SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1998
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13357
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BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Illinois 36-3274349
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Rd., Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1998 and December 31, 1997
(Unaudited)
ASSETS
1998 1997
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Cash and cash equivalents $ 1,643,668 $ 1,684,046
Accounts and accrued interest receivable 7,400 7,951
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$ 1,651,068 $ 1,691,997
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 20,922 $ 15,410
Due to affiliates 38,793 28,315
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Total liabilities 59,715 43,725
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Commitments and contingencies
Limited Partners' capital (52,811
Interests issued and outstanding) 1,710,778 1,710,778
General Partner's deficit (119,425) (62,506)
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Total partners' capital 1,591,353 1,648,272
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$ 1,651,068 $ 1,691,997
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
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Income:
Rental $ 602,642
Service 11,890
Interest on short-term investments $ 44,317 65,882
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Total income 44,317 680,414
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Expenses:
Interest on mortgage notes payable 218,671
Depreciation 121,902
Amortization of deferred expenses 11,324
Property operating 574,437
Real estate taxes 93,493
Property management fees 30,355
Administrative 101,236 124,442
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Total expenses 101,236 1,174,624
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Net loss $ (56,919) $ (494,210)
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Net loss allocated to General Partner $ (56,919) $ (110,961)
============== ==============
Net loss allocated to Limited Partners None $ (383,249)
============== ==============
Net loss per Limited Partnership Interest
(52,811 issued and outstanding) -
Basic and Diluted None $ (7.26)
============== ==============
Distributions to Limited Partners None $ 8,463,491
============== ==============
Distributions per Limited Partnership
Interest None $ 160.26
============== ==============
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, 1998 and 1997
(Unaudited)
1998 1997
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Income:
Rental $ 290,898
Service 7,288
Interest on short-term investments $ 22,105 21,527
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Total income 22,105 319,713
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Expenses:
Interest on mortgage notes payable 109,199
Depreciation 60,951
Amortization of deferred expenses 5,662
Property operating 331,744
Real estate taxes 43,441
Property management fees 14,436
Administrative 41,643 68,423
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Total expenses 41,643 633,856
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Net loss $ (19,538) $ (314,143)
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Net loss allocated to General Partner $ (19,538) $ (11,817)
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Net loss allocated to Limited Partners None $ (302,326)
============== ==============
Net loss per Limited Partnership Interest
(52,811 issued and outstanding) -
Basic and Diluted None $ (5.73)
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Distribution to Limited Partners None $ 145,758
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Distribution per Limited Partnership
Interest None $ 2.76
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
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Operating activities:
Net loss $ (56,919) $ (494,210)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation of properties 121,902
Amortization of deferred expenses 11,324
Net change in:
Escrow deposits 81,761
Accounts and accrued interest
receivable 551 94,022
Note receivable 31,878
Prepaid expenses 17,314
Accounts payable 5,512 (39,957)
Due to affiliates 10,478 (32,362)
Accrued liabilities (80,272)
Security deposits 419
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Net cash used in operating activities (40,378) (288,181)
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Financing activities:
Distributions to Limited Partners (8,463,491)
Principal payments on mortgage note payable (25,549)
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Cash used in financing activities (8,489,040)
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Net change in cash and cash equivalents (40,378) (8,777,221)
Cash and cash equivalents at beginning
of period 1,684,046 10,272,801
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Cash and cash equivalents at end of period $ 1,643,668 $ 1,495,580
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
(a) The loss allocation between the Limited Partners and the General Partner
has been adjusted for financial statement purposes in order that the capital
account balances more accurately reflect their remaining economic interests as
provided for in the Partnership Agreement.
(b) 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, 1998, and all such adjustments are of a normal and
recurring nature.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its remaining property. The
Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in Note 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.
