SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
(Amendment No. 1)
BALCOR EQUITY PENSION INVESTORS-II
(Name of Subject Company)
BALCOR EQUITY PENSION INVESTORS-II
(Name of Person(s) Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
Thomas E. Meador
Chairman
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
(847) 267-1600
(Name, Address and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
Copy To:
Herbert S. Wander
Lawrence D. Levin
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661-3693
(312) 902-5200
<PAGE>
This Amendment No. 1 to Schedule 14D-9 amends the Schedule 14D-9 (the
"Schedule 14D-9") filed by Balcor Equity Pension Investors-II, an Illinois
limited partnership (the "Partnership"), filed with the Securities and Exchange
Commission on May 28, 1996. All capitalized terms used herein but not
otherwise defined shall have the meanings ascribed to such terms in the
Schedule 14D-9.
Item 9. Material to be Filed as Exhibits
Item 9 hereby is amended by removing "5. (c)(4) The Darby Valuation
Report [to be filed by amendment]" and substituting in its place "5. (c)(4)
The Darby Valuation Report"
Signature. After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: June 4, 1996 BALCOR EQUITY PENSION
INVESTORS-II
By: Balcor Equity Partners-II, its
general partner
By: The Balcor Company, a
general partner
By: /s/Thomas E. Meador
---------------------------
Thomas E. Meador, Chairman
<PAGE>
APPRAISAL OF
A TAX-EXEMPT LIMITED PARTNERSHIP INTEREST
AND
A TAXABLE LIMITED PARTNERSHIP INTEREST
IN
BALCOR EQUITY PENSION INVESTORS - II
(BEPI - II)
SKOKIE, ILLINOIS
AS OF MARCH 31, 1996
Valuation Counselors
<PAGE>
May 8, 1996
Balcor Equity Partners - II
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
Attn: Mr. John K. Powell, Jr. - First Vice President
Gentlemen:
In accordance with your request, we are pleased to submit our opinion of the
Value of a Tax-Exempt Limited Partnership Interest and a Taxable Limited
Partnership Interest in:
Balcor Equity Pension Investors - II
(An Illinois Limited Partnership)
as of March 31, 1996.
The term "Value" is defined as follows:
The amount, in dollars, which a Limited Partnership Interest in Balcor
Equity Pension Investors - II is worth to an investor who owns the
Interest with the intention of holding it to maturity, who fully
understands the complexities of the investment, and has an interest in the
potential interest income and capital appreciation of the Limited
Partnership Interest. The valuation does not represent the amount that
would be received by a holder of a Limited Partnership Interest should
he/she decide to liquidate the Interest prior to the maturity of the
Partnership. The value is subject to the terms and conditions set forth
in this report.
The Partnership is forecasted to close the end of the year 2004.
Based on our analyses and conclusions set forth in this report, the estimated
Value of the Limited Partnership Interests in Balcor Equity Pension Investors -
II, as of March 31, 1996, was in the rounded amount of:
Adjusted Original
Capital as
of 3/31/96
1. Tax-Exempt Limited Partnership Interest $152.00 $224.17
2. Taxable Limited Partnership Interest $89.00 $224.17
As of March 31, 1996, the Tax-Exempt Limited Partners and the Taxable Partners
have received $25.83 as a return of capital.
For the quarter ended March 31, 1996, the value of a Tax-Exempt Limited
Partnership Interest decreased $1.00 due mainly to a decrease in cash and a
Taxable Limited Partnership Interest increased $4.00 due to increases in the
Repurchase Fund.
<PAGE>
For the quarter ended December 31, 1995, the value of a Tax-Exempt Limited
Partnership Interest increased $2.00 and a Taxable Limited Partnership Interest
increased $2.00. There were no property transactions in this quarter.
For the quarter ended September 30, 1995, the value of a Tax-Exempt Limited
Partnership Interest remained at $151.00 and the value of a Taxable Limited
Partnership Interest increased $2.00 to $83.00.
For the quarter ended June 30, 1995, the value of a Tax-Exempt Limited
Partnership Interest increased $1.00, while the value of a Taxable Limited
Partnership Interest decreased $2.00.
For the quarter ended December 31, 1992, the value of a Tax-Exempt Limited
Partnership Interest increased $1.80, whereas the value of a Taxable Limited
Partnership Interest decreased $65.32. The value of the Equity Investments and
Real Estate Owned Investments decreased $2,171,000 in the quarter. The
substantial decrease in the value of a Taxable Limited Partnership Interest was
the result of the situation wherein certain proceeds are first applied to the
Tax-Exempt Limited Partnership Interests to return their capital and the
remainder goes to the Taxable Limited Partnership Interests. The extension of
the holding period for the real estate assets and the reforecasting of the cash
flows has created a condition wherein there are no excess proceeds after their
application to the Tax-Exempt Limited Partnership Interest.
On May 27, 1987. the Partnership funded $14,600,000 of a $25,750,000 loan
secured by a first mortgage on the Westech 360 Office Building located in
Austin, TX. The balance of the loan was funded by BEPI-III. The value of the
Westech Office Building mortgage loan was reduced to funds advanced for the
quarter ended September 30, 1988 and the property became Real Estate Owned on
November 30, 1988. As of December 31, 1992, the 56.7% interest was valued at
$9,167,311. Effective May 1, 1987, the terms of the first mortgage loan
secured by the Davidson Office Center were modified, resulting in a lower
return to the Partnership. The loan was modified a second time in the quarter
ended June 30, 1989. In the quarter ended December 31, 1992, the mortgage loan
was modified to a cash flow loan, and was valued at $9,696,434 as of March 31,
1993. As of June 30, 1993, the value of the loan was reduced to $6,000,000 as
a result of a Court Order. The loan was paid off in October, 1993 for
$6,056,347.
On February 5, 1987, the Partnership funded a $19,700,000 loan to Ashford
Dunwoody I Associates, Ltd. (Paragon). As a result of the failure of the
borrower to make payments on the loan, the Partnership acquired title to the
property on October 28, 1987 and it is now classified as Real Estate Owned.
For the quarter ended December 31, 1988, the borrowers prepaid in full the
mortgage loans on the Country Lakes Country Club Apartments - Phase II and
Maple Village Apartments for a total of $31,740,000.
On September 5, 1995 the Partnership received $6,772,920 as payment in full on
the Colonial Coach and Castlewood West loan receivable. There no longer are
any Investments in Loan Receivables in Balcor Equity Pension Investors - II.
<PAGE>
In valuations of Balcor Equity Pension Investors - II prior to the quarter
ending March 31, 1986, all components of income and expense which had tax
consequences from an investment in the Partnership were adjusted for an
estimated 40% tax rate. Commencing with the valuation, as of March 31, 1986,
the revised valuation method included only the net tax benefit from the
depreciation of the equity investments since this is a unique advantage of
investing in real estate.
Because of the many potential permutations and combinations of tax benefits
available and/or not available to the taxable investor under current tax
legislation, any tax benefits have been excluded from the calculation of the
value per interest. The Partnership will provide the tax benefit data to the
taxable investor in order for the owner of the Partnership Interest to apply it
to his or her individual tax situation.
A copy of this report is retained in our files, together with the information
from which the report was compiled.
Respectfully submitted,
/s/Raymond Ghelardi /s/Clement H. Darby
Valuation Counselors Group, Inc. Darby & Associates
Raymond Ghelardi Clement H. Darby
Managing Director President
REG/CHD/ded
cc: Mr. David P. Bennett
Ms. Mary J. Mojica
Ms. Jayne Kosik
Ms. Jane Cody
<PAGE>
TABLE OF CONTENTS
Statement of Facts and Limiting Conditions
Introduction
Distributions to Limited Partners
Description of the Assets
Valuation of a Limited Partnership Interest
Discussion of Risk Rates
Valuation of the Equity Investments In Real Estate
and Real Estate Owned Investments
Valuation of the Offering Expenses and Loan Fees
Conclusion of Value
Schedule
A-1 Balance Sheet - March 31, 1996
A-2 Statements of Income and Expenses for the
quarters ended March 31, 1996 and 1995
A-3 Statements of Cash Flows for quarters ended
March 31, 1996 and 1995
B-1 Cash Flow From Operations
B-2 Calculation of Excess Net Cash Proceeds and
Excess Net Cash Receipts
B-3 Discounted Cash Flow Analysis
C Valuation Summary
<PAGE>
STATEMENT OF FACTS AND LIMITING CONDITIONS
Valuation Counselors Group, Inc./Darby & Associates Joint Venture strives to
clearly and accurately disclose the assumptions and limiting conditions that
directly affect an appraisal analysis, opinion or conclusion. In order to
assist the reader in interpreting this report, such assumptions are set forth
as follows:
Valuation Counselors Group, Inc./Darby & Associates Joint Venture reserves the
right to make adjustments to the analysis, opinion and conclusions set forth in
the report as deemed necessary by consideration of additional or more reliable
data that subsequently may become available.
No opinion is rendered as to legal fee, property title or mortgage notes
related to the appraised assets, which are assumed to be good and marketable.
It is assumed that no opinion is intended in matters that require legal,
engineering or other professional advice which has been or will be obtained
from professional sources; the valuation report will not be used for guidance
in professional matters exclusive of the appraisal and valuation discipline.
Information furnished by others is presumed to be reliable, and where so
specified in the report, has been verified; however, no responsibility, whether
legal or otherwise, is assumed for its accuracy and cannot be guaranteed as
being certain. All facts and data set forth in the report are true and
accurate to the best of the Appraiser's knowledge and belief. No single item
of information was completely relied upon to the exclusion of other
information.
All financial data, operating histories, forecasts, allocations to Tax-Exempt
and Taxable Limited Partnership Interests and other data relating to income and
expenses attributed to the assets and the Partnerships have been provided by
Management or its representatives and have been accepted without further
verification except as specifically stated in the report.
It should be specifically noted that the valuation assumes the appraised assets
will be competently managed and maintained by financially sound owners over the
expected period of ownership except where noted, specifically in assets during
the period of foreclosure where Balcor may not have control. This appraisal
engagement does not entail an evaluation of management's effectiveness, nor are
we responsible for future marketing efforts and other management or ownership
actions upon which actual results will depend.
Neither the report nor any portions thereof, especially any conclusions as to
value, the identity of the appraiser or Valuation Counselors Group, Inc./Darby
& Associates Joint Venture shall be disseminated to the public through public
relations media, news media, sales media, prospectus or any other public means
of communications without the prior written consent and approval of Valuation
Counselors Group, Inc./Darby & Associates Joint Venture. The date of the
valuation to which the value estimate conclusion applies is set forth in the
report.
The preponderance of working paper support for this valuation is maintained in
the offices of management, Balcor Mortgage Advisors.
<PAGE>
Neither the fees nor any of the terms and conditions of the appraisal
assignments given to Valuation Counselors Group, Inc./Darby & Associates Joint
Venture by Balcor Mortgage Advisors are contingent upon the values reported.
No independent investigation of the fair market value of the underlying real
estate assets has been made by Valuation Counselors Group, Inc./Darby &
Associates Joint Venture. We have reviewed the real estate appraisals for
reasonableness, but have assumed the real estate appraisals obtained by Balcor
Mortgage Advisors are independent and accurate. Valuation Counselors Group,
Inc. assumes responsibility for real estate appraisals prepared by their own
staff.
No independent investigation of the terms and conditions of the mortgage loans
made by Balcor Equity Pension Investors - II has been made. We have relied on
data furnished to us by Balcor Mortgage Advisors and the validity of the
information was assumed to be correct.
In the event that this appraisal is used as basis to set a market price for a
Limited Partnership Interest in Balcor Equity Pension Investors - II, no
responsibility is assumed for the seller's inability to obtain a purchaser at
the value reported herein.
