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 June 30, 1994
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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 0-13233
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BALCOR PENSION INVESTORS-V
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(Exact name of registrant as specified in its charter)
Illinois 36-3254673
- - ------------------------------- -------------------
(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 PENSION INVESTORS-V
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1994 and December 31, 1993
(Unaudited)
ASSETS
1994 1993
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Cash and cash equivalents $ 14,578,623 $ 23,623,906
Escrow deposits - restricted 977,830 379,685
Accounts and accrued interest receivable 1,194,800 1,285,486
Deferred expenses, net of accumulated
amortization of $268,346 in 1994
and $172,787 in 1993 161,444 257,003
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16,912,697 25,546,080
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Investment in loans receivable:
Loans receivable - wrap-around, first
and junior mortgages 55,300,437 45,482,975
Investment in acquisition loan 8,548,520 8,587,042
Less:
Loans payable - underlying mortgages 4,198,703 9,160,291
Allowance for potential loan losses 5,957,614 5,957,614
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Net investment in loans receivable 53,692,640 38,952,112
Loans in substantive foreclosure (net of
allowance of $1,300,000) 11,548,672
Real estate held for sale (net of allowance
of $6,055,000 in 1994 and 1993) 41,730,697 41,430,697
Investment in joint ventures - affiliates 5,238,315 3,222,981
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100,661,652 95,154,462
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$117,574,349 $120,700,542
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LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued interest payable $ 169,105 $ 266,687
Due to affiliates 288,808 136,721
Other liabilities, principally escrow
deposits and accrued real estate taxes 1,591,845 927,341
Security deposits 350,774 290,169
Mortgage note payable 2,245,353
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Total liabilities 2,400,532 3,866,271
Partners' capital (439,305 Limited Partnership
Interests issued and outstanding) 115,173,817 116,834,271
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$117,574,349 $120,700,542
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The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Interest on loans receivable, loans in
substantive foreclosure and from
investment in acquisition loans $ 4,458,689 $ 7,948,877
Less interest on loans payable -
underlying mortgages 296,893 900,673
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Net interest income on loans receivable 4,161,796 7,048,204
Income from operations of real estate
held for sale 1,935,797 1,240,897
Interest on short-term investments 330,359 531,698
Participation income 6,271,284
Participation in income of joint ventures -
affiliates 281,142 186,249
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Total income 6,709,094 15,278,332
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Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 1,000,000
Amortization of deferred expenses 95,559 16,846
Mortgage servicing fees 65,658 80,750
Administrative 660,134 716,836
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Total expenses 821,351 1,814,432
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Income before equity in loss from investment
in acquisition loan 5,887,743 13,463,900
Equity in loss from investment in
acquisition loan (38,522) (49,378)
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Net income $ 5,849,221 $ 13,414,522
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Net income allocated to General Partner $ 584,922 $ 1,341,452
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Net income allocated to Limited Partners $ 5,264,299 $ 12,073,070
============= =============
Net income per Limited Partnership Interest
(439,305 issued and outstanding) $ 11.98 $ 27.48
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Distributions to General Partner $ 634,552 $ 1,659,597
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Distributions to Limited Partners $ 6,875,123 $ 22,953,686
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Distributions per Limited Partnership
Interest $ 15.65 $ 52.25
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The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Income:
Interest on loans receivable, loans in
substantive foreclosure and from
investment in acquisition loans $ 2,458,360 $ 4,282,482
Less interest on loans payable -
underlying mortgages 91,392 267,910
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Net interest income on loans receivable 2,366,968 4,014,572
Income from operations of real estate
held for sale 771,889 470,357
Interest on short-term investments 150,748 289,896
Participation income 68,284
Participation in income of joint ventures -
affiliates 152,883 91,420
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Total income 3,442,488 4,934,529
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Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 500,000
Amortization of deferred expenses 11,040 8,423
Mortgage servicing fees 32,824 35,501
Administrative 321,583 427,248
