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 June 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
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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
June 30, 1997 and December 31, 1996
(Unaudited)
ASSETS
1997 1996
------------ ------------
Cash and cash equivalents $ 1,345,657 $ 7,699,068
Accounts and accrued interest receivable 6,200 28,622
------------ ------------
$ 1,351,857 $ 7,727,690
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 14,347
Due to affiliates $ 17,413 20,430
------------ ------------
Total liabilities 17,413 34,777
------------ ------------
Commitments and contingencies
Limited Partners' capital (7,084 Interests
issued and outstanding) 1,334,444 7,692,913
General Partner's capital None None
------------ ------------
Total partners' capital 1,334,444 7,692,913
------------ ------------
$ 1,351,857 $ 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 six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
Income:
Interest on short-term investments $ 61,496 $ 2,556
Participation in net income of joint
ventures with affiliates 113,950
------------ ------------
Total income 61,496 116,506
------------ ------------
Expenses:
Interest on short-term loan from an
affiliate 39,329
Administrative 44,365 65,799
------------ ------------
Total expenses 44,365 105,128
------------ ------------
Income before affiliate's participation
in income from joint venture 17,131 11,378
Affiliate's participation in income from
joint venture (22,006)
------------ ------------
Net income (loss) $ 17,131 $ (10,628)
============ ============
Net (loss) allocated to General Partner None $ (106)
============ ============
Net income (loss) allocated to Limited
Partners $ 17,131 $ (10,522)
============ ============
Net income (loss) per Limited Partnership
Interest (7,084 issued and outstanding) $ 2.42 $ (1.49)
============ ============
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 June 30, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
Income:
Interest on short-term investments $ 18,214 $ 1,245
Participation in net income of joint
ventures with affiliates 31,012
------------ ------------
Total income 18,214 32,257
------------ ------------
Expenses:
Interest on short-term loan from an
affiliate 19,550
Administrative 34,303 37,578
------------ ------------
Total expenses 34,303 57,128
------------ ------------
Loss before affiliate's participation
in income from joint venture (16,089) (24,871)
Affiliate's participation in income from
joint venture (7,784)
------------ ------------
Net loss $ (16,089) $ (32,655)
============ ============
Net loss allocated to General Partner None $ (327)
============ ============
Net loss allocated to Limited Partners $ (16,089) $ (32,328)
============ ============
Net loss per Limited Partnership
Interest (7,084 issued and outstanding) $ (2.27) $ (4.56)
============ ============
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 six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
Operating activities:
Net income (loss) $ 17,131 $ (10,628)
Adjustments to reconcile net income (loss)
to net cash provided by or (used in)
operating activities:
Affiliate's participation in income
from joint venture 22,006
Participation in net income of joint
ventures with affiliates (113,950)
Net change in:
Accounts receivable 22,422 (30,001)
Accounts payable (14,347) (4,480)
Due to affiliates (3,017) (54,744)
------------ ------------
Net cash provided by or (used in) operating
activities 22,189 (191,797)
------------ ------------
Investing activity:
Distribution from joint venture
with an affiliate 200,000
------------
Cash provided by investing activity 200,000
------------
Financing activities:
Distribution to joint venture
partner - affiliate (51,660)
Distribution to Limited Partners (6,375,600)
------------ ------------
Cash used in financing activities (6,375,600) (51,660)
------------ ------------
Net change in cash and cash equivalents (6,353,411) (43,457)
Cash and cash equivalents at beginning of
period 7,699,068 139,880
------------ ------------
Cash and cash equivalents at end of period $ 1,345,657 $ 96,423
============ ============
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) A reclassification has been made to the previously reported 1996 statements
in order to provide comparability with the 1997 statements. This
reclassification has not changed the 1996 results.
(b) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the six months
and quarter ended June 30, 1997, and all such adjustments are of a normal and
recurring nature.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. 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 stemming from
litigation involving the Partnership including, but not limited to, the lawsuit
discussed in Note 4 of Notes to Financial Statements. 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.
3. Transactions with Affiliates:
Expenses paid and payable by the Partnership to affiliates during the six
months and quarter ended June 30, 1997 are:
Paid
----------------------
Six Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $12,737 $9,398 $17,413
<PAGE>
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 six months ended June 30, 1996, the
Partnership incurred and paid interest expense of $39,329 and $100,000,
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 the Partnership's
participation in the operations of the Post Lake and Redwood Shores apartment
complexes, both of which were sold in September 1996. As a result, the
Partnership's participation in net income of joint ventures with affiliates
ceased during 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 six months and
quarters ended June 30, 1997 and 1996.
As a result of higher cash balances due to the retention of a portion of the
proceeds from the sales of Post Lake Apartments and Redwood Shores Apartments,
the Partnership generated higher interest income on short-term investments in
1997 as compared to 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
1996. In addition, an affiliate participated in the operations of Post Lake
Apartments prior to its sale. 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.
