SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2000
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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
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(Exact name of registrant as specified in its charter)
Illinois 36-3327914
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2333 Waukegan Road, Suite 100
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 2000 and December 31, 1999
(Unaudited)
ASSETS
2000 1999
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Cash and cash equivalents $ 1,812,315 $ 1,848,420
Accounts and accrued interest receivable 8,653 8,970
Prepaid expenses 3,989
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$ 1,824,957 $ 1,857,390
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 75,749 $ 75,196
Due to affiliates 11,028 30,767
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Total liabilities 86,777 105,963
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Commitments and contingencies
Limited Partners' capital (59,791
Interests issued and outstanding) 2,055,141 2,068,388
General Partner's deficit (316,961) (316,961)
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Total partners' capital 1,738,180 1,751,427
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$ 1,824,957 $ 1,857,390
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The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 2000 and 1999
(Unaudited)
2000 1999
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Income:
Interest on short-term investments $ 26,558 $ 19,333
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Total income 26,558 19,333
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Expenses:
Administrative 39,805 38,638
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Total expenses 39,805 38,638
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Net loss $ (13,247) $ (19,305)
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Net loss allocated to General Partner None None
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Net loss allocated to Limited Partners $ (13,247) $ (19,305)
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Net loss per Limited Partnership Interest
(59,791 issued and oustanding) -
Basic and Diluted $ (0.22) $ (0.32)
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The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 2000 and 1999
(Unaudited)
2000 1999
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Operating activities:
Net loss $ (13,247) $ (19,305)
Adjustments to reconcile net loss to net
cash used in operating activities:
Net change in:
Accounts and accrued interest
receivable 317 463
Prepaid expenses (3,989) (1,896)
Accounts payable 553 (3,285)
Due to affiliates (19,739) 2,681
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Net cash used in operating activities (36,105) (21,342)
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Net change in cash and cash equivalents (36,105) (21,342)
Cash and cash equivalents at beginning
of year 1,848,420 1,605,485
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Cash and cash equivalents at end of period $ 1,812,315 $ 1,584,143
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The accompanying notes are an integral part of the financial statements.
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 quarter ended March 31,
2000, and all such adjustments are of a normal and recurring nature.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all of its
interests in real estate. The Partnership sold its final real estate investment
in January 1997. The Partnership has retained a portion of the cash from the
property sales to satisfy obligations of the Partnership as well as to
establish a reserve for contingencies. The timing of the termination of the
Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exist or may arise. Such
contingencies may include legal and other fees and costs stemming from
litigation involving the Partnership including, but not limited to, the Bruss
and Masri lawsuits discussed in Note 4 of Notes to Financial Statements. Due to
this litigation, the Partnership will not be dissolved and reserves will be
held by the Partnership until the conclusion of such contingencies. There can
be no assurances as to the time frame for the conclusion of all contingencies.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 2000 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost $27,940 $11,028
4. Contingency:
The Partnership is currently involved in two related lawsuits, Masri vs. Lehman
Brothers, Inc., et al. and Bruss, et al. vs. Lehman Brothers, Inc., et al.,
whereby the Partnership and certain affiliates have been named as defendants
alleging substantially similar claims involving certain state securities and
common law violations with regard to the property acquisition process of the
Partnership, and to the adequacy and accuracy of disclosures of information
concerning, as well as marketing efforts related to, the offering of the
Limited Partnership Interests of the Partnership. The defendants continue to
vigorously contest these actions. A plaintiff class has not been certified in
either action. With respect to the Masri case, no determinations upon any
significant issues have been made. The Bruss complaint was filed on January
25, 1999. On September 24, 1999, the court granted the defendants' motion to
dismiss the complaint for failure to state a cause of action. The plaintiffs
filed an amended complaint on November 30, 1999. The defendants have filed a
motion to dismiss the complaint for failure to state a cause of action. The
defendants continue to vigorously contest these actions. The Partnership
believes it has meritorious defenses to contest the claims. It is not
determinable at this time how the outcome of either action will impact the
remaining cash reserves of the Partnership.
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. The Partnership has no properties remaining in its
portfolio at March 31, 2000.
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 1999 for a more complete understanding of
the Partnership's financial position.
Operations
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2000 Compared to 1999
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The operations of the Partnership in 2000 and 1999 consisted of administrative
expenses which were partially offset by interest income earned on short-term
investments.
As a result of higher interest rates in 2000, interest income on short-term
investments increased during the quarter ended March 31, 2000 as compared to
the same period in 1999.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $36,000 as of
March 31, 2000 as compared to December 31, 1999 primarily due to cash used in
operating activites for the payment of administrative expenses, which was
partially offset by interest income earned on short-term investments.
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all of its
interests in real estate. The Partnership sold its final real estate investment
in January 1997. The Partnership has retained a portion of the cash from the
property sales to satisfy obligations of the Partnership as well as to
establish a reserve for contingencies. The timing of the termination of the
Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exist or may arise. Such
contingencies may include legal and other fees and costs stemming from
litigation involving the Partnership including, but not limited to, the Bruss
and Masri lawsuits discussed in Note 4 of Notes to Financial Statements. Due
to this litigation, the Partnership will not be dissolved and reserves will
be held by the Partnership until the conclusion of such contingencies. There
can be no assurances as to the time frame for the conclusion of all
contingencies.
Limited Partners have received distributions of Net Cash Receipts of $12.50 and
Net Cash Proceeds of $290.74, totaling $303.24 per $1,000 Interest, as well as
certain tax benefits. No additional distributions are anticipated to be made
prior to the termination of the Partnership. However, after paying final
partnership expenses, any remaining cash reserves will be distributed. Limited
Partners will not recover a substantial portion of their original investment.
BALCOR REALTY INVESTORS 86-SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(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.
(27) Financial Data Schedule of the Registrant for the quarter ending March 31,
2000 is attached hereto.
(b) Reports on Form 8-K: No reports were filed in Form 8-K during the quarter
ended March 31, 2000.
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
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners - XIX, the General Partner
By: /s/Jayne A. Kosik
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Jayne A. Kosik
Senior Managing Director and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners - XIX, the General
Partner
Date: May 9, 2000
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