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, 1994
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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 0-13334
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BALCOR REALTY INVESTORS 84-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Maryland 36-3223939
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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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 REALTY INVESTORS 84-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
June 30, 1994 and December 31, 1993
(Unaudited)
ASSETS
1994 1993
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Cash and cash equivalents $ 446,933 $ 1,160,704
Escrow deposits 1,123,676 1,149,671
Accounts and accrued interest receivable 375,978 65,276
Deferred expenses, net of accumulated
amortization of $585,495 in 1994
and $1,084,192 in 1993 597,591 1,064,613
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2,544,178 3,440,264
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Investment in real estate, at cost:
Land 15,412,784 15,412,784
Buildings and improvements 86,867,741 86,867,741
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102,280,525 102,280,525
Less accumulated depreciation 33,709,915 32,387,624
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Investment in real estate, net of
accumulated depreciation 68,570,610 69,892,901
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$ 71,114,788 $ 73,333,165
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LIABILITIES AND PARTNERS' CAPITAL
Loans payable - affiliate $ 8,131,234 $ 7,775,723
Accounts payable 39,439 115,493
Due to affiliates 270,904 268,432
Accrued liabilities, principally interest,
debt restructuring expense and real
estate taxes 2,505,958 2,274,720
Security deposits 371,156 372,855
Purchase price, promissory and mortgage
notes payable 83,858,151 84,130,907
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Total liabilities 95,176,842 94,938,130
Affiliates' participation in joint ventures (1,104,703) (1,053,382)
Partners' capital (87,037 Limited Partnership
Interests issued and outstanding) (22,957,351) (20,551,583)
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$ 71,114,788 $ 73,333,165
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The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 84-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental and service $ 8,989,708 $ 9,327,601
Interest on short-term investments 15,579 12,829
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Total income 9,005,287 9,340,430
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Expenses:
Interest on purchase price, promissory
and mortgage notes payable 3,412,066 4,413,018
Interest on short-term loans 168,692 130,765
Depreciation 1,322,291 1,390,569
Amortization of deferred expenses 467,022 277,607
Property operating 3,589,032 3,237,427
Real estate taxes 883,646 849,817
Property management fees 446,952 451,214
Administrative 385,287 393,311
Debt restructuring expense 736,036
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Total expenses 11,411,024 11,143,728
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Loss before gain on sale of property,
participations in joint ventures and
extraordinary items (2,405,737) (1,803,298)
Gain on sale of property 3,606,825
Affiliates' participation in (income)
losses from joint ventures (31) 43,237
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(Loss) income before extraordinary items (2,405,768) 1,846,764
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Extraordinary items:
Gain on forgiveness of debt 1,234,276
Gain on foreclosure of properties 8,432,686
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Total extraordinary items 9,666,962
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Net (loss) income $ (2,405,768) $ 11,513,726
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(Loss) income before extraordinary items
allocated to General Partner $ (24,058) $ 18,468
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(Loss) income before extraordinary items
allocated to Limited Partners $ (2,381,710) $ 1,828,296
============= =============
(Loss) income before extraordinary items
per Limited Partnership Interest (87,037
issued and outstanding) $ (27.36) $ 21.01
============= =============
Extraordinary items allocated to General
Partner None $ 96,669
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Extraordinary items allocated to Limited
Partners None $ 9,570,293
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Extraordinary items per Limited Partnership
Interest (87,037 issued and outstanding) None $ 109.95
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Net (loss) income allocated to General
Partner $ (24,058) $ 115,137
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Net (loss) income allocated to Limited
Partners $ (2,381,710) $ 11,398,589
============= =============
Net (loss) income per Limited Partnership
Interest (87,037 issued and outstanding) $ (27.36) $ 130.96
============= =============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 84-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental and service $ 4,537,593 $ 4,564,728
Interest on short-term investments 8,934 7,322
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Total income 4,546,527 4,572,050
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Expenses:
Interest on purchase price, promissory
