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, 1994
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: 0-14340
Balcor/Colonial Storage Income Fund - 85
(Exact name of registrant as specified in its charter)
Illinois 36-3338930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Balcor Plaza
4849 Golf Road, Skokie, Illinois 60077
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 677-2900
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
<PAGE>
PART I
Item 1. Business
Balcor/Colonial Storage Income Fund - 85 (the "Registrant") is a limited
partnership formed in September 1983 under the laws of the State of
Illinois, which raised $69,229,500 from sales of Limited Partnership
Interests. The Registrant's operations consist exclusively of investment
in and operation of income-producing mini-warehouse facilities, and all
financial information included in this report relates to that industry
segment.
The principal purpose of the Registrant is to acquire, own, maintain,
operate, lease, and hold for capital appreciation and current income,
existing mini-warehouse facilities offering storage space for business and
personal use. The Registrant utilized the net offering proceeds to acquire
from affiliates of a General Partner sixty-nine mini-warehouse facilities
in 1985. Additionally, the Registrant acquired from non-affiliated
entities four mini-warehouse facilities in 1986. The Registrant sold one
mini-warehouse facility each in 1989 and 1990 and two facilities in 1993.
The Partnership Agreement provides that the proceeds of any sale,
financing, or refinancing will not be reinvested in new acquisitions,
except that net proceeds may be used to purchase or finance improvements or
additions to the Registrant's properties.
The real estate industry continues to experience cyclical downturns in many
cities and regions of the country. Historically, real estate investments
have experienced the same cyclical characteristics affecting most other
types of long-term investments. While real estate values have generally
risen over time, the cyclical character of real estate investments,
together with local, regional, and national market conditions, has resulted
in periodic devaluation of real estate in particular markets. In light of
the competitiveness in the rental markets, the General Partners' goals have
been to maintain high occupancy levels while increasing rents where
possible and to monitor and control operating expenses and capital
improvements.
During 1994 Registrant received repayment of one loan receivable. See Item
7. Liquidity and Capital Resources for further information.
The Registrant, by virtue of its ownership of real estate, is subject to
federal and state laws and regulations covering various environmental
issues. Management of the Registrant utilizes the services of
environmental consultants to assess a wide range of environmental issues
and to conduct tests for environmental contamination as appropriate. The
General Partners are not aware of any potential liability due to
environmental issues or conditions that would be material to the
Registrant.
The officers, directors, and employees of Balcor Storage Partners-85 and
Colonial Storage 85, Inc., the General Partners of the Registrant, and
their affiliates perform certain services for the Registrant. The
Registrant currently has 34 full-time and 78 part-time employees engaged in
its operations.
<PAGE>
Item 2. Properties
As of December 31, 1994, the Registrant owns the properties described below.