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Total expenses 365,447 971,172
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Income before equity in loss from investment
in acquisition loan 3,077,041 3,963,357
Equity in loss from investment in
acquisition loan (19,261) (24,689)
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Net income $ 3,057,780 $ 3,938,668
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Net income allocated to General Partner $ 305,778 $ 393,867
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Net income allocated to Limited Partners $ 2,752,002 $ 3,544,801
============= =============
Net income per Limited Partnership Interest
(439,305 issued and outstanding) $ 6.26 $ 8.07
============= =============
Distribution to General Partner $ 195,247 $ 1,354,524
============= =============
Distribution to Limited Partners $ 2,921,378 $ 20,208,030
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Distribution per Limited Partnership Interest $ 6.65 $ 46.00
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The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1994 and 1993
(Unaudited)
1994 1993
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Operating activities:
Net income $ 5,849,221 $ 13,414,522
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in loss from investment in
acquisition loan 38,522 49,378
Participation in income of joint
ventures - affiliates (281,142) (186,249)
Amortization of deferred expenses 95,559 16,846
Provision for potential losses on
loans, real estate and accrued
interest receivable 1,000,000
Accrued interest income due at maturity (431,240) (345,767)
Collection of interest income due at
maturity 616,266
Net change in:
Escrow deposits - restricted (598,145) (392,421)
Accounts and accrued interest
receivable 90,686 1,585,953
Accounts and accrued interest payable (97,582) (192,968)
Due to affiliates 152,087 38,377
Other liabilities 664,504 343,662
Security deposits 60,605 11,423
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Net cash provided by operating activities 5,543,075 15,959,022
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Investing activities:
Capital contributions to joint venture -
affiliate (5,625)
Distributions from joint venture - affiliate 215,480 181,951
Collection of principal payments on loans
receivable 212,778 37,160,166
Improvements to real estate (300,000) (124,879)
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Net cash provided by investing activities 128,258 37,211,613
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Financing activities:
Distributions to Limited Partners (6,875,123) (22,953,686)
Distributions to General Partner (634,552) (1,659,597)
Principal payments on loans payable -
underlying mortgages (271,717) (445,735)
Repayment of loans payable - underlying
mortgages (4,689,871) (22,110,234)
Principal payments on mortgage notes payable (4,004) (76,387)
Repayment of mortgage note payable (2,241,349)
Payment of deferred expenses (64,493)
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Net cash used in financing activities (14,716,616) (47,310,132)
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Net change in cash and cash equivalents (9,045,283) 5,860,503
Cash and cash equivalents at beginning
of period 23,623,906 24,859,520
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Cash and cash equivalents at end of period $ 14,578,623 $ 30,720,023
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The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
Several reclassifications have been made to the previously reported 1993
statements in order to provide comparability with the 1994 statements. In the
opinion of management, all adjustments necessary for a fair presentation have
been made to the accompanying statements for the six months and quarter ended
June 30, 1994, and all such adjustments are of a normal and recurring nature.
2. Interest Expense:
During the six months ended June 30, 1994 and 1993, the Partnership incurred
and paid interest expense on mortgage notes payable for properties held during
the quarter of $34,585 and $142,968, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the six
months and quarter ended June 30, 1994 are:
Paid
--------------------
Six Months Quarter Payable
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Mortgage servicing fees $ 65,668 $ 43,766 $ 10,941
Property management fees 254,279 137,145 40,860
Reimbursement of expenses to
the General Partner, at cost:
Accounting 16,848 13,725 38,876
Data processing None None 110,931
Investor communications 2,527 2,059 5,229
Legal 2,708 2,206 8,898
Portfolio management 19,061 15,528 57,579
Other 7,819 6,370 15,494
4. Subsequent Event:
In July 1994, the Partnership made a distribution of $1,757,220 ($4.00 per
Interest) to the holders of Limited Partnership Interests which represented the
quarterly distribution for the second quarter of 1994.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors-V (the "Partnership") is a limited partnership formed
in 1983 to invest in wrap-around mortgage loans and first mortgage loans and,
to a lesser extent, other junior mortgage loans. The Partnership raised
$219,652,500 from sales of Limited Partnership Interests and utilized these
proceeds to fund a net of thirty-four loans. Currently, there are ten loans
outstanding in the Partnership's portfolio, and the Partnership is operating
eight properties acquired through foreclosure and two investments in joint
ventures with affiliates.