and mortgage notes payable 1,793,635 2,161,196
Interest on short-term loans 92,279 61,084
Depreciation 661,147 676,318
Amortization of deferred expenses 41,711 208,841
Property operating 1,853,436 1,575,323
Real estate taxes 436,546 392,064
Property management fees 224,960 220,903
Administrative 209,522 217,803
Debt restructuring expense 21,595
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Total expenses 5,334,831 5,513,532
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Loss before gain on sale of property,
participations in joint ventures and
extraordinary items (788,304) (941,482)
Gain on sale of property 3,606,825
Affiliates' participation in losses
from joint ventures 2,000 29,665
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(Loss) income before extraordinary items (786,304) 2,695,008
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Extraordinary items:
Gain on forgiveness of debt 1,234,276
Gain on foreclosures of properties 4,472,622
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Total extraordinary items 5,706,898
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Net (loss) income $ (786,304) $ 8,401,906
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(Loss) income before extraordinary items
allocated to General Partner $ (7,863) $ 26,950
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(Loss) income before extraordinary items
allocated to Limited Partners $ (778,441) $ 2,668,058
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(Loss) income before extraordinary items
per Limited Partnership Interest (87,037
issued and outstanding) $ (8.94) $ 30.65
============= =============
Extraordinary items allocated to General
Partner None $ 57,069
============= =============
Extraordinary items allocated to Limited
Partners None $ 5,649,829
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Extraordinary items per Limited Partnership
Interest (87,037 issued and outstanding) None $ 64.92
============= =============
Net (loss) income allocated to General
Partner $ (7,863) $ 84,019
============= =============
Net (loss) income allocated to Limited
Partners $ (778,441) $ 8,317,887
============= =============
Net (loss) income per Limited Partnership
Interest (87,037 issued and outstanding) $ (8.94) $ 95.57
============= =============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 84-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Operating activities:
Net (loss) income $ (2,405,768) $ 11,513,726
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Gain on forgiveness of debt (1,234,276)
Gain on foreclosure of properties (8,432,686)
Recognized gain on sale of property (3,606,825)
Affiliates' participation in income
(losses) from joint ventures 31 (43,237)
Debt restructuring expense 736,036
Depreciation of properties 1,322,291 1,390,569
Amortization of deferred expenses 467,022 277,607
Net change in:
Escrow deposits 25,995 (324,800)
Accounts and accrued interest
receivable (310,702) (252,608)
Accounts payable (76,054) (71,654)
Due to affiliates 2,472 (34,524)
Accrued liabilities (504,798) (1,149)
Security deposits (1,699) (83,148)
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Net cash used in operating activities (745,174) (903,005)
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Investing activities:
Proceeds from sale of property 9,385,000
Costs incurred in connection with sale
of real estate (164,056)
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Net cash provided by investing activities 9,220,944
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Financing activities:
Distributions to joint venture
partners - affiliate (51,352)
Proceeds from loans payable - affiliate 671,456 333,197
Repayment of loans payable - affiliate (315,945) (1,429,236)
Proceeds from issuance of mortgage notes
payable 13,143,500
Principal payments on purchase price,
promissory and mortgage notes payable (272,756) (345,745)
Repayments of mortgage notes payable (19,792,049)
Payment of deferred expenses (272,503)
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Net cash provided by or (used in) financing
activities 31,403 (8,362,836)
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Net change in cash and cash equivalents (713,771) (44,897)
Cash and cash equivalents at beginning of year 1,160,704 223,828
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Cash and cash equivalents at end of period $ 446,933 $ 178,931
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The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland 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, 1994, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1994 and 1993, the Partnership incurred
interest expense on purchase price, promissory and mortgage notes payable of
$3,412,066 and $4,413,018 and paid interest expense of $3,729,373 and
$4,209,057, 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, 1994 were:
Paid
--------------------
Six Months Quarter Payable
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Property management fees $ 459,443 $246,810 $91,606
Reimbursement of expenses to
the General Partner, at cost:
Accounting 20,907 18,548 40,233
Data processing 15,255 15,255 27,865
Investor processing 3,274 2,905 4,579
Investor communications 2,677 2,375 4,905
Legal 5,267 4,673 13,885
Portfolio management 23,935 18,552 46,539
Other 4,908 4,354 8,235
Through December 31, 1993, the General Partner had advanced $7,775,723 to the
Partnership to provide working capital and meet other Partnership obligations.
