Item 1. Business - ----------------
Balcor Realty Investors 85-Series I A Real Estate Limited Partnership (the "Registrant") is a limited partnership formed in 1983 under the laws of the State of Illinois. The Registrant raised $82,697,000 from sales of Limited Partnership Interests. 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 ten real property investments and minority joint venture interests in three additional properties. The Registrant has disposed of three of these properties. The seven properties and three minority joint venture interests held at December 31, 1994 are described under Item 2.
Item 2. Properties - ------------------
As of December 31, 1994, the Registrant owned the seven properties described below:
Location Description of Property - -------- -----------------------
Chesterfield County, Boulder Springs Apartments: a 284-unit Virginia complex located on approximately 32 acres.
Arlington, Texas Forest Ridge Apartments (Phase I): a 332-unit complex located on approximately 14 acres.
East Baton Rouge Parish, Forestwood Apartments: a 272-unit complex Louisiana located on approximately 11 acres.
Oklahoma City, Oklahoma Heather Ridge Apartments: a 356-unit complex located on approximately 16 acres.
Colorado Springs, Colorado Templeton Park Apartments: a 496-unit complex located on approximately 21 acres.
Altamonte Springs, Florida Timberlake Apartments (Phase I): a 480-unit complex located on approximately 43 acres.
Town & Country, Missouri Willow Bend Apartments: a 208-unit complex located on approximately 21 acres.
The Registrant also held minority joint venture interests in North Hill Apartments, DeKalb County, Georgia; Pinebrook Apartments, Lexington, Kentucky; and Seabrook Apartments, Orange County, Florida.
Each of the above properties is held subject to various forms of financing.
In the opinion of the General Partner, the Registrant has provided for adequate insurance coverage for its real estate investment properties.
See Notes to Financial Statements for other information regarding real property investments.
Item 3.
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.
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 1994.
PART II
Item 5.
Item 5. Market for the 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; therefore, the market value of the Limited Partnership Interests cannot reasonably be determined. For information regarding distributions see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
As of December 31, 1994, the number of record holders of Limited Partnership Interests of the Registrant was 7,719.
Item 6.
Item 6. Selected Financial Data - -------------------------------
Year ended December 31, ---------------------------------------------------------- 1994 1993 1992 1991 1990 ---------- ---------- ---------- ---------- ----------
Total income $15,205,707 $15,678,441 $17,331,431 $16,137,937 $17,253,472 Income (loss) before gains on sales of assets and extraordinary items 529,539 (465,069) (1,653,732) (2,904,684) (4,177,702) Net income (loss) 663,204 7,210,490 (1,653,732) (2,904,684) (778,462) Net income (loss) per Limited Partnership Interest 7.94 86.32 (19.80) (34.77) (9.32) Total assets 59,911,923 58,158,518 75,012,096 76,644,481 83,039,493 Mortgage notes payable 57,381,930 55,919,126 79,230,302 79,520,953 83,198,635 Distributions per Limited Partner- ship Interest 5.00 None None None None
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and - ----------------------------------------------------------------------- Results of Operations - ---------------------
Summary of Operations - ---------------------
As a result of the foreclosure of Suncrest Village Apartments and sale of Sahara Palms Apartments in 1993, Balcor Realty Investors 85 - Series I A Real Estate Limited Partnership (the "Partnership") recognized gains which resulted in significantly higher net income in 1993 as compared to 1994, as well as net income during 1993 as compared to a loss in 1992.
The dispositions of these properties, which were generating losses, coupled with improved operations at certain of the Partnership's remaining properties, contributed to improvements in results of operations before gain on sale of property and extraordinary items resulting in income in 1994 as compared to a loss in 1993, and decreased losses in 1993 as compared to 1992.
Further discussion of the Partnership's operations is summarized below.
Operations - ----------
1994 Compared to 1993 - ---------------------
As a result of the Suncrest Village Apartments foreclosure in May 1993 and the Sahara Palms Apartments sale in July 1993, rental and service income, interest expense, depreciation expense, property operating expense, maintenance and repairs expense, real estate taxes and property management fees decreased during 1994 as compared to 1993.
Increased rental and/or occupancy rates during 1994 at all of the Partnership's seven remaining properties partially offset the decrease in rental and service income due to the 1993 property dispositions.
The increase in cash flow from the Partnership's properties, the proceeds from the July 1993 sale of Sahara Palms Apartments, and the net proceeds received in connection with the refinancing of the mortgage loan on Heather Ridge Apartments in July 1994 caused the Partnership's cash balances to increase. This, together with higher interest rates, resulted in an increase in interest income on short-term investments during 1994 as compared to 1993.
In addition to the decrease resulting from the 1993 property dispositions, interest expense decreased during 1994 as compared to 1993 due to the refinancing of the Timberlake - Phase I Apartments mortgage loan in October 1993, as well as the contractual decrease in the interest rate on the Templeton Park Apartments mortgage loan, effective December 1993. The decrease in interest expense was partially offset by increased interest expense for the Forest Ridge - Phase I and Heather Ridge loans due to higher principal balances resulting from the refinancings during 1994. In conjunction with the 1994 Forest Ridge - Phase I and Heather Ridge refinancings, the remaining deferred expenses were written-off and this combined with the amortization of expenses related to the 1993 Forestwood and Timberlake - Phase I mortgage refinancings caused amortization of deferred expenses to increase during 1994 as compared to 1993.
