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
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
-------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
------------ ------------
Commission file number 0-13357
-------
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
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
-------------- --------------
Cash and cash equivalents $ 2,867,959 $ 10,008,666
Escrow deposits 989,663 1,694,388
Accounts and accrued interest receivable 68,923 809,538
Prepaid expenses 186,603 178,688
Deferred expenses, net of accumulated
amortization of $200,898 in 1996
and $233,092 in 1995 398,494 476,297
-------------- --------------
4,511,642 13,167,577
-------------- --------------
Investment in real estate:
Land 2,667,759 10,331,853
Buildings and improvements 36,049,478 69,865,669
-------------- --------------
38,717,237 80,197,522
Less accumulated depreciation 20,095,835 35,250,546
-------------- --------------
Investment in real estate, net of
accumulated depreciation 18,621,402 44,946,976
-------------- --------------
$ 23,133,044 $ 58,114,553
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 40,247 $ 204,221
Due to affiliates 43,295 33,430
Accrued liabilities, principally interest
and real estate taxes 257,787 1,539,679
Security deposits 171,641 201,907
Mortgage notes payable 21,918,860 39,475,209
-------------- --------------
Total liabilities 22,431,830 41,454,446
-------------- --------------
Limited Partners' capital (52,811
Interests issued and outstanding) 916,038 16,881,697
General Partner's deficit (214,824) (221,590)
-------------- --------------
Total partners' capital 701,214 16,660,107
-------------- --------------
$ 23,133,044 $ 58,114,553
============== ==============
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, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Income:
Rental $ 3,691,065 $ 6,420,669
Service 214,031 1,616,550
Interest on short-term investments 274,473 213,581
Other income 227,155
-------------- --------------
Total income 4,179,569 8,477,955
-------------- --------------
Expenses:
Interest on mortgage notes payable 1,056,818 1,834,680
Depreciation 791,338 1,472,951
Amortization of deferred expenses 39,789 42,216
Property operating 1,351,955 2,370,545
Real estate taxes 508,699 680,080
Property management fees 251,389 405,080
Administrative 290,776 218,460
-------------- --------------
Total expenses 4,290,764 7,024,012
-------------- --------------
(Loss) income before extraordinary item: (111,195) 1,453,943
Extraordinary item:
Gain on extinguishment of debt 787,767
-------------- --------------
Net income $ 676,572 $ 1,453,943
============== ==============
(Loss) income before extraordinary item
allocated to General Partner $ (1,112) $ 14,539
============== ==============
(Loss) income before extraordinary item
allocated to Limited Partners $ (110,083) $ 1,439,404
============== ==============
(Loss) income before extraordinary item
per Limited Partnership Interest
(52,811 issued and outstanding) $ (2.08) $ 27.26
============== ==============
Extraordinary item allocated to
General Partner $ 7,878 None
============== ==============
Extraordinary item allocated to
Limited Partners $ 779,889 None
============== ==============
Extraordinary item per Limited
Partnership Interest (52,811
issued and outstanding) $ 14.77 None
============== ==============
Net income allocated to General Partner $ 6,766 $ 14,539
============== ==============
<PAGE>
Net income allocated to Limited Partners $ 669,806 $ 1,439,404
============== ==============
Net income per Limited Partnership Interest
(52,811 issued and outstanding) $ 12.68 $ 27.26
============== ==============
Distributions to Limited Partners $ 16,635,465 $ 528,110
============== ==============
Distributions per Limited Partnership
Interest (52,811 issued and outstanding) $ 315.00 $ 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, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Income:
Rental $ 1,706,899 $ 3,215,241
Service 59,453 941,749
Interest on short-term investments 68,876 105,048
Other income 20,996
-------------- --------------
Total income 1,835,228 4,283,034
-------------- --------------
Expenses:
Interest on mortgage notes payable 510,324 915,298
Depreciation 395,669 736,476
Amortization of deferred expenses 19,490 21,108
Property operating 622,462 1,254,780
Real estate taxes 155,162 339,942
Property management fees 88,924 209,799
Administrative 200,417 130,735
-------------- --------------
Total expenses 1,992,448 3,608,138
-------------- --------------
Net (loss) income $ (157,220) $ 674,896
============== ==============
Net (loss) income allocated to
General Partner $ (1,572) $ 6,749
============== ==============
Net (loss) income allocated to
Limited Partners $ (155,648) $ 668,147
============== ==============
Net (loss) income per Limited Partnership
Interest (52,811 issued and outstanding) $ (2.95) $ 12.66
============== ==============
Distribution to Limited Partners $ 16,371,410 $ 264,055
============== ==============
Distribution per Limited Partnership
Interest (52,811 issued and outstanding) $ 310.00 $ 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, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Operating activities:
Net income $ 676,572 $ 1,453,943
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on extinguishment of debt (787,767)
Depreciation of properties 791,338 1,472,951
Amortization of deferred expenses 39,789 42,216
Net change in:
Escrow deposits 716,953 (363,417)
Accounts and accrued interest
receivable 740,615 (189,226)
Prepaid expenses (7,915) (173,361)
Accounts payable (163,974) (2,203)
Due to affiliates 9,865 (59,479)
Accrued liabilities (456,111) 143,835
Security deposits (30,266) 7,012
-------------- --------------
Net cash provided by operating activities 1,529,099 2,332,271
-------------- --------------
Investing activities:
Distribution from joint venture
with affiliate 482,229
Proceeds from sale of real estate 8,646,849
Costs incurred in connection with sale
of real estate (465,743)
-------------- --------------
Net cash provided by
investing activities 8,181,106 482,229
-------------- --------------
Financing activities:
Distributions to Limited Partners (16,635,465) (528,110)
Release of capital improvement escrow 76,851
Funding of capital improvement escrow (89,100)
Principal payments on mortgage
notes payable (203,198) (294,405)
-------------- --------------
Net cash used in financing activities (16,850,912) (822,515)
-------------- --------------
Net change in cash and cash equivalents (7,140,707) 1,991,985
Cash and cash equivalents at
beginning of period 10,008,666 6,190,971
-------------- --------------
Cash and cash equivalents at end of period $ 2,867,959 $ 8,182,956
============== ==============
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, 1996, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1996 and 1995, the Partnership incurred
interest expense on mortgage notes payable of $1,056,818 and $1,834,680 and
paid interest expense of $1,454,402 and $1,914,168, 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, 1996 are:
Paid
-----------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost: $ 61,662 $ 38,730 $ 43,295
4. Property Sale:
In February 1996, the Partnership sold the 101 Marietta Tower office complex in
an all cash sale for $26,000,000. The purchaser of the 101 Marietta Tower
office complex acquired the property subject to the existing $17,353,151 first
mortgage loan and the Partnership paid $465,743 consisting of a brokerage
commission and other selling costs. The basis of the property was written down
at December 31, 1995 to an amount equal to the sales price less closing costs.
As a result, the Partnership recognized a $1,016,987 provision for investment
property writedown in 1995, and no gain or loss on the property sale in 1996.
5. Extraordinary Item:
The purchaser of the 101 Marietta Tower office complex acquired the property in
February 1996 subject to the existing first mortgage loan. The Partnership
recognized an extraordinary gain on extinguishment of debt of $787,767 in 1996
representing the difference between the contractual amount of the first
mortgage loan at the time of sale of $17,353,151 and the carrying amount of the
note for financial statement purposes of $18,140,918 which included $825,781 of
accrued interest and the write-off of deferred fees of $38,014.
<PAGE>
6. Subsequent Events:
a) In July 1996, the Partnership made a distribution of $1,320,275 ($25.00 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of Net Cash Receipts of $5.00 per Interest for
the second quarter of 1996 and a special Net Cash Receipts distribution of
$20.00 per Interest from cash reserves.
b) During July 1996, the Partnership sold the Mallard Cove Apartments in an all
cash sale for $7,850,000. From the proceeds of the sale, the Partnership paid
$3,962,005 to the third party mortgage holder in full satisfaction of the first
mortgage loan, and paid $421,826 in selling costs. For financial statement
purposes, the Partnership will recognize a gain of approximately $2,280,000
from the sale of this property during the third quarter of 1996.
<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. The joint venture property was sold in 1994, the 101
Marietta Tower office complex was sold in February 1996 and Mallard Cove
Apartments was sold in July 1996. The Partnership continues to operate two
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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
Due to the February 1996 sale of the 101 Marietta Tower office complex, the
Partnership recognized a loss before extraordinary item for the six months
ended June 30, 1996 and a net loss for the quarter ended June 30, 1996 as
compared to net income for the same periods in 1995. The purchaser of the 101
Marietta Tower office complex acquired the property subject to the existing
first mortgage loan and the Partnership recognized an extraordinary gain on
extinguishment of debt in the first quarter of 1996. As a result the
Partnership recognized a decrease in net income for the six months ended June
30, 1996 as compared to the same period in 1995. Further discussion of the
Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the six months and quarters ended June 30, 1996 and 1995.
Due to the February 1996 sale of 101 Marietta Tower office complex, the
Partnership recognized lower rental and service income, interest on mortgage
notes payable, depreciation, property operating, real estate taxes, and
property management fee expenses during 1996 as compared to 1995.
Due to higher cash balances during 1996 resulting from the proceeds received
from the 101 Marietta Tower sale, interest income on short-term investments
increased during the six months ended June 30, 1996 as compared to the same
period in 1995. Interest income on short-term investments decreased during the
quarter ended June 30, 1996 as compared to the same period in 1995 due to lower
average cash balances resulting from the special distribution of the 101
Marietta Tower office complex sale proceeds to Limited Partners in April 1996.
<PAGE>
A lower property assessment at the 101 Marietta Tower office complex,
retroactive to the 1993 tax year, 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 during the six months and
quarter ended June 30, 1995.
The decrease in property operating expense resulting from the 101 Marietta
Tower office complex sale was partially offset by additional payroll and
repairs and maintenance costs incurred at the Knollwood Village Apartments and
Canyon Point Apartments during 1996.
