BALCOR GROWTH FUND
10-Q, 1997-11-03
REAL ESTATE
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                      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, 1997
                               ------------------
                                      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
                       -------

                            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, 1997 and December 31, 1996
                                  (Unaudited)

                                    ASSETS

                                                  1997            1996
                                              ------------    ------------
Cash and cash equivalents                   $   1,341,745   $   7,699,068
Accounts and accrued interest receivable            6,056          28,622
                                              ------------    ------------
                                            $   1,347,801   $   7,727,690
                                              ============    ============

                       LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                            $         580   $      14,347
Due to affiliates                                  16,181          20,430
                                              ------------    ------------
    Total liabilities                              16,761          34,777
                                              ------------    ------------

Commitments and contingencies
  
Limited Partners' capital (7,084 Interests
  issued and outstanding)                       1,331,040       7,692,913
General Partner's capital                            None            None
                                              ------------    ------------
Total partners' capital                         1,331,040       7,692,913
                                              ------------    ------------
                                            $   1,347,801   $   7,727,690
                                              ============    ============
                                                  
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, 1997 and 1996
                                  (Unaudited)
                                    
                                                  1997            1996
                                              ------------    ------------
Income:
  Interest on short-term investments        $      79,433   $      33,020
  Participation in income of joint
    ventures with affiliates before 
    extraordinary item                                          9,787,737
                                              ------------    ------------
    Total income                                   79,433       9,820,757
                                              ------------    ------------

Expenses:
  Interest on short-term loan from an 
    affiliate                                                      55,852
  Administrative                                   65,706          94,297
                                              ------------    ------------
    Total expenses                                 65,706         150,149
                                              ------------    ------------
Income before affiliate's participation
  in income from joint venture and
  extraordinary item                               13,727       9,670,608

Affiliate's participation in income from 
  joint venture                                                (1,162,319)
                                              ------------    ------------
Income before extraordinary item                   13,727       8,508,289

Extraordinary item:
  Participation in debt extinguishment 
    expense with affiliates                                      (275,190)
                                              ------------    ------------
Net income                                  $      13,727   $   8,233,099
                                              ============    ============
Income before extraordinary item allocated
  to General Partner                                 None   $      67,807
                                              ============    ============
Income before extraordinary item allocated
  to Limited Partners                       $      13,727   $   8,440,482
                                              ============    ============
Income before extraordinary item per Limited
  Partnership Interest (7,084 issued and
  outstanding)                              $        1.94   $    1,191.49
                                              ============    ============
<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, 1997 and 1996
                                  (Unaudited)
                                  (Continued)
                                    

                                                  1997            1996
                                              ------------    ------------
Extraordinary item allocated to General
  Partner                                                   $      (2,752)
                                                              ============
Extraordinary item allocated to Limited
  Partners                                                  $    (272,438)
                                                              ============
Extraordinary item per Limited Partnership
  Interest (7,084 issued and outstanding)                   $      (38.46)
                                                              ============
Net income allocated to General
  Partner                                            None   $      65,055
                                              ============    ============
Net income allocated to Limited Partners    $      13,727   $   8,168,044
                                              ============    ============
Net income per Limited Partnership             
  Interest (7,084 issued and outstanding)   $        1.94   $    1,153.03
                                              ============    ============
Distribution to Limited Partners            $   6,375,600            None
                                              ============    ============
Distribution per Limited Partnership
  Interest (7,084 issued and outstanding)   $      900.00            None
                                              ============    ============

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, 1997 and 1996
                                  (Unaudited)

                                   
                                                  1997            1996
                                              ------------    ------------
Income:
  Interest on short-term investments        $      17,937   $      30,464
  Participation in income of joint
    ventures with affiliates before 
    extraordinary item                                          9,673,787
                                              ------------    ------------
    Total income                                   17,937       9,704,251
                                              ------------    ------------

Expenses:
  Interest on short-term loan from an 
    affiliate                                                      16,523
  Administrative                                   21,341          28,498
                                              ------------    ------------
    Total expenses                                 21,341          45,021
                                              ------------    ------------
(Loss) income before affiliate's participation
  in income from joint venture and             
  extraordinary item                               (3,404)      9,659,230

