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, 1995
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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
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(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.)
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 267-1600
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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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<PAGE>
BALCOR EQUITY PENSION INVESTORS - IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 3,738,325 $ 3,612,180
Accounts and accrued interest
receivable 192,943 70,246
Prepaid expenses 62,879
Deferred expenses, net of accumulated
amortization of $8,382 in 1995 and
$4,191 in 1994 47,502 51,693
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4,041,649 3,734,119
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Investment in real estate:
Land 6,958,341 6,958,341
Buildings and improvements 24,248,600 24,248,600
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31,206,941 31,206,941
Less accumulated depreciation 8,969,977 8,363,940
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Investment in real estate, net of
accumulated depreciation 22,236,964 22,843,001
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Investment in joint venture with
affiliates 1,066,286 1,433,471
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$ 27,344,899 $ 28,010,591
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 231,017 $ 44,724
Due to affiliates 17,819 54,646
Other liabilities, principally
real estate taxes 1,561,571 1,176,087
Security deposits 102,761 108,108
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Total liabilities 1,913,168 1,383,565
Partners' capital (185,486 Limited
Partnership Interests issued
and outstanding) 25,431,731 26,627,026
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$ 27,344,899 $ 28,010,591
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The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental $ 2,758,627 $ 2,722,341
Service 841,680 635,803
Interest on short-term investments 144,831 93,137
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Total income 3,745,138 3,451,281
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Expenses:
Depreciation 606,037 606,037
Property operating 908,182 865,239
Real estate taxes 1,010,631 935,987
Property management fees 179,013 229,018
Administrative 257,704 253,977
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Total expenses 2,961,567 2,890,258
Income before participation in (loss)
income of joint venture with affiliates 783,571 561,023
Participation in (loss) income of
joint venture with affiliates (401,887) 24,900
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Net income $ 381,684 $ 585,923
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Net income allocated to General Partner $ 93,089 $ 117,503
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Net income allocated to Limited Partners $ 288,595 $ 468,420
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Net income per Limited Partnership
Interest (185,486 issued and
outstanding) $ 1.56 $ 2.53
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Distributions to General Partner $ 157,689 $ 158,268
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Distributions to Limited Partners $ 1,419,290 $ 1,424,406
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Distributions per Limited Partnership
Interest:
Taxable $ 8.51 $ 8.52
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Tax-exempt $ 7.26 $ 7.59
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The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental $ 929,087 $ 920,725
Service 210,830 111,496
Interest on short-term investments 41,284 35,335
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Total income 1,181,201 1,067,556
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Expenses:
Depreciation 202,013 202,013
Property operating 277,676 248,130
Real estate taxes 403,423 367,371
Property management fees 52,609 68,193
Administrative 76,661 79,430
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Total expenses 1,012,382 965,137
Income before participation in loss
of joint venture with affiliates 168,819 102,419
Participation in loss of joint
venture with affiliates (376,833) (389)
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Net (loss) income $ (208,014) $ 102,030
============= =============
Net (loss) income allocated to
General Partner $ (2,495) $ 28,510
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Net (loss) income allocated to
Limited Partners $ (205,519) $ 73,520
============= =============
Net (loss) income per Limited
Partnership Interest (185,486
issued and outstanding) $ (1.10) $ 0.40
============= =============
Distribution to General Partner $ 52,235 $ 52,672
============= =============
Distribution to Limited Partners $ 470,128 $ 474,047
============= =============
Distribution per Limited Partnership
Interest:
Taxable $ 2.86 $ 3.08
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Tax-exempt $ 2.50 $ 2.50
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
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, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 381,684 $ 585,923
Adjustments to reconcile net income
to net cash provided by operating
activities:
Participation in loss (income)
of joint venture with
affiliates 401,887 (24,900)
Depreciation of properties 606,037 606,037
Amortization of deferred expenses 4,191 2,794
Net change in:
Accounts and accrued
interest receivable (122,697) 659,452
Prepaid expenses (62,879)
Accounts payable 186,293 (14,558)
Due to affiliates (36,827) 49,694
Other liabilities 385,484 (17,969)
Security deposits (5,347) 2,839
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Net cash provided by operating activities 1,737,826 1,849,312
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Investing activities:
Capital contribution to joint
venture - affiliates (52,492)
Distribution from joint
venture - affiliates 17,790
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Net cash used in investing activities (34,702)
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Financing activities:
Distributions to Limited Partners (1,419,290) (1,424,406)
Distributions to General Partner (157,689) (158,268)
Payment of deferred expenses (55,884)
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Cash used in financing activities (1,576,979) (1,638,558)
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Net change in cash and cash equivalents 126,145 210,754
Cash and cash equivalents at beginning
of period 3,612,180 2,733,081
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Cash and cash equivalents at end of period $ 3,738,325 $ 2,943,835
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1995, and all such adjustments are of a normal and
recurring nature.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1995 are:
Paid
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Nine Months Quarter Payable
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Mortgage servicing fees $ 1,484 None None
Reimbursement of expenses to
the General Partner, at cost 126,620 $15,854 $17,819
3. Investment in Joint Venture with Affiliates:
The Partnership and three affiliates previously funded a $23,000,000 loan on
the 45 West 45th Street Office Building. In February 1995, the participants
received title to the property through foreclosure. The Partnership owns a
15.22% joint venture interest in the property.
4. Subsequent Event:
In October 1995, the Partnership made a distribution of $419,733 ($2.29 per
Taxable Interest and $2.26 per Tax-exempt Interest) to the holders of Limited
Partnership Interests, representing the quarterly distribution for the third
quarter of 1995.
