SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-15649
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BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3327914
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Rd.
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
---------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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<PAGE>
BALCOR REALTY INVESTORS - 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(UNAUDITED)
ASSETS
1996 1995
-------------- --------------
Cash and cash equivalents $ 1,267,460 $ 1,093,098
Escrow deposits 2,542,354 2,246,696
Accounts and accrued interest receivable 11,648 5,857
Prepaid expenses 264,654 229,129
Deferred expenses, net of accumulated
amortization of $89,634 in 1996 and
$378,475 in 1995 581,869 619,028
-------------- --------------
4,667,985 4,193,808
-------------- --------------
Investment in real estate:
Land 7,849,735 11,137,023
Buildings and improvements 49,471,098 83,187,367
-------------- --------------
57,320,833 94,324,390
Less accumulated depreciation 19,938,661 34,286,807
-------------- --------------
Investment in real estate, net of
accumulated depreciation 37,382,172 60,037,583
-------------- --------------
$ 42,050,157 $ 64,231,391
============== ==============
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 67,509 $ 119,006
Due to affiliates 49,804 28,823
Accrued liabilities, principally
real estate taxes and interest 143,500 330,070
Security deposits 348,431 420,724
Mortgage notes payable 47,052,605 74,196,579
-------------- --------------
Total liabilities 47,661,849 75,095,202
Affiliates' participation in
joint ventures (1,406,215) (1,283,650)
<PAGE>
Limited Partners' deficit
(59,791 Interests issued and
outstanding) (3,687,792) (8,962,989)
General Partner's deficit (517,685) (617,172)
-------------- --------------
Total partners' deficit (4,205,477) (9,580,161)
-------------- --------------
$ 42,050,157 $ 64,231,391
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
-------------- --------------
Income:
Rental and service $ 6,419,565 $ 8,115,111
Interest on short-term
investments 49,286 36,306
-------------- --------------
Total income 6,468,851 8,151,417
-------------- --------------
Expenses:
Interest on mortgage
notes payable 2,927,175 3,354,380
Depreciation 969,307 1,395,828
Amortization of deferred
expenses 37,159 75,103
Property operating 2,239,337 2,369,384
Real estate taxes 465,298 676,256
Property management fees 339,005 404,873
Administrative 313,744 321,847
-------------- --------------
Total expenses 7,291,025 8,597,671
-------------- --------------
Loss before gain on sales of
properties, affiliates'
participation in joint ventures
and extraordinary items (822,174) (446,254)
Gain on sales of properties 10,800,286
Affiliates' participation in
(income) loss from joint
ventures (29,416) 13,025
-------------- --------------
Income (loss) before
extraordinary items 9,948,696 (433,229)
Extraordinary items:
Debt extinguishment expense (145,393)
Affiliate's participation in debt
extinguishment expense 58,521
--------------
Total extraordinary items (86,872)
-------------- --------------
Net income (loss) $ 9,948,696 $ (520,101)
============== ==============
<PAGE>
Income (loss) before extraordinary items
allocated to General Partner $ 99,487 $ (4,332)
============== ==============
Income (loss) before extraordinary items
allocated to Limited Partners $ 9,849,209 $ (428,897)
============== ==============
Income (loss) before extraordinary items
per Limited Partnership Interest
(59,791 issued and outstanding) $ 164.73 $ (7.17)
============== ==============
Extraordinary items allocated
to General Partner None $ (869)
============== ==============
Extraordinary items allocated
to Limited Partners None $ (86,003)
============== ==============
Extraordinary items per Limited
Partnership Interest (59,791
issued and outstanding) None $ (1.44)
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(UNAUDITED)
(CONTINUED)
1996 1995
-------------- --------------
Net income (loss) allocated to
General Partner $ 99,487 $ (5,201)
============== ==============
Net income (loss) allocated to
Limited Partners $ 9,849,209 $ (514,900)
============== ==============
Net income (loss) per Limited
Partnership Interest (59,791
issued and outstanding) $ 164.73 $ (8.61)
============== ==============
Distributions to Limited Partners $ 4,574,012 None
============== ==============
Distributions per Limited Partnership
Interest $ 76.50 None
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
-------------- --------------
Income:
Rental and service $ 2,569,469 $ 4,058,299
Interest on short-term
investments 21,404 12,450
-------------- --------------
Total income 2,590,873 4,070,749
-------------- --------------
Expenses:
Interest on mortgage
notes payable 983,278 1,685,659
Depreciation 378,022 697,914
Amortization of deferred
expenses 13,146 37,552
Property operating 829,979 1,163,082
Real estate taxes 171,735 334,936
Property management fees 142,225 203,285
Administrative 176,896 226,186
-------------- --------------
Total expenses 2,695,281 4,348,614
-------------- --------------
Loss before affiliates'
participation in joint
ventures and extraordinary items (104,408) (277,865)
Affiliates' participation in
(income) loss from joint
ventures (22,221) 3,696
-------------- --------------
Loss before extraordinary items (126,629) (274,169)
Extraordinary items:
Debt extinguishment expense (145,393)
Affiliate's participation in debt
extinguishment expense 58,521
--------------
Total extraordinary items (86,872)
-------------- --------------
Net loss $ (126,629) $ (361,041)
============== ==============
<PAGE>
Loss before extraordinary items
allocated to General Partner $ (1,266) $ (2,741)
============== ==============
Loss before extraordinary items
allocated to Limited Partners $ (125,363) $ (271,428)
============== ==============
Loss before extraordinary items
per Limited Partnership Interest
(59,791 issued and outstanding) $ (2.09) $ (4.54)
============== ==============
Extraordinary items allocated
to General Partner None $ (869)
============== ==============
Extraordinary items allocated
to Limited Partners None $ (86,003)
============== ==============
Extraordinary items per Limited
Partnership Interest (59,791
issued and outstanding) None $ (1.44)
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(UNAUDITED)
(CONTINUED)
1996 1995
-------------- --------------
Net loss allocated to General
Partner $ (1,266) $ (3,610)
============== ==============
Net loss allocated to Limited
Partners $ (125,363) $ (357,431)
============== ==============
Net loss per Limited Partnership
Interest (59,791 issued and
outstanding) $ (2.09) $ (5.98)
============== ==============
Distribution to Limited Partners $ 4,424,534 None
