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 June 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 0-14351
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BALCOR REALTY INVESTORS 85-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3327917
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Rd.
Bannockburn, Illinois 60015 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
---------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR REALTY INVESTORS - 85 SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------- -------------
Cash and cash equivalents $ 1,290,670 $ 1,125,457
Escrow deposits 1,467,274 1,693,209
Accounts and accrued interest receivable 604,240 143,573
Prepaid expenses 294,927 137,929
Deferred expenses, net of accumulated
amortization of $473,138 in 1996 and
$429,418 in 1995 750,974 1,013,846
Investment in joint venture with
an affiliate 191,900
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4,599,985 4,114,014
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Investment in real estate:
Land 8,060,630 10,525,187
Buildings and improvements 52,824,940 62,537,549
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60,885,570 73,062,736
Less accumulated depreciation 22,795,251 26,137,982
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Investment in real estate, net of
accumulated depreciation 38,090,319 46,924,754
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$ 42,690,304 $ 51,038,768
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LIABILITIES AND PARTNERS' DEFICIT
Loans payable - affiliate $ 7,907,605 $ 11,900,605
Accounts payable 417,675 142,159
Due to affiliates 63,532 756,004
Accrued liabilities, principally interest
and real estate taxes 386,300 480,390
Security deposits 197,493 233,034
Loss in excess of investment in
joint venture with an affiliate 1,207,069
Mortgage notes payable - affiliate 1,673,215 1,673,215
Mortgage notes payable 43,711,870 51,796,170
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Total liabilities 54,357,690 68,188,646
Limited Partners' deficit (83,936
Interests issued and outstanding) (10,800,703) (16,228,370)
General Partner's deficit (866,683) (921,508)
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Total partners' deficit (11,667,386) (17,149,878)
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$ 42,690,304 $ 51,038,768
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 85 SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership))
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Income:
Rental and service $ 6,633,095 $ 6,359,979
Interest on short-term investments 29,413 33,051
Participation in income of joint venture
with an affiliate 3,028,395 33,246
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Total income 9,690,903 6,426,276
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Expenses:
Interest on mortgage notes payable 2,310,938 2,525,619
Interest on short-term loans
from affiliate 363,518 409,009
Depreciation 923,131 942,993
Amortization of deferred expenses 101,625 103,911
Property operating 2,288,308 2,103,845
Real estate taxes 460,997 523,487
Property management fees 327,749 315,060
Administrative 354,546 268,451
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Total expenses 7,130,812 7,192,375
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Income (loss) before gain on sale and
extraordinary items 2,560,091 (766,099)
Gain of sale of property 3,062,696
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Income (loss) before extraordinary items 5,622,787 (766,099)
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Extraordinary items:
Debt extinguishment expense (161,247)
Participation in gain on forgiveness
of debt from joint venture with an
affiliate 41,897
Participation in debt extinguishment
expense from joint venture with an
affiliate (20,945)
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Total extraordinary items (140,295)
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Net income (loss) $ 5,482,492 $ (766,099)
============= =============
Income (loss) before extraordinary items
allocated to General Partner $ 56,228 $ (7,661)
============= =============
Income (loss) before extraordinary items
allocated to Limited Partners $ 5,566,559 $ (758,438)
============= =============
<PAGE>
Income (loss) before extraordinary items
per Limited Partnership Interest (83,936
Interest issued and outstanding) $ 66.32 $ (9.04)
============= =============
Extraordinary items allocated to
General Partner $ (1,403) $ NONE
============= =============
Extraordinary items allocated to
Limited Partners $ (138,892) $ NONE
============= =============
Extraordinary items per Limited Partnership
Interest (83,936 issued and outstanding) $ (1.66) $ NONE
============= =============
Net income (loss) allocated to General Partner $ 54,825 $ (7,661)
============= =============
Net income (loss) allocated to
Limited Partners $ 5,427,667 $ (758,438)
============= =============
Net income (loss) per Limited Partnership
Interests (83,936 issued and outstanding) $ 64.66 $ (9.04)
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 85 SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership))
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Income:
Rental and service $ 3,237,574 $ 3,213,176
Interest on short-term investments 5,053 16,211
Participation in income of joint venture
