SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13233
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BALCOR PENSION INVESTORS-V
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(Exact name of registrant as specified in its charter)
Illinois 36-3254673
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
-------------- ---------------
Cash and cash equivalents $ 28,539,904 $ 17,680,262
Escrow deposits - restricted 81,792 42,103
Accounts and accrued interest receivable 911,940 576,378
Prepaid expenses 369,208 145,027
Deferred expenses, net of accumulated
amortization of $286,418 in 1996 and
$261,244 in 1995 226,830 149,904
-------------- ---------------
30,129,674 18,593,674
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Investment in loans receivable:
Loans receivable - wrap-around
and first mortgages 11,269,229 26,421,997
Investment in acquisition loan 8,400,288 8,439,304
Less:
Loan payable - underlying mortgage 2,519,350 2,539,832
Allowance for potential loan losses 3,893,148 5,859,733
-------------- ---------------
Net investment in loans receivable 13,257,019 26,461,736
Real estate held for sale (net of
allowance of $4,955,000 in
1996 and 1995) 50,179,120 50,018,118
Investment in joint ventures - affiliates 4,578,147 4,606,036
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68,014,286 81,085,890
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$ 98,143,960 $ 99,679,564
============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued interest payable $ 228,141 $ 265,469
Due to affiliates 72,146 49,849
Other liabilities, principally escrow
deposits and accrued real estate taxes 617,518 611,875
Security deposits 492,267 493,733
-------------- ---------------
Total liabilities 1,410,072 1,420,926
Limited Partners' capital
(439,305 Interests issued
and outstanding) 100,508,876 102,310,790
General Partner's deficit (3,774,988) (4,052,152)
-------------- ---------------
Total partners' capital 96,733,888 98,258,638
-------------- ---------------
$ 98,143,960 $ 99,679,564
============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------------
Income:
Interest on loans receivable and
investment in acquisition loan $ 2,965,711 $ 3,601,918
Less interest on loans payable -
underlying mortgages 101,121 162,807
-------------- ---------------
Net interest income on loans receivable 2,864,590 3,439,111
Income from operations of real estate
held for sale 2,703,278 3,177,587
Interest on short-term investments 589,413 628,259
Participation income 30,844 855,241
Prepayment premiums 315,000
Participation in income of
joint ventures-affiliates 217,642 139,918
Recovery of losses on loans 2,478,000
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Total income 8,883,767 8,555,116
-------------- ---------------
Expenses:
Provision for potential
losses on loans 511,415
Amortization of deferred expenses 25,174 170,604
Administrative 655,341 539,673
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Total expenses 1,191,930 710,277
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Income before equity in loss from
investment in acquisition loan 7,691,837 7,844,839
Equity in loss from investment
in acquisition loan (39,016) (34,852)
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Net income $ 7,652,821 $ 7,809,987
============== ===============
Net income allocated to General Partner $ 765,282 $ 780,999
============== ===============
Net income allocated to Limited Partners $ 6,887,539 $ 7,028,988
============== ===============
Net income per Limited Partnership
Interest (439,305 issued and outstanding) $ 15.68 $ 16.00
============== ===============
Distributions to General Partner $ 488,118 $ 439,306
============== ===============
Distributions to Limited Partners $ 8,689,453 $ 3,953,745
============== ===============
Distributions per Limited
Partnership Interest $ 19.78 $ 9.00
============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------------
Income:
Interest on loans receivable and
investment in acquisition loan $ 1,922,182 $ 2,011,663
Less interest on loans payable -
underlying mortgages 50,422 78,556
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Net interest income on loans receivable 1,871,760 1,933,107
Income from operations of real estate
held for sale 1,351,494 1,792,411
Interest on short-term investments 346,147 202,455
Participation income 30,844 855,241
Prepayment premiums 315,000
Participation in income of
joint ventures-affiliates 112,763 77,695
Recovery of losses on loans 2,478,000
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Total income 6,191,008 5,175,909
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Expenses:
Provision for potential
losses on loans 511,415
Amortization of deferred expenses 15,139 15,118
Administrative 486,487 266,300
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Total expenses 1,013,041 281,418
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Income before equity in loss from
investment in acquisition loan 5,177,967 4,894,491
Equity in loss from investment
