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 June 30, 1997
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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
June 30, 1997 and December 31, 1996
(Unaudited)
ASSETS
1997 1996
--------------- ---------------
Cash and cash equivalents $ 6,659,989 $ 2,025,727
Escrow deposits - restricted 100,000
Escrow deposits 634,200
Accounts and accrued interest receivable 883,347 648,039
Prepaid expenses 44,776
Deferred expenses, net of accumulated
amortization of $187,891 in 1996 200,423
--------------- ---------------
7,643,336 3,553,165
--------------- ---------------
Investment in real estate:
Land 2,714,509
Buildings and improvements 17,638,625
---------------
20,353,134
Less accumulated depreciation 8,291,565
---------------
Investment in real estate, net of
accumulated depreciation 12,061,569
--------------- ---------------
$ 7,643,336 $ 15,614,734
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable $ 38,600 $ 66,808
Due to affiliates 82,111 134,062
Accrued real estate taxes 147,601
Security deposits 125,211
Mortgage notes payable 17,211,741
--------------- ---------------
Total liabilities 120,711 17,685,423
--------------- ---------------
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
(Continued)
1997 1996
--------------- ---------------
Commitments and contingencies
Limited Partners' capital (deficit)
(87,037 Interests issued and outstanding) 8,116,179 (1,343,455)
General Partner's deficit (593,554) (727,234)
--------------- ---------------
Total partners' capital (deficit) 7,522,625 (2,070,689)
--------------- ---------------
$ 7,643,336 $ 15,614,734
=============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
--------------- ---------------
Income:
Rental and service $ 1,970,579 $ 6,585,531
Interest on short-term investments 42,714 64,526
--------------- ---------------
Total income 2,013,293 6,650,057
--------------- ---------------
Expenses:
Interest on mortgage notes payable 771,770 2,058,810
Interest on short-term loans from an
affiliate 189,838
Depreciation 246,374 907,424
Amortization of deferred expenses 31,315 87,602
Property operating 910,024 2,668,878
Real estate taxes 193,078 572,765
Property management fees 103,726 318,838
Other expenses 176,685
Administrative 185,518 380,798
--------------- ---------------
Total expenses 2,618,490 7,184,953
--------------- ---------------
Loss before gains on sale of properties,
participation in joint ventures
and extraordinary items (605,197) (534,896)
Gains on sale of properties 12,350,293 24,331,787
Affiliates' participation in income
from joint ventures (3,288,528)
--------------- ---------------
Income before extraordinary items 11,745,096 20,508,363
--------------- ---------------
Extraordinary items:
Debt extinguishment expense (921,926) (360,073)
Affiliate's participation in debt
extinguishment expense 20,945
--------------- ---------------
Total extraordinary items (921,926) (339,128)
--------------- ---------------
Net income $ 10,823,170 $ 20,169,235
=============== ===============
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1997 and 1996
(Unaudited)
(Continued)
1997 1996
--------------- ---------------
Income before extraordinary
items allocated to General Partner $ 145,067 $ 205,083
=============== ===============
Income before extraordinary
items allocated to Limited Partners $ 11,600,029 $ 20,303,280
=============== ===============
Income before extraordinary
items per Limited Partnership Interest
(87,037 issued and outstanding) $ 133.28 $ 233.27
=============== ===============
Extraordinary items allocated to
General Partner $ (11,387) $ (3,391)
=============== ===============
Extraordinary items allocated to
Limited Partners $ (910,539) $ (335,737)
=============== ===============
Extraordinary items per Limited
Partnership Interest (87,037 issued
and outstanding) $ (10.46) $ (3.86)
=============== ===============
Net income allocated to General Partner $ 133,680 $ 201,692
=============== ===============
Net income allocated to Limited Partners $ 10,689,490 $ 19,967,543
=============== ===============
Net income per Limited Partnership Interest
(87,037 issued and outstanding) $ 122.82 $ 229.41
=============== ===============
Distribution to Limited Partners $ 870,370 None
=============== ===============
Distribution per Limited Partnership
Interest (87,037 issued and outstanding) $ 10.00 None
=============== ===============
The accompaying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1997 and 1996
(Unaudited)
1997 1996
--------------- ---------------
Income:
Rental and service $ 880,147 $ 2,724,660
Interest on short-term investments 27,294 42,179
--------------- ---------------
Total income 907,441 2,766,839
