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, 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 0-16797
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IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Delaware 36-3497345
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road,
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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<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(UNAUDITED)
ASSETS
1996 1995
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Cash and cash equivalents $ 1,019,622 $ 397,080
Accounts and accrued interest receivable 35,546 50,812
Prepaid insurance 22,687 22,920
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1,077,855 470,812
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Investment in real estate:
Land 325,088 1,340,324
Buildings and improvements 7,338,039 13,681,315
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7,663,127 15,021,639
Less accumulated depreciation 3,296,067 5,365,734
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Investment in real estate, net of
accumulated depreciation 4,367,060 9,655,905
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$ 5,444,915 $ 10,126,717
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 25,883 $ 14,005
Due to affiliates 26,831 7,108
Accrued real estate taxes 183,297 124,823
Security deposits 29,669 48,224
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Total liabilities 265,680 194,160
Limited Partners' capital (73,994
Interests issued and outstanding) 5,127,328 9,913,215
General Partners' capital 51,907 19,342
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Total partners'capital 5,179,235 9,932,557
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$ 5,444,915 $ 10,126,717
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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 nine months ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Rental and service $ 1,632,881 $ 2,040,846
Interest on short-term investments 63,067 21,668
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Total income 1,695,948 2,062,514
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Expenses:
Depreciation 369,973 466,640
Property operating 543,787 780,604
Real estate taxes 180,878 142,549
Property management fees 86,644 101,510
Administrative 163,794 143,872
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Total expenses 1,345,076 1,635,175
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Income before gain on sale of property 350,872 427,339
Gain on sale of property 2,905,657
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Net income $ 3,256,529 $ 427,339
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Net income allocated to General Partners $ 32,565 $ 4,273
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Net income allocated to Limited Partners $ 3,223,964 $ 423,066
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Net income per Limited Partnership Interest
(73,994 issued and outstanding) $ 43.57 $ 5.72
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Distributions to Limited Partners $ 8,009,851 $ 860,181
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Distributions per Limited
Partnership Interest $ 108.25 $ 11.63
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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 quarters ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Income:
Rental and service $ 371,455 $ 683,549
Interest on short-term investments 35,846 5,413
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Total income 407,301 688,962
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Expenses:
Depreciation 83,047 155,547
Property operating 156,878 361,273
Real estate taxes 36,659 54,119
Property management fees 17,645 33,945
Administrative 63,325 42,694
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Total expenses 357,554 647,578
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Net income $ 49,747 $ 41,384
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Net income allocated to General Partners $ 497 $ 414
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Net income allocated to Limited Partners $ 49,250 $ 40,970
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Net income per Limited Partnership Interest
(73,994 issued and outstanding) $ 0.66 $ 0.56
============= =============
Distribution to Limited Partners $ 7,399,400 $ 286,727
============= =============
Distribution per Limited
Partnership Interest $ 100.00 $ 3.88
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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 nine months ended September 30, 1996 and 1995
(UNAUDITED)
1996 1995
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Operating activities:
Net income $ 3,256,529 $ 427,339
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of property (2,905,657)
Depreciation of properties 369,973 466,640
Net change in:
Accounts and accrued interest
receivable 15,266 (2,594)
Prepaid expenses 233 (56,271)
Accounts payable 11,878 (15,917)
Due to affiliates 19,723 (12,641)
Accrued liabilities 58,474 11,300
Security deposits (18,555) 2,846
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Net cash provided by operating activities 807,864 820,702
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Investing activities:
Proceeds from sale of real estate 7,900,000
Payment of selling costs (75,471)
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Net cash provided by investing activities 7,824,529
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Financing activities:
Distributions to Limited Partners (8,009,851) (860,181)
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Net cash used in financing activities (8,009,851) (860,181)
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Net change in cash and cash equivalents 622,542 (39,479)
Cash and cash equivalents at beginning
of period 397,080 539,880
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Cash and cash equivalents at end of period $ 1,019,622 $ 500,401
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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 Policy:
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, 1996, and all such adjustments are of a normal
and recurring nature.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 are:
Paid
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Nine Months Quarter Payable
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Reimbursement of expenses to
the Managing General Partner,
at cost $ 34,625 $ 5,524 $ 26,831
3. Property Sale:
In May 1996, the Partnership sold the Post Place Apartments in an all cash
sale for $7,900,000. From the proceeds of the sale, the Partnership paid
$75,471 in selling costs. The basis of the property was $4,918,872, which is
net of accumulated depreciation of $2,439,640. For financial statement
purposes, the Partnership recognized a gain of $2,905,657 from the sale of
this property.
