UNITED STATES 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, 2000
-----------------
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.)
2333 Waukegan Road, Suite 100
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
----- -----
BALCOR EQUITY PROPERTIES - XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 2000 and December 31, 1999
(Unaudited)
ASSETS
2000 1999
----------- -----------
Cash and cash equivalents $1,660,584 $1,709,777
Accounts and accrued interest receivable 8,510 8,360
----------- -----------
$1,669,094 $1,718,137
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 66,126 $ 64,765
Due to affiliates 7,643 32,837
----------- -----------
Total liabilities 73,769 97,602
----------- -----------
Commitments and contingencies
Limited Partners' capital (52,811
Interests issued and outstanding) 1,734,093 1,734,093
General Partner's deficit (138,768) (113,558)
----------- -----------
Total partners' capital 1,595,325 1,620,535
----------- -----------
$1,669,094 $1,718,137
=========== ===========
The accompanying notes are an integral part of the financial statements.
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, 2000 and 1999
(Unaudited)
2000 1999
----------- -----------
Income:
Interest on short-term investments $ 48,903 $ 40,549
----------- -----------
Total income 48,903 40,549
----------- -----------
Expenses:
Administrative 74,113 69,006
----------- -----------
Total expenses 74,113 69,006
----------- -----------
Net loss $ (25,210) $ (28,457)
=========== ===========
Net loss allocated to General Partner $ (25,210) $ (28,457)
=========== ===========
Net loss allocated to Limited Partners None None
=========== ===========
Net loss per Limited Partnership Interest
(52,811 issued and oustanding) -
Basic and Diluted None None
=========== ===========
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PROPERTIES - XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 2000 and 1999
(Unaudited)
2000 1999
----------- -----------
Income:
Interest on short-term investments $ 25,530 $ 19,983
----------- -----------
Total income 25,530 19,983
----------- -----------
Expenses:
Administrative 37,551 33,504
----------- -----------
Total expenses 37,551 33,504
----------- -----------
Net loss $ (12,021) $ (13,521)
=========== ===========
Net loss allocated to General Partner $ (12,021) $ (13,521)
=========== ===========
Net loss allocated to Limited Partners None None
=========== ===========
Net loss per Limited Partnership Interest
(52,811 issued and oustanding) -
Basic and Diluted None None
=========== ===========
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PROPERTIES - XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 2000 and 1999
(Unaudited)
2000 1999
----------- -----------
Operating activities:
Net loss $ (25,210) $ (28,457)
Adjustments to reconcile net loss to net
cash used in operating activities:
Net change in:
Accounts and accrued interest
receivable (150) 836
Accounts payable 1,361 (6,552)
Due to affiliates (25,194) (113)
----------- -----------
Net cash used in operating activities (49,193) (34,286)
----------- -----------
Net change in cash and cash equivalents (49,193) (34,286)
Cash and cash equivalents at beginning
of year 1,709,777 1,741,812
----------- -----------
Cash and cash equivalents at end of period $1,660,584 $1,707,526
=========== ===========
The accompanying notes are an integral part of the financial statements.
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, 2000, 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 of its
interests in real estate. The Partnership sold its final real estate investment
in July 1997. The Partnership has retained a portion of the cash from the
property sales to satisfy obligations of the Partnership as well as to
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 Masri
and Bruss lawsuits discussed in Note 4 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 such contingencies. There
can be no assurances as to the time frame for the conclusion of all
contingencies.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the six
months and quarter ended June 30, 2000 are:
Paid
-------------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $ 40,516 $ 10,470 $ 7,643
4. Contingencies:
(a) The Partnership is currently involved in two related lawsuits, Masri vs.
Lehman Brothers, Inc., et al. and Bruss, et al. vs. Lehman Brothers, Inc., et
al., 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. With respect to the Masri case, no determinations
upon any significant issues have been made. The Bruss complaint was filed on
January 25, 1999. On September 24, 1999, the court granted the defendants'
motion to dismiss the complaint for failure to state a cause of action. The
plaintiffs filed an amended complaint on November 30, 1999. The defendants have
filed a motion to dismiss the complaint for failure to state a cause of action.
The defendants continue to vigorously contest these claims. The Partnership
believes it has meritorious defenses to contest the claims. It is not
determinable at this time how the outcome of either action will impact the
remaining cash reserves of the Partnership.
(b) In May 1999, a lawsuit was filed, Madison Partnership Liquidity Investors
XX, et al. vs. The Balcor Company, et al. whereby the General Partner and
certain affiliates have been named as defendants. The plaintiffs are entities
that initiated tender offers to purchase and, in fact, purchased units in
eleven affiliated partnerships. The complaint alleges breach of fiduciary
duties and breach of contract under the partnership agreement and seeks the
winding up of the affairs of the Partnership, the establishment of a
liquidating trust, the appointment of an independent trustee for the trust and
the distribution of a portion of the cash reserves to limited partners. On June
1, 1999 a second lawsuit was filed and was served on August 16, 1999, Sandra
Dee vs. The Balcor Company, et al. The Dee complaint is virtually identical to
the Madison Partnership complaint and on September 20, 1999 was consolidated
into the Madison Partnership case. On January 19, 2000, a hearing was held on
the defendants' motion to dismiss; the motion to dismiss was denied as to the
Partnership. The defendants intend to vigorously contest these actions. It is
not determinable at this time how the outcome of these actions will impact the
remaining cash reserves of the Partnership.
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 Partnership sold its final real estate investment
in July 1997.
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 1999 for a more complete understanding of
the Partnership's financial position.
Operations
----------
2000 Compared to 1999
---------------------
The operations of the Partnership in 2000 and 1999 consisted of administrative
expenses which were partially offset by interest income earned on short-term
investments.
As a result of higher interest rates, interest income on short-term investments
increased during the six months and quarter ended June 30, 2000 as compared to
the same periods in 1999.
Primarily due to an increase in printing costs, administrative expenses
increased during the six months and quarter ended June 30, 2000 as compared to
the same periods in 1999.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership decreased by approximately $49,000 as of
June 30, 2000 when compared to December 31, 1999 primarily due to cash used in
operating activities for the payment of administrative expenses, which was
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 of its
interests in real estate. The Partnership sold its final real estate investment
in July 1997. The Partnership has retained a portion of the cash from the
property sales to satisfy obligations of the Partnership as well as to
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 Masri
and Bruss lawsuits discussed in Note 4 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 such contingencies. There
can be no assurances as to the time frame for the conclusion of all
contingencies.
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 the 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.
BALCOR EQUITY PROPERTIES-XVIII
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement, previously filed as Exhibit 4.1 to
Amendment No. 1 to Registrant's Registration Statement on Form S-11 dated May
15, 1984 (Registration No. 2-89380), and Form of Confirmation regarding
Interests in the Registrant set forth as Exhibit 4.2 to the Registrant's Report
on Form 10-Q for the quarter ended June 30, 1992 (Commission File No. 0-13357)
are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six months ended June
30, 2000 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 2000.
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 and
Financial Officer) of Balcor
Equity Partners - XVIII, the
General Partner
Date:August 11, 2000
-----------------