The purchaser of the 101 Marietta Tower office complex acquired the property in
February 1996 subject to the existing first mortgage loan. The Partnership
recognized an extraordinary gain on extinguishment of debt of $787,767 in 1996
representing the difference between the contractual amount of the first
mortgage loan at the date of sale and the carrying amount of the note for
financial statement purposes. See Note 5 of Notes to Financial Statements for
additional information.
The Partnership incurred additional professional fees during 1996. As a
result, administrative expenses increased during 1996 as compared to 1995.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $7,141,000 as
of June 30, 1996 as compared to December 31, 1995 primarily due to
distributions to Limited Partners. Cash flow of approximately $1,529,000 was
provided by operating activities during 1996 consisting primarily of cash
provided by the operation of the Partnership's properties and interest income
received on short-term investments which was partially offset by the payment of
administrative expenses. The Partnership's investing activities generated cash
of approximately $8,181,000 from the sale of 101 Marietta Tower office complex.
Cash of approximately $16,851,000 was used in financing activities primarily
consisting of distributions to Limited Partners and principal payments on
mortgage notes payable.
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. All three of the Partnership's remaining
properties, owned at June 30, 1996, have underlying debt and during 1996 and
1995, all three of the properties generated positive cash flow. 101 Marietta
Tower office complex generated positive cash flow in 1995 and before it was
sold in February 1996. As of June 30, 1996, the occupancy rates of the
Partnership's properties ranged from 94% to 98%.
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 to seek rent increases where market conditions allow.
<PAGE>
The General Partner believes that the market for multifamily housing properties
is favorable to sellers of these properties. During July 1996, the Partnership
sold the Mallard Cove Apartments and has entered into contracts to sell the
Canyon Point Apartments for a sales price of $7,600,000 and the Knollwood
Village Apartments for a sales price of $23,000,000. Additionally, the
Partnership sold the 101 Marietta Tower office complex in February 1996. If the
sales of Canyon Point and Knollwood Village Apartments close as expected, the
Partnership's liquidation strategy will be accelerated.
In February 1996, the Partnership sold the 101 Marietta Tower office complex
for a sales price of $26,000,000. The purchaser acquired the property subject
to the existing $17,353,151 first mortgage loan and the Partnership paid
selling costs of $465,743. The Partnership received net proceeds of $8,181,106
which were distributed to Limited Partners in April 1996. See Notes 4 and 5 of
Notes to Financial Statements for additional information.
In July 1996, the Partnership sold the Mallard Cove Apartments for a sales
price of $7,850,000. From the proceeds, the Partnership paid $3,962,005 in full
satisfaction of the first mortgage loan and paid $421,826 in selling costs.
The Partnership received net proceeds of $3,466,169. Pursuant to the terms of
the sale, $500,000 is being retained by the Partnership until October 1996 and
the remaining proceeds will be distributed to Limited Partners in the fourth
quarter of 1996. See Note 6 of Notes to Financial Statements for additional
information.
In July 1996, the Partnership paid $1,320,275 ($25.00 per Interest)
representing the regular quarterly distribution of Net Cash Receipts of $5.00
per Interest for the second quarter of 1996 and a special Net Cash Receipts
distribution of $20.00 per Interest from cash reserves. The level of the
regular quarterly Net Cash Receipts distribution is consistent with that of the
prior quarter. Assuming property operations meet current projections, the
Partnership anticipates making regular quarterly distributions from the
Partnership's continuing property operations and from any cash reserves above
an amount necessary to protect against unforeseen events. Including the July
1996 distribution, Limited Partners have received distributions of Net Cash
Receipts totaling $280.50 and Net Cash Proceeds totaling $189.50 per $1,000
Interest, as well as certain tax benefits. In light of results to date and
current market conditions, the General Partner does not anticipate that
investors will recover all of their original investment.
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 5. Other Information
- ---------------------------
Mallard Cove Apartments
- ------------------------
As previously reported, on April 23, 1996, the Partnership contracted to sell
Mallard Cove Apartments (formerly Hidden Lake), Greenville, South Carolina, to
an unaffiliated party, ERP Operating Limited Partnership ("ERP"), and Illinois
limited partnership, for a sales price of $7,850,000. ERP subsequently
assigned its interest in the contract to an affiliate, EQR-Deer Run Vistas,
Inc., an Illinois corporation, and the sale closed on July 2, 1996. From the
proceeds of the sale, the Partnership paid the outstanding balance of the first
mortgage loan of $3,962,005, legal fees of $15,000, state withholding taxes of
$328,326 and a $78,500 fee to an affiliate of the third party providing
property management services for the property for services rendered in
connection with the sale. The Partnership received $3,466,169 of remaining
proceeds. Of such amount, $500,000 is being retained by the Partnership and
will not be available for use or distribution by the Partnership until 120 days
after closing.
Canyon Point Apartments
- ------------------------
In 1984, the Partnership acquired the Canyon Point Apartments, San Antonio,
Texas, utilizing $4,442,445 of offering proceeds. The property was acquired
subject to first mortgage financing of approximately $6,265,000. In 1993, the
mortgage loan was refinanced with a new mortgage loan in the amount of
$5,250,000. The Partnership contributed $1,000,770 towards the refinancing,
including closing costs.
On August 2, 1996, the Partnership contracted to sell the property for a sales
price of $7,600,000 to an unaffiliated party, ERP Operating Limited
Partnership, an Illinois limited partnership. The purchaser has deposited
$300,000 into an escrow account as earnest money. The remainder of the sales
price will be payable in cash at closing, scheduled for September 16, 1996.
From the proceeds of the sale, the Partnership will pay the outstanding balance
of the first mortgage loan which is expected to be approximately $5,068,000 at
closing and $152,000 to a third party as a brokerage commission. An affiliate
of the third party providing property management services for the property will
receive a fee of $76,000 for services rendered in connection with the sale of
the property. The Partnership will receive the remaining proceeds of
approximately $2,304,000, less closing costs. Of such proceeds, an amount not
to exceed $500,000 will be retained by the Partnership and will not be
available for use or distribution by the Partnership until 120 days after the
closing. Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the property. The General Partner
will be reimbursed by the Partnership for its actual expenses incurred in
connection with the sale.
<PAGE>
The Partnership has recently sold one other property to the purchaser. In
addition, affiliates of the General Partner have recently sold or contracted to
sell 26 other properties to the purchaser.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
Knollwood Village Apartments
- -----------------------------
In 1984, the Partnership acquired the Knollwood Village Apartments, Grand
Blanc, Michigan, utilizing approximately $9,470,000 of offering proceeds. A
portion of the purchase price was payable in the form of wrap-around purchase
money financing in the amount of $11,700,000. In 1994, the purchase money loan
was refinanced with a new $13,000,000 first mortgage loan from an unaffiliated
party. The Partnership received excess refinancing proceeds of $970,128, net
of selling costs.
On July 27, 1996, the Partnership contracted to sell the property for a sales
price of $23,000,000 to an unaffiliated party, Lautrec A.&D., L.L.C., a
Michigan limited liability company. On or before September 10, 1996, upon
completion of the purchaser's due diligence review, the purchaser will deposit
$250,000 into an escrow account as earnest money. The remaining portion of the
sales price will be payable in cash at closing, which is scheduled to occur on,
or about, October 10, 1996. From the proceeds of the sale, the Partnership
will pay the outstanding balance of the first mortgage loan, expected to be
approximately $12,810,000 at closing and $460,000 to an unaffiliated party as a
brokerage commission. An affiliate of the third party providing property
management services for the property will receive a fee for services rendered
in connection with the sale of the property of $172,500. The Partnership will
receive the remaining proceeds of approximately $9,557,500, less closing costs.
Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the property. The General Partner
will be reimbursed by the Partnership for actual expenses incurred in
connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
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.
(10)(a) Agreement of Sale and attachment thereto relating to the sale of the
101 Marietta Tower office building previously filed as Exhibit (2) to the
Registrants Current Report on form 8-K date December 19, 1995 is incorporated
herein by reference.
<PAGE>
(b)(i) Agreement of Sale and attachment thereto relating to the sale of the
Mallard Cove Apartments previously filed as Exhibit 2 to the Registrant's
Current Report on Form 8-K dated April 23, 1996 is incorporated herein by
reference.
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
Mallard Cove Apartments, Greenville, South Carolina.
(iii)Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of Mallard Cove Apartments, Greenville, South Carolina.
(c) Agreement of Sale and attachment thereto relating to the sale of the Canyon
Point Apartments.
(d) Agreement of Sale and attachment thereto relating to the sale of the
Knollwood Village Apartments.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1996 is attached hereto.
(b) Reports on Form 8-K:
A Current Report on Form 8-K dated April 23, 1996 was filed relating to the
contract for the sale of the Mallard Cove Apartments, Greenville, South
Carolina.
<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 12, 1996
---------------------
<PAGE>
MASTER AMENDMENT AND AGREEMENT
This Master Amendment and Agreement (this "Agreement") is entered into as
of this 22nd day of May, 1996 by and among the selling entities set forth on
the signature pages attached hereto (each entity being referred to herein as a
"Seller" and collectively as the "Sellers") and ERP Operating Limited
Partnership, an Illinois limited partnership ("Purchaser").
R E C I T A L S
A. Each Seller and the Purchaser have entered into an Agreement of Sale
dated as of April 23, 1996 (herein called the "Purchase Agreement") for the
sale by such Seller to Purchaser of certain property described therein. All
capitalized terms which are used herein but which are not otherwise defined
herein shall have the meaning ascribed to such term in the applicable Purchase
Agreement.
B. Each Purchase Agreement provides that during the Approval Period,
Purchaser shall have the right to review the status of title of the Property
(including, determining what endorsements, if any, the Title Insurer will make
available to Purchaser).
C. Each Purchase Agreement further provides that each Seller will
deliver to Purchaser an Updated Survey and Purchaser shall have ten (10) days
from the date of receipt of the Updated Survey to approve the Updated Survey.
D. Purchaser has reviewed the status of title for each Property and has
reviewed certain of the Updated Surveys; provided, however, Purchaser and
Seller have not yet agreed upon "Permitted Exceptions" for each Property.
