SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-14353
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BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3244978
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
-------------- --------------
Cash and cash equivalents $ 14,689,621 $ 2,369,231
Accounts and accrued interest receivable 939,911 19,630
Escrow deposits 242,906 1,652,919
Prepaid expenses 127,673 158,090
Deferred expenses, net of accumulated
amortization of $128,984 in 1996
and $302,544 in 1995 218,306 1,027,098
-------------- --------------
16,218,417 5,226,968
-------------- --------------
Investment in real estate:
Land 4,216,423 12,380,326
Buildings and improvements 28,911,233 65,940,832
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33,127,656 78,321,158
Less accumulated depreciation 13,642,908 28,951,829
-------------- --------------
Investment in real estate, net of
accumulated depreciation 19,484,748 49,369,329
-------------- --------------
$ 35,703,165 $ 54,596,297
============== ==============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable $ 340,710 $ 218,237
Due to affiliates 65,414 24,501
Accrued liabilities, principally
real estate taxes 158,531 330,103
Security deposits 83,424 262,183
Losses in excess of investments in joint
ventures with affiliates 424,411 449,476
Mortgage notes payable 22,502,610 56,466,198
-------------- --------------
Total liabilities 23,575,100 57,750,698
-------------- --------------
Limited Partners' capital (deficit)
(82,697 Interests issued and outstanding) 12,576,551 (2,459,643)
General Partner's deficit (448,486) (694,758)
-------------- --------------
Total partners' capital (deficit) 12,128,065 (3,154,401)
-------------- --------------
$ 35,703,165 $ 54,596,297
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Income:
Rental and service $ 10,458,375 $ 11,511,463
Interest on short-term investments 200,392 284,757
Participation in income of joint
ventures with affiliates 180,003 711,278
-------------- --------------
Total income 10,838,770 12,507,498
-------------- --------------
Expenses:
Interest on mortgage notes payable 2,848,397 3,632,583
Depreciation 1,245,072 1,443,806
Amortization of deferred expenses 110,530 113,892
Property operating 3,630,687 3,716,683
Real estate taxes 609,167 752,918
Property management fees 530,136 568,637
Administrative 437,436 412,652
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Total expenses 9,411,425 10,641,171
-------------- --------------
Income before gains on sale of properties
and extraordinary items 1,427,345 1,866,327
Gain on sales of properties 24,672,240
-------------- --------------
Income before extraordinary items 26,099,585 1,866,327
Extraordinary items:
Gain on forgiveness of debt 41,798
Debt extinguishment expense (1,472,357)
-------------- --------------
Net income $ 24,627,228 $ 1,908,125
============== ==============
Income before extraordinary items
allocated to General Partner $ 260,996 $ 18,663
============== ==============
Income before extraordinary items
allocated to Limited Partners $ 25,838,589 $ 1,847,664
============== ==============
Income before extraordinary items
per Limited Partnership Interest
(82,697 issued and outstanding) $ 312.45 $ 22.34
============== ==============
Extraordinary items allocated to
General Partner $ (14,724) $ 418
============== ==============
Extraordinary items allocated to
Limited Partners $ (1,457,633) $ 41,380
============== ==============
Extraordinary items per Limited
Partnership Interest (82,697
issued and outstanding) $ (17.63) $ 0.50
============== ==============
Net income allocated to General Partner $ 246,272 $ 19,081
============== ==============
Net income allocated to Limited Partners $ 24,380,956 $ 1,889,044
============== ==============
Net income per Limited Partnership Interest
(82,697 issued and outstanding) $ 294.82 $ 22.84
============== ==============
Distributions to Limited Partners $ 9,344,762 $ 4,548,335
============== ==============
Distributions per Limited Partnership
Interest (82,697 issued and outstanding) $ 113.00 $ 55.00
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Income:
Rental and service $ 3,015,046 $ 3,885,192
Interest on short-term investments 82,501 76,981
Participation in income (loss) of joint
venture with affiliates 16,949 (22,283)
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Total income 3,114,496 3,939,890
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Expenses:
Interest on mortgage notes payable 801,934 1,143,245
Depreciation 356,178 481,267
Amortization of deferred expenses 31,356 41,645
Property operating 1,165,086 1,557,467
Real estate taxes 179,408 251,058
Property management fees 161,707 196,216
Administrative 134,762 141,216
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Total expenses 2,830,431 3,812,114
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Income before gains on sale of properties
and extraordinary item 284,065 127,776
Gain on sales of properties 16,519,530
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Income before extraordinary item 16,803,595 127,776
Extraordinary item:
Debt extinguishment expense (1,045,017)
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Net income $ 15,758,578 $ 127,776
============== ==============
Income before extraordinary item
allocated to General Partner $ 168,036 $ 1,278
============== ==============
Income before extraordinary item
allocated to Limited Partners $ 16,635,559 $ 126,498
============== ==============
Income before extraordinary item
per Limited Partnership Interest
(82,697 issued and outstanding) $ 201.16 $ 1.53
============== ==============
Extraordinary item allocated to
General Partner $ (10,451) None
============== ==============
Extraordinary item allocated to
Limited Partners $ (1,034,566) None
============== ==============
Extraordinary item per Limited
Partnership Interest (82,697
issued and outstanding) $ (12.51) None
============== ==============
Net income allocated to General Partner $ 157,585 $ 1,278
============== ==============
Net income allocated to Limited Partners $ 15,600,993 $ 126,498
============== ==============
Net income per Limited Partnership Interest
(82,697 issued and outstanding) $ 188.65 $ 1.53
============== ==============
Distribution to Limited Partners $ 8,104,306 $ 3,721,365
============== ==============
Distribution per Limited Partnership
Interest(82,697 issued and outstanding) $ 98.00 $ 45.00
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Operating activities:
Net income $ 24,627,228 $ 1,908,125
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sales of properties (24,672,240)
Gain on forgiveness of debt (41,798)
Debt extinguishment expense 1,472,357
Participation in income of joint
ventures with affiliates (180,003) (711,278)
Depreciation of properties 1,245,072 1,443,806
Amortization of deferred expenses 110,530 113,892
Net change in:
Accounts and accrued interest
receivable (920,281) 11,601
Escrow deposits 271,420 (319,307)
Prepaid expenses 30,417 (270,114)
Accounts payable 122,473 22,402
Due to affiliates 40,913 (50,321)
Accrued liabilities (171,572) 333,875
Security deposits (178,759) (24,029)
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Net cash provided by operating activities 1,797,555 2,416,854
-------------- --------------
Investing activities:
Capital contributions to joint ventures
with affiliates (14,532) (25,323)
Distributions from joint ventures
with affiliates 169,470 549,514
Proceeds from sale of real estate 54,550,077
Payment of selling costs (1,238,328)
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Net cash provided by investing activities 53,466,687 524,191
-------------- --------------
Financing activities:
Distributions to Limited Partners (9,344,762) (4,548,335)
Repayment of mortgage notes payable (32,814,167) (7,786,649)
Proceeds from issuance of mortgage
note payable 8,140,000
Principal payments on mortgage
notes payable (1,149,421) (1,032,874)
Disbursements from improvement escrows 1,138,593 89,678
Payment of prepayment penalties (774,095) (209,967)
<PAGE>
Funding of improvement escrows (369,000)
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Net cash used in financing activities (42,943,852) (5,717,147)
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Net change in cash and cash equivalents 12,320,390 (2,776,102)
Cash and cash equivalents at
beginning of period 2,369,231 6,475,393
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Cash and cash equivalents at end of period $ 14,689,621 $ 3,699,291
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the Partnership
incurred and paid interest expense on mortgage notes payable of $2,848,397 and
$3,632,583, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 are:
Paid
-----------------------
Nine Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $90,875 $16,014 $65,414
4. Property Sales:
(a)The Seabrook Apartments was owned by a joint venture (the "Joint Venture")
consisting of the Partnership and two affiliates. The Partnership and the
affiliates held participating percentages in the joint venture of 15.43% and
84.57%, respectively. In February 1996, the Joint Venture sold the property in
an all cash sale for $5,915,000. From the proceeds of the sale, the Joint
Venture paid $5,081,898 to the third party mortgage holder in full satisfaction
of the first mortgage loan, and paid $190,517 in selling costs. The Joint
Venture recognized a gain of $1,363,431 from the sale of this property, of
which $167,739 is the Partnership's share.