The reader of this valuation report should be fully conversant with the terms
and conditions of Balcor Equity Pension Investors - II Limited Partnership as
set forth in the Prospectus, other related documents, and the prior appraisals
of a Limited Partnership Interest in Balcor Equity Pension Investors - II.
We have discussed the current status and condition of the mortgage loans and
real estate owned with the management of Balcor Mortgage Advisors and have
accepted their comments as being factual.
<PAGE>
INTRODUCTION
The Partnership, Balcor Equity Pension Investors - II, was formed on May 29,
1984. The Partnership Agreement provides for Balcor Equity Partners - II to be
the General Partner and for the admission of Limited Partners through the sale
of Limited Partnership Interests at $250 per Interest. The Partnership
commenced the offering of Limited Partnership Interests to the public on
September 26, 1984; closing of its minimum offering was held on November 15,
1984, after certain minimum sales of Limited Partnership Interests had been
achieved, as provided for in the Partnership Agreement. Prior to November 15,
1984, the Partnership was in a pre-operating status. The Partnership issued
939,587 Limited Partnership Interests on or prior to February 20, 1985, the
termination date of the offering. The total number of units sold was
segregated into 827,028 tax-exempt units and 112,559 taxable units.
The Partnership serves as an investment vehicle for qualified profit sharing,
pension and other retirement trusts; bank commingled trust funds for such
trusts; HR-10 (Keogh) Plans and Individual Retirement Accounts (IRA);
government pension and retirement trusts; other entities intended to be exempt
from Federal income taxation such as certain religious, charitable, scientific,
literary and educational corporations, funds and foundations; and also
individuals and entities not exempt from Federal income tax.
The Partnership's operations consisted of (1) investing in commercial and
residential real properties which the Partnership will acquire with no
permanent mortgage indebtedness and (2) placing equity participating first
mortgages on income-producing real property.
The Partnership Agreement provides that the General Partner, or affiliates,
will receive selling commissions on the sale of Limited Partnership Interests;
real estate acquisition fees, either paid by the sellers or the Partnership
when the Partnership acquires real properties; and loan application and
processing fees and mortgage brokerage fees, paid by borrowers and/or the
Partnership when the Partnership funds first mortgage loans or issues
commitments to fund loans, subject to certain limitations as set forth in the
Partnership Agreement.
The Partnership Agreement also provides that an affiliate of the General
Partner will service the mortgage loans made by the Partnership and will
receive a mortgage servicing fee at an annual rate equal to 1/4 of 1% of the
amounts advanced by the Partnership and outstanding from time to time; and that
an affiliate of the General Partner will perform property management services
in connection with the properties acquired by the Partnership and thereby earn
fees at rates and on terms no less favorable to the Partnership than those
customary for similar property management and leasing services in the relevant
geographical area of the properties managed, subject to certain limitations.
<PAGE>
"Operating Income" of the Partnership will be allocated 10% to the General
Partner and 90% to the Limited Partners, however, certain components are
specially allocated as described in the Partnership Agreement. "Operating
losses" and other certain components will be allocated 1% to the General
Partner and 99% to the Limited Partners pursuant to terms set forth in the
Partnership Agreement. "Net Cash Receipts" available for distribution will be
distributed as follows: 90% to all Limited Partners, 7 1/2% to the General
Partner as its distributive share from Partnership operations and an additional
2 1/2% of such "Net Cash Receipts" will be paid to the General Partner for
allocation to the Repurchase Fund which may be utilized to repurchase Interests
from Limited Partners pursuant to terms set forth in the Partnership Agreement.
Amounts allocated to the Repurchase Fund will be returned to the Partnership at
liquidation if necessary to permit payment to the Limited Partners of their
"Original Capital" plus any deficiency in their "Liquidation Preference" as
defined in the Partnership Agreement. Subject to the provisions of the
Partnership Agreement, "Net Cash Proceeds" which are available for distribution
will be distributed only to the Limited Partners until such time as the Limited
Partners have received a return of their "Original Capital" and their
"Liquidation Preference"; thereafter, the remaining "Net Cash Proceeds" will be
distributed 90% to the Limited Partners and 10% to the General Partner. The
General Partner's share shall be returned to the Partnership if necessary to
permit payment to the Limited Partners of any deficiency in the return of their
Original Capital and Preferential Cumulative Distributions.
It was intended that the proceeds of the offering available for investment
would be invested approximately one-half in real properties with no permanent
mortgage indebtedness and one-half in equity participating first mortgage
loans. The actual mix of investments between real properties and mortgage
loans will be determined by the General Partner and will depend upon financial
and real estate market conditions.
Originally, the Partnership expected to sell or otherwise dispose of its real
property investments between the fifth and tenth years after acquisition and
expected to sell or obtain repayment of its mortgage loans between the twelfth
and fifteenth years after such loans were made. Since the time the original
real estate investments and mortgage loans were made at the inception of the
Partnership, material adverse changes occurred in the real estate market. This
resulted in a number of mortgage loans going in to default and eventually
becoming Real Estate Owned. The Partnership now only has Real Estate Owned and
original Investments in Real Estate. The management of the Partnership has
determined that it may be in the best interests of the Limited Partners to
retain title to a substantial portion of the real estate for approximately ten
years from December 31, 1992. As of March 31, 1996, the forecasted closing of
the Partnership is the year 2004.
<PAGE>
DISTRIBUTIONS TO LIMITED PARTNERS
Net Cash Receipts available for distribution commenced distribution to Limited
Partners on a quarterly basis commencing in the third full calendar quarter
after the termination of the offering. 90% of all Net Cash Receipts available
for distribution are distributed to Limited Partners. In order to equalize the
benefits to the Limited Partners, such Net Cash Receipts are allocated among
the Limited Partners so that on a pro rata basis an Interest originally
purchased by a Tax exempt Limited Partner receives 133% of Net Cash Receipts
that are distributed with respect to an Interest originally purchased by a
Taxable Limited Partner. 7 1/2% of such Net Cash Receipts are paid to the
General Partner as its distributive share from Partnership operations, and an
additional 2 1/2% of such Net cash Receipts are paid to the General Partner for
allocation to the Repurchase Fund. Amounts allocated to the Repurchase Fund
are commingled with other assets of the General Partner and may be utilized to
repurchase Interests from Limited Partners. Amounts allocated to the
Repurchase Fund will be returned to the Partnership at the liquidation of the
Partnership if necessary to permit payment to the Limited Partners of their
Original Capital plus any deficiency in their Liquidation Preference.
In general, the Partnership had expected to sell its real properties between
the fifth and tenth years after acquisition and expects to sell or obtain
repayment of its mortgage loans between the twelfth and fifteenth years after
such loans are made. For reasons previously explained, these time horizons
have been extended beyond the Year 2000. Net Cash Proceeds which are available
for distribution will be distributed only to holders of Interests until such
time as holders of Interests have received a return of their Original Capital
and their Liquidation Preference. 90% of the remaining Net Cash Proceeds
available for distribution will be distributed to holders of Interests. The
General Partner will receive 10% of such remaining Net Cash Proceeds. Prior to
the liquidation of the Partnership, to the extent necessary to permit the
Partnership to pay to the Limited Partners any deficiency in the return of
their Original Capital and their Preferential Cumulative Distribution on
Adjusted Original Capital in the following amount: 17% per annum for Interests
purchased by Tax-exempt Limited Partners prior to January 15, 1985; 15% per
annum for Interests purchased by Tax-exempt Limited Partners on or after
January 15, 1985; 12.75% per annum for Interests purchased by Taxable Limited
Partners prior to January 15, 1985; and 11.25% per annum for Interests
purchased by Taxable Limited Partners on or after January 15, 1985; the
General Partner shall return to the Partnership all or a portion of its 10%
share of such Net Cash Proceeds. For purposes of determining distributable Net
Cash Proceeds, an amount equal to the Adjusted Mortgage Investment for each
year shall be deemed an amount available for distribution and shall also be
deemed the initial amount distributed for such year. For purposes of
determining the amount of Preferential Cumulative Distribution to which the
holder of a particular Interest is entitled, the purchase date shall be the
date the investor's funds are received by the General Partner, notwithstanding
the fact that such funds are initially deposited in escrow accounts. Any
amounts of Preferential Cumulative Distribution that are distributed to early
investors in excess of amounts distributed to later investors will come from
the General Partner's distributive share and not from funds otherwise
distributable to Limited Partners. In the event distributed Net Cash Receipts
and Net Cash Proceeds available for distribution exceed 11.25% per annum on
Adjusted Original Capital but are not sufficient to compensate all Limited
Partners as described above, then additional Net Cash Proceeds shall be
distributed from the General Partner's 10% share equally to all Limited
Partners who are entitled to more than 11.25% per annum until they shall have
<PAGE>
received Preferential Cumulative Distribution in the amount of 12.75% per annum
on their Adjusted Original Capital. Any additional Net Cash Proceeds available
for distribution shall be distributed equally to all Limited Partners who are
entitled to more than 12.75% per annum, and so on, until all of the Net Cash
Proceeds available for distribution shall have been distributed.
Cash available for distribution will be determined by the General Partner after
it creates any reserves or makes expenditures reasonably necessary or
appropriate for the operation of the Partnership.
There is no assurance that the Partnership will generate Net Cash Receipts or
Net Cash Proceeds, or that, if generated, they will be available for
distribution or be sufficient to provide the full amount of the Preferential
Cumulative Distribution.
All Partnership distributions are made quarterly to those recognized as the
holders of Interests as of the last day of each fiscal quarter. Distributions
are expected to commence the third full calendar quarter after termination of
the offering.
Payments were made to Limited Partners during the period of the public offering
of Interests.
As set forth in the Partnership Agreement, the Partnership was obligated to pay
to the purchasers of Interests an amount equivalent to interest at an initial
rate of 11% per annum on the total purchase price of an Interest. The amounts
so payable under this provision ceased to accumulate on February 20, 1985, the
termination date of the offering. Payments made to the Limited Partners during
the offering period totaled $1,510,012 in 1985 and $768,870 in 1984.
