SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
(Amendment No. 1)
BALCOR EQUITY PENSION INVESTORS-III
(Name of Subject Company)
BALCOR EQUITY PENSION INVESTORS-III
(Name of Person(s) Filing Statement)
Limited Partnership Interests
(Title of Class of Securities)
N/A
(CUSIP Number of Class of Securities)
Thomas E. Meador
Chairman
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
(847) 267-1600
(Name, Address and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
Copy To:
Herbert S. Wander
Lawrence D. Levin
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, Illinois 60661-3693
(312) 902-5200
<PAGE>
This Amendment No. 1 to Schedule 14D-9 amends the Schedule 14D-9 (the
"Schedule 14D-9") filed by Balcor Equity Pension Investors-III, an Illinois
limited partnership (the "Partnership"), filed with the Securities and Exchange
Commission on May 28, 1996. All capitalized terms used herein but not
otherwise defined shall have the meanings ascribed to such terms in the
Schedule 14D-9.
Item 9. Material to be Filed as Exhibits
Item 9 hereby is amended by removing "5. (c)(4) The Darby Valuation
Report [to be filed by amendment]" and substituting in its place "5. (c)(4)
The Darby Valuation Report"
Signature. After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: June 5, 1996 BALCOR EQUITY PENSION
INVESTORS-III
By: Balcor Equity Partners-III, its
general partner
By: The Balcor Company, a
general partner
By: /s/Thomas E. Meador
---------------------------
Thomas E. Meador, Chairman
<PAGE>
APPRAISAL OF
A TAX-EXEMPT LIMITED PARTNERSHIP INTEREST
AND
A TAXABLE LIMITED PARTNERSHIP INTEREST
IN
BALCOR EQUITY PENSION INVESTORS - III
(BEPI - III)
SKOKIE, ILLINOIS
AS OF MARCH 31, 1996
Valuation Counselors
<PAGE>
May 8, 1996
Balcor Equity Partners - III
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
Attn: Mr. John K. Powell, Jr. - First Vice President
Gentlemen:
In accordance with your request, we are pleased to submit our opinion of the
Value of a Tax-Exempt Limited Partnership Interest and a Taxable Limited
Partnership Interest in:
Balcor Equity Pension Investors - III
(An Illinois Limited Partnership)
as of March 31, 1996.
The term "Value" is defined as follows:
The amount, in dollars, which a Limited Partnership Interest in Balcor
Equity Pension Investors - III is worth to an investor who owns the
Interest with the intention of holding it to maturity, who fully
understands the complexities of the investment, and has an interest in the
potential interest income and capital appreciation of the Limited
Partnership Interest. The valuation does not represent the amount that
would be received by a holder of a Limited Partnership Interest would
he/she decide to liquidate the Interest prior to the maturity of the
Partnership. The value is subject to the terms and conditions set forth
in this report.
The Partnership is forecasted to close at the end of the year 2003.
Based on our analyses and conclusions set forth in this report, the estimated
Value of the Limited Partnership Interests in Balcor Equity Pension Investors -
III, as of March 31, 1996, was in the rounded amount of:
Adjusted
Original
Capital as
of 3/31/96
1. Tax-Exempt Limited Partnership Interest $220.00 $250.00
2. Taxable Limited Partnership Interest $190.00 $250.00
For the quarter ended March 31, 1996, the value of a Tax-Exempt Limited
Partnership Interest increased $2.00, and a Taxable Limited Partnership
Interest experienced no change.
For the quarter ended December 31, 1995, the value of a Tax-Exempt Limited
Partnership Interest and a Taxable Limited Partnership Interest increased
$1.00. There were no property transactions in this quarter.
<PAGE>
For the quarter ended September 30, 1995, the value of a Tax-Exempt Limited
Partnership Interest increased $4.00, and a Taxable Limited Partnership
Interest increased $3.00.
For the quarter ended June 30, 1995, the value of a Tax-Exempt Limited
Partnership Interest increased $3.00, and a Taxable Limited Partnership
Interest $2.00.
For the quarter ended December 31, 1994, the value of a Tax-Exempt Limited
Partnership Interest increased $2.00 while a Taxable Limited Partnership
Interest remained constant. The increase was due to an increase of $3.1
million in the value of the Westech 360 asset. The discount rate was increased
0.25% in this quarter.
On September 11, 1992, the Partnership acquired title to Greentrails, the only
mortgage loan in the Partnership.
For the quarter ended December 31, 1992, the value of a Tax-Exempt Limited
Partnership Interest decreased $8.93, whereas the value of a Taxable Limited
Partnership Interest decreased $22.00. This was a result of a reduction of
$5,343,000 in the value of the Equity Investments, or about 4.1%. The
increased differential value in value between the Tax-Exempt and Taxable
Limited Partnership Interest was the result of a reallocation of excess
proceeds to return capital to the Tax-Exempt Limited Partnership Interest prior
to returning capital to the Taxable Limited Partnership Interest.
On May 27, 1987, the Partnership funded $11,150,000 of a $25,750,000 loan
secured by a first mortgage on the Westech 360 Office Building located in
Austin, TX. For the quarter ended September 30, 1988 the value of the Westech
360 Office Building mortgage loan was reduced to funds advanced. The property
became real estate owned on November 30, 1988 and the value of the property was
materially reduced again. The balance of the loan was funded by Balcor Equity
Pension Investors - II. On September 26, 1988 the Partnership funded a
$27,500,000 first mortgage loan on the Green Trails Apartments.
Because of the many potential permutations and combinations of tax benefits
available and/or not available to the taxable investor under current tax
legislation, any tax benefits have been excluded from the calculation of the
value per interest. The Partnership will provide the tax benefit data to the
taxable investor in order for the owner of the Partnership Interest to apply it
to his or her individual tax situation.
<PAGE>
A copy of this report is retained in our files, together with the information
from which the report was compiled.
Respectfully submitted,
/s/Raymond Ghelardi /s/Clement H. Darby
Valuation Counselors Group, Inc. Darby & Associates
Raymond Ghelardi Clement H. Darby
Managing Director President
REG/CHD/ded
cc: Mr. David P. Bennett
Ms. Mary J. Mojica
Ms. Jayne Kosik
Ms. Jane Cody
<PAGE>
TABLE OF CONTENTS
Statement of Facts and Limiting Conditions
Introduction
Distributions to Limited Partners
Description of the Assets
Valuation of a Limited Partnership Interest
Discussion of Risk Rates
Valuation of the Equity Investments In Real Estate
and Real Estate Owned Investments
Valuation of the Offering Expenses and Loan Fees
Conclusion of Value
Schedule
A-1 Balance Sheet - March 31, 1996
A-2 Statements of Income and Expenses for the
quarters ended March 31, 1996 and 1995
A-3 Statements of Cash Flows for the quarters ended
March 31, 1996 and 1995
B-1 Cash Flow From Operations
B-2 Calculation of Excess Net Cash Proceeds and
Excess Net Cash Receipts
B-3 Discounted Cash Flow Analysis
C Valuation Summary
<PAGE>
STATEMENT OF FACTS AND LIMITING CONDITIONS
Valuation Counselors Group, Inc./Darby & Associates Joint Venture strives to
clearly and accurately disclose the assumptions and limiting conditions that
directly affect an appraisal analysis, opinion or conclusion. In order to
assist the reader in interpreting this report, such assumptions are set forth
as follows:
Valuation Counselors Group, Inc./Darby & Associates Joint Venture reserves the
right to make adjustments to the analysis, opinion and conclusions set forth in
the report as deemed necessary by consideration of additional or more reliable
data that subsequently may become available.
No opinion is rendered as to legal fee, property title or mortgage notes
related to the appraised assets, which are assumed to be good and marketable.
It is assumed that no opinion is intended in matters that require legal,
engineering or other professional advice which has been or will be obtained
from professional sources; the valuation report will not be used for guidance
in professional matters exclusive of the appraisal and valuation discipline.
Information furnished by others is presumed to be reliable, and where so
specified in the report, has been verified; however, no responsibility, whether
legal or otherwise, is assumed for its accuracy and cannot be guaranteed as
being certain. All facts and data set forth in the report are true and
accurate to the best of the Appraiser's knowledge and belief. No single item
of information was completely relied upon to the exclusion of other
information.
All financial data, forecasts, allocations to Tax-Exempt and Taxable Limited
Partnership Interests, operating histories and other data relating to income
and expenses attributed to the assets and the Partnerships have been provided
by Management or its representatives and have been accepted without further
verification except as specifically stated in the report.
It should be specifically noted that the valuation assumes the appraised assets
will be competently managed and maintained by financially sound owners over the
expected period of ownership except where noted, specifically in assets during
the period of foreclosure where Balcor may not have control. This appraisal
engagement does not entail an evaluation of management's effectiveness, nor are
we responsible for future marketing efforts and other management or ownership
actions upon which actual results will depend.
Neither the report nor any portions thereof, especially any conclusions as to
value, the identity of the appraiser or Valuation Counselors Group, Inc./Darby
& Associates Joint Venture shall be disseminated to the public through public
relations media, news media, sales media, prospectus or any other public means
of communications without the prior written consent and approval of Valuation
Counselors Group, Inc./Darby & Associates Joint Venture. The date of the
valuation to which the value estimate conclusion applies is set forth in the
report.
The preponderance of working paper support for this valuation is maintained in
the offices of management, Balcor Mortgage Advisors.
<PAGE>
Neither the fees nor any of the terms and conditions of the appraisal
assignments given to Valuation Counselors Group, Inc./Darby & Associates Joint
Venture by Balcor Mortgage Advisors are contingent upon the values reported.
No independent investigation of the fair market value of the underlying real
estate assets has been made by Valuation Counselors Group, Inc./Darby &
Associates Joint Venture. We have reviewed the real estate appraisals for
reasonableness, but have assumed the real estate appraisals obtained by Balcor
Mortgage Advisors are independent and accurate. Valuation Counselors Group,
Inc. assumes responsibility for real estate appraisals prepared by their own
staff.
No independent investigation of the terms and conditions of the mortgage loans
made by Balcor Equity Pension Investors - III has been made. We have relied on
data furnished to us by Balcor Mortgage Advisors and the validity of the
information was assumed to be correct.
In the event that this appraisal is used as basis to set a market price for a
Limited Partnership Interest in Balcor Equity Pension Investors - III, no
responsibility is assumed for the seller's inability to obtain a purchaser at
the value reported herein.
The reader of this valuation report should be fully conversant with the terms
and conditions of Balcor Equity Pension Investors - III Limited Partnership as
set forth in the Prospectus, other related documents, and the prior appraisals
of a Limited Partnership Interest in Balcor Equity Pension Investors - III.
We have discussed the current status and condition of the mortgage loans and
real estate owned with the management of Balcor Mortgage Advisors and have
accepted their comments as being factual.
<PAGE>
INTRODUCTION
The Partnership, Balcor Equity Pension Investors - III, was formed on April 19,
1985. The Partnership Agreement provides for Balcor Equity Partners - III to
be the General Partner and for the admission of Limited Partners through the
sale of Limited Partnership Interests at $250 per Interest. The Partnership
commenced the offering of Limited Partnership Interests to the public on
September 27, 1985; closing of its minimum offering was held on December 10,
1985, after certain minimum sales of Limited Partnership Interests had been
achieved, as provided for in the Partnership Agreement. Prior to December 10,
1985, the Partnership was in a pre-operating status. The Partnership issued
683,204 Limited Partnership Interests on or prior to August 1, 1986, the
termination date of the offering. The total number of units sold was
segregated into 634,074 tax-exempt units and 49,130 taxable units.
