SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1997
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-15646
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BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3378299
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
----------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
<PAGE>
BALCOR GROWTH FUND
A REAL ESTATE INVESTMENT FOR CAPITAL APPRECIATION
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEETS
March 31, 1997 and December 31, 1996
(Unaudited)
ASSETS
1997 1996
------------ ------------
Cash and cash equivalents $ 1,361,024 $ 7,699,068
Accounts and accrued interest receivable 8,997 28,622
------------ ------------
$ 1,370,021 $ 7,727,690
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 14,347
Due to affiliates $ 19,488 20,430
------------ ------------
Total liabilities 19,488 34,777
------------ ------------
Commitments and contingencies
Limited Partners' capital (7,084 Interests
issued and outstanding) 1,350,533 7,692,913
------------ ------------
$ 1,370,021 $ 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 quarters ended March 31, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
Income:
Interest on short-term investments $ 43,282 $ 1,311
Participation in net income of joint
ventures with affiliates 82,938
------------ ------------
Total income 43,282 84,249
------------ ------------
Expenses:
Interest on short-term loan from an
affiliate 19,779
Administrative 10,062 28,221
------------ ------------
Total expenses 10,062 48,000
------------ ------------
Income before affiliate's participation
in income from joint venture 33,220 36,249
Affiliate's participation in income from
joint venture (14,222)
------------ ------------
Net income $ 33,220 $ 22,027
============ ============
Net income allocated to General Partner None $ 220
============ ============
Net income allocated to Limited Partners $ 33,220 $ 21,807
============ ============
Net income per Limited Partnership
Interest (7,084 issued and outstanding) $ 4.69 $ 3.08
============ ============
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 CASH FLOWS
for the quarters ended March 31, 1997 and 1996
(Unaudited)
1997 1996
------------ ------------
Operating activities:
Net income $ 33,220 $ 22,027
Adjustments to reconcile net income to net
cash provided by or used in operating
activities:
Affiliate's participation in income
from joint venture 14,222
Participation in net income of joint
ventures with affiliates (82,938)
Net change in:
Accounts receivable 19,625 (26,830)
Accounts payable (14,347) (4,480)
Due to affiliates (942) 24,032
------------ ------------
Net cash provided by or (used in) operating
activities 37,556 (53,967)
------------ ------------
Financing activity:
Distribution to Limited Partners (6,375,600)
------------
Cash used in financing activity (6,375,600)
------------
Net change in cash and cash equivalents (6,338,044) (53,967)
Cash and cash equivalents at beginning of
period 7,699,068 139,880
------------ ------------
Cash and cash equivalents at end of period $ 1,361,024 $ 85,913
============ ============
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 1996 statements in
order to provide comparability with the 1997 statements. This reclassification
has not changed the 1996 results. In the opinion of management, all
adjustments necessary for a fair presentation have been made to the
accompanying statements for the quarter ended March 31, 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 quarter
ended March 31, 1997 are:
Paid Payable
------------ ---------
Reimbursement of expenses to
the General Partner, at cost $3,339 $19,488
During 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 quarter ended March 31, 1996, the Partnership incurred
interest expense of $19,779. The Partnership paid no interest expense during
the quarter ended March 31, 1996. 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.
<PAGE>
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 quarters ended
March 31, 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 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 portfolio management fees and printing and
postage costs, administrative expenses decreased during 1997 as compared to
1996.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $6,338,000 as
of March 31, 1997 as compared to December 31, 1996 primarily due to the
distribution to Limited Partners in January 1997 of the proceeds received from
the sales of Post Lake Apartments and Redwood Shores Apartments. The cash flow
provided by operating activities of approximately $38,000 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 quarter ended March 31,
1997 is attached hereto.
(b) Reports on Form 8-K: There were no reports filed on Form 8-K during the
quarter ended March 31, 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 quarter ended March 31, 1996
(Unaudited)
1996
------------
Income:
Rental and service $ 1,055,889
Interest on short-term investments 4,721
------------
Total income 1,060,610
------------
Expenses:
Interest on mortgage note payable 350,937
Depreciation 163,323
Amortization of deferred expenses 5,495
Property operating 323,259
Real estate taxes 61,572
Property management fees 44,681
Administrative 1,222
------------
Total expenses 950,489
------------
Net income $ 110,121
============
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 quarter ended March 31, 1996
(Unaudited)
1996
------------
Operating activities:
Net income $ 110,121
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property 163,323
Amortization of deferred expenses 5,495
Net change in:
Escrow deposits (61,458)
Accounts receivable 4,004
Accounts payable (615)
Accrued real estate taxes 61,572
Security deposits (7,775)
------------
Net cash provided by operating activities 274,667
------------
Financing activity:
Principal payments on mortgage note payable (58,466)
------------
Cash used in financing activity (58,466)
------------
Net change in cash and cash equivalents 216,201
Cash and cash equivalents at beginning of
period 229,555
------------
Cash and cash equivalents at end of period $ 445,756
============
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 quarter ended March 31, 1996,
and all such adjustments were of a normal and recurring nature.
3. Interest Expense:
During the quarter ended March 31, 1996, the Joint Venture incurred and paid
interest expense on the mortgage note payable of $350,937.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
STATEMENT OF INCOME AND EXPENSES
for the quarter ended March 31, 1996
(Unaudited)
1996
------------
Income:
Rental and service $ 943,717
Interest on short-term investments 52,745
------------
Total income 996,462
------------
Expenses:
Interest on mortgage note payable 348,190
Depreciation 182,663
Amortization of deferred expenses 17,960
Property operating 274,211
Real estate taxes 75,588
Property management fees 37,723
Administrative 4,373
------------
Total expenses 940,708
------------
Net income $ 55,754
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
REDWOOD PARTNERS
(An Illinois General Partnership)
STATEMENT OF CASH FLOWS
for the quarter ended March 31, 1996
(Unaudited)
1996
------------
Operating activities:
Net income $ 55,754
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation of property 182,663
Amortization of deferred expenses 17,960
Net change in:
Accounts receivable (229,531)
Accounts payable (3,710)
Accrued real estate taxes 75,588
Security deposits 335
------------
Net cash provided by operating activities 99,059
------------
Financing activity:
Principal payments on mortgage note payable (100,000)
------------
Cash used in financing activity (100,000)
------------
Net change in cash and cash equivalents (941)
Cash and cash equivalents at beginning of
period 7,025
------------
Cash and cash equivalents at end of period $ 6,084
============
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 quarter ended March 31, 1996,
and all such adjustments were of a normal and recurring nature.
3. Interest Expense:
During the quarter ended March 31, 1996, the joint venture which owned Redwood
Shores Apartments incurred and paid interest expense on the mortgage note
payable of $348,190.
<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: May 13, 1997
-----------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1361
<SECURITIES> 0
<RECEIVABLES> 9
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1370
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1370
<CURRENT-LIABILITIES> 19
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1351
<TOTAL-LIABILITY-AND-EQUITY> 1370
<SALES> 0
<TOTAL-REVENUES> 43
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 33
<INCOME-TAX> 0
<INCOME-CONTINUING> 33
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33
<EPS-PRIMARY> 4.69
<EPS-DILUTED> 4.69
</TABLE>
