SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-17653
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BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Illinois 36-3523598
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(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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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1995 and December 31, 1994
(Unaudited)
ASSETS
1995 1994
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Cash and cash equivalents $ 4,204,535 $ 4,256,384
Accounts and accrued interest receivable 54,273 60,777
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4,258,808 4,317,161
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Investment in loan receivable 7,873,745 7,889,890
Less:
Allowance for potential loan losses 545,000 545,000
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Net investment in loan receivable 7,328,745 7,344,890
Investment in joint ventures - affiliates 5,378,581 5,268,196
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12,707,326 12,613,086
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$ 16,966,134 $ 16,930,247
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 9,412 $ 44,388
Due to affiliates 55,867 42,961
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Total liabilities 65,279 87,349
Partners' capital (292,708 Limited
Partnership Interests issued and
outstanding) 16,900,855 16,842,898
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$ 16,966,134 $ 16,930,247
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Income:
Interest on loans $ 205,810 $ 358,678
Interest on short-term investments 67,262 13,036
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Total income 273,072 371,714
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Expenses:
Administrative 71,071 86,314
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Total expenses 71,071 86,314
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Income before participation in income
of joint ventures - affiliates and equity in
loss from investment in acquisition loan 202,001 285,400
Participation in income of joint
ventures - affiliates 52,229 67,122
Equity in loss from investment in
acquisition loan (16,145) (17,845)
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Net income $ 238,085 $ 334,677
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Net income allocated to General Partner $ 4,503 $ 6,755
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Net income allocated to Limited Partners $ 233,582 $ 327,922
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Net income per Limited Partnership Interest
(292,708 issued and outstanding) $ 0.80 $ 1.12
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Distribution to General Partner $ 4,503 $ 6,755
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Distribution to Limited Partners $ 175,625 $ 263,437
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Distribution per Limited Partnership Interest $ 0.60 $ 0.90
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
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Operating activities:
Net income $ 238,085 $ 334,677
Adjustments to reconcile net income to
net cash provided by operating activities:
Equity in loss from investment in
acquisition loan 16,145 17,845
Participation in (income) of joint
ventures - affiliates (52,229) (67,122)
Accrued interest income due at maturity (3,610)
Net change in:
Escrow deposits - restricted (44,492)
Accounts and accrued interest
receivable 6,504 (2,146)
Escrow liabilities 33,462
Accounts payable (34,976) (39,074)
Due to affiliates 12,906 36,215
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Net cash provided by operating activities 186,435 265,755
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Investing activities:
Contributions to joint venture-
affiliate (58,156)
Distribution from joint venture -
affiliate 30,166
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Net cash used in or provided by
investing activities (58,156) 30,166
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Financing activities:
Distribution to Limited Partners (175,625) (263,437)
Distribution to General Partner (4,503) (6,755)
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Cash used in financing activities (180,128) (270,192)
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Net change in cash and cash equivalents (51,849) 25,729
Cash and cash equivalents at beginning
of period 4,256,384 1,644,086
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Cash and cash equivalents at end of period $ 4,204,535 $ 1,669,815
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
Mortgage servicing fees have been reclassified and are included in
administrative expenses during 1995. This reclassification has also been made
to the previously reported 1994 financial statements to conform with the
classification used in 1995. This reclassification has not changed the 1994
results. In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the quarter
ended March 31, 1995 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
quarter ended March 31, 1995 are:
Paid Payable
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Mortgage servicing fees $ 7,398 $ 1,759
Reimbursement of expenses to
the General Partner, at cost: None 54,108
For the quarter ended March 31, 1995, the General Partner subordinated receipt
of one-half of its share of distributed Cash Flow, totaling $4,503. This amount
will be paid to the General Partner only after required distribution levels to
investors have been met and such amounts, if any, will be allocated to the
Repurchase Fund.
<PAGE>
3. Investments in Joint Ventures - Affiliates:
The following information has been summarized from the financial statements of
the 45 West 45th Street Office Building and Sun Lake Apartments joint ventures:
March 31, 1995 March 31, 1994
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Net investment in real
estate as of March 31 $31,982,434 $33,594,978
Total liabilities as
of March 31 15,990,742 16,019,065
Total income 1,413,159 1,531,721
Net income 92,779 254,151
The Partnership and three affiliates previously funded a $23,000,000 loan on
the 45 West 45th Street Office Building. In February 1995, the participants
received title to the property through foreclosure. The Partnership owns a
21.74% joint venture interest in the property.
4. Subsequent Event:
In April 1995, the Partnership paid $175,625 ($.60 per Interest) to Limited
Partners, representing the distribution for the first quarter of 1995 from Cash
Flow.
<PAGE>
BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Preferred Pension - 12 A Real Estate Limited Partnership (the
"Partnership") was formed in 1987 to invest in participating (and, to a lesser
extent, non-participating) first mortgage loans, wrap-around mortgage loans and
other junior mortgage loans. The Partnership raised $29,270,800 through the
sale of Limited Partnership Interests and utilized these proceeds to invest in
four loans. The Partnership subsequently reclassified its investment in two of
these loans in which it held minority participations to investment in joint
ventures with affiliates. In addition, one of the loans was repaid in 1994. As
of March 31, 1995, the Partnership had an investment in one loan and two joint
ventures with affiliates in its portfolio.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1994 for a more complete understanding of
the Partnership's financial position.
