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 September 30, 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
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------ ------------
Cash and cash equivalents $2,422,420 $139,880
Accounts and accrued interest receivable 109,076 39,213
Investment in joint ventures with affiliates 5,249,334 992,883
------------ ------------
$7,780,830 $1,171,976
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Loan payable - affiliate $1,118,145
Accounts payable $3,163 4,480
Due to affiliates 14,696 185,138
------------ ------------
Total liabilities 17,859 1,307,763
------------ ------------
Affiliate's participation in joint venture 153,015 348,346
------------ ------------
Limited Partners' capital (deficit)
(7,084 Interests issued and outstanding) 7,609,956 (419,078)
General Partner's (deficit) (65,055)
------------ ------------
Total partners' capital (deficit) 7,609,956 (484,133)
------------ ------------
$7,780,830 $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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Income:
Interest on short-term investments $33,020 $2,007
Participation in net income (loss) of joint
ventures with affiliates before
extraordinary items 9,600,316 (80,058)
------------ ------------
Total income (loss) 9,633,336 (78,051)
------------ ------------
Expenses:
Interest on short-term loan from an
affiliate 55,852 45,059
Administrative 94,297 125,919
------------ ------------
Total expenses 150,149 170,978
------------ ------------
Income (loss) before affiliate's participation
in income from joint venture and
extraordinary items 9,483,187 (249,029)
Affiliate's participation in income from
joint venture (1,113,908) (7,211)
------------ ------------
Income (loss) before extraordinary items 8,369,279 (256,240)
------------ ------------
Extraordinary items:
Participation in debt extinguishment
expense with affiliates (98,766)
Participation in prepayment penalty
with affiliates (176,424)
------------
Total extraordinary items (275,190)
------------ ------------
Net income (loss) $8,094,089 $(256,240)
============ ============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
------------ ------------
Income (loss) before extraordinary items
allocated to General Partner $67,807 $(2,562)
============ ============
Income (loss) before extraordinary items
allocated to Limited Partners $8,301,472 $(253,678)
============ ============
Income (loss) before extraordinary items
per Limited Partnership Interest
(7,084 issued and outstanding) $1,171.86 $(35.81)
============ ============
Extraordinary items allocated to
General Partner $(2,752)
============
Extraordinary items allocated to
Limited Partners $(272,438)
============
Extraordinary items per Limited
Partnership Interest (7,084 issued
and outstanding) $(38.46)
============
Net income (loss) allocated to General
Partner $65,055 $(2,562)
============ ============
Net income (loss) allocated to Limited
Partners $8,029,034 $(253,678)
============ ============
Net income (loss) per Limited Partnership
Interest (7,084 issued and outstanding) $1,133.40 $(35.81)
============ ============
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 September 30, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Income:
Interest on short-term investments $30,464 $1,635
Participation in net income (loss) of joint
ventures with affiliates before
extraordinary items 9,486,366 (48,314)
------------ ------------
Total income (loss) 9,516,830 (46,679)
------------ ------------
Expenses:
Interest on short-term loan from an
affiliate 16,523 15,872
Administrative 28,498 37,287
------------ ------------
Total expenses 45,021 53,159
------------ ------------
Income (loss) before affiliate's participation
in (income) loss from joint venture and
extraordinary items 9,471,809 (99,838)
Affiliate's participation in (income) loss from
from joint venture (1,091,902) 3,336
------------ ------------
Income (loss) before extraordinary items 8,379,907 (96,502)
------------ ------------
Extraordinary items:
Participation in debt extinguishment
expense with affiliates (98,766)
Participation in prepayment penalty
with affiliates (176,424)
------------
Total extraordinary items (275,190)
------------ ------------
Net income (loss) $8,104,717 $(96,502)
============ ============
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 September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
------------ ------------
Income (loss) before extraordinary items
allocated to General Partner $67,913 $(965)
============ ============
Income (loss) before extraordinary items
allocated to Limited Partners $8,311,994 $(95,537)
============ ============