4. Subsequent Event:
In October 1996, the Partnership made a distribution of $647,448 ($8.75 per
Interest) to the holders of Limited Partnership Interests for the third
quarter of 1996. This distribution includes a regular quarterly distribution
of $2.00 per Interest from Net Cash Receipts and a special distribution of
$6.75 per Interest representing a portion of the Net Cash Proceeds from the
sale of Post Place Apartments, which has been retained by the Partnership
until September 1996 pursuant to the terms of the sale agreement.
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
IDS/Balcor Income Partners (the "Partnership") was formed in 1987 to invest in
and operate income-producing real property. The Partnership raised $18,498,500
through the sale of Limited Partnership Interests and utilized the net
proceeds to acquire the Post Place and Salem Courthouse apartment complexes.
During 1996, the Partnership sold the Post Place Apartments. The Partnership
continues to operate the Salem Courthouse Apartments.
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 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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Summary of Operations
---------------------
The Partnership recognized a gain related to the May 1996 sale of the Post
Place Apartments which was the primary reason for the increase in net income
for the nine months ended September 30, 1996 as compared to the same period in
1995. Further discussion of the Partnership's operations is summarized below.
1996 Compared to 1995
---------------------
Discussions of fluctuations between 1996 and 1995 refer to both the quarter
and nine months ended September 30, 1996 and 1995.
The Partnership recognized decreases in rental and service income, property
operating expense, property management fees and depreciation expense during
1996 as compared to 1995 due to the sale of Post Place Apartments in May 1996.
Due to higher average cash balances, resulting primarily from net proceeds
received in connection with the May 1996 sale of Post Place Apartments,
interest income on short-term investments increased during 1996 as compared to
1995.
A reduction in exterior painting costs during 1996 at Salem Courthouse
Apartments also contributed to the decrease in property operating expense in
1996 as compared to 1995.
Real estate taxes increased during the nine months ended September 30, 1996 as
compared to the same period in 1995 primarily due to a higher tax rate at the
Salem Courthouse Apartments. The decrease in real estate taxes resulting from
the May 1996 sale of Post Place Apartments partially offset the increase in
expense for the nine months ended September 30, 1996, and resulted in a
decrease in expense for the quarter ended September 30, 1996 as compared to
the same period in 1995.
<PAGE>
Administrative expenses increased in 1996 as compared to 1995 as a result of
an increase in accounting, portfolio management, and printing costs.
In May 1996, the Partnership recognized a $2,905,657 gain related to the sale
of Post Place Apartments.
Liquidity and Capital Resources
-------------------------------
The cash position of the Partnership increased by approximately $623,000 as of
September 30, 1996 when compared to December 31, 1995. The Partnership's
operating activities consisted of approximately $808,000 of cash flow
generated from property operations, net of administrative expenses. The
Partnership's investing activities consisted of net proceeds of approximately
$7,824,000 received from the sale of the Post Place Apartments. Cash of
approximately $8,009,000 was used to fund financing activities which consisted
of quarterly distributions to Limited Partners.
The Salem Courthouse Apartments generated positive cash flow during 1996 and
1995. The Post Place Apartments were sold in May 1996 and generated positive
cash flow in 1995 and in 1996 prior to its sale. The Partnership defines cash
flow generated from its properties as an amount equal to the property's
revenue receipts less property related expenditures. As of September 30, 1996,
the occupancy rate of the Salem Courthouse Apartments was 96%.
