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: 0-14340
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.)
2355 Waukegan Road Suite A200 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
<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. From inception through December 1997, the Registrant's
operations consisted 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 and lease for capital appreciation and current income, mini-
warehouse facilities offering storage space for business and personal use.
The Registrant utilized the net offering proceeds to acquire from affiliates
of one of the General Partners 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, two facilities in 1993 and the remaining 69
facilities in December 1997.
The Partnership Agreement provides that the proceeds of any sale, financing,
or refinancing of a facility 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 facilities.
The General Partners' current strategy is to liquidate the Registrant in the
latter part of 1998. In December, 1997 a majority of the Limited Partners
approved an offer from Value Storage, Ltd. to purchase all 69 of the
remaining mini-warehouse facilities for a purchase price of $59,000,000.
The purchaser received a credit of $355,000 against the purchase price for
certain repairs, environmental and title issues at some of the facilities.
The closing occurred on December 22, 1997. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Result of Operations-
Liquidity and Capital Resources" for further information.
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 no part-time employees engaged in its operations.
The Registrant no longer has an ownership interest in any real estate. 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.
<PAGE>
Item 2. Properties
As of December 31, 1997, the Registrant did not own any properties.
In the opinion of the General Partners, the Registrant has obtained
adequate insurance coverage.
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 1997.
Item 4. Submission of Matters to a Vote of Security Holders
In November 1997 the General Partners mailed to Limited Partners a consent
solicitation relating to a special proposal from Value Storage, Ltd. for the
sale of all of the remaining mini-warehouse facilities owned by the
Registrant. The consent solicitation was made pursuant to Regulation 14A
under the Securities Exchange Act of 1934. No meeting of the Limited
Partners was held. Ballots were to be tabulated on or about November 21,
1997, subject to the right of the General Partners to extend such date. The
General Partners exercised such option to extend the date and ballots were
tabulated on December 5, 1997. The number of Limited Partnership Interests
that voted in favor of the proposal was 141,100.4104 (50.953%) and the
number of Limited Partner Interests that voted against the proposal was
7,385.403 (2.667%). Therefore, the proposal for the sale of the facilities
was approved.
<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."
As of December 31, 1997, the number of record holders of Limited
Partnership Interests of the Registrant was 6,571.
<PAGE>
Item 6. Selected Financial Data
Year Ended December 31
1997 1996 1995 1994 1993
Rental income $ 10,122,384 10,519,053 10,316,881 10,067,226 9,298,505
Interest income $ 159,769 248,062 330,915 293,869 213,018
Net income $ 20,372,717 4,043,793 4,124,388 4,816,067 4,089,522
Net income per
basic and
diluted Limited
Partnership
Interest $ 74.43 14.46 14.74 17.22 14.62
Taxable income $ 21,148,471 4,015,081 4,693,882 4,893,600 3,930,321
Taxable income
per Limited
Partnership
Interest $ 75.61 14.35 16.78 17.50 14.05
Cash and
cash
equivalents $ 57,910,106 4,187,645 3,643,915 4,014,486 2,834,883
Total mini-
warehouse
properties, net
of accumulated
depreciation $ - 41,655,334 43,428,692 44,809,932 46,050,709
Total assets $ 58,123,651 46,089,970 48,991,405 50,764,405 51,105,762
Distributions to
Limited
Partners $ 7,047,562 6,882,762 6,601,725 5,170,064 5,305,745
Distributions
per Limited
Partnership
Interest $ 25.45 24.85 23.84 18.67 19.16
Properties
owned on
December 31 - 69 69 69 69
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operations
Summary of Operations
The net income of Balcor/Colonial Storage Income Fund-85 (the "Partnership")
increased significantly from 1996 to 1997 primarily due to the recognition
of the gain on the sale of the remaining mini-warehouse facilities. All of
the Partnership's 69 remaining mini-warehouse facilities were sold in
December 1997. Net income remained relatively unchanged from 1996 as
compared to 1995. Except for the aforementioned sale of the facilities, no
other 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.
1997 Compared to 1996
Due to an overall decrease in occupancy at the Partnership's mini-warehouse
facilities as well as the sale of the facilities on December 22, 1997,
rental income and property management fees decreased during 1997 as compared
to 1996. Rental income increased slightly in the West Texas region,
decreased in the Carolina, Dallas/Fort Worth and Georgia regions and
remained relatively unchanged in the East Texas region.