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 1993 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Net Income
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In March 1993, the borrower of the wrap-around mortgage collateralized by the
Valley West Shopping Center prepaid the loan in full. In connection with this
prepayment, the Partnership received additional interest and participation
income of approximately $7,900,000. In addition, in April 1993, the borrower of
the wrap-around mortgage collateralized by the Lake Worth Mobile Home Park
prepaid the mortgage note, in connection with which the Partnership recognized
additional interest income. As a result, net income decreased during the six
months and quarter ended June 30, 1994 as compared to the same periods in 1993.
Further discussion of the Partnership's operations is summarized below.
1994 Compared to 1993
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Interest income on loans receivable decreased during the six months ended June
30, 1994 as compared to the same period in 1993 due to the Valley West loan
prepayment in March 1993 and the Lake Worth loan prepayment in April 1993. The
Lake Worth loan prepayment also resulted in a decrease in interest income on
loans receivable during the quarter ended June 30, 1994 as compared to the same
period in 1993. In addition, the Partnership received significant participation
income from the Valley West loan prepayment.
Interest expense on loans payable decreased during the six months ended June
30, 1994 as compared to the same period in 1993 due to the Valley West loan
prepayment and the purchase of the Seven Trails West Apartments underlying loan
in March 1994. The latter transaction also resulted in a decrease in interest
expense on loans payable during the quarter ended June 30, 1994 as compared to
the same period in 1993.
The Partnership's four non-accrual loans at June 30, 1994 are collateralized by
Fairview Plaza I and II located in Charlotte, North Carolina; Seven Trails West
Apartments located in West Saint Louis, Missouri; Springwells Park Apartments
located in Dearborn, Michigan; and Villa Medici Apartments located in Overland
Park, Kansas. For non-accrual loans, income is recorded only as cash payments
are received from the borrowers. The funds advanced by the Partnership for
these non-accrual loans totaled approximately $26,770,000, representing
approximately 14% of the original funds advanced. Certain of these non-accrual
loans are collateralized by properties located in areas which are experiencing
weak rental markets due to various factors, including adverse local economic
conditions, which have resulted in declining rental and occupancy rates. The
reduced cash flows from these properties have adversely affected the borrowers'
abilities to make mortgage payments to the Partnership on a timely basis.
During the six months ended June 30, 1994, the Partnership received cash
payments totaling approximately $1,725,000 of net interest income on these four
loans. Under the terms of the original loan agreements, the Partnership would
have received approximately $1,971,000 of net interest income during the six
months ended June 30, 1994.
Income from operations of real estate held for sale represents net property
operations on the Huntington Meadows apartment complex located in Arlington,
Texas; the Comerica Plaza office building located in Dallas, Texas; the Union
Tower office building located in Lakewood, Colorado; The Glades on Ulmerton
apartment complex located in Largo, Florida; the International Teleport office
building located in Alameda County, California; the Plantation apartment
complex located in Temple Terrace, Florida; the Granada apartment complex
located in Hillsborough County, Florida; and the Waldengreen apartment complex
located in Orlando, Florida. These eight properties comprise approximately 35%
of the Partnership's portfolio based on original funds advanced. The
Partnership foreclosed on the Plantation, Granada and Waldengreen apartment
complexes in April, June and September 1993, respectively. In addition, the
Partnership completed a major repair and renovation program at The Glades on
Ulmerton apartment complex in 1993 which resulted in improved operations in
1994. These increases were partially offset by the lease-up of the
International Teleport Office Building which has resulted in higher leasing
costs in 1994. As a result, income from operations of real estate held for sale
increased for the six months and quarter ended June 30, 1994 as compared to the
same periods in 1993. See Liquidity and Capital Resources for further
information.
