SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13334
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BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 36-3223939
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------- -------------
Cash and cash equivalents $ 1,532,493 $ 419,227
Escrow deposits 618,211 1,158,746
Accounts and accrued interest receivable 838,076 189,252
Prepaid expenses 116,901 159,160
Deferred expenses, net of accumulated
amortization of $412,978 in 1996
and $763,343 in 1995 266,286 565,727
------------- -------------
3,371,967 2,492,112
------------- -------------
Investment in real estate:
Land 4,715,580 11,076,389
Buildings and improvements 25,076,996 71,945,955
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29,792,576 83,022,344
Less accumulated depreciation 11,782,031 31,102,341
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Investment in real estate, net of
accumulated depreciation 18,010,545 51,920,003
------------- -------------
$ 21,382,512 $ 54,412,115
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Loans payable-affiliate $ 8,385,555
Accounts payable $ 103,593 141,388
Due to affiliates 73,467 126,650
Accrued liabilities, principally
interest and real estate taxes 471,029 1,078,917
Security deposits 137,892 273,669
Mortgage notes payable 24,203,736 65,239,773
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Total liabilities 24,989,717 75,245,952
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Affiliates' participation in joint
ventures 191,900 (1,322,633)
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<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
(Continued)
Limited Partners' deficit (87,037
Interests issued and outstanding) (3,045,883) (18,559,083)
General Partner's deficit (753,222) (952,121)
------------- -------------
Total partners' deficit (3,799,105) (19,511,204)
------------- -------------
$ 21,382,512 $ 54,412,115
============= =============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Rental and service $ 8,144,984 $ 11,644,900
Interest on short-term investments 78,982 46,559
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Total income 8,223,966 11,691,459
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Expenses:
Interest on mortgage notes payable 2,733,841 4,323,944
Interest on short-term loans from
an affiliate 189,838 412,519
Depreciation 1,096,062 1,641,573
Amortization of deferred expenses 111,029 133,565
Property operating 3,486,440 4,357,337
Real estate taxes 690,293 929,676
Property management fees 390,289 573,516
Administrative 498,256 414,526
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Total expenses 9,196,048 12,786,656
------------- -------------
Loss before gain on sale of properties,
participation in joint ventures and
extraordinary items (972,082) (1,095,197)
Gain on sales of properties 24,331,787
Affiliates' participation in (income) loss
from joint ventures (3,246,631) 27,446
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Income (loss) before extaordinary items 20,113,074 (1,067,751)
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Extraordinary items:
Gain on forgiveness of debt 157,826
Affiliate's participation in gain
on forgiveness of debt (41,897)
Debt extinguishment expense (360,073)
Affiliate's participation in debt
extinguishment expense 20,945
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Total extraordinary items (223,199)
------------- -------------
Net income (loss) $ 19,889,875 $ (1,067,751)
============= =============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
------------- -------------
Income (loss) before extaordinary items
allocated to General Partner $ 201,131 $ (10,678)
============= =============
Income (loss) before extaordinary items
allocated to Limited Partners $ 19,911,943 $ (1,057,073)
============= =============
Income (loss) before extaordinary items
per Limited Partnership Interest(87,037
issued and outstanding) $ 228.78 $ (12.15)
============= =============
Extraordinary items allocated to
General Partner $ (2,232) None
============= =============
Extraordinary items allocated to
Limited Partners $ (220,967) None
============= =============
Extraordinary items per Limited
Partnership Interest (87,037 issued
and outstanding) $ (2.54) None
============= =============
Net income (loss) allocated to
General Partner $ 198,899 $ (10,678)
============= =============
Net income (loss) allocated to
Limited Partners $ 19,690,976 $ (1,057,073)
============= =============
Net income (loss) per Limited Partnership
Interests (87,037 issued and outstanding) $ 226.24 $ (12.15)
============= =============
Distribution to Limited Partners $ 4,177,776 None
============= =============
Distribution per Limited
Partnership Interest $ 48.00 None
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Rental and service $ 1,559,453 $ 3,912,867
Interest on short-term investments 14,456 12,954
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Total income 1,573,909 3,925,821
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Expenses:
Interest on mortgage notes payable 517,205 1,442,945
Interest on short-term loans from
an affiliate 141,519
