UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549

                                      FORM 10-K

(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
                          -----------------
                                      OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from               to
                               -------------    -------------
Commission file number 0-14332
                       -------

                          BALCOR PENSION INVESTORS-VI
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

           Illinois                                      36-3319330
-------------------------------                      -------------------
(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
                                                   --------------
Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----
Securities registered pursuant to Section 12(g) of the Act:

                      Limited Partnership Interests
                      -----------------------------
                            (Title of class)

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 [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]

                                    PART I

Item 1.  Business
-----------------

Balcor Pension Investors-VI (the "Registrant") is a limited partnership formed
in 1984 under the laws of the State of Illinois. The Registrant raised
$345,640,500 from sales of Limited Partnership Interests. The Registrant has
retained cash reserves from the sale of its real estate investments for
contingencies which exist or may arise. The Registrant's operations currently
consist of interest income earned on short-term investments and the payment of
administrative expenses.

The Registrant originally funded thirty-one loans, and subsequently acquired
thirteen properties and three investments in joint ventures - affiliates
through foreclosure. The Registrant also purchased one additional investment in
joint venture-affiliate related to an existing investment. The Registrant has
since disposed of all of these investments, including the investments in joint
ventures-affiliates.

The Partnership Agreement provides for the dissolution of the Registrant upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1996, the Registrant sold six properties. In addition, in
1996, four properties in which the Registrant held a  minority joint venture
interest were sold. During 1997, the Registrant sold its remaining five
properties, the Park Central, Brookhollow/Stemmons Center and 420 North Wabash
office buildings and the Flamingo Pines and Hammond Aire Plaza shopping
centers. The Registrant has retained a portion of the cash from the property
sales to satisfy obligations of the Registrant as well as establish a reserve
for contingencies. The timing of the termination of the Registrant and 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 Registrant
including, but not limited to, the lawsuit discussed in "Item 3. Legal
Proceedings". In the absence of any such contingency, the reserves will be paid
within twelve months of the last property being sold. In the event a
contingency continues to exist or arises, reserves may be held by the
Registrant for a longer period of time.

During 1997, the Registrant sold the Park Central and 420 North Wabash office
buildings and Flamingo Pines and Hammond Aire Plaza shopping centers in all
cash sales for $21,471,000, $5,000,000, $10,200,000 and $13,800,000,
respectively. In addition, the Brookhollow/Stemmons Center Office Building,
which was owned by the Registrant and an affiliate, was sold in 1997 in an all
cash sale for $12,724,000. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources"
for additional information.

The Registrant no longer has an ownership interest in any real estate
investment.  The General Partner is not aware of any material potential
liability relating to environmental issues or conditions affecting real estate
formerly owned by the Registrant.

The officers and employees of Balcor Mortgage Advisors-VI, the General Partner
of the Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.

Item 2.  Properties
-------------------

As of December 31, 1997, the Registrant did not own any properties.

In the opinion of the General Partner, the Registrant has obtained adequate
insurance coverage.

See Notes to Financial Statements for other information regarding former real
property investments.

Item 3.  Legal Proceedings
--------------------------

Dee vs. Walton Street Capital Acquisition II, LLC
-------------------------------------------------

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 Registrant, 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
Chancery 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 against 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 requested certification as a
class and derivative action, unspecified compensatory damages and rescission of
the tender offers.  Each of the defendants filed motions to dismiss the
complaint for failure to state a cause of action. On January 7, 1997, the
Chancery Court denied the plaintiffs' motion for leave to amend the complaint
and dismissed the matter for failure to state a cause of action, with
prejudice.

On February 3, 1997, the plaintiffs filed a Notice of Appeal of the Chancery
Court's order to the Appellate Court of Illinois. Plaintiff's brief was filed
with the Appellate Court in September 1997. Defendants filed their reply briefs
in January 1998. Oral arguments before the Appellate Court were held on March
18, 1998. The Appellate Court is expected to issue its opinion in the spring of
1998, although there can be no assurances on such date.

The Balcor Defendants intend to vigorously contest this action. No class has
been certified as of this date. The Registrant believes it has 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 Registrant.

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 1997.

                                    PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder
----------------------------------------------------------------------
Matters
-------

There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop. For information
regarding previous distributions, see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity and Capital
Resources".

As of December 31, 1997, the number of record holders of Limited Partnership
Interests of the Registrant was 58,835.

Item 6.  Selected Financial Data
--------------------------------

                                      Year ended December 31,
                    ----------------------------------------------------------
                        1997        1996        1995        1994       1993
                    ----------  ----------  ----------  ----------  ----------
Total income        $2,716,977 $14,782,470 $16,011,025 $16,696,829 $16,941,268
Recovery of
  losses on
  loans, real
  estate and
  accrued interest
  receivable              None   3,351,785   2,465,000        None        None
Provision for
  losses on
  loans, real
  estate and
  accrued interest
  receivable           256,000   2,605,562   1,800,000    3,900,000   4,665,000
Income before extra-
  ordinary items     5,888,495  27,120,917  11,582,447  11,040,627   11,817,474
Net income           5,888,495  26,593,221  11,582,447  11,040,627   11,817,474
Net income per
  Limited Partner-
  ship Interest-
  Basic and Diluted       4.20       12.89        7.54        7.18         7.69
Total assets         5,984,286 115,792,938 176,899,144 190,674,572  240,813,287
Mortgage notes
  payable                 None        None  15,657,066  15,700,000   21,257,668
Distributions per
  Limited Partner-
  ship Interest (A)      79.00(B)    39.04       17.40       39.20         8.00

(A) These amounts include distributions of Original Capital of $74.65, $27.70,
$8.80, and $29.20 per Limited Partnership Interest for the years 1997, 1996,
1995 and 1994, respectively.

(B) In addition to the above distributions, a special distribution of $.15 per

Interest was paid to class members including certain current investors in the
Partnership pursuant to the settlement of a class action lawsuit.

Item 7.  Management's Discussion and Analysis of Financial Condition and
--------------------------------------------------------------------------
Results of Operations
---------------------

Operations
----------

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

Balcor Pension Investors-VI (the "Partnership") recognized significantly higher
net gains related to its 1996 property sales as compared to the net gains
recognized in connection with the 1997 property sales. This was the primary
reason net income decreased during 1997 as compared to 1996. Income from
operations of real estate held for sale decreased significantly and
participation in income of joint venture-affiliates ceased due to the 1997 and
1996 sales of the Partnership's properties and its joint venture interests in
properties, which contributed to the decrease in net income.  The recognition
of net gains on sales during 1996 was the primary reason net income increased
during 1996 as compared to 1995. Further discussion of Partnership's operations
is summarized below.

1997 Compared to 1996
---------------------

As a result of the sale of the Noland Fashion Square acquisition loan in August
1996, interest income and equity in loss from investment in acquisition loan
ceased during 1996.

Income from operations of real estate held for sale represents the net
operations of the properties acquired by the Partnership through foreclosure.
During 1997, the Partnership sold its five remaining properties, the Park
Central, Brookhollow/Stemmons Center and 420 North Wabash office buildings and
Flamingo Pines and Hammond Aire Plaza shopping centers, and recognized net
gains in connection with these sales of $5,820,593. During 1996, the
Partnership sold the Hawthorne Heights, Shoal Run, Sun Lake and Woodscape
apartment complexes and the Symphony Woods and Perimeter 400 Center office
buildings and recognized gains in connection with these sales totaling
$19,443,993. The 1997 and 1996 sales of the Partnership's properties, which
were generating income from operations prior to their sales, resulted in a
decrease in income from operations of real estate held for sale during 1997 as
compared to 1996.

Provisions for potential losses were charged to income when the General Partner
believed an impairment had 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 were made periodically on the basis of performance
under the terms of the loan agreement, assessments of property operations and
the property's estimated sales price less closing costs. Determinations of fair
value represented estimations based on many variables which affected the value
of real estate, including economic and demographic conditions. During 1997, the
Partnership recognized a provision of $256,000 to provide for a change in the

estimate of the fair value of the Hammond Aire Plaza Shopping Center. In
addition, during 1997, the Partnership wrote off previously established
allowances of $388,809, $2,120,000 and $2,562,000 related to the Flamingo Pines
Shopping Center, Hammond Aire Plaza Shopping Center, and 420 North Wabash
Office Building, respectively. The Partnership had no loans in 1997. During
1996, the Partnership recognized provisions of $2,252,809, recoveries of
$3,351,785 and a write off of a previously established loss allowance of
$1,386,215 related to its real estate held for sale. The provisions were
recognized to provide for changes in the estimate of the fair value of the
Flamingo Pines and Hammond Aire Plaza shopping centers. In addition, in 1996,
the Partnership recognized a provision of $352,753 and a write off of an
allowance of $627,347 related to the Noland Fashion Square acquisition loan.

