UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-13357
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BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Illinois 36-3274349
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-----------------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
PART I
Item 1. Business
- ----------------
Balcor Equity Properties-XVIII A Real Estate Limited Partnership (the
"Registrant") is a limited partnership formed in 1984 under the laws of the
State of Illinois. The Registrant raised $52,811,000 from sales of Limited
Partnership Interests. The Registrant's operations consist exclusively of
investment in and operation of income-producing real property, and all
financial information included in this report relates to this industry segment.
The Registrant utilized the net offering proceeds to acquire four real property
investments and a minority joint venture interest in one additional property.
The property in which the Registrant held a minority joint venture interest was
sold in December 1994. The Registrant continues to own the remaining four
properties described under "Properties" (Item 2). The Partnership Agreement
generally provides that the proceeds of any sale or refinancing of the
Registrant's properties will not be reinvested in new acquisitions.
The commercial real estate industry is beginning to emerge from several years
of decline and re-structuring. Office properties have begun to emerge from the
effects of overbuilding and corporate downsizing. Effective rents and occupancy
levels began to increase nationally in 1994 and some markets are experiencing a
shortage of large blocks of contiguous space. With new construction expected to
remain at a minimum for 1995, office market conditions are expected to continue
their upward performance for the next year.
During 1994, institutionally owned and managed multi-family residential
properties in many markets continued to experience favorable operating
conditions combined with relatively low levels of new construction. These
favorable operating conditions were supported by the strong pattern of national
economic growth which contributed to job growth and rising income levels in
most local economies. However, some 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 improvements requirements at the
properties. All of the Registrant's remaining properties generated positive
cash flow during 1994. In addition, the property in which the Registrant owned
a minority joint venture interest generated a marginal cash flow deficit prior
to its sale.
Historically, real estate investments have experienced the same cyclical
characteristics affecting most other types of long-term investments. While
real estate values have generally risen over time, the cyclical character of
real estate investments, together with local, regional and national market
conditions, has resulted in periodic devaluations of real estate in particular
markets, as has been experienced in the last few years. As a result of these
factors, it has become necessary for the Registrant to retain ownership of many
of its properties for longer than the holding period for the assets originally
described in the prospectus. The General Partner examines the operations of
each property and each local market in conjunction with the Registrant's long-
term dissolution strategy when determining the optimal time to sell each of the
Registrant's properties.
In June 1994, the Registrant refinanced the Knollwood Village mortgage note,
and in December 1994, the joint venture in which the Registrant held a minority
interest sold the Belmere Apartments. See Item 7. Liquidity and Capital
Resources for additional information regarding these transactions.
The Registrant, by virtue of its ownership of real estate, is subject to
federal and state laws and regulations covering various environmental issues.
Management of the Registrant utilizes the services of environmental consultants
to assess a wide range of environmental issues and to conduct tests for
environmental contamination as appropriate. The General Partner is not aware
of any potential liability due to environmental issues or conditions that would
<PAGE>
be material to the Registrant.
The officers and employees of Balcor Equity Partners-XVIII, the General Partner
of the Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.
Other Information
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Belmere Apartments
- ------------------
In 1984, Belmere Apartments (the "Property") was acquired by a limited
partnership (the "Limited Partnership") in which the Registrant and an
affiliate held joint venture interests of approximately 26% and 74%,
respectively. The Registrant contributed $1,265,000 and the affiliate
contributed $3,675,000 towards the purchase of the Property. The Property was
acquired subject to first mortgage financing of $6,390,000.
On December 14, 1994, the Limited Partnership sold the Property for a sale
price of $8,500,000 to Mid-America Apartments, L.P., a Tennessee limited
partnership (the "Purchaser"). From the sale proceeds, the Limited Partnership
paid $6,377,168, including accrued interest and a $42,471 prepayment premium,
to the holder of the first mortgage loan, $191,250 to two unaffiliated parties
as a brokerage commission, $176,398 in closing and other costs and received the
remaining $1,755,184 of sale proceeds. In February 1995, the Registrant
received a distribution of $482,229 which represents its share of sales
proceeds and fourth quarter property operations. In lieu of a commission, the
General Partner will be reimbursed by the Registrant for actual expenses
incurred in connection with the sale.
Item 2. Properties
- ------------------
As of December 31, 1994, the Registrant owns the four properties described
below:
Location Description of Property
- -------- -----------------------
San Antonio, Texas Canyon Point Apartments: a 214-unit apartment
complex located on approximately 9 acres.
Greenville, South Carolina Mallard Cove Apartments (formerly Hidden Lakes):
a 211-unit apartment complex located on
approximately 15 acres.
Grand Blanc, Michigan Knollwood Village Apartments: a 648-unit
apartment complex located on approximately 55
acres.
Atlanta, Georgia 101 Marietta Tower: a 35-story office building
containing 579,823 square feet.
Each of the above properties is held subject to various mortgages and other
forms of financing.
In the opinion of the General Partner, the Registrant has provided adequate
insurance coverage for its real estate investment properties.
See Notes to Financial Statements for other information regarding real property
investments.
<PAGE>
Item 3. Legal Proceedings
- -------------------------
The Registrant is not subject to any material pending legal proceedings, nor
were any such proceedings terminated during the fourth quarter of 1994.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the Limited Partners of the Registrant
during 1994.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
- -------------------------------------------------------------------------
Matters
- -------
There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop; therefore, the
market value of the Limited Partnership Interests cannot reasonably be
determined. For information regarding previous distributions, see Financial
Statements, Statements of Partners' Capital and Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources, below.
As of December 31, 1994, the number of record holders of Limited Partnership
Interests of the Registrant was 5,216.
Item 6. Selected Financial Data
- -------------------------------
Year ended December 31,
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1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
Total income $16,740,793 $15,328,981 $13,535,576 $13,015,657 $13,620,049
Net income (loss) 885,014 (8,829) (1,754,481) (1,776,892) (1,662,313)
Net income (loss) per
Limited Partner-
ship Interest 16.59 (.16) (32.89) (33.31) (31.16)
Total assets 58,914,891 58,492,849 58,875,919 61,394,682 63,058,449
Mortgage notes
payable 40,078,625 39,289,424 39,415,967 39,861,120 40,187,324
Distributions per
Limited Partner-
ship Interest 20.00 None None None 20.00
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
- -----------------------------------------------------------------------
Results of Operations
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Summary of Operations
- ---------------------
Balcor Equity Properties-XVIII (the "Partnership") recognized net income in
1994, compared to net losses for 1993 and 1992, due primarily to the
recognition of its share of the gain on the sale in December 1994 of the
Belmere Apartments in which it held a minority joint venture interest.
Increased rental and service income, primarily at the 101 Marietta Tower office
complex, reduced the Partnership's net loss during 1993 as compared to 1992.
Further discussion of the Partnership's operations is summarized below.
Operations
- ----------
1994 Compared to 1993
- ---------------------
Higher rental and/or occupancy rates at all of the Partnership's properties
resulted in an increase in rental income and property management fees for 1994
as compared to 1993.
As required by the terms of the General Service Administration ("GSA") lease at
the 101 Marietta Tower office complex, a recalculation of the recoverable
operating and real estate tax expenses was made in late 1993. This
recalculation and subsequent collection of 1993 and 1994 reimbursements
resulted in an increase in service income and property management fees during
1994 when compared to 1993.
Due to higher cash balances and interest rates, interest income on short-term
investments increased during 1994 as compared to 1993.
Belmere Apartments, in which the Partnership held a minority joint venture
interest, was sold during 1994. As a result of the gain recognized in
connection with the sale, the Partnership recognized income from participation
in joint venture with an affiliate in 1994 compared to a loss in 1993.
As a result of a prepayment penalty on the previous first mortgage loan, which
has been recorded as interest expense, and a higher mortgage loan balance
associated with the Knollwood Village Apartments refinancing in June 1994,
interest expense on mortgage notes payable increased for 1994 as compared to
1993. This increase was partially offset by the 1993 refinancing of the Canyon
Point Apartments' mortgage note at a lower rate.
The loan refinancings in 1993 related to Mallard Cove (formerly Hidden Lakes)
and Canyon Point apartment complexes and in 1994 related to Knollwood Village
Apartments required the payment of certain expenses which are deferred and
amortized over the terms of the mortgage notes payable. As a result,
amortization expense increased for 1994 as compared to 1993.
As a result of higher insurance and janitorial expenses at the 101 Marietta
Tower office complex and higher insurance expense at the Canyon Point, Mallard
Cove and Knollwood Village apartment complexes, property operating expense
increased for 1994 as compared to 1993.
A lower property assessment at the 101 Marietta Tower office complex and a
decrease in tax rates at the Knollwood Village Apartments caused real estate
tax expense to decrease for 1994 as compared to 1993.
Due to higher portfolio management and accounting fees which were partially
offset by decreases in other professional and consulting fees, administrative
expenses increased slightly for 1994 as compared to 1993.
<PAGE>
1993 Compared to 1992
- ---------------------
Higher rental rates as a result of the General Service Administration ("GSA")
lease extension at the 101 Marietta Tower office complex and higher rental
rates and occupancy levels at the Canyon Point and Mallard Cove apartment
complexes resulted in increased rental income during 1993 as compared to 1992.
