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 June 30, 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
------------------------------------------------------
(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.)
2355 Waukegan Rd., Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 267-1600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
--------------- ---------------
Cash and cash equivalents $ 8,182,956 $ 6,190,971
Escrow deposits 2,445,666 2,082,249
Accounts and accrued
interest receivable 808,621 1,101,624
Prepaid expenses 231,759 58,398
Deferred expenses, net of accumulated
amortization of $190,875 in 1995
and $148,659 in 1994 518,514 560,730
--------------- ---------------
12,187,516 9,993,972
--------------- ---------------
Investment in real estate, at cost:
Land 10,514,910 10,514,910
Buildings and improvements 70,699,599 70,699,599
--------------- ---------------
81,214,509 81,214,509
Less accumulated depreciation 33,766,541 32,293,590
--------------- ---------------
Investment in real estate, net
of accumulated depreciation 47,447,968 48,920,919
--------------- ---------------
$ 59,635,484 $ 58,914,891
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 223,133 $ 225,336
Due to affiliates 7,566 67,045
Accrued liabilities, principally
interest and real estate taxes 1,997,467 1,853,632
Security deposits 221,208 214,196
Mortgage notes payable 39,784,220 40,078,625
--------------- ---------------
Total liabilities 42,233,594 42,438,834
Partners' capital (52,811
Limited Partnership Interests
issued and outstanding) 17,401,890 16,476,057
--------------- ---------------
$ 59,635,484 $ 58,914,891
=============== ===============
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 six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
--------------- ---------------
Income:
Rental $ 6,420,669 $ 6,157,271
Service 1,616,550 1,721,194
Interest on short-term investments 213,581 62,106
Other income 227,155
--------------- ---------------
Total income 8,477,955 7,940,571
--------------- ---------------
Expenses:
Interest on mortgage notes payable 1,834,680 1,941,476
Depreciation 1,472,951 1,462,896
Amortization of deferred expenses 42,216 25,722
Property operating 2,370,545 2,661,731
Real estate taxes 680,080 789,688
Property management fees 405,080 466,100
Administrative 218,460 245,278
Participation in loss of joint
venture with an affiliate 36,386
--------------- ---------------
Total expenses 7,024,012 7,629,277
--------------- ---------------
Net income $ 1,453,943 $ 311,294
=============== ===============
Net income allocated to
General Partner $ 14,539 $ 3,113
=============== ===============
Net income allocated to
Limited Partners $ 1,439,404 $ 308,181
=============== ===============
Net income per Limited
Partnership Interest (52,811
issued and outstanding) $ 27.26 $ 5.84
=============== ===============
Distributions to Limited Partners $ 528,110 $ 528,110
=============== ===============
Distributions per Limited
Partnership Interest (52,811
issued and outstanding) $ 10.00 $ 10.00
=============== ===============
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 INCOME AND EXPENSES
for the quarters ended June 30, 1995 and 1994
(Unaudited)
1995 1994
--------------- ---------------
Income:
Rental $ 3,215,241 $ 3,101,870
Service 941,749 930,116
Interest on short-term investments 105,048 37,577
Other income 20,996
--------------- ---------------
Total income 4,283,034 4,069,563
--------------- ---------------
Expenses:
Interest on mortgage notes payable 915,298 1,059,653
Depreciation 736,476 731,448
Amortization of deferred expenses 21,108 12,861
Property operating 1,254,780 1,295,445
Real estate taxes 339,942 394,844
Property management fees 209,799 289,137
Administrative 130,735 116,121
Participation in loss of joint
venture with an affiliate 12,579
--------------- ---------------
Total expenses 3,608,138 3,912,088
--------------- ---------------
Net income $ 674,896 $ 157,475
=============== ===============
Net income allocated to
General Partner $ 6,749 $ 1,575
=============== ===============
Net income allocated to
Limited Partners $ 668,147 $ 155,900
=============== ===============
Net income per Limited
Partnership Interest (52,811
issued and outstanding) $ 12.66 $ 2.96
=============== ===============
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 six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
--------------- ---------------
Operating activities:
Net income $ 1,453,943 $ 311,294
Adjustments to reconcile net income
to net cash provided by operating
activities:
Participation in loss of joint
venture with an affiliate 36,386
Depreciation of properties 1,472,951 1,462,896
Amortization of deferred expenses 42,216 25,722
Net change in:
Escrow deposits (363,417) (44,357)
Accounts and accrued interest
receivable (189,226) 429,124
Prepaid expenses (173,361) 11,997
Accounts payable (2,203) (127,691)
Due to affiliates (59,479) 125,717
Accrued liabilities 143,835 182,755
Security deposits 7,012 4,668
--------------- ---------------
Net cash provided by
operating activities 2,332,271 2,418,511
--------------- ---------------
Investing activities:
Distribution from joint venture
with an affiliate 482,229
Capital contribution to joint
venture with an affiliate (15,658)
Improvements to properties (132,663)
--------------- ---------------
Net cash provided by (used in)
investing activities 482,229 (148,321)
--------------- ---------------
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 six months ended June 30, 1995 and 1994
(Unaudited)
(Continued)
1995 1994
--------------- ---------------
Financing activities:
Distributions to Limited Partners (528,110) (528,110)
Repayment of mortgage note payable (11,700,000)
Proceeds from refinancing of
mortgage note payable 13,000,000
Payment of deferred expenses (401,372)
Funding of capital improvement escrow (903,512)
Principal payments on
mortgage notes payable (294,405) (230,307)
--------------- ---------------
Net cash used in
financing activities (822,515) (763,301)
--------------- ---------------
Net change in cash
and cash equivalents 1,991,985 1,506,889
Cash and cash equivalents at
beginning of period 6,190,971 3,280,330
--------------- ---------------
Cash and cash equivalents at
end of period $ 8,182,956 $ 4,787,219
=============== ===============
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 six
months and quarter ended June 30, 1995, and all such adjustments are of a
normal and recurring nature.