During 1994, the General Partner made net advancements of $355,511 to the
Partnership for additional working capital. As of June 30, 1994, the total of
these outstanding borrowings was $8,131,234. During the six months ended June
30, 1994 and 1993, the Partnership incurred interest expense in connection with
these loans of $168,692 and $130,765, respectively. The Partnership paid
interest expense of $275,511 and $159,062 during the six months ended June 30,
1994 and 1993, respectively. As of June 30, 1994, interest of $33,057 was
payable on these advances. Interest was computed at the American Express
Company cost of funds rate plus a spread to cover administrative expenses. As
of June 30, 1994, this rate was 4.82%.
4. Debt Restructuring:
Plans of reorganization related to the Ridgepoint Green and Ridgepoint Way
apartment complexes were confirmed by the Bankruptcy Court in March 1994 and
made effective in April 1994. In accordance with the plans, the lender's
secured claims for the two first mortgage loans are equal to the outstanding
principal balances of the loans, the unpaid interest due through the effective
date of the plans and all legal and all other professional fees incurred by the
lender during the bankruptcy proceedings. The total of these amounts were
$9,209,519 and $9,986,005 for Ridgepoint Green and Ridgepoint Way,
respectively, at June 30, 1994. The outstanding principal amount of the loans
will bear interest at 8% per annum payable in monthly interest only
installments through the new maturity date of October 1, 1995. The Partnership
is also obligated to remit to the lender all monthly excess cash flow from the
properties to be applied to unpaid amounts due under each of the loans.
Under the plans, the Partnership has until maturity to sell the properties, on
an all cash basis, to an unaffiliated party at a purchase price which will
yield net cash proceeds combined for the properties of no less than
$16,038,000. The lender will accept this amount as payment in full of both of
its loans, which includes a discount to the current outstanding balance of the
loans, plus 50% of net cash proceeds in excess of $16,038,000 up to net cash
proceeds of $17,038,000 and 25% of net cash proceeds thereafter. If a qualified
sale does not occur, the lender has the right to obtain title to the
properties.
The General Partner has guaranteed payment of $2,000,000 of each of the loans
in the event of specified defaults under the loans. A default under either loan
is a default under the other loan. Both loans must be repaid before the
Partnership will be permitted to make any distributions to the General Partner
or Limited Partners.
5. Loan Refinancing:
In July 1994, the Partnership completed the refinancing of the loan
collateralized by the Spring Creek Apartments. The refinancing resulted in the
Partnership obtaining a new $7,448,362 first mortgage loan from an unaffiliated
lender. The loan bears interest at 9.21% per annum and monthly principal and
interest payments of $61,060 will be payable through maturity, August 1, 2000.
The Partnership used the proceeds from the new mortgage loan to repay the prior
loan of $7,100,000. The Partnership also paid refinancing costs of $238,235
which will be amortized over the life of the loan.
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors 84-Series II, A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1983 to invest in and operate
income-producing real property. The Partnership raised $87,037,000 through the
sale of Limited Partnership Interests and utilized these proceeds to acquire
fourteen real property investments. Titles to the Southern Hills, Rancho Mirage
and Highland Ridge apartment complexes were relinquished through foreclosure
during January 1990, March 1993 and May 1993, respectively. The Partnership
also sold the Butterfield Village Apartments in April 1993. The Partnership
continues to operate the ten remaining 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 1993 for a more complete understanding of
the Partnership's financial position.
Operations
- - ----------
Summary of Operations
- - ---------------------
The Partnership recognized a gain on the sale of the Butterfield Village
Apartments in April 1993. In addition, as a result of approved plans of
reorganization related to the Ridgepoint Green and Ridgepoint Way apartment
complexes, the Partnership recognized debt restructuring expense and increased
amortization expense during the quarter ended March 31, 1994. The combined
effect of these events were the primary reason for the recognition of a loss
before extraordinary items during the six months and quarter ended June 30,
1994 as compared to income during the same periods in 1993. The Partnership
realized further income during the six months and quarter ended June 30, 1993
as a result of the extraordinary gains recognized in connection with the
foreclosures of the Rancho Mirage and Highland Ridge apartment complexes, as
well as the gain recognized in connection with the forgiveness of debt related
to the Ridgetree II refinancing in April 1993. Further discussion of the
Partnership's operations is summarized below.
