Item 1. Business - ----------------
IDS/Balcor Income Partners A Real Estate Limited Partnership (the "Registrant") is a limited partnership formed in 1987 under the laws of the State of Delaware. The Registrant raised $18,498,500 through the sale of 73,994 Limited Partnership Interests to the public during 1987, 1988 and 1989. The Registrant's operations consist exclusively of investment in and operation of income producing real property, and all financial information included in this report relates to this industry segment.
The Registrant utilized the net offering proceeds to acquire two real property investments, the Post Place and Salem Courthouse apartment complexes, both of which were sold in 1996. (See "Other Information" below and "Item 7. Liquidity and Capital Resources" for additional information.)
Pursuant to the Partnership Agreement, when all interests in real estate are sold or otherwise disposed of and the General Partners determine there are no remaining contingencies, the Registrant will be dissolved. Therefore, the General Partners commenced liquidation of the Registrant, and on March 25, 1997, the Registrant's registration under the Securities Exchange Act of 1934 was terminated and the Registrant was dissolved.
The officers and employees of Balcor Affiliated Partners-87, Inc., the Registrant's Managing General Partner, and IDS Realty Corporation, the Registrant's Supervising General Partner, and their affiliates perform services for the Registrant. The Registrant currently has no employees engaged in its operations.
Other Information - -----------------
Salem Courthouse Apartments - ---------------------------
As previously reported, on October 1, 1996, the Partnership contracted to sell the Salem Courthouse Apartments, West LaFayette, Indiana, to an unaffiliated party, Samuel Geltman & Co., New Jersey corporation, for a sale price of $8,725,000. The purchaser assigned its rights under the agreement of sale to one of its affiliates, Bethlehem Towers, a New Jersey corporation, and the sale closed on November 15, 1996. From the proceeds of the sale, the Partnership paid $152,688 to an unaffiliated party as a brokerage commission, $87,250 to an affiliate of the third party providing property management services for the property as a fee for services rendered in connection with the sale of the property and $25,100 in closing costs. The Partnership received the remaining proceeds of approximately $8,460,000.
Item 2.
Item 2. Properties - ------------------
The Registrant no longer owns any physical properties.
Item 3.
Item 3. Legal Proceedings - -------------------------
The Registrant is not subject to any material pending legal proceedings, nor were any such proceedings terminated during the fourth quarter of 1996.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders - -----------------------------------------------------------
No matters were submitted to a vote of the Limited Partners of the Registrant during 1996.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder - --------------------------------------------------------------------- Matters - -------
The Registrant was terminated in the State of Delaware on March 21, 1997. On March 25, 1997, the Registrant's registration under the Securities Exchange Act of 1934 was terminated.
As of December 31, 1996, immediately prior to the liquidation of the Registrant, the number of record holders of Limited Partnership Interests of the Registrant was 2,773. For information regarding previous distributions, see Financial Statements, Statements of Partners' Capital, and Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources, below.
Item 6.
Item 6. Selected Financial Data - -------------------------------
Year ended December 31, ---------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- ---------- ---------- ---------- ----------
Total income $1,932,607 $2,773,922 $2,596,525 $2,470,381 $2,322,085 Gain on sale of properties 7,040,652 None None None None Net income 7,389,411 488,958 562,501 298,967 343,139 Net income per Limited Partner- ship Interest 100.35 6.54 7.53 4.00 4.59 Total assets None 10,126,717 10,877,550 11,439,068 12,255,088 Distributions per Limited Part- nership Interest 234.32(A) 15.875 15.50 15.50 15.245
(A) Includes distributions of Original Capital of $220.30 per Limited Partnership Interest during 1996.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and - ----------------------------------------------------------------------- Results of Operations - ---------------------
Operations - ----------
Summary of Operations - ---------------------
IDS/Balcor Income Partners A Real Estate Limited Partnership (the "Partnership") recognized gains related to the 1996 property sales, resulting in an increase in net income during 1996 as compared to 1995. Net income decreased during 1995 as compared to 1994 primarily due to administrative expenses incurred during 1995 in connection with a tender offer. Further discussion of the Partnership's operations is summarized below.
