SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1997
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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 0-15528
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BALCOR PENSION INVESTORS-VII
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(Exact name of registrant as specified in its charter)
Illinois 36-3390487
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
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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<PAGE>
BALCOR PENSION INVESTORS - VII
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEETS
June 30, 1997 and December 31, 1996
(Unaudited)
ASSETS
1997 1996
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Cash and cash equivalents $ 35,767,024 $ 17,297,262
Accounts and accrued interest receivable 755,157 411,712
Escrow deposits 1,100,000
Prepaid expenses 61,204
Deferred expenses, net of accumulated
amortization of $177,082 in 1996 70,174
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37,622,181 17,840,352
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Real estate held for sale (net of
allowance of $3,935,000 in 1996) 25,986,259
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$ 37,622,181 $ 43,826,611
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 228,578 $ 251,125
Due to affiliates 106,436 88,416
Due to affiliate - joint venture partner 4,176,066
Accrued real estate taxes 106,465
Security deposits 70,823
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Total liabilities 4,511,080 516,829
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Commitments and contingencies
Affiliates' participation in joint venture 3,584,170
Limited Partners' capital (461,470
Interests issued and outstanding) 33,102,155 41,621,252
General Partner's capital (deficit) 8,946 (1,895,640)
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Total partners' capital 33,111,101 39,725,612
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$ 37,622,181 $ 43,826,611
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS - VII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
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Income:
Income from operations of real estate
held for sale $ 905,888 $ 4,071,460
Interest on short-term investments 335,429 209,564
Recovery of losses on real estate 95,250
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Total income 1,336,567 4,281,024
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Expenses:
Administrative 391,191 476,594
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Total expenses 391,191 476,594
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Income before gain on sales and affiliates'
participation in income of joint ventures 945,376 3,804,430
Gain on sales of real estate 8,906,309
Affiliates' participation in
income of joint ventures (659,794) (1,059,456)
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Net income $ 9,191,891 $ 2,744,974
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Net income allocated to General Partner $ 1,994,316 $ 274,497
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Net income allocated to Limited Partners $ 7,197,575 $ 2,470,477
============== ==============
Net income per Limited Partnership Interest
(461,470 issued and outstanding) $ 15.60 $ 5.35
============== ==============
Distributions to General Partner $ 205,098 $ 307,646
============== ==============
Settlement Distribution to Limited Partners $ 72,839 NONE
============== ==============
Distributions to Limited Partners $ 15,643,833 $ 3,765,595
============== ==============
Distributions per Limited Partnership
Interest (461,470 issued and outstanding) $ 33.90 $ 8.16
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS - VII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1997 and 1996
(Unaudited)
1997 1996
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Income:
Income from operations of real estate
held for sale $ 68,454 $ 1,867,479
Interest on short-term investments 220,480 97,886
Recovery of losses on real estate 95,250
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Total income 384,184 1,965,365
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Expenses:
Administrative 199,487 337,881
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Total expenses 199,487 337,881
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Income before gain on sales and affiliates'
participation in income of joint ventures 184,697 1,627,484
Gain on sales of real estate 8,906,309
Affiliates' participation in
income of joint ventures (567,095) (495,437)
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Net income $ 8,523,911 $ 1,132,047
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Net income allocated to General Partner $ 1,927,518 $ 113,204
============== ==============
Net income allocated to Limited Partners $ 6,596,393 $ 1,018,843
============== ==============
Net income per Limited Partnership Interest
(461,470 issued and outstanding) $ 14.30 $ 2.20
============== ==============
Distribution to General Partner $ 51,275 $ 153,823
============== ==============
Distribution to Limited Partners $ 4,568,553 $ 2,381,185
============== ==============
Distribution per Limited Partnership Interest
(461,470 issued and outstanding) $ 9.90 $ 5.16
============== ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS - VII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
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Operating activities:
Net income $ 9,191,891 $ 2,744,974
Adjustments to reconcile net income to
net cash provided by operating
activities:
Gain on sales of real estate (8,906,309)
Affiliates' participation in income
of joint ventures 659,794 1,059,456
Amortization of deferred expenses 215,662 13,424
Recovery of losses on real estate (95,250)
Payment of leasing commissions (145,488)
Net change in:
Escrow deposits (5,945)
Accounts and accrued interest
receivable 210,805 (43,259)
Prepaid expenses 61,204 (232,256)
Accounts payable (22,547) 57,471
Due to affiliates 18,020 18,037
Accrued real estate taxes (106,465) 69,574
Security deposits (70,823) 20,480
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Net cash provided by operating
activities 1,010,494 3,701,956
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Investing activities:
Proceeds from sales of real estate 35,900,000
Payment of selling costs (1,096,914)
Escrow related to property sale (1,100,000)
Proceeds relating to land condemnation 113,900
Improvements to properties (369,518)
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Net cash provided by investing activities 33,333,568 113,900
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<PAGE>
BALCOR PENSION INVESTORS - VII
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
(Unaudited)
(Continued)
1997 1996
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Financing activities:
Distributions to Limited Partners (15,716,672) (3,765,595)
Distributions to General Partner (205,098) (307,646)
Contribution by General Partner 115,368
Distributions to joint venture partners -
affiliates (67,898) (868,387)
Principal payments on mortgage note
payable (28,475)
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Net cash used in financing activities (15,874,300) (4,970,103)
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Net change in cash and cash equivalents 18,469,762 (1,154,247)
Cash and cash equivalents at beginning
of year 17,297,262 8,595,511
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Cash and cash equivalents at end of period $ 35,767,024 $ 7,441,264
============ ==============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-VII
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
(a) For financial statement purposes, in previous years partners were allocated
income and loss in accordance with the provisions in the Partnership Agreement.
In order for the capital accounts of the General Partner and Limited Partners
to appropriately reflect their respective remaining economic interests as
provided for in the Partnership Agreement, the General Partner was allocated
additional income in 1997 for financial statement purposes.
(b) 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, 1997, 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 interests in
real estate. During 1996, the Partnership sold four properties. During 1997,
the Partnership sold its remaining three real estate investments, the U.S. West
Direct Center Office Building, the Butler Plaza Shopping Center and the loan
collateralized by the Whispering Hills Apartments, which was accounted for as
real estate held for sale. The Partnership distributed the available proceeds
from the sales of the U.S. West Direct Center Office Building and Butler Plaza
Shopping Center in July 1997 and will distribute the available proceeds from
the Whispering Hills Apartments loan sale in October 1997. The Partnership has
retained a portion of the proceeds from the sales to satisfy obligations of the
Partnership as well as 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 stemming from
litigation involving the Partnership including, but not limited to, the lawsuit
discussed in Note 5 of Notes to Financial Statements. In the absence of any
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency exists, reserves may be held by
the Partnership for a longer period of time.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the six
months and quarter ended June 30, 1997 are:
Paid
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Six Months Quarter Payable
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Mortgage servicing fees $ 7,359 None $ 9,813
Reimbursement of expenses to
the General Partner, at cost 64,755 $44,536 96,623
<PAGE>
The General Partner made a contribution of $115,368 in connection with the
settlement of certain litigation as further discussed in Note 6 of Notes to
Financial Statements.
As of June 30, 1997, the Partnership owed $4,176,066 to the affiliated joint
venture partner on Whispering Hills Apartments for its share of the sale
proceeds and property operations for the second quarter of 1997. The
Partnership distributed the proceeds to the joint venture partner in July 1997.
4. Property Sales:
(a) In April 1997, the Partnership sold the U.S. West Direct Center Office
Building in an all cash sale for $14,250,000. From the proceeds of the sale,
the Partnership paid $324,819 in selling costs. The basis of the property was
$6,812,133. For financial statement purposes, the Partnership recognized a
gain of $7,113,048 from the sale of the property.