E. Purchaser and Seller desire to amend each Purchase Agreement to give
Purchaser and Seller until May 23, 1996 to agree upon Permitted Exceptions for
each Property.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each Seller (with respect to the Purchase
Agreement to which such Seller is a party) and the Purchaser, hereby agree as
follows:
<PAGE>
A G R E E M E N T
1. RECITALS. The recitals set forth above are hereby incorporated
herein by reference as if same were fully set forth herein.
2. AMENDMENT. Purchaser and Seller hereby agree that Purchaser and
Seller shall have until the later of: (i) the expiration of the Approval Period
(as same may have been extended) or (ii) May 23, 1996 (the "Deadline Date") to
agree upon Permitted Exceptions for each Purchase Agreement (subject to
Purchaser's additional right to have 10 days to review Updated Surveys). If
Purchaser and Seller are unable to agree upon Permitted Exceptions on or prior
to the Deadline Date, then Seller shall have the right to elect to either
terminate the applicable Purchase Agreement, in which case the applicable
Earnest Money, including interest thereon, shall be returned to Purchaser
immediately following the applicable Seller's receipt of the Reports or (ii)
agree to cure the title objections identified by Purchaser as being
problematic, which cure may be effectuated by causing the Title Insurer, at
such Seller's expense, to insure over any objection, if applicable.
3. Miscellaneous
A. Except as modified herein, each Purchase Agreement shall remain
unmodified and in full force and effect.
B. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first above written.
[See Attached Signature Blocks]
<PAGE>
PURCHASER
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment
trust
By: /s/Daniel L. Baskes
----------------------------------
Name: Daniel L. Baskes
--------------------------------
Title: Attorney
-------------------------------
<PAGE>
Hidden Lakes Apartments (now known as Mallard
Cove)
The Lakes Partners Limited Partnership, an
Illinois limited partnership
By: The Lakes of South Carolina Partners, Inc.,
an Illinois corporation, its general partner
By: /s/Andrew Small - Attorney
----------------------------
Name:
Its:
<PAGE>
MASTER AMENDMENT AND AGREEMENT #2
This Amendment and Agreement #2 (this "Agreement") is entered into as of
this 22nd day of May, 1996 by and among the selling entities set forth on the
signature pages attached hereto (each entity being referred to herein as a
"Seller" and collectively as the "Sellers") and ERP Operating Limited
Partnership, an Illinois limited partnership ("Purchaser").
R E C I T A L S
A. Each Seller and the Purchaser have entered into an Agreement of Sale
dated as of April 23, 1996 (herein called the "Purchase Agreement") for the
sale by such Seller to Purchaser of certain property described therein. All
capitalized terms which are used herein but which are not otherwise defined
herein shall have the meaning ascribed to such terms in the applicable Purchase
Agreement.
B. Each Purchase Agreement provides that during the Approval Period,
Purchaser shall have the right to review the status of title of the Property
(including, determining what endorsements, if any, the Title Insurer will make
available to Purchaser).
C. Each Purchase Agreement further provides that each Seller will
deliver to Purchaser an Updated Survey and Purchaser shall have ten (10) days
from the date of receipt of the Updated Survey to approve the Updated Survey.
D. Purchaser has reviewed the status of title for each Property and has
reviewed certain of the Updated Surveys.
E. The Purchase Agreements further provide that promptly following the
Approval Period, Purchaser and each Seller will identify the exceptions to
title which have been agreed to by Purchaser and such Seller.
F. The parties desire to enter into this Agreement to identify the
"Permitted Exceptions" for each Property and to set forth the parties agreement
with respect to title and survey matters as of the date hereof and to also set
forth certain additional agreements of the parties.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each Seller (with respect to the Purchase
Agreement to which such Seller is a party) and the Purchaser, hereby agree as
follows:
<PAGE>
A G R E E M E N T
1. Surveys.
A. As of the date hereof, Purchaser has not yet received and/or
reviewed the Updated Surveys for the following properties:
(1) Briarwood Place
(2) Canyon Sands
(3) Desert Sands
(4) Sunnyoak Village
(5) Rosehill Pointe
(6) Post Place
In accordance with each Purchase Agreement, Purchaser shall have ten (10)
days following Purchaser's receipt of each Updated Survey to approve or
disapprove of the applicable Updated Survey, all as more specifically set forth
in each Purchase Agreement. If the Updated Survey is approved by Purchaser,
all items disclosed by the Updated Survey shall be "Permitted Exceptions".
B. In addition, Purchaser has reviewed and approved of the Updated
Surveys for the following properties.
(1) Brierwood Apts.
(2) Country Ridge
(3) Forest Ridge I
(4) Forest Ridge II
(5) Lakeville
(6) Mallard Cove
(7) Park Place I
(8) Park Place II
(9) Ridgetree I
(10) Ridgetree II
Each Seller (solely with respect to the Property owned by such Seller)
hereby agrees to reasonably assist Purchaser in causing the surveyor to correct
certain clean up items identified by Purchaser during its review of the Survey.
2. Title Matters. Purchaser has reviewed the title commitments for all
of the properties. Attached hereto as Exhibit A is a list of "Permitted
Exceptions" for each Property. Notwithstanding anything contained in this
Agreement or the exhibits hereto to the contrary, any Permitted Exceptions set
forth on Exhibit A which have the notation "awaiting survey" written next to
the applicable Permitted Exception (herein called "Survey Based Exceptions")
have not been agreed to by Purchaser because Purchaser has not yet reviewed the
Updated Survey which identifies the location of the applicable Permitted
Exception. Purchaser shall have until 10 days following Purchaser's receipt of
the Updated Survey to advise the applicable Seller, in writing, whether any
Survey Based Exception is or is not reasonably acceptable to Purchaser. If
Purchaser advises the applicable Seller that any Survey Based Exception is not
reasonably acceptable to Purchaser, then the applicable Seller shall have five
(5) business days following receipt of such notice, to elect to either
terminate the applicable Purchase Agreement, in which case the applicable
Earnest Money, including interest thereon, shall be returned to Purchaser
immediately following the applicable Seller's receipt of the Reports or (ii)
<PAGE>
agree to cure the title objections identified by Purchaser, which cure may be
effectuated by causing the Title Insurer, at such Seller's expense, to insure
over any objection, if applicable.
3. Assignment of Partnership Interests. If requested to do so by
Purchaser, each Seller hereby agrees, at no cost or expense to such Seller, to
cooperate in good faith with Purchaser in structuring the conveyance of
Property by the applicable Seller to Purchaser as a conveyance of title to such
Property by the applicable Seller into a partnership or limited liability
company having the applicable Seller and/or affiliates of the applicable Seller
as its sole partners (or members) and then, at closing, assigning to Purchaser
the partnership (or membership) interests in the partnership (or limited
liability company). In such case, the Purchaser hereby agrees to indemnify and
hold the applicable Seller harmless from and against any and all loss, cost,
expense, liability or damage (including reasonable attorneys fees) incurred by
such Seller arising out of Seller's conveyance in and out of such partnership
(or limited liability company) provided that such loss, cost, expense,
liability or damage (including reasonable attorneys fees) would not have been
suffered or incurred by such Seller if such Property had been conveyed directly
by such Seller to Purchaser.
4. Miscellaneous
A. Except as modified herein, each Purchase Agreement shall remain
unmodified and in full force and effect.
B. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first above written.
[See Attached Signature Blocks]
<PAGE>
PURCHASER
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment
trust
By: /s/Linda A. Menich
------------------------------------
Name: Linda A. Menich
------------------------------------
Title: Assistant Vice President
------------------------------------
<PAGE>
Hidden Lakes Apartments (now known as Mallard
Cove)
The Lakes Partners Limited Partnership, an
Illinois limited partnership
By: The Lakes of South Carolina Partners, Inc.,
an Illinois corporation, its general partner
By: /s/Alan Lieberman
----------------------------------
Name: Alan Lieberman
Its: Authorized Agent
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 2nd day of August, 1996, by and
between ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership
("Purchaser") and VALLEY POINT PARTNERS LIMITED PARTNERSHIP, an Illinois
limited partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of SEVEN MILLION SIX HUNDRED THOUSAND and No/100 Dollars
($7,600,000.00), that certain property ("Property") in San Antonio, Texas more
particularly described on Exhibit A attached hereto, which Property is known as
Canyon Point Apartments and contains 214 units and approximately 9 acres.
Included in the "Purchase Price" (as hereinafter defined) is all of Seller's
right, title and interest in the personal property set forth on Exhibit B,
which shall be transferred to Purchaser at "Closing" (as hereinafter defined)
by a Bill of Sale; and all right, title and interest of Seller (whether now or
hereafter existing) in and to any land lying in the bed of any street, alley,
road or avenue (whether open, closed or proposed) within, in front of, behind
or otherwise adjoining the Property or any of it; and all right, title and
interest of Seller (whether now or hereafter existing) in and to any award made
or to be made as a result of or in lieu of condemnation, and in and to any
award for damage to the Property or any part thereof by reason of casualty (all
of the foregoing being included within the term "Property"); and all of the
building, structures, fixtures, facilities, installations and all of Seller's
right, title and interest in other improvements of every kind and description
now or hereafter in, on, over and under the land, including, without
limitation, any and all recreational buildings, structures and facilities,
plumbing, air conditioning, heating, ventilating, mechanical, electrical and
other utility systems, parking lots, landscaping, sidewalks, swimming pools,
signs and light fixtures which are not owned by tenants under leases (all of
the foregoing being included within the term "Property"); and all of Seller's
right, title and interest in all of the following which are in Seller's
possession: existing surveys, blue prints, drawings, plans and specifications
(including, without limitation, structural, HVAC, mechanical and plumbing,
water and sewer plans and specifications); all available tenant lists and data,
correspondence with present and prospective tenants, vendors, suppliers,
utility companies and other third parties, booklets, manuals and promotional
and advertising materials concerning the Property or any part thereof (all of
the foregoing being included within the term "Property"); and all right, title
<PAGE>
and interest of Seller in and to the intangible personal property now or
hereafter owned by Seller and used in connection with or arising from the
business now or hereafter conducted on or from the Property or any part
thereof, including, without limitation, claims, choses in action, lease and
other contract rights, names and telephone exchange numbers (all of the
foregoing being included within the term "Property"). The computer software
located at the Property is not included in the conveyance to Purchaser.
