as presently conducted by the Seller, shall continue until the
Closing Date.
c. If on or prior to the Closing Date, Seller discovers that a
representation or warranty is untrue, then upon receipt of notice from Seller,
Purchaser can elect to terminate this Agreement or take title to the Property
subject to the untrue representation or warranty.
19. ENVIRONMENTAL REPORTS. Attached to this Agreement as Exhibit M is a
list of environmental reports (" Environmental Reports") of the Property, which
Seller has delivered to Purchaser, at Purchaser's request. 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.
20. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
21. PURCHASER'S ORGANIZATIONAL DOCUMENTS. At least ten (10) days prior
to the Closing Date, Purchaser will provide Seller's attorney with copies of
its organizational documents, including a certified copy of its recorded
certificate of limited partnership and a true copy of its Partnership Agreement
or a certified copy of its Articles of Incorporation, corporate resolutions
authorizing the transaction, and an incumbency certificate, whichever is
applicable.
22. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
23. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: James E. Mendelson
847/267-1600
847/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
TO PURCHASER: c/o Ed Hurley, Sr.
15944 East 6-Mile Road
Grant Park, Illinois 60940
815/465-6653
815/465-6654 (FAX)
with a copy to: Mr. Lonnie Shalton
Polsinelli, White, Vardeman & Shalton
700 W. 47th Street
Suite 1000
Kansas City, Missouri 64112
816/753-1000
816/753-1536 (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.
<PAGE>
24. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent. Seller will forward one (1) copy of the executed
Agreement to Purchaser and will forward the following to the Escrow Agent:
a. Earnest Money;
b. One (1) fully executed copy of this Agreement; and
c. Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller.
25. GOVERNING LAW. The provision contained herein with reference to
retention of the Earnest Money in the event of Purchaser's default shall be
governed by the laws of the State of Illinois. The remaining provisions of
this Agreement shall be governed by the laws of the State of Kansas.
26. 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.
27. 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.
28. 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.
<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:
10/24/96, 1996.
HEOW, INC., a Wisconsin corporation
By: /s/Edward J. Hurley
-------------------------------
President
<PAGE>
Executed by Seller on SELLER:
_______________, 1996.
VILLA MEDICI LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Villa Medici Partners, Inc.,
an Illinois corporation
By: /s/James E. Mendelson
---------------------------
Villa Medici
Paine Webber Real Estate Group ("Broker") executes this Agreement in its
capacity as a real estate broker and acknowledges that the fee or commission
("Fee") due to it as a result of the transaction described in this Agreement is
the amount as set forth in the listing agreement between Broker and Seller.
Broker also acknowledges that payment of the aforesaid Fee is conditioned upon
the Closing and the receipt of the Purchase Price by the Seller. Broker agrees
to deliver a receipt to the Seller at the Closing for the Fee and a release
stating that no other fees or commissions are due to Broker from Seller or
Purchaser.
PAINE WEBBER REAL ESTATE GROUP
By: ____________________________
Cohen-Esrey Real Estate Services Inc. ("Co-Broker") executes this Agreement in
its capacity as a real estate broker and acknowledges that the amount of the
fee or commission ("Co-Fee") due it as a result of the transaction described in
this Agreement is the amount as set forth in the listing agreement between
Co-Broker and Seller. Co-Broker also acknowledges that payment of the
aforesaid Co-Fee is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Co-Broker agrees to deliver a receipt to the
Seller at the Closing for the Co-Fee and a release stating that no other fees
or commissions are due to Co-Broker from Seller or Purchaser.
COHEN-ESREY REAL ESTATE SERVICES
INC.
By: ___________________________________
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Assignment of Intangibles
L - Rent Roll
M - Environmental Reports
<PAGE>
FIRST AMENDMENT TO AGREEMENT
OF SALE AND ESCROW AGREEMENT
This First Amendment to Agreement of Sale and Escrow Agreement ("First
Amendment") is entered into as of November 5, 1996 by and between VILLA MEDICI
LIMITED PARTNERSHIP, an Illinois limited partnership, as Seller and HEOW, INC.,
as Purchaser.
R E C I T A L S:
A. Purchaser and Seller have entered into an Agreement of Sale
("Agreement") and an Escrow Agreement ("Escrow Agreement"), both dated as of
October 29, 1996, for the purchase and sale of the apartment project known as
Villa Medici Apartments.
B. The parties hereto now wish to amend the Agreement and the Escrow
Agreement.
NOW, THEREFORE, the parties agree that the Agreement and Escrow Agreement
are modified as follows:
1. Paragraph 2(a) of the Agreement is modified to provide that the
Earnest Money will be deposited with the Escrow Agent on or before November 22,
1996.
2. The Escrow Agreement is modified by deleting the last two sentences
of Paragraph 1 and Exhibit A.
3. Except as modified herein, all other terms and conditions of the
Agreement and Escrow Agreement remain in full force and effect.
4. All capitalized terms used herein shall have the same meaning as in
the Agreement and the Escrow Agreement.
5. 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:
HEOW, INC., a Wisconsin corporation
By: /s/ Edward J. Hurley
-----------------------------------
President, 11/5/96
SELLER:
VILLA MEDICI LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Villa Medici Partners, Inc.,
an Illinois corporation
By: /s/ James E. Mendelson
-----------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 18840
<SECURITIES> 0
<RECEIVABLES> 6721
<ALLOWANCES> 8587
<INVENTORY> 0
<CURRENT-ASSETS> 19780
<PP&E> 49509
<DEPRECIATION> 0
<TOTAL-ASSETS> 80188
<CURRENT-LIABILITIES> 1893
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 78295
<TOTAL-LIABILITY-AND-EQUITY> 80188
<SALES> 0
<TOTAL-REVENUES> 10729
<CGS> 0
<TOTAL-COSTS> 52
<OTHER-EXPENSES> 996
<LOSS-PROVISION> 1511
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8170
<INCOME-TAX> 0
<INCOME-CONTINUING> 8170
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8170
<EPS-PRIMARY> 16.74
<EPS-DILUTED> 16.74
</TABLE>