Due to the Valley West and Lake Worth loan prepayments and the timing of the
subsequent distributions to partners, the Partnership's cash balances were
significantly higher during 1993, which resulted in a decrease in interest
income on short-term investments for the six months and quarter ended June 30,
1994 as compared to the same periods in 1993.
Participation in income of joint ventures - affiliates represents the
Partnership's 25% share of the income of the Whispering Hills Apartments and
22% share of the income of the 45 West 45th Street Office Building loan which
was reclassified to investment in joint ventures - affiliates, effective
January 1994. The addition of the 45 West 45th Street Office Building in 1994
resulted in an increase in income during the six months and quarter ended June
30, 1994 as compared to the same periods in 1993.
The allowance for potential losses provides for potential loan losses and is
based upon loan loss experience for similar loans and for the industry, upon
prevailing economic conditions and the General Partner's analysis of specific
loans in the Partnership's portfolio. The Partnership did not recognize a
provision for potential losses during the six months ended June 30, 1994. While
actual losses may vary from time to time because of changes in circumstances
(such as occupancy rates, rental rates, and other economic factors), the
General Partner believes that adequate recognition has been given to loss
exposure in the portfolio at June 30, 1994.
As a result of the prepayment of the underlying mortgage on The Glades on
Ulmerton Apartments and the full amortization of the related deferred expenses,
amortization expense increased during the six months ended June 30, 1994 as
compared to the same period in 1993.
Due to the loan foreclosures and prepayments during 1993, the total amount of
loans outstanding decreased, resulting in decreased mortgage servicing fees
during the six months and quarter ended June 30, 1994 as compared to the same
periods in 1993.
Legal fees incurred during 1993 in connection with foreclosures, non-accrual
loans and loan defaults were the primary reason administrative expenses
decreased during the six months and quarter ended June 30, 1994 as compared to
the same periods in 1993.
Liquidity and Capital Resources
- - -------------------------------
The Partnership's cash flow provided by operating activities during the six
months ended June 30, 1994 was generated by interest income received from the
Partnership's loans receivable and short-term investments, and cash flow from
the operation of the Partnership's properties held for sale. This cash flow was
partially offset by the payment of administrative expenses and mortgage
servicing fees. This cash flow and Partnership reserves were utilized for
financing activities primarily consisting of distributions to Limited Partners
and the General Partner, the prepayment of the underlying mortgage loan on The
Glades on Ulmerton Apartments and the purchase of the underlying mortgage loan
on Seven Trails West Apartments. The Partnership's cash or near cash position
also fluctuates during each quarter, initially decreasing with the payment of
Partnership distributions for the previous quarter, and then gradually
increasing each month in the quarter as mortgage payments and cash flow from
property operations are received.
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 unless otherwise indicated. A deficit is
considered to be significant once it exceeds $250,000 annually or 20% of the
property's rental and service income. All eight properties held by the
Partnership at June 30, 1994, are generating positive cash flow, as compared to
five of the six properties held by the Partnership at June 30, 1993, excluding
Granada Apartments which was acquired through foreclosure in June 1993. The
Glades on Ulmerton apartment complex, located in Largo, Florida, generated a
significant cash flow deficit after debt service payments during the six months
ended June 30, 1993 as a result of extensive repairs completed at the property
during 1993. In addition, the Partnership prepaid the $2,241,349 underlying
mortgage on this property in February 1994. Significant leasing costs of
approximately $300,000 were incurred in 1994 at the International Teleport
Office Building. These costs were not included in classifying the cash flow
performance of the property since they are non-recurring expenditures. Had
these costs been included, the property would have been classified as
generating a significant cash flow deficit for the six months ended June 30,
1994. The General Partner's goals are to maintain high occupancy levels, while
increasing rents where possible, and to monitor and control operating expenses
and capital improvement requirements at the properties. The General Partner
will also examine the terms of any mortgage loans collateralized by its
properties, and may refinance or, in certain instances, use Partnership
reserves to repay such loans.