1996 Compared to 1995 - ---------------------
The Partnership sold the Post Place and Salem Courthouse apartment complexes in 1996. As a result, the Partnership recognized gains totaling $7,040,652. These sales also resulted in decreases in rental and service income, property operating expense, property management fees, and depreciation expense during 1996 as compared to 1995.
Due to higher average cash balances, resulting from net proceeds received in connection with the 1996 property sales, interest income on short-term investments increased during 1996 as compared to 1995.
Real estate taxes increased by approximately $23,000 during 1996 as compared to 1995 primarily due to a higher tax rate from the taxing authorities at the Salem Courthouse Apartments, offsetting the decrease of approximately $22,000 resulting from the 1996 property sales.
The Partnership incurred legal, consulting, printing and postage costs in connection with a tender offer during the fourth quarter of 1995. As a result, administrative expenses decreased in 1996 as compared to 1995.
1995 Compared to 1994 - ---------------------
Rental income increased during 1995 as compared to 1994 due to increased rental rates at Post Place and Salem Courthouse apartments complexes.
Interest income on short-term investments increased during 1995 as compared to 1994 as a result of higher average interest rates.
Property operating expense increased in 1995 as compared to 1994 as a result of exterior painting at Post Place and Salem Courthouse apartment complexes.
Real estate tax expense decreased in 1995 as compared to 1994 due to a decrease in the tax rate from the taxing authorities of the Salem Courthouse Apartments. This decrease was partially offset by a refund of 1992 real estate taxes received in 1994, due to a reduction in the assessed value of the Post Place Apartments.
The Partnership incurred legal, consulting, printing and postage costs in connection with a tender offer during the fourth quarter of 1995. As a result, administrative expenses increased during 1995 as compared to 1994.
Liquidity and Capital Resources - -------------------------------
The cash position of the Partnership fluctuated during the year and a final distribution was made to the Limited Partners in December 1996 as discussed below. The Partnership's cash flow provided by operating activities was approximately $640,000 and consisted primarily of the operations of the Partnership's properties which was partially offset by the payment of administrative expenses. The Partnership's cash flow of approximately $16,284,000 from investing activities represented the net proceeds from the sales of the Post Place and Salem Courthouse apartment complexes. The financing activities consisted of a $16,307 contribution from the General Partners, as well as approximately $17,338,000 of distributions made to the Limited Partners. (See Note 7 of Notes to Financial Statements for additional information regarding property sales.)
Pursuant to the Partnership Agreement, when all interests in real estate are sold or otherwise disposed of and the General Partners determine there are no remaining contingencies, the Partnership will be dissolved. After retaining approximately $112,000 to pay the final administrative expenses of the Partnership, a final distribution of $8,680,976 ($117.32 per Interest) was made to the Limited Partners in December 1996, which represents all remaining cash reserves, including a capital contribution of $16,307 from the General Partners. (See Note 5 of Notes to the Financial Statements for additional information regarding the General Partners' capital contribution.)
The Partnership was terminated in the State of Delaware on March 21, 1997. On March 25, 1997, the Partnership's registration under the Securities Exchange Act of 1934 was terminated.
Since inception, Limited Partners have received distributions of Net Cash Receipts of $121.77 and Net Cash Proceeds of $220.30, totaling $342.07 per $250 Interest, as well as certain tax benefits. The General Partners have received no distribution of Net Cash Receipts or Net Cash Proceeds during the entire lifetime of the Partnership.
Item 8.
Item 8. Financial Statements and Supplementary Data - ---------------------------------------------------
The supplemental financial information specified by Item 302 of Regulation S-K is not applicable.
