SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13357
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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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 7,384,835 $ 6,190,971
Escrow deposits 2,245,339 2,082,249
Accounts and accrued
interest receivable 692,552 1,160,022
Deferred expenses, net of accumulated
amortization of $169,767 in 1995 and
$148,659 in 1994 539,622 560,730
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10,862,348 9,993,972
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Investment in real estate, at cost:
Land 10,514,910 10,514,910
Buildings and improvements 70,699,599 70,699,599
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81,214,509 81,214,509
Less accumulated depreciation 33,030,065 32,293,590
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Investment in real estate, net
of accumulated depreciation 48,184,444 48,920,919
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$ 59,046,792 $ 58,914,891
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 219,650 $ 225,336
Due to affiliates 94,682 67,045
Accrued liabilities, principally
interest and real estate taxes 1,595,273 1,853,632
Security deposits 212,934 214,196
Mortgage notes payable 39,933,204 40,078,625
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Total liabilities 42,055,743 42,438,834
Partners' capital (52,811 Limited
Partnership Interests
issued and outstanding) 16,991,049 16,476,057
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$ 59,046,792 $ 58,914,891
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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 quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental $ 3,205,428 $ 3,055,401
Service 674,801 791,078
Interest on short-term investments 108,533 24,529
Other income 206,159
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Total income 4,194,921 3,871,008
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Expenses:
Interest on mortgage notes payable 919,382 881,823
Depreciation 736,475 731,448
Amortization of deferred expenses 21,108 12,861
Property operating 1,115,765 1,366,286
Real estate taxes 340,138 394,844
Property management fees 195,281 176,963
Administrative 87,725 129,157
Participation in loss of joint
venture with an affiliate 23,807
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Total expenses 3,415,874 3,717,189
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Net income $ 779,047 $ 153,819
============== ==============
Net income allocated to General
Partner $ 7,790 $ 1,538
============== ==============
Net income allocated to Limited
Partners $ 771,257 $ 152,281
============== ==============
Net income per Limited Partnership
Interest (52,811 issued
and outstanding) $ 14.60 $ 2.88
============== ==============
Distribution to Limited Partners $ 264,055 $ 264,055
============== ==============
Distribution per Limited Partnership
Interest (52,811 issued
and outstanding) $ 5.00 $ 5.00
============== ==============
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 quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 779,047 $ 153,819
Adjustments to reconcile net income
to net cash provided by operating
activities:
Participation in loss of joint
venture with an affiliate 23,807
Depreciation of properties 736,475 731,448
Amortization of deferred expenses 21,108 12,861
Net change in:
Escrow deposits (163,090) 93,951
Accounts and accrued interest
receivable (14,759) (585,533)
Accounts payable (5,686) (160,191)
Due to affiliates 27,637 65,812
Accrued liabilities (258,359) (40,720)
Security deposits (1,262) (5,499)
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Net cash provided by
operating activities 1,121,111 289,755
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Investing activities:
Distribution from joint venture
with an affiliate 482,229
Improvements to properties (99,003)
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Net cash provided by (used in)
investing activities 482,229 (99,003)
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Financing activities:
Distribution to Limited Partners (264,055) (264,055)
Principal payments on
mortgage notes payable (145,421) (113,757)
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Net cash used in financing activities (409,476) (377,812)
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Net change in cash and cash equivalents 1,193,864 (187,060)
Cash and cash equivalents at beginning
of period 6,190,971 3,280,330
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Cash and cash equivalents
at end of period $ 7,384,835 $ 3,093,270
============== ==============
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 Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the quarter ended March 31,
1995, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarter ended March 31, 1995 and 1994, the Partnership incurred
interest expense on mortgage notes payable of $919,382 and $881,823 and paid
interest expense of $958,866 and $924,423, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1995 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost None $94,682
4. Subsequent Event:
In April 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 first quarter of
1995.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Equity Properties-XVIII A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1984 to invest in and operate
income-producing real property. The Partnership raised $52,811,000 through the
sale of Limited Partnership Interests and utilized these proceeds to acquire
four real property investments and a minority joint venture interest in one
additional real property, which was sold in 1994. The Partnership continues to
operate four properties.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1994 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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Due primarily to the receipt in 1995 of a refund of 1993 real estate taxes
relating to the 101 Marietta Tower office complex, as well as decreased
property operating expenses at two of the Partnership's properties, the
Partnership recognized an increase in net income for the quarter ended March
31, 1995 as compared to the same period in 1994. Further discussion of the
Partnership's operations is summarized below.
