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, 1996
--------------
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.)
2355 Waukegan Road
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
----- -----
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEETS
March 31, 1996 and December 31, 1995
Unaudited)
ASSETS
1996 1995
------------ ------------
Cash and cash equivalents $ 85,913 $ 139,880
Accounts receivable 66,043 39,213
Investment in joint ventures with affiliates 1,075,821 992,883
------------ ------------
$ 1,227,777 $ 1,171,976
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Loan payable - affiliate $ 1,118,145 $ 1,118,145
Accounts payable 4,480
Due to affiliates 209,170 185,138
------------ ------------
Total liabilities 1,327,315 1,307,763
------------ ------------
Affiliate's participation in joint venture 362,568 348,346
------------ ------------
Limited Partners' deficit (7,084 Interests
issued and outstanding) (397,271) (419,078)
General Partner's deficit (64,835) (65,055)
------------ ------------
Total partners' deficit (462,106) (484,133)
------------ ------------
$ 1,227,777 $ 1,171,976
============ ============
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, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Income:
Participation in net income (loss) of joint
ventures with affiliates $ 82,938 $ (14,116)
------------ ------------
Total income 82,938 (14,116)
------------ ------------
Expenses:
Interest on short-term loan from an
affiliate 19,779 13,871
Administrative 26,910 37,925
------------ ------------
Total expenses 46,689 51,796
------------ ------------
Income (loss) before affiliate's participation
in income from joint venture 36,249 (65,912)
Affiliate's participation in income from
joint venture (14,222) (10,260)
------------ ------------
Net income (loss) $ 22,027 $ (76,172)
============ ============
Net income (loss) allocated to General
Partner $ 220 $ (762)
============ ============
Net income (loss) allocated to Limited
Partners $ 21,807 $ (75,410)
============ ============
Net income (loss) per Limited Partnership
Interest (7,084 issued and outstanding) $ 3.08 $ (10.65)
============ ============
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, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Operating activities:
Net income (loss) $ 22,027 $ (76,172)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Affiliate's participation in income
from joint venture 14,222 10,260
Participation in net (income) loss of
joint ventures with affiliates (82,938) 14,116
Net change in:
Accounts receivable (26,830)
Accounts payable (4,480) (14,556)
Due to affiliates 24,032 29,519
------------ ------------
Net cash used in operating activities (53,967) (36,833)
------------ ------------
Investing activity:
Capital contribution to joint venture
with an affiliate (24,500)
------------
Cash used in investing activity (24,500)
------------
Financing activity:
Proceeds from loan payable - affiliate 25,000
------------
Cash provided by financing activity 25,000
------------
Net change in cash and cash equivalents (53,967) (36,333)
Cash and cash equivalents at beginning of
period 139,880 37,514
------------ ------------
Cash and cash equivalents at end of period $ 85,913 $ 1,181
============ ============
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,
1996, 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, 1996 are:
Paid Payable
-------- --------
Reimbursement of expenses to
the General Partner, at cost $5,262 $10,343
As of March 31, 1996, $1,118,145 is owed to the General Partner. During the
quarters ended March 31, 1996 and 1995, the Partnership incurred interest
expense of $19,779 and $13,871, respectively. The Partnership paid no interest
expense during either period. As of March 31, 1996, interest expense of
$198,827 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, 1996, this rate was 5.850%.
<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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Net Income
- ---------------------
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. Primarily as a result of decreased interest expense at Redwood
Shores due to the 1995 bond re-marketing, the Partnership generated net income
during the quarter ended March 31, 1996 as compared to a net loss during the
same period in 1995. Further discussion of the Partnership's operations is
summarized below.
1996 Compared to 1995
- ---------------------
Discussions of fluctuations between 1996 and 1995 refer to the quarters ended
March 31, 1996 and 1995.
The net income from Post Lake Apartments increased during 1996 as compared to
1995 primarily as a result of higher rental income due to higher rental rates.
The improvement in operations resulted in increased affiliate's participation
in income from joint venture during 1996 as compared to 1995.
