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 September 30, 2000
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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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2333 Waukegan Road, Suite 100
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 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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BALCOR EQUITY PENSION INVESTORS - IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 2000 and December 31, 1999
(Unaudited)
ASSETS
2000 1999
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Cash and cash equivalents $1,384,601 $1,605,938
Accounts and accrued interest receivable 7,263 7,676
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$1,391,864 $1,613,614
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 56,941 $ 120,757
Due to affiliates 9,904 114,429
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Total liabilities 66,845 235,186
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Commitments and contingencies
Limited Partners' capital (185,486
Interests issued and outstanding) 1,727,027 1,727,027
General Partner's deficit (402,008) (348,599)
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Total partners' capital 1,325,019 1,378,428
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$1,391,864 $1,613,614
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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, 2000 and 1999
(Unaudited)
2000 1999
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Income:
Interest on short-term investments $ 64,464 $ 87,909
Settlement income 107,996
Other income 5,673 5,266
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Total income 70,137 201,171
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Expenses:
Administrative 123,546 207,096
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Total expenses 123,546 207,096
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Net loss $ (53,409) $ (5,925)
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Net loss allocated to General Partner $ (53,409) None
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Net loss allocated to Limited Partners None $ (5,925)
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Net loss per Limited Partnership Interest
(185,486 issued and oustanding)
- Basic and Diluted None $ (0.03)
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Distribution to General Partner None $ 50,081
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Distribution to Limited Partners None $3,804,852
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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, 2000 and 1999
(Unaudited)
(Continued)
2000 1999
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Distribution per Limited Partnership
Interest:
Taxable None $ 20.54
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Tax-exempt None $ 20.51
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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, 2000 and 1999
(Unaudited)
2000 1999
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Income:
Interest on short-term investments $ 22,331 $ 20,128
Other income 1,256
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Total income 23,587 20,128
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Expenses:
Administrative 33,910 66,076
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Total expense 33,910 66,076
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Net loss $ (10,323) $ (45,948)
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Net loss allocated to General Partner $ (10,323) None
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Net loss allocated to Limited Partners None $ (45,948)
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Net loss per Limited Partnership Interest
(185,486 issued and oustanding)
- Basic and Diluted None $ (0.25)
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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, 2000 and 1999
(Unaudited)
2000 1999
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Operating activities:
Net loss $ (53,409) $ (5,925)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Net change in:
Accounts and accrued interest
receivable 413 12,231
Accounts payable (63,816) (124,524)
Due to affiliates (104,525) 53,674
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Net cash used in operating activities (221,337) (64,544)
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Investing activity:
Release of escrow in connection with
sale of property 46,000
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Cash provided by investing activity 46,000
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Financing activities:
Distribution to Limited Partners (3,804,852)
Distribution to General Partner (50,081)
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Cash used in financing activities (3,854,933)
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Net change in cash and cash equivalents (221,337) (3,873,477)
Cash and cash equivalents at beginning
of year 1,605,938 5,525,151
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Cash and cash equivalents at end of period $1,384,601 $1,651,674
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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) 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, 2000, and all such adjustments are of a normal
and recurring nature.
(b) A reclassification has been made to the previously reported 1999 financial
statements in order to provide comparability with the 2000 statements. This
reclassification has not changed the 1999 results.
2. Partnership Termination:
As previously reported, the Partnership sold its final real estate asset in
December 1998. The Partnership has continued in existence since that time as
a result of several contingencies. First, a class action lawsuit, the Dee vs.
Walton Capital Acquisition II, LLC matter, was pending. Second, the
Partnership was considering the possibility of filing a lawsuit against certain
third parties for costs spent in performing environmental remediation at
Evanston Plaza Shopping Center. Third, $543,929 of the proceeds from the sale
of Evanston Plaza Shopping Center had been placed in escrow to be paid to the
Partnership or the buyer of the property depending on the outcome of certain
issues related to real estate taxes, of which $26,278 was released in 1999.