As required by the GSA lease, a recalculation of the amount of operating and
real estate tax expenses that is recoverable by the Partnership was made in
1993. This amount increased from 1992 levels based on actual operating results
of the property for the previous five year period. This recalculation has
resulted in an increase in service income during 1993 when compared to 1992.
Interest income on short-term investments decreased during 1993 as compared to
1992 due to a decrease in interest rates.
The refinancings of the Mallard Cove and Canyon Point apartment complexes'
mortgage loans resulted in the payment of fees which were deferred and are now
being amortized over the terms of the loans. As a result of these transactions,
amortization expense increased for 1993 as compared to 1992.
Decreased utility and janitorial costs at the 101 Marietta Tower office complex
resulted in a decrease in property operating expense during 1993 as compared to
1992.
Higher expenditures for carpet replacement, parking lot repairs, and painting
and siding repairs at the Canyon Point and Mallard Cove apartment complexes,
along with walkway repairs at the Mallard Cove Apartments, caused an increase
in maintenance and repairs in 1993 as compared to 1992. Additional tenant
expenditures at the 101 Marietta Tower office complex further increased
maintenance and repairs in 1993 as compared to 1992.
Due to a reduction in the assessed value and a decreased tax rate at the 101
Marietta Tower office complex, real estate tax expense decreased for 1993 as
compared to 1992.
Due to higher portfolio management, legal and consulting fees associated with
the Mallard Cove and Canyon Point loan refinancings, administrative expenses
increased during 1993 when compared to 1992.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased during 1994 as compared to 1993.
The Partnership's cash flow provided by operating activities was generated by
cash flow from the properties which included the collection of approximately
$1,500,000 of recoverable expenses from GSA at the 101 Marietta Tower office
complex. The operating activities also include receipt of short-term interest
income and payment of administrative expenses. Cash used in investing
activities consisted of tenant improvements at the 101 Marietta Tower office
complex and a capital contribution to the joint venture which owned Belmere
Apartments. Net cash used in financing activities consisted of principal
payments on the Partnership's mortgage notes payable, distributions to Limited
Partners, the release of capital improvement and replacement escrows at the
Mallard Cove and Knollwood Village apartment complexes and activity associated
with the refinancing of the Knollwood Village Apartments mortgage note payable.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit
is considered to be significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. The Partnership defines cash flow
generated from its properties as an amount equal to the property's revenue
receipts less property related expenditures, which include debt service
payments. During 1994 and 1993, the 101 Marietta Tower office complex and the
<PAGE>
Knollwood Village and Canyon Point apartment complexes generated positive cash
flow. The Mallard Cove apartment complex generated positive cash flow during
1994 as compared to a marginal cash flow deficit in 1993 due to increased
rental rates in 1994. The Belmere apartment complex, in which the Partnership
held a minority joint venture interest, operated at a marginal cash flow
deficit during 1994 and 1993.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue actions aimed at improving property
operating performance and seeks rent increases where market conditions allow.
As of December 31, 1994, the occupancy rates of the Partnership's residential
properties ranged from 90% to 98%, while the occupancy rate at the 101 Marietta
Tower office complex was 99%. Despite improvements during 1994 and 1993 in the
local economies and rental markets where certain of the Partnership's
properties are located, the General Partner believes that continued ownership
of its remaining properties is in the best interests of the Partnership in
order to maximize potential returns to Limited Partners. Therefore, the
Partnership will continue to own its remaining properties for longer than the
holding period for the assets originally described in the prospectus.
Approximately 83% of the space at the 101 Marietta Tower office complex is
leased to GSA and 47% of the Partnership's total rental and service income
recognized during 1994 relates to GSA. In August 1992, GSA exercised an option
under the existing lease to extend its lease for an additional five years
through December 1997. The Federal government has approved construction of a
new office building in Atlanta. This project is under construction and is
scheduled to be completed in late 1996. Current plans call for various Federal
agencies (including GSA) to be relocated from their current offices into the
new project. If completed on time, it is likely that GSA would vacate all or
most of its space by the end of its lease term in 1997 and the Partnership
would have the responsibility to lease this space. The Partnership is reviewing
its alternatives with respect to releasing or selling the property.
In June 1994, the Partnership completed the refinancing of the Knollwood
Village Apartments mortgage loan. The Partnership did not receive any proceeds
after paying the costs and escrows required in connection with the refinancing.
See Note 3 of Notes to Financial Statements for additional information.
In December 1994, the joint venture in which the Partnership owns a 25.6%
interest sold the Belmere Apartments for a sales price of $8,500,000. From the
sale proceeds, the joint venture repaid the first mortgage loan and other costs
and received approximately $1,755,000. In February 1995, the Partnership
received a distribution of $482,229 which represents its share of sales
proceeds and fourth quarter property operations. This amount was included in
accounts receivable in the financial statements at December 31, 1994.
In January 1991, quarterly distributions to Limited Partners were suspended due
to the March 1991 maturity of the Canyon Point mortgage note payable and the
pending December 1992 expiration of the GSA lease at 101 Marietta Tower. With
the resolution of these issues, along with the refinancing of the Mallard Cove
mortgage note payable, the Partnership resumed quarterly distributions to
Limited Partners in January 1994. The Partnership made four quarterly
distributions totaling $20.00 per Interest during 1994. In January, 1995, the
Partnership made a distribution of $264,055 ($5.00 per Interest) to the holders
of Limited Partnership Interests representing the quarterly distribution of
available Net Cash Receipts for the fourth quarter of 1994. The level of this
distribution is consistent with that of the prior quarter. To date, investors
have received distributions of Net Cash Receipts totaling $100.50 and Net Cash
Proceeds totaling $14.50 per $1,000 Interest, as well as certain tax benefits.
Continued distributions will depend on the level of cash flow generated by the
Partnership's properties and proceeds from future property sales, as to all of
which there can be no assurances. In light of results to date and current
market conditions, there can be no assurance that investors will recover all of
their original investment.
Each of the Partnership's properties is owned through the use of third-party
<PAGE>
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. See Note 3 of Notes to Financial
Statements for information concerning outstanding balances, maturity dates,
interest rates, and other terms related to each of these mortgage loans. As a
result of the General Partner's efforts to modify and refinance these loans,
the Partnership has no third party financing which matures prior to 1998.
The General Partner has recently completed the outsourcing of the financial
reporting and accounting services, transfer agent and investor records
services, and computer operations and systems development functions that
provided services to the Partnership. All of these functions are now being
provided by independent third parties. Additionally, Allegiance Realty Group,
Inc., which has provided property management services to all of the
Partnership's properties, was sold to a third party. Each of these transactions
occurred after extensive due diligence and competitive bidding processes. The
General Partner does not believe that the cost of providing these services to
the Partnership, in the aggregate, will be materially different to the
Partnership during 1995 when compared to 1994.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
See Financial Statements and Schedule in this Form 10-K.
The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.
The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
December 31, 1994 December 31, 1993
----------------------- -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
---------- --------- ---------- ---------
Total assets $58,914,891 $54,244,538 $58,492,849 $53,467,239
Partners' capital
(deficit):
General Partner (233,993) (237,302) (242,843) (261,661)
Limited Partners 16,710,050 13,025,947 16,890,106 13,321,363
Net income (loss):
General Partner 8,850 24,359 (89) 46,422
Limited Partners 876,164 760,804 (8,740) (1,348,990)
Per Limited Part-
nership Interest 16.59 14.41 (.16) (25.55)
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
- --------------------
There have been no changes in or disagreements with accountants on any matter
of accounting principles, practices or financial statement disclosure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
(a) Neither the Registrant nor Balcor Equity Partners-XVIII, its General
Partner, has a Board of Directors.
(b, c & e) The names, ages and business experiences of the executive officers
and significant employees of the General Partner of the Registrant are as
follows:
TITLE OFFICERS
----- --------
Chairman, President and Chief Thomas E. Meador
Executive Officer
Executive Vice President, Allan Wood
Chief Financial Officer and
Chief Accounting Officer
Senior Vice President Alexander J. Darragh
First Vice President Daniel A. Duhig
First Vice President Josette V. Goldberg
First Vice President Alan G. Lieberman
First Vice President Brian D. Parker
and Assistant Secretary
First Vice President John K. Powell, Jr.
First Vice President Reid A. Reynolds
First Vice President Thomas G. Selby
Thomas E. Meador (July 1947) joined Balcor in July 1979. He is Chairman,
President and Chief Executive Officer and has responsibility for all ongoing
day-to-day activities at Balcor. He is a Director of The Balcor Company.
Prior to joining Balcor, Mr. Meador was employed at the Harris Trust and
Savings Bank in the commercial real estate division where he was involved in
various lending activities. Mr. Meador received his M.B.A. degree from the
Indiana University Graduate School of Business.
Allan Wood (January 1949) joined Balcor in August 1983 and, as Balcor's Chief
Financial Officer and Chief Accounting Officer, is responsible for the
financial and administrative functions. He is also a Director of The Balcor
Company. Mr. Wood is a Certified Public Accountant. Prior to joining Balcor,
he was employed by Price Waterhouse where he was involved in auditing public
and private companies.