Property operating expense decreased during 1994 as compared to 1993 primarily as a result of the 1993 property dispositions. However, increases in carpet replacement at Forest Ridge - Phase I, Forestwood, Timberlake - Phase I and Willowbend apartment complexes as well as higher insurance expense at all of the Partnership's properties partially offset the decrease for 1994 as compared to 1993.
In addition to the decrease resulting from the 1993 property dispositions, maintenance and repairs expense also decreased during 1994 as compared to 1993 due to maintenance and repairs expenses incurred in 1993 at the Forestwood Apartments for which the Partnership received an insurance reimbursement in 1994.
North Hill Apartments is owned by a joint venture consisting of the Partnership and an affiliate. In connection with the December 1994 North Hill Apartments refinancing, the joint venture received a refund relating to prior year payments made to Mutual Benefit Life Insurance Company representing its 1% guaranty fee on the original North Hills Apartments mortgage loan. As a result, the joint venture recognized a $534,659 extraordinary gain on forgiveness of debt in 1994, of which $133,665 represents the Partnership's share.
As a result of the sale of Sahara Palms Apartments in July 1993 and the relinquishment of title through foreclosure of Suncrest Village Apartments in May 1993, the Partnership recognized a gain on sale of property of $4,194,237 in 1993 and extraordinary gain on foreclosure of property of $3,118,578 in 1993, respectively.
In October 1993, the Partnership completed the refinancing of the Timberlake- Phase I first mortgage loan, and obtained a new first mortgage loan from an unaffiliated lender. The Partnership received a $362,744 discount from the previous lender for prepayment of the mortgage note and consequently recognized an extraordinary gain on debt forgiveness in 1993.
1993 Compared to 1992 - ---------------------
As a result of the foreclosure of Suncrest Village Apartments in May 1993 and the sale of Sahara Palms Apartments in July 1993, rental income, interest expense, depreciation expense, amortization of deferred expenses, property operating expense, maintenance and repairs expense, real estate tax expense and property management fees decreased during 1993 as compared to 1992.
Rental and service income decreased during 1993 as compared to 1992 due to the dispositions of Sahara Palms and Suncrest Village apartment complexes. This decrease was partially offset by increased rental and/or occupancy rates at all of the Partnership's seven remaining properties.
The improved cash flow at five of the Partnership's seven remaining properties, the proceeds from the sale of Sahara Palms Apartments, and the cash retained as a result of the suspension of debt service and real estate tax payments on Suncrest Village Apartments caused the Partnership's cash balance to increase. This resulted in an increase in interest income on short-term investments during 1993 when compared 1992.
The Partnership reached settlements with the sellers of the Forest Ridge - Phase I, Highpoint - Phase II, and Sahara Palms apartment complexes in 1992. Settlement income of $481,861 was recognized in connection with these transactions.
The decrease in property operating expense during 1993 as compared to 1992 as a result of the dispositions of the Sahara Palms and Suncrest Village apartment complexes was partially offset by higher payroll costs at the Willow Bend and Templeton Park apartment complexes.
In addition to the decrease from the dispositions of the Sahara Palms and Suncrest Village apartment complexes, maintenance and repairs expense also decreased during 1993 as compared to 1992 due to higher exterior painting expenses at the Heather Ridge Apartments during 1992. This decrease in maintenance and repairs expense was partially offset by increased carpet replacement costs at the Templeton Park Apartments and increased carpet replacement and asphalt paving at the Forestwood Apartments.
As a result of improved operations at North Hill Apartments, in which the Partnership holds a minority joint venture interest, participation in losses of joint ventures with affiliates decreased for 1993 as compared to 1992.
During 1993 the Partnership sold the Sahara Palms Apartments and recognized a $4,194,237 gain on sale of property.
In October 1993, the Partnership completed the refinancing of the Timberlake - Phase I first mortgage loan and obtained a new first mortgage loan from an unaffiliated lender. The Partnership received a $362,744 discount from the previous lender for prepayment of the mortgage note and consequently recognized an extraordinary gain on debt forgiveness.
Liquidity and Capital Resources - -------------------------------
The cash position of the Partnership increased by approximately $3,346,000 as of December 31, 1994 as compared to December 31, 1993. The Partnership's cash flow provided by operating activities during 1994 was generated primarily from the Partnership's properties, and was partially offset by the payment of administrative expenses. The Partnership's net cash used in investing activities consisted of a net contribution to joint ventures with affiliates. The Partnership received cash flow from financing activities which consisted of net proceeds from the refinancing of the underlying mortgage loans on both the Forest Ridge - Phase I and Heather Ridge apartment complexes. A portion of these proceeds were used for the payment of deferred expenses and funding of improvement escrows in connection with the two refinancings. Cash was used in
other financing activities for principal payments on mortgage notes payable and a distribution to the Limited Partners.