Depreciation 188,638 547,190
Amortization of deferred expenses 23,427 44,520
Property operating 817,562 1,660,259
Real estate taxes 117,528 318,711
Property management fees 71,451 197,093
Administrative 117,458 142,453
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Total expenses 1,853,269 4,494,690
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Loss before participation in joint ventures (279,360) (568,869)
Affiliates' participation in loss from
joint ventures 36,992
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Net loss $ (279,360) $ (531,877)
============= =============
Net loss allocated to General Partner $ (2,793) $ (5,319)
============= =============
Net loss allocated to Limited Partners $ (276,567) $ (526,558)
============= =============
Net loss per Limited Partnership Interest
(87,037 issued and outstanding) $ (3.17) $ (6.05)
============= =============
Distribution to Limited Partners $ 4,177,776 None
============= =============
Distribution per Limited
Partnership Interest $ 48.00 None
============= =============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Operating activities:
Net income (loss) $ 19,889,875 $ (1,067,751)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities:
Gain on forgiveness of debt (157,826)
Affiliate's participation in gain on
forgiveness of debt 41,897
Debt extinguishment expense 360,073
Affiliate's participation in debt
extinguishment expense (20,945)
Gain on sales of properties (24,331,787)
Affiliates' participation in income
(loss) from joint ventures 3,246,631 (27,446)
Depreciation of properties 1,096,062 1,641,573
Amortization of deferred expenses 111,029 133,565
Net change in:
Escrow deposits 540,535 (71,008)
Accounts and accrued interest
receivable (648,824) 312,693
Prepaid expenses 42,259 (271,424)
Accounts payable (37,795) (43,656)
Due to affiliates (53,183) (183,055)
Accrued liabilities (607,888) 87,092
Security deposits (135,777) (6,495)
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Net cash (used in) provided by operating
activities (665,664) 504,088
------------- -------------
Investing activities:
Proceeds from sales of properties 58,215,000
Cost incurred in connection with sales of
properties (1,069,817)
-------------
Net cash provided by investing activities 57,145,183
-------------
Financing activities:
Distribution to Limited Partners (4,177,776)
Capital contributions by joint venture
partners-affiliate 25,323
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
Distributions to joint venture partners-
affiliates (1,753,050) (56,269)
Proceeds from loans payable-affiliate 537,000
Repayment of loans payable-affiliate (8,385,555) (400,000)
Principal payments on mortgage notes
payable (413,632) (551,683)
Repayment of mortgage notes payable (40,464,579)
Payment of prepayment penalties (171,661)
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Net cash used in financing activities (55,366,253) (445,629)
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Net change in cash and cash equivalents 1,113,266 58,459
Cash and cash equivalents at beginning
of period 419,227 325,412
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Cash and cash equivalents at end of period $ 1,532,493 $ 383,871
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the Partnership
incurred interest expense on mortgage notes payable of $2,733,841 and
$4,323,944 and paid interest expense of $2,903,698 and $4,374,226,
respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 were:
Paid
------------------------
Nine Months Quarter Payable
------------ --------- --------
Reimbursement of expenses to
the General Partner, at cost $107,701 $19,338 $73,467
During the first six months of 1996, the Partnership repaid the General Partner
loan, which had an outstanding balance of $8,385,555 at December 31, 1995,
primarily with proceeds from the sales of the Seabrook, La Contenta and Meadow
Creek apartment complexes. (See Note 4 of Notes to Financial Statements for
additional information.) During the nine months ended September 30, 1996 and
1995, the Partnership incurred interest expense of $189,838 and $412,519, and
paid interest expense of $277,324 and $527,062 on these loans, respectively.
Interest expense was computed at the American Express Company cost of funds
rate plus a spread to cover administrative expenses. The interest rate was
5.911% at the date of the loan repayment.
4. Property Sales:
(a) The Seabrook Apartments was owned by a joint venture consisting of the
Partnership and two affiliates. The Partnership and the affiliates held
participating percentages in the joint venture of 83.72% and 16.28%,
respectively. In February 1996, the joint venture sold the property in an all
cash sale for $5,915,000. From the proceeds of the sale, the joint venture paid
$5,081,898 to the third party mortgage holder in full satisfaction of the first
mortgage loan, and paid $190,517 in selling costs. The basis of the property
was $4,361,052, which is net of accumulated depreciation of $2,625,226. For
financial statement purposes, the Partnership recognized a gain of $1,363,431
<PAGE>
from the sale of this property, of which $228,084 is the minority joint venture
partners' shares.