Interest income on short-term investments increased in 1997 as compared to
1996 due to an increase in amounts available for investment primarily due to
proceeds received in connection with the December 1997 sale of the remaining
mini-warehouse facilities.
Interest from mortgage notes receivable ceased in 1996 due to the receipt of
the repayment of the remaining mortgage note balances in that year.
Incentive management fees decreased for 1997 when compared to 1996 due to
Balcor Storage Partners-85's election to forego receipt of their portion of
incentive management fees earned during 1997.
General and administrative expenses increased for 1997 when compared to 1996
due an increase in the allowance for uncollected receivables. The
Partnership is entitled to its portion of unpaid rents collected in the
first 90 days after the sale date. Uncollected receivables after the ninety
day period were charged to bad debts.
1996 Compared to 1995
Due to an overall increase in rental rates at the Partnership's mini-
warehouse facilities, rental income increased during 1996 as compared to
1995. Rental income increased slightly in the Dallas/Fort Worth, Georgia and
Carolina regions and decreased slightly in the West Texas region.
Interest income from short term investments decreased during 1996 as
compared to 1995 as a result of a decrease in amounts available for
investment primarily due to the payment of the additional 3% property
management fee and incentive management fees during the first quarter of
1996.
Interest income from mortgage notes receivable decreased during 1996 as
compared to 1995 due to the repayment of the outstanding mortgage notes
during 1996.
The Limited Partners received distributions equal to 10% of Adjusted
Original Capital for the periods April 1995 through March 1996 and April
1996 through March 1997. In accordance with the Partnership Agreement, the
full 6% management fee was recognized for the twelve months ended March 31,
1997 and 1996. The recognition of the additional management fee was the
primary reason property management fees increased for 1996 as compared to
1995.
Higher payroll and supply expenses as well as professional fees and printing
and postage costs incurred in connection with the tender offers during 1996
resulted in an increase in general and administrative expenses for 1996 as
compared to 1995.
Liquidity and Capital Resources
The cash position of the Partnership increased by approximately $53,722,000
from December 31, 1996 to December 31, 1997 primarily from cash generated
from the sale of the Partnership's remaining mini-warehouse facilities. The
Partnership's cash flow provided from operating activities in 1997 of
approximately $4,671,000 was generated primarily by the operations of the
mini-warehouse properties and interest income earned on the Partnership's
short-term investments, which was partially offset by administrative
expenses. The Partnership received cash of approximately $56,168,000 from
its investing activities consisting of the net proceeds received from the
sale of the remaining 69 mini-warehouse facilities, which was partially
offset by capital improvements made to the properties, which included
painting, roofing and paving expenditures of approximately $496,000.
Financing activities consisted of the payment of distributions to the
Limited and General Partners totaling approximately $7,116,000.
Accounts receivable net of the related allowance for doubtful accounts
increased from December 31, 1996 to December 31, 1997 due primarily to the
level and timing of collection efforts. The timing of collection efforts
are determined by individual state law. There have been no changes in the
credit terms extended to the Partnership's customers nor in the method used
to allow for doubtful accounts.
The Partnership sold all 69 of its remaining mini-warehouse facilities on
December 22, 1997 in an all cash sale for $59,000,000. The purchaser
received a credit of $355,000 against the purchase price for certain
repairs, environmental and title issues at some of the facilities. From the
proceeds of the sale the Partnership paid selling costs of $1,981,364.
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 (see Note
1(c) of Notes to Financial Statements for additional information). Colonial
Storage-85, Inc., a General Partner, received $227,110 in January, 1998
($198,721 as its incentive management fee and $28,389 as its distributive
share of Net Cash Receipts). Balcor Storage Partners-85 elected to forego
its share of the January 1998 distribution (a total of $227,110 of which
$198,721 was incentive management fees and $28,389 was their distributive
share of Net Cash Receipts). The General Partners received $549,026 in
January, 1997 ($480,398 as their incentive management fee and $68,628 as
their distributive share of Net Cash Receipts). From inception of the
offering through December 31, 1997, the General Partners' share of Net Cash
Receipts, which had not been deferred, totaled approximately $1,321,000 of
which $227,110 was paid in 1998. The General Partners are not entitled to
receive any further amounts pursuant to the Partnership Agreement.
