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
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 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
-------------------------------------------------------
(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
June 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
--------------- ---------------
Cash and cash equivalents $ 3,415,416 $ 3,612,180
Accounts and accrued interest receivable 79,396 70,246
Prepaid expenses 89,828
Deferred expenses, net of accumulated
amortization of $6,985 in 1995 and
$4,191 in 1994 48,899 51,693
--------------- ---------------
3,633,539 3,734,119
--------------- ---------------
Investment in real estate:
Land 6,958,341 6,958,341
Buildings and improvements 24,248,600 24,248,600
--------------- ---------------
31,206,941 31,206,941
Less accumulated depreciation 8,767,964 8,363,940
--------------- ---------------
Investment in real estate, net of
accumulated depreciation 22,438,977 22,843,001
--------------- ---------------
Investment in joint venture with
affiliates 1,429,546 1,433,471
--------------- ---------------
$ 27,502,062 $ 28,010,591
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 27,354 $ 44,724
Due to affiliates 6,779 54,646
Other liabilities, principally
real estate taxes 1,196,862 1,176,087
Security deposits 108,959 108,108
--------------- ---------------
Total liabilities 1,339,954 1,383,565
--------------- ---------------
Partners' capital (185,486 Limited
Partnership Interests issued and
outstanding) 26,162,108 26,627,026
--------------- ---------------
$ 27,502,062 $ 28,010,591
=============== ===============
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 six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
--------------- ---------------
Income:
Rental $ 1,829,540 $ 1,801,616
Service 630,850 524,307
Interest on short-term investments 103,547 57,802
--------------- ---------------
Total income 2,563,937 2,383,725
--------------- ---------------
Expenses:
Depreciation 404,024 404,024
Property operating 630,506 617,109
Real estate taxes 607,208 568,616
Property management fees 126,404 160,825
Administrative 181,043 174,547
--------------- ---------------
Total expenses 1,949,185 1,925,121
--------------- ---------------
Income before participation in (loss)
income of joint venture with affiliates 614,752 458,604
Participation in (loss) income of joint
venture with affiliates (25,054) 25,289
--------------- ---------------
Net income $ 589,698 $ 483,893
=============== ===============
Net income allocated to General Partner $ 95,584 $ 88,993
=============== ===============
Net income allocated to Limited Partners $ 494,114 $ 394,900
=============== ===============
Net income per Limited Partnership
Interest (185,486 issued and
outstanding) $ 2.66 $ 2.13
=============== ===============
Distributions to General Partner $ 105,454 $ 105,596
=============== ===============
Distributions to Limited Partners $ 949,162 $ 950,359
=============== ===============
Distributions per Limited Partnership
Interest:
Taxable $ 6.22 $ 5.44
=============== ===============
Tax-exempt $ 5.00 $ 5.09
=============== ===============
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 June 30, 1995 and 1994
(Unaudited)
1995 1994
--------------- ---------------
Income:
Rental $ 909,321 $ 908,597
Service 430,246 288,230
Interest on short-term investments 51,991 30,296
--------------- ---------------
Total income 1,391,558 1,227,123
--------------- ---------------
Expenses:
Depreciation 202,012 202,012
Property operating 410,173 307,824
Real estate taxes 299,834 295,852
Property management fees 66,078 60,666
Administrative 99,361 82,451
--------------- ---------------
Total expenses 1,077,458 948,805
--------------- ---------------
Income before participation in (loss)
income of joint venture with affiliates 314,100 278,318
Participation in (loss) income of joint
venture with affiliates (9,070) 43,406
--------------- ---------------
Net income $ 305,030 $ 321,724
=============== ===============
Net income allocated to General Partner $ 48,810 $ 50,480
=============== ===============
Net income allocated to Limited Partners $ 256,220 $ 271,244
=============== ===============
Net income per Limited Partnership
Interest (185,486 issued and
outstanding) $ 1.38 $ 1.46
=============== ===============
Distribution to General Partner $ 52,467 $ 52,395
=============== ===============
Distribution to Limited Partners $ 472,265 $ 471,553
=============== ===============
Distribution per Limited Partnership
Interest:
Taxable $ 2.98 $ 2.94
=============== ===============
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 six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
Operating activities: --------------- ---------------
Net income $ 589,698 $ 483,893
Adjustments to reconcile net income to
net cash provided by operating
activities:
Participation in loss (income) of
joint venture - affiliates 25,054 (25,289)
Depreciation of properties 404,024 404,024
Amortization of deferred expenses 2,794 1,397
Net change in:
Accounts and accrued interest
receivable (9,150) 551,880
Prepaid expenses (89,828)
Accounts payable (17,370) (38,732)
Due to affiliates (47,867) 65,879
Other liabilities 20,775 123,616
Security deposits 851 2,995
--------------- ---------------
Net cash provided by operating
activities 878,981 1,569,663
--------------- ---------------
Investing activities:
Capital contribution to joint
venture - affiliates (38,919)
Distribution from joint venture -
affiliates 17,790
---------------
Net cash used in investing activities (21,129)
---------------
Financing activities:
Distributions to Limited Partners (949,162) (950,359)
Distributions to General Partner (105,454) (105,596)
Payment of deferred expenses (55,884)
--------------- ---------------
Cash used in financing activities (1,054,616) (1,111,839)
--------------- ---------------
Net change in cash and cash equivalents (196,764) 457,824
Cash and cash equivalents at beginning
of period 3,612,180 2,733,081
--------------- ---------------
Cash and cash equivalents at end of
period $ 3,415,416 $ 3,190,905
=============== ===============
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 six months and quarter
ended June 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
six months and quarter ended June 30, 1995 are:
Paid
----------------------
Six Months Quarter Payable
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Mortgage servicing fees $ 1,484 None None
Reimbursement of expenses to
the General Partner, at cost 110,766 $110,766 $6,779
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 August 1995, the Partnership made a distribution of $470,128 ($2.86 per
Taxable Interest and $2.50 per Tax-exempt Interest) to the holders of Limited
Partnership Interests, representing the quarterly distribution for the second
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 June 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
---------------------
Improved operations at the Evanston Plaza Shopping Center resulting primarily
from increased real estate tax reimbursements was the primary reason for the
increase in net income for the six months ended June 30, 1995 as compared to
the same period in 1994. Further discussion of the Partnership's operations is
summarized below.