Income (loss) before extraordinary items
per Limited Partnership Interest
(7,084 issued and outstanding) $1,173.35 $(13.49)
============ ============
Extraordinary items allocated to
General Partner $(2,752)
============
Extraordinary items allocated to
Limited Partners $(272,438)
============
Extraordinary items per Limited
Partnership Interest (7,084 issued
and outstanding) $(38.46)
============
Net income (loss) allocated to General
Partner $65,161 $(965)
============ ============
Net income (loss) allocated to Limited
Partners $8,039,556 $(95,537)
============ ============
Net income (loss) per Limited Partnership
Interest (7,084 issued and outstanding) $1,134.89 $(13.49)
============ ============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Operating activites:
Net income (loss) $8,094,089 $(256,240)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Affiliate's participation in income
from joint venture 1,113,908 7,211
Participation in net (income) loss of
joint ventures with affiliates (9,600,316) 80,058
Participation in debt extinguishment
expense with an affiliate 98,766
Participation in prepayment penalty
with an affiliate 176,424
Net change in:
Accounts receivable (69,863) (5,385)
Accounts payable (1,317) (10,917)
Due to affiliates (170,442) 26,833
------------ ------------
Net cash used in operating activities (358,751) (158,440)
------------ ------------
Investing activities:
Capital contributions to joint venture
with an affiliate (157,500)
Distributions from joint venture
with an affiliate 5,068,675 175,000
------------ ------------
Net Cash provided by investing activities 5,068,675 17,500
------------ ------------
Financing activities:
Distributions to joint venture
partner - affiliate (1,309,239) (45,203)
Proceeds from loan payable - affiliate 304,000
Repayment of loan payable - affiliate (1,118,145)
------------ ------------
Net cash used in or provided by
financing activities (2,427,384) 258,797
------------ ------------
Net change in cash and cash equivalents 2,282,540 117,857
Cash and cash equivalents at beginning of
period 139,880 37,514
------------ ------------
Cash and cash equivalents at end of period $2,422,420 $155,371
============ ============
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:
A reclassification has been made to the previously reported 1995 statements in
order to provide comparability with the 1996 statements. This reclassification
has not changed the 1995 results. In the opinion of management, all
adjustments necessary for a fair presentation have been made to the
accompanying statements for the nine months and quarter ended September 30,
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 nine
months and quarter ended September 30, 1996 are:
Paid
-----------------------
Nine Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $20,322 $2,741 $14,696
During 1996, the General Partner loan and accrued interest thereon totaling
$1,253,045 was fully repaid from proceeds from the sale of Post Lake
Apartments, as described below. During the nine months ended September 30,
1996 and 1995, the Partnership incurred interest expense of $55,852 and
$45,059, respectively. The Partnership paid interest expense of $234,900 during
the nine months ended September 30, 1996 and paid no interest expense during
the same period in 1995. Interest expense was computed at the American Express
Company cost of funds rate plus a spread to cover administrative costs. As of
September 30, 1996, this rate was 5.931%.
3. Investment in Joint Ventures with Affiliates:
(a) The Partnership owns a 74.17% interest in Atlanta Lakes Investors, which
owns a 50% joint venture interest in Atlanta Lakes Joint Venture, which owned
Post Lake Apartments. Post Lake Apartments was sold in September 1996. The
Partnership's share of the proceeds from the sale of Post Lake Apartments in
the amount of $3,906,250 was distributed to the Partnership in September 1996.
The Partnership's share of the remaining cash held at the Atlanta Lakes Joint
Venture level will be distributed to the Partnership after any remaining
liabilities are paid.
(b) The Partnership, through its ownership of Redwood Associates, owns a 50%
joint venture interest in Redwood Partners, which owns a 70% general
partnership interest in a limited partnership which owned Redwood Shores
<PAGE>
Apartments. Redwood Shores Apartments was sold in September 1996. The
Partnership's share of the proceeds from the sale of Redwood Shores Apartments
in the amount of $4,465,115 was distributed to the Partnership in November
1996. The Partnership's share of the remaining cash held at the Redwood
Partners level will be distributed to the Partnership after any remaining
liabilities are paid.