Alexander J. Darragh (February 1955) joined Balcor in September 1988 and has
primary responsibility for the Portfolio Advisory Group. He is responsible for
due diligence analysis and real estate advisory services in support of asset
management, institutional advisory and capital markets functions. Mr. Darragh
has supervisory responsibility of Balcor's Investor Services, Investment
Administration, Fund Management and Land Management departments. Mr. Darragh
received masters' degrees in Urban Geography from Queens's University and in
Urban Planning from Northwestern University.
Daniel A. Duhig (October 1956) joined Balcor in November 1986 and is
responsible for the Asset Management Department relating to real estate
investments made by Balcor and its affiliated partnerships, including
negotiations for modifications or refinancings of real estate mortgage
investments and the disposition of real estate investments.
Josette V. Goldberg (April 1957) joined Balcor in January 1985 and has primary
responsibility for all human resources matters. In addition, she has
supervisory responsibility for Balcor's administrative and MIS departments.
Ms. Goldberg has been designated as a Senior Human Resources Professional
<PAGE>
(SHRP).
Alan G. Lieberman (June 1959) joined Balcor in May 1983 and is responsible for
the Property Sales and Capital Markets Groups. Mr. Lieberman is a Certified
Public Accountant.
Brian D. Parker (June 1951) joined Balcor in March 1986 and is responsible for
Balcor's corporate and property accounting, treasury and budget activities.
Mr. Parker is a Certified Public Accountant and holds an M.S. degree in
Accountancy from DePaul University.
John K. Powell, Jr. (June 1950) joined Balcor in September 1985 and is
responsible for the administration of the investment portfolios of Balcor's
partnerships and for Balcor's risk management functions. Mr. Powell received a
Master of Planning degree from the University of Virginia. He has been
designated a Certified Real Estate Financier by the National Society for Real
Estate Finance and is a full member of the Urban Land Institute.
Reid A. Reynolds (April 1950) joined Balcor in March 1981 and is involved with
the asset management of residential properties for Balcor. Mr. Reynolds is a
licensed Real Estate Broker in the State of Illinois.
Thomas G. Selby (July 1955) joined Balcor in February 1984 and has
responsibility for various Asset Management functions, including oversight of
the residential portfolio. From January 1986 through September 1994, Mr. Selby
was Regional Vice President and then Senior Vice President of Allegiance Realty
Group, Inc., an affiliate of Balcor providing property management services.
Mr. Selby was responsible for supervising the management of residential
properties in the western United States.
(d) There is no family relationship between any of the foregoing officers.
(f) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1994.
Item 11. Executive Compensation
- -------------------------------
The Registrant has not paid and does not propose to pay any remuneration to the
executive officers and directors of Balcor Equity Partners-XVIII, the General
Partner. Certain of these officers receive compensation from The Balcor Company
(but not from the Registrant) for services performed for various affiliated
entities, which may include services performed for the Registrant. However, the
General Partner believes that any such compensation attributable to services
performed for the Registrant is immaterial to the Registrant. See Note 7 of
Notes to Financial Statements for the information relating to transactions with
affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
(a) No person owns of record or is known by the Registrant to own beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant.
(b) Balcor Equity Partners-XVIII and its officers and partners own as a group
the following Limited Partnership Interests of the Registrant:
Amount
Beneficially
Title of Class Owned Percent of Class
-------------- ------------- ----------------
Limited Partnership
Interests 100 Interests Less than 1%
<PAGE>
Relatives and affiliates of the officers and partners of the General Partner
own an additional 15 Interests.
(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 7 of Notes to Financial Statements for additional information
relating to transactions with affiliates.
See Note 2 of Notes to Financial Statements for information relating to the
Partnership Agreement and the allocation of distributions and profits and
losses.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
- -------------------------------------------------------------------------
(a)
(1 & 2) See Index to Financial Statements and Schedule in this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement and Certificate of Limited Partnership
set forth as Exhibit 3 to Amendment No. 2 to the Registrant's Registration
Statement on Form S-11 dated September 17, 1984 (Registration No. 2-89380) is
hereby incorporated herein by reference.
(4) Form of Subscription Agreement, previously filed as Exhibit 4.1 to
Amendment No. 1 to Registrant's Registration Statement on Form S-11 dated May
15, 1984 (Registration No. 2-89380), and Form of Confirmation regarding
Interests in the Registrant set forth as Exhibit 4.2 to the Registrant's Report
on Form 10-Q for the quarter ended June 30, 1992 (Commission File No. 0-13357)
are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for 1994 is attached hereto.
(99) Additional exhibits:
Agreement of Sale and attachment thereto relating to the sale of Belmere
Apartments, Hillsborough County, Florida is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the year
ended December 31, 1994.
(c) Exhibits: See Item 14(a)(3) above.
(d) Financial Statement Schedule: See Index to Financial Statements and
Schedule in this Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Allan Wood
-----------------------------------
Allan Wood
Executive Vice President, and Chief
Accounting and Financial Officer
(Principal Accounting and Financial
Officer) of Balcor Equity
Partners-XVIII, the General Partner
Date: March 27, 1995
-----------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ------------------------ ----------------------------- --------------
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Equity
Partners-XVIII, the General
/s/Thomas E. Meador Partner March 27, 1995
- ---------------------- --------------
Thomas E. Meador
Executive Vice President, and Chief
Accounting and Financial Officer
(Principal Accounting Officer and
Financial Officer) of Balcor
Equity Partners-XVIII, the
/s/Allan Wood General Partner March 27, 1995
- ---------------------- --------------
Allan Wood
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Report of Independent Auditors
Financial Statements:
Balance Sheets, December 31, 1994 and 1993
Statements of Partners' Capital, for the years ended December 31, 1994, 1993
and 1992
Statements of Income and Expenses, for the years ended December 31, 1994, 1993
and 1992
Statements of Cash Flows, for the years ended December 31, 1994, 1993 and 1992
Notes to Financial Statements
Schedule:
III - Real Estate and Accumulated Depreciation, as of December 31, 1994
Schedules, other than that listed, are omitted for the reason that they are
inapplicable or equivalent information has been included elsewhere herein.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Balcor Equity Properties-XVIII
A Real Estate Limited Partnership:
We have audited the accompanying balance sheets of Balcor Equity
Properties-XVIII A Real Estate Limited Partnership (An Illinois Limited
Partnership) as of December 31, 1994 and 1993, and the related statements of
partners' capital, income and expenses and cash flows for each of the three
years in the period ended December 31, 1994. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits. We did not audit the financial statements of
Balcor Equity Properties - XIV, an affiliate, which is the majority joint
venturer of the partnership which owned the Belmere Apartments. The
Partnership's share of the operating income (loss) of this joint venture
included in the accompanying 1994 and 1993 statements of income and expenses
was approximately $755,000 (principally due to the gain on sale of the property
owned) and ($77,000), respectively. The financial statements of Balcor Equity
Properties - XIV were audited by other auditors whose report has been furnished
to us, and our opinion, insofar as it relates to the amounts included for the
aforementioned investment in joint venture, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Balcor Equity Properties-XVIII A Real
Estate Limited Partnership (An Illinois Limited Partnership) at December 31,
1994 and 1993, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
ERNST & YOUNG LLP
Chicago, Illinois
March 1, 1995
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
December 31, 1994 and 1993
ASSETS
1994 1993
------------ ------------
Cash and cash equivalents $ 6,190,971 $ 3,280,330
Escrow deposits 2,082,249 1,209,300
Accounts and accrued interest receivable 1,101,624 2,025,732
Prepaid expenses, principally real
estate taxes 58,398 155,208
Deferred expenses, net of accumulated
amortization of $148,659 in 1994 and
$80,720 in 1993 560,730 298,797
------------ ------------
9,993,972 6,969,367
------------ ------------
Investment in real estate, at cost:
Land 10,514,910 10,514,910
Buildings and improvements 70,699,599 70,366,316
------------ ------------
81,214,509 80,881,226
Less accumulated depreciation 32,293,590 29,357,744
------------ ------------
Investment in real estate, net
of accumulated depreciation 48,920,919 51,523,482
------------ ------------
$58,914,891 $58,492,849
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 225,336 $ 160,191
Due to affiliates 67,045 76,057
Accrued liabilities, principally interest
and real estate taxes 1,853,632 1,817,900
Security deposits 214,196 207,882
Loss in excess of investment in joint
venture with an affiliate 294,132
Mortgage notes payable 40,078,625 39,289,424
------------ ------------
Total liabilities 42,438,834 41,845,586
Partners' capital (52,811 Limited Partnership