with an affiliate 3,015,443 10,763
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Total income 6,258,070 3,240,150
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Expenses:
Interest on mortgage notes payable 1,130,166 1,278,461
Interest on short-term loans
from affiliate 171,487 206,143
Depreciation 451,635 471,497
Amortization of deferred expenses 49,048 53,461
Property operating 1,155,455 1,129,089
Real estate taxes 238,763 261,645
Property management fees 158,640 160,142
Administrative 256,991 147,011
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Total expenses 3,612,185 3,707,449
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Income (loss) before gain on sale and
extraordinary items 2,645,885 (467,299)
Gain on sale of property 3,062,696
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Income (loss) before extraordinary items 5,708,581 (467,299)
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Extraordinary items:
Debt extinguishment expense (161,247)
Participation in gain on forgiveness
of debt from joint venture with an
affiliate 41,897
Participation in debt extinguishment
expense from joint venture with an
affiliate (20,945)
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Total extraordinary items (140,295)
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Net income (loss) $ 5,568,286 $ (467,299)
============= =============
Income (loss) before extraordinary items
alloacated to General Partner $ 57,086 (4,673)
============= =============
Income (loss) before extraordinary items
alloacated to Limited Partners $ 5,651,495 (462,626)
============= =============
<PAGE>
Income (loss) before extraordinary items
per Limited Partnership Interest (83,936
Interest issued and outstanding) $ 67.33 (5.52)
============= =============
Extraordinary items allocated to
General Partner $ (1,403) $ NONE
============= =============
Extraordinary items allocated to
Limited Partners $ (138,892) $ NONE
============= =============
Extraordinary items per Limited Partnership
Interest (83,936 issued and outstanding) $ (1.66) $ NONE
============= =============
Net income (loss) allocated to General Partner $ 55,683 $ (4,673)
============= =============
Net income (loss) allocated to
Limited Partners $ 5,512,603 $ (462,626)
============= =============
Net income (loss) per Limited Partnership
Interests (83,936 issued and outstanding) $ 65.67 $ (5.52)
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 85 SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership))
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Operating activities:
Net income (loss) $ 5,482,492 $ (766,099)
Adjustments to reconcile net income (loss)
to net cash (used in) and provided by
operating activities:
Gain on sale of property (3,062,696)
Debt extinguishment expense 161,247
Participation in gain on forgiveness
of debt from joint venture with an
affiliate (41,897)
Participation in debt extinguishment
expense from joint venture with an
affiliate 20,945
Participation in income of joint
venture with affiliate (3,028,395) (33,246)
Depreciation of properties 923,131 942,993
Amortization of deferred expenses 101,625 103,911
Net change in:
Escrow deposits (17,450) (578,060)
Accounts and accrued
interest receivable (460,667) 183,575
Prepaid expenses (156,998) (94,091)
Accounts payable 120,216 (106,930)
Due to affiliates (692,472) 318,834
Accrued liabilities (94,090) 217,412
Security deposits (35,541) 4,943
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Net cash used in and provided by
operating activities (780,550) 193,242
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Investing activities:
Proceeds from sale of property 11,100,000
Payment of selling costs (126,000)
Distributions from joint venture with
an affiliate 1,805,678 54,754
Redemption of restricted investments 480,000
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Net cash provided by investing activities 12,779,678 534,754
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Financing activities:
Repayment of loans payable - affiliate (3,993,000) (480,000)
Proceeds from loans payable - affiliate 80,000
Repayment of mortgage notes payable (7,870,116) (5,480,512)
Proceeds from issuance of mortgage
notes payable 6,010,000
Principal payments on mortgage notes
payable (214,184) (197,257)
<PAGE>
Funding of repair escrows (157,500)
Releases from repair escrows 243,385
Payment of deferred expenses (182,890)
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Net cash used in financing activities (11,833,915) (408,159)
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Net change in cash and cash equivalents 165,213 319,837
Cash and cash equivalents at beginning
of period 1,125,457 600,949
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Cash and cash equivalents at end of period $ 1,290,670 $ 920,786
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 85-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
A reclassification has been made to the previously reported 1995 statements in
order to provide comparability with the 1996 statements. This reclassification
has not changed the 1995 results. In the opinion of management, all adjustments
necessary for a fair presentation have been made to the accompanying statements
for the six months and quarter ended June 30, 1996, and all such adjustments
are of a normal and recurring nature.
