UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Rd.
Bannockburn, IL 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(Title of class)
<PAGE>
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
PART I
Item 1. Business
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Balcor Realty Investors 84-Series II, A Real Estate Limited Partnership (the
"Registrant") is a limited partnership formed in 1983 and governed by the laws
of the State of Maryland. The Registrant raised $87,037,000 from sales of
Limited Partnership Interests. The Registrant's operations consist exclusively
of investment in and operation of income-producing real properties, and all
financial information included in this report relates to this industry segment.
The Registrant utilized the net offering proceeds to acquire fourteen real
property investments. The Registrant has since disposed of seven of these
properties including the Seabrook Apartments which was sold in February 1996.
As of December 31, 1995, the Registrant owned the eight properties described
under Item 2. Properties. The Partnership Agreement provides that the proceeds
of any sale or refinancing of the Registrant's properties will not be
reinvested in new acquisitions.
Overall, the investment real estate market saw gradual improvement over the
last year. This improvement has taken place in an environment of generally low
interest rates and little or no new supply, parameters which may not exist in
the next few years. Demand for real estate space, while projected to improve in
line with the overall economy, is also vulnerable to external forces. The major
challenges facing the real estate industry today include increased
international competition, corporate restructurings, new computer and
communications technologies, an aging population and potential revisions of
the tax code. In addition, the increased flow of capital to real estate through
new vehicles such as commercial mortgage-backed securities and REITs could spur
new construction at unsupportable levels, as well as impact existing property
values.
Operationally, existing apartment properties continued to register occupancy
percentages in the 90s, with average rents rising at an annual rate of between
3 and 4 percent. The Registrant's remaining properties face various levels of
competition for retention of their tenants from similar types of properties in
the vicinities in which they are located. Apartments are still considered one
of the top real estate asset classes in terms of performance. However, some
markets are experiencing new construction of rental units which, if
unrestrained, could impact the performance of existing properties. Most of the
new construction is aimed at the two segments of the rental market which are
growing the fastest: low-income households and upper-income households who
prefer to rent rather than own. Of all the major asset classes, apartments
typically display the least volatility in terms of property values. The
Registrant has no plans to change the current use of or to renovate any of its
remaining properties.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. As a result,
the General Partner is exploring an acceleration of its strategy to sell the
Registrant's properties.
<PAGE>
Activity for the purchase of limited partnership interests ("tender offers")
has increased in real estate limited partnerships generally. Many of these
tender offers have been made by investors seeking to make a profit from the
purchase of the interests. In the event a tender offer is made for interests in
the Registrant, the General Partner will issue a response to Limited Partners
expressing the General Partner's opinion regarding the offer. Certain
administrative costs will be incurred to respond to a tender offer. The General
Partner cannot predict with any certainty what impact a tender offer will have
on the operations or management of the Registrant.
The Registrant, by virtue of its ownership of real estate is subject to federal
and state laws and regulations covering various environmental issues.
Management of the Registrant utilizes the services of environmental consultants
to assess a wide range of environmental issues and to conduct tests for
environmental contamination as appropriate. The General Partner is not aware
of any potential liability due to environmental issues or conditions that would
be material to the Registrant.
The officers and employees of Balcor Partners-84 II, Inc., the General Partner
of the Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.
Other Information
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Seabrook Apartments
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In 1984, Seabrook Apartments, Orange County, Florida, was acquired by a limited
partnership (the "Limited Partnership") in which the Registrant and two
affiliates of the Registrant (the "Affiliates") held effective ownership
interests of approximately 83.72% and 16.28%, respectively. The Registrant
contributed $2,700,000 and the Affiliates contributed $492,480 from their
respective offering proceeds towards the purchase of the property. The property
was acquired subject to first mortgage financing of $5,950,000.
On February 20, 1996, the Limited Partnership sold the property to an
unaffiliated party, United Dominion Realty Trust, Inc., a Virginia corporation,
for a sale price of $5,915,000. From the proceeds of the sale, the Limited
Partnership repaid the $5,081,898 outstanding balance of the first mortgage
loan collateralized by the property, a brokerage commission of $147,875 to an
unaffiliated party, closing and other sale costs of $42,642. The Limited
Partnership will receive the remaining proceeds of approximately $640,000.
Pursuant to the terms of the sale, $250,000 of the proceeds will be retained by
the Limited Partnership until August 1996. The Registrant's share of the net
sale proceeds will be approximately $540,000. The General Partner was
reimbursed by the Registrant for its actual expenses incurred in connection
with the sale.
<PAGE>
Item 2. Properties
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As of December 31, 1995, the Registrant, either directly or through joint
ventures, owns the eight apartment complexes described below, all of which are
owned in fee simple.
Location Description of Property
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Tempe, Arizona La Contenta Apartments: a 274-unit apartment
complex located on approximately 13 acres.
Pineville, North Carolina * Meadow Creek Apartments: a 250-unit apartment
complex located on approximately 23 acres.
Gwinnett County, Georgia Park Colony Apartments: a 352-unit apartment
complex located on approximately 29 acres.
Dallas, Texas Ridgetree Apartments (Phase II): a 354-unit
apartment complex located on approximately 9
acres.
Lenexa, Kansas ** Rosehill Pointe Apartments: a 498-unit apartment
complex located on approximately 35 acres.
Orange County, Florida ** Seabrook Apartments: a 200-unit apartment complex
*** located on approximately 16 acres.
Columbus, Ohio Spring Creek Apartments: a 288-unit apartment
complex located on approximately 19 acres.
Irving, Texas Westwood Village Apartments: a 320-unit apartment
complex located on approximately 16 acres.
* Owned by the Registrant through a joint venture with the seller. See Note
6 of Notes to Financial Statements for additional information.
** Owned by the Registrant through a joint venture with one or more
affiliated partnerships. See Note 7 of Notes to Financial Statements for
additional information.
*** This property was sold during 1996. See Item 1. Business and Note 10 of
Notes to Financial Statements for additional information.
Each of the above properties is held subject to various mortgage loans and
other forms of financing, as described in more detail in Note 4 of Notes to
Financial Statements.
The occupancy rates and effective average rent per unit for each of the last
five years for the eight properties owned by the Registrant at December 31,
1995, are described below.
<PAGE>
1995 1994 1993 1992 1991
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La Contenta
Occupancy rate 98% 96% 97% 97% 96%
Effective rent $ 579 $ 544 $ 473 $ 435 $ 423
Meadow Creek
Occupancy rate 93% 91% 92% 94% 84%
Effective rent $ 588 $ 552 $ 505 $ 478 $ 468
Park Colony
Occupancy rate 97% 96% 97% 98% 89%
Effective rent $ 618 $ 586 $ 540 $ 497 $ 525
Ridgetree II
Occupancy rate 88% 92% 90% 96% 95%
Effective rent $ 501 $ 487 $ 482 $ 503 $ 493
Rosehill Pointe
Occupancy rate 93% 92% 95% 99% 98%
Effective rent $ 593 $ 579 $ 548 $ 515 $ 465
Seabrook
Occupancy rate 92% 94% 96% 93% 96%
Effective rent $ 562 $ 573 $ 563 $ 534 $ 548
Spring Creek
Occupancy rate 93% 96% 96% 97% 98%
Effective rent $ 500 $ 510 $ 517 $ 493 $ 481
Westwood Village
Occupancy rate 95% 93% 94% 94% 96%
Effective rent $ 514 $ 503 $ 487 $ 461 $ 462
Apartment units in the above properties are rented with leases of one year or
less, with no tenant occupying greater than ten percent of the property. Real
estate taxes incurred in 1995 for the above properties totaled $1,255,631.
The Federal tax basis of the Registrant's properties totaled $76,327,715 as of
December 31, 1995. For Federal income tax purposes, the acquisition costs of
the properties are depreciated over useful lives ranging from 15 to 18 years,
using the ACRS method. Other minor assets are depreciated over their
applicable recovery periods.
In the opinion of the General Partner, the Registrant has provided for adequate
insurance coverage for its real estate investment properties.
See Notes to Financial Statements for other information regarding real property
investments.
<PAGE>
Item 3. Legal Proceedings
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Proposed class action
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On February 29, 1996, a proposed class action complaint was filed, Raymond
Masri vs. Lehman Brothers, Inc., et al., Case No. 96/103727 (Supreme Court of
the State of New York, County of New York). The Registrant, additional limited
partnerships which were sponsored by The Balcor Company, three limited
partnerships sponsored by the predecessor of Lehman Brothers, Inc. (together
with the Registrant and the affiliated partnerships, the "Defendant
Partnerships"), Lehman Brothers, Inc. and Smith Barney Holdings, Inc. are
defendants. The complaint alleges, among other things, common law fraud and
deceit, negligent misrepresentation and breach of fiduciary duty relating to
the disclosure of information in the offering of limited partnership interests
in the Defendant Partnerships. The complaint seeks judgment for compensatory
damages equal to the amount invested in the Defendant Partnerships by the
proposed class plus interest accrued thereon; general damages for injuries
arising from the defendants' actions; recovery from the defendants of all
profits received by them as a result of their actions relating to the Defendant
Partnerships; exemplary damages; attorneys' fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims. It is not determinable at this
time whether or not an unfavorable decision in this action would have a
material adverse impact on the Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the Limited Partners of the Registrant
during 1995.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
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Matters
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There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop; therefore, the
market value of the Limited Partnership Interests cannot reasonably be
determined. The Registrant has not made distributions to date to Limited
Partners. For additional information, see Item 7. - "Management's Discussion
and Analysis of Financial Condition and Results of Operations" below.
As of December 31, 1995, the number of record holders of Limited Partnership
Interests of the Registrant was 8,475.