Summary of Operations
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Primarily as a result of lower interest income on loans receivable due to the
June 1994 repayment of the Skyline Village Mobile Home Park loan, the
Partnership's net income decreased during the quarter ended March 31, 1995 as
compared to the same period in 1994. Further discussion of the Partnership's
operations is summarized below.
1995 Compared to 1994
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The June 1994 repayment of the Skyline Village loan resulted in a decrease in
interest income on loans for the quarter ended March 31, 1995 when compared to
the same period in 1994.
Higher average cash balances due to proceeds received from the Skyline Village
loan repayment and higher interest rates resulted in an increase in interest
income on short-term investments for the quarter ended March 31, 1995 as
compared to the same period in 1994.
As a result of lower legal, accounting and mortgage servicing fees,
administrative expenses were lower during the quarter ended March 31, 1995 as
compared to the same period in 1994.
<PAGE>
Allowances are charged to income when the General Partner believes an
impairment has occurred, either in a borrower's ability to repay the loan or in
the value of the collateral property. Determinations of fair value are made
periodically on the basis of performance under the terms of the loan agreements
and assessments of property operations. Determinations of
fair value represent estimations based on many variables which affect the value
of real estate, including economic and demographic conditions. The Partnership
recognized no provisions during the quarters ending March 31, 1995 and 1994
related to its loans.
Participation in income of joint ventures with affiliates represents the
Partnership's share of the property operations at the Sun Lake Apartments and
the 45 West 45th Street Office Building. Primarily as a result of lower
revenues at the 45 West 45th Street office building, the participation in
income of joint ventures was lower during the quarter ended March 31, 1995 as
compared to the same period in 1994. The property had been classified as real
estate held for sale by the participants effective January 1, 1993. This
decrease was partially offset by lower interest expense at the Sun Lake
Apartments due to the November 1994 re-marketing of the mortgage bonds.
Liquidity and Capital Resources
- - --------------------------------
The cash position of the Partnership decreased slightly at March 31, 1995 as
compared to December 31, 1994. Operating activities consisted of the cash flow
from the Partnership's loan receivable and interest income earned on short-term
investments, which was partially offset by the payment of administrative
expenses. Investing activities consisted of contributions to the 45 West 45th
Street joint venture and financing activities consisted of the regular
quarterly distributions to the Limited Partners and the General Partner.
The Partnership and three affiliates funded a $23,000,000 mortgage loan
collateralized by the 45 West 45th Street Office Building. The Partnership
funded $5,000,000 of the loan amount for a participating percentage of 21.74%.
In February 1995, the participants received title to the property through
foreclosure.
In April 1995, the Partnership paid $175,625 ($.60 per Interest) to Limited
Partners representing a distribution for the first quarter of 1995 from Cash
Flow. The level of this distribution is consistent with that of the prior
quarter. The Partnership also paid $4,503 to the General Partner as its
unsubordinated distributive share of Cash Flow for the first quarter of 1995.
To date, including the April 1995 distribution, the Partnership has distributed
$45.30 per $100 Interest, of which $32.82 represents Cash Flow from operations
and $12.48 represents Original Capital.
The Noland Fashion Square loan has been recorded by the Partnership as an
investment in acquisition loan. The Partnership has recorded its share of the
collateral property's operations as equity in loss from investment in
acquisition loan. The Partnership's share of operations has no effect on the
cash flow of the Partnership. Amounts representing contractually required debt
service are recorded as interest income on loans.
<PAGE>
The Partnership expects to continue making quarterly cash distributions from
available Cash Flow. In accordance with the Partnership Agreement, ninety-five
percent of such Cash Flow will be distributed to Limited Partners, and five
percent will be distributed to the General Partner as its share from
Partnership operations, subject to certain subordinations. Cash available for
distribution will be determined by the General Partner after it creates any
reserves or makes expenditures appropriate for the operation of the
Partnership. There is no assurance that the Partnership will generate Cash Flow
or that, if generated, it will be available for distribution or be sufficient
to provide a return of Original Capital, the Warranty Distribution or the
Cumulative Return.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement previously filed as Exhibit 4.1 in Amendment
No. 1 to the Registrant's Registration Statement on Form S-11 dated December 9,
1987 (Registration No. 33-16145) 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. 0-17653) are
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the three month period
ending March 31, 1995 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated February 2, 1995
was filed reporting the acquisition through foreclosure of the 45 West 45th
Street Office Building in New York, New York.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR PREFERRED PENSION-12
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-VIII, the General Partner
By: /s/Brian Parker
------------------------------
Brian Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Mortgage Advisors-VIII,
the General Partner
Date: May 11, 1995
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<PAGE>
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<PERIOD-END> MAR-31-1995
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<ALLOWANCES> 545
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0
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<OTHER-SE> 16901
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