(b) In May 1997, the Partnership sold the Butler Plaza Shopping Center in an
all cash sale for $5,200,000. From the proceeds of the sale, the Partnership
paid $378,790 in selling costs. The basis of the property was $8,660,960, after
a reduction of $554,250 related to the second installment of proceeds from a
land condemnation which was received in August 1997. The amount is recorded as
an account receivable in the financial statements at June 30, 1997. The
Partnership had previously established an allowance for potential losses
related to the property against which its remaining net investment of
$3,839,750 was written off. The Partnership recognized a recovery of the loss
allowance of $95,250.
(c) The loan collateralized by the Whispering Hills Apartments, which was
accounted for as real estate held for sale, was owned by a joint venture
consisting of the Partnership and an affiliate. The Partnership and the
affiliate held participating percentages in the joint venture of 75% and 25%,
respectively. In June 1997, the joint venture sold the loan in an all cash sale
for $17,200,000. From the proceeds of the sale, the joint venture paid $750,000
to the borrower in accordance with an amendment to the modified loan agreement
and $393,305 in selling costs. The basis of the property was $14,263,434. For
financial statement purposes, the Partnership recognized a gain of $1,793,261
from the sale of this property, of which $499,141 is the minority joint venture
partner's share. In July 1997, the Partnership made a distribution of
$4,176,066 to the joint venture partner which represented its share of sale
proceeds and second quarter 1997 property operations. This amount is included
in due to affiliate - joint venture partner in the financial statements at June
30, 1997.
5. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership, the
General Partner and certain third parties have been named as defendants seeking
damages relating to tender offers to purchase interests in the Partnership and
nine affiliated partnerships initiated by the third party defendants in 1996.
The defendants continue to vigorously contest this action. The action has been
dismissed with prejudice and plaintiffs have filed an appeal. It is not
<PAGE>
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the financial position, operations and
liquidity of the Partnership. The Partnership believes that it has meritorious
defenses to contest the claims.
6. Settlement of Litigation:
A settlement received final approval by the court in November 1996 in the class
action, Paul Williams and Beverly Kennedy et. al. v. Balcor Pension Investors,
et. al. upon the terms described in the notice to class members in September
1996. The General Partner made a contribution of $115,368 to the Partnership,
of which the plaintiff's counsel received $11,537 pursuant to the settlement
agreement. In February 1997, the General Partner paid the remainder of the
settlement of $103,831 ($0.22 per Interest) to members of the class. Of the
settlement amount, $72,839 was paid to original investors who held their
Limited Partnership Interests at the date of the settlement and was recorded as
a distribution to Limited Partners in the Financial Statements. The remaining
portion of the settlement of $30,992 was paid to original investors who
previously sold their Interests in the Partnership. This amount was recorded as
an administrative expense in the Financial Statements. The settlement had no
material impact on the Partnership.
7. Subsequent Event:
In July 1997, the Partnership paid $17,074,390 ($37.00 per Interest) to the
holders of Limited Partnership Interests. This amount consists of a special
distribution from Cash Flow of $2.50 per Interest from the sale of the U.S.
West Direct Center Office Building and a special distribution of $34.50 per
Interest from Mortgage Reductions from available net proceeds from the sales of
the U.S. West Direct Center Office Building and the Butler Plaza Shopping
Center.
<PAGE>
BALCOR PENSION INVESTORS-VII
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors - VII (the "Partnership") is a limited partnership
formed in 1985 to invest principally in first mortgage loans. The Partnership
raised $115,367,500 from sales of Limited Partnership Interests and utilized
these proceeds to fund eight loans. During 1996, the Partnership sold four
properties. During 1997, the Partnership sold its remaining properties, the
U.S. West Direct Center Office Building and the Butler Plaza Shopping Center,
and the loan collateralized by Whispering Hills Apartments, which was accounted
for as real estate held for sale. As of June 30, 1997, the Partnership no
longer holds an interest in any loans or real estate.