Item 6. Selected Financial Data
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Year ended December 31,
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1995 1994 1993 1992 1991
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Total income $15,677,369 $17,020,543 $17,984,872 $21,928,782 $21,284,255
Loss before
gains on sales
of assets and
extraordinary
items (1,414,559) (3,313,544) (3,371,970) (5,099,275) (5,662,553)
Net (loss) income (1,414,559) 2,454,938 9,901,817 (5,099,275) (5,662,553)
Net (loss) income
per Limited Part-
nership Interest (16.09) 27.92 112.63 (58.00) (64.41)
Total assets 54,412,115 56,636,602 73,333,165 100,416,387 104,489,888
Mortgage notes
payable 65,239,773 65,971,823 84,130,907 120,086,011 120,708,225
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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Operations
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Summary of Operations
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Balcor Realty Investors 84 - Series II (the "Partnership") sold two properties
in August 1994 and an additional property in April 1993. In addition, the
Partnership recognized an extraordinary gain on forgiveness of debt relating to
the repayment of the mortgage notes in connection with the 1994 property sales
and recognized extraordinary gains on two other properties that were lost
through foreclosure in March and May of 1993. In April 1993, the Partnership
refinanced the Ridgetree II first mortgage loan at a discount and recognized a
gain in connection with this refinancing. The timing of the gains related to
these events resulted in the Partnership recognizing net income during 1994 as
compared to a net loss during 1995 and a decrease in net income during 1994 as
compared to 1993. Further discussion of the Partnership's operations are
summarized below.
1995 Compared to 1994
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The Partnership sold the Ridgepoint Green and Ridgepoint Way apartment
complexes in August 1994. As a result, rental and service income decreased
approximately $2,199,000. Increased rental rates at six of the Partnership's
eight remaining properties during 1995 partially offset the decrease in rental
and service income by approximately $838,000.
As a result of higher average interest rates earned on short-term investments,
interest income on short-term investments increased during 1995 as compared to
1994.
The sales of Ridgepoint Green and Ridgepoint Way resulted in a decrease in
interest expense on mortgage notes payable during 1995 as compared to 1994.
Due to higher average short-term loan balances payable to an affiliate and
higher average interest rates in 1995, interest expense on short-term loans
from an affiliate increased during 1995 as compared to 1994.
Depreciation expense decreased during 1995 as compared to 1994 due to the sales
of Ridgepoint Green and Ridgepoint Way.
Property operating expenses decreased in 1995 as compared to 1994 primarily due
to the 1994 property sales discussed above. Also contributing to the decrease
was the high level of maintenance and repair expense incurred during 1994,
which included exterior painting, wood siding replacement and the replacement
of floor coverings at the Meadow Creek and Seabrook apartment complexes.
The 1994 property sales were the primary reason real estate taxes decreased
during 1995 as compared to 1994.
<PAGE>
Property management fees decreased approximately $110,000 during 1995 due to
the 1994 property sales. Increased rental income at six of the remaining eight
properties during 1995 partially offset the decrease by approximately $31,000.
Legal and professional fees were incurred in 1994 in connection with the
reorganization proceedings related to the Ridgepoint Green and Ridgepoint Way
apartment complexes prior to their sale. This was the primary reason for the
decrease in administrative expense during 1995 as compared to 1994. Lower data
processing costs, portfolio management and accounting fees in 1995 also
contributed to the decrease.
During 1994, the Partnership recognized a gain of $4,257,709 on the sale of the
Ridgepoint Green and Ridgepoint Way apartment complexes.
During 1995, rental and service income increased at the Rosehill Pointe
Apartments due to increased rental rates and higher average occupancy and
resulted in a decrease in the affiliates' participation in losses from joint
ventures during 1995 as compared to 1994.
During 1994, the Partnership recognized an extraordinary gain on forgiveness of
debt of $1,510,773 in connection with the 1994 sale of the Ridgepoint Green and
Ridgepoint Way apartment complexes. This gain is net of the debt restructuring
expense and full amortization of deferred expenses recognized by the
Partnership during the first and second quarters of 1994 in connection with the
approved plans of reorganization related to the Ridgepoint Green and Ridgepoint
Way mortgage notes. The debt restructuring expense was subsequently forgiven
in connection with the sale.
1994 Compared to 1993
- ---------------------
The Partnership sold the Butterfield Village Apartments in April 1993 and the
Ridgepoint Green and Ridgepoint Way apartment complexes in August 1994. As a
result, rental and service income decreased approximately $1,552,000. Increased
rental rates at five of the Partnership's remaining properties during 1994
partially offset the decrease in rental and service income by approximately
$551,000.
The sales of Ridgepoint Green and Ridgepoint Way resulted in a decrease in
interest expense on mortgage notes payable during 1994 as compared to 1993. In
addition, the first mortgage loans on these two properties were modified,
effective April 1994. The Partnership had previously recognized interest
expense liabilities under the prior terms of these loans. In connection with
the modifications, the Partnership wrote-off approximately $290,000 of these
liabilities which, along with decreased interest rates, contributed to the
decrease in interest expense on mortgage notes payable. During April, May and
December 1993, the Ridgetree II, Meadow Creek and Park Colony loans were
refinanced or modified. In addition, in accordance with the loan agreements,
the interest rates on the Rosehill Pointe and Westwood Village loans were
adjusted to lower rates during July and October 1993, respectively. These
events also contributed to the decrease.
During 1994, the General Partner made net 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 from an
affiliate during 1994 as compared to 1993.
<PAGE>
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.
Insurance premiums increased at all of the Partnership's properties. In
addition, higher utility, payroll, and advertising costs at the La Contenta,
Ridgetree II, Rosehill Pointe, Seabrook, Spring Creek, and Westwood Village
apartment complexes during 1994, as well as higher maintenance and repair
expense, which included exterior painting and wood siding replacement, asphalt
repairs, landscaping improvements, plumbing repairs and the replacement of
floor coverings at the La Contenta, Meadow Creek, Park Colony, Ridgepoint
Green, Ridgepoint Way, Seabrook and Spring Creek apartment complexes during
1994 were the primarily reasons for the increase in property operating expense
during 1994 as compared to 1993. The Partnership had deferred non-critical
costs during 1993 at the Ridgepoint Green and Ridgepoint Way apartment
complexes due to the bankruptcy filings, and in accordance with the terms of
the bankruptcy plans, the Partnership completed exterior painting at these two
properties during 1994. The increase was partially offset by a decrease of
approximately $286,000 in property operating expense due to the property
dispositions discussed above.
During 1994, higher real estate taxes were incurred at the Ridgetree II
Apartments as a result of an increased assessment. This additional expense
fully offset the reduction in real estate tax expense due to the property
dispositions discussed above and resulted in an increase in real estate taxes
of approximately $86,000 for 1994 as compared to 1993.
An increase in legal fees relating to the Ridgepoint Green and Ridgepoint Way
loan modifications, and higher accounting, portfolio management, and data
processing fees resulted in an increase in administrative expense during 1994
as compared to 1993.
During April 1993, the Partnership recognized a gain of $3,606,825 on the sale
of the Butterfield Village Apartments.
During 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. The Partnership also recognized extraordinary gains
on foreclosures totaling $8,432,686 in connection with the foreclosures of the
Rancho Mirage and Highland Ridge apartments complexes in March 1993 and May
1993, respectively. See Note 11 of Notes to Financial Statements for additional
information.
Liquidity and Capital Resources
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The cash position of the Partnership increased slightly as of December 31,
1995 when compared to December 31, 1994. The Partnership received cash flow
from its 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 loans. The
Partnership used cash to fund certain of its financing activities which
consisted primarily of the payment of principal on the Partnership's loans.
During February 1996, the Partnership received proceeds from the sale of the
Seabrook Apartments. Pursuant to the terms of the sale, a portion of the
<PAGE>
proceeds is being retained by the Partnership until August 1996. The remainder
of the proceeds received by the Partnership was used to repay a portion of the
General Partner loans.
The Partnership has loans of approximately $8,386,000 payable to the General
Partner at December 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 make arrangements with an affiliate to
provide additional short-term loans to the Partnership to fund working capital
needs or operating deficits, although there is no assurance that such loans
will be available. 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.
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 1995, seven of the Partnership's eight remaining properties at
December 31, 1995 generated positive cash flow and one generated a marginal
cash flow deficit. During 1994, six of these properties generated positive cash
flow and two generated marginal cash flow deficits. The Ridgetree Apartments -
Phase II, which had generated a marginal cash flow deficit during 1994,
generated positive cash flow during 1995 as a result of higher rental income
and lower property operating expense. In addition, the Ridgepoint Green and
Ridgepoint Way apartment complexes generated significant cash flow deficits
prior to the sale of the properties in August 1994. As of December 31, 1995,
occupancy rates ranged from 90% to 98%.
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 improving property
operating performance, and seeking rent increases where market conditions
allow.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. As a result,
the General Partner is exploring an acceleration of its strategy to sell the
Partnership's properties.
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 only one loan, a mortgage loan of approximately $6,933,000
collateralized by the La Contenta Apartments, which matures in 1996. The
General Partner is currently seeking to refinance or sell the property.
<PAGE>
During February 1996, the Partnership sold the Seabrook Apartments, which was
owned by a joint venture consisting of the Partnership and two affiliates, in
an all cash sale for $5,915,000. From the proceeds, $5,081,898 was paid in full
satisfaction of the first mortgage loan. Net proceeds received from this
transaction were approximately $640,000, of which approximately $540,000 was
the Partnership's share. See Note 13 of Notes to Financial Statements for
additional information.
In 1995, the Financial Accounting Standards Board issued Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of" which establishes accounting standards for impairment of
long-lived assets and long-lived assets to be disposed of. This statement has
been adopted by the Partnership as of January 1, 1995, and did not have a
material impact on the financial position or results of operations of the
Partnership.
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 and/or sales prices
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.
Item 8. Financial Statements and Supplementary Data
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See Index to Financial Statements and Schedule in this Form 10-K.
The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.
The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
December 31, 1995 December 31, 1994
------------------------- -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
---------- --------- ---------- ---------
Total assets $54,412,115 $38,289,522 $ 56,636,602 $41,311,618
Partners' capital
accounts (deficit):
General Partner (952,121) (11,388,533) (937,975) (11,183,177)
Limited Partners (18,559,083) (20,172,629) (17,158,670) (18,151,946)
Net income (loss):
General Partner (14,146) (205,356) 24,549 (661,350)
Limited Partners (1,400,413) (2,020,683) 2,430,389 7,371,477
Per Limited Part-
nership Interest (16.09) (23.22) 27.92 84.69<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
- --------------------
There have been no changes in or disagreements with accountants on any matter
of accounting principles, practices or financial statement disclosure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
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(a) The Registrant does not have a Board of Directors; however, Balcor
Partners-84 II, Inc., the General Partner, does have a Board of Directors which
consists of Thomas Meador and Brian Parker. The term of office as a director of
the General Partner is one year. Directors are elected at the annual meeting of
shareholders.
