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 March 31, 1995
--------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - -----
EXCHANGE ACT OF 1934.
For the transition period from to
------------ ------------
Commission file number 0-15646
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BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3378299
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
- - ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
--------------
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
----- -----
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
------------- -------------
Cash and cash equivalents $ 1,181 $ 37,514
Investment in joint ventures with affiliates 982,704 972,320
------------- -------------
$ 983,885 $ 1,009,834
============= =============
LIABILITIES AND PARTNERS' DEFICIT
Loans payable - affiliate $ 756,645 $ 731,645
Accounts payable 14,556
Due to affiliates 168,811 139,292
------------- -------------
Total liabilities 925,456 885,493
Affiliate's participation in joint venture 393,921 383,661
Partners' deficit (7,084 Limited Partnership
Interests issued and outstanding) (335,492) (259,320)
------------- -------------
$ 983,885 $ 1,009,834
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
------------- ------------
Expenses:
Interest on short-term loan from
an affiliate $ 13,871 $ 7,496
Administrative 37,925 33,909
Participation in losses of joint ventures
with affiliates 14,116 53,882
------------- ------------
Total expenses 65,912 95,287
------------- ------------
Loss before affiliate's participation
in loss from joint venture (65,912) (95,287)
Affiliate's participation in (income) loss
from joint venture (10,260) 63
------------- ------------
Net loss $ (76,172) $ (95,224)
============= ============
Net loss allocated to General Partner $ (762) $ (952)
============= ============
Net loss allocated to Limited Partners $ (75,410) $ (94,272)
============= ============
Net loss per Limited Partnership Interest
(7,084 issued and outstanding) $ (10.65) $ (13.31)
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
------------- ------------
Operating activities:
Net loss $ (76,172) $ (95,224)
Adjustments to reconcile net loss to net
cash used in operating activities:
Affiliate's participation in income
(loss) from joint venture 10,260 (63)
Participation in losses of joint
ventures with affiliates 14,116 53,882
Net change in:
Accounts payable (14,556) (10,035)
Due to affiliates 29,519 25,742
------------- ------------
Net cash used in operating activities (36,833) (25,698)
------------- ------------
Investing activity:
Capital contribution to joint venture with
an affiliate (24,500) (17,000)
------------- ------------
Cash used in investing activity (24,500) (17,000)
------------- ------------
Financing activity:
Proceeds from loan payable - affiliate 25,000
-------------
Cash provided by financing activity 25,000
-------------
Net change in cash and cash equivalents (36,333) (42,698)
Cash and cash equivalents at beginning
of period 37,514 43,067
------------- ------------
Cash and cash equivalents at end of period $ 1,181 $ 369
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(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,
1995, and all such adjustments are of a normal and recurring nature.
2. Transactions with Affiliates:
Expenses paid and payable by the Partnership to affiliates during the quarter
ended March 31, 1995 are:
Paid Payable
----------- ---------
Reimbursement of expenses to
the General Partner, at cost None $41,394
As of March 31, 1995, $756,645 is owed to the General Partner, $25,000 of which
was borrowed during the quarter ended March 31, 1995. During the quarters ended
March 31, 1995 and 1994, the Partnership incurred interest expense of $13,871
and $7,496, respectively. The Partnership paid no interest expense during
either quarter. As of March 31, 1995, interest expense of $127,417 is payable.
Interest expense was computed at the American Express Company cost of funds
rate plus a spread to cover administrative costs. As of March 31, 1995, this
rate was 6.552%.
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Growth Fund A Real Estate Investment for Capital Appreciation (the
"Partnership") was formed in 1985 to invest in and operate income-producing
real property. The Partnership raised $7,084,000 from sales of Limited
Partnership Interests and utilized these proceeds to acquire joint venture
interests in two real properties. The Partnership is currently involved in the
operation of these joint ventures.
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 1994 for a more complete understanding of
the Partnership's financial position.
Operations
- - ----------
Summary of Net Loss
- - -------------------
The operations of the Partnership are primarily comprised of the Partnership's
participation in the operations of the Post Lake and Redwood Shores apartment
complexes. As a result of improved operations at the Post Lake apartment
complex, the Partnership's net loss decreased during the quarter ended March
31, 1995 as compared to the same period in 1994. Further discussion of the
Partnership's operations is summarized below.
1995 Compared to 1994
- - ---------------------
Post Lake Apartments generated net income during the quarter ended March 31,
1995 as compared to a net loss during the same period in 1994 primarily due to
higher rental rates and higher occupancy in the first quarter of 1995. The
improvements at Post Lake also resulted in affiliate's participation in income
from joint venture during the quarter ended March 31, 1995 as compared to a
participation in loss during the same period in 1994.
The net loss from Redwood Shores Apartments remained relatively unchanged
during the quarter ended March 31, 1995 as compared to the same period in 1994.
Higher rental income due to increased occupancy was offset by higher payroll
related costs.