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 1996 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
- ---------------------
During the quarter ended June 30, 1997, the Partnership sold the U.S. West
Direct Center Office Building and the loan collateralized by Whispering Hills
Apartments, which was accounted for as real estate held for sale, and
recognized significant gains for financial statement purposes. This was the
primary reason net income increased significantly for the six months and
quarter ended June 30, 1997 as compared to the same periods in 1996. During
the quarter ended June 30, 1997, the Partnership also sold the Butler Plaza
Shopping Center and during 1996, the Partnership sold the Hickory Creek -
Phases I and II, Sand Pebble Village - Phases I and II and Jonathan's Landing
apartment complexes. All of these properties were generating income from
operations prior to their sales. As a result of the sales, income from
operations of real estate held for sale decreased during 1997 as compared to
1996 which partially offset the increase in net income during the six months
and quarter ended June 30, 1997 as compared to the same periods in 1996.
Further discussion of the Partnership's operations is summarized below.
1997 Compared to 1996
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1997 and 1996 refer
to the six months and quarters ended June 30, 1997 and 1996.
Income from operations of real estate held for sale represents the net
operations of the properties acquired by the Partnership through foreclosure.
The Partnership sold four properties during 1996 and three properties during
1997, including the loan collateralized by Whispering Hills Apartments, which
<PAGE>
was accounted for as real estate held for sale. All of these properties were
generating income from operations prior to their sales. As a result, income
from operations of real estate held for sale decreased during 1997 as compared
to 1996.
As a result of higher average cash balances due to the investment of proceeds
from property sales prior to distribution to Limited Partners, interest income
on short-term investments increased during 1997 as compared to 1996.
Provisions were charged to income when the General Partner believed an
impairment had occurred to the value of its properties. Determinations of fair
value were made periodically, but not less than annually, on the basis of
assessments of property operations and estimated sales prices less closing
costs. Determinations of fair value represented estimates based on many
variables which affect the value of real estate, including economic and
demographic conditions. During the second quarter of 1997, the Partnership
recognized a recovery of $95,250 and a write off of $3,839,750 of a previously
established loss allowance in connection with the sale of the Butler Plaza
Shopping Center. The Partnership did not recognize any provisions or recoveries
during 1996.
The Partnership incurred higher consulting fees in connection with its response
to a tender offer during the second quarter of 1996. As a result,
administrative expense decreased during 1997 as compared to 1996.
During the second quarter of 1997, the Partnership sold the U.S. West Direct
Center Office Building and the loan collateralized by Whispering Hills
Apartments, which was accounted for as real estate held for sale. As a result,
the Partnership recognized gains totaling $8,906,309 in connection with these
sales for financial statement purposes.
The Jonathan's Landing and Sand Pebble Village Phases I and II apartment
complexes were owned by joint ventures with affiliates. As a result of the
sales of these properties during 1996, affiliates' participation in income of
joint ventures decreased during the six months ended June 30, 1997 as compared
to the same period in 1996. Affiliates' participation in income from joint
venture during 1997 relates to the Whispering Hills Apartments. As a result of
the gain recognized on the sale of this property in the second quarter of 1997,
affiliates' participation in income from joint venture increased during the
quarter ended June 30, 1997 as compared to the same period in 1996.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $18,470,000 as
of June 30, 1997, when compared to December 31, 1996 primarily due to the
proceeds from the 1997 property sales, which was partially offset by
distributions to Limited Partners in January and April 1997 from the
Partnership's share of net proceeds received in connection with the property
sales. Operating activities provided cash flow of approximately $1,010,000 from
the operations of the Partnership's properties and interest income earned on
short-term investments, offset by the payment of administrative expenses.