Affiliate's participation in income from 
  joint venture                                                (1,140,313)
                                              ------------    ------------
(Loss) income before extraordinary item            (3,404)      8,518,917

Extraordinary item:
  Participation in debt extinguishment 
    expense with affiliates                                      (275,190)
                                              ------------    ------------
Net (loss) income                           $      (3,404)  $   8,243,727
                                              ============    ============
Income before extraordinary item
  allocated to General Partner                       None   $      67,913
                                              ============    ============
(Loss) income before extraordinary item
  allocated to Limited Partners             $      (3,404)  $   8,451,004
                                              ============    ============
(Loss) income before extraordinary item per
 Limited Partnership Interest (7,084 issued 
 and outstanding)                          $       (0.48)  $    1,192.97
                                              ============    ============
<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, 1997 and 1996
                                  (Unaudited)
                                  (Continued)

                                   
                                                  1997            1996
                                              ------------    ------------
Extraordinary item allocated to General
  Partner                                                   $      (2,752)
                                                              ============
Extraordinary item allocated to Limited
  Partners                                                  $    (272,438)
                                                              ============
Extraordinary item per Limited Partnership
  Interest (7,084 issued and outstanding)                   $      (38.46)
                                                              ============
Net income allocated to General
  Partner                                            None   $      65,161
                                              ============    ============
Net (loss) income allocated to Limited 
  Partners                                  $      (3,404)  $   8,178,566
                                              ============    ============
Net (loss) income per Limited Partnership      
  Interest (7,084 issued and outstanding)   $       (0.48)  $    1,154.51
                                              ============    ============

   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, 1997 and 1996
                                  (Unaudited)

                                                  1997            1996
                                              ------------    ------------
Operating activities:
  Net income                                $      13,727   $   8,233,099
  Adjustments to reconcile net income
    to net cash provided by or (used in) 
    operating activities:
     Affiliate's participation in income
        from joint venture                                      1,162,319
      Participation in income of joint
        ventures with affiliates                               (9,787,737)
      Participation in debt extinguishment
        expense with an affiliate                                 275,190
      Net change in:
        Accounts receivable                        22,566         (69,863)
        Accounts payable                          (13,767)         (1,317)
        Due to affiliates                          (4,249)       (170,442)
                                              ------------    ------------
  Net cash provided by or (used in) operating  
    activities                                     18,277        (358,751)
                                              ------------    ------------
Investing activity:
  Distributions from joint venture
    with an affiliate                                           5,256,096
                                                              ------------
  Cash provided by investing activity                           5,256,096
                                                              ------------
Financing activities:                          
  Deemed distribution to Limited Partners                        (139,010)
  Distributions to joint venture
    partner - affiliate                                        (1,309,239)
  Deemed distribution to joint venture
    partner - affiliate                                           (48,411)
  Repayment of loan payable - affiliate                        (1,118,145)
  Distribution to Limited Partners             (6,375,600)
                                              ------------    ------------
  Cash used in financing activities            (6,375,600)     (2,614,805)
                                              ------------    ------------

Net change in cash and cash equivalents        (6,357,323)      2,282,540

Cash and cash equivalents at beginning of
  period                                        7,699,068         139,880
                                              ------------    ------------
Cash and cash equivalents at end of period  $   1,341,745   $   2,422,420
                                              ============    ============

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 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 remaining economic interests as provided for in
the Partnership Agreement, the income (loss) allocations between the partners
have been adjusted for financial statement purposes.

(b) The Partnership has restated net income for the nine months and quarter
ended September 30, 1996 as a result of the state withholding taxes paid in
connection with the sale of Post Lake Apartments, in which the Partnership held
a joint venture interest.  Such amounts had previously been recorded as an
expense of the sale and were included in participation in income of joint
ventures with affiliates.  The state withholding taxes are now reflected as a
deemed distribution.  Accordingly, there was no change to partners' capital as
a result of this restatement.

