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 March 31, 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.)
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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<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
------------- -------------
Cash and cash equivalents $ 549,572 $ 325,412
Escrow deposits 1,120,228 1,094,558
Accounts and accrued interest receivable 364,148 364,052
Deferred expenses, net of accumulated
amortization of $629,775 in 1995
and $585,255 in 1994 699,295 743,815
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2,733,243 2,527,837
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Investment in real estate, at cost:
Land 11,076,389 11,076,389
Buildings and improvements 71,945,955 71,945,955
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83,022,344 83,022,344
Less accumulated depreciation 29,460,772 28,913,579
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Investment in real estate, net of
accumulated depreciation 53,561,572 54,108,765
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$ 56,294,815 $ 56,636,602
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LIABILITIES AND PARTNERS' DEFICIT
Loans payable - affiliate $ 8,415,555 $ 8,108,555
Accounts payable 130,435 170,393
Due to affiliates 178,588 258,657
Accrued liabilities, principally interest
and real estate taxes 1,002,978 1,131,065
Security deposits 291,411 293,922
Mortgage notes payable 65,770,012 65,971,823
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Total liabilities 75,788,979 75,934,415
Affiliates' participation in joint ventures (1,193,118) (1,201,168)
Partners' deficit (87,037 Limited Partnership
Interests issued and outstanding) (18,301,046) (18,096,645)
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$ 56,294,815 $ 56,636,602
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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 March 31, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 3,890,589 $ 4,452,115
Interest on short-term investments 20,216 6,645
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Total income 3,910,805 4,458,760
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Expenses:
Interest on mortgage notes payable 1,440,378 1,618,431
Interest on short-term loans 131,712 76,413
Depreciation 547,193 661,144
Amortization of deferred expenses 44,520 69,774
Property operating 1,306,124 1,735,596
Real estate taxes 317,500 447,100
Property management fees 185,830 221,992
Administrative 131,721 175,765
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Total expenses 4,104,978 5,006,215
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Loss before participations in joint ventures
and extraordinary item (194,173) (547,455)
Affiliates' participation in income from
joint ventures (10,228) (2,031)
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Net loss before extraordinary item (204,401) (549,486)
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Extraordinary item:
Debt restructuring expense (1,069,978)
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Net loss $ (204,401) $ (1,619,464)
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Loss before extraordinary item allocated
to General Partner $ (2,044) $ (5,495)
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Loss before extraordinary item allocated
to Limited Partners $ (202,357) $ (543,991)
============= =============
Loss before extraordinary item per Limited
Partnership Interest (87,037 issued and
outstanding) $ (2.32) $ (6.25)
============= =============
Extraordinary item allocated to General
Partner None $ (10,700)
============= =============
Extraordinary item allocated to Limited
Partners None $ (1,059,278)
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Extraordinary item per Limited Partnership
Interest (87,037 issued and outstanding) None $ (12.17)
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<PAGE>
Net loss allocated to General Partner $ (2,044) $ (16,195)
============= =============
Net loss allocated to Limited Partners $ (202,357) $ (1,603,269)
============= =============
Net loss per Limited Partnership Interest
(87,037 issued and outstanding) $ (2.32) $ (18.42)
============= =============
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 quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net loss $ (204,401) $ (1,619,464)
Adjustments to reconcile net loss to
net cash provided by or (used in)
operating activities:
Debt restructuring expense 1,069,978
Affiliates' participation in income
from joint ventures 10,228 2,031
Depreciation of properties 547,193 661,144
Amortization of deferred expenses 44,520 69,774
Net change in:
Escrow deposits (25,670) 385,324
Accounts and accrued interest
receivable (96) (333,673)
Accounts payable (39,958) 171,373
Due to affiliates (80,069) (15,718)
Accrued liabilities (128,087) (731,557)
Security deposits (2,511) (4,489)
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Net cash provided by or (used in)
operating activities 121,149 (345,277)
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Financing activities:
Capital contribution by joint
venture partner - affiliate 11,464 493
Distributions to joint venture
partners - affiliate (13,642) (15,382)
Proceeds from loans payable - affiliate 307,000
Repayment of loans payable - affiliate (315,945)
Principal payments on mortgage notes
payable (201,811) (135,024)
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Net cash provided by or (used in)
financing activities 103,011 (465,858)
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Net change in cash and cash equivalents 224,160 (811,135)
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 $ 549,572 $ 349,569
============= =============
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 quarter ended March 31, 1995, and all such
adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarter ended March 31, 1995 and 1994, the Partnership incurred
interest expense on mortgage notes payable of $1,440,378 and $1,618,431 and
paid interest expense of $1,457,139 and $1,940,354, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1995 were:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost None $130,364
As of March 31, 1995, the General Partner has advanced $8,415,555 to the
Partnership to provide working capital and meet other Partnership obligations,
including net advances of $307,000 during 1995. During the quarters ended March
31, 1995 and 1994, the Partnership incurred interest expense in connection with
these loans of $131,712 and $76,413, respectively. The Partnership paid
interest expense of $244,127 and $189,055 during the quarters ended March 31,
1995 and 1994, respectively. As of March 31, 1995, interest of $48,224 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 March 31, 1995, this rate was 6.55%.