============== ==============
Distribution per Limited Partnership
Interest $ 74.00 None
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS - 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(UNAUDITED)
1996 1995
-------------- --------------
Operating activities:
Net income (loss) $ 9,948,696 $ (520,101)
Adjustments to reconcile net income
(loss) to net cash (used in) or
provided by operating activities:
Gain on sales of properties (10,800,286)
Debt extinguishment expense 145,393
Affiliates' participation in debt
extinguishment expense (58,521)
Affiliates' participation
in income (loss) from
joint ventures 29,416 (13,025)
Depreciation of properties 969,307 1,395,828
Amortization of deferred expenses 37,159 75,103
Net change in:
Escrow deposits 39,342 (179,886)
Accounts and accrued interest
receivable (5,791) 62,277
Prepaid expenses (35,525) (488,229)
Accounts payable (51,497) 3,726
Due to affiliates 20,981 (65,611)
Accrued liabilities (186,570) 74,762
Security deposits (72,293) (21,284)
-------------- --------------
Net cash (used in) or provided by
operating activities (107,061) 410,432
-------------- --------------
Investing activities:
Proceeds from sales of properties 33,074,000
Payment of selling costs (587,610)
Funding of escrow in connection
with sale of property (335,000)
------------
Net cash provided by investing
activities 32,151,390
------------
<PAGE>
Financing activities:
Capital contribution by joint venture
partner - affiliate 342,760
Distributions to joint venture
partner - affiliate (151,981) (328,376)
Distributions to Limited
Partners (4,574,012)
Principal payments on mortgage notes
payable (508,935) (779,164)
Issuance of mortgage note payable 20,932,600
Repayment of mortgage notes payable (26,635,039) (18,728,280)
Payment of deferred expenses (499,868)
Funding of improvement escrow (1,604,551)
-------------- --------------
Net cash used in financing
activities (31,869,967) (664,879)
-------------- --------------
Net change in cash and cash equivalents 174,362 (254,447)
Cash and cash equivalents at beginning
of period 1,093,098 1,058,935
-------------- --------------
Cash and cash equivalents at end of
period $ 1,267,460 $ 804,488
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the six months and quarter
ended June 30, 1996, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1996 and 1995, the Partnership incurred
interest expense on mortgage notes payable of $2,927,175 and $3,354,380 and
paid interest expense of $2,891,761 and $3,354,380, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1996 are:
Paid
-----------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $67,836 $40,132 $49,804
4. Property Sales:
(a) In March 1996, the Partnership sold the Pines of Cloverlane Apartments in
an all cash sale for $18,974,000. From the proceeds of the sale, the
Partnership paid $14,208,240 to the third party mortgage holder in full
satisfaction of the first mortgage loan, and paid $288,460 in selling costs.
The Partnership also funded an escrow of $335,000 required in connection with
the sale. The basis of the property was $12,369,952, which is net of
accumulated depreciation of $10,441,365. For financial statement purposes, the
Partnership recognized a gain of $6,315,588 from the sale of this property.
(b) In March 1996, the Partnership sold the Lakeside Apartments in an all cash
sale for $14,100,000. From the proceeds of the sale, the Partnership paid
$12,894,356 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $299,150 in selling costs. The amount paid to the
mortgage holder includes the outstanding principal balance of the loan and
additional interest expense of $467,557, as required by the loan documents,
which is equal to 50% of the net sale proceeds in excess of $12,654,000. The
basis of the property was $9,316,152, which is net of accumulated depreciation
of $4,876,088. For financial statement purposes, the Partnership recognized a
gain of $4,484,698 from the sale of this property.
<PAGE>
5. Subsequent Event:
In July 1996, the Partnership made a special distribution of $149,478 ($2.50
per Interest) to the holders of Limited Partnership Interests representing a
distribution of sales proceeds from Net Cash Proceeds reserves.
<PAGE>
BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors 86-Series I A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1984 to invest in and operate
income-producing real property. The Partnership raised $59,791,000 through the
sale of Limited Partnership Interests and utilized these proceeds to acquire
eight real property investments and a minority joint venture interest in one
additional real property. Prior to 1996, title to two of these properties and
the property in which the Partnership held a minority joint venture interest
were relinquished through foreclosure. During 1996, the Partnership sold two
additional properties. The Partnership continues to operate its four remaining
properties.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership sold two properties in March 1996. As a result of the gains
recognized on these sales, the Partnership generated net income during the six
months ended June 30, 1996 as compared to a net loss for the same period in
1995. As a result of extraordinary debt extinguishment expense recognized in
June 1995, the Partnership's net loss decreased during the quarter ended June
30, 1996 as compared to the same period in 1995. Further discussion of the
Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the six months and quarters ended June 30, 1996 and 1995.
In March 1996, the Partnership sold the Pines of Cloverlane and Lakeside
apartment complexes. As a result, the Partnership recognized gains totaling
$10,800,286 during 1996. These sales also resulted in decreases in rental and
service income, depreciation, property operating, real estate taxes and
property management fees during 1996 as compared to 1995.
Higher average cash balances due to the investment of the proceeds from the
property sales prior to distribution to Limited Partners, resulted in an
increase in interest income on short-term investments during 1996 as compared
to 1995.
<PAGE>
Interest expense on mortgage notes payable decreased during 1996 as compared to
1995 due to the property sales during March 1996 and lower interest expense at
the Lakeville Apartments due to the 1995 loan refinancing at a lower interest
rate. This decrease was partially offset by a $467,557 payment made to the
lender in connection with the sale of the Lakeside Apartments, as required by
the loan documents.
The amortization of deferred loan fees on the current Lakeville Resort
Apartments mortgage note is lower than the amortization related to the former
mortgage note, resulting in a decrease in amortization expense for 1996 as
compared to 1995.