(c) A reclassification has been made to the previously reported 1996
statements. This reclassification has not changed the 1996 results.

(d) 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, 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. The Partnership held joint venture interests in Redwood Shores
Apartments and Post Lake Apartments, both of which were sold in 1996. The
Partnership distributed a majority of the proceeds in January 1997 to Limited
Partners and retained 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 and costs stemming
from litigation involving the Partnership including, but not limited to, the
lawsuit discussed in Note 4 of Notes to Financial Statements. Due to this
litigation, the Partnership will not be dissolved and reserves will be held by
the Partnership until the conclusion of all contingencies.  There can be no
assurances as to the time frame for conclusion of these contingencies.

3. Transactions with Affiliates:

Expenses paid and payable by the Partnership to affiliates during the nine
months and quarter ended September 30, 1997 are:
<PAGE>
                                           Paid
                                    ----------------------
                                    Nine Months    Quarter      Payable
                                    ------------  ---------    ----------     

   Reimbursement of expenses to
     the General Partner, at cost   $19,084       $6,347        $16,181
        
During September 1996, the General Partner loan of $1,118,145 and accrued
interest thereon of $134,900 were fully repaid from a portion of the
Partnership's share of the proceeds from the sales of Post Lake Apartments and
Redwood Shores Apartments. During the nine months ended September 30, 1996, the
Partnership incurred and paid interest expense of $55,852 and $234,900,
respectively. Interest expense was computed at the American Express Company
cost of funds rate plus a spread to cover administrative costs. This rate
varied between 5.76% and 6.34% during 1996, prior to the repayment.
           
4. Contingency:

The Partnership is currently involved in a lawsuit whereby the Partnership and
certain affiliates have been named as defendants alleging certain federal
securities law violations with regard to the adequacy and accuracy of
disclosures of information concerning, as well as the marketing efforts related
to, the offering of the Limited Partnership Interests of the Partnership. The
defendants continue to vigorously contest this action. A plaintiff class has
not yet been certified, and no determination of the merits have been made. 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's financial
position, operations or liquidity. The Partnership believes it has meritorious
defenses to contest the claims.
<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 1996 for a more complete understanding of
the Partnership's financial position.

Operations
- ----------

Summary of Operations
- ---------------------

The operations of the Partnership were primarily comprised of participation in
the operations of the Post Lake and Redwood Shores apartment complexes.  Both
of the properties were sold in September 1996 and the Partnership recognized
its share of the gains on the sales. As a result, net income decreased during
the nine months ended September 30, 1997 as compared to the same period in 1996
and a net loss was recognized during the quarter ended September 30, 1997 as
compared to net income during the same period in 1996. Further discussion of
the Partnership's operations is summarized below.

1997 Compared to 1996
- ---------------------

Discussions of fluctuations between 1997 and 1996 refer to the nine months and
quarters ended September 30, 1997 and 1996.

The Partnership invested the proceeds from the September 1996 sales of Post
Lake Apartments and Redwood Shores Apartments until January 1997 when a
majority of the sales proceeds was distributed to Limited Partners.  A portion
of the sales proceeds has been retained by the Partnership. The timing of the
property sales and subsequent distribution resulted in higher average cash
balances during the nine months ended September 30, 1997 and lower average cash
balances during the quarter ended September 30, 1997 as compared to the same
periods in 1996. As a result, interest income on short-term investments
increased during the nine months ended September 30, 1997 and decreased during
the quarter ended September 30, 1997 as compared to the same periods in 1996.

The Partnership participated in the operations of the Post Lake and Redwood
Shores apartment complexes prior to the sale of both properties in September
<PAGE>
1996. The Partnership also recognized its share of the gains on the sales of he
properties in the third quarter of 1996. In addition, an affiliate participated
in the operations of Post Lake Apartments prior to its sale and recognized its
share of the gain on the sale of the property. As a result of the two property
sales, the Partnership's participation in net income of joint ventures with
affiliates and affiliate's participation in income from joint venture ceased
during 1996.

The Partnership incurred interest expense on the short-term loan from an
affiliate prior to its repayment in September 1996.

