UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-16797
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IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3497345
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
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Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-----------------------------
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
PART I
Item 1. Business
----------------
IDS/Balcor Income Partners A Real Estate Limited Partnership (the "Registrant")
is a limited partnership formed in 1987 under the laws of the State of
Delaware. The Registrant raised $18,498,500 through the sale of 73,994 Limited
Partnership Interests to the public during 1987, 1988 and 1989. The
Registrant's operations consist exclusively of investment in and operation of
income producing real property, and all financial information included in this
report relates to this industry segment.
The Registrant utilized the net offering proceeds to acquire the two real
property investments described under "Properties" (Item 2). The Partnership
Agreement generally provides that the proceeds of any sale or refinancing of
the Registrant's properties will not be reinvested in new acquisitions.
During 1994, institutionally owned and managed multi-family residential
properties in many markets continued to experience favorable operating
conditions combined with relatively low levels of new construction. These
favorable operating conditions were supported by the strong pattern of national
economic growth which contributed to job growth and rising income levels in
most local economies. However, some 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. During 1994 both of the Registrant's properties generated positive
cash flow.
The Registrant's properties are subject to certain competitive conditions in
the markets in which they are located. See Liquidity and Capital Resources for
additional information.
Historically, real estate investments have experienced the same cyclical
characteristics affecting most other types of long-term investments. While real
estate values have generally risen over time, the cyclical character of real
estate investments, together with local, regional and national market
conditions, has resulted in periodic devaluations of real estate in particular
markets, as has been experienced in the last few years.
The Registrant, by virtue of its ownership of real estate, is subject to
federal and state laws and regulations covering various environmental issues.
Management of the Registrant utilizes the services of
environmental consultants to assess a wide range of environmental issues and to
conduct tests for environmental contamination as appropriate. The General
Partner is not aware of any potential liability due to environmental issues or
conditions that would be material to the Registrant.
The officers and employees of Balcor Affiliated Partners-87, Inc., the
Registrant's Managing General Partner, and IDS Realty Corporation, the
Registrant's Supervising General Partner, and their affiliates perform services
for the Registrant. The Registrant currently has no employees engaged in its
operations.
Item 2. Properties
------------------
The Registrant owns the properties described below:
Location Description of Property
-------- -----------------------
Atlanta, Georgia Post Place Apartments: a 122-unit apartment
complex located on approximately 15 acres.
<PAGE>
West Lafayette, Indiana Salem Courthouse Apartments: a 240-unit apartment
complex located on approximately 16 acres.
See Notes to Financial Statements for other information regarding real property
investments.
In the opinion of the General Partners, the Registrant has provided for
adequate insurance coverage for its real estate investment properties.
Item 3. Legal Proceedings
-------------------------
The Registrant is not subject to any material pending legal proceedings, nor
were any such proceedings terminated during the fourth quarter of 1994.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the Limited Partners of the Registrant
during 1994.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
---------------------------------------------------------------------
Matters
-------
There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop. For information
regarding previous distributions, see Financial Statements, Statements of
Partners' Capital, and Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources, below.
As of December 31, 1994, the number of record holders of Limited Partnership
Interests of the Registrant was 2,901.
Item 6. Selected Financial Data
-------------------------------
Year ended December 31,
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1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
Total income $2,596,525 $2,470,381 $2,322,085 $2,260,007 $2,282,504
Net income 562,501 298,967 343,139 325,190 334,160
Net income
per Limited Partner-
ship Interest 7.53 4.00 4.59 4.35 4.47
Total assets 10,877,550 11,439,068 12,255,088 13,057,693 13,825,764
Distributions per
Limited Part-
nership Interest 15.50 15.50 15.245 15.00 15.00
Item 7. Management's Discussion and Analysis of Financial Condition and
-----------------------------------------------------------------------
Results of Operations
---------------------
Summary of Operations
---------------------
The increase in net income for 1994 as compared to 1993 is primarily due to
improved operations at Post Place and Salem Courthouse apartment complexes, as
well as a decrease in depreciation expense at Salem Courthouse Apartments. Net
income was relatively unchanged for 1993 as compared to 1992. Further
discussion of IDS/Balcor Income Partners' (the "Partnership") operations is
summarized below.
Operations
----------
1994 Compared to 1993
---------------------
Net income from Post Place Apartments increased during 1994 as compared to 1993
primarily due to increased rental income as a result of increased rental rates
and occupancy at the complex.
Net income from Salem Courthouse Apartments increased in 1994 as compared to
1993 primarily due to increased rental income as a result of increased rental
rates and occupancy at the complex. In addition, depreciation expense decreased
since personal property became fully depreciated in 1993. Repair and
maintenance expense also decreased due to exterior wood trim and asphalt
driveway repair work which had been substantially completed in 1993. These
decreases were partially offset by higher property operating expenses including
<PAGE>
insurance and payroll costs.
Administrative expenses increased during 1994 as compared to 1993 primarily as
a result of higher accounting, portfolio management and data processing fees.