(b) In April 1996, the Partnership sold the La Contenta Apartments in an all
cash sale for $11,300,000. From the proceeds of the sale, the Partnership paid
$6,970,559 to the third party mortgage holder in full satisfaction of the first
mortgage loan, and paid $236,400 in selling costs and $69,765 in prepayment
penalties. The basis of the property was $4,737,918, which is net of
accumulated depreciation of $3,049,224. For financial statement purposes, the
Partnership recognized a gain of $6,325,682 from the sale of this property.
(c) In May 1996, the Partnership sold the Meadow Creek Apartments in an all
cash sale for $11,100,000. From the proceeds of the sale, the Partnership paid
$5,076,321 to the third party mortgage holder in full satisfaction of the first
mortgage loan, and paid $365,650 in selling costs and $101,896 in prepayment
penalties. The basis of the property was $4,195,785, which is net of
accumulated depreciation of $2,861,903. For financial statement purposes, the
Partnership recognized a gain of $6,538,565 from the sale of this property.
(d) In June 1996, the Partnership sold the Ridgetree Apartments - Phase II in
an all cash sale for $9,200,000. From the proceeds of the sale, the Partnership
paid $7,798,124 to the third party mortgage holder in full satisfaction of the
first and second mortgage loans, and paid $107,000 in selling costs. The basis
of the property was $6,909,090, which is net of accumulated depreciation of
$4,455,600. For financial statement purposes, the Partnership recognized a gain
of $2,183,910 from the sale of this property.
(e) The Rosehill Pointe Apartments was owned by a joint venture consisting of
the Partnership and an affiliate. The Partnership and the affiliate hold
participating percentages in the joint venture of 61.62% and 38.38%,
respectively. In June 1996, the joint venture sold the property in an all cash
sale for $20,700,000. From the proceeds of the sale, the joint venture paid
$15,537,677 to the third party mortgage holders in full satisfaction of the
first and second mortgage loans, and paid $170,250 in selling costs. The basis
of the property was $12,609,551, which is net of accumulated depreciation of
$7,424,419. For financial statement purposes, the Partnership recognized a gain
of $7,920,199 from the sale of this property, of which $3,055,484 is the
minority joint venture partner's share.
5. Extraordinary Items:
(a) During 1996, the Partnership recognized an extraordinary gain on
forgiveness of debt of $157,826 as a result of the sales of the La Contenta,
Meadow Creek and Rosehill Pointe apartment complexes, of which $41,897
represents the Rosehill Pointe Apartments affiliate's share.
(b) In connection with the sales of the La Contenta and Meadow Creek apartment
complexes during 1996, the Partnership paid $171,661 of prepayment penalties.
In addition, the Partnership fully amortized the remaining deferred financing
fees in the amount of $188,412 as a result of the sales of the La Contenta,
Meadow Creek, Ridgetree - Phase II and Rosehill Pointe apartment complexes
during 1996. These amounts were recognized as extraordinary items and
classified as debt extinguishment expense of $360,073, of which $20,945
represents the Rosehill Pointe Apartments affiliate's share.
<PAGE>
6. Subsequent Event:
In October 1996, the Partnership paid $870,370 ($10 per Interest) to Limited
Partners, representing a special distribution of Net Cash Proceeds received in
connection with the sales of the Ridgetree - Phase II and Rosehill Pointe
apartment complexes.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors 84-Series II, A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1983 to invest in and operate
income-producing real property. The Partnership raised $87,037,000 through the
sale of Limited Partnership Interests and utilized these proceeds to acquire
fourteen real property investments. The Partnership has since disposed of
eleven of these properties, including five properties which were sold during
1996. The Partnership continues to operate the three remaining properties.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership sold five properties in 1996 and recognized significant gains
on these sales for financial statement purposes. As a result of these sales and
the timing of the related gains, the Partnership generated net income during
the nine months ended September 30, 1996 as compared to a net loss during the
same period in 1995 and recognized a decrease in the net loss during the
quarter ended September 30, 1996 as compared to the same period in 1995.
Further discussion of the Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the nine months and quarters ended September 30, 1996 and 1995.