The net effect of the differences between the financial statements and the tax returns is summarized as follows:
December 31, 1996 December 31, 1995 ------------------------ ------------------------- Financial Tax Financial Tax Statements Returns Statements Returns ---------- --------- ---------- ---------
Total assets None None $10,126,717 $12,152,693 Partners' capital accounts: General Partners None None 19,342 39,386 Limited Partners None None 9,913,215 14,512,918 Net (loss) income: General Partners $(35,649) $(55,693) 4,890 6,780 Limited Partners 7,425,060 5,419,130 484,068 671,122 Per Limited Part- nership Interest 100.35 73.24 6.54 9.07
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and - ----------------------------------------------------------------------- Financial Disclosure - --------------------
There have been no changes in or disagreements with accountants on any matter of accounting principles, practices or financial statement disclosure.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant - -----------------------------------------------------------
(a) The Registrant does not have a Board of Directors. However, Balcor Affiliated Partners-87, Inc. and IDS Realty Corporation, the General Partners, each have a Board of Directors. IDS Realty Corporation is a wholly-owned subsidiary of IDS Management Corporation which is itself a wholly-owned subsidiary of American Express Financial Corporation. The term of office as directors of each of the General Partners is one year. Directors are elected at the respective annual meeting of stockholders. The Board of Directors for Balcor Affiliated Partners-87, Inc. consists of Thomas E. Meador and James E. Mendelson. The Board of Directors for IDS Realty Corporation consists of Morris Goodwin, William N. Westhoff, and Lori J. Larson. The names, ages and business experience of the directors are listed below.
(b, c & e) The names, ages and business experience of the executive officers and significant employees of the Managing General Partner of the Registrant are as follows:
TITLE OFFICERS
Chairman, President and Chief Thomas E. Meador Executive Officer Senior Vice President Alexander J. Darragh Senior Vice President James E. Mendelson Senior Vice President John K. Powell, Jr. Managing Director, Chief Jayne A. Kosik Financial Officer, Treasurer and Assistant Secretary
Thomas E. Meador (age 49) joined Balcor in July 1979. He is Chairman, President and Chief Executive Officer and has responsibility for all ongoing day-to-day activities at Balcor. He is a Director of The Balcor Company. He is also Senior Vice President of American Express Company and is responsible for its real estate operations worldwide. Prior to joining Balcor, Mr. Meador was employed at the Harris Trust and Savings Bank in the commercial real estate division where he was involved in various lending activities. Mr. Meador received his M.B.A. degree from the Indiana University Graduate School of Business.
Alexander J. Darragh (age 42) joined Balcor in September 1988 and is responsible for due diligence analysis and real estate advisory services for Balcor and American Express Company. He also has supervisory responsibility for Balcor's environmental matters. Mr. Darragh received masters' degrees in Urban Geography from Queen's University and in Urban Planning from Northwestern University.
James E. Mendelson (age 34) joined Balcor in July 1984 and is responsible for Balcor's property sales activities. He also has supervisory responsibility for Balcor's accounting, financial, treasury, investor services and investment administration functions. From 1989 to 1995, Mr. Mendelson was Vice President - Transaction Management and Vice President - Senior Transaction Manager and had responsibility for various asset management matters relating to real estate investments made by Balcor, including negotiations for the restructuring of mortgage loan investments. Mr. Mendelson received his M.B.A. degree from the University of Chicago.
John K. Powell, Jr. (age 46) joined Balcor in September 1985 and is responsible for portfolio and asset management matters relating to Balcor's partnerships. Mr. Powell also has supervisory responsibility for Balcor's risk management function. He received a Master of Planning degree from the University of Virginia. Mr. Powell has been designated a Certified Real Estate Financier by the National Society for Real Estate Finance and is a full member of the Urban Land Institute.
Jayne A. Kosik (age 39) joined Balcor in August 1982 and, as Chief Financial Officer, is responsible for Balcor's financial, human resources and treasury functions. From June 1989 until October 1996, Ms. Kosik had supervisory responsibility for accounting functions relating to Balcor's public and private partnerships. She is also Treasurer and a Managing Director of The Balcor Company. Ms. Kosik is a Certified Public Accountant.
The names, ages and business experience of the executive officers and significant employees of the Supervising General Partner of the Registrant are as follows:
Title Officers
Director and President Lori J. Larson Director and Vice President William N. Westhoff Vice President and Treasurer Morris Goodwin, Jr. Vice President and Assistant Secretary Ronald W. Powell Vice President Georgiann L. Holmquist Vice President F. Dale Simmons Vice President John M. Knight
Lori J. Larson (age 38) has been employed by American Express Financial Corporation since 1981 and currently holds the title of Vice President-Product Development for Variable Assets. Since August 1988, she has been responsible for day-to-day management of vendor relationships, due diligence review, and operational aspects for the limited partnerships distributed by American Express Financial Advisors Inc. In addition, she has responsibility for the product development of the publicly offered mutual funds in the IDS Mutual Fund Group. Ms. Larson has held a variety of management positions with American Express Financial Corporation throughout her career. She is a graduate of, and has an M.B.A. from, the University of Minnesota.