The directors of Balcor Partners-84 II, Inc., the General Partner of the
Registrant, are not directors in any company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934 (the
"Act") or subject to the requirements of Section 15 (b) of the Act or any
company registered as an investment company under the Investment Company Act of
1940. Messrs. Meador and Parker are, however, directors of the general partner
of Balcor Equity Properties-XIV, which had a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
(b, c & e) The names, ages and business experiences of the executive officers,
directors and significant employees of the General Partner of the Registrant
are as follows:
TITLE OFFICERS
----- --------
Chairman, President and Chief Thomas E. Meador
Executive Officer
Senior Vice President Alexander J. Darragh
Senior Vice President Josette V. Goldberg
Senior Vice President Alan G. Lieberman
Senior Vice President, Chief Brian D. Parker
Financial Officer, Treasurer
and Assistant Secretary
Senior Vice President John K. Powell, Jr.
Thomas E. Meador (48) joined Balcor in July 1979. He is Chairman, President and
Chief Executive Officer and has responsibility for all ongoing day-to-day
activities at Balcor. He is a Director of The Balcor Company. He is also Senior
Vice President of American Express Company and is responsible for its real
estate operations worldwide. Prior to joining Balcor, Mr. Meador was employed
at the Harris Trust and Savings Bank in the commercial real estate division
where he was involved in various lending activities. Mr. Meador received his
M.B.A. degree from the Indiana University Graduate School of Business.
Alexander J. Darragh (40) joined Balcor in September 1988 and is responsible
for due diligence analysis and real estate advisory services for Balcor and
American Express Company. He also has supervisory responsibility for Balcor's
environmental matters. Mr. Darragh received masters' degrees in Urban
Geography from Queen's University and in Urban Planning from Northwestern
University.
Josette V. Goldberg (38) joined Balcor in January 1985 and has primary
responsibility for all human resources matters. In addition, she has
<PAGE>
supervisory responsibility for Balcor's MIS functions. Ms. Goldberg has been
designated as a Senior Human Resources Professional (SHRP).
Alan G. Lieberman (36) joined Balcor in May 1983 and is responsible for
Balcor's property sales and capital markets functions. Mr. Lieberman is a
Certified Public Accountant.
Brian D. Parker (44) joined Balcor in March 1986 and, as Chief Financial
Officer and Chief Accounting Officer, is responsible for Balcor's financial,
legal and treasury functions. He is a Director of The Balcor Company. Mr.
Parker is a Certified Public Accountant and holds an M.S. degree in Accountancy
from DePaul University.
John K. Powell Jr. (45) joined Balcor in September 1985 and is responsible for
portfolio and asset management matters relating to Balcor's partnerships. Mr.
Powell also has supervisory responsibility for Balcor's risk management and
investor services functions. He received a Master of Planning degree from the
University of Virginia. Mr. Powell has been designated a Certified Real Estate
Financier by the National Society for Real Estate Finance and is a full member
of the Urban Land Institute.
(d) There is no family relationship between any of the foregoing officers or
directors.
(f) None of the foregoing officers, directors or employees are currently
involved in any material legal proceedings nor were any such proceedings
terminated during the fourth quarter of 1995.
Item 11. Executive Compensation
- -------------------------------
The Registrant has not paid and does not propose to pay any remuneration to the
executive officers and directors of Balcor Partners-84 II, Inc., the General
Partner. Certain of these officers receive compensation from The Balcor Company
for services performed for various affiliated entities, which may include
services performed for the Registrant. However, the General Partner believes
that any such compensation attributable to services performed for the
Registrant is immaterial to the Registrant. See Note 9 of Notes to Financial
Statements for the information relating to transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
(a) No person owns of record or is known by the Registrant to own
beneficially more than 5% of the outstanding Limited Partnership
Interests of the Registrant.
(b) Balcor Partners-84 II, Inc. and its shareholders, directors, and officers
own as a group the following Limited Partnership Interests of the Registrant.
<PAGE>
Amount
Beneficially
Title of Class Owned Percent of Class
-------------- ------------- ----------------
Limited Partnership
Interests 95 Interests Less than 1%
Relatives and affiliates of the partners and officers of the General Partner
own 41 additional Interests.
(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 3 of Notes to Financial Statements for information relating to
the Partnership Agreement and the allocation of distributions and profits and
losses.
See Note 9 of Notes to Financial Statements for additional information relating
to transactions with affiliates.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
- -------------------------------------------------------------------------
(a)
(1 & 2) See Index to Financial Statements and Financial Statement Schedule in
this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement and Certificate of Limited Partnership
is set forth as Exhibit 3 to Amendment No. 2 to Registrant's Registration
Statement on Form S-11 dated July 6, 1984 (Registration No. 2-89319), and said
Agreement and Certificate is incorporated herein by reference.
(4) Form of Subscription Agreement and Power of Attorney set forth as
Exhibit 4.1 to Amendment No. 2 of the Registrant's Registration Statement on
Form S-11 dated July 6, 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 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended December 31, 1995.
(c) Exhibits: See Item 14(a)(3) above.
(d) Financial Statement Schedules: See Index to Financial Statements and
Financial Statement Schedule in this Form 10-K.
(99) Agreement of Sale and Amendment thereto relating to the sale of Seabrook
Apartments, Orlando, Florida.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/ Jayne Kosik
------------------------
Jayne Kosik
Vice President, and Chief
Financial Officer (Principal Accounting
and Financial Officer) of Balcor
Partners-84 II, Inc., the General
Partner
Date: October 21, 1996
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ---------------------- --------------------------------- --------------
President, Chief Executive Officer
(Principal Executive Officer) and
Director of Balcor Partners-84 II,
/s/ Thomas E. Meador Inc., the General Partner October 21, 1996
- ---------------------- ----------------
Thomas E. Meador
Vice President, and Chief
Financial Officer (Principal
Accounting and Financial Officer)
of Balcor Partners-84 II, Inc.,
/s/ Jayne Kosik the General Partner October 21, 1996
- ---------------------- ----------------
Jayne Kosik
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants
Financial Statements:
Balance Sheets, December 31, 1995 and 1994
Statements of Partners' Deficit, for the years ended December 31, 1995, 1994
and 1993
Statements of Income and Expenses, for the years ended December 31, 1995, 1994
and 1993
Statements of Cash Flows, for the years ended December 31, 1995, 1994 and 1993
Notes to Financial Statements
Financial Statement Schedule:
III - Real Estate and Accumulated Depreciation, as of December 31, 1995
Financial Statement Schedules, other than that listed, are omitted for the
reason that they are inapplicable or equivalent information has been included
elsewhere herein.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Balcor Realty Investors 84-Series II
A Real Estate Limited Partnership:
We have audited the financial statements and the financial statement schedule
of Balcor Realty Investors 84-Series II, A Real Estate Limited Partnership (A
Maryland Limited Partnership) as listed in the index of this Form 10-K. These
financial statements and the financial statement schedule are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and the financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Balcor Realty Investors
84-Series II, A Real Estate Limited Partnership at December 31, 1995 and 1994,
and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 23, 1996
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
1995 1994
-------------- --------------
Cash and cash equivalents $ 419,227 $ 325,412
Escrow deposits 1,158,746 1,094,558
Accounts and accrued interest receivable 189,252 364,052
Prepaid expenses 159,160
Deferred expenses, net of accumulated
amortization of $763,343 in 1995 and
$585,255 in 1994 565,727 743,815
-------------- --------------
2,492,112 2,527,837
-------------- --------------
Investment in real estate:
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 31,102,341 28,913,579
-------------- --------------
Investment in real estate, net of
accumulated depreciation 51,920,003 54,108,765
-------------- --------------
$ 54,412,115 $ 56,636,602
============== ==============
LIABILITIES AND PARTNERS' DEFICIT
Loans payable - affiliate $ 8,385,555 $ 8,108,555
Accounts payable 141,388 170,393
Due to affiliates 126,650 258,657
Accrued liabilities, principally interest
and real estate taxes 1,078,917 1,131,065
Security deposits 273,669 293,922
Mortgage notes payable 65,239,773 65,971,823
-------------- --------------
Total liabilities 75,245,952 75,934,415
-------------- --------------
Affiliates' participation in joint ventures (1,322,633) (1,201,168)
-------------- --------------
Limited Partners' deficit (87,037 Interests
issued and outstanding) (18,559,083) (17,158,670)
<PAGE>
General Partner's deficit (952,121) (937,975)
-------------- --------------
Total partners' capital (19,511,204) (18,096,645)
-------------- --------------
$ 54,412,115 $ 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 PARTNERS' DEFICIT
for the years ended December 31, 1995, 1994 and 1993
Partners' Deficit Accounts
--------------------------------------------
General Limited
Total Partner Partners (A)
-------------- -------------- --------------
Balance at December 31, 1992 $ (30,453,400) $ (1,061,542) $ (29,391,858)
Net income for the year
ended December 31, 1993 9,901,817 99,018 9,802,799
-------------- -------------- --------------
Balance at December 31, 1993 (20,551,583) (962,524) (19,589,059)
Net income for the year
ended December 31, 1994 2,454,938 24,549 2,430,389
-------------- -------------- --------------
Balance at December 31, 1994 (18,096,645) (937,975) (17,158,670)
Net loss for the year
ended December 31, 1995 (1,414,559) (14,146) (1,400,413)
-------------- -------------- --------------
Balance at December 31, 1995 $ (19,511,204) $ (952,121) $ (18,559,083)
============== ============== ==============
(A) Includes a $95,000 investment by the General Partner.
