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, 1996
--------------
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 0-15648
-------
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
- ---------------------------------------- -------------------
(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 EQUITY PENSION INVESTORS - IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------- -------------
Cash and cash equivalents $ 3,216,610 $ 3,389,826
Accounts and accrued interest receivable 126,412 87,630
Prepaid expenses 8,983 35,931
Deferred expenses, net of accumulated
amortization of $11,176 in 1996 and
$9,779 in 1995 44,708 46,105
------------- -------------
3,396,713 3,559,492
------------- -------------
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 9,374,001 9,171,989
------------- -------------
Investment in real estate, net of
accumulated depreciation 21,832,940 22,034,952
------------- -------------
Investment in joint venture
with affiliates 1,090,715 1,139,513
------------- -------------
$ 26,320,368 $ 26,733,957
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 40,259 $ 105,783
Due to affiliates 26,370 16,286
Accrued real estate taxes 841,412 1,034,351
Security deposits 85,264 88,176
------------- -------------
Total liabilities 993,305 1,244,596
------------- -------------
Limited Partners' capital (185,486
Interests issued and
outstanding) 25,441,540 25,605,915
General Partner's deficit (114,477) (116,554)
------------- -------------
Total partners' capital 25,327,063 25,489,361
------------- -------------
$ 26,320,368 $ 26,733,957
============= =============
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 March 31, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Income:
Rental $ 1,008,520 $ 920,219
Service 154,512 200,604
Interest on short-term investments 42,355 51,556
------------- -------------
Total income 1,205,387 1,172,379
------------- -------------
Expenses:
Depreciation 202,012 202,012
Property operating 276,972 220,333
Real estate taxes 324,237 307,374
Property management fees 56,414 60,326
Administrative 54,070 81,682
------------- -------------
Total expenses 913,705 871,727
------------- -------------
Income before participation in
loss of joint venture with
affiliates 291,682 300,652
Participation in income (loss) of joint
venture with affiliates 12,390 (15,984)
------------- -------------
Net income $ 304,072 $ 284,668
============= =============
Net income allocated to General Partner $ 48,714 $ 46,774
============= =============
Net income allocated to Limited Partners $ 255,358 $ 237,894
============= =============
Net income per Limited Partnership Interest
(185,486 issued and outstanding) $ 1.38 $ 1.28
============= =============
Distribution to General Partner $ 46,637 $ 52,987
============= =============
Distribution to Limited Partners $ 419,733 $ 476,897
============= =============
Distribution per Limited Partnership
Interest:
Taxable $ 2.29 $ 3.24
============= =============
Tax-exempt $ 2.26 $ 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 quarters ended March 31, 1996 and 1995
(Unaudited)
1996 1995
------------- -------------
Operating activities:
Net income $ 304,072 $ 284,668
Adjustments to reconcile net income
to net cash provided by
operating activities:
Participation in (income) loss of
joint venture with affiliates (12,390) 15,984
Depreciation of properties 202,012 202,012
Amortization of deferred expenses 1,397 1,397
Net change in:
Accounts and accrued interest
receivable (38,782) (47,138)
Prepaid expenses 26,948 (14,238)
Accounts payable (65,524) (16,747)
Due to affiliates 10,084 29,377
Accrued liabilities (192,939) (181,147)
Security deposits (2,912) (4,292)
------------- -------------
Net cash provided by operating activities 231,966 269,876
------------- -------------
Investing activities:
Capital contribution to joint
venture - affiliates (38,919)
Distribution from joint
venture - affiliates 61,188
------------- -------------
Cash provided by (used in)
investing activities 61,188 (38,919)
------------- -------------
Financing activities:
Distribution to Limited Partners (419,733) (476,897)
Distribution to General Partner (46,637) (52,987)
------------- -------------
Cash used in financing activities (466,370) (529,884)
------------- -------------
Net change in cash and cash equivalents (173,216) (298,927)
Cash and cash equibalents at beginning
of period 3,389,826 3,612,180
------------- -------------
Cash and cash equivalents at end of period $ 3,216,610 $ 3,313,253
============= =============
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 quarter ended March 31,
1996, 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
quarter ended March 31, 1996 are:
Paid Payable
----------- --------
Reimbursement of expenses to
the General Partner, at cost $11,655 $26,370
3. Subsequent Event:
In April 1996, 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 regular quarterly distribution for the
first quarter of 1996.