William N. Westhoff (age 49) has held the position of Senior Vice President - - Global Investments with American Express Financial Corporation since August 1994. From November 1989 to August 1994 he held the position of Senior Vice President - Fixed Income Management. Mr. Westhoff joined American Express Financial Corporation in 1971 as a Securities Analyst, Certificate Investments. He held positions of Associate Portfolio Manager, Portfolio Manager and Senior Portfolio Manager in the Certificate and Insurance Investment unit of the Investment Department until his promotion to Vice President - Taxable Fixed Income Mutual Funds in February 1988. He managed the IDS Life Special Income Fund from January 1986 to October 1989. Mr. Westhoff holds an M.B.A. from the University of Minnesota, a B.S. in Economics from Central Missouri State University, and is a Chartered Financial Analyst.
Morris Goodwin, Jr. (age 45) has held the position of Vice President and Treasurer of American Express Financial Corporation since July 1989. From January 1988 to July 1989 he had been the Chief Financial Officer and Treasurer of IDS Bank & Trust Company. From January 1980 to January 1988, he was a Vice President with Morgan Stanley, an investment banking business headquartered in New York. He is a graduate of Williams College and has an M.B.A. from Stanford University.
Ronald W. Powell (age 52) has held the position of Vice President and Assistant General Counsel with American Express Financial Corporation since November 1985. He has been a member of the American Express Financial Corporation Law Department since 1975. He is a graduate of the William Mitchell College of Law.
Georgiann L. Holmquist (age 39) has been employed by American Express Financial Corporation since February 1981. Since October 1995 she has been Manager - Product Development for Mutual Funds and prior to that she was responsible for day-to-day management of vendor relationships, due diligence review and operational aspects for limited partnerships distributed by American Express Financial Advisors Inc. From May 1979 to February 1981 she was an internal auditor for International Multifoods. Ms. Holmquist is a graduate of Concordia College and a Certified Public Accountant.
F. Dale Simmons (age 59) has been employed American Express Financial Corporation since September 1986 as a Senior Portfolio Manager in the Investment Department and currently holds the title of Vice President. From September 1984 to August 1986 he was employed as Senior Vice President - Interim Lending Division of First Interstate Mortgage Company. From September 1983 to August 1984 he was employed as Vice President - Interim Lending Division of FBS Mortgage. From 1972 to 1984 he held various positions with American Express Financial Corporation in the areas of real estate and loan management. He is a graduate of Syracuse University.
John M. Knight (age 45) has been employed by American Express Financial Corporation and/or its affiliates and predecessors since 1975. He is currently Vice President and Controller - Variable Assets and has overall finance responsibilities for Mutual Funds, Limited Partnerships, Variable Annuities and Wealth Management Services. From 1981 through March 1994, he held a number of positions in the IDS Certificate Company including Controller. Mr. Knight is also a Fellow, Life Management Institute (FLMI).
The directors of Balcor Affiliated Partners-87, Inc., the Managing General Partner of the Registrant, and IDS Realty Corporation, the Supervising General Partner of the Registrant, are not directors of any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15 (b) of that Act or any company registered as an investment company under the Investment Company Act of 1940. Messrs. Meador and Mendelson are, however, directors of general partners of two other issuers which have a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.
(d) There are no family relationships between any of the foregoing officers or directors.
(f) None of the foregoing officers, directors or employees are currently involved in any material legal proceedings nor were any such proceedings terminated during the fourth quarter of 1996.
Item 11.
Item 11. Executive Compensation - -------------------------------
The Registrant paid $1,683 in 1996 with respect to one of the executive officers and directors of Balcor Affiliated Partners-87, Inc. or IDS Realty Corporation, the Managing and Supervising General Partners, respectively. The Registrant has not paid and does not propose to pay any remuneration to the remaining executive officers and directors of the General Partners. Certain of these officers receive compensation from The Balcor Company or American Express Financial Advisors Inc., (but not from the Registrant) for services performed for various affiliated entities, which may include services performed for the Registrant. However, the General Partners believe that any such compensation attributable to services performed for the Registrant is immaterial to the Registrant. See Note 5 of Notes to Financial Statements for the information relating to transactions with affiliates.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management - -----------------------------------------------------------------------
(a) No person owned of record or is known by the Registrant to have owned beneficially more than 5% of the outstanding Limited Partnership Interests of the Registrant.