Interests issued and outstanding) 16,476,057 16,647,263
------------ ------------
$58,914,891 $58,492,849
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
for the years ended December 31, 1994, 1993 and 1992
Partners' Capital (Deficit) Accounts
-----------------------------------------
General Limited
Total Partner Partners
------------- ------------ ------------
Balance at December 31, 1991 $ 18,410,573 $ (225,209) $18,635,782
Net loss for the year
ended December 31, 1992 (1,754,481) (17,545) (1,736,936)
------------- ------------ ------------
Balance at December 31, 1992 16,656,092 (242,754) 16,898,846
Net loss for the year
ended December 31, 1993 (8,829) (89) (8,740)
------------- ------------ ------------
Balance at December 31, 1993 16,647,263 (242,843) 16,890,106
Cash distributions to
Limited Partners (A) (1,056,220) (1,056,220)
Net income for the year
ended December 31, 1994 885,014 8,850 876,164
------------- ------------ ------------
Balance at December 31, 1994 $ 16,476,057 $ (233,993) $16,710,050
============= ============ ============
(A) Summary of cash distributions per Interest:
1994 1993 1992
------------ ----------- -----------
First Quarter $ 5.00 None None
Second Quarter 5.00 None None
Third Quarter 5.00 None None
Fourth Quarter 5.00 None None
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the years ended December 31, 1994, 1993 and 1992
1994 1993 1992
------------- ------------ ------------
Income:
Rental $ 12,672,200 $12,334,913 $11,528,047
Service 3,090,448 2,894,136 1,876,640
Interest on short-term
investments 223,412 99,932 130,889
Participation in income
of joint venture with an
affiliate 754,733
------------- ------------ ------------
Total income 16,740,793 15,328,981 13,535,576
------------- ------------ ------------
Expenses:
Interest on mortgage
notes payable 3,785,223 3,586,643 3,770,235
Depreciation 2,935,846 3,040,277 3,136,186
Amortization of deferred
expenses 67,939 28,958 6,471
Property operating 4,435,031 3,987,621 4,243,371
Maintenance and repairs 1,835,800 1,850,052 1,349,109
Real estate taxes 1,400,303 1,597,631 1,705,483
Property management fees 930,617 730,637 727,220
Administrative 465,020 439,444 273,951
Participation in loss
of joint venture with an
affiliate 76,547 78,031
------------- ------------ ------------
Total expenses 15,855,779 15,337,810 15,290,057
------------- ------------ ------------
Net income (loss) $ 885,014 $ (8,829) $(1,754,481)
============= ============ ============
Net income (loss) allocated to
General Partner $ 8,850 $ (89) $ (17,545)
============= ============ ============
Net income (loss) allocated to
Limited Partners $ 876,164 $ (8,740) $(1,736,936)
============= ============ ============
Net income (loss) per Limited
Partnership Interest (52,811
issued and outstanding) $ 16.59 $ (0.16) $ (32.89)
============= ============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1994, 1993 and 1992
1994 1993 1992
------------- ------------ ------------
Operating activities:
Net income (loss) $ 885,014 $ (8,829) $(1,754,481)
Adjustments to reconcile net
income (loss) to net
cash provided by
operating activities:
Participation in (income)
loss of joint venture
with an affiliate (754,733) 76,547 78,031
Depreciation of properties 2,935,846 3,040,277 3,136,186
Amortization of deferred
expenses 67,939 28,958 6,471
Collection (accrual) of
recoverable expenses 1,509,618 (1,509,618)
Net change in:
Escrow deposits (141,768) (908,628) 794,818
Accounts and accrued
interest receivable (103,281) 100,938 69,107
Prepaid expenses 96,810 230,298 (221,462)
Accounts payable 65,145 (199,282) (243,197)
Due to affiliates (9,012) 4,187 (3,938)
Accrued liabilities 35,732 (104,708) (108,662)
Security deposits 6,314 675 23,378
------------- ------------ ------------
Net cash provided by operating
activities 4,593,624 750,815 1,776,251
------------- ------------ ------------
Investing activities:
Capital contributions to
joint venture with an affiliate (21,628) (25,117) (64,741)
Improvements to properties (333,283) (127,696) (446,636)
------------- ------------ ------------
Net cash used in investing
activities (354,911) (152,813) (511,377)
------------- ------------ ------------
Financing activities:
Distributions to Limited
Partners (1,056,220)
Repayment of mortgage notes
payable (11,700,000) (9,001,276)
Proceeds from refinancing of
mortgage notes payable 13,000,000 9,300,000
Payment of deferred expenses (329,872) (269,517)
Release of capital improvement
escrow 172,331
Funding of capital improvement
escrow (903,512)
Principal payments on
mortgage notes payable (510,799) (425,267) (445,153)
------------- ------------ -----------
Net cash used in financing
activities (1,328,072) (396,060) (445,153)
------------- ------------ -----------
<PAGE>
Net change in cash and cash
equivalents 2,910,641 201,942 819,721
Cash and cash equivalents at
beginning of year 3,280,330 3,078,388 2,258,667
------------- ------------ ------------
Cash and cash equivalents at
end of year $ 6,190,971 $ 3,280,330 $ 3,078,388
============= ============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
(a) Depreciation expense is computed using the straight-line method. Rates used
in the determination of depreciation are based upon the following estimated
useful lives:
Years
-----
Buildings and improvements 18-30
Furniture and fixtures 5
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements are charged to the related asset account.
The Partnership records its investments in real estate at cost, and
periodically assesses possible impairment to the value of its properties. In
the event that the General Partner determines that a permanent impairment in
value has occurred, the carrying basis of the property is reduced to its
estimated fair value.
(b) Deferred expenses consist of refinancing fees which are amortized over the
terms of the respective agreements.
(c) Cash equivalents include all highly liquid investments with a maturity of
three months or less when purchased.
(d) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership loss or income in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
(e) A reclassification has been made to the previously reported 1993 statements
in order to provide comparability with the 1994 statements. These
reclassifications have not changed the 1993 results.
2. Partnership Agreement:
The Partnership was organized in January 1984. The Partnership Agreement
provides for Balcor Equity Partners-XVIII to be the General Partner and for the
admission of Limited Partners through the sale of up to 100,000 Limited
Partnership Interests at $1,000 per Interest, 52,811 of which were sold on or
prior to July 31, 1985, the termination date of the offering.
All profits and losses of the Partnership are allocated 99% to the capital
accounts of the Limited Partners and 1% to the capital account of the General
Partner.
When and as cash distributions are made, 100% of the Net Cash Receipts will be
distributed to holders of Interests. The General Partner will not receive any
portion of Net Cash Receipts; however, there will be accrued for the benefit of
the General Partner an amount equal to 1% of Net Cash Receipts distributed to
holders of Interests, which will be paid only out of Net Cash Proceeds as a
part of the General Partner's distributive share on sale or refinancing of
properties.
When the Partnership sells or refinances its properties, the Net Cash Proceeds
resulting therefrom which are available for distribution will be distributed
only to holders of Limited Partnership Interests until such time as they have
received an amount equal to their Original Capital plus a 6% per annum,
non-compounded, return. The remaining Net Cash Proceeds available for
<PAGE>
distribution will be distributed 85% to holders of Limited Partnership
Interests and 15% to the General Partner, provided that the General Partner's
distributive share shall be further subordinated to the prior receipt by
Limited Partners of a Preferential Cumulative Distribution of their Original
Capital in the amount of 100% for Interests purchased prior to January 1, 1985
and 80% for Interests purchased thereafter.
3. Mortgage Notes Payable:
Mortgage notes payable at December 31, 1994 and 1993 consisted of the
following:
Carrying Carrying Current Final
Property Amount of Amount of Inter- Matur- Periodic Estimated
Pledged as Notes at Notes at est ity Payment Balloon
Collateral 12/31/94 12/31/93 Rate Date Terms Payment
- -------------- ----------- ----------------- ------ -------- ----------
Apartment Complexes:
Canyon Point (A) $ 5,193,774 $ 5,234,165 8.59% 1998 $ 40,703 $ 5,022,000
Mallard Cove (B) 4,007,623 4,036,503 9.01 2000 32,616 3,797,000
(formerly
Hidden Lakes)
Knollwood
Village (C) 12,961,273 11,700,000 9.55 2004 109,786 11,737,000
Office Building:
101 Marietta
Tower 17,915,955 18,318,756 10.00 2001 554,971 13,899,000
----------- -----------
$40,078,625 $39,289,424
=========== ===========
(A) In July 1993, this loan was refinanced. The interest rate decreased from
10.00% to 8.59%, the maturity date was extended to August 1998 and the monthly
payments decreased from $53,723 to $40,703. Partnership cash reserves and
proceeds from the new $5,250,000 first mortgage loan were used to repay the
existing first mortgage loan of $6,137,525.
(B) In June 1993, this loan was refinanced. The interest rate decreased from
12.75% to 9.01%, the maturity date was extended from December 1995 to July 2000
and the monthly payments decreased from $33,280 to $32,616. A portion of the
proceeds from the new $4,050,000 first mortgage loan were used to repay the
existing first mortgage loan of $2,863,751.
(C) In June 1994, this loan was refinanced. The interest rate increased from
9.00% to 9.55%, the maturity date was extended from December 1994 to July 2004
and the monthly payments increased from $87,750 to $109,786. A portion of the
proceeds from the new $13,000,000 first mortgage loan were used to repay the
existing first mortgage loan of $11,700,000.
During 1994, 1993 and 1992 the Partnership incurred interest expense on
mortgage notes payable of $3,785,223, $3,586,643 and $3,770,235 and paid
interest expense of $3,968,746, $3,949,717 and $3,894,845, respectively.
