AN APPRAISAL OF
A LIMITED PARTNERSHIP INTEREST
IN
BALCOR PENSION INVESTORS - VI
SKOKIE, ILLINOIS
AS OF MARCH 31, 1996
Valuation Counselors
May 8, 1996
Balcor Mortgage Advisors - VI
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
Attention: Mr. John K. Powell, Jr. - First Vice President
Gentlemen:
In accordance with your request, we are pleased to submit our opinion of the
Value of a Limited Partnership Interest in:
Balcor Pension Investors - VI
(an Illinois Limited Partnership)
as of March 31, 1996.
The term "Value" is defined as follows:
The amount, in dollars, which a Limited Partnership Interest in Balcor
Pension Investors - VI is worth to an investor who owns the Interest with
the intention of holding it to maturity, who fully understands the
complexities of the investment, and has an interest in the potential
interest income and capital appreciation of the Limited Partnership
Interest. The valuation does not represent the amount that would be
received by a holder of a Limited Partnership Interest should he/she
decide to liquidate the Interest prior to the maturity of the Partnership.
The value is subject to the terms and limiting conditions set forth in
this report.
It is anticipated that Balcor Pension Investors - VI will close in the year
2000.
Based on our analyses and conclusions set forth in this report, the estimated
Value of a Limited Partnership Interest in Balcor Pension Investors - VI, as of
March 31, 1996, was in the rounded amount of:
$131.00
=======
Adjusted Original Capital, as of March 31, 1996, was $175.20. Subsequently, a
distribution of $0.86 per Limited Partnership Interest was made as a Return of
Capital, reducing the Adjusted Original Capital to $174.34.
For the quarter ended June 30, 1995, the value of a Limited Partnership
Interest decreased $3.00 as a result of a distribution of $2.50 per Limited
Partnership Interest as a Return of Capital and a shortening of the offering
expense amortization period.
For the quarter ended September 30, 1995, the value of a Limited Partnership
Interest decreased $2.00 as a result of a distribution of $3.92 per Limited
Partnership Interest as a Return of Capital in July 1995.
For the quarter ended December 31, 1995, the value of a Limited Partnership
Interest increased by $1.00. This was the result of an increase of $6,243,000
($4.52 per Limited Partnership Interest) in the value of the Real Estate Owned
and mortgage loan assets, partially offset by a special distribution of
$3,926,000 ($2.38 per Limited Partnership Interest) as a Return of Capital in
October of 1995.
For the quarter ended March 31, 1996, the value of a Limited Partnership
Interest decreased $1.00 due to a reduction of $1.425 million in the value of
the Shoal Run Apartments Real Estate Owned.
It is noted that this is prior to any distributions to the Limited Partners
under the Early Investment Incentive Fund. The present value of a unit of the
Early Investment Incentive Fund, as of March 31, 1996, was in the rounded
amount of:
Investors Level 1 $5.00
=====
Investors Level 2 $5.00
=====
Some of the funds received from prepayments and/or excess funds have been
invested in first mortgage loans vis-a-vis wrap-around mortgage loans. The cash
flows from these first mortgage loans are discounted at a risk rate somewhat
less than that rate used for the wrap-around mortgage loans to compensate for
the lower risk.
The variable components in the total Value of a Limited Partnership Interest
and their values, as estimated by Valuation Counselors Group, Inc./Darby &
Associates Joint Venture (Schedule E), are as follows:
Net Investment in Loans Receivable $ 4,077,400
Unamortized Portion of the Offering
Expenses 5,743,548
Real Estate Acquired Through
Foreclosure 167,017,479
A copy of this report is retained in our files, together with the information
from which the report was compiled.
Respectively submitted.
Sincerely,
/s/Raymond Ghelardi /s/Clement H. Darby
Valuation Counselors Group, Inc. Darby & Associates
Raymond Ghelardi Clement H. Darby
Managing Director President
REG/CHD/ded
cc: Ms. Mary J. Mojica
Ms. Jayne Kosik
Ms. Jane Cody
Ms. Terri Thompson
TABLE OF CONTENTS
Statement of Facts and Limiting Conditions
Introduction
Payments to the Limited Partners and General Partner
Early Investment Incentive Fund
Valuation of a Limited Partnership Interest
Valuation of "The Net Investment in Loans Receivable"
(1) Discussion of Risk Rates
(2) The Present Value of the Return on Funds Advanced
and the Return of Principal
(3) The Present Value of the Equity Build-up and Accrued
Interest
(4) The Present Value of the "Kickers"
Conclusions of Value of the "Net Investment in Loans Receivable"
Valuation of the "Real Estate Acquired Through Foreclosure"6
Calculation of the Unamortized Portion of the Offering Expenses
Calculation of the Value of a Limited Partnership Interest
in Balcor Pension Investors - VI
Calculation of an Interest in the Early Investment Incentive Fund
Schedule
A Distributions to the Limited Partnership
B-1 Unadjusted Balance Sheet of Balcor Pension Investors -
VI as of March 31, 1996
B-2 Statements of Income and Expenses for the quarters
ended March 31, 1996 and 1995
B-3 Statements of Cash Flows for the quarters ended
March 31, 1996 and 1995
C Loan Portfolio Summary
D-1 Real Estate Asset Summary
D-2 Real Estate Appraisal Projections
E Adjusted Balance Sheet of Balcor Pension Investors -
VI as of March 31, 1996
STATEMENT OF FACTS AND LIMITING CONDITIONS
Valuation Counselors Group, Inc./Darby & Associates Joint Venture strives to
clearly and accurately disclose the assumptions and limiting conditions that
directly affect an appraisal analysis, opinion or conclusion. In order to
assist the reader in interpreting this report, such assumptions are set forth
as follows:
Valuation Counselors Group, Inc./Darby & Associates Joint Venture reserves the
right to make adjustments to the analysis, opinion and conclusions set forth in
the report as deemed necessary by consideration of additional or more reliable
data that subsequently may become available.
No opinion is rendered as to legal fee, property title or mortgage notes
related to the appraised assets, which are assumed to be good and marketable.
It is assumed that no opinion is intended in matters that require legal,
engineering or other professional advice which has been or will be obtained
from professional sources; the valuation report will not be used for guidance
in professional matters exclusive of the appraisal and valuation discipline.
Information furnished by others is presumed to be reliable, and where so
specified in the report, has been verified; however, no responsibility, whether
legal or otherwise, is assumed for its accuracy and cannot be guaranteed as
being certain. All facts and data set forth in the report are true and accurate
to the best of the Appraiser's knowledge and belief. No single item of
information was completely relied upon to the exclusion of other information.
All financial data, operating histories and other data relating to income and
expenses attributed to the assets and the Partnerships have been provided by
Management or its representatives and have been accepted without further
verification except as specifically stated in the report.
It should be specifically noted that the valuation assumes the appraised assets
will be competently managed and maintained by financially sound owners over the
expected period of ownership except where noted, specifically in assets during
the period of foreclosure where Balcor may not have control. This appraisal
engagement does not entail an evaluation of management's effectiveness, nor are
we responsible for future marketing efforts and other management or ownership
actions upon which actual results will depend.
Neither the report nor any portions thereof, especially any conclusions as to
value, the identity of the appraiser or Valuation Counselors Group, Inc./Darby
& Associates Joint Venture shall be disseminated to the public through public
relations media, news media, sales media, prospectus or any other public means
of communications without the prior written consent and approval of Valuation
Counselors Group, Inc./Darby & Associates Joint Venture. The date of the
valuation to which the value estimate conclusion applies is set forth in the
report.
The preponderance of working paper support for this valuation is maintained in
the offices of management, Balcor Mortgage Advisors.
Neither the fees nor any of the terms and conditions of the appraisal
assignments given to Valuation Counselors Group, Inc./Darby & Associates Joint
Venture by Balcor Mortgage Advisors are contingent upon the values reported.
No independent investigation of the fair market value of the underlying real
estate assets has been made by Valuation Counselors Group, Inc./Darby &
Associates Joint Venture. We have reviewed the real estate appraisals for
reasonableness, but have assumed the real estate appraisals obtained by Balcor
Mortgage Advisors are independent and accurate. Valuation Counselors assumes
responsibility for real estate appraisals prepared by their own staff.
No independent investigation of the terms and conditions of the mortgage loans
made by Balcor Pension Investors - VI has been made. We have relied on data
furnished to us by Balcor Mortgage Advisors and the validity of the information
was assumed to be correct.
In the event that this appraisal is used as basis to set a market price for a
Limited Partnership Interest in Balcor Pension Investors - VI, no
responsibility is assumed for the seller's inability to obtain a purchaser at
the value reported herein.
The reader of this valuation report should be fully conversant with the terms
and conditions of Balcor Pension Investors - VI Limited Partnership as set
forth in the Prospectus, other related documents, and the prior appraisals of a
Limited Partnership Interest in Balcor Pension Investors - VI.
We have discussed the current status and condition of the mortgage loans and
real estate owned with the management of Balcor Mortgage Advisors and have
accepted their comments as being factual.
INTRODUCTION
Balcor Pension Investors - VI ("BPI - VI") is a Limited Partnership formed in
1984, pursuant to the Uniform Limited Partnership Act of the State of Illinois.