2. Interest Expense:
During the six months ended June 30, 1996 and 1995, the Partnership incurred
and paid interest expense on non-affiliated mortgage notes payable of
$2,232,735 and $2,406,832, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1996 are:
Paid
-----------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $67,724 $50,469 $46,433
The Partnership incurred interest expense on mortgage notes payable-affiliate
of $78,203 and $118,786 and paid interest expense of $90,884 and $31,382 during
the six months ended June 30, 1996 and 1995, respectively.
As of June 30, 1996, the Partnership owes $7,907,605 to the General Partner in
connection with the funding of additional working capital and other Partnership
obligations. The Partnership repaid $3,993,000 to the General Partner during
the six months ended June 30, 1996, primarily with the proceeds received from
the sales of Forest Ridge - Phase II and Rosehill Pointe apartment complexes.
The Partnership incurred interest expense of $363,518 and $409,009, and paid
interest expense of $1,081,000 and $17,040 on this loan during the six months
ended June 30, 1996 and 1995, respectively. As of June 30, 1996, interest
expense of $17,099 was payable. Interest expense was computed at the American
Express Company cost of funds rate plus a spread to cover administrative costs.
As of June 30, 1996, this rate was 5.911%.
<PAGE>
4. Investment in Joint Venture with an Affiliate:
The Rosehill Pointe Apartments was owned by a joint venture consisting of the
Partnership and an affiliate. The Partnership and the affiliate hold
participating percentages in the joint venture of 38.38% and 61.62%,
respectively. In June 1996, the joint venture sold the property in an all cash
sale for $20,700,000. From the proceeds of the sale, the joint venture paid
$15,537,677 to the third party mortgage holders in full satisfaction of the
first and second mortgage loans, and paid $170,250 in selling costs. The joint
venture recognized a gain of $7,920,199 from the sale of this property, of
which $3,055,484 was the Partnership's share.
5. Property Sale:
In June 1996, the Partnership sold the Forest Ridge - Phase II Apartments in an
all cash sale for $11,100,000. From the proceeds of the sale, the Partnership
paid $7,870,116 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $126,000 in selling costs. The basis of the
property was $7,911,304, which is net of accumulated depreciation of
$4,265,862. For financial statement purposes, the Partnership recognized a
gain of $3,062,696 from the sale of this property.
6. Extraordinary Items:
(a) In June 1996, the Partnership sold the Forest Ridge - Phase II Apartments.
In connection with the sale, the Partnership fully amortized the remaining
deferred expenses in the amount of $161,427. This amount was recognized as an
extraordinary item and is classified as debt extinguishment expense.
(b) In June 1996, the joint venture consisting of the Partnership and an
affiliate sold the Rosehill Pointe Apartments. In connection with the sale,
the joint venture fully amortized the remaining deferred expenses and
recognized a gain related to the forgiveness of debt. The Partnership's shares
of these amounts of $20,945 and $41,897 were recognized as extraordinary items
and classified as debt extinguishment expense and gain on the forgiveness of
debt, respectively.
<PAGE>
BALCOR REALTY INVESTORS 85-SERIES II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors 85-Series II (the "Partnership") was formed in 1984 to
invest in and operate real property. The Partnership raised $83,936,000 through
the sale of Limited Partnership Interests and utilized these proceeds to
acquire thirteen real property investments and a minority joint venture
interest in one additional real property. Prior to 1996, the Partnership
disposed of five of these properties. During 1996, the Partnership sold an
additional property and the property in which it owned a minority joint venture
interest. The Partnership continues to own the seven remaining properties.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership recognized a gain related to the June 1996 sale of the Forest
Ridge - Phase II Apartments. The Partnership also recognized its share of the
gain from the June 1996 sale of the Rosehill Pointe Apartments, which was owned
by a joint venture consisting of the Partnership and an affiliate. These were
the primary reasons for the recognition of net income during the six months and
quarters ended June 30, 1996 as compared to a net loss during 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 six months and quarters ended June 30, 1996 and 1995.