The Partnership classifies the cash flow performance of its properties as either positive, a marginal deficit, or a significant deficit, each after consideration of debt service payments. A deficit is considered to be significant if it exceeds $250,000 annually or 20% of the property's rental and service income. The Partnership defines cash flow generated from its properties as an amount equal to the property's revenue receipts less property related expenditures, which include debt service payments. During 1994 and 1993, all seven of the Partnership's properties generated positive cash flow. Of the three properties in which the Partnership holds minority joint venture interests, the North Hill Apartments generated positive cash flow during 1994 and 1993. The Seabrook and Pinebrook apartment complexes generated marginal cash flow deficits during 1994 as compared to positive cash flow for 1993, primarily due to plumbing repairs at the Seabrook Apartments and default interest expense and legal fees incurred in connection with the bankruptcy plan of reorganization at the Pinebrook Apartments.
While the cash flow of certain of the Partnership's remaining properties has improved, the General Partner continues to pursue a number of actions aimed at further improving the cash flow of the Partnership's properties including refinancing of mortgage loans, improving property operating performance, and seeking rent increases where market conditions allow. As of December 31, 1994, the occupancy rates of the Partnership's properties ranged from 88% to 98%. Despite recent improvements in the local economies and rental markets where certain of the Partnership's properties are located, the General Partner believes that continued ownership of many of the properties is in the best interest of the Partnership in order to maximize potential returns to Limited Partners. As a result, the Partnership will continue to own these properties for longer than the holding period for the assets originally described in the prospectus.
Each of the Partnership's properties is owned through the use of third-party mortgage loan financing and, therefore, the Partnership is subject to the financial obligations required by such loans. The $7,787,000 Boulder Springs mortgage loan matures in 1995 and the Partnership expects to refinance this loan prior to its maturity. See Note 3 of Notes to Financial Statements for information concerning outstanding balances, maturity dates, interest rates and other terms related to each of these mortgage loans. In certain instances it may be difficult for the Partnership to refinance a property in an amount sufficient to retire in full the current mortgage financing with respect to the property. In the event negotiations with the existing lender for a loan modification or with new lenders for a refinancing are unsuccessful, the Partnership may sell the collateral property or other properties to satisfy an obligation or may relinquish title to the collateral property in satisfaction of the outstanding mortgage loan balance.
During 1994, the Heather Ridge and Forest Ridge - Phase I first mortgage loans were refinanced. Proceeds from the two new loans which totalled $12,890,000 were used to pay the existing loans totalling $10,563,000. See Note 3 of Notes to the Financial Statements for additional information.
The Pinebrook Apartments were owned by a joint venture ("Joint Venture") consisting of the Partnership and an affiliate, and were financed with a $5,185,000 wrap-around mortgage payable, which matured in July 1993. In December 1992, the Joint Venture filed for protection under the U.S. Bankruptcy Code and in 1994, a plan of reorganization was approved by the Bankruptcy Court. Pursuant to the plan, the Joint Venture was required to sell the property within two years. Consequently, in February 1995, the Partnership sold the Pinebrook Apartments in an all cash sale for $6,140,000. From the proceeds, the Partnership paid $5,058,226 to the third party mortgage holders in full satisfaction of the first, second and fourth mortgage loans. See Note 6 of Notes to Financial Statements and Item 1. Other Information for additional information.
North Hill Apartments are owned by a joint venture ("Joint Venture") consisting of the Partnership and an affiliate. The $18,700,000 tax exempt bond issue which funded the first mortgage financing collateralized by the property went into technical default in July 1991 due to the insolvency of the guarantor of the bonds. In April 1993, the Joint Venture and the trustee for the bondholders entered into an agreement in which the loan was modified and the trustee agreed to forebear from commencing foreclosure proceedings while the Joint Venture sought alternative financing. In conjunction with the subsequent extension of the agreement,the Joint Venture agreed to pay 50% of monthly net cash flow into an escrow account to be applied to amounts due under the mortgage loan upon refinancing. In December 1994, the Joint Venture refinanced the mortgage loan. In conjunction with the refinancing, $828,605 held in escrow representing the 50% of net cash flow and the guarantee fee previously paid to the trustee, but not paid to the guarantor due to its insolvency, were released to the Joint Venture, a portion of which was used to repay the previous bond financing. In addition, the Joint Venture received proceeds of $1,350,000 from a non- affiliated party which was also used to repay the previous bond financing. See Note 6 of Notes to Financial Statements for additional information.
In January 1995, the Partnership made a distribution of $413,485 ($5.00 per Interest) to the holders of Limited Partnership Interests for the fourth quarter of 1994. The Partnership made its first distribution to Limited Partners of $5.00 per Limited Partnership Interest in October 1994. The General Partner expects to continue quarterly distributions to Limited Partners. However, the level of future distributions, if available, will depend on cash flow from the Partnership's remaining properties, the successful refinancing of certain mortgage loans and proceeds from future property sales, as to all of which there can be no assurances. In light of results to date and current market conditions, the General Partner does not anticipate that investors will recover all of their original investment.
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 all 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.
Item 8.