In January 1998, the Partnership paid $56,768,190 ($205 per Interest) to the
Limited Partners representing the quarterly Net Cash Receipts distribution
for the fourth quarter of 1997 and available Net Cash Proceeds from the sale
of the mini-warehouse facilities. Limited Partners received distributions
equal to 10% of Adjusted Original Capital for 1997 (distributions paid in
April, July and October 1997 and January 1998). Including the January 1998
distribution, the Partnership has distributed to Limited Partners $437.57
per Interest, of which $231.75 represents Net Cash Receipts and $205.82
represents Net Cash Proceeds.
The General Partners' current strategy is to liquidate the Partnership in
the latter part of 1998. No further distributions are anticipated to be made
prior to the termination of the Partnership. After paying final partnership
expenses, any remaining cash reserves will be distributed to Limited
Partners.
<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, 1997 December 31, 1996
Financial Tax Financial Tax
Statements Return Statements Return
Total assets $ 58,123,651 65,836,901 46,089,970 52,569,595
Partners' capital accounts:
General Partners $ 28,389 658,322 334,503 390,166
Limited Partners $ 57,680,699 64,786,877 44,118,058 51,022,418
Net (loss) income:
General Partners $ (237,486) 211,485 40,438 41,511
Limited Partners $ 20,610,203 20,936,986 4,003,355 4,109,570
Per Limited Partnership
Interest $ 74.43 75.61 14.46 14.84
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 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 due diligence analysis and 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.
Colonial Storage 85, Inc.
Name Title
James R. Pruett President, Vice President,
Secretary, Treasurer, Director
James R. Pruett (55) received his Bachelor of Science
degree from McMurry College in Abilene, Texas, in 1965. 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. Mr. Pruett is
President and a Director of Colonial Storage Management 85, Inc.
("CSM-85") which manage the properties of the Registrant.
The sole director of Colonial Storage 85, Inc. is not a director in
any company, or a director of any corporation which acts as a General
Partner of a limited partnership with a class of securities
Registered pursuant to Section 12 of the Securities Exchange Act of
1934 ("the Act") 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 ("the Investment 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 judgments
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 paid $2,591 in 1997 with respect to one of the
executive officers and directors of The Balcor Company. Certain of
the remaining 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. The Registrant has not paid
and does not propose to pay any remuneration to the remaining
executive officers and directors of the General Partners. 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) The following entity is the sole Limited Partner which owns
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 Public 30,317.28 10.95%
Partnership Storage, Inc. Limited
Interests Glendale, Partnership
California Interests
(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 do not own any additional 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.
<PAGE>
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.
(10) (a) Agreement of sale by and between Value Storage,
Ltd., and Balcor/Colonial Storage Income
Fund-85, dated as of September 4, 1997, and
First Amendment to Agreement of Sale dated as
of September 17, 1997, previously filed as
Exhibits 2.1 and 2.2 respectively to the
Registrant's Form 8-K dated September 4, 1997
(Commission File No. 0-14340) are incorporated
herein by reference.
(b) Second Amendment to Agreement of Sale by and
between Value Storage, Ltd. and Balcor/colonial
Storage Income Fund-85, dated as of October 28,
1997, previously filed as Exhibit 3 to
Registrant's Report on Form 10-Q for the quarter
ended September 30, 1997 (Commission File No. 0-
14340) is incorporated herein by reference.
(c) Third Amendment to Agreement of Sale by and
between Value Storage, Ltd. and Balcor/Colonial
Storage Income Fund-85, dated as of December 5,
1997 is attached hereto.
(22) Letter to Limited Partners dated December 10, 1997 is attached
hereto.
(27) Financial Data Schedule of the Registrant for the year ended
December 31, 1997 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, 1997.
(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 R. Pruett
James R. Pruett
Secretary/Treasurer (Principal
Financial and Accounting
Officer) of Colonial Storage
85,Inc., a General Partner
Date: April 15, 1998
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
/s/ Thomas E. Meador President and Chief Executive Officer
Thomas E. Meador (Principal Executive Officer) of Balcor
Storage Partners-85, a General Partner April 15, 1998
/s/ Jayne A. Kosik Senior Managing Director and Chief
Jayne A. Kosik Accounting and Financial Officer
(Principal Accounting Officer) of
Balcor Storage Partners-85, a General
Partner April 15, 1998
/s/ James R. Pruett President, Secretary/Treasurer and
James R. Pruett Director of Colonial Storage 85 Inc.,
a General Partner April 15, 1998
<PAGE>
Index to Financial Statements
Pages
Independent Auditors' Report F-2
Financial Statements:
Balance Sheets as of December 31, 1997 and 1996 F-3
Statements of Income, years ended December 31, 1997, 1996 and 1995 F-4
Statements of Partners' Capital, years ended December 31, 1997, 1996
and 1995 F-5
Statements of Cash Flows, years ended December 31, 1997, 1996
and 1995 F-6
Notes to Financial Statements F-7 to F-12
Schedules are omitted for the reason that they are inapplicable or
equivalent information has been included elsewhere herein.