Net
Rentable
Land Area No. of
Area (Square Rentable
Location (Acres) Feet) Spaces
3233 East Highway 80
Odessa, Texas 1.3 22,450 156
2306 North Collins Boulevard
Arlington, Texas 1.7 26,098 248
3107 South Lake Drive
Texarkana, Texas 1.1 19,230 155
6715 Wolflin Road
Amarillo, Texas 1.6 21,080 218
7800 North Broadway
Oklahoma City, Oklahoma 2.4 35,880 264
1604 Camp Lane
Albany, Georgia 1.9 32,942 301
1005 West Cotton
Longview, Texas 2.2 24,002 210
6046 Financial Drive
Norcross, Georgia 2.2 34,708 285
1320 Norwood Drive
Bedford, Texas 1.8 29,220 254
5311 Apex Highway
Durham, North Carolina 3.0 23,000 252
218 Eisenhower Drive
Savannah, Georgia 1.5 21,716 206
132 Slaton Highway
Lubbock, Texas 1.9 16,840 114
2960 South Cobb Drive
Smyrna, Georgia 1.8 28,892 255
<PAGE>
3513 Highway 45 North
Meridian, Mississippi 2.0 24,980 191
3194 South Campbell Avenue
Springfield, Missouri 1.7 25,360 242
1440 North Hairston Road
Stone Mountain, Georgia 2.3 30,117 270
3472 Hillsboro Road
Durham, North Carolina 1.9 31,600 315
4615 West Beryl Road
Raleigh, North Carolina 1.7 28,750 295
2826 South Clack Street
Abilene, Texas 2.4 32,038 273
1301 South Stemmons
Lewisville, Texas 1.2 21,900 162
2316 Highway 19 North
Meridian, Mississippi 2.3 27,880 216
3016 South Cooper
Arlington, Texas 1.5 24,912 193
2215 West Southwest Loop 223
Tyler, Texas 2.5 28,301 241
2000 Country Club Drive
Carrollton, Texas 2.0 35,379 237
2331 South Collins Boulevard
Arlington, Texas 2.0 31,396 273
2990 Pio Nono Avenue
Macon, Georgia 1.7 26,998 220
5513 East Lancaster
Fort Worth, Texas 1.3 22,104 210
5121 North Street
Nacogdoches, Texas 2.0 17,483 146
4917 California Parkway, S.E.
Fort Worth, Texas 1.7 27,132 247
<PAGE>
1881 Gordon Highway
Augusta, Georgia 1.6 22,464 230
3208 East Park Row
Arlington, Texas 2.1 35,505 341
5502 Chapel Hill Boulevard
Chapel Hill, North Carolina 1.7 26,800 260
3654 West Pioneer Parkway
Arlington, Texas 2.3 34,176 245
1311 Northwest Loop 281
Longview, Texas 2.0 24,940 200
3125 Cherry Street North
Winston-Salem, North Carolina 1.3 21,500 259
1010 Holiday Hill Drive
North Midland, Texas 2.6 42,578 357
95 Green Street
Warner Robins, Georgia 1.2 19,940 192
2115 Silas Creek Parkway
Winston-Salem, North Carolina 1.7 25,350 299
3120 Knickerbocker Road
San Angelo, Texas 1.8 19,425 146
2302 Parkview Drive
San Angelo, Texas 1.1 19,575 180
8457 Roswell Road
Dunwoody, Georgia 3.9 60,240 447
5717 Will Ruth Avenue
El Paso, Texas 2.0 33,056 260
1513 Denman Street
Lufkin, Texas 1.5 14,362 120
9303 Abercorn Extension
Savannah, Georgia 3.0 34,080 278
1850 North Clack Street
Abilene, Texas 1.2 17,280 99
<PAGE>
7012 Glenwood
Raleigh, North Carolina 1.5 25,200 196
3730 West Wendover Avenue
Greensboro, North Carolina 1.7 30,600 289
2305 East Lohman Avenue
Las Cruces, New Mexico 1.3 17,380 177
4000 I-40 East
Amarillo, Texas 1.6 21,860 218
4701 Osborne Drive
El Paso, Texas 1.3 18,900 183
3229 Highway 80
Mesquite, Texas 2.1 31,120 206
1510 West 7th Street
Clovis, New Mexico 1.0 13,640 124
914 N.E. 8th Street
Grand Prairie, Texas 1.8 27,940 206
7469 Tara Boulevard
Jonesboro, Georgia 1.8 29,082 221
871 North Forest
Amarillo, Texas 2.5 23,379 200
5808 Highway 271 South
Fort Smith, Arkansas 1.1 14,680 123
5604 Tinker Diagonal
Midwest City, Oklahoma 1.6 27,901 278
3751 Longmire Way
Doraville, Georgia 2.1 29,780 300
818 South Clack Street
Abilene, Texas 1.5 16,340 165
8400 Canyon Drive
Amarillo, Texas 2.2 17,570 157
3121 Washington Road
Augusta, Georgia 1.4 28,138 255
<PAGE>
4011 Midland Boulevard
Fort Smith, Arkansas 1.9 26,580 174
4141 Snapfinger Woods Drive
Decatur, Georgia 2.7 36,580 336
1808 Hampton Road
Texarkana, Texas 2.8 28,621 247
4155 Milgen Road
Columbus, Georgia 1.5 24,624 215
426 South College Drive
Wilmington, North Carolina 2.3 28,131 290
1412 Poinsett Highway
Greenville, South Carolina 1.6 19,300 200
2815 White Horse Road
Greenville, South Carolina 2.6 31,500 309
1515 Mt. Zion Road
Morrow, Georgia 5.0 64,539 666
In the opinion of the General Partners, the Registrant has provided for
adequate insurance coverage for its real estate investment properties.
Item 3. Legal Proceedings
The Registrant is not subject to any material pending legal proceedings,
nor were any such proceedings terminated during the fourth quarter of 1994.
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 1994.
<PAGE>
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 the Statements of
Partners' Capital, page F-5, and Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources, below.
As of December 31, 1994, the number of record holders of Limited
Partnership Interests of the Registrant was 7,749.
<PAGE>
Item 6. Selected Financial Data
Year Ended December 31
1994 1993 1992 1991 1990
Rental income $ 10,067,226 9,298,505 8,600,074 8,117,059 7,714,249
Interest income $ 293,869 213,018 194,020 266,973 301,746
Net income $ 4,816,067 4,089,522 3,443,706 3,224,478 3,258,345
Net income per
Limited
Partnership
Interest $ 17.22 14.62 12.31 11.53 11.65
Taxable income $ 4,893,600 3,930,321 3,208,375 2,969,489 3,145,786
Taxable income
per Limited
Partnership
Interest $ 17.50 14.05 11.47 10.62 11.25
Cash and
cash
equivalents $ 4,014,486 2,834,883 2,427,287 2,328,126 2,900,221
Total mini-
warehouse
properties, net
of accumulated
depreciation $ 44,809,932 46,050,709 48,492,489 49,807,181 50,519,817
Total assets $ 50,764,405 51,105,762 52,366,414 53,577,746 54,862,156
Distributions to
Limited Partners $ 5,170,064 5,305,745 4,715,919 4,641,178 4,474,994
Distributions per
Limited
Partnership
Interest $ 18.67 19.16 17.03 16.76 16.16
Properties
owned on
December 31 69 69 71 71 71
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Summary of Operations
Increased rental revenues resulting from substantially improved market
conditions in cities where many of Balcor/Colonial Storage Income Fund-
85's (the "Partnership") properties are located was the primary reason for
the increases in net income generated by the Partnership during 1994, 1993
and 1992. No material events occurred during these periods which
significantly impacted the net income of the Partnership. Further
discussion of the Partnership's operations is summarized below.
