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 September 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
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(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
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
--------------- ---------------
Cash and cash equivalents $ 18,840,430 $ 17,680,262
Escrow deposits - restricted 88,500 42,103
Accounts and accrued interest receivable 592,328 576,378
Prepaid expenses 258,981 145,027
Deferred expenses, net of accumulated
amortization of $301,559 in 1996 and
$261,244 in 1995 211,689 149,904
--------------- ---------------
19,991,928 18,593,674
--------------- ---------------
Investment in loans receivable:
Loans receivable - wrap-around
and first mortgages 11,269,229 26,421,997
Investment in acquisition loan 8,439,304
Less:
Loan payable - underlying mortgage 2,508,818 2,539,832
Allowance for potential loan losses 2,632,001 5,859,733
--------------- ---------------
Net investment in loans receivable 6,128,410 26,461,736
Real estate held for sale (net of
allowance of $5,955,000 in
1996 and $4,955,000 in 1995) 49,509,391 50,018,118
Investment in joint ventures - affiliates 4,558,649 4,606,036
--------------- ---------------
60,196,450 81,085,890
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$ 80,188,378 $ 99,679,564
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued interest payable $ 209,259 $ 265,469
Due to affiliates 102,427 49,849
Other liabilities, principally escrow
deposits and accrued real estate taxes 1,088,217 611,875
Security deposits 493,304 493,733
--------------- ---------------
Total liabilities 1,893,207 1,420,926
Limited Partners' capital
(439,305 Interests issued
and outstanding) 82,646,636 102,310,790
General Partner's deficit (4,351,465) (4,052,152)
--------------- ---------------
Total partners' capital 78,295,171 98,258,638
--------------- ---------------
$ 80,188,378 $ 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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Income:
Interest on loans receivable and
investment in acquisition loan $ 3,344,802 $ 4,693,199
Less interest on loans payable -
underlying mortgages 151,308 203,041
--------------- ---------------
Net interest income on loans receivable 3,193,494 4,490,158
Income from operations of real estate
held for sale 3,875,433 4,420,405
Interest on short-term investments 821,938 889,962
Participation income 35,495 859,526
Prepayment premiums 315,000
Participation in income (loss) of
joint ventures-affiliates 324,516 (317,297)
Recovery of loss on loan 2,478,000
--------------- ---------------
Total income 10,728,876 10,657,754
--------------- ---------------
Expenses:
Provision for potential losses on
loans and real estate 1,511,415
Amortization of deferred expenses 40,315 185,723
Administrative 955,011 822,079
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Total expenses 2,506,741 1,007,802
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Income before equity in loss from
investment in acquisition loan 8,222,135 9,649,952
Equity in loss from investment
in acquisition loan (52,021) (52,278)
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Net income $ 8,170,114 $ 9,597,674
=============== ===============
Net income allocated to General Partner $ 817,011 $ 959,767
=============== ===============
Net income allocated to Limited Partners $ 7,353,103 $ 8,637,907
=============== ===============
Net income per Limited Partnership
Interest (439,305 issued and outstanding)$ 16.74 $ 19.66
=============== ===============
Distributions to General Partner $ 1,116,324 $ 1,561,974
=============== ===============
Distributions to Limited Partners $ 27,017,257 $ 17,932,430
=============== ===============
Distributions per Limited
Partnership Interest $ 61.50 $ 40.82
=============== ===============
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 September 30, 1996 and 1995
(Unaudited)
1996 1995
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Income:
Interest on loans receivable and
investment in acquisition loan $ 379,091 $ 1,091,281
Less interest on loans payable -
underlying mortgages 50,187 40,234
--------------- ---------------
Net interest income on loans receivable 328,904 1,051,047
Income from operations of real estate
held for sale 1,172,155 1,242,818
Interest on short-term investments 232,525 261,703
Participation income 4,651 4,285
Participation in income (loss) of
joint ventures-affiliates 106,874 (457,215)
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Total income 1,845,109 2,102,638
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Expenses:
Provision for potential losses on