The Partnership recognized other income during 1997 in connection with refunds
of prior years' insurance premiums relating to the Partnership's properties.

The Partnership wrote off the remaining unamortized leasing commissions of
approximately $747,000 in connection with the sales of the Park Central,
Brookhollow/Stemmons Center and 420 North Wabash office buildings during 1997,
which resulted in an increase in amortization expense during 1997 as compared
to 1996. During 1996, the Partnership wrote off the remaining unamortized
leasing commissions of approximately $712,000 in connection with the sale of
the Perimeter 400 Center office building, which partially offset the increase.

During 1996, the Partnership incurred higher legal, professional, printing and
postage costs in connection with its response to a tender offer. In addition,
portfolio management and legal fees decreased in 1997 due to the property sales
in 1996. As a result, administrative expenses decreased during 1997 as compared
to 1996.

Participation in income of joint ventures with affiliates represented the
Partnership's share of the operations of the Sand Pebble Village - Phases I and
II and Jonathan's Landing apartment complexes and the 45 West 45th Street
Office Building. Due to the 1996 sales of these properties, participation in
income of joint ventures with affiliates ceased during 1996. In addition, the
Partnership incurred its share of a prepayment penalty of $65,074 paid in 1996
in connection with the sale of Sand Pebble Village - Phase II Apartments. This
amount was recognized as participation in debt extinguishment expense of joint
venture-affiliate and classified as an extraordinary item during 1996.

The Sun Lake Apartments and Perimeter 400 Center and Brookhollow/Stemmons
Center office buildings were owned by joint ventures with affiliates. As a
result of the gain recognized in connection with the sale of Perimeter 400
Center Office Building and the recovery of a previously established loss
allowance related to Sun Lake Apartments, affiliates' participation in income
of joint ventures decreased during 1997 as compared to 1996.

In connection with the 1996 sale of Sun Lake Apartments, the Partnership wrote
off the remaining unamortized deferred expenses related to the property of
$746,767, of which $284,145 was the minority joint venture partner's share.
This amount was recognized as debt extinguishment expense and classified as an
extraordinary item during 1996.

1996 Compared to 1995
---------------------

The July 1995 foreclosure of the Jonathan's Landing Apartments loan and the
August 1996 sale of the Noland Fashion Square acquisition loan resulted in a
decrease in interest income on loans receivable and income from investment in
acquisition loan during 1996 as compared to 1995.

Income from operations of real estate held for sale represented the net
operations of the properties acquired by the Partnership through foreclosure.
As of December 31, 1996, the Partnership was operating five properties.
Original funds advanced by the Partnership totaled approximately $88,600,000
for those five properties. The Partnership sold the Hawthorne Heights,
Woodscape, Shoal Run and Sun Lake apartment complexes in June, August,
September and November 1996, respectively, and the Symphony Woods and Perimeter
400 Center office buildings in December 1996. The property sales resulted in a
decrease in income from operations of real estate held for sale during 1996 as
compared to 1995.  This decrease was partially offset by an increase in
operations at the Park Central Office Building and Sun Lake Apartments totaling
approximately $930,000.  The increase is attributable to lower tenant related
expenditures at Park Central during 1996 and exterior painting incurred during
1995 at the Sun Lake Apartments.

Interest income on short-term investments decreased during 1996 as compared to
1995 primarily due to lower average cash balances available for investment in
1996 due to special distributions paid to the Limited Partners in 1995.

During 1995, the Partnership recognized a provision of $1,800,000 and a
recovery of $2,465,000 related to its real estate held for sale. The
Partnership did not recognize any provisions during 1995 related to its loans.

In connection with the sale of the Perimeter 400 Center, the Partnership wrote
off the remaining unamortized leasing commissions related to the property which
resulted in an increase in amortization expense during 1996 as compared to
1995. Amortization expense related to a settlement of disputed leasing
commissions at the Perimeter 400 Office Building contributed to the increase in
amortization expense.

The Partnership incurred increased legal, consulting, printing, postage and
investor processing costs in connection with its responses to a tender offer
during the second quarter of 1996. As a result, administrative expenses
increased during 1996 as compared to 1995.

Participation in income (loss) of joint ventures with affiliates represented
the Partnership's share of the operations of the Sand Pebble Village - Phases I
and II and Jonathan's Landing apartment complexes and the 45 West 45th Street
Office Building. During 1996, the Partnership recognized its share of gains
recognized in connection with the sales of the Sand Pebble Village - Phase II
and Jonathan's Landing apartment complexes and the 45 West 45th Street Office
Building, and the recovery of a previously established loss allowance related
to the Sand Pebble Village Apartments - Phase I. During 1995, the Partnership
recognized its share of a provision for loss relating to the 45 West 45th
Street Office Building. The combined effect of these events resulted in the
Partnership recognizing participation in income of joint ventures during 1996
as compared to participation in loss during 1995.

The Sun Lake Apartments and Perimeter 400 Center Office Building were both
owned by joint ventures with affiliates. As a result of the gain recognized in

connection with the sale of Perimeter 400 Center and the recovery of a
previously established loss allowance related to Sun Lake Apartments,
affiliates' participation in income of joint ventures increased during 1996 as
compared to 1995.

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

The cash position of the Partnership decreased by approximately $52,652,000 as
of December 31, 1997 when compared to December 31, 1996 primarily due to the
payment of a distribution to Limited Partners in January 1997 from proceeds
from the 1996 property sales. In addition, the Partnership made distributions
to Limited Partners in 1997 from proceeds from the sales of the Flamingo Pines
and Hammond Aire Plaza shopping centers and the Park Central,
Brookhollow/Stemmons Center and 420 North Wabash office buildings and
distributions to joint venture partners primarily of proceeds from the sale of
the Brookhollow/Stemmons Center Office Building. Operating activities generated
cash of approximately $606,000 primarily as a result of cash flow from the
collection of certain receivables related to sold properties, the operations of
the Partnership's properties prior to their sale and interest income earned
from short-term investments, net of the payment of administrative expenses.
Cash received from investing activities consisted primarily of net proceeds of
approximately $61,515,000 from the 1997 property sales and a distribution from
joint venture-affiliate of approximately $207,000 less expenditures of
approximately $428,000 for improvements to certain Partnership properties and
the funding of restricted escrows of $310,000 related to the sale of the
Hammond Aire Plaza Shopping Center. Financing activities consisted primarily of
distributions to Partners of approximately $110,059,000, a contribution to the
Partnership by the General Partner of approximately $230,000 in connection with
a class action lawsuit pursuant to a settlement agreement and distributions
paid to joint venture partners of approximately $4,413,000.

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. During 1996, the Partnership sold six properties. In addition, in
1996, four properties in which the Partnership held a minority joint venture
interest were sold. During 1997, the Partnership sold its remaining five
properties, the Park Central, Brookhollow/Stemmons Center and 420 North Wabash
office buildings and the Flamingo Pines and Hammond Aire Plaza shopping
centers. 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 may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in "Item 3. Legal
Proceedings". In the absence of any such contingency, the reserves will be paid
within twelve months of the last property being sold. In the event a
contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.

Pursuant to the sale agreement for 45 West 45th Street Office Building, which
was owned by a joint venture consisting of the Partnership and three
affiliates, $500,000 of the sale proceeds was retained by the joint venture and
was unavailable for distribution until April 1997, at which time the funds were
released in full. The Partnership's share was $206,499. These proceeds were
distributed to Limited Partners in July 1997.

Pursuant to the sale agreement for the Perimeter 400 Center Office Building,
which was owned by a joint venture consisting of the Partnership and three
affiliates, $1,750,000 of the sale proceeds was retained by the joint venture
and was unavailable for distribution until September 1997, at which time the
funds were released in full. The Partnership's share was $875,000. These
proceeds were distributed to Limited Partners in October 1997.

In February 1997, the Partnership sold the Park Central Office Building in an
all cash sale for $21,471,000. From the proceeds of the sale, the Partnership
paid $470,891 in selling costs. Pursuant to the terms of the sale, the
Partnership was required to retain $1,100,000 of the sales proceeds until
November 1997, at which time the funds were released in full. The available
proceeds were distributed to Partners in April 1997. See Note 12 of Notes to
Financial Statements for additional information.

In February 1997, the Partnership sold the Flamingo Pines Shopping Center in an
all cash sale for $10,200,000. From the proceeds of the sale, the Partnership
paid $346,400 in selling costs. The available proceeds were distributed to
Partners in April 1997. See Note 12 of Notes to Financial Statements for
additional information.