The Partnership serves as an investment vehicle for qualified pension,
profit-sharing and other retirement trusts; bank commingled trust funds for
qualified pension and profit-sharing plans; Individual Retirement Accounts and
HR-10 (Keogh) Plans; government pension and retirement trusts; and other
entities intended to be exempt from Federal income taxation such as certain
religious, charitable, scientific, literary and educational corporations, funds
and foundations. The Limited Partnership provides for Balcor Mortgage Advisors
- - VI to be the General Partner. The sale of the Limited Partnership Interests
were at $250 per interest up to a maximum of 1,450,000 interests. The offering
period, during which interests were sold by Balcor Pension Investors - VI,
commenced January 18, 1985, and terminated October 31, 1985. As of October 31,
1985, the closing date, 1,382,562 Limited Partnership Interests had been sold.
The Partnership's investment objective is to make wrap-around mortgage loans
and other junior mortgage loans and first mortgage loans. As of March 31, 1996,
the loan portfolio consisted of one mortgage loan (Noland Fashion Square).
Unfunded monies totaling $17,036,178(1) were invested in short-term money
market instruments and in demand deposit bank accounts. There are fifteen real
estate owned properties; Perimeter 400 Center, Pembroke Pines Shopping Center,
Hammond Aire Plaza Shopping Center, Park Central Office Park, Stemmons Center,
Hawthorne Heights Apartments, Symphony Woods Office Center, Sun Lake
Apartments, 420 North Wabash, Woodscape Apartments, Sand Pebble Village I, Sand
Pebble Village II, Shoal Run Apartments, Jonathan's Landing and 45 W. 45th
Street. During the quarter ended June 30, 1994, a project adjacent to Sand
Pebble Village, called Sand Dune Apartments (now Sand Pebble Village II), was
acquired for $9,300,000 in order to preserve the integrity of the investment in
Sand Pebble Village.
In the quarter ended December 31, 1987, the Partnership gained ownership of
Hammond Aire Plaza Shopping Center. As of March 31, 1996, it is carried as Real
Estate Owned at $16,138,032 based on cash flows. In addition, the Partnership
increased its funds advanced during that quarter on Symphony Woods Office
Center by $1,400,000. In June, 1987, the Partnership received a $9,625,000
payoff of the Plaza Shopping Center mortgage loan. In January of 1988, the
Claymoor Apartment mortgage loan was prepaid in the amount of $7,832,106.
In the quarter ended June 30, 1988, the Partnership acquired title to Park
Central Office Building through foreclosure and it is valued at $20,692,742
based on its projected 1996 cash flow as of March 31, 1996.
In the quarter ending September 30, 1988, the Partnership funded a $7,434,783
participation in a $18,000,000 (41.30%) mortgage loan on 45 West 45th Street,
New York City. This commitment reflected the Partnership's portion of a $23
million loan package that included three affiliated limited partnerships. The
Partnership's participating percentage, both in the total loan commitment and
as a minority Joint Venture Affiliate, is 41.3%. The Partnership funded an
additional $2,065,217 related to that total loan commitment at the end of the
quarter ended March 31, 1989. On February 2, 1995, the property was foreclosed
and became Real Estate Owned proportionate to the 41.3% interest. As of March
31, 1996, it is valued at $3,459,607 based on projected 1996 cash flow.
Also in the quarter ended June 30, 1988, the Partnership cashed in its $145,000
CD on Lake and Racquet Apartments mortgage loan and fully reserved the balance
in the same quarter. In the quarter ended March 31, 1989, the Partnership
funded a $5,000,000 first mortgage loan on Noland Fashion Square. On April 21,
1989, the Partnership funded a $7,000,000 loan representing its share of an
$11,300,000 loan on Sun Lake Apartments. The property subsequently became Real
Estate Owned and Balcor Pension Investors - VI's 61.95% interest is valued at
$20,148,925 based on projected 1996 cash flow as of March 31, 1996. On June 9,
the Sterling Knolls mortgage loan was paid down to $250,000 and on June 16,
1989 the Executive Hills loan was prepaid in full. On September 8, 1989 the
Meadowbrook mortgage loan was prepaid in the amount of $4,075,987.
On April 26, 1990, the Sterling Knolls Apartments second mortgage loan of
$250,000 was prepaid in full. On June 6, 1990, the Partnership received a
partial paydown of principal, equity kicker and interest on Jonathan's Landing
mortgage loan totaling $2,428,897. The principal reduction was $1,410,000 and
the remaining $9,635,000 was reset to May 1997. The Jonathans Landing mortgage
loan was in default, became Real Estate Owned on July 14, 1995 and is valued at
$10,048,185 based on projected 1996 cash flow as of March 31, 1996.
The Stemmons Center Office Complex was foreclosed upon August 7, 1990. This
Partnership's Interest of 72.50% is carried as Real Estate owned at $8,769,273
based on projected 1996 cash flow as of March 31, 1996. The Hawthorne Heights
Apartment Complex was foreclosed on September 5, 1990, and is carried at a
value of $7,920,600 as of March 31, 1996, based on a projected sale of
$8,300,000.
On October 14, 1987, the Partnership funded a $14,500,000 first mortgage loan
collateralized by the Pembroke Pines Shopping Center (Flamingo Pines) located
in Pembroke Pines, Florida. On October 8, 1990, a foreclosure sale of the
property was held and the Partnership made a successful bid to purchase the
property and acquired title to the property on October 19, 1990, and also
received $750,000 by cashing letters of credit. The property is valued at
$12,255,008 as of March 31, 1996 based on projected 1996 cash flow.
On May 21, 1986, pursuant to a participation agreement executed between the
Partnership and three affiliated limited partnerships, the Partnership funded
$37,000,000 of a $41,000,000 loan (the "Loan"), to an unaffiliated entity
secured by a first mortgage loan on the 357,790 net rentable square foot
Perimeter 400 Center office building (the "Property"), located in Fulton
County, Georgia. The Partnership's share of the Loan was $18,500,000. Certain
requirements of the Loan were not met by the Borrower and the remaining
$4,000,000 of the Loan was not funded. In December 1990, the Borrower advised
the Partnership that due to the current and anticipated market conditions
affecting the cash flow position of the Property, the Borrower would be unable
to make future debt service payments on the Loan. On February 7, 1991, the
Borrower conveyed title to the Property. Balcor Pension Investors - VI's 49.76%
share is valued at $17,219,305 based on projected 1996 cash flow.
In April 1991, the Sand Pebble Village Apartments mortgage loan went into
default. As a result, the Partnership and an affiliated partnership cashed a
letter of credit of $750,000. The Partnership's share of the proceeds of
$337,500 was applied against the principal balance of the loan. The property
became Real Estate Owned in the quarter ended September 30, 1992, and the
Partnership's 44.64% interest is valued at $8,586,474 based on projected 1996
cash flow as of March 31, 1996.
A joint venture consisting of the Partnership and an affiliate (Balcor Pension
Investors - VII) purchased the Sand Dune Apartments in Riverside, CA (Sand
Pebble Village II), adjacent to the Sand Pebble Apartments, on October 26,
1993, for $9,300,000. The joint venture took out a $5,000,000 mortgage loan to
finance the transaction. As of March 31, 1996, its allocated value (44.64%) is
$5,032,770.
The Three Fountains mortgage loan was previously written off. The 420 North
Wabash mortgage loan became Real Estate Owned on October 15, 1992, and is
valued at $8,167,086 based on projected 1996 cash flow as of March 31, 1996.
Ansonia Mall was Real Estate Owned, but was sold for $750,000 on December 23,
1992. Symphony Woods is Real Estate Owned and is valued at $7,116,270 based on
projected 1996 cash flow. Woodscape Apts. became Real Estate Owned on December
14, 1992, and is valued at $9,934,203 as of March 31, 1996, based on projected
1996 cash flow.
On February 25, 1993, Shoal Run Apts. became Real Estate Owned and is valued at
$11,529,000 as of March 31, 1996, based on projected 1996 cash flow.
For the quarter ended June 30, 1993, the Miami Free Zone mortgage loan was
revalued to conform to certain payoff terms whereby deferred interest payments
were reclassified to payment of principal. This resulted in a reduction of
$1,635,000 in the value of the mortgage loan. On December 15, 1993, the loan
was paid off in the net amount of $14,520,989.
On August 25, 1993, the loans on Skyway Mobile Home Park and Pinellas Cascades
Mobile Home Park were paid off in the amounts of $7,423,338 and $6,555,821,
respectively.
On September 30, 1993, Winchester Mall was sold for a gross sale price of
$9,000,000, with a net to the Partnership of $9,058,635.
On February 16, 1994, the Partnership received full prepayment of the
Breckenridge Apartments and Highland Green Apartments loans in the amounts of
$15,782,123 and $9,023,389.
On May 16, 1994, Balcor Pension Investors - VI prepaid the underlying first
mortgage of approximately $3,394,000 on Woodscape Apartments.
On August 1, 1994, the Partnership received $6,345,585 as payment in full on
the Gatewood/Northbrook Apartments mortgage loan.
The stated objectives of Balcor Pension Investors - VI are as follows:
1.Preservation and protection of Limited Partners' capital;
2.Provide the Limited Partners with regular quarterly cash distributions;
3.Provide the Limited Partners with additional cash distributions through
the receipt of deferred interest;
4.Maximize cash distributions over the life of the Partnership (estimated
to be 12 to 15 years) through the receipt of additional interest in
the form of equity participations.