The Partnership loans described above require current monthly payments of
principal and interest, except for the 101 Marietta loan which requires
quarterly payments of principal and interest.
Real estate with an aggregate carrying value of $81,214,509 at December 31,
1994 was pledged as collateral for repayment of the mortgage notes.
Maturities of the above mortgage notes payable during each of the next five
years are approximately as follows:
<PAGE>
1995 $ 603,000
1996 665,000
1997 732,000
1998 5,800,000
1999 827,000
4. Management Agreements:
As of December 31, 1994, all of the properties owned by the Partnership are
under management agreements with a third-party management company. These
management agreements provide for annual fees of 3% to 6% of gross operating
receipts.
5. Investment in Joint Venture with an Affiliate:
The Partnership owned a 25.6% joint venture interest in Belmere Apartments and
accounted for it under the equity method. In December 1994, the joint venture
sold the property for a sales price of $8,500,000. From the sales proceeds, the
joint venture repaid the first mortgage loan and other selling costs and
received approximately $1,755,000. In February 1995, the Partnership received a
distribution of $482,229 which represents its share of sales proceeds and
fourth quarter property operations. This amount is included in accounts
receivable in the financial statements at December 31,1994. The Partnership's
share of the gain on the sale is $949,032 and is included in "Participation in
income of joint venture with an affiliate" and is partially offset by the
Partnership's share of operating losses through the sale date. During 1994,
1993 and 1992, the Partnership made capital contributions of $21,628, $25,117
and $64,741, respectively to the joint venture.
6. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder and existing interpretations
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, will differ from the
tax returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences is that
the net income for 1994 in the financial statements is $99,851 more than the
tax income of the Partnership for the same period.
7. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
-------------- -------------- --------------
Paid Payable Paid Payable Paid Payable
------ ------- ------ ------- ------ -------
Property management fees $842,028 None $732,228 $58,502 $726,136 $60,093
Reimbursement of expenses
to the General Partner,
at cost:
Accounting 61,056 22,549 46,147 3,819 48,797 3,779
Data processing 30,712 5,868 20,772 4,578 22,349 1,832
Investor communica-
tions 18,801 5,524 18,181 1,505 10,273 795
Legal 12,405 6,419 12,347 1,022 12,841 995
Portfolio management 93,124 9,612 66,900 5,626 44,945 3,481
Other 12,405 17,073 12,142 1,005 11,557 895
The Partnership participates in an insurance deductible program with other
affiliated partnerships in which the program pays claims up to the amount of
the deductible under the master insurance policies for its properties. The
<PAGE>
program is administered by an affiliate of the General Partner who receives no
fee for administering the program. The Partnership's premiums to the deductible
insurance program were $118,333, $80,847 and $74,351 for 1994, 1993 and 1992,
respectively.
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed all
of the Partnership's properties until the affiliate was sold to a third party
in November 1994.
8. Rentals under Operating Leases:
The Partnership receives rental income from the leasing of office space under
operating leases. The minimum future rentals (excluding amounts representing
executory costs such as taxes, maintenance and insurance) for the 101 Marietta
Tower office building based on operating leases held at December 31, 1994 are
approximately as follows:
1995 $ 6,101,000
1996 5,638,000
1997 5,497,000
1998 543,000
1999 388,000
Thereafter 528,000
------------
$ 18,695,000
============
The Partnership is subject to the usual business risks regarding the collection
of the above-mentioned rentals.
Approximately 83% of the space at the 101 Marietta Tower office complex is
leased to the General Service Administration ("GSA"), and 47%, 48% and 45% of
the Partnership's total rental and service income recognized during 1994, 1993
and 1992, respectively, relates to GSA. In August 1992, GSA exercised its
option under the existing lease to extend its lease for an additional five
years through December 1997.
9. Subsequent Event:
In January 1995, the Partnership paid a distribution of $264,055 ($5.00 per
Interest) to Limited Partners relating to the fourth quarter of 1994.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1994
<CAPTION>
Col. A Col. B Col. C Col. D
- --------------------- -------- -------------------- ---------------------------------
Initial Cost Cost Adjustments
to Partnership Subsequent to Acquisition
-------------------- ---------------------------------
Buildings Carrying Reduction
Encum- and Im- Improve- Costs of Basis
Description brances Land provements ments (b) (c)
- --------------------- ------- -------- ------------ ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Canyon Point Apts.,
214-units in
San Antonio, TX (a) $ 800,000 $ 8,134,000 $ 135,362 $ 9,850 $(249,068)
Mallard Cove Apts.,
211-units in
Greenville, SC (a) 600,000 7,952,550 28,719
Knollwood Village Apts.,
648-units in Grand
Blanc, MI (a) 1,285,210 19,485,000 333,041 34,626
101 Marietta Tower,
579,823-sq. ft. ofc.
bldg. in Atlanta, GA (a) 7,840,000 32,095,745 2,692,986 36,488
----------- ----------- ---------- -------- ---------
Total $10,525,210 $67,667,295 $3,161,389 $109,683 $(249,068)
=========== =========== ========== ======== =========
</TABLE>
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1994
(Continued)
<CAPTION>
Col. A Col. E Col. F Col. G Col. H Col. I
- ------------------- -------------------------------- -------- -------- ------ --------------
Gross Amounts at Which Life Upon
Carried at Close of Period Which Depre-
------------------------------- ciation in
Buildings Accumulated Date Date Latest Income
and Im- Total Deprecia- of Con- Acq- Statement
Description Land provements (c)(d) tion(d) struction uired is Computed
- ------------------- -------- ---------- ---------- --------- --------- ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Canyon Point Apts.,
214-units in
San Antonio, TX $ 778,460 $ 8,051,684 $ 8,830,144 $ 3,196,406 1984 1984 (f)
Mallard Cove Apts.,
211-units in
Greenville, SC 602,011 7,979,258 8,581,269 3,039,451 1983 1985 (f)
Knollwood Village Apts.
648-units in Grand
Blanc, MI 1,287,287 19,850,590 21,137,877 11,318,019 (g) 1984 (f)
101 Marietta Tower,
579,823-sq. ft. ofc.
bldg. in Atlanta, GA 7,847,152 34,818,067 42,665,219 14,739,714 1974 1984 (f)
----------- ----------- ----------- -----------
Total $10,514,910 $70,699,599 $81,214,509 $32,293,590
=========== =========== =========== ===========
</TABLE>
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO SCHEDULE III
(a) See description of Mortgage Notes Payable in Note 3 of Notes to Financial
Statements.
(b) Consists of legal fees, appraisal fees, title costs and other related
professional fees.
(c) Guaranteed income earned on properties under the terms of certain
management and guarantee agreements was recorded by the Partnership as a
reduction of the basis of the property to which the guaranteed income related.
(d) The aggregate cost of land for Federal income tax purposes is $10,537,326
and the aggregate cost of buildings and improvements for Federal income tax
purposes is $71,288,800. The total of the above-mentioned is $81,826,126.
(e) Reconciliation of Real Estate
-----------------------------
1994 1993 1992
---------- ---------- ----------
Balance at beginning
of year $80,881,226 $80,753,530 $80,306,894
Additions during the year:
Improvements 333,283 127,696 446,636
----------- ----------- -----------
Balance at end of year $81,214,509 $80,881,226 $80,753,530
============ =========== ===========
Reconciliation of Accumulated Depreciation
------------------------------------------
1994 1993 1992
----------- ----------- -----------
Balance at beginning of year $29,357,744 $26,317,467 $23,181,281
Depreciation expense for
the year 2,935,846 3,040,277 3,136,186
------------ ----------- -----------
Balance at end of year $32,293,590 $29,357,744 $26,317,467
============ =========== ===========
(f) Depreciation expense is computed based upon the following estimated useful
lives:
Years
-----
Buildings and improvements 18-30
Furniture and fixtures 5
(g) This apartment complex was completed in three phases from 1970 through
1973.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 6191
<SECURITIES> 0
<RECEIVABLES> 1102
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9433
<PP&E> 81215
<DEPRECIATION> 32294
<TOTAL-ASSETS> 58915
<CURRENT-LIABILITIES> 2360
<BONDS> 40079
<COMMON> 0
0
0
<OTHER-SE> 16476
<TOTAL-LIABILITY-AND-EQUITY> 58915
<SALES> 0
<TOTAL-REVENUES> 16741
<CGS> 0
<TOTAL-COSTS> 8602
<OTHER-EXPENSES> 3469
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3785
<INCOME-PRETAX> 885
<INCOME-TAX> 0
<INCOME-CONTINUING> 885
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 885
<EPS-PRIMARY> 16.59
<EPS-DILUTED> 16.59
</TABLE>
AGREEMENT OF SALE EXHIBIT 99
THIS AGREEMENT OF SALE (this "Agreement"), entered into as of the __ day
of December, 1994, by and between MID-AMERICA APARTMENTS, L.P., a Tennessee
limited partnership ("Purchaser"), and B ASSOCIATES, an Illinois limited
partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Eight Million Five Hundred Thousand And No/100 Dollars
($8,500,000.00) (the "Purchase Price"), that certain property commonly known as
Belmere Apartments located in the City of Tampa, State of Florida, and legally
described and depicted on Exhibit A attached hereto (the "Property"). Included
in the Purchase Price is all of the personal property set forth in Exhibit B
(the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
(a) Upon the execution of this Agreement, the sum of Two Hundred Thousand
And No/100 Dollars ($200,000.00) (the "Earnest Money") to be held in escrow by
and in accordance with the provisions of the Escrow Agreement ("Escrow
Agreement") attached hereto as Exhibit C; and
(b) On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
A. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Lawyer's Title Insurance
Company (hereinafter referred to as "Title Insurer") dated November 21, 1994
for the Property (the "Title Commitment"). For purposes of this Agreement,
"Permitted Exceptions" shall mean: (a) the general printed exceptions contained
in the standard title policy to be issued by Title Insurer based on the Title
Commitment; (b) general real estate taxes not yet due and payable; (c) matters
shown on the "Updated Survey" (hereinafter defined); (d) matters caused by the
actions of Purchaser; and (e) the title exceptions set forth in Schedule B of
the Title Commitment as Numbers 5 through 9 inclusive, to the extent that same
effect the Property. All the other exceptions to title shall be referred to as
"Unpermitted Exceptions". The Title Commitment shall be conclusive evidence of
good title as therein shown as to all matters to be insured by the title
policy, subject only to the exceptions therein stated. On the Closing Date,
Title Insurer shall deliver to Purchaser a standard title policy in conformance
with the previously delivered Title Commitment, subject only to Permitted
Exceptions (the "Title Policy"). Seller shall pay all costs associated with
the Title Commitment and Title Policy, except that the costs of any
endorsements to, or extended coverage on, the Title Policy shall be paid by
Purchaser.