<PAGE>
Distributions to the Limited Partnership
Tax-Exempt Interest Taxable Interest
Effective Amount Amount
Date Per Interest Annual Rate Per Interest Annual Rate
9/30/85 $4.99 7.98% $3.75 6.00%
12/31/85 4.99 7.98% 3.75 6.00%
3/31/86 4.99 7.98% 3.75 6.00%
Tax-Exempt Interest Taxable Interest
Effective Amount Amount
Date Per Interest Annual Rate Per Interest Annual Rate
6/30/86 $4.99 7.98% $3.75 6.00%
9/30/86 3.66 5.86% 2.75 4.40%
10/86 1.33 - 1.00 -
(Return of capital)
12/31/86 3.60 5.79% 2.70 4.34%
1/87 1.39 - 1.05 -
(Return of capital)
3/31/87 3.92 6.34% 2.95 4.76%
4/87 1.07 - 0.80 -
(Return of capital)
6/30/87 3.72 6.04% 2.80 4.53%
7/87 0.43 - 0.32 -
(Return of capital)
9/30/87 4.06 6.61% 3.05 4.94%
10/87 0.09 - 0.07 -
(Return of capital)
12/31/87 2.00 3.26% 1.50 2.43%
3/31/88 2.00 3.26% 1.50 2.43%
6/30/88 2.00 3.26% 1.50 2.43%
9/30/88 2.00 3.26% 1.50 2.43%
12/31/88 2.66 4.33% 2.00 3.24%
3/31/89 2.66 4.33% 2.00 3.24%
6/30/89 2.66 4.33% 2.00 3.24%
9/30/89 2.66 4.33% 2.00 3.24%
12/31/89 2.66 4.33% 2.00 3.24%
1/90 5.76 - 5.76 -
(Return of capital)
3/31/90 2.26 3.77% 1.70 2.82%
4/90 15.26 - 15.26 -
(Return of capital)
6/30/90 2.26 4.02% 1.70 3.01%
9/30/90 2.26 4.02% 1.70 3.01%
10/90 0.50 - 1.57 -
(Return of capital)
12/31/90 2.26 4.03% 1.70 3.03%
3/31/91 1.93 3.44% 1.45 2.59%
6/30/91 1.93 3.44% 1.45 2.59%
9/30/91 1.93 3.44% 1.45 2.59%
12/31/91 1.93 3.44% 1.45 2.59%
<PAGE>
Tax-Exempt Interest Taxable Interest
Effective Amount Amount
Date Per Interest Annual Rate Per Interest Annual Rate
3/31/92 $1.93 3.44% $1.45 2.59%
6/30/92 1.93 3.44% 1.45 2.59%
9/30/92 1.93 3.44% 1.45 2.59%
12/31/92 1.93 3.44% 1.45 2.59%
3/31/93 1.73 3.09% 1.30 2.32%
6/30/93 1.73 3.09% 1.30 2.32%
9/30/93 1.73 3.09% 1.30 2.32%
12/31/93 1.73 3.09% 1.30 2.32%
3/31/94 1.73 3.09% 1.30 2.32%
6/30/94 1.73 3.09% 1.30 2.32%
9/30/94 1.73 3.09% 1.30 2.32%
12/31/94 1.73 3.09% 1.30 2.32%
3/31/95 1.73 3.09% 1.30 2.32%
6/30/95 1.73 3.09% 1.30 2.32%
9/30/95 1.73 3.09% 1.30 2.32%
12/31/95 3.46 6.17% 2.60 4.64%
3/31/96 3.46 6.17% 2.60 4.64%
<PAGE>
DESCRIPTION OF THE ASSETS
Equity Investments in Real Estate
1. 1275 K Street Office Building, Washington, DC
On January 7, 1986, the Partnership acquired a 60.52% joint venture
interest in the limited partnership which owns the twelve-story 1275 K
Street Office Building. The joint venture's purchase price of the
property was $47,150,050, which included $13,300,000 for the land. The
Partnership paid $28,535,333 for its interest. Its value based on March
1993 cash flow projections is $24,018,780. As of March 31, 1996, the
occupancy rate was 99%.
2. Spalding Bridge Apartments, Atlanta, GA
On September 30, 1985, the Partnership acquired Spalding Bridge
Apartments, a 190-unit garden apartment complex located on an
approximately 19 acre site in Atlanta, GA. The complex was completed in
1984. Its value based on March 1993 cash flow projections is $10,179,809.
As of March 31, 1996, the occupancy rate was 97%.
3. Denver Centerpoint (Silverado), Denver, CO
On February 1, 1985, the Partnership acquired a fourteen-story office
building containing 157,000 square feet, located on an approximately
2-acre site in Denver, CO. The building was completed in 1983. Its value
based on March 1993 cash flow projections is $10,977,990. As of March 31,
1996, the occupancy rate was 99%.
4. Bingham Farms Office Plaza - Phase V, Bingham Farms, MI
On March 26, 1985, the Partnership acquired Bingham Farms Office Plaza -
Phase V, a four-story office building containing 145,268 square feet,
located on an approximately 6 acre site in Bingham Farms, MI, northwest of
Detroit. The building was completed in 1984. Its value based on March
1993 cash flow projections is $13,011,012. As of March 31, 1996, the
occupancy rate was 84%.
5. Ross Plaza (formerly Century Square Shopping Center), Federal Square, WA
On June 25, 1985, the Partnership acquired Century Square Shopping Center
located on approximately 18.6 acre site in Federal Square, WA, 20 miles
south of Seattle. The Center consists of two one-story buildings and one
two-story building containing 163,667 square feet. Its value based on
March 1993 cash flow projections is $15,780,585. As of March 31, 1996,
the occupancy rate was 94%.
<PAGE>
6. Pacific Center Office Buildings, Dallas, TX
On November 29, 1984, the Partnership acquired a 22.91% joint venture
interest in Phase I and Phase II of Pacific Center Office Buildings. The
project consists of two nine-story office buildings located on North
Dallas Parkway, 12 miles north of Dallas central business district and 15
miles east of the Dallas/Fort Worth Regional Airport. The purchase price
of the joint venture interest in the property was $8,592,542, with an
allocation of $3,904,424 to the land and $330,385 to personal property.
Balcor Equity Pension Investors - II is the joint venture partner. Its
allocated value based on March 1993 cash flow projections is $2,162,712.
As of March 31, 1996, the occupancy rate was 95%.
Real Estate Owned Investments
1. 100 Ashford, Atlanta, GA
On February 5, 1987, the Partnership funded an equity and revenue
participating $19,700,000 first mortgage loan on the Ashford at Dunwoody
Office Building comprising of 148,077 square feet located in Atlanta, GA.
On October 28, 1987, the Partnership acquired title to the property as a
result of the borrower's default on the loan. This is now classified as
Real Estate Owned and was valued at $18,600,000 based on an appraisal
dated July 1, 1991. It is valued on the basis of July 1993 cash flow
projections and, as of March 31, 1996, the value was $14,926,519. As of
March 31, 1996, the occupancy rate was 100%.
2. Westech 360 Office Building, Austin, TX
On May 27, 1987, the Partnership funded an equity and revenue
participating $14,600,000 portion (56.7%) of a $25,750,000 mortgage loan
on the Westech 360 Office Building comprising of 175,716 square feet in
Austin, TX. The loan was to mature in June of 1999, however, the
Partnership took title to the property on November 30, 1988. The asset is
now classified as Real Estate Owned and, as of December 31, 1991, was
valued at $4,961,250 for a 56.7% interest based on an appraisal of
$8,750,000 for the total property. It is valued on the basis of November
1994 cash flow projections and, as of March 31, 1996, the value is
$9,853,549. As of March 31, 1996, the occupancy rate was 98%.
3. Ammendale Technology Park I, Beltsville, MD
On January 27, 1986, the Partnership funded an equity and revenue
participating $10,000,000 first mortgage loan on Ammendale Technology Park
I, a 167,000 square foot office building located in Prince George's
County, Beltsville, MD. The loan was to mature on December 31, 1997. The
loan was in default and the Partnership acquired title on October 16,
1991. The asset is now classified as Real Estate Owned and was appraised
at $9.7 million as of December 31, 1991. In the quarter ended June 30,
1992, the Partnership retained a new property manager. It is valued on
the basis of January 1994 cash flow projections and, as of March 31, 1996,
the value is $10,204,163. As of March 31, 1996, the occupancy rate was
100%.
<PAGE>
Investments in Loan Receivables
1. Colonial Coach and Castlewood West Mobile Home Communities, Clayton and Cobb
Counties, GA (Paid Off)
On December 29, 1986, the Partnership funded an equity and revenue
participating $9,500,000 first mortgage loan collectively on Colonial
Coach Estates Mobile Home Park, a 449 pad mobile home community on an 89
acre site in Clayton County, GA, and Castlewood Estates Mobile Home Park,
a 303 pad mobile home community on a 69 acre site in Cobb County, GA.
This is part of a total loan of $10,800,000. The remaining $1,300,000 was
funded by an affiliate. In September 1995, the Partnership received
$6,772,920 as payment in full on the loan.
2. Davidson Office Center, Somerset County, NJ (Paid Off)
On February 17, 1987, the Partnership funded an equity and revenue
participating $15,650,000 first mortgage loan on the Davidson Office
Center comprising of 127,034 square feet in Franklin Township, NJ. The
loan matures in February, 1999. On May 1, 1987, the terms of the mortgage
loan were modified. The loan was modified a second time on May 19, 1989.
The loan was valued at $9,922,080 as of March 31, 1993, based on the cash
flow from the property.
Due to the failure of the borrower to make certain payments when due under
the loan, on July 7, 1992, the Partnership placed the loan in default and,
on July 30, 1992, accelerated payment of the loan. On August 11, 1992,
the Partnership commenced proceedings for foreclosure of its mortgage and
the appointment of a receiver. However, the Partnership and the borrower
negotiated for a settlement. On October 2, 1992, the Partnership and the
borrower executed a letter agreement permitting the borrower until July
31, 1993, to pay $6,000,000 in full satisfaction of the loan, representing
a discount of approximately $9,650,000. However, the borrower refused to
execute the final settlement agreement and on January 6, 1993, the
Partnership filed a motion to compel the borrower to sign the settlement
agreement or, in the alternative, permit the foreclosure to continue. On
February 5, 1993, the Court ordered that the settlement agreement be set
aside and that the Partnership be permitted to pursue foreclosure. A
subsequent Court Order has directed the Partnership to sell the property
for $6,000,000. This decision was appealed by the Partnership, but to no
avail. The loan was paid off October 7, 1993, for $6,056,347.
<PAGE>
VALUATION OF A LIMITED PARTNERSHIP INTEREST
Valuation Counselors Group, Inc./Darby & Associates Joint Venture has been
retained by Balcor Equity Partners - II to estimate the Value of a Limited
Partnership Interest in Balcor Equity Pension Investors - II on a quarterly
basis.
The methodology used in estimating the Value of a Limited Partnership Interest
in Balcor Equity Pension Investors - II is based upon substituting the
estimated (1) present value of the Equity Cash Flows and Return of Capital in
place of the Investments in Real Estate and Real Estate Owned, (2) appraised
value of certain Real Estate Owned assets acquired in foreclosure and scheduled
for disposition in the near-term (if applicable to this Partnership), and (3)
the present value of the Debt Cash Flows in place of Investment in Loan
Receivable, First Mortgage as shown on March 31, 1996 Balance Sheet of Balcor
Equity Pension Investors - II (Schedule A-1) (if applicable to this
Partnership). In addition, the unamortized portions of the Offering Expenses
and Loan Fees as well as the present value of the Repurchase Fund are added to
the Assets on the same Balance Sheet. The amortization is calculated by
reducing the total Offering Expenses, as set forth in the financial statements,
on a straight line basis, quarterly, to the expiration date of the loan
portfolio. For financial reporting purposes, Balcor Equity Partners - II
initially deducted the total Offering Expenses from the proceeds of the Limited
Partnership Interest. Current Assets and Current Liabilities remained as
stated and subsequently are called "Net Current Assets."
Cash, the present value of the Equity Cash Flows, Return of Capital and
Repurchase Fund, appraised Real Estate Owned (where applicable) and the present
value of the Debt Cash Flows (if any) were segregated into the interests of the
Tax-exempt Limited Partnership Interests, Taxable Limited Partnership Interests
and General Partner Interest Shares in accordance with the terms of the Limited
Partnership Agreement and the proportionate share of the Partnership Interests.
As of December 31, 1992, the holding period for the Investments in Real Estate
and Real Estate Owned not scheduled for near-term sale were extended, on the
average, to ten years for the purpose of attempting to realize a greater return
to the Limited Partners. In addition the cash flows were refined in order to
calculate excess cash proceeds and excess net cash receipts since certain of
those proceeds are applied to assets where the acquisition costs have not been
achieved.
Historically, the valuation process has allocated certain proceeds to the
Tax-Exempt and Taxable Limited Partnership Interests on the basis of certain
procedures set forth in the Partnership Agreement. Based on additional
formulae in the Partnership Agreement, as the Fund has "matured" it has become
necessary to reallocate certain proceeds between the Tax-Exempt and Taxable
Limited Partnership Interests so that the Tax-Exempt Limited Partnership
Interests will be made whole prior to returning capital to the Taxable Limited
Partnership Interest.
With the extension of the holding period and redefining the Real Estate Owned,
the Repurchase Fund has become material and is included separately as an Asset.
For Balcor Equity Pension Investors - II, the General Partner has assigned the
total value of the Repurchase Fund to the Taxable Limited Partnership Interest
to partially compensate for the priority allocation of the proceeds from the
sale of assets and repayment of loans to the Tax-Exempt Limited Partnership
Interest.