Item 8. Financial Statements and Supplementary Data - ---------------------------------------------------
See Index to Financial Statements and Financial Statement 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 $59,911,923 $48,360,939 $58,158,518 $45,508,342 Partners' capital (deficit) accounts: General Partner (716,180) (1,589,662) (722,812) (1,557,623) Limited Partners 1,828,563 (11,454,275) 1,585,476 (9,746,864) Net income (loss): General Partner 6,632 (32,039) 72,105 1,064,002 Limited Partners 656,572 (1,293,926) 7,138,385 10,248,616 Per Limited Part- nership Interest 7.94 (15.65) 86.32 123.93
Item 9.
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.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant - -----------------------------------------------------------
(a) Neither the Registrant nor Balcor Partners-XVI, its General Partner, has either a Board of Directors or a Board of Advisors.
(b, c & e) The names, ages and business experiences of the executive officers and significant employees of the 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 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.
(d) There is no family relationship between any of the foregoing officers.
(f) None of the foregoing officers or employees are currently involved in any material legal proceedings nor were any such proceedings terminated during the fourth quarter of 1994.
Item 11.
Item 11. Executive Compensation - -------------------------------
The Registrant has not paid and does not propose to pay any remuneration to the executive officers and directors of the General Partner. Certain of these officers receive compensation from The Balcor Company (but not from the Registrant) for services performed for various affiliated entities, which may include services performed for the Registrant. However, the General Partner believes that any such compensation attributable to services performed for the Registrant is immaterial to the Registrant. See Note 8 of Notes to Financial Statements for the information relating to transactions with affiliates.
Item 12.
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 more than 5% of the outstanding Limited Partnership Interests of the Registrant.
(b) Balcor Partners-XVI and its officers and partners own as a group the following Limited Partnership Interests of the Registrant:
Amount Beneficially Title of Class Owned Percent of Class -------------- ------------- ----------------
Limited Partnership Interests 880 Interests 1.06%
Relatives and affiliates of the officers and partners of the General Partner own an additional fifteen 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.
Item 13. Certain Relationships and Related Transactions - -------------------------------------------------------
(a & b) See Note 8 of Notes to Financial Statements for additional 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.
PART IV
Item 14.
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 is set forth as Exhibit 3 to Amendment No. 1 to the Registrant's Registration Statement on Form S-11 dated November 29, 1984 (Registration No. 2-92777), and said Agreement and Certificate is incorporated herein by reference.
(4) The Subscription Agreement as set forth as Exhibit 4.1 to Amendment No. 1 to Registrant's Registration Statement on Form S-11 dated November 29, 1984 (Registration No. 2-92777) and Form of Confirmation regarding Interests in the Partnership as 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. 0-14353) are incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for 1994 is attached hereto.
(99) Agreement of Sale relating to the sale of Pinebrook Apartments, Lexington, Kentucky is attached hereto.
(b) Reports on Form 8-K: There were no reports 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 in this Form 10-K.
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.
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Allan Wood -------------------------------- Allan Wood Executive Vice President, and Chief Accounting and Financial Officer (Principal Accounting and Financial Officer) of Balcor Partners-XVI, the General Partner
Date: March 27, 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 and Chief Executive Officer (Principal Executive Officer) of Balcor Partners- /s/Thomas E. Meador XVI, the General Partner March 27,1995 - -------------------- -------------- Thomas E. Meador Executive Vice President, and Chief Accounting and Financial Officer (Principal Accounting and Financial Officer) of Balcor Partners-XVI, the /s/Allan Wood General Partner March 27, 1995 - -------------------- -------------- Allan Wood
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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of Balcor Realty Investors 85-Series I A Real Estate Limited Partnership:
We have audited the financial statements and the financial statement schedule of Balcor Realty Investors 85-Series I A Real Estate Limited Partnership (An Illinois 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 Balcor Realty Investors 85-Series I 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 March 4, 1995
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois Limited Partnership)
BALANCE SHEETS December 31, 1994 and 1993
ASSETS
1994 1993 ------------- ------------ Cash and cash equivalents $ 6,475,393 $ 3,129,791 Accounts and accrued interest receivable 28,827 455,823 Escrow deposits 1,140,420 621,838 Deferred expenses, net of accumulated amortization of $213,273 in 1994 and $300,956 in 1993 973,153 731,862 ------------- ------------ 8,617,793 4,939,314 ------------- ------------ Investment in real estate: Land 12,380,326 12,380,326 Buildings and improvements 65,940,832 65,940,832 ------------- ------------ 78,321,158 78,321,158 Less accumulated depreciation 27,027,028 25,101,954 ------------- ------------ Investment in real estate, net of accumulated depreciation 51,294,130 53,219,204 ------------- ------------ $ 59,911,923 $58,158,518 ============= ============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 133,743 $ 104,513 Due to affiliates 75,413 79,562 Accrued liabilities, principally real estate taxes and interest 366,628 369,386 Security deposits 288,084 299,099 Losses in excess of investments in joint ventures with affiliates 553,742 524,168 Mortgage notes payable 57,381,930 55,919,126 ------------- ------------ Total liabilities 58,799,540 57,295,854
Partners' capital (82,697 Limited Partnership Interests issued and outstanding) 1,112,383 862,664 ------------- ------------ $ 59,911,923 $58,158,518 ============= ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL for the years ended December 31, 1994, 1993 and 1992
Partners' Capital(Deficit) Accounts ---------------------------------------- General Limited Total Partner Partners ------------- ------------- ------------ Balance at December 31, 1991 $ (4,694,094) $ (778,380) $(3,915,714)
Net loss for the year ended December 31, 1992 (1,653,732) (16,537) (1,637,195) ------------- ------------- ------------ Balance at December 31, 1992 (6,347,826) (794,917) (5,552,909)
Net income for the year ended December 31, 1993 7,210,490 72,105 7,138,385 ------------- ------------- ------------ Balance at December 31, 1993 862,664 (722,812) 1,585,476
Cash distribution (A) (413,485) (413,485) Net income for the year ended December 31, 1994 663,204 6,632 656,572 ------------- ------------- ------------ Balance at December 31, 1994 $ 1,112,383 $ (716,180) $ 1,828,563 ============= ============= ============
(A)A distribution of $5.00 per Limited Partnership Interest was made in the fourth quarter of 1994.