--------------- ---------------
Expenses:
Interest on mortgage notes payable 370,879 692,089
Interest on short-term loans from an
affiliate 62,120
Depreciation 112,360 381,412
Amortization of deferred expenses 13,949 36,303
Property operating 461,285 1,281,618
Real estate taxes 92,003 250,342
Property management fees 47,795 146,669
Other expenses 176,685
Administrative 97,315 278,100
--------------- ---------------
Total expenses 1,372,271 3,128,653
--------------- ---------------
Loss before gains on sale of properties,
participation in joint ventures
and extraordinary items (464,830) (361,814)
Gains on sale of properties 12,350,293 22,968,356
Affiliates' participation in income
from joint ventures (3,057,338)
--------------- ---------------
Income before extraordinary items 11,885,463 19,549,204
--------------- ---------------
Extraordinary items:
Debt extinguishment expense (921,926) (360,073)
Affiliate's participation in debt
extinguishment expense 20,945
--------------- ---------------
Total extraordinary items (921,926) (339,128)
--------------- ---------------
Net income $ 10,963,537 $ 19,210,076
=============== ===============
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1997 and 1996
(Unaudited)
(Continued)
1997 1996
--------------- ---------------
Income before extraordinary
items allocated to General Partner $ 146,471 $ 195,491
=============== ===============
Income before extraordinary
items allocated to Limited Partners $ 11,738,992 $ 19,353,713
=============== ===============
Income before extraordinary
items per Limited Partnership Interest
(87,037 issued and outstanding) $ 134.88 $ 222.36
=============== ===============
Extraordinary items allocated to
General Partner $ (11,387) $ (3,391)
=============== ===============
Extraordinary items allocated to
Limited Partners $ (910,539) $ (335,737)
=============== ===============
Extraordinary items per Limited
Partnership Interest (87,037 issued
and outstanding) $ (10.46) $ (3.86)
=============== ===============
Net income allocated to General Partner $ 135,084 $ 192,100
=============== ===============
Net income allocated to Limited Partners $ 10,828,453 $ 19,017,976
=============== ===============
Net income per Limited Partnership Interest
(87,037 issued and outstanding) $ 124.42 $ 218.50
=============== ===============
The accompanying notes are an integral part of the financial statments.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
--------------- ---------------
Operating activities:
Net income $ 10,823,170 $ 20,169,235
Adjustments to reconcile net income to
net cash used in operating activities:
Debt extinguishment expense 169,108 188,412
Affiliates' participation in debt
extinguishment expense (20,945)
Gains on sale of properties (12,350,293) (24,331,787)
Affiliates' participation in income
from joint ventures 3,288,528
Depreciation of properties 246,374 907,424
Amortization of deferred expenses 31,315 87,602
Net change in:
Escrow deposits 634,200 474,808
Accounts and accrued
interest receivable (235,308) (556,818)
Prepaid expenses 44,776 (1,072)
Accounts payable (28,208) 10,283
Due to affiliates (51,951) (72,675)
Accrued liabilities (147,601) (641,451)
Security deposits (125,211) (138,175)
--------------- ---------------
Net cash used in operating activities (989,629) (636,631)
--------------- ---------------
Investing activities:
Proceeds from sale of properties 24,725,000 58,215,000
Payment of selling costs (559,512) (1,069,817)
Escrow deposits - restricted (100,000)
--------------- ---------------
Net cash provided by investing activities 24,065,488 57,145,183
--------------- ---------------
Financing activities:
Distribution to Limited Partners (870,370)
Deemed distribution to Limited Partners (359,486)
Distributions to joint venture partners-
affiliates (1,753,050)
Repayment of loans payable-affiliate (8,385,555)
Principal payments on mortgage notes
payable (25,686) (495,603)
Repayment of mortgage notes payable (17,186,055) (40,464,579)
--------------- ---------------
Net cash used in financing activities (18,441,597) (51,098,787)
--------------- ---------------
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
--------------- ---------------
Net change in cash and cash equivalents 4,634,262 5,409,765
Cash and cash equivalents at beginning
of year 2,025,727 419,227
--------------- ---------------
Cash and cash equivalents at end of period $ 6,659,989 $ 5,828,992
=============== ===============
The accompanying notes are an integral part of the financial statments.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
(a) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the six months
and quarter ended June 30, 1997, and all such adjustments are of a normal and
recurring nature.