2. PURCHASE PRICE. The purchase price (the "Purchase Price") shall be
paid by Purchaser as follows:
A. Upon the execution of this Agreement, the sum of $300,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term is
defined in the "Escrow Agreement" [as hereinafter defined]) by and in
accordance with the provisions of the Escrow Agreement ("Escrow Agreement")
attached hereto as Exhibit C;
B. On the "Closing Date" (as hereinafter defined), the balance of
the Purchase Price adjusted in accordance with the prorations by federally
wired "immediately available" funds delivered to the "Title Insurer" (as
hereinafter defined) no later than 12:00 Noon on the Closing Date. If the
funds are not received by 12:00 Noon, then, on the Closing Date, Purchaser
shall pay Seller an amount equal to any additional mortgage per diem interest
costs incurred by the Seller.
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 Chicago Title Insurance
Company (hereinafter referred to as "Title Insurer") dated July 2, 1996 for the
Property (the "Title Commitment"). For purposes of this Agreement, "Permitted
Exceptions" shall mean: (a) general real estate taxes, association assessments,
special assessments, special district taxes and related charges not yet due and
payable; (b) matters shown on the "Survey" (hereinafter defined); (c) matters
caused by the actions of Purchaser; and (d) the title exceptions set forth in
Section II of Schedule B of the Title Commitment as Numbers 2, 4, 5, 6 and 9A -
9H, inclusive, to the extent that same affect the Property. All 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 to Permitted Exceptions and "Unpermitted Exceptions"
<PAGE>
(as hereinafter defined) which have been waived by Purchaser (the "Title
Policy"). Purchaser and Seller hereby agree to divide evenly the costs of the
Title Commitment and Title Policy.
B. Purchaser acknowledges receipt of a survey ("Survey") of the Property
dated July 16, 1996, prepared by Maverick Land Surveying, Co. If Purchaser
desires any modifications to the Survey Seller will reasonably cooperate with
Purchaser to cause the surveyor to make such modifications. Purchaser and
Seller shall each pay for one-half of the costs of any modifications to the
Survey.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed in the form of Exhibit E
attached hereto (the "Deed") in recordable form subject only to the Permitted
Exceptions. If Seller is unable to convey title to the Property subject only
to the Permitted Exceptions because of the existence of an additional title
exception ("Unpermitted Exception"), then Purchaser can elect to take title to
the Property subject to the Unpermitted Exception or terminate this Agreement.
Notwithstanding the aforesaid, Seller shall be required to remove all
Unpermitted Exceptions which are liens of a definite or ascertainable amount.
If Purchaser elects to terminate this Agreement, then the Earnest Money plus
all accrued interest shall be delivered to the Purchaser.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller hereby agree to
divide evenly the costs of the documentary stamps (if any) to be paid with
reference to the Deed and all other stamps, intangible, documentary, recording,
sales tax and surtax imposed by law with reference to any other documents
delivered in connection with this Agreement as well as for all costs of the
Title Commitment, Updated Survey, Title Policy, escrow charges and all other
charges of the Title Insurer in connection with this transaction. Escept as
set forth in the next sentence, Seller shall pay any fees and charges payable
in connection with paying off the loan currently encumbering the property (the
"Loan") and causing the release of the related loan documents, including,
without limitation, any applicable prepayment fees and charges. Purchaser
acknowledges that the Loan will not be paid off until October 1, 1996 (the
"Payoff Date"). Purchaser agrees that Purchaser shall be responsible to pay
for all interest which accrues on the Loan for the period following the Closing
Date through the Payoff date. Purchaser and Seller shall be responsible for
the costs of their respective attorneys.
<PAGE>
6. DAMAGE, CASUALTY AND CONDEMNATION.
A. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of real
property for $76,000.00 or less, or in the case of Personal Property, for
$25,000.00 or less, as determined by Seller in good faith, then Seller shall
either repair such damage prior to Closing or, at Purchaser's option (which
shall be exercised by Purchaser within ten (10) days after notice of such
casualty), allow Purchaser a credit against the Purchase Price in an amount
equal to the reasonably estimated cost of repair. Seller shall retain all
insurance proceeds. If the cost of repair or restoration exceeds the aforesaid
amounts (as determined by Seller in good faith), then Purchaser can, upon
notice to Seller within ten (10) days after notice of such casualty, elect to
either: (a) cause Seller to repair and restore same, in which event the Closing
Date will be extended until such date as may reasonably be required to complete
the repair or restoration; or (b) terminate this Agreement upon notice to
Seller served within ten (10) days of notice of such casualty or (c) accept the
Property in its damaged condition together with an assignment from Seller of
all insurance proceeds and receive a credit at Closing in the amount of the
deductible.
B. If condemnation proceedings ("Proceedings") have been instituted
against the Property and such Proceedings are in an amount less than
$100,000.00, then Purchaser shall take the Property subject to the Proceedings
and an assignment of Seller's interest in the Proceedings. If the Proceedings
are in excess of $100,000.00, then Purchaser can elect to either take the
Property subject to the Proceedings and an assignment of Seller's interest in
the Proceedings or terminate this Agreement. If Purchaser elects to terminate
this Agreement, it shall be by notice to the Seller within five (5) days after
Seller notifies Purchaser of the Proceedings.
C. If the Agreement is terminated pursuant to this Paragraph, then
the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
7. AS-IS CONDITION.
A. Except as may hereinafter be specifically set forth in this
Agreement, Purchaser is not relying on Seller having made any inquiry as to the
condition of the Property or the leases. Purchaser acknowledges and agrees
that, except as may hereinafter be specifically set forth in this Agreement, it
will be purchasing the Property based solely upon its inspection and
investigations of the Property and that Purchaser will be purchasing the
<PAGE>
Property "AS IS" and "WITH ALL FAULTS" based upon the condition of the Property
as of the date of this Agreement, subject to reasonable wear and tear and loss
by fire or other casualty or condemnation from the date of this Agreement until
the Closing Date. Without limiting the foregoing, Purchaser acknowledges that,
except as may otherwise be specifically set forth elsewhere in this Agreement,
neither Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements, the existence or nonexistence of
asbestos, lead in water, lead in paint, radon, underground or above ground
storage tanks, petroleum, toxic waste or any "Hazardous Materials" or
"Hazardous Substances" (as such terms are defined below), the tenants of the
Property or the leases affecting the Property, economic projections or market
studies concerning the Property, any development rights, taxes, bonds,
covenants, conditions and restrictions affecting the Property, water or water
rights, topography, drainage, soil, subsoil of the Property, the utilities
serving the Property or any zoning, environmental or building laws, rules or
regulations affecting the Property. Seller makes no representation that the
Property complies with Title III of the Americans With Disabilities Act and,
except as may hereinafter be specifically set forth in this Agreement, Seller
makes no representation that the Property complies with any fire codes or
building codes. Purchaser hereby releases Seller from any and all liability in
connection with any claims which Purchaser may have against Seller, and
Purchaser hereby agrees not to assert any claims, for damage, loss,
compensation, contribution, cost recovery or otherwise, against Seller, whether
in tort, contract, or otherwise, relating directly or indirectly to the
existence of asbestos or Hazardous Materials or Hazardous Substances on, or
environmental conditions of, the Property, or arising under the "Environmental
Laws" (as such term is hereinafter defined), or relating in any way to the
quality of the indoor or outdoor environment at the Property. This release
shall survive the Closing. As used herein, the term "Hazardous Materials" or
"Hazardous Substances" means (i) hazardous wastes, hazardous materials,
hazardous substances, hazardous constituents, toxic substances or related
materials, whether solids, liquids or gases, including but not limited to
substances defined as "hazardous wastes," "hazardous materials," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
<PAGE>
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum, (B)
refined petroleum products, (C) waste oil, (D) waste aviation or motor vehicle
fuel, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon, (H)
Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
B. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as may hereinafter be
specifically set forth in this Agreement, Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller from any liability with respect
to such historical information.
8. CLOSING. The closing ("Closing") of this transaction shall be on
September 16, 1996 ("Closing Date"), at the office of the Seller's attorney, at
which time Seller shall deliver possession of the Property to Purchaser.
9. CLOSING DOCUMENTS.
A. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such other
documents as may be reasonably required in order to consummate the transaction
as set forth in this Agreement.
B. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property; the Deed subject to the Permitted Exceptions and
those Unpermitted Exceptions waived by Purchaser; a UCC search from appropriate
jurisdictions reflecting no liens against Seller, or a termination statement as
to any lien secured by a UCC filing; an inventory of the Personal Property and
<PAGE>
a Bill of Sale for the same (in the form of Exhibit F attached hereto); an
executed closing statement; an executed assignment and assumption of all
service contracts (in the form of Exhibit G attached hereto); an executed
assignment and assumption of all leases and security deposits (in the form of
Exhibit H attached hereto); updated rent roll; a notice to the tenants of the
transfer of title and the assumption by Purchaser of the landlord's obligations
under the leases and the obligation to refund the security deposits (in the
form of Exhibit I attached hereto), the original leases to be delivered to
Purchaser at the Property; a non-foreign affidavit (in the form of Exhibit J
attached hereto) and such other documents as may be reasonably required by the
Title Insurer in order to consummate the transaction as set forth in this
Agreement and shall cause the Title Company to deliver the Title Policy subject
only to Permitted Exceptions and Unpermitted Exceptions waived by Purchaser.
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 THIS TRANSACTION FAILS TO
CLOSE DUE TO THE DEFAULT OF THE PURCHASER UNDER THE PROVISIONS OF THIS
AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST
THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY. THE PARTIES
HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY
PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE.
THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE
EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE ACTUAL DAMAGES NOT TO EXCEED THE
AMOUNT OF THE EARNEST MONEY THEN ON DEPOSIT WITH THE ESCROW AGENT, PLUS THE
RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND
THIS AGREEMENT SHALL TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY
TO EACH OTHER AT LAW OR IN EQUITY. NOTWITHSTANDING ANYTHING CONTAINED HEREIN
TO THE CONTRARY, IF SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED, THEN
PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12.