2. Interest Expense:
During the six months and quarter ended June 30, 1995 and 1994, the
Partnership incurred interest expense on mortgage notes payable of
$1,834,680 and $1,941,476 and paid interest expense of $1,914,168 and
$2,040,666, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during
the six months and quarter ended June 30, 1995 are:
Paid
---------------------
Six Months Quarter Payable
----------- -------- ---------
Reimbursement of expenses to
the General Partner, at cost: $134,685 $134,685 $7,566
4. Subsequent Event:
In July 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 second
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
----------
Summary of Operations
---------------------
Improved operations at three of the Partnership's properties, as well as
the receipt in 1995 of a refund of a portion of the 1993 real estate taxes
relating to the 101 Marietta Tower office complex, resulted in an increase
in net income for the six months and quarter ended June 30, 1995 as
compared to the same periods in 1994. Further discussion of the
Partnership's operations is summarized below.
1995 Compared to 1994
---------------------
Higher rental and occupancy rates at the Knollwood Village Apartments
resulted in an increase in rental income for the six months and quarter
ended June 30, 1995 as compared to same periods in 1994.
A lower property assessment at the 101 Marietta Tower office complex,
retroactive to the 1993 tax year, has reduced real estate tax expense and
recoverable expenses. This reduction in real estate taxes has resulted in a
decrease in service income during the six months ended June 30, 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 in two
installments during the first and second quarters of 1995, and was
recognized as other income in the six months and quarter ended June 30,
1995.
Due to higher cash balances and interest rates, interest income on
short-term investments increased during the six months and quarter ended
June 30, 1995 as compared to the same periods in 1994.
During June 1994 the Knollwood Village mortgage loan was refinanced. The
Partnership incurred a prepayment penalty in connection with retiring the
prior mortgage loan which was recorded as interest expense. As a result,
<PAGE>
interest on mortgage notes payable decreased for the six months and quarter
ended June 30, 1995 as compared to the same periods in 1994.
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 six months and quarter ended
June 30, 1995 as compared to the same periods in 1994.
A recalculation of the recoverable expenses as required by the terms of the
General Service Administration ("GSA") lease at the 101 Marietta Tower
office complex was made in late 1993. Additional income related to this
recalculation was received in the second quarter of 1994, resulting in
additional management fees. This caused a decrease in property management
fees during the six months and quarter ended June 30, 1995 when compared to
the same periods in 1994.
Due to lower portfolio management fees, administrative expenses decreased
during the six months ended June 30, 1995 when compared to the same period
in 1994. Due to increased legal fees, administrative expenses increased
during the quarter ended June 30, 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 six months
and quarter ended June 30, 1994 with regard to this property.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership increased as of June 30, 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 six months ended June 30, 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
June 30, 1995, the occupancy rates of the Partnership's residential
properties ranged from 93% to 100%, 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.
<PAGE>
Approximately 83% of the space at the 101 Marietta Tower office complex is
leased to the General Service Administration ("GSA"), which will expire in
December 1997 and 58% of the Partnership's total rental and service income
recognized during the first six months of 1995 relates to GSA. At the
current time, the Partnership has commenced discussion with prospective
buyers for the sale of the 101 Marietta Tower. The sale is subject to many
factors and therefore may not be completed. However, if the sale is
completed, the Partnership expects to distribute the net proceeds from the
sale to the Limited Partners in late 1995 or early 1996.
In July 1995, the Partnership paid $264,055 ($5.00 per Interest)
representing the quarterly distribution to Limited Partners for the second
quarter of 1995. The level of this distribution is consistent with that of
the prior quarter. Including the July 1995 distribution, investors have
received distributions of Net Cash Receipts totaling $110.50 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
-----------------------------------------
(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 six month period
ending June 30, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the
quarter ended June 30, 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 D. Parker
----------------------------------
Brian D. Parker
Senior Vice President, and
Chief Financial Officer
(Principal Accountant and Financial
Officer) of Balcor Equity Partners -
XVIII, the General Partner
Date: August 10, 1995
---------------------
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 8183
<SECURITIES> 0
<RECEIVABLES> 809
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11669
<PP&E> 81215
<DEPRECIATION> 33767
<TOTAL-ASSETS> 59635
<CURRENT-LIABILITIES> 2449
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 17402
<TOTAL-LIABILITY-AND-EQUITY> 59635
<SALES> 0
<TOTAL-REVENUES> 8478
<CGS> 0
<TOTAL-COSTS> 3456
<OTHER-EXPENSES> 1733
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1835
<INCOME-PRETAX> 1454
<INCOME-TAX> 0
<INCOME-CONTINUING> 1454
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1454
<EPS-PRIMARY> 27.26
<EPS-DILUTED> 27.26
</TABLE>