(b) A reclassification has been made to the previously reported 1996 financial
statements in order to provide comparability with the 1997 statements. This
reclassification has not changed the 1996 results.
(c) For financial statement purposes, in previous years partners were allocated
income and loss in accordance with the provisions in the Partnership Agreement.
In order for the capital accounts of the General Partner and Limited Partners
to appropriately reflect their respective remaining economic interests as
provided for in the Partnership Agreement, the General Partner was allocated
additional income during 1997 for financial statement purposes.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1996, the Partnership sold six properties. During June
1997, the Partnership sold its remaining two properties, the Spring Creek and
Park Colony apartment complexes. The Partnership has retained a portion of the
cash from the property sales to satisfy obligations of the Partnership as well
as establish a reserve for contingencies. 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 including, but not limited to, the lawsuits discussed
below in Note 8 of Notes to Financial Statements. 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.
3. Interest Expense:
During the six months ended June 30, 1997 and 1996, the Partnership incurred
interest expense on mortgage notes payable of $771,770 and $2,058,810 and paid
interest expense of $738,380 and $2,386,493, respectively.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
<PAGE>
six months and quarter ended June 30, 1997 were:
Paid
----------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $ 100,821 $87,310 $ 82,111
During the six months ended June 30, 1996, the Partnership repaid the General
Partner loan, primarily with proceeds from the sales of the Seabrook, La
Contenta and Meadow Creek apartment complexes. During the six months ended June
30, 1996, the Partnership incurred interest expense of $189,838 and paid
interest expense of $277,324 on these loans. 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.
5. Property Sales:
(a) In June 1997, the Partnership sold the Spring Creek Apartments in an all
cash sale for $10,225,000. From the proceeds of the sale, the Partnership paid
$7,297,746 to the third party mortgage holder in full satisfaction of the first
mortgage loan, $244,437 in selling costs and $218,932 in prepayment penalties.
The basis of the property was $5,093,533, which is net of accumulated
depreciation of $3,509,545. For financial statement purposes, the Partnership
recognized a gain of $4,887,030 from the sale of this property.
(b) In June 1997, the Partnership sold the Park Colony Apartments in an all
cash sale for $14,500,000. From the proceeds of the sale, the Partnership paid
$9,888,309 to the third party mortgage holder in full satisfaction of the first
mortgage loan, $315,075 in selling costs and $533,886 in prepayment penalties.
In addition, the Partnership paid a state withholding tax of $359,486 on behalf
of the Limited Partners relating to the gain on the sale of the property, which
has been recorded as a deemed distribution for financial statement purposes.
The basis of the property was $6,721,662 which is net of accumulated
depreciation of $5,028,394. For financial statement purposes, the Partnership
recognized a gain of $7,463,263 from the sale of this property.
6. Extraordinary Item:
In connection with the sales of the Spring Creek and Park Colony apartment
complexes in June 1997, the Partnership paid $752,818 in prepayment penalties
and wrote off the remaining unamortized deferred expenses of $169,108. These
amounts were recognized as an extraordinary item and classified as debt
extinguishment expense.