The Partnership sold the La Contenta, Meadow Creek, Ridgetree - Phase II,
Rosehill Pointe and Seabrook apartment complexes during 1996. As a result, the
Partnership recognized gains of $24,331,787 on the sales during the nine months
ended September 30, 1996. These sales also resulted in decreases in rental and
service income, interest expense on mortgage notes payable, depreciation,
amortization, property operating expenses, real estate taxes and property
management fees during 1996 as compared to 1995.
All three of the Partnership's remaining properties experienced higher rental
rates in 1996 which resulted in increased rental and service income and
property management fees and partially offset the decreases from the five
property sales.
<PAGE>
Proceeds received in connection with the sales of the Meadow Creek, Ridgetree -
Phase II and Rosehill Pointe apartment complexes were invested in short-term
investments prior to their distribution to Limited Partners in July 1996. As a
result, interest income on short-term investments increased during 1996 as
compared to 1995.
Due to decreases in the short-term loan balance during 1996 and its full
repayment in June 1996, interest expense on short-term loans from an affiliate
decreased during the nine months ended September 30, 1996 as compared to the
same period in 1995 and ceased during the quarter ended September 30, 1996.
Due to higher consulting fees, administrative expenses increased during the
nine months ended September 30, 1996 as compared to the same period in 1995.
Lower accounting fees incurred during 1996 partially offset the increase for
the nine months and resulted in a decrease in administrative expenses during
the quarter ended September 30, 1996 as compared to the same period in 1995.
The gains recognized in connection with the sales of the Rosehill Pointe and
Seabrook apartment complexes resulted in the recognition of affiliates'
participation in income from joint ventures during the nine months ended
September 30, 1996 as compared to affiliates' participation in loss from joint
ventures during the same period in 1995. In addition, as a result of the
properties' sales during the first six months of 1996, affiliates'
participation in loss from joint ventures ceased during the quarter ended
September 30, 1996.
As a result of the sales of the La Contenta, Meadow Creek and Rosehill Pointe
apartment complexes, the Partnership recognized an extraordinary gain on
forgiveness of debt of $157,826, of which $41,897 represents Rosehill Pointe
Apartments affiliate's share, during the nine months ended September 30, 1996.
Due to the sales of the La Contenta, Meadow Creek, Ridgetree - Phase II and
Rosehill Pointe apartment complexes, remaining unamortized deferred financing
fees in the amount of $188,412 and prepayment penalties of $171,661 were
recognized as an extraordinary item and classified as debt extinguishment
expense of $360,073, of which $20,945 represents the Rosehill Pointe Apartments
affiliate's share, during the nine months ended September 30, 1996.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $1,113,000 as
of September 30, 1996 when compared to December 31, 1995. The Partnership used
cash of approximately $666,000 to fund its operating activities. The revenue
generated by the Partnership's properties was offset by the payment of
administrative expenses, short-term interest expense and expenditures relating
to damage caused by a hail storm at the Westwood Village Apartments and snow
damage incurred at the Spring Creek Apartments. The Partnership expects to be
reimbursed by its insurance carrier for the costs of the damage. The
Partnership received cash of approximately $57,145,000 from its investing
activities relating to the sales of the La Contenta, Meadow Creek, Ridgetree -
Phase II, Rosehill Pointe and Seabrook apartment complexes. The Partnership
<PAGE>
used cash to fund its financing activities which consisted of the payment of a
distribution totaling approximately $4,178,000 to the Limited Partners, the
repayment of the $8,385,555 loan from the General Partner, the repayment of
mortgage notes payable of approximately $40,465,000, the payment of prepayment
penalties of approximately $172,000 related to two property sales, principal
payments on mortgage notes payable of approximately $414,000 and distributions
to joint venture partners of approximately $1,753,000. The Partnership also
made a special distribution to Limited Partners from Net Cash Proceeds in
October 1996 as described below.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit is
considered to be significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. The Partnership defines cash flow
generated from its properties as an amount equal to the property's revenue
receipts less property related expenditures, which include debt service
payments. During the nine months ended September 30, 1996 and 1995, the Park
Colony and Westwood Village apartment complexes generated positive cash flow.