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 years ended December 31, 1995, 1994 and 1993
1995 1994 1993
-------------- -------------- --------------
Income:
Rental and service $ 15,621,758 $ 16,985,963 $ 17,953,526
Interest on short-term
investments 55,611 34,580 31,346
-------------- -------------- --------------
Total income 15,677,369 17,020,543 17,984,872
-------------- -------------- --------------
Expenses:
Interest on mortgage
notes payable 5,762,150 6,514,973 8,287,777
Interest on short-term loans
from an affiliate 544,980 399,006 290,389
Depreciation 2,188,762 2,492,641 2,712,857
Amortization of deferred
expenses 178,088 211,246 441,513
Property operating 5,906,395 7,431,340 6,567,907
Real estate taxes 1,255,631 1,639,635 1,553,880
Property management fees 768,357 850,097 893,859
Administrative 526,207 870,872 679,625
-------------- -------------- --------------
Total expenses 17,130,570 20,409,810 21,427,807
-------------- -------------- --------------
Loss before gain on sale of
properties, participation
in joint ventures and
extraordinary items (1,453,201) (3,389,267) (3,442,935)
Gain on sale of properties 4,257,709 3,606,825
Affiliates' participation in
losses from joint ventures 38,642 75,723 70,965
-------------- -------------- --------------
(Loss) income before
extraordinary items (1,414,559) 944,165 234,855
-------------- -------------- --------------
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 years ended December 31, 1995, 1994 and 1993
(Continued)
1995 1994 1993
-------------- -------------- --------------
Extraordinary items:
Gain on forgiveness of debt 1,510,773 1,234,276
Gain on foreclosure of
properties 8,432,686
-------------- ------------
Total extraordinary items 1,510,773 9,666,962
-------------- -------------- --------------
Net (loss) income $ (1,414,559) $ 2,454,938 $ 9,901,817
============== ============== ==============
(Loss) income before
extraordinary item allocated
to General Partner $ (14,146) $ 9,441 $ 2,349
============== ============== ==============
(Loss) income before
exrtaordinary item allocated
to Limited Partners $ (1,400,413) $ 934,724 $ 232,506
============== ============== ==============
(Loss) income before
extraordinary item per
Limited Partnership Interest
(87,037 issued and
outstanding) $ (16.09) $ 10.74 $ 2.68
============== ============== ==============
Extraordinary item allocated
to General Partner None $ 15,108 $ 96,669
============== ============== ==============
Extraordinary item allocated
to Limited Partners None $ 1,495,665 $ 9,570,293
============== ============== ==============
Extraordinary item per Limited
Partnership Interest (87,037
issued and outstanding) None $ 17.18 $ 109.95
============== ============== ==============
Net (loss) income allocated to
General Partner $ (14,146) $ 24,549 $ 99,018
============== ============== ==============
Net (loss) income allocated to
Limited Partners $ (1,400,413) $ 2,430,389 $ 9,802,799
============== ============== ==============
Net (loss) income per Limited
Partnership Interest (87,037
issued and outstanding) $ (16.09) $ 27.92 $ 112.63
============== ============== ==============
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 Parnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995, 1994 and 1993
1995 1994 1993
-------------- -------------- --------------
Operating activities:
Net (loss) income $ (1,414,559) $ 2,454,938 $ 9,901,817
Adjustments to reconcile net
(loss) income to net cash
provided by or (used in)
operating activities:
Gain on forgiveness
of debt (1,510,773) (1,234,276)
Gain on foreclosure of
of properties (8,432,686)
Gain on sale of
properties (4,257,709) (3,606,825)
Affiliates' participation
in losses from joint
ventures (38,642) (75,723) (70,965)
Depreciation of
properties 2,188,762 2,492,641 2,712,857
Amortization of deferred
expenses 178,088 211,246 441,513
Net change in:
Escrow deposits (64,188) 55,113 (360,723)
Accounts and accrued
interest receivable 174,800 (298,776) 165,444
Prepaid expenses (159,160)
Accounts payable (29,005) 54,900 (185,544)
Due to affiliates (132,007) (9,775) 99,586
Accrued liabilities (52,148) (615,274) 341,199
Security deposits (20,253) (78,933) (102,146)
-------------- -------------- --------------
Net cash provided by or
(used in) operating
activities 631,688 (1,578,125) (330,749)
-------------- -------------- --------------
Investing activities:
Proceeds from sale of
properties 17,790,715 9,385,000
Costs incurred in connection
with sale of properties (241,511) (164,056)
-------------- --------------
Net cash provided by investing
activities 17,549,204 9,220,944
-------------- --------------
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 years ended December 31, 1995, 1994 and 1993
(Continued)
1995 1994 1993
-------------- -------------- --------------
Financing activities:
Capital contributions by
joint venture partners-
affiliates $ 42,706 $ 17,320
Distributions to joint
venture partners-
affiliates (125,529) (89,383) $ (25,037)
Proceeds from loans payable-
affiliate 677,000 866,905 1,086,469
Repayment of loans payable-
affiliate (400,000) (534,073) (1,429,236)
Proceeds from issuance of
mortgage notes payable 7,448,362 13,236,340
Principal payments on
mortgage notes payable (732,050) (576,339) (614,974)
Repayments of mortgage notes
payable (23,693,178) (19,792,049)
Payment of deferred expenses (245,985) (414,832)
-------------- -------------- --------------
Net cash used in financing
activities (537,873) (16,806,371) (7,953,319)
-------------- -------------- --------------
Net change in cash and cash
equivalents 93,815 (835,292) 936,876
Cash and cash equivalents at
beginning of year 325,412 1,160,704 223,828
-------------- -------------- --------------
Cash and cash equivalents at
end of year $ 419,227 $ 325,412 $ 1,160,704
============== ============== ==============
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. Nature of the Partnership's Business:
Balcor Realty Investors 84-Series II (the "Partnership") is engaged principally
in the operation of residential real estate located in various markets within
the United States.
2. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could vary from those estimates.
(b) Depreciation expense is computed using the straight-line and accelerated
methods. Rates used in the determination of depreciation are based upon the
following estimated useful lives:
Buildings and land improvements 30 years
Furniture and fixtures 5 years
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements are charged to the related asset account.
Interest incurred while properties were under construction was capitalized.
As properties are sold, the related costs and accumulated depreciation are
removed from the respective accounts. Any gain or loss on disposition is
recognized in accordance with generally accepted accounting principles.
(c) Effective January 1, 1995 the Partnership adopted Statement of Financial
Accounting Standards, No. 121 (SFAS 121), ("Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of"). Under SFAS 121,
the Partnership records its investments in real estate at the lower of cost or
fair value, and periodically assesses, but not less than on an annual basis,
possible impairment to the value of its properties. The General Partner
estimates the fair value of its properties by dividing the property's expected
net operating income by a risk adjusted rate of return which considers economic
and demographic conditions in the market. In the event the General Partner
determines an impairment in value has occurred, and the carrying amount of the
real estate asset will not be recovered, a provision is recorded to reduce the
carrying basis of the property to its estimated fair value. The General Partner
considers the method referred to above to result in a reasonable measurement of
a property's fair value, unless other factors affecting the property's value
indicate otherwise.
<PAGE>
(d) Deferred expenses consist of loan modification and financing fees which are
amortized over the terms of the respective loan agreements.
(e) The Financial Accounting Standard Board's Statement No. 107, "Disclosures
About Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments for which it is practicable to estimate
that value. Since quoted market prices are not available for the Partnership's
financial instruments, fair values have been based on estimates using present
value techniques. These techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, may not be realized in
immediate settlement of the instrument. Statement No. 107 does not apply to all
balance sheet items and excludes certain financial instruments and all
non-financial instruments such as real estate from its disclosure requirements.
(f) Cash and cash equivalents include all unrestricted, highly liquid
investments with an original maturity of three months or less.
(g) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership income or loss in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
(h) Revenue is recognized on an accrual basis in accordance with generally
accepted accounting principles.
(i) A reclassification has been made to the previously reported 1994 and 1993
financial statements to conform with the classification used in 1995. This
reclassification has not changed the 1994 and 1993 results.
3. Partnership Agreement:
The Partnership was organized in February 1983. The Partnership Agreement
provides for Balcor Partners-84 II, Inc. to be the General Partner and for the
admission of Limited Partners through the sale of up to 110,000 Limited
Partnership Interests at $1,000 per Interest, 87,037 of which were sold on or
prior to September 28, 1984, the termination date of the offering.
The Partnership Agreement provides that the General Partner will be allocated
1% of the profits and losses and the Limited Partners will be allocated 99% of
the profits and losses. One hundred percent of Net Cash Receipts available for
distribution shall be distributed to the holders of Interests in proportion to
their participating percentages as of the record date for such distributions.
However, there shall be accrued for the benefit of the General Partner as its
distributive share from operations, an amount equivalent to approximately 1% of
the total Net Cash Receipts being distributed, which will be paid only out of
Net Cash Proceeds. Under certain circumstances, the General Partner may
participate in the Net Cash Proceeds of the sale or refinancing of Partnership
properties. The General Partner's participation is limited to 15% of Net Cash
Proceeds, including its share of accrued Net Cash Receipts, and is subordinated
to the return of Original Capital plus any deficiency in a Cumulative
Distribution of 6% on Adjusted Original Capital to the holders of Interests, as
defined in the Partnership Agreement.
<PAGE>
4. Mortgage Notes Payable:
Mortgage notes payable at December 31, 1995 and 1994 consisted of the following:
<TABLE>
<CAPTION> Carrying Carrying
Amount Amount Current Current
Estimated Final
Property Pledged of Notes at of Notes at Interest Monthly
Balloon Maturity
as Collateral 12/31/95 12/31/94 Rate Payment
Payment Date
----------------- ---------- ---------- -------- -------
- ----------------
<S> <C> <C> <C> <C> <C>
<C>
Apartment Complexes:
La Contenta $7,036,403 $ 7,119,382 9.50% $ 62,634
$ 6,933,000 1996
Meadow Creek 5,096,878 5,141,497 8.54% 40,131
4,972,000 1998
Park Colony 9,975,000 9,975,000 9.375% 84,294
9,753,000 1999
Ridgetree (Phase II) 7,816,515 7,868,144 10.05% 70,004
7,529,000 2000
Rosehill Pointe 14,478,769 14,750,078 7.875% 117,886
13,619,000 1998
1,302,358(A) 1,344,000 9.75% 14,238
1,206,000 1998
Seabrook (B) 5,081,898 5,081,898
Spring Creek (C) 7,369,551 7,420,202 9.21% 61,060
7,076,000 2000
Westwood Village 7,082,401 7,271,622 6.498% 52,333
6,612,000 1998
------------ ------------
Total $65,239,773 $65,971,823
============ ============
</TABLE>
See notes (A) through (C).
