SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1998
--------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
------------ ------------
Commission file number 0-13334
-------
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
----- -----
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
BALANCE SHEETS
March 31, 1998 and December 31, 1997
(Unaudited)
ASSETS
1998 1997
-------------- --------------
Cash and cash equivalents $ 2,055,246 $ 2,902,925
Accounts and accrued interest receivable 13,778 18,051
Prepaid expenses 2,273
-------------- --------------
$ 2,071,297 $ 2,920,976
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 35,991 $ 30,525
Due to affiliates 41,783 36,092
-------------- --------------
Total liabilities 77,774 66,617
-------------- --------------
Commitments and contingencies
Limited Partners' capital (87,037
Interests issued and outstanding) 2,590,585 3,451,421
General Partner's deficit (597,062) (597,062)
-------------- --------------
Total partners' capital 1,993,523 2,854,359
-------------- --------------
$ 2,071,297 $ 2,920,976
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1998 and 1997
(Unaudited)
1998 1997
-------------- --------------
Income:
Rental and service $ 1,090,432
Interest on short-term investments $ 31,116 15,420
-------------- --------------
Total income 31,116 1,105,852
-------------- --------------
Expenses:
Interest on mortgage notes payable 400,891
Depreciation 134,014
Amortization of deferred expenses 17,366
Property operating 448,739
Real estate taxes 101,075
Property management fees 55,931
Administrative 88,065 88,203
-------------- --------------
Total expenses 88,065 1,246,219
-------------- --------------
Net loss $ (56,949) $ (140,367)
============== ==============
Net loss allocated to General Partner None $ (1,404)
============== ==============
Net loss allocated to Limited Partners $ (56,949) $ (138,963)
============== ==============
Net loss per Limited Partnership Interest
(87,037 issued and outstanding) -
Basic and Diluted $ (0.65) $ (1.60)
============== ==============
Distribution to Limited Partners $ 803,887 $ 870,370
============== ==============
Distribution per Limited
Partnership Interest $ 9.24 $ 10.00
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 84-SERIES II,
A REAL ESTATE LIMITED PARTNERSHIP
(A Maryland Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1998 and 1997
(Unaudited)
1998 1997
-------------- --------------
Operating activities:
Net loss $ (56,949) $ (140,367)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation of properties 134,014
Amortization of deferred expenses 17,366
Net change in:
Escrow deposits 17,670
Accounts and accrued
interest receivable 4,273 (163,641)
Prepaid expenses (2,273) 33,582
Accounts payable 5,466 (30,827)
Due to affiliates 5,691 (5,940)
Accrued liabilities 19,208
Security deposits 4,675
-------------- --------------
Net cash used in operating activities (43,792) (114,260)
-------------- --------------
Financing activities:
Distribution to Limited Partners (803,887) (870,370)
Principal payments on mortgage notes
payable (35,171)
-------------- --------------
Cash used in financing activities (803,887) (905,541)
-------------- --------------
Net change in cash and cash equivalents (847,679) (1,019,801)
Cash and cash equivalents at beginning
of year 2,902,925 2,025,727
-------------- --------------
Cash and cash equivalents at end of period$ 2,055,246 $ 1,005,926
============== ==============
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 Policies:
(a) The loss allocation between the Limited Partners and the General Partner
has been adjusted for financial statement purposes during 1998 in order that
the capital account balances more accurately reflect their remaining economic
interests as provided for in the Partnership Agreement.
(b) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the quarter
ended March 31, 1998, and all such adjustments are of a normal and recurring
nature.
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 1997, the Partnership sold its two remaining properties.
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 and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in Note 5 of Notes to the
Financial Statements. In the absence of any such contingencies, the reserves
will be paid within twelve months of the last property being sold. In the event
a contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.
3. Interest Expense:
During the quarter ended March 31, 1997, the Partnership incurred and paid
interest expense on mortgage notes payable of $400,891.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1998 were:
Paid Payable
------------ ---------
Reimbursement of expenses to
the General Partner, at cost $7,534 $41,783
<PAGE>
5. 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 state securities and common law violations
with regard to the property acquisition process of the Partnership, and 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.
<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 no properties remaining
in its portfolio at March 31, 1998.
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 1997 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
Administrative expenses were higher than interest earned on short-term
investments, which resulted in a net loss during the quarter ended March 31,
1998. In June 1997, the Partnership sold its two remaining properties, which
were generating a loss from operations prior to their sales, which resulted in
a net loss during the quarter ended March 31, 1997. Further discussion of the
Partnership's operations is summarized below.
1998 Compared to 1997
- ---------------------
Discussions of fluctuations between 1998 and 1997 refer to the quarters ended
March 31, 1998 and 1997.
The Partnership sold the Spring Creek and Park Colony apartment complexes
during 1997. As a result, rental and service income, interest expense on
mortgage notes payable, depreciation, amortization, property operating
expenses, real estate taxes and property management fees ceased during 1997.
Due to higher average cash balances resulting from the investment of remaining
available proceeds from property sales prior to distribution to Limited
Partners in January 1998, interest income on short-term investments increased
during 1998 as compared to 1997.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $848,000 as of
<PAGE>
March 31, 1998 when compared to December 31, 1997 primarily due to the payment
of a distribution to Limited Partners in January 1998 of remaining available
Net Cash Proceeds. The Partnership used cash of approximately $44,000 to fund
its operating activities, which consisted of the payment of administrative
expenses which were partially offset by interest income earned on short-term
investments. The Partnership used cash to fund its financing activities which
consisted of a distribution to Limited Partners of approximately $804,000.
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 1997, the Partnership sold its two remaining properties.
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 and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in Note 5 of Notes to the
Financial Statements. In the absence of any such contingencies, the reserves
will be paid within twelve months of the last property being sold. In the event
a contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.
To date, Limited Partners have received distributions of Net Cash Proceeds
totaling $130.24 per $1,000 Interest, as well as certain tax benefits. No
distributions are anticipated to be made prior to the termination of the
Partnership. However, after paying final partnership expenses, any remaining
cash reserves will be distributed. 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 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:
(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, 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.
(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
<PAGE>
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, previously filed as Exhibit (10)(d)(iii)
to the Registrant's Report on Form 10-Q for the quarter ended June 30, 1997 is
incorporated herein by reference.
(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 quarter ended March 31,
1998 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 1998.
<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, Chief Executive Officer (Principal
Executive Officer) and Director of Balcor
Partners-84 II, Inc., the General Partner
By: /s/Jayne A. Kosik
---------------------------------
Jayne A. Kosik
Senior Managing Director and Chief
Financial Officer (Principal Accounting
Officer) of Balcor Partners-84 II, Inc.,
the General Partner
Date: April 30, 1998
---------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 2055
<SECURITIES> 0
<RECEIVABLES> 14
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2071
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2071
<CURRENT-LIABILITIES> 78
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1993
<TOTAL-LIABILITY-AND-EQUITY> 2071
<SALES> 0
<TOTAL-REVENUES> 31
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 88
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (57)
<INCOME-TAX> 0
<INCOME-CONTINUING> (57)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57)
<EPS-PRIMARY> (.65)
<EPS-DILUTED> (.65)
</TABLE>