The Brookhollow/Stemmons Center Office Building was owned by a joint venture
consisting of the Partnership and an affiliate. In April 1997, the joint
venture sold the property in an all cash sale for $12,724,000. From the
proceeds of the sale, the joint venture paid $340,293 in selling costs. The net
proceeds of the sale were $12,383,707, of which $8,978,188 was the
Partnership's share. Pursuant to the terms of the sale, $250,000 of the sale
proceeds were placed in an escrow and were not to be disbursed to the joint
venture until the earlier of the settlement of any claims presented by the
purchaser or October 1997. The funds were released in full in October 1997 and
the Partnership's share was $181,250. The available proceeds were distributed
to Partners in July 1997. See Note 12 of Notes to Financial Statements for
additional information.

In May 1997, the Partnership sold the Hammond Aire Plaza Shopping Center in an
all cash sale for $13,800,000. From the proceeds of the sale, the Partnership
paid $376,001 in selling costs. The available proceeds were distributed to
Partners in July 1997. Pursuant to the terms of the sale, the Partnership was
required to retain $712,500 of the sales proceeds until the later of November
1997 or the settlement of any claims presented by the purchaser. The funds were
released in March 1998 after the Partnership paid $53,437 for certain tenant
improvement costs and leasing commissions. Pursuant to the terms of the sale,
an additional $310,000 of the sale proceeds was placed in escrow at closing. In
March 1998, $50,000 of the escrow was disbursed to the Partnership and $25,000
was disbursed to the purchaser to cover certain survey and easement costs. The
remaining sale proceeds of $235,000 remain in escrow pending resolution of
certain tenant issues. The Partnership expects to receive a majority of the
sales proceeds remaining in the escrow. See Note 12 of Notes to Financial
Statements for additional information.

In August 1997, the Partnership sold the 420 North Wabash Office Building in an
all cash sale for $5,000,000. From the proceeds of the sale, the Partnership
paid $146,323 in selling costs. The available proceeds were distributed to
Partners in October 1997. See Note 12 of Notes to Financial Statements for
additional information.

n February 1997, the General Partner made a settlement payment of $207,384

($0.15 per Interest) to members of the class pursuant to the settlement
approved by the court in November 1996 in the Paul Williams and Beverly
Kennedy, et. al., v. Balcor Pension Investors, et. al. class action lawsuit.
The General Partner made a contribution of $230,427 to the Partnership, from
which the plaintiffs' counsel was paid $23,043 pursuant to the settlement
agreement. Of the remaining settlement amount, $124,075 was paid to original
investors who held their Limited Partnership Interests at the date of the
settlement, and was recorded as a distribution to Limited Partners in Financial
Statements. The remaining portion of the settlement of $83,309 was paid to
original investors who previously had sold their Interests in the Partnership.
This amount was recorded as an administrative expense in the Financial
Statements. Similar contributions and payments were made on the seven other
partnerships included in the lawsuit in addition to those payments described
above. The Balcor Company paid an additional $635,000 to the plaintiffs' class
counsel and The Balcor Company received approximately $946,000 from the eight
partnerships as a reimbursement of its legal expenses, of which $272,571 was
the Partnership's share.

In February 1997, the Partnership discontinued the repurchase of Interests from
Limited Partners. As of December 31, 1997, there were 70,711 Interests and cash
of $5,461,510 in the Early Investment Incentive Fund.

The Partnership made four distributions totaling $79.00, $39.04 and $17.40 per
Interest in 1997, 1996 and 1995, respectively. See Statements of Partners'
Capital for additional information. Distributions were comprised of $4.35 of
Cash Flow and $74.65 of Mortgage Reductions in 1997, $11.34 of Cash Flow and
$27.70 of Mortgage Reductions in 1996 and $8.60 of Cash Flow and $8.80 of
Mortgage Reductions in 1995.

To date, Limited Partners have received cash distributions totaling $319.36 per
$250 Interest. Of this amount, $142.21 represents Cash Flow from operations and
$177.15 represents a return of Original Capital. The Partnership is expected to
make a distribution from the release of the holdbacks and escrows on several of
the Partnership's properties in April 1998. Thereafter, no additional
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.

Item 8.  Financial Statements and Supplementary Data
----------------------------------------------------

See Index to Financial Statements in this Form 10-K.

The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
------------------------------------------------------------------------
Financial Disclosure
--------------------

There have been no changes in or disagreements with accountants in any matter
of accounting principles, practices or financial statement disclosure.

                                 PART III

Item 10.  Directors and Executive Officers of the Registrant
------------------------------------------------------------

(a) Neither the Registrant nor Balcor Mortgage Advisors-VI, its General
Partner, has a Board of Directors.

(b, c & e) The names, ages and business experience of the executive officers
and significant employees of the 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                     John K. Powell, Jr.
Senior Managing Director, Chief           Jayne A. Kosik
   Financial Officer, Treasurer
   and Assistant Secretary

Thomas E. Meador (age 50) 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 member of the board of directors 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 43) joined Balcor in September 1988 and is
responsible for real estate advisory services for Balcor and American Express
Company. Mr. Darragh received masters' degrees in Urban Geography from Queen's
University and in Urban Planning from Northwestern University.

John K. Powell Jr. (age 47) 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 is a member of the board of directors of The Balcor Company. 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 40) 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 Senior Managing Director of The
Balcor Company. Ms. Kosik is a Certified Public Accountant.

(d) There is no family relationship between any of the foregoing officers.

(f) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1997.

Item 11.  Executive Compensation
--------------------------------

The Registrant paid $8,875 in 1997 with respect to one of the executive
officers and directors of Balcor Mortgage Advisors-VI, the General Partner. The
Registrant has not paid and does not propose to pay any remuneration to the
remaining executive officers and directors of the General Partner. The other
officers receive compensation from The Balcor Company (but not from the
Registrant) for services performed for various affiliated entities, which may
include services performed for the Registrant. However, the General Partner
believes that any such compensation attributable to services performed for the
Registrant is immaterial to the Registrant. See Note 11 of Notes to Financial
Statements for the information relating to transactions with affiliates.

Item 12.  Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------
(a) The following entities are the sole Limited Partners which own beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant.

                    Name and            Amount and
                    Address of          Nature of      Percent
                    Beneficial          Beneficial     of
Title of Class      Owner               Ownership      Class
----------------    -----------         ----------     ------------
Limited             Walton Street       63,849.53            4.62%
Partnership         Capital Acquisition Limited
Interests           Co. II, L.L.C.      Partnership
                    Chicago             Interests
                    Illinois

Limited             Beattie             34,380.51            2.49%
Partnership         Place               Limited
Interests           Greenville,         Partnership
                    South Carolina      Interests

While Walton Street Capital Acquisition Co. II, L.C.C. and Beattie Place
individually own less than 5% of the Interests, for purposes of this Item 12,
Walton Street Capital Acquisition Co. II, L.L.C. is an affiliate of Beattie
Place and, collectively, they own 7.11% of the Interests.

(b) Balcor Mortgage Advisors-VI (principally through the Early Investment
Incentive Fund) and its officers and partners own as a group the following
Limited Partnership Interests of the Registrant:

                                  Amount
                               Beneficially
         Title of Class            Owned       Percent of Class
         --------------        -------------   ----------------
         Limited Partnership
         Interests             70,714 Interests       5.1%

Relatives of the officers and affiliates of the partners of the General Partner
do not own any additional 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.  Certain Relationships and Related Transactions
--------------------------------------------------------

(a & b) See Note 4 of Notes to Financial Statements for information relating to
the Partnership Agreement and the allocation of distributions and profits and
losses.

See Note 11 of Notes to Financial Statements for additional 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.  Exhibits 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 January 14, 1985 (Registration No.
2-93840), is incorporated herein by reference.

(4) Form of Subscription Agreement previously filed as Exhibit 4.1 to Amendment
No. 1 to the Registrant's Registration Statement on Form S-11 dated January 14,
1985 (Registration No. 2-93840) 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 are incorporated herein by reference.

(10) Material Contracts:

(a) Agreement of Sale and attachment thereto relating to the sale of Perimeter
400 Center, Fulton County, Georgia, as previously filed as Exhibit (2) to the
Registrant's Current Report on Form 8-K dated December 2, 1996 is incorporated
herein by reference.

(b)(i) Agreement of Sale and attachment thereto relating to the sale of the
Park Central Office Building, DeKalb County, Georgia, as previously filed as
Exhibit (2) to the Registrant's Current Report on Form 8-K dated December 18,
1996 is incorporated herein by reference.

(b)(ii)  Letter Agreement relating to the sale of the Park Central Office
building, De Kalb County, Georgia, previously filed as Exhibit (10)(b)(ii) to
the Registrant's Annual Report on Form 10-K for the quarter ended December 31,
1996, is incorporated herein by reference.