(b) Neither Balcor Affiliated Partners-87, Inc., the Managing General Partner of the Registrant, IDS Realty Corporation, the Supervising General Partner of the Registrant, nor their officers or members of their Boards of Directors owned any Limited Partnership Interests of the Registrant.
Relatives and affiliates of the officers and members of the Boards of Directors of the respective General Partners owned twenty Interests.
(c) The Registrant is not aware of any arrangements, the operation of which may result in a change of control of the Registrant.
Item 13.
Item 13. Certain Relationships and Related Transactions - -------------------------------------------------------
(a & b) See Note 5 of Notes to Financial Statements for information relating to transactions with affiliates.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K - ------------------------------------------------------------------------
(a) (1 & 2) See Index to Financial Statements in this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement and Certificate of Limited Partnership previously filed as Exhibit 3 to Amendment No. 1 to the Registrant's Registration Statement on Form S-11 dated July 2, 1987 (Registration No. 33-12617), is hereby incorporated herein by reference.
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to the Registrant's Registration Statement on Form S-11 dated July 2, 1987 (Registration No. 33-12617) 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 30, 1992 (Commission File No. 0-16797) are hereby incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachment thereto relating to the sale of the Post Place Apartments, Atlanta, Georgia previously filed as Exhibit (2) to the Partnership's Current Report on Form 8-K dated April 23, 1996, is incorporated herein by reference.
(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sale of the Post Place Apartments, Atlanta, Georgia previously filed as Exhibit (10)(b) to the Partnership's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, is incorporated herein by reference.
(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the sale of the Post Place Apartments, Atlanta, Georgia previously filed as Exhibit (10(c) to the Partnership's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, is incorporated herein by reference.
(b)(i) Agreement of Sale and attachment thereto relating to the sale of the Salem Courthouse Apartments, West Lafayette, Indiana, previously filed as Exhibit 2(a) to the Partnership's Current Report on Form 8-K dated October 1, 1996, is incorporated herein by reference.
(ii) Amendment No. 1 to Agreement of Sale relating to the sale of the Salem Courthouse Apartments, West Lafayette, Indiana, previously filed as Exhibit (2)(b) to the Partnership's Current Report on Form 8-K dated October 1, 1996, is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for 1996 is attached hereto.
(b) Reports on Form 8-K: A Current Report on Form 8-K dated October 1, 1996, was filed reporting the execution of a contract for the sale of Salem Courthouse Apartments, West LaFayette, Indiana.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of l934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
IDS/BALCOR INCOME PARTNERS A REAL ESTATE LIMITED PARTNERSHIP
By: /s/ Jayne A. Kosik ----------------------------- Jayne A. Kosik Managing Director and Chief Financial Officer (Principal Accounting Officer) of Balcor Affiliated Partners-87, Inc., the Managing General Partner Date: March 27, 1997 ---------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date - ---------------------- ------------------------------- ------------- President and Chief Executive Officer (Principal Executive Officer) of Balcor Affiliated Partners-87, Inc., the /s/ Thomas E. Meador Managing General Partner March 27, 1997 - ---------------------- -------------- Thomas E. Meador
Managing Director and Chief Financial Officer (Principal Accounting Officer) of Balcor Affiliated Partners-87, /s/ Jayne A. Kosik Inc., the Managing General Partner March 27, 1997 - ---------------------- -------------- Jayne A. Kosik
Signatures, continued
Signature Title Date - ----------------------- ----------------------------------- ------------
President and Director of IDS Realty Corporation, the Supervising /s/ Lori J. Larson General Partner March 27, 1997 - ----------------------- -------------- Lori J. Larson
Vice President, Treasurer and Director of IDS Realty Corporation, /s/ Morris Goodwin, Jr. the Supervising General Partner March 27, 1997 - ----------------------- -------------- Morris Goodwin, Jr.