<PAGE>
(A) In January 1995, this loan was modified. The interest rate remained at
9.75%, the maturity date was extended from January 1995 to January 1998, and
the monthly interest-only payments of $10,920 increased to monthly principal
and interest payments of $14,238.
(B) In February 1996, this property was sold. The mortgage maturity amount is
included in the 1996 maturity schedule amount below. See Note 10 of Notes to
Financial Statements for additional information.
(C) In July 1994, this loan was refinanced. The interest rate decreased from
9.25% to 9.21%, the maturity date was extended from August 1994 to August 2000,
and the monthly payments increased from $54,729 to $61,060 due to the increased
principal balance of the loan. Proceeds from the new $7,448,362 first mortgage
loan were used to repay the existing first mortgage loan of $7,100,000.
The Partnership's loans described above require current monthly payments of
principal and interest. The Park Colony mortgage loan required monthly
interest-only payments through December 31, 1995. Effective January 1996, the
monthly payments were changed to include principal and interest.
Real estate with an aggregate carrying value of $51,920,003 at December 31,
1995 was pledged as collateral for repayment of mortgage loans.
Future annual maturities of the above mortgage notes payable during each of the
next five years are approximately as follows:
1996 $ 12,820,000
1997 809,000
1998 26,912,000
1999 9,903,000
2000 14,671,000
During 1995, 1994 and 1993, the Partnership incurred interest expense on
mortgage notes payable of $5,762,150, $6,514,973 and $8,287,777 and paid
interest expense of $5,829,192, $6,863,768 and $7,888,588, respectively.
5. Management Agreements:
As of December 31, 1995, all of the properties owned by the Partnership are
under management agreements with a third party management company. These
management agreements provide for annual fees of 5% of gross operating
receipts.
6. Seller's Participation in Joint Venture:
Meadow Creek Apartments is owned by a joint venture between the Partnership and
the seller. Consequently, the seller retains an interest in the property
through an interest in the joint venture. All assets, liabilities, income and
expenses of the joint venture are included in the financial statements of the
Partnership with the appropriate deduction from income, if any, for the
seller's participation in the joint venture.
7. Affiliates' Participation in Joint Ventures:
<PAGE>
Rosehill Pointe Apartments is owned by the Partnership and an affiliate.
Profits and losses are allocated 61.62% to the Partnership and 38.38% to the
affiliate. In addition, Seabrook Apartments was owned by the Partnership and
two affiliates prior to its sale in February 1996. Profits and losses are
allocated 83.72% to the Partnership and 16.28% to the affiliates. All assets,
liabilities, income and expenses of the joint ventures are included in the
financial statements of the Partnership with appropriate adjustment for profit
or loss for each affiliate's participation. Net distributions of $82,823,
$72,063 and $25,037 were made to joint venture partners during 1995, 1994 and
1993, respectively.
8. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder, and existing interpretations
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, will differ from the
tax returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences is that
the net loss for 1995 in the financial statements is $811,480 less than the tax
loss for the same period.
9. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/95 12/31/94 12/31/93
----------------- --------------------- --------------------
Paid Payable Paid Payable Paid Payable
--------- ------- ---------- --------- --------- ---------
Property manage-
ment fees None None $827,716 None $866,889 $104,097
Reimbursement of
expenses to
General Partner
at cost:
Accounting $53,668 $4,094 80,957 $31,333 64,215 5,310
Data processing 35,823 3,392 64,251 14,023 36,471 6,722
Investment
processing None None 7,068 571 10,056 831
Investor com-
munications 6,701 None 12,403 5,388 8,223 680
Legal 30,858 4,769 15,160 9,948 16,178 1,338
Other 5,790 194 25,194 4,658 15,075 1,246
Portfolio
management 117,173 18,777 65,385 32,097 64,233 5,311
Property sales
admini-
stration 9,056 7,938 11,274 None 9,379 3,021
The Partnership participates in an insurance deductible program with other
affiliated partnerships in which the program pays claims up to the amount of
the deductible under the master insurance policies for its properties. The
program is administered by an affiliate of the General Partner who receives no
<PAGE>
fee for administering the program; however, the General Partner is reimbursed
for program expenses. The Partnership paid premiums to the deductible insurance
program of $122,696, $186,498 and $126,927 in 1995, 1994 and 1993,
respectively.
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed the
Partnership's properties until the affiliate was sold to a third party in
November 1994.
As of December 31, 1995, the General Partner has advanced $8,385,555, including
net advances of $277,000 during 1995, to the Partnership to provide working
capital and meet other Partnership obligations. During 1995, 1994 and 1993, the
Partnership incurred interest expense of $544,980, $399,006, and $290,389,
respectively, in connection with these loans. The Partnership paid interest
expense of $618,133, $378,243, and $217,334 during 1995, 1994 and 1993,
respectively. As of December 31, 1995, interest of $87,486 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 December 31, 1995,
this rate was 6.307%.
The General Partner may continue to make arrangements with an affiliate to
provide additional short-term loans to the Partnership to fund future working
capital needs or operating deficits, although there is no assurance that such
loans will be available. 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.
10. Property Sales:
The Partnership sold the Ridgepoint Green and Ridgepoint Way apartment
complexes during 1994 and the Butterfield Village Apartments during 1993 in
separate all cash sales for $17,790,715 and $9,385,000, respectively. From the
proceeds of the sales, the Partnership paid $16,593,178 and $6,269,575 in full
satisfaction of the properties' first mortgage loans, respectively. The bases
of these properties totaled $13,291,495 and $5,614,119, net of accumulated
depreciation of $5,966,686 and $2,713,101, respectively. For financial
statement purposes, the Partnership recognized gains of $4,257,709 and
$3,606,825 from the sale of these properties during 1994 and 1993,
respectively. The remaining proceeds from the sales were used to repay a
portion of the loan from the General Partner.
11. Extraordinary Items:
(a) During 1994, the Ridgepoint Green and Ridgepoint Way apartment complexes
were sold. In connection with the sale, the mortgage notes which had
outstanding balances of $18,459,488, including accrued interest, were repaid
for $16,593,178. The Partnership also fully amortized the remaining $355,537 of
loan modification fees related to the 1989 modifications of these mortgage
notes. During 1993, the Ridgetree II mortgage note was refinanced. In
connection with the refinancing, the mortgage note which had an outstanding
balance of $9,578,078, including accrued interest and other fees, was repaid
for $8,343,802. These transactions resulted in extraordinary gains on
forgiveness of debt totaling $1,510,773 in 1994 and $1,234,276 in 1993 for
financial statement purposes.
<PAGE>
(b) During 1993, title to the Rancho Mirage and Highland Ridge Apartments were
relinquished through foreclosure. The Partnership wrote off the property bases
of $19,861,720, net of accumulated depreciation of $8,478,201, mortgage loan
balances of $27,645,298, accrued and unpaid interest expense and real estate
taxes of $619,926 and security deposits of $29,182. The Partnership recognized
extraordinary gains of $8,432,686 during 1993 for financial statement purposes.
12. Fair Value of Financial Instruments:
The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1995 are as follows:
The carrying value of cash and cash equivalents, accounts and accrued interest
receivable, accounts and accrued interest payable approximates fair value.
Mortgage notes payable: Based on borrowing rates available to the Partnership
at the end of 1995 for mortgage loans with similar terms and maturities, the
fair value of the mortgage notes payable approximates the carrying value.
13. Subsequent Events:
(a) During February 1996, Seabrook Apartments, which was owned by a joint
venture consisting of the Partnership and two affiliates, was sold in an all
cash sale for $5,915,000. From the proceeds of the sale, $5,081,898 was paid in
full satisfaction of the first mortgage loan and closing costs of $190,517 were
paid. The basis of the property was $4,361,052, net of accumulated depreciation
of $2,625,226. The Partnership will recognize a gain of $1,363,431 in its 1996
financial statements.
(b) On February 29, 1996, a proposed class action complaint was filed, Raymond
Masri vs. Lehman Brothers, Inc., et al., Case No. 96/103727 (Supreme Court of
the State of New York, County of New York). The Partnership, additional limited
partnerships which were sponsored by The Balcor Company, three limited
partnerships sponsored by the predecessor of Lehman Brothers, Inc. (together
with the Partnership and the affiliated partnerships, the "Defendant
Partnerships"), Lehman Brothers, Inc. and Smith Barney Holdings, Inc. are
defendants. The complaint alleges, among other things, common law fraud and
deceit, negligent misrepresentation and breach of fiduciary duty relating to
the disclosure of information in the offering of limited partnership interests
in the Defendant Partnerships. The complaint seeks judgment for compensatory
damages equal to the amount invested in the Defendant Partnerships by the
proposed class plus interest accrued thereon; general damages for injuries
arising from the defendants' actions; recovery from the defendants of all
profits received by them as a result of their actions relating to the Defendant
Partnerships; exemplary damages; attorneys' fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims. It is not determinable at this
time whether or not an unfavorable decision in this action would have a
material adverse impact on the Partnership.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
<CAPTION>
Col. A Col. B Col. C
Col. D
- --------------------- ------ ------- --------------
- ---------------------------------
Initial Cost
Cost Adjustments
to Partnership
Subsequent to Acquisition
--------------------
- ---------------------------------
Buildings Carrying
Encum- and Im- Improve- Costs
Reduction
Description brances Land provements ments (a)
of Basis
- --------------------- ------- -------- ------------ ---------
- --------- ----------
<S> <C> <C> <C> <C>
<C> <C>
La Contenta Apts., 274-
units in Tempe, AZ (d) $1,300,000 $5,875,000 None
$612,142 None
Meadow Creek Apts., 250-
units in Pineville, NC (d) 550,000 6,150,000 None
905,804 $(548,116)(f)
Park Colony Apts.,
352-units in
Gwinnett County, GA (d) 1,450,000 9,000,000 $44,720
1,255,336 None
Ridgetree Apts.