Operations
1994 Compared to 1993
Due to increases in rental rates at certain of the Partnership's mini-
warehouse facilities, particularly in the Georgia and mid-Atlantic regions
of the United States, rental income and, correspondingly, property
management fees increased from 1993 to 1994.
Interest income from mortgage notes receivable increased from 1993 to 1994
due to interest payments on the first mortgage notes which were received by
the Partnership in connection with the sale of two mini-warehouse
properties in July 1993. This increase was partially offset by the
retirement of one note in April 1994.
Interest income on short-term investments increased from 1993 to 1994 due
to an increase in average balances available for investment as well as an
increase in rates.
Increased accounting and asset management costs as well as supplies
expenses resulted in an increase in general and administrative expenses
during 1994 as compared to 1993.
1993 Compared to 1992
Due to an increase in occupancy levels and rental rate increases at certain
of the Partnership's mini-warehouse facilities, particularly in the Central
and Eastern regions of the United States, rental income and,
correspondingly, property management fees increased from 1992 to 1993.
Interest income from mortgage notes receivable increased from 1992 to 1993
primarily due to interest payments on the first mortgage notes which were
received by the Partnership in July 1993 in connection with the sale of the
two mini-warehouse properties.
Increased legal fees resulting from the property sales and higher payroll
costs resulted in an increase in general and administrative expense during
1993 as compared to 1992.
The loss on sale of mini-warehouse facilities resulted from the sale of two
mini-warehouse facilities located in Albuquerque, New Mexico (See note 2
of Notes to Financial Statements for additional information).
<PAGE>
Liquidity and Capital Resources
The cash position of the Partnership increased from December 31, 1993, to
December 31, 1994 as cash from operations and from mortgage notes
receivable exceeded distributions to Limited Partners and capital
expenditures. The Partnership's cash flow provided by operating activities
in 1994 was generated primarily by the operations of the mini-warehouse
properties and interest income earned on the Partnership's short-term
investments and mortgage notes receivable, which was partially offset by
administrative expenses. This cash flow was used in investing activities
to make capital improvements to the properties, which included painting,
roofing and paving expenditures, and in financing activities to provide
distributions to the Limited Partners.
On March 3, 1994 a $215,000 note related to the sale of one mini-warehouse
facility in 1993 was paid in full.
Pursuant to the Partnership Agreement, the General Partners are entitled to
8% of Net Cash Receipts available for distribution, which is subordinated
to the receipt by Limited Partners of specified distribution levels
following the termination of the offering (See note 1(c) of Notes to
Financial Statements for additional information). From the inception of
the offering through December 31, 1994, the General Partners' share of Net
Cash Receipts totaled approximately $3,776,000, none of which has been
paid. The General Partners are entitled to receive such subordinated
amounts only from distributed Net Cash Proceeds.
In January 1995, the Partnership paid $1,367,975 ($4.94 per Interest) to
the Limited Partners representing the quarterly distribution for the fourth
quarter of 1994. This distribution amount is less than the full Special
Distribution (as defined in the Partnership Agreement) of ten percent per
annum. As stated in the Partnership Agreement, any deficiency in the
Special Distribution is payable from distributed Net Cash Proceeds. The
General Partners believe the cash flow generated from property operations
should enable the Partnership to continue making quarterly distributions to
Limited Partners. However, the level of future cash distributions to
Limited Partners will be dependent upon the amount of cash flow generated
by the Partnership's properties, as to which there can be no assurance.
Quarterly distributions increased from $4.63 per Interest for the first and
second quarters of 1994 to $4.94 per $250 Interest for the third and fourth
quarters of 1994 due to improved operating results at several of the
Partnership's mini-warehouse facilities. To date, the Partnership has
distributed $163.37 per Interest, of which $160.29 represents Net Cash
Receipts and $3.08 represents Net Cash Proceeds. The General Partners
intend to retain on behalf of the Partnership cash reserves adequate to
meet working capital requirements as they may arise.
One of the General Partners has recently completed the outsourcing of the
transfer agent and investor records services, and computer operations and
systems development functions that provided services to the Partnership.
All of these functions are now being provided by independent third parties.
Each of these transactions occurred after extensive due diligence and
competitive bidding processes. The General Partners do not believe that
the cost of providing these services to the Partnership, in the aggregate,
will be materially different to the Partnership during 1995 when compared
to 1994.