(c)(i) Agreement of Sale and attachment thereto relating to the sale of Hammond
Aire Plaza Shopping Center, Baton Rouge, Louisiana, previously filed as Exhibit
(10)(c) to the Registrant's Annual Report on Form 10-K for the quarter ended
December 31, 1996, is incorporated herein by reference.

(c)(ii) Due Diligence Termination Notice relating to the sale of Hammond Aire
Plaza Shopping Center, Baton Rouge, Louisiana, previously filed as Exhibit
(10)(c)(ii) to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, is incorporated herein by reference.

(c)(iii) Ratification and Amendment of Agreement of Sale relating to the sale
of Hammond Aire Plaza Shopping Center, Baton Rouge, Louisiana, previously filed
as Exhibit (10)(c)(iii) to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997, is incorporated herein by reference.

(c)(iv) Second Amendment to Agreement of Sale relating to the sale of Hammond
Aire Plaza Shopping Center, Baton Rouge, Louisiana, previously filed as Exhibit
(10)(c)(iv) to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 is incorporated herein by reference.

(d)(i) Agreement of Sale relating to the contract to sell Brookhollow/Stemmons
Office Building, Dallas, Texas, previously filed as Exhibit (2) to the
Registrant's Current Report on Form 8-K dated March 27, 1997, is incorporated
herein by reference.

(d)(ii) Amendment No. 1 to Agreement of Sale relating to the sale of
Brookhollow/Stemmons Center Office Building, Dallas, Texas, previously filed as
Exhibit (10)(d)(ii) to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 is incorporated herein by reference.

(e)(i) Agreement of Sale and attachment thereto relating to the sale of the 420
North Wabash Office Building, Chicago, Illinois, as previously filed as Exhibit
(2)(ii) to the Registrant's Current Report on Form 8-K dated June 16, 1997, is
incorporated herein by reference.

(e)(ii) First Amendment to Agreement of Sale relating to the sale of the 420
North Wabash Office Building, Chicago, Illinois, previously filed as Exhibit
(2)(e)(ii) to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 is incorporated herein by reference.

(27) Financial Data Schedule of the Registrant for 1997 is attached hereto.

(b) Reports on form 8-K: No reports were filed on Form 8-K during the quarter
ended December 31, 1997.

(c) Exhibits: See Item 14(a)(3) above.

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.

                         BALCOR PENSION INVESTORS-VI

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

Date:
      ----------------

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
---------------------    -------------------------------     ------------
                         Executive and Chief Executive
                         Officer (Principal Executive
                         Officer) of Balcor Mortgage
  /s/Thomas E. Meador    Advisors-VI, the General Partner
-------------------                                         ---------------
  Thomas E. Meador

                         Senior Managing Director and Chief
                         Accounting and Financial Officer
                         (Principal Accounting Officer) of
                         Balcor Mortgage Advisors-VI, the
                         General Partner
  /s/Jayne A. Kosik
-------------------                                         ---------------
  Jayne A. Kosik

                         INDEX TO FINANCIAL STATEMENTS

Report of Independent Accountants

Financial Statements:

Balance Sheets, December 31, 1997 and 1996

Statements of Partners' Capital, for the years ended December 31, 1997, 1996
and 1995

Statements of Income and Expenses, for the years ended December 31, 1997, 1996
and 1995

Statements of Cash Flows, for the years ended December 31, 1997, 1996 and 1995

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
Balcor Pension Investors-VI:

We have audited the financial statements of Balcor Pension Investors-VI (An
Illinois 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 Balcor Pension Investors-VI
(An Illinois Limited Partnership) at December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted
accounting principles.

As described in Note 2 to the financial statements, the partnership agreement
provides for the dissolution of the Partnership upon the disposition of all its
real estate interests. As of December 31, 1997, the Partnership has disposed of
all of its remaining real estate interests. Upon resolution of the litigation
described in Note 16 to the financial statements, the Partnership intends to
cease operations and dissolve.


                                        COOPERS & LYBRAND L.L.P.


Chicago, Illinois
March 25, 1998

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                                 BALANCE SHEETS
                    December 31, 1997 and December 31, 1996

                                     ASSETS

                                               1997             1996
                                          ---------------  ---------------
Cash and cash equivalents                 $    5,290,460   $   57,942,543
Escrow deposits - restricted                     310,000
Accounts and accrued interest receivable         383,826        2,632,514
Prepaid expenses                                                   95,079
Deferred expenses, net of accumulated
  amortization of $380,456 in 1996                                634,027
                                          ---------------  ---------------
                                          $    5,984,286       61,304,163
                                          ---------------  ---------------
Real estate held for sale (net of
  allowance of $4,814,809 in 1996)                             54,282,276
Investment in joint venture with
  affiliates                                                      206,499
                                                           ---------------
                                                               54,488,775
                                          ---------------  ---------------
                                          $    5,984,286   $  115,792,938
                                          ===============  ===============

                       LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                          $       41,259   $      926,057
Due to affiliates                                 66,452          174,426
Accrued liabilities, principally
  real estate taxes                                               715,520
Security deposits                                                 256,363
                                          ---------------  ---------------
    Total liabilities                            107,711        2,072,366
                                          ---------------  ---------------
Commitments and contingencies

Affiliates' participation in joint
  ventures                                                      3,904,307
Limited Partners' capital (1,382,562
  Interests issued and outstanding)            6,388,335      109,967,857
General Partner's deficit                       (511,760)        (151,592)
                                          ---------------  ---------------
    Total partners' capital                    5,876,575      109,816,265
                                          ---------------  ---------------
                                          $    5,984,286   $  115,792,938
                                          ===============  ===============

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                        STATEMENTS OF PARTNERS' CAPITAL
              for the years ended December 31, 1997, 1996 and 1995


                                 Partners' Capital  (Deficit) Accounts
                             --------------    ------------ --------------
                                                  General       Limited
                                  Total           Partner      Partners
                             --------------    ------------ --------------
Balance at December 31, 1994 $ 152,886,800     $(7,020,373) $ 159,907,173

Cash distributions to:
  Limited Partners (A)         (24,056,579)                   (24,056,579)
  General Partner               (1,321,115)     (1,321,115)

Net income for the year
  ended December 31, 1995       11,582,447       1,158,245     10,424,202
                             --------------    ------------ --------------
Balance at December 31, 1995   139,091,553      (7,183,243)   146,274,796

Cash distributions to:
  Limited Partners (A)         (53,975,220)                   (53,975,220)
  General Partner               (1,742,028)     (1,742,028)
  Deemed distribution (B)         (151,261)                      (151,261)

Net income for the year
  ended December 31, 1996       26,593,221       8,773,679     17,819,542
                             --------------    ------------ --------------
Balance at December 31, 1996   109,816,265        (151,592)   109,967,857

Cash distributions to:
  Limited Partners (A)        (109,346,473)                  (109,346,473)
  General Partner                 (668,239)       (668,239)
  Deemed distribution (C)          (43,900)                       (43,900)

Cash contribution                  230,427         230,427

Net income for the year
  ended December 31, 1997        5,888,495          77,644      5,810,851
                             --------------    ------------ --------------
Balance at December 31, 1997 $   5,876,575     $  (511,760) $   6,388,335
                             ==============    ============  =============

(A) Summary of cash distributions paid per Limited Partnership Interest:

                                  1997            1996           1995
                             --------------     ----------- --------------

             First Quarter   $       28.00 (D) $      2.00  $        2.00

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                        STATEMENTS OF PARTNERS' CAPITAL
               for the years ended December 31, 1997, 1996 and 1995
                                  (Continued)


                                 1997               1996         1995
                             --------------     -----------   ------------
             Second Quarter          31.35            2.86           4.50
             Third Quarter           15.45            7.68           6.52
             Fourth Quarter           4.20           26.50           4.38

(B) This amount represents a state withholding tax paid on behalf of the
    Limited Partners relating to the gain on the sale of the Perimeter
    400 Center Office Building.

(C) This amount represents a state withholding tax paid on behalf of the
    Limited Partners relating to the gain on the sale of the Park Central
    Office Building.