Higher legal fees in 1995 were partially offset by increased consulting fees
related to property sales and increased printing and postage costs in response
to a tender offer during 1996, resulting in a decrease in administrative
expenses during 1996 when compared to 1995.
Lower interest expense and amortization expense at the Lakeville Resort
Apartments due to the June 1995 refinancing, resulted in affiliates'
participation in income from joint ventures during 1996 as compared to
affiliates' participation in loss from joint venture during 1995.
The Lakeville Resort Apartments is owned by a joint venture consisting of the
Partnership and an affiliate. In June 1995, the mortgage note was refinanced
with a new lender. In connection with the transaction, the Partnership
recognized an extraordinary debt extinguishment expense of $145,393 in 1995
relating to the full amortization of deferred loan fees on the former mortgage
note, of which $58,521 represents the affiliate's share.
Liquidity and Capital Resources
- -------------------------------
The Partnership's cash position increased by approximately $174,000 as of June
30, 1996 when compared to December 31, 1995. The Partnership used cash of
approximately $107,000 in its operating activities which consisted primarily of
operating cash flow from the properties which was offset by the payment of
additional interest expense relating to the sale of the Lakeside Apartments as
well as administrative expenses. Cash provided by investing activities of
approximately $32,151,000 consisted of proceeds received from the sales of
properties, net of closing costs and the funding of an escrow required in
connection with the sale of Pines of Cloverlane Apartments. Cash used in
financing activities of approximately $31,870,000 consisted of the repayment of
mortgage notes payable in the amount of $26,635,039, principal payments on
mortgage notes payable, distributions to Limited Partners in the amount of
$4,574,012, and distributions to joint venture partner - affiliate.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit is
considered significant if it exceeds $250,000 annually or 20% of the property's
rental and service income. The Partnership defines cash flow generated from its
properties as an amount equal to the property's revenue receipts less property
related expenditures, which include debt service payments. During the six
<PAGE>
months ended June 30, 1996 and 1995, the Partnership's four remaining
properties generated positive cash flow. The Lakeside Apartments was sold in
March 1996 and generated a significant cash flow deficit prior to its sale in
1996 as compared to a marginal cash flow deficit in 1995, due to expenses
incurred to enhance the property's sale value. The Pines of Cloverlane
Apartments was sold in March 1996 and generated a significant cash flow deficit
prior to its sale in 1996 as compared to positive cash flow in 1995 also due to
expenses incurred to enhance the property's sale value. As of June 30, 1996,
the occupancy rates of the Partnership's remaining properties ranged from 94%
to 98%.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties, including improving operating
performance and seeking rent increases where market conditions allow.
Each of the Partnership's properties is owned through the use of third-party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. Third party financing of
approximately $6,900,000 on the Brighton Townhomes Apartments matures in 1996;
the Partnership has entered into a contract to sell this property. The
Partnership does not own any other properties with third party financing which
matures prior to 1998.
The General Partner believes that the market for multifamily housing properties
is favorable to sellers of these properties. During March 1996, the Partnership
sold the Lakeside and Pines of Cloverlane apartment complexes. Currently, the
Partnership has entered into contracts to sell the Lakeville Resort Apartments
and the Brighton Townhomes for sales prices of $27,200,00 and $11,150,000,
respectively. Additionally, the Partnership is actively marketing the two
remaining properties in its portfolio. If current market conditions remain
favorable and the General Partner can obtain appropriate sales prices, the
Partnership's liquidation strategy will be accelerated.
In March 1996, the Partnership sold the Pines of Cloverlane Apartments in all
cash sale for $18,974,000. From the proceeds of the sale, the Partnership paid
$14,208,240 to the third party mortgage holder in full satisfaction of the
first mortgage loan, paid $288,460 in selling costs and also funded an escrow
of $335,000 required in connection with the sale. The majority of the proceeds
were distributed as a special distribution to the Limited Partners in April
1996. See Note 4 of Notes to Financial Statements for additional information.
In March 1996, the Partnership sold the Lakeside Apartments in an all cash sale
for $14,100,000. From the proceeds of the sale, the Partnership paid
$12,894,356 to the third party mortgage holder in full satisfaction of the
first mortgage loan and paid $299,150 in selling costs. The amount paid to the
mortgage holder includes the outstanding principal balance of the loan and
additional interest expense of $467,557, as required by the loan documents. The
majority of the proceeds were distributed as a special distribution to the
Limited Partners in April 1996. See Note 4 of Notes to Financial Statements for
additional information.
<PAGE>
During July 1996, the Partnership made a special distribution of Net Cash
Proceeds of $149,478 ($2.50 Per Interest) to the holders of Limited Partnership
Interests. The special distribution was made with Net Cash Proceeds from prior
property sales which were held in the Partnership's cash reserves. To date,
including the July 1996 distribution, investors have received cumulative
distributions of Net Cash Receipts of $7.50 per $1,000 Interest and Net Cash
Proceeds of $74.00 per $1,000 Interest, totaling $81.50 per $1,000 Interest, as
well as certain tax benefits. Future quarterly distributions from cash flow and
cash reserves are expected to continue until the properties are sold. As the
properties are sold, the Partnership will distribute the proceeds to investors.
In light of results to date and current market conditions, the General Partner
does not anticipate that investors will recover a substantial portion of their
original investment.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
will increase operating costs and replacement costs and may lead to increased
rental revenues and real estate values.
<PAGE>
BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- ---------------------------
Lakeville Resort Apartments
- ---------------------------
As previously reported, on April 23, 1996, a joint venture consisting of the
Partnership and an affiliate which owns Lakeville Resort Apartments, Petaluma,
California, contracted to sell the property to an unaffiliated party, ERP
Operating Limited Partnership, an Illinois limited partnership, for a sale
price of $27,200,000. The closing of the sale has been extended to September 3,
1996.