Report of Independent Accountants
Financial Statements:
Balance Sheet, December 31, 1995
Statements of Partners' Capital, for the years ended December 31, 1996, 1995 and 1994
Statements of Income and Expenses, for the years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows, for the years ended December 31, 1996, 1995 and 1994
Notes to Financial Statements
Financial Statement Schedules are omitted for the reason that they are inapplicable or equivalent information has been included elsewhere herein.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of IDS/Balcor Income Partners A Real Estate Limited Partnership:
We have audited the financial statements of IDS/Balcor Income Partners A Real Estate Limited Partnership (A Delaware Limited Partnership) as listed in the index of this Form 10-K. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of IDS/Balcor Income Partners A Real Estate Limited Partnership at December 31, 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
As described in Note 1 to the financial statements, the Partnership Agreement provides for the dissolution of the Partnership upon the disposition of all its interests in real estate. At December 31, 1996 the Partnership had disposed of all its interests in real estate and, accordingly, has ceased operations and was dissolved on March 21, 1997.
/s/ Coopers & Lybrand, L.L.P.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois March 26, 1997
IDS/BALCOR INCOME PARTNERS A REAL ESTATE LIMITED PARTNERSHIP (A Delaware Limited Partnership)
BALANCE SHEET December 31, 1995
ASSETS
------------- Cash and cash equivalents $ 397,080 Accounts and accrued interest receivable 50,812 Prepaid insurance 22,920 ------------- 470,812 ------------- Investment in real estate: Land 1,340,324 Buildings and improvements 13,681,315 ------------- 15,021,639 Less accumulated depreciation 5,365,734 ------------- Investment in real estate, net of accumulated depreciation 9,655,905 ------------- $ 10,126,717 =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 14,005 Due to affiliates 7,108 Accrued real estate taxes 124,823 Security deposits 48,224 ------------- Total liabilities 194,160
Limited Partners' capital (73,994 Interests issued and outstanding) 9,913,215 General Partners' capital 19,342 ------------- Total partners' capital 9,932,557 ------------- $ 10,126,717 =============
The accompanying notes are an integral part of the financial statements.
IDS/BALCOR INCOME PARTNERS A REAL ESTATE LIMITED PARTNERSHIP (A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL for the years ended December 31, 1996, 1995 and 1994
Partners' Capital Accounts ------------ ------------ ------------ General Limited Total Partners Partners ------------ ------------ ------------
Balance at December 31, 1993 $ 11,202,661 $ 8,827 $ 11,193,834
Cash distributions to Limited Partners (A) (1,146,907) (1,146,907)
Net income for the year ended December 31, 1994 562,501 5,625 556,876 ------------ ------------ ------------ Balance at December 31, 1994 10,618,255 14,452 10,603,803
Cash distributions to Limited Partners (A) (1,174,656) (1,174,656)
Net income for the year ended December 31, 1995 488,958 4,890 484,068 ------------ ------------ ------------ Balance at December 31, 1995 9,932,557 19,342 9,913,215
Cash distributions to Limited Partners (A) (17,338,275) (17,338,275)
Cash contribution by General Partners 16,307 16,307
Net income (loss) for the year ended December 31, 1996 7,389,411 (35,649) 7,425,060 ------------ ------------ ------------ Balance at December 31, 1996 $ None $ None $ None ============ ============ ============
(A) Summary of cash distributions per Interest:
1996 1995 1994 ------------ ------------ ------------ First Quarter $ 4.250 $ 3.875 $ 3.875 Second Quarter 4.000 3.875 3.875 Third Quarter 100.000 3.875 3.875 Fourth Quarter 126.070 4.250 3.875
The accompanying notes are an integral part of the financial statements.
IDS/BALCOR INCOME PARTNERS A REAL ESTATE LIMITED PARTNERSHIP (A Delaware Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994 -------------- -------------- -------------- Income: Rental and service $ 1,806,508 $ 2,745,228 $ 2,575,336 Interest on short-term investments 126,099 28,694 21,189 -------------- -------------- -------------- Total income 1,932,607 2,773,922 2,596,525 -------------- -------------- --------------
Expenses: Depreciation 412,066 622,186 614,974 Property operating 671,124 1,047,033 847,544 Real estate taxes 206,780 206,325 246,529 Property management fees 97,411 136,945 128,488 Administrative 196,467 272,475 196,489 -------------- -------------- -------------- Total expenses 1,583,848 2,284,964 2,034,024 -------------- -------------- -------------- Income before gain on sale of properties 348,759 488,958 562,501
Gain on sale of properties 7,040,652 -------------- -------------- -------------- Net income $ 7,389,411 $ 488,958 $ 562,501 ============== ============== ============== Net (loss) income allocated to General Partners $ (35,649) $ 4,890 $ 5,625 ============== ============== ============== Net income allocated to Limited Partners $ 7,425,060 $ 484,068 $ 556,876 ============== ============== ============== Net income per Limited Partnership Interest (73,994 issued and (outstanding) $ 100.35 $ 6.54 $ 7.53 ============== ============== ==============
The accompanying notes are an integral part of the financial statements.
