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, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-15648
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BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3447130
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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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
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BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
ASSETS
1994 1993
-------------- --------------
Cash and cash equivalents $ 2,943,835 $ 2,733,081
Accounts and accrued interest receivable 251,825 911,277
Deferred expenses, net of accumulated
amortization of $2,794 in 1994 53,090
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3,248,750 3,644,358
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Investment in real estate:
Land 6,958,341 6,958,341
Buildings and improvements 24,248,600 24,248,600
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31,206,941 31,206,941
Less accumulated depreciation 8,161,928 7,555,891
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Investment in real estate, net of
accumulated depreciation 23,045,013 23,651,050
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Investment in joint venture
with affiliates 1,438,933 1,414,033
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$ 27,732,696 $ 28,709,441
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 24,586 $ 39,144
Due to affiliates 82,127 32,433
Accrued liabilities, principally
real estate taxes 918,204 936,173
Security deposits 118,576 115,737
-------------- --------------
Total liabilities 1,143,493 1,123,487
Partners' capital (185,486 Limited
Partnership Interests issued and
outstanding) 26,589,203 27,585,954
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$ 27,732,696 $ 28,709,441
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental $ 2,722,341 $ 2,647,244
Service 635,803 336,077
Interest on short-term investments 93,137 67,730
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Total income 3,451,281 3,051,051
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Expenses:
Depreciation 606,037 606,037
Property operating 865,239 684,729
Real estate taxes 935,987 904,849
Property management fees 229,018 164,271
Administrative 253,977 194,216
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Total expenses 2,890,258 2,554,102
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Income before participation in income of
joint venture with affiliates 561,023 496,949
Participation in income of joint venture
with affiliates 24,900 192,546
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Net income $ 585,923 $ 689,495
============== ==============
Net income allocated to General Partner $ 117,503 $ 124,143
============== ==============
Net income allocated to Limited Partners $ 468,420 $ 565,352
============== ==============
Net income per Limited Partnership
Interest (185,486 issued and
outstanding) $ 2.53 $ 3.05
============== ==============
Distributions to General Partner $ 158,268 $ 154,730
============== ==============
Distributions to Limited Partners $ 1,424,406 $ 1,392,570
============== ==============
Distributions per Limited Partnership
Interest:
Taxable $ 8.52 $ 7.58
============== ==============
Tax-exempt $ 7.59 $ 7.50
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Rental $ 920,725 $ 887,919
Service 111,496 110,787
Interest on short-term investments 35,335 20,524
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Total income 1,067,556 1,019,230
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Expenses:
Depreciation 202,013 202,013
Property operating 248,130 257,883
Real estate taxes 367,371 337,915
Property management fees 68,193 52,347
Administrative 79,430 54,108
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Total expenses 965,137 904,266
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Income before participation in loss of
joint venture with affiliates 102,419 114,964
Participation in (loss) income of joint
venture with affiliates (389) 139,669
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Net income $ 102,030 $ 254,633
============== ==============
Net income allocated to General Partner $ 28,510 $ 43,861
============== ==============
Net income allocated to Limited Partners $ 73,520 $ 210,772
============== ==============
Net income per Limited Partnership
Interest (185,486 issued and
outstanding) $ 0.40 $ 1.14
============== ==============
Distribution to General Partner $ 52,672 $ 51,643
============== ==============
Distribution to Limited Partners $ 474,047 $ 464,784
============== ==============
Distribution per Limited Partnership
Interest:
Taxable $ 3.08 $ 2.56
============== ==============
Tax-exempt $ 2.50 $ 2.50
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1994 and 1993
(Unaudited)
1994 1993
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Operating activities:
Net income $ 585,923 $ 689,495
Adjustments to reconcile net income
to net cash provided by operating
activities:
Participation in income (loss) of
joint venture with affiliates (24,900) 37,514
Depreciation of properties 606,037 606,037
Amortization of deferred expenses 2,794
Net change in:
Accounts and accrued interest
receivable 659,452 434,666
Accounts payable (14,558) (17,803)
Due to affiliates 49,694 895
Accrued liabilities (17,969) (31,324)
Security deposits 2,839 3,287
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Net cash provided by operating
activities 1,849,312 1,722,767
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Financing activities:
Distributions to Limited Partners (1,424,406) (1,392,570)
Distributions to General Partner (158,268) (154,730)
Payment of deferred expenses (55,884)
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Net cash used in financing activities (1,638,558) (1,547,300)
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Net change in cash and cash equivalents 210,754 175,467
Cash and cash equivalents at beginning
of period 2,733,081 2,843,637
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Cash and cash equivalents at end
of period $ 2,943,835 $ 3,019,104
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
(a) Several reclassifications have been made to the previously reported 1993
statements in order to provide comparability with the 1994 statements. These
reclassifications have not changed the 1993 results. In the opinion of
management, all adjustments necessary for a fair presentation have been made to
the accompanying statements for the nine months and quarter ended September 30,
1994, and all such adjustments are of a normal and recurring nature.