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES for the years ended December 31, 1994, 1993 and 1992
1994 1993 1992 ------------- ------------- ------------ Income: Rental and service $ 14,972,425 $ 15,565,175 $16,756,049 Interest on short-term investments 233,282 113,266 93,521 Settlement income 481,861 ------------- ------------- ------------ Total income 15,205,707 15,678,441 17,331,431 ------------- ------------- ------------
Expenses:
Interest on mortgage notes payable 4,969,653 5,853,947 7,612,695 Depreciation 1,925,074 2,216,451 2,565,255 Amortization of deferred expenses 154,912 96,490 100,493 Property operating 3,618,794 3,702,971 4,215,101 Maintenance and repairs 1,366,497 1,668,294 1,686,221 Real estate taxes 991,624 1,051,338 1,167,480 Property management fees 747,795 778,849 838,046 Administrative 584,187 581,139 543,572 Participation in losses of joint ventures with affiliates before extraordinary item 317,632 194,031 256,300 ------------- ------------- ------------ Total expenses 14,676,168 16,143,510 18,985,163 ------------- ------------- ------------ Income (loss) before gain on sale of property and extraordinary items 529,539 (465,069) (1,653,732) Gain on sale of property 4,194,237 ------------- ------------- ------------ Income (loss) before extraordinary items 529,539 3,729,168 (1,653,732) ------------- ------------- Extraordinary items: Gain on forgiveness of debt 362,744 Gain on foreclosure of property 3,118,578 Participation in gain on forgiveness of debt from joint venture with an affiliate 133,665 ------------- ------------- Total extraordinary items 133,665 3,481,322 ------------- ------------- ------------ Net income (loss) $ 663,204 $ 7,210,490 $(1,653,732) ============= ============= ============ Income (loss) before extraordinary items allocated to General Partner $ 5,295 $ 37,292 $ (16,537) ============= ============= ============ Income (loss) before extraordinary items allocated to Limited Partners $ 524,244 $ 3,691,876 $(1,637,195) ============= ============= ============ Income (loss) before
extraordinary items per Limited Partnership Interest (82,697 issued and outstanding) $ 6.34 $ 44.64 $ (19.80) ============= ============= ============ Extraordinary items allocated to General Partner $ 1,337 $ 34,813 None ============= ============= ============ Extraordinary items allocated to Limited Partners $ 132,328 $ 3,446,509 None ============= ============= ============ Extraordinary items per Limited Partnership Interest (82,697 issued and outstanding) $ 1.60 $ 41.68 None ============= ============= ============ Net income (loss) allocated to General Partner $ 6,632 $ 72,105 $ (16,537) ============= ============= ============ Net income (loss) allocated to Limited Partners $ 656,572 $ 7,138,385 $(1,637,195) ============= ============= ============ Net income (loss) per Limited Partnership Interest (82,697 issued and outstanding) $ 7.94 $ 86.32 $ (19.80) ============= ============= ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS for the years ended December 31, 1994, 1993 and 1992
1994 1993 1992 ------------- ------------- ------------
Operating activities:
Net income (loss) $ 663,204 $ 7,210,490 $(1,653,732) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Gain on forgiveness of debt (362,744) Gain on foreclosure of property (3,118,578) Gain on sale of property (4,194,237) Participation in losses of joint ventures with affiliates before extraordinary item 317,632 194,031 256,300 Participation in gain on forgiveness of debt from joint venture with an affiliate (133,665) Depreciation of properties 1,925,074 2,216,451 2,565,255 Amortization of deferred expenses 154,912 96,490 100,493 Accrued interest expense due at maturity 366,050 Net change in: Accounts and accrued interest receivable 426,996 (203,405) 351,655 Escrow deposits 29,178 (360,225) (56,278) Accounts payable 29,230 (244,111) 306,735 Due to affiliates (4,149) (4,061) (20,417) Accrued liabilities (2,758) (494,386) (124,417) Security deposits (11,015) (78,091) 21,552 ------------- ------------- ------------ Net cash provided by operating activities 3,394,639 657,624 2,113,196 ------------- ------------- ------------
Investing activities:
Capital contributions to joint ventures with affiliates (280,003) (49,751) (230,457) Distributions from joint ventures with affiliates 125,610 91,904 102,702 Improvements to properties (118,767) Proceeds from sale of real estate 13,200,000 Payment of selling costs (99,559) ------------- ------------- ------------ Net cash used in or provided by investing activities (154,393) 13,023,827 (127,755) ------------- ------------- ------------ Financing activities:
Distribution to Limited Partners $ (413,485) Repayment of mortgage notes payable (10,563,000) $(29,604,431) Proceeds from issuance of mortgage notes payable 12,890,000 17,600,000 Principal payments on mortgage notes payable (864,196) (465,471) $ (656,701) Payment of deferred expenses (396,203) (684,351) (39,122) Funding of improvement escrows (547,760) ------------- ------------- ------------ Net cash provided by or used in financing activities 105,356 (13,154,253) (695,823) ------------- ------------- ------------
Net change in cash and cash equivalents 3,345,602 527,198 1,289,618 Cash and cash equivalents at beginning of year 3,129,791 2,602,593 1,312,975 ------------- ------------- ------------ Cash and cash equivalents at end of year $ 6,475,393 $ 3,129,791 $ 2,602,593 ============= ============= ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois 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 30 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.