Because of the current weak real estate markets in certain cities and regions
of the country, attributable to local and regional market conditions such as
overbuilding and recessions in local economies and specific industry segments,
certain borrowers have requested that the Partnership allow prepayment of
mortgage loans. The Partnership has allowed some of these borrowers to prepay
such loans, in some cases without assessing prepayment premiums, under
circumstances where the General Partner believed that refusing to allow such
prepayment would ultimately prove detrimental to the Partnership in light of
the probable inability of the properties to generate sufficient revenues to
keep loan payments current. In other cases, borrowers have requested prepayment
in order to take advantage of lower available interest rates. In these cases,
the General Partner evaluates the request for prepayment along with the market
conditions on a case by case basis, and in some cases the Partnership collects
substantial prepayment premiums.
In addition, certain borrowers have failed to make payments when due to the
Partnership for more than ninety days and, accordingly, these loans have been
placed on non-accrual status (income is recorded only as cash payments are
received). The General Partner has negotiated with some of these borrowers
regarding modifications of the loan terms and has instituted foreclosure
proceedings under certain circumstances. Such foreclosure proceedings may be
delayed by factors beyond the General Partner's control such as bankruptcy
filings by borrowers and state law procedures regarding foreclosures. Further,
certain loans made by the Partnership have been restructured to defer and/or
reduce interest payments where the properties collateralizing the loans were
generating insufficient cash flow to support property operations and debt
service. In the case of most loan restructurings, the Partnership receives
concessions, such as increased participations or additional interest accruals,
in return for modifications, such as deferral or reduction of basic interest
payments. There can be no assurance, however, that the Partnership will receive
actual benefits from the concessions.
In March 1994, the Seven Trails West Apartments loan matured and was extended
for two years on the same terms as the previously modified loan, except for an
increase in the interest rate from 10% to 11%. In connection with this
extension, the Partnership received a $147,000 extension fee. In addition, in
March 1994 the $4,689,871 underlying first mortgage loan on the property was
purchased by the Partnership.
The borrower of the loan collateralized by Cinnamon Square Apartments had
previously repaid the loan except for accrued interest in the amount of
$1,141,771 which was payable pursuant to the terms of a note executed by the
borrower. In April 1994, the Partnership received $600,000 as a discounted pay-
off of the note. In accordance with its accounting policies, the Partnership
did not reflect this note in its financial statements; therefore, the
discounted pay-off has been recognized as interest income during the second
quarter of 1994.
The loan collateralized by the Villa Medici apartment complex was placed in
default by the Partnership in 1991. This borrower subsequently filed for
protection under the U.S. Bankruptcy Code. The Partnership anticipates
acquiring title to the property during the latter half of 1994. In addition, in
April 1993, the Partnership accelerated the second mortgage loan collateralized
by the Springwells Park Apartments. During December 1993, this borrower filed
for protection under the U.S. Bankruptcy Code. See Item 1. Legal Proceedings
for additional information.
The Partnership and three affiliated partnerships (the "Participants") funded a
$23,000,000 mortgage loan collateralized by the 45th Street Office Building.
The Partnership funded $5,000,000 of the total loan amount for a participating
percentage of approximately 22%. In September 1991, the loan was placed in
default. The Participants expect to file foreclosure proceedings during 1994.
The loan collateralized by the Noland Fashion Square shopping center located in
Independence, Missouri, is recorded by the Partnership as an investment in an
acquisition loan. The Partnership has recorded its share of the 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.
