FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
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 Identification Number)
incorporation or organization)
Balcor Plaza
4849 Golf Road
Skokie, Illinois 60077
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (708) 677-2900
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No .
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Balance Sheets
March 31, 1995 and December 31, 1994
1995
(Unaudited) 1994
Assets
Cash and cash equivalents $ 4,171,507 4,014,486
Accounts receivable, net of allowance for doubtful
accounts of $24,729 at March 31, 1995 and $27,465
at December 31, 1994 87,066 110,990
Mortgage notes receivable 1,669,784 1,676,085
Other 159,220 152,912
6,087,577 5,954,473
Mini-warehouse facilities, at cost:
Land 14,193,743 14,193,743
Buildings 46,928,042 46,901,166
Furniture, fixtures, and equipment 996,955 982,631
62,118,740 62,077,540
Less accumulated depreciation 17,759,732 17,267,608
Mini-warehouse facilities, net of accumulated
depreciation 44,359,008 44,809,932
$ 50,446,585 50,764,405
Liabilities and Partners' Capital
Accounts payable 4,037 4,037
Due to affiliates 164,520 190,858
Accrued real estate taxes 207,169 302,008
Other accrued liabilities 54,194 54,194
Security deposits 70,144 76,487
Deferred income 340,580 299,808
Total liabilities 840,644 927,392
Partners' capital (276,918 Limited Partnership
Interests issued and outstanding) 49,605,941 49,837,013
$ 50,446,585 50,764,405
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Statements of Income
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
1995 1994
Income:
Rental $ 2,473,994 2,415,780
Interest on short-term investments 44,961 14,103
Interest from mortgage notes receivable 39,847 44,967
2,558,802 2,474,850
Expenses:
Property operating 706,872 687,003
Depreciation 492,124 487,063
Property management fees 75,004 73,702
General and administrative 147,897 133,160
1,421,897 1,380,928
Net income $ 1,136,905 1,093,922
Limited Partners' share of net income ($4.06 and
$3.91 per Interest for the three months ended
March 31, 1995 and 1994, respectively) $ 1,125,536 1,082,983
General Partners' share of net income 11,369 10,939
$ 1,136,905 1,093,922
Distribution to Limited Partners ($4.94 and $4.47
per Interest for the three months ended
March 31, 1995 and 1994, respectively) $ 1,367,977 1,237,823
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Statements of Cash Flows
For the Three Months Ended March 31, 1995 and 1994
(Unaudited)
1995 1994
Operating activities:
Net income $ 1,136,905 1,093,922
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 492,124 487,063
Net change in:
Net accounts receivable 23,924 34,936
Other assets (6,308) 24,694
Due to affiliates (26,338) 27,976
Accrued real estate taxes (94,839) (138,085)
Other accrued liabilities - 6,354
Security deposits (6,343) (20,585)
Deferred income 40,772 55,759
Net cash provided by operating
activities 1,559,897 1,572,034
Investing activities:
Additions to mini-warehouse facilities, net (41,200) (90,475)
Collection of principal payments on mortgage
notes receivable 6,301 6,367
Net cash used in investing activities (34,899) (84,108)
Financing activities:
Distribution to Limited Partners (1,367,977) (1,237,823)
Net cash used in financing activities (1,367,977) (1,237,823)
Net change in cash and cash equivalents 157,021 250,103
Cash and cash equivalents at beginning of period 4,014,486 2,834,883
Cash and cash equivalents at end of period $ 4,171,507 3,084,986
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
1) Summary of Significant Accounting Policies
In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the
three months ended March 31, 1995, and all such adjustments are of a
normal and recurring nature.
2) 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 12-month period thereafter. Any deferred portion of the property
management fee will be paid only from distributed Net Cash Proceeds.
As of March 31, 1995, property management fees of $1,991,890 were
deferred.
Fees and expenses paid and payable by the Partnership to affiliates
for the quarter ended March 31, 1995 are:
Paid Payable
Property management fees $ 124,314 $ 25,116
General and administrative expenses 56,871 65,494
Property sales commissions (A) - 73,910
(A) These commissions payable to the General
Partners have been subordinated in accordance
with the Partnership Agreement.