B. Purchaser has received a survey of the Property prepared by Post,
Buckley, Schuh & Jernigan, Inc. dated November 23, 1994 (the "Updated Survey").
Seller shall pay for the cost of the Updated Survey. Purchaser hereby
acknowledges that all matters disclosed by the Updated Survey are acceptable to
Purchaser.
4. PAYMENT OF CLOSING COSTS.
A. In addition to the costs set forth in Paragraphs 3A and B, Seller
shall pay for cost of the documentary or transfer stamps to be paid with
reference to the "Deed" (hereinafter defined) and all other stamps, intangible,
transfer, documentary, recording, sales tax and surtax imposed by law with
reference to any other sale documents delivered in connection with the sale of
<PAGE>
the Property. Seller shall pay all other closing charges of the Title Insurer
in connection with this transaction.
5. CONDITION OF TITLE.
A. If, prior to Closing, a date-down to the Title Commitment or the
Updated Survey disclose an Unpermitted Exception (other than the current
financing secured by the Property, which will be satisfied at Closing), Seller
shall have thirty (30) days from the date of the date-down to the Title
Commitment to (i) bond over, cure and/or have any Unpermitted Exceptions which,
in the aggregate, do not exceed $50,000.00 (a "Minor Unpermitted Exception"),
removed from the Title Commitment or to have the Title Insurer commit to insure
against loss or damage (together with the commitment to reissue the appropriate
endorsement for the benefit of Purchaser's financings and sale at no cost to
Purchaser) that may be occasioned by such Minor Unpermitted Exceptions at no
additional premium to Purchaser, or (ii) have the right, but not the
obligation, to bond over, cure and/or have any Unpermitted Exceptions which, in
the aggregate, equals or exceeds $50,000.00, removed from the Title Commitment
or to have the Title Insurer commit to insure against loss or damage (together
with the commitment to reissue the appropriate endorsement for the benefit of
Purchaser's financings and sale at no cost to Purchaser) that may be occasioned
by such Unpermitted Exceptions at no additional premium to Purchaser. The time
of Closing shall be delayed, if necessary, to give effect to said
aforementioned time periods. If Seller fails to cure or have said Unpermitted
Exception removed or have the Title Insurer commit to insure as specified above
within said thirty (30) day period or if Seller elects not to exercise its
rights under (ii) in the preceding sentence, Purchaser may terminate this
Agreement upon notice to Seller within five (5) days after the expiration of
said thirty (30) day period; provided, however, and notwithstanding anything
contained herein to the contrary, if the Unpermitted Exception which gives rise
to Purchaser's right to terminate was recorded against the Property as a result
of the affirmative, willful action of Seller (and not by any unrelated third
party) with the intention to prevent the sale of the Property in accordance
with the terms hereof or if Seller is able to bond over, cure or remove a Minor
Unpermitted Exception for a cost not to exceed $50,000 or the Title Insurer is
willing to insure over a Minor Unpermitted Exception for a cost not to exceed
$50,000 in accordance with the terms hereof and Seller fails to expend said
funds in either case, then Purchaser shall have the additional rights contained
in Paragraph 11 herein. Absent notice from Purchaser to Seller in accordance
with the terms hereof, Purchaser shall be deemed to have elected to take title
subject to said Unpermitted Exception. If Purchaser terminates this Agreement
in accordance with the terms of this Paragraph 5A, this Agreement shall become
null and void without further action of the parties and all Earnest Money
theretofore deposited into the escrow by Purchaser together with any interest
accrued thereon, shall be returned to Purchaser, and neither party shall have
any further liability to the other, except for Purchaser's obligation to
indemnify Seller and restore the Property, as more fully set forth in Paragraph
7.
B. Seller agrees to convey fee simple title to the Property to Purchaser
by special warranty deed ("Deed") in recordable form subject only to the
Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
A. Except as provided in any indemnity provisions of this Agreement,
Seller shall bear all risk of loss with respect to the Property up to the
earlier of the dates upon which either possession or title is transferred to
Purchaser in accordance with this Agreement. Notwithstanding the foregoing, in
the event of damage to the Property by fire or other casualty prior to the
Closing Date, repair of which would cost less than or equal to $100,000.00 (as
determined by Seller in good faith) Purchaser shall not have the right to
terminate its obligations under this Agreement by reason thereof, but Seller
shall have the right to elect to either repair and restore the Property (in
which case the Closing Date shall be extended until completion of such
restoration) or to assign and transfer to Purchaser on the Closing Date all of
<PAGE>
Seller's right, title and interest in and to all insurance proceeds paid or
payable to Seller on account of such fire or casualty, including, without
limitation, proceeds of lost rental insurance for the period commencing with
the Closing Date through the period of Purchaser's repair, to the extent said
lost rental insurance covers Purchaser's loss in rental insurance and Seller
shall pay to Purchaser at the Closing the amount of Seller's insurance
deductible. Seller shall promptly notify Purchaser in writing of any such fire
or other casualty and Seller's determination of the cost to repair the damage
caused thereby. In the event of damage to the Property by fire or other
casualty prior to the Closing Date, repair of which would cost in excess of
$100,000.00 (as determined by Seller in good faith), then this Agreement may be
terminated at the option of Purchaser, which option shall be exercised, if at
all, by Purchaser's written notice thereof to Seller within five (5) business
days after Purchaser receives written notice of such fire or other casualty and
Seller's determination of the amount of such damages, and upon the exercise of
such option by Purchaser this Agreement shall become null and void, the Earnest
Money deposited by Purchaser shall be returned to Purchaser together with
interest thereon, and neither party shall have any further liability or
obligations hereunder except for Purchaser's obligations to indemnify Seller
and restore the Property, as set forth more fully in Paragraph 7. In the event
that Purchaser does not exercise the option set forth in the preceding
sentence, the Closing shall take place on the Closing Date and Seller shall
assign and transfer to Purchaser on the Closing Date all of Seller's right,
title and interest in and to all insurance proceeds paid or payable to Seller
on account of the fire or casualty, including, without limitation, proceeds of
lost rental insurance for the period commencing with the Closing Date through
the period of Purchaser's repair, to the extent said lost rental insurance
covers Purchaser's loss in rental insurance and Seller shall pay to Purchaser
at the Closing the amount of Seller's insurance deductible.
B. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material non-
compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impairs the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
(a) terminate this Agreement by written notice to Seller, in which event the
Earnest Money deposited by Purchaser, together with interest thereon, shall be
returned to Purchaser and all rights and obligations of the parties hereunder
with respect to the closing of this transaction will cease, except for
Purchaser's obligations to indemnify Seller and restore the Property, as set
forth more fully in Paragraph 7; or
(b) proceed with the Closing, in which event Seller shall assign to Purchaser
all of Seller's right, title and interest in and to any award made in
connection with such condemnation or eminent domain proceedings and give
Purchaser the right of approval as to the amount of any award.
Purchaser shall then notify Seller, within five (5) business days after
Purchaser's receipt of Seller's notice, whether Purchaser elects to exercise
its rights under subparagraph (a) or subparagraph (b) of this Paragraph 6B.
Closing shall be delayed, if necessary, until Purchaser makes such election.
If Purchaser fails to make an election within such five (5) business day
period, Purchaser shall be deemed to have elected to exercise its rights under
subparagraph (b).
If between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
<PAGE>
and to any award made in connection with such condemnation or eminent domain
proceedings and give Purchaser the right of approval as to the amount of any
award.