loans and real estate 1,000,000
Amortization of deferred expenses 15,141 15,119
Administrative 299,670 282,406
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Total expenses 1,314,811 297,525
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Income before equity in loss from
investment in acquisition loan 530,298 1,805,113
Equity in loss from investment
in acquisition loan (13,005) (17,426)
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Net income $ 517,293 $ 1,787,687
=============== ===============
Net income allocated to General Partner $ 51,729 $ 178,769
=============== ===============
Net income allocated to Limited Partners $ 465,564 $ 1,608,918
=============== ===============
Net income per Limited Partnership
Interest (439,305 issued and outstanding)$ 1.06 $ 3.66
=============== ===============
Distribution to General Partner $ 628,206 $ 1,122,668
=============== ===============
Distribution to Limited Partners $ 18,327,804 $ 13,978,685
=============== ===============
Distribution per Limited
Partnership Interest $ 41.72 $ 31.82
=============== ===============
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 nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
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Operating activities:
Net income $ 8,170,114 $ 9,597,674
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in loss from investment
in acquisition loan 52,021 52,278
Participation in (income) loss
of joint ventures - affiliates (324,516) 317,297
Recovery of loss on loan (2,478,000)
Provision for potential losses on
loans and real estate 1,511,415
Amortization of deferred expenses 40,315 185,723
Payment of leasing commissions (102,100)
Accrued interest income
due at maturity (478,441)
Collection of interest
income due at maturity 452,768 2,591,071
Net change in:
Escrow deposits - restricted (46,397) (17,659)
Accounts and accrued
interest receivable (15,950) (277,826)
Prepaid expenses (113,954) (303,713)
Accounts and accrued
interest payable (56,210) (50,607)
Due to affiliates 52,578 (86,058)
Other liabilities 476,342 254,496
Security deposits (429) 127,696
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Net cash provided by operating activities 7,617,997 11,911,931
--------------- ---------------
Investing activities:
Proceeds from sale of acquisition loan 7,226,945
Costs incurred in connection with
the sale of acquisition loan (100,810)
Capital contributions to joint
ventures - affiliates (22,759) (142,109)
Distributions from joint
ventures - affiliates 394,663 304,918
Collection of principal
payments on loans receivable 14,700,000 9,809,272
Improvements to real estate (491,273) (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 21,706,766 11,954,090
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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 nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
--------------- ---------------
Financing activities:
Distributions to Limited Partners $ (27,017,257) $ (17,932,430)
Distributions to General Partner (1,116,324) (1,561,974)
Principal payments on loans payable
- underlying mortgages (31,014) (290,528)
--------------- ---------------
Net cash used in financing activities (28,164,595) (19,784,932)
--------------- ---------------
Net change in cash and cash equivalents 1,160,168 4,081,089
Cash and cash equivalents at
beginning of period 17,680,262 16,045,584
Cash and cash equivalents --------------- ---------------
at end of period $ 18,840,430 $ 20,126,673
=============== ===============
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 nine months and quarter
ended September 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
nine months and quarter ended September 30, 1996 are:
Paid
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Nine Months Quarter Payable
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Mortgage servicing fees $ 48,062 $ 11,367 $ 2,074
Reimbursement of expenses to
the General Partner, at cost 115,895 25,352 100,353
3. Sale of Acquisition Loan Receivable:
In August 1996, the Noland Fashion Square acquisition loan, in which the
Partnership held a 40.77% participation interest, was sold. The Partnership's
share of the sale price was $7,226,945. From the proceeds of the sale, the
Partnership paid $100,810 as its share of the selling costs. The carrying
value of the loan was $8,387,283, and the remaining loan balance of $1,261,148
was written off against the previously established allowance for losses.
4. 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.
Notice of the proposed settlement terms was sent to class members in September
1996. 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.