7. Other Expense:
In connection with the 1996 sale of Meadow Creek Apartments, the Partnership
paid $176,685 in April 1997 for a state income tax liability related to the
<PAGE>
gain on sale, which has been recorded as other expense for financial statement
purposes.
8. Contingencies:
The Partnership is currently involved in two lawsuits whereby the Partnership
and certain affiliates have been named as defendants alleging substantially
similar claims involving certain federal securities law violations with regard
to the adequacy and accuracy of disclosures of information concerning, as well
as marketing efforts related to, the offering of the Limited Partnership
Interests of the Partnership. The defendants continue to vigorously contest
these actions. A plaintiff class has not been certified in either action and,
no determinations of the merits have been made. It is not determinable at this
time whether or not an unfavorable decision in either action would have a
material adverse impact on the financial position, operations and liquidity of
the Partnership. The Partnership believes it has meritorious defenses to
contest the claims.
9. Subsequent Event:
In July 1997, the Partnership made a distribution of $1,305,555 ($15.00 per
Interest) to the holders of Limited Partnership Interests representing a
special distribution of available Net Cash Proceeds from the sale of Spring
Creek Apartments.
<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. Prior to 1996, the Partnership disposed of
six of these properties. The Partnership sold six properties during 1996 and
the remaining two properties in 1997.
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 1996 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership recognized substantially larger gains in connection with the
sales of five of its properties in 1996 as compared to the gains recognized
during 1997 related to the sale of two of its properties. This was the primary
reason net income decreased during the six months and quarter ended June 30,
1997 as compared to the same periods in 1996. Further discussion of the
Partnership's operations is summarized below.
1997 Compared to 1996
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1997 and 1996 refer
to both the six months and quarters ended June 30, 1997 and 1996.
In June 1997 the Partnership sold the Spring Creek and Park Colony apartment
complexes and recognized gains in connection with these sales of $12,350,293.
During the six months ended June 30, 1996, the Partnership sold the La
Contenta, Meadow Creek, Ridgetree - Phase II, Rosehill Pointe and Seabrook
apartment complexes and recognized gains in connection with these sales of
$24,331,787. The sales of these properties and Westwood Village Apartments in
November 1996 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 1997
as compared to 1996.
Due to higher average cash balances resulting from the investment of net
proceeds received in connection with the 1996 sales of Meadow Creek, Ridgetree
- - Phase II and Rosehill Pointe apartment complexes prior to distribution to
<PAGE>
Limited Partners in July 1996, interest income on short-term investments
decreased during 1997 as compared to 1996.
Due to the repayment in full of the short-term loan from an affiliate during
June 1996 with proceeds from the sales of the Seabrook, La Contenta and Meadow
Creek apartment complexes, interest expense on short-term loans from an
affiliate ceased during 1996.
In connection with the 1996 sale of Meadow Creek Apartments, the Partnership
paid $176,685 in April 1997 for a state income tax liability related to the
gain on sale, which has been recorded as other expense for financial statement
purposes.
The Partnership incurred higher professional fees during 1996 in connection
with the valuation of the Partnership's assets. In addition, legal and
portfolio management fees decreased during 1997 due to the sale of the
Partnership's properties. As a result, administrative expenses decreased during
1997 as compared to 1996.
Due to the sales of the Rosehill Pointe and Seabrook apartment complexes in
1996, affiliates' participation in income from joint ventures, which included
the affiliates' share of the gains on the sales of these properties, ceased
during 1996.
In connection with the sales of the Spring Creek and Park Colony apartment
complexes in 1997, the Partnership paid $752,818 in prepayment penalties and
wrote off the remaining unamortized deferred expenses of $169,108. In addition,
in connection with the sales of the LaContenta, Meadow Creek, Ridgetree - Phase
II and Rosehill Pointe apartment complexes in 1996, the Partnership paid
$171,661 in prepayment penalties and wrote off the remaining unamortized
deferred expenses of $188,412, the total of which includes $20,945 representing
the Rosehill Pointe Apartments affiliate's share. These amounts were recorded
as extraordinary items and classified as debt extinguishment expense for
financial statement purposes.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $4,634,000 as
of June 30, 1997 when compared to December 31, 1996 primarily due to the net
proceeds received from the sale of the Partnership's remaining two properties.