(b)In March 1996, the Partnership sold the Willowbend Apartments in an all
cash sale for $9,985,000. From the proceeds of the sale, the Partnership paid
$5,790,869 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $240,515 in selling costs and paid $243,712 of prepayment
penalties. The basis of the property was $5,117,354, which is net of
accumulated depreciation of $2,613,770. For financial statement purposes, the
Partnership recognized a gain of $4,627,131 from the sale of this property.
<PAGE>
(c) In June 1996, the Partnership sold the Forest Ridge Apartments in an all
cash sale for $11,600,000. From the proceeds of the sale, the Partnership paid
$7,589,194 to the third party mortgage holder in full satisfaction of the first
mortgage loan, and paid $131,000 in selling costs. The basis of the property
was $7,943,421, which is net of accumulated depreciation of $4,357,296. For
financial statement purposes, the Partnership recognized a gain of $3,525,579
from the sale of this property.
(d) In September 1996, the Partnership sold the Boulder Springs Apartments in
an all cash sale for $14,831,000. From the proceeds of the sale, the
Partnership paid $8,046,954 to the third party mortgage holder in full
satisfaction of the first mortgage loan, and paid $449,784 in selling costs.
The basis of the property was $5,802,792, which is net of accumulated
depreciation of $4,137,891. For financial statement purposes, the Partnership
recognized a gain of $8,578,424 from the sale of this property.
(e) In September 1996, the Partnership sold the Timberlake Apartments in an all
cash sale for $18,134,077. From the proceeds of the sale, the Partnership paid
$11,387,150 to the third party mortgage holder in full satisfaction of the
first mortgage loan, paid $417,029 in selling costs, and paid $530,383 of
prepayment penalties. The basis of the property was $9,775,942, which is net of
accumulated depreciation of $5,445,035. For financial statement purposes, the
Partnership recognized a gain of $7,941,106 from the sale of this property.
5. Extraordinary Item:
In connection with the sales of the Partnership's properties during 1996, the
Partnership paid prepayment penalties of $530,383 and $243,712 relating to the
Timberlake and Willowbend mortgage loans, respectively. In addition, the
Partnership fully amortized the remaining deferred financing fees relating to
four of the properties sold during 1996 totaling $698,262. These amounts were
recognized as extraordinary items and classified as debt extinguishment
expenses.
6. Subsequent Events:
(a) In October 1996, the Partnership made a distribution of $6,450,366 ($78.00
per Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of Net Cash Receipts of $8.00 per Interest for
the third quarter of 1996 and a special distribution of $70.00 per Interest
representing Net Cash Proceeds received from sale of the Boulder Springs
Apartments.
(b) In October 1996, the Partnership sold the Forestwood Apartments in an all
cash sale for $10,050,000. From the proceeds of the sale, the Partnership paid
$5,754,000 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $336,012 in selling costs and paid $230,160 in prepayment
penalties. For financial statement purposes, the Partnership will recognize a
gain of approximately $4,065,000 from the sale of this property during the
fourth quarter of 1996.
(c) In November 1996, the Partnership sold the Heather Ridge Apartments in an
all cash sale for $8,890,000. From the proceeds of the sale, the Partnership
paid $5,117,987 to the third party mortgage holder in full satisfaction of the
first mortgage loan, paid $271,760 in selling costs and paid $118,051 in
prepayment penalties. For financial statement purposes, the Partnership will
recognize a gain of approximately $5,074,000 from the sale of this property
during the fourth quarter of 1996.
<PAGE>
BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors 85 - Series I A Real Estate Limited Partnership (the
"Partnership") was formed in 1983 to invest in and operate income-producing
real property. The Partnership raised $82,697,000 through the sale of Limited
Partnership Interests and utilized these proceeds to acquire ten real property
investments and minority joint venture interests in three additional
properties. During 1996, the Partnership sold one of its minority joint venture
interests and six properties, and, in prior years, sold two properties and one
of its minority joint venture interests and relinquished an additional property
through foreclosure. The Partnership continues to operate Templeton Park
Apartments and owns a minority joint venture interest in the North Hill
Apartments. Templeton Apartments is under contract to be sold in the fourth
quarter 1996 and North Hill is being actively marketed for sale.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
During the first nine months of 1996, the Partnership recognized gains in
connection with the 1996 sales of four of the Partnership's properties,
which was the primary reason for the increase in net income for the nine
months and quarter ended September 30, 1996 as compared to the same periods
in 1995. Further discussion of the Partnership's operations is summarized
below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the nine months and quarters ended September 30, 1996 and 1995.