5. Subsequent Events:
a) In October 1996, the Partnership made a distribution of $9,071,648 ($20.65
per Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of Cash Flow of $5.00 per Interest for the third
quarter of 1996, and a special distribution of $15.65 per Interest from the
proceeds received from the sale of the Noland Fashion Square acquisition loan.
b) The 45 West 45th Street Office Building was owned by a joint venture
consisting of the Partnership and three affiliates. The Partnership held a
participating percentage in the joint venture of 21.74%. In November 1996, the
joint venture sold the property in an all cash sale for $10,300,000. From the
proceeds of the sale, the joint venture paid $579,075 in selling costs. For
financial statement purposes, the joint venture will recognize a gain of
approximately $2,935,000 from the sale of this property during the fourth
quarter of 1996, of which $638,000 will be the Partnership's share.
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, first mortgage loans and, to a
lesser extent, junior mortgage loans. The Partnership raised $219,652,500 from
sales of Limited Partnership Interests and utilized these proceeds to fund
thirty-four loans. The Seven Trails Apartments loan was repaid in April 1996,
the Noland Fashion Square acquisition loan was sold in August 1996 and the 45
West 45th Street Office Building in which the Partnership had a joint venture
interest was sold in November 1996. There are currently two loans outstanding
in the Partnership's portfolio, and the Partnership is operating eight
properties acquired through foreclosure and owns one investment in joint
venture with affiliate.
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 provisions for potential losses on loans and real
estate held for sale during the second and third quarters of 1996. For the
nine months ending September 30, 1996, the 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
nine months and quarter ended September 30, 1996 as compared to the same
periods 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 nine months
and quarters ended September 30, 1996 and 1995.
Net interest income on loans receivable decreased in 1996 as compared to 1995
due primarily to the 1995 repayments of the Club Wildwood, Four Seasons and
Point West mobile home parks and the Fairview Plaza I and II loans.
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 in 1995 resulting from the loan repayments
in 1995, interest on short-term investments decreased during 1996 as compared
to 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 the recognition of a
provision for losses related to a change in the estimate of the fair value of
the 45 West 45 Street Office Building in the third quarter of 1995, the
Partnership recognized participation in income of joint ventures with
affiliates during 1996 as compared to participation in loss during 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. During 1996, the Partnership recognized a provision of $511,415
related to the Noland Fashion Square loan and provisions of $1,000,000 related
to its real estate held for sale to provide for changes in the estimate of the
fair value of certain properties in the Partnership's portfolio. The
Partnership also recognized a recovery of $2,478,000 related to the Seven
Trails Apartments loan during the nine months ended September 30, 1996. The
Partnership did not recognize any provisions during the nine months ended
September 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 nine months ended September 30, 1996 as compared to the same period
in 1995.
The Partnership incurred higher consulting, legal, postage and printing costs
in connection with its response to a tender offer and related litigation during
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
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The cash position of the Partnership increased by approximately $1,160,000 as
of September 30, 1996 as compared to December 31, 1995. The Partnership's cash
flow provided by operating activities of approximately $7,618,000 was generated
primarily by net interest income from the Partnership's loans receivable, net
interest income on short-term investments and cash flow from the operation of
the Partnership's properties held for sale which was partially offset by the
payment of administrative expenses. The Partnership's investing activities
generated cash flow of approximately $21,707,000 primarily from the Seven
Trails Apartments loan repayment and the Noland Fashion Square acquisition loan
sale proceeds. Cash of approximately $28,165,000 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 properties in which the
Partnership holds minority joint venture interests with affiliates, the
Whispering Hills Apartments and the 45 West 45th Street Office Building,
generated positive cash flow during 1996 and 1995. However, significant
leasing costs were incurred at the 45 West 45th Street Office Building in 1995.
These costs were not included in classifying the cash flow performance of the
property in 1995 since they were nonrecurring expenditures. Had these costs
been included, the 45 West 45th Street Office Building would have generated a
significant cash flow deficit for the nine months ended September 30, 1995.