The Partnership serves as an investment vehicle for qualified profit sharing,
pension and other retirement trusts; bank commingled trust funds for such
trusts; HR-10 (Keogh) Plans and Individual Retirement Accounts (IRA);
government pension and retirement trusts; other entities intended to be exempt
from Federal income taxation such as certain religious, charitable, scientific,
literary and educational corporations, funds and foundations; and also
individuals and entities not exempt from Federal income tax.
The Partnership's operations consisted of (1) investing in commercial and
residential real properties which the Partnership will acquire with no
permanent mortgage indebtedness and (2) placing equity participating first
mortgages on income-producing real property.
The Partnership Agreement provides that the General Partner, or affiliates,
will receive selling commissions on the sale of Limited Partnership Interests;
real estate acquisition fees, either paid by the sellers or the Partnership
when the Partnership acquires real properties; and loan application and
processing fees and mortgage brokerage fees, paid by borrowers and/or the
Partnership when the Partnership funds first mortgage loans or issues
commitments to fund loans, subject to certain limitations as set forth in the
Partnership Agreement.
The Partnership Agreement also provides that an affiliate of the General
Partner will service the mortgage loans made by the Partnership and will
receive a mortgage servicing fee at an annual rate equal to 1/4 of 1% of the
amounts advanced by the Partnership and outstanding from time to time; and that
an affiliate of the General Partner will perform property management services
in connection with the properties acquired by the Partnership and thereby earn
fees at rates and on terms no less favorable to the Partnership than those
customary for similar property management and leasing services in the relevant
geographical area of the properties managed, subject to certain limitations.
<PAGE>
"Operating Income" of the Partnership will be allocated 10% to the General
Partner and 90% to the Limited Partners, however, certain components are
specially allocated as described in the Partnership Agreement. "Operating
losses" and other certain components will be allocated 1% to the General
Partner and 99% to the Limited Partners pursuant to terms set forth in the
Partnership Agreement. "Net Cash Receipts" available for distribution will be
distributed as follows: 90% to all Limited Partners, 7 1/2% to the General
Partner as its distributive share from Partnership operations and an additional
2 1/2% of such "Net Cash Receipts" will be paid to the General Partner for
allocation to the Repurchase Fund which may be utilized to repurchase Interests
from Limited Partners pursuant to terms set forth in the Partnership Agreement.
Amounts allocated to the Repurchase Fund will be returned to the Partnership at
liquidation if necessary to permit payment to the Limited Partners of their
"Original Capital" plus any deficiency in their "Liquidation Preference" as
defined in the Partnership Agreement. Subject to the provisions of the
Partnership Agreement, "Net Cash Proceeds" which are available for distribution
will be distributed only to the Limited Partners until such time as the Limited
Partners have received a return of their "Original Capital" and their
"Liquidation Preference"; thereafter, the remaining "Net Cash Proceeds" will be
distributed 90% to the Limited Partners and 10% to the General Partner. The
General Partner's share shall be returned to the Partnership if necessary to
permit payment to the Limited Partners of any deficiency in the return of their
Original Capital and Preferential Cumulative Distributions.
It was intended that the proceeds of the offering available for investment
would be invested approximately one-half in real properties with no permanent
mortgage indebtedness and one-half in equity participating first mortgage
loans. The actual mix of investments between real properties and mortgage
loans will be determined by the General Partner and will depend upon financial
and real estate market conditions.
Originally, the Partnership expected to sell or otherwise dispose of this real
property investments between the fifth and tenth years after acquisition and
expected to sell or obtain repayment of its mortgage loans between the twelfth
and fifteenth years after such loans are made. Since the time the original
real estate investments and mortgage loans were made at the inception of the
Partnership, material adverse changes occurred in the real estate market. This
resulted in a number of mortgage loans going in to default and eventually
becoming Real Estate Owned. The Partnership now only has Real Estate Owned and
original Investments in Real Estate. The management of the Partnership has
determined that it may be in the best interests of the Limited Partners to
retain title to a substantial portion of the real estate for approximately ten
years from December 31, 1992. As of March 31, 1996, the forecasted closing of
the Partnership is the year 2003.
<PAGE>
DISTRIBUTIONS TO LIMITED PARTNERS
Net Cash Receipts available for distribution commenced distribution to Limited
Partners on a quarterly basis commencing in the third full calendar quarter
after the termination of the offering. 90% of all Net Cash Receipts available
for distribution are distributed to Limited Partners. In order to equalize the
benefits to the Limited Partners, such Net Cash Receipts are allocated among
the Limited Partners so that on a pro rata basis an Interest originally
purchased by a Tax exempt Limited Partner receives 133% of Net Cash Receipts
that are distributed with respect to an Interest originally purchased by a
Taxable Limited Partner. 7 1/2% of such Net Cash Receipts are paid to the
General Partner as its distributive share from Partnership operations, and an
additional 2 1/2% of such Net cash Receipts are paid to the General Partner for
allocation to the Repurchase Fund. Amounts allocated to the Repurchase Fund
are commingled with other assets of the General Partner and may be utilized to
repurchase Interests from Limited Partners. Amounts allocated to the
Repurchase Fund will be returned to the Partnership at the liquidation of the
Partnership if necessary to permit payment to the Limited Partners of their
Original Capital plus any deficiency in their Liquidation Preference.
In general, the Partnership had expected to sell its real properties between
the fifth and tenth years after acquisition and expects to sell or obtain
repayment of its mortgage loans between the twelfth and fifteenth years after
such loans are made. For reasons previously explained, these time horizons
have been extended beyond the Year 2000. Net Cash Proceeds which are available
for distribution will be distributed only to holders of Interests until such
time as holders of Interests have received a return of their Original Capital
and their Liquidation Preference. 90% of the remaining Net Cash Proceeds
available for distribution will be distributed to holders of Interests. The
General Partner will receive 10% of such remaining Net Cash Proceeds. Prior to
the liquidation of the Partnership, to the extent necessary to permit the
Partnership to pay to the Limited Partners any deficiency in the return of
their Original Capital and their Preferential Cumulative Distribution on
Adjusted Original Capital in the following amount: 14% per annum for Interests
purchased by Tax-exempt Limited Partners prior to November 11, 1986; 12% per
annum for Interests purchased by Tax-exempt Limited Partners thereafter; 10.50%
per annum for Interests purchased by Taxable Limited Partners prior to January
15, 1986; and 9% per annum for Interests purchased by Taxable Limited Partners
thereafter; the General Partner shall return to the Partnership all or a
portion of its 10% share of such Net Cash Proceeds. For purposes of
determining distributable Net Cash Proceeds, an amount equal to the Adjusted
Mortgage Investment for each year shall be deemed an amount available for
distribution and shall also be deemed the initial amount distributed for such
year. For purposes of determining the amount of Preferential Cumulative
Distribution to which the holder of a particular Interest is entitled, the
purchase date shall be the date the investor's funds are received by the
General Partner, notwithstanding the fact that such funds are initially
deposited in escrow accounts. Any amounts of Preferential Cumulative
Distribution that are distributed to early investors in excess of amounts
distributed to later investors will come from the General Partner's
distributive share and not from funds otherwise distributable to Limited
Partners. In the event distributed Net Cash Receipts and Net Cash Proceeds
available for distribution exceed 9.00% per annum on Adjusted Original Capital
but are not sufficient to compensate all Limited Partners as described above,
then additional Net Cash Proceeds shall be distributed from the General
Partner's 10% share equally to all Limited Partners who are entitled to more
than 9.00% per annum until they shall have received Preferential Cumulative
<PAGE>
Distribution in the amount of 10.50% per annum on their Adjusted Original
Capital. Any additional Net Cash Proceeds available for distribution shall be
distributed equally to all Limited Partners who are entitled to more than
10.50% per annum, and so on, until all of the Net Cash Proceeds available for
distribution shall have been distributed.
Cash available for distribution will be determined by the General Partner after
it creates any reserves or makes expenditures reasonably necessary or
appropriate for the operation of the Partnership.
There is no assurance that the Partnership will generate Net Cash Receipts or
Net Cash Proceeds, or that, if generated, they will be available for
distribution or be sufficient to provide the full amount of the Preferential
Cumulative Distribution.
All Partnership distributions are made quarterly to those recognized as the
holders of Interests as of the last day of each fiscal quarter. Distributions
are expected to commence the third full calendar quarter after termination of
the offering.
Payments were made to Limited Partners during the period of the public offering
of Interests.
As set forth in the Partnership Agreement, the Partnership was obligated to pay
to the purchasers of Interests an amount equivalent to interest at an initial
rate of 7.75% per annum on the total purchase price of an Interest. The
amounts so payable under this provision ceased to accumulate on August 1, 1986,
the termination date of the offering. Payments made to the Limited Partners
during the offering period totaled $4,563,280 through August 1, 1986.
Distributions to the Limited Partnership
Tax-Exempt Interest Taxable Interest
Effective Amount Amount
Date Per Interest Annual Rate Per Interest Annual Rate
3/31/87 $3.99 6.38% $3.00 4.80%
6/30/87 3.99 6.38% 3.00 4.80%
9/30/87 3.99 6.38% 3.00 4.80%
12/31/87 3.19 5.10% 2.40 3.84%
3/31/88 3.19 5.10% 2.40 3.84%
6/30/88 3.99 6.38% 3.00 4.80%
9/30/88 3.99 6.38% 3.00 4.80%
12/31/88 3.33 5.33% 2.50 4.00%
3/31/89 3.33 5.33% 2.50 4.00%
6/30/89 3.33 5.33% 2.50 4.00%
9/30/89 3.33 5.33% 2.50 4.00%
12/31/89 3.33 5.33% 2.50 4.00%
3/31/90 3.33 5.33% 2.50 4.00%
6/30/90 3.33 5.33% 2.50 4.00%
9/30/90 3.33 5.33% 2.50 4.00%
12/31/90 3.33 5.33% 2.50 4.00%
3/31/91 3.33 5.33% 2.50 4.00%
6/30/91 3.33 5.33% 2.50 4.00%
9/30/91 3.33 5.33% 2.50 4.00%
12/31/91 3.33 5.33% 2.50 4.00%
<PAGE>
Tax-Exempt Interest Taxable Interest
Effective Amount Amount
Date Per Interest Annual Rate Per Interest Annual Rate
3/31/92 $2.99 4.78% $2.25 3.60%
6/30/92 2.99 4.78% 2.25 3.60%
9/30/92 2.99 4.78% 2.25 3.60%
12/31/92 2.99 4.78% 2.25 3.60%
3/31/93 2.33 3.73% 1.75 2.80%
6/30/93 2.33 3.73% 1.75 2.80%
9/30/93 2.33 3.73% 1.75 2.80%
12/31/93 2.33 3.73% 1.75 2.80%
3/31/94 2.33 3.73% 1.75 2.80%
6/30/94 2.33 3.73% 1.75 2.80%
9/30/94 2.33 3.73% 1.75 2.80%
12/31/94 2.33 3.73% 1.75 2.80%
3/31/95 2.33 3.73% 1.75 2.80%
6/30/95 3.52 5.63% 2.65 4.24%
9/30/95 2.33 3.73% 1.75 2.80%
12/31/95 2.33 3.73% 1.75 2.80%
3/31/96 3.72 5.96% 2.80 4.48%
<PAGE>
DESCRIPTION OF THE ASSETS
Equity Investments in Real Estate
1. 1275 K Street Office Building, Washington, DC
On January 7, 1986, the Partnership acquired a 39.48% joint venture
interest in the limited partnership which owns the twelve-story 1275 K
Street Office Building. The joint venture's purchase price of the
property was $47,150,050, which included $13,300,000 for the land and
$1,778,657 for personal property. The Partnership paid $18,614,717 for
its interest. An additional capital contribution of $135,822 was made in
1986 by the J. V. Partner. Its proportionate value based on March 1993
cash flow projections is $15,668,563. As of March 31, 1996, the occupancy
rate was 99%.