<PAGE>
DISCUSSION OF RISK RATES
The discount rate applied to the cash flow mathematically expresses risk. Risk
represents the uncertainty related to achievement of the prospective cash
flows. The primary components of risk exposure in fixed income securities are
interest rate risk, inflation risk, market risk, liquidity risk and risk of
default. As previously discussed, the valuation of the assets in question have
been predicated upon the present valuing of the components of the loan
portfolio. Therefore, determination of an appropriate risk rate is essential
in the valuation of the net investment in loans receivable.
Financial theory dictates the necessity of incremental return resulting from
incremental risk. Accordingly, the typical risk/return tradeoff indicates that
investors should demand greater rates of return as the perceived riskiness of
the asset or security increases. In examining an investment situation, a
hypothetical investor would weigh the perceived level of risk against the
return expected from the subject investment. In determining the required rate
of return or discount rate on a particular asset or investment, the
hypothetical investor would also consider returns available from alternative
investment opportunities such as government securities, corporate bonds,
mortgages, real estate and common stock, if applicable.
The subject assets consist of a self-liquidating real estate investment fund
with investments in both real estate loans with varying maturities and real
estate assets. Accordingly, in determining an appropriate risk rate associated
with the subject assets, we have considered alternative and comparable rates of
return in the lending and real estate marketplace as indicated by such sources
as the Wall Street Journal, Real Estate Research Corporation Real Estate
Report, Investment Dealers Digest, Corporate Financing Week, American Council
of Life Insurance Investment Bulletin and the National Association of Real
Estate Investment Trusts.
The following table presents yield rates associated with various types of
government and corporate securities as indicated by the March 29,1996 and
January 3, 1996 Wall Street Journals.
Yield Rates as Indicated by the Wall Street Journal
Security First Quarter 1996 Fourth Quarter 1995
Three Month U.S. Treasury Bills 4.99% 5.04%
Six Month U.S. Treasury Bills 4.97% 5.03%
Prime Rate 8.25% 8.50%
Ten Year U.S. Treasury Bonds 6.60% 5.64%
Twenty Year U.S. Treasury Bonds 6.90% 6.02%
Corporate Bonds
Aaa, Aa 6.72% to 7.60% 6.02% to 6.96%
A, Baa 6.95% to 7.91% 6.23% to 7.31%
Ba, C 9.8% 9.7%
Collateralized Mortgage
Obligations
10 Year 7.90% 6.94%
20 year 8.05% 7.17%
<PAGE>
Additionally, information from Moody's Corporate Bond Survey and the Investment
Dealer's Digest indicates the corporate original issue Real Estate Mortgage
Investment Conduit (REMIC) yields from 1988 to 1995 ranged from 7% to 11.3% for
obligations with terms in excess of ten years. A yield difference of one to
three points was exhibited within multiple class REMIC issues where accrued
interest payments did not commence on the (higher yielding) security until
senior class notes were paid in full. A short term issuance collateralized by
elderly living properties exhibited a four point yield differential between
classes.
According to information from the Mortgage-Based Securities Letter, REMIC
issuances in 1994 have decreased substantially from the levels exhibited during
1992 and 1993. Reportedly, many REMIC underwriters and investors incurred
losses due to price corrections in the derivative mortgage securities market.
The price decline was believed to be attributable to several factors including
rising interest rates, increased volatility, average-life extension and lack of
liquidity. According to the Wall Street Journal, new issues of mortgage-backed
securities were down 57% in 1994 as compared to the prior year.
In addition to the previously noted yields on various market securities, we
have also considered mortgage rates associated with various types of commercial
real estate properties. This data is relevant in that it provides an
indication of rates of return associated with similar types of investments.
These statistics have been extracted from the December 29, 1995 and October 1,
1995 editions of the Investment Bulletin published by the American Council of
Life Insurance, is as follows:
Averages
Contract Interest
Rate
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.83% 8.23%
Apartment 7.64% 8.13%
Office Building 7.98% 8.23%
Retail 7.79% 8.17%
Industrial 7.84% 8.21%
Other Commercial 7.73% 8.47%
Yield With
Fees
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.85% 8.24%
Apartment 7.67% 8.15%
Office Building 8.00% 8.24%
Retail 7.81% 8.18%
Industrial 7.85% 8.22%
Other Commercial 7.74% 8.51%
<PAGE>
Maturity
(Years/Months)
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 11/06 11/02
Apartment 10/11 10/09
Office Building 10/0 09/07
Retail 13/05 13/06
Industrial 10/08 10/00
Other Commercial 11/04 12/02
Additionally, we have considered expected capitalization rates and internal
rates of return extracted from "Korpacz Real Estate Investor Surveys, First
Quarter 1996". For comparative purposes, we have also presented similar data
extracted from "Korpacz Real Estate Investor Surveys, Fourth Quarter 1995".
National Market Indicators: First Quarter 1996
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.50% 10.00%-15.00% 12.10%
Free and Clear Equity Cap
Rate 6.25%-11.00% 8.11% 8.00%-12.50% 9.58%
Terminal Cap Rate 7.00%-11.00% 8.56% 8.25%-12.00% 9.62%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.90% 9.00%-14.00% 11.27%
Free and Clear Equity Cap
Rate 8.00%-11.00% 9.47% 7.25%-13.00% 9.29%
Terminal Cap Rate 8.50%-12.00% 9.68% 8.00%-11.00% 9.51%
National
Apartment
Range Average
Free and Clear Equity IRR 10.50%-13.00% 11.38%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.97%
Terminal Cap Rate 8.00%-11.00% 9.29%
<PAGE>
National Market Indicators: Fourth Quarter 1995
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.55% 10.00%-15.00% 12.15%
Free and Clear Equity Cap
Rate 6.25%-11.00% 7.86% 7.50%-12.50% 9.52%
Terminal Cap Rate 7.00%-11.00% 8.45% 8.25%-12.00% 9.63%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-15.00% 12.04% 9.00%-14.00% 11.31%
Free and Clear Equity Cap
Rate 8.00%-11.50% 9.57% 7.25%-13.00% 9.36%
Terminal Cap Rate 8.50%-12.00% 9.75% 8.00%-11.00% 9.58%
National
Apartment
Range Average
Free and Clear Equity IRR 10.00%-13.00% 11.50%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.99%
Terminal Cap Rate 8.00%-11.00% 9.31%
Our discount rates have been selected based upon the returns exhibited on
alternative securities and real estate properties as previously presented, in
conjunction with the attributes of the subject assets.
Risk Measurement in Real Estate
As previously discussed, the primary components of risk exposure for fixed
income securities include interest rate risk, inflation risk, market risk,
liquidity risk and default risk. For real estate, these risks are similar and
can be segmented into two categories. The first is systematic risk which
includes all risks external to the property. The remaining risks can be
categorized as nonsystematic risk and includes all risks directly related to
the property. Generally, systematic risk affects the overall market as a whole
and is often referred to as market risk. However, nonsystematic risk is
generally more attributable to the property specifics. Nonsystematic risk can
be further broken down into risk relative to the immediate neighborhood or
local market with the residual risks being unique to the property.
<PAGE>
When viewing an investment in a single property, the systematic overall market
risk, the nonsystematic local market risk and the nonsystematic unique property
risks must be weighed in the derivation of an appropriate risk rate (discount
rate) to be applied to anticipated cash flows. The overall market risks would
include such factors which effect the market as a whole. Among these factors
would be the level of interest rates, the economic condition of the nation,
federal tax incentives related to real estate and the expected inflation rate.
Each of these factors can have a direct effect on real estate throughout the
nation.
Nonsystematic local market risks are those that effect a regional area or
neighborhood and are not part of the overall market risk. There are many types
of possible local market risks. Some examples of local market risk include
fluctuations in the local economy, changes in transportation systems, local
crime rates and over building. These local market risks may be severe enough
to override the effects of the overall market risk.
Property unique risks are those which effect the subject property in a manner
more specific than the local market risks. Many of the property unique risks
are similar to the local market risks but are more significant for the subject
property. Some examples of property specific risks would include dependence on
single industries or tenants, crime frequency on the property, changes in
immediate traffic patterns, changes in adjacent zoning or adjacent property
conditions and unanticipated capital improvement requirements. These property
specific risks may have a material impact on the property but may not be
reflected in the local market risks.
Investments in individual property would reflect three groups of risks
including the systematic overall market risks, the nonsystematic local market
risks and the nonsystematic property unique risks. However, modern portfolio
theory recognizes that through investment diversification, the nonsystematic
risks associated with the local market and the unique attributes of the
property can be reduced. Furthermore, with sufficient diversification, a
portfolio can virtually eliminate nonsystematic risk.
The benefits of portfolio diversification are reflected in the improvement of
the portfolio's return-risk ratio. The return-risk ratio measures the return
of the investment relative to the volatility of the return. Generally, the
volatility of return is measured by the standard deviation of the return over a
period of time. Therefore, the return-risk ratio is simply the return of the
investment divided by the standard deviation of the return.
As an example of the application of this ratio, assume that portfolio A invests
in only one type of property in one local market and experiences an average
annual return of 13% over fifteen years with a standard deviation of return of
17%. The return-risk ratio is computed to be 0.76 (13% divided by 17%).
Portfolio A's risk-return ratio can then be compared to the ratio of other
portfolios to evaluate the level of return relative to the risk taken.
To illustrate, assume portfolio B invests in a wide variety of property types
in a numerous geographical regions and only generated an annual return of 12%
over fifteen years. However, the standard deviation of return was only 13%.
The return-risk ratio is computed to be 0.86 (12% divided by 13%). Even though
portfolio A's return exceeded portfolio B's return, the superior return was not
enough to offset the increase in risk. Therefore, an investor would likely
prefer an investment in Portfolio B.
<PAGE>
It should be noted, however, that with the reduction in the volatility of
returns, modern portfolio theory also recognizes that there is a reduction in
the level of potential return. This is because that volatility generally
provides the opportunity for added returns. This is the basis for the axiom
that greater risk equals greater reward. However, an investor generally
requires that the increase in risk is offset by an increase in potential
return. Conversely, if an investor is looking for a lower risk, the investor
would expect lower returns.
In the instant case, the discount rates selected for the appraisal of
individual properties which are expected to be sold in the near future reflect
all the systematic and nonsystematic risks associated with each individual
property. The discount rates are derived considering overall market factors,
local market factors and property unique factors. However, for those
properties which are valued as real estate investments on the basis of their
cash flows, the discount rate applied reflects the benefits of reduced
nonsystematic risks through portfolio diversification. These benefits include
the offsetting of local market risks and property unique risks of each property
with the local market risks and property unique risks of the other properties
in the portfolio. As a result, the volatility of returns for each property is
offset by the volatility of returns of the other properties in the portfolio.
The discount rates applied to the latter category of properties are derived
from market data on portfolio returns, which reflect the dichotomies described
above.