1994 Compared to 1993
- - ---------------------
As mentioned above, the Partnership sold the Butterfield Village Apartments in
April 1993. As a result, the Partnership experienced decreases in rental and
service income, interest expense on purchase price, promissory and mortgage
notes payable, depreciation, property operating expense, real estate taxes and
property management fees during the six months and quarter ended June 30, 1994
as compared to the same periods in 1993. Increased occupancy and/or rental
rates at six of the Partnership's remaining properties during the six months
ended June 30, 1994 partially offset the above decrease in rental and service
income, and consequently, property management fees.
The loans collateralized by the Ridgepoint Green and Ridgepoint Way apartment
complexes were modified, effective in April 1994. The Partnership had
previously recognized level yield adjustments relating to the interest paid
under the prior terms of these loans. In connection with the modifications, the
Partnership wrote-off these liabilities, of approximately $290,000 which, along
with decreased interest rates, contributed to the decrease in interest expense
on purchase price, promissory and mortgage notes payable discussed above. The
Partnership also fully amortized the remaining loan modification fees related
to the 1989 modifications of these loans, which resulted in increased
amortization expense during the six months ended June 30, 1994 as compared to
the same period in 1993. In addition, in accordance with the terms of the
plans, the Partnership is obligated to pay for all legal and all other
professional fees incurred by the lender during the bankruptcy proceedings from
the future cash flow of the properties. These costs were recognized as debt
restructuring expense during the six months ended June 30, 1994.
During April, May and December 1993, the loans collateralized by the Ridgetree
II, Meadow Creek and Park Colony apartment complexes were refinanced or
modified. In addition, in accordance with the loan agreements, the interest
rates on the loans collateralized by the Rosehill Pointe and Westwood Village
apartment complexes were adjusted to lower rates during July and October 1993,
respectively. These events contributed to the decreases in interest expense on
purchase price, promissory and mortgage notes payable discussed above.
During the second quarter of 1994, the General Partner made advances to the
Partnership for additional working capital. This, along with higher interest
rates in 1994, resulted in an increase in interest expense on short-term loans
during the six months and quarter ended June 30, 1994 as compared to the same
periods in 1993.
Due to the sale of the Butterfield Village Apartments and the foreclosure of
the Highland Ridge Apartments, the Partnership fully amortized the remaining
financing fees related to the corresponding mortgage notes payable in 1993.
This partially offset the increase in amortization expense discussed above and
resulted in a decrease for the quarter ended June 30, 1994 as compared to the
same period in 1993.
During the six months ended June 30, 1994, the Partnership incurred higher
maintenance and repair expense at the La Contenta, Ridgepoint Green, Ridgepoint
Way, Rosehill Pointe and Seabrook apartment complexes. The Partnership had
deferred non-critical costs during 1993 at the Ridgepoint Green and Ridgepoint
Way apartment complexes due to the bankruptcy filings. In addition, in
accordance with the terms of the plans, the Partnership completed exterior
painting at these two properties during the second quarter of 1994. These
increases fully offset the decrease in property operating expenses discussed
above and resulted in an increase for the six months and quarter ended June 30,
1994 as compared to the same periods in 1993.
During the six months and quarter ended June 30, 1994, higher real estate taxes
were incurred at the Ridgetree II Apartments as a result of an increased
assessment. This additional expense offset the reduction in real estate tax
expense due to the property disposition discussed above.
During 1994, Rosehill Pointe Apartments experienced a decrease in interest
expense, as discussed above. This was partially offset by increases in
maintenance and repair expense at this property and at the Seabrook Apartments
during 1994 and resulted in affiliates' participation in income from joint
ventures during the six months ended June 30, 1994 as compared to losses during
the same period in 1993 and a decrease in affiliates' participation in losses
during the quarter ended June 30, 1994 as compared to the same period in 1993.