On wrap-around mortgage loans the intent is to generate a higher total return
on investment through the "equity build-up" portion of a wrap-around mortgage
whereby there is a spread in the principal reduction between the wrap-around
mortgage and the underlying mortgage loans. Although there is a mathematical
build-up of this equity during the life of the loan, the material benefit of
the equity build-up normally is not realized until the maturity of the
wrap-around loan - which usually occurs in a period of from ten to fifteen
years from the initial funding of the loan. In addition, there are potential
additional earnings available from a participation in the future gross income
as well as a participation in the appreciated value of the properties on which
Balcor Pension Investors - VI has made mortgage loans to date. These potential
earnings are commonly known as "kickers." It is noted that no value has been
attributed to the kickers on a significant number of the mortgage loans because
of existing or potential problems with the loans.
(1)Source: Balcor Pension Investors - VI Balance Sheet as of March 31, 1996,
Schedule B-1. The Net Investment in Loans Receivable includes funds advanced as
well as earned equity build-up and earned accrued interest, discounted to a
present value, and miscellaneous adjustments.
PAYMENTS TO THE LIMITED PARTNERS AND GENERAL PARTNER
The Limited Partnership, Balcor Pension Investors - VI, is a partial self-
liquidating real estate investment fund. As of March 31, 1996, the Partners'
capital was invested in one real estate loan (Noland Fashion Square). Interest
income and amortization, as well as interests in gross income of certain
properties, after deducting the General Partners' expenses, income and
reserves, is distributed to the Limited Partners under certain formulae, terms
and conditions set forth in the Limited Partnership Agreements and described in
the summary in the previous section. The remaining Limited Partners' capital,
equity build-up and interests in the appreciation of certain properties is
distributed to the Limited Partners upon the maturity and/or the successful
payoff of the loans. The Partnership owns fourteen real estate assets acquired
through foreclosure and one real estate asset acquired by acquisition.
The Prospectus of Balcor Pension Investors - VI indicated that during the
offering period, which expired on October 31, 1985, as well as during the term
of the Partnership, distributions are to be made to the investors. Partnership
to date.
SCHEDULE A
DISTRIBUTIONS TO THE LIMITED PARTNERSHIP
Effective Number of Annual
Date Interests Rate Amount Paid
11/30/85 1,382,562 Offering $7,245,448
period interest
2/28/86 1,382,562 7.20% 6,221,529
5/31/86 1,382,562 7.20 6,221,529
8/31/86 1,382,562 7.20 6,221,529
11/30/86 1,382,562 6.80 5,875,888
12/86 1,382,562 - 345,640
($0.25 per Interest as a Return of Capital.)
2/28/87 1,382,562 5.61 4,838,967
3/87 1,382,562 - 1,382,562
($1.00 per Interest as a Return of Capital.)
5/31/87 1,382,562 6.83 5,875,888
6/87 1,382,562 - 345,640
($0.25 per Interest as a Return of Capital.)
8/31/87 1,382,562 6.84 5,875,888
9/87 1,382,562 - 345,640
($0.25 per Interest as a Return of Capital.)
12/31/87 1,382,562 7.25 6,221,529
3/31/88 1,382,562 7.25 6,221,529
6/30/88 1,382,562 5.08 4,355,070
7/88 2,765,124
($2.00 per Interest as a Return of Capital.)
9/30/88 1,382,562 5.12 4,355,070
12/31/88 1,382,562 5.69 4,838,967
3/31/89 1,382,562 5.69 4,838,967
4/89 9,194,037
($6.65 per Interest as a Return of Capital.)
6/30/89 1,382,562 5.84 4,838,967
7/89 1,382,562 3,871,173
($2.80 per Interest as a Return of Capital.)
Effective Number of Annual
Date Interests Rate Amount Paid
9/30/89 1,382,562 5.91% $4,838,967
12/31/89 1,382,562 5.91 4,838,967
3/31/90 1,382,562 9.29 7,604,091
6/30/90 1,382,562 6.96 5,696,155
7/90 27,443,858
($19.85 per Interest as a Return of Capital.)
9/90 1,382,562 6.45 4,838,967
10/90 1,382,562 - 4,147,686
($3.00 per Interest as a Return of Capital.)
12/31/90 1,382,562 6.54 4,838,967
3/31/91 1,382,562 6.54 4,838,967
6/30/91 1,382,562 6.54 4,838,967
9/30/91 1,382,562 6.54 4,838,967
12/31/91 1,382,562 5.14 3,802,046
1/92 1,382,562 - 1,036,921
($0.75 per Interest as a Return of Capital.)
3/31/92 1,382,562 5.16 3,802,046
6/30/92 1,382,562 5.16 3,802,046
9/30/92 1,382,562 4.46 2,765,124
12/31/92 1,382,562 4.46 2,765,124
3/31/93 1,382,562 3.75 2,765,124
6/30/93 1,382,562 3.75 2,765,124
9/30/93 1,382,562 3.75 2,765,124
12/31/93 1,382,562 7.50 5,530,248
1/94 1,382,562 - 11,337,008
($8.20 per Interest as a Return on Capital)
3/31/94 1,382,562 3.90 2,765,124
4/94 1,382,562 - 13,825,620
($10.00 per Interest as a Return of Capital)
6/30/94 1,382,562 4.10 2,765,124
7/94 1,382,562 - 15,208,182
($11.00 per Interest as a Return of Capital)
9/30/94 1,382,562 4.35 2,765,124
12/3194 1,382,562 4.35 2,765,124
3/31/95 1,382,562 4.35 2,765,124
4/95 1,382,562 - 3,456,405
($2.50 per Interest as a Return of Capital)
6/30/95 1,382,562 5.73 3,594,661
($2.60 per Interest)
7/95 1,382,562 - 5,418,500
($3.92 per Interest as a Return of Capital)
9/30/95 1,382,565 4.50 2,759,352
10/95 1,382,565 - 3,926,270
($2.38 per Interest as a Return of Capital)
12/31/95 1,382,565 4.57 2,765,124
3/31/96 1,382,565 4.57 2,765,124
($2.00 per Interest)
4/96 1,382,565 - 1,189,003
($0.86 per Interest as a Return of Capital)
The Partnership Agreement provides that the General Partner will receive loan
application and loan processing fees paid by borrowers, subject to certain
limitations, when the Partnership funds mortgage loans or issues commitments to
fund mortgage loans and may receive additional loan fees paid by the
Partnership upon full specificity of the offering and the funding of all loans.
The General Partner will service the Partnership`s mortgages and will receive a
mortgage servicing fee, payable not more frequently than monthly, at an annual
rate equal to 1/4 of 1% of the amounts advanced by the Partnership and
outstanding from time to time. The General Partner is also reimbursed for
certain expenses incurred in connection with the organization of and the day to
day operations of the Partnership.
Pursuant to the Partnership Agreement, all profits of the Partnership will be
allocated 90% to the Limited Partners and 10% to the General Partner, and all
losses of the Partnership will be allocated 99% to the Limited Partners and 1%
to the General Partner.
After the termination of the offering and then to the extent that Cash Flow is
distributed, distributions will be made as follows: (I) 90% of such Cash Flow
will be distributed to the Limited Partners, (ii) 7.5% of such Cash Flow will
be distributed to the General Partner, and (iii) an additional 2.5% of such
Cash Flow will be distributed to the General Partner and shall constitute the
Early Investment Incentive Fund. Upon the liquidation of the Partnership, the
General Partner will return to the Partnership for distribution to Early
Investors amounts available in the Early Investment Incentive Fund, if
necessary for Early Investors to receive a return of their Original Capital
plus a specified Cumulative Return based on the date of investment. Subject to
certain limitations, the General Partner may repurchase Interests from existing
Limited Partners from amounts available in the Early Investment Incentive Fund.
As set forth in the Partnership Agreement, the Partnership is obligated to pay
to the purchasers of Limited Partnership Interests an amount equivalent to
interest at the initial rate of 8% per annum on the total purchase price of an
Interest. This rate may be increased or decreased at the sole discretion of the
General Partner. The amounts payable under this provision ceased to accumulate
on October 31, 1985, the termination date of the offering.
EARLY INVESTMENT INCENTIVE FUND
Cash Flow available for distribution will be distributed on a quarterly basis
after the close of the first full operating quarter following the termination
of the offering. Ninety per cent of such Cash Flow will be distributed to
Limited Partners. Ten per cent of such Cash Flow will be paid to the General
Partner as its distributive share from Partnership operations, provided that
25% of the General Partner's share will be allocated to the Early Investment
Incentive Fund described below, and will be returned to the Partnership by the
General Partner at the dissolution of the Partnership if necessary to enable
Early Investors to receive a return of their Original Capital plus a Cumulative
Return determined as follows: (I) for Interests purchased on or before June 30,
1985, 15.0% per year, and (ii) for Interests purchased between July 1, 1985,
and December 31, 1985, 14.0% per year. In the event that on dissolution of the
Partnership, cash available for distribution and the amounts allocated to the
Early Investment Incentive Fund are not sufficient to return to Early Investors
their Original Capital plus the Cumulative Return, the amount of any funds in
the Early Investment Incentive Fund will be distributed first to all Early
Investors until they shall have received a Cumulative Return equal to the rate
described in period (ii) above, and then to those Early Investors who purchased
Interests in period (I) above.
As noted above, 25% of the General Partner's share of Cash Flow shall be
allocated to the Early Investment Incentive Fund when and as distributions of
Cash Flow are made to the Limited Partners and the General Partner. The amounts
in the Early Investment Incentive Fund will be commingled with other assets of
the General Partner and may be utilized to repurchase Interests from Limited
Partners as set forth under "Description of the Partnership Agreement --
Repurchase of Interests."