(Phase II), 354-units
in Dallas, TX (d) 1,432,000 8,643,000 None
1,289,690 None
Rosehill Pointe Apts.,
498-units in
Lenaxa, KS (d) 2,350,000 15,948,000 None
1,799,487 (63,517)(f)
Seabrook Apts.,
200-units in
Orange County, FL (g) (d) 757,000 5,465,000 None
764,278 None
<PAGE>
Spring Creek Apts., 288-
units in Columbus, OH (d) 1,400,000 7,005,000 None
1,054,199 (856,121)(f)
Westwood Apts., 320-
units in Irving, TX (d) 2,265,000 6,914,000 None
1,261,442 (1,001,000)(h)
----------- ----------- --------
- ----------- -----------
Total $11,504,000 $65,000,000 $ 44,720
$ 8,942,378 $(2,468,754)
=========== =========== ========
=========== ===========
</TABLE>
See Notes (a) through (h).
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1995
(Continued)
<CAPTION>
Col. A Col. E Col. F Col. G
Col. H Col. I
- ------------------- -------------------------------- -------- --------
- ------ --------------
Gross Amounts at Which
Life Upon
Carried at Close of Period
Which Depre-
-------------------------------
ciation in
Buildings Accumulated Date
Date Latest Income
and Im- Total Deprecia- of Con-
Acq- Statement
Description Land provements (b)(c) tion(c)
struction uired is Computed ------------------- ----------------------
- ------------- ------------ ---------- -------------------
<S> <C> <C> <C> <C> <C>
<C> <C>
La Contenta Apts., 274-
units in Tempe, AZ $1,301,240 $6,485,902 $7,787,142 $ 2,992,200 1984
7/83 (e)
Meadow Creek Apts., 250-
units in Pineville, NC 509,743 6,547,945 7,057,688 2,778,467 1985
1/84 (e)
Park Colony Apts.,
352-units in
Gwinnett County, GA 1,451,544 10,298,512 11,750,056 4,557,704 1984
5/83 (e)
Ridgetree Apts.
(Phase II) 354-units
in Dallas, TX 1,432,426 9,932,264 11,364,690 4,326,968 1984
2/83 (e)
Rosehill Pointe Apts.,
498-units in
Lenexa, KS 2,343,930 17,690,040 20,033,970 7,190,196 1985
11/84 (e)
Seabrook Apts.,
200-units in
Orange County, FL (g) 773,470 6,212,808 6,986,278 2,598,392 1985
12/83 (e)
<PAGE>
Spring Creek Apts., 288-
units in Columbus, OH 1,262,965 7,340,113 8,603,078 3,197,805 1985
2/84 (e)
Westwood Apts., 320-
units in Irving, TX 2,001,071 7,438,371 9,439,442 3,460,609 1984
3/83 (e)
----------- ----------- ------------ -----------
Total $11,076,389 $71,945,955 $ 83,022,344 $31,102,341
=========== =========== ============ ===========
</TABLE>
See Notes (a) through (h).
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
NOTES TO SCHEDULE III
(a) Consists of legal fees, appraisal fees, title costs, other related
professional fees and capitalized construction-period interest.
(b) The aggregate cost of land for Federal income tax purposes is $11,465,047
and the aggregate cost of buildings and improvements for Federal income tax
purposes is $64,862,668. The total of the above-mentioned is $76,327,715.
(c)
Reconciliation of Real Estate
------------------------------
1995 1994 1993
----------- ------------- -------------
Balance at beginning of year $83,022,344 $102,280,525 $138,947,666
Reductions during the year:
Cost of real estate sold (19,258,181) (8,327,220)
Foreclosure of properties (28,339,921)
------------ ------------- -------------
Balance at end of year $83,022,344 $83,022,344 $102,280,525
============ ============= =============
Reconciliation of Accumulated Depreciation
-------------------------------------------
1995 1994 1993
------------ ------------ --------------
Balance at beginning of year $28,913,579 $32,387,624 $40,866,069
Depreciation expense
for the year 2,188,762 2,492,641 2,712,857
Accumulated depreciation of
real estate sold (5,966,686) (2,713,101)
Foreclosure of properties (8,478,201)
----------- ------------ ------------
Balance at end of year $31,102,341 $28,913,579 $32,387,624
=========== =========== ============
(d) See description of Mortgage Notes Payable in Note 4 of Notes to Financial
Statements.
<PAGE>
(e) Depreciation expense is computed based upon the following estimated useful
lives:
Buildings and improvements 30 years
Furniture and fixtures 5 years
(f) Guaranteed income earned on properties under the terms of certain
management and guarantee agreements is recorded by the Partnership as a
reduction of the basis of the property to which the guaranteed income relates.
(g) In February 1996, this property was sold. See Note 13 of Notes to Financial
Statements for additional information.
(h) A reduction of basis was made to write down the property to its December
31, 1988 mortgage liability balance (net of an outstanding letter of credit of
$500,000).
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 15 day of December, 1995, by and
between UNITED DOMINION REALTY TRUST, INC., a Virginia corporation
("Purchaser") and BROOKSEA ASSOCIATES, an Illinois Limited Partnership
("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Six Million Two Hundred Fifty Thousand and No/100 Dollars
($6,250,000.00) ("Purchase Price"), that certain property ("Property") in
Winter Park, Florida, more particularly described on Exhibit A attached hereto,
which Property is known as Seabrook Apartments. Included in the Purchase Price
is all of the personal property set forth on Exhibit B, which shall be
transferred to Purchaser at Closing (as hereinafter defined) by a Bill of Sale.
2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Within one (1) business day after Purchaser receives a fully executed
Agreement, the sum of $100,000.00 ("Earnest Money") to be held in escrow by the
Escrow Agent (as that term is defined in the Escrow Agreement), by and in
accordance with the provisions of the Escrow Agreement ("Escrow Agreement")
attached hereto as Exhibit C;
b. On the Closing Date (as hereinafter defined), $6,250,000.00
(inclusive of all Earnest Money) adjusted in accordance with the prorations by
federally wired "immediately available" funds delivered to the Title Insurer
(as hereinafter defined) no later than 12:00 Noon on the Closing Date. If the
funds are not received by 12:00 Noon, then, on the Closing Date, Purchaser
shall pay Seller an amount equal to any additional mortgage per diem interest
costs incurred by the Seller.
3. TITLE COMMITMENT AND SURVEY.
a. Attached hereto as Exhibit C is a title commitment with an effective
date of September 6, 1995 ("Title Commitment") for an owner's standard coverage
title insurance policy ("Title Policy") issued by Chicago Title Insurance
Company ("Title Insurer"). The owner's Title Policy issued at Closing will be
in the amount of the Purchase Price subject only to real estate taxes not yet
due and payable, the general printed exceptions contained in the policy and the
special title exceptions set forth in Schedule B approved by Purchaser in
writing prior to the expiration of the Approval Period. All of the above are
herein referred to as the "Permitted Exceptions". The Title Commitment shall
be conclusive evidence of good title as therein shown as to all matters insured
by the policy, subject only to the exceptions therein stated. On the Closing
Date, Seller shall cause the Title Insurer to issue the Title Policy or a
"marked up" commitment in conformity with the Title Commitment and the
Permitted Exceptions. Seller and Purchaser shall equally share the costs of
the Title Policy; however, Purchaser shall pay the costs of "extended coverage"
or any special endorsements which Purchaser requires.
<PAGE>
b. Purchaser acknowledges receipt of a survey ("Survey") of the Property
prepared by Sears Surveying Company dated July 7, 1995, and Purchaser will
approve or disapprove the Survey and advise Seller of any objections prior to
the expiration of the Approval Period. If Purchaser requires any additional
survey work, Purchaser shall pay for the cost of such additional work.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple title
to the Property by Special Warranty Deed ("Deed") in recordable form subject
only to the Permitted Exceptions. If Seller is unable to convey title to the
Property subject only to the Permitted Exceptions because of the existence of
an additional title exception ("Unpermitted Exception"), then Purchaser can
elect to take title to the Property subject to the Unpermitted Exception or
terminate this Agreement. If Purchaser elects to terminate this Agreement,
then the Earnest Money plus all accrued interest shall be delivered to the
Purchaser. Notwithstanding the aforesaid, Seller shall remove all liens of a
definite ascertainable amount, and Seller shall not create any new encumbrances
against the Property.
5. PAYMENT OF CLOSING COSTS. Seller and Purchaser shall equally share the
costs of the documentary stamps to be paid with reference to the Deed and all
other stamps, intangible, documentary, recording, sales tax and surtax imposed
by law with reference to any other documents delivered in connection with this
Agreement.
6. DAMAGE, CASUALTY AND CONDEMNATION.
a. If the Property suffers damage as a result of any casualty prior to
the Closing Date and can be repaired or restored in the case of real property
for $100,000 or less, or in the case of Personal Property, for $10,000 or less,
then Purchaser shall accept the Property in its damaged condition together with
an assignment from Seller of all insurance proceeds and receive a credit at
Closing in the amount of the deductible. If the cost of repair or restoration
exceeds those amounts, then Purchaser can elect to either: (a) accept the
Property in its damaged condition together with an assignment from Seller of
all insurance proceeds and receive a credit at Closing in the amount of the
deductible; or (b) terminate this Agreement upon notice to Seller served within
twenty (20) business days of receipt of notice of such casualty.
b. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) impair access to the Property; (ii) cause any non-compliance with any
applicable law, ordinance, rule or regulation of any federal, state or local
authority or governmental agencies having jurisdiction over the Property or any
portion thereof; or (iii) adversely impair the use of the Property as it is
currently being operated (hereinafter collectively referred to as a "Material
Event"), Purchaser may:
i. terminate this Agreement by written notice to Seller, in which event
the Earnest Money deposited by Purchaser, together with interest thereon,
shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will
cease, except for Purchaser's obligations to indemnify Seller and restore
the Property, as set forth more fully in Paragraph ; or
<PAGE>
ii. proceed with the Closing, in which event Seller shall assign to
Purchaser all of Seller's right, title and interest in and to any award
made in connection with such condemnation or eminent domain proceedings.
Purchaser shall notify Seller within five (5) business days after Purchaser's
receipt of Seller's notice whether Purchaser elects to exercise its rights
under subparagraph (i) or subparagraph (ii) of this Paragraph b. The Closing
shall be delayed, if necessary, until Purchaser makes such election. If
Purchaser fails to make an election within such five (5) business day period,
Purchaser shall be deemed to have elected to terminate this Agreement.