<PAGE>
SCHEDULE A-1
BALCOR EQUITY PENSION INVESTORS - II
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEET
MARCH 31, 1996
(AUDITED)
Assets
Current Assets
Cash and Cash Equivalent $23,415,402
Escrow Deposits (restricted) 0
Accounts and Accrued Interest Receivable 481,650
Prepaid Expenses 304,059
Total Current Assets $24,201,111
Deferred Expenses, Net of accumulated
amortization 740,721
Investment in Joint Venture with an affiliate 1,414,978
Investments
Investment in Acquisition Loans 0
Investment in Loans Receivable,
first mortgages 0
Loan Application Fees, net of amortization 0
0
Investment in Real Estate, at Cost:
Land 26,808,775
Buildings and Improvements 108,826,412
135,635,187
Less accumulated depreciation 43,220,592
Total Investment Properties, Net
of Accumulated Depreciation 92,414,595
Total Assets $118,771,405
Liabilities and Partners' Capital
Accrued real estate taxes $ 320,372
Accounts Payable 288,138
Due to Affiliates 53,123
Security Deposits 478,769
Total Liabilities $1,140,402
Affiliates Participation in joint venture 16,955,544
Partners' Capital (Limited Partner-
ship Interests Issued and
Outstanding: 939,587 100,675,459
Total Liabilities and Partners' Capital $118,771,405
<PAGE>
SCHEDULE A-2
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Income:
Rental income $ 4,800,099 $ 4,357,498
Service income 439,169 464,145
Interest on short-term investments 314,016 267,584
Interest on loan receivable - first mortgage,
net of amortization of $6,552 in 1995 152,965
Participation in income of joint venture
with an affiliate 32,567 32,588
-------------- --------------
Total income 5,585,851 5,274,780
-------------- --------------
Expenses:
Depreciation 816,520 808,024
Amortization of deferred expenses 61,627 55,314
Property operating 1,737,955 1,423,065
Real estate taxes 517,674 537,322
Property management fees 182,902 167,623
Administrative 149,343 219,456
-------------- --------------
Total expenses 3,466,021 3,210,804
-------------- --------------
Income before affiliates' participation in
joint ventures 2,119,830 2,063,976
Affiliates' participation in income from
joint ventures (380,850) (303,645)
-------------- --------------
Net income $ 1,738,980 $ 1,760,331
============== ==============
Net income allocated to General Partner $ 242,680 $ 240,419
============== ==============
Net income allocated to Limited Partners $ 1,496,300 $ 1,519,912
============== ==============
Net income per Limited Partnership Interest
(939,587 issued and outstanding) $ 1.59 $ 1.62
============== ==============
Distribution to General Partner $ 350,464 $ 175,232
============== ==============
Distribution to Limited Partners $ 3,154,170 $ 1,577,085
============== ============
Distribution per Limited Partnership Interest:
Taxable $ 2.60 $ 1.30
============== ==============
Tax-exempt $ 3.46 $ 1.73
============== ==============
<PAGE>
SCHEDULE A-3
BALCOR EQUITY PENSION INVESTORS-II
A REAL ESTATE LIMITED PARTNERSHIP
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Operating activities:
Net income $ 1,738,980 $ 1,760,331
Adjustments to reconcile net income to net
cash provided by operating activities:
Affiliates' participation in income
from joint ventures 380,850 303,645
Participation in income of joint
venture with an affiliate (32,567) (32,588)
Depreciation of properties 816,520 808,024
Amortization of deferred expenses 61,627 55,314
Amortization of loan application and
processing fees 6,552
Payment of leasing commissions (62,255)
Net change in:
Accounts and accrued interest
receivable 56,391 (119,794)
Prepaid expenses (90,818) (220,517)
Accounts payable 6,124 (36,055)
Due to affiliates 19,545 50,930
Accrued real estate taxes (127,658) (109,075)
Security deposits 11,169 (6,629)
-------------- --------------
Net cash provided by operating activities 2,777,908 2,460,138
-------------- --------------
Investing activity:
Capital contribution to joint venture with (45,552)
an affiliate
--------------
Cash used in investing activity (45,552)
--------------
Financing activities:
Distribution to Limited Partners (3,154,170) (1,577,085)
Distribution to General Partner (350,464) (175,232)
Distribution to joint venture
partners - affiliates (408,613)
-------------- --------------
Cash used in financing activities (3,913,247) (1,752,317)
-------------- --------------
Net change in cash and cash equivalents (1,180,891) 707,821
Cash and cash equivalents at
beginning of period 24,596,293 17,106,496
-------------- --------------
Cash and cash equivalents at end of period $ 23,415,402 $ 17,814,317
============== ==============
<PAGE>
VALUATION OF THE EQUITY INVESTMENTS IN REAL ESTATE
AND REAL ESTATE OWNED INVESTMENTS
The value of the Equity Investments in Real Estate and the Real Estate Owned
Investments is equal to the sum of the present values of the Operating Cash
Flows and the Sales Proceeds. As of March 31, 1996, the Partnership owned nine
equities: a 22.91% joint venture interest in Pacific Center Office Buildings,
a 60.52% interest in 1275 K Street Office Building, Spalding Bridge Apartments,
Denver Center Point (Silverado), Bingham Farms Office Building, Ross Plaza, a
56.7% joint venture interest in Westech 360 Office Building, Ashford at
Dunwoody Office Building and Ammendale Technology Park I. Prior to the
December 31, 1992 valuation, Ashford at Dunwoody, Ammendale Technology Park and
Westech 360 Office Building were carried as Appraised Real Estate Owned.
The General Partner, Balcor Equity Partners - II, has prepared individual cash
flows for each property. The projected annual Operating Cash Flows from the
properties have been discounted at an annual rate of 10.00% to a net present
value quarterly, imputed by the straight-line method. The Agreement calls for
the General Partner to receive 10.0% of the Operating Cash Flows, and the
remaining 90% is allocated to the Tax-exempt and Taxable Limited Partnership
Interests on the basis of 10.1360% to the Taxable Limited Partnership Interests
and 89.8640% to the Tax-exempt Limited Partnership Interests.
Sales Proceeds on residential properties are calculated on the basis of the net
operating cash flow less taxes and insurance, capped at 9%, less stabilized
capital improvements and 2.5% sales commission. The sales proceeds for
commercial properties are calculated on the basis of net operating cash flow
(already net of taxes and insurance) capped at 9%, less stabilized capital
improvements, tenant improvements and leasing commissions and 2.5% sales
commission. The net proceeds from the sale have been discounted at an annual
rate of 10.50% to a net present value. A higher risk rate of 10.50% is used
for Sales Proceeds vs. a 10.00% rate for Operating Cash Flows to reflect the
higher risk rate of projecting a capitalization rate for several years.
As of the quarter ended December 31, 1992, all of the Equities were valued on
the basis of their cash flows. Prior to that quarter, Real Estate Owned Assets
were valued on the basis of an independent appraisal since it was the intent to
sell those assets in the near-term. As described elsewhere in this report,
these assets, unless indicated otherwise, will be held to maturity.
A summary of the Cash Flows from Operations is in the following Exhibit B-1.
Exhibit B-2 summarizes the calculations used to determine Excess Net Cash
Proceeds where they may exist. Exhibit B-3 (2 schedules) is the Discounted
Cash Flow Analysis.
As of March 31, 1996, the total Asset Value of the nine Real Estate Investments
is $111,115,119, an increase of $636,574 compared with the prior quarter.
<PAGE>
SCHEDULE B-1
BEPI II Cash Flow From Operations
as of: 31-Mar-96
Quarter Factor (for formula reference) 1
Net Cash Receipts Actual Budget Pro-ject Pro-ject
Equity Investments 1994 1995 1996 1997
- --------------------------------------------------------------------------
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,173,616 2,098,834 2,339,224 1,953,275
TI/LC/Capital 1,676,172 363,386 212,944 515,558
----------------------------------------
Net Cash Receipts 497,444 1,735,448 2,126,280 1,437,717
Denver Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 993,124 976,497 731,950 795,954
TI/LC/Capital 420,683 271,784 202,314 447,045
----------------------------------------
Net Cash Receipts 572,441 704,713 529,636 348,909
Ross Plaza
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,358,681 1,513,988 1,345,762 1,385,671
TI/LC/Capital 50,400 14,000 74,108 68,113
----------------------------------------
Net Cash Receipts 1,308,281 1,499,988 1,271,654 1,317,558
Pacific Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 208,719 217,057 218,875 219,608
TI/LC/Capital 159,848 27,890 189,558 35,083
----------------------------------------
Net Cash Receipts 48,871 189,167 29,317 184,526
Bingham V
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,225,515 1,059,678 1,267,096 1,202,623
TI/LC/Capital 1,361,571 456,361 65,423 252,172
----------------------------------------
Net Cash Receipts (136,056) 603,317 1,201,673 950,451
Spalding Bridge
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 826,596 822,020 877,765 908,256
TI/LC/Capital 147,250 170,838 108,300 95,000
----------------------------------------
Net Cash Receipts 679,346 651,182 769,465 813,256
Total NCR-Equity Investments 2,970,327 5,383,815 5,928,025 5,052,417
========================================
<PAGE>
REO Investments
- ----------------------------------
Ammendale -Phase I
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 833,621 909,873 931,241 907,788
TI/LC/Capital 212,124 164,337 125,157 184,025
----------------------------------------
Net Cash Receipts 621,497 745,536 806,084 723,763
Ashford Dunwoody
Appraisal CF's at 7/93
NOI B4 TI/LC/Capital 1,315,796 1,748,294 1,353,533 1,375,122
TI/LC/Capital 724,859 984,570 45,339 41,432
----------------------------------------
Net Cash Receipts 590,937 763,724 1,308,194 1,333,690
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital 437,724 535,154 808,028 864,586
TI/LC/Capital 317,986 244,429 211,720 164,428
----------------------------------------
Net Cash Receipts 119,738 290,725 596,308 700,158
Total NCR-REO Investments 1,332,172 1,799,985 2,710,586 2,757,611
========================================
Loan Investments
- ----------------------------------
Colonial Castlewood (paid-off) 0 0 0 0
Total NCR-Colonial Castlewood 0 0 0 0
Davidson O.B. 0 0 0 0
Total NCR-Davidson O.B. 0 0 0 0
TOTAL NCR FROM INVESTMENTS 4,302,499 7,183,800 8,638,611 7,810,027
LESS: GP 7.5% Share 322,687 538,785 647,896 585,752
Repurchase Fund @ 2.5% 107,562 179,595 215,965 195,251
----------------------------------------
Net to Limited Partners @ 90% 3,872,249 6,465,420 7,774,750 7,029,025
========================================
<PAGE>
Net Cash Receipts Pro-ject Pro-ject Pro-ject Pro-ject
Equity Investments 1998 1999 2000 2001
- --------------------------------------------------------------------------
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,313,308 2,430,615 2,082,949 2,106,649
TI/LC/Capital 217,926 46,235 612,778 599,587
----------------------------------------
Net Cash Receipts 2,095,382 2,384,379 1,470,171 1,507,062
Denver Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,015,056 1,064,249 1,106,643 1,149,162
TI/LC/Capital 179,988 85,396 153,904 192,583
----------------------------------------
Net Cash Receipts 835,068 978,853 952,739 956,579
Ross Plaza
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,458,150 1,492,038 1,431,110 1,473,400
TI/LC/Capital 61,442 50,012 115,297 111,569
----------------------------------------
Net Cash Receipts 1,396,708 1,442,026 1,315,813 1,361,831
Pacific Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 193,992 214,748 228,075 237,136
TI/LC/Capital 75,985 69,465 27,095 60,416
----------------------------------------
Net Cash Receipts 118,007 145,283 200,980 176,720
Bingham V
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,162,583 923,457 1,042,862 1,473,065
TI/LC/Capital 110,251 615,783 329,789 49,181
----------------------------------------
Net Cash Receipts 1,052,332 307,674 713,073
Spalding Bridge
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 940,045 972,947 1,007,000 1,042,245
TI/LC/Capital 95,000 95,000 142,500 110,911
----------------------------------------
Net Cash Receipts 845,045 877,947 864,500 931,334
Total NCR-Equity Investments 6,342,541 6,136,162 5,517,276 4,933,526
========================================
<PAGE>
REO Investments
- ----------------------------------
Ammendale -Phase I
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 947,832 898,342 1,055,414 1,066,104
TI/LC/Capital 78,029 275,119 61,676 103,612
----------------------------------------
Net Cash Receipts 869,803 623,223 993,738 962,492
Ashford Dunwoody
Appraisal CF's at 7/93
NOI B4 TI/LC/Capital 1,289,077 1,397,215 1,377,235 1,568,670
TI/LC/Capital 452,108 200,080 607,563 477,159
----------------------------------------
Net Cash Receipts 836,969 1,197,135 769,672 1,091,511
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital 942,423 1,033,965
TI/LC/Capital 223,574 278,195
----------------------------------------
Net Cash Receipts 718,848
Total NCR-REO Investments 2,425,620 1,820,358 1,763,410 2,054,003
========================================
Loan Investments
- ----------------------------------
Colonial Castlewood (paid-off)
Total NCR-Colonial Castlewood 0 0 0 0
0
Davidson O.B. 0 0 0 0
Total NCR-Davidson O.B. 0 0 0 0
TOTAL NCR FROM INVESTMENTS 8,768,161 7,956,520 7,280,686 6,987,529
LESS: GP 7.5% Share 657,612 596,739 546,051 524,065
Repurchase Fund @ 2.5% 219,204 198,913 182,017 174,688
----------------------------------------
Net to Limited Partners @ 90% 7,891,345 7,160,868 6,552,617 6,288,776
========================================
<PAGE>
Net Cash Receipts Pro-ject Pro-ject
Equity Investments 2002 2003 2004 2005
- ----------------------------------
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,551,297 2,735,669 2,233,903
TI/LC/Capital 270,028 101,613 780,316
----------------------------------------
Net Cash Receipts 2,281,269
Denver Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,205,348 1,384,275 1,438,318 1,479,259
TI/LC/Capital 648,900 194,721 55,314 204,303
----------------------------------------
Net Cash Receipts 556,448
Ross Plaza
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,624,519 1,687,736
TI/LC/Capital 99,873 70,897
----------------------------------------
Net Cash Receipts 1,524,646
Pacific Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 249,414 239,534 252,581 291,722
TI/LC/Capital 31,063 66,520 109,977 31,016
----------------------------------------
Net Cash Receipts 218,351 173,014 142,604
Bingham V
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,429,847 1,490,546 1,305,748 1,287,661
TI/LC/Capital 143,739 123,025 369,055 689,081
----------------------------------------
Net Cash Receipts
Spalding Bridge
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,078,723 1,116,479
TI/LC/Capital 114,792 118,810
----------------------------------------
Net Cash Receipts 963,931
Total NCR-Equity Investments 5,544,646 173,014 142,604 0
========================================
<PAGE>
REO Investments
- ----------------------------------
Ammendale -Phase I
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 1,056,919 1,149,758
TI/LC/Capital 200,084 106,988
----------------------------------------
Net Cash Receipts 856,835
Ashford Dunwoody
Appraisal CF's at 7/93
NOI B4 TI/LC/Capital 1,744,674 1,654,563 1,784,164
TI/LC/Capital 32,846 352,997 305,947
----------------------------------------
Net Cash Receipts 1,711,828 1,301,566
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital
TI/LC/Capital
----------------------------------------
Net Cash Receipts
Total NCR-REO Investments 2,568,663 1,301,566 0 0
========================================
Loan Investments
- ----------------------------------
Colonial Castlewood (paid-off)
Total NCR-Colonial Castlewood 0 0 0 0
Davidson O.B.
