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, 1996
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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.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
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 two real property
investments, the Post Place and Salem Courthouse apartment complexes, both of
which were sold in 1996. (See "Other Information" below and "Item 7. Liquidity
and Capital Resources" for additional information.)
Pursuant to the Partnership Agreement, when all interests in real estate are
sold or otherwise disposed of and the General Partners determine there are no
remaining contingencies, the Registrant will be dissolved. Therefore, the
General Partners commenced liquidation of the Registrant, and on March 25,
1997, the Registrant's registration under the Securities Exchange Act of 1934
was terminated and the Registrant was dissolved.
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.
Other Information
- -----------------
Salem Courthouse Apartments
- ---------------------------
As previously reported, on October 1, 1996, the Partnership contracted to sell
the Salem Courthouse Apartments, West LaFayette, Indiana, to an unaffiliated
party, Samuel Geltman & Co., New Jersey corporation, for a sale price of
$8,725,000. The purchaser assigned its rights under the agreement of sale to
one of its affiliates, Bethlehem Towers, a New Jersey corporation, and the sale
closed on November 15, 1996. From the proceeds of the sale, the Partnership
paid $152,688 to an unaffiliated party as a brokerage commission, $87,250 to an
affiliate of the third party providing property management services for the
property as a fee for services rendered in connection with the sale of the
property and $25,100 in closing costs. The Partnership received the remaining
proceeds of approximately $8,460,000.
<PAGE>
Item 2. Properties
- ------------------
The Registrant no longer owns any physical 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 1996.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
No matters were submitted to a vote of the Limited Partners of the Registrant
during 1996.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
- ---------------------------------------------------------------------
Matters
- -------
The Registrant was terminated in the State of Delaware on March 21, 1997.
On March 25, 1997, the Registrant's registration under the Securities
Exchange Act of 1934 was terminated.
As of December 31, 1996, immediately prior to the liquidation of the
Registrant, the number of record holders of Limited Partnership Interests of
the Registrant was 2,773. 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.
Item 6. Selected Financial Data
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Year ended December 31,
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1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
Total income $1,932,607 $2,773,922 $2,596,525 $2,470,381 $2,322,085
Gain on sale of
properties 7,040,652 None None None None
Net income 7,389,411 488,958 562,501 298,967 343,139
Net income
per Limited Partner-
ship Interest 100.35 6.54 7.53 4.00 4.59
Total assets None 10,126,717 10,877,550 11,439,068 12,255,088
Distributions per
Limited Part-
nership Interest 234.32(A) 15.875 15.50 15.50 15.245
(A) Includes distributions of Original Capital of $220.30 per Limited
Partnership Interest during 1996.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
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Operations
- ----------
Summary of Operations
- ---------------------
IDS/Balcor Income Partners A Real Estate Limited Partnership (the
"Partnership") recognized gains related to the 1996 property sales, resulting
in an increase in net income during 1996 as compared to 1995. Net income
decreased during 1995 as compared to 1994 primarily due to administrative
expenses incurred during 1995 in connection with a tender offer. Further
discussion of the Partnership's operations is summarized below.
1996 Compared to 1995
- ---------------------
The Partnership sold the Post Place and Salem Courthouse apartment complexes in
1996. As a result, the Partnership recognized gains totaling $7,040,652. These
sales also resulted in decreases in rental and service income, property
operating expense, property management fees, and depreciation expense during
1996 as compared to 1995.
Due to higher average cash balances, resulting from net proceeds received in
connection with the 1996 property sales, interest income on short-term
investments increased during 1996 as compared to 1995.
Real estate taxes increased by approximately $23,000 during 1996 as compared to
1995 primarily due to a higher tax rate from the taxing authorities at the
Salem Courthouse Apartments, offsetting the decrease of approximately $22,000
resulting from the 1996 property sales.
The Partnership incurred legal, consulting, printing and postage costs in
connection with a tender offer during the fourth quarter of 1995. As a result,
administrative expenses decreased in 1996 as compared to 1995.