The Partnership sold the Boulder Springs, Forest Ridge, Timberlake and
Willowbend apartment complexes, during the first nine months of 1996. As a
result, the Partnership recognized gains totaling $24,672,240. These sales also
resulted in decreases in rental and service income, interest expense on
mortgage notes payable, depreciation, amortization of deferred expenses,
property operating, real estate taxes and property management fees during 1996
as compared to 1995. These decreases were partially offset by the events
described below.
<PAGE>
Increased occupancy during 1996 at three of the Partnership's remaining
properties partially offset the decrease in rental and service income, and
consequently, property management fees.
Due to lower average cash balances, resulting primarily from special
distributions to Limited Partners in the second and third quarters of 1996, as
well as lower interest rates, interest income on short-term investments
decreased for the nine months ended September 30, 1996 as compared to the same
period in 1995.
Pinebrook Apartments, in which the Partnership held a minority joint venture
interest, was sold during February 1995. As a result of the gain recognized
during 1995 in connection with the sale, the Partnership recognized a decrease
in participation in income from joint ventures with affiliates during the nine
months ended September 30, 1996 when compared to the same period in 1995. The
February 1996 sale of Seabrook Apartments, in which the Partnership also held a
minority joint venture interest, resulted in the recognition of a gain in the
first quarter of 1996, which partially offset the above decrease. The sale of
Seabrook Apartments, which was generating a loss prior to its sale, was the
primary reason the Partnership recognized participation in income from joint
ventures with affiliates during the quarter ended September 30, 1996 as
compared to a loss in 1995.
In May 1995, the Boulder Springs Apartments mortgage loan was refinanced and
the interest rate decreased. This, along with the 1996 property sales discussed
above, resulted in a decrease in interest expense on mortgage notes payable for
1996 as compared to 1995.
In May 1995, the Partnership began to amortize financing fees related to the
refinancing of the Boulder Springs Apartments mortgage loan over the term of
the loan. This partially offset the decrease in amortization expense related
to the 1996 property sales for 1996 as compared to 1995.
In 1996, the Partnership incurred higher exterior repair and maintenance
expenditures at several of the Partnership's properties, which partially offset
the decreases related to the 1996 property sales for 1996 as compared to 1995.
In 1996, the Partnership recognized extraordinary debt extinguishment expense
of $1,472,357 comprised of prepayment penalties related to the Willowbend and
Timberlake mortgage loans and the full amortization of deferred financing fees
related to the repayment of the mortgage loans in connection with the four
property sales.
During 1995, the Partnership recognized an extraordinary gain on forgiveness of
debt of $41,798 in connection with a settlement reached with the seller of
Templeton Park Apartments.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $12,320,000 as
of September 30, 1996 when compared to December 31, 1995 due primarily to the
net proceeds received in connection with the sales of the Willowbend, Forest
<PAGE>
Ridge, Boulder Springs and Timberlake apartment complexes. The Partnership's
cash flow provided by operating activities of approximately $1,798,000, was
generated primarily from the operations of the Partnership's properties, and
was partially offset by the payment of administrative expenses. The
Partnership's net cash provided by investing activities of approximately
$53,467,000, consisted primarily of the net proceeds received from the sale of
the Willowbend, Forest Ridge, Boulder Springs and Timberlake apartment
complexes. Cash was used in the Partnership's financing activities primarily
for the repayment of the mortgage loans in connection with the 1996 property
sales which totaled approximately $32,814,000, principal payments on mortgage
notes payable of approximately $1,149,000, and distributions to Limited
Partners of approximately $9,345,000. The Partnership also made a special
distribution to the Limited Partners from sales proceeds in October 1996 as
described below.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. The
Partnership defines cash flow generated from its properties as an amount equal
to the property's revenue receipts less property related expenditures, which
include debt service payments. During 1996 and 1995, all three of the
Partnership's remaining properties generated positive cash flow. The Boulder
Springs, Forest Ridge, Timberlake and Willowbend apartment complexes which were
sold in 1996, also generated positive cash flow in 1995 and prior to their
sales in 1996. The remaining property in which the Partnership holds a minority
joint venture interest, North Hill Apartments, generated positive cash flow
during 1996 and 1995. Seabrook Apartments, in which the Partnership held a
minority joint venture interest, was sold in February 1996 and generated
marginal cash flow deficits in 1996 prior to its sale and during 1995. As of
September 30, 1996, the occupancy rates of the Partnership's remaining
properties ranged from 92% to 99%.
The General Partner believes that the market for multifamily housing properties
is favorable to sellers of these properties and has accelerated the
Partnership's liquidation strategy. During 1996, the Partnership has sold
Seabrook Apartments, in which it held a minority joint venture interest, and
the Willowbend, Forest Ridge, Boulder Springs, Timberlake, Forestwood and
Heather Ridge apartment complexes. Currently, the Partnership has entered into
a contract to sell the Templeton Park Apartments for a sales price of
$23,300,000. In addition, the General Partner is actively marketing the North
Hill Apartments, in which the Partnership holds a minority joint venture
interest.
The timing of the termination of the Partnership and final distribution of cash
will depend upon the nature and extent of liabilities and contingencies which
exist or may arise. Such contingencies may include legal and other fees
stemming from litigation involving the Partnership. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency arises, reserves may be held by
the Partnership for a longer period of time.
<PAGE>
The Seabrook Apartments were owned by a joint venture consisting of the
Partnership and two affiliates. In February 1996, the joint venture sold the
property in an all cash sale for $5,915,000. From the proceeds of the sale, the
joint venture paid $5,081,898 to the third party mortgage holder in full
satisfaction of the first mortgage loan, and paid $190,517 in selling costs.
The net proceeds of the sale were $642,585, of which $103,770 was the
Partnership's share. Pursuant to the terms of the sale, the joint venture was
required to holdback $250,000 of the proceeds until August 1996. The full
amount of the holdback was released to the joint venture in August 1996. The
proceeds received by the Partnership were distributed as part of a
special distribution to the Limited Partners in July and October 1996.
See Note 4 of Notes to Financial Statements for additional information.
In March 1996, the Partnership sold the Willowbend Apartments in an all cash
sale for $9,985,000. From the proceeds of the sale, the Partnership paid
$5,790,869 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $240,515 in selling costs and paid $243,712 of prepayment
penalties. The remainder of the proceeds were distributed as part of a special
distribution to the Limited Partners in July 1996. See Note 4 of Notes to
Financial Statements for additional information.