5. Partnership Termination:
The Partnership held joint venture interests in Redwood Shores Apartments and
Post Lake Apartments, both of which were sold in September 1996. The
Partnership expects to distribute a majority of the proceeds in January 1997 to
Limited Partners and retain a portion of the cash 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 Lenore
Klein case discussed elsewhere in this report. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency continues to exist or arises,
reserves may be held by the Partnership for a longer period of time. Net
income for the nine months ended September 30, 1996 was allocated to the
partners' capital account balances to reflect the remaining distributions the
partners are expected to receive. The General Partner will receive no
distributions.
<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. Both of the properties were sold in September
1996.
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. As a result of gains recognized from the sales of the Post Lake and
Redwood Shores apartment complexes in September 1996, the Partnership generated
net income during the nine months and quarter ended September 30, 1996 as
compared to a net loss during the same periods 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 both the nine months
and quarters ended September 30, 1996 and 1995.
The net income from Post Lake Apartments increased during 1996 as compared to
1995 primarily as a result of the gain on the sale of the property. This gain
also 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 the gain on the sale of the property.
In addition, the property had lower interest expense on the mortgage note
payable as a result of the October 1995 re-marketing of the bonds secured by
the property. The increase in net income was partially offset by higher
property operating expenses during 1996 as compared to 1995 due to exterior
painting and repairs made to the wood siding of the buildings.
<PAGE>
As a result of higher cash balances due to the receipt of proceeds from the
sale of Post Lake Apartments, as described above, the Partnership generated
higher interest income on short-term investments in 1996 as compared to 1995.
As a result of higher outstanding average loan balances prior to the loan
repayment in September 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 increased by approximately $2,283,000 as
of September 30, 1996 as compared to December 31, 1995. The cash flow deficit
from operating activities consisted of the payment of administrative expenses
of approximately $124,000 and the payment of interest expense of approximately
$235,000 on the short-term loan with an affiliate. The investing activity
consisted of a distribution of approximately $5,069,000 received from the
Atlanta Lakes Joint Venture. The financing activities consisted of a
distribution to the affiliated partner of Atlanta Lakes Investors of
approximately $1,309,000, and the repayment of the General Partner loan of
approximately $1,118,000.
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. Prior to the sales
in 1996, both Post Lake Apartments and Redwood Shores Apartments generated
positive cash flow. During the nine months ended Septembe 30, 1995, Post Lake
Apartments generated positive cash flow while Redwood Shores Apartments
generated a marginal cash flow deficit. The improvement at Redwood Shores was
a result of lower interest expense on the mortgage note payble as a result of
the October 1995 re-marketing of the bonds secured by the property.
Post Lake Apartments, in which the Partnership held a joint venture interest,
was sold in September 1996. The majority of the Partnership's share of the
proceeds from the sale of Post Lake Apartments of approximately $3,906,000 was
distributed to the Partnership in September 1996. The Partnership's share of
the remaining cash held at the joint venture level will be distributed to the
Partnership after any remaining liabilities are paid.
Redwood Shores Apartments, in which the Partnership held a joint venture
interest, was sold in September 1996. The Partnership's share of the proceeds
from the sale of Redwood Shores Apartments of approximately $4,465,000 was
distributed to the Partnership in November 1996. The Partnership's share of
the remaining cash held at the joint venture level will be distributed to the
Partnership after any remaining liabilities are paid.
<PAGE>
The loan from the General Partner and accrued interest thereon totaling
$1,253,045 were repaid from a portion of the Partnership's share of the
proceeds from the sale of Post Lake Apartments.