7. INSPECTION AND AS-IS CONDITION.
A. Seller has delivered to Purchaser copies of the current rent roll for
the Property, the most recent tax and insurance bills, utility account numbers,
service contracts, and unaudited year end 1993 and 1994 (through October 31)
operating statements. Purchaser has completed its due diligence review of the
Property and the aforesaid delivered materials.
Purchaser agrees that as a condition to being allowed on the Property to
conduct its due diligence, Purchaser agrees to restore the Property to the
condition existing prior to the performance of any investigations by or on
behalf of Purchaser if there is damage to the Property caused by Purchaser's
investigations or inspection of the Property. Purchaser shall defend,
indemnify and hold Seller and any affiliate, parent of Seller, and all
shareholders, employees, officers and directors of Seller or Seller's affiliate
or parent (hereinafter collectively referred to as "Affiliate of Seller")
harmless from any and all liability, cost and expense (including without
limitation, reasonable attorney's fees, court costs and costs of appeal)
suffered or incurred by Seller or Affiliates of Seller for injury to persons or
property caused by Purchaser's investigations and inspection of the Property.
Purchaser shall undertake its obligation to defend set forth in the preceding
sentence using attorneys selected by Purchaser and reasonably acceptable to
Seller.
B. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspections 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, wear and tear and loss by fire or other casualty or condemnation
excepted. 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 comprising the Property, the
existence or non-existence of any hazardous materials or substances, 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 or
warranty that the Property complies with Title III of the Americans with
Disabilities Act or any fire code or building code. Except with respect to a
breach by Seller of any representation or warranty expressly contained herein,
Purchaser hereby releases Seller and the Affiliates of Seller from any and all
liability in connection with any claims which Purchaser may have against
Seller, and except with respect to a breach by Seller of any representation or
warranty expressly contained herein, Purchaser hereby agrees not to assert any
claims for contribution, cost recovery or otherwise, against Seller, relating
directly or indirectly to the existence of asbestos or hazardous materials or
substances on, or environmental conditions of, the Property, whether known or
unknown. As used herein, the term "hazardous materials or substances" means
(i) hazardous wastes, 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
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 Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601. et seq.; the
<PAGE>
Clear 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, regulator 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 and (E) asbestos. Radon is a naturally occurring radioactive gas that,
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
the county public health unit. Seller makes no representation regarding the
levels of radon at the Property.
C. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as expressly set forth herein,
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 the representations
and warranties of Seller expressly contained herein and releases Seller from
any liability with respect to such historical information, except with respect
to a breach of a representation or warranty of Seller contained herein.
D. Seller has provided to Purchaser the following reports: Preliminary
Environmental Site Assessment prepared by Environmental Management Group, Inc.
dated February 14, 1994 ("Existing Report"). Seller makes no representation
or warranty concerning the accuracy or completeness of the Existing Report.
Purchaser hereby releases Seller from any liability whatsoever with respect to
the Existing Report, or, including, without limitation, the matters set forth
in the Existing Report, the accuracy and/or completeness of the Existing
Report. Furthermore, Purchaser acknowledges that it will be purchasing the
Property with all faults disclosed in the Existing Report.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
December 15, 1994 (the "Closing Date"), at the office of Title Insurer, Tampa,
Florida, at which time Seller shall deliver possession of the Property to
Purchaser. This transaction shall be closed through an escrow with Title
Insurer, in accordance with the general provisions of the usual and customary
form of deed and money escrow for similar transactions in Florida, or at the
option of either party, the Closing shall be a "New York style" closing at
which the Purchaser shall wire the Purchase Price to Title Insurer on the
Closing Date and prior to the release of the Purchase Price to Seller,
Purchaser shall receive the Title Policy or marked up commitment dated the date
of the Closing Date. In the event of a New York style closing, Seller shall
deliver to Title Insurer any customary affidavit in connection with a New York
style closing. Purchaser shall pay all closing and escrow fees.
9. CLOSING DOCUMENTS.
A. On the Closing Date, Purchaser shall deliver to Seller an executed
closing statement, the balance of the Purchase Price, an assumption of the
documents set forth in Paragraph 9.B.(iii) and (iv) and such other documents as
<PAGE>
may be reasonably required by the Title Insurer in order to consummate the
transaction as set forth in this Agreement.
B. On the Closing Date, Seller shall deliver to Purchaser the following:
(i) the Deed (in the form of Exhibit E attached hereto), subject to
Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
(ii) a special warranty bill of sale conveying the Personal Property
(in the form of Exhibit F attached hereto);
(iii) assignment and assumption of intangible property (in the form
attached hereto as Exhibit G);
(iv) an assignment and assumption of leases and security deposits (in
the form attached hereto as Exhibit H);
(v) non-foreign affidavit (in the form of Exhibit I attached hereto);
(vi) original, and/or copies of, leases affecting the Property in
Seller's possession;
(vii) all documents and instruments reasonably required by the Title
Insurer to issue the Title Policy;
(viii) possession of the Property to Purchaser;
(ix) an executed closing statement;
(x) notice to the tenants of the Property of the transfer of title and
assumption by Purchaser of the landlord's obligation under the
leases and the obligation to refund the security deposits (in the
form of Exhibit J); and
(xi) an updated rent roll.
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 A 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,
EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER PURSUANT TO PARAGRAPH 7A
HEREOF. 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 THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7 AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER ITS ACTUAL, DOCUMENTED
THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE DILIGENCE HEREUNDER
AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED $200,000 IN THE AGGREGATE.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT
IS (i) ITS (AND NOT AN UNRELATED THIRD PARTY'S) AFFIRMATIVE, WILLFUL ACTION
WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY WITH THE
INTENTION TO PREVENT THE SALE OF THE PROPERTY IN ACCORDANCE WITH THE TERMS
HEREOF AND WHICH GIVES RISE TO PURCHASER'S RIGHT TO TERMINATE THIS AGREEMENT
PURSUANT TO PARAGRAPH 5 HEREOF; (ii) ITS FAILURE TO EXPEND UP TO $50,000 IF (a)
SELLER IS ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED EXCEPTION FOR A
COST NOT TO EXCEED $50,000 OR (b) THE TITLE INSURER IS WILLING TO INSURE OVER A
<PAGE>
MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED $50,000 IN ACCORDANCE WITH
THE TERMS HEREOF OR (iii) ITS REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL
BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
A. 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); association assessments for
the Carrolwood Phase III Homeowner's Association, Inc.; water and other utility
charges; fuels; prepaid operating expenses; real and personal property taxes;
and other similar items shall be adjusted ratably as of 12:01 a.m. on the
Closing Date. Assessments of record payable in installments which are due
subsequent to the Closing Date shall be paid by Purchaser. If the amount of
any of the items to be prorated is not then ascertainable, the adjustments
thereof shall be on the basis of the most recent ascertainable data. The
parties agree to re-prorate the proration items within forty-five (45) days
after the date of Closing, except as to delinquent rent referred to in
Paragraph 12B below.
B. All sums paid following the Closing Date by any tenant of the
Property who is indebted under a lease for any period prior to and including
the Closing Date shall be deemed a "Post-Closing Receipt" until such time as
all such indebtedness is paid in full. Within ten (10) days following each
receipt by Purchaser of a Post-Closing Receipt, Purchaser shall pay such Post-
Closing Receipt to Seller. Purchaser shall send monthly collection notices to
tenants residing at the Property owing Post-Closing Receipts. Within 90 days
after the Closing Date, Purchaser shall deliver to Seller a reconciliation
statement of Post-Closing Receipts through the first 60 days after the Closing
Date. Upon the delivery of the Post-Closing Receipts reconciliation, Purchaser
shall deliver to Seller any Post-Closing Receipts owing to Seller and not
previously delivered to Seller in accordance with the terms hereof. At
Seller's expense, Seller retains the right to conduct an audit, at reasonable
times and upon reasonable notice, of Purchaser's books and records to verify
the accuracy of the Post-Closing Receipts reconciliation statement and upon the
verification of additional funds owing to Seller, Purchaser shall pay to Seller
said additional Post-Closing Receipts. Paragraph 12B 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 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 10.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to (i) Cushman & Wakefield of Florida, Inc. (to be paid by Seller)
and (ii) Insignia Financial Group and Memphis Commercial Group (to be paid by
Cushman & Wakefield of Florida, Inc.). Seller's commission to Cushman &
Wakefield of Florida, Inc. shall only be payable out of the proceeds of the
sale of the Property in the event the transaction set forth herein closes.
Purchaser and Seller shall indemnify, defend and hold the other party hereto
harmless from any claim whatsoever (including without limitation, reasonable
attorney's fees, court costs and costs of appeal) from anyone claiming by or
through the indemnifying party any fee, commission or compensation on account
of this Agreement, its negotiation or the sale hereby contemplated other than
to Cushman & Wakefield of Florida, Inc., Insignia Financial Group and Memphis
Commercial Group. The indemnifying party shall undertake its obligations set
forth in this Paragraph 15 using attorneys selected by the indemnifying party
and reasonably acceptable to the indemnified party. The provisions of this
Paragraph 15 will survive the Closing and delivery of the Deed.