Total NCR-Davidson O.B. 0 0 0 0
TOTAL NCR FROM INVESTMENTS 8,113,309 1,474,580 142,604 0
LESS: GP 7.5% Share 608,498 110,593 10,695 0
Repurchase Fund @ 2.5% 202,833 36,864 3,565 0
----------------------------------------
Net to Limited Partners @ 90% 7,301,978 1,327,122 128,344 0
========================================
<PAGE>
Net Cash Receipts Pro-ject Pro-ject
Equity Investments 2006 2007 2008
- ----------------------------------
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
------------------------------
Net Cash Receipts
Denver Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,526,533
TI/LC/Capital 208,542
------------------------------
Net Cash Receipts
Ross Plaza
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
------------------------------
Net Cash Receipts
Pacific Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
------------------------------
Net Cash Receipts
Bingham V
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,006,592
TI/LC/Capital 55,814
------------------------------
Net Cash Receipts
Spalding Bridge
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
------------------------------
Net Cash Receipts
Total NCR-Equity Investments 0 0 0
==============================
<PAGE>
REO Investments
- ----------------------------------
Ammendale -Phase I
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital
TI/LC/Capital
------------------------------
Net Cash Receipts
Ashford Dunwoody
Appraisal CF's at 7/93
NOI B4 TI/LC/Capital
TI/LC/Capital
------------------------------
Net Cash Receipts
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital
TI/LC/Capital
------------------------------
Net Cash Receipts
Total NCR-REO Investments 0 0 0
==============================
Loan Investments
- ----------------------------------
Colonial Castlewood (paid-off)
Total NCR-Colonial Castlewood 0 0 0
Davidson O.B.
Total NCR-Davidson O.B. 0 0
TOTAL NCR FROM INVESTMENTS 0 0 0
LESS: GP 7.5% Share 0 0 0
Repurchase Fund @ 2.5% 0 0 0
------------------------------
Net to Limited Partners @ 90% 0 0 0
==============================
<PAGE>
Net Cash Receipts Asset PV as of
Equity Investments 31-Mar-96
- ------------------------------------------------------
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 8,979,065 NCR PV
TI/LC/Capital 15,039,715 Residual PV
----------
Net Cash Receipts 24,018,780 Asset Value
Denver Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,440,723 NCR PV
TI/LC/Capital 7,537,268 Residual PV
----------
Net Cash Receipts 10,977,990 Asset Value
Ross Plaza
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 8,506,206 NCR PV
TI/LC/Capital 9,274,379 Residual PV
----------
Net Cash Receipts 15,780,585 Asset Value
Pacific Center
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 857,658 NCR PV
TI/LC/Capital 1,305,054 Residual PV
----------
Net Cash Receipts 2,162,712 Asset Value
Bingham V
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,119,252 NCR PV
TI/LC/Capital 9,891,761 Residual PV
----------
Net Cash Receipts 13,011,012 Asset Value
Spalding Bridge
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 4,081,196 NCR PV
TI/LC/Capital 6,098,613 Residual PV
----------
Net Cash Receipts 10,179,809 Asset Value
Total NCR-Equity Investments
<PAGE>
REO Investments
- ----------------------------------
Ammendale -Phase I
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 3,915,945 NCR PV
TI/LC/Capital 6,288,218 Residual PV
----------
Net Cash Receipts 10,204,163 Asset Value
Ashford Dunwoody
Appraisal CF's at 7/93
NOI B4 TI/LC/Capital 6,160,331 NCR PV
TI/LC/Capital 8,766,187 Residual PV
----------
Net Cash Receipts 14,926,519 Asset Value
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital 1,560,769 NCR PV
TI/LC/Capital 8,292,780 Residual PV
----------
Net Cash Receipts 9,853,549 Asset Value
Total NCR-REO Investments
Loan Investments
- ----------------------------------
Colonial Castlewood (paid-off) 0 NCR PV
0 Principal PV
----------
Total NCR-Colonial Castlewood 0
<PAGE>
SCHEDULE B-2
CAP RATE @ 9.00%
Sale Commission : 2.5%
Sale Activity 1994 1995 1996 1997
- --------------------------------------------------------------------------
1275 K Street Sales Price
30,331,256 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Denver Center Sales Price
26,428,087 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Ross Plaza Sales Price
14,072,966 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Pacific Cntr Sales Price
8,610,346 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Bingham V Sales Price
20,166,401 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Spalding Bridge
Sales Price
10,074,284 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Total Capital Invested
Capital Invested 0 0 0 0
109,683,340 Sale Proceeds 0 0 0 0
Return of Cap 0 0 0 0
Excess NCP 0 0 0 0
Deficiency NCP 0 0 0 0
<PAGE>
Sale Activity - REO
Ammendale I Sales Price
10,353,887 Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Ashford Dunwoody
Sales Price
21,179,443 Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Sales Price
Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Westech 360 Sales Price
14,409,687 Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Total Capital Invested
Capital Invested 0 0 0 0
Sale Proceeds 0 0 0 0
45,943,017 Return of Cap 0 0 0 0
Excess NCR 0 0 0 0
Deficiency NCP 0 0 0 0
Loan Repayments
Colonial Castlewood
Balloon 6,772,920
9,386,562 Amortized Principal 0 0 0
Davidson O.B. Balloon 0
16,018,798 Amortized Principal
Capital Returned From
Colonial Castlewood 0 0 6,772,920 0
Capital Returned From
Davidson O.B. 0 0 0 0
Total Return of Capital 0 0 0 0
Total Excess NCP 0 0 0 0
Total Excess NCR 0 0 0 0
<PAGE>
Sale Activity 1998 1999 2000 2001
- --------------------------------------------------------------------------
1275 K Street Sales Price
30,331,256 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Denver Center Sales Price
26,428,087 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Ross Plaza Sales Price
14,072,966 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Pacific Cntr Sales Price
8,610,346 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Bingham V Sales Price 15,909,023
20,166,401 Orig Cap Invest 20,166,401
--------------------------------------------
Excess NCP 0 0 (4,257,378) 0
Spalding Bridge
Sales Price
10,074,284 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Total Capital Invested
Capital Invested 0 0 20,166,401 0
109,683,340 Sale Proceeds 0 0 15,909,023 0
Return of Cap 0 0 15,909,023 0
Excess NCP 0 0 0 0
Deficiency NCP 0 0 (4,257,378) 0
<PAGE>
Sale Activity - REO
Ammendale I Sales Price
10,353,887 Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Ashford Dunwoody
Sales Price
21,179,443 Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Sales Price
Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Westech 360 Sales Price 10,923,090
14,409,687 Cap Invest 14,409,687
--------------------------------------------
Excess NCR (3,486,597) 0 0 0
Total Capital Invested
Capital Invested 14,409,687 0 0 0
Sale Proceeds 10,923,090 0 0 0
45,943,017 Return of Cap 10,923,090 0 0 0
Excess NCR 0 0 0 0
Deficiency NCP (3,486,597) 0 0 0
Loan Repayments
Colonial Castlewood
Balloon
9,386,562 Amortized Principal 0
Davidson O.B. Balloon
16,018,798 Amortized Principal
Capital Returned From
Colonial Castlewood 0 0 0 0
Capital Returned From
Davidson O.B. 0 0 0 0
Total Return of Capital 10,923,090 0 15,909,023 0
Total Excess NCP 0 0 0 0
Total Excess NCR 0 0 0 0
<PAGE>
Sale Activity 2002 2003 2004 2005
- --------------------------------------------------------------------------
1275 K Street Sales Price 29,534,803
30,331,256 Orig Cap Invest 30,331,256
--------------------------------------------
Excess NCP (796,453) 0 0 0
Denver Center Sales Price 14,801,592
26,428,087 Orig Cap Invest 26,428,087
--------------------------------------------
Excess NCP (11,626,496) 0 0 0
Ross Plaza Sales Price 18,212,910
14,072,966 Orig Cap Invest 14,072,966
--------------------------------------------
Excess NCP 4,139,944 0 0 0
Pacific Cntr Sales Price 3,129,302
8,610,346 Orig Cap Invest 8,610,346
--------------------------------------------
Excess NCP 0 0 (5,481,044) 0
Bingham V Sales Price
20,166,401 Orig Cap Invest
--------------------------------------------
Excess NCP 0 0 0 0
Spalding Bridge
Sales Price 11,976,379
10,074,284 Orig Cap Invest 10,074,284
--------------------------------------------
Excess NCP 1,902,095 0 0 0
Total Capital Invested
Capital Invested 80,906,593 0 8,610,346 0
109,683,340 Sale Proceeds 74,525,684 0 3,129,302 0
Return of Cap 74,525,684 0 3,129,302 0
Excess NCP 0 0 0 0
Deficiency NCP (6,380,909) 0 (5,481,044) 0
<PAGE>
Sale Activity - REO
Ammendale I Sales Price 12,348,724
10,353,887 Cap Invest 10,353,887
--------------------------------------------
Excess NCR 1,994,837 0 0 0
Ashford Dunwoody
Sales Price 19,022,496
21,179,443 Cap Invest 21,179,443
--------------------------------------------
Excess NCR 0 (2,156,947) 0 0
Sales Price 0
Cap Invest 0
--------------------------------------------
Excess NCR 0 0 0 0
Westech 360 Sales Price
14,409,687 Cap Invest
--------------------------------------------
Excess NCR 0 0 0 0
Total Capital Invested
Capital Invested 10,353,887 21,179,443 0 0
Sale Proceeds 12,348,724 19,022,496 0 0
45,943,017 Return of Cap 10,353,887 19,022,496 0 0
Excess NCR 1,994,837 0 0 0
Deficiency NCP 0 (2,156,947) 0 0
Loan Repayments
Colonial Castlewood
Balloon
9,386,562 Amortized Principal
Davidson O.B. Balloon
16,018,798 Amortized Principal
Capital Returned From
Colonial Castlewood 0 0 0 0
Capital Returned From
Davidson O.B. 0 0 0 0
Total Return of Capital 84,879,571 19,022,496 3,129,302 0
Total Excess NCP 0.00000 0 0.00000 0
Total Excess NCR 1,994,837 0 0 0
<PAGE>
Sale Activity 2006 2007
- -----------------------------------------------------
1275 K Street Sales Price
30,331,256 Orig Cap Invest