As a result of lower average interest rates, interest income on short-term
investments decreased during 1996 when compared to 1995.
Rosehill Pointe Apartments, in which the Partnership held a minority joint
venture interest, was sold during June 1996. As a result of the Partnership's
share of the gain recognized during 1996 in connection with the sale, income
from participation in joint venture with an affiliate increased during 1996
when compared to 1995. In connection with the sale, the Partnership also
recognized its share of a gain on forgiveness of debt of $41,897 and debt
extinguishment expense of $20,945, which are classified as extraordinary items.
The June 1996 sale of the Forest Ridge - Phase II Apartments and the Country
Oaks Apartment's refinancing in June 1995 caused interest expense on mortgage
notes payable to decrease during 1996 when compared to 1995.
<PAGE>
The repayment of a portion of the General Partner loans during the second
quarter of 1996 along with lower interest rates resulted in a decrease in
interest on short-term loans from affiliate during 1996 when compared to 1995.
Real estate tax expense decreased during the six months ended June 30, 1996
when compared to the same period in 1995 as a result of a decrease in the tax
rate at the Hunter's Glen Apartments and the receipt of a refund for the
Marbrisa Apartments.
Higher professional fees caused an increase in administrative expenses during
1996 when compared to 1995.
In June 1996, the Partnership sold the Forest Ridge - Phase II Apartments and
recognized a gain on sale of $3,062,696. In connection with the sale, the
Partnership fully amortized the remaining deferred expenses in the amount of
$161,427. This amount was recognized as an extraordinary item and classified
as debt extinguishment expense.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $165,000 as of
June 30, 1996 when compared to December 31, 1995. The Partnership used cash of
approximately $781,000 in its operating activities which primarily represented
the cash flow from the operations of its properties, which was offset by
administrative expenses and the payment of accrued interest on short-term loans
from an affiliate. Cash provided by investing activities of approximately
$12,780,000 consisted of net proceeds from the sale of Forest Ridge - Phase II
Apartments, and distributions received from the joint venture with an
affiliate, which primarily represent the Partnership's share of the proceeds
from the sale of Rosehill Pointe Apartments. Cash used in financing activities
of approximately $11,834,000 consisted primarily of the repayment of $3,993,000
of loans payable - affiliate and the repayment of the Forest Ridge- Phase II
mortgage note payable of approximately $7,870,000.
The Partnership owes approximately $7,908,000 to the General Partner at June
30, 1996 in connection with the funding of operating deficits and other working
capital requirements. These loans are expected to be repaid from proceeds
received from the disposition of the Partnership's real estate investments,
and available cash flow from future property operations, prior to any
distributions to Limited Partners. The General Partner may continue to provide
additional short-term loans to the Partnership to fund working capital needs or
property operating deficits, although there can be no assurances that such
loans will be available.
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 of the
Partnership's seven remaining properties generated positive cash flow. The
Forest Ridge - Phase II Apartments was sold in June 1996, and generated
positive cash flow in 1995 and prior to its sale in 1996. The Rosehill Pointe
Apartments, in which the Partnership held a minority joint venture interest,
was sold in June 1996 and generated positive cash flow in 1995 and prior to its
sale in 1996. As of June 30, 1996, the occupancy rates at the Partnership's
properties ranged from 92% to 98%.
<PAGE>
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties including improving operating
performance and seeking rent increases where market conditions allow.
The General Partner believes that the market for multifamily housing properties
is favorable to sellers of these properties. During June 1996, the General
Partner sold the Forest Ridge - Phase II Apartments, and Rosehill Pointe
Apartments, in which the Partnership held a minority joint venture interest.
Currently, the Partnership has entered into contracts to sell the Country Oaks,
Hunter's Glen, Steeplechase, Willow Bend Lake and Marbrisa apartment complexes
for sales prices of $8,250,000, $9,100,000, $11,500,000, $14,853,000, and
$8,100,000 respectively. The Partnership is marketing its remaining two
properties. If current market conditions remain favorable, and the General
Partner can obtain appropriate sales prices, the Partnership's liquidation
strategy will be accelerated.