The Spring Creek Apartments, which had generated a marginal cash flow deficit
during the nine months ended September 30, 1995, generated positive cash flow
during the same period in 1996 as a result of higher rental income. In
addition, the Meadow Creek and Rosehill Pointe apartment complexes, which were
sold in May and June 1996, respectively, generated positive cash flow during
1995 and prior to their sales in 1996. The Seabrook and Ridgetree - Phase II
apartment complexes, which were sold in February and June 1996, respectively,
generated marginal cash flow deficits during 1995 and prior to their sales in
1996. The La Contenta Apartments, which was sold in April 1996, generated
positive cash flow during 1995 and a marginal cash flow deficit prior to its
sale in 1996. As of September 30, 1996, occupancy rates of the Partnership's
remaining properties ranged from 93% to 97%.
The General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's remaining 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
is favorable to sellers of these properties and has accelerated the
Partnership's liquidation strategy. During 1996, the Partnership sold the La
Contenta, Meadow Creek, Ridgetree - Phase II, Rosehill Pointe and Seabrook
apartment complexes. Currently, the Partnership has entered into a contract to
sell the Westwood Village Apartments for $9,000,000. Additionally, the
Partnership is actively marketing the Park Colony Apartments. The Partnership
expects to sell the remaining two properties during 1997.
The timing of the termination of the Partnership and final distribution of cash
will depend upon the nature and extent of liabilities and contingencies which
exist or may arise. Such contingencies may include legal and other fees
stemming from litigation involving the Partnership. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency exists, reserves may be held by
the Partnership for a longer period of time.
<PAGE>
The Seabrook Apartments was owned by a joint venture consisting of the
Partnership and two affiliates. In February 1996, the joint venture sold the
property in an all cash sale for $5,915,000. From the proceeds of the sale, the
joint venture paid $5,081,898 to the third party mortgage holder in full
satisfaction of the first mortgage loan, and paid $190,517 in selling costs.
The net proceeds of the sale were $642,585, of which $538,815 was the
Partnership's share. Pursuant to the terms of the sale, the joint venture was
required to holdback $250,000 of the proceeds until August 1996. The full
amount of the holdback was released in August 1996. The remainder of the
proceeds received by the Partnership were used to repay a portion of the
General Partner loan. See Note 4 of Notes to Financial Statements for
additional information.
In April 1996, the Partnership sold the La Contenta Apartments in an all cash
sale for $11,300,000. From the proceeds of the sale, the Partnership paid
$6,970,559 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $236,400 in selling costs and paid $69,765 of prepayment
penalties. The remainder of the proceeds were used to repay a portion of the
General Partner loan. See Note 4 of Notes to Financial Statements for
additional information.
In May 1996, the Partnership sold the Meadow Creek Apartments in an all cash
sale for $11,100,000. From the proceeds of the sale, the Partnership paid
$5,076,321 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $365,650 in selling costs and paid $101,896 of prepayment
penalties. The remainder of the proceeds were used to repay the remaining
balance of the General Partner loan and to make a special distribution to the
Limited Partners in July 1996. See Note 4 of Notes to Financial Statements for
additional information.
In June 1996, the Partnership sold the Ridgetree Apartments - Phase II in an
all cash sale for $9,200,000. From the proceeds of the sale, the Partnership
paid $7,798,124 to the third party mortgage holder in full satisfaction of the
first and second mortgage loans, and paid $107,000 in selling costs. Pursuant
to the terms of the sale, the Partnership was required to holdback $500,000 of
the proceeds until October 1996. The full amount of the holdback was released
in October 1996. The remainder of the proceeds were distributed as special
distributions to the Limited Partners in July and October 1996. See Note 4 of
Notes to Financial Statements for additional information.
The Rosehill Pointe Apartments was owned by a joint venture consisting of the
Partnership and an affiliate. In June 1996, the joint venture sold the property
in an all cash sale for $20,700,000. From the proceeds of the sale, the joint
venture paid $15,537,677 to the third party mortgage holders in full
satisfaction of the first and second mortgage loans, and paid $170,250 in
selling costs. The net proceeds of the sale were $4,992,073, of which
$3,076,115 was the Partnership's share. Pursuant to the terms of the sale, the
joint venture was required to holdback $500,000 of the proceeds until October
1996. The full amount of the holdback was released in October 1996. A portion
of the remaining proceeds received by the Partnership were distributed as
special distributions to the Limited Partners in July and October 1996, while
the remainder has been retained for working capital purposes. See Note 4 of
Notes to Financial Statements for additional information.