Inflation has several types of potentially conflicting impacts on real
estate investments. Short-term inflation can increase real estate
operating costs which may or may not be recovered through increased rents
and/or sales prices depending on general or local economic conditions. In
the long term, inflation can be expected to increase operating costs and
replacement costs and may lead to increased rental revenues and real estate
values.
<PAGE>
Item 8. Financial Statements and Supplementary Data
See Index to Financial Statements on Page F-1 of this Form 10-K.
The supplemental financial information specified by Item 302 of Regulation
S-K is not applicable.
The net effect of the differences between the financial statements and the
tax information is summarized as follows:
December 31, 1994 December 31, 1993
Financial Tax Financial Tax
Statements Return Statements Return
Total assets $ 50,764,405 57,046,797 51,105,762 57,310,121
Partners' capital accounts:
General Partners $ 320,967 267,680 272,806 218,744
Limited Partners $ 49,516,046 55,851,225 49,918,204 56,176,625
Net income:
General Partners $ 48,161 48,936 40,895 39,303
Limited Partners $ 4,767,906 4,844,664 4,048,627 3,891,018
Per Limited Partnership
Interest $ 17.22 17.50 14.62 14.05
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with accountants on any matter
of accounting principles, practices or financial statement disclosure.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Neither the Registrant nor Balcor Storage Partners-85, one of the
General Partners, has a Board of Directors.
The other General Partner, Colonial Storage 85, Inc., has a Board of
Directors. The sole member is James R. Pruett (see b, c, e, and f
below) who has been a director since the formation of Colonial
Storage 85, Inc.
(b,c,
&e) The names, ages, and business experience of the executive officers and
significant employees of the General Partners of the Registrant are as
follows:
Balcor Storage Partners-85
Title Name
Chairman, President and Chief Thomas E. Meador
Executive Officer
Executive Vice President, Allan Wood
Chief Financial Officer and
Chief Accounting Officer
Senior Vice President Alexander J. Darragh
First Vice President Daniel A. Duhig
First Vice President Josette V. Goldberg
First Vice President Alan G. Lieberman
First Vice President Brian D. Parker
and Assistant Secretary
First Vice President John K. Powell, Jr.
First Vice President Reid A. Reynolds
First Vice President Thomas G. Selby
Thomas E. Meador (July 1947) joined Balcor in July 1979. He is
Chairman, President and Chief Executive Officer and has responsibility
for all ongoing day-to-day activities at Balcor. He is a Director of
The Balcor Company. 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.
Allan Wood (January 1949) joined Balcor in August 1983 and, as
Balcor's Chief Financial Officer and Chief Accounting Officer, is
responsible for the financial and administrative functions. He is
also a Director of The Balcor Company. Mr. Wood is a Certified Public
Accountant. Prior to joining Balcor, he was employed by Price
Waterhouse where he was involved in auditing public and private
companies.
Alexander J. Darragh (February 1955) joined Balcor in September 1988
and has primary responsibility for the Portfolio Advisory Group. He
is responsible for due diligence analysis and real estate advisory
services in support of asset management, institutional advisory and
capital markets functions. Mr. Darragh has supervisory responsibility
of Balcor's Investor Services, Investment Administration, Fund
Management and Land Management departments. Mr. Darragh received
masters' degrees in Urban Geography from Queens's University and in
Urban Planning from Northwestern University.
Daniel A. Duhig (October 1956) joined Balcor in November 1986 and is
responsible for the Asset Management Department relating to real
estate investments made by Balcor and its affiliated partnerships,
including negotiations for modifications or refinancings of real
estate mortgage investments and the disposition of real estate
investments.
Josette V. Goldberg (April 1957) joined Balcor in January 1985 and has
primary responsibility for all human resources matters. In addition,
she has supervisory responsibility for Balcor's administrative and MIS
departments. Ms. Goldberg has been designated as a Senior Human
Resources Professional (SHRP).
Alan G. Lieberman (June 1959) joined Balcor in May 1983 and is
responsible for the Property Sales and Capital Markets Groups. Mr.
Lieberman is a Certified Public Accountant.
Brian D. Parker (June 1951) joined Balcor in March 1986 and is
responsible for Balcor's corporate and property accounting, treasury
and budget activities. Mr. Parker is a Certified Public Accountant
and holds an M.S. degree in Accountancy from DePaul University.
John K. Powell, Jr. (June 1950) joined Balcor in September 1985 and is
responsible for the administration of the investment portfolios of
Balcor's partnerships and for Balcor's risk management functions. Mr.
Powell received a Master of Planning degree from the University of
Virginia. He 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.
Reid A. Reynolds (April 1950) joined Balcor in March 1981 and is
involved with the asset management of residential properties for
Balcor. Mr. Reynolds is a licensed Real Estate Broker in the State of
Illinois.