In June 1996, the Partnership sold the Forest Ridge Apartments in an all cash
sale for $11,600,000. From the proceeds of the sale, the Partnership paid
$7,589,194 to the third party mortgage holder in full satisfaction of the first
mortgage loan, and paid $131,000 in selling costs. Pursuant to the terms of the
sale, the Partnership was required to hold back $500,000 of the proceeds until
October 1996. The full amount of the holdback was released to the Partnership
in October 1996. The remainder of the proceeds were distributed as part of a
special distribution to the Limited Partners in July 1996. See Note 4 of Notes
to Financial Statements for additional information.
In September 1996, the Partnership sold the Boulder Springs Apartments in an
all cash sale for $14,831,000. From the proceeds of the sale, the Partnership
paid $8,046,954 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $449,784 in selling costs. Pursuant to the terms
of the sale, the Partnership was required to hold back $500,000 of the proceeds
until June 1997. The remainder of the proceeds were distributed as part of a
special distribution to the Limited Partners in October 1996. See Note 4 of
Notes to Financial Statements for additional information.
In September 1996, the Partnership sold the Timberlake Apartments in an all
cash sale for $18,134,077. From the proceeds of the sale, the Partnership paid
$11,387,150 to the third party mortgage holder in full satisfaction of the
first mortgage loan, paid $417,029 in selling costs and paid $530,383 of
prepayment penalties . Pursuant to the terms of the sale, the Partnership is
required to hold back $250,000 of the proceeds until December 1996. The
proceeds will be distributed as part of a special distribution to the Limited
Partners in January 1997. See Note 4 of Notes to Financial Statements for
additional information.
In October 1996, the Partnership sold the Forestwood Apartments in an all cash
sale for $10,050,000. From the proceeds of the sale, the Partnership paid
$5,754,000 to the third party mortgage holder in full satisfaction of the first
<PAGE>
mortgage loan, paid $336,012 in selling costs and paid $230,160 of prepayment
penalties. Pursuant to the terms of the sale, $250,000 of the proceeds will be
retained by the Partnership until February 1997. The remainder of the proceeds
will be distributed as a special distribution to the Limited Partners in
January 1997. See Note 6 of Notes to Financial Statements for additional
information.
In November 1996, the Partnership sold the Heather Ridge Apartments in an all
cash sale for $8,890,000. From the proceeds of the sale, the Partnership paid
$5,117,987 to the third party mortgage holder in full satisfaction of the first
mortgage loan, paid $271,760 in selling costs and paid $118,051 of prepayment
penalties. The proceeds will be distributed as a special distribution to the
Limited Partners in January 1997. See Note 6 of Notes to Financial Statements
for additional information.
The Partnership's remaining property is owned through the use of third-party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by this loan. This loan matures in the year
2001. However, as mentioned above, the Partnership is actively marketing this
property for sale.
In October 1996, the Partnership made a distribution of $6,450,366 ($78.00 per
Interest) to the holders of Limited Partnership Interests representing a
distribution of Net Cash Receipts of $8.00 per Interest for the third quarter
of 1996 and a special distribution of $70.00 per Interest representing Net Cash
Proceeds received from sale of the Boulder Springs Apartments. The quarterly
distribution level remained unchanged from the second quarter of 1996.
Including the October 1996 distribution, Limited Partners have received
cumulative cash distributions of $273.50 per $1,000 Interest as well as certain
tax benefits. Of this amount, $84.50 has been from Net Cash Receipts and
$189.00 has been from Net Cash Proceeds. Future distributions will be primarily
comprised of future sale proceeds. In light of results to date and current
market conditions, the General Partner does not anticipate that investors
will recover all of their original investment.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Proposed class action: On August 30, 1996, a proposed class action complaint
was filed, Lenore Klein vs. Lehman Brothers, Inc., et al. (Superior Court of
New Jersey, Law Division, Union County, Docket No. Unn-L-5162-96). The
Partnership, additional limited partnerships which were sponsored by The Balcor
Company (together with the Partnership, the "Affiliated Partnerships"),
American Express Company, Lehman Brothers, Inc., additional limited
partnerships sponsored by the predecessor of Lehman Brothers, Inc. (together
with the Partnership and the Affiliated Partnerships, the "Defendant
Partnerships") and Smith Barney Holdings, Inc. are the named defendants in the
action. The complaint was amended on October 18, 1996 to add additional
plaintiffs. The amended complaint alleges, among other things, common law fraud
and deceit, negligent misrepresentation, breach of contract, breach of
fiduciary duty and violation of certain New Jersey statutes relating to the
disclosure of information in the offering of limited partnership interests in
the Defendant Partnerships. The amended complaint seeks judgment for
compensatory damages equal to the amount invested in the Defendant Partnerships
by the proposed class plus interest accrued thereon; general damages for
injuries arising from the defendants' actions; equitable relief, including
rescission, on certain counts; punitive damages; treble damages on certain
counts; recovery from the defendants of all profits received by them as a
result of their actions relating to the Defendant Partnership; attorneys'
fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims. It is not determinable at this
time whether or not an unfavorable decision in this action would have a
material adverse impact on the Partnership.
Item 5. Other Information
- --------------------------
Forestwood Apartments
- ---------------------
As previously reported, on October 14, 1996, the Partnership contracted to sell
the Forestwood Apartments, East Baton Rouge Parish, Louisiana, to an
unaffiliated party, New Plan Realty Trust, a Massachusetts business trust, for
a sale price of $10,100,000. Pursuant to an amendment, the sale price was
reduced to $10,050,000. The sale closed on October 31, 1996. From the proceeds
of the sale, the Partnership repaid the first mortgage loan of $5,754,000, and
paid closing costs of $264,672, which includes $230,160 of prepayment
penalties, and $201,000 to an unaffiliated party as a brokerage commission. An
<PAGE>
affiliate of the third party providing property management services for the
property received a fee of $100,500 for services rendered in connection with
the sale of the property. The Partnership received the remaining proceeds of
approximately $3,730,000 representing the net proceeds. Of the net sale
proceeds, $250,000 will be retained by the Partnership and will not be
available for use or distribution by the Partnership until February 1997.
Templeton Park Apartments
- -------------------------
As previously reported, on August 26, 1996, the Partnership contracted to sell
the Templeton Park Apartments, Colorado Springs, Colorado, to an unaffiliated
party, Griffis/Blessing, Inc., a Colorado corporation, for a sale price of
$24,500,000. The purchaser exercised its option to terminate the sale; however,
the agreement of sale was subsequently reinstated. The Partnership and the
purchaser also agreed to reduce the sale price to $23,300,000 and extend the
closing date to December 18, 1996. The closing date may be extended to January
17, 1997, upon notice by the purchaser no later than December 11, 1996, and
receipt of an additional $50,000 in earnest money. The purchaser may further
extend the closing date to February 16, 1997, upon notice by the purchaser no
later than January 12, 1997, and receipt of an additional $50,000 in earnest
money.