During April 1993, the Partnership recognized a gain of $3,606,825 on the sale
of Butterfield Village Apartments located in Tempe, Arizona.
During the six months ended June 30, 1993, the Partnership recognized an
extraordinary gain on forgiveness of debt of $1,234,276 in connection with the
April 1993 refinancing of the Ridgetree II Apartments located in Dallas, Texas.
The Partnership also recognized extraordinary gains on foreclosures of
$8,432,686 in connection with the March 1993 foreclosure of the Rancho Mirage
Apartments located in Phoenix, Arizona and the May 1993 foreclosure of the
Highland Ridge Apartments located in Oklahoma City, Oklahoma.
Liquidity and Capital Resources
- - -------------------------------
The cash or near cash position of the Partnership decreased as of June 30, 1994
when compared to December 31, 1993. The Partnership used cash to fund its
operating activities. The cash flow generated by the Partnership's properties
was offset by the payment of administrative expenses, interest expense on the
General Partner loan and expenditures relating to damage caused by a hailstorm
at the Ridgepoint Green and Ridgepoint Way apartment complexes. The Partnership
expects to be reimbursed by its insurance company for the costs of this damage
less the amount of the deductible portion of the claim. The Partnership
received cash from its financing activities due to additional net borrowings
received from the General Partner. This was partially offset by the payment of
principal on the loans collateralized by the Partnership's properties and the
payment of distributions to joint venture partners.
The Partnership is largely dependent on loans from the General Partner and owes
approximately $8,131,000 to the General Partner at June 30, 1994 in connection
with funds advanced for working capital purposes. These loans are expected to
be repaid from available cash flow from future property operations, or from
proceeds received from the disposition of the Partnership's real estate
investments prior to any distributions to the Limited Partners from these
sources.
The General Partner may continue to provide additional short-term loans to the
Partnership or to fund working capital needs or property operating deficits,
although there is no assurance that such loans will be available. Should such
short-term loans not be available, the General Partner will seek alternative
third party sources of financing working capital. However, the current economic
environment and its impact on the real estate industry make it unlikely that
the Partnership would be able to secure financing from third parties to fund
working capital needs or operating deficits. Should additional borrowings be
needed and not be available either through the General Partner or third
parties, the Partnership may be required to dispose of some of its properties
to satisfy these obligations.
During the six months ended June 30, 1994, six of the Partnership's ten
remaining properties generated positive cash flow, two generated a marginal
cash flow deficit and two generated significant cash flow deficits. During the
six months ended June 30, 1993, eight of the Partnership's ten remaining
properties generated positive cash flow while two generated marginal cash flow
deficits. The Partnership classifies the cash flow performance of its
properties as either positive, a marginal deficit or a significant deficit,
each after consideration of debt service payments unless otherwise indicated. A
deficit is considered to be significant if it exceeds $250,000 annually or 20%
of the property's rental and service income.
The Park Colony and Westwood Village apartment complexes generated marginal
cash flow deficits during the first six months of 1993, whereas during the same
period in 1994, the properties generated positive cash flow due to reduced debt
service payments. The loan collateralized by the Park Colony Apartments was
modified in 1993 and the interest rate on the loan collateralized by the
Westwood Village Apartments was adjusted to a lower rate during 1993 in
accordance with the loan agreement. The Ridgetree II Apartments, which
generated positive cash flow during the first six months of 1993, generated a
marginal cash flow deficit during the same period in 1994 due to higher real
estate taxes resulting from an increased assessment. The Seabrook Apartments
which had generated positive cash flow during the first six months of 1993
experienced slightly higher expenses which caused the property to operate at a
marginal deficit during the same period in 1994. The Ridgepoint Green and
Ridgepoint Way apartment complexes, which generated significant cash flow
deficits during the six months ended June 30, 1994 due to the payment of non-
critical maintenance and repair expenses which had been deferred due to the
bankruptcy filings, generated positive cash flow during the same period in 1993
due to the suspension of debt service payments by the Partnership effective
January 1993. Had the Partnership paid the suspended debt service payments,
both properties would have generated marginal cash flow deficits for the six
months ended June 30, 1993. While the bankruptcy proceedings continued, the
Partnership remitted partial debt service payments to the lender equal to
monthly net cash flow from the property.