Distributions to Limited Partners can be expected to fluctuate for various
reasons. Generally, distributions are made from Cash Flow generated by interest
and other payments made by borrowers under the Partnership's mortgage loans and
by the operations of the Partnership's properties. Loan prepayments and
repayments can initially cause Cash Flow to increase as prepayment premiums and
participations are paid; however, thereafter, prepayments and repayments will
have the effect of reducing Cash Flow. These fluctuations can be partially
offset if prepayment or repayment proceeds are reinvested in new mortgage
loans. If such proceeds are distributed rather than reinvested, Limited
Partners will receive a return of capital and the dollar amount of Cash Flow
available for distribution thereafter can be expected to decrease. Distribution
levels can also vary as loans are placed on non-accrual status, modified or
restructured and, if the Partnership has taken title to properties through
foreclosure or otherwise, as a result of property operations.
In July 1994, the Partnership made a distribution of $1,757,220 ($4.00 per
Interest) to the holders of Limited Partnership Interests which represented the
quarterly distribution for the second quarter of 1994. The level of the regular
quarterly distribution remained the same as the first quarter of 1994. In
addition, during April 1994, the Partnership paid $146,435 to the General
Partner as its distributive share of the Cash Flow distributed for the first
quarter of 1994 and made a contribution of $48,812 to the Early Investment
Incentive Fund.
During the quarter ended June 30, 1994, the General Partner used amounts placed
in the Early Investment Incentive Fund to repurchase 1,374 Interests from
Limited Partners at a total cost of $429,856.
The General Partner presently expects to continue making cash distributions
from the Cash Flow generated from property operations and by the receipt of
mortgage payments, less payments on the underlying loans, fees to the General
Partner and administrative expenses. The General Partner believes it has
retained, on behalf of the Partnership, an appropriate amount of working
capital to meet current cash or liquidity requirements which may occur.
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. The Partnership's use of
participations for loans receivable is intended to provide a hedge against the
impact of inflation; sharing in cash flow or rental income and/or the capital
appreciation of the properties securing the loans should result in increases in
the total yields on the loans as inflation rises.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- - --------------------------
Springwells Park Apartments:
The Partnership received three promissory notes in 1990 totaling $4,200,000
representing unpaid amounts upon the partial repayment of the first mortgage
loan secured by the Springwells Park Apartments (the "Property"). One of the
notes collateralized by a second mortgage on the Property was subsequently
placed in default. In May 1993, the Partnership filed a claim against the
borrower and a principal of the borrower (the "Guarantor") to enforce a
guarantee by the Guarantor (Circuit Court of Wayne County, Michigan, Balcor
Pension Investors-V v. Springwells Properties Limited Partnership, et. al.,
Case No.: 93-313288CH). The borrower filed a counterclaim in this action
alleging lender liability claims against the Partnership. On June 3, 1994, a
judgment was entered which awarded the Partnership approximately $2,300,000
from the Guarantor, and the counterclaims filed by the borrower against the
Partnership alleging lender liability claims were dismissed with prejudice. On
May 10, 1994, the borrower filed an appeal of the dismissal of the
counterclaims and the award. No hearing date on the appeal has been set.
In October 1993, the holder of the first mortgage loan collateralized by the
Property, the Federal National Mortgage Association ("FNMA"), filed non-
judicial foreclosure proceedings against the Property. Subsequently, in
December 1993, the borrower filed bankruptcy proceedings under Chapter 11 of
the U.S. Bankruptcy Code (In re Springwell Properties Limited Partnership, U.S.
Bankruptcy Court for the Eastern District of Michigan, Case No.: 93-53186-G).
On May 18, 1994, a motion filed by FNMA to lift the stay imposed by the
Bankruptcy Court in order to proceed with a foreclosure of the Property was
granted. On May 27, 1994, FNMA was the successful bidder for the Property at
the foreclosure sale. Each of the borrower and the Partnership (as a junior
mortgage holder) have six months from the day of the foreclosure sale to redeem
the Property, or else FNMA will own the Property and the Partnership's second
mortgage lien will be extinguished. FNMA has signed an agreement to extend the
redemption period and allow the borrower to repay the loan at a discount for
$11,500,000 through December 23, 1994, in satisfaction of FNMA's loan of
$13,000,000. The borrower has also filed a motion to dismiss the bankruptcy
case. No hearing date has been set. The Partnership is negotiating with FNMA
for a similar type of agreement wherein the Partnership would have until early
1995 to redeem the Property at a discount from the amount of FNMA's loan.