Heather Ridge Apartments
- ------------------------
As previously reported, on August 19, 1996, the Partnership contracted to sell
the Heather Ridge Apartments, Oklahoma City, Oklahoma, to an unaffiliated
party, Fowlershore & Flanagan, a California general partnership, for a sale
price of $8,890,000. Pursuant to an amendment, the closing was extended from
October 30, 1996 to November 6, 1996. The sale closed on November 6, 1996. From
the proceeds of the sale, the Partnership repaid the first mortgage loan of
$5,117,987, and paid closing costs of $145,336, which includes $118,051 of
prepayment penalties, and $155,575 to an unaffiliated party as a brokerage
commission. An affiliate of the third party providing property management
services for the property received a fee of $88,900 for services rendered in
connection with the sale of the property. The Partnership received the
remaining proceeds of approximately $3,382,000 representing the net proceeds.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) The Subscription Agreement as set forth as Exhibit 4.1 to Amendment No. 1
to Registrant's Registration Statement on Form S-11 dated November 29, 1984
(Registration No. 2-92777) and Form of Confirmation regarding Interests in the
Partnership as set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q
for the quarter ended June 30, 1995 (Commission File No. 0-14353) are
incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachments thereto relating to the sale of
Forestwood Apartments, East Baton Rouge Parish, Louisiana, previously filed as
Exhibit (2) to the Partnership's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.
<PAGE>
(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Forestwood Apartments, East Baton Rouge, Louisiana is attached hereto.
(iii) Second Amendment to Agreement of Sale relating to the sale of Forestwood
Apartments, East Baton Rouge, Louisiana is attached hereto.
(b)(i) Agreement of Sale and attachments thereto relating to Forest Ridge
Apartments, Phase I, Arlington, Texas previously filed as Exhibit (2) to the
Partnership's Current Report on Form 8-K dated April 23, 1996 is incorporated
herein by reference.
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
Forest Ridge Apartments, Phase I, Dallas, Texas previously filed as Exhibit
(99)(a) to the Partnership's Current Report on Form 8-K dated June 28, 1996 is
incorporated herein by reference.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of Forest Ridge Apartments, Phase I, Dallas, Texas previously filed as Exhibit
(99)(b) to the Partnership's Current Report on Form 8-K dated June 28, 1996 is
incorporated herein by reference.
(c)(i) Agreement of Sale and attachment thereto relating to the sale of Boulder
Springs Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(2)(a)(i) to the Partnership's Current Report on Form 8-K dated August 8, 1996,
is incorporated herein by reference.
(ii) Letter dated August 19, 1996 relating to the sale of Boulder Springs
Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(2)(a)(ii) to the Partnership's Current Report on Form 8-K dated August 8,
1996, is incorporated herein by reference.
(iii) Amendment to Agreement of Sale relating to the sale of Boulder Springs
Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(99)(b)(i) to the Partnership's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.
(iv) Second Amendment of Agreement of Sale relating to the sale of Boulder
Springs Apartments, Chesterfield County, Virginia, previously filed as Exhibit
(99)(b)(ii) to the Partnership's Current Report on Form 8-K dated October 14,
1996, is incorporated herein by reference.
(d)(i) Agreement of Sale and attachment thereto relating to the sale of
Timberlake Apartments, Phase I, Altamonte Springs, Florida, previously filed as
Exhibit (2)(b) to the Partnership's Current Report on Form 8-K dated August 8,
1996, is incorporated herein by reference.
(ii) Letter Agreement relating to the sale of Timberlake Apartments, Phase I,
Altamonte Springs, Florida, previously filed as Exhibit (99)(c) to the
Partnership's Current Report on Form 8-K dated October 14, 1996, is
incorporated herein by reference.
(e)(i) Agreement of Sale and Attachments thereto relating to the sale of
Templeton Park Apartments, Colorado Springs, Colorado, previously filed as
Exhibit (2) to the Partnership's Current Report on Form 8-K dated August 26,
1996, is incorporated herein by reference.
<PAGE>
(ii) Letter agreements relating to the sale of the Templeton Park Apartments,
Colorado Springs, Colorado, previously filed as Exhibit (99)(a) to the
Partnership's Current Report on Form 8-K dated October 14, 1996, is
incorporated herein by reference.
(iii) Letter agreement and Notice of Disapproval dated October 25, 1996,
regarding the sale of Templeton Park Apartments, Colorado Springs, Colorado is
attached hereto.
(iv) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Templeton Park Apartments, Colorado Springs, Colorado is attached
hereto.
(27) Financial Data Schedule of the Registrant for the nine months ending
September 30, 1996 is attached hereto.
(99)(a)(i) Agreement of Sale and attachment thereto relating to the sale of
Heather Ridge Apartments, Oklahoma City, Oklahoma, previously filed as Exhibit
(99)(n) to the Partnership's Current Report on Form 8-K dated August 8, 1996,
is incorporated herein by reference.
(ii) Amendment to Agreement of Sale and Escrow Agreement relating to the sale
of Heather Ridge Apartments, Oklahoma City, Oklahoma, previously filed as
Exhibit (99)(d) to the Partnership's Current Report on Form 8-K dated October
14, 1996, is incorporated herein by reference.
(iii) Second Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of Heather Ridge Apartments, Oklahoma City, Oklahoma is attached
hereto.
(b) Reports on Form 8-K:
(i) A Current Report on Form 8-K dated August 8, 1996, was filed reporting the
execution of contracts for the sales of the Boulder Springs Apartments,
Chesterfield County, Virginia, Timberlake Apartments, Phase I, Altamonte
Springs, Florida, and the Heather Ridge Apartments, Oklahoma City, Oklahoma,
and the termination of the contract for the sale of the Forestwood Apartments,
East Baton Rouge Parish, Louisiana.
(ii) A Current Report on Form 8-K dated August 26, 1996, was filed reporting
both the execution of a contract for the sale of the Templeton Park Apartments,
Colorado Springs, Colorado, and the Termination of the contract for the sale of
North Hill Apartments, Atlanta, Georgia.
