SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q
(Mark One)

  X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
     EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 1998
                               --------------
                                      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             
                               ------------    ------------
Commission file number 0-11126
                       -------

                     BALCOR EQUITY PROPERTIES-XII         
            -------------------------------------------------------
            (Exact name of registrant as specified in its charter)

          Illinois                                      36-3169763    
-------------------------------                     -------------------
(State or other jurisdiction of                      (I.R.S. Employer  
incorporation or organization)                      Identification No.)

2355 Waukegan Road
Bannockburn, Illinois                                     60015    
----------------------------------------            ------------------- 
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
                                                   --------------
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
   -----     -----
<PAGE>
                        BALCOR EQUITY PROPERTIES - XII
                       (An Illinois Limited Partnership)

                                BALANCE SHEETS
                   September 30, 1998 and December 31, 1997
                                  (Unaudited)

                                    ASSETS

                                              1998             1997
                                         ---------------- ----------------
Cash and cash equivalents                $     1,448,135  $     1,801,748
Accounts and accrued interest receivable           6,432           26,571
                                         ---------------- ----------------
                                         $     1,454,567  $     1,828,319
                                         ================ ================


                      LIABILITIES AND PARTNERS' CAPITAL 

Accounts payable                         $        33,540  $        13,705
Due to affiliates                                 34,234           23,682
                                         ---------------- ----------------
     Total liabilities                            67,774           37,387
                                         ---------------- ----------------

Commitments and contingencies

Limited Partners' capital (37,447
  Interests issued and outstanding)            1,441,205        1,832,932
General Partner's deficit                        (54,412)         (42,000)
                                         ---------------- ----------------
     Total partners' capital                   1,386,793        1,790,932
                                         ---------------- ----------------
                                         $     1,454,567  $     1,828,319
                                         ================ ================

The accompanying notes are an integral part of the financial statements.
<PAGE>
                        BALCOR EQUITY PROPERTIES - XII
                       (An Illinois Limited Partnership)

                       STATEMENTS OF INCOME AND EXPENSES
             for the nine months ended September 30, 1998 and 1997
                                  (Unaudited)


                                               1998             1997
                                         ---------------- ----------------
Income:
  Interest on short-term investments     $        60,007  $       242,678
  Other income                                                     15,821
                                         ---------------- ----------------
    Total income                                  60,007          258,499
                                         ---------------- ----------------
Expenses:
  Property operating                                               74,437
  Real estate taxes                               26,041           42,742
  Administrative                                 128,216          135,173
                                         ---------------- ----------------
    Total expenses                               154,257          252,352
                                         ---------------- ----------------
Net (loss) income                        $       (94,250) $         6,147
                                         ================ ================
Net loss allocated to
  General Partner                        $       (12,412)            None
                                         ================ ================
Net (loss) income allocated to
  Limited Partners                       $       (81,838) $         6,147
                                         ================ ================
Net (loss) income per Limited 
  Partnership Interest (37,447 issued
  and outstanding) - Basic and Diluted   $         (2.19) $          0.16
                                         ================ ================
Distributions to Limited Partners        $       309,889  $    18,081,284
                                         ================ ================
Distributions per Limited 
  Partnership Interest                   $          8.28  $        482.85
                                         ================ ================

The accompanying notes are an integral part of the financial statements.
<PAGE>
                        BALCOR EQUITY PROPERTIES - XII
                       (An Illinois Limited Partnership)

                       STATEMENTS OF INCOME AND EXPENSES
              for the quarters ended September 30, 1998 and 1997
                                  (Unaudited)


                                              1998             1997
                                         ---------------- ----------------
Income:
  Interest on short-term investments     $        19,822  $        25,429
  Other income                                                     15,821
                                         ---------------- ----------------
    Total income                                  19,822           41,250
                                         ---------------- ----------------
Expenses:
  Property operating                                               10,700
  Real estate taxes                               26,041
  Administrative                                  37,873           24,560
                                         ---------------- ----------------
    Total expenses                                63,914           35,260
                                         ---------------- ----------------
Net (loss) income                        $       (44,092) $         5,990
                                         ================ ================
Net loss allocated to
  General Partner                                   None             None
                                         ================ ================
Net (loss) income allocated to
  Limited Partners                       $       (44,092) $         5,990
                                         ================ ================
Net (loss) income per Limited 
  Partnership Interest (37,447 issued
  and outstanding) - Basic and Diluted   $         (1.18) $          0.15
                                         ================ ================

The accompanying notes are an integral part of the financial statements.
<PAGE>
                        BALCOR EQUITY PROPERTIES - XII
                       (An Illinois Limited Partnership)