in acquisition loan (19,508) (17,426)
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Net income $ 5,158,459 $ 4,877,065
============== ===============
Net income allocated to General Partner $ 515,846 $ 487,707
============== ===============
Net income allocated to Limited Partners $ 4,642,613 $ 4,389,358
============== ===============
Net income per Limited Partnership
Interest (439,305 issued and outstanding) $ 10.57 $ 9.99
============== ===============
Distribution to General Partner $ 244,059 $ 244,059
============== ===============
Distribution to Limited Partners $ 6,492,928 $ 2,196,525
============== ===============
Distribution per Limited
Partnership Interest $ 14.78 $ 5.00
============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Operating activities:
Net income $ 7,652,821 $ 7,809,987
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in loss from investment
in acquisition loan 39,016 34,852
Participation in (income) of
joint ventures - affiliates (217,642) (139,918)
Recovery of losses on loans (2,478,000)
Provision for potential
losses on loans 511,415
Amortization of deferred expenses 25,174 170,604
Payment of leasing commissions (102,100)
Accrued interest income
due at maturity (359,807)
Collection of interest
income due at maturity 452,768 2,591,071
Net change in:
Escrow deposits - restricted (39,689) (206,832)
Accounts and accrued
interest receivable (335,562) (357,996)
Prepaid expenses (224,181) (442,970)
Accounts and accrued
interest payable (37,328) (37,302)
Due to affiliates 22,297 (119,986)
Other liabilities 5,643 19,359
Security deposits (1,466) 123,347
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Net cash provided by operating activities 5,273,166 9,084,409
-------------- ---------------
Investing activities:
Capital contributions to joint
ventures - affiliates (22,759) (58,156)
Distributions from joint
ventures - affiliates 268,290 171,350
Collection of principal
payments on loans receivable 14,700,000 9,731,918
Improvements to real estate (161,002) (412,704)
Proceeds from sale
of real estate 2,570,208
Costs incurred in connection with
the sale of real estate (175,495)
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Net cash provided by investing activites 14,784,529 11,827,121
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The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
-------------- ---------------
Financing activities:
Distributions to Limited Partners $ (8,689,453) $ (3,953,745)
Distributions to General Partners (488,118) (439,306)
Principal payments on loans payable
- underlying mortgages (20,482) (219,316)
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Net cash used in financing activities (9,198,053) (4,612,367)
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Net change in cash and
cash equivalents 10,859,642 16,299,163
Cash and cash equivalents at
beginning of period 17,680,262 16,045,584
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Cash and cash equivalents $ 28,539,904 $ 32,344,747
at end of period ============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the six months and quarter
ended June 30, 1996, 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 six
months and quarter ended June 30, 1996 are:
Paid
-----------------------
Six Months Quarter Payable
------------ --------- ----------
Mortgage servicing fees $ 36,695 $ 21,577 $ 3,973
Reimbursement of expenses to
the General Partner, at cost $ 90,543 $ 68,811 $ 68,173
3. Contingency:
A proposed settlement has been reached with respect to the class action
complaint, Paul Williams and Beverly Kennedy, et al, v. Balcor Pension
Investors, et al. between counsel for the Class and counsel for the defendants.
A final hearing on the proposed settlement is expected to be held in November
1996. The General Partner does not believe that the proposed settlement will
have a material adverse impact on the Partnership.
4. Subsequent Event:
In July 1996, the Partnership made a distribution of $18,327,805 ($41.72 per
Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of Cash Flow of $5.00 per Interest for the
second quarter of 1996, a special distribution of $7.87 per Interest from Cash
Flow from the Seven Trails Apartments loan repayment and a special distribution
from Mortgage Reductions of $28.85 per Interest from the Seven Trails
Apartments loan repayment.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors-V (the "Partnership") is a limited partnership formed
in 1983 to invest in wrap-around mortgage loans and first mortgage loans and,
to a lesser extent, other junior mortgage loans. The Partnership raised
$219,652,500 from sales of Limited Partnership Interests and utilized these
proceeds to fund thirty-four loans. There are currently three loans outstanding
in the Partnership's portfolio, and the Partnership is operating eight
properties acquired through foreclosure and owns two investments in joint
ventures with affiliates. The Seven Trails Apartments loan was repaid in April
1996.