IDS/BALCOR INCOME PARTNERS A REAL ESTATE LIMITED PARTNERSHIP (A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994 -------------- -------------- -------------- Operating activities: Net income $ 7,389,411 $ 488,958 $ 562,501 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of properties (7,040,652) Depreciation of properties 412,066 622,186 614,974 Net change in: Accounts and accrued interest receivable 50,812 8,767 (315) Prepaid expenses 22,920 (22,920) Accounts payable (14,005) (33,499) 6,077 Due to affiliates (7,108) (15,100) 10,731 Accrued liabilities (124,823) (19,907) 11,257 Security deposits (48,224) 3,371 (5,177) -------------- -------------- -------------- Net cash provided by operating activities 640,397 1,031,856 1,200,048 -------------- -------------- -------------- Investing activities: Proceeds from sales of real estate 16,625,000 Payment of selling costs (340,509) Improvements to properties (120,103) -------------- -------------- Net cash provided by or used in investing activities 16,284,491 (120,103) -------------- -------------- Financing activities: Distributions to Limited Partners (17,338,275) (1,174,656) (1,146,907) Capital contribution by General Partners 16,307 -------------- -------------- -------------- Net cash used in financing activities (17,321,968) (1,174,656) (1,146,907) -------------- -------------- -------------- Net change in cash and cash equivalents (397,080) (142,800) (66,962) Cash and cash equivalents at beginning of period 397,080 539,880 606,842 -------------- -------------- -------------- Cash and cash equivalents at end of period $ None $ 397,080 $ 539,880 ============== ============== ==============
The accompanying notes are an integral part of the financial statements.
IDS/BALCOR INCOME PARTNERS A REAL ESTATE LIMITED PARTNERSHIP (A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Termination of Partnership Affairs:
The Partnership Agreement provides for the dissolution of the Partnership upon the occurrence of certain events, including the sale of all interests in real estate. During 1996, the Partnership sold both of its properties, and as a result, the General Partners commenced liquidation of the Partnership. After retaining approximately $112,000 to pay the final administrative expenses of the Partnership, a final distribution of $8,680,976 ($117.32 per Interest) was made to the Limited Partners in December 1996 which represents all remaining cash reserves, including a capital contribution of $16,307 from the General Partners. This distribution consisted of Net Cash Receipts of $130,969 ($1.77 per Interest) and Net Cash Proceeds of $8,550,007 ($115.55 per Interest). The General Partners have received no distribution of Net Cash Receipts or Net Cash Proceeds during the entire lifetime of the Partnership.
The Partnership was terminated in the State of Delaware on March 21, 1997. On March March 25, 1997, the Partnership's registration under the Securities Exchange Act of 1934 was terminated.
2. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could vary from those estimates.
(b) Depreciation expense was computed using the straight-line method. Rates used in the determination of depreciation were based upon the following estimated useful lives:
Years -----
Buildings and improvements 20 to 22 Furniture and fixtures 5
Maintenance and repairs were charged to expense when incurred. Expenditures for improvements were charged to the related asset account.
(c) Effective January 1, 1995, the Partnership adopted Statement of Financial Accounting Standards, No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of". Under SFAS 121, the Partnership recorded its investments in real estate at the lower of cost or fair value, and periodically assessed, but not less than on an annual basis, possible impairment to the value of its properties. The General Partners
estimated the fair value of their properties by dividing the property's expected net operating income by a risk adjusted rate of return which considered economic and demographic conditions in the market. Under SFAS 121, the General Partners determined that no impairment in value had occurred prior to the sales of the properties. The General Partners considered the method referred to above to result in a reasonable measurement of a property's fair value, unless other factors affecting the property's value indicate otherwise.