(b) Deferred expenses consist of leasing commissions paid to outside brokers
which are amortized over the term of the lease to which they apply.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1994 are:
Paid
--------------------
Nine Months Quarter Payable
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Property management fees $222,509 $64,795 $23,179
Reimbursement of expenses to
the General Partner, at cost:
Accounting 38,308 23,091 17,001
Data processing 8,160 7,048 19,405
Investor communications 15,152 10,094 7,251
Legal 3,151 2,099 1,508
Portfolio management 19,847 13,222 9,498
Other 8,952 5,963 4,285
3. Subsequent Event:
In November 1994, the Partnership made a distribution of $468,367 ($2.76 per
Taxable Interest and $2.50 per Tax-exempt Interest) to the holders of Limited
Partnership Interests, representing the quarterly distribution for the third
quarter of 1994.
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Equity Pension Investors-IV A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1986 to make first mortgage
loans and to invest in and operate income-producing real property. The
Partnership raised $46,371,500 through the sale of Limited Partnership
Interests and utilized these proceeds to fund a participating share of an
acquisition loan and acquire two real property investments. The Partnership
reclassified its investment in the loan to an investment in joint venture with
affiliates. As of September 30, 1994, the Partnership continues to operate its
two properties and owns a minority interest in the joint venture.
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 1993 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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A decline in rental rates at the 45 West 45th Street Office Building in 1994
resulted in a decrease in participation in income of joint venture with
affiliates, which was the primary reason for the decrease in net income during
the nine months and quarter ended September 30, 1994 as compared to the same
periods in 1993. This decrease was partially offset by improved property
operations at the Gleneagles Apartments and Evanston Plaza Shopping Center.
Further discussion of the Partnership's operations is summarized below.
1994 Compared to 1993
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Increased real estate tax and common area maintenance reimbursements from
tenants at the Evanston Plaza Shopping Center resulted in higher service income
for the nine months ended September 30, 1994 as compared to the same period in
1993. Property management fees, which are earned as a percentage of rental and
service income collected, also increased for this period.
As a result of higher average cash balances available for investment, interest
income on short-term investments increased during the nine months and quarter
ended September 30, 1994 as compared to the same periods in 1993.
The Partnership reclassified its investment in the loan collateralized by the
45 West 45th Street Office Building to an investment in joint venture with
affiliates and recognized a participation in income of joint venture with
affiliates. This represents the Partnership's share of the property's
operations as well as the amortization of the remaining balance of the loan
application and processing fees which related to the loan.
Increased painting and carpet replacement costs at the Gleneagles Apartments,
and increased snow removal and tenant expenditures at the Evanston Plaza
Shopping Center resulted in increased property operating expenses during the
nine months ended September 30, 1994 as compared to the same period in 1993.
