SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 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
March 31, 1998 and December 31, 1997
(Unaudited)
ASSETS
1998 1997
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Cash and cash equivalents $ 1,659,007 $ 1,684,046
Accounts and accrued interest receivable 7,535 7,951
Prepaid expenses 1,947
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$ 1,668,489 $ 1,691,997
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 25,345 $ 15,410
Due to affiliates 32,253 28,315
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Total liabilities 57,598 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 (99,887) (62,506)
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Total partners' capital 1,610,891 1,648,272
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$ 1,668,489 $ 1,691,997
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The accompanying notes are an integral part of the financial statements.
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BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1998 and 1997
(Unaudited)
1998 1997
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Income:
Rental $ 311,744
Service 4,602
Interest on short-term investments $ 22,212 44,355
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Total income 22,212 360,701
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Expenses:
Interest on mortgage note payable 109,472
Depreciation 60,951
Amortization of deferred expenses 5,662
Property operating 242,693
Real estate taxes 50,052
Property management fees 15,919
Administrative 59,593 56,019
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Total expenses 59,593 540,768
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Net loss $ (37,381) $ (180,067)
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Net loss allocated to
General Partner $ (37,381) $ (99,144)
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Net loss allocated to
Limited Partners None $ (80,923)
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Net loss per Limited Partnership
Interest (52,811 issued and outstanding)
- Basic and Diluted None $ (1.53)
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Distribution to Limited Partners None $ 8,317,733
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Distribution per Limited Partnership
Interests (52,811 issued and outstanding) None $ 157.50
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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 quarters ended March 31, 1998 and 1997
(Unaudited)
1998 1997
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Operating activities:
Net loss $ (37,381) $ (180,067)
Adjustments to reconcile net loss
to net cash used in operating activities
Depreciation of properties 60,951
Amortization of deferred expenses 5,662
Net change in:
Escrow deposits 109,898
Accounts and accrued interest
receivable 416 15,046
Notes receivable 12,751
Prepaid expenses (1,947) 13,589
Accounts payable 9,935 (39,576)
Due to affiliates 3,938 (2,071)
Accrued liabilities (123,713)
Security deposits (57)
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Net cash used in operating activities (25,039) (127,587)
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Financing activities:
Distribution to Limited Partners (8,317,733)
Principal payments on mortgage
note payable (12,638)
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Net cash used in financing activities (8,330,371)
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Net change in cash and cash equivalents (25,039) (8,457,958)
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 $ 1,659,007 $ 1,814,843
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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 during 1998 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 quarter
ended March 31, 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. In the absence of any such contingency, the reserves will
be paid within twelve months of the last property being sold. In the event a
contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.
3. Interest Expense:
During the quarter ended March 31, 1997, the Partnership incurred and paid
interest expense on mortgage note payable of $109,472.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1998 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost: $ 5,376 $ 32,253
5. Contingency:
The Partnership is currently involved in two lawsuits whereby the Partnership
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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, operations or liquidity 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 March 31, 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 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 1998 as compared to 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 the quarters ended March 31, 1998 and 1997.
As a result of the sale of 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 1997
as compared to 1998.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $25,000 as of
<PAGE>
March 31, 1998 as compared to December 31, 1997 due to the payment of
administrative expenses which were partially offset by interest income received
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. In the absence of any such contingency, the reserves will
be paid within twelve months of the last property being sold. In the event a
contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.
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 September 30, 1992 (Commission File No.
0-13357) are incorporated herein by reference.
(10) Material Contracts:
(a)(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, previously filed as
Exhibit (10)(b)(ii) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996 is incorporated herein by reference.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of Mallard Cove Apartments, Greenville, South Carolina, previously filed as
Exhibit (10)(b)(iii) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996 is incorporated herein by reference.
(b)(i) Agreement of Sale and attachment thereto relating to the sale of the
Knollwood Village Apartments, Grand Blanc, Michigan, previously filed as
Exhibit (10)(d) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996 is incorporated herein by reference.
(ii) First Amendment to the Agreement of Sale dated August 9, 1996 relating to
the sale of the Knollwood Village Apartments, Grand Blanc, Michigan, previously
filed as Exhibit (10)(d)(ii) to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996 is incorporated herein by reference.
(c)(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.
<PAGE>
(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 quarter ending March 31,
1998 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended March 31, 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: May 5, 1998
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<PAGE>
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