1995 Compared to 1994
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Higher rental and occupancy rates at the Knollwood Village Apartments resulted
in an increase in rental income and property management fees for the quarter
ended March 31, 1995 as compared to same period in 1994.
A lower property assessment at the 101 Marietta Tower office complex,
retroactive to the 1993 tax year, has reduced recoverable expenses. This
reduction in real estate taxes has resulted in a decrease in service income
during the quarter ended March 31, 1995 when compared to the same period in
1994. The lower property assessment resulted in a refund of 1993 real estate
taxes which was received during 1995, which was recognized as other income in
the quarter ended March 31, 1995.
Due to higher cash balances and interest rates, interest income on short-term
investments increased during the quarter ended March 31, 1995 as compared to
the same period in 1994.
<PAGE>
As a result of lower tenant-related repairs and maintenance expenses and
leasing costs at the 101 Marietta Tower office complex in 1995 and due to an
exterior painting project at Canyon Point Apartments completed in 1994,
property operating expense decreased for the quarter ended March 31, 1995 as
compared to the same period in 1994.
Due to decreases in portfolio management and accounting fees, administrative
expenses decreased during the quarter ended March 31, 1995 when compared to the
same period in 1994.
Belmere Apartments, in which the Partnership held a minority joint venture
interest, was sold during December 1994. The Partnership recognized a
participation in loss of joint venture with an affiliate for the quarter ended
March 31, 1994.
Liquidity and Capital Resources
- - -------------------------------
The cash position of the Partnership increased as of March 31, 1995 when
compared to December 31, 1994. The cash flow provided by operating activities
was generated primarily from the Partnership's properties and interest earned
on short-term investments, and was partially offset by the payment of
administrative expenses. Cash provided by investing activities consisted of the
final distribution from a joint venture with an affiliate representing the
Partnership's share of sales proceeds and property operations at the Belmere
Apartments. Cash used in financing activities consisted of principal payments
on the Partnership's mortgage notes payable and distributions to Limited
Partners.
During the quarters ended March 31, 1995 and 1994, all four of the
Partnership's properties generated positive cash flow. 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 March 31, 1995,
the occupancy rates of the Partnership's residential properties ranged from 82%
to 99%, while the occupancy rate at the 101 Marietta Tower office complex was
99%. Despite recent improvements 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
interest 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 the General Service Administration ("GSA") and 56% of the
Partnership's total rental and service income recognized during the first three
months of 1995 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.
<PAGE>
In April 1995, the Partnership paid $264,055 ($5.00 per Interest) representing
the quarterly distribution to Limited Partners for the first quarter of 1995.
The level of this distribution is consistent with that of the prior quarter.
Including the April 1995 distribution, investors have received distributions of
Net Cash Receipts totaling $105.50 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 December 1994, the joint venture in which the Partnership owned a 25.6%
interest sold the Belmere Apartments for a sale 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.
Each of the Partnership's properties is owned through the use of third-party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. As a result of the General
Partner's efforts to modify and refinance these loans, the Partnership has no
third party financing which matures prior to 1998.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(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 the three month period
ending March 31, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR EQUITY PROPERTIES - XVIII
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
----------------------------------
Thomas E. Meador
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Equity Partners -
XVIII, the General Partner
By: /s/Brian Parker
----------------------------------
Brian Parker
Senior Vice President, and
Chief Financial Officer
(Principal Accountant and Financial
Officer) of Balcor Equity Partners -
XVIII, the General Partner
Date: May 12, 1995
---------------------
<PAGE>
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<PERIOD-END> MAR-31-1995
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<PP&E> 81215
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0
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<OTHER-SE> 16991
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