<PAGE>
16. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. Any reference herein to Seller's knowledge, representation, warranty
or notice of any matter or thing shall only mean such knowledge or notice that
has actually been received by Phillip Schechter or Michael Becker (asset
manager of the Property and who is in a position to have a basis for having
knowledge with respect to the Property) (hereinafter collectively referred to
as the "Seller's Representatives"), and any representation or warranty of the
Seller is based upon those matters of which the Seller's Representatives have
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, the
general partner or limited partners of Seller, the subpartners of the general
partner or limited partners of Seller or Seller's Representatives.
B. Subject to the limitations set forth in Paragraph A of this Paragraph
16, Seller hereby makes the following representations and warranties, which
representations and warranties are made to the Seller's knowledge and which
shall, subject to Paragraph 16C, be remade at Closing:
(i) Seller has no knowledge of any pending or threatened litigation, claim,
cause of action or administrative proceeding concerning the Property;
(ii) Seller has paid the Carrolwood Phase III Homeowners Association, Inc.
$34,650 in satisfaction of its obligation for 1994 assessments;
(iii) The rent roll attached hereto as Exhibit L and which shall be updated as
of the Closing Date accurately sets forth the number of tenants then in
possession of the Property as of the date of said rent roll, contains an
accurate summary of the rental obligations, the expiration date, the security
deposit and the delinquencies of each such tenancy as of the date of said rent
roll;
(iv) That the tenant leases evidencing such tenancies referred to in the rent
roll are in full force and effect and have not been amended or modified except
as set forth in the rent roll or the leases made available to Purchaser for
Purchaser's review;
(v) Seller has received no notice of any material default on the part of Seller
under any said tenant leases;
(vi) Except as set forth in the rent roll, no tenant under the leases as of the
date of the rent roll is in material default of the payment of rent;
(vii) That Seller will not collect any of the rent or other sums arising or
accruing under any of the said tenant leases in advance of the time when they
come due except for the benefit of Purchaser (and Seller retains ownership of
all accounts receivable for rents due for periods of time prior to the
Closing);
(viii) The Seller has not given or suffered any assignment, pledge or
encumbrance with respect to any of the tenant leases or its interests
thereunder except as additional collateral for the existing loan secured by the
Property;
(ix) Pending the Closing, Seller will not without the prior consent of
Purchaser convey all or any portion of the Property;
(x) Except as shown on Exhibit M, there are no service contracts which in any
manner affect or otherwise relate to the Property or the tenant leases;
(xi) Seller has full right, power and authority to enter into this Agreement
and consummate the transaction contemplated hereby;
(xii) Seller and all persons or entities having beneficial interests in the
Property are "United States Persons," as defined in Section 1445(f)(3) and
Section 7701(g) of the Internal Revenue Code of 1986, as amended, and the
<PAGE>
purchase of the Property by Purchaser as contemplated herein will not be
subject to the withholding requirements of Section 1445(a) of the Code;
(xiii) Except as may be set forth in the Existing Report, Seller has not
received any notice from any governmental authority having jurisdiction over
the Property of any uncured violation of any Environmental Law with respect to
the Property. Seller has not commissioned any environmental report with
respect to the Property other than the Existing Report; and
(xiv) Seller has not received written notice from any third party of any
structural defects that would render the Property unusable as an apartment
complex.
C. If at any time after the execution of this Agreement, either
Purchaser or Seller become aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclosure said information to the other
party hereto. Provided the party making the representation or warranty did not
take any deliberate actions to cause the representation or warranty in question
to become untrue in any material respect, said party shall not be in default
under this Agreement and the sole remedy of the other party shall be to
terminate this Agreement. Notwithstanding anything contained herein to the
contrary, if the status of any of the tenancies changes from the date of the
rent roll attached hereto and the date of the rent roll delivered at Closing,
provided the change in status is not caused by a breach of Seller's covenants
contained in Paragraph 16D herein, then Purchaser shall not have the right to
terminate this Agreement or make any claim for a breach of a representation or
warranty hereunder involving the rent roll or tenancies thereunder. Purchaser
and Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party has actual knowledge of prior to the Closing. The parties agree that the
representations contained herein shall survive Closing for a period of sixty
(60) days (i.e., the claiming party shall have no right to make any claims
against the other party for a breach of a representation or warranty after the
expiration of sixty (60) days immediately following Closing).
D. Seller covenants to operate and manage the Property in the same
manner that it has managed, maintained and operated the Property during the
period of Seller's ownership, subject to reasonable wear and tear and casualty.
17. LIMITATION OF LIABILITY. Neither any of Seller's respective partners
(whether general partners, limited partners or any level of sub-partner) nor
any beneficiaries, shareholders, officers, agents or 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. Notwithstanding anything
contained herein to the contrary, Purchaser hereby agrees that the maximum
aggregate liability of Seller, in connection with, arising out of or in any way
related to a breach by Seller under this Agreement or any document or
conveyance agreement in connection with the transaction set forth herein shall
be $250,000; provided, however, in no way shall this sentence or the following
sentence preclude Purchaser's right of specific performance contained in
Paragraph 11 herein. Purchaser hereby waives for itself and anyone who may
claim by, through or under Purchaser any and all rights to sue or recover from
Seller any amount greater than said limit. Seller further agrees not to
distribute $250,000 of the proceeds of the Purchase Price to its partners for
the longer of (i) sixty (60) days after the Closing and (ii) final resolution
of any claims by Purchaser and asserted in writing against Seller prior to the
expiration of the sixtieth (60th) day after the Closing in accordance with the
terms of this Agreement ("Claims"); provided, however, that if any Claims are
disputed by Seller, Seller shall have the right, by written notice to
Purchaser, to require Purchaser to file suit in a court of competent
<PAGE>
jurisdiction within thirty (30) days after such notice to Purchaser; otherwise
said notice with respect to the Claim in question shall no longer prevent
Seller from distributing the proceeds.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. 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, facsimile delivered or given or made
by overnight courier such as Federal Express or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
4849 Golf Road
Skokie, Illinois 60077
Attention: Ilona Adams
with copies to: The Balcor Company
4849 Golf Road
Skokie, Illinois 60077
Attention: Alan Lieberman
(708) 677-2900
(708) 982-4027 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: c/o Mid-America Apartment Communities, Inc.
6584 Poplar Avenue
Suite 340
Memphis, Tennessee 38138
Attention: Donald Aldridge
(901) 682-6600
(901) 682-6667 (FAX)
and one copy to: Apperson, Crump, Duzane & Maxwell
1755 Kirby Parkway
Suite 100
Memphis, Tennessee 38120
Attention: John Maxwell
(901) 756-6300
(901) 757-1296 (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, on the same day if sent by facsimile transmission prior to 5:00 p.m.
Chicago time 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 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.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute three
(3) copies of this Agreement and four (4) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
<PAGE>
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(1) Purchaser's check for the Earnest Money;
(2) One (1) fully executed copy of this Agreement; and
(3) 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 each of the Purchaser and the
Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Florida, except that with respect to the retainage of the
Earnest Money as liquidated damages the laws of the State of Illinois shall
govern.
22. 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.
23. 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.
24. 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.
25. SERVICE CONTRACTS. Attached hereto as Exhibit M is a list of service
contracts affecting the Property. Seller shall assign the service contracts to
Purchaser at Closing, and Purchaser shall assume responsibility and obligations
under the service contracts. Seller agrees not to enter into any other service
contracts affecting the Property. Seller agrees to terminate any and all
management agreements affecting the Property as of the Closing Date.
26. AUDIT. Seller will make available to Purchaser's representatives such
books, accounts and records necessary for Purchaser to conduct an audit of the
Property's preceding fiscal year. This audit will be conducted solely at
Purchaser's expense for the purpose of satisfying its requirements as a
publicly held entity. Seller agrees to execute and deliver a disclosure letter
prepared by the auditors of Purchaser in the form attached hereto as Exhibit K.
The terms of this Paragraph 26 shall survive the Closing for a period of one
(1) year after the Closing Date.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the ____ day of December, 1994.
PURCHASER:
MID-AMERICA APARTMENTS, L.P., a Tennessee limited partnership
By: MID-AMERICA APARTMENT COMMUNITIES, INC., a
Tennessee corporation, its general partner
By:
-----------------------------
Its:
----------------------------
SELLER:
B ASSOCIATES, an Illinois limited partnership
<PAGE>
By: Belmere Investors, an Illinois joint
venture, a general partner
By: Florida Investors, an Illinois
limited partnership, a general
partner
By: Balcor Equity Partners - XVIII,
an Illinois general partnership,
a general partner
By: THE BALCOR COMPANY, a
Delaware Corporation, a
general partner
By: /s/Phillip Schechter
-------------------------
By: Balcor Equity Properties - XIV, an Illinois
limited partnership, a general partner
By: Balcor Equity Properties XIV, Inc. a
Delaware corporation, its general
partner
By: /s/Phillip Schechter
----------------------------
Its: Authorized Agent
---------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Special Warranty Deed
F - Special Warranty Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Assignment and Assumption of Leases and Security Deposits
I - Non-Foreign Affidavit (FIRPTA Statement)
J - Notice to Tenants
K - Auditor's Disclosure Letter
L - Rent Roll
M - List of Service Contracts