Thomas G. Selby (July 1955) joined Balcor in February 1984 and has
responsibility for various Asset Management functions, including
oversight of the residential portfolio. From January 1986 through
September 1994, Mr. Selby was Regional Vice President and then Senior
Vice President of Allegiance Realty Group, Inc., an affiliate of
Balcor providing property management services. Mr. Selby was
responsible for supervising the management of residential properties
in the western United States.
Colonial Storage 85, Inc.
Name Title
James R. Pruett President, Vice President, Director
James N. Danford Secretary, Treasurer
James R. Pruett (September 1942) received his Bachelor of Science
degree from McMurry College in Abilene, Texas, in 1965. He is the
president, sole director and sole shareholder of James R. Pruett,
Inc., one of the corporate general partners of Colonial Storage
Centers Group, Colonial Storage Centers Group II, and Colonial Storage
Centers Group III, the managing general partner of Colonial Storage
Centers I, Ltd. (Colonial I), Colonial Storage Centers II, Ltd.
(Colonial II) and Colonial Storage Centers III, Ltd. (Colonial III),
respectively. Mr. Pruett is also President and a Director of Colonial
Storage 86, Inc., which serves as a General Partner of Balcor/Colonial
Storage Income Fund - 86 (BCSIF-86). Mr. Pruett developed the first
Atlanta, Georgia, Colonial Self Storage mini-warehouse facility in
1972. Since that time, he has handled substantially all business
aspects of mini-warehouse development, construction, operation, and
management. Mr. Pruett has directed the site selection and
development or acquisition of numerous locations for mini-warehouses
and office/warehouses including the facilities of Colonial I,
Colonial II, and Colonial III. Mr. Pruett is President and a Director
of Colonial Storage Management, Inc.("CSM"), Colonial Properties
Management, Inc.("CPM"), Colonial Storage Management 85, Inc.("CSM-
85"), and Colonial Storage Management 86, Inc.("CSM-86") which manage
the properties of Colonial I and Colonial II, Colonial III, the
Registrant, and BCSIF-86, respectively.
James N. Danford (January 1959) received his Bachelor of Business
Administration degree from The University of Texas at Arlington.
Mr. Danford was a senior accountant with a public accounting firm
prior to joining Colonial Storage Centers in June of 1986.
Mr. Danford is a Certified Public Accountant, member of the Texas
Society of Certified Public Accountants, and is chief financial
officer of Colonial Storage Management 85, Inc., Colonial I,
Colonial II, Colonial III, Registrant, BCSIF-86, CSM, CPM, CSM-
85 and CSM-86.
The sole director of Colonial Storage 85, Inc. is not a director in
any company with a class of securities registered pursuant to Section
12 of the Securities Exchange Act of 1934 or subject to the
requirements of Section 15 (b) of the Act or any company registered as
an investment company under the Investment Company Act of 1940, but is
a director of four other corporations which act as general partners of
limited partnerships which have a class of securities registered
pursuant to Section 12 of the Act.
(d) There is no family relationship between any of the foregoing officers or
director.
(f) To the best of the Registrant's knowledge, there have been no events
under any bankruptcy act, no criminal proceedings, and no judgements
or injunctions material to the evaluation of the ability and integrity
of any current director or executive officer of Colonial Storage 85,
Inc., Colonial Storage Management 85, Inc., or any current executive
officer of Balcor Storage Partners-85 during the past five years.
<PAGE>
Item 11. Executive Compensation
(a,b,c,
d&e) The Registrant has not paid and does not propose to pay any
renumeration to the executive officers and directors of the general
partners. Certain of these officers receive compensation from The
Balcor Company and Colonial Storage 85-Inc., (but not from the
Registrant) for services performed for various affiliated entities,
which may include services performed for the Registrant. However, the
general partners believe that any such compensation attributable to
services performed for the Registrant is immaterial to the Registrant.
See Note 3 of Notes to Financial Statements for the information
relating to transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No person owns of record or is known by the Registrant to own
beneficially more than 5% of the outstanding Limited Partnership
Interests of the Registrant.
(b) Balcor Storage Partners-85 and Colonial Storage 85, Inc. and its
officers and director own as a group the following Limited Partnership
Interests in the Registrant:
Title of Class Beneficially Owned Percent of Class
Limited Partnership Interests 400 less than 1%
Relatives and affiliates of the officers or director of the General
Partners own an additional twenty Limited Partnership Interests in the
Registrant.
(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 1 of Notes to Financial Statements for information relating
to the Partnership Agreement and the allocation of distributions and
profits and losses.
See Note 3 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.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1&2) See Index to Financial Statements on page F-1 of this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement and Certificate of
Limited Partnership set forth as Exhibit 3 to Amendment No.