Primarily as a result of lower accounting and portfolio management fees,
administrative expenses decreased during 1997 as compared to 1996. 

During the third quarter of 1996, the Partnership recognized its share of
extraordinary debt extinguishment expenses related to the sales of the Redwood
Shores Apartments and Post Lake Apartments of approximately $93,000 and
$182,000, respectively. 

Liquidity and Capital Resources
- -------------------------------

The cash position of the Partnership decreased by approximately $6,357,000 as
of September 30, 1997 as compared to December 31, 1996 primarily due to the
distribution to Limited Partners in January 1997 of a majority of the proceeds
received from the sales of Post Lake Apartments and Redwood Shores Apartments.
The cash flow provided by operating activities of approximately $18,000
consisted of interest income earned on short-term investments, which was
partially offset by the payment of administrative expenses. The financing
activity consisted of a $6,375,600 distribution  to Limited Partners in January
1997.

The Partnership made a distribution of $6,375,600 ($900.00 per Interest) to
Limited Partners in January 1997 from the proceeds received in connection with
the sales of Post Lake Apartments and Redwood Shores Apartments. The
Partnership has retained a portion of the cash 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 and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 4 of Notes to
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and reserves will be held by the Partnership until the conclusion of
all contingencies.  There can be no assurances as to the time frame for
conclusion of these contingencies.

To date, investors have received distributions totaling $900.00 per Interest.
Of this amount, $45.00 per Interest represents a distribution of Net Cash
Receipts and $855.00 per Interest represents a distribution of Net Cash
Proceeds. In addition, Limited Partners have received certain tax benefits
since the beginning of the Partnership. The General Partner has not received
any distribution of Net Cash Receipts or Net Cash Proceeds from the
Partnership.  
<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.

(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.

(27) Financial Data Schedule of the Registrant for the nine months ended
September 30, 1997 is attached hereto.

(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended September 30, 1997.
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)

                       STATEMENT OF INCOME AND EXPENSES
                 for the nine months ended September 30, 1996
                                  (Unaudited)

                                                        1996
                                                    ------------
Income:
  Rental and service                              $   3,028,138
  Interest on short-term investments                     17,256
                                                    ------------
    Total income                                      3,045,394
                                                    ------------

Expenses:
  Interest on mortgage note payable                   1,006,193
  Depreciation                                          467,149
  Amortization of deferred expenses                      16,485
  Property operating                                  1,180,008
  Real estate taxes                                     183,377
  Property management fees                              133,782
  Administrative                                         11,496
                                                    ------------
    Total expenses                                    2,998,490
                                                    ------------
Income before gain on sale of property and           
  extraordinary item                                     46,904
Gain on sale of property                              9,295,496
                                                    ------------
Income before extraordinary item                      9,342,400
Extraordinary item:                                
  Debt extinguishment expense                          (365,668)
                                                    ------------
Net income                                        $   8,976,732
                                                    ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)

                       STATEMENT OF INCOME AND EXPENSES
                   for the quarter ended September 30, 1996
                                  (Unaudited)

                                                        1996
                                                    ------------
Income:
  Rental and service                              $     911,058
  Interest on short-term investments                      4,871
                                                    ------------
    Total income                                        915,929
                                                    ------------

Expenses:
  Interest on mortgage note payable                     305,682
  Depreciation                                          140,503
  Amortization of deferred expenses                       5,495
  Property operating                                    480,350
  Real estate taxes                                      60,234
  Property management fees                               44,086
  Administrative                                          3,064
                                                    ------------
    Total expenses                                    1,039,414
                                                    ------------
Loss before gain on sale of property and             
  extraordinary item                                   (123,485)
Gain on sale of property                              9,295,496
                                                    ------------
Income before extraordinary item                      9,172,011
Extraordinary item:                                
  Debt extinguishment expense                          (365,668)
                                                    ------------
Net income                                        $   8,806,343
                                                    ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                          ATLANTA LAKES JOINT VENTURE
                       (An Illinois General Partnership)

