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
- - -----
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - -----
EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-14332
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BALCOR PENSION INVESTORS-VI
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(Exact name of registrant as specified in its charter)
Illinois 36-3319330
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077-9894
- - ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 677-2900
--------------
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-VI
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1994 and December 31, 1993
(Unaudited)
ASSETS
1994 1993
-------------- --------------
Cash and cash equivalents $ 32,731,538 $ 48,820,877
Restricted investment 700,000 700,000
Escrow deposits - restricted 238,983
Accounts and accrued interest receivable 2,772,130 1,798,891
Prepaid expenses 95,767 131,352
Deferred expenses, net of accumulated
amortization of $683,451 in 1994 and
$516,617 in 1993 1,232,952 1,194,206
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37,532,387 52,884,309
-------------- --------------
Investment in loans receivable:
Loans receivable - first mortgages 9,635,000 31,272,000
Investment in acquisition loan 4,477,226 4,507,534
Less:
Allowance for potential loan losses 1,308,594 1,308,594
-------------- --------------
Net investment in loans receivable 12,803,632 34,470,940
Real estate held for sale (net of allowance
of $7,965,000 in 1994 and
$4,065,000 in 1993) 129,508,096 139,802,469
Investment in joint venture with an affiliate 13,212,641 13,655,569
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155,524,369 187,928,978
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$ 193,056,756 $ 240,813,287
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued interest payable $ 412,521 $ 428,576
Due to affiliates 316,383 154,415
Other liabilities, principally escrow
liabilities and accrued real estate taxes 1,537,882 1,090,697
Security deposits 665,027 666,823
Mortgage notes payable 15,700,000 21,257,668
-------------- --------------
Total liabilities 18,631,813 23,598,179
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Affiliates' participation in joint ventures 19,395,530 19,636,325
Partners' capital (1,382,562 Limited
Partnership Interests issued and
outstanding) 155,029,413 197,578,783
-------------- --------------
$ 193,056,756 $ 240,813,287
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1994 and 1993
(Unaudited)
1994 1993
-------------- --------------
Income:
Interest on loans receivable and from
investment in acquisition loan $ 1,681,752 $ 7,118,623
Less interest on loans payable -
underlying mortgages 727,689
-------------- --------------
Net interest income on loans receivable 1,681,752 6,390,934
Income from operations of real estate
held for sale 8,152,065 5,943,729
Interest on short-term investments 1,274,448 381,704
Participation income 3,000,000 932,553
Prepayment premium 210,000
-------------- --------------
Total income 14,108,265 13,858,920
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Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 3,900,000 5,108,000
Amortization of deferred expenses 166,834 118,146
Mortgage servicing fees 51,372 143,453
Administrative 1,066,742 1,021,405
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Total expenses 5,184,948 6,391,004
-------------- --------------
Income before joint venture participations 8,923,317 7,467,916
Participation in income (loss) of joint
ventures - affiliates 863,359 (2,828,217)
Equity in loss from investment in
acquisition loans (30,308) (38,849)
Affiliates' participation in (income) loss of
joint ventures (463,867) 1,038,670
Gain on disposition/sale of property 818,379 3,471,731
-------------- --------------
Net income $ 10,110,880 $ 9,111,251
============== ==============
Net income allocated to General Partner $ 1,011,088 $ 911,125
============== ==============
Net income allocated to Limited Partners $ 9,099,792 $ 8,200,126
============== ==============
Net income per Limited Partnership Interest
(1,382,562 issued and outstanding) $ 6.58 $ 5.93
============== ==============
Distributions to General Partner $ 1,228,944 $ 921,708
============== ==============
Distributions to Limited Partners $ 51,431,306 $ 8,295,372
============== ==============
Distributions per Limited Partnership
Interest $ 37.20 $ 6.00
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1994 and 1993
(Unaudited)
1994 1993
-------------- --------------
Income:
Interest on loans receivable and from
investment in acquisition loan $ 521,269 $ 2,642,334
Less interest on loans payable -