-----------------------
Excess NCP 0 0
Denver Center Sales Price
26,428,087 Orig Cap Invest
-----------------------
Excess NCP 0 0
Ross Plaza Sales Price
14,072,966 Orig Cap Invest
-----------------------
Excess NCP 0 0
Pacific Cntr Sales Price
8,610,346 Orig Cap Invest
-----------------------
Excess NCP 0 0
Bingham V Sales Price
20,166,401 Orig Cap Invest
-----------------------
Excess NCP 0 0
Spalding Bridge
Sales Price
10,074,284 Orig Cap Invest
-----------------------
Excess NCP 0 0
Total Capital Invested
Capital Invested 0 0
109,683,340 Sale Proceeds 0 0
Return of Cap 0 0
Excess NCP 0 0
Deficiency NCP 0 0
<PAGE>
Sale Activity - REO
Ammendale I Sales Price
10,353,887 Cap Invest
-----------------------
Excess NCR 0 0
Ashford Dunwoody
Sales Price
21,179,443 Cap Invest
-----------------------
Excess NCR 0 0
Sales Price
Cap Invest
-----------------------
Excess NCR 0 0
Westech 360 Sales Price
14,409,687 Cap Invest
-----------------------
Excess NCR 0 0
Total Capital Invested
Capital Invested 0 0
Sale Proceeds 0 0
45,943,017 Return of Cap 0 0
Excess NCR 0 0
Deficiency NCP 0 0
Loan Repayments
Colonial Castlewood
Balloon
9,386,562 Amortized Principal
Davidson O.B. Balloon
16,018,798 Amortized Principal
Capital Returned From
Colonial Castlewood 0 0
Capital Returned From
Davidson O.B. 0 0
Total Return of Capital 0 0
Total Excess NCP 0 0
Total Excess NCR 0 0
<PAGE>
SCHEDULE B-3
NCR ALLOCATION PERCENTAGES NCP ALLOCATION PERCENTAGES
Tax-Exempt 90.7168% 88.0203%
Taxable 9.2832% 11.9797%
--------- -----------
100.00% 100.00%
BEPI II Discounted Cash Flow Analysis
1996 1997 1998
---------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital(NCR) 5,928,025 5,052,417 6,342,541
Tax-Exempt Share of 90% Cash Flow(NCR) 4,839,943 4,125,052 5,178,375
Discounted @ 10.00% 22,031,200 20,053,583 17,933,889
per unit 26.64 24.25 21.68
Taxable Share of 90% Cash Flow (NCR) 495,279 422,123 529,912
Discounted @ 10.00% 2,254,489 2,052,116 1,835,205
per unit 20.03 18.23 16.30
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital(NCR) 2,710,586 2,757,611 2,425,620
Tax-Exempt Share of 90% Cash Flow (NCR) 2,213,061 2,251,455 1,980,401
Discounted @ 10.00% 9,501,080 8,553,865 7,157,797
per unit 11.49 10.34 8.65
Taxable Share of 90% Cash Flow (NCR) 226,466 230,395 202,658
Discounted @ 10.00% 972,261 875,331 732,469
per unit 8.64 7.78 6.51
COLONIAL LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
DAVIDSON LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
<PAGE>
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 38.13 34.59 30.34
Taxable Share 28.67 26.01 22.81
DISCOUNTED NCP ALLOCATION
Discounted @ 10.25%
NET CAPITAL RETURNED ON
COLONIAL LOAN PAYOFF 6,772,920 0 0
Tax-Exempt Share of NCP 6,772,920 0 0
per unit 8.19 0.00 0.00
0.00%
NET CAPITAL RETURNED ON
DAVIDSON LOAN PAYOFF 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
10.50%
NET CAPITAL TO RETURN 0 0 10,923,090
Tax-Exempt Share of NCP 71,478,164 77,107,069 85,203,312
per unit 86.43 93.23 103.02
NET CAPITAL TO RETURN 0 0 0
Taxable Share of Cash Flow (NCP) 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 94.62 93.23 103.02
Taxable Share 0.00 0.00 0.00
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0 0 0
Discounted @ 10.50% 1,015,811 1,095,806 1,210,866
Tax-Exempt Share of 90% NCR 829,360 894,672 988,613
per unit 1.00 1.08 1.20
Taxable Share of 90% NCR 84,870 91,553 101,166
per unit 0.75 0.81 0.90
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 133.75 128.91 134.56
Taxable Share 29.42 26.82 23.71
<PAGE>
1999 2000 2001
---------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital(NCR) 6,136,162 5,517,276 4,933,526
Tax-Exempt Share of 90% Cash Flow(NCR) 5,009,877 4,504,587 4,027,983
Discounted @ 10.00% 14,548,903 10,993,916 7,588,721
per unit 17.59 13.29 9.18
Taxable Share of 90% Cash Flow (NCR) 512,669 460,962 412,190
Discounted @ 10.00% 1,488,813 1,125,026 776,566
per unit 13.23 9.99 6.90
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital(NCR) 1,820,358 1,763,410 2,054,003
Tax-Exempt Share of 90% Cash Flow (NCR) 1,486,233 1,439,738 1,676,993
Discounted @ 10.00% 5,893,177 4,996,261 4,056,149
per unit 7.13 6.04 4.90
Taxable Share of 90% Cash Flow (NCR) 152,089 147,331 171,609
Discounted @ 10.00% 603,058 511,276 415,072
per unit 5.36 4.54 3.69
COLONIAL LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
DAVIDSON LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 24.72 19.33 14.08
Taxable Share 18.58 14.54 10.59
<PAGE>
DISCOUNTED NCP ALLOCATION
Discounted @ 10.25%
NET CAPITAL RETURNED ON
COLONIAL LOAN PAYOFF 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
0.00%
NET CAPITAL RETURNED ON
DAVIDSON LOAN PAYOFF 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
10.50%
NET CAPITAL TO RETURN 0 15,909,023 0
Tax-Exempt Share of NCP 83,226,570 91,965,359 85,712,699
per unit 100.63 111.20 103.64
NET CAPITAL TO RETURN 0 0 0
Taxable Share of Cash Flow (NCP) 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 100.63 111.20 103.64
Taxable Share 0.00 0.00 0.00
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0 0 0
Discounted @ 10.50% 1,338,007 1,478,497 1,633,739
Tax-Exempt Share of 90% NCR 1,092,417 1,207,121 1,333,869
per unit 1.32 1.46 1.61
Taxable Share of 90% NCR 111,789 123,527 136,497
per unit 0.99 1.10 1.21
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 126.67 131.99 119.33
Taxable Share 19.58 15.63 11.80
<PAGE>
2002 2003 2004
---------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital(NCR) 5,544,646 173,014 142,604
Tax-Exempt Share of 90% Cash Flow(NCR) 4,526,933 141,257 116,429
Discounted @ 10.00% 4,319,610 224,638 105,845
per unit 5.22 0.27 0.13
Taxable Share of 90% Cash Flow (NCR) 463,248 14,455 11,914
Discounted @ 10.00% 442,033 22,988 10,831
per unit 3.93 0.20 0.10
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital(NCR) 2,568,663 1,301,566 0
Tax-Exempt Share of 90% Cash Flow (NCR) 2,097,188 1,062,665 0
Discounted @ 10.00% 2,784,770 966,059 0
per unit 3.37 1.17 0.00
Taxable Share of 90% Cash Flow (NCR) 214,609 108,744 0
Discounted @ 10.00% 284,970 98,858 0
per unit 2.53 0.88 0.00
COLONIAL LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
DAVIDSON LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 8.59 1.44 0.13
Taxable Share 6.46 1.08 0.10
<PAGE>
DISCOUNTED NCP ALLOCATION
Discounted @ 10.25%
NET CAPITAL RETURNED ON
COLONIAL LOAN PAYOFF
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
0.00%
NET CAPITAL RETURNED ON
DAVIDSON LOAN PAYOFF 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
10.50%
NET CAPITAL TO RETURN 84,879,571 19,022,496 3,129,302
Tax-Exempt Share of NCP 94,712,532 19,777,778 2,831,948
per unit 114.52 23.91 3.42
NET CAPITAL TO RETURN 0 0 0
Taxable Share of Cash Flow (NCP) 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 114.52 23.91 3.42
Taxable Share 0.00 0.00 0.00
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 1,994,837 0 0
Discounted @ 10.50% 1,805,282 0 0
Tax-Exempt Share of 90% NCR 1,473,925 0 0
per unit 1.78 0.00 0.00
Taxable Share of 90% NCR 150,829 0 0
per unit 1.34 0.00 0.00
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 124.89 25.35 3.55
Taxable Share 7.80 1.08 0.10
<PAGE>
2005 2006 2007
---------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital(NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital(NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
COLONIAL LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
DAVIDSON LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.25% 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00
<PAGE>
DISCOUNTED NCP ALLOCATION
Discounted @ 10.25%
NET CAPITAL RETURNED ON
COLONIAL LOAN PAYOFF
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
0.00%
NET CAPITAL RETURNED ON
DAVIDSON LOAN PAYOFF 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
10.50%
NET CAPITAL TO RETURN 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL TO RETURN 0 0 0
Taxable Share of Cash Flow (NCP) 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of 90% NCR 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% NCR 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00
<PAGE>
2008
-----------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital(NCR) 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0
Discounted @ 10.00% 0
per unit 0.00
Taxable Share of 90% Cash Flow (NCR) 0
Discounted @ 10.00% 0
per unit 0.00
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital(NCR) 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0
Discounted @ 10.00% 0
per unit 0.00
Taxable Share of 90% Cash Flow (NCR) 0
Discounted @ 10.00% 0
per unit 0.00
COLONIAL LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0
Discounted @ 10.25% 0
per unit 0.00
Taxable Share of 90% Cash Flow (NCR) 0
Discounted @ 10.25% 0
per unit 0.00
DAVIDSON LOAN NCR ALLOCATION
LOAN Cash Flow after TI/LC/Capital (NCR) 0
Tax-Exempt Share of 90% Cash Flow (NCR) 0
Discounted @ 10.25% 0
per unit 0.00
Taxable Share of 90% Cash Flow (NCR) 0
Discounted @ 10.25% 0
per unit 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
<PAGE>
DISCOUNTED NCP ALLOCATION
Discounted @ 10.25%
NET CAPITAL RETURNED ON
COLONIAL LOAN PAYOFF
Tax-Exempt Share of NCP 0
per unit 0.00
0.00%
NET CAPITAL RETURNED ON
DAVIDSON LOAN PAYOFF 0
Taxable Share of NCP 0
per unit 0.00
10.50%
NET CAPITAL TO RETURN 0
Tax-Exempt Share of NCP 0
per unit 0.00
NET CAPITAL TO RETURN 0
Taxable Share of Cash Flow (NCP) 0
per unit 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
EXCESS NET CASH PROCEEDS (EQUITY) 0
Discounted @ 10.50% 0
Tax-Exempt Share of NCP 0
per unit 0.00
Taxable Share of NCP 0
per unit 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0
Discounted @ 10.50% 0
Tax-Exempt Share of 90% NCR 0
per unit 0.00
Taxable Share of 90% NCR 0
per unit 0.00
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
<PAGE>
SCHEDULE B-3 (continued)
BEPI II Discounted Cash Flow Analysis (con't.)
