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, 1995
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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
-------------------------------------------------------
(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.)
2355 Waukegan Road
Bannockburn, Illinois 60015
---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 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 REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
------------- -------------
Cash and cash equivalents $ 223,210 $ 325,412
Escrow deposits 950,820 1,094,558
Accounts and accrued interest receivable 14,044 364,052
Prepaid expenses 353,195
Deferred expenses, net of accumulated
amortization of $674,300 in 1995
and $585,255 in 1994 654,770 743,815
------------- -------------
2,196,039 2,527,837
------------- -------------
Investment in real estate, at cost:
Land 11,076,389 11,076,389
Buildings and improvements 71,945,955 71,945,955
------------- -------------
83,022,344 83,022,344
Less accumulated depreciation 30,007,962 28,913,579
------------- -------------
Investment in real estate, net of
accumulated depreciation 53,014,382 54,108,765
------------- -------------
$ 55,210,421 $ 56,636,602
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Loans payable - affiliate $ 8,015,555 $ 8,108,555
Accounts payable 118,171 170,393
Due to affiliates 50,332 258,657
Accrued liabilities, principally interest
and real estate taxes 1,000,248 1,131,065
Security deposits 292,402 293,922
Mortgage notes payable 65,596,861 65,971,823
------------- -------------
Total liabilities 75,073,569 75,934,415
Affiliates' participation in joint ventures (1,230,629) (1,201,168)
Partners' deficit (87,037 Limited Partnership
Interests issued and outstanding) (18,632,519) (18,096,645)
------------- -------------
$ 55,210,421 $ 56,636,602
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1995 and 1994
(Unaudited)
1995 1994
------------- -------------
Income:
Rental and service $ 7,732,033 $ 8,989,708
Interest on short-term investments 33,605 15,579
------------- -------------
Total income 7,765,638 9,005,287
------------- -------------
Expenses:
Interest on mortgage notes payable 2,880,999 3,412,066
Interest on short-term loans 271,000 168,692
Depreciation 1,094,383 1,322,291
Amortization of deferred expenses 89,045 111,485
Property operating 2,697,078 3,596,899
Real estate taxes 610,965 883,646
Property management fees 376,423 446,952
Administrative 272,073 377,420
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Total expenses 8,291,966 10,319,451
------------- -------------
Loss before participation in joint ventures
and extraordinary item (526,328) (1,314,164)
Affiliates' participation in income
from joint ventures (9,546) (31)
------------- -------------
Loss before extraordinary item (535,874) (1,314,195)
Extraordinary item:
Debt restructuring expense (1,091,573)
------------- -------------
Net loss $ (535,874) $ (2,405,768)
============= =============
Loss before extraordinary item
allocated to General Partner $ (5,359) $ (13,142)
============= =============
Loss before extraordinary item
allocated to Limited Partners $ (530,515) $ (1,301,053)
============= =============
Loss before extraordinary item per
Limited Partnership Interest (87,037
issued and outstanding) $ (6.10) $ (14.95)
============= =============
Extraordinary item allocated to General
Partner None $ (10,916)
============= =============
Extraordinary item allocated to Limited
Partners None $ (1,080,657)
============= =============
Extraordinary item per Limited Partnership
Interest (87,037 issued and outstanding) None $ (12.41)
============= =============
Net loss allocated to General Partner $ (5,359) $ (24,058)
============= =============
Net loss allocated to Limited Partners $ (530,515) $ (2,381,710)
============= =============
Net loss per Limited Partnership
Interest (87,037 issued and outstanding) $ (6.10) $ (27.36)
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1995 and 1994
(Unaudited)
1995 1994
------------- -------------
Income:
Rental and service $ 3,841,444 $ 4,537,593
Interest on short-term investments 13,389 8,934
------------- -------------
Total income 3,854,833 4,546,527
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Expenses:
Interest on mortgage notes payable 1,440,621 1,793,635
Interest on short-term loans 139,288 92,279
Depreciation 547,190 661,147
Amortization of deferred expenses 44,525 41,711
Property operating 1,390,954 1,861,303
Real estate taxes 293,465 436,546
Property management fees 190,593 224,960
Administrative 140,352 201,655
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Total expenses 4,186,988 5,313,236
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Loss before participation in joint ventures
and extraordinary item (332,155) (766,709)
Affiliates' participation in income
from joint ventures 682 2,000
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Loss before extraordinary item (331,473) (764,709)
Extraordinary item:
Debt restructuring expense (21,595)
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Net loss $ (331,473) $ (786,304)
============= =============
Loss before extraordinary item
allocated to General Partner $ (3,315) $ (7,647)
============= =============
Loss before extraordinary item
allocated to Limited Partners $ (328,158) $ (757,062)