When properties are sold, the related costs and accumulated depreciation are removed from the respective accounts. Any gain or loss on disposition is recognized in accordance with generally accepted accounting principles.
(b) Deferred expenses consist principally of loan refinancing and modification fees which are amortized over the terms of the respective agreements.
(c) Investment in joint ventures with affiliates represents the Partnership's 48.4%, 25% and 15.4% interests in the Pinebrook Apartments, North Hill Apartments and Seabrook Apartments, respectively, recorded under the equity method of accounting. Under this method, the Partnership records its initial investment at cost and adjusts its investment account for additional capital contributions, distributions and its share of joint venture income or loss. Depreciation recognized in connection with the ownership of real estate by the joint ventures has resulted in the Partnership's share of cumulative losses exceeding the net amounts invested in the joint ventures. This has resulted in the classification of the investment as "Losses in excess of investments in joint ventures with affiliates" in the accompanying financial statements.
(d) Cash equivalents include all unrestricted highly liquid investments with a maturity of three months or less when purchased.
(e) 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 on August 1, 1983. The Partnership Agreement provides for Balcor Partners-XVI to be the General Partner and for the admission of Limited Partners through the sale of up to 100,000 Limited Partnership Interests at $1,000 per Interest, 82,697 of which were sold through April 30, 1985, the termination date of the offering.
The Partnership Agreement generally provides that the General Partner will be allocated 1% of the profits and losses. One hundred percent of Net Cash Receipts available for distribution shall be distributed to the holders of Interests in proportion to their participating percentages as of the record
date for such distributions. However, there shall be accrued for the benefit of the General Partner as its distributive share from operations, an amount equivalent to approximately 1% of the total Net Cash Receipts being distributed, which will be paid only out of distributed Net Cash Proceeds in excess of total Adjusted Original Capital plus a 6% Cumulative Distribution. Under certain circumstances, the General Partner may participate in the Net Cash Proceeds of the sale or refinancing of Partnership properties. The General Partner's participation is limited to 15% of excess Net Cash Proceeds after the return of Original Capital plus a Cumulative Distribution of 6% to the holders of Interests, as defined in the Partnership Agreement.
3. Mortgage Notes Payable:
Mortgage notes payable at December 31, 1994 and 1993 consisted of the following:
Carrying Carrying Current Final Property Amount of Amount of Inter- Matur- Current Estimated Pledged as Notes at Notes at est ity Monthly Balloon Collateral 12/31/94 12/31/93 Rate Date Payment Payment - -------------- ---------- ---------- ------ ------ -------- ---------- Apartment Complexes: Boulder Springs $7,813,574 $7,887,784 12.875% 1995 $90,457 $7,787,000 Forest Ridge Phase I (A) 7,668,517 6,741,000 8.963% 2001 61,671 7,206,000 Forestwood (B) 5,836,145 5,877,537 9.130% 2001 48,026 5,465,000 Heather Ridge (C) 5,212,157 3,848,723 8.950% 2001 41,653 4,872,000 Templeton Park (D) 13,385,348 13,918,175 6.381% 2016 97,701 None Timberlake Phase I (E) 11,579,411 11,683,431 7.750% 2003 83,820 10,210,000 Willow Bend 5,886,778 5,962,476 9.500% 1997 53,230 5,714,000 ----------- -----------
Total $57,381,930 $55,919,126 =========== ===========
(A) In July 1994, this loan was refinanced. The interest rate decreased from 9.025% to 8.963%, the maturity date was extended from November 1994 to August 2001 and the monthly payments increased from $50,698 to $61,671. A portion of the proceeds from the new $7,690,000 first mortgage loan was used to repay the existing first mortgage loan of $6,741,000.
(B) In May 1993, this loan was refinanced. The interest rate decreased from 10.5% to 9.13%, the maturity date was extended from November 1994 to June 2001 and the monthly payments decreased from $49,927 to $48,026. A portion of the proceeds from the new $5,900,000 first mortgage loan was used to repay the existing first mortgage loan of $5,627,810.