Redwood Shores Apartments generated net income during 1996 as compared to a net
loss during 1995 primarily as a result of lower interest expense on the
mortgage note payable as a result of the October 1995 re-marketing of the bonds
secured by the property. In addition, rental income increased during 1996 as
compared to 1995 due to higher rental rates. These improvements were offset by
higher property operating expenses during 1996 as compared to 1995 due to
repairs made to the wood siding of the buildings and decreased interest income
on short-term investments during 1996 as compared to 1995 due to lower interest
rates earned on investments.
On the attached Redwood Partners financial statements, income from Redwood
Shores Apartments Associates, Ltd. for 1996 has been allocated entirely to
<PAGE>
Redwood Partners, due to a disproportionate allocation of losses generated in
prior years. The sellers's participation in losses from prior years had been
limited to the extent the seller contributed capital to the joint venture.
As a result of higher outstanding loan balances during 1996, interest expense
on the Partnership's short-term loan with an affiliate increased during 1996 as
compared to 1995.
Primarily as a result of lower accounting fees, administrative expenses
decreased during 1996 as compared to 1995.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $54,000 as of
March 31, 1996 as compared to December 31, 1995, due primarily to the payment
of administrative expenses.
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, 1996 and 1995, Post Lake Apartments generated positive cash flow.
Redwood Shores Apartments generated positive cash flow during the quarter ended
March 31, 1996 as compared to a marginal cash flow deficit during the same
period in 1995 due to lower interest expense on the mortgage note payable as a
result of the re-marketing of the bonds secured by the property in October
1995.
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 improving property operating performance, and seeking rent increases
where market conditions allow. As of March 31, 1996 the Redwood Shores
Apartments had an occupancy rate of 98% and the Post Lake Apartments had an
occupancy rate of 94%.
As of March 31, 1996, $1,118,145 was 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. 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. 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.
There can be no assurance that investors will recover all of their original
investment.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. Currently,
<PAGE>
one of the joint ventures in which the Partnership is invested has entered into
negotiations for a contract to sell Redwood Shores Apartments and the other
joint venture is actively marketing Post Lake Apartments for sale. If current
market conditions remain favorable and the General Partner can obtain
appropriate sales prices, the Partnership's liquidation strategy may be
accelerated.
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.
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 quarter ending March 31,
1996 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended March 31, 1996.
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------ ------------
Cash and cash equivalents $ 445,756 $ 229,555
Escrow deposits 141,715 80,257
Accounts receivable 214,296 218,300
Deferred expenses, net of accumulated
amortization of $195,988 in 1996 and
$190,493 in 1995 23,811 29,306
------------ ------------
825,578 557,418
------------ ------------
Investment in real estate:
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 7,786,752 7,623,429
------------ ------------
Investment in real estate, net of
accumulated depreciation 17,305,330 17,468,653
------------ ------------
$ 18,130,908 $ 18,026,071
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 287 $ 902
Accrued real estate taxes 61,572
Security deposits 102,116 109,891
Mortgage note payable 15,136,564 15,195,030
------------ ------------
Total liabilities 15,300,539 15,305,823
Partners' capital 2,830,369 2,720,248
------------ ------------
$ 18,130,908 $ 18,026,071
============ ============
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, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Income:
Rental and service $ 1,055,889 $ 1,005,749
Interest on short-term investments 4,721 4,116
------------ ------------
Total income 1,060,610 1,009,865
------------ ------------
Expenses:
Interest on mortgage note payable 350,937 356,083
Depreciation 163,323 163,323
Amortization of deferred expenses 5,495 5,495
Property operating 323,259 302,953
Real estate taxes 61,572 56,896
Property management fees 44,681 42,744
Administrative 1,222 2,930
------------ ------------
Total expenses 950,489 930,424
------------ ------------
Net income $ 110,121 $ 79,441
============ ============
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, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Operating activities:
Net income $ 110,121 $ 79,441
Adjustments to reconcile net income 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 (61,458) (56,397)