1 to the Registrant's Registration Statement Form S-11 dated
May 14, 1985 and to Registrant's Registration Statements
dated September 23, 1985, and January 29, 1986 (Registration
No. 2-95752, No. 33-357, and No. 33-2977, respectively) are
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 May 14, 1985 and
to Registrant's Registration Statement on Form S-11 dated
January 29, 1986 (Registration No. 2-95752, and No. 33-2977,
respectively) and Form of Confirmation regarding Interests
in the Registrant set forth as Exhibit 4.2 to the
Registrant's Report on Form 10-Q for the quarter ended June
30, 1992 (Commission File No. 0-14340) are incorporated
herein by reference.
(27) Financial Data Schedule of the Registrant for the year ended
December 31, 1994 is attached hereto.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Registrant during the quarter
ended December 31, 1994.
(c) Exhibits: See Item 14 (a)(3) above.
(d) Financial Statement Schedules: See Index to Financial Statements on Page
F-1 of this Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BALCOR/COLONIAL STORAGE INCOME FUND -85
By: /s/ James N. Danford
James N. Danford
Secretary/Treasurer (Principal
Financial and Accounting
Officer) of Colonial Storage 85,
Inc., a General Partner
Date: March 28, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
/s/ Thomas E. Meador Storage Partners-85, a General Partner March 28, 1995
Thomas E. Meador
Executive Vice President, and Chief
Accounting and Financial Officer
(Principal Accounting and Financial
Officer) of Balcor Storage Partners-85,
/s/ Allan Wood a General Partner March 28, 1995
Allan Wood
President and Director of Colonial
/s/ James Pruett Storage 85 Inc., a General Partner March 28, 1995
James Pruett
Secretary/Treasurer (Principal Financial
and Accounting Officer) of Colonial
/s/ James N. Danford Storage 85, Inc., a General Partner March 28, 1995
James N. Danford
<PAGE>
Index to Financial Statements
Pages
Independent Auditors' Report F-2
Financial Statements:
Balance Sheets as of December 31, 1994 and 1993 F-3
Statements of Income, years ended December 31, 1994, 1993 and 1992 F-4
Statements of Partners' Capital, years ended December 31, 1994, 1993
and 1992 F-5
Statements of Cash Flows, years ended December 31, 1994, 1993 and
1992 F-6
Notes to Financial Statements F-7 to F-11
Schedules are omitted for the reason that they are inapplicable or
equivalent information has been included elsewhere herein.
<PAGE>
Financial Statements and Supplementary Data
INDEPENDENT AUDITORS' REPORT
The Partners
Balcor/Colonial Storage Income Fund - 85:
We have audited the financial statements of Balcor/Colonial Storage Income
Fund - 85 (an Illinois Limited Partnership) as listed in the accompanying
index. 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/Colonial Storage
Income Fund - 85 as of December 31, 1994 and 1993, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Fort Worth, Texas
February 9, 1995
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Balance Sheets
December 31, 1994 and 1993
1994 1993
Assets
Cash and cash equivalents $ 4,014,486 2,834,883
Accounts receivable, net of allowance for doubtful
accounts of $27,465 and $18,243 in 1994 and 1993,
respectively 110,990 128,857
Mortgage notes receivable (note 2) 1,676,085 1,913,987
Other 152,912 177,326
5,954,473 5,055,053
Mini-warehouse facilities, at cost:
Land 14,193,743 14,193,743
Buildings 46,901,166 46,265,292
Furniture, fixtures and equipment 982,631 892,230
62,077,540 61,351,265
Less accumulated depreciation 17,267,608 15,300,556
Mini-warehouse facilities, net of accumulated
depreciation 44,809,932 46,050,709
$ 50,764,405 51,105,762
Liabilities and Partners' Capital
Accounts payable $ 4,037 -
Due to affiliates (note 3) 190,858 115,291
Accrued real estate taxes 302,008 309,320
Other accrued liabilities 54,194 57,364
Security deposits 76,487 131,156
Deferred income 299,808 301,621
Total liabilities 927,392 914,752
Partners' capital (276,918 Limited Partnership
Interests issued and outstanding) 49,837,013 50,191,010
$ 50,764,405 51,105,762
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Statements of Income
Years ended December 31, 1994, 1993 and 1992
1994 1993 1992
Income:
Rental $ 10,067,226 9,298,505 8,600,074
Interest on short-term investments 126,665 73,933 74,619
Interest from mortgage notes
receivable 167,204 139,085 119,401
10,361,095 9,511,523 8,794,094
Expenses:
Property operating 2,759,069 2,681,661 2,771,397
Depreciation 1,967,052 1,941,870 1,914,313
Property management fees (note 3) 297,186 277,295 257,561
General and administrative (note 3) 521,721 480,334 407,117
5,545,028 5,381,160 5,350,388
Income from operations 4,816,067 4,130,363 3,443,706
Loss on sale of land, property and
equipment (note 2) - (40,841) -
Net income $ 4,816,067 4,089,522 3,443,706
Limited Partners' share of net income
($17.22, $14.62 and $12.31 per
Interest for 1994, 1993 and 1992,
respectively) $ 4,767,906 4,048,627 3,409,269
General Partners' share of net income 48,161 40,895 34,437
$ 4,816,067 4,089,522 3,443,706