Brighton Townhomes
- ------------------
As previously reported, on May 6, 1996, the Partnership contracted to sell
Brighton Townhomes, Washington County, Oregon, to Security Capital Pacific
Trust, a Maryland real estate investment trust, for a sale price of
$11,500,000. Upon the agreement of the Partnership and the purchaser, the sale
price has been reduced from $11,500,000 to $11,150,000. The closing date has
been extended to August 16, 1996. The purchaser has deposited into the escrow
account an additional $50,000 as earnest money for a total of $350,000.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
of the Registrant's Registration Statement on Form S-11 dated December 16, 1985
(Registration No. 33-361), and Form of Confirmation regarding Interests in the
Partnership set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q
for the quarter ended June 30, 1992 (Commission File No. 0-15649) are
incorporated herein by reference.
(10) Material Contracts:
(a)(i) The Agreement of Sale and attachment thereto relating to the sale of
Pines of Cloverlane Apartments previously filed as Exhibit 2 to the
Registrant's Current Report on Form 8-K dated January 25, 1996 is incorporated
herein by reference.
<PAGE>
(ii) First, Second and Third Amendments to Agreement of Sale relating to the
sale of Pines of Cloverlane Apartments previously filed as Exhibits (10)(ii),
(10)(iii) and (10)(iv), respectively, to the Registrant's Report on Form 10-K
for the year ended December 31, 1995 is incorporated herein by reference.
(b)(i) The Agreement of Sale and attachment thereto relating to the sale of the
Lakeside Apartments previously filed as Exhibit 2 to the Registrant's Current
Report on Form 8-K dated February 21, 1996 is incorporated herein by reference.
(c)(i) The Agreement of Sale and attachment thereto relating to the sale of
Lakeville Resort Apartments previously filed as Exhibit 2 to the Registrant's
Current Report on Form 8-K dated April 23, 1996 is incorporated herein by
reference.
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
Lakeville Resort Apartments, Petaluma, California, is attached hereto.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale
of Lakeville Resort Apartments, Petaluma, California, is attached hereto.
(iv) Letter Agreements dated May 22, 1996 and July 8, 1996 relating to the sale
of Lakeville Resort Apartments, Petaluma, California, are attached hereto.
(d)(i) The Agreement of Sale relating to the sale of Brighton Townhomes
Apartments previously filed as Exhibit (10)(v) to the Registrant's Report on
Form 10-Q for the quarter ending March 31, 1996 is incorporated herein by
reference.
(ii) First Amendment to Agreement of Sale and Escrow Agreement dated May 31,
1996 relating to the sale of Brighton Townehomes, Washington County, Oregon, is
attached hereto.
(iii) Letter of Termination dated June 12, 1996 relating to the sale of
Brighton Townhomes, Washington County, Oregon, is attached hereto.
(iv) Reinstatement and Second Amendment to Agreement of Sale and Escrow
Agreement dated June 13, 1996 relating to the sale of Brighton Townhomes,
Washington County, Oregon, is attached hereto.
(v) Letter of Extension dated July 8, 1996 relating to the sale of Brighton
Townhomes, Washington County, Oregon, is attached hereto.
(27) Financial Data Schedule of the Registrant for the six months ending June
30, 1996 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated April 23, 1996 was
filed reporting the contract to sell the Lakeville Resort Apartments in
Petaluma, California.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/ Thomas E. Meador
--------------------------------
Thomas E. Meador
President and Chief Executive Officer (Principal
Executive Officer) of Balcor Partners-XIX, the
General Partner
By: /s/ Brian D. Parker
---------------------------------
Brian D. Parker
Senior Vice President, and Chief
Financial Officer (Principal Accounting and
Financial Officer) of Balcor Partners-XIX,
the General Partner
Date: August 20, 1996
------------------------
<PAGE>
MASTER AMENDMENT AND AGREEMENT
This Master Amendment and Agreement (this "Agreement") is entered into as
of this 22nd day of May, 1996 by and among the selling entities set forth on
the signature pages attached hereto (each entity being referred to herein as a
"Seller" and collectively as the "Sellers") and ERP Operating Limited
Partnership, an Illinois limited partnership ("Purchaser").
R E C I T A L S
A. Each Seller and the Purchaser have entered into an Agreement of Sale
dated as of April 23, 1996 (herein called the "Purchase Agreement") for the
sale by such Seller to Purchaser of certain property described therein. All
capitalized terms which are used herein but which are not otherwise defined
herein shall have the meaning ascribed to such term in the applicable Purchase
Agreement.
B. Each Purchase Agreement provides that during the Approval Period,
Purchaser shall have the right to review the status of title of the Property
(including, determining what endorsements, if any, the Title Insurer will make
available to Purchaser).
C. Each Purchase Agreement further provides that each Seller will
deliver to Purchaser an Updated Survey and Purchaser shall have ten (10) days
from the date of receipt of the Updated Survey to approve the Updated Survey.
D. Purchaser has reviewed the status of title for each Property and has
reviewed certain of the Updated Surveys; provided, however, Purchaser and
Seller have not yet agreed upon "Permitted Exceptions" for each Property.
E. Purchaser and Seller desire to amend each Purchase Agreement to give
Purchaser and Seller until May 23, 1996 to agree upon Permitted Exceptions for
each Property.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each Seller (with respect to the Purchase
Agreement to which such Seller is a party) and the Purchaser, hereby agree as
follows:
<PAGE>
A G R E E M E N T
1. RECITALS. The recitals set forth above are hereby incorporated
herein by reference as if same were fully set forth herein.
2. AMENDMENT. Purchaser and Seller hereby agree that Purchaser and
Seller shall have until the later of: (i) the expiration of the Approval Period
(as same may have been extended) or (ii) May 23, 1996 (the "Deadline Date") to
agree upon Permitted Exceptions for each Purchase Agreement (subject to
Purchaser's additional right to have 10 days to review Updated Surveys). If
Purchaser and Seller are unable to agree upon Permitted Exceptions on or prior
to the Deadline Date, then Seller shall have the right to elect to either
terminate the applicable Purchase Agreement, in which case the applicable
Earnest Money, including interest thereon, shall be returned to Purchaser
immediately following the applicable Seller's receipt of the Reports or (ii)
agree to cure the title objections identified by Purchaser as being
problematic, which cure may be effectuated by causing the Title Insurer, at
such Seller's expense, to insure over any objection, if applicable.