<PAGE>
Each of the Partnership's remaining properties is owned through the use of
third-party mortgage loan financing and, therefore, the Partnership is subject
to the financial obligations required by such loans. As a result of the General
Partner's efforts to refinance certain of the existing loans with new lenders,
the Partnership has no third-party, first mortgage financing which matures
prior to April 1998.
In October 1996, the Partnership paid $870,370 ($10 per Interest) to Limited
Partners representing a special distribution of Net Cash Proceeds received in
connection with the sales of the Ridgetree - Phase II and Rosehill Pointe
apartment complexes. Including the October 1996 distribution, Limited Partners
have received distributions of Net Cash Proceeds totaling $58 per $1,000
Interest, as well as certain tax benefits. The Partnership expects to continue
making distributions from proceeds generated from future property sales,
although there can be no assurance in this regard. The General Partner,
however, does not anticipate that investors will recover a substantial portion
of their original investment.
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.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Proposed class action
- ----------------------
On August 30, 1996, a proposed class action complaint was filed, Lenore Klein
vs. Lehman Brothers, Inc., et al., Superior Court of New Jersey, Law Division,
Union County, Docket No. Unn-L-5162-96). The Partnership, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnerships"), American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by the predecessor of
Lehman Brothers, Inc. (together with the Partnership and the Affiliated
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the action. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
things, common law fraud and deceit, negligent misrepresentation, breach of
contract, breach of fiduciary duty and violation of certain New Jersey statutes
relating to the disclosure of information in the offering of limited
partnership interests in the Defendant Partnerships. The amended 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; punitive
damage; equitable relief, including rescission, on certain counts; punitive
damages; treble damages on certain counts; recovery from the defendants of all
profits received by them as a result of their actions relating to the Defendant
Partnerships; 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.
Item 5. Other Information
- --------------------------
Westwood Village Apartments
- ---------------------------
As previously reported, the Partnership contracted to sell Westwood Village
Apartments, Irving, Texas, to an unaffiliated party, Alliance Holdings, L.L.C.,
an Illinois limited liability company, for a sale price of $9,000,000. The
Partnership and the purchaser have agreed to extend the closing date from
November 1, 1996 to December 30, 1996. The purchaser has deposited an
additional $75,000 as earnest money, which amount is non-refundable except in
the event of a Partnership default under the agreement of sale, for a total of
$165,000.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 2
of the Registrant's Registration Statement on Form S-11 dated May 16, 1984
(Registration No. 2-89319), and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended June 30, 1992 (Commission File No. 0-13334) are incorporated
herein by reference.
(10) (a) (i) Agreement of Sale and attachment thereto relating to the sale of
Ridgetree Apartments, Phase II, previously filed as Exhibit 2(a) to the
Registrant's Current Report on Form 8-K dated April 23, 1996, are incorporated
herein by reference.
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
Ridgetree Apartments, Phase II and Rosehill Pointe Apartments, previously filed
as Exhibit 2(a)(i) to the Registrant's Current Report on Form 8-K dated May 31,
1996, is incorporated herein by reference.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of Ridgetree Apartments, Phase II and Rosehill Pointe Apartments, previously
filed as Exhibit 2(a)(ii) to the Registrant's Current Report on Form 8-K dated
May 31, 1996, is incorporated herein by reference.
(b) Agreement of Sale and attachment thereto relating to the sale of Rosehill
Pointe Apartments, previously filed as Exhibit 2(b) to the Registrant's Current
Report on Form 8-K dated April 23, 1996, are incorporated herein by reference.
(c)(i) Agreement of Sale and attachment thereto relating to the sale of
Westwood Village Apartments, previously filed as Exhibit (2) to the
Registrant's Current Report on Form 8-K dated September 4, 1996, are
incorporated herein by reference.
(ii) Modification Agreement relating to the sale of Westwood Village Apartments
is attached hereto.
(iii) Letter Agreement relating to the sale of Westwood Village Apartments is
attached hereto.