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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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The Partnership recognized decreases in net interest income from loans
receivable, participation income and prepayment premiums in 1996 due to four
loan repayments in 1995, a decrease in income from operations of real estate
held for sale in 1996 and a provision for potential losses on loans. These
decreases were offset by the recognition of a recovery of losses on loans in
the second quarter of 1996. The net effect of these events resulted in a
decrease in net income for the six months ended June 30, 1996 as compared to
the same period in 1995 and an increase in net income for the quarter ended
June 30, 1996 as compared to the same period in 1995. Further discussion of the
Partnership's operations is summarized below.
1996 Compared to 1995
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Discussions of fluctuations between 1996 and 1995 refer to both the six months
and quarters ended June 30, 1996 and 1995.
Net interest income on loans receivable decreased in 1996 as compared to 1995
due to the 1995 repayments of the Club Wildwood, Four Seasons and Point West
mobile home parks, and Fairview Plaza I and II loans.
The Partnership had one loan on nonaccrual status which was collateralized by
the Seven Trails West Apartments. This loan was repaid in full in April 1996.
Income from operations of real estate held for sale represents net property
operations generated by the properties the Partnership has acquired through
foreclosure. Original funds advanced by the Partnership totaled approximately
$69,545,000 for these properties. Income from operations of real estate held
for sale decreased in 1996 as compared to the same period in 1995 due to lower
occupancy at the Harbor Bay Office Building and increased tenant related
expenditures at the Union Tower Office Building.
Due to higher average cash balances during the quarter ended June 30, 1996,
resulting from the Seven Trails Apartments loan repayment in April 1996,
interest income on short-term investments increased for the quarter ended June
30, 1996 as compared to the same period in 1995.
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 collateralizing the Partnership's loan and/or a
share in the increase of the gross income of the property above a certain
level. Participation income was recognized during 1995 in connection with the
prepayment of the Club Wildwood, Four Seasons and Point West mobile home parks
loans. Additionally, participation income was recognized on the Glen and Meadow
Run Apartments loans during 1996 and 1995.
Prepayment premiums were received in 1995 in connection with the prepayments on
the Club Wildwood, Four Seasons and Point West mobile home park loans.
Participation in joint ventures with affiliates represents the Partnership's
share of the property operations at the Whispering Hills Apartments and the 45
West 45th Street Office Building. Primarily as a result of higher rental income
and lower interior maintenance and repairs at the 45 West 45 Street Office
Building, the participation in income of joint ventures increased during 1996
as compared to the same period in 1995.
Provisions are charged to income when the General Partner believes an
impairment has occurred to the value of its properties or in a borrower's
ability to repay a loan or in the value of the collateral property.
Determinations of fair value are made periodically on the basis of performance
under the terms of the loan agreement and assessments of property operations.
Determinations of fair value represent estimations based on many variables
which affect the value of real estate, including economic and demographic
conditions. The Partnership recognized a provision of $511,415 related to the
Noland Fashion Square loan and a recovery of $2,478,000 related to the Seven
Trails Apartments loan during the six months ended June 30, 1996. The
Partnership did not recognize any provisions during the six months ended June
30, 1995 related to its loans receivable or real estate held for sale.
As a result of the sale of the Comerica Office Building in 1995 and the full
amortization of the related deferred expenses, amortization expense decreased
during the six months ended June 30, 1996 as compared to the same period in
1995.
The Partnership incurred higher consulting, postage and printing costs in
connection with its response to a tender offer and related litigation during
the second quarter of 1996. As a result, administrative expenses increased
during 1996 as compared to 1995. This increase was partially offset by a
decrease in legal fees related to the 1995 foreclosure of the 45 West 45th
Street Office Building.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $10,860,000 as
of June 30, 1996 as compared to December 31, 1995. The Partnership's cash flow
provided by operating activities of approximately $5,273,000 was generated
primarily by net interest income from the Partnership's loans receivable and
cash flow from the operation of the Partnership's properties held for sale. The
Partnership's investing activities generated cash flow of approximately
$14,785,000 primarily from the Seven Trails Apartments loan repayment. Cash of
approximately $9,200,000 was used in financing activities consisting primarily
of distributions to partners.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit. A deficit is
considered to be significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. The Partnership defines cash flow
generated from its properties as an amount equal to the property's revenue
receipts less property related expenditures. None of the properties have any
underlying debt. During 1996 and 1995, all of the Partnership's properties
generated positive cash flow. In addition, the Partnership holds minority joint
venture interests in two other properties. The Whispering Hills Apartments
generated positive cash flow during 1996 and 1995 and the 45 West 45th Street
Office Building generated positive cash flow during 1996 and a significant
deficit during 1995. The improvement in the cash flow of this property was due
to higher rental income and lower interior maintenance and repairs.