In June 1996, the Partnership sold the Forest Ridge - Phase II Apartments
complex in an all cash sale for $11,100,000. From the proceeds of the sale,
the Partnership paid $7,870,116 to the third party mortgage holder in full
satisfaction of the first mortgage loan, and paid $126,000 in selling costs.
Pursuant to the terms of the sale, $500,000 of the proceeds will be retained by
the Partnership until October 1996. The remaining proceeds were used to repay a
portion of the General Partner loan. See Note 5 of Notes to Financial
Statements for additional information.
The Rosehill Pointe Apartments was owned by a joint venture consisting of the
Partnership and an affiliate. In June 1996, the joint venture sold the
property in an all cash sale for $20,700,000. From the proceeds of the sale,
the joint venture paid $15,537,677 to the third party mortgage holder in full
satisifaction of the first mortgage loan, and paid $170,250 in selling costs.
The net proceeds of the sale were $4,992,073, of which $1,915,958 was the
Partnership's share. Pursuant to the terms of the sale, $500,000 of the
proceeds will be retained by the joint venture until October 1996. The
Partnership's share of the remaining proceeds were used to repay a portion of
the General Partner loan. See Note 4 of Notes to Financial Statements for
additional information.
The Partnership's properties are owned through the use of third-party and
affiliate mortgage loans and therefore, the Partnership is subject to the
financial obligations required by such loans. As a result of the General
Partner's efforts to obtain loan refinancings, the Partnership has no third
party financing which matures prior to 1998.
Although investors have received certain tax benefits, the Partnership has not
commenced distributions. Future distributions to investors will depend on the
repayment of loans to the General Partner and proceeds from property sales, as
to both of which there can be no assurances. In light of results to date and
current market conditions, the General Partner does not anticipate that
investors will recover a substantial portion of their original investment.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices
depending on general or local economic conditions. In the long-term, inflation
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 II
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- --------------------------
Hunter's Glen Apartments
- ------------------------
As previously reported, on June 30, 1996, the Partnership contracted to sell
the Hunter's Glen Apartments, St. Louis County, Missouri, to ERP Operating
Limited Partnership, an Illinois limited partnership, for a sale price of
$9,100,000. The Partnership and the purchaser have agreed to extend the closing
date of the sale from August 15, 1996 to August 30, 1996.
Willow Bend Lake Apartments
- --------------------------
As previously described, on June 28, 1996, the Partnership contracted to sell
the Willow Bend Lake Apartments, East Baton Rouge, Louisiana to an unaffiliated
party, BH TFL, Inc. for a sale price of $14,853,000. Pursuant to the agreement
of sale, the purchaser is required to deposit $148,530 into an escrow account
as earnest money upon completion of the purchaser's due diligence review, which
date has been extended upon the agreement of the Partnership and the purchaser
from July 23, 1996 to August 14, 1996. The closing date of the sale has been
extended from August 15, 1996 to September 19, 1996.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1 to the
Registrant's Registration Statement on Form S-11 dated March 12, 1985
(Registration No. 2-95000) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended June 30, 1992 (Commission File No. 0-14351) are incorporated
herein by reference.
(10) Material Contracts:
(a)(i) Agreement of Sale and attachment thereto relating to the sale of the
Forest Ridge - Phase II apartment complex, Arlington, Texas previously filed as
Exhibit 2 to the Registrant's Report on Form 8-K dated April 23, 1996 is
incorporated herein by reference.
(ii) Master Amendment and Agreement relating to the sales of the Forest Ridge -
Phase II, apartment complex, Arlington, Texas and Rosehill Pointe apartment
complex, Lenexa, Kansas previously filed as Exhibit 2(b)(i) to the Registrant's
Report on Form 8-K dated May 31, 1996 is incorporated herein by reference.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the
sales of the Forest Ridge - Phase II, apartment complex, Arlington, Texas and
Rosehill Pointe apartment complex, Lenexa, Kansas previously filed as Exhibit
2(b)(ii) to the Registrant's Report on Form 8-K dated May 31, 1996 is
incorporated herein by reference.