VALUATION OF A LIMITED PARTNERSHIP INTEREST
The methodology used in estimating the Value of a Limited Partnership Interest
in Balcor Pension Investors - VI is based upon substituting the estimated value
of the mortgage loan portfolio in place of the "Net Investment in Loans
Receivable" as shown on the March 31, 1996, Balance Sheet of Balcor Pension
Investors - VI. In addition, the unamortized portion of the Offering Expenses
is added to the Assets on the same Balance Sheet. The amortization is
calculated by reducing the total Offering Expenses, as set forth in the
financial statements, on a straight line basis, quarterly, to the expiration
date of the loan portfolio. For financial reporting purposes, Balcor Pension
Investors - VI initially deducted the total Offering Expenses from the proceeds
of the Limited Partnership Interest. Where equities exist, they are included in
the Balance Sheet (Schedule E) at their market value based on an independent
real estate appraisals or estimates based on the cash flows of the properties.
Schedules D-1 and D-2 summarize the calculations of Partnership Asset Values
for the Real Estate Acquired Through Foreclosure.
Future General Partner fees and related expenses are not present valued as an
expense because of their unpredictability but rather are taken as a charge in
the quarter incurred.
Valuation Counselors Group, Inc./Darby & Associates Joint Venture has been
retained by Balcor Mortgage Advisors - VI to estimate the Value of a Limited
Partnership Interest in Balcor Pension Investors - VI on a quarterly basis. In
order to accomplish this, we valued the "Net Investment in Loans Receivable" as
well as calculated the "Unamortized Portion of the Offering Expenses."
Cash and Investments in Certificates of Deposit and Marketable Securities are
considered short term investments since eventually all but a working capital
reserve will be funded in real estate loans and real estate owned or returned
to the investor. Consequently, they remain in the valuation at face value in
both Schedules B-1 and E.
A simplified version of the Balance Sheet of Balcor Pension Investors - VI,
prepared by Balcor Mortgage Advisors - VI, before the aforementioned
adjustments, is on the following Schedule B-1. Schedules B-2 and B-3 are
Statements of Income and Expense.
SCHEDULE B-1
UNADJUSTED BALANCE SHEET
BALCOR PENSION INVESTORS - VI
AS OF MARCH 31, 1996
(UNAUDITED)
Assets
Cash & Cash Equivalents $17,036,178
Prepaid Expenses 104,248
Accounts and Accrued Interest Receivable 2,370,824
Interest Receivable on Wrap-around Notes 25,865
Interest Receivable on Short-Term
Investments 96,850
Deferred Expenses 1,863,444
Net Investment in Loans Receivable,
less Discount on Loans Receivable ($0) 4,434,410
Participation in Loss from Acquisition
Loans (14,598)
Allowance for Potential Losses on Loans,
Real Estate and Accrued Interest
Receivable (63,385,985)
Real Estate Held For Sale (1) 193,261,269
Investment in Joint Ventures - affiliates (1) 21,395,970
------------
Total Assets $177,188,475
============
Liabilities
Accounts and Accrued Interest Payable $ 961,130
Due to Affiliates 70,529
Security Deposits and other Liabilities 859,470
Mortgage Notes Payable (Sun Lake Apts.) 15,613,431
-----------
Total Liabilities 17,504,560
Affiliates Participation in Joint Venture 20,483,467
Partners' Capital
(1,382,562 Limited Partnership
Interests) 139,200,448
------------
Total Liabilities and Partners' Capital $177,188,475
============
(1)Perimeter 400, Hammond Aire Plaza Shopping Center, Park Central Office Park,
Stemmons Center, Hawthorne Heights Apartments, Pembroke Pines, Symphony Woods
Office Center, Sun Lake Apts., Sand Pebble Village Apts. I, Sand Pebble Village
II, 420 North Wabash, Shoal Run Apts., 45 W. 45th Street, Jonathan's Landing
and Woodscape.
SCHEDULE B-2
BALCOR PENSION INVESTORS-VI
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1996 and 1995
(UNAUDITED)
1996 1995
---------------- ---------------
Income:
Interest on loans receivable and from
investment in acquisition loan $ 116,938 $ 187,767
Income from operations of real estate
held for sale 3,032,244 3,129,972
Interest on short-term investments 209,658 465,142
---------------- ---------------
Total income 3,358,840 3,782,881
---------------- ---------------
Expenses:
Amortization of deferred expenses 71,597 73,168
Administrative 202,327 297,748
---------------- ---------------
Total expenses 273,924 370,916
---------------- ---------------
Income before joint venture participations 3,084,916 3,411,965
Participation in income of joint
ventures - affiliates 510,460 239,523
Equity in loss from investment in
acquisition loan (14,598) (5,293)
Affiliates' participation in income of
joint ventures (399,523) (393,551)
---------------- ---------------
Net income $ 3,181,255 $ 3,252,644
================ ===============
Net income allocated to General Partner $ 318,125 $ 325,264
================ ===============
Net income allocated to Limited Partners $ 2,863,130 $ 2,927,380
================ ===============
Net income per Limited Partnership
Interest (1,382,562 issued and
outstanding) $ 2.07 $ 2.12
================ ===============
Distributions to General Partner $ 307,236 $ 307,236
================ ===============
Distributions to Limited Partners $ 2,765,124 $ 2,765,124
================ ===============
Distributions per Limited Partnership
Interest $ 2.00 $ 2.00
================ ===============
SCHEDULE B-3
BALCOR PENSION INVESTORS-VI
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1996 and 1995
(UNAUDITED)
1996 1995
---------------- ---------------
Operating activities:
Net income $ 3,181,255 $ 3,252,644
Adjustments to reconcile net income to
net cash provided by operating
activities:
Amortization of deferred expenses 71,597 73,168
Participation in income of joint
ventures - affiliates (510,460) (239,523)
Equity in loss from investment in
acquisition loan 14,598 5,293
Affiliates' participation in income
of joint ventures 399,523 393,551
Net change in:
Escrow deposits (151,828)
Accounts and accrued interest
receivable 28,950 83,962
Prepaid expenses 179,277 (3,034)
Accounts payable 197,388 (20,100)
Due to affiliates 18,829 57,170
Accrued liabilities, principally
real estate taxes 19,940 86,183
Security deposits 75,496 (17,118)
---------------- ---------------
Net cash provided by operating
activities 3,524,565 3,672,196
---------------- ---------------
Investing activities:
Distributions from joint ventures -
affiliates 328,646
Contribution to joint ventures -
affiliates (138,899)
Improvements to properties (114,882)
---------------- ---------------
Net cash provided by or used in
investing activities 328,646 (253,781)
---------------- ---------------
Financing activities:
Distributions to Limited Partners (2,765,124) (2,765,124)
Distributions to General Partner (307,236) (307,236)
Capital contributions by joint venture
partners - affiliates 222,128
Principal payments on mortgage
note payable (43,635)
---------------- ---------------
Net cash used in financing activities (2,893,867) (3,072,360)
---------------- ---------------
Net change in cash and cash equivalents 959,344 346,055
Cash and cash equivalents at beginning
of period 16,076,834 31,007,746
---------------- ---------------
Cash and cash equivalents at end of
period $ 17,036,178 $ 31,353,801
================ ===============
VALUATION OF "THE NET INVESTMENT IN LOANS RECEIVABLE"
The value of the "Net Investment in Loans Receivable" (the loan portfolio) is
equal to the present value of the various income and equity components of the
loan portfolio, discounted at current market rates of interest, commensurate
with the risks, as of March 31, 1996.
The income and equity components of the loan portfolio are as follows:
(1)The present value of the average annual rate of return on funds
advanced (cash received) over the life of the loans,
(2)The present value of the funds advanced, due at maturity,
(3)The present value of the equity build-up for wrap-around mortgage loans
and accrued interest, and
(4)The present value of the "kicker" income, i.e., a share in the future
gross income and the appreciated value, "equity kickers," in certain
properties.
(1) Discussion of Risk Rates
The discount rate applied to the cash flow mathematically expresses risk. Risk
represents the uncertainty related to achievement of the prospective cash
flows. The primary components of risk exposure in fixed income securities are
interest rate risk, inflation risk, market risk, liquidity risk and risk of
default. As previously discussed, the valuation of the assets in question have
been predicated upon the present valuing of the components of the loan
portfolio. Therefore, determination of an appropriate risk rate is essential in
the valuation of the net investment in loans receivable.
Financial theory dictates the necessity of incremental return resulting from
incremental risk. Accordingly, the typical risk/return tradeoff indicates that
investors should demand greater rates of return as the perceived riskiness of
the asset or security increases. In examining an investment situation, a
hypothetical investor would weigh the perceived level of risk against the
return expected from the subject investment. In determining the required rate
of return or discount rate on a particular asset or investment, the
hypothetical investor would also consider returns available from alternative
investment opportunities such as government securities, corporate bonds,
mortgages, real estate and common stock, if applicable.
The subject assets consist of a self-liquidating real estate investment fund
with investments in both real estate loans with varying maturities and real
estate assets. Accordingly, in determining an appropriate risk rate associated
with the subject assets, we have considered alternative and comparable rates of
return in the lending and real estate marketplace as indicated by such sources
as the Wall Street Journal, Real Estate Research Corporation Real Estate
Report, Investment Dealers Digest, Corporate Financing Week, American Council
of Life Insurance Investment Bulletin and the National Association of Real
Estate Investment Trusts.
The following table presents yield rates associated with various types of
government and corporate securities as indicated by the March 29,1996 and
January 3, 1996 Wall Street Journals.