As of June 30, 1996, the occupancy rates of the Partnership's residential
properties ranged from 94% to 99%, and the occupancy rates of the Harbor Bay
Office Building and the Union Tower Office Building were 86% and 94%,
respectively. Many rental markets continue to remain extremely competitive;
therefore, the General Partner's goals are to maintain high occupancy levels,
while increasing rents where possible, and to monitor and control operating
expenses and capital improvement requirements at the properties.
The General Partner believes that the market for multifamily housing properties
is favorable to sellers of these properties. The Partnership is actively
marketing its residential properties. Additionally, the General Partner is
exploring the sale of its commercial properties. Currently, the Partnership has
entered into a contract to sell the 45 West 45th Street Office Building in
which the Partnership holds a minority joint venture interest for a sales price
of $10,300,000. The General Partner examines each property individually by
property type and market in determining the optimal time to sell each property.
In June 1996, Heitman/JMB Advisory corporation, an unaffiliated third party,
initiated discussions with the General Partner for a potential sale of all of
the properties and the remaining loans of the Partnership. These discussions
did not result in any agreement of all of the terms between the parties, and it
is unlikely at this time that a sale of the Partnership's assets to them will
be consummated. This will not affect the Partnership's strategy as described
in the preceding paragraph.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate. Lower interest rates
may increase the probability that borrowers' may seek prepayment of the
Partnership's loan whereas rising interest rates decrease the yields on the
loans and make prepayment less likely.
The Partnership funded a $14,700,000 loan collateralized by a wrap-around
mortgage on the Seven Trails Apartments which wrapped around an underlying
first mortgage of $6,714,692, resulting in funds advanced by the Partnership of
$7,985,308. In March 1994, the underlying first mortgage loan was purchased by
the Partnership at face value for $4,689,871 which increased the funds advanced
to $12,675,179. The wrap-around mortgage loan matured in February 1996. The
Partnership extended the loan until April 1, 1996 to allow the borrower
additional time to secure alternate financing. The loan was repaid in full in
April 1996. The Partnership received proceeds of $16,473,402 consisting of
funds advanced of $12,675,179, equity buildup related to principal payments of
$2,024,821 made by the Partnership on the underlying loan and additional
interest income of $1,773,402.
The Meadow Run Apartments first mortgage loan matured in July 1996. The
Partnership is currently negotiating to extend the loan until December 1996 to
allow the borrower additional time to secure alternate financing.
The Noland Fashion Square Shopping Center loan is recorded by the Partnership
as an investment in an acquisition loan. The Partnership has recorded its share
of the property's operations as equity in loss from investment in acquisition
loan. The Partnership's share of operations has no effect on the cash flow of
the Partnership. Amounts representing contractually required debt service are
recorded as interest income. The Partnership has entered into a contract to
sell this loan. See Item 5. Other Information for additional information.
In July 1996, the Partnership paid a distribution of $18,327,805 ($41.72 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of Cash Flow of $5.00 for the second quarter of
1996, a special distribution of $7.87 per Interest from Cash Flow from the
Seven Trails Apartments loan repayment and a special distribution from Mortgage
Reductions of $28.85 per Interest from the Seven Trails Apartments loan
repayment. The level of the regular quarterly Cash Flow distribution was
consistent with the prior quarter. Including the July 1996 distribution,
Limited Partners have received cash distributions totaling $579.25 per $500
Interest. Of this amount, $405.12 has been Cash Flow from operations and
$174.13 represents a return of Original Capital. In July 1996, the Partnership
also paid $471,155 to the General Partner as its distributive share of Cash
Flow for the second quarter of 1996 and made a contribution to the Early
Investment Incentive Fund of $157,052.