1993 Compared to 1992
---------------------
Net income from Post Place Apartments increased during 1993 as compared to 1992
primarily due to increased rental income as a result of an increase in rental
rates and occupancy at the complex. This increase was partially offset by an
increase in payroll expenses.
Net income from Salem Courthouse Apartments decreased in 1993 as compared to
1992 primarily due to exterior wood trim and asphalt driveway repair work. In
addition, real estate tax expense increased during 1993 as compared to 1992 due
to an increase in the tax assessment of the property. These additional
expenditures were partially offset by higher rental and service income
resulting from increased rental rates.
Administrative expenses were higher in 1993 as compared to 1992 primarily due
to an increase in accounting fees.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership decreased slightly from December 31, 1993
to December 31, 1994. The Partnership's operating activities consisted of cash
flow generated from property operations, net of administrative expenses. Cash
flow from operating activities along with Partnership reserves were used to
fund investing and financing activities. Investing activities consisted of the
installation of a security gate at Post Place Apartments and the replacement of
balconies at Salem Courthouse Apartments, while financing activities consisted
of quarterly distributions to Limited Partners.
The Salem Courthouse and Post Place apartment complexes generated positive cash
flow during 1994 and 1993. The Partnership defines cash flow generated from its
properties as an amount equal to the property's revenue receipts less property
related expenditures.
The Salem Courthouse Apartments are located in West Lafayette, Indiana. The
property is in the submarket characterized as the west section of West
Lafayette. The property contains 240 units, while the direct competition in the
submarket consists of five properties with approximately 1500 units. The
average occupancy for this submarket at comparable properties is 96%, while
Salem Courthouse Apartments had an occupancy of 97% at December 31, 1994. The
rental rates at the property are slightly higher than the average for
comparable properties in the submarket. Within a mile of Salem Courthouse
Apartments there is a new 40 unit apartment complex which is expected to expand
to as many as 250 units. This new property is considered to be in direct
competition with Salem Courthouse Apartments. The West Lafayette market and
this submarket are considered strong as evidenced by high rental and occupancy
rates.
The Post Place Apartments are located in Atlanta, Georgia. The property is in
the submarket characterized as northeast Atlanta (DeKalb County). The property
contains 122 units, while the direct competition in the submarket consists of
six properties with approximately 1750 units. The average occupancy for this
submarket at comparable properties is 96%, while Post Place Apartments has an
occupancy of 98% at December 31, 1994. The rental rates at the property are
consistent with the average for comparable properties in the submarket. The
construction of one new apartment complex containing 104 units is expected to
begin in 1995. This new property is considered to be in direct competition with
Post Place Apartments. The Atlanta market and this submarket are considered
strong as evidenced by high rental and occupancy rates.
<PAGE>
In January 1995, the Partnership made a distribution of $286,727 ($3.875 per
Interest) to the holders of Limited Partnership Interests for the fourth
quarter of 1994. The Partnership made four distributions to Limited Partners
totaling $15.50 per Interest in 1994 and 1993 and four distributions totaling
$15.245 per Interest in 1992. See Financial Statements-Statements of Partners'
Capital. Including the January 1995 distribution, investors have received
distributions of Net Cash Receipts of $95.745 per $250 Interest, as well as
certain tax benefits. The General Partners anticipate that the cash flow from
property operations should enable the Partnership to continue making quarterly
distributions to Limited Partners at the current level during 1995 although
there can be no assurances in this regard.
The General Partner has recently completed the outsourcing of the financial
reporting and accounting services, transfer agent and investor records
services, and computer operations and systems development functions that
provided services to the Partnership. All of these functions are now being
provided by independent third parties. Additionally, Allegiance Realty Group,
Inc., which has provided property management services to one of the
Partnership's properties, was sold to a third party. Each of these transactions
occurred after extensive due diligence and competitive bidding processes. The
General Partner does not believe that the cost of providing these services to
the Partnership, in the aggregate, will be materially different to the
Partnership during 1995 when compared to 1994.
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>
Item 8. Financial Statements and Supplementary Data
---------------------------------------------------
See Index to Financial Statements and Schedule in this Form 10-K.
The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.