1995 Compared to 1994
- ---------------------
Rental income increased during 1995 as compared to 1994 due to increased rental
rates at Post Place and Salem Courthouse apartments complexes.
Interest income on short-term investments increased during 1995 as compared to
1994 as a result of higher average interest rates.
Property operating expense increased in 1995 as compared to 1994 as a result of
exterior painting at Post Place and Salem Courthouse apartment complexes.
<PAGE>
Real estate tax expense decreased in 1995 as compared to 1994 due to a decrease
in the tax rate from the taxing authorities of the Salem Courthouse Apartments.
This decrease was partially offset by a refund of 1992 real estate taxes
received in 1994, due to a reduction in the assessed value of the Post Place
Apartments.
The Partnership incurred legal, consulting, printing and postage costs in
connection with a tender offer during the fourth quarter of 1995. As a result,
administrative expenses increased during 1995 as compared to 1994.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership fluctuated during the year and a final
distribution was made to the Limited Partners in December 1996 as discussed
below. The Partnership's cash flow provided by operating activities was
approximately $640,000 and consisted primarily of the operations of the
Partnership's properties which was partially offset by the payment of
administrative expenses. The Partnership's cash flow of approximately
$16,284,000 from investing activities represented the net proceeds from the
sales of the Post Place and Salem Courthouse apartment complexes. The financing
activities consisted of a $16,307 contribution from the General Partners, as
well as approximately $17,338,000 of distributions made to the Limited
Partners. (See Note 7 of Notes to Financial Statements for additional
information regarding property sales.)
Pursuant to the Partnership Agreement, when all interests in real estate are
sold or otherwise disposed of and the General Partners determine there are no
remaining contingencies, the Partnership will be dissolved. After retaining
approximately $112,000 to pay the final administrative expenses of the
Partnership, a final distribution of $8,680,976 ($117.32 per Interest) was
made to the Limited Partners in December 1996, which represents all remaining
cash reserves, including a capital contribution of $16,307 from the General
Partners. (See Note 5 of Notes to the Financial Statements for additional
information regarding the General Partners' capital contribution.)
The Partnership was terminated in the State of Delaware on March 21, 1997.
On March 25, 1997, the Partnership's registration under the Securities
Exchange Act of 1934 was terminated.
Since inception, Limited Partners have received distributions of Net Cash
Receipts of $121.77 and Net Cash Proceeds of $220.30, totaling $342.07 per $250
Interest, as well as certain tax benefits. The General Partners have received
no distribution of Net Cash Receipts or Net Cash Proceeds during the entire
lifetime of the Partnership.
<PAGE>
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
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, 1996 December 31, 1995
------------------------ -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
---------- --------- ---------- ---------
Total assets None None $10,126,717 $12,152,693
Partners' capital
accounts:
General Partners None None 19,342 39,386
Limited Partners None None 9,913,215 14,512,918
Net (loss) income:
General Partners $(35,649) $(55,693) 4,890 6,780
Limited Partners 7,425,060 5,419,130 484,068 671,122
Per Limited Part-
nership Interest 100.35 73.24 6.54 9.07
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
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 American Express Financial Corporation. 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 James E.
Mendelson. The Board of Directors for IDS Realty Corporation consists of Morris
Goodwin, William N. Westhoff, and Lori J. Larson. The names, ages and business
experience of 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
Senior Vice President Alexander J. Darragh
Senior Vice President James E. Mendelson
Senior Vice President John K. Powell, Jr.
Managing Director, Chief Jayne A. Kosik
Financial Officer, Treasurer
and Assistant Secretary
Thomas E. Meador (age 49) 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. He is also Senior
Vice President of American Express Company and is responsible for its real
estate operations worldwide. 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.
Alexander J. Darragh (age 42) joined Balcor in September 1988 and is
responsible for due diligence analysis and real estate advisory services for
Balcor and American Express Company. He also has supervisory responsibility for
Balcor's environmental matters. Mr. Darragh received masters' degrees in Urban
Geography from Queen's University and in Urban Planning from Northwestern
University.