3) Subsequent Event
In April 1995, the Partnership paid $2,115,654 to the Limited
Partners, $1,462,127 of which represents the quarterly distribution
for the first quarter of 1995 and $653,527 represents a distribution
of sales proceeds.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor/Colonial Storage Income Fund - 85 (the "Partnership") is a limited
partnership formed in September 1983. 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
raised $69,229,500 through the sale of Limited Partnership Interests and
utilized these proceeds to acquire 69 mini-warehouse facilities from
affiliates in 1985 and 4 mini-warehouse facilities from non-affiliated
entities in 1986. The Partnership sold one mini-warehouse facility in
1989, one facility in 1990 and two facilities in 1993. As of March 31, 1995
the Partnership continues to operate 69 mini-warehouse facilities.
Inasmuch as the management's discussion and analysis below relates
primarily to the time period since the end of the last fiscal year,
investors are encouraged to review the financial statements and the
management's discussion and analysis contained in the annual report for
1994 for a more complete understanding of the Partnership's financial
position.
Operations
Summary of Operations
Rental revenues and interest income increased slightly resulting in an
increase in net income during the first quarter of 1995 as compared to the
first quarter of 1994. 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.
1995 Compared to 1994
Due to increases in rental rates at certain of the mini-warehouse
facilities, particularly those located in Georgia, rental income and
therefore, property managment fees increased during the first quarter of
1994 as compared to the first quarter of 1995. Rental income increased
significantly in Georgia and decreased slightly in Texas. All other areas
increased slightly.
Interest income from short term investments increased during the quarter
ended March 31, 1995 as compared to the same period in 1994 due to an
increase in interest rates and amounts available for investment.
Interest income from mortgage notes receivable decreased during the quarter
ended March 31, 1995 as compared to the same period in 1994, due to a
decrease in the average balance outstanding on such notes.
Higher maintenance costs and real estate taxes resulted in an increase in
property operating expenses for the quarter ended March 31, 1995 as
compared to the same period in 1994. Maintenance expenses increased due to
higher expenditures related to the ongoing maintenance program. Real estate
tax expense increased due to increases in property values at certain of the
Partnership's mini-warehouse facilities for 1995.
Higher supply expenses resulted in an increase in general and
administrative expenses for the first quarter of 1995 as compared to the
first quarter of 1994.
Liquidity and Capital Resources
The cash position of the Partnership increased from December 31, 1994, to
March 31, 1995. The Partnership's cash flow provided by operating
activities in the first quarter of 1995 was generated primarily by the
operations of the mini-warehouse properties, interest income received on
the Partnership's short term investments and interest income received on
mortgage notes receivable, which were partially offset by administrative
expenses. This cash flow was used in investing activities to make capital
improvements to the properties, which included painting, security, door and
configuration expenditures, and in financing activities to provide
distributions to the Limited Partners.
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 March 31, 1995, the General Partner's share of Net
Cash Receipts totaled approximately $3,895,000, none of which has been
paid. The General Partners are entitled to receive such subordinated
amounts only from distributed Net Cash Proceeds.
In April 1995, the Partnership paid $1,462,127 ($5.28 per Interest) to the
Limited Partners representing the quarterly distribution for the first
quarter of 1995. Additionally, the Partnership paid $653,527 ($2.36 per
Interest) to the Limited Partners representing a distribution of sales
proceeds. To date, the Partnership has distributed $171.01 per $250
Interest. The net cash receipts 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 $4.94 per Interest for
the third and fourth quarters of 1994 to $5.28 per Interest for the first
quarter of 1995 due to improved operating results at several of the
Partnership's mini-warehouse facilities. The General Partners intend to
retain on behalf of the Partnership cash reserves deemed adequate to meet
working capital requirements as they may arise.
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>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(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 the Registrant's Registration Statement on Form
S-11 dated January 29, 1985 (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 March 31, 1995 is attached hereto.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter
ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Balcor/Colonial Storage Income Fund - 85
By: /s/ Thomas E. Meador
Thomas E. Meador,
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Storage Partners-85, a General Partner
By: /s/ Brian Parker
Brian Parker,
Senior Vice President and Chief
Accounting and Financial Officer
(Principal Accounting and Financial
Officer) of Balcor Storage Partners-85,
a General Partner
By: /s/ James Pruett
James Pruett
President and Director of Colonial
Storage 85, Inc., a General Partner
By: /s/ James N. Danford
James N. Danford,
Secretary/Treasurer (Principal Financial
and Accounting Officer) of Colonial
Storage 85, Inc., a General Partner
Date: May 12, 1995
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<PERIOD-END> MAR-31-1995
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<PP&E> 62119
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0
0
<OTHER-SE> 49606
<TOTAL-LIABILITY-AND-EQUITY> 50447
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