(iii) A Current Report on Form 8-K dated October 14, 1996, was filed reporting
the execution of a contract for the sale of the Forestwood Apartments, East
Baton Rouge Parish, Louisiana, a letter agreement relating to the sale of
Templeton Park Apartments, Colorado Springs, Colorado, Amendments to the
Agreement of Sale relating to Boulder Springs Apartments, Chesterfield County,
Virginia, a Letter Agreement relating to the sale of Timberlake Apartments,
Phase I, Altamonte Springs, Florida, and an Amendment to Agreement of Sale
relating to Heather Ridge Apartments, Oklahoma City, Oklahoma.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR REALTY INVESTORS 85-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/ Thomas E. Meador
--------------------------------
Thomas E. Meador
President and Chief Executive Officer (Principal
Executive Officer) of Balcor Partners-XVI, the
General Partner
By: /s/ Jayne A. Kosik
--------------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Partners-XVI, the General Partner
Date: November 14, 1996
-------------------------
<PAGE>
FIRST AMENDMENT TO
AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS FIRST AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is made and entered into as of this 24th day of October, 1996, by
and between FORESTWOOD PARTNERS LIMITED PARTNERSHIP, an Illinois limited
partnership ("Seller"), NEW PLAN REALTY TRUST, a Massachusetts business trust
("Purchaser"), and COMMONWEALTH LAND TITLE INSURANCE COMPANY ("Escrow Agent").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated October 14, 1996 (the "Agreement"), pursuant to which Purchaser has
agreed to purchase and Seller has agreed to sell certain Property (as defined
in the Agreement) legally described and depicted on Exhibit A attached to the
Agreement.
B. Seller, Purchaser and Escrow Agent are parties to that certain Escrow
Agreement, dated October 14, 1996 (the "Escrow Agreement"), pursuant to which
Purchaser has deposited funds in escrow to be held by Escrow Agent in
accordance with the terms of the Escrow Agreement.
C. Seller and Purchaser desire to amend the Agreement and the Escrow
Agreement in accordance with the terms of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The first two (2) grammatical sentences of Paragraph 16a of the Agreement
are deleted in their entirety and replaced with the following:
"a. Seller has delivered to Purchaser copies of the most recent available
tax bills, rent rolls, insurance premiums, and service contracts (collectively
the "Documents"). All of the Documents and other matters to be reviewed by
Purchaser shall be subject to review by Purchaser by the close of business
(5:00 P.M. Central Daylight Time) on October 28, 1996 ("Approval Period")."
3. The reference to the date "October 24, 1996" in Paragraph 1 of the Escrow
Agreement is hereby deleted and the date "October 28, 1996" is hereby inserted
in lieu thereof.
4. TExcept as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
5. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument. To facilitate the execution of this Amendment, Seller
and Purchaser may execute and exchange by telephone facsimile counterparts of
the signature pages, with each facsimile being deemed an "original" for all
purposes.
<PAGE>
6. This Amendment and all documents, agreements, understandings and
arrangements relating to this transaction have been negotiated, executed and
delivered on behalf of Purchaser by the trustees or officers thereof in their
representative capacity under the Amended and Restated Declaration of Trust of
New Plan Realty Trust dated as of January 15, 1996 and not individually, and
bind only the trust estate of Purchaser, and no trustee, officer, employee,
agent or shareholder of Purchaser shall be bound or held to any personal
liability or responsibility in connection with the agreements, obligations and
undertakings of Purchaser thereunder, and any person or entity dealing with
Purchaser in connection therewith shall look solely to the trust estate for the
payment of any claim or for the performance of any agreement, obligation or
undertaking thereunder. Seller acknowledges and agrees that each agreement and
other document executed by Purchaser in accordance with or in respect of this
transaction shall be deemed and treated to include in all respects and for all
purposes the foregoing exculpatory provision.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
NEW PLAN REALTY TRUST, a Massachusetts business trust
By: /s/ Robert M. Horwitch
----------------------------------
Name: Robert M. Horwitch
----------------------------------
Its: Vice Pres
----------------------------------
SELLER:
FORESTWOOD PARTNERS LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Forestwood Partners, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
-----------------------------------
Name: James E. Mendelson
-----------------------------------
Its: Authorized Representative
-----------------------------------
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: /s/ Brian S. Henry
-----------------------------------
Name: Brian S. Henry
-----------------------------------
Its: Vice President
-----------------------------------
<PAGE>
SECOND AMENDMENT TO
AGREEMENT OF SALE
THIS SECOND AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and
entered into as of this 30th day of October, 1996, by and between FORESTWOOD
PARTNERS LIMITED PARTNERSHIP, an Illinois limited partnership ("Seller"), NEW
PLAN REALTY TRUST, a Massachusetts business trust ("Purchaser"), and
COMMONWEALTH LAND TITLE INSURANCE COMPANY ("Escrow Agent").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated October 14, 1996 (the "Agreement"), pursuant to which Purchaser has
agreed to purchase and Seller has agreed to sell certain Property (as defined
in the Agreement) legally described and depicted on Exhibit A attached to the
Agreement.
B. Seller, Purchaser and Escrow Agent are parties to that certain Escrow
Agreement, dated October 14, 1996 (the "Escrow Agreement"), pursuant to which
Purchaser has deposited funds in escrow to be held by Escrow Agent in
accordance with the terms of the Escrow Agreement.
C. Seller, Purchaser and Escrow Agent are parties to that certain First
Amendment to Agreement of Sale and Escrow Agreement dated as of October 24,
1996, which changed the "Approval Period" (as defined in the Agreement).
D. Seller and Purchaser desire to further amend the Agreement in
accordance with the terms of this Amendment.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The reference to Ten Million One Hundred Thousand and No/100 Dollars
($10,100,000.00) contained in the second and third lines of Paragraph 1 of the
Agreement is hereby deleted in its entirety and replaced with the following:
"Ten Million Fifty Thousand and No/100 Dollars ($10,050,000.00)".
3. The reference to "$10,100,000.00" contained in the first line of Paragraph
2(b) of the Agreement is hereby deleted in its entirety and replaced with the
following: "$10,050,000.00".
4. The reference to "October 30, 1996" contained in the first sentence of
Paragraph 8 of the Agreement is hereby deleted in its entirety and replaced
with the following: "October 31, 1996".
<PAGE>
5. The third grammatical sentence of Section 14 of the Agreement is hereby
deleted in its entirety and replaced with the following: "Seller hereby
consents to an assignment to any corporation or limited partnership which
directly or indirectly is owned or controlled by Purchaser, provided such
assignment is effected prior to the Closing Date."
6. The reference to "October 30, 1996" contained in the first line of
Paragraph 2 of the Escrow Agreement is hereby deleted and replaced with the
following: "October 31, 1996".
7. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
8. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument. To facilitate the execution of this Amendment, Seller
and Purchaser may execute and exchange by telephone facsimile counterparts of
the signature pages, with each facsimile being deemed an "original" for all
purposes.