The Partnership held joint venture interests in Redwood Shores Apartments and
Post Lake Apartments, both of which were sold in September 1996. The
Partnership expects to distribute a majority of the proceeds in January 1997 to
Limited Partners and retain a portion of the cash 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 Lenore
Klein case discussed elsewhere in this report. In the absence of any such
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency continues to exist or arises,
reserves may be held by the Partnership for a longer period of time.
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
Proposed class action
- ---------------------
On August 30, 1996, a proposed class action complaint was filed, Lenore Klein
vs. Lehman Brothers, Inc., et al. (Superior Court of New Jersey, Law Division,
Union County, Docket No. Unn-L-5162-96). The Partnership, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnerships"), American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by the predecessor of
Lehman Brothers, Inc. (together with the Partnership and the Affiliated
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the action. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
things, common law fraud and deceit, negligent misrepresentation, breach of
contract, breach of fiduciary duty and violation of certain New Jersey statutes
relating to the disclosure of information in the offering of limited
partnership interests in the Defendant Partnerships. The amended complaint
seeks judgment for compensatory damages equal to the amount invested in the
Defendant Partnerships by the proposed class plus interest accrued thereon;
general damages for injuries arising from the defendants' actions; equitable
relief, including rescission, on certain counts; punitive damages; treble
damages on certain counts; recovery from the defendants of all profits received
by them as a result of their actions relating to the Defendant Partnerships;
attorneys' fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims. It is not determinable at this
time whether or not an unfavorable decision in this action would have a
material adverse impact on the Partnership.
Item 5. Other Information
- --------------------------
Post Lake Apartments
- --------------------
The Partnership holds, through two joint ventures, approximately a 37% interest
in Post Lake Apartments, Cobb County, Georgia. As previously reported, on
September 6, 1996, the joint venture which owns the property (the "Joint
Venture") contracted to sell the property for a sale price of $26,600,000 to an
unaffiliated party, RJR Properties, Inc., a Florida corporation. The purchaser
<PAGE>
assigned its rights under the agreement of sale to an affiliate, J. Robert
Love, Trustee, as trustee of RJRA-I Trust, and the sale closed on September 19,
1996. From the proceeds of the sale, the Joint Venture repaid the first
mortgage loan of $15,036,078 and paid $352,847 as a prepayment penalty,
$266,000 to an unaffiliated party as a brokerage commission and closing costs
of $411,841. Of such proceeds, $250,000 will be retained by the Partnership and
will not be available for use or distribution by the Partnership until December
27, 1996. The Joint Venture received the remaining proceeds of approximately
$10,533,234, of which the Partnership's share is $3,906,250.
Redwood Shores Apartments
- -------------------------
The Partnership holds, through two joint ventures, approximately a 35% interest
in Redwood Shores Apartments, Redwood City, California. As previously reported,
on June 12, 1996, the joint venture which owns the property (the "Joint
Venture") contracted to sell the property for a sale price of $37,000,000 to an
unaffiliated party, Security Capital Pacific Trust, a Maryland real estate
investment trust. The sale closed on September 20, 1996. The purchaser took
title to the property subject to the first mortgage loan funded from the
proceeds of the sale of bonds issued by Redwood City, California. The principal
amount of the bonds at closing was $25,220,000. From the proceeds of the sale,
the Joint Venture paid closing costs of $43,728 and received the remaining sale
proceeds of $14,214,272, which includes the $2,478,000 bond reserve previously
deposited by the Joint Venture with the bond trustee. The Partnership's share
of the proceeds was $4,465,115.
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 September 30, 1992 (Commission File No. 0-15646) are
incorporated herein by reference.
(10) Material Contracts:
(a)(i) Agreement of Sale relating to the sale of Redwood Shores Apartments in
Redwood City, California previously filed as Exhibit (2) to the Registrant's
Current Report on Form 8-K dated June 12, 1996 is incorporated herein by
reference.
(ii) Letter Agreements dated July 12, 1996 and August 9, 1996 related to the
sale of Redwood Shores Apartments in Redwood City, California previously filed
as Exhibit (99) to the Registrant's Current Report on Form 8-K dated September
6, 1996 is incorporated herein by reference.