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Statements of Partners' Capital
Years ended December 31, 1994, 1993 and 1992
Limited General
Partners Partners Total
Balance at December 31, 1991 $ 52,481,972 197,474 52,679,446
Net income 3,409,269 34,437 3,443,706
Cash distributions ($17.03 per
Interest) (4,715,919) - (4,715,919)
Balance at December 31, 1992 51,175,322 231,911 51,407,233
Net income 4,048,627 40,895 4,089,522
Cash distributions ($19.16 per
Interest) (5,305,745) - (5,305,745)
Balance at December 31, 1993 49,918,204 272,806 50,191,010
Net income 4,767,906 48,161 4,816,067
Cash distributions ($18.67 per
Interest) (5,170,064) - (5,170,064)
Balance at December 31, 1994 $ 49,516,046 320,967 49,837,013
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1994, 1993 and 1992
1994 1993 1992
Operating activities:
Net income $ 4,816,067 4,089,522 3,443,706
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 1,967,052 1,941,870 1,914,313
Loss on sale of mini-warehouse
facilities (note 2) - 40,841 -
Net change in:
Net accounts receivable 17,867 (6,214) (14,079)
Other assets 24,414 (40,777) (4,182)
Accounts payable 4,037 (77,738) 72,668
Due to affiliates 75,567 48,395 (4,824)
Accrued real estate taxes (7,312) (18,187) (42,361)
Other accrued liabilities (3,170) 9,213 24,898
Security deposits (54,669) (31,566) 1,583
Deferred income (1,813) 25,454 8,917
Net cash provided by
operating activities 6,838,040 5,980,813 5,400,639
Investing activities:
Additions to mini-warehouse
facilities, net (726,275) (690,197) (599,621)
Proceeds from sale of land,
property and equipment - net
(note 2) - 404,266 -
Collection of principal payments on
mortgage notes receivable
(note 2) 237,902 18,459 14,062
Net cash used in investing
activities (488,373) (267,472) (585,559)
Financing activities:
Distributions to Limited Partners (5,170,064) (5,305,745) (4,715,919)
Net cash used in financing
activities (5,170,064) (5,305,745) (4,715,919)
Net change in cash and cash
equivalents 1,179,603 407,596 99,161
Cash and cash equivalents at
beginning of year 2,834,883 2,427,287 2,328,126
Cash and cash equivalents at
end of year $ 4,014,486 2,834,883 2,427,287
Supplemental Disclosure of Noncash Investing Activities
The Partnership sold two mini-warehouse facilities in 1993 for $1,195,000.
Consideration received included mortgage notes receivable for $745,000 (note 2).
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
December 31, 1994, 1993 and 1992
(1) Summary of Significant Accounting Policies
(a) Description of Partnership
Balcor/Colonial Storage Income Fund - 85 (the
"Partnership) is a limited partnership formed
in September 1983. The Partnership Agreement
provides that Balcor Storage Partners-85 (an
Illinois general partnership) and Colonial
Storage 85, Inc. (a Texas corporation) are
the General Partners of the Partnership and
provides for the admission of Limited
Partners through the sale of up to 320,000
Limited Partnership Interests at $250 per
Interest, of which 276,918 ($69,229,500)
Limited Partnership Interests were sold prior
to the termination of the offering.
The principal purpose of the Partnership is
to acquire, own, maintain, operate, lease,
and hold for capital appreciation and current
income, existing mini-warehouse facilities
offering storage space for business and
personal use. The Partnership acquired
sixty-nine mini-warehouse facilities from
affiliates in 1985 and four mini-warehouse
facilities from non-affiliated entities in
1986. The Partnership sold four mini-
warehouse facilities prior to 1994.
(b) Allocation of Net Income and Profits
The Partnership Agreement provides that net
income (after a deduction for any incentive
management fees) from operations shall be
allocated 99% and 1% to the Limited Partners
and General Partners, respectively.
Additionally, when a property is sold or
otherwise disposed of, the General Partners
will be allocated profits equal to the
greater of 1% of total profits or the amount
of Net Cash Proceeds distributable to the
General Partners from the sale (in excess of
subordinated Net Cash Receipts, note 1(c)).
The balance of the profits will be allocated
to the Limited Partners.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
(c) Cash Distributions
Net Cash Receipts available for distribution
from operations shall be distributed 92% to
the Limited Partners and 8% to the General
Partners, 7% as a partnership incentive
management fee and 1% as their distributable
share from operations. Distributions from
operations to the General Partners are
subordinated to receipt by the Limited
Partners of a return equal to 8% on Adjusted
Original Capital during the first twelve
month period following the termination of the
offering of Interests, 9% during the second
twelve month period following the termination
of the offering of Interests, and 10% during
each twelve month period thereafter.
Net Cash Proceeds from sales or refinancings
will be distributed first to the Limited
Partners until they have received any
deficiencies in the aforementioned minimum
cash distributions from operations.