3. Miscellaneous
A. Except as modified herein, each Purchase Agreement shall remain
unmodified and in full force and effect.
B. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first above written.
[See Attached Signature Blocks]
<PAGE>
PURCHASER
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment
trust
By: /s/Daniel L. Baskes
----------------------------------
Name: Daniel L. Baskes
--------------------------------
Title: Attorney
-------------------------------
<PAGE>
Lakeville Resort Apartments
LAKEVILLE INVESTORS, an Illinois joint venture
By: Balcor Realty Investors 85- Series III A Real
Estate Limited Partnership, a partner in
Lakeville Investors
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
-----------------------------
Name: Alan Lieberman
Its: Senior Vice President
By: Lakeville Partners, an Illinois limited
partnership, a partner in Lakeville Investors
By: Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
------------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
MASTER AMENDMENT AND AGREEMENT #2
This Amendment and Agreement #2 (this "Agreement") is entered into as of
this 22nd day of May, 1996 by and among the selling entities set forth on the
signature pages attached hereto (each entity being referred to herein as a
"Seller" and collectively as the "Sellers") and ERP Operating Limited
Partnership, an Illinois limited partnership ("Purchaser").
R E C I T A L S
A. Each Seller and the Purchaser have entered into an Agreement of Sale
dated as of April 23, 1996 (herein called the "Purchase Agreement") for the
sale by such Seller to Purchaser of certain property described therein. All
capitalized terms which are used herein but which are not otherwise defined
herein shall have the meaning ascribed to such terms in the applicable Purchase
Agreement.
B. Each Purchase Agreement provides that during the Approval Period,
Purchaser shall have the right to review the status of title of the Property
(including, determining what endorsements, if any, the Title Insurer will make
available to Purchaser).
C. Each Purchase Agreement further provides that each Seller will
deliver to Purchaser an Updated Survey and Purchaser shall have ten (10) days
from the date of receipt of the Updated Survey to approve the Updated Survey.
D. Purchaser has reviewed the status of title for each Property and has
reviewed certain of the Updated Surveys.
E. The Purchase Agreements further provide that promptly following the
Approval Period, Purchaser and each Seller will identify the exceptions to
title which have been agreed to by Purchaser and such Seller.
F. The parties desire to enter into this Agreement to identify the
"Permitted Exceptions" for each Property and to set forth the parties agreement
with respect to title and survey matters as of the date hereof and to also set
forth certain additional agreements of the parties.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, each Seller (with respect to the Purchase
Agreement to which such Seller is a party) and the Purchaser, hereby agree as
follows:
<PAGE>
A G R E E M E N T
1. Surveys.
A. As of the date hereof, Purchaser has not yet received and/or
reviewed the Updated Surveys for the following properties:
(1) Briarwood Place
(2) Canyon Sands
(3) Desert Sands
(4) Sunnyoak Village
(5) Rosehill Pointe
(6) Post Place
In accordance with each Purchase Agreement, Purchaser shall have ten (10)
days following Purchaser's receipt of each Updated Survey to approve or
disapprove of the applicable Updated Survey, all as more specifically set forth
in each Purchase Agreement. If the Updated Survey is approved by Purchaser,
all items disclosed by the Updated Survey shall be "Permitted Exceptions".
B. In addition, Purchaser has reviewed and approved of the Updated
Surveys for the following properties.
(1) Brierwood Apts.
(2) Country Ridge
(3) Forest Ridge I
(4) Forest Ridge II
(5) Lakeville
(6) Mallard Cove
(7) Park Place I
(8) Park Place II
(9) Ridgetree I
(10) Ridgetree II
Each Seller (solely with respect to the Property owned by such Seller)
hereby agrees to reasonably assist Purchaser in causing the surveyor to correct
certain clean up items identified by Purchaser during its review of the Survey.
2. Title Matters. Purchaser has reviewed the title commitments for all
of the properties. Attached hereto as Exhibit A is a list of "Permitted
Exceptions" for each Property. Notwithstanding anything contained in this
Agreement or the exhibits hereto to the contrary, any Permitted Exceptions set
forth on Exhibit A which have the notation "awaiting survey" written next to
the applicable Permitted Exception (herein called "Survey Based Exceptions")
have not been agreed to by Purchaser because Purchaser has not yet reviewed the
Updated Survey which identifies the location of the applicable Permitted
Exception. Purchaser shall have until 10 days following Purchaser's receipt of
the Updated Survey to advise the applicable Seller, in writing, whether any
Survey Based Exception is or is not reasonably acceptable to Purchaser. If
Purchaser advises the applicable Seller that any Survey Based Exception is not
reasonably acceptable to Purchaser, then the applicable Seller shall have five
(5) business days following receipt of such notice, to elect to either
terminate the applicable Purchase Agreement, in which case the applicable
Earnest Money, including interest thereon, shall be returned to Purchaser
immediately following the applicable Seller's receipt of the Reports or (ii)
<PAGE>
agree to cure the title objections identified by Purchaser, which cure may be
effectuated by causing the Title Insurer, at such Seller's expense, to insure
over any objection, if applicable.
3. Assignment of Partnership Interests. If requested to do so by
Purchaser, each Seller hereby agrees, at no cost or expense to such Seller, to
cooperate in good faith with Purchaser in structuring the conveyance of
Property by the applicable Seller to Purchaser as a conveyance of title to such
Property by the applicable Seller into a partnership or limited liability
company having the applicable Seller and/or affiliates of the applicable Seller
as its sole partners (or members) and then, at closing, assigning to Purchaser
the partnership (or membership) interests in the partnership (or limited
liability company). In such case, the Purchaser hereby agrees to indemnify and
hold the applicable Seller harmless from and against any and all loss, cost,
expense, liability or damage (including reasonable attorneys fees) incurred by
such Seller arising out of Seller's conveyance in and out of such partnership
(or limited liability company) provided that such loss, cost, expense,
liability or damage (including reasonable attorneys fees) would not have been
suffered or incurred by such Seller if such Property had been conveyed directly
by such Seller to Purchaser.