The Partnership used cash of approximately $990,000 to fund its operating
activities. The payment of administrative expenses, prepayment penalties
relating to the two property sales, an expense for a state income tax liability
related to a gain on a 1996 property sale and expenditures relating to the fire
damage incurred at the Spring Creek Apartments was partially offset by the cash
flow generated by the Partnership's properties, interest income earned on
short-term investments and the collection of certain escrow deposits related to
sold properties. The Partnership expects to be reimbursed by its insurance
carrier for the cost of the fire damage to the Spring Creek Apartments, less
the deductible. The Partnership received cash of approximately $24,065,000 from
its investing activities consisting of net proceeds received in connection with
the sales of the Partnership's remaining two properties. Financing activities
<PAGE>
consisted of a distribution of sale proceeds of approximately $870,000 to
Limited Partners, a deemed distribution to Limited Partners of approximately
$359,000 representing a state withholding tax related to the sale of Park
Colony Apartments, principal payments on mortgage notes payable of
approximately $26,000 and the repayment of mortgage notes payable of
approximately $17,186,000. In addition, in July 1997, the Partnership made a
special distribution of $1,305,555 to Limited Partners, as discussed below.
During 1996, the Partnership sold six properties. During June 1997, the
Partnership sold its remaining two properties, the Spring Creek and Park Colony
apartment complexes. The Partnership has retained a portion of the cash from
the property sales to satisfy obligations of the Partnership as well as
establish a reserve for contingencies. 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 including, but not limited to, the lawsuits discussed
in Note 8 of Notes to Financial Statements. 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.
In June 1997, the Partnership sold the Spring Creek Apartments in an all cash
sale for $10,225,000. From the proceeds of the sale, the Partnership paid
$7,297,746 to the third party mortgage holder in full satisfaction of the first
mortgage loan, $244,437 in selling costs and $218,932 in prepayment penalties.
Pursuant to the terms of the sale, $250,000 of the proceeds will be retained by
the Partnership until October 1997. The remainder of the available proceeds
were distributed to Limited Partners in July 1997. See Note 5 of Notes to
Financial Statements for additional information.
In June 1997, the Partnership sold the Park Colony Apartments in an all cash
sale for $14,500,000. From the proceeds of the sale, the Partnership paid
$9,888,309 to the third party mortgage holder in full satisfaction of the first
mortgage loan, $315,075 in selling costs and $533,886 in prepayment penalties.
In addition, the Partnership paid a state withholding tax of $359,486 on behalf
of the Limited Partners relating to the gain on sale of the property. Pursuant
to the terms of the sale, $100,000 of the sale proceeds was placed in escrow
and was not to be disbursed until the later of the settlement of any claims by
the purchaser or August 1, 1997. Of the escrow amount approximately $92,600 is
expected to be disbursed to the Partnership in August 1997. The balance of
approximately $7,400 will remain in the escrow account pending the resolution
of additional claims which have been presented by the purchaser. The available
proceeds will be distributed to Limited Partners in October 1997. See Note 5 of
Notes to Financial Statements for additional information.