                            STATEMENTS OF CASH FLOWS
             for the nine months ended September 30, 1998 and 1997
                                  (Unaudited)


                                               1998             1997
                                         ---------------- ----------------
Operating activities:
  Net (loss) income                      $       (94,250) $         6,147
  Adjustments to reconcile net (loss) 
    income to net cash (used in) 
    provided by operating activities: 
      Net change in:
        Accounts and accrued 
          interest receivable                     20,139          307,255
        Accounts payable                          19,835         (206,059)
        Due to affiliates                         10,552          (29,286)
                                         ---------------- ----------------
  Net cash (used in) provided by 
    operating activities                         (43,724)          78,057
                                         ---------------- ----------------
Financing activities:
  Distributions to Limited Partners             (309,889)     (18,081,284)
                                         ---------------- ----------------
  Net cash used in financing 
    activities                                  (309,889)     (18,081,284)
                                         ---------------- ----------------
Net change in cash and cash 
  equivalents                                   (353,613)     (18,003,227)
Cash and cash equivalents at
  beginning of period                          1,801,748       19,824,096
                                         ---------------- ----------------
Cash and cash equivalents at end 
  of period                              $     1,448,135  $     1,820,869
                                         ================ ================

The accompanying notes are an integral part of the financial statements.
<PAGE>
                         BALCOR EQUITY PROPERTIES-XII
                       (An Illinois Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

1. Accounting Policies:

(a) For financial statement purposes, the capital accounts of the General
Partner and the Limited Partners have been adjusted to appropriately reflect
their remaining economic interests as provided for in the Partnership
Agreement.
 
(b) 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, 1998, and all such adjustments are of a normal
and recurring nature.

2. Partnership Termination:

The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership sold all of its remaining properties in 1996. The
Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and the final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies may include legal
and other fees and costs stemming from litigation involving the Partnership,
including but not limited to, the lawsuits discussed in Note 4 of Notes to the
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and the reserves will be held by the Partnership until the conclusion
of all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.

3. Transactions with Affiliates:

Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1998 were:
                                               
                                           Paid
                                   -------------------------
                                     Nine Months    Quarter    Payable
                                    ------------   ---------  ---------

   Reimbursement of expenses to
     the General Partner, at cost   $ 12,383       $ 4,587    $ 34,234


4. Contingencies: 

The Partnership is currently involved in two lawsuits whereby the Partnership
and certain affiliates have been named as defendants alleging substantially
<PAGE>
similar claims involving certain state securities and common law violations
with regard to the property acquisition process of the Partnership, and to the
adequacy and accuracy of disclosures of information concerning, as well as
marketing efforts related to, the offering of the Limited Partnership Interests
of the Partnership. The defendants continue to vigorously contest these
actions. A plaintiff class has not been certified in either action. No
determination of the merits has been made in one action. The other action was
dismissed without prejudice by the trial court on September 24, 1998 for
failure to state a cause of action. It is not determinable at this time whether
or not an unfavorable decision in either action would have a material adverse
impact on the financial position of the Partnership. The Partnership believes
it has meritorious defenses to contest the claims.
<PAGE>
                         BALCOR EQUITY PROPERTIES-XII
                       (An Illinois Limited Partnership)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

Balcor Equity Properties-XII (the "Partnership") was formed in 1981 to invest
in and operate income-producing real property. The Partnership raised
$37,447,000 through the sale of Limited Partnership Interests and utilized
these proceeds to acquire seven real property investments and a minority joint
venture interest in one additional real property. As of September 30, 1998, the
Partnership has no properties remaining in its portfolio. 

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 1997 for a more complete understanding of
the Partnership's financial position.

Operations
----------

Summary of Operations
---------------------

Administrative expenses were higher than interest income earned on short-term
investments, which resulted in a net loss during the nine months and quarter
ended September 30, 1998. The payment of real estate taxes related to a
property sold during 1996 also contributed to the loss during the nine months
and quarter ended September 30, 1998. The Partnership recognized net income
during the nine months and quarter ended September 30, 1997 due to higher
interest income earned on short-term investments in connection with proceeds
received from property sales and income received related to refunds of prior
year insurance premiums which was partially offset by administrative and
operating expenses. Further discussion of the Partnership's operations is
summarized below.

1998 Compared to 1997
---------------------

Unless otherwise noted, discussion of fluctuations between 1998 and 1997 refer
to both the nine months and quarters ended September 30, 1998 and 1997.

Due to higher average cash balances in 1997 as a result of the investment of
proceeds received in connection with the 1996 property sales prior to
distributions to Limited Partners in 1997 and January 1998, interest income on
short term investments was higher during 1997 as compared to 1998.