A. PRORATIONS. Rents for the month of the Closing (exclusive of
delinquent rents, but including prepaid rents); any previously paid signing
bonus or similar payment relating to any laundry room, cable, telephone or
similar agreement in effect as of the Closing, refundable security deposits
with interest if required by local law (which will be assigned to and assumed
by Purchaser and credited to Purchaser at Closing); refundable and
non-refundable pet and cleaning fees and deposits, water and other utility
charges; fuels; prepaid operating expenses; real and personal property taxes
<PAGE>
(as provided for in the next following sentence); and other similar items shall
be adjusted ratably as of 11:59 P.M. on the Closing Date ("Proration Date"),
and credited or debited to the balance of the cash due at Closing. Real
property taxes shall be prorated based on the following information in the
following circumstances: (i) if the current tax bill is available, real
property taxes shall be prorated based on that tax bill; (ii) if the tax bill
for the current tax year is not available, real property taxes shall be
prorated based on an assessed valuation for the Property of $5,954,200
multiplied by a tax rate equal to 101% of the tax rate for the prior tax year
multiplied by the equalization factor for the prior tax year, if applicable.
If the amount of any of the items to be prorated is not then ascertainable, the
adjustment thereof shall be on the basis of the most recent ascertainable data.
All prorations will be final except as to Delinquent Rents referred to in 12B
below, and errors in calculation on the closing statement. If special
assessments have been levied against the Property for completed improvements,
then the amount of any installments which are due prior to the Closing Date
shall be paid by the Seller; and the amount of installments which are due after
the Closing Date shall be paid by the Purchaser. All assessments for
incomplete improvements shall be paid by Purchaser.
B. DELINQUENT RENTS. If, as of the Closing Date, any rent is in
arrears ("Delinquent Rent") for thirty (30) days or less, then the first rent
collected by Purchaser will be delivered to Seller for the Delinquent Rent. If
Delinquent Rent is in arrears for more than thirty (30) days, then rents
collected by Purchaser shall first be applied to current rent and then to
Delinquent Rent. Purchaser shall deliver Seller's pro rata share within 10
days of Purchaser's receipt of that Delinquent Rent. Within 120 days after the
Closing Date, Purchaser shall deliver to Seller a reconciliation statement of
rents collected by Purchaser through the first 90 days after the Closing Date.
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 reconciliation statement and if such audit discloses that additional funds
are owing, then the party owing such funds shall promptly pay such sums to the
party so owed. This subparagraph of this Agreement shall survive the Closing
and the delivery and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph 10.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller,
except to an entity directly or indirectly controlled by Purchaser. Any
<PAGE>
non-permitted 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. Seller hereby
consents to an assignment to an entity which is an affiliate of Purchaser,
provided Purchaser notifies Seller of the assignment at least five (5) business
days prior to the Closing Date.
15. BROKER. The parties hereto hereby each represent and warrant to
the other that neither has retained the services of a broker in connection with
this transaction except for PW Real Estate Group ("Seller's Broker") retained
by Seller and whose commission will be paid by Seller. Purchaser agrees to
indemnify, defend and hold harmless the Seller and any partner, affiliate,
parent of Seller, and all shareholders, employees, officers and directors of
Seller or Seller's partner, parent or affiliate (each of the above is
individually referred to as a "Seller Indemnitee") from all claims, including
attorneys' fees and costs incurred by a Seller Indemnitee as a result of
anyone's claiming by or through Purchaser any fee, commission or compensation
on account of this Agreement, its negotiation or the sale hereby contemplated
(except for Seller's Broker). Seller agrees to indemnify, defend and hold
harmless the Purchaser and any partner, affiliate, parent of Purchaser and all
shareholders, employees, officers and directors of Purchaser or Purchaser's
parent or affiliate (each of the above is individually referred to as a
"Purchaser Indemnitee") from all claims, including attorneys' fees and costs
incurred by a Purchaser Indemnitee as a result of anyone's claiming by or
through Seller any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated.
16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
A. Seller has delivered to Purchaser copies of the most recent
available tax bills, rent rolls, insurance premiums, service contracts, utility
account numbers, year-end 1995 and year-to-date 1996 operating statements
(collectively the "Documents"). All of the Documents shall be subject to
approval by Purchaser by the close of business (5:00 P.M. Central Daylight
Time) on September 5, 1996 ("Approval Period"). During the Approval Period,
upon reasonable notice to the Seller, the Purchaser shall have the right to
inspect and approve the condition of the Property including the interior of the
apartments, during normal business hours. Purchaser shall maintain public
liability insurance policies insuring against claims arising as a result of the
inspections of the Property being conducted by Purchaser. Purchaser agrees to
indemnify, defend, protect and hold Seller harmless from any and all loss,
costs, including attorneys' fees, liability or damages which Seller may incur
or suffer as a result of Purchaser's conducting its inspection and
investigation of the Property including the entry of Purchaser, its employees
or agents and its lender onto the Property, including without limitation,
liability for mechanics' lien claims.
<PAGE>
B. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
C. If Purchaser disapproves the Documents or the condition of the
Property, in its sole and absolute discretion, it must be by a notice ("Notice
of Disapproval") delivered to Seller and the Escrow Agent prior to the
expiration of the Approval Period. The Notice of Disapproval delivered to
Seller shall be accompanied by copies of all third-party reports ("Reports")
which Purchaser has received during the Approval Period. Upon receipt of the
Notice of Disapproval and copies of the Reports, the Earnest Money plus the
interest accrued thereon shall be returned to the Purchaser. If Purchaser does
not timely deliver a Notice of Disapproval and copies of the Reports to Seller,
then it shall be conclusively presumed that Purchaser has approved the
Documents and the condition of the Property and all Earnest Money plus the
interest accrued thereon shall belong to Seller unless Seller is in default
hereunder.
17. SURVIVAL OF INDEMNITY. Notwithstanding anything in this Agreement to
the contrary, the parties' obligations to indemnify, defend and hold each other
harmless under various provisions of this Agreement shall forever survive the
termination of this Agreement or the Closing and delivery and recording of the
Deed.
18. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing, shall only mean such knowledge or
notice that has actually been received by Alan Lieberman and Phillip Schechter,
and any representation or warranty of the Seller is based upon those matters of
which Alan Lieberman and Phillip Schechter have actual knowledge. A copy of
this Paragraph 18 shall be delivered to the resident manager of the Property
within two (2) days after the execution by Seller of this Agreement, with a
request to advise Phillip Schechter within five (5) business days after receipt
by the resident manager as to the accuracy and truthfulness of the
representations and warranties. Phillip Schechter shall notify Purchaser as to
the response of the resident manager by August 5, 1996, if the resident manager
indicated that any of the representations or warranties were incorrect. If
Phillip Schechter fails to so notify Purchaser, Purchaser shall be entitled to
conclude that the resident manager reviewed the representations and warranties
and that they are correct. Any knowledge or notice given, had or received by
any of Seller's agents, servants or employees shall not be imputed to Seller or
the individual partners or the general partner of Seller.
<PAGE>
B. Subject to the limitations set forth in subparagraph "A" above,
Seller hereby makes the following representations and warranties, all of which
are made to the Seller's knowledge. The parties agree that the representations
contained herein shall survive Closing for a period of 120 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 120 days
immediately following Closing.)
(1) Except as set forth on Exhibit K attached hereto, the
present use and occupancy of the Property conform with applicable building
and zoning laws and Seller has received no written notice that any such
laws, rules or regulations are being violated.
(2) The rent roll attached hereto as Exhibit L and which shall
be updated as of the Closing Date is true and accurate. No tenant under
any lease has any option or right of first refusal to acquire any
ownership interest in the Property or any right to terminate its lease or
is entitled to any rebate or concession except as set forth in its lease
or on Exhibit L.
(3) Except as set forth on Exhibit K attached hereto, Seller
has no knowledge of any pending or threatened litigation, claim, cause of
action or administrative proceeding concerning the Property.
(4) Attached hereto as Exhibit M are copies of all licenses and
permits which are in Seller's possession and all service contracts
affecting the Property (none of which is in default), except for the
management agreement which shall be terminated as of the Closing Date; and
Seller shall not enter into any new service contracts which cannot be
terminated within 30 days written notice or modify or extend any existing
service contracts without the prior consent of Purchaser which consent
shall not be unreasonably withheld or delayed.
(5) Seller has not received any written notice from any tenant
occupying the Property that Seller is in default under that tenant's
lease.
(6) Except as set forth on Exhibit K attached hereto, Seller
has not received from any governmental authority, any written notice of
zoning, building, fire, health code or other violations with respect to
the Property, or any part thereof, that will not have been corrected prior
to Closing solely at Seller's expense.
<PAGE>
(7) Seller is duly organized, validly existing, qualified and
empowered to conduct its business, and has full power and authority to
perform and comply with the terms of this Agreement. Neither the
execution and delivery of this Agreement nor its performance will conflict
with or result in the breach of Seller's partnership agreement or any
contract or agreement to which Seller is a party or by which Seller is
bound.
(8) This Agreement is valid and enforceable against Seller in
accordance with its terms and each instrument to be executed by Seller
pursuant to this Agreement or in connection herewith will, when executed
and delivered, be valid and enforceable against Seller in accordance with
its terms.
(9) Seller has not received written notice from any
governmental authority alleging that the Property presently contains
Hazardous Materials or Hazardous Substances.
(10) As of the Closing Date, no leasing commissions will be due
subsequent to the Closing Date.
(11) None of the on-site employees is employed by the Seller.
(12) Through the Closing Date, Seller shall continue to operate,
manage and maintain the Property in the same manner as prior to the
execution of this Agreement.
(13) Seller shall not extend or otherwise renew any lease
without the prior written consent of Purchaser, except for any renewal or
other extension of a lease providing for a monthly rental of not less than
the monthly rental being presently charged for a similar apartment and for
a period of time not to exceed twelve (12) months.
(14) Seller agrees not to distribute the net proceeds of the
Purchase Price up to a maximum amount of $500,000.00 to its partners for
one hundred twenty (120) days after the Closing Date.
(15) Exhibit B attached hereto is a list of all the personal
property owned by Seller and used in the operation of the Property. The
computer software used at the Property will not be transferred to the
Purchaser.