(b) Agreement of Sale relating to the sale of Post Lake Apartments in Cobb
County, Georgia previously filed as Exhibit (2) to the Registrant's Current
Report on Form 8-K dated September 6, 1996 is incorporated herein by reference.
<PAGE>
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1996 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated September 6, 1996
was filed reporting the contract to sell the Post Lake Apartments in Cobb
County, Georgia and the extension of the closing date for the sale of Redwood
Shores Apartments in Redwood City, California.
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
<PAGE>
ATLANTA LAKES JOINT VENTURE
(An Illinois General Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------ ------------
Cash and cash equivalents $695,690 $229,555
Escrow deposits 80,257
Accounts receivable 489,098 218,300
Deferred expenses, net of accumulated
amortization of $190,493 in 1995 29,306
------------ ------------
1,184,788 557,418
------------ ------------
Investment in real estate:
Land 3,794,165
Buildings and improvements 21,297,917
------------
25,092,082
Less accumulated depreciation 7,623,429
------------
Investment in real estate, net of
accumulated depreciation 17,468,653
------------ ------------
$1,184,788 $18,026,071
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $902
Security deposits 109,891
Mortgage note payable 15,195,030
------------
Total liabilities 15,305,823
Partners' capital $1,184,788 2,720,248
------------ ------------
$1,184,788 $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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- ------------
Income:
Rental and service $3,028,138 $3,014,705
Interest on short-term investments 17,256 7,913
------------ ------------
Total income 3,045,394 3,022,618
------------ ------------
Expenses:
Interest on mortgage note payable 1,006,193 1,064,493
Depreciation 467,149 489,969
Amortization of deferred expenses 16,485 16,485
Property operating 1,180,008 1,087,618
Real estate taxes 183,377 170,688
Property management fees 133,782 127,725
Administrative 11,496 9,809
------------ ------------
Total expenses 2,998,490 2,966,787
------------ ------------
Income before gain on sale of property
and extraordinary items 46,904 55,831
Gain on sale of property 8,920,655
------------ ------------
Income before extraordinary items 8,967,559 55,831
------------ ------------
Extraordinary items:
Debt extinguishment expense (12,821)
Prepayment penalty (352,847)
-------------
Total extraordinary items (365,668)
------------ ------------
Net income $8,601,891 $55,831
============ ============
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 September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- ------------
Income:
Rental and service $911,058 $1,007,600
Interest on short-term investments 4,871 2,721
------------ ------------
Total income 915,929 1,010,321
------------ ------------
Expenses:
Interest on mortgage note payable 305,682 353,569
Depreciation 140,503 163,323
Amortization of deferred expenses 5,495 5,495
Property operating 480,350 412,106
Real estate taxes 60,234 56,896
Property management fees 44,086 42,418
Administrative 3,064 2,345
------------ ------------
Total expenses 1,039,414 1,036,152
------------ ------------
Loss before gain on sale of property
and extraordinary items (123,485) (25,831)
Gain on sale of property 8,920,655
------------ ------------
Income (loss) before extraordinary items 8,797,170 (25,831)
------------ ------------
Extraordinary items:
Debt extinguishment expense (12,821)
Prepayment penalty (352,847)
-------------
Total extraordinary items (365,668)
------------ ------------
Net income (loss) $8,431,502 $(25,831)
============ ============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- ------------
Operating activities:
Net income $8,601,891 $55,831
Adjustments to reconcile net income to net
cash used in or provided by operating
activities:
Extraordinary item:
Debt extinguishment expense 12,821
Gain on sale of property (8,920,655)
Depreciation of property 467,149 489,969
Amortization of deferred expenses 16,485 16,485
Net change in:
Escrow deposits 80,257 (170,587)
Accounts receivable (270,798) (25,968)
Accounts payable (902) (3,112)
Accrued real estate taxes 170,688
Security deposits (109,891) 2,002
------------- ------------
Net cash used in or provided by operating
activities (123,643) 535,308
------------- ------------
Investing activities:
Proceeds from sale of property 26,600,000
Payment of selling costs (677,841)
-------------
Net cash provided by investing activities 25,922,159
-------------
Financing activities:
Distributions to Joint Venture Partners (10,137,351) (350,000)
Repayment of mortgage note payable (15,036,078)
Principal payments on mortgage note payable (158,952) (163,714)
------------ ------------
Cash used in financing activities (25,332,381) (513,714)
------------ ------------
Net change in cash and cash equivalents 466,135 21,594
Cash and cash equivalents at beginning of
period 229,555 47,918
------------ ------------
Cash and cash equivalents at end of period $695,690 $69,512
============ ============
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 nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the Atlanta Lakes
Joint Venture (the "Joint Venture") incurred and paid interest expense on the
mortgage note payable of $1,006,193 and $1,064,493, respectively.