underlying mortgages 239,852
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Net interest income on loans receivable 521,269 2,402,482
Income from operations of real estate
held for sale 2,421,290 2,400,971
Interest on short-term investments 388,329 157,103
Participation income 932,553
Prepayment premium 210,000
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Total income 3,330,888 6,103,109
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Expenses:
Provision for potential losses on loans,
real estate and accrued interest
receivable 3,900,000 1,508,000
Amortization of deferred expenses 58,727 54,519
Mortgage servicing fees 14,830 44,787
Administrative 200,487 284,969
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Total expenses 4,174,044 1,892,275
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(Loss) income before joint venture
participations (843,156) 4,210,834
Participation in income (loss) of joint
ventures - affiliates 215,961 (1,351,353)
Equity in loss from investment in
acquisition loans (10,108) (12,949)
Affiliates' participation in loss of
joint ventures 330,725 197,806
Gain on disposition/sale of property 818,379 3,471,731
-------------- --------------
Net income $ 511,801 $ 6,516,069
============== ==============
Net income allocated to General Partner $ 51,180 $ 651,607
============== ==============
Net income allocated to Limited
Partners $ 460,621 $ 5,864,462
============== ==============
Net income per Limited Partnership
Interest (1,382,562 issued and outstanding) $ 0.33 $ 4.24
============== ==============
Distribution to General Partner $ 307,236 $ 280,236
============== ==============
Distribution to Limited Partners $ 17,973,306 $ 2,765,124
============== ==============
Distribution per Limited Partnership Interest $ 13.00 $ 2.00
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1994 and 1993
(Unaudited)
1994 1993
-------------- --------------
Operating activities:
Net income $ 10,110,880 $ 9,111,251
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on disposition/sale of property (818,379) (3,471,731)
Participation in (income) loss of
joint ventures - affiliates (863,359) 3,452,700
Equity in loss from investment in
acquisition loans 30,308 38,849
Affiliates' participation in income
(loss) of joint ventures 463,867 (1,038,670)
Amortization of deferred expenses 166,834 118,146
Provision for potential losses on
loans, real estate and accrued
interest receivable 3,900,000 5,108,000
Net change in:
Escrow deposits - restricted 238,983 430,259
Accounts and accrued interest
receivable (673,239) (23,804)
Prepaid expenses 35,585
Other assets (323,429)
Accounts and accrued interest payable (16,055) (60,026)
Due to affiliates 161,968 24,581
Other liabilities 447,185 39,849
Security deposits (1,796) 36,731
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Net cash provided by operating activities 13,182,782 13,442,706
-------------- --------------
Investing activities:
Distribution from joint venture
partner - affiliate 621,387 433,770
Collection of principal payments on
loans receivable 21,637,000 12,263,000
Improvements to properties (727,348) (2,086,959)
Payment of deferred expenses (205,580) (401,397)
Proceeds from disposition/sale
of real estate 8,325,000 9,000,000
Costs incurred in connection with
sale of real estate (28,269)
-------------- --------------
Net cash provided by
investing activities 29,650,459 19,180,145
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Financing activities:
Distributions to Limited Partners (51,431,306) (8,295,372)
Distributions to General Partner (1,228,944) (921,708)
Distributions to joint venture partners -
affiliates (839,963) (103,218)
Capital contributions by joint venture
partners - affiliates 135,301 371,133
Repayment of underlying loans payable (5,434,419)
Principal payments on underlying loans
and mortgage notes payable (123,249) (479,608)
-------------- --------------
Net cash used in financing activities (58,922,580) (9,428,773)
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Net change in cash and cash equivalents (16,089,339) 23,194,078
Cash and cash equivalents at beginning
of period 48,820,877 14,279,189
-------------- --------------
Cash and cash equivalents at end of period $ 32,731,538 $ 37,473,267
============== ==============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-VI
(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. These
reclassifications have not changed the 1993 results. In the opinion of
management, all adjustments necessary for a fair presentation have been made to
the accompanying statements for the nine months and quarter ended September 30,
1994, and all such adjustments are of a normal and recurring nature.
2. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the
nine months and quarter ended September 30, 1994 are:
Paid
--------------------
Nine Months Quarter Payable
----------- -------- ---------
Mortgage servicing fees $ 52,162 $ 9,887 $ 9,887
Property management fees 811,208 268,404 82,334
Reimbursement of expenses to
the General Partner, at cost:
Accounting 88,702 61,703 40,799
Data processing 45,557 45,557 106,835
Investor communications 15,861 11,033 7,536
Legal 27,758 19,309 12,965
Portfolio management 106,011 65,574 37,146
Other 16,216 11,280 18,881
3. Property Disposition:
At December 31, 1993, the Partnership classified its investment in the
Northgate and Gatewood apartment complexes as real estate held for sale for
financial statement purposes. In August 1994, the Partnership disposed of its
investment in these properties which had a carrying value of $7,506,621. In
connection with the disposition, the Partnership received proceeds of
$8,325,000, paid off the underlying loan balances related to the properties of
$2,047,463 and recognized a gain for financial statement purposes of $818,379.
4. Subsequent Event:
In October 1994, the Partnership made a distribution of $2,765,124 ($2.00 per
Interest) to the holders of Limited Partnership Interests for the third quarter
of 1994.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors - VI (the "Partnership") is a limited partnership
formed in 1984 to invest in first mortgage loans and, to a lesser extent,
wrap-around loans and junior mortgage loans. The Partnership raised
$345,640,500 through the sale of Limited Partnership Interests and utilized
these proceeds to fund thirty-one loans. Currently, the Partnership has two
loans outstanding in its portfolio, owns eleven properties acquired through
foreclosure and holds minority joint venture interests with affiliates in three
additional real estate investments.
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
- - ----------
Summary of Net Income
- - ---------------------
The Partnership recognized a lower provision for losses on loans and real
estate during the nine months ended September 30, 1994, and received
significant participation income in connection with the February 1994
prepayment of the loans collateralized by the Breckenridge and Highland Green
apartment complexes. In addition, operations improved at several of the
Partnership's properties. These were the primary reasons for an increase in net
income during the nine months ended September 30, 1994 as compared to the same
period in 1993. In addition, the Partnership recognized a gain during the third
quarter of 1993 relating to the sale of Winchester Mall, and a decrease in net
interest income on loans receivable as a result of the 1993 and 1994 loan
prepayments, which partially offset the increase in net income.
The 1993 and 1994 loan prepayments, an increased provision for losses on loans
and real estate and the September 1993 sale of Winchester Mall were the primary
reasons for the decrease in net income during the quarter ended September 30,
1994 as compared to the same period in 1993. Further discussion of the
Partnership's operations is summarized below.
1994 Compared to 1993
- - ---------------------
As a result of the 1993 prepayment of the Miami Free Zone, Pinellas Cascade,
Land of Lakes Pinellas Park and Skyway, Mariwood and Hickory Knoll loans and
the 1994 prepayment of the Breckenridge and Highland Green loans, interest
income on loans receivable, and consequently mortgage servicing fees, decreased
during the nine months and quarter ended September 30, 1994 as compared to the
same periods in 1993. Interest on loans payable - underlying mortgages ceased
in 1994 due to the prepayment of the Miami Free Zone loan in December 1993.
Income from operations of real estate held for sale represents the net property
operations of the following properties:
Occupancy
Date of Percent at
Property Acquisition Sept. 30,1994
- - -------- --------------------------------
Hammond Aire Plaza Shopping Center December 1987 93%
Park Central Office Building April 1988 95%
Brookhollow/Stemmons Center Office
Complex August 1990 94%
Hawthorne Heights Apartments September 1990 96%
Flamingo Pines Shopping Center October 1990 96%
Perimeter 400 Center Office Complex December 1990 97%
Symphony Woods Office Center September 1991 89%
Sun Lake Apartments December 1991 98%
420 North Wabash Office Building October 1992 85%
Woodscape Apartments December 1992 95%
Shoal Run Apartments December 1992 96%
The properties owned by the Partnership at September 30, 1994 comprise
approximately 51% of the Partnership's portfolio based on original funds
advanced. Income from operations of real estate held for sale increased during
the nine months ended September 30, 1994 as compared to the same periods in
1993 due to improved operations at seven of the properties, but in particular
at the Perimeter 400 Center Office Complex resulting from significant leasing
activity in 1993.
The December 1993 and February 1994 loan prepayments resulted in an increase in
cash available for investment and correspondingly, an increase in interest
income on short-term investments during the nine months and quarter ended
September 30, 1994 as compared to the same periods in 1993.