4. Miscellaneous
A. Except as modified herein, each Purchase Agreement shall remain
unmodified and in full force and effect.
B. This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first above written.
[See Attached Signature Blocks]
<PAGE>
PURCHASER
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment
trust
By: /s/Linda A. Menich
------------------------------------
Name: Linda A. Menich
------------------------------------
Title: Assistant Vice President
------------------------------------
<PAGE>
Lakeville Resort Apartments
LAKEVILLE INVESTORS, an Illinois joint venture
By: Balcor Realty Investors 85- Series III A Real
Estate Limited Partnership, a partner in
Lakeville Investors
By: Balcor Partners-XVIII, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
-----------------------------
Name: Alan Lieberman
Its: Senior Vice President
By: Lakeville Partners, an Illinois limited
partnership, a partner in Lakeville Investors
By: Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/Alan Lieberman
------------------------------
Name: Alan Lieberman
Its: Senior Vice President
<PAGE>
May 22, 1996
VIA FACSIMILE MAIL
Lakeville Investors The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 ("the
Agreement") between The Lakeville Investors, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of
Lakeville Apartments, Petaluma, California (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
July 19, 1996 in the seventh line of Section 9 thereof to August 3, 1996.
Please acknowledge Seller's acceptance of this modification to the Agreement by
executing this letter in the space provided below and returning it via
facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Bruce C. Strohm
---------------------------------
Bruce C. Strohm
Executive Vice President
Approved and Accepted this 22nd day of May, 1996
LAKEVILLE INVESTORS, an Illinois joint venture
By: The Balcor Company, a Delaware corporation,
a general partner of its general partner
By: /s/ Alan Lieberman
------------------------------
Alan Lieberman
Senior Vice President
<PAGE>
July 8, 1996
VIA FACSIMILE MAIL
Lakeville Investors The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between Lakeville Investors, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of
Lakeville Apartments, Petaluma, California ("the Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
August 3, 1996 in the seventh line of Section 9 thereof to September 3,
1996. Please acknowledge Seller's acceptance of this modification to the
Agreement by executing this letter in the space provided below and returning
it via facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Shelley L. Dunck
-------------------------------
Shelley L. Dunck
Vice President
Approved and Accepted this 8th day of July, 1996
LAKEVILLE INVESTORS
By: Balcor Realty Investors 85-Series III A Real
Estate Limited Partnership, a partner
By: Balcor Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Alan Lieberman
-----------------------------
Name: Alan Lieberman
Title: Senior Vice President
<PAGE>
By: Lakeville Partners, an Illinois limited partnership,
a partner
By: Balcor Partners-XIX, an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Alan Lieberman
------------------------------
Name: Alan Lieberman
Title: Senior Vice President
<PAGE>
FIRST AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS FIRST AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT (this
"Amendment") is made and entered into as of this 31st day of May, 1996, by and
between BALCOR REALTY INVESTORS 86-SERIES I A REAL ESTATE LIMITED PARTNERSHIP,
an Illinois limited partnership ("Seller"), SECURITY CAPITAL PACIFIC TRUST, a
Maryland real estate investment trust ("Purchaser"), and CHARTER TITLE
INSURANCE COMPANY ("Escrow Agent").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated May 6, 1996 ("Agreement"), pursuant to which Purchaser has agreed to
purchase and Seller has agreed to sell certain Property (as defined in the
Agreement) legally described and depicted on Exhibit A attached to the
Agreement.
B. Seller, Purchaser and Escrow Agent are parties to that certain Escrow
Agreement, dated May 6, 1996 ("Escrow Agreement"), pursuant to which Purchaser
has deposited funds in escrow to be held by Escrow Agent in accordance with the
terms of the Escrow Agreement.
C. Seller and Purchaser desire to amend the Agreement and the Escrow
Agreement in accordance with the terms of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
2. The reference to the date "May 31, 1996" in the first line of Paragraph
7.1 of the Agreement is hereby deleted and the date "June 12, 1996" is
substituted in lieu thereof.
3. The reference to the date "June 17, 1996" in the first line of Paragraph 8
of the Agreement is hereby deleted and the date "June 19, 1996" is substituted
in lieu thereof.
4. The reference to the phrase "for a period of thirty (30) days each" in the
first sentence of Paragraph 8 of the Agreement is hereby deleted and the phrase
"for a period of twenty-eight (28) days and thirty (30) days, respectively," is
substituted in lieu thereof.
5. Each reference to the date "May 31" in the Escrow Agreement is hereby
deleted and the date "June 12" is substituted in lieu thereof.
<PAGE>
6. Each reference to the date "June 10" in the Escrow Agreement is hereby
deleted and the date "June 12" is substituted in lieu thereof.
7. The reference to the date "June 17, 1996" in the first line of Paragraph 3
of the Escrow Agreement is hereby deleted and the date "June 19, 1996" is
substituted in lieu thereof.
8. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
9. This Amendment may be executed in counterparts each of which shall be
deemed an original, but all of which, when taken together shall constitute one
and the same instrument.
[EXECUTION PAGE TO FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
SECURITY CAPITAL PACIFIC TRUST, a Maryland real
estate investment trust
By: /s/ Anthony R. Arnest
-----------------------------------
Name: Anthony R. Arnest
-----------------------------------
Its: Vice President
-----------------------------------
SELLER:
BALCOR REALTY INVESTORS 86-SERIES I A REAL ESTATE
LIMITED PARTNERSHIP, an Illinois limited partnership
By: Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware corporation,
a general partner
By: /s/ Phillip Schechter
----------------------------------
Name: Phillip Schechter
----------------------------------
Its: Authorized Agent
----------------------------------
ESCROW AGENT:
CHARTER TITLE INSURANCE COMPANY
By: ___________________________
Name: _________________________
Its: __________________________
<PAGE>
June 12, 1996
Balcor Realty Investors 86-I A
Real Estate Limited Partnership
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, IL 60015
Attention: Ilona Adams
Re: Agreement of Sale dated as of May 6, 1996 between Balcor Realty Investors
86-Series I A Real Estate Limited Partnership (the "Seller") and Security
Capital Pacific Trusts (the "Purchaser"), as amended by a First Amendment to
Agreement of Sale and Escrow Agreement dated May 31, 1996
Gentlemen:
We regret to inform you that, pursuant to paragraph 7.1 of the captioned
document (the "Agreement"), Purchaser hereby terminates the Agreement.