During 1996 the General Partner used amounts placed in the Early Incentive Fund
to repurchase 1,932 Interests from Limited Partners at a total cost of
$500,105.
The Partnership expects to continue making cash distributions. The level of
future distributions is dependent on cash flow from property operations less
fees to the General Partner and administrative expenses. 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.
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.
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Williams class action
- ----------------------
With respect to the class action complaint, Paul Williams and Beverly Kennedy,
et al. vs. Balcor Pension Investors, et al. (U.S. District Court, Northern
District of Illinois, Case No.: 90 C 0726), the ongoing settlement discussions
among the parties have resulted in a proposed settlement between counsel for
the Class and counsel for defendants. A draft notice including a description of
the terms of the proposed settlement is attached as Exhibit 99. A final hearing
to determine the fairness, reasonableness and adequacy of the proposed
settlement will be held on November 20, 1996 at 11:00 a.m. Copies of the
proposed settlement agreement may be inspected at the office of the Clerk of
the Court of the United States District Court for the Northern District of
Illinois located at 219 South Dearborn, Chicago, Illinois 60604.
Proposed Class and Derivative Action Lawsuits
- ----------------------------------------------
On May 22, 1996, a proposed class and derivative action complaint was filed,
Chipain vs. Walton Street Capital Acquisition II, LLC (Circuit Court of Cook
County, Illinois, County Department, Chancery Division ("Chancery Court"), Case
No. 96 CH 05299) (the "Chipain Case"), naming the General Partner and the
general partners (together, the "Balcor Defendants") of nine other limited
partnerships sponsored by The Balcor Company (together, with the Partnership,
the "Affiliated Partnerships") as defendants. Additional defendants were
Insignia Management Group ("Insignia") and Walton Street Capital Acquisition
II, LLC ("Walton") and certain of their affiliates and principals
(collectively, the "Walton and Insignia Defendants"). The complaint alleged,
among other things, that the tender offers for the purchase of limited
partnership interests in the Affiliated Partnerships made by a joint venture
consisting of affiliates of Insignia and Walton were coercive and unfair.
The Walton and Insignia Defendants filed motions to dismiss the complaint,
which were granted on June 5, 1996. The plaintiffs filed an amended complaint,
which all defendants then moved to dismiss. On June 18, 1996, the court
dismissed the complaint in its entirety as to the Walton and Insignia
Defendants and as to the Balcor Defendants on all counts on which dismissal was
sought.
On June 14, 1996, a second proposed class and derivative action complaint was
filed in Chancery Court, Dee vs. Walton Street Capital Acquisition II, LLC
(Case No. 96 CH 06283) (the "Dee Case"). On July 1, 1996, a proposed class
action complaint was filed in the same court, Anderson vs. Balcor Mortgage
Advisors (Case No. 96 CH 06884) (the "Anderson Case"). An amended complaint
consolidating the Dee and Anderson Cases (the "Dee/Anderson Case") was filed on
July 25, 1996. The same day, the plaintiffs in the Chipain Case withdrew their
complaint. The Dee/Anderson Case names the Balcor Defendants, the Affiliated
Partnerships, and the Walton and Insignia Defendants, as defendants. The
complaint seeks to assert class and derivative claims against the Walton and
Insignia Defendants and alleges that, in connection with the tender offers, the
Walton and Insignia Defendants misused the General Partner's and Insignia's
fiduciary positions and knowledge in breach of the Walton and Insignia
Defendants' fiduciary duty and in violation of the Illinois Securities and
Consumer Fraud Acts. The plaintiffs request certification as a class and
derivative action, unspecified compensatory damages and rescission of the
tender offers.
The Balcor Defendants intend to vigorously contest this action. No class has
been certified as of this date. Management of each of the Balcor Defendants
believes they have meritorious defenses to contest the claims. It is not
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the Partnership.
Item 5. Other Information
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45 West 45th Street
- -------------------
In 1988 and 1989, the Partnership and three affiliates (the "Participants")
funded a $23,000,000 loan collateralized by the 45 West 45th Street Office
Building, New York City, New York. The Partnership's participation in the loan
was $9,500,000, for a participating percentage of approximately 41%. In 1993,
the Participants cashed a letter of credit in the amount of $483,000 previously
received from the borrower as partial collateral for the loan which was applied
to the principal amount of the loan. The Partnership's share of the proceeds
was $199,500. In 1995, a limited partnership (the "Limited Partnership") in
which each of the Participants holds an interest equal to its participating
percentage in the loan obtained title to the property pursuant to an
uncontested foreclosure.
