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 March 31, 1996
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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 (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 CURRENT INCOME FUND-87
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
March 31, 1996 and December 31, 1995
(UNAUDITED)
ASSETS
1996 1995
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Cash and cash equivalents $ 224,210 $ 229,105
Escrow deposits 251,502 153,190
Prepaid expenses 7,029 28,541
Deferred expenses, net of accumulated
amortization of $90,270 in 1996 and
$82,305 in 1995 69,030 76,995
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551,771 487,831
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Investment in real estate:
Land 940,021 940,021
Buildings and improvements 16,578,369 16,578,369
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17,518,390 17,518,390
Less accumulated depreciation 8,166,927 7,970,988
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Investment in real estate, net of
accumulated depreciation 9,351,463 9,547,402
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$ 9,903,234 $ 10,035,233
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LIABILITIES AND PARTNERS' DEFICIT
Loan payable - affiliate $ 1,025,666 $ 1,010,262
Accounts payable 45,203 50,888
Due to affiliates 105,141 96,437
Accrued liabilities, principally
real estate taxes 342,938 274,351
Security deposits 37,797 39,478
Mortgage note payable 9,504,687 9,525,894
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Total liabilities 11,061,432 10,997,310
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Affiliate's participation in joint venture 18,789 22,373
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Unitholders' deficit (996,146 Units
issued and outstanding) (1,064,351) (873,609)
General Partner's deficit (112,636) (110,841)
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Total partners' deficit (1,176,987) (984,450)
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$ 9,903,234 $ 10,035,233
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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 quarters ended March 31, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Rental and service $ 701,768 $ 674,480
Interest on short-term investments 2,534 5,298
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Total income 704,302 679,778
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Expenses:
Interest on mortgage note payable 207,987 209,756
Interest on short-term loan payable -
affiliate 15,404 16,997
Depreciation 195,939 195,939
Amortization 7,965 7,965
Property operating 247,442 186,146
Real estate taxes 68,587 63,894
Property management fees 34,911 33,665
Incentive partnership management fees 5,603 5,603
Administrative 37,830 38,860
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Total expenses 821,668 758,825
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Loss before affiliate's participation
in joint venture (117,366) (79,047)
Affiliate's participation in loss from
joint venture 163 55
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Net loss $ (117,203) $ (78,992)
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Net loss allocated to General Partner $ (1,172) $ (790)
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Net loss allocated to Unitholders $ (116,031) $ (78,202)
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Net loss per Unit (996,146 issued
and outstanding) $ (0.12) $ (0.08)
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Distribution to General Partner $ 623 $ 623
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Distribution to Unitholders $ 74,711 $ 74,711
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Distribution per Unit $ 0.075 $ 0.075
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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 CASH FLOWS
for the quarters ended March 31, 1996 and 1995
(UNAUDITED)
1996 1995
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Operating activities:
Net loss $ (117,203) $ (78,992)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Affiliate's participation in loss
from joint venture (163) (55)
Depreciation of property 195,939 195,939
Amortization of deferred expenses 7,965 7,965
Accrued interest expense due at
maturity - affiliate 15,404 16,997
Net change in:
Escrow deposits (98,312) (91,438)
Prepaid expense 21,512
Accounts payable (5,685) (6,802)
Due to affiliates 8,704 16,787
Accrued liabilities 68,587 69,546
Security deposits (1,681) 1,892
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Net cash provided by operating activities 95,067 131,839
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Financing activities:
Distribution to Unitholders (74,711) (74,711)
Distribution to General Partner (623) (623)
Distribution to joint venture partner -
affiliate (3,421)
Principal payments on mortgage notes
payable (21,207) (19,438)
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Cash used in financing activities (99,962) (94,772)
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Net change in cash and cash equivalents (4,895) 37,067
Cash and cash equivalents at beginning
of period 229,105 639,493
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Cash and cash equivalents at end of period $ 224,210 $ 676,560
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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:
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. Interest Expense:
During the quarters ended March 31, 1996 and 1995, the Partnership incurred and
paid interest expense on the mortgage note payable of $207,987 and $209,756
respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1996 are:
Paid Payable
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Incentive partnership management
fees $5,603 $88,557
Reimbursement of expenses to
the General Partner, at cost 7,835 16,584
In conjunction with the May 1993 financing of Autumn Woods Apartments, 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 a
demand loan and is expected to be repaid from the available cash flow from
operations of the property and/or property sale proceeds. As of March 31, 1996,
this loan had a balance of $1,025,666. During the three months ended March 31,
1996 and 1995, the Partnership incurred interest expense on this loan of
$15,404 and $16,997, respectively, which has been added to the principal
balance of the loan. Interest expense was computed at the American Express
Company cost of funds rate plus a spread to cover administrative costs. As of
March 31, 1996, this rate was 5.850%.
