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 0-16712
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BALCOR CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Delaware 36-3451878
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Rd., 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 CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
June 30, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
------------- -------------
Cash and cash equivalents $ 559,720 $ 639,493
Escrow deposits 178,559 105,883
Deferred expenses, net of accumulated
amortization of $66,375 in 1995 and
$50,445 in 1994 92,925 108,855
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831,204 854,231
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Investment in real estate, at cost:
Land 940,021 940,021
Buildings and improvements 16,578,369 16,578,369
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17,518,390 17,518,390
Less accumulated depreciation 7,579,110 7,187,233
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Investment in real estate, net of
accumulated depreciation 9,939,280 10,331,157
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$ 10,770,484 $ 11,185,388
============= =============
LIABILITIES AND PARTNERS' (DEFICIT) CAPITAL
Loan payable - affiliate $ 1,076,258 $ 1,041,594
Accounts payable 25,908 17,887
Due to affiliates 91,723 118,273
Accrued liabilities, principally real
estate taxes 274,351 283,839
Security deposits 45,584 41,760
Mortgage note payable 9,566,947 9,606,251
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Total liabilities 11,080,771 11,109,604
Affiliate's participation in joint venture 24,598 24,869
Partners' (deficit) capital (996,146 Units
issued and outstanding) (334,885) 50,915
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$ 10,770,484 $ 11,185,388
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 1,379,576 $ 1,323,887
Interest on short-term investments 11,073 16,153
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Total income 1,390,649 1,340,040
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Expenses:
Interest on mortgage
note payable 419,084 422,361
Interest on short-term
loan payable - affiliate 34,664 18,450
Depreciation 391,877 390,120
Amortization 15,930 15,930
Property operating 461,704 426,910
Real estate taxes 127,687 122,059
Property management fees 67,582 66,194
Incentive partnership management fees 11,206 33,620
Administrative 96,318 76,711
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Total expenses 1,626,052 1,572,355
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Loss before affiliate's participation in
joint venture (235,403) (232,315)
Affiliate's participation in loss
from joint venture 271 324
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Net loss $ (235,132) $ (231,991)
============= =============
Net loss allocated to General Partner $ (2,351) $ (2,320)
============= =============
Net loss allocated to Unitholders $ (232,781) $ (229,671)
============= =============
Net loss per Unit (996,146 issued
and outstanding) $ (0.23) $ (0.23)
============= =============
Distributions to General Partner $ 1,246 $ 3,736
============= =============
Distributions to Unitholders $ 149,422 $ 448,266
============= =============
Distributions per Unit $ 0.15 $ 0.45
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Rental and service $ 705,096 $ 670,514
Interest on short-term investments 5,775 9,235
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Total income 710,871 679,749
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Expenses:
Interest on mortgage
note payable 209,328 210,984
Interest on short-term
loan payable - affiliate 17,667 11,320
Depreciation 195,938 195,060
Amortization 7,965 7,965
Property operating 275,558 257,972
Real estate taxes 63,793 64,400
Property management fees 33,917 33,434
Incentive partnership management fees 5,603 16,810
Administrative 57,458 34,602
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Total expenses 867,227 832,547
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Loss before affiliate's participation in
joint venture (156,356) (152,798)
Affiliate's participation in loss
from joint venture 216 269
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Net loss $ (156,140) $ (152,529)
============= ============
Net loss allocated to General Partner $ (1,561) $ (1,525)
============= =============
Net loss allocated to Unitholders $ (154,579) $ (151,004)
============= =============
Net loss per Unit (996,146 issued
and outstanding) $ (0.15) $ (0.15)
============= =============
Distribution to General Partner $ 623 $ 1,868
============= =============
Distribution to Unitholders $ 74,711 $ 224,133
============= =============
Distribution per Unit $ 0.075 $ 0.225
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net loss $ (235,132) $ (231,991)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Affiliate's participation in loss
from joint venture (271) (324)
Depreciation of property 391,877 390,120
Amortization of deferred expenses 15,930 15,930
Accrued interest expense due at
maturity - affiliate 34,664 18,450
Net change in:
Escrow deposits (72,676) (30,958)
Accounts payable 8,021 (15,800)
Due to affiliates (26,550) 36,476
Accrued liabilities (9,488) (10,195)
Security deposits 3,824 (9,403)
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Net cash provided by operating
activities 110,199 162,305
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Financing activities:
Distributions to Unitholders (149,422) (448,266)
Distributions to General Partner (1,246) (3,736)
Distributions to joint venture partner -
affiliate (1,984)
Proceeds from loan payable - affiliate 458,387
Principal payments on mortgage note
payable (39,304) (36,026)
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Net cash used in financing activities (189,972) (31,625)
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Net change in cash and cash equivalents (79,773) 130,680
Cash and cash equivalents at beginning
of period 639,493 1,050,766
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Cash and cash equivalents at end of period $ 559,720 $ 1,181,446
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
Reclassifications have been made to the previously reported 1994 statements in
order to provide comparability with the 1995 statements. These
reclassifications have not changed the 1994 results. 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. Interest Expense:
During the six months ended June 30, 1995 and 1994, the Partnership incurred
and paid interest expense on the mortgage note payable of $419,084 and
$422,361, respectively.