2. Bingham Farms Office Plaza - Phase IV, Bingham Farms, MI
On January 23, 1986, the Partnership acquired Bingham Farms Office Plaza
-Phase IV, a four story office building containing 145,280 square feet
located on a six acre site in Bingham Farms, Michigan, northwest of
Detroit. The purchase price was $18,180,850 of which $1,000,828 was
allocated to land and $1,161,961 to personal property. On October 1,
1987, Balcor Property Management took over management of the Bingham Farms
Office Plaza - Phase IV. Its value based on March 1993 cash flow
projections is $14,227,902. As of March 31, 1996, the occupancy rate was
99%.
3. Arborland Consumer Mall, Ann Arbor, MI
On May 9, 1986, the Partnership acquired a 99% interest in Arborland
Consumer Mall, a 348,043 square foot shopping center on a 37 acre site in
Ann Arbor, MI. The purchase price was $20,744,680 of which $2,400,000 was
allocated to land and $250,000 for personal property. Its value based on
March 1993 cash flow projections is $24,775,488. As of March 31, 1996,
the occupancy rate was 71%.
4. Belmont Apartments, King County, Renton, WA
On July 31, 1986, the Partnership acquired Belmont Apartments, a 202 unit
garden apartment complex on an 11 acre site in King County near Renton,
WA. The complex consists of 15 two story wood frame residential units
with parking for 350 cars, including 50 carports. The purchase price was
$8,669,400, including $1,010,000 for the land and $1,148,910 for personal
property. Its value based on March 1993 cash flow projections is
$8,022,429. As of March 31, 1996, the occupancy rate was 93%.
5. Westlake Meadows Apartments, Lake Oswego, OR
On July 30, 1986, the Partnership acquired the Westlake Meadows
Apartments, a 162 unit garden apartment/townhouse complex on an 8 acre
site in Lake Oswego, OR, a suburb of Portland. The complex consists of 13
two story residential buildings, 28 townhouses and 324 parking spaces,
including 162 carports. The purchase price was $8,457,445, including an
allocation of $900,000 for land and $576,000 for personal property. Its
value based on March 1993 cash flow projections is $9,520,150. As of
March 31, 1996, the occupancy rate was 99%.
<PAGE>
6. Erindale Centre Shopping Center, Colorado Springs, CO
On September 19, 1986, the Partnership acquired approximately 167,239 net
rentable square feet of the Erindale Centre Shopping Center located on 13
acres in Colorado Springs, CO. The center was completed in phases from
1983 through 1985. The total center consists of six one-story buildings
on a 17 acre site containing 223,150 square feet of net rentable area.
Approximately 55,912 square feet on four acres are owned and occupied by
Levitz Furniture and Standard Brands. The purchase price was $17,340,425
of which $2,630,000 was allocated to the land and $200,000 to personal
property. A 14,000 square foot tenant abruptly vacated in the quarter
ended September 30, 1989. Its value based on March 1993 cash flow
projections is $9,394,021. As of March 31, 1996, the occupancy rate was
95%.
Real Estate Owned Investments
1. Westech 360 Office Building, Austin, TX
On May 27, 1987, the Partnership funded an equity and revenue
participating $11,150,000 portion (43.3%) of a $25,750,000 mortgage loan
on the Westech 360 Office Building comprising 175,716 square feet in
Austin, TX. The loan was to mature in June of 1999 but the Partnership
took title to the property November 30, 1988 and it is now classified as
Real Estate Owned. As of December 31, 1991, it was valued at $3,788,750
based on a July 3, 1991 appraisal. As of March 31, 1996, its allocated
value based on November 1994 cash flow projections is $7,524,845. As of
March 31, 1996, the occupancy rate was 98%.
2. Perimeter 400 Center, Fulton County, GA
On May 21, 1986, the Partnership funded an equity and revenue
participating $8,121,951 first mortgage loan on Perimeter 400 Center,
Fulton County, GA. This is a participation in a $41,000,000 mortgage loan
on two office towers totaling 357,790 square feet. The other funds were
provided by three affiliates of the Partnership. On February 7, 1991, the
borrower conveyed title to the property to the affiliated partnerships
which had funded this loan. The property was appraised at $28,500,000,
and BEPI - III's 21.95% interest equated to $6,255,750. As of March 31,
1996, its value based on internal cash flow projections is $7,557,669. As
of March 31, 1996, the occupancy rate was 100%.
3. Ammendale Technology Park II, Beltsville, MD
On February 12, 1987, the Partnership funded an equity and revenue
participating $9,360,000 first mortgage loan on Ammendale Technology Park
II, a four building complex totaling 139,500 square feet on 11 acres of
land in Beltsville, MD, approximately 9 miles Northeast of downtown
Washington, DC. The loan remained on a nonaccrual status. The
Partnership commenced foreclosure proceedings on this loan on April 30,
1991. On June 12, 1991, a foreclosure sale was held and the Partnership
made a successful bid to purchase this property. The Partnership received
title to the property during on October 16, 1991. The property was
appraised at $8.0 million as of November 1991, a reduction in value of
$1.36 million from its value as a mortgage loan. On December 11, 1992,
the Partnership sold one of the four buildings that comprise Ammendale
<PAGE>
Technology Park-Phase II for a sale price of $1.9 million. As of March
31, 1996, its value based on January 1994 cash flow projections is
$6,245,513. As of March 31, 1996, the occupancy rate was 95%.
4. Green Trails Apartments, Lisle, IL
On September 26, 1988 the Partnership funded an equity and revenue
participating $27,500,000 first mortgage loan on Green Trails Apartments,
a 440 unit apartment complex in Lisle, IL. It is a ten year loan with a
base rate of 9.5% years 1-4 and 10.0% years 5-10. On July 9, 1991, the
borrower filed for involuntary bankruptcy (this subsequently was changed
to reorganization under Chapter 11) and, on July 18, 1991, a $2,750,000
letter of credit was cashed. The Partnership acquired title to the
property on September 11, 1992. It was valued at funds advanced of
$25,801,493. As of March 31, 1996, its value based on March 1993 cash
flow projections is $32,144,797. As of March 31, 1996, the occupancy rate
was 96%.
<PAGE>
VALUATION OF A LIMITED PARTNERSHIP INTEREST
Valuation Counselors Group, Inc./Darby & Associates Joint Venture has been
retained by Balcor Equity Partners - III to estimate the Value of a Limited
Partnership Interest in Balcor Equity Pension Investors - III on a quarterly
basis.
The methodology used in estimating the Value of a Limited Partnership Interest
in Balcor Equity Pension Investors - III is based upon substituting the
estimated (1) present value of the Equity Cash Flows and Return of Capital in
place of the Investments in Real Estate and Real Estate Owned, (2) appraised
value of certain Real Estate Owned assets acquired in foreclosure and scheduled
for disposition in the near-term (if applicable to this Partnership), and (3)
the present value of the Debt Cash Flows in place of Investment in Loan
Receivable, First Mortgage as shown on March 31, 1996 Balance Sheet of Balcor
Equity Pension Investors - III (Schedule A-1) (if applicable to this
Partnership). As of September 11, 1992, when the Partnership acquired title to
Greentrails through foreclosure there no longer are any mortgage loans in this
Partnership. In addition, the unamortized portions of the Offering Expenses
and Loan Fees as well as the present value of the Repurchase Fund are added to
the Assets on the same Balance Sheet. The amortization is calculated by
reducing the total Offering Expenses, as set forth in the financial statements,
on a straight line basis, quarterly, to the expiration date of the loan
portfolio. For financial reporting purposes, Balcor Equity Partners - III
initially deducted the total Offering Expenses from the proceeds of the Limited
Partnership Interest. Current Assets and Current Liabilities remained as
stated and subsequently are called "Net Current Assets."
Cash, the present value of the Equity Cash Flows, Return of Capital and
Repurchase Fund, appraised Real Estate Owned (where applicable) and the present
value of the Debt Cash Flows (if any) were segregated into the interests of the
Tax-exempt Limited Partnership Interests, Taxable Limited Partnership Interests
and General Partner Interest Shares in accordance with the terms of the Limited
Partnership Agreement and the proportionate share of the Partnership Interests.
As of December 31, 1992, the holding period for the Investments in Real Estate
and Real Estate Owned not scheduled for near-term sale were extended, on the
average, to ten years for the purpose of attempting to realize a greater return
to the Limited Partners. In addition the cash flows were refined in order to
calculate excess cash proceeds and excess net cash receipts since certain of
those proceeds are applied to assets where the acquisition costs have not been
achieved.
Historically, the valuation process has allocated certain proceeds to the
Tax-Exempt and Taxable Limited Partnership Interests on the basis of certain
procedures set forth in the Partnership Agreement. Based on additional
formulae in the Partnership Agreement, as the Fund has "matured" it has become
necessary to reallocate certain proceeds between the Tax-Exempt and Taxable
Limited Partnership Interests so that the Tax-Exempt Limited Partnership
Interests will be made whole prior to returning capital to the Taxable Limited
Partnership Interest.
<PAGE>
With the extension of the holding period and redefining the Real Estate Owned
Investments, the Repurchase Fund has become material and is included separately
as an Asset. The Repurchase Fund is allocated pro rata in the valuation
because the General Partner forecasts that both the Tax-Exempt Limited
Partnership Interest and Taxable Limited Partnership Interest will recover all
of their capital by the time the Partnership closes by the end of the year
2003.
<PAGE>
DISCUSSION OF RISK RATES
The discount rate applied to the cash flow mathematically expresses risk. Risk
represents the uncertainty related to achievement of the prospective cash
flows. The primary components of risk exposure in fixed income securities are
interest rate risk, inflation risk, market risk, liquidity risk and risk of
default. As previously discussed, the valuation of the assets in question have
been predicated upon the present valuing of the components of the loan
portfolio. Therefore, determination of an appropriate risk rate is essential
in the valuation of the net investment in loans receivable.
Financial theory dictates the necessity of incremental return resulting from
incremental risk. Accordingly, the typical risk/return tradeoff indicates that
investors should demand greater rates of return as the perceived riskiness of
the asset or security increases. In examining an investment situation, a
hypothetical investor would weigh the perceived level of risk against the
return expected from the subject investment. In determining the required rate
of return or discount rate on a particular asset or investment, the
hypothetical investor would also consider returns available from alternative
investment opportunities such as government securities, corporate bonds,
mortgages, real estate and common stock, if applicable.
The subject assets consist of a self-liquidating real estate investment fund
with investments in both real estate loans with varying maturities and real
estate assets. Accordingly, in determining an appropriate risk rate associated
with the subject assets, we have considered alternative and comparable rates of
return in the lending and real estate marketplace as indicated by such sources
as the Wall Street Journal, Real Estate Research Corporation Real Estate
Report, Investment Dealers Digest, Corporate Financing Week, American Council
of Life Insurance Investment Bulletin and the National Association of Real
Estate Investment Trusts.