As of September 30, 1996, the occupancy rates of the Partnership's residential
properties ranged from 92% to 100%, and the occupancy rates of the Harbor Bay
Office Building and the Union Tower Office Building were 84% and 88%,
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 and office
properties has become increasingly favorable to sellers of these properties.
During November 1996, the General Partner sold the 45 West 45th Street Office
Building in which it held a minority joint venture interest. Currently, the
Partnership has entered into contracts to sell the Glades on Ulmerton
Apartments, Granada Apartments, Plantation Apartments, Huntington Meadows
Apartments, Waldengreen Apartments, Union Tower office building and the Villa
Medici Apartments for sales prices of $6,500,000, $2,300,000, $3,000,000,
$9,300,000, $6,590,000, $15,350,000 and $13,100,000 respectively. The
Partnership also is actively marketing the remaining property in its portfolio.
The General Partner examines each property individually by property type and
market in determining the optimal time to sell each property.
The 45 West 45th Street Office Building was owned by a joint venture consisting
of the Partnership and three affiliates. In November 1996, the joint venture
sold the property in an all cash sale for $10,300,000. From the proceeds of
the sale, the joint venture paid $579,075 in selling costs. The net proceeds
of the sale were $9,720,925, of which $2,113,329 was the Partnership's share.
Pursuant to the terms of the sale, $500,000 of the proceeds will be retained by
the joint venture until April 1997. See Note 5 of Notes to Financial Statements
for additional information.
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 negotiated an extension of the loan until December 1996 to allow
the borrower additional time to secure alternate financing.
In August 1996, the Noland Fashion Square acquisition loan, in which the
Partnership held a 40.77% participating interest, was sold. The Partnership's
share of the sale price was $7,226,945. From the proceeds of the sale, the
Partnership paid $100,810 as its share of selling costs. Pursuant to the terms
of the sale, $101,932 of the proceeds will be held in an escrow account until
November 22, 1996. A majority of the remaining proceeds were distributed as a
special distribution to the Limited Partners in October 1996. See Note 3 of
Notes to Financial Statements for additional information.
The Noland Fashion Square Shopping Center loan was 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.
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.
In October 1996, the Partnership paid a distribution of $9,071,648 ($20.65 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of Cash Flow of $5.00 per Interest for the third
quarter of 1996 and a special distribution of $15.65 per Interest from the
Noland Fashion Square acquisition loan sale proceeds. The level of the regular
quarterly Cash Flow distribution was consistent with the prior quarter.
Including the October 1996 distribution, Limited Partners have received cash
distributions totaling $599.90 per $500 Interest. Of this amount, $410.12 has
been Cash Flow from operations and $189.78 represents a return of Original
Capital. In October 1996, the Partnership also paid $183,044 to the General
Partner as its distributive share of Cash Flow for the third quarter of 1996
and made a contribution to the Early Investment Incentive Fund of $61,015.
During 1996 the General Partner used amounts placed in the Early Incentive Fund
to repurchase 4,062 Interests from Limited Partners at a total cost of
$944,088.
The Partnership expects to continue making quarterly cash distributions to
Limited Partners. The level of future distributions is dependent on cash flow
from property operations and property sales 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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Proposed Class and Derivative Action Lawsuits
- ---------------------------------------------
On June 14, 1996, a proposed class and derivative action complaint was filed,
Dee vs. Walton Street Capital Acquisition II, LLC (Circuit Court of Cook
County, Illinois, County Department, Chancery Division ("Chancery Court"), Case
No. 96 CH 06283) (the "Dee Case"), naming the General Partner and the general
partners (the "Balcor Defendants") of nine other limited partnerships sponsored
by The Balcor Company (together with the Partnership, the "Affiliated
Partnerships"), as well as 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.