Investing activities consisted of net proceeds received from the sales of the
<PAGE>
U.S. West Direct Center Office Building, the Butler Plaza Shopping Center, and
the loan collateralized by Whispering Hills Apartments totaling approximately
$34,803,000, less the funding of an escrow of $1,100,000 related to the sale of
the U.S. West Direct Center Office Building and improvements to the U.S. West
Direct Center Office Building of approximately $370,000. Financing activities
consisted primarily of the payment of distributions to Limited Partners
totaling approximately $15,717,000. In addition, in July 1997 the Partnership
made a distribution of approximately $17,074,000 to Limited Partners primarily
from available net proceeds from the sales of the U.S. West Direct Center
Office Building and the Butler Plaza Shopping Center.
During 1996, the Partnership sold four properties. During 1997, the Partnership
sold its remaining three real estate investments, the U.S. West Direct Center
Office Building, the Butler Plaza Shopping Center and the loan collateralized
by the Whispering Hills Apartments, which was accounted for as real estate held
for sale. The Partnership distributed the available proceeds from the sales of
U.S. West Direct Center Office Building and Butler Plaza Shopping Center in
July 1997 and will distribute the available proceeds from the Whispering Hills
Apartments loan sale in October 1997. The Partnership has retained a portion of
the proceeds from the sales to satisfy obligations of the Partnership as well
as 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 stemming from litigation
involving the Partnership including, but not limited to, the lawsuit as
discussed in Note 5 of Notes to Financial Statements. In the absence of any
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency exists, reserves may be held by
the Partnership for a longer period of time.
In April 1997, the Partnership sold the U.S. West Direct Center Office Building
in an all cash sale for $14,250,000. From the proceeds of the sale, the
Partnership paid $324,819 in selling costs. Pursuant to the terms of the sale,
$1,100,000 of the proceeds is held in escrow and is expected to be returned to
the Partnership prior to November 1997. The remainder of the available proceeds
were distributed to the Limited Partners in July 1997. See Note 4 of Notes to
the Financial Statements for additional information.
In May 1997, the Partnership sold the Butler Plaza Shopping Center in an all
cash sale for $5,200,000. From the proceeds of the sale, the Partnership paid
$378,790 in selling costs. The net available proceeds were distributed to the
Limited Partners in July 1997. See Note 4 of Notes to the Financial Statements
for additional information.
In 1996, the Partnership was awarded $303,200 in connection with the
condemnation of a parcel of land at the Butler Plaza Shopping Center. In 1997,
the Partnership was awarded an additional $364,950 related to the land
condemnation. The Partnership received $113,900 in 1996 and expects to receive
$554,250 in the fourth quarter of 1997. The proceeds were recorded as a
reduction of the carrying value of the property, prior to its sale, in the
financial statements.
The loan collateralized by the Whispering Hills Apartments, which was accounted
for as real estate held for sale, was owned by a joint venture consisting of
<PAGE>
the Partnership and an affiliate. In June 1997, the joint venture sold the
loan in an all cash sale for $17,200,000. From the proceeds of the sale, the
joint venture paid $750,000 to the borrower in accordance with an amendment to
the modified loan agreement and $393,305 in selling costs. The net proceeds of
the sale were $16,056,695, of which $12,042,521 was the Partnership's share.
The Partnership's share of the proceeds will be distributed to Limited Partners
in October 1997. The Partnership distributed its share of the sales proceeds
to the joint venture partner in July 1997. This amount is included in due to
affiliate - joint venture partner in the financial statements at June 30, 1997.
See Note 4 of Notes to the Financial Statements for additional information.
Pursuant to the sale agreement for the Hickory Creek Apartments, $250,000 of
the sale proceeds was retained by the Partnership and was unavailable for
distribution until March 1997, at which time the funds were released.