Financial Statements and Supplementary Data
<PAGE>
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, 1997 and 1996, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Fort Worth, Texas
April 3, 1998
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Balance Sheets
December 31, 1997 and 1996
1997 (note 4) 1996
Assets
Cash and cash equivalents $ 57,910,106 4,187,645
Accounts receivable, net of allowance
for doubtful accounts of $142,219
and $19,068 in 1997 and 1996, respectively 145,351 122,698
Other 68,194 124,293
58,123,651 4,434,636
Mini-warehouse facilities:
Land - 14,193,743
Buildings - 47,634,567
Furniture, fixtures and equipment - 1,127,156
- 62,955,466
Less accumulated depreciation - 21,300,132
Mini-warehouse facilities, net of
accumulated depreciation - 41,655,334
$ 58,123,651 46,089,970
Liabilities and Partners' Capital
Accounts payable $ 99,880 -
Due to affiliates, net (note 3) 314,683 902,658
Accrued real estate taxes - 302,408
Other accrued liabilities - 48,932
Security deposits - 43,333
Deferred income - 340,078
Total liabilities 414,563 1,637,409
Partners' capital (276,918 Limited
Partnership Interests issued and
outstanding) (note 5) 57,709,088 44,452,561
$ 58,123,651 46,089,970
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Statements of Income
Years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Income:
Rental $ 10,122,384 10,519,053 10,316,881
Interest on short-term
investments 159,769 132,236 172,464
Interest from mortgage notes
receivable - 115,826 158,451
10,282,153 10,767,115 10,647,796
Expenses:
Property operating 2,723,157 2,832,574 2,929,624
Depreciation 2,006,297 2,028,882 2,003,642
Property management
fees (note 3) 601,950 623,983 532,242
Incentive management
fees (note 3) 198,721 480,398 477,021
General and
administrative (note 3) 897,921 757,485 580,879
6,428,046 6,723,322 6,523,408
Net operating income 3,854,107 4,043,793 4,124,388
Gain on sale of mini-warehouse
facilities (note 4) 16,518,610 - -
Net income $ 20,372,717 4,043,793 4,124,388
Limited Partners' share of net income
($74.43, $14.46 and $14.74 per basic
and diluted Interest for 1997, 1996
and 1995, respectively) $ 20,610,203 4,003,355 4,083,144
General Partners' share of
net (loss) income (237,486) 40,438 41,244
$ 20,372,717 4,043,793 4,124,388
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, 1997, 1996 and 1995
Limited General
Partners Partners Total
Balance at December 31, 1994 $ 49,516,046 320,967 49,837,013
Net income 4,083,144 41,244 4,124,388
Cash distributions ($23.84 per
Limited Partner Interest) (6,601,725) - (6,601,725)
Balance at December 31, 1995 46,997,465 362,211 47,359,676
Net income 4,003,355 40,438 4,043,793
Cash distributions ($24.85 per
Limited Partner Interest) (6,882,762) - (6,882,762)
Cash distributions to
General Partners - (68,146) (68,146)
Balance at December 31, 1996 44,118,058 334,503 44,452,561
Net income (loss) (note 1(b)) 20,610,203 (237,486) 20,372,717
Cash distributions ($25.45 per
Limited Partner Interest) (7,047,562) - (7,047,562)
Cash distributions to
General Partners - (68,628) (68,628)
Balance at December 31, 1997 $ 57,680,699 28,389 57,709,088
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, 1997, 1996 and 1995
1997 1996 1995
Operating activities:
Net income $ 20,372,717 4,043,793 4,124,388
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 2,006,297 2,028,882 2,003,642
Gain on sale of mini-warehouse
facilities (note 4) (16,518,610) - -
Net change in:
Net accounts receivable (22,653) 25,602 (37,310)
Other assets 56,099 (3,748) 32,367
Accounts payable 99,880 (1,503) (2,534)
Due to affiliates (587,975) 77,458 634,342
Accrued real estate taxes (302,408) (70,119) 70,519
Other accrued liabilities (48,932) (32,358) 27,096
Security deposits (43,333) (11,408) (21,746)
Deferred income (340,078) 43,610 (3,340)
Net cash provided by
operating activities 4,671,004 6,100,209 6,827,424
Investing activities:
Proceeds from sale of mini-
warehouse facilities (note 4) 58,645,000 - -
Closing costs related to sale of
mini-warehouse
facilities (note 4) (1,981,364) - -
Additions to mini-warehouse
facilities, net (495,989) (255,524) (622,402)
Collection of principal payments
on mortgage notes
receivable (note 2) - 1,649,953 26,132
Net cash provided by (used in)
investing activities 56,167,647 1,394,429 (596,270)
Financing activities:
Distributions to Limited Partners (7,047,562) (6,882,762) (6,601,725)
Distribution to General Partners (68,628) (68,146) -
Net cash used in financing
activities (7,116,190) (6,950,908) (6,601,725)
Net change in cash and cash
equivalents 53,722,461 543,730 (370,571)
Cash and cash equivalents at
beginning of year 4,187,645 3,643,915 4,014,486
Cash and cash equivalents at
end of year $ 57,910,106 4,187,645 3,643,915
See accompanying notes to financial statements.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
December 31, 1997, 1996 and 1995
(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 1997. The remaining 69 properties were
sold on December 22, 1997 (note 4).