Accounts receivable 4,004 (12,402)
Accounts payable (615) (2,712)
Accrued real estate taxes 61,572 56,896
Security deposits (7,775) (3,140)
------------ ------------
Net cash provided by operating activities 274,667 230,504
------------ ------------
Financing activity:
Principal payments on mortgage note payable (58,466) (53,319)
------------ ------------
Cash used in financing activity (58,466) (53,319)
------------ ------------
Net change in cash and cash equivalents 216,201 177,185
Cash and cash equivalents at beginning of
period 229,555 47,918
------------ ------------
Cash and cash equivalents at end of period $ 445,756 $ 225,103
============ ============
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,
1996, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarters ended March 31, 1996 and 1995, the Partnership incurred and
paid interest expense on the mortgage note payable of $350,937 and $356,083,
respectively.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------ ------------
Cash and cash equivalents $ 6,084 $ 7,025
Bond reserve 2,478,000 2,478,000
Accounts and accrued interest receivable 817,060 587,529
Deferred expenses, net of accumulated
amortization of $35,921 in 1996 and
$17,961 in 1995 323,292 341,252
------------ ------------
3,624,436 3,413,806
------------ ------------
Investment in real estate:
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 7,512,083 7,329,420
------------ ------------
Investment in real estate, net of
accumulated depreciation 21,474,193 21,656,856
------------ ------------
$ 25,098,629 $ 25,070,662
============ ============
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $ 66,507 $ 70,217
Accrued real estate taxes 75,588
Security deposits 113,548 113,213
Mortgage note payable 25,430,000 25,530,000
------------ ------------
Total liabilities 25,685,643 25,713,430
Partners' deficit (587,014) (642,768)
------------ ------------
$ 25,098,629 $ 25,070,662
============ ============
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, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Income:
Rental and service $ 943,717 $ 883,736
Interest on short-term investments 52,745 76,312
------------ ------------
Total income 996,462 960,048
------------ ------------
Expenses:
Interest on mortgage note payable 348,190 568,969
Depreciation 182,663 182,663
Amortization of deferred expenses 17,960
Property operating 274,211 230,206
Real estate taxes 75,588 72,480
Property management fees 37,723 35,170
Administrative 4,373 3,439
------------ ------------
Total expenses 940,708 1,092,927
------------ ------------
Income (loss) before seller's participation
in loss of joint venture 55,754 (132,879)
Seller's participation in loss of joint
venture 25,206
------------ ------------
Net income (loss) $ 55,754 $ (107,673)
============ ============
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, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Operating activities:
Net income (loss) $ 55,754 $ (107,673)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Seller's participation in loss from
joint venture (25,206)
Depreciation of property 182,663 182,663
Amortization of deferred expenses 17,960
Net change in:
Accounts receivable (229,531) (95,530)
Accounts payable (3,710) (2,573)
Accrued real estate taxes 75,588 72,480
Security deposits 335 (4,798)
------------ ------------
Net cash provided by operating activities 99,059 19,363
------------ ------------
Financing activities:
Capital contribution by joint venture
partners 49,000
Capital contribution by joint venture
partner - seller 25,206
Principal payments on mortgage note payable (100,000) (92,500)
------------ ------------
Net cash used in financing activities (100,000) (18,294)
------------ ------------
Net change in cash and cash equivalents (941) 1,069
Cash and cash equivalents at beginning of
period 7,025 9,887
------------ ------------
Cash and cash equivalents at end of period $ 6,084 $ 10,956
============ ============
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,
1996, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the quarters ended March 31, 1996 and 1995, the Partnership incurred and
paid interest expense on the mortgage note payable of $348,190 and $568,969,
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 D. Parker
------------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XX, the General
Partner
Date: May 15, 1996
--------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 86
<SECURITIES> 0
<RECEIVABLES> 66
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 152
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1228
<CURRENT-LIABILITIES> 1327
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (462)
<TOTAL-LIABILITY-AND-EQUITY> 1228
<SALES> 0
<TOTAL-REVENUES> 83
<CGS> 0
<TOTAL-COSTS> 14
<OTHER-EXPENSES> 27
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20
<INCOME-PRETAX> 22
<INCOME-TAX> 0
<INCOME-CONTINUING> 22
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22
<EPS-PRIMARY> 3.08
<EPS-DILUTED> 3.08
</TABLE>