============= =============
Loss before extraordinary item per
LimitedPartnership Interest (87,037
issued and outstanding) $ (3.78) $ (8.70)
============= =============
Extraordinary item allocated to General
Partner None $ (216)
============= =============
Extraordinary item allocated to Limited
Partners None $ (21,379)
============= =============
Extraordinary item per Limited Partnership
Interest (87,037 issued and outstanding) None $ (0.24)
============= =============
Net loss allocated to General Partner $ (3,315) $ (7,863)
============= =============
Net loss allocated to Limited Partners $ (328,158) $ (778,441)
============= =============
Net loss per Limited Partnership
Interest (87,037 issued and outstanding) $ (3.78) $ (8.94)
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1995 and 1994
(Unaudited)
1995 1994
------------- -------------
Operating activities:
Net loss $ (535,874) $ (2,405,768)
Adjustments to reconcile net loss to
net cash provided by or (used in)
operating activities:
Debt restructuring expense 1,091,573
Affiliates' participation in income
from joint ventures 9,546 31
Depreciation of properties 1,094,383 1,322,291
Amortization of deferred expenses 89,045 111,485
Net change in:
Escrow deposits 143,738 25,995
Accounts and accrued interest
receivable 350,008 (310,702)
Prepaid expenses (353,195)
Accounts payable (52,222) (76,054)
Due to affiliates (208,325) 2,472
Accrued liabilities (130,817) (504,798)
Security deposits (1,520) (1,699)
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Net cash provided by or (used in)
operating activities 404,767 (745,174)
------------- -------------
Financing activities:
Capital contribution by joint venture
partners - affiliate 15,749
Distributions to joint venture
partners - affiliate (54,756) (51,352)
Proceeds from loans payable - affiliate 307,000 671,456
Repayment of loans payable - affiliate (400,000) (315,945)
Principal payments on mortgage notes
payable (374,962) (272,756)
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Net cash (used in) or provided by
financing activities (506,969) 31,403
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Net change in cash and cash equivalents (102,202) (713,771)
Cash and cash equivalents at beginning
of year 325,412 1,160,704
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Cash and cash equivalents at end of period $ 223,210 $ 446,933
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
Several reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have not changed the 1994 results. 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, 1995,
and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the six months ended June 30, 1995 and 1994, the Partnership incurred
interest expense on mortgage notes payable of $2,880,999 and $3,412,066 and
paid interest expense of $2,914,520 and $3,729,373, 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, 1995 were:
Paid
----------------------
Six Months Quarter Payable
----------- --------- -----------
Reimbursement of expenses to
the General Partner, at cost $182,605 $182,605 $ 6,931
During the six months ended June 30, 1995, the Partnership made net repayments
of $93,000 on the General Partner loan. As of June 30, 1995, the General
Partner has advanced $8,015,555 to the Partnership to provide working capital
and meet other Partnership obligations. During the six months ended June 30,
1995 and 1994, the Partnership incurred interest expense in connection with
these loans of $271,000 and $168,692, respectively. The Partnership paid
interest expense of $388,238 and $275,511 during the six months ended June 30,
1995 and 1994, respectively. As of June 30, 1995, interest of $43,401 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, 1995, this rate was 6.542%.
<PAGE>
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. The Partnership has since disposed of six
of these properties. As of June 30, 1995, the Partnership continues to operate
the eight 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 1994 for a more complete understanding of
the Partnership's financial position.
Operations
----------
Summary of Operations
---------------------
The Partnership recognized debt restructuring expense as a result of approved
plans of reorganization related to the Ridgepoint Green and Ridgepoint Way
loans during the first and second quarters of 1994. Subsequently, in August
1994, the Partnership sold these properties which were generating losses for
financial statement purposes. These events were the primary reason for the
decrease in the net loss for the six months and quarter ended June 30, 1995 as
compared to the same periods in 1994.
1995 Compared to 1994
---------------------
As mentioned above, the Partnership sold the Ridgepoint Green and Ridgepoint
Way apartment complexes in August 1994. As a result, the Partnership
experienced decreases in rental and service income, interest expense on
mortgage notes payable, depreciation, property operating expense, real estate
taxes and property management fees during the six months and quarter ended June
30, 1995 as compared to the same periods in 1994. Increased occupancy and/or
rental rates at six of the Partnership's eight remaining properties during the
six months ended June 30, 1995 partially offset the decrease in rental and
service income, and consequently, property management fees.