(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.
For financial statement purposes, in previous years partners
were allocated income and loss in accordance with the profit
and loss percentages in the Partnership Agreement. In order
for the capital accounts of the General Partners and Limited
Partners to appropriately reflect their respective remaining
economic interests as provided for in the Partnership
Agreement, the Limited Partners were allocated additional
income in 1997 for financial statement purposes.
(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 their 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 10% on Adjusted Original Capital.
Pursuant to the Partnership Agreement, Net Cash Proceeds from
sales or refinancings were to be distributed first to the
Limited Partners until they had received any deficiencies in
the aforementioned minimum cash distributions from operations.
Distributions to the Limited Partners were then to 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 or the property management fee (note
3) had been deferred as a result of subordination, thereafter,
available Net Cash Proceeds would be distributed to the General
Partners to the extent of such deferred amounts. Thereafter,
remaining Net Cash Proceeds were to be distributed 85% to the
Limited Partners and 15% to the General Partners. None of the
General Partners' 8% share of Net Cash Receipts which has been
deferred ($3.748 million as of December 31, 1997) will be paid.
(d) Cash and Cash Equivalents
The Partnership considers all highly liquid investments with
maturities at the date of purchase of three months or less to
be cash equivalents.
(e) Mini-Warehouse Facilities
Costs associated with the appraisal and acquisition of mini-
warehouse facilities were capitalized.
The buildings, furniture, fixtures, and equipment were
depreciated using the straight-line method over their estimated
useful lives ranging from 7 to 25 years.
Maintenance and repairs were charged to expense when incurred.
Expenditures for improvements were charged to the related asset
account.
The Partnership adopted the provisions of SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", on January 1, 1996.
Adoption of this Statement had no impact on the Partnership's
financial position, results of operations, or liquidity.
When properties were disposed of, the related costs and
accumulated depreciation were removed from the respective
accounts, and the gain on disposition was 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 exceeded the amounts
recorded in the Financial Statements at December 31, 1997 and
1996, by $7,713,250 and $6,479,625, respectively.
(g) Use of Estimates
Management of the Partnership has made a number of estimates
and assumptions relating to the reporting of assets and
liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results
could differ from those estimates.
(h) Fair Value of Financial Instruments
In accordance with the reporting requirements of Statement on
Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments", the Partnership calculates the
fair value of its financial instruments and includes this
additional information in the notes to the financial statements
when the fair value is different than the carrying value of
those financial instruments. When the fair value reasonably
approximates the carrying value, no additional disclosure is
made.
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
(i) Earnings Per Share
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) 128
"Earnings per Share", which was required to be adopted for
financial statements issued for annual or interim periods after
December, 15, 1997. The Partnership adopted this standard
which requires a change in the presentation of basic and
diluted earnings per share "EPS" and to restate EPS for all
periods presented. Because there are no dilutive Partnership
Interests, basic and dilutive Parnership Interests are the
same. Therefore, adoption of SFAS 128 did not have an impact
on the Partnership's financial statements.