On July 1, 1996, another 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 complaint seeks to assert class and derivative claims again the Walton and
Insignia Defendants and alleges that, in connection with the tender offers, the
Walton and Insignia Defendants misused the Balcor Defendants' 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 amended their complaint on October 8, 1996,
adding additional claims. The plaintiffs request certification as a class and
derivative action, unspecified compensatory damages and rescission of the
tender offers. Each of the defendants have filed motions to dismiss the
complaint. The court has not yet ruled on these motions.
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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Waldengreen Apartments
- ----------------------
As previously reported, on August 29, 1996, the Partnership contracted to sell
Waldengreen Apartments, Orlando, Florida to an unaffiliated party, Southern
Properties Fund, Inc., a Florida corporation, for a sale price of $7,100,000.
The purchaser exercised its option to terminate the sale; however, the
agreement of sale was subsequently reinstated. Pursuant the reinstatement, the
purchaser has deposited an additional $150,000 into the escrow account. The
Partnership and the purchaser also agreed to reduce the sale price to
$6,590,000 and the closing date has been extended from October 26, 1996 to
December 15, 1996. In connection with the extension of the closing date, the
purchaser is obligated to deposit an additional $100,000 into the escrow
account.
Villa Medici Apartments
- -----------------------
In 1987, the Partnership funded a $10,850,000 first mortgage loan,
collateralized by the Villa Medici Apartments, Overland Park, Kansas. In March
1995, the Partnership obtained title to the property through foreclosure.
On October 29, 1996, the Partnership contracted to sell the property for a sale
price of $13,100,000 to an unaffiliated party, Heow, Inc., a Wisconsin
corporation. The purchaser is obligated to deposit $75,000 into an escrow
account as earnest money, on or before November 22, 1996. The remainder of the
sale price will be payable in cash at closing, scheduled to occur December 2,
1996. From the proceeds of the sale, the Partnership will pay $262,000 to an
unaffiliated party as a brokerage commission. An affiliate of the third party
providing property management services for the property will receive a fee for
services rendered in connection with the sale of the property of up to $98,250.
The Partnership will receive the remaining proceeds of approximately
$12,739,750, less 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 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.
Granada Apartments
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As previously reported, on September 17, 1996, the Partnership contracted to
sell the Granada Apartments, Tampa, Florida, to an unaffiliated party, Housing
Systems, Incorporated, a Georgia corporation, for a sale price of $2,850,000.
Pursuant to an amendment, the purchase price has been reduced to $2,300,000.
Plantation Apartments
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As previously reported, on September 17, 1996, the Partnership contracted to
sell the Plantation Apartments, Tampa, Florida, to an unaffiliated party,
Housing Systems, Incorporated, a Georgia corporation, for a sale price of
$3,550,000. Pursuant to an amendment, the purchase price has been reduced to
$3,000,000.
45 West 45th Street
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As previously reported, on July 29, 1996, a limited partnership (the "Limited
Partnership") in which the Partnership and three affiliates hold interests and
which owns the 45 West 45th Street Office Building, New York City, New York,
contracted to sell the property to an unaffiliated party, Olmstead Properties,
Inc., a New York corporation, for a sale price of $10,300,000. The sale closed
November 6, 1996. From the proceeds of the sale, the Limited Partnership paid
$257,500 to an unaffiliated party as a brokerage commission and closing costs
of $321,575. The Limited Partnership received the remaining $9,720,925 of
proceeds. Of such amount, $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 closing. The Partnerships' share of the total net proceeds
is $2,113,329.
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.
(10)(a)(i) Agreement of Sale and attachments thereto relating to the sale of
the Granada Apartments, Tampa, Florida previously filed as Exhibit (2)(a)(i) to
the Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the Granada
Apartments, Tampa, Florida previously filed as Exhibit (2)(a)(ii) to the
Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the
Granada Apartments, Tampa, Florida previously filed as Exhibit (99)(b) to the
Partnerships Current Report on Form 8-K dated October 3, 1996 is incorporated
herein by reference.