The loans collateralized by the Ridgepoint Green and Ridgepoint Way apartment
complexes were modified, effective in April 1994. Pursuant to the
modifications, the outstanding principal amount of the loans will bear interest
at 8% per annum payable in monthly interest-only installments through the new
maturity date of October 1, 1995. In addition, the Partnership is obligated to
sell the properties on or before the maturity date on certain specified terms.
The Partnership is also obligated to remit to the lender all monthly excess
cash flow from the properties to be applied to unpaid amounts due under the
loans. See Note 4 of Notes to Financial Statements for additional information.
In July 1994, the first mortgage loan collateralized by the Spring Creek
Apartments was refinanced with a new $7,448,362 first mortgage loan from an
unaffiliated lender. The original loan bore interest at 9.25% and was to mature
in August 1994, whereas the new loan bears interest at 9.21% and matures on
August 1, 2000. See Note 5 of Notes to Financial Statements for additional
information.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties including refinancing of mortgage
loans, improving property operating performance, and seeking rent increases
where market conditions allow. Despite improvements during 1993 and the first
six months of 1994 in the local economies and rental markets where certain of
the Partnership's properties are located, the General Partner believes that
continued ownership of many of the properties is in the best interests of the
Partnership in order to maximize potential returns to Limited Partners. As a
result, the Partnership will continue to own these properties for longer than
the holding period for the assets originally described in the prospectus.
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. During 1995, $17,900,000 of
mortgage loans collateralized by the Ridgepoint Green and Ridgepoint Way
apartment complexes mature. As a result of the downturn experienced by the
real estate industry over the last few years, many banks, savings and loans and
other lending institutions have tightened mortgage lending criteria and are
generally willing to advance less funds with respect to a property than many
lenders were willing to advance during the 1980's. As a result, in certain
instances it may be difficult for the Partnership to refinance a property in an
amount sufficient to retire in full the current mortgage financing with respect
to the property. In the event negotiations with the existing lender for a loan
modification or with new lenders for a refinancing are unsuccessful, the
Partnership may sell the collateral property or other properties to satisfy an
obligation or may relinquish title to the collateral property in satisfaction
of the outstanding mortgage loan balance.
In July 1994, the Partnership contracted to sell the Ridgepoint Green and
Ridgepoint Way apartment complexes for a sale price of $17,790,715. The closing
of the sale of the properties is scheduled for August 17, 1994, and is subject
to the satisfaction of numerous terms and conditions.
Westwood Village Apartments is located near the Dallas/Ft. Worth Airport. A
proposed expansion plan provides for the construction of two additional runways
on airport property. A proposed plan provides for varying levels of
compensations to single family homeowners for the expected loss in value of
their homes as a result of increased air traffic and heightened noise levels.
However, no similar compensation is planned for the majority of apartment
complex owners in the area, including the Partnership. In July 1993, the
Partnership and other affected multi-family property owners filed a lawsuit to
obtain equitable compensation. The airport board and the plaintiffs each filed
a motion for summary judgement in March and April 1994, respectively. Court-
ordered mediation between the parties held in April 1994 has not resulted in a
resolution of the matter to date. It is expected that the court will rule on
the motions during 1994.
Although investors have received certain tax benefits, the Partnership has not
commenced distributions. Future distributions will depend on improved cash flow
from the Partnership's remaining properties and proceeds from future property
sales, as to both of which there can be no assurances.
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 depending on general
or local economic conditions. In the long-term, inflation will increase
operating costs and replacement costs and may lead to increased rental revenues
and real estate values.
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- - -----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 2
of the Registrant's Registration Statement on Form S-11 dated May 16, 1984
(Registration No. 2-89319), 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. 0-13334) are incorporated
herein by reference.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1994.
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 REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
--------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-84 II, Inc., the General Partner
By: /s/Allan Wood
---------------------------------
Allan Wood
Executive Vice President, and Chief Accounting
and Financial Officer (Principal Accounting and
Financial Officer) of Balcor Partners-84 II,
Inc., the General Partner
Date: August 12, 1994
---------------------------