(2) Mortgage Notes Receivable
The Partnership had three notes resulting from the sale of mini-
warehouse facilities in 1993, 1990 and 1989. Two notes bore interest
rates of 10% per annum with monthly principal and interest payments
based on a 25-year amortization schedule and final balloon payments
in 1996 and 1998, respectively. The other note bore an interest rate
of 8.5% per annum with monthly principal and interest payments based
on a 25-year amortization schedule and a final balloon payment in
1998. In September, 1996 the notes were repaid in full in the amount
of $1,628,650.
(3) Transactions With Affiliates
The Partnership had 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 was
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. None of the
deferred property management fees ($1,991,890 as of December 31,
1997) will be paid.
The Limited Partners received distributions equal to 10% of Adjusted
Original Capital for the period April 1995 through March 1996, the
period April 1996 through March 1997 and the period April 1997
through March 1998. Consequently, in January 1998,January 1997 and
<PAGE>
Balcor/Colonial Storage Income Fund - 85
(An Illinois Limited Partnership)
Notes to Financial Statements
February 1996 the Partnership paid Colonial Storage Management 85,
Inc. $223,530, $234,057 and $228,837, respectively, representing the
amount necessary to meet the 6% property management fee. Colonial
Storage-85, Inc., a General Partner, received $227,110 ($198,721 as
incentive management fees and $28,389 as its distributive share of
Net Cash Receipts)in January 1998. Balcor Storage Partners-85, a
General Partner, has elected to forego its share of the January 1998
distribution (a total of $227,110 of which $198,721 was incentive
management fees and $28,389 was their distributive share of Net Cash
Receipts ). The General Partners received $549,026 ($480,398 as
incentive management fees and $68,628 as their distributive share of
Net Cash Receipts) in January 1997, and $545,167 ($477,021 as
incentive management fees and $68,146 as their distributive share of
Net Cash Receipts) in February 1996. Incentive management fees have
been accrued at December 31, 1997 and 1996, while the General
Partners' distributive share of Net Cash Receipts was deducted from
Partners' Capital when paid. The General Partners will not receive
any further distributions in accordance with the Partnership
Agreement.
The Partnership charged real estate commissions due to affiliates of
the General Partners against the gain on sale of mini-warehouse
facilities in 1989, 1990 and 1993, respectively. The Partnership
Agreement requires that Limited Partners receive their Original
Capital plus a 6% average annual return on Original Capital in order
for affiliates to receive commissions from the sale of the
Partnership's properties. The sale of the remaining properties on
December 22, 1997 did not meet the requirements of the Partnership
Agreement. Consequently, previously accrued real estate commissions
were credited against closing costs relating to the aforementioned
sale. This resulted in an increase in the gain on sale of mini-
warehouse facilities of $73,910.
Certain general and administrative expenses are reimbursed to
affiliates of the General Partners to cover administrative
requirements of the Partnership.
<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, 1997, 1996 and 1995,
are:
1997 1996 1995
Paid Payable Paid Payable Paid Payable
Property
management
fees $ 616,881 245,024 615,969 259,955 354,727 251,941
General and
administrative
expenses (net)$ 608,639 (129,062) 419,375 88,395 392,417 22,328
Real estate
commissions $ - - - 73,910 - 73,910
Incentive
management
fees $ 480,398 198,721 477,021 480,398 - 477,021
(4) Sale of Mini-Warehouse Facilities
The Partnership sold all 69 of its remaining mini-warehouse
facilities on December 22, 1997 in an all cash sale for $59,000,000.
The purchaser received a credit of $355,000 against the purchase
price for certain repairs, environmental and title issues at some of
the facilities. From the proceeds of the sale the Partnership paid
selling costs of $1,981,364. The Partnership's basis in
the properties was $40,145,026 net of accumulated depreciation of
$23,306,429 which resulted in a gain of $16,518,610.
(5) Subsequent Event
In January 1998, the Partnership paid $56,768,190 ($205.00 per
Interest) to the Limited Partners representing the quarterly
distribution of Net Cash Receipts and available Net Cash Proceeds
from the sale of the mini-warehouse facilities in December 1997.
After paying final Partnership expenses, any remaining cash will be
distributed to the Limited Partners.
THIRD AMENDMENT TO AGREEMENT OF SALE PRIVATE
THIS THIRD AMENDMENT TO AGREEMENT OF SALE (this "Amendment")
is made and entered into on this day of December, 1997 by and between
BALCOR/COLONIAL STORAGE INCOME FUND-85, an Illinois limited partnership
("Seller") and VALUE STORAGE, LTD, a Texas limited partnership ("Purchaser").