                            STATEMENT OF CASH FLOWS
                 for the nine months ended September 30, 1996 
                                  (Unaudited)

                                                        1996
                                                    ------------
Operating activities:
   Net income                                      $   8,976,732
   Adjustments to reconcile net income to net
    cash used in operating activities:
      Extraordinary item:
        Debt extinguishment expense                      12,821
      Gain on sale of property                       (9,295,496)
      Depreciation of property                          467,149
      Amortization of deferred expenses                  16,485
      Net change in:
        Escrow deposits                                  80,257
        Accounts receivable                            (270,798)
        Accounts payable                                   (902)
        Security deposits                              (109,891)
                                                    ------------
  Net cash used in operating activities                (123,643)
                                                    ------------

Investing activities:
  Proceeds from sale of property                     26,600,000
  Payment of selling costs                             (303,000)
                                                    ------------
  Net cash provided by investing activities          26,297,000
                                                    ------------

Financing activities:
  Distributions to joint venture partners           (10,137,351)
  Deemed distribution to joint venture partners        (374,841)
  Repayment of mortgage note payable                (15,036,078)
  Principal payments on mortgage note payable          (158,952)
                                                    ------------
  Cash used in financing activities                 (25,707,222)
                                                    ------------

Net change in cash and cash equivalents                 466,135

Cash and cash equivalents at beginning of 
  period                                                229,555
                                                    ------------
Cash and cash equivalents at end of period        $     695,690
                                                    ============
                                                        
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. Nature of the Partnership's Business: 

Atlanta Lakes Joint Venture (the "Joint Venture") was engaged solely in the
operation of residential real estate located in Atlanta, Georgia (Post Lake
Apartments). Post Lake Apartments was sold in September 1996. 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.
The Joint Venture distributed the proceeds from the sale of the property as
well as the remaining assets of the Joint Venture, and the Joint Venture was
terminated on December 31, 1996.

2. Accounting Policies:

(a) The Joint Venture has restated net income for the nine months and quarter
ended September 30, 1996 as a result of the state withholding taxes paid in
connection with the sale of Post Lake Apartments. Such amounts had previously
been recorded as an expense of the sale. The state withholding taxes are now
reflected as a deemed distribution. Accordingly, there was no change to
partners' capital as a result of this restatement.

(b) A reclassification has been made to the previously reported 1996
statements. This reclassification has not changed the 1996 results.

(c) In the opinion of management, all adjustments necessary for a fair
presentation were made to the accompanying statements for the nine months and
quarter ended September 30, 1996, and all such adjustments were of a normal and
recurring nature.

3. Interest Expense:

During the nine months ended September 30, 1996, the Joint Venture incurred and
paid interest expense on the mortgage note payable of $1,006,193.
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                       STATEMENT OF INCOME AND EXPENSES
                 for the nine months ended September 30, 1996 
                                  (Unaudited)

                                                        1996
                                                    ------------
Income:
  Rental and service                              $   2,797,528
  Interest on short-term investments                    164,083
                                                    ------------
    Total income                                      2,961,611
                                                    ------------

Expenses:
  Interest on mortgage note payable                   1,012,566
  Depreciation                                          524,446
  Amortization of deferred expenses                      53,883
  Property operating                                    905,590
  Real estate taxes                                     218,475
  Property management fees                              122,614
  Administrative                                         27,599
                                                    ------------
    Total expenses                                    2,865,173
                                                    ------------

Income before gain on sale of property, seller's
  participation in joint venture and extraordinary
  item                                                   96,438
Gain on sale of property                             15,823,862
Seller's participation in income of joint venture    (5,584,570)
                                                    ------------
Income before extraordinary item                     10,335,730
Extraordinary item:
  Debt extinguishment expense                          (287,369)
                                                    ------------
Net income                                        $  10,048,361
                                                    ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                       STATEMENT OF INCOME AND EXPENSES
                   for the quarter ended September 30, 1996 
                                  (Unaudited)

                                                        1996
                                                    ------------
Income:
  Rental and service                              $     863,281
  Interest on short-term investments                     65,460
                                                    ------------
    Total income                                        928,741
                                                    ------------