The Partnership recognized other income during 1997 in connection with a refund
of a prior year insurance premium relating to the Partnership's properties.

During 1997, the Partnership paid additional expenditures related to certain of
<PAGE>
the properties sold during 1996. As a result, the Partnership recognized
property operating expense during 1997.

During the quarters ended March 31, 1997 and September 30, 1998, the
Partnership paid additional real estate taxes related to the DeFoors Creek
Apartments, which was sold in 1996. The Partnership had filed an appeal against
an increase in the assessed value of the property in prior years. The
Partnership did not win the appeal and consequently, paid the taxes due for
prior years. As a result, real estate tax expense decreased during the nine
months ended September 30, 1998 and increased during the quarter ended
September 30, 1998 as compared to the same periods in 1997.

Due primarily to lower accounting and bank fees, administrative expenses
decreased during the nine months ended September 30, 1998 as compared to the
same period in 1997. This decrease was offset during the quarter ended
September 30, 1998 by higher accrued legal fees which resulted in an increase
in administrative expense during the quarter ended September 30, 1998 as
compared to the same period in 1997.

Liquidity and Capital Resources
-------------------------------

The cash position of the Partnership decreased by approximately $354,000 as of
September 30, 1998 as compared to December 31, 1997 primarily due to a
distribution to the Limited Partners in January 1998 from remaining available
Net Cash Proceeds. The Partnership used cash of approximately $44,000 to fund
its operating activities, which consisted of the payment of administrative
expenses and real estate taxes related to a property sold in 1996, which were
partially offset by interest income earned on short-term investments and the
collection of an account receivable related to a sold property. Cash used in
financing activities consisted of the payment of a distribution to the Limited
Partners of approximately $310,000.

The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership sold all of its remaining properties in 1996. The
Partnership has retained a portion of the cash from the property sales to
satisfy obligations of the Partnership as well as establish a reserve for
contingencies. The timing of the termination of the Partnership and final
distribution of cash will depend upon the nature and extent of liabilities and
contingencies which exist or may arise. Such contingencies include legal and
other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuits discussed in Note 4 of Notes to
Financial Statements. Due to this litigation, the Partnership will not be
dissolved and the reserves will be held by the Partnership until the conclusion
of all contingencies. There can be no assurances as to the time frame for
conclusion of these contingencies.

To date, Limited Partners have received distributions of Net Cash Receipts of
$70 and Net Cash Proceeds of $566.63, totaling $636.63 per $1,000 Interest, as
well as certain tax benefits. No distributions are anticipated to be made prior
to the termination of the Partnership. However, after paying final
partnership expenses, any remaining cash reserves will be distributed. Limited
Partners will not recover all of their original investment.
<PAGE>
                         BALCOR EQUITY PROPERTIES-XII
                       (An Illinois Limited Partnership)

                          PART II - OTHER INFORMATION

Item 1. Legal Proceedings
---------------------------

Klein et al. vs. Lehman Brothers, Inc. et al.
----------------------------------------------

With regard to the proposed complaint, Lenore Klein, et al. vs. Lehman
Brothers, Inc. et al. (Superior Court of New Jersey, Law Division, Union
County, Docket No. Unn-L-5162-96), on June 9, 1998 the defendants filed a
motion to dismiss the complaint for failure to state a cause of action. The
motion was briefed by all parties and oral argument was heard by the court on
August 21, 1998. On September 24, 1998, the judge issued a letter opinion
granting the defendant's motion to dismiss the complaint, and on October 23,
1998, the judge announced that he would enter an order dismissing the complaint
without prejudice.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(a)  Exhibits:

(4)  Certificate of Limited Partnership set forth as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-11 dated July 2, 1982
(Registration No. 2-76947) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended June 30, 1992 (Commission File No. 0-11126) are hereby
incorporated herein by reference.

(27) Financial Data Schedule of the Registrant for the nine months ending
September 30, 1998 is attached hereto.

(b) Reports on Form 8-K: No Reports on Form 8-K were filed during the quarter
ended September 30, 1998.
<PAGE>
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 EQUITY PROPERTIES-XII


                              By: /s/ Thomas E. Meador
                                  -----------------------------
                                  Thomas E. Meador
                                  President and Chief Executive Officer 
                                  (Principal Executive Officer) of Balcor 
                                  Partners - XII, the General Partner


                              By: /s/ Jayne A. Kosik
                                  ------------------------------
                                  Jayne A. Kosik
                                  Senior Managing Director and Chief Financial
                                  Officer (Principal Accounting Officer) of 
                                  Balcor Partners - XII, the General Partner


Date:  November 10, 1998
       -----------------
<PAGE>