Yield Rates as Indicated by the Wall Street Journal
Security First Quarter 1996 Fourth Quarter 1995
Three Month U.S. Treasury Bills 4.99% 5.04%
Six Month U.S. Treasury Bills 4.97% 5.03%
Prime Rate 8.25% 8.50%
Ten Year U.S. Treasury Bonds 6.60% 5.64%
Twenty Year U.S. Treasury Bonds 6.90% 6.02%
Corporate Bonds
Aaa, Aa 6.72% to 7.60% 6.02% to 6.96%
A, Baa 6.95% to 7.91% 6.23% to 7.31%
Ba, C 9.8% 9.7%
Collateralized Mortgage
Obligations
10 Year 7.90% 6.94%
20 year 8.05% 7.17%
Additionally, information from Moody's Corporate Bond Survey and the Investment
Dealer's Digest indicates the corporate original issue Real Estate Mortgage
Investment Conduit (REMIC) yields from 1988 to 1995 ranged from 7% to 11.3% for
obligations with terms in excess of ten years. A yield difference of one to
three points was exhibited within multiple class REMIC issues where accrued
interest payments did not commence on the (higher yielding) security until
senior class notes were paid in full. A short term issuance collateralized by
elderly living properties exhibited a four point yield differential between
classes.
According to information from the Mortgage-Based Securities Letter, REMIC
issuances in 1994 have decreased substantially from the levels exhibited during
1992 and 1993. Reportedly, many REMIC underwriters and investors incurred
losses due to price corrections in the derivative mortgage securities market.
The price decline was believed to be attributable to several factors including
rising interest rates, increased volatility, average-life extension and lack of
liquidity. According to the Wall Street Journal, new issues of mortgage-backed
securities were down 57% in 1994 as compared to the prior year.
In addition to the previously noted yields on various market securities, we
have also considered mortgage rates associated with various types of commercial
real estate properties. This data is relevant in that it provides an indication
of rates of return associated with similar types of investments. These
statistics have been extracted from the December 29, 1995 and October 1, 1995
editions of the Investment Bulletin published by the American Council of Life
Insurance, is as follows:
Averages
Contract Interest
Rate
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.83% 8.23%
Apartment 7.64% 8.13%
Office Building 7.98% 8.23%
Retail 7.79% 8.17%
Industrial 7.84% 8.21%
Other Commercial 7.73% 8.47%
Yield With
Fees
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 7.85% 8.24%
Apartment 7.67% 8.15%
Office Building 8.00% 8.24%
Retail 7.81% 8.18%
Industrial 7.85% 8.22%
Other Commercial 7.74% 8.51%
Maturity
(Years/Months)
Type of Loan
Property Type Third Quarter Second Quarter
1995 1995
FIXED RATE-FIXED TERM 11/06 11/02
Apartment 10/11 10/09
Office Building 10/0 09/07
Retail 13/05 13/06
Industrial 10/08 10/00
Other Commercial 11/04 12/02
Additionally, we have considered expected capitalization rates and internal
rates of return extracted from "Korpacz Real Estate Investor Surveys, First
Quarter 1996". For comparative purposes, we have also presented similar data
extracted from "Korpacz Real Estate Investor Surveys, Fourth Quarter 1995".
National Market Indicators: First Quarter 1996
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.50% 10.00%-15.00% 12.10%
Free and Clear Equity Cap
Rate 6.25%-11.00% 8.11% 8.00%-12.50% 9.58%
Terminal Cap Rate 7.00%-11.00% 8.56% 8.25%-12.00% 9.62%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.90% 9.00%-14.00% 11.27%
Free and Clear Equity Cap
Rate 8.00%-11.00% 9.47% 7.25%-13.00% 9.29%
Terminal Cap Rate 8.50%-12.00% 9.68% 8.00%-11.00% 9.51%
National
Apartment
Range Average
Free and Clear Equity IRR 10.50%-13.00% 11.38%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.97%
Terminal Cap Rate 8.00%-11.00% 9.29%
National Market Indicators: Fourth Quarter 1995
Retail Office
(National Regional (Central Business
Malls) District)
Range Average Range Average
Free and Clear Equity IRR 10.00%-14.00% 11.55% 10.00%-15.00% 12.15%
Free and Clear Equity Cap
Rate 6.25%-11.00% 7.86% 7.50%-12.50% 9.52%
Terminal Cap Rate 7.00%-11.00% 8.45% 8.25%-12.00% 9.63%
Office National
(National Suburban) Industrial
Range Average Range Average
Free and Clear Equity IRR 10.00%-15.00% 12.04% 9.00%-14.00% 11.31%
Free and Clear Equity Cap
Rate 8.00%-11.50% 9.57% 7.25%-13.00% 9.36%
Terminal Cap Rate 8.50%-12.00% 9.75% 8.00%-11.00% 9.58%
National
Apartment
Range Average
Free and Clear Equity IRR 10.00%-13.00% 11.50%
Free and Clear Equity Cap
Rate 7.50%-10.50% 8.99%
Terminal Cap Rate 8.00%-11.00% 9.31%
Our discount rates have been selected based upon the returns exhibited on
alternative securities and real estate properties as previously presented, in
conjunction with the attributes of the subject assets.
Risk Measurement in Real Estate
As previously discussed, the primary components of risk exposure for fixed
income securities include interest rate risk, inflation risk, market risk,
liquidity risk and default risk. For real estate, these risks are similar and
can be segmented into two categories. The first is systematic risk which
includes all risks external to the property. The remaining risks can be
categorized as nonsystematic risk and includes all risks directly related to
the property. Generally, systematic risk affects the overall market as a whole
and is often referred to as market risk. However, nonsystematic risk is
generally more attributable to the property specifics. Nonsystematic risk can
be further broken down into risk relative to the immediate neighborhood or
local market with the residual risks being unique to the property.
When viewing an investment in a single property, the systematic overall market
risk, the nonsystematic local market risk and the nonsystematic unique property
risks must be weighed in the derivation of an appropriate risk rate (discount
rate) to be applied to anticipated cash flows. The overall market risks would
include such factors which effect the market as a whole. Among these factors
would be the level of interest rates, the economic condition of the nation,
federal tax incentives related to real estate and the expected inflation rate.
Each of these factors can have a direct effect on real estate throughout the
nation.
Nonsystematic local market risks are those that effect a regional area or
neighborhood and are not part of the overall market risk. There are many types
of possible local market risks. Some examples of local market risk include
fluctuations in the local economy, changes in transportation systems, local
crime rates and overbuilding. These local market risks may be severe enough to
override the effects of the overall market risk.
Property unique risks are those which effect the subject property in a manner
more specific than the local market risks. Many of the property unique risks
are similar to the local market risks but are more significant for the subject
property. Some examples of property specific risks would include dependence on
single industries or tenants, crime frequency on the property, changes in
immediate traffic patterns, changes in adjacent zoning or adjacent property
conditions and unanticipated capital improvement requirements. These property
specific risks may have a material impact on the property but may not be
reflected in the local market risks.
Investments in individual property would reflect three groups of risks
including the systematic overall market risks, the nonsystematic local market
risks and the nonsystematic property unique risks. However, modern portfolio
theory recognizes that through investment diversification, the nonsystematic
risks associated with the local market and the unique attributes of the
property can be reduced. Furthermore, with sufficient diversification, a
portfolio can virtually eliminate nonsystematic risk.
The benefits of portfolio diversification are reflected in the improvement of
the portfolio's return-risk ratio. The return-risk ratio measures the return of
the investment relative to the volatility of the return. Generally, the
volatility of return is measured by the standard deviation of the return over a
period of time. Therefore, the return-risk ratio is simply the return of the
investment divided by the standard deviation of the return.
As an example of the application of this ratio, assume that portfolio A invests
in only one type of property in one local market and experiences an average
annual return of 13% over fifteen years with a standard deviation of return of
17%. The return-risk ratio is computed to be 0.76 (13% divided by 17%).
Portfolio A's risk-return ratio can then be compared to the ratio of other
portfolios to evaluate the level of return relative to the risk taken.
To illustrate, assume portfolio B invests in a wide variety of property types
in a numerous geographical regions and only generated an annual return of 12%
over fifteen years. However, the standard deviation of return was only 13%. The
return-risk ratio is computed to be 0.86 (12% divided by 13%). Even though
portfolio A's return exceeded portfolio B's return, the superior return was not
enough to offset the increase in risk. Therefore, an investor would likely
prefer an investment in Portfolio B.
It should be noted, however, that with the reduction in the volatility of
returns, modern portfolio theory also recognizes that there is a reduction in
the level of potential return. This is because that volatility generally
provides the opportunity for added returns. This is the basis for the axiom
that greater risk equals greater reward. However, an investor generally
requires that the increase in risk is offset by an increase in potential
return. Conversely, if an investor is looking for a lower risk, the investor
would expect lower returns.
In the instant case, the discount rates selected for the appraisal of
individual properties which are expected to be sold in the near future reflect
all the systematic and nonsystematic risks associated with each individual
property. The discount rates are derived considering overall market factors,
local market factors and property unique factors. However, for those properties
which are valued as real estate investments on the basis of their cash flows,
the discount rate applied reflects the benefits of reduced nonsystematic risks
through portfolio diversification. These benefits include the offsetting of
local market risks and property unique risks of each property with the local
market risks and property unique risks of the other properties in the
portfolio. As a result, the volatility of returns for each property is offset
by the volatility of returns of the other properties in the portfolio. The
discount rates applied to the latter category of properties are derived from
market data on portfolio returns, which reflect the dichotomies described
above.