WHEREAS, Seller and Purchaser entered into that certain Agreement of
Sale dated September 3, 1997, (the "Original Agreement"), that certain First
Amendment to Agreement of Sale dated September 17, 1997, (the "First
Amendment") and that Second Amendment to Agreement of Sale dated October 28,
1997, (the "Second Amendment") (as amended by the First Amendment and Second
Amendment the Original Agreement is hereinafter referred to as the "Agreement")
pursuant to which Seller agreed to sell and Purchaser agreed to purchase sixty-
nine (69) separate self-storage properties located in the states of North
Carolina, South Carolina, Georgia, Mississippi, Missouri, New Mexico, Arkansas,
Texas and Oklahoma, which properties are legally described in Exhibit B of the
Agreement (collectively, the "Real Properties" and individually a "Real
Property"); and
WHEREAS, Seller and Purchaser desire to amend the Purchase Price to
eliminate the broker's commission payable to Steven A. Smathers; and
WHEREAS, Seller and Purchaser desire to establish a final Closing Date;
and
WHEREAS, Seller and Purchaser desire to establish a Prorations Date in
order to facilitate the Closing.
WHEREAS, Seller and Purchaser desire to establish an allocation of the
Purchase Price among each Property.
WHEREAS, Seller and Purchaser desire that those sums to be credited at
Closing to Purchaser and Purchaser's lender pursuant to Paragraphs 3 and 4 of
the First Amendment and Paragraph 3 of the Second Amendment shall be credited
to Purchaser and paid as Purchaser directs at Closing.
NOW, THEREFORE, in consideration of the mutual covenants and agreement
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:
1. Defined Terms. All capitalized terms used herein and not
otherwise defined shall have the meaning ascribed to them in the Agreement.
2. Purchase Price. The Purchase Price, as defined in Paragraph 1.1
of the Agreement, is hereby changed to "Fifty-Nine Million and No/100 Dollars
($59,000,000.00)".
3. Broker Commission. The first grammatical sentence of Paragrap
17 of the Agreement is hereby amended by deleting the following:
"and to Steven A. Smathers in the amount of Seven Hundred Fifty Thousand
and No/100 Dollars ($750,000.00) (to be paid by Seller)"
In addition, the second grammatical sentence of Paragraph 17 of the Agreement is
amended by deleting the following:
"and Seller's commission to Steven A. Smathers"
4. Closing Date. Paragraph 9 of the Agreement is hereby amended by
deleting the first grammatical sentence and by inserting the following in lieu
thereof:
"The closing of this transaction (the "Closing") shall occur on
December 19, 1997 (the "Closing Date"), at the office of Purchaser's counsel,
Dallas, Texas, at which time Seller shall deliver possession of the Properties
to Purchaser. Should Purchaser elect to close on a date earlier than
December 19, 1997, Purchaser must provide Seller with notice at least seventy-
two (72) hours before the proposed Closing Date."
5. Prorations Date. Regardless of the actual Closing Date and in
order to expedite the Closing prorations process, the date on which the
prorations shall be computed pursuant to Paragraph 13 shall be December 18,
1997 (the "Prorations Date"), and all calculations based upon the "Closing
Date" shall be based upon the Prorations Date. Such prorations shall be based
upon the actual figures for the operation of the Real Properties through
November 20, 1997, together with estimates based upon those figures for the
period from November 21, 1997 through the Prorations Date. In order to
reconcile a possible change in the Closing Date or differences between the
actual income and expenses from those estimates made for the purposes of the
Closing, Seller and Purchaser shall reprorate in accordance with the actual
figures for the period from November 21, 1997 through the Closing Date on or
before January 30, 1998. For the purposes of the reproration pursuant to this
Paragraph 5, the "Closing Date" shall be the date on which Seller receives
Seller's sale proceeds on or before 2:00 p.m. Central Standard Time.
6. Allocations. Purchaser and Seller agree that the allocation of
the Purchase Price among each Property (the "Schedule Price") and the allocation
of the Schedule Price for each Property among the following categories:
(i) land, (ii) improvements, (iii) Personal Property, (iv) intangibles and (v)
Leases and plans and specifications (the "Property Breakdown Schedule"), shall
be computed as set forth on Exhibit A attached hereto.