The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
December 31, 1994 December 31, 1993
------------------------ -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
---------- --------- ---------- ---------
Total assets $10,877,550 $12,714,579 $11,439,068 $13,093,689
Partners' capital
accounts:
General Partners 14,452 32,606 8,827 25,157
Limited Partners 10,603,803 15,016,452 11,193,834 15,425,899
Net income:
General Partners 5,625 7,449 2,990 5,475
Limited Partners 556,876 737,460 295,977 541,973
Per Limited Part-
nership Interest 7.53 9.97 4.00 7.32
Item 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
--------------------
There have been no changes in or disagreements with accountants on any matter
of accounting principles, practices or financial statement disclosure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
-----------------------------------------------------------
(a) The Registrant does not have a Board of Directors. However, Balcor
Affiliated Partners-87, Inc. and IDS Realty Corporation, the General Partners,
each have a Board of Directors. IDS Realty Corporation is a wholly-owned
subsidiary of IDS Management Corporation which is itself a wholly-owned
subsidiary of IDS Financial Corporation. Effective January 1, 1995, IDS
Financial Corporation changed its name to American Express Financial
Corporation and IDS Financial Services Inc. changed its name to American
Express Financial Advisors Inc. The term of office as directors of each of the
General Partners is one year. Directors are elected at the respective annual
meeting of stockholders. The Board of Directors for Balcor Affiliated
Partners-87, Inc. consists of Thomas E. Meador and Allan Wood. The Board of
Directors for IDS Realty Corporation consists of Janis E. Miller, Juanita
Costa, Wendell L. Halvorson, William N. Westhoff, and Lori J. Larson. The
names, ages and business experience for the directors are listed below.
(b, c & e) The names, ages and business experience of the executive officers
and significant employees of the Managing General Partner of the Registrant are
as follows:
TITLE OFFICERS
----- --------
Chairman, President and Chief Thomas E. Meador
Executive Officer
Executive Vice President, Allan Wood
Chief Financial Officer and
Chief Accounting Officer
Senior Vice President Alexander J. Darragh
First Vice President Daniel A. Duhig
First Vice President Josette V. Goldberg
First Vice President Alan G. Lieberman
First Vice President Brian D. Parker
and Assistant Secretary
First Vice President John K. Powell, Jr.
First Vice President Reid A. Reynolds
First Vice President Thomas G. Selby
Thomas E. Meador (July 1947) joined Balcor in July 1979. He is Chairman,
President and Chief Executive Officer and has responsibility for all ongoing
day-to-day activities at Balcor. He is a Director of The Balcor Company.
Prior to joining Balcor, Mr. Meador was employed at the Harris Trust and
Savings Bank in the commercial real estate division where he was involved in
various lending activities. Mr. Meador received his M.B.A. degree from the
Indiana University Graduate School of Business.
Allan Wood (January 1949) joined Balcor in August 1983 and, as Balcor's Chief
Financial Officer and Chief Accounting Officer, is responsible for the
financial and administrative functions. He is also a Director of The Balcor
Company. Mr. Wood is a Certified Public Accountant. Prior to joining Balcor,
he was employed by Price Waterhouse where he was involved in auditing public
and private companies.
Alexander J. Darragh (February 1955) joined Balcor in September 1988 and has
primary responsibility for the Portfolio Advisory Group. He is responsible for
due diligence analysis and real estate advisory services in support of asset
management, institutional advisory and capital markets functions. Mr. Darragh
has supervisory responsibility of Balcor's Investor Services, Investment
Administration, Fund Management and Land Management departments. Mr. Darragh
received masters' degrees in Urban Geography from Queens's University and in
<PAGE>
Urban Planning from Northwestern University.
Daniel A. Duhig (October 1956) joined Balcor in November 1986 and is
responsible for the Asset Management Department relating to real estate
investments made by Balcor and its affiliated partnerships, including
negotiations for modifications or refinancings of real estate mortgage
investments and the disposition of real estate investments.
Josette V. Goldberg (April 1957) joined Balcor in January 1985 and has primary
responsibility for all human resources matters. In addition, she has
supervisory responsibility for Balcor's administrative and MIS departments.
Ms. Goldberg has been designated as a Senior Human Resources Professional
(SHRP).
Alan G. Lieberman (June 1959) joined Balcor in May 1983 and is responsible for
the Property Sales and Capital Markets Groups. Mr. Lieberman is a Certified
Public Accountant.
Brian D. Parker (June 1951) joined Balcor in March 1986 and is responsible for
Balcor's corporate and property accounting, treasury and budget activities.
Mr. Parker is a Certified Public Accountant and holds an M.S. degree in
Accountancy from DePaul University.
John K. Powell, Jr. (June 1950) joined Balcor in September 1985 and is
responsible for the administration of the investment portfolios of Balcor's
partnerships and for Balcor's risk management functions. Mr. Powell received a
Master of Planning degree from the University of Virginia. He has been
designated a Certified Real Estate Financier by the National Society for Real
Estate Finance and is a full member of the Urban Land Institute.
Reid A. Reynolds (April 1950) joined Balcor in March 1981 and is involved with
the asset management of residential properties for Balcor. Mr. Reynolds is a
licensed Real Estate Broker in the State of Illinois.
Thomas G. Selby (July 1955) joined Balcor in February 1984 and has
responsibility for various Asset Management functions, including oversight of
the residential portfolio. From January 1986 through September 1994, Mr. Selby
was Regional Vice President and then Senior Vice President of Allegiance Realty
Group, Inc., an affiliate of Balcor providing property management services.
Mr. Selby was responsible for supervising the management of residential
properties in the western United States.