At this time, the general partner has decided to dissolve the Partnership in
December 2000 and make a final distribution of all remaining cash reserves to
the limited partners. The contingencies described above have been resolved by
the general partner as follows. First, the Dee vs. Walton Capital Acquisition
II, LLC lawsuit was dismissed by the Illinois Supreme Court in April 1999 in
favor of the Partnership. Second, the general partner has decided that it would
not be in the best interests of the Partnership to file a lawsuit against third
parties for the environmental contamination at Evanston Plaza Shopping Center.
This decision was made for several reasons. The amount that could be recovered
in such a lawsuit is limited to the amount actually spent on remediation of the
contamination, plus certain costs. The amount actually spent on remediation was
less than the general partner anticipated would be spent on remediation. This,
combined with the likelihood that such litigation would take four or more years
to complete, the legal and other costs that the Partnership would need to incur
in pursuing such a lawsuit, as well as the inherent uncertainties involved in
any lawsuit, caused the general partner to conclude that such a lawsuit would
not be in the best interests of the Partnership. Third, while the issues
relating to the escrow of sale proceeds have not been resolved and the money
remains in escrow, the general partner has voluntarily agreed to give the
Partnership $470,600 in order for the limited partners to be made whole on this
amount. This amount represents the current principal balance in the escrow of
$517,651 less $47,051 owed to the purchaser of the property. Limited partners
will also receive from the general partner an amount equal to the interest
earned on the escrow amount. The general partner will continue to seek a
resolution of the escrow with the purchaser in order to recoup this amount.
However, it should be noted that the general partner can not receive from the
escrow more principal than it has given to the Partnership on this matter, and
may in fact receive substantially less than this amount.
The Madison Partnership litigation, which was filed in 1999, is still
pending. The general partner does not consider this litigation to be a matter
that would preclude dissolution of the Partnership.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the
nine months and quarter ended September 30, 2000 are:
Paid
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Nine Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $ 129,911 $ 7,643 $ 9,904
4. Other Income:
During the nine months ended September 30, 2000, the Partnership received
$5,673 in connection with partial refunds of prior years' real estate taxes and
a utility deposit refund related to the Evanston Plaza Shopping Center, which
was sold in 1998. These amounts have been recognized as other income for
financial statement purposes.
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. The Partnership sold its final real estate
investment in December 1998.
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 1999 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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The operations of the Partnership in 2000 and 1999 consisted primarily of
administrative expenses which were partially offset by interest income earned
on short-term investments. During the first quarter of 1999, the Partnership
recognized settlement income in connection with amounts owed by former tenants
at the Evanston Plaza Shopping Center. As a result, the Partnership's net loss
increased during the nine months ended September 30, 2000 as compared to the
same period in 1999. This increase was partially offset by lower administrative
expenses. The Partnership's net loss decreased during the quarter ended
September 30, 2000 as compared to the same period in 1999 primarily as a result
of lower administrative expenses. Further discussion of the Partnership's
operations is summarized below.
2000 Compared to 1999
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Unless otherwise noted, discussions of fluctuations between 2000 and 1999 refer
to both the nine months and quarters ended September 30, 2000 and 1999.
As a result of higher cash balances in 1999 prior to a distribution to Limited
Partners in February 1999, interest income on short-term investments decreased
during the nine months ended September 30, 2000 as compared to the same period
in 1999. This decrease was partially offset by higher interest rates in 2000,
which resulted in an increase in interest income on short-term investments
during the quarter ended September 30, 2000 as compared to the same period in
1999.
During January 1999 and March 1999, the Partnership received $105,000 and
$2,996, respectively, from settlements with former tenants at the Evanston
Plaza Shopping Center. The settlements relate to rental income owed to the
Partnership pursuant to the tenants' leases. These amounts have been recognized
as settlement income for financial statement purposes.
During the nine months ended September 30, 2000, the Partnership received
$5,673 in connection with partial refunds of prior years' real estate taxes and
a utility deposit refund related to the Evanston Plaza Shopping Center, which
was sold in 1998. During April 1999, the Partnership received $5,266 in
connection with a partial refund of a prior year's insurance premium related to
the Evanston Plaza Shopping Center. These amounts have been recognized as other
income for financial statement purposes.