While Purchaser remains interested in acquisition of the subject property,
unfortunately it has not been feasible for us to complete our necessary
inspection and evaluation activities within the time frame set forth in the
Agreement.
While this must necessarily be a formal notice to comport with the requirements
of the Agreement, we would like to express our interests in keeping the
possibility of Purchaser's acquisition of the Property alive. To that end, we
would be happy to discuss the matter with you at your convenience.
Sincerely,
Security Capital Pacific Trust
By: /s/ Anthony R. Arnest
---------------------------------
Printed Name: Anthony R. Arnest
------------------------
Title: Vice President
-------------------------------
[copies indicated on attached page]
<PAGE>
cc: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, IL 60015
Att: Alan Lieberman
Facsimile No: 847/317-4462
Katten, Muchin and Zavis
525 West Monroe Street, Suite 1600
Chicago, IL 60606
Att: Daniel J. Perlman, Esq.
Facsimile No: 312-902-1061
Charter Title Insurance Company
4655 Sweetwater Blvd.
Suite 200
Sugar Land, TX 77479
Att: Francis Chetta
Facisimile No: 713-242-1144
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
Att: John F. Edelbrock, Jr. Esq.
Facisimile: 312-701-7711
<PAGE>
REINSTATEMENT AND SECOND AMENDMENT
TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS REINSTATEMENT AND SECOND AMENDMENT TO AGREEMENT OF SALE AND ESCROW
AGREEMENT (this "Amendment") is made and entered into as of this 13 day of
June, 1996, by and between BALCOR REALTY INVESTORS 86-SERIES I A REAL ESTATE
LIMITED PARTNERSHIP, an Illinois limited partnership ("Seller"), SECURITY
CAPITAL PACIFIC TRUST, a Maryland real estate investment trust ("Purchaser"),
and CHARTER TITLE INSURANCE COMPANY ("Escrow Agent").
RECITALS:
A. Seller and Purchaser are parties to that certain Agreement of Sale,
dated as of May 6, 1996 ("Original Agreement"), pursuant to which Purchaser has
agreed to purchase and Seller has agreed to sell certain Property (as defined
in the Agreement) legally described and depicted on Exhibit A attached to the
Agreement.
B. Seller, Purchaser and Escrow Agent are parties to that certain Escrow
Agreement, dated as of May 6, 1996 ("Original Escrow Agreement"), pursuant to
which Purchaser has deposited funds in escrow to be held by Escrow Agent in
accordance with the terms of the Escrow Agreement.
C. Seller, Purchaser and Escrow Agent are parties to that certain First
Amendment to Agreement of Sale and Escrow Agreement dated as of May 31, 1996
("First Amendment"), pursuant to which certain provisions of the Original
Agreement and the Original Escrow Agreement have been amended. the Original
Agreement and the Original Escrow Agreement as amended by the First Amendment
are referred to herein as the "Agreement" and the "Escrow Agreement",
respectively.
D. Pursuant to the terms of the Agreement and the Escrow Agreement,
Purchaser terminated its obligations thereunder pursuant to the respective
terms thereof on June 12, 1996.
E. Seller and Purchaser desire to reinstate the Agreement and the Escrow
Agreement in accordance with the terms of this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Notwithstanding that Purchaser has heretofore terminated the Agreement and
the Escrow Agreement pursuant to the respective terms thereof (the
"Termination"), the parties hereto agree that the Agreement and the Escrow
Agreement, are hereby reinstated and reestablished in full force and effect as
though the Termination had not occurred; provided, however, that the Agreement
and the Escrow Agreement shall be modified and amended as set forth
hereinbelow.
<PAGE>
2. All terms not otherwise defined herein shall have the meanings ascribed to
each in the Agreement.
3. Except as amended hereby, the Agreement shall be and remain unchanged and
in full force and effect in accordance with its terms.
4. All references in the Agreement to the "Purchase Price" or to the sum
"$11,500,000.00" shall hereafter mean and be replaced by the sum
$11,150,000.00.
5. (a) Purchaser acknowledges that, except as set forth in Section 5(b) of
this Amendment, Purchaser waives any right afforded Purchaser under Paragraph
7.1 of the Agreement to terminate the Agreement based upon the results of
tests, studies, investigation, surveys and information received pursuant to
Paragraph 7.1 of the Agreement.
(b) Notwithstanding the foregoing subsection (a) or the provisions of
Paragraph 7.1 of the Agreement, Purchaser and Seller hereby agree that
Purchaser shall have until July 1, 1996 (the "Outside Date") to obtain the
release (the "Release") from the current holder of the beneficial interest (the
"Holder") of a certain Covenant to Grant Easement, dated March 19, 1985, and
recorded as Recorder's Fee No. 85012768 in the real property records of
Washington County, Oregon (the "Easement") of all right, title, interest and
claim that the Holder may have in or with respect to the Easement. In the
event that Purchaser is unable to obtain the Release on or before the Outside
Date, Purchaser shall have the right to notify Seller and Escrow Agent on or
before the Outside Date of its inability to obtain such release (the
"Notification"). Upon receipt of the Notification, (i) the Agreement and the
Escrow Agreement shall thereafter terminate, (ii) all Earnest Money theretofore
deposited by Purchaser with Escrow Agent, including all interest earned
thereupon shall immediately be returned to Purchaser and (iii) all obligations
of the Purchaser and Seller under the Agreement and the Escrow Agreement shall
terminate, with the exception of such obligations that by the terms of
Paragraph 7.1 of the Agreement are therein stated to survive a termination
pursuant to such Paragraph.