In February 1997, the General Partner made a settlement payment of $103,831
($0.22 per $250 Interest) to members of the class pursuant to the settlement
approved by the court in November 1996 in the Paul Williams and Beverly
Kennedy, et al, v. Balcor Pension Investors, et al class action lawsuit. The
General Partner made a contribution of $115,368 to the Partnership from which
the plaintiff's counsel received $11,537 pursuant to the settlement agreement.
Of the remaining settlement amount, $72,839 was paid to original investors who
held their Limited Partnership Interests at the date of the settlement and was
recorded as a distribution to Limited Partners in the Financial Statements.
The remaining portion of the settlement of $30,992 was paid to original
investors who previously had sold their Interests in the Partnership. This
amount was recorded as an administrative expense in the Financial Statements.
In July 1997, the Partnership paid $17,074,390 ($37.00 per Interest) to the
holders of Limited Partnership Interests. This amount consists of a special
distribution of Cash Flow of $2.50 per Interest from the sale of the U.S. West
Direct Center Office Building and a special distribution of $34.50 per Interest
from Mortgage Reductions from available net proceeds from sales of the U.S.
West Direct Center Office Building and the Butler Plaza Shopping Center. The
Partnership will distribute available proceeds from the sale of the loan
collateralized by the Whispering Hills Apartments in October 1997 and available
proceeds from the $1,100,000 escrow held for the U.S. West Direct Center Office
Building in January 1998; however, it is not expected that any further regular
quarterly distributions will be made. In July 1997, the Partnership also paid
$96,140 to the General Partner as its share of the Cash Flow distributed for
the second quarter of 1997 and $32,047 as its contribution to the Early
Investment Incentive Fund. Including the July 1997 distribution, Limited
Partners have received $123.06 of Cash Flow from operations and a return of
Original Capital of $158.89, totaling $281.95 per $250 Interest.
In February 1997, the Partnership discontinued the repurchase of Interests from
Limited Partners.
<PAGE>
BALCOR PENSION INVESTORS-VII
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- -------------------------
Butler Plaza Shopping Center
- ----------------------------
As previously reported, on March 25, 1997, the Partnership contracted to sell
the Butler Plaza Shopping Center, Casselberry, Florida to an unaffiliated
party, Sterling Investment Co., Inc., a Florida corporation. The purchaser
assigned its rights under the agreement of sale to an affiliate, Sterling
Casselberry Limited Partnership, a Florida limited partnership. The sale of the
property closed on May 14, 1997. The sale price was $5,200,000. From the
proceeds of the sale, the Partnership paid selling costs of $248,790, and a
brokerage commission of $130,000 to an affiliate of the third party which
managed the property. The Partnership received approximately $4,821,000
representing the remaining proceeds.
Whispering Hills Apartments
- ---------------------------
As previously reported, on May 6, 1997, the first mortgage loan funded by the
Partnership and an affiliate (together, the "Participants") and collateralized
by the Whispering Hills Apartments, Overland Park, Kansas (the "Property") was
contracted to be sold by the Participants to the current owners of the
Property (the "Owners"). The sale price was $17,200,000. The Participants had
participating percentages in the loan of 75% and 25%, respectively. The Owners
assigned their interest in the agreement of sale to Metropolitan Life Insurance
Company ("Metropolitan"), and on June 30, 1997, the sale of the loan closed.
In addition, the Participants received $77,000 representing the Property's net
cash flow for the period May 1, 1997 through the closing date.
From the proceeds of the sale, the Participants paid closing costs of $49,305
and $344,000 as a sale commission to an unaffiliated party which provided
property management services for other properties owned by the Partnership. In
addition, pursuant to the terms of the 1989 loan modification agreement and the
1991 amendment to the loan modification agreement, the Participants made a
payment of $750,000 to the borrower out of the proceeds of the sale. The
Participants received the remaining proceeds of $16,056,695. The Partnership's
share of the total net proceeds is $12,042,521. In addition to the sale price,
the Participants received $77,000 representing the Property's net cash flow for
the period May 1, 1997 through the closing date, of which $57,750 represents
the Partnership's share.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement previously filed as Exhibit 4.1 to Amendment
<PAGE>
No. 1 to the Registrant's Registration Statement on Form S-11 dated March 6,
1986 (Registration No. 33-01630) and Form of Confirmation regarding Interests
in the Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form
10-Q for the quarter ended September 30, 1992 (Commission File No. 0-15528) are
incorporated herein by reference.