<PAGE>
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 portfolio management fees, administrative
expenses decreased during 1997 as compared to 1996.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $6,353,000 as
of June 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 $22,000
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 stemming from litigation involving the Partnership including,
but not limited to, the lawsuit discussed in Note 4 of Notes to Financial
Statements. 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.
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 six months ended June
30, 1997 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended June 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 six months ended June 30, 1996
(Unaudited)
1996
------------
Income:
Rental and service $ 2,117,080
Interest on short-term investments 12,385
------------
Total income 2,129,465
------------
Expenses:
Interest on mortgage note payable 700,511
Depreciation 326,646
Amortization of deferred expenses 10,990
Property operating 699,658
Real estate taxes 123,143
Property management fees 89,696
Administrative 8,432
------------
Total expenses 1,959,076
------------
Net income $ 170,389
============
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 June 30, 1996
(Unaudited)
1996
------------
Income:
Rental and service $ 1,061,191
Interest on short-term investments 7,664
------------
Total income 1,068,855
------------
Expenses:
Interest on mortgage note payable 349,574
Depreciation 163,323
Amortization of deferred expenses 5,495
Property operating 376,399
Real estate taxes 61,571
Property management fees 45,015
Administrative 7,210
------------
Total expenses 1,008,587
------------
Net income $ 60,268
============
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 six months ended June 30, 1996
(Unaudited)
1996
------------
Operating activities:
Net income $ 170,389
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property 326,646
Amortization of deferred expenses 10,990
Net change in:
Escrow deposits (122,916)
Accounts receivable 218,300
Accounts payable 2,196
Accrued real estate taxes 123,143
Security deposits (8,543)
------------
Net cash provided by operating activities 720,205
------------
Financing activities:
Distribution to Joint Venture Partners (400,000)
Principal payments on mortgage note payable (118,294)
------------
Cash used in financing activities (518,294)
------------
Net change in cash and cash equivalents 201,911
Cash and cash equivalents at beginning of
period 229,555
------------
Cash and cash equivalents at end of period $ 431,466
============
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 Policy:
In the opinion of management, all adjustments necessary for a fair presentation
were made to the accompanying statements for the six months and quarter ended
June 30, 1996, and all such adjustments were of a normal and recurring nature.
3. Interest Expense:
During the six months ended June 30, 1996, the Joint Venture incurred and paid
interest expense on the mortgage note payable of $700,511.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
STATEMENT OF INCOME AND EXPENSES
for the six months ended June 30, 1996
(Unaudited)
1996
------------
Income:
Rental and service $ 1,934,247
Interest on short-term investments 98,623
------------
Total income 2,032,870
------------
Expenses:
Interest on mortgage note payable 693,780
Depreciation 365,325
Amortization of deferred expenses 35,921
Property operating 627,835
Real estate taxes 151,177
Property management fees 82,522
Administrative 18,797
------------
Total expenses 1,975,357
------------
Net income $ 57,513
============
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 June 30, 1996
(Unaudited)
1996
------------
Income:
Rental and service $ 990,530
Interest on short-term investments 45,878
------------
Total income 1,036,408
------------
Expenses:
Interest on mortgage note payable 345,590
Depreciation 182,662
Amortization of deferred expenses 17,961
Property operating 353,624
Real estate taxes 75,589
Property management fees 44,799
Administrative 14,424
------------
Total expenses 1,034,649
------------
Net income $ 1,759
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
STATEMENT OF CASH FLOWS
for the six months ended June 30, 1996
(Unaudited)
1996
------------
Operating activities:
Net income $ 57,513
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of property 365,325
Amortization of deferred expenses 35,921
Net change in:
Accounts receivable (247,896)
Accounts payable (1,004)
Security deposits 565
------------
Net cash provided by operating activities 210,424
------------
Financing activity:
Principal payments on mortgage note payable (205,000)
------------
Cash used in financing activity (205,000)
------------
Net change in cash and cash equivalents 5,424
Cash and cash equivalents at beginning of
period 7,025
------------
Cash and cash equivalents at end of period $ 12,449
============
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 six months and quarter ended
June 30, 1996, and all such adjustments were of a normal and recurring nature.
3. Interest Expense:
During the six months ended June 30, 1996, the joint venture which owned
Redwood Shores Apartments incurred and paid interest expense on the mortgage
note payable of $693,780.
<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: August 6, 1997
-----------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1346
<SECURITIES> 0
<RECEIVABLES> 6
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1352
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1352
<CURRENT-LIABILITIES> 17
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1334
<TOTAL-LIABILITY-AND-EQUITY> 1334
<SALES> 0
<TOTAL-REVENUES> 61
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 44
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 17
<INCOME-TAX> 0
<INCOME-CONTINUING> 17
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17
<EPS-PRIMARY> 2.42
<EPS-DILUTED> 2.42
</TABLE>