Participation income is recognized from participations in cash flow from
properties securing certain of the Partnership's loans. The Partnership's loans
generally bear interest at contractually fixed interest rates. Some loans also
provide for additional interest in the form of participations, usually
consisting of either a share in the capital appreciation of the property
securing the Partnership's loan and/or a share in the increase of gross income
of the property above a certain level. The Partnership received participation
income totaling $3,000,000 in connection with the February 1994 prepayments of
the loans collateralized by the Breckenridge and Highland Green apartment
complexes. During the third quarter of 1993, the Partnership received
participation income of approximately $818,000 in connection with the August
1993 prepayments of the Skyway, Mariwood and Hickory Knoll and Pinellas
Cascade, Land of Lakes Pinellas Park Loans.
A prepayment premium of $210,000 was received in August 1993 in connection with
the prepayment of the loan collateralized by the Pinellas Cascade, Land of
Lakes Pinellas Park mobile home parks.
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. A provision for potential losses was not
recognized for the Partnership's loans during the nine months ended September
30, 1994. During the quarter ended September 30, 1994, the Partnership
recognized a provision of $3,900,000 to provide for declines in the fair value
of certain of its properties. 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 September 30, 1994.
During 1993, the Partnership incurred leasing commissions in connection with
leases signed at the Perimeter 400 Center and Brookhollow/Stemmons Center
office complexes and the Park Central and 420 N. Wabash office buildings which
resulted in an increase in amortization of deferred expenses during the nine
months ended September 30, 1994 as compared to the same periods in 1993.
The Partnership incurred higher legal fees during the third quarter of 1993
which resulted in a decrease in administrative expenses for the quarter ended
September 30, 1994 as compared to the same period in 1993.
Participation in income (loss) of joint ventures with affiliates represents the
Partnership's 44.63% share of the operations of the Sand Pebble Village and
Sand Pebble Village II apartment complexes, and the Partnership's investment in
the loan collateralized by the 45 West 45th Street Office Building. The
Partnership purchased its share of Sand Pebble Village II in October 1993. The
Partnership recognized its share of a decline in the fair values of the Sand
Pebble Village Apartments and 45 West 45th Street Office Building during 1993.
As a result, the Partnership recognized participation in loss of joint ventures
with affiliates during the nine months and quarter ended September 30, 1993 as
compared to income during the same periods in 1994. In addition, the purchase
of Sand Pebble Village II, which generated income in 1994, contributed to
income from joint ventures with affiliates during 1994.
Affiliates' participation in joint ventures represents the affiliates' shares
of income or loss at the Sun Lake Apartments and Perimeter 400 Center and
Brookhollow/Stemmons Center office complexes. The Partnership incurred
significant leasing costs at the Perimeter 400 Center during 1993, which
resulted in improved operations at the property during 1994. In addition, the
Partnership recognized a decline in the fair values of the Sun Lake Apartments
during the third quarter of 1994 and the Brookhollow/Stemmons Center during the
second quarter of 1993. As a result of the combined effect of these events, the
affiliates recognized participation in income of joint ventures during the nine
months ended September 30, 1994 as compared to a loss during the same period in
1993. In addition, the decline in the fair value of Sun Lake Apartments was the
primary reason for the increase in the affiliates' loss during the quarter
ended September 30, 1994 as compared to the same period in 1993.
The Partnership recognized a gain on the sale of property during the third
quarter of 1993 of $3,471,731 in connection with the sale of Winchester Mall in
September 1993, and during the third quarter of 1994 of $818,379 resulting from
the disposition of the Partnership's investment in the Northgate and Gatewood
apartment complexes in August 1994.