The following table presents yield rates associated with various types of
government and corporate securities as indicated by the March 29,1996 and
January 3, 1996 Wall Street Journals.
<PAGE>
Yield Rates as Indicated by the Wall Street Journal
Security First Quarter 1996 Fourth Quarter 1995
Three Month U.S. Treasury Bills 4.99% 5.04%
Six Month U.S. Treasury Bills 4.97% 5.03%
Prime Rate 8.25% 8.50%
Ten Year U.S. Treasury Bonds 6.60% 5.64%
Twenty Year U.S. Treasury Bonds 6.90% 6.02%
Corporate Bonds
Aaa, Aa 6.72% to 7.60% 6.02% to 6.96%
A, Baa 6.95% to 7.91% 6.23% to 7.31%
Ba, C 9.8% 9.7%
Collateralized Mortgage
Obligations
10 Year 7.90% 6.94%
20 year 8.05% 7.17%
Additionally, information from Moody's Corporate Bond Survey and the Investment
Dealer's Digest indicates the corporate original issue Real Estate Mortgage
Investment Conduit (REMIC) yields from 1988 to 1995 ranged from 7% to 11.3% for
obligations with terms in excess of ten years. A yield difference of one to
three points was exhibited within multiple class REMIC issues where accrued
interest payments did not commence on the (higher yielding) security until
senior class notes were paid in full. A short term issuance collateralized by
elderly living properties exhibited a four point yield differential between
classes.
According to information from the Mortgage-Based Securities Letter, REMIC
issuances in 1994 have decreased substantially from the levels exhibited during
1992 and 1993. Reportedly, many REMIC underwriters and investors incurred
losses due to price corrections in the derivative mortgage securities market.
The price decline was believed to be attributable to several factors including
rising interest rates, increased volatility, average-life extension and lack of
liquidity. According to the Wall Street Journal, new issues of mortgage-backed
securities were down 57% in 1994 as compared to the prior year.
In addition to the previously noted yields on various market securities, we
have also considered mortgage rates associated with various types of commercial
real estate properties. This data is relevant in that it provides an
indication of rates of return associated with similar types of investments.
These statistics have been extracted from the December 29, 1995 and October 1,
1995 editions of the Investment Bulletin published by the American Council of
Life Insurance, is as follows:
<PAGE>
Averages
Contract Interest
Rate
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.83% 8.23%
Apartment 7.64% 8.13%
Office Building 7.98% 8.23%
Retail 7.79% 8.17%
Industrial 7.84% 8.21%
Other Commercial 7.73% 8.47%
Yield With
Fees
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.85% 8.24%
Apartment 7.67% 8.15%
Office Building 8.00% 8.24%
Retail 7.81% 8.18%
Industrial 7.85% 8.22%
Other Commercial 7.74% 8.51%
Maturity
(Years/Months)
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 11/06 11/02
Apartment 10/11 10/09
Office Building 10/0 09/07
Retail 13/05 13/06
Industrial 10/08 10/00
Other Commercial 11/04 12/02
Additionally, we have considered expected capitalization rates and internal
rates of return extracted from "Korpacz Real Estate Investor Surveys, First
Quarter 1996". For comparative purposes, we have also presented similar data
extracted from "Korpacz Real Estate Investor Surveys, Fourth Quarter 1995".
<PAGE>
National Market Indicators: First Quarter 1996
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.50% 10.00%-15.00% 12.10%
Free and Clear Equity Cap
Rate 6.25%-11.00% 8.11% 8.00%-12.50% 9.58%
Terminal Cap Rate 7.00%-11.00% 8.56% 8.25%-12.00% 9.62%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.90% 9.00%-14.00% 11.27%
Free and Clear Equity Cap
Rate 8.00%-11.00% 9.47% 7.25%-13.00% 9.29%
Terminal Cap Rate 8.50%-12.00% 9.68% 8.00%-11.00% 9.51%
National
Apartment
Range Average
Free and Clear Equity IRR 10.50%-13.00% 11.38%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.97%
Terminal Cap Rate 8.00%-11.00% 9.29%
<PAGE>
National Market Indicators: Fourth Quarter 1995
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.55% 10.00%-15.00% 12.15%
Free and Clear Equity Cap
Rate 6.25%-11.00% 7.86% 7.50%-12.50% 9.52%
Terminal Cap Rate 7.00%-11.00% 8.45% 8.25%-12.00% 9.63%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-15.00% 12.04% 9.00%-14.00% 11.31%
Free and Clear Equity Cap
Rate 8.00%-11.50% 9.57% 7.25%-13.00% 9.36%
Terminal Cap Rate 8.50%-12.00% 9.75% 8.00%-11.00% 9.58%
National
Apartment
Range Average
Free and Clear Equity IRR 10.00%-13.00% 11.50%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.99%
Terminal Cap Rate 8.00%-11.00% 9.31%
<PAGE>
Our discount rates have been selected based upon the returns exhibited on
alternative securities and real estate properties as previously presented, in
conjunction with the attributes of the subject assets.
Risk Measurement in Real Estate
As previously discussed, the primary components of risk exposure for fixed
income securities include interest rate risk, inflation risk, market risk,
liquidity risk and default risk. For real estate, these risks are similar and
can be segmented into two categories. The first is systematic risk which
includes all risks external to the property. The remaining risks can be
categorized as nonsystematic risk and includes all risks directly related to
the property. Generally, systematic risk affects the overall market as a whole
and is often referred to as market risk. However, nonsystematic risk is
generally more attributable to the property specifics. Nonsystematic risk can
be further broken down into risk relative to the immediate neighborhood or
local market with the residual risks being unique to the property.
When viewing an investment in a single property, the systematic overall market
risk, the nonsystematic local market risk and the nonsystematic unique property
risks must be weighed in the derivation of an appropriate risk rate (discount
rate) to be applied to anticipated cash flows. The overall market risks would
include such factors which effect the market as a whole. Among these factors
would be the level of interest rates, the economic condition of the nation,
federal tax incentives related to real estate and the expected inflation rate.
Each of these factors can have a direct effect on real estate throughout the
nation.
Nonsystematic local market risks are those that effect a regional area or
neighborhood and are not part of the overall market risk. There are many types
of possible local market risks. Some examples of local market risk include
fluctuations in the local economy, changes in transportation systems, local
crime rates and over building. These local market risks may be severe enough
to override the effects of the overall market risk.
Property unique risks are those which effect the subject property in a manner
more specific than the local market risks. Many of the property unique risks
are similar to the local market risks but are more significant for the subject
property. Some examples of property specific risks would include dependence on
single industries or tenants, crime frequency on the property, changes in
immediate traffic patterns, changes in adjacent zoning or adjacent property
conditions and unanticipated capital improvement requirements. These property
specific risks may have a material impact on the property but may not be
reflected in the local market risks.
Investments in individual property would reflect three groups of risks
including the systematic overall market risks, the nonsystematic local market
risks and the nonsystematic property unique risks. However, modern portfolio
theory recognizes that through investment diversification, the nonsystematic
risks associated with the local market and the unique attributes of the
property can be reduced. Furthermore, with sufficient diversification, a
portfolio can virtually eliminate nonsystematic risk.
<PAGE>
The benefits of portfolio diversification are reflected in the improvement of
the portfolio's return-risk ratio. The return-risk ratio measures the return
of the investment relative to the volatility of the return. Generally, the
volatility of return is measured by the standard deviation of the return over a
period of time. Therefore, the return-risk ratio is simply the return of the
investment divided by the standard deviation of the return.
As an example of the application of this ratio, assume that portfolio A invests
in only one type of property in one local market and experiences an average
annual return of 13% over fifteen years with a standard deviation of return of
17%. The return-risk ratio is computed to be 0.76 (13% divided by 17%).
Portfolio A's risk-return ratio can then be compared to the ratio of other
portfolios to evaluate the level of return relative to the risk taken.
To illustrate, assume portfolio B invests in a wide variety of property types
in a numerous geographical regions and only generated an annual return of 12%
over fifteen years. However, the standard deviation of return was only 13%.
The return-risk ratio is computed to be 0.86 (12% divided by 13%). Even though
portfolio A's return exceeded portfolio B's return, the superior return was not
enough to offset the increase in risk. Therefore, an investor would likely
prefer an investment in Portfolio B.
It should be noted, however, that with the reduction in the volatility of
returns, modern portfolio theory also recognizes that there is a reduction in
the level of potential return. This is because that volatility generally
provides the opportunity for added returns. This is the basis for the axiom
that greater risk equals greater reward. However, an investor generally
requires that the increase in risk is offset by an increase in potential
return. Conversely, if an investor is looking for a lower risk, the investor
would expect lower returns.
In the instant case, the discount rates selected for the appraisal of
individual properties which are expected to be sold in the near future reflect
all the systematic and nonsystematic risks associated with each individual
property. The discount rates are derived considering overall market factors,
local market factors and property unique factors. However, for those
properties which are valued as real estate investments on the basis of their
cash flows, the discount rate applied reflects the benefits of reduced
nonsystematic risks through portfolio diversification. These benefits include
the offsetting of local market risks and property unique risks of each property
with the local market risks and property unique risks of the other properties
in the portfolio. As a result, the volatility of returns for each property is
offset by the volatility of returns of the other properties in the portfolio.
The discount rates applied to the latter category of properties are derived
from market data on portfolio returns, which reflect the dichotomies described
above.
<PAGE>
SCHEDULE A-1
BALCOR EQUITY PENSION INVESTORS - III
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEET
MARCH 31, 1996
(AUDITED)
Assets
Current Assets
Cash and Cash Equivalents $12,587,650
Escrow Deposits 0
Accounts and Accrued Interest Receivable 1,373,997
Prepaid Expenses 303,858
Other Assets 0
-----------
Total Current Assets $14,265,505
-----------
Deferred Expenses, Net of accumulated
amortization 186,171
-----------
Investment in Joint Ventures with affiliates (1) 23,102,280
----------
Investments
Investment in Real Estate, at Cost:
Land 14,394,281
Buildings and Improvements 81,277,182
------------
95,671,463
Less accumulated depreciation 29,985,097
------------
Total Investment Properties, Net
of Accumulated Depreciation 65,686,366
------------
Total Assets $103,240,322
============
Liabilities and Partners' Capital
Escrow Liabilities $ 0
Accrued liabilities 625,300
Accounts Payable 212,860
Due to Affiliates 48,492
Security Deposits 324,341
------------
Total Liabilities $1,210,993
Partners' Capital (Limited Partnership
Interests Issued and
Outstanding: 683,204) 102,029,329
------------
Total Liabilities and Partners' Capital $103,240,322
============
(1) Perimeter 400 Office Center reclassified.