1996 1997 1998 1999
--------------------------------------------
CASH BALANCES
Working Capital
Contingency Reserves
SUBTOTAL WC & CR
Undistributed NCR
Fund Expenses
SUBTOTAL UNDISTRIBUTED NCR
TOTAL CASH(net of Loan Payoff)
Short-Term Interest @ 4.00% 652,164 652,164 652,164 652,164
Fund Expenses
DISCOUNTED CASH BALANCES
Discount Rate @ 4.00%
NCP(Working Capital&Reserves) 0 0 0 0
0 0 0 0
Tax-Exempt Share of NCP 4,366,087 4,497,069 4,676,952 4,864,030
per unit 5.28 5.44 5.66 5.88
0 0 0 0
Taxable Share of NCP 0 0 0 0
per unit 0.00 0.00 0.00 0.00
NCR (Undistributed NCR) 7,200,173 7,416,178 7,712,825 8,021,338
LESS: Fund Expenses 0 0 0 0
NCR (Short-Term Interest) 4,737,842 4,390,854 3,914,324 3,418,733
--------------------------------------------
TOTAL NCR 11,938,015 11,807,033 11,627,150 11,440,072
Less: GP 10% Share 1,193,802 1,180,703 1,162,715 1,144,007
--------------------------------------------
Net to Limited Partners 10,744,214 10,626,329 10,464,435 10,296,065
Tax-Exempt Share of NCR 9,746,807 9,639,866 9,493,000 9,340,260
per unit 11.79 11.66 11.48 11.29
Taxable Share of NCR 997,407 986,463 971,434 955,804
per unit 8.86 8.76 8.63 8.49
LOAN FEES 43,047 7,492 0 0
(straight-line amortization)
OFFERING EXPENSES 1,168,918 467,566 0 0
(straight-line amortization)
--------------------------------------------
TOTAL 1,211,965 475,058 0 0
<PAGE>
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 1.29 0.51 0.00 0.00
Taxable Share 1.29 0.51 0.00 0.00
REPURCHASE FUND 0 0 0 0
Discounte 10.00% 5,610,451 6,031,234 6,634,358 7,297,794
Tax-Exempt Share 0 0 0 0
Discounted 0 0 0 0
Taxable Share 0 0 0 0
Discounted 5,610,451 6,031,234 6,634,358 7,297,794
Tax-Exempt per unit 0.00 0.00 0.00 0.00
Taxable per unit 49.84 53.58 58.94 64.84
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 152.10 146.51 151.69 143.85
Taxable Share @ 89.42 89.67 91.28 92.90
2000 2001 2002 2003
--------------------------------------------
CASH BALANCES
Working Capital
Contingency Reserves
SUBTOTAL WC & CR
Undistributed NCR
Fund Expenses
SUBTOTAL UNDISTRIBUTED NCR
TOTAL CASH(net of Loan Payoff)
Short-Term Interest @ 4.00% 652,164 652,164 652,164 652,164
Fund Expenses
DISCOUNTED CASH BALANCES
Discount Rate @ 4.00%
NCP(Working Capital&Reserves) 0 0 0 0
0 0 0 0
Tax-Exempt Share of NCP 5,058,591 5,260,935 5,471,373 5,690,227
per unit 6.12 6.36 6.62 6.88
0 0 0 0
Taxable Share of NCP 0 0 0 0
per unit 0.00 0.00 0.00 0.00
<PAGE>
NCR (Undistributed NCR) 8,342,192 8,675,880 9,022,915 9,383,831
LESS: Fund Expenses 0 0 0 0
NCR (Short-Term Interest) 2,903,319 2,367,287 1,809,815 1,230,043
--------------------------------------------
TOTAL NCR 11,245,511 11,043,167 10,832,729 10,613,875
Less: GP 10% Share 1,124,551 1,104,317 1,083,273 1,061,387
--------------------------------------------
Net to Limited Partners 10,120,959 9,938,850 9,749,457 9,552,487
Tax-Exempt Share of NCR 9,181,411 9,016,207 8,844,395 8,665,711
per unit 11.10 10.90 10.69 10.48
Taxable Share of NCR 939,549 922,643 905,062 886,776
per unit 8.35 8.20 8.04 7.88
LOAN FEES 0 0 0 0
(straight-line amortization)
OFFERING EXPENSES 0 0 0 0
(straight-line amortization)
--------------------------------------------
TOTAL 0 0 0 0
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00 0.00
REPURCHASE FUND 0 0 0 0
Discounte 10.00% 8,027,573 8,830,330 9,713,363 10,684,700
Tax-Exempt Share 0 0 0 0
Discounted 0 0 0 0
Taxable Share 0 0 0 0
Discounted 8,027,573 8,830,330 9,713,363 10,684,700
Tax-Exempt per unit 0.00 0.00 0.00 0.00
Taxable per unit 71.32 78.45 86.30 94.93
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 149.21 136.60 142.20 42.71
Taxable Share @ 95.30 98.45 102.14 103.89
<PAGE>
2004 2005 2006 2007
--------------------------------------------
CASH BALANCES
Working Capital 2,974,021
Contingency Reserves 3,180,529
-----------
SUBTOTAL WC & CR 6,154,550
Undistributed NCR 10,149,552
Fund Expenses 0
SUBTOTAL UNDISTRIBUTED NCR 10,149,552
-----------
TOTAL CASH(net of Loan Payoff)16,304,102
Short-Term Interest @ 4.00% 652,164 0 0 0
Fund Expenses
DISCOUNTED CASH BALANCES
Discount Rate @ 4.00%
NCP(Working Capital&Reserves) 6,154,550 0 0 0
6,154,550 0 0 0
Tax-Exempt Share of NCP 5,917,837 0 0 0
per unit 7.16 0.00 0.00 0.00
0 0 0 0
Taxable Share of NCP 0 0 0 0
per unit 0.00 0.00 0.00 0.00
NCR (Undistributed NCR) 9,759,185 0 0 0
LESS: Fund Expenses 0 0 0 0
NCR (Short-Term Interest) 627,081 0 0 0
--------------------------------------------
TOTAL NCR 10,386,265 0 0 0
Less: GP 10% Share 1,038,627 0 0 0
--------------------------------------------
Net to Limited Partners 9,347,639 0 0 0
Tax-Exempt Share of NCR 8,479,879 0 0 0
per unit 10.25 0.00 0.00 0.00
Taxable Share of NCR 867,760 0 0 0
per unit 7.71 0.00 0.00 0.00
LOAN FEES 0 0 0 0
(straight-line amortization)
OFFERING EXPENSES 0 0 0 0
(straight-line amortization)
TOTAL 0 0 0 0
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00 0.00
<PAGE>
REPURCHASE FUND 12,928,487 0 0 0
Discounte 10.00% 11,753,170 0 0 0
Tax-Exempt Share 0 0 0 0
Discounted 0 0 0 0
Taxable Share 12,928,487 0 0 0
Discounted 11,753,170 0 0 0
Tax-Exempt per unit 0.00 0.00 0.00 0.00
Taxable per unit 104.42 0.00 0.00 0.00
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 20.96 0.00 0.00 0.00
Taxable Share @ 112.22 0.00 0.00 0.00
2008
-----------
CASH BALANCES
Working Capital
Contingency Reserves
SUBTOTAL WC & CR
Undistributed NCR
Fund Expenses
SUBTOTAL UNDISTRIBUTED NCR
TOTAL CASH(net of Loan Payoff)
Short-Term Interest @ 4.00% 0
Fund Expenses
DISCOUNTED CASH BALANCES
Discount Rate @ 4.00%
NCP(Working Capital&Reserves) 0
0
Tax-Exempt Share of NCP 0
per unit 0.00
0
Taxable Share of NCP 0
per unit 0.00
NCR (Undistributed NCR) 0
LESS: Fund Expenses 0
NCR (Short-Term Interest) 0
-----------
TOTAL NCR 0
Less: GP 10% Share 0
-----------
Net to Limited Partners 0
<PAGE>
Tax-Exempt Share of NCR 0
per unit 0.00
Taxable Share of NCR 0
per unit 0.00
LOAN FEES 0
(straight-line amortization)
OFFERING EXPENSES 0
(straight-line amortization)
TOTAL 0
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
REPURCHASE FUND 0
Discounte 10.00% 0
Tax-Exempt Share 0
Discounted 0
Taxable Share 0
Discounted 0
Tax-Exempt per unit 0.00
Taxable per unit 0.00
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 0.00
Taxable Share @ 0.00
<PAGE>
VALUATION OF THE OFFERING EXPENSES AND LOAN FEES
The valuation methodology of the Partnership Interests includes the
capitalization of the Offering Expenses and their amortization over the life of
the equity assets and debt assets. As of March 31, 1996, the total unamortized
portion of the Offering Expenses was $1,168,918. The total amount of the
Offering Expenses is allocated proportionally to the Equity Assets and Debt
Assets, if any, and amortized on the basis of depreciating the Equity on a
straight-line basis over 10 years and the Debt on a straight-line basis to
maturity. For financial reporting purposes, Balcor Equity Partners - II
initially deducted the total offering expenses and loan fees as incurred from
the proceeds of the Limited Partnership Interest.
The loan fees paid to the General Partner are capitalized and amortized over
the life of the loans. They are allocated between Tax-Exempt and Taxable
Interests.
A summary of the Offering Expense and Loan Fees Balances are as follows.
General
Tax-exempt Taxable Partner Total
Offering Expenses$1,028,885 $140,033$ 0 $1,168,918
Loan Fees 37,890 5,157 0 43,047
<PAGE>
CONCLUSION OF VALUE
Based on the various analyses of the components of the Partnership's Interests
presented in this report, our conclusions of value are summarized in the
following Schedule C.
SCHEDULE C
BEPI II
VALUATION SUMMARY
as of : 31-Mar-96
GENERAL
TAX-EXEMPT TAXABLE PARTNER TOTAL
================================================
CASH:
Working Capital &
Contingency Reserves 4,366,087 0 0 4,366,087
Current Undistributed NCR 9,746,807 997,407 1,193,802 11,938,015
------------------------------------------------
14,112,894 997,407 1,193,802 16,304,102
EQUITY INVESTMENTS
Net Cash Receipts 22,031,200 2,254,489 2,698,410 26,984,099
LOAN/REO INVESTMENTS
Net Cash Receipts 9,501,080 972,261 1,163,705 11,637,046
EXCESS NET CASH PROCEEDS
(EQUITY) 0 0 0 0
EXCESS NET CASH
RECEIPTS (LOANS/REOS) 829,360 84,870 101,581 1,015,811
RETURN OF CAPITAL
(PROCEEDS) 78,251,084 0 0 78,251,084
REPURCHASE FUND 0 5,610,451 0 5,610,451
LOAN FEES 37,890 5,157 0 43,047
OFFERING EXPENSES 1,028,885 140,033 0 1,168,918
------------------------------------------------
TOTAL VALUE OF ASSETS 125,792,393 10,064,667 5,157,497 141,014,557
================================================
NUMBER OF UNITS 827,028 112,559
VALUE PER UNIT 152.10 89.42
========================
ADJUSTED CAPITAL PER UNIT 224.17 224.17
4th Qtr 1995 Actual 152.86 85.43
Change in value -0.50% 4.67%