Expenses:
  Interest on mortgage note payable                     318,786
  Depreciation                                          159,121
  Amortization of deferred expenses                      17,962
  Property operating                                    277,755
  Real estate taxes                                      67,298
  Property management fees                               40,092
  Administrative                                          8,802
                                                    ------------
    Total expenses                                      889,816
                                                    ------------

Income before gain on sale of property, seller's
  participation in joint venture and extraordinary
  item                                                   38,925
Gain on sale of property                             15,823,862
Seller's participation in income of joint venture    (5,584,570)
                                                    ------------
Income before extraordinary item                     10,278,217
Extraordinary item:
  Debt extinguishment expense                          (287,369)
                                                    ------------
Net income                                        $   9,990,848
                                                    ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                            STATEMENT OF CASH FLOWS
                 for the nine months ended September 30, 1996
                                  (Unaudited)

                                                        1996
                                                    ------------
Operating activities:
  Net income                                      $  10,048,361
  Adjustments to reconcile net income 
    to net cash provided by operating
    activities:
      Extraordinary item:
        Debt extinguishment expense                     287,369
      Gain on sale of property                      (15,823,862)
      Seller's participation in income from 
        joint venture                                 5,584,570
      Depreciation of property                          524,446
      Amortization of deferred expenses                  53,883
      Net change in:
        Accounts receivable                            (414,657)
        Accounts payable                                 17,463
        Security deposits                              (113,213)
                                                    ------------
  Net cash provided by operating activities             164,360
                                                    ------------

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:
  Refund of bond reserve                              2,478,000
  Principal payments on mortgage note payable          (310,000)
                                                    ------------
  Net cash provided by financing activities           2,168,000
                                                    ------------

Net change in cash and cash equivalents              14,068,632

Cash and cash equivalents at beginning of
  period                                                  7,025
                                                    ------------
Cash and cash equivalents at end of period        $  14,075,657
                                                    ============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                               REDWOOD PARTNERS
                       (An Illinois General Partnership)

                         NOTES TO FINANCIAL STATEMENTS

1. Nature of the Partnership's Business:

Redwood Partners (the "Joint Venture") was engaged solely in the operation of
residential real estate located in the Redwood City, California market (Redwood
Shores Apartments). Redwood Shores Apartments was sold in September 1996. 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. The Joint Venture distributed the proceeds from the sale of the
property as well as the remaining assets of the Joint Venture, and the Joint
Venture was terminated on December 31, 1996.

2. Accounting Policy:

In the opinion of management, all adjustments necessary for a fair presentation
were made to the accompanying statements for the nine months and quarter ended
September 30, 1996, and all such adjustments were of a normal and recurring
nature.

3. Interest Expense:

During the nine months ended September 30, 1996, the joint venture which owned
Redwood Shores Apartments incurred and paid interest expense on the mortgage
note payable of $1,012,566. 
<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
                                  Managing Director and Chief Financial
                                  Officer (Principal Accounting Officer) of
                                  Balcor Partners-XX, the General Partner


Date: November 3, 1997
      -----------------
<PAGE>

<TABLE> <S> <C>

<ARTICLE> 5
<MULTIPLIER> 1000
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1997
<PERIOD-END>                               SEP-30-1997
<CASH>                                            1342
<SECURITIES>                                         0
<RECEIVABLES>                                        6
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                                  1348
<PP&E>                                               0
<DEPRECIATION>                                       0
<TOTAL-ASSETS>                                    1348
<CURRENT-LIABILITIES>                               17
<BONDS>                                              0
                                0
                                          0
<COMMON>                                             0
<OTHER-SE>                                        1331
<TOTAL-LIABILITY-AND-EQUITY>                      1348
<SALES>                                              0
<TOTAL-REVENUES>                                    79
<CGS>                                                0
<TOTAL-COSTS>                                        0
<OTHER-EXPENSES>                                    66
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                     14
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                                 14
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                        14
<EPS-PRIMARY>                                     1.94
<EPS-DILUTED>                                     1.94
        

</TABLE>


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