(D) In addition to the above distribution, a special distribution of $0.15
    per Interest was paid to class members including certain current

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                       STATEMENTS OF INCOME AND EXPENSES
              for the years ended December 31, 1997, 1996 and 1995


                                  1997             1996          1995
                             --------------    ------------ --------------
Income:
  Interest on loans
    receivable and from
    investment in
    acquisition loan                           $   313,255  $     816,044
Income from operations
    of real estate held
    for sale                 $   1,569,360       9,923,126     11,142,276
  Interest on short-term
    investments                  1,124,011       1,194,304      1,587,705
  Recovery of losses on
    loans, real estate
    and accrued interest
    receivable                                   3,351,785      2,465,000
  Other income                      23,606
                             --------------    ------------ --------------
    Total income                 2,716,977      14,782,470     16,011,025
                             --------------    ------------ --------------
Expenses:
  Provision for potential
    losses on loans, real
    estate and accrued
    interest receivable            256,000       2,605,562      1,800,000
  Amortization of deferred
    expenses                       853,874         851,951        300,935
  Administrative                 1,030,548       1,556,744      1,229,199
                             --------------    ------------ --------------
    Total expenses               2,140,422       5,014,257      3,330,134
                             --------------    ------------ --------------
Income before joint venture
  participations, equity in
  loss from investment in
  acquisition loan,net gains on
  dispositions of real estate
  and extraordinary items          576,555       9,768,213     12,680,891
Participation in income (loss)
  of joint ventures -
  affiliates before
  extraordinary items                            5,573,531        (18,481)
Equity in loss from
  investment in
  acquisition loan                                 (56,481)       (32,714)

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                       STATEMENTS OF INCOME AND EXPENSES
              for the years ended December 31, 1997, 1996 and 1995
                                  (Continued)

                                  1997             1996          1995
                             --------------    ------------ --------------
Affiliates' participation
  in income of joint ventures     (508,653)     (7,608,339)    (1,047,249)
Net gains on dispositions of
  real estate                    5,820,593      19,443,993
                             --------------    ------------ --------------
  Income before extraordinary
    items                        5,888,495      27,120,917     11,582,447
                             --------------    ------------ --------------
Extraordinary items:
  Debt extinguishment expenses                    (746,767)
  Affiliate's participation in
    debt extinguishment expense                    284,145
  Participation in debt
    extinguishment expense of
    joint venture - affiliate                      (65,074)
                                               ------------
    Total extraordinary items                     (527,696)
                             --------------    ------------ --------------
Net income                   $   5,888,495     $26,593,221  $  11,582,447
                             ==============    ===========================
Income before extraordinary
  items allocated to
  General Partner            $      77,644     $ 8,826,449  $   1,158,245
                             ==============    ============ ==============
Income before extraordinary
  items allocated to
  Limited Partners           $   5,810,851     $18,294,468  $  10,424,202
                             ==============    ============ ==============
Income before extraordinary
  items per Limited Partnership
  Interest (1,382,562 issued
  and outstanding) - Basic
  and Diluted                $        4.20     $     13.23  $        7.54
                             ==============    ============ ==============
Extraordinary items allocated
  to General Partner                 None      $   (52,770)         None
                             ==============    ============ ==============
Extraordinary items allocated
  to Limited Partners                None      $  (474,926)         None
                             ==============    ============ ==============
Extraordinary items per
Limited Partnership Interest

  The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                       STATEMENTS OF INCOME AND EXPENSES
              for the years ended December 31, 1997, 1996 and 1995
                                  (Continued)

                                  1997             1996          1995
                             --------------    ------------ --------------

  (1,382,562 issued and
  outstanding) - Basic and
  Diluted                            None      $     (0.34)         None
                             ==============    ============ ==============
Net income allocated to
  General Partner            $      77,644     $ 8,773,679  $   1,158,245
                             ==============    ============ ==============
Net income allocated to
  Limited Partners           $   5,810,851     $17,819,542  $  10,424,202
                             ==============    ============ ==============
Net income per Limited
  Partnership Interest
  (1,382,562 issued and
  outstanding) - Basic and
  Diluted                    $        4.20     $     12.89  $        7.54
                             ==============     =========== ==============

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                             STATEMENTS OF CASH FLOWS
              for the years ended December 31, 1997, 1996 and 1995


                                  1997             1996          1995
                             --------------    ------------ --------------
Operating activities:
  Net income                 $   5,888,495     $26,593,221  $  11,582,447
  Adjustments to reconcile
    net income to net cash
    provided by operating
    activities:
      Recovery of losses on
      loans, real estate
      and accrued interest
      receivable                                (3,351,785)    (2,465,000)
      Provision for
        potential losses on
        loans, real estate
        and accrued interest
        receivable                 256,000       2,605,562      1,800,000
      Payment of deferred
        expenses                  (219,847)       (297,704)      (264,559)
      Amortization of
        deferred expenses          853,874         851,951        300,935
      Participation in (income)
        loss of joint ventures
        - affiliates                            (5,573,531)        18,481
      Equity in loss from
        investment in
        acquisition loan                            56,481         32,714
      Affiliates' participation
        in income of joint
        ventures                   508,653       7,608,339      1,047,249
      Net gains on dispositions
        of real estate          (5,820,593)    (19,443,993)
      Debt extinguishment
        expenses                                   746,767
      Affiliate's participation
        in debt extinguishment
        expense                                   (284,145)
      Participation in debt
        extinguishment expense of
        of joint venture -
        affiliate                                   65,074
      Net change in:
        Escrow deposits                            356,330       (341,703)
        Accounts and accrued
          interest receivable    1,008,678        (116,082)        17,251

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                             STATEMENTS OF CASH FLOWS
              for the years ended December 31, 1997, 1996 and 1995
                                  (Continued)

                                  1997             1996          1995
                             --------------    ------------ --------------

       Prepaid expenses             95,079         194,503       (176,701)
        Accounts payable          (884,798)        162,315        258,094
        Due to affiliates         (107,974)        122,726       (122,478)
        Accrued liabilities       (715,520)        (92,742)       (97,008)
        Security deposits         (256,363)       (408,642)        19,401
                             --------------    ------------ --------------
  Net cash provided by
    operating activities           605,684       9,794,645     11,609,123
                             --------------    ------------ --------------
Investing activities:
  Proceeds from sale of
    investment in acquisition
    loan                                       $ 3,803,640
  Cost incurred in connection
    with sale of investment in
    acquisition loan                               (53,058)
  Distributions from joint
    ventures - affiliates    $     206,499      26,576,814  $     859,648
  Contribution to joint
    ventures - affiliates                          (60,700)      (138,899)
  Improvements to properties      (428,213)     (1,478,867)      (521,832)
  Proceeds from dispositions
    of real estate              63,195,000      85,116,168
  Cost incurred with
    dispositions of real estat  (1,679,908)     (2,735,562)
  Escrow deposits - restricted    (310,000)
                             --------------    ------------ --------------
  Net cash provided by
    investing activities        60,983,378      111,168,435       198,917
                             --------------    ------------ --------------

Financing activities:
  Distributions to Limited
    Partners                  (109,346,473)    (53,975,220)   (24,056,579)
  Deemed distribution to
    Limited Partners               (43,900)       (151,261)
  Distributions to General
    Partner                       (668,239)     (1,742,028)    (1,321,115)
  Contribution by General
    Partner                        230,427
  Distributions to joint

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                            STATEMENTS OF CASH FLOWS
              for the years ended December 31, 1997, 1996 and 1995
                                  (Continued)

                                  1997              1996         1995
                             --------------    ------------ --------------

    venture partners -
    affiliates                  (4,412,960)    (23,769,020)    (1,042,505)
  Capital contributions by
    joint venture partners -
    affiliates                                     487,317
  Refunding of underlying
    revenue bonds                                              15,700,000
  Issuance of underlying
    revenue bonds                                             (15,700,000)
  Release of restricted
    investment                                                    700,000
  Principal payments on
    mortgage note payable                         (148,234)       (42,934)
  Funding of repair escrows                                      (201,075)
  Release of repair escrows                        201,075
  Payment of refinancing fees                                    (774,744)
                             --------------    ------------ --------------
  Net cash used in
    financing activities      (114,241,145)    (79,097,371)   (26,738,952)
                             --------------    ------------ --------------
Net change in cash and cash
  equivalents                  (52,652,083)     41,865,709    (14,930,912)
Cash and cash equivalents
  at beginning of year          57,942,543      16,076,834     31,007,746
                             --------------    ------------ --------------
Cash and cash equivalents
  at end of year             $   5,290,460     $57,942,543  $  16,076,834
                             ==============    ============ ==============

The accompanying notes are an integral part of the financial statements.

                          BALCOR PENSION INVESTORS-VI
                       (An Illinois Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

1. Nature of the Partnership's Business:

Balcor Pension Investors-VI (the "Partnership") has retained cash reserves from
the sale of its real estate investments for contingencies which exist or may
arise. The Partnership's operations currently consist of interest income earned
on short-term investments and the payment of administrative expenses.

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. During 1996, the Partnership sold six properties. In addition, in
1996, four properties in which the Partnership held a minority joint venture
interests were sold. During 1997, the Partnership sold its remaining five
properties, the Park Central, Brookhollow/Stemmons Center and 420 Wabash office
buildings and Flamingo Pines and Hammond Aire Plaza shopping centers. 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 may include legal
and other fees and costs stemming from litigation involving the Partnership
including, but not limited to, the lawsuit discussed in Note 16 of Notes to
Financial Statements. In the absence of any such contingency, the reserves will
be paid within twelve months of the last property being sold. In the event a
contingency continues to exist or arises, reserves may be held by the
Partnership for a longer period of time.

