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 June 30, 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
incorporation or organization) Identification Number)
2355 Waukegan Road Suite A200 Bannockburn, Illinois 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 267-1600
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No .
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Balance Sheets
June 30, 1995 and December 31, 1994
1995
(Unaudited) 1994
Assets
Cash and cash equivalents $ 3,585,318 4,014,486
Accounts receivable, net of allowance for
doubtful accounts of $19,461 at
June 30, 1995 and $27,465 at December 31, 1994 96,670 110,990
Mortgage notes receivable 1,663,331 1,676,085
Other 122,305 152,912
5,467,624 5,954,473
Mini-warehouse facilities, at cost:
Land 14,193,743 14,193,743
Buildings 47,160,180 46,901,166
Furniture, fixtures, and equipment 1,037,945 982,631
62,391,868 62,077,540
Less accumulated depreciation 18,246,149 17,267,608
Mini-warehouse facilities, net of accumulated
depreciation 44,145,719 44,809,932
$ 49,613,343 50,764,405
Liabilities and Partners' Capital
Accounts payable $ 4,037 4,037
Due to affiliates 106,774 190,858
Accrued real estate taxes 343,441 302,008
Other accrued liabilities 54,194 54,194
Security deposits 64,575 76,487
Deferred income 388,637 299,808
Total liabilities 961,658 927,392
Partners' capital (276,918 Limited Partnership
Interests issued and outstanding) 48,651,685 49,837,013
$ 49,613,343 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 and Six Months Ended June 30, 1995 and 1994
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Income:
Rental $ 2,568,310 2,527,770 5,042,304 4,943,550
Interest on short-term
investments 44,213 23,296 89,174 37,399
Interest from mortgage
notes receivable 39,693 42,099 79,540 87,066
2,652,216 2,593,165 5,211,018 5,068,015
Expenses:
Property operating 760,204 690,828 1,467,076 1,377,831
Depreciation 486,417 489,722 978,541 976,785
Property management fees 76,833 74,278 151,837 147,980
General and administrative 167,364 152,760 315,261 285,920
1,490,818 1,407,588 2,912,715 2,788,516
Net income $ 1,161,398 1,185,577 2,298,303 2,279,499
Limited Partners' share of net
income ($4.15 and $4.24 per
Interest for the quarter
ended June 30, 1995 and 1994,
respectively, and $8.22 and
$8.15 per Interest for the
six months ended June 30,1995
and 1994, respectively) $ 1,149,784 1,173,721 2,275,320 2,256,705
General Partners' share of net
income 11,614 11,856 22,983 22,794
$ 1,161,398 1,185,577 2,298,303 2,279,499
Distributions to Limited Partners
($7.64 and $4.63 per Interest
for the quarter ended
June 30, 1995 and 1994,
respectively, and $12.58 and
$9.10 per Interest for the
six months ended June 30, 1995
and 1994, respectively) $ 2,115,654 1,282,131 3,483,631 2,519,954
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
Operating activities:
Net income $ 2,298,303 2,279,499
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 978,541 976,785
Net change in:
Net accounts receivable 14,320 16,182
Other assets 30,607 (41,857)
Due to affiliates (84,084) 47,604
Accrued real estate taxes 41,433 10,282
Other accrued liabilities - 8,810
Security deposits (11,912) (36,654)
Deferred income 88,829 68,180
Net cash provided by operating
activities 3,356,037 3,328,831
Investing activities:
Additions to mini-warehouse facilities, net (314,328) (377,394)
Collection of principal payments on mortgage
notes receivable 12,754 226,720
Net cash used in investing activities (301,574) (150,674)
Financing activities:
Distributions to Limited Partners (3,483,631) (2,519,954)
Net cash used in financing activities (3,483,631) (2,519,954)
Net change in cash and cash equivalents (429,168) 658,203
Cash and cash equivalents at beginning of period 4,014,486
2,834,883
Cash and cash equivalents at end of period $ 3,585,318 3,493,086
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
quarter and six months ended June 30, 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 June 30, 1995, property
management fees of $2,068,733 were deferred.
Fees and expenses paid and payable by the Partnership to affiliates
for the quarter and six months ended June 30, 1995 are:
Paid Payable
Quarter Six Months
Property management fees $ 75,713 201,027 $ 26,236
General and administrative
expenses 232,169 289,040 6,628
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 July 1995, the Partnership paid $1,514,741 to the Limited
Partners representing the quarterly distribution for the second
quarter of 1995.
<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 June 30, 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
No material events occurred during 1995 or 1994 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 management fees increased during the second quarter and
six months ended June 30, 1995 as compared to the same periods in 1994.
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
and six months ended June 30, 1995 as compared to the same periods in 1994
due to an increase in interest rates and amounts available for investment.
Interest income from mortgage notes receivable decreased during the quarter
and six months ended June 30, 1995 as compared to the same periods 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 and six months ended June 30,
1995 as compared to the same periods in 1994. Maintenance expenses
increased due to an increase in non-capitalized repairs 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 quarter and six months ended June 30, 1995
as compared to the same periods in 1994.
Liquidity and Capital Resources
The cash position of the Partnership decreased from December 31, 1994, to
June 30, 1995. The Partnership's cash flow provided by operating
activities in the first six month 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, gate security,
door repair and replacement and unit dimension changes, 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. From the inception of
the offering through June 30, 1995, the General Partner's share of Net
Cash Receipts totaled approximately $4,022,000, none of which has been
paid. The General Partners are entitled to receive such subordinated
amounts only from distributed Net Cash Proceeds.
In July 1995, the Partnership paid $1,514,741 ($5.47 per Interest) to the
Limited Partners representing the quarterly distribution for the second
quarter of 1995. To date, the Partnership has distributed $176.48 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 $5.28 per Interest for
the first quarter of 1995 to $5.47 per Interest for the second 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 six months ended June 30, 1995 is attached hereto.
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the
quarter ended June 30, 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 D. Parker
Brian D. Parker,
Senior Vice President and Chief 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: August 11, 1995
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<PERIOD-END> JUN-30-1995
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<PP&E> 62392
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<TOTAL-ASSETS> 49613
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0
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<OTHER-SE> 48652
<TOTAL-LIABILITY-AND-EQUITY> 49613
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