<PAGE>
SCHEDULE A-2
BALCOR EQUITY PENSION INVESTORS - III
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Income:
Rental $ 3,306,814 $ 3,170,369
Service 546,788 629,344
Participation in income of joint
ventures with affiliates 496,138 415,293
Interest on short-term investments 144,575 144,899
-------------- --------------
Total income 4,494,315 4,359,905
-------------- --------------
Expenses:
Depreciation 746,163 742,907
Amortization of deferred expenses 18,265 18,265
Property operating 1,323,492 1,157,183
Real estate taxes 406,811 441,489
Property management fees 176,359 178,006
Administrative 130,591 166,102
-------------- --------------
Total expenses 2,801,681 2,703,952
-------------- --------------
Net income $ 1,692,634 $ 1,655,953
============== ==============
Net income allocated to General Partner $ 250,391 $ 246,053
============== ==============
Net income allocated to Limited Partners $ 1,442,243 $ 1,409,900
============== ==============
Net income per Limited Partnership Interest
(683,204 issued and outstanding) $ 2.11 $ 2.06
============== ==============
Distribution to General Partner $ 173,708 $ 173,708
============== ==============
Distribution to Limited Partners $ 1,563,370 $ 1,563,370
============== ==============
Distribution per Limited Partnership
Interest:
Taxable $ 1.75 $ 1.75
============== ==============
Tax Exempt $ 2.33 $ 2.33
============== ==============
<PAGE>
SCHEDULE A-3
BALCOR EQUITY PENSION INVESTORS - III
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
-------------- --------------
Operating activities:
Net income $ 1,692,634 $ 1,655,953
Adjustments to reconcile net income to
net cash provided by operating
activities:
Participation in income of joint
ventures with affiliates (496,138) (415,293)
Depreciation of properties 746,163 742,907
Amortization of deferred expenses 18,265 18,265
Net change in:
Accounts and accrued interest
receivable 401,124 356,073
Prepaid expenses 227,691 169,583
Accounts payable (76,331) (164,801)
Due to affiliates 18,519 38,803
Accrued liabilities 106,067 112,404
Security deposits (4,758) 18,536
-------------- --------------
Net cash provided by operating activities 2,633,236 2,532,430
-------------- --------------
Investing activities:
Distributions from joint ventures with
affiliates 411,097
Improvements to property (17,304)
-------------- --------------
Net cash provided by or used in
investing activities 411,097 (17,304)
-------------- --------------
Financing activities:
Distribution to Limited Partners (1,563,370) (1,563,370)
Distribution to General Partner (173,708) (173,708)
-------------- --------------
Cash used in financing activities (1,737,078) (1,737,078)
-------------- --------------
Net change in cash and cash equivalents 1,307,255 778,048
Cash and cash equivalents at beginning
of period 11,280,395 9,862,343
-------------- --------------
Cash and cash equivalents at end of period $ 12,587,650 $ 10,640,391
============== ==============
<PAGE>
VALUATION OF THE EQUITY INVESTMENTS IN REAL ESTATE
AND REAL ESTATE OWNED INVESTMENTS
The value of the Equity Investments in Real Estate and the Real Estate Owned
Investments is equal to the sum of the present values of the Operating Cash
Flows and the Sales Proceeds. As of December 31, 1995, the Partnership had an
interest in or owned ten equities: a 39.48% interest in 1275 K Street Office
Building, Washington, DC, Bingham Farms Office Plaza - Phase IV, Bingham Farms,
MI, Arborland Consumer Mall, Ann Arbor, MI, Belmont Apartments, King County,
Renton, WA, Westlake Meadows Apartments, Lake Oswego (Portland), OR, Erindale
Centre Shopping Center, Colorado Springs, CO, a 43.3% interest in Westech 360
Office Building in Austin, TX, a 21.95% interest in Perimeter 400 Center,
Fulton Co., GA and Green Trails Apartments, Lisle, IL. Westech 360, Perimeter
400 Center, Ammendale Technology Park II and Green Trails Apartments were
formerly classified as Real Estate Owned.
The General Partner, Balcor Equity Partners - III, has prepared individual cash
flows for each property. The projected annual Operating Cash Flows from the
properties have been discounted at an annual rate of 10.00% to a net present
value quarterly, imputed by the straight-line method. The Agreement calls for
the General Partner to receive 10.0% of the Operating Cash Flows, and the
remaining 90% is allocated to the Tax-exempt and Taxable Limited Partnership
Interests on the basis of 10.1360% to the Taxable Limited Partnership Interests
and 89.8640% to the Tax-exempt Limited Partnership Interests.
Sales Proceeds on residential properties are calculated on the basis of the net
operating cash flow less taxes and insurance, capped at 9%, less stabilized
capital improvements and 2.5% sales commission. The sales proceeds for
commercial properties are calculated on the basis of net operating cash flow
(already net of taxes and insurance) capped at 9%, less stabilized capital
improvements, tenant improvements and leasing commissions and 2.5% sales
commission. The net proceeds from the sale have been discounted at an annual
rate of 10.50% to a net present value. A higher risk rate of 10.50% is used
for Sales Proceeds vs. a 10.00% rate for Operating Cash Flows to reflect the
higher risk rate of projecting a capitalization rate deferred for several
years.
As of the quarter ended December 31, 1992, all of the equities were valued on
the basis of their cash flows. Prior to that quarter, Real Estate Owned Assets
were valued on the basis of an independent appraisal since it was the intent to
sell those assets in the near-term. As described elsewhere in this report,
these assets, unless indicated otherwise, will be held to maturity. The
exception is the independent appraisal conducted on Perimeter 400 in October
1995 due to the rapid improvement in market conditions in the Atlanta area.
A summary of the Cash Flows from Operations is in the following Exhibit B-1.
Exhibit B-2 summarizes the calculations used to determine Excess Net Cash
Proceeds where they may exist. Exhibit B-3 (2 Schedules) is the Discounted
Cash Flow Analysis.
As of March 31, 1996, the total Asset Value of the ten Real Estate Investments
was $135,081,377, an increase of $617,954 over the prior quarter.
<PAGE>
SCHEDULE B-1
as of: 31-Mar-96 BEPI III Cash Flow From Operations
Quarter Factor (for formula reference) 1
Actual Budget Pro-ject Pro-ject
1994 1995 1996 1997
--------------------------------------------
Net Cash Receipts
Equity Investments
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,417,951 1,369,167 1,525,984 1,274,212
TI/LC/Capital 1,093,444 237,054 138,913 336,323
--------------------------------------------
Net Cash Receipts 324,507 1,132,113 1,387,071 937,889
Arborland
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 821,910 1,816,216 2,781,000 2,832,000
TI/LC/Capital (2,750) 11,100 107,000 74,000
--------------------------------------------
Net Cash Receipts 824,660 1,805,116 2,674,000 2,758,000
Share of Cash Receipts 824,660 1,682,558 2,117,000 2,159,000
Belmont
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 589,378 674,757 698,007 722,437
TI/LC/Capital 94,946 157,970 90,900 90,900
--------------------------------------------
Net Cash Receipts 494,432 516,787 607,107 631,537
Bingham IV
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,152,076 993,654 1,489,435 1,451,250
TI/LC/Capital 851,975 260,525 22,000 135,877
--------------------------------------------
Net Cash Receipts 300,101 733,129 1,467,435 1,315,373
Erindale
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 903,695 938,219 782,114 802,467
TI/LC/Capital 274,732 351,119 28,357 44,583
--------------------------------------------
Net Cash Receipts 628,963 587,100 753,757 757,884
Westlake Mdw.
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 737,052 785,690 813,056 841,513
TI/LC/Capital 88,928 160,145 72,900 72,900
--------------------------------------------
Net Cash Receipts 648,124 625,545 740,156 768,613
Total NCR-Equity Investments 3,220,787 5,277,232 7,072,526 6,570,296
============================================
<PAGE>
REO Investments
Ammendale - Phase II
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 536,019 442,870 581,756 543,299
TI/LC/Capital 229,748 272,792 25,646 91,513
--------------------------------------------
Net Cash Receipts 306,271 170,078 556,110 451,786
Greentrails
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,470,185 2,624,194 2,715,144 2,810,174
TI/LC/Capital 172,830 177,068 176,000 176,000
--------------------------------------------
Net Cash Receipts 2,297,355 2,447,126 2,539,144 2,634,174
Perimeter 400
Balcor Internal Projections
NOI B4 TI/LC/Capital 581,496 743,891 737,287 648,948
TI/LC/Capital 254,538 265,684 185,215 126,195
--------------------------------------------
Net Cash Receipts 326,958 478,207 552,073 522,753
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital 334,276 408,680 617,065 660,257
TI/LC/Capital 242,836 186,663 161,684 125,569
--------------------------------------------
Net Cash Receipts 91,440 222,017 455,381 534,688
Total NCR-REO Investments 3,022,024 3,317,428 4,102,708 4,143,401
============================================
Loan Investments
NONE
Total NCR-Loan Investments 0 0 0 0
============================================
TOTAL NCR FROM INVESTMENTS 6,242,811 8,594,660 11,175,234 10,713,697
LESS: GP 7.5% Share 468,211 644,599 838,143 803,527
Repurchase Fund @ 2.5% 156,070 214,866 279,381 267,842
--------------------------------------------
Net to Limited Partners @ 90% 5,618,530 7,735,194 10,057,711 9,642,327
-------> Shaded Cash Flow numbers used for capping purpose only
<PAGE>
Pro-ject Pro-ject Pro-ject Pro-ject
1998 1999 2000 2001
--------------------------------------------
Net Cash Receipts
Equity Investments
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,509,078 1,585,602 1,358,804 1,374,264
TI/LC/Capital 142,164 30,162 399,744 391,138
--------------------------------------------
Net Cash Receipts 1,366,914 1,555,441 959,060 983,126
Arborland
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,835,000 2,916,000 2,958,000 3,026,000
TI/LC/Capital 125,000 171,000 99,000 235,000
--------------------------------------------
Net Cash Receipts 2,710,000 2,745,000 2,859,000 2,791,000
Share of Cash Receipts 2,135,000 2,152,500 2,209,500 2,175,500
Belmont
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 747,723 773,893 800,979 829,013
TI/LC/Capital 90,900 90,900 107,965 111,744
--------------------------------------------
Net Cash Receipts 656,823 682,993 693,014 717,269
Bingham IV
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 646,197 1,378,067 1,383,364 1,487,586
TI/LC/Capital 991,374 94,889 145,551 0
--------------------------------------------
Net Cash Receipts (345,177) 1,283,178 1,237,813 1,487,586
Erindale
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 823,619 854,911 892,326 940,413
TI/LC/Capital 25,637 46,999 64,369 41,551
--------------------------------------------
Net Cash Receipts 797,982 807,912 827,957 898,862
Westlake Mdw.