3. Property Sale:
In September 1996, the Joint Venture sold the Post Lake Apartments in an all
cash sale for $26,600,000. From the proceeds of the sale, the Joint Venture
repaid the first mortgage loan of $15,036,078 and paid $352,847 as a prepayment
penalty, $266,000 to an unaffiliated party as a brokerage commission and
closing costs of $411,841. Pursuant to the terms of the sale, $250,000 of the
sales proceeds will be retained by the Joint Venture until December, 1996. The
basis of the property was $17,001,504, which is net of accumulated depreciation
of $8,090,578. For financial statement purposes, the Joint Venture recognized
a gain of $8,920,655 from the sale of this property.
4. Partnership Termination:
Post Lake Apartments is the Joint Venture's sole real estate asset. The Joint
Venture distributed the sales proceeds to its partners in September 1996, and
will distribute the remaining cash and terminate the Joint Venture after any
remaining liabilities are paid.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
----------- -----------
Cash and cash equivalents $14,075,657 $7,025
Bond reserve 2,478,000
Accounts and accrued interest receivable 1,002,186 587,529
Deferred expenses, net of accumulated
amortization of $17,961 in 1995 341.252
----------- -----------
15,077,843 3,413,806
----------- -----------
Investment in real estate:
Land 6,043,941
Buildings and improvements 22,942,335
-----------
28,986,276
Less accumulated depreciation 7,329,420
-----------
Investment in real estate, net of
accumulated depreciation 21,656,856
----------- -----------
$15,077,843 $25,070,662
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Accounts payable $87,680 $70,217
Security deposits 113,213
Mortgage note payable 25,530,000
----------- -----------
Total liabilities 87,680 25,713,430
Seller's capital 5,584,570
Partners' capital (deficit) 9,405,593 (642,768)
----------- -----------
$15,077,843 $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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Rental and service $2,797,528 $2,672,851
Interest on short-term investments 164,083 250,870
------------- -------------
Total income 2,961,611 2,923,721
------------- -------------
Expenses:
Interest on mortgage notes payable 1,012,566 1,698,813
Depreciation 524,446 547,989
Amortization of deferred expenses 53,883
Property operating 905,590 660,140
Real estate taxes 218,475 218,439
Property management fees 122,614 106,947
Administrative 27,599 9,084
------------- -------------
Total expenses 2,865,173 3,241,412
------------- -------------
Income (loss) before gain on sale of
property, seller's participation in
joint venture and extraordinary item 96,438 (317,691)
Gain on sale of property 15,823,862
Seller's participation in (income) loss
of joint venture (5,584,570) 101,742
------------- -------------
Income before extraordinary item 10,335,730 (215,949)
Extraordinary item:
Debt extinguishment expense (287,369)
------------- -------------
Net income (loss) $10,048,361 $(215,949)
============= =============
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 September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Rental and service $863,281 $893,933
Interest on short-term investments 65,460 82,296
------------- -------------
Total income 928,741 976,229
------------- -------------
Expenses:
Interest on mortgage notes payable 318,786 564,923
Depreciation 159,121 182,663
Amortization of deferred expenses 17,962
Property operating 277,755 266,131
Real estate taxes 67,298 72,680
Property management fees 40,092 35,928
Administrative 8,802 1,239
------------- -------------
Total expenses 889,816 1,123,564
------------- -------------
Income (loss) before gain on sale of
property, seller's participation in
joint venture and extraordinary item 38,925 (147,335)
Gain on sale of property 15,823,862
Seller's participation in (income) loss
of joint venture (5,584,570) 76,536