(2) The Present Value of the Return on Funds Advanced and the
Return of Principal
Schedule C lists one first mortgage loan (Noland Fashion Square) funded as of
March 31, 1996, with total funds advanced of $4,797,441.
In order to determine the present value of the return on funds advanced, the
interest due in the loan in each year to maturity was calculated on the basis
of the average annual rate of return on funds advanced. This interest was
discounted to a current present value at a market rate of interest. After
reviewing various market rates in effect as of March 31, 1996, including those
set forth in (1) Discussion of Risk Rates, as well as others, and recognizing
the present rates of similar new mortgage loans, we have concluded that a rate
of 10.25% is commensurate for the risk of the first mortgage loan in this Fund.
The present value of the funds advanced is the present value of the principal
of the loan at maturity, discounted to a present value at 10.25%. The loan is
summarized in Schedule C, which follows a later section of this report.
The total present value of the principal and interest on the mortgage loan in
this Partnership, as of March 31, 1996, is:
$4,077,400
(3) The Present Value of the Equity Build-up and Accrued
Interest
This is a first mortgage loan so no value has been assigned to Equity Build-up
or Accrued Interest.
(4) The Present Value of the Income and Equity Kickers
No value has been assigned to the kickers.
BALCOR PENSION INVESTORS VI SCHEDULE C
LOAN PORTFOLIO SUMMARY
AS OF: 31-Mar-96
DISCOUNT RATES: FIRSTS
DATE DATE DISCOUNTING CURRENT
LOAN OF OF TERM FUNDS
DEAL TYPE FUNDING MATURITY (IN QUARTERS) ADVANCED
------------------------------------------------------------------------
1 NOLAND FASHION SQUAREFIRST 31-Jan-89 31-Jan-2000 16.00 4,797,441
----------
4,797,441
LESS: GP 10% SHARE
LESS: GP 5% SHARE (on Loans Valued at Funds Outstanding)
NET TO LIMITED PARTNERS
1 Valued at less than the amount of Funds Advanced
10.25% 10.25% 10.25% 10.25%
DISCOUNTED DISCOUNTED DISCOUNTED
FUNDS DEBT EQUITY DISCOUNTED
ADVANCED SERVICE BUILD-UP NOTES
---------------------------------------------
NOLAND FASHION SQUARE 4,077,400 0 0 0
---------------------------------------------
4,077,400 0 0 0
LESS: GP 10% SHARE 0 0 0
LESS: GP 5% SHARE (on Loans
Valued at Funds Outstanding) 0
---------------------------------------------
NET TO LIMITED PARTNERS 4,077,400 0 0 0
=============================================
10.25% 15.00% 15.00%
DISCOUNTED DISCOUNTED DISCOUNTED TOTAL
ACCRUED INCOME EQUITY CURRENT
INTEREST KICKERS KICKERS VALUATION
---------------------------------------------
NOLAND FASHION SQUARE 0 0 0 4,077,400
---------------------------------------------
0 0 0 4,077,400
LESS: GP 10% SHARE 0 0 0 0
LESS: GP 5% SHARE (on Loans
Valued at Funds Outstanding) 0
---------------------------------------------
NET TO LIMITED PARTNERS 0 0 0 4,077,400
=============================================
CONCLUSIONS OF VALUE OF THE "NET INVESTMENT IN LOANS RECEIVABLE"
The value of the "Net Investment in Loans Receivable" is the sum of the present
values of the various components of the loans described in the foregoing
sections of this report. Our conclusions are summarized as follows:
(1) The Present Value of the Return on Funds
Advanced and Return of Principal $4,077,400
(2) The Present Value of the Equity Build-up
and Accrued Interest 0
(3) The Present Value of the Income and
Equity Kickers 0
----------
Total Value of the "Net Investment in
Loans Receivable" as of March 31, 1996 $4,077,400
==========
VALUATION OF THE "REAL ESTATE ACQUIRED THROUGH FORECLOSURE"
Balcor Pension Investors - VI began in 1985 as a Limited Partnership with an
investment objective to make mortgage loans. Because of the general decline in
the real estate market over the past several years, it was necessary for the
Partnership to acquire a number of the assets, secured by the mortgage loans,
through foreclosure or accepting the deed in lieu of foreclosure. As of March
31, 1996, the Partnership owned fourteen Real Estate Assets Acquired Through
Foreclosure and one asset acquired by acquisition in the quarter ended December
31, 1993 (Sandpebble Village II). Several others have been sold or liquidated
prior to this date.
In arriving at an estimate of the value of each asset a number of factors were
considered. Important to the analysis was the Partnership's policy on the
assets as to whether an asset would be retained until the maturity of the
Partnership or sold in the near-term. The decision to sell in the near-term
might be on the basis that there is no long-term potential for the asset to
materially increase in value or that substantial dollars might be necessary to
renovate and repair the asset. Also, the Partnership may have received an offer
to purchase the property for a price that would be difficult to refuse, based
on the factors known at this time. The decision to hold an asset until the
maturity of the Partnership indicates it is to be considered as an investment
with the assumption that the asset will grow in value.
Schedule D-1 lists the fifteen Real Estate Assets in Balcor Pension Investors -
VI presently owned by the Partnership. The first column indicates the Asset
Present Value without regard to potential payments to the General Partner. The
remaining columns set forth the calculations to determine if there is Excess
Value, and, if so, what amount is due the General Partner. The last column is
the Partnership Asset Value, which is equal to the Asset Present Value minus
the General Partner Share of Excess. The Partnership Asset Value includes the
Underlying Mortgage, where applicable, since the Underlying Mortgage is
deducted later in Schedule E - Liabilities.
Schedule D-2 is a summary of the calculations of the Asset Present Value for
each real estate asset in Balcor Pension Investors - VI. Hammond Aire Shopping
Center had previously been included at a proposed sale value of $17,000,000 but
the sale contract failed to close, resulting in a value based on expected cash
flows. Sandpebble Village II is valued on the basis of its allocated value of
44.64% with the Partnership's affiliate, Balcor Pension Investors - VII,
assuming the total debt. The remaining assets are valued as real estate
investments on the basis of their projected 1996 cash flows. The projected cash
receipts up to the projected sale date are discounted at 10.00% to a present
value. The final years' net cash receipts are capitalized at 9.00% and the
residual is discounted at 10.50% to a present value. There is a sales cost
allowance of 2.50% on the gross price.
The valuation methodology of the Real Estate Assets Acquired Through
Foreclosure represents a procedure modification commencing with the quarterly
valuation as of December 31, 1992. Prior to that date the valuation relied
heavily on independent appraisals which, by the very nature of the ever
changing real estate market, quickly became obsolete. In addition, it is noted
that, in many cases, when Balcor took over the management of the assets, there
was a marked improvement in the cash flow. In those funds where it is expected
that the assets may be held to maturity to maximize their value, the assets are
generally valued on the basis of each asset's predicted cash flows. These cash
flows and the residual values are discounted at rates more related to holding
the asset to its maturity rather than forcing a sale in today's market. As
previously stated, where the intention is to sell the asset in the near-term,
an independent appraisal or an internal estimate of value predicated on a
near-term sale may be more appropriate.
It should be noted that, as the modifications in the valuation procedures were
made, there were significant changes in the asset value of some of the
individual Real Estate Assets Acquired Through Foreclosure, however, the
overall value of the portfolio did not change substantially. It is believed
that individual values arrived as a result of the revised procedures would
better represent their current asset values based on the assumptions set forth
herein.