<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 March 31, 1996, the Partnership owns two
properties and holds 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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
Net income remained relatively unchanged for the quarter ended March 31, 1996
as compared to the same period in 1995. Further discussion of the Partnership's
operations is summarized below.
1996 Compared to 1995
- ---------------------
Discussions of fluctuations between 1996 and 1995 refer to the quarters ended
March 31, 1996 and 1995.
Decreased common area maintenance reimbursements from tenants at the Evanston
Plaza Shopping Center resulted in decreased service income during 1996 as
compared to 1995.
As a result of lower interest rates earned on short-term investments, interest
income on short-term investments decreased during 1996 as compared to 1995.
Property operating expenses increased as a result of increased insurance costs
at the Evanston Plaza Shopping Center and increased insurance costs and
expenditures for floor coverings at Gleneagles Apartments for 1996 as compared
to 1995.
Lower accounting and legal fees resulted in a decrease in administrative
expenses during 1996 as compared to 1995.
Participation in (loss) income of joint venture with affiliates represents the
partnership's share of the operations of the 45 West 45th Street Office
Building. The Partnership recognized participation in income of joint venture
with affiliates during 1996 as compared to a loss during 1995 due to lower
interior maintenance and repairs and legal expenses during 1996.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $173,000 as of
March 31, 1996 as compared to December 31, 1995. Cash flow of approximately
$232,000 was provided by operating activities during 1996 consisting of cash
flow from the operations of properties and interest income on short-term
investments, which were partially offset by the payment of administrative
expenses. Cash provided by investing activities of approximately $61,000
consisted of the distribution received from the joint venture with affiliates.
Financing activities consisted of distributions to the Partners of
approximately $466,000.
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. For the quarters ended March 31, 1996 and 1995, the
Gleneagles Apartments and Evanston Plaza Shopping Center generated positive
cash flow. The 45 West 45th Street Office Building, in which the Partnership
holds a minority joint venture interest with affiliates, generated positive
cash flow during 1996 and a marginal deficit during 1995. The improvement in
the cash flow of this property was due to lower property operating expenses.
Significant leasing costs were incurred in 1995 at the 45 West 45th Street
Office Building to lease vacant space and renew existing tenant leases which
were scheduled to expire. These nonrecurring expenditures were not included in
classifying the cash flow performance of the property. Had these nonrecurring
expenditures been included in classifying the cash flow performance, this
property would have generated a significant cash flow deficit during 1995.
As of March 31, 1996, the Gleneagles Apartments and Evanston Plaza Shopping
Center had occupancy rates of 99% and 85%, respectively, while the 45 West 45th
Street Office Building had an occupancy rate of 86%. 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.
As previously reported, the General Partner believes that the market for
multifamily housing properties has become increasingly favorable to sellers of
these properties. Currently, the Partnership is preparing to market its
residential property for sale. In addition, the General Partner is marketing
the commercial property in which the Partnership holds a minority joint venture
interest. The General Partner will explore the sale of the Partnership's
remaining commercial property over the next year if market conditions are
favorable.
In April 1996, the Partnership paid 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 regular quarterly distribution of Cash
Flow for the first quarter of 1996. Including the April 1996 distribution,
Limited Partners have received cumulative distributions of $86.51 per $250
Taxable Interest, of which $86.26 represents Cash Flow from operations and $.25
represents a return of Original Capital, and $84.48 per $250 Tax-exempt
Interest, of which $84.23 represents Cash Flow from operations and $.25
<PAGE>
represents a return of Original Capital. In April 1996, the Partnership also
paid $34,978 to the General Partner as its distributive share of the first
quarter of 1996 distribution, and made a contribution to the Repurchase Fund of
$11,659.
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 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.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate.
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
(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 quarter ending March 31,
1996 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 1996.
<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: May 14, 1996
-----------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3217
<SECURITIES> 0
<RECEIVABLES> 126
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3352
<PP&E> 31207
<DEPRECIATION> 9374
<TOTAL-ASSETS> 26320
<CURRENT-LIABILITIES> 993
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25327
<TOTAL-LIABILITY-AND-EQUITY> 26320
<SALES> 0
<TOTAL-REVENUES> 1218
<CGS> 0
<TOTAL-COSTS> 658
<OTHER-EXPENSES> 256
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 304
<INCOME-TAX> 0
<INCOME-CONTINUING> 304
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 304
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 1.38
</TABLE>