------------- -------------
Income (loss) before extraordinary item 10,278,217 (70,799)
Extraordinary item:
Debt extinguishment expense (287,369)
------------- -------------
Net income (loss) $9,990,848 $(70,799)
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Operating activities:
Net income (loss) $10,048,361 $(215,949)
Adjustments to reconcile net income (loss)
to net cash provided by operating activites:
Extraordinary item:
Debt extinguishment expense 287,369
Gain on sale of property (15,823,862)
Seller's participation in income (loss)
from joint venture 5,584,570 (101,742)
Depreciation of property 524,446 547,989
Amortization of deferred expenses 53,883
Net change in:
Accounts receivable (414,657) (72,314)
Prepaid expenses (60,000)
Accounts payable 17,463 (3,890)
Accrued real estate taxes 72,680
Security deposits (113,213) (2,151)
------------- -------------
Net cash provided by operating activities 164,360 164,623
------------- -------------
Investing activities:
Proceeds from sale of property 11,780,000
Payment of selling costs (43,728)
-------------
Net cash provided by investing activities 11,736,272
-------------
Financing activities:
Capital contributions by joint venture
partners 315,000
Capital contributions by joint venture
partner - seller 139,206
Refund of bond reserve 2,478,000
Principal payments on mortgage note
payable (310,000) (287,500)
Payment of deferred expenses (331,005)
------------- -------------
Net cash provided by or used in
financing activities 2,168,000 (164,299)
------------- -------------
Net change in cash and cash equivalents 14,068,632 324
Cash and cash equivalents at beginning
of period 7,025 9,887
------------- -------------
Cash and cash equivalents at end of period $14,075,657 $10,211
============= =============
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 nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the joint venture
which owns Redwood Shores Apartments (the "Joint Venture") incurred and paid
interest expense on the mortgage note payable of $1,012,566 and $1,698,813,
respectively.
3. Property Sale:
In September 1996, the Joint Venture sold the property in an all cash sale for
$37,000,000. The purchaser took title subject to the existing bond financing
collateralized by the property in the amount of $25,220,000. From the proceeds
of the sale, the Joint Venture paid closing costs of $43,728. The basis of the
property was $21,132,410, which is net of accumulated depreciation of
$7,853,866. For financial statement purposes, the Joint Venture recognized a
gain of $15,823,862 from the sale of this property.
4. Partnership Termination:
Redwood Partners' interest in Redwood Shores Apartments is its sole real estate
asset. Redwood Partners' share of the proceeds from the sale of the apartment
complex was distributed from the Joint Venture to Redwood Partners in November
1996. Redwood Partners will distribute its remaining cash to its partners and
terminate the Partnership and the Joint Venture after any remaining liabilities
are paid.
<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/ Jayne A. Kosik
------------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Partners-XX, the General Partner
Date: November 14, 1996
--------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2422
<SECURITIES> 0
<RECEIVABLES> 109
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2531
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7781
<CURRENT-LIABILITIES> 18
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7610
<TOTAL-LIABILITY-AND-EQUITY> 7781
<SALES> 0
<TOTAL-REVENUES> 8519
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 94
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56
<INCOME-PRETAX> 8369
<INCOME-TAX> 0
<INCOME-CONTINUING> 8369
<DISCONTINUED> 0
<EXTRAORDINARY> (275)
<CHANGES> 0
<NET-INCOME> 8094
<EPS-PRIMARY> 1133.40
<EPS-DILUTED> 1133.40
</TABLE>