<PAGE>
James E. Mendelson (age 34) joined Balcor in July 1984 and is responsible for
Balcor's property sales activities. He also has supervisory responsibility for
Balcor's accounting, financial, treasury, investor services and investment
administration functions. From 1989 to 1995, Mr. Mendelson was Vice President -
Transaction Management and Vice President - Senior Transaction Manager and had
responsibility for various asset management matters relating to real estate
investments made by Balcor, including negotiations for the restructuring of
mortgage loan investments. Mr. Mendelson received his M.B.A. degree from the
University of Chicago.
John K. Powell, Jr. (age 46) joined Balcor in September 1985 and is responsible
for portfolio and asset management matters relating to Balcor's partnerships.
Mr. Powell also has supervisory responsibility for Balcor's risk management
function. He received a Master of Planning degree from the University of
Virginia. Mr. Powell 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.
Jayne A. Kosik (age 39) joined Balcor in August 1982 and, as Chief Financial
Officer, is responsible for Balcor's financial, human resources and treasury
functions. From June 1989 until October 1996, Ms. Kosik had supervisory
responsibility for accounting functions relating to Balcor's public and private
partnerships. She is also Treasurer and a Managing Director of The Balcor
Company. Ms. Kosik is a Certified Public Accountant.
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 Lori J. Larson
Director and Vice President William N. Westhoff
Vice President and Treasurer Morris Goodwin, Jr.
Vice President and Assistant
Secretary Ronald W. Powell
Vice President Georgiann L. Holmquist
Vice President F. Dale Simmons
Vice President John M. Knight
Lori J. Larson (age 38) 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.
<PAGE>
William N. Westhoff (age 49) 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.
Morris Goodwin, Jr. (age 45) 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 (age 52) has held the position of Vice President and
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 (age 39) has been employed by American Express
Financial Corporation since February 1981. Since October 1995 she has been
Manager - Product Development for Mutual Funds and prior to that she was
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.
F. Dale Simmons (age 59) has been employed 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.
John M. Knight (age 45) has been employed by American Express Financial
Corporation and/or its affiliates and predecessors since 1975. He is currently
Vice President and Controller - Variable Assets and has overall finance
responsibilities for Mutual Funds, Limited Partnerships, Variable Annuities and
Wealth Management Services. From 1981 through March 1994, he held a number of
positions in the IDS Certificate Company including Controller. Mr. Knight is
also a Fellow, Life Management Institute (FLMI).
<PAGE>
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 Mendelson 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 1996.
Item 11. Executive Compensation
- -------------------------------
The Registrant paid $1,683 in 1996 with respect to one of the executive
officers and directors of Balcor Affiliated Partners-87, Inc. or IDS Realty
Corporation, the Managing and Supervising General Partners, respectively. The
Registrant has not paid and does not propose to pay any remuneration to the
remaining executive officers and directors of the General Partners. Certain of
these officers receive compensation from The Balcor Company or American Express
Financial Advisors Inc., (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 owned of record or is known by the Registrant to have owned
beneficially 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
owned 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 owned 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.
<PAGE>
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 5 of Notes to Financial Statements for information relating to
transactions with affiliates.