<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 March 31, 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
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Summary of Operations
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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 quarter of 1994. Subsequently, the Partnership sold
these properties, which were generating losses for financial statement
purposes, in August 1994. These events were the primary reason for the decrease
in net loss for the quarter ended March 31, 1995 as compared to the same period
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, amortization, property operating expense,
real estate taxes and property management fees during the quarter ended March
31, 1995 as compared to the same period in 1994. Increased occupancy and/or
rental rates at six of the Partnership's eight remaining properties during the
quarter ended March 31, 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 quarter ended March 31,
1995 as compared to the same period in 1994.
During 1994 and the first quarter of 1995, the General Partner made net
advances to the Partnership for additional working capital. This, along with
higher interest rates in 1995, resulted in an increase in interest expense on
short-term loans during the quarter ended March 31, 1995 as compared to the
same period in 1994.
<PAGE>
Increased landscaping and painting costs at the LaContenta Apartments partially
offset the decrease in property operating expense caused by the property sales
in 1994.
Decreases in data processing costs and portfolio management fees, as well as
legal fees which were incurred in connection with the reorganization
proceedings related to the Ridgepoint Green and Ridgepoint Way apartment
complexes were the primary reasons for the decrease in administrative expense
for the quarter ended March 31, 1995 as compared to the same period in 1994.
During the first quarter 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
1989 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 increased as of March 31, 1995 when
compared to December 31, 1994. The Partnership received cash from its financing
activities primarily due to the advances received from the General Partner for
additional working capital requirements, net of principal payments on the
Partnership's loans. In addition, cash was provided by the Partnership's
operating activities. The revenue generated by the Partnership's properties was
partially offset by the payment of property operating expenses, administrative
expenses, and interest expense on the General Partner loan.
The Partnership has loans of approximately $8,416,000 payable to the General
Partner at March 31, 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 three months ended March 31, 1995, six of the
Partnership's eight remaining properties generated positive cash flow and two
generated a marginal cash flow deficit. During the quarter ended March 31,
1994, seven of the Partnership's ten remaining properties generated positive
cash flow, one generated a marginal cash flow deficit and two generated
significant cash flow deficits. As discussed previously, the Ridgepoint Green
and Ridgepoint Way apartment complexes, which generated significant cash flow
deficits, were sold in August 1994. The Seabrook Apartments, which generated
positive cash flow during the first quarter of 1994, generated a marginal
deficit during the same period in 1995 due to increased interest payments. The
interest rate on the mortgage note adjusts monthly based on a market index.
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 March 31, 1995, the occupancy rates of the
Partnership's properties ranged from 92% to 97%. Despite improvements during
1994 and the first three 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 obtain refinancing of many 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
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(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 three month period
ending March 31, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 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 Parker
---------------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-84 II, Inc., the
General Partner
Date: May 15, 1995
---------------------------
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 550
<SECURITIES> 0
<RECEIVABLES> 364
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2034
<PP&E> 83022
<DEPRECIATION> 29461
<TOTAL-ASSETS> 56295
<CURRENT-LIABILITIES> 10019
<BONDS> 65770
<COMMON> 0
0
0
<OTHER-SE> (18301)
<TOTAL-LIABILITY-AND-EQUITY> 56295
<SALES> 0
<TOTAL-REVENUES> 3901
<CGS> 0
<TOTAL-COSTS> 1810
<OTHER-EXPENSES> 723
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1572
<INCOME-PRETAX> (204)
<INCOME-TAX> 0
<INCOME-CONTINUING> (204)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (204)
<EPS-PRIMARY> (2.32)
<EPS-DILUTED> (2.32)
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