<PAGE>
(16) The unaudited operating statements heretofore or hereafter
delivered to Purchaser by Seller are and shall be true, complete and
correct in all material respects.
C. For the period commencing with the execution of this Agreement,
and expiring at the earlier of a termination of this Agreement or the Closing
Date, Seller will not offer the Property for sale to any other third party.
D. Seller shall furnish to Purchaser unaudited operating
statements, rent rolls and a leasing status report on a monthly basis.
E. Upon at least two (2) days' prior notice, Purchaser shall have
the right, during normal business hours, to visit the Property and the
interiors of the apartments.
F. Seller shall not apply security deposits towards delinquent rent
except for (i) those tenants who have vacated their apartments or (ii) tenants
who are in arrears for rent for more than thirty (30) days and Seller has
commenced the process of evicting the tenant.
G. Seller hereby agrees to remake the aforesaid representations and
warranties at Closing. If at any time after the execution of this Agreement,
Seller becomes aware of information which makes a representation or warranty
contained in this Agreement to become untrue in any material respect, Seller
shall promptly disclose said information to Purchaser. Provided the
representation or warranty was true when made and further provided that Seller
did not take any deliberate actions to cause the representation or warranty in
question to become untrue in any material respect, Seller shall not be in
default under this Agreement and the sole remedy of Purchaser 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 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 had actual knowledge of prior to Closing.
<PAGE>
19. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby
represents and warrants to Seller that Purchaser has the full right, power and
authority to execute this Agreement and consummate the transactions
contemplated herein.
20. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit N are
the following reports (together, the "Existing Reports") of the Property, which
Seller is delivering to Purchaser, at Purchaser's request: Phase I
Architectural, Engineering & Environmental Assessment prepared by Building
Evaluation Service & Technology, Inc., dated January 15, 1993 and Final Phase I
Environmental Site Assessment prepared by H+GCL under Project #45004.19, dated
May 26, 1993. Seller makes no representation or warranty that the Existing
Reports are accurate or complete. Purchaser hereby releases Seller from any
liability whatsoever with respect to the Existing Reports or, including,
without limitation, the matters set forth in the Existing Reports, the accuracy
and/or completeness of the Existing Reports.
21. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability. Notwithstanding the foregoing to the contrary, for
any claims against Seller following Closing, if Seller fails to retain the net
proceeds of the Purchase Price up to a maximum amount of $500,000.00 (the
"Cap") for 120 days after the Closing Date, then the general partner of Seller
shall be liable for actual damages sustained by Purchaser as a result of
Seller's breach of a representation or warranty contained in Paragraph 18 of
this Agreement in an amount not to exceed the Cap. The foregoing Cap on
liability for a claim against the Seller following Closing shall not apply, and
Seller's general partner shall be liable, if Seller has entered into leases at
the Property for more than one year in breach of the representation identified
in Paragraph 18(B)(2) hereof and Purchaser makes a claim against Seller for a
breach of said representation within 120 days immediately following Closing.
22. ORGANIZATIONAL DOCUMENTS.
A. On or before the Closing Date, Purchaser will provide Seller's
attorney with copies of its organizational documents, including a certified
copy of its recorded certificate of limited partnership and a true copy of its
Partnership Agreement or a certified copy of its Articles of Incorporation,
corporate resolutions authorizing the transaction, and an incumbency
certificate, whichever is applicable.
<PAGE>
B. On or before the Closing Date, Seller will deliver copies of its
partnership agreement and appropriate certificates of authority to the
Purchaser.
23. TIME OF ESSENCE. Time is of the essence of this Agreement.
24. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
708/267-1600
708/317-4462 (FAX)
and
Andrew D. Small, Esq.
Katten Muchin & Zavis
Suite 2100
525 W. Monroe Street
Chicago, Illinois 60661
312/902-5532
312/222-1061 (FAX)
TO PURCHASER: Alan George
c/o Equity Residential Properties Trust
Two North Riverside Plaza
Suite 450
Chicago, Illinois 60606-2639
312/466-3932
312/454-9678 (FAX)
<PAGE>
with a copy to: Bruce Strohm
c/o Equity Residential Properties Trust
Two North Riverside Plaza
Suite 450
Chicago, Illinois 60606-2639
312/466-3624
312/454-0434 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, or on the 4th
business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
25. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution. Seller will forward one (1) copy of
the executed Agreement to Purchaser and will forward the following to the
Escrow Agent:
A. One (1) fully executed copy of this Agreement, and
B. Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller. Purchaser shall deposit
the initial $300,000.00 of Earnest Money immediately following receipt by
Purchaser of a fully executed Purchase Agreement and Escrow Agreement.
26. GOVERNING LAW. The provision contained herein with reference to
retention of the Earnest Money in the event of Purchaser's default shall be
governed by the laws of the State of Illinois. The remaining provisions of
this Agreement shall be governed by the laws of the State of Texas.
27. 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.
<PAGE>
28. 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.
29. 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.
30. FINANCIAL STATEMENTS. Seller acknowledges that audited financial
statements pertaining to the Property for one prior calendar year of operation
and the portion of the calendar year in which the Closing occurs up to the
Closing Date are required to be filed by the Purchaser with the Securities and
Exchange Commission after the Closing. Accordingly, Seller agrees that for a
period of six (6) months after the Closing Date it shall provide Purchaser and
its representatives with access to Seller's books and records after the Closing
upon reasonable advance notice in order to conduct the required audit, which
shall be done at Purchaser's cost and expense.
31. CONVEYANCE OF PARTNERSHIP INTERESTS. If requested to do so by
Purchaser, Seller hereby agrees, at no cost or expense to Seller, to cooperate
in good faith with Purchaser in structuring the conveyance of Property by the
Seller to Purchaser as a conveyance of title to such Property by the Seller
into a partnership or limited liability company having the Seller and/or
affiliates of the Seller as its sole partners (or members) and then, at
Closing, assigning to Purchaser the partnership (or membership) interests in
the partnership (or limited liability company). In such case, the Purchaser
hereby agrees to indemnify and hold the Seller harmless from and against any
and all loss, cost, expense, liability or damage (including reasonable
attorneys fees) incurred by Seller arising out of Seller's conveyance in and
out of such partnership (or limited liability company) provided that such loss,
cost, expense, liability or damage (including reasonable attorneys fees) would
not have been suffered or incurred by such Seller if such Property had been
conveyed directly by Seller to Purchaser. This Paragraph 31 shall survive the
Closing and the delivery of the Deed.
32. CONSIDERATION. On or before the execution of this Agreement,
Purchaser shall deliver to Seller One Hundred And No/100 Dollars ($100.00) cash
(the "Independent Contract Consideration"), which amount has been bargained for
and agreed to as consideration for Purchaser's right to purchase the Property
pursuant to this Agreement and for Seller's execution and delivery of this
Agreement. The Independent Contract Consideration is in addition to and
independent of all other consideration provided in this Agreement, and is
nonrefundable in all events.
<PAGE>
33. WAIVER OF DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT.
Purchaser waives its rights under the Deceptive Trade Practices-Consumer
Protection Act, Section 17.41 et seq., Business & Commerce Code, a law that
gives consumers special rights and protections. After consultation with an
attorney/legal counsel of Purchaser's own selection, Purchaser voluntarily
consents to this waiver. Purchaser covenants, represents and warrants that
such attorney/legal counsel was not directly or indirectly identified,
suggested, or selected by Seller or an agent of Seller.
[this space intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
July ___, 1996.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment trust
By: /s/ Shelley Dunck
-------------------------------
Name: Shelley Dunck
-------------------------------
Title: Vice President
-------------------------------
Executed by Seller on SELLER:
August 5, 1996
VALLEY POINT PARTNERS LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Valley Point Partners, Inc., an Illinois
corporation, its general partner
By: Balcor Partners - XIX, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a partner
By: /s/ Phillip A. Schechter
----------------------------
Name: Phillip A. Schechter
----------------------------
Title: Authorized Agent
----------------------------
<PAGE>
BROKER JOINDER
of PW Real Estate Group ("Seller's Broker") executed this
Agreement in its capacity as a real estate broker and acknowledges that the fee
or commission due it from Seller as a result of the transaction described in
this Agreement is as set forth in that certain Listing Agreement, dated
between Seller and Seller's Broker (the "Listing
Agreement"). Seller's Broker also acknowledges that payment of the aforesaid
fee or commission is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt to
the Seller at the Closing for the fee or commission due Seller's Broker and a
release, in the appropriate form, stating that no other fees or commissions are
due to it from Seller or Purchaser.
PW REAL ESTATE GROUP
By:
----------------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Compliance with Laws and Notice of Litigation
L - Rent Roll
M - Licenses, Permits and Service Contracts
N - Existing Reports
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 27th
day of July, 1996, by and between LAUTREC A.& D., L.L.C., a Michigan limited
liability company, on behalf of an entity to be formed ("Purchaser"), and
KNOLLWOOD VILLAGE PARTNERS, an Illinois limited partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Twenty Three Million And No/100 Dollars ($23,000,000.00) (the
"Purchase Price"), that certain property commonly known as the Knollwood
Village Apartments, Grand Blanc, Michigan, legally described on Exhibit A
attached hereto (the "Property") and to grant Purchaser the covenant not to
compete referenced in Paragraph 25 hereof. The Purchase Price shall be
allocated as set forth in Paragraph 26 hereof. The Property consists of
approximately 52 acres of land, 648 apartment units (320 one bedroom and 328
two bedroom units), swimming pool, clubhouse, tennis and handball courts and
nine hole golf course, and is known as Knollwood Village Apartments. Included
in the Purchase Price is all of the personal property set forth on Exhibit B
attached hereto (the "Personal Property"), which shall include no less than 648
refrigerators, ovens, ranges, dishwashers and disposers.