(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 Schedules and Reports on Form 8-K
- ------------------------------------------------------------------------
(a) (1 & 2) See Index to Financial Statements 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 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 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 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/ Jayne A. Kosik
-----------------------------
Jayne A. Kosik
Managing Director and Chief
Financial Officer (Principal
Accounting Officer) of Balcor
Affiliated Partners-87,
Inc., the Managing General Partner
Date: March 27, 1997
---------------
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 and Chief Executive
Officer (Principal Executive
Officer) of Balcor Affiliated
Partners-87, Inc., the
/s/ Thomas E. Meador Managing General Partner March 27, 1997
- ---------------------- --------------
Thomas E. Meador
Managing Director and Chief
Financial Officer (Principal
Accounting Officer) of Balcor
Affiliated Partners-87,
/s/ Jayne A. Kosik Inc., the Managing General Partner March 27, 1997
- ---------------------- --------------
Jayne A. Kosik
<PAGE>
Signatures, continued
Signature Title Date
- ----------------------- ----------------------------------- ------------
President and Director of IDS
Realty Corporation, the Supervising
/s/ Lori J. Larson General Partner March 27, 1997
- ----------------------- --------------
Lori J. Larson
Vice President, Treasurer and
Director of IDS Realty Corporation,
/s/ Morris Goodwin, Jr. the Supervising General Partner March 27, 1997
- ----------------------- --------------
Morris Goodwin, Jr.
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants
Financial Statements:
Balance Sheet, December 31, 1995
Statements of Partners' Capital, for the years ended December 31, 1996, 1995
and 1994
Statements of Income and Expenses, for the years ended December 31, 1996, 1995
and 1994
Statements of Cash Flows, for the years ended December 31, 1996, 1995 and 1994
Notes to Financial Statements
Financial Statement Schedules 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 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 are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements 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, 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
As described in Note 1 to the financial statements, the Partnership Agreement
provides for the dissolution of the Partnership upon the disposition of all
its interests in real estate. At December 31, 1996 the Partnership had
disposed of all its interests in real estate and, accordingly, has ceased
operations and was dissolved on March 21, 1997.
/s/ Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 26, 1997
<PAGE>
IDS/BALCOR INCOME PARTNERS
A REAL ESTATE LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEET
December 31, 1995
ASSETS
1995
-------------
Cash and cash equivalents $ 397,080
Accounts and accrued interest receivable 50,812
Prepaid insurance 22,920
-------------
470,812
-------------
Investment in real estate:
Land 1,340,324
Buildings and improvements 13,681,315
-------------
15,021,639
Less accumulated depreciation 5,365,734
-------------
Investment in real estate, net of
accumulated depreciation 9,655,905
-------------
$ 10,126,717
=============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 14,005
Due to affiliates 7,108
Accrued real estate taxes 124,823
Security deposits 48,224
-------------
Total liabilities 194,160
Limited Partners' capital (73,994
Interests issued and outstanding) 9,913,215
General Partners' capital 19,342
-------------
Total partners' capital 9,932,557
-------------
$ 10,126,717
=============
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, 1996, 1995 and 1994
Partners' Capital Accounts
------------ ------------ ------------
General Limited
Total Partners Partners
------------ ------------ ------------
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
Cash distributions to Limited
Partners (A) (1,174,656) (1,174,656)
Net income for the year
ended December 31, 1995 488,958 4,890 484,068
------------ ------------ ------------
Balance at December 31, 1995 9,932,557 19,342 9,913,215
Cash distributions to Limited
Partners (A) (17,338,275) (17,338,275)
Cash contribution by General
Partners 16,307 16,307
Net income (loss) for the year
ended December 31, 1996 7,389,411 (35,649) 7,425,060
------------ ------------ ------------
Balance at December 31, 1996 $ None $ None $ None
============ ============ ============
(A) Summary of cash distributions per Interest:
1996 1995 1994
------------ ------------ ------------
First Quarter $ 4.250 $ 3.875 $ 3.875