6. Paragraph 8 of the Agreement is hereby amended to read in its entirety as
follows:
"The closing of this transaction (the "Closing") shall be on the date (the
"Closing Date") that is seven (7) business days after Purchaser shall have
obtained a release (the "Release") (and provided to Seller) from the current
holder of the beneficial interest (the "Holder") of a certain Covenant to Grant
Easement, dated March 19, 1985, and recorded as Recorder's Fee No. 85012768 in
the real property records of Washington County, Oregon (the "Easement") of all
right, title, interest and claim that the Holder may have in or with respect to
the Easement, provided, however, that the Closing Date shall not be later than
July 10, 1996. The Closing shall be at the office of Title Insurer, in
Portland Oregon, at which time Seller shall deliver possession of the Property
to Purchaser, provided, however, that so long as Purchaser is not in default
hereunder, Purchaser shall have two (2) options to extend the Closing Date for
purposes of a 1031 Exchange (see Paragraph 18) to July 17, 1996 and August 16,
1996, respectively, by (a) giving written notice to Seller of the exercise of
<PAGE>
the applicable option to extend no later than five (5) business days prior to
the then applicable Closing Date (as the same may have been extended) and (b)
depositing in each instance at least five (5) business days prior to the then
applicable Closing Date (as the same may have been extended) an amount equal to
Twenty-Five Thousand and No/100 Dollars with the Title Insurer, which sum(s)
shall be part of and included in the definition of "Earnest Money" and shall be
governed by the terms of the Escrow Agreement. This transaction shall be
closed through an escrow with Title Insurer, in accordance with the general
provisions of the usual and customary form of deed and money escrow for similar
transactions in Oregon, provided, however, that in any instance, the sale
proceeds shall not be disbursed from such escrow unless and until the Title
Insurer shall be unconditionally committed to issuing the Title Policy. All
closing and escrow fees shall be divided equally between the parties hereto."
7. (a) Paragraph 2 of the Escrow Agreement is hereby amended and restated to
read in its entirety as follows:
"On or before July 1, 1996 Purchaser may deliver to Escrow Agent a notice
in the form of Schedule 1 attached hereto that Purchaser has elected to
terminate the Agreement pursuant to the terms of that certain Second Amendment
to Agreement of Sale and Escrow Agreement dated as of June 13, 1996 (the "Due
Diligence Termination Notice"). In the event that Purchaser shall deliver to
Escrow Agent the Due Diligence Termination Notice on or before July 1, 1996,
Escrow Agent shall promptly deliver to Purchaser the Earnest Money, together
with all interest earned thereon, and thereafter this Escrow Agreement shall be
null and void."
(b) Paragraph 3 of the Escrow Agreement is hereby amended and restated to
read in its entirety as follows:
"The Closing Date shall be the date established pursuant to Paragraph 8 of
the Agreement. Unless terminated pursuant to Paragraph 2 above, on the Closing
Date, or at such other date as Seller and Purchaser may, in writing, advise
Escrow Agent, Escrow Agent shall deliver all funds then held in the escrow to
Seller. However, if Purchaser has delivered an Affidavit of Seller's Default
to Escrow Agent, on or before the Closing Date, in substantially the form of
Schedule 2, subscribed and sworn to by Purchaser, specifying in detail the
default or defaults of Seller, then Escrow Agent shall not deliver the funds to
Seller, but shall continue to hold the funds until advised in writing by both
Seller and purchaser or until directed by judicial order to disburse the
funds."
8. The Purchaser hereby directs the Escrow Agent that the funds together with
interest thereon (if any) that were (i) heretofore deposited with Escrow Agent
by Purchaser and (ii) subsequently directed to be returned to Purchaser
pursuant to the Termination, shall be held as, and shall constitute, the
Earnest Money, as provided in the Agreement and the Escrow Agreement.
9. This Amendment may be executed by facsimile and in counterparts, each of
which shall be deemed an original, but all of which, when taken together shall
constitute one and the same instrument.
[EXECUTION PAGE TO FOLLOW]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first set forth above.
PURCHASER:
SECURITY CAPITAL PACIFIC TRUST, a Maryland
real estate investment trust
By: /s/ Anthony R. Arnest
------------------------------------
Name: Anthony R. Arnest
------------------------------------
Its: Vice President
------------------------------------
SELLER:
BALCOR REALTY INVESTORS 86 SERIES I A REAL
ESTATE LIMITED PARTNERSHIP, an Illinois
limited partnership
By: Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Phillip Schechter
---------------------------------
Name: Phillip Schechter
---------------------------------
Its: Authorized Agent
---------------------------------
ESCROW AGENT:
CHARTER TITLE INSURANCE COMPANY
By:
-------------------------------------
Name:
-------------------------------------
Its:
-------------------------------------
<PAGE>
July 8, 1996
VIA HAND DELIVERY
Mr. Kyle Hauberg
Katten Muchin & Zavis
525 W. Monroe Street
Suite 1600
Chicago, IL 60661-3693
Re: Purchase of Brighton Townhomes
Dear Kyle:
This letter will confirm that my client, Security Capital Pacific Trust,
intends to exercise its right under the Agreement of Sale to extend the closing
date to August 16, 1996.
An additional $25,000 earnest money will be deposited on July 10, 1996, in
accordance with the terms of the amended Agreement of Sale.
Please feel free to call me if you have any questions about this letter.
Sincerely,
/s/ Jack Edelbrock
JE/jv
cc: Tony Arnest
Alan Lieberman
Daniel Perlman
Mark Petersen
<PAGE>
Mr. Kyle Hauberg
July 8, 1996
Page 2
Anthony R. Arnest
Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Fax: (505) 820-0643
Alan Lieberman
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, IL 60015
Fax: (708) 317-4462
Mark Petersen
Security Capital Group Incorporated
330 112th Ave N.E.
Suite 201
Bellevue, Washington 98004
Fax: 451-2692
Daniel Perlman, Esq.
Katten Muchin & Zavis
525 W. Monroe Street, Suite 1600
Chicago, IL 60661-3693
Fax: (312) 902-1061
<PAGE>
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<PERIOD-END> JUN-30-1996
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0
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