Distributions to the Limited Partners will
then be made in an amount equal to total
Original Capital plus any deficiency in a
cumulative distribution of 12% of Adjusted
Original Capital for the period commencing
approximately one year following the
termination of the offering. If the receipt
of any portion of the General Partners' 8%
share of Net Cash Receipts from operations
(approximately $3,776,000 has been deferred
as of December 31, 1994) or the property
management fee (note 3) has been deferred as
a result of subordination, thereafter,
available Net Cash Proceeds will be
distributed to the General Partners to the
extent of such deferred amounts. Thereafter,
remaining Net Cash Proceeds will be
distributed 85% to the Limited Partners and
15% to the General Partners.
(d) Cash and Cash Equivalents
The Partnership considers all highly liquid
investments with maturities at date of
purchase of three months or less to be cash
equivalents.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
(e) Mini-Warehouse Facilities
Costs associated with the appraisal and
acquisition of mini-warehouse facilities are
capitalized.
The buildings, furniture, fixtures, and
equipment are depreciated using the straight-
line method over their estimated useful lives
ranging from 5 to 25 years.
Maintenance and repairs are charged to
expense when incurred. Expenditures for
improvements are charged to the related asset
account.
The Partnership records its investments in
real estate at cost, and periodically
assesses possible impairment to the value of
its properties. In the event that the
General Partners determine that a permanent
impairment in value has occurred, the
carrying basis of the property is reduced to
its estimated fair value.
When properties are disposed of, the related
costs and accumulated depreciation will be
removed from the respective accounts, and any
gain or loss on disposition will be
recognized in accordance with generally
accepted accounting principles.
(f) Income Taxes
Taxable income or loss of the Partnership is
includable in the income tax returns of the
individual partners; therefore, no provision
for income taxes has been made in the
accompanying financial statements.
The tax bases of the Partnership's assets and
liabilities exceeded the amounts recorded in
the Financial Statements at December 31, 1994
and 1993, by $6,281,392 and $6,204,359,
respectively.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
(2) Sale of Mini-warehouse Facilities
On July 16, 1993, the Partnership sold two mini-
warehouse facilities located in Albuquerque, New
Mexico, for $780,000 and $415,000, respectively.
The sales price consisted of cash payments to the
Partnership of $250,000 and $200,000 and first
mortgage notes of $530,000 and $215,000,
respectively. On March 3, 1994 the $215,000 first
mortgage note was paid in full. The remaining
note bears interest at 8.5% per annum with monthly
principal and interest payments based on a 25-
year amortization schedule, with a final balloon
payment due in 1998. The basis in the properties
sold was $781,967 and $408,140, net of accumulated
depreciation, and the Partnership recognized
losses for financial statement purposes of $32,221
and $8,620, respectively. The General Partners
may receive commissions of $23,400 and $12,450,
respectively which are subordinated in accordance
with the Partnership Agreement.
(3) Transactions With Affiliates
The Partnership has an agreement with Colonial
Storage Management 85, Inc., an affiliate of
Colonial Storage 85, Inc., a General Partner, to
supervise and direct the business and affairs
associated with the mini-warehouse facilities for
a fee of 6% of the gross revenues of the
facilities. One-half of this property management
fee is subordinated to receipt by the Limited
Partners of a Special Distribution of 8% during
the first twelve month period after termination of
the offering, 9% during the second twelve month
period and 10% during each twelve month period
thereafter. Any deferred portion of the property
management fee will be paid only from distributed
Net Cash Proceeds. As of December 31, 1994
property management fees of $1,916,886 were
deferred.
In connection with the sales of the mini-warehouse
facilities made to date, the General Partners may
each receive a real estate commission of up to
$36,975 which have been subordinated in accordance
with the Partnership Agreement.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
Commissions, fees, and expenses paid and payable
by the Partnership to affiliates for the years
ended December 31, 1994, 1993 and 1992, are:
1994 1993 1992
Paid Payable Paid Payable Paid Payable
Property
management
fees $ 246,188 74,426 275,081 23,428 257,233 21,214
General and
administrative
expenses 343,434 42,482 302,912 17,913 294,279 7,582
Real estate
commissions - 73,950 - 73,950 - 38,100
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 4015
<SECURITIES> 0
<RECEIVABLES> 1787
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5954
<PP&E> 62077
<DEPRECIATION> 17268
<TOTAL-ASSETS> 50764
<CURRENT-LIABILITIES> 927
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 49837
<TOTAL-LIABILITY-AND-EQUITY> 50764
<SALES> 0
<TOTAL-REVENUES> 10361
<CGS> 0
<TOTAL-COSTS> 3056
<OTHER-EXPENSES> 2489
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4816
<INCOME-TAX> 0
<INCOME-CONTINUING> 4816
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4816
<EPS-PRIMARY> 17.22
<EPS-DILUTED> 17.22
</TABLE>