(iv) Second Amendment to Agreement of Sale relating to the sale of Granada
Apartments, Tampa, Florida is attached hereto.
(b)(i) Agreement of Sale and attachments thereto relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (2)(b)(i) to
the Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (2)(b)(ii) to
the Partnerships Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (99)(c) to
the Partnerships Current Report on Form 8-K dated October 3, 1996 is
incorporated herein by reference.
(iv) Second Amendment to Agreement of Sale relating to the sale of Plantation
Apartments, Tampa, Florida is attached hereto.
(c)(i) Agreement of Sale and attachments thereto relating to the sale of the
The Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(2)(c)(i) to the Partnerships Current Report on Form 8-K dated September 17,
1996 is incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the The
Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(2)(c)(ii) to the Partnerships Current Report on Form 8-K dated September 17,
1996 is incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the The
Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(99)(d) to the Partnerships Current Report on Form 8-K dated October 3, 1996 is
incorporated herein by reference.
(d)(i) Agreement of Sale and attachments thereto relating to the sale of the
Union Tower office building, Lakewood, Colorado previously filed as Exhibit (2)
to the Partnerships Current Report on Form 8-K dated October 10, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the Union
Tower office building, Lakewood, Colorado is attached hereto.
(99)(a)(i) Agreement of Sale and attachments thereto relating to the sale of
the Waldengreen Apartments, Orlando, Florida previously filed as Exhibit
(99)(a) to the Partnerships Current Report on Form 8-K dated August 29, 1996 is
incorporated herein by reference.
(ii) Reinstatement of, and First Amendment to Agreement of Sale and Escrow
Agreement relating to the sale of Waldengreen Apartments, Orlando, Florida is
attached hereto.
(iii) Letter agreement dated September 26, 1996 relating to the sale of
Waldengreen Apartments, Orlando, Florida is attached hereto.
(iv) Letter agreement dated November 5, 1996 relating to the sale of
Waldengreen Apartments, Orlando, Florida is attached hereto.
(b) First Amendment to Agreement of Sale relating to the sale of the 45 W.
45th Street Office Building, New York City, New York previously filed as
Exhibit (99)(b) to the Partnerships Current Report on Form 8-K dated August 29,
1996 is incorporated herein by reference.
(c) Agreement of Sale and attachments thereto relating to the sale of the
Huntington Meadow Apartments, Arlington, Texas previously filed as Exhibit
(99)(a) to the Partnerships Current Report on Form 8-K dated October 3, 1996 is
incorporated herein by reference.
(d)(i) Agreement of Sale and attachments thereto relating to the sale of the
Villa Medici Apartments, Overland Park, Kansas is attached hereto.
(ii) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of the Villa Medici Apartments, Overland Park, Kansas is attached hereto.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1996 is attached hereto.
(b) Reports on form 8-K:
(i) A Current Report on Form 8-K dated August 29, 1996 was filed relating to
the contracts for the sale of the Noland Fashion Square loan and the
Waldengreen Apartments, Orlando, Florida and the 45 W. 45th Street Office
Building, New York City, New York.
(ii) A Current Report on Form 8-K dated September 17, 1996 was filed relating
to the contracts for the sale of Granada Apartments, Tampa, Florida, Plantation
Apartments, Tampa, Florida, and The Glades on Ulmerton Apartments, Largo,
Florida.
(iii) A Current Report on Form 8-K dated October 3, 1996 was filed relating to
the contracts for the sale of Huntington Meadows Apartments, Arlington, Texas,
Granada Apartments, Tampa, Florida, Plantation Apartments, Tampa, Florida, and
The Glades on Ulmerton Apartments, Largo, Florida.
(iv) A Current Report on Form 8-K dated October 10, 1996 was filed relating to
the contract for the sale of Union Tower office building, Lakewood, Colorado.
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/Jayne A. Kosik
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Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Mortgage Advisors-V, the General Partner
Date: November 14, 1996
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