If between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
c. If the Agreement is terminated pursuant to this Paragraph, then the
Earnest Money plus all accrued interest shall be delivered to the Purchaser.
7. AS-IS CONDITION.
a. Purchaser acknowledges and agrees that it will be purchasing the
Property based solely upon its inspection and investigations of the Property
and that Purchaser will be purchasing the Property "AS IS" and "WITH ALL
FAULTS" based upon the condition of the Property as of the date of this
Agreement, subject to reasonable wear and tear and loss by fire or other
casualty or condemnation from the date of this Agreement until the Closing
Date. Without limiting the foregoing, Purchaser acknowledges that, except as
may otherwise be specifically set forth elsewhere in this Agreement, neither
Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements, the existence or nonexistence of
asbestos, lead in water, lead in paint, radon, underground or above ground
storage tanks, petroleum, toxic waste or any Hazardous Materials or Hazardous
Substances (as such terms are defined below), the tenants of the Property or
the leases affecting the Property, economic projections or market studies
concerning the Property, any development rights, taxes, bonds, covenants,
conditions and restrictions affecting the Property, water or water rights,
topography, drainage, soil, subsoil of the Property, the utilities serving the
Property or any zoning, environmental or building laws, rules or regulations
affecting the Property. Seller makes no representation that the Property
complies with Title III of the Americans With Disabilities Act or any fire
codes or building codes. Except for any breach of the representations set
forth in Paragraph b.vi. and vii., Purchaser hereby releases Seller from any
and all liability in connection with any claims which Purchaser may have
against Seller, and Purchaser hereby agrees not to assert any claims, for
damage, loss, compensation, contribution, cost recovery or otherwise, against
Seller, whether in tort, contract, or otherwise, relating directly or
indirectly to the existence of asbestos or Hazardous Materials or Hazardous
Substances on, or environmental conditions of, the Property, or arising under
the Environmental Laws (as such term is hereinafter defined), or relating in
any way to the quality of the indoor or outdoor environment at the Property.
This release shall survive the Closing. As used herein, the term "Hazardous
Materials" or "Hazardous Substances" means (i) hazardous wastes, hazardous
<PAGE>
materials, hazardous substances, hazardous constituents, toxic substances or
related materials, whether solids, liquids or gases, including but not limited
to substances defined as "hazardous wastes," "hazardous materials," "hazardous
substances," "toxic substances," "pollutants," "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum,
(B) refined petroleum products, (C) waste oil, (D) waste aviation or motor
vehicle fuel, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon,
(H) Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Except as may otherwise be
specifically set forth elsewhere in this Agreement, Seller makes no
representation or warranty that such material is complete or accurate or that
Purchaser will achieve similar financial or other results with respect to the
operations of the Property, it being acknowledged by Purchaser that Seller's
operation of the Property and allocations of revenues or expenses may be vastly
different than Purchaser may be able to attain. Purchaser acknowledges that it
is a sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and except as may otherwise be specifically set forth
elsewhere in this Agreement releases Seller from any liability with respect to
such historical information.
8. CLOSING. The closing ("Closing") of this transaction shall be within
fifteen(15) days after the end of the Approval Period, prvided, however, in no
eventshall Seller be obligated to close earlier than (4) four business days
after Purchaser's ("Closing Date"), at the office of the Purchaser's attorney
in Tampa, Florida, at which time Seller shall deliver possession of the
Property to Purchaser.
9. CLOSING DOCUMENTS.
a. On the Closing Date, Purchaser shall deliver to Seller an executed
closing statement, the balance of the Purchase Price, and such other documents
as may be reasonably required in order to consummate the transaction as set
forth in this Agreement.
<PAGE>
b. On the Closing Date, Seller shall deliver to Purchaser possession of
the Property; the Deed (in the form of Exhibit E attached hereto) subject to
the Permitted Exceptions; a quitclaim deed conveying all of Seller's right,
title and interest, if any, in and to any strips, gores, hiatuses and/or other
property discrepancies reflected on the Survey which are not included within
the legal description of the Property; an assignment of any termite bond that
Seller has, provided such bond is assignable; an inventory of the Personal
Property and a Bill of Sale for the same (in the form of Exhibit F attached
hereto); an executed closing statement; an executed assignment and assumption
of all service contracts to be assumed by Purchaser (in the form of Exhibit G
attached hereto); an executed assignment and assumption of all leases and
security deposits (in the form of Exhibit H attached hereto); updated rent roll
(to be delivered two days prior to the Closing Date); a notice to the tenants
of the transfer of title and the assumption by Purchaser of the landlord's
obligations under the leases and the obligation to refund the security deposits
(in the form of Exhibit I attached hereto); a non-foreign affidavit (in the
form of Exhibit J attached hereto); an affidavit (in the form of Exhibit L
attached hereto) stating Purchaser's right to audit Seller's books and records
relating to the Property, at Purchaser's expense, at a time reasonably
convenient to Seller, but before March 31, 1996, if Purchaser is required to
submit to the Securities and Exchange Commission or any other regulatory body;
an executed assignment of intangible property (in the form of Exhibit M
attached hereto); an executed certificate as to representations and warranties
(in the form of Exhibit P attached hereto); an opinion letter from the in-house
counsel of The Balcor Company substantially in the form of Exhibit Q attached
hereto; and such other documents as may be reasonably required by the Title
Insurer in order to consummate the transaction as set forth in this Agreement.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT, INCLUDING ITS OBLIGATIONS TO MAKE ALL DEPOSITS ON OR
BEFORE THE DATES PROVIDED FOR HEREIN. IF THE PURCHASER FAILS TO MAKE ITS
DEPOSITS INTO THE ESCROW ON OR BEFORE THE DATE SUCH DEPOSIT IS DUE AS PROVIDED
FOR HEREIN, OR IN THE EVENT OF ANY OTHER DEFAULT OF THE PURCHASER UNDER THE
PROVISIONS OF THIS AGREEMENT, THEN SELLER SHALL RETAIN ALL OF THE EARNEST MONEY
AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY.
THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT
BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE.
THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE
EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RIGHT TO RECOVER FROM THE SELLER
ACTUAL DAMAGES IN AN AMOUNT NOT TO EXCEED $100,000.00 AND THE RETURN OF ALL
EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT
SHALL TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY TO EACH OTHER
AT LAW OR IN EQUITY. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE
CONTRARY, IF SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED, THEN
PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE, PROVIDED THAT AT
THE TIME OF THE FILING OF THE COMPLAINT, PURCHASER SHALL DEPOSIT WITH THE
ESCROW AGENT THE AMOUNT OF THE PURCHASE PRICE INCLUSIVE OF THE EARNEST MONEY.
<PAGE>
12. a. PRORATIONS. Rents (exclusive of delinquent rents, but including
prepaid rents); all security deposits and interest thereon if required by law
or under the leases (which will be assigned to and assumed by Purchaser and
credited to Purchaser at Closing); water and other utility charges; fuels;
service contracts; real and personal property taxes; and other similar items
shall be adjusted ratably as of 11:59 P.M. on the day prior to the Closing Date
("Proration Date"), and credited or debited to the balance of the cash due at
Closing. If the amount of any of the items to be prorated is not then
ascertainable, the adjustment thereof shall be on the basis of the most recent
ascertainable data. All prorations will be final except as to Delinquent Rents
referred to in b below. If special assessments have been levied against the
Property for completed improvements, then the amount of any installments which
are due prior to the Closing Date shall be paid by the Seller; and the amount
of installments which are due after the Closing Date shall be paid by the
Purchaser. Post-closing assessments for incomplete improvements shall be paid
by Purchaser.
b. DELINQUENT RENTS. If, as of the Closing Date, any rent is in arrears
("Delinquent Rent") for the calendar month in which the Closing occurs, then
the first rent collected by Purchaser will be delivered to Seller for the
Delinquent Rent. If Delinquent Rent is in arrears for a period prior to the
calendar month in which the Closing occurs, then rents collected by Purchaser
shall first be applied to current rent and then to Delinquent Rent. Purchaser
shall deliver Seller's pro rata share within 60 days after the Closing Date.
This subparagraph of this Agreement shall survive the Closing and the delivery
and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of recording
by Purchaser or Seller shall be an act of default hereunder by such party and
shall be subject to the provisions of Paragraph or , as applicable.
14. ASSIGNMENT. Purchaser reserves the right to assign its rights under this
Agreement (but without release of its obligations herein) to a third party who
may purchase or sell and thereafter exchange the Property in accordance with
the provisions of Section 1031 of the Internal Revenue Code of 1986. Such
exchange shall be accomplished at no additional expense or delay to Seller and
Purchaser agrees to indemnify Seller against any claims or liabilities
resulting solely from structuring the transaction as an exchange, rather than a
direct purchase.
15. BROKER. The parties hereto acknowledge that Cushman & Wakefield of
Florida, Inc. ("Broker") is the only real estate broker involved in this
transaction. Seller agrees to pay Broker a commission or fee ("Fee") pursuant
to a listing agreement between Seller and Broker. However, this Fee is due and
payable only from the proceeds of the Purchase Price received by Seller.
Purchaser agrees to indemnify, defend and hold harmless the Seller and any
partner, affiliate, parent of Seller, and all shareholders, employees, officers
and directors of Seller or Seller's partner, parent or affiliate (each of the
above is individually referred to as a "Seller Indemnitee") from all claims,
including attorneys' fees and costs incurred by a Seller Indemnitee as a result
of anyone's claiming by or through Purchaser any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated. Purchaser does now and shall at all times consent to a Seller
Indemnitee's selection of defense counsel. Seller agrees to indemnify, defend
and hold harmless the Purchaser and all shareholders, employees, officers and
directors of Purchaser or Purchaser's parent or affiliate (each of the above is
individually referred to as a "Purchaser Indemnitee") from all claims,
<PAGE>
including attorneys' fees and costs incurred by a Purchaser Indemnitee as a
result of anyone's claiming by or through Seller any fee, commission or
compensation on account of this Agreement, its negotiation or the sale hereby
contemplated. Seller does now and shall at all times consent to a Purchaser
Indemnitee's selection of defense counsel. This Paragraph shall survive the
Closing and the delivery and recording of the Deed.