In May 1996, the Partnership sold the Post Place Apartments in an all cash
sale for $7,900,000. From the proceeds of the sale, the Partnership paid
$75,471 in selling costs. Substantially all of the remaining proceeds were
distributed to Limited Partners in July and October 1996. See Notes 3 and 4 of
Notes to Financial Statements for additional information.
In October 1996, the Partnership made a distribution of $647,448 ($8.75 per
Interest) to the holders of Limited Partnership Interests for the third
quarter of 1996. The regular quarterly distribution level of $2.00 per Limited
Partnership Interest remained unchanged from the second quarter of 1996. In
addition, Net Cash Proceeds of $6.75 per Interest from the sale of the Post
Place Apartments were distributed to holders of Limited Partnership Interests.
Including the October 1996 distribution, investors have received distributions
of Net Cash Receipts of $120 per $250 Interest and Net Cash Proceeds of
$104.75 per $250 Interest, as well as certain tax benefits.
The Partnership sold the Post Place Apartments and has signed a contract to
sell Salem Courthouse Apartments for a sale price of $8,725,000 which is
anticipated to close in November 1996. The timing of the termination of the
Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which may arise. Such contingencies
may include legal and other fees stemming from litigation involving the
Partnership. In the absence of any such contingency, and provided the sale of
Salem Courthouse closes on schedule, the Partnership expects to terminate in
December 1996 and a final distribution will be made to Limited Partners in
December 1996 or January 1997. In the event a contingency arises, reserves may
be held by the Partnership for a longer period of time.
<PAGE>
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>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to 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 September 30, 1992 (Commission File No. 0-16797)
are hereby incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachment thereto relating to the sale of
the Post Place Apartments, Atlanta, Georgia previously filed as Exhibit (2) to
the Partnership's Current Report on Form 8-K dated April 23, 1996, is
incorporated herein by reference.
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of
the Post Place Apartments, Atlanta, Georgia previously filed as Exhibit (10)
(b) to the Partnership's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, is incorporated herein by reference.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the
sale of the Post Place Apartments, Atlanta, Georgia previously filed as
Exhibit (10(c) to the Partnership's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996, is incorporated herein by reference.
(b)(i) Agreement of Sale and attachment thereto relating to the sale of the
Salem Courthouse Apartments, West Lafayette, Indiana, previously filed as
Exhibit 2(a) to the Partnership's Current Report on Form 8-K dated October 1,
1996, is incorporated herein by reference.
(ii) Amendment No. 1 to Agreement of Sale relating to the sale of the Salem
Courthouse Apartments, West Lafayette, Indiana, previously filed as Exhibit
(2)(b) to the Partnership's Current Report on Form 8-K dated October 1, 1996,
is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the nine month period
ending September 30, 1996 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated October 1, 1996
was filed reporting the execution of a contract for the sale of Salem
Courthouse Apartments, West Lafayette, Indiana.
<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.
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/ Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Affiliated Partners-87, Inc., the Managing
General Partner
By: /s/ Jayne A. Kosik
------------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Affiliated Partners-87, Inc., the Managing
General Partner
Date: November 12, 1996
----------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1020
<SECURITIES> 0
<RECEIVABLES> 36
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1078
<PP&E> 7663
<DEPRECIATION> 3296
<TOTAL-ASSETS> 5445
<CURRENT-LIABILITIES> 266
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5179
<TOTAL-LIABILITY-AND-EQUITY> 5445
<SALES> 0
<TOTAL-REVENUES> 4602
<CGS> 0
<TOTAL-COSTS> 811
<OTHER-EXPENSES> 534
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3257
<INCOME-TAX> 0
<INCOME-CONTINUING> 3257
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3257
<EPS-PRIMARY> 43.57
<EPS-DILUTED> 43.57
</TABLE>