The names, ages and business experience of the executive officers and
significant employees of the Supervising General Partner of the Registrant are
as follows:
TITLE OFFICERS
----- --------
Director and President Janis E. Miller
Director and Vice President Juanita Costa
Director and Vice President Wendell L. Halvorson
Director and Vice President William N. Westhoff
Director and Vice President Lori J. Larson
Vice President and Treasurer Morris Goodwin, Jr.
Vice President and Assistant
Secretary Ronald W. Powell
Vice President Georgiann L. Holmquist
Vice President Lavern G. Johnson
Vice President F. Dale Simmons
Janis E. Miller (June 1951) has served as President and Director of IDS Realty
Corporation since February 1994. She has also served as American Express
<PAGE>
Financial Corporation Vice President of Variable Assets since December 1993 and
has overall responsibility for equity, fixed-income and cash mutual funds; the
Flexible Annuity; Wealth Management; limited partnerships; and non-proprietary
variable products. From June 1990 to November 1993, Ms. Miller held the
position of Vice President - Mutual Funds/Limited Partnership Product
Development and Marketing. From May 1987 to May 1990, she served as Director of
Mutual Fund Product Development and Marketing. Ms. Miller has been employed by
American Express Financial Corporation since 1981. She holds a B.S. from
Indiana University and M.B.A. with a concentration in finance from the
University of Minnesota.
Juanita Costa (December 1948) has served as Director of Financial Education
Services ("FES") for American Express Financial Corporation since January 1994.
She is responsible for marketing FES programs to corporate clients. Ms. Costa
served as Vice President of Investment Services with IDS Trust Company from
October 1991 to January 1994. From April 1987 until shortly before joining IDS
Trust Company, Ms. Costa was Vice President - Limited Partnership Operations.
From June 1984 to April 1987 she was Vice President of L.F. Rothschild and,
from January 1980 to June 1984, she was an Assistant Vice President at
Prudential Bache Securities. Ms. Costa is a graduate of the University of
Nebraska and has an M.B.A. from Boston University.
Wendell L. Halvorson (August 1936) has held the position of Director - Limited
Partnership Operations with American Express Financial Corporation since August
1983. He has been employed with American Express Financial Corporation since
November 1968. Since August of 1983, he has been responsible for day-to-day
management of vendor relationships, due diligence review and investor services
for limited partnerships distributed by American Express Financial Advisors
Inc. Mr. Halvorson has held a variety of management positions with American
Express Financial Corporation throughout his career, including Director -
Brokerage Sales, Director - Plan Services Business Products and Vice President
- Group Insurance. He is a graduate of the University of Minnesota.
William N. Westhoff (June 1947) has held the position of Senior Vice
President - Global Investments with American Express Financial Corporation
since August 1994. From November 1989 to August 1994 he held the position of
Senior Vice President - Fixed Income Management. Mr. Westhoff joined American
Express Financial Corporation in 1971 as a Securities Analyst, Certificate
Investments. He held positions of Associate Portfolio Manager, Portfolio
Manager and Senior Portfolio Manager in the Certificate and Insurance
Investment unit of the Investment Department until his promotion to Vice
President - Taxable Fixed Income Mutual Funds in February 1988. He managed the
IDS Life Special Income Fund from January 1986 to October 1989. Mr. Westhoff
holds an M.B.A. from the University of Minnesota, a B.S. in Economics from
Central Missouri State University, and is a Chartered Financial Analyst.
Lori J. Larson (August 1958) has been employed by American Express Financial
Corporation since 1981 and currently holds the title of Vice President-Product
Development for Variable Assets. Since August 1988, she has been responsible
for day-to-day management of vendor relationships, due diligence review, and
operational aspects for the limited partnerships distributed by American
Express Financial Advisors Inc. In addition, she has responsibility for the
product development of the publicly offered mutual funds in the IDS Mutual Fund
Group. Ms. Larson has held a variety of management positions with American
Express Financial Corporation throughout her career. She is a graduate of, and
has an M.B.A. from, the University of Minnesota.
Morris Goodwin, Jr. (August 1951) has held the position of Vice President and
Treasurer of American Express Financial Corporation since July 1989. From
January 1988 to July 1989, he had been the Chief Financial Officer and
Treasurer of IDS Bank & Trust Company. From January 1980 to January 1988, he
was a Vice President with Morgan Stanley, an investment banking business
headquartered in New York. He is a graduate of Williams College and has an
M.B.A. from Stanford University.
Ronald W. Powell (November 1944) has held the position of Vice President and
<PAGE>
Assistant General Counsel with American Express Financial Corporation since
November 1985. He has been a member of the American Express Financial
Corporation Law Department since 1975. He is a graduate of the William Mitchell
College of Law.
Georgiann L. Holmquist (October 1957) has been employed by American Express
Financial Corporation since February 1981. Since August 1991, she has been
responsible for day to day management of vendor relationships, due diligence
review and operational aspects for limited partnerships distributed by American
Express Financial Advisors Inc. From May 1979 to February 1981 she was an
internal auditor for International Multifoods. Ms. Holmquist is a graduate of
Concordia College and a Certified Public Accountant.