7. Purchaser's Credits. Purchaser and Seller agree that the
amounts referenced in Paragraphs 3 and 4 of the First Amendment and Paragraph 3
of the Second Amendment, specifically the $100,000.00 deposit into Purchaser's
Capital Improvements Reserve, the $55,000.00 credit against the Purchase Price
to compensate Purchaser for attorneys' fees and other costs incurred in
connection with resolving the Unpermitted Exceptions, the $100,000.00 deposit
into Purchaser's Insurance Reserve, and the $100,000.00 Environmental Issues
Credit, shall instead be credited to Purchaser at Closing and shall be paid as
Purchaser directs, rather than paid in the manner contemplated in the First
Amendment and Second Amendment.
8. Full Force and Effect and Counterparts. Except as amended
hereby, the Agreement shall be and remain unchanged and in full force and
effect in accordance with its terms. This Amendment may be executed in
counterparts, each of which shall be deemed an original, but all of which,
when taken together shall constitute one and the same instrument. To
facilitate the execution of this Amendment, Seller and Purchaser may execute
and exchange by telephone facsimile counterparts of the signature pages, with
each facsimile being deemed an "original" for all purposes.
[EXECUTION PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as
of the date first set forth above.
PURCHASER
VALUE STORAGE, LTD., a Texas limited
partnership
By: VALSTOR, Inc., a Texas corporation, its
general partner
By:
Name:
Its:
SELLER
BALCOR/COLONIAL STORAGE INCOME
FUND - 85, an Illinois limited
partnership
By: Balcor Storage Partners - 85,
an Illinois general partnership,
a general partner
By: The Balcor Company,
a Delaware corporation,
its general partner
By:
Name:
Its:
By: COLONIAL STORAGE 85, INC., a Texas
corporation, a general partner
By:
Name:
Its:
ACKNOWLEDGEMENT OF PURCHASER'S BROKER
The undersigned, Steven A. Smathers ("Purchaser's Broker"), hereby
consents to the foregoing amendment and hereby waives any right to a fee or
commission due it from Seller as a result of the transaction described in this
Agreement.
By:
BALCOR/COLONIAL STORAGE INCOME FUND-85
December 10, 1997
Dear Investor:
Your Partnership is pleased to advise you of the following developments:
On December 5, 1997, a majority of the outstanding Partnership interests
consented to a sale of substantially all of the Partnership's assets to Value
Storage, Ltd. In accordance with the consent solicitation materials we mailed
to you on November 4, 1997 and on November 21, 1997, your Partnership
terminated the consent process and ceased accepting consent forms or
revocations on December 5, 1997, when a majority of consents were received.
At 5:00 p.m. on December 5, 1997, 141,100.4104 of the 276,918 partnership
interests outstanding as of October 1, 1997 had been voted for the sale of the
Partnership's assets to Value Storage, Ltd. Of the votes cast prior to the
closing of the Consent Solicitation, approximately 50.953 percent of the
Partnership's interests were voted for the sale to Value Storage, Ltd., and
2.667 percent of the Partnership's interests were voted against the sale to
Value Storage, Ltd.
It is anticipated that the sale to Value Storage, Ltd., will be consummated
on or about December 19, 1997. Your Partnership intends to distribute the
proceeds resulting from the sale and liquidate the Partnership, in accordance
with the terms provided in the consent solicitation materials first mailed to
you on November 4, 1997. An initial distribution is expected to be made on or
about January 15, 1998.
Assuming the sale of the Partnership's assets to Value Storage Ltd., occurs on
or about December 19, 1997 as scheduled, our next correspondence to you will be
attached to your distribution in January 1998.
Your General Partners thank you for your support and patience during this
process. Should you have any questions, please call 800-422-5267.
Very truly yours, Very truly yours,
James R. Pruett, President Thomas E. Meador, Chairman
Colonial Storage 85, Inc. Balcor Storage Partners-85
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 4188
<SECURITIES> 0
<RECEIVABLES> 123
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4435
<PP&E> 62955
<DEPRECIATION> 21300
<TOTAL-ASSETS> 46090
<CURRENT-LIABILITIES> 1637
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 47360
<TOTAL-LIABILITY-AND-EQUITY> 46090
<SALES> 0
<TOTAL-REVENUES> 10767
<CGS> 0
<TOTAL-COSTS> 3457
<OTHER-EXPENSES> 3266
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4044
<INCOME-TAX> 0
<INCOME-CONTINUING> 4044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4044
<EPS-PRIMARY> 14.46
<EPS-DILUTED> 14.46
</TABLE>