As a result of higher interest rates and outstanding balances in the first
quarter of 1995, interest expense on the Partnership's short-term loan with an
affiliate increased during the quarter ended March 31, 1995 as compared to the
same period in 1994.
Primarily as a result of increased accounting fees, administrative expenses
increased during the quarter ended March 31, 1995 as compared to the same
period in 1994.
<PAGE>
Liquidity and Capital Resources
- - -------------------------------
The cash position of the Partnership decreased as of March 31, 1995 as compared
to December 31, 1994. The Partnership's operating activities consisted of the
payment of Partnership administrative expenses; investing activities consisted
of the Partnership's share of capital contributions to Redwood Partners; and
financing activities consisted of borrowings from the General Partner.
The Partnership classifies the cash flow performance of the properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments. A deficit is considered to be
significant if it exceeds $250,000 annually or 20% of the property's rental and
service income. The Partnership defines cash flow generated from the properties
as an amount equal to the property's revenue receipts less property related
expenditures, which include debt service payments. During the quarters ended
March 31, 1995 and 1994, Post Lake Apartments generated positive cash flow
while Redwood Shores Apartments experienced a marginal cash flow deficit.
During the quarters ended March 31, 1995 and 1994, the mortgage financing on
the Redwood Shores Apartments required principal payments of $92,500 and
$85,000, respectively, which caused the property's cash flow deficits. The
joint venture partners of Redwood Shores (Redwood Partners and the seller) are
required to fund their share of any cash flow deficit the property generates.
While the cash flow of the properties in which the Partnership holds joint
venture interests has improved, the General Partner continues to pursue a
number of actions aimed at improving the cash flow of these properties
including refinancing of mortgage loans, improving property operating
performance, and seeking rent increases where market conditions allow. As of
March 31, 1995 the Redwood Shores Apartments had an occupancy rate of 96% and
the Post Lake Apartments had an occupancy rate of 99%.
Each of the 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. Although the Partnership has no third-party
financing which matures prior to 1997, the General Partner is currently
pursuing a refinancing of the Redwood Shores mortgage note payable.
As of March 31, 1995, $756,645 is owed to the General Partner. The General
Partner may continue to provide additional short-term loans to the Partnership
for working capital or liquidity purposes, although there is no assurance that
such loans will be available. Should such short-term loans not be available,
the General Partner will seek alternative third party sources of financing
working capital. However, the current economic environment and its impact on
the real estate industry make it unlikely that the Partnership would be able to
secure financing from third parties to fund working capital needs or operating
deficits. Should additional borrowings be needed and not be available either
through the General Partner or third parties, the Partnership may be required
to dispose of one or both of its joint venture interests to satisfy these
obligations. The Partnership may need additional borrowings during 1995 to fund
its share of deficits at Redwood Shores Apartments. It is not expected that the
Partnership will generate substantial Net Cash Receipts, and any cash flow that
is generated is expected to be used to finance the Partnership's share of
improvements that are intended to enhance the value of the properties and to
repay General Partner advances. The Redwood Shores and Post Lake apartment
complexes may not currently be sold on terms which are advantageous to the
Partnership and it may be necessary for the joint ventures to retain ownership
of the properties for longer than the holding period originally projected in
the Prospectus.
<PAGE>
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
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. 3
dated October 1, 1986 to the Registrant's Registration Statement on Form S-11
(Registration No. 33-4963) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended June 30, 1992 (Commission File No. 0-15646) are incorporated
herein by reference.
(27) Financial Data Schedule of the Registrant for the three month period
ending March 31, 1995 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended March 31, 1995.