4. Subsequent Event:
In April 1996, the Partnership made a distribution of $74,711 ($.075 per Unit)
to the Unitholders for the first quarter of 1996.
<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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
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An increase in interior repairs and roof repairs during the first quarter of
1996 were the primary reasons for an increase in the net loss as compared to
the same period in 1995. Further discussion of the Partnership's operations is
summarized below.
1996 Compared to 1995
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Discussions of fluctuations between 1996 and 1995 refer to the quarters ended
March 31, 1996 and 1995.
Rental and service income increased in 1996 when compared to 1995 due to
increased occupancy and decreased rental concessions at the Autumn Woods
Apartments.
Primarily due to lower average cash balances, resulting from distributions in
excess of cash flow generated by the Partnership during 1995, interest income
on short-term investments decreased during 1996 when compared to 1995.
Increased roof repairs and interior repairs at the Autumn Woods Apartments
resulted in higher property operating expenses in 1996 when compared to 1995.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $5,000 as of
March 31, 1996 when compared to December 31, 1995. The Partnership's operating
activities generated approximately $95,000 of cash flow primarily from the
operations of the Autumn Woods Apartments, which was partially offset by the
payment of administrative expenses and incentive partnership management fees.
Cash flow used in financing activities totaled approximately $100,000 and
included the payment of distributions to Unitholders, the General Partner and
the joint venture partner, as well as the payment of principal on the mortgage
note payable.
<PAGE>
During 1996 and 1995, the 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 includes debt service
payments. As of March 31, 1996, the occupancy rate of the property was 92%.
The General Partner believes that the market for multifamily housing properties
has become increasingly favorable to sellers of these properties. Currently,
the Partnership is actively marketing the Autumn Woods Apartments for sale. If
current market conditions remain favorable and the General Partner can obtain
an appropriate sales price, the Partnership's liquidation strategy may be
accelerated.
In conjunction with the May 1993 financing of Autumn Woods Apartments, 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, at which time 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 and/or
property sale proceeds. Commencing in 1994, all debt service payments required
under the first mortgage loan, which matures in 1998, are paid by the
Partnership. As of March 31, 1996, the loan payable to the General Partner was
$1,025,666.
In April 1996, the Partnership paid $74,711 ($.075 per Unit) of Net Cash
Receipts to the Unitholders representing the distribution for the first quarter
of 1996. The level of this distribution remained unchanged from the amount
distributed to Unitholders during the fourth quarter of 1995. Including the
April 1996 distribution, the Partnership has distributed $6.62 per $15.00 Unit
all of which represents Cash Flow from operations. The General Partner 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 Autumn Woods Apartments. In light of results to
date and current market conditions, there can be no assurance that investors
will recover all of their original investment.
Since the Preferred Distribution levels to Unitholders specified in the
Partnership Agreement have not been 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 price,
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 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. 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 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 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 D. Parker
-----------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor CIF Partners, the General
Partner
Date: May 15, 1996
----------------------------
<PAGE>
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