Lavern G. Johnson (October 1932) has been employed by American Express
Financial Corporation since June 1954 and is currently a Portfolio Manager in
the Investment Department. He is a graduate of Gustavus Adolphus College and a
Chartered Financial Analyst.
F. Dale Simmons (September 1937) has been employed by American Express
Financial Corporation since September 1986 as a Senior Portfolio Manager in the
Investment Department and currently holds the title of Vice President. From
September 1984 to August 1986 he was employed as Senior Vice President -
Interim Lending Division of First Interstate Mortgage Company. From September
1983 to August 1984 he was employed as Vice President - Interim Lending
Division of FBS Mortgage. From 1972 to 1984 he held various positions with
American Express Financial Corporation in the areas of real estate and loan
management. He is a graduate of Syracuse University.
The directors of Balcor Affiliated Partners-87, Inc., the Managing General
Partner of the Registrant, and IDS Realty Corporation, the Supervising General
Partner of the Registrant, are not directors of any company with a class of
securities registered pursuant to Section 12 of the Securities Exchange Act of
1934 or subject to the requirements of Section 15 (b) of that Act or any
company registered as an investment company under the Investment Company Act of
1940. Messrs. Meador and Wood are, however, directors of general partners of
two other issuers which have a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
(d) There are no family relationships between any of the foregoing officers or
directors.
(f) None of the foregoing officers, directors or employees are currently
involved in any material legal proceedings nor were any such proceedings
terminated during the fourth quarter of 1994.
Item 11. Executive Compensation
-------------------------------
The Registrant has not paid and does not propose to pay any remuneration to the
executive officers and directors of Balcor Affiliated Partners-87, Inc. or IDS
Realty Corporation, the Managing and Supervising General Partners,
respectively. Certain of these officers receive compensation from The Balcor
Company or American Express Financial Advisors Inc. (formerly known as IDS
Financial Services), (but not from the Registrant) for services performed for
various affiliated entities, which may include services performed for the
Registrant. However, the General Partners believe that any such compensation
attributable to services performed for the Registrant is immaterial to the
Registrant. See Note 5 of Notes to Financial Statements for the information
relating to transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------
(a) No person owns of record or is known by the Registrant to own beneficially
<PAGE>
more than 5% of the outstanding Limited Partnership Interests of the
Registrant.
(b) Neither Balcor Affiliated Partners-87, Inc., the Managing General Partner
of the Registrant, IDS Realty Corporation, the Supervising General Partner of
the Registrant, nor their officers or members of their Boards of Directors own
any Limited Partnership Interests of the Registrant.
Relatives and affiliates of the officers and members of the Boards of Directors
of the respective General Partners own twenty Interests.
(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.
Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------
(a & b) See Note 5 of Notes to Financial Statements for information relating to
transactions with affiliates.
See Note 2 of Notes to Financial Statements for information relating to the
Partnership Agreement and the allocation of distributions and profits and
losses.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
------------------------------------------------------------------------
(a) (1 & 2) See Index to Financial Statements and Financial Statement Schedule
in this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement and Certificate of Limited Partnership
previously filed as Exhibit 3 to Amendment No. 1 to the Registrant's
Registration Statement on Form S-11 dated July 2, 1987 (Registration
No. 33-12617), is hereby incorporated herein by reference.
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
to the Registrant's Registration Statement on Form S-11 dated July 2, 1987
(Registration No. 33-12617) 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. 0-16797) are hereby
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for 1994 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended December 31, 1994.
(c) Exhibits: See Item 14(a)(3) above.