3. 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
----------- --------- ----------
Incentive partnership management
fees $11,206 $5,603 $88,557
Reimbursement of expenses to
the General Partner, at cost 66,183 66,183 3,166
In conjunction with the May 1993 financing of the Autumn Woods loan, the
monthly debt service payments due on the first mortgage loan were required to
be funded by advances from the General Partner through December 16, 1994, at
which time the General Partner loan became due. The General Partner loan is now
a demand loan and is expected to be repaid from the available cash flow from
operations of the property. As of June 30, 1995, this loan had a balance of
$1,076,258. During the six months ended June 30, 1995 and 1994, the Partnership
incurred interest expense on this loan of $34,664 and $18,450, respectively.
Interest expense was computed at the American Express Company cost of funds
rate plus a spread to cover administrative costs. As of June 30, 1995, this
rate was 6.542%.
4. Subsequent Event:
In July 1995, the Partnership made a distribution of $74,711 ($.075 per Unit)
to the Unitholders for the second quarter of 1995.
<PAGE>
BALCOR CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Current Income Fund-87 A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1986 to invest in and operate
income-producing real property. The Partnership raised $14,942,190 from sales
of Limited Partnership Depositary Units and utilized these proceeds to acquire
Autumn Woods Apartments. The Partnership continues to operate this property.
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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No material events occurred that affected the Partnership's operations during
the six months and quarter ended June 30, 1995. Further discussion of the
Partnership's operations is summarized below.
1995 Compared to 1994
---------------------
Due to lower average cash balances, interest income on short-term investments
decreased during the six months and quarter ended June 30, 1995 as compared to
the same periods in 1994.
The General Partner advanced funds as required by the Prospectus to pay the
monthly debt service payments due on the property's mortgage loan through
December 1994, which increased the balance of the loan payable - affiliate.
This increase, combined with higher interest rates, resulted in an increase in
interest expense on the short-term loan payable - affiliate during the six
months and quarter ended June 30, 1995 as compared to the same periods in 1994.
Due to a decrease in the distribution level to Unitholders, incentive
partnership management fees payable to the General Partner decreased during the
six months and quarter ended June 30, 1995 as compared to the same periods in
1994.
Higher accounting fees resulted in an increase in administrative expenses
during the six months and quarter ended June 30, 1995 as compared to the same
periods in 1994.
Liquidity and Capital Resources
-------------------------------
The Partnership's cash position decreased as of June 30, 1995 when compared to
December 31, 1994. The Partnership's cash flow provided by operating activities
was generated primarily from the operation of Autumn Woods Apartments, which
was partially offset by the payment of administrative expenses and incentive
partnership management fees. Financing activities included the payment of
<PAGE>
distributions to Unitholders and the General Partner and the payment of
principal on the mortgage note payable.
During the six months ended June 30, 1995 and 1994, Autumn Woods Apartments
generated positive cash flow, which the Partnership defines as an amount equal
to the property's revenue receipts less property related expenditures, which
include debt service payments. As of June 30, 1995, the occupancy rate of the
property was 95%.
In conjunction with the May 1993 financing of the Autumn Woods loan, the
monthly debt service payments due on the first mortgage loan were required by
the Prospectus to be funded by advances from the General Partner on a zero
coupon basis until December 1994 when the General Partner loan matured. The
General Partner loan is now a demand loan and is expected to be repaid from the
available cash flow from operations of the property. Additionally, all debt
service payments required under the first mortgage loan, which matures in 1998,
will now be paid from the cash flow of the property. As of June 30, 1995, the
loan payable to the General Partner is $1,076,258, including accrued interest
thereon.
In July 1995, the Partnership paid $74,711 ($.075 per Unit) of Net Cash
Receipts to the Unitholders representing the distribution for the second
quarter of 1995. The level of this distribution remained unchanged from the
amount distributed to Unitholders for the first quarter of 1995. To date, the
Partnership has distributed $6.395 per Unitholder which represents Cash Flow
from operations. The General Partner presently expects that cash flow from
property operations will allow the Partnership to continue making quarterly
distributions to Unitholders. However, the level of future distributions will
be dependent on the repayment of the General Partner loan and the cash flow
generated by the Autumn Woods Apartments.
Since the Preferred Distribution levels to Unitholders specified in the
Partnership Agreement were not attained in any year, the General Partner has
subordinated 25% of its share of Net Cash Receipts in accordance with the
Partnership Agreement. The General Partner anticipates that future distribution
levels will continue to result in further subordinations of its incentive
management fee and distributive share from operations.
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 CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 2
to the Registrant's Registration Statement on Form S-11 dated December 17, 1986
(Registration No. 33-7858) and Form of Confirmation regarding Depositary Units
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. 0-16712) 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 CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor CIF
Partners, the General Partner
By: /s/Brian Parker
-----------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor CIF Partners, the General
Partner
Date: August 14, 1995
----------------------------
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 560
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 738
<PP&E> 17518
<DEPRECIATION> 7579
<TOTAL-ASSETS> 10770
<CURRENT-LIABILITIES> 1514
<BONDS> 9567
<COMMON> 0
0
0
<OTHER-SE> (335)
<TOTAL-LIABILITY-AND-EQUITY> 10770
<SALES> 0
<TOTAL-REVENUES> 1391
<CGS> 0
<TOTAL-COSTS> 668
<OTHER-EXPENSES> 504
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 454
<INCOME-PRETAX> (235)
<INCOME-TAX> 0
<INCOME-CONTINUING> (235)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (235)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