SCHEDULE D-1
Real Estate Asset Summary
BALCOR PENSION INVESTORS VI
ASSET
PRESENT LESS: LESS:
VALUE UNDERLYING FUNDS
PROPERTY 31-Mar-96 MORTGAGE OUTSTANDING
- --------------------------------------------------------------
Sun Lake Apartments(61.95%) 20,148,925 15,700,000 6,163,675
Symphony Woods 7,116,270 0 11,900,000
Pembroke Pines
(Flamingo Pines) 12,255,008 0 13,863,812
Perimeter 400 Cntr (49.76%) 17,219,305 0 18,500,000
Hammond Aire S/C 16,138,032 0 20,715,310
Park Central Office Park 20,975,356 0 18,149,214
Stemmons Center (72.50%) 8,769,273 0 20,300,000
Hawthorne Heights 8,134,000 0 6,000,000
Sandpebble Village (44.64%) 8,586,474 0 9,662,500
Sandpebble Vill. II(44.64%) 5,377,199 0 1,932,909
Woodscape 10,271,380 0 6,899,607
420 N. Wabash 8,167,086 0 11,300,000
Shoal Run Apartments 11,760,000 0 9,450,000
45 W. 45th Street (41.30%) 3,459,607 0 9,500,000
Jonathan's Landing (47.00%) 10,094,094 0 9,635,000
-----------------------------------
168,472,009 15,700,000 173,972,027
GENERAL
PARTNER
SHARE OF NET PARTNERSHIP
EXCESS EXCESS EXCESS ASSET VALUE
PROPERTY VALUE AT 10% VALUE 31-Mar-96
- --------------------------------------------------------------------------
Sun Lake Apartments(61.95%) (1,714,750) 0 (1,714,750) 20,148,925
Symphony Woods (4,783,730) 0 (4,783,730) 7,116,270
Pembroke Pines
(Flamingo Pines) (1,608,804) 0 (1,608,804) 12,255,008
Perimeter 400 Cntr (49.76%) (1,280,695) 0 (1,280,695) 17,219,305
Hammond Aire S/C (4,577,278) 0 (4,577,278) 16,138,032
Park Central Office Park 2,826,142 282,614 2,543,528 20,692,742
Stemmons Center (72.50%) (11,530,727) 0 (11,530,727) 8,769,273
Hawthorne Heights 2,134,000 213,400 1,920,600 7,920,600
Sandpebble Village (44.64%) (1,076,026) 0 (1,076,026) 8,586,474
Sandpebble Vill. II(44.64%) 3,444,290 344,429 3,099,861 5,032,770
Woodscape 3,371,773 337,177 3,034,596 9,934,203
420 N. Wabash (3,132,914) 0 (3,132,914) 8,167,086
Shoal Run Apartments 2,310,000 231,000 2,079,000 11,529,000
45 W. 45th Street (41.30%) (6,040,393) 0 (6,040,393) 3,459,607
Jonathan's Landing (47.00%) 459,094 45,909 413,185 10,048,185
-----------------------------------------------
(21,200,018) 1,454,530 (22,654,548)167,017,479
SCHEDULE D-2
Real Estate Appraisal Projections
BALCOR PENSION INVESTORS VI
REO - Discounted Cash Flow Analysis as of31-Mar-96
PROJECTION SOURCE: APPRAISAL PROJECTIONS and BALCOR PROJECTIONS
DISCOUNT RATES:
Net Cash Receipts 10.00%
Residual Value 10.50%
Sales Commission 2.50%(on Gross Price)
Quarter Factor (for formula reference) 1
ACTUAL ACTUAL ACTUAL ACTUAL
1992 1993 1994 1995
Net Cash Receipts ---------------------------------------------
Reo Investments
Sun Lake Apartments (61.95%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 1,064,158 1,160,901 1,208,016
TI/LC/Capital 0 172,855 220,938 253,138
---------------------------------------------
Net Cash Receipts 0 891,303 939,963 954,878
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Symphony Woods
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 779,118 505,399 674,572
TI/LC/Capital 0 218,146 362,271 379,390
---------------------------------------------
Net Cash Receipts 0 560,972 143,128 295,182
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Pembroke Pines(Flamingo Pines)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 637,119 998,840 1,036,436
TI/LC/Capital 0 183,190 143,555 (152,475)
---------------------------------------------
Net Cash Receipts 0 453,929 855,285 1,188,911
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
ACTUAL ACTUAL ACTUAL ACTUAL
1992 1993 1994 1995
Net Cash Receipts ---------------------------------------------
Reo Investments
Perimeter 400 Center (49.76%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 1,040,314 1,326,060 1,694,872
TI/LC/Capital 0 721,429 371,156 605,331
---------------------------------------------
Net Cash Receipts 0 318,884 954,904 1,089,541
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Hammond Aire S/C
Sale Price
NOI B4 TI/LC/Capital 0 0 0 1,867,163
TI/LC/Capital 0 0 0 (5,260)
---------------------------------------------
Net Cash Receipts 0 0 0 1,872,423
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Park Central Office Park
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 1,766,682 1,881,771 1,773,996
TI/LC/Capital 0 619,189 452,129 913,165
---------------------------------------------
Net Cash Receipts 0 1,147,493 1,429,642 860,832
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Stemmons Center (72.50%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 661,911
TI/LC/Capital 0 0 0 328,116
---------------------------------------------
Net Cash Receipts 0 0 0 333,794
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
ACTUAL ACTUAL ACTUAL ACTUAL
1992 1993 1994 1995
Net Cash Receipts ---------------------------------------------
Reo Investments
Hawthorne Heights Apts
Sales Value
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts 0 0 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 10.00%
Sandpebble Village (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 465,860 715,922 740,517
TI/LC/Capital 0 19,266 90,910 76,752
---------------------------------------------
Net Cash Receipts 0 446,594 625,012 663,765
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Sandpebble Village II (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 475,719 450,841
TI/LC/Capital 0 0 56,758 50,439
---------------------------------------------
Net Cash Receipts 0 0 418,961 400,402
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Woodscape
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 215,005 792,413 993,395
TI/LC/Capital 0 327,872 306,368 103,066
---------------------------------------------
Net Cash Receipts 0 (112,867) 486,045 890,328
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
420 N. Wabash
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 356,113 401,500 244,501
TI/LC/Capital 0 338,697 417,472 223,135
---------------------------------------------
Net Cash Receipts 0 17,416 (15,972) 21,366
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
ACTUAL ACTUAL ACTUAL ACTUAL
1992 1993 1994 1995
Net Cash Receipts ---------------------------------------------
Reo Investments
Shoal Run Apartments
Sales Value
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts 0 0 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
45 W. 45th Street (41.30%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 151,054
TI/LC/Capital 0 0 0 111,510
---------------------------------------------
Net Cash Receipts 0 0 0 39,544
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Jonathan's Landing (47.00%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 260,446
TI/LC/Capital 0 0 0 161,378
---------------------------------------------
Net Cash Receipts 0 0 0 99,068
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
TOTAL NCR FROM INVESTMENTS 0 3,723,725 5,836,968 8,710,034
Budget Pro-ject Pro-ject Pro-ject
1996 1997 1998 1999
---------------------------------------------
Sun Lake Apartments (61.95%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,227,520 1,281,083 1,337,429 1,396,207
TI/LC/Capital 210,290 148,680 247,552 262,420
---------------------------------------------
Net Cash Receipts 1,017,230 1,132,403 1,089,876 1,133,787
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Symphony Woods
Balcor Internal Projections
NOI B4 TI/LC/Capital 698,000 612,781 546,612 772,576
TI/LC/Capital 374,384 46,074 272,181 202,701
---------------------------------------------
Net Cash Receipts 323,616 566,707 274,431
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 8,166,872
Pembroke Pines (Flamingo Pines)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,099,721 1,120,742 1,110,229 1,185,697
TI/LC/Capital 37,946 22,159 39,830 11,219
---------------------------------------------
Net Cash Receipts 1,061,775 1,098,583 1,070,399 1,174,478
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Perimeter 400 Center (49.76%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,679,826 1,478,555 1,711,635 0
TI/LC/Capital 421,991 287,522 263,662 0
---------------------------------------------
Net Cash Receipts 1,257,836 1,191,033
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 18,279,046
Hammond Aire S/C
Sale Price
NOI B4 TI/LC/Capital 1,766,607 1,768,699 1,816,114 1,855,209
TI/LC/Capital 147,709 16,690 100,676 34,766
---------------------------------------------
Net Cash Receipts 1,618,898 0 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 19,144,216
Budget Pro-ject Pro-ject Pro-ject
1996 1997 1998 1999
---------------------------------------------
Park Central Office Park
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,711,719 1,731,798 2,027,811 2,238,876
TI/LC/Capital 701,227 410,884 716,032 198,762
---------------------------------------------
Net Cash Receipts 1,010,492 1,320,914 1,311,779 2,040,114
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 24,334,249
Stemmons Center (72.50%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 716,960 811,749 792,729 872,963
TI/LC/Capital 181,536 0 104,050 0
---------------------------------------------
Net Cash Receipts 535,425 811,749 688,679
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 9,457,100
Hawthorne Heights Apts
Sales Value
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts 0
GROWTH RATE 1.04
CAPPED VALUE @ 10.00% 0
Sandpebble Village (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 755,226 783,408 813,205 844,116
TI/LC/Capital 76,370 78,566 78,566 137,491
---------------------------------------------
Net Cash Receipts 678,856 704,841 734,638 706,625
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 9,399,744
Sandpebble Village II (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 473,206 490,825 509,479 528,829
TI/LC/Capital 51,122 48,925 48,925 85,620
---------------------------------------------
Net Cash Receipts 422,084 441,900 460,553 443,210
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 5,887,721
Budget Pro-ject Pro-ject Pro-ject
1996 1997 1998 1999
---------------------------------------------
Woodscape
Balcor Internal Projections
NOI B4 TI/LC/Capital 914,021 957,221 1,003,159 0
TI/LC/Capital 143,566 132,480 96,000 0
---------------------------------------------
Net Cash Receipts 770,455 824,741
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 10,771,556
420 N. Wabash
Balcor Internal Projections
NOI B4 TI/LC/Capital 900,160 762,381 778,211 0
TI/LC/Capital 255,432 0 0 0
---------------------------------------------
Net Cash Receipts 644,728 762,381
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 8,430,619
Shoal Run Apartments
Sales Value
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 0
45 W. 45th Street (41.30%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 397,999 355,658 322,517 342,324