9. This Amendment and all documents, agreements, understandings and
arrangements relating to this transaction have been negotiated, executed and
delivered on behalf of Purchaser by the trustees or officers thereof in their
representative capacity under the Amended and Restated Declaration of Trust of
New Plan Realty Trust dated as of January 15, 1996 and not individually, and
bind only the trust estate of Purchaser, and no trustee, officer, employee,
agent or shareholder of Purchaser shall be bound or held to any personal
liability or responsibility in connection with the agreements, obligations and
undertakings of Purchaser thereunder, and any person or entity dealing with
Purchaser in connection therewith shall look solely to the trust estate for the
payment of any claim or for the performance of any agreement, obligation or
undertaking thereunder. Seller acknowledges and agrees that each agreement and
other document executed by Purchaser in accordance with or in respect of this
transaction shall be deemed and treated to include in all respects and for all
purposes the foregoing exculpatory provision.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
NEW PLAN REALTY TRUST, a Massachusetts business trust
By: /s/ Robert M. Horwitch
-----------------------------------------
Name: Robert M. Horwitch
-----------------------------------------
Its: Vice Pres
-----------------------------------------
SELLER:
FORESTWOOD PARTNERS LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Forestwood Partners, Inc., an Illinois
corporation, its general partner
By: /s/ James E. Mendelson
------------------------------------------
Name: James E. Mendelson
------------------------------------------
Its: Authorized Representative
------------------------------------------
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: /s/ Deborah A. Payne
-----------------------------------------
Name: Deborah A. Payne
-----------------------------------------
Its: National Accounts Administrator
-----------------------------------------
<PAGE>
October 25, 1996
Facsimile (847) 317-4462) & Federal Express
Templeton Investors
c/o The Balcor Company
Attn: Ilona Adams
2355 Waukegan Road
Suite A200
Bannockburn, IL 60015
Facsimile (713) 242-1144 & Federal Express
Ms. Frances Chetta
Charter Title Company, as agent
for Lawyers Title Insurance Company
4655 Sweetwater Blvd., Suite 200
Sugar Land, TX 77479
Re: Agreement of Sale dated August 26, 1996 ("Agreement") by and between
Templeton Investors, an Illinois limited partnership ("Seller") and
Griffis/Blessings, Inc., a Colorado corporation or qualified assigns
("Purchaser")
Dear Ms. Adams and Ms. Chetta:
Pursuant to the terms of the Agreement and Escrow Agreement ("Escrow
Agreement") dated August 26, 1996 by and between Seller and Purchaser, please
find enclosed a Notice of Disapproval executed by Purchaser notifying Seller of
Purchaser's disapproval of the "Property" (as defined in the Agreement and
Escrow Agreement) and termination of the Agreement. Please refund to Purchaser
the refundable portion of the Earnest Money in accordance with the Agreement
and Escrow Agreement.
Copies of the reports received by the Purchaser are not included with this
letter because of their bulk and quantity. We will under separate cover
provide these reports to you for overnight delivery.
We regret to inform you of our decision to terminate the Agreement;
however we have been unable to timely resolve the few remaining issues with our
prospective lender. We wish to express our willingness to move forward with
the acquisition of the Property provided Seller extends the Approval Date and
Disapproval Date until such time as we have commitment from the lender, which
we anticipate will be within 2 to 3 weeks from delivery of the loan
application.
<PAGE>
Thank you for your past courtesies and professional manner. Should you
have any questions, please do not hesitate to call me.
Sincerely yours,
BRADEN, FRINDT, STINAR, & STAGEMEN, LLC
/s/ Gilbert G. Weiskopf
Gilbert G. Weiskopf
GGW:ce
Enclosure
cc: Al Lieberman
Phillip Schecter
Morton Poznak, Esq.
Ian Griffis
Rick Saas Esq.
Turner Smith
Gordon Michelson
<PAGE>
EXHIBIT A
NOTICE OF DISAPPROVAL
The undersigned, the Purchaser under that certain Agreement dated August
26, 1996 providing for the sale by Templeton Investors, an Illinois limited
partnership of property located in Colorado Springs, Colorado and known as
Templeton Park Apartments does hereby, pursuant to the provisions of the
Agreement, terminate the Agreement prior to the "Disapproval Date" as defined
in this Escrow Agreement and does hereby request that Charter Title Company, as
Escrow Agent, return the Earnest Money under this Escrow Agreement to the
undersigned. The undersigned certifies that Purchaser has delivered copies of
all of the Reports (as that term is defined in the Agreement) to the Seller.
Dated: October 25, 1996
Griffis/Blessing, Inc., a Colorado
corporation
/s/ Buck Blessing
----------------------------------
Buck Blessing, as Vice President
and Secretary
<PAGE>
FIRST AMENDMENT TO AGREEMENT
OF SALE AND ESCROW AGREEMENT
This First Amendment ("First Amendment") to Agreement of Sale and Escrow
Agreement is entered into as of November , 1996, by and between
GRIFFIS/BLESSING, INC., a Colorado corporation, as Purchaser, and TEMPLETON
INVESTORS, an Illinois Limited Partnership, as Seller.
RECITALS
A. Purchaser and Seller hereto have entered into an Agreement of Sale
("Agreement") and an Escrow Agreement, both dated as of August 26, 1996 for the
purchase and sale of the apartment project known as Templeton Place Apartments.
The Agreement and the Escrow Agreement were terminated.
B. Purchaser and Seller now wish to reinstate and amend the Agreement
and the Escrow Agreement.
NOW, THEREFORE, the parties agree that the Agreement and the Escrow
Agreement are reinstated and are amended as follows:
1. Paragraph 1 of the Agreement is modified to change the Purchase Price
to Twenty-Three Million Three Hundred Thousand Dollars ($23,300,000.00).
2. The number $24,500,000.00 in Paragraph 2b is changed to
$23,300,000.00.