On July 29, 1996, the Limited Partnership contracted to sell the property for a
sale price of $10,300,000 to an unaffiliated party, Olmstead Properties, Inc.,
a New York corporation. The purchaser has deposited $100,000 into an escrow
account as earnest money. The remainder of the sale price will be payable in
cash no later than the closing, scheduled for October 25, 1996. From the
proceeds of the sale, the Limited Partnership will pay $257,500 to a third
party as a brokerage commission. The Limited Partnership will receive the
remaining proceeds of $10,042,500, less closing costs. Of such proceeds, an
amount not to exceed $500,000 will be retained by the Limited Partnership and
will not be available for use or distribution by the Limited Partnership until
150 days after the closing. The Partnership's share of total net proceeds is
expected to be approximately $4,148,000, less the Partnership's share of
closing costs.
Neither the General Partner nor any affiliate will receive a brokerage
commission in connection with the sale of the property. The General Partner
will be reimbursed by the Limited Partnership for actual expenses incurred in
connection with the sale.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
Noland Fashion Square Loan
- --------------------------
In 1989, the Partnership and two affiliates (together, the "Participants")
funded a $23,300,000 first mortgage loan (the "Loan") collateralized by the
Noland Fashion Square Shopping Center, Independence, Missouri. The Loan is
payable in monthly interest only payments through maturity in January 2000.
The Partnership contributed $9,500,000 towards the funding of the Loan for a
participating percentage of 41%. In 1992, the Participants cashed a $1,300,000
letter of credit previously deposited by the borrower as additional collateral
for the Loan. Pursuant to the terms of the Loan, the Participants received
$943,893 of the letter of credit proceeds, which was credited against principal
so that the outstanding balance of the Loan was reduced to $22,356,107.
On August 8, 1996, the Participants contracted to sell their interest in the
Loan to CS First Boston Mortgage Capital Corp. for a sale price equal to 79.28%
of the principal balance of the Loan at closing, scheduled for August 22, 1996
("Closing Date"), which sale price is estimated to be approximately
$17,725,000. The purchaser has deposited $885,000 into an escrow account as
earnest money with the remainder of the sale price payable in cash at closing.
From the proceeds of the sale, the Participants will pay closing costs and
approximately $197,250 to an unaffiliated party as a commission. The
Partnership will receive a share of the net proceeds based on its participating
percentage in the Loan. Neither the General Partner nor any affiliate will
receive a brokerage commission in connection with the sale of the Loan. The
General Partner will be reimbursed by the Participants for actual expenses
incurred in connection with the sale.
Affiliates of the General Partner have simultaneously contracted to sell their
interests in 3 other loans ("Other Loans") to the purchaser. In the event that
the closing of the sale of any of the Other Loans does not occur on the Closing
Date or the purchaser terminates the contract for any Other Loan, the sale
price of the Loan will be reduced by $25,000.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore it is possible the sale of the Loan may not occur.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
dated January 16, 1984 to the Registrant's Registration Statement on Form S-11
(Registration No. 2-87662) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended September 31, 1992 (Commission File No. 0-13233) are
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the six month period ending
June 30, 1996 is attached hereto.
(b) Reports on form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1996.
(99(a) Agreement of Sale dated July 29, 1996 relating to the contract to sell
the 45 West 45th Street Office Building in New York City, New York is attached
hereto.
(b) Purchase and Sale Agreement relating to the sale of the Noland Fashion
Square Loan, collateralized by the Noland Fashion Square Shopping Center,
Independence, Missouri is attached hereto.
(c) Form of Notice of Proposed Class Action Settlement and Hearing relating to
Paul Williams and Beverly Kennedy, et al. vs. Balcor Pension Investors, et al.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR PENSION INVESTORS-V
By: /s/ Thomas E. Meador
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-V, the General Partner
By: /s/ Brian D. Parker
----------------------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Mortgage Advisors-V, the
General Partner
Date: August 14, 1996
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