<PAGE>
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 one acquisition loan and acquire
two real property investments. As of September 30, 1995, the Partnership owns
two properties and a minority interest in a joint venture with affiliates.
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 1994 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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The Partnership recognized its share of the decline in the fair value of the 45
West 45th Street Office Building during the quarter ended September 30, 1995.
This was partially offset by increased real estate tax reimbursements at the
Evanston Plaza Shopping Center. The combined effect of these events resulted
in decreased net income during the nine months ended September 30, 1995 as
compared to the same period in 1994 and recognition of a net loss during the
quarter ended September 30, 1995 as compared to income during the same period
in 1994. Further discussion of the Partnership's operations is summarized
below.
1995 Compared to 1994
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Unless otherwise noted, discussions of fluctuations between 1994 and 1995 refer
to the quarter and nine months ended September 30, 1995 and 1994.
Increased real estate tax reimbursements from tenants at the Evanston Plaza
Shopping Center resulted in increased service income.
Interest income on short-term investments increased as a result of higher
interest rates earned on short-term investments and higher average cash
balances available for investment.
Property operating expenses increased as a result of increased tenant
improvement expenditures at the Evanston Plaza Shopping Center. This increase
was partially offset by a decrease in snow removal costs incurred during the
first quarter and plumbing repairs at the Evanston Plaza Shopping Center.
Property management fees, which are earned as a percentage of rental and
service income collected, decreased due to the timing of the collection of real
estate tax reimbursements at the Evanston Plaza Shopping Center.
<PAGE>
The Partnership recognized its share of the decline in the fair value of the 45
West 45th Street Office Building during the quarter ended September 30, 1995.
This resulted in the participation in loss of joint venture with affiliates
during the nine months ended September 30, 1995 as compared to income during
the same period in 1994 and an increase in net loss during the quarter ended
September 30, 1995 as compared to the same period in 1994.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership at September 30, 1995 increased when
compared to December 31, 1994 primarily due to cash flow from the operation of
the Partnership's properties which was partially offset by the payment of
distributions to the Limited and General Partners.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit, or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit is
considered significant if it exceeds $250,000 annually or 20% of the property's
rental and service income. The Partnership defines cash flow generated from its
properties as an amount equal to the property's revenue receipts less property
related expenditures. During the nine months ended September 30, 1995 and 1994,
the Gleneagles Apartments and Evanston Plaza Shopping Center generated positive
cash flow. The property in which the Partnership holds a minority joint venture
interest with affiliates, the 45 West 45th Street Office Building, generated
positive cash flow during the nine months ended September 30, 1995 and 1994.
Significant leasing costs were incurred in 1995 at the property. These
non-recurring expenditures were not included in classifying the cash flow
performance of the property. Had the costs been included, the property would
have been classified as generating a significant cash flow deficit for the nine
months ended September 30, 1995.
As of September 30, 1995, the Gleneagles Apartments and Evanston Plaza Shopping
Center both had occupancy rates of 96%, while the 45 West 45th Street Office
Building had an occupancy rate of 98%. Many rental markets continue to remain
extremely competitive; therefore, the General Partner's goals are to maintain
high occupancy levels while increasing rents where possible and to monitor and
control operating expenses and capital improvement requirements at the
properties.
The Partnership and three affiliates previously funded a $23,000,000 loan on
the 45 West 45th Street Office Building. In February 1995, the participants
received title to the property through foreclosure. The Partnership owns a
15.22% joint venture interest in the property.
In October 1995, the Partnership made a cash distribution of $419,733 ($2.29
per Taxable Interest and $2.26 per Tax-exempt Interest) to Limited Partners,
representing the quarterly distribution for the third quarter of 1995. In
addition, during October 1995, the Partnership paid $34,991 to the General
Partner as its share of the third quarter of 1995 distribution, and made a
$11,664 contribution to the Repurchase Fund. Including the October 1995
distribution, Limited Partners have received cumulative distributions of $81.93
per $250 Taxable Interest, of which $81.68 represents cash flow from operations
and $.25 represents a return of original capital, and $79.96 per $250
Tax-exempt Interest, of which $79.71 represents cash flow from operations and
$.25 represents a return of original capital.
<PAGE>
The General Partner expects that the cash flow from property operations 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 property operations as to which there can be
no assurances.
During the nine months ended September 30, 1995, the General Partner on behalf
of the Partnership used amounts placed in the Repurchase Fund to repurchase 226
Interests from Limited Partners at a total cost of $38,499.
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.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
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, 1995 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated September 14, 1995,
as amended by Form 8-K/A dated October 27, 1995, was filed reporting a change
in the Registrant's certifying public accountants.
<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 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/Brian Parker
------------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Equity Partners-IV, the
General Partner
Date: November 9, 1995
-----------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3738
<SECURITIES> 0
<RECEIVABLES> 193
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3994
<PP&E> 31207
<DEPRECIATION> 8970
<TOTAL-ASSETS> 27345
<CURRENT-LIABILITIES> 1913
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 25432
<TOTAL-LIABILITY-AND-EQUITY> 27345
<SALES> 0
<TOTAL-REVENUES> 3745
<CGS> 0
<TOTAL-COSTS> 2500
<OTHER-EXPENSES> 863
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 382
<INCOME-TAX> 0
<INCOME-CONTINUING> 382
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 382
<EPS-PRIMARY> 1.56
<EPS-DILUTED> 1.56
</TABLE>