3. a. Paragraph 8 of the Agreement is modified to provide that the
Closing Date shall be December 18, 1996.
b. Purchaser shall have the right to extend the Closing Date to a
date which is no later than thirty (30) days after the Closing Date ("Second
Extended Closing Date"), upon notice delivered to Seller and Escrow Agent no
later than December 11, 1996. The notice shall be accompanied by federally
wired funds or a cashier's or unendorsed certified check in the sum of
$50,000.00 as additional Earnest Money to be deposited with and held by Escrow
Agent in accordance with the provisions of the Escrow Agreement.
c. Purchaser shall have the right to further extend the Closing
Date to a date which is no later than thirty (30) days from the Second Extended
Closing Date ("Third Extended Closing Date"), upon notice delivered to Seller
and Escrow Agent no later than five (5) business days prior to the Second
Extended Closing Date. The notice shall be accompanied by federally wired
funds or a cashier's or unendorsed certified check in the sum of $50,000.00 as
additional Earnest Money to be deposited with and held by Escrow Agent in
accordance with the provisions of the Escrow Agreement.
d. If Purchaser extends the Closing pursuant to subparagraph 3b or
3c above, then all references to the Closing Date shall mean either the Second
Extended Closing Date or the Third Extended Closing Date, as applicable.
Thereafter all references to Earnest Money shall mean the Earnest Money
deposited under the Agreement and the additional deposit(s) pursuant to this
paragraph of this First Amendment.
<PAGE>
4. Purchaser hereby acknowledges that it has approved the Documents and
the condition of the Property.
5. Purchaser's obligations under the Agreement and this First Amendment
are subject to and conditioned upon Purchaser's receipt of a mortgage loan
commitment ("Loan Commitment") in the amount of $17,475,000 upon terms
reasonably acceptable to Purchaser from PPM Finance Inc. (or an affiliate
thereof) on or before November 25, 1996. The Loan Commitment shall include
approval of the subordinated debt documents.
6. If Purchaser does not receive the Loan Commitment containing terms
reasonably acceptable to Purchaser prior to the close of business on November
25, 1996, then Purchaser shall have the right to terminate the Agreement upon
written notice delivered to and received by Seller and Escrow Agent no later
than 5:00 P.M. Central Time on November 25, 1996. In such event, Escrow Agent
shall deliver $25,000.00 of the Earnest Money to Seller and shall deliver the
balance of the Earnest Money to Purchaser.
7. The applicable provisions of the Escrow Agreement are hereby amended
to comply with the terms and provisions of this First Amendment.
8. Except as modified herein, all other terms and conditions of the
Agreement and the Escrow Agreement shall remain in full force and effect and
are hereby ratified and reaffirmed.
9. All capitalized terms used herein shall have the same meaning as in
the Agreement and the Escrow Agreement.
10. This First Amendment may be executed in multiple facsimile
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER
GRIFFIS/BLESSING, INC., a Colorado corporation
By: /s/ Ian Griffis
------------------------------------
Ian Griffis
SELLER
TEMPLETON INVESTORS, an Illinois
limited partnership
By: Balcor Partners-XVI, an Illinois general
partnership, the general partner
By: RGF-Balcor Associates-II, an Illinois
general partnership, a partner
By: The Balcor Company, a Delaware corporation,
a general partner
By: /s/ John K. Powell, Jr.
-------------------------------------
John K. Powell, Jr.
Sr. Vice President
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS SECOND AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is made and entered into as of the 31st day of October, 1996,
between HEATHER RIDGE LIMITED PARTNERSHIP, an Illinois limited partnership
("Seller") and FOWLERSHORE & FLANAGAN, a California general partnership
("Purchaser")
W I T N E S S E T H:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale entered into as of August 19, 1996, as heretofore amended (the
"Agreement"), pursuant to which Seller agreed to sell to Purchaser, and
Purchaser agreed to purchase from Seller, the "Property" (as defined in the
Agreement);
WHEREAS, pursuant to the Agreement Seller and Purchaser entered into that
certain Escrow Agreement, dated August 19, 1996, as heretofore amended (the
"Escrow Agreement"); and
WHEREAS, Seller and Purchaser now desire to amend the Agreement and the
Escrow Agreement pursuant to the terms and provisions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements contained herein, the payment of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller, Purchaser and Escrow Agent agree that the
Agreement and the Escrow Agreement are amended as follows:
1. All capitalized terms used in this Amendment, to the extent not
otherwise expressly defined herein, shall have the same meanings ascribed to
such terms in the Agreement.
2. Lines one (1) and two (2) of Paragraph 8 of the Agreement are hereby
deleted and the following is hereby inserted in lieu thereof: "8. CLOSING.
The closing of this transaction (the "Closing") shall be on November 5, 1996
(the".
3. The first three lines of Paragraph 3 of the Escrow agreement are
hereby deleted and the following is hereby inserted in lieu thereof: "3. On
November 5, 1996, or at such other date as Seller and Purchaser may, in
writing, advise Escrow Agent is the".
4. Except as amended herein, the terms and conditions of the Agreement
and the Escrow Agreement shall continue in full force and effect and are hereby
ratified in their entirety.
5. This Amendment may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
6. The parties hereto agree and acknowledge that a facsimile copy of any
party's signature on this Amendment shall be enforceable against such party as
an original.
<PAGE>
Purchaser and Seller hereby agree and acknowledge that this Amendment shall be
enforceable and binding as between the two parties notwithstanding the lack of
Escrow Agent's execution hereof.
Executed as of the date first written above.
SELLER:
HEATHER RIDGE LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Heather Ridge, Inc., an Illinois corporation,
its general partner
By: /s/ John K. Powell, Jr.
-----------------------------------
Name: John K. Powell, Jr.
-----------------------------------
Its: Senior Vice President
-----------------------------------
PURCHASER:
FOWLERSHORE & FLANAGAN, a California
general partnership
By: /s/ Darla L. Flanagan
-----------------------------------
Name: Darla L. Flanagan
-----------------------------------
Its: General Partner
-----------------------------------
ESCROW AGENT:
LAWYERS TITLE INSURANCE CORPORATION
By: /s/ M. B. Ranz
-----------------------------------
Name: M. B. Ranz
-----------------------------------
Its: Vice President
-----------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 14690
<SECURITIES> 0
<RECEIVABLES> 940
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16000
<PP&E> 33128
<DEPRECIATION> 13643
<TOTAL-ASSETS> 35703
<CURRENT-LIABILITIES> 648
<BONDS> 22503
0
0
<COMMON> 0
<OTHER-SE> 12128
<TOTAL-LIABILITY-AND-EQUITY> 35703
<SALES> 0
<TOTAL-REVENUES> 35511
<CGS> 0
<TOTAL-COSTS> 4770
<OTHER-EXPENSES> 1793
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2848
<INCOME-PRETAX> 26100
<INCOME-TAX> 0
<INCOME-CONTINUING> 26100
<DISCONTINUED> 0
<EXTRAORDINARY> (1473)
<CHANGES> 0
<NET-INCOME> 24627
<EPS-PRIMARY> 294.82
<EPS-DILUTED> 294.82
</TABLE>