(d) Financial Statement Schedule: See Index to Financial Statements and
Financial Statement Schedule attached hereto in this Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Allan Wood
-----------------------------
Allan Wood
Executive Vice President, Chief
Accounting and Financial Officer
and Director (Principal Accounting
and Financial Officer) of Balcor
Affiliated Partners-87, Inc., the
Managing General Partner
Date: March 29, 1995
---------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
---------------------- ------------------------------- ------------
President, Chief Executive
Officer and Director (Principal
Executive Officer) of Balcor
Affiliated Partners-87, Inc., the
/s/Thomas E. Meador Managing General Partner March 29, 1995
-------------------- --------------
Thomas E. Meador
Executive Vice President, Chief
Accounting and Financial Officer and
Director (Principal Accounting and
Financial Officer) of Balcor
Affiliated Partners-87, Inc.,
/s/Allan Wood the Managing General Partner March 29, 1995
-------------------- --------------
Allan Wood
<PAGE>
Signatures, continued
Signature Title Date
---------------------- ------------------------------- ------------
President and Director of IDS
Realty Corporation,the Supervising
/s/Janis E. Miller General Partner March 29, 1995
-------------------- --------------
Janis E. Miller
Vice President and Director of
IDS Realty Corporation, the
/s/ Lori J. Larson Supervising General Partner March 29, 1995
-------------------- --------------
Lori J. Larson
Vice President and Director of
IDS Realty Corporation, the
/s/Wendell L. Halvorson Supervising General Partner March 29, 1995
----------------------- --------------
Wendell L. Halvorson
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants
Financial Statements:
Balance Sheets, December 31, 1994 and 1993
Statements of Partners' Capital, for the years ended December 31, 1994, 1993
and 1992
Statements of Income and Expenses, for the years ended December 31, 1994, 1993
and 1992
Statements of Cash Flows, for the years ended December 31, 1994, 1993 and 1992
Notes to Financial Statements
Financial Statement Schedule:
III - Real Estate and Accumulated Depreciation, as of December 31, 1994
Financial Statement Schedules, other than that listed, are omitted for the
reason that they are inapplicable or equivalent information has been included
elsewhere herein.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
IDS/Balcor Income Partners
A Real Estate Limited Partnership:
We have audited the financial statements and the financial statement schedule
of IDS/Balcor Income Partners A Real Estate Limited Partnership (A Delaware
Limited Partnership) as listed in the index of this Form 10-K. These financial
statements and the financial statement schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IDS/Balcor Income Partners A
Real Estate Limited Partnership at December 31, 1994 and 1993, and the results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
February 14, 1995
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
December 31, 1994 and 1993
ASSETS
1994 1993
------------ ------------
Cash and cash equivalents $ 539,880 $ 606,842
Accounts and accrued interest receivable 59,579 59,264
------------ ------------
599,459 666,106
------------ ------------
Investment in real estate, at cost:
Land 1,340,324 1,340,324
Buildings and improvements 13,681,315 13,561,212
------------ ------------
15,021,639 14,901,536
Less accumulated depreciation 4,743,548 4,128,574
------------ ------------
Investment in real estate, net of
accumulated depreciation 10,278,091 10,772,962
------------ ------------
$10,877,550 $11,439,068
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 47,504 $ 41,427
Due to affiliates 22,208 11,477
Accrued liabilities, principally
real estate taxes 144,730 133,473
Security deposits 44,853 50,030
------------ ------------
Total liabilities 259,295 236,407
Partners' capital (73,994 Limited Partnership
Interests issued and outstanding) 10,618,255 11,202,661
------------ ------------
$10,877,550 $11,439,068
============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
for the years ended December 31, 1994, 1993 and 1992
Partners' Capital Accounts
--------------------------------------
General Limited
Total Partners Partners
------------ ------------ ------------
Balance at December 31, 1991 $12,835,500 $ 2,406 $12,833,094
Cash distributions to
Limited Partners (A) (1,128,038) (1,128,038)
Net income for the year
ended December 31, 1992 343,139 3,431 339,708
------------ ------------ ------------
Balance at December 31, 1992 12,050,601 5,837 12,044,764
Cash distributions to
Limited Partners (A) (1,146,907) (1,146,907)
Net income for the year
ended December 31, 1993 298,967 2,990 295,977
------------ ------------ ------------
Balance at December 31, 1993 11,202,661 8,827 11,193,834
Cash distributions to
Limited Partners (A) (1,146,907) (1,146,907)
Net income for the year
ended December 31, 1994 562,501 5,625 556,876
------------ ------------ ------------
Balance at December 31, 1994 $10,618,255 $ 14,452 $10,603,803
============ ============ ============
(A) Summary of cash distributions per Interest:
1994 1993 1992
------------ ------------ ------------
First Quarter $ 3.875 $ 3.875 $ 3.750
Second Quarter 3.875 3.875 3.810
Third Quarter 3.875 3.875 3.810
Fourth Quarter 3.875 3.875 3.875
The accompanying notes are an integral part of the financial statements.