3. Interest Expense:
During the six months ended June 30, 1997, the Partnership incurred and paid
interest expense on mortgage note payable of $218,671.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1998 are:
Paid
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Six Months Quarter Payable
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<PAGE>
Reimbursement of expenses to
the General Partner, at cost $ 9,038 $ 3,662 $ 38,793
5. Contingency:
The Partnership is currently involved in two lawsuits whereby the Partnership
and certain affiliates have been named as defendants alleging substantially
similar claims involving certain state securities and common law violations
with regard to the property acquisition process of the Partnership, and to the
adequacy and accuracy of disclosures of information concerning, as well as
marketing efforts related to, the offering of the Limited Partnership Interests
of the Partnership. The defendants continue to vigorously contest these
actions. A plaintiff class has not been certified in either action and, no
determinations of the merits have been made. It is not determinable at this
time whether or not an unfavorable decision in either action would have a
material adverse impact on the financial position of the Partnership. The
Partnership believes it has meritorious defenses to contest the claims.
<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. As of June 30, 1998, the Partnership has no
properties remaining in its portfolio.
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 1997 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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The operations of the Partnership in 1998 consisted primarily of the payment of
administrative expenses which were partially offset by interest income earned
on short-term investments. During July 1997, the Partnership sold the Canyon
Pointe Apartments which was generating a loss from operations. Primarily as a
result of the sale of the Canyon Pointe Apartments, the Partnership's net loss
decreased during the six months and quarter ended June 30, 1998 as compared to
the same periods in 1997. Further discussion of the Partnership's operations is
summarized below.
1998 Compared to 1997
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Unless otherwise noted, discussions of fluctuations between 1998 and 1997 refer
to both the six months and quarters ended June 30, 1998 and 1997.
As a result of the sale of the Canyon Pointe Apartments in July 1997, rental
and service income, interest expense on mortgage notes payable, depreciation
expense, amortization expense, property operating, real estate tax expense and
property management fees expense ceased during 1997.
The proceeds from the October 1996 sale of the Knollwood Village Apartments
were not distributed to Limited Partners until January 1997. As a result, the
Partnership earned higher interest income on short-term investments during the
six months ended June 30, 1997 as compared to the same period in 1998.
Primarily as a result of lower portfolio management, accounting and bank fees,
administrative expenses decreased during 1998 as compared to 1997.
<PAGE>
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $40,000 as of
June 30, 1998 as compared to December 31, 1997 due to the payment of
administrative expenses which were partially offset by interest income earned
on short-term investments.
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1997, the Partnership sold its remaining property. The
Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in Note 5 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.
To date, Limited Partners have received distributions of Net Cash Receipts of
$288.00 and Net Cash Proceeds of $428.26, totaling $716.26 per $1,000 Interest,
as well as certain tax benefits. No additional distributions are anticipated to
be made prior to termination of the Partnership. However, after paying final
partnership expenses, any remaining cash reserves will be distributed. Limited
Partners will not recover all of their original investment.
<PAGE>
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement, previously filed as Exhibit 4.1 to
Amendment No. 1 to Registrant's Registration Statement on Form S-11 dated May
15, 1984 (Registration No. 2-89380), and Form of Confirmation regarding
Interests in the Registrant set forth as Exhibit 4.2 to the Registrant's Report
on Form 10-Q for the quarter ended June 30, 1992 (Commission File No.
0-13357) are incorporated herein by reference.
(10) Material Contracts:
(i) Agreement of Sale and attachment thereto relating to the sale of the Canyon
Pointe Apartments, San Antonio, Texas previously filed as Exhibit (2) to the
Registrant's Current Report on Form 8-K dated June 11, 1997, is incorporated
herein by reference.
(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the Canyon Pointe Apartments, San Antonio, Texas, previously filed as
Exhibit (10)(d)(ii) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 is incorporated herein by reference.
(iii) Second Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of the Canyon Pointe Apartments, San Antonio, Texas, previously filed
as Exhibit (10)(d)(iii) to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1997 is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six months ending June
30, 1998 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended June 30, 1998.
<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/ Jayne A. Kosik
-----------------------------
Jayne A. Kosik
Senior Managing Director and
Chief Financial Officer
(Principal Accounting Officer)
of Balcor Equity Partners
- XVIII, the General Partner
Date:
-----------------
<PAGE>
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