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Prior to the expiration of the Inspection Period, as defined in
Section 7.1 hereof, the sum of Two Hundred Fifty Thousand and No/100 Dollars
($250,000.00) (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
2.2. 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 5: 00 p.m. Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Seller shall immediately apply for and provide Purchaser with a title
commitment for an owner's title insurance policy without standard exceptions
(the "Title Commitment") issued by Partners Title Company as agent for Chicago
Title Insurance Company (hereinafter referred to as "Title Insurer"). For
purposes of this Agreement, "Permitted Exceptions" shall mean: (a) Paragraphs F
through I of the general printed exceptions contained in the standard title
<PAGE>
policy to be issued by Title Insurer based on the Title Commitment; (b) general
real estate taxes, special district taxes and related charges not yet due and
payable; (c) matters shown on the "Existing Survey" (hereinafter defined); (d)
matters caused by the actions of Purchaser; and (e) those title exceptions set
forth in Schedule B of the Title Commitment that are not inconsistent with
Purchaser's use of the Property as an apartment complex subsequent to closing.
All other exceptions to title shall be referred to as "Unpermitted Exceptions".
Purchaser shall approve the Title Commitment prior to expiration of the
Inspection Period; provided that its failure to object to title shall be deemed
a conclusive approval of the Title Commitment, subject to Section 5.1 hereof.
On the Closing Date, Title Insurer shall deliver to Purchaser a standard title
policy in conformance with the previously delivered Title Commitment or a
"marked up" commitment, subject to Permitted Exceptions and Unpermitted
Exceptions waived by Purchaser (the "Title Policy"). Seller and Purchaser
shall each pay for one-half of the costs of the Title Commitment and Title
Policy and Purchaser shall pay for the cost of any endorsements to, or extended
coverage on, the Title Policy.
3.2. Purchaser has received a survey of the Property prepared by Gould
Engineering (the "Existing Survey"). Seller and Purchaser shall each pay for
one-half of the costs of updating the Existing Survey and Seller shall deliver
the updated survey (the "Updated Survey") to Purchaser within 14 days after the
date hereof. Purchaser hereby acknowledges that all matters disclosed by the
Existing Survey are acceptable to Purchaser.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement, unless
such termination is pursuant to Paragraphs 5.1, 6.1, 6.2.1 or 7.1 hereof.
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1 and 3.2,
Purchaser and Seller shall each pay for one-half of the costs 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 the Property to Purchaser
and all other charges of the Title Insurer in connection with this transaction.
<PAGE>
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to the
Title Commitment or the Updated Survey discloses any new Unpermitted Exception,
Seller shall have thirty (30) days from the date of the date-down to the Title
Commitment or the Updated Survey, as applicable, at Seller's expense, to (i)
bond over, cure and/or have any Unpermitted Exceptions which, in the aggregate,
do not exceed $25,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions, or (ii) have the right, but not the obligation, to
bond over, cure and/or have any Unpermitted Exceptions which, in the aggregate,
equal or exceed $25,000.00, removed from the Title Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions and agree to likewise insure in the event of a sale
or one or more refinancings by Purchaser. In such event, the time of Closing
shall be delayed, if necessary, to give effect to said aforementioned time
periods provided that such extension does not extend beyond the expiration of
any financing commitment obtained by Purchaser. 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)
business days after the expiration of said thirty (30) day period. Absent
notice from Purchaser to Seller in accordance with the preceding sentence,
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 5.1, 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 indemnity
Seller and restore the Property, as more fully set forth in Paragraph 7.
5.2. Seller agrees to convey fee simple title to the Property to Purchaser
by special warranty deed (the "Deed") in recordable form subject only to the
Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in Paragraph
7.1 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
<PAGE>
prior to the Closing Date, repair of which would cost less than or equal to
$100,000.00 (as determined by Seller and Purchaser 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 Seller's right, title and interest in and to all insurance
proceeds paid or payable to Seller on account of such fire or casualty (as
verified to Purchaser's reasonable satisfaction by the insurance carrier) and
grant Purchaser a credit at Closing for the amount of any deductible under
Seller's insurance policies. 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. 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 and grant Purchaser a credit at Closing for the amount of any
deductible under Seller's insurance policies.
6.2. 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 could:
(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
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
<PAGE>
6.2.1. 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; or
6.2.2. 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.
6.3. Purchaser shall then notify Seller, within ten (10) business days
after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such ten (10) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. 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
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.l. During the period commencing on the date hereof and ending at 5:00
p.m. Chicago time on the day which is forty-five (45) days after the first
business day on which Purchaser receives a fully executed copy hereof with all
Exhibits attached (said period being herein referred to as the "Inspection
Period"), Purchaser and the agents, engineers, employees, contractors and
surveyors retained by Purchaser may enter upon the Property, at any reasonable
time and upon reasonable prior notice to Seller, to inspect the Property and
individual apartment units, including a review of leases located at the
Property, and to conduct and prepare such studies, tests and surveys as
Purchaser may deem reasonably necessary and appropriate. Inspections of
individual apartment units shall be accompanied by Seller's representative, if
required by law, and shall be based upon at least 24 hours notice to the
Tenants of any occupied units. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, unaudited year end 1995 and year-to-date 1996
operating statements and the existing report. Purchaser may review and audit
Seller's other records concerning the Property (including 1993 and 1994
Operating Statements and any audited statements in Seller's possession) at
Seller's offices in Chicago, Illinois upon reasonable advance notice to Seller
during Seller's regular business hours.
<PAGE>
All of the foregoing tests, investigations and studies to be conducted under
this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and expense
and Purchaser shall restore the Property to the condition existing prior to the
performance of such tests or investigations by or on behalf of Purchaser.
Purchaser shall defend, indemnity 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 Seller, in
Seller's sole discretion.
Prior to commencing any such tests, studies and investigations, Purchaser shall
furnish to Seller a certificate of insurance evidencing comprehensive general
public liability insurance insuring the person, firm or entity performing such
tests, studies and investigations and listing Seller and Purchaser as
additional insureds thereunder.
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Paragraph 7.
1, Purchaser shall have the right to terminate this Agreement by giving written
notice of such termination to Seller at any time prior to the expiration of the
Inspection Period or any extension thereof. If written notice is not given by
Purchaser pursuant to this Paragraph 7.1 prior to the expiration of the
Inspection Period or any extension thereof, then the right of Purchaser to
terminate this Agreement pursuant to this Paragraph 7.1 shall be waived. If
Purchaser terminates this Agreement by written notice to Seller prior to the
expiration of the Inspection Period: (i) Purchaser shall promptly deliver to
Seller copies of all studies, reports and other investigations obtained by
Purchaser in connection with its due diligence during the Inspection Period;
and (ii) the Earnest Money deposited by Purchaser shall be immediately paid to
Purchaser, together with any interest earned thereon, and neither Purchaser nor
Seller shall have any right, obligation or liability under this Agreement,
except for Purchaser's obligation to indemnity Seller and rest restore the
Property, as more fully set forth in this Paragraph 7.1. Notwithstanding
anything contained herein to the contrary, Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in this Paragraph 7.1,
shall survive the Closing and the delivery of the Deed and termination of this
Agreement.
<PAGE>
7.2. Except as expressly set forth in this Agreement: (i) Seller makes no
representations or warranties relating to the condition of the Property or the
Personal Property and (ii) Purchaser acknowledges and agrees that it will be
purchasing the Property and the Personal Property based solely upon its
inspections and investigations of the Property and the Personal Property, and
that Purchaser will be purchasing the Property and the Personal Property "AS
IS" and "WITH ALL FAULTS", based upon the condition of the Property and the
Personal Property as of the date of this Agreement, reasonable 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 representations or warranties of
any kind upon which Purchaser is relying as to any matters concerning the
Property or the Personal Property, including, but not limited to, the condition
of the land or any improvements comprising the Property, the existence or
non-existence of "Hazardous Materials" (as hereinafter defined), 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 or building laws, rules or
regulations or "Environmental Laws" (hereinafter defined) affecting the
Property. Except as set forth in Section 16.2 (iv) hereof, Seller makes no
representation or warranty that the Property compiles with Title III of the
Americans with Disabilities Act or any fire code or building code. Except as
set forth herein or in Paragraph 7.4 hereof, 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 or the Affiliates of Seller, and
Purchaser hereby agrees not to assert any claims for contribution, cost
recovery or otherwise, against Seller or the Affiliates of Seller, relating
directly or indirectly to the existence of asbestos or Hazardous Materials on,
or environmental conditions of, the Property, whether known or unknown. As
used herein, "Environmental Laws" means all federal, state and local statutes,
codes, regulations, rules, ordinances, orders, standards, permits, licenses,
policies and requirements (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preservation, remediation or
conservation of the environment or worker health or safety, all as amended or
reauthorized, or as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. S9601 et seq., the Resource Conservation
and Recovery Act of 1976 ("RCRA"), 42 U.S.C. S6901 et seq., the Emergency
Planning and Community Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C.
S11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C. S7401 et seq., the Federal
Water Pollution Control Act ("Clean Water Act"), 33 U.S.C. S1251 et seq., the
<PAGE>
Toxic Substances Control Act ("TSCA"), 15 U.S.C. S2601 et seq., the Safe
Drinking Water Act ("Safe Drinking Water Act"), 42 U.S.C. S300f et seq., the
Atomic Energy Act ("AEA"), 42 U.S.C. S 2011 et seq., the Occupational Safety
and Health Act ("OSHA_), 29 U.S.C. S 651 et seq., and the Hazardous Materials
Transportation Act (the "Transportation Act"), 49 U.S.C. S 1802 et seq. As
used herein, "Hazardous Materials" means: (1) "hazardous substances," as
defined by CERCLA; (2) "hazardous wastes," as defined by RCRA; (3) any
radioactive material including, without limitation, any source, special nuclear
or by-product material, as defined by AEA; (4) asbestos in any form or
condition; (5) polychlorinated biphenyls; and (6) any other material,
substance or waste to which liability or standards of conduct may be imposed
under any Environmental Laws.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate (but Seller's
Representative (as hereinafter defined) has no knowledge that such material is
incomplete or inaccurate)) or that Purchaser will achieve similar financial or
other results with respect to the operations of the Property, it being
acknowledged by Purchaser that Seller's operation of the Property and
allocations of revenues or expenses may be vastly different than Purchaser may
be able to attain. Purchaser acknowledges that it is a sophisticated and
experienced purchaser of real estate and further that Purchaser has relied upon
its own investigation and inquiry with respect to the operation of the Property
and releases Seller and the Affiliates of Seller from any liability with
respect to such historical information.