16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered to Purchaser copies of the most recent available
tax bills, rent rolls, insurance premiums, and service contracts (collectively
the "Documents"). All of the Documents shall be subject to approval by
Purchaser by the close of business (5:00 P.M. Central Time) on January 25, 1996
("Approval Period"). During the Approval Period, upon reasonable notice to the
Seller, the Purchaser shall have the right, during normal business hours, to
inspect and approve the condition of the Property including the interior of the
apartments and review all files and leases located at the Property and related
locations. Purchaser, its engineers, architects, employees, contractors and
agents shall maintain public liability insurance policies insuring against
claims arising as a result of the inspections of the Property being conducted
by Purchaser. Purchaser agrees to indemnify, defend, protect and hold Seller
harmless from any and all loss, costs, including attorneys' fees, liability or
damages which Seller may incur or suffer as a result of Purchaser's conducting
its inspection and investigation of the Property including the entry of
Purchaser, its employees or agents and its lender onto the Property, including
without limitation, liability for mechanics' lien claims.
b. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
c. If Purchaser disapproves the Documents or the condition of the
Property, for any reason or no reason, it must be by a notice ("Notice of
Disapproval") delivered to Seller and the Escrow Agent on or prior to the first
business day after the expiration of the Approval Period. Upon receipt of the
Notice of Disapproval, the Earnest Money plus the interest accrued thereon
shall be returned to the Purchaser. If Purchaser does not deliver a Notice of
Disapproval, then it shall be conclusively presumed that Purchaser has approved
the Documents and the condition of the Property and all Earnest Money plus the
interest accrued thereon shall belong to Seller unless Seller is in default
hereunder. Upon receipt by Seller of a Notice of Disapproval from Purchaser,
Seller shall instruct Escrow Agent to return the Earnest Money plus all accrued
interest thereon to Purchaser.
17. SURVIVAL OF PURCHASER'S INDEMNITY. Notwithstanding anything in this
Agreement to the contrary, Purchaser's obligation to indemnify, defend and hold
Seller harmless under various provisions of this Agreement shall forever
survive the termination of this Agreement or the Closing and delivery and
recording of the Deed.
<PAGE>
18. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
a. Any reference herein to Seller's knowledge, representation, warranty
or notice of any matter or thing, shall only mean such knowledge or notice that
has actually been received by Phillip Schechter or Michael Becker (the asset
manager of the Property), and any representation or warranty of the Seller is
based upon those matters of which Phillip Schechter or Michael Becker has
actual knowledge. Any knowledge or notice given, had or received by any of
Seller's agents, servants or employees shall not be imputed to Seller or the
individual partners or the general partner of Seller.
b. Subject to the limitations set forth in subparagraph a above, Seller
hereby makes the following representations, warranties and covenants, all of
which are made to the best of Seller's knowledge, which shall survive the
Closing and delivery of the Deed for a period of one hundred eighty (180) days:
i. The present use and occupancy of the Property conform with applicable
building and zoning laws and Seller has received no written notice that
any such laws, rules or regulations are being violated.
ii. The rent roll attached hereto as Exhibit N which will be updated as
of the Closing Date is true and accurate.
iii. Seller has no knowledge of any pending or threatened litigation,
claim, cause of action or administrative proceeding concerning the
Property.
iv. Seller has the power and authority to execute and deliver this
Agreement, the Deed and the other conveyance documents; the persons
executing the documents are duly authorized to do so, without further
consent of any other party and upon their execution, the documents shall
be binding upon Seller;
v. The management, operation, leasing and maintenance of the Property,
as presently conducted by the Seller, shall continue until the Closing
Date.
vi. Seller has not received written notice from any governmental
authorities that the Property contains Hazardous Materials or Hazardous
Substances or that the Property violates any Environmental Laws.
vii. Seller has no knowledge of the existence of Hazardous Materials or
Hazardous Substances on the Property.
viii. Except as otherwise set forth on the list of Service Contracts
attached hereto as Exhibit O, all of the Service Contracts are terminable
on thirty days' prior notice without premium or penalty.
ix. Seller has made available or will make available to the Purchaser, at
Purchaser's request, during the Approval Period, the books and records
concerning the Property which books and records are located at various
locations.
<PAGE>
x. All representations and warranties made by Seller under this
Paragraph will be reviewed by Michael Becker (the asset manager), Jan
Mason (the district manager of the management company) after inquiry of
the on-site manager and Jerry Ogle, the in-house counsel of The Balcor
Company, with a requirement that they respond in writing to Michael Becker
as to whether or not to the best of their knowledge any of the
representations and warranties is false or misleading.
c. If on or prior to the Closing Date, Seller discovers that a
representation or warranty is untrue, then upon notice to Purchaser, Purchaser
can elect to terminate this Agreement or take title to the Property subject to
the untrue representation or warranty.
19. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit K is a Phase
I Environmental Site Assessment dated March 13, 1995 prepared by Environmental
Management Group, Inc. ("Environmental Report") of the Property, which Seller
is delivering to Purchaser, at Purchaser's request. Seller makes no
representation or warranty that the Environmental Report is accurate or
complete. Purchaser hereby releases Seller from any liability whatsoever with
respect to the Environmental Report, including, without limitation, the matters
set forth in the Environmental Report or the accuracy and/or completeness of
the Environmental Report.
20. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
21. PURCHASER'S ORGANIZATIONAL DOCUMENTS. At least ten (10) days prior to the
Closing Date, Purchaser and Seller will provide the other party's attorney with
copies of their organizational documents, including a certified copy of the
recorded certificate of limited partnership and a true copy of its Partnership
Agreement or a certified copy of its Articles of Incorporation and corporate
resolutions authorizing the transaction, whichever is applicable.
22. TIME OF ESSENCE. Time is of the essence of this Agreement.
<PAGE>
23. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Al Lieberman
708/267-1600
708/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (FAX)
TO PURCHASER: United Dominion Realty Trust, Inc.
7800 South Land Blvd.
Suite 154
Orlando, Florida 32809
Attention: Harold S. Warren
407/856-0338
407/856-0523 (FAX)
with a copy to: United Dominion Realty Trust, Inc.
10 S. Sixth Street
Suite 203
Richmond, Virginia 23219
Attention: Sarah S. Schimmels, Esq. and
M.A. "Buddy" Scott, Asst. V.P.
Acquisitions
804/780-2691
804/788-4607 (FAX)
<PAGE>
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, or on the 4th
business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent. Hard
copies of all facsimiles will be sent by overnight courier no later than the
next business day after the facsimiles are sent.
24. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute three
(3) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution. Seller will forward one (1) copy of the
executed Agreement to Purchaser and will forward the following to the Escrow
Agent:
a. One (1) fully executed copy of this Agreement; and
b. Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to the Purchaser and the Seller upon receipt of the Earnest
Money.
Purchaser will wire transfer the Earnest Money to the Escrow Agent within one
(1) business day after Purchaser receives a fully executed Agreement of Sale.
25. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Florida.
26. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
27. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
28. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
29. RADON GAS. Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
<PAGE>
30. CONFIDENTIALITY. Purchaser and Seller each hereby agree to reasonably
endeavor to keep the terms and conditions of this Agreement confidential,
provided that either party may reveal such information regarding the terms and
provisions of this Agreement as may be necessary in their reasonable discretion
to comply with the provisions of this Agreement, the reasonable operation and
conduct of their respective businesses or any provision of any law, ordinance
or governmental regulation.
31. VACANT APARTMENTS. If, as of the Closing Date, any of the apartment units
has been vacant for more than five (5) days, then Purchaser shall receive a
credit of $200.00 for each of those vacant units which is not in a "rent ready
condition".
32. MISCELLANEOUS. Seller agrees that it will not terminate its partnership
agreement prior to a date which is 180 days after the Closing Date and it will
withhold $250,000.00 from its distribution of the net proceeds of this sale to
its partners until a date which is 180 days after the Closing Date.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of the
date set forth above.
Executed by Purchaser on PURCHASER:
15 December, 1995.
UNITED DOMINION REALTY TRUST, INC.,
a Virginia corporation
By:
--------------------------------
Executed by Seller on SELLER:
December 19, 1995.
BROOKSEA ASSOCIATES, an Illinois
limited partnership
By: Seabrook Associates, an Illinois
limited partnership, its sole
general partner
By: Balcor Realty Associates VIII, an
Illinois general partnership, general
partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Phillip Schechter
--------------------------------
Authorized Agent
<PAGE>
Seabrook
Cushman & Wakefield of Florida, Inc. ("Broker") executes this Agreement in its
capacity as a real estate broker and acknowledges that the fee or commission
("Fee") due to it as a result of the transaction described in this Agreement is
the amount as set forth in the listing agreement between Broker and Seller.
Broker also acknowledges that payment of the aforesaid Fee is conditioned upon
the Closing and the receipt of the Purchase Price by the Seller. Broker agrees
to deliver a receipt to the Seller at the Closing for the Fee and a release
stating that no other fees or commissions are due to Broker from Seller or
Purchaser.
CUSHMAN & WAKEFIELD OF FLORIDA,
INC.
By:
----------------------------
Associate Director
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Environmental Report
L - Affidavit As To Audit
M - Assignment of Intangible Property
N - Rent Roll
O - List of Service Contracts
P - Certificate as to Representations and Warranties
Q - Opinion Letter
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 419
<SECURITIES> 0
<RECEIVABLES> 189
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1926
<PP&E> 83022
<DEPRECIATION> 31102
<TOTAL-ASSETS> 54412
<CURRENT-LIABILITIES> 10006
<BONDS> 65240
0
0
<COMMON> 0
<OTHER-SE> (19511)
<TOTAL-LIABILITY-AND-EQUITY> 54412
<SALES> 0
<TOTAL-REVENUES> 15677
<CGS> 0
<TOTAL-COSTS> 7892
<OTHER-EXPENSES> 2893
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6307
<INCOME-PRETAX> (1415)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1415)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1415)
<EPS-PRIMARY> (16.09)
<EPS-DILUTED> (16.09)
</TABLE>