(b)(i) Agreement of Sale relating to the sale of the Hunter's Glen Apartments,
St. Louis County, Missouri previously filed as Exhibit 2(a) to the Registrant's
Report on Form 8-K dated June 28, 1996 is incorporated herein by reference.
(ii) Letter Agreement dated June 25, 1996, relating to the Sale of Hunter's
Glen apartment complex, St. Louis County, Missouri, previously filed as Exhibit
99 to the Registrant's Report on Form 8-K dated July 15, 1996 is incorporated
herein by reference.
(iii) Letter Agreement dated August 2, 1996, relating to the Sale of Hunter's
Glen apartment complex, St. Louis County, Missouri, is attached hereto.
(c)(i) Agreement of Sale and attachment thereto relating to the sale of Willow
Bend Lake Apartments, East Baton Rouge Parish, Louisiana previously filed as
Exhibit 2(b)(i) to the Registrant's Report on Form 8-K dated June 28, 1996 is
incorporated herein by reference.
(ii) Amendment to Agreement of Sale and Escrow Agreement relating to the sale
of Willow Bend Lake Apartments, East Baton Rouge Parish, Louisiana previously
filed as Exhibit 2(b)(ii) to the Registrant's Report on Form 8-K dated June 28,
1996 is incorporated herein by reference.
(iii) Second Amendment to Agreement of Sale and Escrow Agreement relating to
the contract to sell Willow Bend Lake Apartments, East Baton Rouge Parish,
Louisiana, is attached hereto.
<PAGE>
(d) Agreement of Sale dated July 15, 1996 and letter agreements thereto
relating to the sale of Marbrisa apartment complex, Hillsborough County,
Florida previously filed as Exhibit 2(a) to the Registrant's Report on Form 8-K
dated July 15, 1996 is incorporated herein by reference.
(e) Agreement of Sale dated July 15, 1996 and letter agreement thereto relating
to the sale of Steeplechase apartment complex, Lexington-Fayette, Kentucky
previously filed as Exhibit 2(b) to the Registrant's Report on Form 8-K dated
July 15, 1996 is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six months ending June
30, 1996 is attached hereto.
(b) Reports on Form 8-K:
(i) A Current Report on Form 8-K dated April 23, 1996 was filed reporting
contracts to sell Forest Ridge Apartments - Phase II located in Arlington,
Texas and Rosehill Pointe Apartments located in Lenexa, Kansas.
(ii) A Current Report on Form 8-K dated May 31, 1996 was filed reporting the
closings of the sales of Forest Ridge Apartments - Phase II located in
Arlington, Texas, and Rosehill Pointe Apartments located in Lenexa, Kansas.
Also reported were the contracts to sell Marbrisa Apartments located in
Hillsborough County, Florida, and Steeplechase Apartments both dated May 31,
1996 located in Lexington-Fayette, Kentucky.
(iii) A Current Report on Form 8-K dated June 28, 1996 was filed reporting
contracts to sell Hunter's Glen Apartments located in St. Louis County,
Missouri, Willow Bend Lake Apartments located in East Baton Rouge Parish,
Louisiana, and Country Oaks Apartments located in Memphis, Tennessee. Also
reported were the terminations of the contracts, both dated May 31, 1996, to
sell Marbrisa Apartments located in Hillsborough County, Florida, and
Steeplechase Apartments located in Lexington-Fayette, Kentucky.
(iv) A Current Report on Form 8-K dated July 15, 1996 was filed reporting
contracts to sell Marbrisa Apartments located in Hillsborough County, Florida,
and Steeplechase Apartments located in Lexington-Fayette, Kentucky. Also
reported was an extension of the closing date for the sale of Hunter's Glen
Apartments located in St. Louis County, Missouri.