In July 1997, the Partnership made a distribution of $1,305,555 ($15.00 per
Interest) to the holders of Limited Partnership Interests representing a
special distribution of available Net Cash Proceeds from the sale of Spring
Creek Apartments. Including the July 1997 distribution, Limited Partners have
received distributions of Net Cash Proceeds totaling $83 per $1,000 Interest,
as well as certain tax benefits. The Partnership expects to make a distribution
from available proceeds from the Park Colony Apartments sale and the release of
the Spring Creek Apartments holdback in October 1997. Investors will not
recover a substantial portion of their original investment.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- --------------------------
Park Colony Apartments
- ----------------------
As previously reported, on April 30, 1997, the Partnership contracted to sell
Park Colony Apartments, Gwinnett County, Georgia, to an unaffiliated party,
Ambassador VIII, L.P., a Delaware limited partnership, for a sale price of
$14,500,000. The sale closed on June 27, 1997. From the proceeds of the sale,
the Partnership repaid the outstanding balance of the first mortgage loan of
$9,888,309 and paid $533,886 in prepayment penalties, $290,000 as a brokerage
commission to an affiliate of the third party providing property management
services for the property, $359,486 on behalf of the Limited Partners for a
state withholding tax relating to the gain on the sale of the property and
$25,075 in closing costs. In addition, $100,000 was placed in escrow and was
not to be disbursed until the later of the settlement of any claims by the
purchaser or August 1, 1997. Of the escrow amount, approximately $92,600 is
expected to be disbursed to the Partnership in August 1997. The balance of
approximately $7,400 will remain in the escrow account pending the resolution
of additional claims which have been presented by the purchaser. The
Partnership received sale proceeds of approximately $3,403,000.
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) is incorporated
herein by reference.
(10) Material Contracts:
(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, is 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.
<PAGE>
(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, is 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, is
incorporated herein by reference.
(ii) Modification Agreement relating to the sale of Westwood Village
Apartments, previously filed as Exhibit (10)(c)(ii) to the Registrant's Report
on Form 10-Q for the quarter ended September 30, 1996, is incorporated herein
by reference.
(iii) Letter Agreement relating to the sale of Westwood Village Apartments,
previously filed as Exhibit (10)(c)(iii) to the Registrant's Report on Form
10-Q for the quarter ended September 30, 1996, is incorporated herein by
reference.
(d)(i) Agreement of Sale and attachment thereto relating to the sale of Park
Colony Apartments, previously filed as Exhibit (10)(d)(i) to the Registrant's
Report on Form 10-Q for the quarter ended March 31, 1997 is incorporated herein
by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of Park Colony
Apartments, previously filed as Exhibit (10)(d)(ii) to the Registrant's Report
on Form 10-Q for the quarter ended March 31, 1997 is incorporated herein by
reference.
(iii) Second Amendment to Agreement of Sale relating to the sale of Park Colony
Apartments, Gwinnett County, Georgia, is attached hereto.
(iv) Third Amendment to Agreement of Sale relating to the sale of Park Colony
Apartments, previously filed as Exhibit (99) to the Registrant's Report on Form
8-K dated May 30, 1997 is incorporated herein by reference.
(e) Agreement of Sale and attachment thereto relating to the sale of Spring
Creek Apartments previously filed as Exhibit (2) to the Registrant's Report on
Form 8-K dated May 30, 1997 is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six months ended June
30, 1997 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated May 30, 1997 was
filed reporting the contract to sell the Spring Creek Apartments in Columbus,
Ohio and the extension of the sale of Park Colony Apartments in Gwinnett
County, Georgia.
<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 and
Director (Principal Executive Officer) of
Balcor Partners-84 II, Inc., the General
Partner
By: /s/Jayne A. Kosik
---------------------------------
Jayne A. Kosik
Managing Director and Chief
Financial Officer (Principal Accounting
Officer) of Balcor Partners-84 II, Inc., the
General Partner
Date: August 14, 1997
---------------------------
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF SALE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of this 4th day of June, 1997, by and between AMBASSADOR VIII,
L.P., a Delaware limited partnership ("Purchaser") and PARK COLONY INVESTORS,
an Illinois limited partnership ("Seller").