(10) Material Contracts:
(a)(i) Agreement of Sale and attachment thereto relating to the sale of the
U.S. West Office Building, Murray, Utah, previously filed as Exhibit (99) to
the Registrant's Current Report on Form 8-K dated January 14, 1997, is
incorporated herein by reference.
(a)(ii) First Amendment to Agreement of Sale relating to the sale of the
U.S. West Office Building, Murray, Utah, previously filed as Exhibit
(10)(a)(ii) to the Registrant's Form 10-K dated December 31, 1996, is
incorporated herein by reference.
(a)(iii) Second Amendment to Agreement of Sale relating to the sale of
the U.S. West Office Building, Murray, Utah, previously filed as Exhibit
(10)(a)(iii) to the Registrant's Form 10-K dated December 31, 1996, is
incorporated herein by reference.
(a)(iv) Third Amendment to Agreement of Sale relating to the sale of the U.S.
West Office Building, Murray, Utah, previously filed as Exhibit (10)(a)(iv) to
the Registrant's Form 10-K dated December 31, 1996, is incorporated herein by
reference.
(b) Agreement of Sale and attachments thereto relating to the sale of Sand
Pebble Village Apartments - Phase I previously filed as Exhibit (2)(a) to the
Registrant's Current Report on Form 8-K dated June 28, 1996, is incorporated
herein by reference.
(c) Agreement of Sale and attachments thereto relating to the sale of Sand
Pebble Village Apartments - Phase II previously filed as Exhibit (2)(b) to the
Registrant's Current Report on Form 8-K dated June 28, 1996, is incorporated
herein by reference.
(d)(i) Agreement of Sale and attachments thereto relating to the sale of
Hickory Creek Apartments previously filed as Exhibit (10)(i) to the
Registrant's Form 10-Q dated June 30, 1996, is incorporated herein by
reference.
(d)(ii) Letter Agreement dated August 14, 1996, relating to the sale of Hickory
Creek Apartments previously filed as Exhibit (10)(c)(ii) to the Registrant's
Form 10-Q dated September 30, 1996 is incorporated herein by reference.
(e)(i) Agreement of Sale and attachment thereto relating to the sale of
Jonathan's Landing Apartments previously filed as Exhibit (2) to the
Registrant's Current Report on Form 8-K dated August 30, 1996, is incorporated
herein by reference.
<PAGE>
(e)(ii) First Amendment to the Agreement of Sale relating to the sale of
Jonathan's Landing Apartments previously filed as Exhibit (10)(d)(ii) to the
Registrant's Form 10-Q dated September 30, 1996 is incorporated herein by
reference.
(f)(i) Agreement of Sale and attachment thereto relating to the sale of Butler
Plaza Shopping Center, Orlando, Florida, previously filed as Exhibit (10)(f) to
the Registrant's Form 10-K dated December 31, 1996, is incorporated herein by
reference.
(f)(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of Butler Plaza Shopping Center, Orlando, Florida, previously filed as
Exhibit (10)(f)(ii) to the Registrant's Form 10-Q dated March 31, 1997, is
incorporated herein by reference.
(g)(i) Agreement to Purchase Loan Documents relating to the sale of the loan
collateralized by the Whispering Hills Apartments, Overland Park, Kansas,
previously filed as Exhibit (10)(g) to the Registrant's Form 10-Q dated March
31, 1997, is incorporated herein by reference.
(g)(ii) First Amendment to Agreement to Purchase Loan Documents related to the
sale of the loan collateralized by the Whispering Hills Apartments, Overland
Park, Kansas, is attached hereto.