(C) In July 1994, this loan was refinanced. The interest rate decreased from 9.025% to 8.95%, the maturity date was extended from November 1994 to August 2001 and the monthly payments increased from $28,745 to $41,653. A portion of the proceeds from the new $5,200,000 first mortgage loan was used to repay the existing first mortgage loan of $3,822,000.
(D) In accordance with the 1989 loan modification, the interest rate will be adjusted on certain "adjustment dates". The next adjustment date is June 1, 1998 with subsequent adjustments every five years thereafter. In addition, 50% of property cash flow must be paid annually and will be applied against the outstanding principal on the loan. Upon the sale or refinancing of the property, the lender will participate in a percentage of the proceeds in excess of the outstanding mortgage debt.
(E) In October 1993, this loan was refinanced. The interest rate decreased from 9.875% to 7.75%, the maturity date was extended from October 1993 to November 2003 and the monthly payments decreased from $110,160 to $83,820. The proceeds from the new $11,700,000 first mortgage loan were used to repay the existing first mortgage loan of $12,091,471.
During 1994, 1993 and 1992, the Partnership incurred interest expense on mortgage notes payable to unaffiliated parties of $4,969,653, $5,853,947 and $7,612,695 and paid interest expense of $4,969,653, $6,213,241 and $7,304,710, respectively.
The Partnership's loans described above all require current monthly payments of principal and interest.
Five-year scheduled maturities of the mortgage notes payable are approximately as follows:
1995 $ 8,478,000 1996 715,000 1997 6,386,000 1998 723,000 1999 777,000
4. Management Agreements:
As of December 31, 1994, all of the properties owned by the Partnership are managed by a third-party management company. These management agreements provide for annual fees of 5% of gross operating receipts.
5. Settlement of Litigation:
In June 1992, the Partnership reached a settlement with the seller of the Forest Ridge - Phase I and Highpoint - Phase II apartment complexes. Under the terms of the settlement, the Partnership received cash of $426,000 and the Partnership and seller released all claims against one another. Settlement income of $426,000 was recognized in connection with this transaction.
The Partnership also reached a settlement with the seller of the Sahara Palms Apartments for proration amounts the seller owed the Partnership pursuant to the original management and guarantee agreement. The Partnership received $145,767 in 1992 pursuant to the settlement. The Partnership also received a payment of $393,641 in August 1992 from the General Partner, who voluntarily agreed to reimburse the Partnership for a portion of the seller's obligations due to the contract dispute with the seller. Settlement income of $55,861 was recognized in connection with this transaction.
6. Investment in Joint Ventures with Affiliates:
The Partnership owns 48.4%, 25% and 15.4% joint venture interests in Pinebrook Apartments, North Hill Apartments and Seabrook Apartments, respectively. The joint venturers are affiliates of the Partnership with investment objectives similar to those of the Partnership. During 1994 and 1992, the Partnership made net capital contributions of $154,393 and $127,755, respectively and during 1993, the Partnership received a net capital distribution of $42,153.
Pinebrook Apartments was acquired by a joint venture ("Joint Venture") consisting of the Partnership and an affiliate. The Partnership and the affiliate hold participating percentages in the Joint Venture of 48.43% and 51.57%, respectively. In February 1995, the Joint Venture sold the property for a sale price of $6,140,000. From the proceeds of the sale, the Joint Venture paid approximately $5,097,952, including accrued interest, to the third party mortgage holders in full satisfaction of the outstanding amount of the loans. Additionally, the Joint Venture paid approximately $758,299 to Pinebrook Limited Partnership in full satisfaction of the outstanding amount of its loan, of which the Partnership's share is $367,244. The Joint Venture paid $184,200 as a brokerage commission to an unaffiliated party and approximately $25,975 representing closing and other costs and in 1995 will recognize a gain of $1,814,970. The Joint Venture received proceeds of $13,315 from the sale of the property.
North Hill Apartments is owned by a joint venture ("Joint Venture") in which the Partnership and an affiliate have participating percentages of 25% and 75%, respectively. The $18,700,000 tax-exempt bond issue which funded the first mortgage financing collateralized by the property was in technical default due to the insolvency of the guarantor of the bonds. In April 1993, the Joint Venture and the trustee for the bondholders entered into an agreement in which the loan was modified and the trustee agreed to forebear from commencing foreclosure proceedings while the Joint Venture sought alternate financing. In December 1994, the bonds which funded the previous North Hill Apartments mortgage loan were repaid. The interest rate increased from 6.75% to 8.09% and
the maturity date was extended from December 1994 to December 2024. As a condition of the new agreement, on January 1, 2005, at the discretion of both the Joint Venture and the lender, the bonds will either be repaid or remarketed. Under the terms of the loan, monthly payments increased from $105,188 to $124,920. The Joint Venture repaid the existing mortgage loan of $18,700,000 with proceeds from the new mortgage loan of $16,795,600, which was net of a discount of $84,400, proceeds of a $1,350,000 note from an unaffiliated party, and Joint Venture cash reserves, which included amounts previously held in escrow by the trustee which were refunded to the Joint Venture in conjunction with the refinancing (see Note 9 of Notes to Financial Statements).