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the years ended December 31, 1994, 1993 and 1992
1994 1993 1992
------------ ------------ ------------
Income:
Rental and service $ 2,575,336 $ 2,451,860 $ 2,300,328
Interest on short-term
investments 21,189 18,521 21,757
------------ ------------ ------------
Total income 2,596,525 2,470,381 2,322,085
------------ ------------ ------------
Expenses:
Depreciation 614,974 747,330 756,394
Property operating 560,352 508,914 468,778
Maintenance and repairs 287,192 385,731 276,864
Real estate taxes 246,529 255,484 223,571
Property management fees 128,488 121,220 114,868
Administrative 196,489 152,735 138,471
------------ ------------ ------------
Total expenses 2,034,024 2,171,414 1,978,946
------------ ------------ ------------
Net income $ 562,501 $ 298,967 $ 343,139
============ ============ ============
Net income allocated to
General Partners $ 5,625 $ 2,990 $ 3,431
============ ============ ============
Net income allocated to
Limited Partners $ 556,876 $ 295,977 $ 339,708
============ ============ ============
Net income per Limited
Partnership Interest
(73,994 issued and
outstanding) $ 7.53 $ 4.00 $ 4.59
============ ============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1994, 1993 and 1992
1994 1993 1992
------------ ------------ ------------
Operating activities:
Net income $ 562,501 $ 298,967 $ 343,139
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation of properties 614,974 747,330 756,394
Net change in:
Accounts and accrued
interest receivable (315) 5,046 45,018
Accounts payable 6,077 23,653 9,265
Due to affiliates 10,731 2,000 (8,117)
Accrued liabilities 11,257 9,114 (16,185)
Security deposits (5,177) (2,847) (2,669)
------------ ------------ ------------
Net cash provided by
operating activities 1,200,048 1,083,263 1,126,845
------------ ------------ ------------
Investing activities:
Improvements to properties (120,103)
-----------
Net cash used in investing
activities (120,103)
-----------
Financing activities:
Distributions to Limited
Partners (1,146,907) (1,146,907) (1,128,038)
------------ ------------ ------------
Net cash used in
financing activities (1,146,907) (1,146,907) (1,128,038)
------------ ------------ ------------
Net change in cash and cash
equivalents (66,962) (63,644) (1,193)
Cash and cash equivalents at
beginning of year 606,842 670,486 671,679
------------ ------------ ------------
Cash and cash equivalents at
end of year $ 539,880 $ 606,842 $ 670,486
============ ============ ============
The accompanying notes are an integral part of the financial statements.
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policies:
(a) Depreciation expense is computed using the straight-line method. Rates used
in the determination of depreciation are based upon the following estimated
useful lives:
Years
-----
Buildings and improvements 20 to 22
Furniture and fixtures 5
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements are charged to the related asset account.
The Partnership records its investments in real estate at cost, and
periodically assesses possible impairment to the value of its properties. In
the event that the General Partner determines that a permanent impairment in
value has occurred, the carrying basis of the property is reduced to its
estimated fair value.
(b) Cash equivalents include all highly liquid investments with a maturity of
three months or less when purchased.
(c) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership income or loss in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
2. Partnership Agreement:
The Partnership was organized in March 1987. The Partnership Agreement provides
for Balcor Affiliated Partners-87, Inc. to be the Managing General Partner, for
IDS Realty Corporation to be the Supervising General Partner and for the
admission of Limited Partners through the sale of up to 400,000 Limited
Partnership Interests at $250 per Interest. The Partnership sold 73,994
Interests to the public.
The Partnership Agreement provides that, except for profit or loss from the
sale or other disposition of Partnership property, the General Partners
together shall be allocated from each item of Partnership income from
operations the greater of (i) 1% of such item or (ii) the amount of the General
Partners' distributions of Net Cash Receipts (in excess of accrued Net Cash
Receipts) from the Partnership. The remaining income from operations shall be
allocated to the Limited Partners. Of each item of Partnership deduction, loss
and credit from operations, 1% shall be allocated to the General Partners and
99% to the Limited Partners.
Net Cash Receipts available for distribution will be distributed 93% to the
Limited Partners and 7% to the General Partners, provided that the General
Partners' share of Net Cash Receipts will be subordinated on a year-by-year
basis to the Limited Partners' receipt of a 7% Preferred Distribution. Net Cash
Receipts available for distribution will be applied first toward the current
year, and then on a year-by-year basis, commencing with the earliest year in
which a deficiency exists or a subordinated amount remains outstanding and
continuing for each year thereafter, to pay any deficiencies in the Limited
Partners' receipt of their Preferred Distribution for such year and/or any
unpaid portion of the General Partners' 7% share of Net Cash Receipts for such
year, provided that the Limited Partners have received their Preferred
Distribution for such year before the General Partners shall receive any
<PAGE>
portion of their share of Net Cash Receipts for such year.
When the Partnership sells or refinances its properties, the Net Cash Proceeds
resulting therefrom which are available for distribution shall be distributed
(i) first, 99% to the Limited Partners and 1% to the General Partners until the
Limited Partners have received an amount equal to their Original Capital plus
any deficiency in a Cumulative Distribution of 11% per annum for Interests
purchased prior to January 1, 1988, and 9% per annum for Interests purchased on
or after January 1, 1988, provided, however, that the General Partners' 15%
share of Net Cash Proceeds as described below is subordinated to the receipt by
Limited Partners who purchased Interests on or after January 1, 1988, of an
additional 1% Cumulative Distribution; (ii) next, to pay to the General
Partners an amount equal to their share of Net Cash Receipts which has been
subordinated and is then unpaid; and (iii) then, 85% to the Limited Partners
and 15% to the General Partners.
For Interests purchased prior to June 8, 1988, the commencement date for
computing the Cumulative Distribution and the Preferred Distribution is July 1,
1988. For Interests purchased on or after August 1, 1988, the commencement date
for computing the Cumulative Distribution and the Preferred Distribution is the
first day of the first full calendar quarter after the purchasers of the
Interests became Limited Partners.