TI/LC/Capital 256,461 95,219 89,054 26,840
---------------------------------------------
Net Cash Receipts 141,538 260,439 233,463 315,484
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 3,988,960
Jonathan's Landing (47.00%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 882,923 920,840 961,275 1,003,454
TI/LC/Capital 202,578 108,288 135,360 135,360
---------------------------------------------
Net Cash Receipts 680,345 812,552 825,915 868,094
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 11,193,587
TOTAL NCR FROM INVESTMENTS 10,163,277 9,928,244 6,689,734 6,681,792
Pro-ject Pro-ject Pro-ject Pro-ject
2000 2001 2002 2003
---------------------------------------------
Sun Lake Apartments (61.95%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,457,522 1,521,480 0 0
TI/LC/Capital 232,270 240,400 0 0
---------------------------------------------
Net Cash Receipts 1,225,251
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 16,242,302
Symphony Woods
Balcor Internal Projections
NOI B4 TI/LC/Capital 877,077 0 0 0
TI/LC/Capital 151,331 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Pembroke Pines (Flamingo Pines)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,217,253 1,214,845 0 0
TI/LC/Capital 4,015 19,947 0 0
---------------------------------------------
Net Cash Receipts 1,213,238
GROWTH RATE 1.04
CAPPED VALUE @ 9.00% 13,140,874
Perimeter 400 Center (49.76%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Hammond Aire S/C
Sale Price
NOI B4 TI/LC/Capital 1,828,308 0 0 0
TI/LC/Capital 62,550 0 0 0
---------------------------------------------
Net Cash Receipts 0 0 0 0
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Pro-ject Pro-ject Pro-ject Pro-ject
2000 2001 2002 2003
---------------------------------------------
Park Central Office Park
Balcor Internal Projections
NOI B4 TI/LC/Capital 2,264,713 0 0 0
TI/LC/Capital 200,142 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Stemmons Center (72.50%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Hawthorne Heights Apts
Sales Value
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 10.00%
Sandpebble Village (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 876,183 0 0 0
TI/LC/Capital 92,236 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Sandpebble Village II (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 548,902 0 0 0
TI/LC/Capital 58,716 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Pro-ject Pro-ject Pro-ject Pro-ject
2000 2001 2002 2003
---------------------------------------------
Woodscape
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
420 N. Wabash
Balcor Internal Projections
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Shoal Run Apartments
Sales Value
NOI B4 TI/LC/Capital 0 0 0 0
TI/LC/Capital 0 0 0 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
45 W. 45th Street (41.30%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 369,020 367,570
TI/LC/Capital 8,757 33,788
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Jonathan's Landing (47.00%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,047,450 0
TI/LC/Capital 153,793 0
---------------------------------------------
Net Cash Receipts
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
TOTAL NCR FROM INVESTMENTS 2,438,489 0 0 0
Asset PV as of
31-Mar-96
Sun Lake Apartments (61.95%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 4,076,091 NCR Present Value
TI/LC/Capital 10,098,984 Residual Present Value
------------
Net Cash Receipts 14,175,075 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Symphony Woods
Balcor Internal Projections
NOI B4 TI/LC/Capital 916,002 NCR Present Value
TI/LC/Capital 6,200,267 Residual Present Value
------------
Net Cash Receipts 7,116,270 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Pembroke Pines (Flamingo Pines)
Balcor Internal Projections
NOI B4 TI/LC/Capital 4,084,401 NCR Present Value
TI/LC/Capital 8,170,607 Residual Present Value
------------
Net Cash Receipts 12,255,008 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Perimeter 400 Center (49.76%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,884,776 NCR Present Value
TI/LC/Capital 15,334,529 Residual Present Value
------------
Net Cash Receipts 17,219,305 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Hammond Aire S/C
Sale Price
NOI B4 TI/LC/Capital 2,828,033 NCR Present Value
TI/LC/Capital 13,309,999 Residual Present Value
------------
Net Cash Receipts 16,138,032 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Asset PV as of
31-Mar-96
Park Central Office Park
Balcor Internal Projections
NOI B4 TI/LC/Capital 4,256,356 NCR Present Value
TI/LC/Capital 16,719,000 Residual Present Value
------------
Net Cash Receipts 20,975,356 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Stemmons Center (72.50%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,589,468 NCR Present Value
TI/LC/Capital 7,179,804 Residual Present Value
------------
Net Cash Receipts 8,769,273 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Hawthorne Heights Apts
Sales Value
NOI B4 TI/LC/Capital 0 NCR Present Value
TI/LC/Capital 8,134,000 Residual Present Value
------------
Net Cash Receipts 8,134,000 Sales Value
GROWTH RATE 1.04
CAPPED VALUE @ 10.00%
Sandpebble Village (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 2,128,320 NCR Present Value
TI/LC/Capital 6,458,154 Residual Present Value
------------
Net Cash Receipts 8,586,474 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Sandpebble Village II (44.64%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,332,002 NCR Present Value
TI/LC/Capital 4,045,196 Residual Present Value
------------
Net Cash Receipts 5,377,199 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Asset PV as of
31-Mar-96
Woodscape
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,234,982 NCR Present Value
TI/LC/Capital 9,036,398 Residual Present Value
------------
Net Cash Receipts 10,271,380 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
420 N. Wabash
Balcor Internal Projections
NOI B4 TI/LC/Capital 1,094,530 NCR Present Value
TI/LC/Capital 7,072,556 Residual Present Value
------------
Net Cash Receipts 8,167,086 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Shoal Run Apartments
Sales Value
NOI B4 TI/LC/Capital 0 NCR Present Value
TI/LC/Capital 11,760,000 Residual Present Value
------------
Net Cash Receipts 11,760,000 Sales Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
45 W. 45th Street (41.30%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 718,967 NCR Present Value
TI/LC/Capital 2,740,640 Residual Present Value
------------
Net Cash Receipts 3,459,607 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
Asset PV as of
31-Mar-96
Jonathan's Landing (47.00%)
Balcor Internal Projections
NOI B4 TI/LC/Capital 2,403,469 NCR Present Value
TI/LC/Capital 7,690,625 Residual Present Value
------------
Net Cash Receipts 10,094,094 Asset Present Value
GROWTH RATE 1.04
CAPPED VALUE @ 9.00%
TOTAL NCR FROM INVESTMENTS
28,547,397 Total NCR PV
133,950,760 Total Residual PV
------------
162,498,157 TOTAL PRESENT VALUES
CALCULATION OF THE UNAMORTIZED PORTION OF
THE OFFERING EXPENSES
The unamortized portion of the offering expenses of Balcor Pension Investors -
VI, previously was calculated on a straight line basis over the life of the
mortgage loan portfolio. There is only one mortgage loan remaining (Noland
Fashion Square) and it matures 31 January 2000. It is possible that the loan
will be prepaid or sold and that Balcor Pension Investors - VI may be closed
prior to that date. As a result, the maturity date of the offering expenses
was reduced to December 31, 1998.
Total Offering Expenses through March 31, 1996 - $31,300,648
-----------
Unamortized Portion as of December 31, 1992 - $13,880,254
-----------
Quarterly Amortization = $478,629
---------
Unamortized Portion as of March 31, 1996 = $13,880,254 - 8,136,706
$5,743,548
==========
(12 Remaining Quarters)
CALCULATION OF THE VALUE OF A LIMITED PARTNERSHIP INTEREST
IN BALCOR PENSION INVESTORS - VI
The calculation of the Value of a Limited Partnership Interest in Balcor
Pension Investors - VI calls for the substitution of the value of the assets
appraised for the related accounting numbers. The following Schedule E, which
is Schedule B-1 modified for the values of the appraised assets, summarizes the
calculations.
SCHEDULE E
ADJUSTED BALANCE SHEET
BALCOR PENSION INVESTORS - VI
AS OF MARCH 31, 1996
(UNAUDITED)
Assets
Cash & Cash Equivalents $ 17,036,178
Prepaid Expenses 104,248
Accounts and Accrued Interest Receivable 2,370,824
Interest Receivable on Wrap-around Notes
and Short-term Investments 122,715
Deferred Expenses 1,863,444
Net Investment in Loans Receivable (1) 4,077,400
Unamortized Portion of Offering Expenses 5,743,548
Real Estate Acquired through Foreclosure (2) 167,017,479
------------
Total Assets $198,335,836
============
Liabilities
Total Liabilities (includes mortgage note
payable of $15,613,431 on Sun Lake
Apts.) $17,504,560
Partners' Capital, adjusted for Value
(1,382,562 Limited Partnership
Interests) 180,831,276
------------
Total Liabilities and Partners' Capital $198,335,836
============
(1) From Schedule C.
(2) From Schedule D-1.
The Value of a Limited Partnership Interest in Balcor Pension Investors - VI as
of March 31, 1996 =
Partners' Capital, Adjusted for Value of the Assets
--------------------------------------------------- =
Number of Partnership Interests
$180,831,276
------------ = $130.79
1,382,562 =======
Rounded $131.00
=======
CALCULATION OF AN INTEREST IN THE EARLY INVESTMENT
INCENTIVE FUND ("FUND")
As described in an earlier section of this report, the Partnership Agreement
provides that, under certain terms and conditions, 2.5% of the cash flow
distributed be set aside in the Early Incentive Investment Fund for payment, on
the dissolution of the Partnership, to two classes of investors who purchased
Interests (1) on or before June 30, 1985 and (2) between July 1, 1985 and
December 31, 1985. For the purpose of this valuation, 944,428 Interests
qualified for level 1 under the Early Investment Incentive Fund and 438,134 for
level 2.
The valuation is based on the sum of (1) the present value of the Early
Investors' 25% share in the General Partners' 10% share of certain designated
earnings of the Partnership, (2) the Early Investors Capital as of March 31,
1996, and (3) the present value of the future earnings from repurchased
interests.
General Partners' 10% Share of 3/31/96
Valuation $ 0
Early Investor 25% Share 0
Early Investor Capital @ 3/31/96 7,227,181
----------
Present Value of Future Earnings on
Repurchased Shares 7,227,181
==========
Value per unit
Investors Level 1 $5.23
=====
Investors Level 2 $5.23
=====
Rounded Value per unit
Investors Level 1 $5.00
=====
Investors Level 2 $5.00
=====