Second Quarter 4.000 3.875 3.875
Third Quarter 100.000 3.875 3.875
Fourth Quarter 126.070 4.250 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, 1996, 1995 and 1994
1996 1995 1994
-------------- -------------- --------------
Income:
Rental and service $ 1,806,508 $ 2,745,228 $ 2,575,336
Interest on short-term
investments 126,099 28,694 21,189
-------------- -------------- --------------
Total income 1,932,607 2,773,922 2,596,525
-------------- -------------- --------------
Expenses:
Depreciation 412,066 622,186 614,974
Property operating 671,124 1,047,033 847,544
Real estate taxes 206,780 206,325 246,529
Property management fees 97,411 136,945 128,488
Administrative 196,467 272,475 196,489
-------------- -------------- --------------
Total expenses 1,583,848 2,284,964 2,034,024
-------------- -------------- --------------
Income before gain on sale
of properties 348,759 488,958 562,501
Gain on sale of properties 7,040,652
-------------- -------------- --------------
Net income $ 7,389,411 $ 488,958 $ 562,501
============== ============== ==============
Net (loss) income allocated
to General Partners $ (35,649) $ 4,890 $ 5,625
============== ============== ==============
Net income allocated to
Limited Partners $ 7,425,060 $ 484,068 $ 556,876
============== ============== ==============
Net income per Limited
Partnership Interest
(73,994 issued and
(outstanding) $ 100.35 $ 6.54 $ 7.53
============== ============== ==============
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, 1996, 1995 and 1994
1996 1995 1994
-------------- -------------- --------------
Operating activities:
Net income $ 7,389,411 $ 488,958 $ 562,501
Adjustments to reconcile net
income to net cash provided
by operating activities:
Gain on sale of properties (7,040,652)
Depreciation of properties 412,066 622,186 614,974
Net change in:
Accounts and accrued
interest receivable 50,812 8,767 (315)
Prepaid expenses 22,920 (22,920)
Accounts payable (14,005) (33,499) 6,077
Due to affiliates (7,108) (15,100) 10,731
Accrued liabilities (124,823) (19,907) 11,257
Security deposits (48,224) 3,371 (5,177)
-------------- -------------- --------------
Net cash provided by
operating activities 640,397 1,031,856 1,200,048
-------------- -------------- --------------
Investing activities:
Proceeds from sales of real
estate 16,625,000
Payment of selling costs (340,509)
Improvements to properties (120,103)
-------------- --------------
Net cash provided by or used
in investing activities 16,284,491 (120,103)
-------------- --------------
Financing activities:
Distributions to Limited
Partners (17,338,275) (1,174,656) (1,146,907)
Capital contribution by
General Partners 16,307
-------------- -------------- --------------
Net cash used in financing
activities (17,321,968) (1,174,656) (1,146,907)
-------------- -------------- --------------
Net change in cash and cash
equivalents (397,080) (142,800) (66,962)
Cash and cash equivalents at
beginning of period 397,080 539,880 606,842
-------------- -------------- --------------
Cash and cash equivalents at
end of period $ None $ 397,080 $ 539,880
============== ============== ==============
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. Termination of Partnership Affairs:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the sale of all interests in real
estate. During 1996, the Partnership sold both of its properties, and as a
result, the General Partners commenced liquidation of the Partnership. After
retaining approximately $112,000 to pay the final administrative expenses of
the Partnership, a final distribution of $8,680,976 ($117.32 per Interest) was
made to the Limited Partners in December 1996 which represents all remaining
cash reserves, including a capital contribution of $16,307 from the General
Partners. This distribution consisted of Net Cash Receipts of $130,969 ($1.77
per Interest) and Net Cash Proceeds of $8,550,007 ($115.55 per Interest). The
General Partners have received no distribution of Net Cash Receipts or Net Cash
Proceeds during the entire lifetime of the Partnership.
The Partnership was terminated in the State of Delaware on March 21, 1997.
On March March 25, 1997, the Partnership's registration under the Securities
Exchange Act of 1934 was terminated.
2. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could vary from those estimates.
(b) Depreciation expense was computed using the straight-line method. Rates
used in the determination of depreciation were based upon the following
estimated useful lives:
Years
-----
Buildings and improvements 20 to 22
Furniture and fixtures 5
Maintenance and repairs were charged to expense when incurred. Expenditures for
improvements were charged to the related asset account.