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
------------- ------------
Cash and cash equivalents $ 225,103 $ 47,918
Escrow deposits 148,754 92,357
Accounts and accrued interest receivable 219,582 207,180
Deferred expenses, net of accumulated
amortization of $174,008 in 1995 and
$168,513 in 1994 45,791 51,286
------------- ------------
639,230 398,741
------------- ------------
Investment in real estate, at cost:
Land 3,794,165 3,794,165
Buildings and improvements 21,297,917 21,297,917
------------- ------------
25,092,082 25,092,082
Less accumulated depreciation 7,133,459 6,970,136
------------- ------------
Investment in real estate, net of
accumulated depreciation 17,958,623 18,121,946
------------- ------------
$ 18,597,853 $18,520,687
============= ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 400 $ 3,112
Accrued liabilities, principally
real estate taxes 56,896
Security deposits 104,869 108,009
Mortgage note payable 15,362,559 15,415,878
------------- ------------
Total liabilities 15,524,724 15,526,999
Partners' capital 3,073,129 2,993,688
------------- ------------
$ 18,597,853 $18,520,687
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
------------- ------------
Income:
Rental and service $ 1,005,749 $ 950,626
Interest on short-term investments 4,116 714
------------- ------------
Total income 1,009,865 951,340
------------- ------------
Expenses:
Interest on mortgage note payable 356,083 360,777
Depreciation 163,323 163,323
Amortization of deferred expenses 5,495 5,495
Property operating 302,953 319,882
Real estate taxes 56,896 57,756
Property management fees 42,744 38,861
Administrative 2,930 5,733
------------- ------------
Total expenses 930,424 951,827
------------- ------------
Net income (loss) $ 79,441 $ (487)
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
------------- ------------
Operating activities:
Net income (loss) $ 79,441 $ (487)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation of property 163,323 163,323
Amortization of deferred expenses 5,495 5,495
Net change in:
Escrow deposits (56,397) (57,273)
Accounts and accrued interest
receivable (12,402) 186,612
Accounts payable (2,712) (1,556)
Accrued liabilities 56,896 57,756
Security deposits (3,140) 3,926
------------- ------------
Net cash provided by operating activities 230,504 357,796
------------- ------------
Financing activity:
Principal payments on mortgage note payable (53,319) (48,625)
------------- ------------
Cash used in financing activity (53,319) (48,625)
------------- ------------
Net change in cash and cash equivalents 177,185 309,171
Cash and cash equivalents at beginning of
period 47,918 49,917
------------- ------------
Cash and cash equivalents at end of period $ 225,103 $ 359,088
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General 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,
1995, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarters ended March 31, 1995 and 1994, the Partnership incurred and
paid interest expense on the mortgage note payable of $356,083 and $360,777,
respectively.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
------------- ------------
Cash and cash equivalents $ 10,956 $ 9,887
Bond reserve 2,478,000 2,478,000
Accounts and accrued interest receivable 299,758 204,228
------------- ------------
2,788,714 2,692,115
------------- ------------
Investment in real estate, at cost:
Land 6,043,941 6,043,941
Buildings and improvements 22,942,335 22,942,335
------------- ------------
28,986,276 28,986,276
Less accumulated depreciation 6,781,432 6,598,769
------------- ------------
Investment in real estate, net of
accumulated depreciation 22,204,844 22,387,507
------------- ------------
$ 24,993,558 $25,079,622
============= ============
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 1,317 $ 3,890
Accrued liabities, principally
real estate taxes 72,480
Security deposits 110,767 115,565
Mortgage note payable 25,825,000 25,917,500
------------- ------------
Total liabilities 26,009,564 26,036,955
Partners' deficit (1,016,006) (957,333)
------------- ------------
$ 24,993,558 $25,079,622
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
------------- ------------
Income:
Rental and service $ 883,736 $ 866,613
Interest on short-term investments 76,312 73,550
------------- ------------
Total income 960,048 940,163
------------- ------------
Expenses:
Interest on mortgage note payable 568,969 576,299
Depreciation 182,663 182,663
Property operating 230,206 192,476
Real estate taxes 72,480 70,739
Property management fees 35,170 43,375
Administrative 3,439 5,558
------------- ------------
Total expenses 1,092,927 1,071,110
------------- ------------
Loss before seller's participation
in loss of joint venture (132,879) (130,947)
Seller's participation in loss
of joint venture 25,206 23,671
------------- ------------
Net loss $ (107,673) $ (107,276)
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1995 and 1994
(Unaudited)
1995 1994
------------- ------------
Operating activities:
Net loss $ (107,673) $ (107,276)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Seller's participation in loss from
joint venture (25,206) (23,671)
Depreciation of property 182,663 182,663
Net change in:
Accounts receivable (95,530) (100,884)
Accounts payable (2,573) (1,070)
Accrued liabilities 72,480 70,739
Security deposits (4,798) (2,575)
------------- ------------
Net cash provided by operating activities 19,363 17,926
------------- ------------
Financing activities:
Capital contributions by joint venture
partners 49,000 34,000
Capital contribution by joint venture
partner - seller 25,206 23,671
Principal payments on mortgage note payable (92,500) (85,000)
------------- ------------
Net cash used in financing activities (18,294) (27,329)
------------- ------------
Net change in cash and cash equivalents 1,069 (9,403)
Cash and cash equivalents at beginning of
period 9,887 19,602
------------- ------------
Cash and cash equivalents at end of period $ 10,956 $ 10,199
============= ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
REDWOOD PARTNERS
(An Illinois General 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,
1995, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarters ended March 31, 1995 and 1994, the Partnership incurred and
paid interest expense on the mortgage note payable of $568,969 and $576,299,
respectively.
<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 GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL
APPRECIATION
By: /s/ Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Partners-XX, the General Partner
By: /s/ Brian Parker
------------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XX, the General
Partner
Date: May 12, 1995
--------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 984
<CURRENT-LIABILITIES> 925
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (335)
<TOTAL-LIABILITY-AND-EQUITY> 984
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 24
<OTHER-EXPENSES> 38
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14
<INCOME-PRETAX> (76)
<INCOME-TAX> 0
<INCOME-CONTINUING> (76)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (76)
<EPS-PRIMARY> (10.65)
<EPS-DILUTED> (10.65)
</TABLE>