3. Accounting Policies:

(a)  The preparation of the financial statements in conformity with generally
accepted accounting principles requires the General Partner 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 revenues and expenses during the
reporting period. Actual results could vary from those estimates.

(b) Income on loans was recorded as earned in accordance with the terms of the
related loan agreements. The accrual of interest was discontinued when a loan
became ninety days contractually delinquent or sooner when, in the opinion of
the General Partner, an impairment had occurred in the value of the collateral
property securing the loan. Income on nonaccrual loans or loans which were
otherwise not performing in accordance with their terms was recorded on a cash
basis.

Income from operations of real estate held for sale was reflected in the
accompanying Statements of Income and Expenses net of related direct operating
expenses.

(c) Loan losses on mortgage notes receivable were charged to income and an
allowance account was established when the General Partner believed the loan
balance would not be recovered. The General Partner periodically assessed the
collectibility of each loan on a periodic basis through a review of the
collateral property operations, the property value and the borrower's ability
to repay the loan.  Upon foreclosure, the loan net of the allowance was
transferred to real estate held for sale after the fair value of the property,
less costs of disposal, was assessed. Upon the transfer to real estate held for
sale, a new basis in the property was established.

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,
the fair value of its real estate properties held for sale. The General Partner
estimated the fair value of its properties based on the current sales price
less estimated closing costs. Changes in the property's fair value were
recorded by an adjustment to the property allowance account and was recognized
in the income statement as an increase or decrease through recovery income or a
provision for loss in the period the change in fair value was determined. The
General Partner considered the methods referred to above to result in a
reasonable measurement of a property's fair value, unless other factors
affecting the property's value indicated otherwise.

(d)  Investment in acquisition loan represented a first mortgage loan which,
because the loan agreement included certain specified terms, was accounted for
as an investment in a real estate venture. The investment was therefore
reflected in the accompanying financial statements using the equity method of
accounting. Under this method, the Partnership recorded its investment at cost
(representing total loan fundings) and subsequently adjusted its investment for
its share of property income or loss.

Amounts representing contractually required debt service were recorded in the
accompanying Statements of Income and Expenses as interest income and
participation income. Equity from investment in acquisition loan represented
the Partnership's share of the collateral property's operations, including
depreciation and interest expense. The Partnership's share of operations had no
effect on cash flow of the Partnership.

(e) Investment in joint ventures - affiliates represented the Partnership's
44.63%, 41.3%, and 46.5% interest, under the equity method of accounting, in
joint ventures with affiliates. Under the equity method of accounting, the
Partnership recorded its initial investment at cost and adjusted its investment
account for additional capital contributions, distributions and its share of
joint venture income or loss.

(f)  Deferred expenses, which consisted of refinancing fees, were amortized
over the term of the respective agreement and upon sale, any remaining
unamortized balance was recognized as debt extinguishment expense and
classified as an extraordinary item. Leasing commissions were amortized over
the life of each respective lease and upon sale, any remaining unamortized
balance was recognized as amortization expense.

(g) 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. Since quoted market prices are not available for the Partnership's
financial instruments, fair values have been based on estimates using present
value techniques. These techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, may not be realized in
immediate settlement of the instrument. 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 and investment in joint ventures
from its disclosure requirements.

(h) Revenue was recognized on an accrual basis in accordance with generally
accepted accounting principles. Income from operating leases with significant
abatements and/or scheduled rent increases was recognized on a straight line
basis over the respective lease term. Service income includes reimbursements
from operating costs such as real estate taxes, maintenance and insurance and
was recognized as revenue in the period the applicable costs were incurred.

(i) Cash and cash equivalents include all unrestricted highly liquid
investments with an original maturity of three months or less. Cash is held or
invested in one financial institution.

(j) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership's income or loss in his
tax return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.

(k) For financial statement purposes, in previous years partners were allocated
income and loss in accordance with the provisions in the Partnership Agreement.
In order for the capital accounts of the General Partner and Limited Partners
to appropriately reflect their remaining economic interests as provided for in
the Partnership Agreement, income allocations between the partners have been
adjusted for financial statement purposes in 1997 and 1996.

(l) A reclassification has been made to the previously reported 1996 financial
statements to conform with the classifications used in 1997. These
reclassifications have not changed the 1996 results.

(m) Statement of Financial Accounting Standards, No. 128, "Earnings per Share"
was adopted by the Partnership for the year-ended December 31, 1997 and has
been applied to all prior earnings periods presented in the financial
statements. Since the Partnership has no dilutive securities, there is no
difference between basic and diluted net income per Limited Partnership
Interest.

4. Partnership Agreement:

The Partnership was organized in October 1984. The Partnership Agreement
provides for Balcor Mortgage Advisors-VI to be the General Partner and for the
admission of Limited Partners through the sale of up to 1,450,000 Limited

Partnership Interests at $250 per Interest, 1,382,562 of which were sold on or
prior to October 31, 1985, the termination date of the offering.

The Partnership Agreement provides that the profits and losses will be
allocated 90% to Limited Partners and 10% to the General Partner, of which 2.5%
of the General Partner's share relates to the Early Investment Incentive Fund
(the "Fund"). For financial statement purposes, in previous years partners were
allocated income and loss in accordance with the provisions in the Partnership
Agreement. In order for the capital accounts of the General Partner and Limited
Partners to appropriately reflect their remaining economic interests as
provided for in the Partnership Agreement, income allocations between partners
have been adjusted for financial statement purposes in 1997 and 1996.

To the extent that Cash Flow is distributed, distributions are made as follows:
(i) 90% of such Cash Flow is distributed to the Limited Partners, (ii) 7.5% of
such Cash Flow is distributed to the General Partner, and (iii) an additional
2.5% of such Cash Flow is distributed to the General Partner and constitutes
the Fund. An amount not to exceed such 2.5% share originally allocated will be
returned to the Partnership by the Fund at the dissolution of the Partnership
to the extent necessary to enable early investors to receive upon dissolution
of the Partnership a return of their Original Capital plus a Cumulative Return
of 15% for Interests purchased on or before June 30, 1985, and 14% for
Interests purchased between July 1, 1985 and October 31, 1985.

Amounts placed in the Fund were used to repurchase Interests from existing
Limited Partners, at the sole discretion of the General Partner and subject to
certain limitations. All repurchases of Interests have been made at 90% of the
current value of such Limited Partnership Interests at the previous quarter
end. Distributions of Cash Flow and Mortgage Reductions pertaining to such
repurchased Interests were paid to the Fund and were available to repurchase
additional Interests. In February 1997, the Partnership discontinued the
repurchase of Interests from Limited Partners. As of December 31, 1997, there
were 70,711 Interests and cash of $5,461,510 in the Fund.

In accordance with the Partnership Agreement, 100% of Mortgage Reductions
generated from the disposition of the Partnership's investments is distributed
to the Limited Partners.

5. Interest Expense:

During the years ended December 31, 1996 and 1995, the Partnership incurred
interest expense on the mortgage notes payable of $941,895 and $959,064,
respectively, and paid interest of $941,895 and $1,020,529, respectively.

6. Investment in Acquisition Loan:

In January 1989, the joint venture consisting of the Partnership and two
affiliates entered into a participation agreement to fund a $23,300,000 first
mortgage loan on the Noland Fashion Square. The Partnership participated
ratably in 21.46% of the loan amount, related interest income and participation
income. In August 1996, the Partnership sold its interest in the loan for a
sales price of $3,803,640. From the proceeds of the sale, the Partnership paid

$53,058 as its share of the selling costs. The carrying value of the loan was
$4,377,929. The Partnership did not recognize a gain or loss in connection with
the sale of this loan. During 1996, the Partnership recognized a provision for
loan losses of $352,753 and wrote off $627,347 against the previously
established loss allowance related to this loan.

The Jonathan's Landing loan receivable was on nonaccrual status in 1994 and
prior to the acquisition through foreclosure of the property in 1995.  Loans on
nonaccrual status and loans whose payment terms had been restructured were
referred to as impaired loans. Net interest income relating to impaired loans
was $524,637 in 1995. Net interest income included in the accompanying
Statements of Income and Expenses amounted to $425,421 in 1995. As a result of
the sale of the Partnership's remaining loan receivable in 1996, the
Partnership did not recognize net interest income in 1996 or 1997.