The two remaining notes are collateralized by a second mortgage on other real
property owned by an affiliate of the borrower ("Affiliate") and are also
guaranteed by the Guarantor. Pursuant to litigation commenced in November 1992
against the Guarantor under these two notes, which have been in default since
1990 (Balcor Pension Investors V v. Springwells Properties Limited Partnership
and Anthony S. Brown, Circuit Court of Cook County, Case No.: 92-L-13994), the
Partnership obtained a judgment of approximately $2,770,597 against the
Guarantor on May 31, 1994.
Additionally, in March 1993, the Affiliate filed bankruptcy proceedings under
Chapter 11 of the U. S. Bankruptcy Code (In re Aspen Hotel Partners Limited
Partnership, U. S. Bankruptcy Court, Eastern District of Michigan, Case No.:
93-42354). Pursuant to a plan of reorganization confirmed by the Bankruptcy
Court in February 1994, the Guarantor was obligated to pay the Partnership
$55,000 on or before May 1, 1994, at which time the second mortgage lien would
be released. This amount was not received, and the borrower has filed a motion
for an extension to allow them additional time to pay the $55,000. A hearing
on this motion is set for the latter half of 1994.
Whispering Hills Apartments:
The settlement negotiated between Balcor Mortgage Advisors, Inc., acting as
nominee for the Partnership and an affiliate (together, the "Participants"),
the borrower of the loan collateralized by Whispering Hills Apartments
("Borrower") and the insurance carriers for the seller of the property to the
Borrower ("Seller") was approved on July 5, 1994 by the Bankruptcy Court in
which the Seller and its general partner had filed for protection under Chapter
11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern
District of California, In re Catwil Corporation (Case No.:92-91348) and In re
Sixty Ninth Street Associates (Case No.: 92-91349). As part of the settlement
agreement, the insurance carriers agreed to pay the Participants and the
Borrower a total of $1,000,000 in full satisfaction of their claims in the
bankruptcy case. Additionally, as part of the settlement, the Participants and
the Borrower have dismissed all proceedings filed by them against the Seller
(District Court of Johnson County, Kansas, Arnold L. Porath et al. vs.
Robertson Homes and Catwil Corporation, and Sixty Ninth Street Associates, Case
No.: 88-C-2457), and have withdrawn their claims in the bankruptcy case. The
Participants expect to receive the $1,000,0000 settlement during the third
quarter of 1994, all of which will be applied to the outstanding amount due
under the loan.
Villa Medici Apartments:
In the bankruptcy proceedings filed by the borrower of the first mortgage loan
collateralized by the Villa Medici Apartments (the "Property"), under Chapter
11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of
Kansas, In re Wiston XXIV Limited Partnership (Case No.: 91-40410-11), the
borrower previously appealed the Bankruptcy Court's denial of its plan of
reorganization. In July 1994, the Bankruptcy Court dismissed the borrower's
appeal. As a result, the Partnership has resumed its foreclosure proceedings
in the District Court of Johnson County, Kansas, Balcor Pension Investors-V vs.
Wiston XXIV Limited Partnership, et al., Case No. 92-C-11570, against the
borrower and anticipates acquiring title to the Property during the latter half
of 1994.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
dated January 16, 1984 to the Registrant's Registration Statement on Form S-11
(Registration No. 2-87662) 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. 0-13233) are incorporated
herein by reference.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1994.
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 PENSION INVESTORS-V
By: /s/Thomas E. Meador
----------------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-V, the General Partner
By: /s/Allan Wood
----------------------------------------
Allan Wood
Executive Vice President, and Chief
Accounting and Financial Officer (Principal
Accounting and Financial Officer) of Balcor
Mortgage Advisors-V, the General Partner
Date: August 10, 1994
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