As a result of higher accounting, portfolio management and data processing
costs, administrative expenses increased during the nine months and quarter
ended September 30, 1994 as compared to the same periods in 1993.
Liquidity and Capital Resources
- - -------------------------------
The cash or near cash position of the Partnership at September 30, 1994
increased when compared to December 31, 1993. The Partnership generated cash
flow from the operations of its properties and short-term investments, which
was partially offset by the payment of administrative expenses. The
Partnership's financing activities consisted of distributions to the Limited
Partners and the General Partner, as well as the payment of leasing commissions
at the Evanston Plaza Shopping Center. The Partnership's cash or near cash
position fluctuates during each quarter, initially decreasing with the payment
of Partnership distributions for the previous quarter, and then gradually
increasing each month as property operating income is received.
The Partnership and three affiliates (the "Participants") funded a $23,000,000
mortgage loan collateralized by the 45 West 45th Street Office Building in New
York, New York. The Partnership funded $3,500,000 of the loan amount for a
participating percentage of approximately 15.22%. In September 1991, the loan
was placed in default. In October 1994, the Participants filed consensual
foreclosure proceedings against the borrower. The Participants expect to obtain
title to the property in 1995. See Part II Item 1. Legal Proceedings for
additional information.
In November 1994, the Partnership made a cash distribution of $468,367 ($2.76
per Taxable Interest and $2.50 per Tax-exempt Interest) to Limited Partners,
representing the quarterly distribution for the third quarter of 1994. The
level of this distribution was consistent with the amount distributed to both
Taxable and Tax-exempt Limited Partners for the second quarter of 1994. It
should be noted that distributions to Taxable Limited Partners and Tax-exempt
Limited Partners are computed by different formulas as set forth in the
Prospectus; therefore, the amount of distributions to Taxable Limited Partners
when compared to the amount of distributions to Tax-exempt Limited Partners
will fluctuate from quarter to quarter. The General Partner expects that the
cash flow from property operations and its investment in joint venture with
affiliates should enable the Partnership to continue making quarterly
distributions to Limited Partners. However, the level of future distributions
will be dependent on the amount of cash flow generated from these investments,
as to which there can be no assurances.
During the nine months ended September 30, 1994, the General Partner, on behalf
of the Partnership, used amounts placed in the Repurchase Fund to repurchase
approximately 277 Interests from Limited Partners at a total cost of $50,776.
On November 4, 1994, The Balcor Company completed the sale of the assets of
Allegiance Realty Group, Inc. to an unaffiliated company, Insignia Allegiance
Management, Inc. ("Insignia"), which is based in Greenville, South Carolina. As
a result of this transaction, Insignia has assumed the management of the
Partnership's properties. This transaction is not expected to result in any
material change to the property management fees paid by the Partnership.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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45 West 45th Street Office Building
- - -----------------------------------
As previously reported the Partnership and three affiliates (together, the
"Participants") funded a $23,000,000 mortgage loan collateralized by the 45
West 45th Street Office Building. The Partnership funded $3,500,000 of the
loan for a participating percentage of 15.22%. The loan was placed in default
and, after negotiations between the Participants and the borrower failed, on
October 7, 1994, the Participants filed foreclosure proceedings against the
borrower in the Supreme Court of the State of New York, City of New York,
Balcor Mortgage Advisors, Inc. vs. 45 W. 45th Street Associates (Case No.:
128631/94). The borrower has agreed not to contest the case. The Participants
expect to obtain title to the property in 1995.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
to Registrant's Registration Statement on Form S-11 dated November 28, 1986
(Registration No. 33-7133) 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. 0-15648) are incorporated
herein by reference.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1994 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 30, 1994.
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 EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Equity Partners-IV, the General Partner
By: /s/Allan Wood
------------------------------
Allan Wood
Executive Vice President, and Chief
Accounting and Financial Officer (Principal
Accounting and Financial Officer) of Balcor
Equity Partners-IV, the General Partner
Date: November 14, 1994
-----------------------
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