7. Allowances for Losses on Loans and Real Estate Held for Sale:

Activity recorded in the allowances for losses on loans and real estate held
for sale during the three years ended December 31, 1997 is described in the
table below:

                                    1997           1996          1995
                                -----------   -----------   -----------
     Loans:
      Balance at beginning of
      year                             None      $274,594    $1,308,594
     Provision charged to
      income                           None       352,753         None
     Direct write-off of
      loans against allowance          None     (627,347)   (1,034,000)
                                -----------   -----------   -----------
     Balance at the end of
      the year                         None          None    $ 274,594
                                ===========   ===========   ===========

    Real Estate Held for Sale:
      Balance at beginning of
      year                       $4,814,809    $7,300,000    $7,965,000
     Provision charged to
      income                        256,000     2,252,809     1,800,000
     Recovery of provision
       previously charged
       to income                       None   (3,351,785)   (2,465,000)
     Direct write-off of real
       estate held for sale
       against allowance         (5,070,809)  (1,386,215)          None
                                -----------   ----------   ------------
     Balance at the end of
      the year                         None    $4,814,809    $7,300,000
                                ===========   ===========   ===========

8.  Management Agreements:

The Partnership's  properties were under management agreements with a
third-party management company prior to the sale of the properties. These
management agreements provided for annual fees of 3% to 6% of gross operating
receipts.

9. Affiliates' Participation in Joint Ventures:

(a) The Brookhollow/Stemmons Center Office Complex was owned by the Partnership
and an affiliate prior to its sale in April 1997. In previous years, profits
and losses were allocated 72.5% to the Partnership and 27.5% to the affiliate.
In order for the capital accounts of the joint venture partners to
appropriately reflect their respective remaining economic interests, the
minority joint venture partner received an adjusted income allocation during
1997. Pursuant to the sale agreement, $250,000 of the sale proceeds were placed
in an escrow and were not to be disbursed to the joint venture until the
earlier of the settlement of any claims presented by the purchaser or October
1997. The funds were released in full in October 1997 and the affiliate's share
of the proceeds was $68,750. See Note 12 of Note to Financial Statements for
additional information.

(b) The Perimeter 400 Center Office Building was owned by a joint venture
consisting of the Partnership and three affiliates prior to its sale in
December 1996. Profits and losses were allocated 50% to the Partnership and 50%
among the affiliates. Pursuant to the sale agreement, $1,750,000 of the sale
proceeds was retained by the joint venture and was unavailable for distribution
until September 1997, at which time the funds were released in full. The
affiliate's share of the proceeds was $875,000. See Note 12 of Notes to
Financial Statements for additional information.

(c) The Sun Lake Apartments was owned by a joint venture consisting of the
Partnership and an affiliate prior to its sale in November 1996. Profits and
losses were allocated 61.95% to the Partnership and 38.05% to the affiliate.
See Note 12 of Notes to Financial Statements for additional information.

All assets, liabilities, income and expenses of the joint ventures were
included in the financial statements of the Partnership with the appropriate
adjustment of profit or loss for each affiliate's participation.

Net distributions of $4,412,960, $23,281,703 and $1,042,505 were made to joint
venture partners during 1997, 1996 and 1995, respectively. In addition, the
joint venture partners were allocated their pro-rata share of the recovery of
losses in the amount of $977,945 during 1996 and $580,001 during 1995.
Provisions for potential losses in the amount of $684,900 were recognized
during 1995.

10. Investment in Joint Ventures with Affiliates:

(a) Title to Sand Pebble Village - Phase I Apartments was acquired through a
foreclosure sale by a joint venture consisting of the Partnership and an
affiliate in 1992. The joint venture purchased the adjacent property, Sand
Pebble Village - Phase II Apartments in October 1993. Profits and losses, all
capital contributions and distributions for both properties were allocated in
accordance with each participant's original funding percentage in the Phase I
loan. The Partnership's ownership percentage was 44.63%.

In August 1996, the joint venture sold Sand Pebble Village Apartments - Phase I
in an all cash sale for $19,411,765. From the proceeds of the sale, the joint
venture paid $431,822 in selling costs. The basis of the property was
$21,436,000. The joint venture recognized no gain or loss on the sale of this
property. The joint venture recognized a recovery of loss on real estate of
$2,080,943 from the sale of this property, of which $928,725 represented the
Partnership's share.

In August 1996, the joint venture also sold Sand Pebble Village Apartments -
Phase II in an all cash sale for $12,088,235. From the proceeds of the sale,
the joint venture paid $4,859,155 to the third party mortgage holder in full
satisfaction of the first mortgage loan, paid a prepayment penalty of $145,775
and selling costs of $272,701. The basis of the property was $9,357,449. The
joint venture recognized a gain of $2,458,085 from the sale of this property,
of which $1,097,043 represented the Partnership's share.

The Partnership's share of the recovery of the loss allowance in 1996 was
included in the Partnership's participation in income (loss) of joint venture
with affiliates. In addition, during 1996 and 1995, the Partnership received
net distributions from these joint ventures totaling $12,229,052 and $855,945,
respectively.

(b)  In 1995, a joint venture consisting of the Partnership and three
affiliates acquired title to the 45 West 45th Street Office Building. Profits
and losses, all capital contributions and distributions were allocated in
accordance with each participant's original funding percentage in the loan. The
Partnership's ownership percentage was 41.3%.

In November 1996, the joint venture sold the 45 West 45th Street Office
Building 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 basis of the property was
$6,786,740. The joint venture recognized a gain of $2,934,185 and a recovery of
a previously established loss allowance of $2,475,000 from the sale of this
property, of which the Partnership's share is $1,211,818 and $1,021,000,
respectively. Pursuant to the sale agreement, $500,000 of the sale proceeds was
retained by the joint venture and was unavailable for distribution until April
1997, at which time the funds were released in full. The Partnership's share
was $206,499.

During 1995, the Partnership recognized a loss of $1,021,000 as its share of a
provision for losses relating to the change in the estimate of the fair value
of the property. This amount is included in the Partnership's participation in
income (loss) of joint venture with affiliates. During 1996 the Partnership
received net distributions from the joint venture of $4,121,167.  During 1995,
the Partnership made a net contribution of $211,957 to this joint venture.

(c)  In 1995, a joint venture consisting of the Partnership and an affiliate
acquired title to the Jonathan's Landing Apartments. Profits and losses, all
capital contributions and distributions were allocated in accordance with each
participant's original funding percentage in the loan. The Partnership's
ownership percentage was 46.5%.

In November 1996, the joint venture sold the Jonathan's Landing Apartments in
an all cash sale for $21,300,000. From the proceeds of the sale, the joint

venture paid $796,475 in selling costs. The basis of the property was
$18,354,120. The joint venture recognized a gain of $2,149,405 from the sale of
this property, of which $999,473 is the Partnership's share.

During 1996 and 1995, the Partnership received net distributions from the joint
venture of $10,165,895 and $76,761, respectively.

The following combined information has been summarized from the December 31,
1996 and 1995 financial statements of the above joint ventures:

                                          1996                 1995
                                     -----------           ----------
Net investment in real estate
 as of December 31                          None          $51,397,309
Total liabilities as
 of December 31                          $108,700           5,324,506
Total income                           17,522,704           8,268,086
Income before loss provisions,
  gains on sales and
  extraordinary items                   2,380,073           1,251,627
Provision for potential losses               None          (2,473,000)
Recovery of loss                        4,553,943                None
Gain on sales                           9,622,619                None
Extraordinary items:
    Debt extinguishment expense           145,775                None
Net income (loss)                      16,410,860          (1,221,373)

11. Transactions with Affiliates:

Fees and expenses paid and payable by the Partnership to affiliates are:

                            Year Ended       Year Ended       Year Ended
                             12/31/97         12/31/96         12/31/95
                         ----------------  ---------------  ----------------
                           Paid   Payable   Paid   Payable   Paid    Payable
                          ------  -------  ------  -------  ------   -------

Mortgage servicing fees      None    None  $8,338    None   $30,603    $957
Reimbursement of expenses
  to the General Partner,
  at cost:
    Accounting            $72,527 $17,704  38,973 $26,534    93,992   8,319
    Data processing         7,606   3,731  11,596   3,890    74,804   5,848
    Investor communica-
      tions                  None    None    None    None    10,982    None
    Legal                  27,757   6,335  18,825  12,816    35,956   4,294
    Portfolio management  169,269  38,682 192,692 131,186   195,656  32,272
    Other                    None    None    None    None    27,456      10

The Partnership participated in an insurance deductible program with other
affiliated partnerships in which the program paid 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 General Partner who received no
fee for administering the program; however, the General Partner was reimbursed
for program expenses. The Partnership paid premiums to the deductible insurance
program of $41,553 and $169,385 in 1996 and 1995, respectively.