(c) Effective January 1, 1995, the Partnership adopted Statement of Financial
Accounting Standards, No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of". Under SFAS 121, the
Partnership recorded its investments in real estate at the lower of cost or
fair value, and periodically assessed, but not less than on an annual basis,
possible impairment to the value of its properties. The General Partners
<PAGE>
estimated the fair value of their properties by dividing the property's
expected net operating income by a risk adjusted rate of return which
considered economic and demographic conditions in the market. Under SFAS 121,
the General Partners determined that no impairment in value had occurred prior
to the sales of the properties. The General Partners considered the method
referred to above to result in a reasonable measurement of a property's fair
value, unless other factors affecting the property's value indicate otherwise.
(d) The Financial Accounting Standard Board's Statement No. 107, "Disclosures
About Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments for which it is practicable to estimate
that value. Statement No. 107 does not apply to all balance sheet items and
excludes certain financial instruments and all non-financial instruments such
as real estate from its disclosure requirements.
(e) Revenue was recognized on an accrual basis in accordance with generally
accepted accounting principles.
(f) Cash and cash equivalents included all highly liquid investments with an
original maturity of three months or less.
(g) 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.
(h) In previous years partners were allocated income and loss in accordance
with the profit and loss percentages in the Partnership Agreement. In order for
the capital accounts of the General Partners and Limited Partners to
appropriately reflect their respective remaining economic interests as provided
for in the Partnership Agreement, the General Partners were allocated a loss in
1996 for financial statement purposes.
3. Management Agreements:
During 1996, Post Place Apartments was under a management agreement with an
affiliate of the seller and Salem Courthouse Apartments was under a management
agreement with a third party management company. These management agreements
provided for annual fees of 5% of gross operating receipts.
4. Tax Accounting:
The Partnership kept 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 1996 in the financial statements is $2,025,974 more than the
tax income of the Partnership for the same period.
<PAGE>
5. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94
-------------- -------------- --------------
Paid Payable Paid Payable Paid Payable
------ ------- ------ ------- ------ -------
Property management fees None None None None $64,817 None
Reimbursement of expenses
to the Managing General
Partner, at cost:
Accounting $18,580 None $25,088 $2,147 29,521 10,267
Data processing 1,264 None 11,706 572 20,464 4,205
Investor communica-
tions None None 639 None 1,990 568
Legal 10,966 None 4,302 510 2,301 663
Other 2,227 None 1,052 None 1,494 995
Portfolio management 57,272 None 31,405 3,879 12,438 5,510
The Partnership participated 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
program was administered by an affiliate of the Managing General Partner who
received no fee for administering the program; however, the General Partner was
reimbursed for expenses. The Partnership paid premiums to the deductible
insurance program of $3,230, $15,556 and $23,937 in 1996, 1995 and 1994,
respectively.
Allegiance Realty Group, Inc., an affiliate of the Managing General Partner,
managed one of the Partnership's properties until the affiliate was sold to a
third party in November 1994.
Since the Limited Partners did not receive Net Cash Proceeds distributions in
an amount equal to their original capital contribution, the General Partners
were required to make a capital contribution of $16,307 to the Partnership upon
dissolution in accordance with the Partnership Agreement. This amount was
included in the Net Cash Proceeds distribution made to the Limited Partners in
December 1996.
6. Fair Values of Financial Instruments:
The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1995 were as follows:
The carrying values of cash and cash equivalents, accounts and accrued interest
receivable and accounts payable approximated fair value.
<PAGE>
7. Property Sales:
(a) 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.
(b) In November 1996, the Partnership sold the Salem Courthouse Apartments in
an all cash sale for $8,725,000. From the proceeds of the sale, the Partnership
paid $265,038 in selling costs. The basis of the property was $4,324,967, which
is net of accumulated depreciation of $3,338,160. For financial statement
purposes, the Partnership recognized a gain of $4,134,995 from the sale of this
property.
<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 8973
<CGS> 0
<TOTAL-COSTS> 975
<OTHER-EXPENSES> 609
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7389
<INCOME-TAX> 0
<INCOME-CONTINUING> 7389
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7389
<EPS-PRIMARY> 100.35
<EPS-DILUTED> 100.35
</TABLE>