1995 Compared to 1994
---------------------
Increased real estate tax reimbursements from tenants at the Evanston Plaza
Shopping Center resulted in increased service income for the six months and
quarter ended June 30, 1995 as compared to the same periods in 1994.
As a result of higher interest rates earned on short-term investments and
higher average cash balances available for investment, interest income on
short-term investments increased during the six months and quarter ended June
30, 1995 as compared to the same periods in 1994.
As a result of increased tenant improvement expenditures at the Evanston Plaza
Shopping Center, property operating expenses increased during the quarter ended
June 30, 1995 as compared to the same period in 1994. This increase was
partially offset by a decrease in carpet replacement costs at the Gleneagles
Apartments.
Property management fees, which are earned as a percentage of rental and
service income collected, decreased during the six months ended June 30, 1995
as compared to the same period in 1994 due to the timing of the collection of
real estate tax reimbursements at the Evanston Plaza Shopping Center.
Increased accounting costs resulted in an increase in administrative expenses
during the quarter ended June 30, 1995 as compared to the same period in 1994.
<PAGE>
As a result of lower revenues at the 45 West 45th Street Office Building, the
Partnership recognized participation in loss of joint venture with affiliates
for the six months and quarter ended June 30, 1995 as compared to participation
in income of joint venture with affiliates for the same periods in 1994.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership at June 30, 1995 decreased when compared
to December 31, 1994. Operating activities included cash flow from the
operation of the Partnership's properties and short-term investments, which
were partially offset by the payment of administrative expenses. The investing
activity consisted of net capital contributed to the joint venture with
affiliates, while financing activities consisted 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 six months ended June 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 a
significant cash flow deficit during the six months ended June 30, 1995 as
compared to positive cash flow during the same period in 1994 due to lower
rental rates in 1995. In addition, 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. As of June 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 88%. 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 August 1995, the Partnership made a cash distribution of $470,128 ($2.86 per
Taxable Interest and $2.50 per Tax-exempt Interest) to Limited Partners,
representing the quarterly distribution for the second quarter of 1995. In
addition, during August 1995, the Partnership paid $39,176 to the General
Partner as its share of the second quarter of 1995 distribution, and made a
$13,059 contribution to the Repurchase Fund. Including the August 1995
distribution, Limited Partners have received cumulative distributions of $79.64
per $250 Taxable Interest, of which $79.39 represents cash flow from operations
and $.25 represents a return of original capital, and $77.70 per $250
Tax-exempt Interest, of which $77.45 represents cash flow from operations and
$.25 represents a return of 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 six months ended June 30, 1995, the General Partner on behalf of the
Partnership used amounts placed in the Repurchase Fund to repurchase 125
Interests from Limited Partners at a total cost of $21,175.
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
----------------------------------------
(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 six month period ending
June 30, 1995 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1995.
<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: August 14, 1995
-----------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3415
<SECURITIES> 0
<RECEIVABLES> 79
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3585
<PP&E> 31207
<DEPRECIATION> 8768
<TOTAL-ASSETS> 27502
<CURRENT-LIABILITIES> 1340
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 26162
<TOTAL-LIABILITY-AND-EQUITY> 27502
<SALES> 0
<TOTAL-REVENUES> 2539
<CGS> 0
<TOTAL-COSTS> 1364
<OTHER-EXPENSES> 585
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 590
<INCOME-TAX> 0
<INCOME-CONTINUING> 590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 590
<EPS-PRIMARY> 2.66
<EPS-DILUTED> 2.66
</TABLE>