As a result of higher interest rates earned on short-term investments, interest
income on short-term investments increased during the six months and quarter
ended June 30, 1995 as compared to the same periods in 1994.
Due to higher average short-term loan balances payable to an affiliate and
higher interest rates in 1995, interest expense on short-term loans increased
during the six months and quarter ended June 30, 1995 as compared to the same
periods in 1994.
<PAGE>
During 1994, the Partnership fully amortized the remaining loan modification
fees related to the Ridgepoint Green and Ridgepoint Way loans. As a result the
amortization expense related to the loan modification fees ceased and caused a
decrease in amortization expense during the six months ended June 30, 1995 as
compared to the same period in 1994. The amortization of financing fees
related to the refinancing of the Spring Creek mortgage in July 1994 partially
offset the decrease in amortization expense and resulted in an increase in
amortization expense for the quarter ended June 30, 1995 as compared to the
same period in 1994.
Legal and professional fees were incurred in 1994 in connection with the
reorganization proceedings related to the Ridgepoint Green and Ridgepoint Way
apartment complexes. This was the primary reason for the decrease in
administrative expense for the six months and quarter ended June 30, 1995 as
compared to the same periods in 1994. Decreased data processing costs in 1995
also contributed to the decrease.
During the first six months of 1994, the Partnership recognized debt
restructuring expense in connection with the approved plans of reorganization
related to the Ridgepoint Green and Ridgepoint Way mortgage notes. In addition,
the Partnership fully amortized the remaining loan modification fees related to
the prior modifications of these loans. The amortization of these fees has been
included in the debt restructuring expense in the 1994 financial statements.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership decreased as of June 30, 1995 when
compared to December 31, 1994. The Partnership generated cash flow from its
operating activities. The cash flow generated by the Partnership's properties
and the receipt of insurance proceeds for the costs of the 1994 hail storm
damage at the Ridgepoint Green and Ridgepoint Way apartment complexes were
partially offset by the payment of administrative expenses and interest expense
on the General Partner loan. The Partnership used cash to fund its financing
activities which included a net repayment on the General Partner loan and the
payment of principal on the Partnership's loans.
The Partnership has loans of approximately $8,016,000 payable to the General
Partner at June 30, 1995 in connection with funds advanced for working capital
purposes and for property operating deficits. 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 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.
<PAGE>
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 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. During the six months ended June 30, 1995 and 1994, six of the
Partnership's eight remaining properties generated positive cash flow and two
generated marginal cash flow deficits. In addition, during the six months ended
June 30, 1994, the Ridgepoint Green and Ridgepoint Way apartment complexes,
which were sold in August 1994, generated significant cash flow deficits.
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. As of June 30, 1995, the occupancy rates of the
Partnership's properties ranged from 91% to 98%. Despite improvements during
1994 and the first six months of 1995 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. As a result of the General
Partner's efforts to refinance certain of the existing loans with new lenders,
the Partnership has no third-party, first mortgage financing which matures
prior to October 1996.
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.
<PAGE>
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.
(10) Material Contracts
Agreement of Sale relating to the sale of Ridgepoint Green and Ridgepoint Way
apartment complexes, Dallas, Texas, previously filed as Exhibit 2 to the
Registrant's Report on Form 8-K dated July 8, 1994 is incorporated herein by
reference.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1995.
<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 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/Brian D. Parker
---------------------------------
Brian D. Parker
Senior Vice President, and Chief
Financial Officer (Principal Accounting and
Financial Officer) of Balcor Partners-84 II,
Inc., the General Partner
Date: August 14, 1995
---------------------------
<PAGE>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 223
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<RECEIVABLES> 14
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1541
<PP&E> 83022
<DEPRECIATION> 30008
<TOTAL-ASSETS> 55210
<CURRENT-LIABILITIES> 9477
<BONDS> 65597
<COMMON> 0
0
0
<OTHER-SE> (18633)
<TOTAL-LIABILITY-AND-EQUITY> 55210
<SALES> 0
<TOTAL-REVENUES> 7756
<CGS> 0
<TOTAL-COSTS> 3684
<OTHER-EXPENSES> 1456
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3152
<INCOME-PRETAX> (536)
<INCOME-TAX> 0
<INCOME-CONTINUING> (536)
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<NET-INCOME> (536)
<EPS-PRIMARY> (6.10)
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