The $1,350,000 note to an unaffiliated party is non-interest bearing, is not collateralized by the property, and will be repaid only to the extent net sales proceeds exceed a certain predetermined level.
7. 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 return 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 $1,989,169 more than the tax loss of the Partnership for the same period.
8. 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 $738,965 None $790,418 $59,512 $834,668 $71,081 Reimbursement of expenses to General Partner at cost: Accounting 61,640 25,026 58,782 4,865 44,257 3,234 Data processing 53,294 10,763 32,212 6,338 35,212 2,919 Investor communications 20,271 8,230 18,986 1,571 11,713 856 Legal 12,118 4,920 9,444 782 18,522 1,353 Other 15,653 6,355 19,649 1,626 25,258 1,846 Portfolio management 49,554 20,119 59,473 4,868 31,938 2,334
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed all 7 of the Partnership's properties until the affiliate was sold to a third party in November 1994.
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 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 $146,555 $98,035 and $117,746 for 1994, 1993 and 1992, respectively.
9. Extraordinary Items:
(a) North Hill Apartments is owned by a joint venture consisting of the Partnership and an affiliate. In connection with the December 1994 North Hill Apartments refinancing, the joint venture received a refund of the escrow
account held by the trustee representing the amount which would have been paid to Mutual Benefit Life Insurance Company as its 1% guaranty fee on the original mortgage loan. As a result, the joint venture recognized a $534,659 extraordinary gain on forgiveness of debt in 1994, of which $133,665 represents the Partnership's share.
(b) During 1993, title to the Suncrest Village Apartments was relinquished through foreclosure. The Partnership had suspended debt service payments in February 1993 in an attempt to modify the terms of the mortgage loan, which would have matured in 1994. The Partnership wrote-off the mortgage loan balance of $10,478,532, accrued real estate taxes of $140,710, security deposit of $27,716, and the property basis of $7,528,380, net of accumulated depreciation of $3,495,674. The Partnership recognized an extraordinary gain of $3,118,578 during 1993 for financial statement purposes.
(c) During 1993, the Partnership completed the refinancing of the $12,091,471 Timberlake - Phase I first mortgage loan and obtained a new first mortgage loan from an unaffiliated lender in the amount of $11,700,000. The Partnership received a $362,744 discount from the previous lender for prepayment of the mortgage note which was recognized as an extraordinary gain on debt forgiveness.
10. Property Sale:
During 1993, the Partnership sold the Sahara Palms Apartments for an all cash sale price of $13,200,000. From the proceeds of the sale, the Partnership paid $12,356,625 in full satisfaction of the property's mortgage loans. The basis of the property was $8,906,204, net of accumulated depreciation of $4,134,055, and the Partnership recognized a gain on the sale of the property of $4,194,237.
11. Subsequent Event:
In January 1995, the Partnership made a distribution of $413,485 ($5.00 per Interest) to the holders of Limited Partnership Interests for the fourth quarter of 1994.
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois Limited Partnership)
See notes (a) through (g)
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois Limited Partnership)
See notes (a) through (g)
BALCOR REALTY INVESTORS 85-SERIES I A REAL ESTATE LIMITED PARTNERSHIP (An Illinois Limited Partnership)
NOTES TO SCHEDULE III
(a) Consists of legal fees, appraisal fees, title costs, other related professional fees and capitalized construction period interest.
(b) Guaranteed income earned on properties under the terms of certain management and guarantee agreements was recorded by the Partnership as a reduction of the basis of the property to which the guaranteed income related.
(c) The aggregate cost of land for Federal income tax purposes is $13,595,151 and the aggregate cost of buildings and improvements for Federal income tax purposes is $63,571,184. The total of these is $77,166,335.
(d) Reconciliation of Real Estate -----------------------------
1994 1993 1992 ---------- ---------- ----------
Balance at beginning of year $78,321,158 $102,266,703 $102,266,703
Additions during year: Improvements None 118,767 None
Deductions during year: Foreclosure of investment property None (11,024,054) None Cost of real estate sold None (13,040,258) None ----------- ------------ ------------
Balance at close of year $78,321,158 $ 78,321,158 $102,266,703 ============ ============ ============
Reconciliation of Accumulated Depreciation ------------------------------------------
1994 1993 1992 ---------- ---------- ----------
Balance at beginning of year $25,101,954 $30,515,232 $27,949,977
Depreciation expense for the year 1,925,074 2,216,451 2,565,255 Accumulated depreciation of foreclosed investment property None (3,495,674) None Accumulated depreciation of real estate sold None (4,134,055) None ------------ ------------ ------------
Balance at close of year $27,027,028 $25,101,954 $30,515,232 ============ ============ ============
(e) See descriptions of the mortgage notes payable in Note 3 of Notes to Financial Statements.
(f) Depreciation expense is computed based upon the estimated useful lives of 30 years for buildings and improvements and five years for furniture and fixtures.
(g) This amount consists primarily of a reduction of basis due to a provision
for investment property write down during 1989.