3. Management Agreements:
As of December 31, 1994, Post Place Apartments is under a management agreement
with an affiliate of the seller and Salem Courthouse Apartments is under a
management agreement with a third party management company. These management
agreements provide for annual fees of 5% of gross operating receipts.
4. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder and existing interpretations
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, will differ from the
tax returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences is that
the net income for 1994 in the financial statements is $182,408 less than the
tax income of the Partnership for the same period.
5. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
-------------- -------------- --------------
Paid Payable Paid Payable Paid Payable
------ ------- ------ ------- ------ -------
Property management fees $64,817 None $67,297 $5,774 $64,252 $5,478
Reimbursement of expenses
to the Managing General
Partner, at cost:
Accounting 29,521 10,267 23,510 1,943 25,778 1,812
Data processing 20,464 4,205 13,891 2,661 18,320 1,425
Investor communica-
tions 1,990 568 979 80 1,337 94
Legal 2,301 663 721 60 975 69
Other 1,494 995 2,820 233 2,023 142
Portfolio management 12,438 5,510 8,779 726 6,498 457
The Partnership participates in an insurance deductible program with other
affiliated partnerships in which the program pays claims up to the amount of
the deductible under the master insurance policies for its properties. The
<PAGE>
program is administered by an affiliate of the General Partner who receives no
fee for administering the program. The Partnership's premiums to the deductible
insurance program were $23,937, $16,371 and $15,021 for 1994, 1993 and 1992,
respectively.
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed one
of the Partnership's properties until the affiliate was sold to a third party
in November 1994.
6. Subsequent Event:
In January 1995, the Partnership made a distribution of $286,727 ($3.875 per
Interest) to the holders of Limited Partnership Interests for the fourth
quarter of 1994.
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1994
<CAPTION>
Col. A Col. B Col. C Col. D
--------------------- -------- -------------------- ---------------------------
Initial Cost Cost Adjustments
to Partnership Subsequent to Acquisition
-------------------- ---------------------------
Buildings Carrying
Encum- and Im- Improve- Costs
Description brances Land provements ments (a)
--------------------- ------- -------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Post Place Apartments,
a 122-unit complex
in Atlanta, GA None $1,000,000 $6,161,400 $ 80,853 $116,259
Salem Courthouse
Apartments, a 240-
unit complex in
West Lafayette, IN None 320,000 7,180,000 39,250 123,877
---------- ---------- ---------- --------
Total $1,320,000 $13,341,400 $120,103 $240,136
========== =========== =========== ========
</TABLE>
See notes (a) through (d).
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1994
(Continued)
<CAPTION>
Col. A Col. E Col. F Col. G Col. H Col. I
------------------ -------------------------------- -------- -------- ------ --------------
Gross Amounts at Which Life Upon
Carried at Close of Period Which Depre-
--------------------------------- ciation in
Buildings Accumulated Date Date Latest Income
and Im- Total Deprecia- of Con- Acq- Statement
Description Land provements (b) tion(c) struction uired is Computed
------------------- -------- ---------- ---------- --------- --------- ----- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Post Place Apartments,
a 122-unit complex
in Atlanta, GA $1,015,236 $6,343,276 $7,358,512 $2,028,806 3/79 11/87 (d)
Salem Courthouse
Apartments, a 240-
unit complex in
West Lafayette, IN 325,088 7,338,039 7,663,127 2,714,742 8/78 12/88 (d)
---------- ----------- ----------- ----------
Total $1,340,324 $13,681,315 $15,021,639 $4,743,548
========== =========== =========== ==========
</TABLE>
See notes (a) through (d).
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO SCHEDULE III
(a) Consists of acquisition fees, legal fees, appraisal fees, title costs and
other related professional fees.
(b) The aggregate cost of land, buildings and improvements is the same for
Federal income tax purposes.
(c) Reconciliation of Accumulated Depreciation
------------------------------------------
1994 1993 1992
---------- ---------- ----------
Balance at beginning of year $4,128,574 $3,381,244 $2,624,850
Depreciation expense
for the year 614,974 747,330 756,394
---------- ---------- ----------
Balance at close of year $4,743,548 $4,128,574 $3,381,244
========== ========== ==========
(d) Depreciation expense is computed based upon the following estimated useful
lives:
Years
-----
Buildings and improvements 20 to 22
Furniture and fixtures 5
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 540
<SECURITIES> 0
<RECEIVABLES> 60
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 599
<PP&E> 15022
<DEPRECIATION> 4744
<TOTAL-ASSETS> 10878
<CURRENT-LIABILITIES> 259
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 10618
<TOTAL-LIABILITY-AND-EQUITY> 10878
<SALES> 0
<TOTAL-REVENUES> 2597
<CGS> 0
<TOTAL-COSTS> 1223
<OTHER-EXPENSES> 811
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 563
<INCOME-TAX> 0
<INCOME-CONTINUING> 563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 563
<EPS-PRIMARY> 7.53
<EPS-DILUTED> 7.53
</TABLE>