<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 II
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
---------------------------------
Thomas E. Meador
President and Chief Executive Officer (Principal
Executive Officer) of Balcor Partners-XVII, the
General Partner
By: /s/Brian D. Parker
----------------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XVII, the General
Partner
Date: August 14, 1996
-------------------------
<PAGE>
August 2, 1996
VIA FACSIMILE MAIL
Hunters Partners Limited
Partnership The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, Illinois 525 W. Monroe Street
Bannockburn, Illinois 60015 Chicago, Illinois
60015 Attn.: Al Lieberman 60661
Attn.: Ilona Adams
Re: Agreement of Sale, dated as of the 25th day of June, 1996
(the "Agreement") between Hunters Partners Limited Partnership,
as Seller, and ERP Operating Limited Partnership, as Purchaser,
for the purchase of Hunter's Glen Apartments, Chesterfield,
Missouri (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests an extension of the Approval Period, as such
term is defined in Section 16(A) of the Agreement, from August 5, 1996 until
5:00 CDT on August 23, 1996. Purchaser further requests that the Closing Date,
as such term is defined in Section 8 of the Agreement, be changed from August
15, 1996 to August 30, 1996. Please acknowledge Seller's acceptance of these
modifications to the Agreement by executing this letter in the space provided
below and returning it via facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Shelley L. Dunck
------------------------------------
Shelley L. Dunck
Vice President
Approved and Accepted this 2nd day of August, 1996
HUNTERS PARTNERS LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Hunters Partners, Inc., an Illinois corporation
By: /s/ Alan Lieberman
------------------------------
Alan Lieberman
Authorized Agent
<PAGE>
AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is made and entered into as of the 2nd day of July, 1996, by and
among WILLOW BEND LAKE PARTNERS LIMITED PARTNERSHIP, an Illinois Limited
Partnership ("Seller"), BH TFL, INC. ("Purchaser") and TICOR TITLE SERVICES
("Escrow Agent").
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 June 28, 1996 (the "Original Agreement"), pursuant to
which Seller agreed to sell to Purchaser, and Purchaser agreed to purchase from
Seller, the "Property" (as defined in the Original Agreement);
WHEREAS, pursuant to the Original Agreement Seller, Purchaser and Escrow
Agent entered into that certain Escrow Agreement, dated June 28, 1996 (the
"Escrow Agreement"); and
WHEREAS, Seller and Purchaser now desire to amend the Original 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 Original
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 Original Agreement.
2. The reference to July 8, 1996 in Paragraph 7a(i) of the Original
Agreement and Paragraph 2 of the Escrow Agreement are hereby deleted and "July
23, 1996" is hereby substituted in their place.
3. Notwithstanding anything to the contrary contained in the Original
Agreement and the Escrow Agreement, the Deposit shall be delivered by Purchaser
to Escrow Agent on or before July 23, 1996 in the event Purchaser does not
elect to terminate the Agreement pursuant to Paragraph 7a. of the Agreement and
Paragraph 2 of the Escrow Agreement.
<PAGE>
4 Except as amended herein, the terms and conditions of the Original
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.
Executed as of the date first written above.
SELLER:
WILLOW BEND LAKE PARTNERS LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Willow Bend Lake Partners, Inc., an Illinois
corporation, its general partner
By: /s/ Alan G. Lieberman
-----------------------------
Name: Alan G. Lieberman
-----------------------------
Its: Senior Vice President
-----------------------------
PURCHASER:
BH TFL, INC.
By: /s/Harry Bookey
------------------------------
Harry Bookey
President
ESCROW AGENT:
TICOR TITLE SERVICES
By:
-------------------------------
Its:
-------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1291
<SECURITIES> 0
<RECEIVABLES> 604
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3657
<PP&E> 60886
<DEPRECIATION> 22795
<TOTAL-ASSETS> 42690
<CURRENT-LIABILITIES> 8972
<BONDS> 45385
0
0
<COMMON> 0
<OTHER-SE> (11667)
<TOTAL-LIABILITY-AND-EQUITY> 42690
<SALES> 0
<TOTAL-REVENUES> 9691
<CGS> 0
<TOTAL-COSTS> 3077
<OTHER-EXPENSES> 1379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2674
<INCOME-PRETAX> 5622
<INCOME-TAX> 0
<INCOME-CONTINUING> 5622
<DISCONTINUED> 0
<EXTRAORDINARY> (140)
<CHANGES> 0
<NET-INCOME> 5482
<EPS-PRIMARY> 64.66
<EPS-DILUTED> 64.66
</TABLE>