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 870,966 901,450 933,000 965,655
TI/LC/Capital 72,900 72,900 93,511 96,784
--------------------------------------------
Net Cash Receipts 798,066 828,550 839,489 868,871
Total NCR-Equity Investments 5,409,608 7,310,574 6,766,833 7,131,214
============================================
<PAGE>
REO Investments
Ammendale - Phase II
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 592,651 530,355 571,737 632,460
TI/LC/Capital 0 108,422 87,288 29,726
--------------------------------------------
Net Cash Receipts 592,651 421,933 484,449 602,734
Greentrails
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,908,530 3,010,329 3,115,690 3,224,739
TI/LC/Capital 176,000 308,000 209,705 217,045
--------------------------------------------
Net Cash Receipts 2,732,530 2,702,329 2,905,985 3,007,694
Perimeter 400
Balcor Internal Projections
NOI B4 TI/LC/Capital 751,248
TI/LC/Capital 115,723
--------------------------------------------
Net Cash Receipts
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital 719,698 789,606
TI/LC/Capital 170,737 212,449
--------------------------------------------
Net Cash Receipts 548,962
Total NCR-REO Investments 3,874,143 3,124,262 3,390,434 3,610,428
============================================
Loan Investments
NONE
Total NCR-Loan Investments 0 0 0 0
============================================
TOTAL NCR FROM INVESTMENTS 9,283,751 10,434,836 10,157,267 10,741,642
LESS: GP 7.5% Share 696,281 782,613 761,795 805,623
Repurchase Fund @ 2.5% 232,094 260,871 253,932 268,541
--------------------------------------------
Net to Limited Partners @ 90% 8,355,376 9,391,352 9,141,541 9,667,478
<PAGE>
Pro-ject Pro-ject Pro-ject Pro-ject
2002 2003 2004 2005
--------------------------------------------
Net Cash Receipts
Equity Investments
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,664,330 1,784,604 1,457,279
TI/LC/Capital 176,152 66,287 509,036
--------------------------------------------
Net Cash Receipts 1,488,178
Arborland
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,174,000 3,289,000 3,304,000 3,624,000
TI/LC/Capital 131,000 290,000 862,000 392,000
--------------------------------------------
Net Cash Receipts 3,043,000
Share of Cash Receipts 2,301,500
Belmont
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 858,029 888,060
TI/LC/Capital 115,655 119,703
--------------------------------------------
Net Cash Receipts 742,374
Bingham IV
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 1,484,649 670,067 1,864,305 1,882,542
TI/LC/Capital 12,332 1,122,952 107,572 165,074
--------------------------------------------
Net Cash Receipts 1,472,317 (452,885)
Erindale
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 974,973 1,003,197
TI/LC/Capital 51,683 29,720
--------------------------------------------
Net Cash Receipts 923,290
Westlake Mdw.
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 999,453 1,034,434
TI/LC/Capital 100,172 103,678
--------------------------------------------
Net Cash Receipts 899,281
Total NCR-Equity Investments 7,826,940 (452,885) 0 0
============================================
<PAGE>
REO Investments
Ammendale - Phase II
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 601,763 692,324
TI/LC/Capital 63,621 64,404
--------------------------------------------
Net Cash Receipts 538,142
Greentrails
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,337,605 3,454,421
TI/LC/Capital 224,641 232,504
--------------------------------------------
Net Cash Receipts 3,112,964
Perimeter 400
Balcor Internal Projections
NOI B4 TI/LC/Capital
TI/LC/Capital
--------------------------------------------
Net Cash Receipts
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital
TI/LC/Capital
--------------------------------------------
Net Cash Receipts
Total NCR-REO Investments 3,651,106 0 0 0
============================================
Loan Investments
NONE
Total NCR-Loan Investments 0 0 0 0
============================================
TOTAL NCR FROM INVESTMENTS 11,478,046 (452,885) 0 0
LESS: GP 7.5% Share 860,853 (33,966) 0 0
Repurchase Fund @ 2.5% 286,951 (11,322) 0 0
--------------------------------------------
Net to Limited Partners @ 90% 10,330,241 (407,597) 0 0
<PAGE>
Pro-ject Pro-ject Pro-ject
2006 2007 2008
---------------------------------
Net Cash Receipts
Equity Investments
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Arborland
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,835,000 3,960,000
TI/LC/Capital 157,000 113,000
---------------------------------
Net Cash Receipts
Share of Cash Receipts
Belmont
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Bingham IV
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 2,002,438
TI/LC/Capital 0
---------------------------------
Net Cash Receipts
Erindale
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Westlake Mdw.
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Total NCR-Equity Investments 0 0 0
=================================
<PAGE>
REO Investments
Ammendale - Phase II
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Greentrails
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Perimeter 400
Balcor Internal Projections
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital
TI/LC/Capital
---------------------------------
Net Cash Receipts
Total NCR-REO Investments 0 0 0
=================================
Loan Investments
NONE
Total NCR-Loan Investments 0 0 0
=================================
TOTAL NCR FROM INVESTMENTS 0 0 0
LESS: GP 7.5% Share 0 0 0
Repurchase Fund @ 2.5% 0 0 0
---------------------------------
Net to Limited Partners @ 90% 0 0 0
<PAGE>
Asset PV as of
31-Mar-96
-----------
Net Cash Receipts
Equity Investments
1275 K Street
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 5,857,460 NCR PV
TI/LC/Capital 9,811,103 Residual PV
-----------
Net Cash Receipts 15,668,563 Asset Value
Arborland
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 10,317,409 NCR PV
TI/LC/Capital 14,458,079 Residual PV
-----------
Net Cash Receipts
Share of Cash Receipts24,775,488 Asset Value
Belmont
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,184,356 NCR PV
TI/LC/Capital 4,838,073 Residual PV
-----------
Net Cash Receipts 8,022,429 Asset Value
Bingham IV
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 4,970,205 NCR PV
TI/LC/Capital 9,257,697 Residual PV
-----------
Net Cash Receipts 14,227,902 Asset Value
Erindale
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,874,968 NCR PV
TI/LC/Capital 5,519,053 Residual PV
-----------
Net Cash Receipts 9,394,021 Asset Value
Westlake Mdw.
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 3,866,437 NCR PV
TI/LC/Capital 5,653,713 Residual PV
-----------
Net Cash Receipts 9,520,150 Asset Value
Total NCR-Equity Investments
<PAGE>
REO Investments
Ammendale - Phase II
Appraisal CF's at 1/94
NOI B4 TI/LC/Capital 2,459,068 NCR PV
TI/LC/Capital 3,786,445 Residual PV
-----------
Net Cash Receipts 6,245,513 Asset Value
Greentrails
Appraisal CF's at 3/93
NOI B4 TI/LC/Capital 13,206,703 NCR PV
TI/LC/Capital 18,938,094 Residual PV
-----------
Net Cash Receipts 32,144,797 Asset Value
Perimeter 400
Balcor Internal Projections
NOI B4 TI/LC/Capital 827,241 NCR PV
TI/LC/Capital 6,730,428 Residual PV
-----------
Net Cash Receipts 7,557,669 Asset Value
Westech 360
Appraisal CF's at 11/94
NOI B4 TI/LC/Capital 1,191,910 NCR PV
TI/LC/Capital 6,332,934 Residual PV
-----------
Net Cash Receipts 7,524,845 Asset Value
<PAGE>
SCHEDULE B-2
CAP RATE @ 9.00%
Sale Commission : 2.5%
Sale Activity 1994 1995 1996 1997
----------------------------------------------
1275 K Street
Sales Price
19,875,747 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Arborland Sales Price
21,080,887 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Belmont Sales Price
8,726,132 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Bingham IV Sales Price
18,975,278 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Erindale Sales Price
17,667,155 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Westlake Mdw.
Sales Price
8,491,243 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Total Capital Invested
Capital Invested 0 0 0 0
94,816,442 Sale Proceeds 0 0 0 0
Return of Cap 0 0 0 0
Excess NCP 0 0 0 0
Deficiency NCP 0 0 0 0
Sale Activity - REO
Ammendale - Phase II
Sales Price
8,121,488 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
<PAGE>
Greentrails Sales Price
26,803,919 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
Perimeter 400
Sales Price 8,022,797
8,163,210 Cap Invest 8,163,210
----------------------------------------------
Excess NCR 0 0 0 (140,413)
Westech 360 Sales Price
10,745,199 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
Total Capital Invested
Capital Invested 0 0 0 8,163,210
Sale Proceeds 0 0 0 8,022,797
53,833,816 Return of Cap 0 0 0 8,022,797
Excess NCR 0 0 0 0
Deficiency NCP 0 0 0 (140,413)
Loan Repayments
None Balloon
Amortized Principal
Capital Returned From
Loan Investments 0 0 0 0
Total Return of Capital 0 0 0 8,022,797
Total Excess NCP 0 0 0 0
Total Excess NCR 0 0 0 0
* - Formula nets out $6,948,240 of Sale Proceeds allocated to J.V Partner.
Sale Activity 1998 1999 2000 2001
----------------------------------------------
1275 K Street
Sales Price
19,875,747 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Arborland Sales Price
21,080,887 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
<PAGE>
Belmont Sales Price
8,726,132 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Bingham IV Sales Price
18,975,278 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Erindale Sales Price
17,667,155 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Westlake Mdw.
Sales Price
8,491,243 Orig Cap Invest
----------------------------------------------
Excess NCP 0 0 0 0
Total Capital Invested
Capital Invested 0 0 0 0
94,816,442 Sale Proceeds 0 0 0 0
Return of Cap 0 0 0 0
Excess NCP 0 0 0 0
Deficiency NCP 0 0 0 0
Sale Activity - REO
Ammendale - Phase II
Sales Price
8,121,488 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
Greentrails Sales Price
26,803,919 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
Perimeter 400
Sales Price
8,163,210 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
Westech 360 Sales Price 8,341,619
10,745,199 Cap Invest 10,745,199
----------------------------------------------
Excess NCR (2,403,580) 0 0 0
<PAGE>
Total Capital Invested
Capital Invested 10,745,199 0 0 0
Sale Proceeds 8,341,619 0 0 0
53,833,816 Return of Cap 8,341,619 0 0 0
Excess NCR 0 0 0 0
Deficiency NCP (2,403,580) 0 0 0
Loan Repayments
None Balloon
Amortized Principal
Capital Returned From
Loan Investments 0 0 0 0
Total Return of Capital 8,341,619 0 0 0
Total Excess NCP 0 0 0 0
Total Excess NCR 0 0 0 0
Sale Activity 2002 2003 2004 2005
----------------------------------------------
1275 K Street
Sales Price 19,266,921
19,875,747 Orig Cap Invest 19,875,747
----------------------------------------------
Excess NCP (608,826) 0 0 0
Arborland Sales Price 28,392,593
21,080,887 Orig Cap Invest 21,080,887
----------------------------------------------
Excess NCP 7,311,706 0 0 0
Belmont Sales Price 9,500,947
8,726,132 Orig Cap Invest 8,726,132
----------------------------------------------
Excess NCP 774,815 0 0 0
Bingham IV Sales Price 20,089,066
18,975,278 Orig Cap Invest 18,975,278
----------------------------------------------
Excess NCP 0 1,113,788 0 0
Erindale Sales Price 10,838,248
17,667,155 Orig Cap Invest 17,667,155
----------------------------------------------
Excess NCP (6,828,908) 0 0 0
<PAGE>
Westlake Mdw.
Sales Price 11,102,690
8,491,243 Orig Cap Invest 8,491,243
----------------------------------------------
Excess NCP 2,611,447 0 0 0
Total Capital Invested
Capital Invested 75,841,164 18,975,278 0 0
94,816,442 Sale Proceeds 79,101,399 20,089,066 0 0
Return of Cap 75,841,164 18,975,278 0 0
Excess NCP 3,260,235 1,113,788 0 0
Deficiency NCP 0 0 0 0
Sale Activity - REO
Ammendale - Phase II
Sales Price 7,435,773
8,121,488 Cap Invest 8,121,488
----------------------------------------------
Excess NCR (685,715) 0 0 0
Greentrails Sales Price 37,190,390
26,803,919 Cap Invest 26,803,919
----------------------------------------------
Excess NCR 10,386,471 0 0 0
Perimeter 400
Sales Price
8,163,210 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
Westech 360 Sales Price
10,745,199 Cap Invest
----------------------------------------------
Excess NCR 0 0 0 0
Total Capital Invested
Capital Invested 34,925,407 0 0 0
Sale Proceeds 44,626,163 0 0 0
53,833,816 Return of Cap 34,239,692 0 0 0
Excess NCR 10,386,471 0 0 0
Deficiency NCP (685,715) 0 0 0
Loan Repayments
None Balloon
Amortized Principal
Capital Returned From
Loan Investments 0 0 0 0
Total Return of Capital 110,766,571 18,975,278 0 0
Total Excess NCP 2,574,520 1,113,788 0 0
Total Excess NCR 10,386,471 0 0 0
<PAGE>
Sale Activity 2006 2007
------------------------
1275 K Street
Sales Price
19,875,747 Orig Cap Invest
------------------------
Excess NCP 0 0
Arborland Sales Price
21,080,887 Orig Cap Invest
------------------------
Excess NCP 0 0
Belmont Sales Price
8,726,132 Orig Cap Invest
------------------------
Excess NCP 0 0
Bingham IV Sales Price
18,975,278 Orig Cap Invest
------------------------
Excess NCP 0 0
Erindale Sales Price
17,667,155 Orig Cap Invest
------------------------
Excess NCP 0 0
Westlake Mdw.