WITNESSETH:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale, dated as of April 30, 1997 (the "Original Agreement"), that certain First
Amendment to Agreement of Sale dated May 6, 1997 (the "First Amendment") (as
amended the Original Agreement is hereinafter referred to as the "Agreement"),
pursuant to which Purchaser has agreed to purchase and Seller has agreed to
sell certain Property (as defined in the Agreement) legally described and
depicted on Exhibit A attached to the Agreement;
WHEREAS, Seller and Purchaser desire to amend the Agreement in accordance
with the terms of this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The Closing Date for this transaction shall be extended to June 11, 1997.
3. Purchaser acknowledges that Seller has an outstanding first mortgage on the
Property (the "Loan"). In consideration for Seller agreeing to extend the
Closing Date, Purchaser hereby agrees to cooperate with Seller to negotiate a
payoff arrangement with Seller's first mortgage lender (the "Lender") that is
reasonably satisfactory to Seller, provided that:
(a) Seller shall bear the costs of interest and principal (if any)
accruing under the Loan from June 2, 1997 (the "Original Closing Date")
through, but not including, the Closing Date; and
(b) Purchaser shall bear the costs of any interest and principal (if any)
accruing under the Loan on and after the Closing Date (the "Interest Charges").
Seller agrees to payoff the Loan at the earliest commercially reasonable payoff
date and in accordance with the payoff arrangement negotiated with Lender
pursuant to the terms of this paragraph. In addition to the foregoing Seller
and Purchaser agree that Purchaser's obligation to pay the Interest Charges
shall be adjusted, either up or down, by the difference between the prepayment
penalty due at the time the Loan is paid off and the prepayment penalty that
was due when the Loan was scheduled to be paid off on the Original Closing Date
(the "Prepayment Adjustment"); provided, however, that if the Prepayment
Adjustment is a credit to Purchaser and is greater in magnitude than the
Interest Charges, then there shall be no credit to Seller, and in no event
<PAGE>
shall Purchaser be entitled to a credit from Seller as a result of the terms of
this paragraph. (For example, if the Prepayment Adjustment is a $50,000 credit
to Purchaser, and the Interest Charges are $125,000, the net costs to Purchaser
shall be $75,000; however, if the Prepayment Adjustment is a $100,000 credit to
Purchaser, and the Interest Charges are $75,000, then the net costs to
Purchaser shall be $0, and Purchaser would not be entitled to any credit from
Seller.)
4. Purchaser agrees to deposit $100,000.00 with the Escrow Agent as additional
earnest money concurrently herewith. Such sum shall be included within the
definition of Earnest Money for which Purchaser shall receive a credit at
Closing.
7. Except as amended hereby, the Agreement and the Escrow Agreement shall be
and remain unchanged and in full force and effect in accordance with its terms.
8. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument. To facilitate the execution of this Amendment, Seller
and Purchaser may execute and exchange by telephone facsimile counterparts of
the signature pages, with each facsimile being deemed an "original" for all
purposes.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
AMBASSADOR VII, L.P., a Delaware limited partnership
By: Ambassador VIII, Inc.,, a Delaware
corporation
By: /s/ Thomas J. Coorsh
---------------------------
Name: Thomas J. Coorsh
Its: Sr. Vice President
SELLER:
PARK COLONY INVESTORS,
an Illinois limited partnership
By: Balcor Partners-84II, Inc., a
Delaware corporation,
its general partner
By: /s/Michael J. Becker
------------------------------
Name: Michael J. Becker
Its: Managing Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 6660
<SECURITIES> 100
<RECEIVABLES> 883
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7643
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7643
<CURRENT-LIABILITIES> 121
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7522
<TOTAL-LIABILITY-AND-EQUITY> 7643
<SALES> 0
<TOTAL-REVENUES> 14364
<CGS> 0
<TOTAL-COSTS> 1384
<OTHER-EXPENSES> 463
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 772
<INCOME-PRETAX> 11745
<INCOME-TAX> 0
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<EXTRAORDINARY> (922)
<CHANGES> 0
<NET-INCOME> 10823
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<EPS-DILUTED> 122.82
</TABLE>