The General Partner made a contribution of $230,427 to the Partnership in
connection with the settlement of certain litigation as further described in
Note 14 of Notes to the Financial Statements.

12. Property Dispositions:

(a) In August 1997, the Partnership sold the 420 North Wabash Office Building
in an all cash sale for $5,000,000. From the proceeds of the sale, the
Partnership paid $146,323 in selling costs. In connection with the sale, the
Partnership wrote off $336,626 of accounts receivable related to rental
abatements and scheduled rent increases, which has been recorded as a cost of
sale of this property. The basis of the property was $4,800,000, which is net
of an allowance of $2,562,000. The Partnership had previously established an
allowance for potential losses related to this property against which
$2,562,000 of its remaining net investment was written off. For financial
statement purposes, the Partnership recognized a loss of $282,949 in connection
with the sale of this property.

(b) In May 1997, the Partnership sold the Hammond Aire Plaza Shopping Center in
an all cash sale for $13,800,000. From the proceeds of the sale, the
Partnership paid $376,001 in selling costs. Pursuant to the terms of the sale,
$310,000 of the sale proceeds was placed in escrow at closing. In March 1998,
$50,000 of the escrow was disbursed to the Partnership and $25,000 was
disbursed to the purchaser to cover certain survey and easement costs. The
remaining sale proceeds of $235,000 remain in escrow pending resolution of
certain tenant issues. The Partnership expects to receive a majority of the
sales proceeds remaining in the escrow. The basis of the property was
$13,423,999, which is net of an allowance of $2,120,000. For financial
statement purposes, the Partnership recognized no gain or loss from the sale
of this property. However, the Partnership had previously established an
allowance for potential losses related to this property against which its
remaining net investment of $2,120,000 was written off.

(c) The Brookhollow/Stemmons Center Office Building was owned by a joint
venture consisting of the Partnership and an affiliate. The Partnership and the
affiliate held participation percentages in the joint venture of 72.5% and
27.5%, respectively. In April 1997, the joint venture sold the property in an
all cash sale for $12,724,000. From the proceeds of the sale, the joint venture
paid $340,293 in selling costs. In connection with the sale, the joint venture
wrote off $903,384 of accounts receivable related to rental abatements and
scheduled rent increases, which has been recorded as a reduction of the gain.
The basis of the property was $11,074,128. For financial statement purposes,
the joint venture recognized a gain of $406,195 from the sale of this property,
all of which was allocated to the minority joint venture partner. See Note 10
of Notes to Financial Statements for additional information regarding the
allocation of the gain.

(d) In February 1997, the Partnership sold the Flamingo Pines Shopping Center
in an all cash sale for $10,200,000. From the proceeds of the sale, the

Partnership paid $346,400 in selling costs. The basis of the property was
$9,853,600, which is net of an allowance of $388,809. For financial statement
purposes, the Partnership recognized no gain or loss on the sale of this
property. However, the Partnership had previously established an allowance for
potential losses related to this property against which its remaining net
investment of $388,809 was written off.

(e) In February 1997, the Partnership sold the Park Central Office Building in
an all cash sale for $21,471,000. From the proceeds of the sale, the
Partnership paid $470,891 in selling costs. In addition, the Partnership paid a
state withholding tax of $43,900 on behalf of the Limited Partners relating to
the gain on the sale of the property which has been recorded as a deemed
distribution for financial statement purposes. The basis of the property was
$15,302,762. For financial statement purposes, the Partnership recognized a
gain of $5,697,347 in connection with the sale of this property.

(f) In December 1996, the Partnership sold Symphony Woods Office Building in an
all cash sale for $7,275,000. From the proceeds of the sale, the Partnership
paid $251,836 in selling costs. The basis of the property was $5,153,837.  For
financial statement purposes, the Partnership recognized a gain of $1,869,327
from the sale of this property.

(g) The Perimeter 400 Center Office Building was owned by a joint venture
consisting of the Partnership and three affiliates. The Partnership and the
affiliates held participating percentages in the joint venture of 50%, 22%,
15%, and 13%, respectively. In December 1996, the joint venture sold the
property in an all cash sale for $40,700,000. From the proceeds of the sale,
the joint venture paid $882,765 in selling costs. In addition, the Partnership
paid a state withholding tax of $151,261 relating to the gain on the sale of
this property. The basis of the property was $27,396,252. For financial
statement purposes, the Partnership recognized a gain of $12,420,983 from the
sale of this property, of which $6,210,492 was the minority joint venture
partners' share.

(h) Sun Lake Apartments was owned by a joint venture consisting of the
Partnership and an affiliate. The Partnership and the affiliate held
percentages in the joint venture of 61.95% and 38.05%, respectively. In
November 1996, the joint venture sold the property in an all cash sale for
$24,000,000. The purchaser of the property took title to the property subject
to the existing first mortgage loan of $15,508,832, which represents a noncash
transaction to the Partnership. Accordingly, the noncash aspect of this
transaction is not presented in the Partnership's Statements of Cash Flows.
From the proceeds of the sale, the joint venture paid $701,215 in selling
costs. The basis of the property was $24,685,000. For financial statement
purposes, the joint venture recognized no gain or loss from the sale of this
property. The joint venture recognized a recovery of loss on real estate of
$1,413,785 from the sale of this property, of which $537,945 was the minority
joint venture partner's share, and wrote off $1,386,215 against the previously
established loss allowance related to this property.

(i) In September 1996, the Partnership sold Shoal Run Apartments in an all cash
sale for $10,800,000. From the proceeds of the sale, the Partnership paid

$290,800 in selling costs. The basis of the property was $9,450,000. For
financial statement purposes, the Partnership recognized a gain of $1,059,000
from the sale of this property.

(j) In August 1996, the Partnership sold the Woodscape Apartments in an all
cash sale for $9,550,000. From the proceeds of the sale, the Partnership paid
$299,421 in selling costs. The basis of the property was $6,629,000. For
financial statement purposes, the Partnership recognized a gain of $2,621,579
from the sale of this property.

(k) In June 1996, the Partnership sold the Hawthorne Heights Apartments in an
all cash sale for $8,300,000. From the proceeds of the sale, the Partnership
paid $309,525 in selling costs. The basis of the property was $6,517,570. For
financial statement purposes, the Partnership recognized a gain of $1,472,905
from the sale of this property.

13. Extraordinary Items:

(a) In connection with the 1996 of the Sun Lake Apartments, the Partnership
wrote off the remaining unamortized deferred financing fees in the amount of
$746,767, of which $284,145 was the minority joint venture partner's share.
This amount was recognized as debt extinguishment expense and classified as an
extraordinary item.

(b) In connection with the 1996 sale of the Sand Pebble Village - Phase II
Apartments, the joint venture paid a prepayment penalty in the amount of
$145,775, of which $65,074 was the Partnership's share. This amount was
recognized as debt extinguishment expense and classified as an extraordinary
item.

14. Settlement of Litigation:

A settlement received final approval by the court in November 1996 in the class
action, Paul Williams and Beverly Kennedy, et. al. v. Balcor Pension Investors,
et. al. upon the terms described in the notice to class members in September
1996. The General Partner made a contribution of $230,427 to the Partnership,
from which the plaintiffs' counsel was paid $23,043 pursuant to the settlement
agreement. In February 1997, the General Partner made a settlement payment of
$207,384 ($0.15 per Interest) to members of the class pursuant to the
settlement. Of the total settlement amount, $124,075 was paid to original
investors who held their Limited Partnership Interests at the date of the
settlement and was recorded as a distribution to Limited Partners in the
Financial Statements. The remaining portion of the settlement of $83,309 was
paid to original investors who previously sold their Interests in the
Partnership. This amount was recorded as an administrative expense in the
Financial Statements. Similar contributions and payments were made on the seven
other partnerships included in the lawsuit in addition to those payments
described above. The Balcor Company paid an additional $635,000 to the
plaintiffs' class counsel and The Balcor Company received approximately
$946,000 from the eight partnerships as a reimbursement of its legal expenses,
of which $272,571 was the Partnership's share. The settlement had no material
impact on the Partnership.

15. Fair Values of Financial Instruments:

The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1997 and 1996 are as follows:

The carrying value of cash and cash equivalents, accounts and accrued interest
receivable, and accounts payable approximates fair value.

16. Contingency:

The Partnership is currently involved in a lawsuit whereby the Partnership, the
General Partner and certain third parties have been named as defendants seeking
damages relating to tender offers to purchase interests in the Partnership and
nine affiliated partnerships initiated by the third party defendants in 1996.
The defendants continue to vigorously contest this action. The action has been
dismissed with prejudice and plaintiffs have filed an appeal. It is not
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the financial position, operations or
liquidity of the Partnership. The Partnership believes it has meritorious
defenses to contest the claims.