Liquidity and Capital Resources
- - -------------------------------
The cash or near cash position of the Partnership decreased as of September 30,
1994 when compared to December 31, 1993. The Partnership's operating
activities include cash flow from the operations of the Partnership's real
estate held for sale, participation income from the loan prepayments and
interest income from the Partnership's remaining loans. This cash flow, along
with interest earned on short-term investments, was used in part to pay
Partnership administrative expenses and mortgage servicing fees. The
Partnership received funds from investing activities relating primarily to two
loan prepayments and the disposition of its investment in the Northgate and
Gatewood Apartment Complexes in 1994 and used a portion of these funds for
improvements to certain properties. The Partnership's financing activities
included distributions to Partners, the payment of principal on the underlying
loans and mortgage notes payable and the repayment of the underlying mortgage
loans collateralized by the Woodscape Apartments and Northgate and Gatewood
Apartment Complexes. Currently, the Partnership holds approximately $14,373,000
of Mortgage Reductions from previous loan prepayments. The Partnership made
special distributions of Mortgage Reductions of approximately $11,337,000,
$13,826,000 and $15,208,000 in January, April and July 1994, respectively. The
remaining Mortgage Reductions have been retained while the Partnership analyzes
future working capital requirements.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit, or a significant deficit. A deficit is
considered significant if it exceeds $250,000 annually or 20% of the property's
rental and service income, each after consideration of debt service. During
the nine months ended September 30, 1994, all of the Partnership's eleven
properties generated positive cash flow. The Northgate and Gatewood apartment
complexes also generated positive cash flow during 1994. The Partnership also
holds minority joint venture interests in two properties, both of which
generated positive cash during the nine months ended September 30, 1994. The
Partnership incurred leasing costs in 1994 at the Brookhollow/Stemmons Center
Office Complex to lease vacant space and renew existing tenant leases which
were scheduled to expire. These non-recurring expenditures were not included in
classifying the cash flow performance of the property. Had these costs been
included, this property would have operated at a marginal deficit during 1994.
During the nine months ended September 30, 1993, eleven of the Partnership's
twelve properties generated positive cash flow. Winchester Mall, which
generated positive cash flow, was sold in September 1993. The Woodscape
Apartments generated positive cash flow during the first nine months of 1994 as
compared to a marginal deficit during the same period in 1993, due to the
prepayment of the underlying debt on the property in May 1994.
The General Partner is continuing its efforts 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.
The Partnership and three affiliated partnerships (the "Participants") funded a
$23,000,000 mortgage loan collateralized by the 45 West 45th Street Office
Building located in New York, New York. The Partnership funded $9,500,000 of
the total loan amount for a participating percentage of approximately 41%. In
September 1991, the loan was placed in default. In October 1994, the
Participants filed consensual foreclosure proceedings against the borrower. The
Participants expect to obtain title to the property in 1995. See Part II Item
1. Legal Proceedings for additional information.
In February 1994, the borrower of the loan collateralized by the Breckenridge
Apartments located in Richmond, Virginia prepaid the loan in full in the amount
of $15,782,123, comprised of the original funds advanced on the loan
($13,737,000), unpaid interest thereon ($140,423), and additional interest
($1,904,700).
In February 1994, the borrower of the loan collateralized by the Highland Green
Apartments located in Raleigh, North Carolina prepaid the loan in full in the
amount of $9,023,389, comprised of the original funds advanced on the loan
($7,900,000), unpaid interest thereon ($28,089), and additional interest
($1,095,300).
In February 1994, the Partnership entered into a contract for the sale of the
Hammond Aire Plaza Shopping Center. The purchaser failed to satisfy the terms
of the agreement and the contract was terminated. The Partnership has retained
$25,000 of earnest money, including accrued interest thereon, previously
received from the purchaser.
In May 1994, the Partnership prepaid the underlying mortgage loan of $3,386,956
collateralized by the Woodscape Apartments located in Raleigh, North Carolina
and paid a prepayment premium of $101,609.
In July 1994, the Partnership purchased an out parcel of land at the Flamingo
Pines Shopping Center for approximately $280,000.
In August 1994, the Partnership disposed of its investment in the Northgate and
Gatewood apartment complexes which had been classified as real estate held for
sale at December 31, 1993 for financial statement purposes. In connection with
the disposition, the Partnership received $8,325,000 in full consideration of
its investment interest in the properties, and repaid the outstanding
underlying loan balances of $2,047,463 related to the properties. Included in
the proceeds was $325,000 representing consideration for the Partnership's
general partnership interest in the subsidiary partnership which holds title to
the properties.
In November 1994, the Partnership completed the re-marketing of the Sun Lake
Apartments underlying revenue bonds.
The loan collateralized by the Noland Fashion Square Shopping Center has been
recorded by the Partnership as an investment in acquisition loan. The
Partnership has recorded its share of the collateral property operations as
equity in loss from investment in acquisition loan. The Partnership's share of
the loss has no effect on the cash flow of the Partnership, and amounts
representing contractually required debt service are recorded as interest
income.