Sales Price
8,491,243 Orig Cap Invest
------------------------
Excess NCP 0 0
Total Capital Invested
Capital Invested 0 0
94,816,442 Sale Proceeds 0 0
Return of Cap 0 0
Excess NCP 0 0
Deficiency NCP 0 0
Sale Activity - REO
Ammendale - Phase II
Sales Price
8,121,488 Cap Invest
------------------------
Excess NCR 0 0
Greentrails Sales Price
26,803,919 Cap Invest
------------------------
Excess NCR 0 0
<PAGE>
Perimeter 400
Sales Price
8,163,210 Cap Invest
------------------------
Excess NCR 0 0
Westech 360 Sales Price
10,745,199 Cap Invest
------------------------
Excess NCR 0 0
Total Capital Invested
Capital Invested 0 0
Sale Proceeds 0 0
53,833,816 Return of Cap 0 0
Excess NCR 0 0
Deficiency NCP 0 0
Loan Repayments
None Balloon
Amortized Principal
Capital Returned From
Loan Investments 0 0
Total Return of Capital 0 0
Total Excess NCP 0 0
Total Excess NCR 0 0
<PAGE>
SCHEDULE B-3
NCR ALLOCATION PERCENTAGES NCP ALLOCATION PERCENTAGES
Tax-Exempt 94.4949% Tax-Exempt 92.8089%
Taxable 5.5051% Taxable 7.1911%
--------- ------------
100.00% 100.00%
BEPI III Discounted Cash Flow Analysis
1996 1997 1998
------------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital (NCR) 7,072,526 6,570,296 5,409,608
Tax-Exempt Share of 90% Cash Flow(NCR) 6,014,859 5,587,735 4,600,624
Discounted @ 10.00% 27,274,773 24,809,237 21,702,425
per unit 43.02 39.13 34.23
Taxable Share of 90% Cash Flow (NCR) 350,415 325,531 268,024
Discounted @ 10.00% 1,588,978 1,445,341 1,264,344
per unit 32.34 29.42 25.73
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital (NCR) 4,102,708 4,143,401 3,874,143
Tax-Exempt Share of 90% Cash Flow(NCR) 3,489,165 3,523,772 3,294,781
Discounted @ 10.00% 15,040,215 13,551,358 11,382,721
per unit 23.72 21.37 17.95
Taxable Share of 90% Cash Flow (NCR) 203,272 205,289 191,948
Discounted @ 10.00% 876,215 789,477 663,137
per unit 17.83 16.07 13.50
LOAN NCR ALLOCATION
LOAN Cash Flow after
TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 66.74 60.50 52.18
Taxable Share 50.18 45.49 39.23
<PAGE>
DISCOUNTED NCP ALLOCATION
Discounted @ 10.50%
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL TO RETURN 0 8,022,797 8,341,619
Tax-Exempt Share of NCP 75,869,809 81,844,556 82,415,438
per unit 119.65 129.08 129.98
NET CAPITAL TO RETURN 0 0 0
Taxable Share of Cash Flow (NCP) 4,166,810 4,494,947 4,966,916
per unit 84.81 91.49 101.10
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 119.65 129.08 129.98
Taxable Share 84.81 91.49 101.10
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0 0 0
Discounted @ 10.50% 5,289,000 5,705,508 6,304,587
Tax-Exempt Share of 90% NCR 4,498,051 4,852,273 5,361,762
per unit 7.09 7.65 8.46
Taxable Share of 90% NCR 262,048 282,685 312,366
per unit 5.33 5.75 6.36
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 193.48 197.23 190.61
Taxable Share 140.32 142.73 146.69
<PAGE>
1999 2000 2001
------------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital (NCR) 7,310,574 6,766,833 7,131,214
Tax-Exempt Share of 90% Cash Flow(NCR) 6,217,308 5,754,881 6,064,770
Discounted @ 10.00% 19,272,044 14,981,941 10,725,254
per unit 30.39 23.63 16.91
Taxable Share of 90% Cash Flow (NCR) 362,209 335,269 353,322
Discounted @ 10.00% 1,122,754 872,820 624,834
per unit 22.85 17.77 12.72
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital (NCR) 3,124,262 3,390,434 3,610,428
Tax-Exempt Share of 90% Cash Flow(NCR) 2,657,041 2,883,408 3,070,503
Discounted @ 10.00% 9,226,213 7,491,793 5,357,563
per unit 14.55 11.82 8.45
Taxable Share of 90% Cash Flow (NCR) 154,794 167,982 178,882
Discounted @ 10.00% 537,502 436,458 312,122
per unit 10.94 8.88 6.35
LOAN NCR ALLOCATION
LOAN Cash Flow after
TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 44.94 35.44 25.36
Taxable Share 33.79 26.65 19.07
DISCOUNTED NCP ALLOCATION
Discounted @ 10.50%
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
<PAGE>
NET CAPITAL TO RETURN 0 0 0
Tax-Exempt Share of NCP 82,727,441 91,413,822 101,012,273
per unit 130.47 144.17 159.31
NET CAPITAL TO RETURN 0 0 0
Taxable Share of Cash Flow (NCP) 5,488,442 6,064,729 6,701,525
per unit 111.71 123.44 136.40
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 130.47 144.17 159.31
Taxable Share 111.71 123.44 136.40
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0 0 0
Discounted @ 10.50% 6,966,568 7,698,058 8,506,354
Tax-Exempt Share of 90% NCR 5,924,747 6,546,845 7,234,264
per unit 9.34 10.33 11.41
Taxable Share of 90% NCR 345,165 381,407 421,455
per unit 7.03 7.76 8.58
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 184.76 189.94 196.08
Taxable Share 152.53 157.85 164.05
2002 2003 2004
------------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital (NCR) 7,826,940 (452,885) 0
Tax-Exempt Share of 90% Cash Flow(NCR) 6,656,453 (385,158) 0
Discounted @ 10.00% 5,733,009 (350,144) 0
per unit 9.04 (0.55) 0.00
Taxable Share of 90% Cash Flow (NCR) 387,793 (22,439) 0
Discounted @ 10.00% 333,995 (20,399) 0
per unit 6.80 (0.42) 0.00
<PAGE>
REO NCR ALLOCATION
LOAN/REO Cash Flow after TI/LC/Capital 3,651,106 0 0
Tax-Exempt Share of 90% Cash Flow(NCR) 3,105,098 0 0
Discounted @ 10.00% 2,822,816 0 0
per unit 4.45 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 180,897 0 0
Discounted @ 10.00% 164,452 0 0
per unit 3.35 0.00 0.00
LOAN NCR ALLOCATION
LOAN Cash Flow after
TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 13.49 (0.55) 0.00
Taxable Share 10.15 (0.42) 0.00
DISCOUNTED NCP ALLOCATION
Discounted @ 10.50%
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL TO RETURN 113,341,091 11,047,149 0
Tax-Exempt Share of NCP 111,618,562 9,997,420 0
per unit 176.03 15.77 0.00
NET CAPITAL TO RETURN 0 9,041,916 0
Taxable Share of Cash Flow (NCP) 7,405,185 8,182,730 0
per unit 150.73 166.55 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 176.03 15.77 0.00
Taxable Share 150.73 166.55 0.00
<PAGE>
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 10,386,471 0 0
Discounted @ 10.50% 9,399,521 0 0
Tax-Exempt Share of 90% NCR 7,993,862 0 0
per unit 12.61 0.00 0.00
Taxable Share of 90% NCR 465,708 0 0
per unit 9.48 0.00 0.00
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 202.13 15.21 0.00
Taxable Share 170.35 166.14 0.00
2005 2006 2007
------------------------------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital (NCR) 0 0 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
LOAN NCR ALLOCATION
LOAN Cash Flow after
TI/LC/Capital (NCR) 0 0 0
<PAGE>
Tax-Exempt Share of 90% Cash Flow(NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of 90% Cash Flow (NCR) 0 0 0
Discounted @ 10.00% 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00
DISCOUNTED NCP ALLOCATION
Discounted @ 10.50%
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL RETURNED ON LOAN PAYOFFS 0 0 0
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL TO RETURN 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
NET CAPITAL TO RETURN 0 0 0
Taxable Share of Cash Flow (NCP) 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00
EXCESS NET CASH PROCEEDS (EQUITY) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of NCP 0 0 0
per unit 0.00 0.00 0.00
Taxable Share of NCP 0 0 0
per unit 0.00 0.00 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0 0 0
Discounted @ 10.50% 0 0 0
Tax-Exempt Share of 90% NCR 0 0 0
per unit 0.00 0.00 0.00
<PAGE>
Taxable Share of 90% NCR 0 0 0
per unit 0.00 0.00 0.00
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00
2008
------------
EQUITY NCR ALLOCATION
Equity Cash Flow after
TI/LC/Capital (NCR) 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0
Discounted @ 10.00% 0
per unit 0.00
Taxable Share of 90% Cash Flow (NCR) 0
Discounted @ 10.00% 0
per unit 0.00
REO NCR ALLOCATION
LOAN/REO Cash Flow after
TI/LC/Capital (NCR) 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0
Discounted @ 10.00% 0
per unit 0.00
Taxable Share of 90% Cash Flow (NCR) 0
Discounted @ 10.00% 0
per unit 0.00
LOAN NCR ALLOCATION
LOAN Cash Flow after
TI/LC/Capital (NCR) 0
Tax-Exempt Share of 90% Cash Flow(NCR) 0
Discounted @ 10.00% 0
per unit 0.00
Taxable Share of 90% Cash Flow (NCR) 0
Discounted @ 10.00% 0
per unit 0.00
TOTAL NCR ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
DISCOUNTED NCP ALLOCATION
Discounted @ 10.50%
<PAGE>
NET CAPITAL RETURNED ON LOAN PAYOFFS 0
Tax-Exempt Share of NCP 0
per unit 0.00
NET CAPITAL RETURNED ON LOAN PAYOFFS 0
Taxable Share of NCP 0
per unit 0.00
NET CAPITAL TO RETURN 0
Tax-Exempt Share of NCP 0
per unit 0.00
NET CAPITAL TO RETURN 0
Taxable Share of Cash Flow (NCP) 0
per unit 0.00
TOTAL NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
EXCESS NET CASH PROCEEDS (EQUITY) 0
Discounted @ 10.50% 0
Tax-Exempt Share of NCP 0
per unit 0.00
Taxable Share of NCP 0
per unit 0.00
EXCESS NET CASH RECEIPTS (LOANS/REOS) 0
Discounted @ 10.50% 0
Tax-Exempt Share of 90% NCR 0
per unit 0.00
Taxable Share of 90% NCR 0
per unit 0.00
TOTAL NCR & NCP ALLOCATION (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
<PAGE>
SCHEDULE B-3 (continued)
BEPI III Discounted Cash Flow Analysis (con't.)