7.4. Seller has provided to Purchaser the following existing report: Phase
I Environmental Site Assessment and Limited Asbestos Survey prepared by Astex,
dated March 22, 1994 ("Existing Report"). Seller makes no representation or
warranty concerning the accuracy or completeness of the Existing Report.
Purchaser hereby releases Seller and the Affiliates of Seller from any
liability whatsoever with respect to the Existing Report, or, including,
without limitation, the matters set forth in the Existing Report, and 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; provided that nothing herein shall be interpreted as a
waiver of any of Purchaser's exemptions from liability under MCLA 324.20126(2),
(3) or (4), nor otherwise constitute an indemnification of Seller by Purchaser
for any condition in violation of any Environmental Laws existing on the
Property as of the day of Closing. The preceding sentence shall not be deemed
to modify the release of Seller or waiver set forth in Section 7.2 hereof.
<PAGE>
8. CLOSING. The closing of this transaction (the "Closing") shall be the
first business day which is 30 days after expiration of the Inspection Period
(the "Closing Date"), at the office of Title Insurer, 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 Michigan, 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. All closing and escrow fees shall be
divided equally between the parties hereto.
9. CLOSING DOCUMENTS.
9.1. On the Closing Date, Seller and Purchaser shall execute and deliver
to one another a joint closing statement. In addition, Purchaser shall deliver
to Seller the balance of the Purchase Price, an assumption of the documents set
forth in Paragraph 9.2.3 and 9.2.4 and such other documents as may be
reasonably required by the Title Insurer in order to consummate the transaction
as set forth in this Agreement.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto), subject to
Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
9.2.2. an inventory of the Personal Property and a quit claim bill of
sale conveying the same (in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in the form
attached hereto as Exhibit G, including, without limitation, the service
contracts listed in Exhibit H;
9.2.4. an assignment and assumption of leases and security deposits (in
the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J attached hereto);
<PAGE>
9.2.6. original, and/or copies of, leases affecting the Property in
Seller's possession;
9.2.7. all documents and instruments reasonably required by the Title
Insurer to issue the Title Policy;
9.2.8. possession of the Property to Purchaser;
9.2.9. evidence of the termination of the management agreement;
9.2.10. 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 K);
9.2.11. an updated rent roll showing delinquent and prepaid rents
certified by Seller subject to the limitations on knowledge and survival
contained herein;
9.2.12. an executed Closing Statement; and
9.2.13. an executed Noncompetitive Covenant.
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 AND RESTORE THE PROPERTY
AS SET FORTH IN PARAGRAPH 7.1 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 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 7.1 NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED, THEN PURCHASER
WILL BE ENTITLED TO EITHER (i) SUE FOR SPECIFIC PERFORMANCE OR (ii) RECEIVE AN
AMOUNT FROM SELLER, NOT TO EXCEED $2150,000, EQUAL TO PURCHASER'S ACTUAL
VERIFIABLE THIRD-PARTY COSTS INCURRED IN CONNECTION WITH THIS AGREEMENT.
<PAGE>
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid
rents); refundable security deposits (which will be assigned to and assumed by
Purchaser and credited to Purchaser at Closing); water and other utility
charges (based on final meter readings if available); fuels; prepaid operating
expenses; real and personal property taxes prorated on a "net" basis (i.e.
adjusted for all tenants' liability, if any, for such items) on the due date
basis of the taxing authority; operating expenses which are reimbursable by the
tenants for the period prior to the Closing Date less any amount previously
paid by the Tenants shall be credited to Seller; and other similar items shall
be adjusted ratably as of 11:59 p.m. on the date prior to Closing Date, and
credited to the balance of the cash due at Closing. Assessments 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. All prorations will be final except as to delinquent rent
referred to in Paragraph 12.2 below.
12.2. DELINQUENT RENTS. If, as of the Closing Date, any rent is in
arrears for thirty (30) days or less, then the first rent collected by
Purchaser from a delinquent Tenant (prorated to the Closing Date) will be
delivered to Seller for such delinquent rent on a Tenant-by-Tenant basis. If
rent is in arrears for more than thirty (30) days, then rent collected by
Purchaser shall first be applied to current rent, and then to delinquent rent.
Any amounts shall be paid by Purchaser to Seller within 10 days of receipt of
such amounts. This subparagraph of this Agreement shall survive the Closing
and the delivery and recording of the Deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall 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 hereof.
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 hereof. Seller consents to an
assignment of this Agreement to any affiliate of Purchaser, provided such
assignment is effected at least 5 days prior to Closing.
<PAGE>
15. BROKER.
15.1 PW Real Estate Group (the "Broker") has acted as real estate broker
in this transaction. Seller shall pay a brokerage commission to the Broker at
the successful closing of this transaction. Purchaser warrants that it has
dealt with no other third party broker in connection with this transaction and
that it has not paid and will not pay at any time before, at or after the
closing any fee, commission or compensation whatsoever to any person, directly
or indirectly, on account of this Agreement, its negotiation or the sale
contemplated hereby, except attorney fees, loan broker fees and due diligence
expenses.
15.2 Except for claims of the Broker as set forth in Section 15.1
hereof, Purchaser and Seller shall indemnity, defend and hold the other party
hereto harmless from any claim whatsover (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. The indemnifying party shall undertake its obligations set forth
in this Section 15.1 using attorneys selected by the indemnifying party and
reasonably acceptable to the indemnified party. The provisions of this Section
will survive the Closing and delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any
matter or thing shall only mean such knowledge or notice that has actually been
received by Gregg Handrich (the "Seller's Representative"), and any
representation or warranty of the Seller is based upon those matters of which
the Seller's Representative has actual knowledge. By his execution hereof,
Seller's Representative warrants that he is familiar with the operations of the
Property. 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 Representative.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which 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
representation or warranty after the expiration of sixty (60) days immediately
following Closing): (i) Seller has no knowledge of any pending or threatened
<PAGE>
litigation, claim, cause of action or administrative proceeding concerning the
Property; (ii) Seller has the power to execute this Agreement and consummate
the transactions contemplated herein; (iii) the rent rolls which Seller has
submitted to the Purchaser and updated as of the Closing Date are accurate as
of the date set forth thereon; (iv) Seller has not received written notice of
any uncured violations of Environmental Laws, or applicable building and zoning
laws, including ADA and handicappers rights laws; (v) each apartment unit is
complete and in rentable condition without alterations or additions other than
redecorating; (vi) each apartment unit contains a refrigerator, oven, range,
dishwasher and disposer which shall be in operating condition on the closing
date; and (vii) from the date hereof to the Closing date, Seller shall operate,
repair and maintain the Property in substantially the same manner as it has
heretofore been operated and maintained.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute this Agreement and
consummate the transactions contemplated herein.
17. LIMITATION OF LIABILITY. Neither Seller, nor any of its respective
beneficiaries, shareholders, partners, 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.
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 or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
<PAGE>
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(847) 317-4360
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Jacob Kaufman, Esq.
(312) 902-5490
(312) 902-1061 (FAX)
TO PURCHASER: Lautrec A.& D., L.L.C.
31550 Northwestern Highway, Suite 200
Farmington Hills, MI 48834
Attention: Mr. Peter Kostishak
Mr. Barry Nienberg
(810) 851-2700
(810) 851-1934 (FAX)
and one copy to: Maddin, Hauser, Wartell, Roth,
Heller & Pesses, P.C.
28400 Northwestern, Suite 300
Southfield, MI 48034
Attention: Mark R. Hauser, Esq.
(810) 827-1860
(810) 354-1422 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 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, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
<PAGE>
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute two
(2) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution. Seller will forward one (1) copy of the
executed Agreement to Purchaser and will forward the following to the Escrow
Agent:
(A) One (1) fully executed copy of this Agreement; and
(B) 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 Michigan 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. NONCOMPETITIVE COVENANT. At closing, Seller shall deliver to Purchaser a
Noncompetitive Covenant whereby Seller agrees, for a period of three (3) years
following the Closing, not to own or operate an apartment complex within a ten
(10) mile radius of the Property.
26. ALLOCATION OF PURCHASE PRICE. The purchase price shall be allocated as
follows:
Land, buildings & personal property 20,500,000
Noncompetitive Covenant 1,000,000
Goodwill 1,500,000
----------------
23,000,000
<PAGE>
27. MISCELLANEOUS.
27.1 Seller will cooperate with Purchaser, at no cost to Seller, in
canceling any service contracts which may be canceled in accordance with their
terms if Purchaser so elects.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of the
date first set forth above.
PURCHASER:
LAUTREC A. & D., L.L.C., a Michigan limited
iability company
By: /s/ Spencer M. Partrich
------------------------------------------
Spencer M. Partrich, Member
SELLER:
KNOLLWOOD VILLAGE PARTNERS,
an Illinois limited partnership
BY: Knollwood Village, Inc., an Illinois
corporation, Its general partner
By: /s/ Alan Lieberman
-----------------------------------------
Alan Lieberman, Senior Vice President
<PAGE>
Exhibits
A Legal
B. Personal Property
C. Escrow Agreement
D. Intentionally Deleted
E. Deed
F. Bill of Sale
G. Assignment and Assumption of Intangible Property
H. Service Contracts
I. Assignment and Assumption of Leases and Security Deposits
J. Non-Foreign Affidavit
K. Notice to Tenants
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2868
<SECURITIES> 0
<RECEIVABLES> 69
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4113
<PP&E> 38717
<DEPRECIATION> 20096
<TOTAL-ASSETS> 23133
<CURRENT-LIABILITIES> 513
<BONDS> 21919
0
0
<COMMON> 0
<OTHER-SE> 701
<TOTAL-LIABILITY-AND-EQUITY> 23133
<SALES> 0
<TOTAL-REVENUES> 4180
<CGS> 0
<TOTAL-COSTS> 2112
<OTHER-EXPENSES> 1122
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1057
<INCOME-PRETAX> (111)
<INCOME-TAX> 0
<INCOME-CONTINUING> (111)
<DISCONTINUED> 0
<EXTRAORDINARY> 788
<CHANGES> 0
<NET-INCOME> 677
<EPS-PRIMARY> 12.68
<EPS-DILUTED> 12.68
</TABLE>