(d) The Financial Accounting Standard Board's Statement No. 107, "Disclosures About Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments for which it is practicable to estimate that value. Statement No. 107 does not apply to all balance sheet items and excludes certain financial instruments and all non-financial instruments such as real estate from its disclosure requirements.
(e) Revenue was recognized on an accrual basis in accordance with generally accepted accounting principles.
(f) Cash and cash equivalents included all highly liquid investments with an original maturity of three months or less.
(g) The Partnership is not liable for Federal income taxes and each partner recognizes his proportionate share of the Partnership income or loss in his tax return; therefore, no provision for income taxes is made in the financial statements of the Partnership.
(h) In previous years partners were allocated income and loss in accordance with the profit and loss percentages in the Partnership Agreement. In order for the capital accounts of the General Partners and Limited Partners to appropriately reflect their respective remaining economic interests as provided for in the Partnership Agreement, the General Partners were allocated a loss in 1996 for financial statement purposes.
3. Management Agreements:
During 1996, Post Place Apartments was under a management agreement with an affiliate of the seller and Salem Courthouse Apartments was under a management agreement with a third party management company. These management agreements provided for annual fees of 5% of gross operating receipts.
4. Tax Accounting:
The Partnership kept its books in accordance with the Internal Revenue Code, rules and regulations promulgated thereunder and existing interpretations thereof. The accompanying financial statements, which are prepared in accordance with generally accepted accounting principles, will differ from the tax returns due to the different treatment of various items as specified in the Internal Revenue Code. The net effect of these accounting differences is that the net income for 1996 in the financial statements is $2,025,974 more than the tax income of the Partnership for the same period.
5. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended 12/31/96 12/31/95 12/31/94 -------------- -------------- -------------- Paid Payable Paid Payable Paid Payable ------ ------- ------ ------- ------ -------
Property management fees None None None None $64,817 None Reimbursement of expenses to the Managing General Partner, at cost: Accounting $18,580 None $25,088 $2,147 29,521 10,267 Data processing 1,264 None 11,706 572 20,464 4,205 Investor communica- tions None None 639 None 1,990 568 Legal 10,966 None 4,302 510 2,301 663 Other 2,227 None 1,052 None 1,494 995 Portfolio management 57,272 None 31,405 3,879 12,438 5,510
The Partnership participated in an insurance deductible program with other affiliated partnerships in which the program pays claims up to the amount of the deductible under the master insurance policies for its properties. The program was administered by an affiliate of the Managing General Partner who received no fee for administering the program; however, the General Partner was reimbursed for expenses. The Partnership paid premiums to the deductible insurance program of $3,230, $15,556 and $23,937 in 1996, 1995 and 1994, respectively.
Allegiance Realty Group, Inc., an affiliate of the Managing General Partner, managed one of the Partnership's properties until the affiliate was sold to a third party in November 1994.
Since the Limited Partners did not receive Net Cash Proceeds distributions in an amount equal to their original capital contribution, the General Partners were required to make a capital contribution of $16,307 to the Partnership upon dissolution in accordance with the Partnership Agreement. This amount was included in the Net Cash Proceeds distribution made to the Limited Partners in December 1996.
6. Fair Values of Financial Instruments:
The carrying amounts and fair values of the Partnership's financial instruments at December 31, 1995 were as follows:
The carrying values of cash and cash equivalents, accounts and accrued interest receivable and accounts payable approximated fair value.
7. Property Sales:
(a) In May 1996, the Partnership sold the Post Place Apartments in an all cash sale for $7,900,000. From the proceeds of the sale, the Partnership paid $75,471 in selling costs. The basis of the property was $4,918,872, which is net of accumulated depreciation of $2,439,640. For financial statement purposes, the Partnership recognized a gain of $2,905,657 from the sale of this property.
(b) In November 1996, the Partnership sold the Salem Courthouse Apartments in an all cash sale for $8,725,000. From the proceeds of the sale, the Partnership paid $265,038 in selling costs. The basis of the property was $4,324,967, which is net of accumulated depreciation of $3,338,160. For financial statement purposes, the Partnership recognized a gain of $4,134,995 from the sale of this property.