1996 1997 1998 1999
--------------------------------------------
CASH BALANCES
Working Capital
Contingency Reserves
SUBTOTAL WC & CR
Undistributed NCR
Fund Expenses
SUBTOTAL UNDISTRIBUTED NCR
TOTAL CASH
Short-Term
Interest @ 4.00% 535,038 535,038 535,038 535,038
Fund Expenses
DISCOUNTED CASH BALANCES
Discount 4.00%
NCP (Working Capital
& Reserves) 0 0 0 0
0 0 0 0
Tax-Exempt Share of NCP 1,520,185 1,565,791 1,628,422 1,693,559
per unit 2.40 2.47 2.57 2.67
0 0 0 0
Taxable Share of NCP 1,244,247 1,281,575 1,332,838 1,386,151
per unit 25.33 26.09 27.13 28.21
NCR (Undistributed NCR) 7,104,136 7,317,260 7,609,950 7,914,348
LESS: Fund Expenses 0 0 0 0
NCR (Short-Term Interest) 3,507,385 3,211,328 2,804,743 2,381,895
TOTAL NCR 10,611,521 10,528,588 10,414,694 10,296,243
Less: GP 10% Share 1,061,152 1,052,859 1,041,469 1,029,624
Net to Limited Partners 9,550,369 9,475,729 9,373,224 9,266,619
Tax-Exempt Share of NCR 9,024,612 8,954,081 8,857,219 8,756,482
per unit 14.23 14.12 13.97 13.81
Taxable Share of NCR 525,757 521,648 516,005 510,137
per unit 10.70 10.62 10.50 10.38
LOAN FEES 128,173 70,597 0
(straight-line amortization)
OFFERING EXPENSES 1,747,625 1,083,665 541,833 135,458
(straight-line amortization)
TOTAL 1,875,798 1,154,262 541,833 135,458
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 2.75 1.69 0.79 0.20
Taxable Share 2.75 1.69 0.79 0.20
<PAGE>
REPURCHASE FUND 0 0 0 0
Discounted 10.00% 5,268,510 5,663,649 6,230,013 6,853,015
Tax-Exempt Share 0 0 0 0
Discounted 4,740,195.99 5,095,711 5,605,282 6,165,810
Taxable Share 0 0 0 0
Discounted 528,314 567,938 624,732 687,205
Tax-Exempt per unit 7.48 8.04 8.84 9.72
Taxable per unit 10.75 11.56 12.72 13.99
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 220.34 223.55 216.78 211.16
Taxable Share @ 189.85 192.69 197.83 205.31
2000 2001 2002 2003
--------------------------------------------
CASH BALANCES
Working Capital
Contingency Reserves
SUBTOTAL WC & CR
Undistributed NCR
Fund Expenses
SUBTOTAL UNDISTRIBUTED NCR
TOTAL CASH
Short-Term
Interest @ 4.00% 535,038 535,038 535,038 535,038
Fund Expenses
DISCOUNTED CASH BALANCES
Discount 4.00%
NCP (Working Capital
& Reserves) 0 0 0 3,746,939
0 0 0 2,060,474
Tax-Exempt Share of NCP 1,761,302 1,831,754 1,905,024 1,981,225
per unit 2.78 2.89 3.00 3.12
0 0 0 1,686,465
Taxable Share of NCP 1,441,597 1,499,261 1,559,232 1,621,601
per unit 29.34 30.52 31.74 33.01
NCR (Undistributed NCR) 8,230,922 8,560,159 8,902,566 9,258,668
LESS: Fund Expenses 0 0 0 0
NCR (Short-Term Interest) 1,942,132 1,484,780 1,009,133 514,460
TOTAL NCR 10,173,055 10,044,939 9,911,698 9,773,128
Less: GP 10% Share 1,017,305 1,004,494 991,170 977,313
Net to Limited Partners 9,155,749 9,040,445 8,920,528 8,795,815
Tax-Exempt Share of NCR 8,651,716 8,542,759 8,429,444 8,311,597
per unit 13.64 13.47 13.29 13.11
<PAGE>
Taxable Share of NCR 504,033 497,686 491,084 484,218
per unit 10.26 10.13 10.00 9.86
LOAN FEES
(straight-line amortization)
OFFERING EXPENSES 0
(straight-line amortization)
TOTAL 0 0 0 0
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00 0.00
REPURCHASE FUND 0 0 0 11,036,849
Discounted 10.00% 7,538,316 8,292,148 9,121,363 10,033,499
Tax-Exempt Share 0 0 0 9,930,099
Discounted 6,782,391 7,460,630 8,206,693 9,027,362
Taxable Share 0 0 0 1,106,750
Discounted 755,925 831,518 914,670 1,006,137
Tax-Exempt per unit 10.70 11.77 12.94 14.24
Taxable per unit 15.39 16.92 18.62 20.48
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 217.06 224.21 231.38 45.68
Taxable Share @ 212.84 221.62 230.70 229.48
2004 2005 2006 2007
--------------------------------------------
CASH BALANCES
Working Capital 2,750,870
Contingency Reserves 996,069
SUBTOTAL WC & CR 3,746,939
Undistributed NCR 9,629,015
Fund Expenses 0
SUBTOTAL UNDISTRIBUTED NCR 9,629,015
TOTAL CASH 13,375,954
Short-Term
Interest @ 4.00% 0 0 0 0
Fund Expenses
DISCOUNTED CASH BALANCES
Discount 4.00%
NCP (Working Capital
& Reserves) 0 0 0 0
<PAGE>
0 0 0 0
Tax-Exempt Share of NCP 0 0 0 0
per unit 0.00 0.00 0.00 0.00
0 0 0 0
Taxable Share of NCP 0 0 0 0
per unit 0.00 0.00 0.00 0.00
NCR (Undistributed NCR) 0 0 0 0
LESS: Fund Expenses 0 0 0 0
NCR (Short-Term Interest) 0 0 0 0
TOTAL NCR 0 0 0 0
Less: GP 10% Share 0 0 0 0
Net to Limited Partners 0 0 0 0
Tax-Exempt Share of NCR 0 0 0 0
per unit 0.00 0.00 0.00 0.00
Taxable Share of NCR 0 0 0 0
per unit 0.00 0.00 0.00 0.00
LOAN FEES
(straight-line amortization)
OFFERING EXPENSES
(straight-line amortization)
TOTAL 0 0 0 0
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 0.00 0.00 0.00 0.00
Taxable Share 0.00 0.00 0.00 0.00
REPURCHASE FUND 0 0 0 0
Discounted 10.00% 0 0 0 0
Tax-Exempt Share 0 0 0 0
Discounted 0 0 0 0
Taxable Share 0 0 0 0
Discounted 0 0 0 0
Tax-Exempt per unit 0.00 0.00 0.00 0.00
Taxable per unit 0.00 0.00 0.00 0.00
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 0.00 0.00 0.00 0.00
Taxable Share @ 0.00 0.00 0.00 0.00
<PAGE>
2008
-----------
CASH BALANCES
Working Capital
Contingency Reserves
SUBTOTAL WC & CR
Undistributed NCR
Fund Expenses
SUBTOTAL UNDISTRIBUTED NCR
TOTAL CASH
Short-Term
Interest @ 4.00% 0
Fund Expenses
DISCOUNTED CASH BALANCES
Discount 4.00%
NCP (Working Capital
& Reserves) 0
0
Tax-Exempt Share of NCP 0
per unit 0.00
0
Taxable Share of NCP 0
per unit 0.00
NCR (Undistributed NCR) 0
LESS: Fund Expenses 0
NCR (Short-Term Interest) 0
TOTAL NCR 0
Less: GP 10% Share 0
Net to Limited Partners 0
Tax-Exempt Share of NCR 0
per unit 0.00
Taxable Share of NCR 0
per unit 0.00
LOAN FEES
(straight-line amortization)
OFFERING EXPENSES
(straight-line amortization)
TOTAL 0
FEES & OFF EXP (PER UNIT)
Tax-Exempt Share 0.00
Taxable Share 0.00
REPURCHASE FUND 0
Discounte 10.00% 0
<PAGE>
Tax-Exempt Share 0
Discounted 0
Taxable Share 0
Discounted 0
Tax-Exempt per unit 0.00
Taxable per unit 0.00
TOTAL ALLOCATION (PER UNIT)
Tax-Exempt Share @ 0.00
Taxable Share @ 0.00
<PAGE>
VALUATION OF THE OFFERING EXPENSES AND LOAN FEES
The valuation methodology of the Partnership Interests includes the
capitalization of the Offering Expenses and their amortization over the life of
the equity assets and debt assets. As of March 31, 1996, the total unamortized
portion of the Offering Expenses was $1,747,625. The total amount of the
Offering Expenses is allocated proportionally to the Equity Assets and the Debt
Assets and amortized on the basis of depreciating the Equity on a straight-line
basis over 10 years and the Debt on a straight-line basis to maturity. For
financial reporting purposes, Balcor Equity Partners - III initially deducted
the total offering expenses and loan fees as incurred from the proceeds of the
Limited Partnership Interest.
The loan fees paid to the General Partner are capitalized and amortized over
the life of the loans. They are allocated between Tax-Exempt and Taxable
Interests.
A summary of the Offering Expense and Loan Fees Balances are as follows.
General
Tax-exempt Taxable Partner Total
Offering Expenses$1,621,952 $125,673 $ 0 $1,747,625
Loan Fees 118,956 9,217 0 128,173
<PAGE>
CONCLUSION OF VALUE
Based on the various analyses of the components of the Partnership's Interests
presented in this report, our conclusions of value are summarized in the
following Schedule C.
SCHEDULE C
BEPI III
VALUATION SUMMARY
as of : 31-Mar-96
GENERAL
TAX-EXEMPT TAXABLE PARTNER TOTAL
CASH: ------------------------------------------------
Working Capital &
Contingency Reserves 1,520,185 1,244,247 0 2,764,433
Current Undistributed NCR 9,024,612 525,757 1,061,152 10,611,521
10,544,797 1,770,005 1,061,152 13,375,954
EQUITY INVESTMENTS
Net Cash Receipts 27,274,773 1,588,978 3,207,083 32,070,835
LOAN/REO INVESTMENTS
Net Cash Receipts 15,040,215 876,215 1,768,492 17,684,923
EXCESS NET CASH PROCEEDS
(EQUITY) 0 0 0 0
EXCESS NET CASH RECEIPTS
(LOANS/REOS) 4,498,051 262,048 528,900 5,289,000
RETURN OF CAPITAL
(PROCEEDS) 75,869,809 4,166,810 0 80,036,619
REPURCHASE FUND 4,740,196 528,314 0 5,268,510
LOAN FEES 118,956 9,217 0 128,173
OFFERING EXPENSES 1,621,952 125,673 0 1,747,625
------------------------------------------------
TOTAL VALUE OF ASSETS 139,708,749 9,327,262 6,565,628 155,601,639
================================================
NUMBER OF UNITS 634,074 49,130
VALUE PER UNIT 220.34 189.85
ADJUSTED CAPITAL PER UNIT 250.00 250.00
4th Qtr 1995 (actual) 218.43 189.77
Change in Value 0.87% 0.04%