(27) Financial Data Schedule of the Registrant for the six months ended June
30, 1997 is attached hereto.
(b) Reports on Form 8-K: No Reports on Form 8-K were filed during the quarter
ended June 30, 1997.
<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 PENSION INVESTORS-VII
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-VII, the General Partner
By: /s/Jayne A. Kosik
-----------------------------
Jayne A. Kosik
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Mortgage Advisors-VII, the General
Partner
Date: Aug 13, 1997
---------------------------
<PAGE>
FIRST AMENDMENT TO AGREEMENT TO
PURCHASE LOAN DOCUMENTS
THE FIRST AMENDMENT (this "Amendment") is made as of the 23rd day of May,
1997, by and between BALCOR MORTGAGE ADVISORS, INC. ("Balcor") and MICHAEL P.
HARRIS, ARNOLD L. PORATH, JOHN P. LOWNEY, JR. and KAY S. LOWNEY, AS TRUSTEES OF
THE JKL TRUST, and STEPHEN D. MOSES (collectively, "Purchaser").
RECITALS
A. Balcor and Purchaser are parties to that certain Agreement to
Purchase Loan Documents made as of the 23rd day of April, 1997 (this
"Agreement").
B. Purchaser desires to extend the Closing Date of the Agreement and
Balcor is agreeable to extending the Closing Date subject to the terms and
conditions set forth in this Amendment.
NOW, THEREFORE, for and in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Capitalized terms used but not defined in this Amendment shall have
the meanings assigned to them in the Agreement.
2. The Closing Date, as defined in paragraph 4 of the Agreement, is
hereby amended to mean and refer to June 30, 1997, or such earlier date
approved by Balcor and Porath on behalf of all of the Purchasers, without
further right to extend. In addition, the Positive Cash Flow Letter (Exhibit E
to the Agreement) is hereby amended by replacing, where appropriate, the proper
dates and months to be consistent with a Closing Date of June 30, 1997.
3. Concurrently with the execution of this Amendment, the parties shall
execute the attached First Amendment to Escrow Agreement and deliver same to
the Escrow Agent and each other by facsimile transmission.
4. All other terms and provisions of the Agreement shall remain in full
force and effect to the extent not inconsistent with the above amendments.
5. This Amendment may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Execution and delivery of this Amendment by
exchange of facsimile copies bearing the facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Amendment by such
party. Such facsimile copy shall constitute enforceable original documents.
<PAGE>
IN WITNESS WHEREOF, the parties have each caused this Amendment to be duly
executed as of the day and year first above written.
BALCOR MORTGAGE ADVISORS, INC.
By: /s/ Terri Thompson
--------------------------------
Name: Terri Thompson
--------------------------------
Its: Authorized Representive
--------------------------------
PURCHASER:
/s/ Michael P. Harris
--------------------------------------
MICHAEL P. HARRIS
/s/ Arnold L. Porath
--------------------------------------
ARNOLD L. PORATH
/s/ John P. Lowney, Jr.
--------------------------------------
JOHN P. LOWNEY, JR. AS TRUSTEE OF THE
JKL TRUST
/s/ Kay S. Lowney
--------------------------------------
KAY S. LOWNEY, AS TRUSTEE OF THE JKL
TRUST
/s/ Stephen D. Moses
--------------------------------------
STEPHEN D. MOSES
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 35767
<SECURITIES> 0
<RECEIVABLES> 755
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 37622
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 37622
<CURRENT-LIABILITIES> 4511
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 33111
<TOTAL-LIABILITY-AND-EQUITY> 37622
<SALES> 0
<TOTAL-REVENUES> 9583
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9192
<INCOME-TAX> 0
<INCOME-CONTINUING> 9192
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9192
<EPS-PRIMARY> 15.60
<EPS-DILUTED> 15.60
</TABLE>