Distributions to Limited Partners can be expected to fluctuate for various
reasons. 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. If such proceeds are distributed, Limited Partners will have received 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 October 1994, the Partnership paid a distribution of $2,765,124 ($2.00 per
Interest) to the holders of Limited Partnership Interests for the third quarter
of 1994. The level of the regular quarterly distribution is consistent with the
amount distributed for the first and second quarter of 1994. In October 1994,
the Partnership also paid $230,427 to the General Partner as its distributive
share of the Cash Flow distributed for the third quarter of 1994 and made a
contribution to the Early Investment Incentive Fund in the amount of $76,809.
During the nine months ended September 30, 1994, the General Partner used
amounts placed in the Early Investment Incentive Fund to repurchase 12,190
Interests from Limited Partners for a total cost of $1,533,578.
The Partnership expects to continue making cash distributions from the Cash
Flow generated from property operations less payments on the underlying loans,
fees to the General Partner and administrative expenses and by the receipt of
mortgage payments. The level of future distributions is dependent on cash flow
from property operations and the receipt of interest income from mortgage
loans. The General Partner, on behalf of the Partnership, has retained what it
believes is an appropriate amount of working capital to meet current cash or
liquidity requirements which may occur.
On November 4, 1994, The Balcor Company completed the sale of the assets of
Allegiance Realty Group, Inc. to an unaffiliated company, Insignia Allegiance
Management, Inc. ("Insignia"), which is based in Greenville, South Carolina. As
a result of this transaction, Insignia has assumed the management of the
Partnership's properties. This transaction is not expected to result in any
material change to the property management fees paid by the Partnership.
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
equity 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 collateralizing the loans should
result in increases in the total yields on the loans as inflation rates rise.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- - --------------------------
(a) Williams proposed class action
- - ----------------------------------
With respect to the proposed class action lawsuit filed in the U. S. District
Court, Northern District of Illinois (Paul Williams and Beverly Kennedy, et al.
vs. Balcor Pension Investors, et al., Case No. 90-C-0726), against the
Partnership and certain affiliated entities, in May 1993, the Court issued an
opinion and order denying the plaintiffs' motion for class certification based
in part on the inadequacy of the individual plaintiffs representing the
proposed class. Further, the Court granted the defendants' motion for certain
sanctions against plaintiffs' counsel and ordered the plaintiffs' counsel to
pay the defendants' attorneys' fees incurred with the class certification
motion. The defendants filed a petition for reimbursement of their fees and
costs from plaintiffs' counsel which remains pending. A motion previously filed
by the plaintiffs seeking to dismiss the defendants' counterclaim for fraud was
denied on August 18, 1994.
In July 1993, the Court gave plaintiffs leave to retain new counsel and to
propose new individual class representatives. The plaintiffs retained new
counsel and proposed three new individual class representatives. The
defendants conducted discovery regarding the proposed new class representatives
and, in February 1994, filed a response to the plaintiffs' latest motion for
class certification. On July 29, 1994, the Court indicated an intent to certify
a class relating to the plaintiffs' securities fraud claims, but gave leave for
the defendants to file a further motion opposing class certification. On
August 26, 1994, the defendants filed a motion which has been briefed. The
motion remains pending.
(b) 45 West 45th Street Office Building
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As previously reported, the Partnership and three affiliates (together, the
"Participants") funded a $23,000,000 mortgage loan collateralized by the 45
West 45th Street Office Building. The Partnership funded $9,500,000 of the
loan for a participating percentage of approximately 41%. The loan was placed
in default, and after modification negotiations between the Participants and
the borrower were unsuccessful, the borrower agreed to an uncontested
foreclosure. On October 7, 1994, the Participants filed consensual foreclosure
proceedings against the borrower in the Supreme Court of the State of New York,
City of New York, Balcor Mortgage Advisors, Inc. vs. 45 W. 45th Street
Associates (Case No.: 128631/94). The borrower has agreed not to contest the
case. The Participants expect to obtain title to the property during the first
quarter of 1995, and until such time, continues to receive all net cash from
property operations.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement previously filed as Exhibit 4.1 to Amendment
No. 1 to the Registrant's Registration Statement on Form S-11 dated January 4,
1985 (Registration No. 2-93840) 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. 0-14332) are
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1994 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 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-VI
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-VI, 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-VI, the General Partner
Date: November 14, 1994
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