Primarily due to a decrease in accounting, legal, consulting and portfolio
management fees, administrative expenses decreased during 2000 as compared to
1999.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $221,000 as of
September 30, 2000 as compared to December 31, 1999 due to cash used in
operating activities for the payment of administrative expenses, which was
partially offset by interest income earned on short-term investments.
As previously reported, the Partnership sold its final real estate asset in
December 1998. The Partnership has continued in existence since that time as a
result of several contingencies. First, a class action lawsuit, the Dee vs.
Walton Capital Acquisition II, LLC matter, was pending. Second, the
Partnership was considering the possibility of filing a lawsuit against certain
third parties for costs spent in performing environmental remediation at
Evanston Plaza Shopping Center. Third, $543,929 of the proceeds from the sale
of Evanston Plaza Shopping Center had been placed in escrow to be paid to the
Partnership or the buyer of the property depending on the outcome of certain
issues related to real estate taxes, of which $26,278 was released in 1999.
At this time, the general partner has decided to dissolve the Partnership in
December 2000 and make a final distribution of all remaining cash reserves to
the limited partners. The contingencies described above have been resolved by
the general partner as follows. First, the Dee vs. Walton Capital Acquisition
II, LLC lawsuit was dismissed by the Illinois Supreme Court in April 1999 in
favor of the Partnership. Second, the general partner has decided that it would
not be in the best interests of the Partnership to file a lawsuit against third
parties for the environmental contamination at Evanston Plaza Shopping Center.
This decision was made for several reasons. The amount that could be recovered
in such a lawsuit is limited to the amount actually spent on remediation of the
contamination, plus certain costs. The amount actually spent on remediation was
less than the general partner anticipated would be spent on remediation. This,
combined with the likelihood that such litigation would take four or more years
to complete, the legal and other costs that the Partnership would need to incur
in pursuing such a lawsuit, as well as the inherent uncertainties involved in
any lawsuit, caused the general partner to conclude that such a lawsuit would
not be in the best interests of the Partnership. Third, while the issues
relating to the escrow of sale proceeds have not been resolved and the money
remains in escrow, the general partner has voluntarily agreed to give the
Partnership $470,600 in order for the limited partners to be made whole on this
amount. This amount represents the current principal balance in the escrow of
$517,651 less $47,051 owed to the purchaser of the property. Limited partners
will also receive from the general partner an amount equal to the interest
earned on the escrow amount. The general partner will continue to seek a
resolution of the escrow with the purchaser in order to recoup this amount.
However, it should be noted that the general partner can not receive from the
escrow more principal than it has given to the Partnership on this matter, and
may in fact receive substantially less than this amount.
The Madison Partnership litigation, which was filed in 1999, is still pending.
The general partner does not consider this litigation to be a matter that would
preclude dissolution of the Partnership.
Limited Partners have received cumulative distributions of $199.82 per $250
Taxable Interest, of which $100.17 represents Net Cash Receipts and $99.65
represents Net Cash Proceeds, and $197.61 per $250 Tax-exempt Interest, of
which $97.96 represents Net Cash Receipts and $99.65 represents Net Cash
Proceeds. No additional distributions are anticipated to be made prior to the
termination of the Partnership. However, after paying final partnership
expenses, any remaining cash reserves will be distributed in accordance with
the Partnership Agreement. Amounts allocated to the Repurchase Fund will also
be distributed at that time. Limited Partners will not recover all of their
original investment.
In 1997, the Partnership discontinued the repurchase of Interests from Limited
Partners. As of September 30, 2000, there was cash of $398,864 in the
Repurchase Fund.
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 months ended
September 30, 2000 is attached hereto.
(b) Reports on Form 8-K: No Reports on Form 8-K were filed during the quarter
ended September 30, 2000.
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
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Equity Partners - IV, the General Partner
By: /s/Jayne A. Kosik
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Jayne A. Kosik
Senior Managing Director and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Equity Partners - IV, the
General Partner
Date: November 13, 2000
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