(27) Financial Data Schedule of the Registrant for the nine month period ended
September 30, 1996 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated September 4, 1996
was filed reporting the contract to sell the Westwood Village Apartments in
Irving, Texas.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/ Thomas E. Meador
--------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-84 II, Inc., the General Partner
By: /s/ Jayne A. Kosik
---------------------------------
Jayne A. Kosik
Vice President, and Chief
Financial Officer (Principal Accounting
Officer) of Balcor Partners-84
II, Inc., the General Partner
Date: November 12, 1996
---------------------------
<PAGE>
MODIFICATION AGREEMENT
This Modification Agreement ("Modification") dated this 2nd day of
October, 1996, by and between ALLIANCE HOLDINGS, L.L.C., an Illinois limited
liability company ("Purchaser") and WEST VILLAGEWOOD LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
W I T N E S S E T H:
WHEREAS, Purchaser and Seller entered into an Agreement of Sale dated
September 4, 1996 ("Contract") for the Westwood Village Apartments, Irving,
Texas; and
WHEREAS, Purchaser and Seller desire to modify the Contract as hereinafter
provided; and
NOW, THEREFORE, in consideration of the sum of Ten and 00/100 Dollars
($10.00) and other good and valuable consideration, in hand paid, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Section 8 of the Contract is modified by adding the following
thereto: Notwithstanding anything to the contrary contained herein, Purchaser
shall have the right to extend the Closing Date to December 30, 1996, upon (i)
written notice to Seller effective on or before October 25, 1996 of Purchaser's
intention to so extend the Closing Date and (ii) payment by Purchaser to
Seller, on or before October 25, 1996, of the amount Seventy-Five Thousand and
00/100 Dollars ($75,000.00), which amount shall be non-refundable to Purchaser
(except in the event of Seller default) and applicable to the Purchase Price
(in the event this transaction proceeds to Closing).
2. Except as above provided, the Contract remains unmodified and in full
force an effect.
PURCHASER: SELLER:
ALLIANCE HOLDINGS, L.L.C., WEST VILLAGEWOOD LIMITED
an Illinois limited liability PARTNERSHIP, an Illinois limited
company partnership
By: /s/ Andrew W. Schor By: Westvill, Inc., an Illinois
------------------------------ corporation, its general partner
Name: Andrew W. Schor
------------------------------ By: /s/ James E. Mendelson
Its: President -----------------------------
------------------------------ Name: James E. Mendelson
-----------------------------
Its: Sr VP
-----------------------------
<PAGE>
October 23, 1996
Via Facsimile (847) 317-4662 Via Facsimile (312) 992-1061
The Balcor Company Katten Muchin & Zavis
Bannockburn Lake Office Plaza 525 West Monroe Street
2355 Waukegan Road Suite 1600
Suite A-200 Chicago, Illinois 60661-3693
Bannockburn, Illinois 60015 Attention: Daniel J. Perlman
Attention: Alan Lieberman and
Ilona Adama
Re: Agreement of Sale dated August 29, 1996, by and between Alliance
Holdings, L.L.C. and West Villagewood Limited Partnership for
Westwood Village Apartments, Irvine, Texas ("Agreement")
Notice is hereby tendered that Purchaser has elected to extend the Closing
Date under the above-referenced Agreement to December 30, 1996, in accordance
with the terms of Section 8 of the Agreement (as modified by that certain
Second Modification Agreement dated October 2, 1996).
The Seventy Five Thousand Dollar ($75,000.00) payment required by the
Modification Agreement will be wired to the Escrow Agent on or before October
25, 1996.
Alliance Holdings, L.L.C.
By: /s/ David O'Keefe
-----------------------------------
Its: Attorney in Fact
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1532
<SECURITIES> 0
<RECEIVABLES> 838
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3106
<PP&E> 29793
<DEPRECIATION> 11782
<TOTAL-ASSETS> 21383
<CURRENT-LIABILITIES> 786
<BONDS> 24204
0
0
<COMMON> 0
<OTHER-SE> (3799)
<TOTAL-LIABILITY-AND-EQUITY> 21383
<SALES> 0
<TOTAL-REVENUES> 29309
<CGS> 0
<TOTAL-COSTS> 4567
<OTHER-EXPENSES> 1705
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2924
<INCOME-PRETAX> 20113
<INCOME-TAX> 0
<INCOME-CONTINUING> 20113
<DISCONTINUED> 0
<EXTRAORDINARY> (223)
<CHANGES> 0
<NET-INCOME> 19890
<EPS-PRIMARY> 226.24
<EPS-DILUTED> 226.24
</TABLE>
