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 September 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-14352
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BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3344227
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
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
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<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
-------------- ---------------
Cash and cash equivalents $ 19,815,508 $ 5,475,539
Escrow deposits 512,847 909,293
Prepaid expenses 73,259 35,463
Accounts and accrued interest receivable 98,818 157,490
Deferred expenses, net of accumulated
amortization of $45,533 in 1996 and
$23,383 in 1995 273,199 631,343
-------------- ---------------
20,773,631 7,209,128
-------------- ---------------
Investment in real estate:
Land 3,440,509 10,567,930
Buildings and improvements 29,537,388 58,506,072
-------------- ---------------
32,977,897 69,074,002
Less accumulated depreciation 13,335,358 23,640,594
-------------- ---------------
Investment in real estate, net of
accumulated depreciation 19,642,539 45,433,408
-------------- ---------------
$ 40,416,170 $ 52,642,536
============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 318,052 $ 61,352
Due to affiliates 69,690 23,216
Accrued real estate taxes 205,783 23,314
Security deposits 100,894 257,824
Mortgage notes payable 16,844,205 33,824,504
-------------- ---------------
Total liabilities 17,538,624 34,190,210
-------------- ---------------
Limited Partners' capital (57,074
Interests issued and outstanding) 23,031,134 18,695,717
General Partner's deficit (153,588) (243,391)
-------------- ---------------
Total partners' capital 22,877,546 18,452,326
-------------- ---------------
$ 40,416,170 $ 52,642,536
============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------------
Income:
Rental and service $ 6,723,787 $ 7,337,047
Interest on short-term investments 180,085 134,674
-------------- ---------------
Total income 6,903,872 7,471,721
-------------- ---------------
Expenses:
Interest on mortgage notes payable 1,795,730 2,225,698
Depreciation 1,233,672 1,312,180
Amortization of deferred expenses 66,149 129,040
Property operating 2,946,955 2,774,966
Real estate taxes 579,963 638,182
Property management fees 339,666 375,799
Administrative 336,091 340,913
-------------- ---------------
Total expenses 7,298,226 7,796,778
-------------- ---------------
Loss before gains on sales of properties
and extraordinary item (394,354) (325,057)
Gains on sales of properties 9,666,645
-------------- ---------------
Income (loss) before extraordinary item 9,272,291 (325,057)
Extraordinary item:
Debt extinguishment expenses (291,995) (539,471)
-------------- ---------------
Net income (loss) $ 8,980,296 $ (864,528)
============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
-------------- ---------------
Income (loss) before extraordinary item
allocated to General Partner $ 92,723 $ (3,251)
============== ===============
Income (loss) before extraordinary item
allocated to Limited Partners $ 9,179,568 $ (321,806)
============== ===============
Income (loss) before extraordinary item
Per Limited Partnership Interest
(57,074 issued and outstanding) $ 160.84 $ (5.64)
============== ===============
Extraordinary item allocated
to General Partner $ (2,920) $ (5,394)
============== ===============
Extraordinary item allocated
to Limited Partners $ (289,075) $ (534,077)
============== ===============
Extraordinary item per Limited
Partnership Interest (57,074
issued and outstanding) $ (5.06) $ (9.36)
============== ===============
Net income (loss) allocated to General
Partner $ 89,803 $ (8,645)
============== ===============
Net income (loss) allocated to Limited
Partners $ 8,890,493 $ (855,883)
============== ===============
Net income (loss) per Limited Partnership
Interest (57,074 issued and outstanding) $ 155.77 $ (15.00)
============== ===============
Distributions to Limited Partners $ 4,555,076 None
============== ===============
Distributions per Limited Partnership
interest (57,074 issued and outstanding) $ 79.81 None
============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------------
Income:
Rental and service $ 1,917,634 $ 2,398,831
Interest on short-term investments 109,523 39,304
-------------- ---------------
Total income 2,027,157 2,438,135
-------------- ---------------
Expenses:
Interest on mortgage notes payable 524,656 728,421
Depreciation 358,885 437,393
Amortization of deferred expenses 19,383 39,875
Property operating 1,062,154 942,344
Real estate taxes 174,628 247,473
Property management fees 103,141 126,337
Administrative 115,445 149,887
-------------- ---------------
Total expenses 2,358,292 2,671,730
-------------- ---------------
Loss before gains on sales of properties
and extraordinary item (331,135) (233,595)
Gains on sales of properties 9,666,645
-------------- ---------------
Income (loss) before extraordinary item 9,335,510 (233,595)
Extraordinary item:
Debt extinguishment expenses (291,995) (539,471)
-------------- ---------------
Net income (loss) $ 9,043,515 $ (773,066)
============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended September 30, 1996 and 1995
(Unaudited)
(Continued)
1996 1995
-------------- ---------------
Income (loss) before extraordinary item
allocated to General Partner $ 93,355 $ (2,336)
============== ===============
Income (loss) before extraordinary item
allocated to Limited Partners $ 9,242,155 $ (231,259)
============== ===============
Income (loss) before extraordinary item
Per Limited Partnership Interest
(57,074 issued and outstanding) $ 161.94 $ (4.05)
============== ===============
Extraordinary item allocated
to General Partner $ (2,920) $ (5,394)
============== ===============
Extraordinary item allocated
to Limited Partners $ (289,075) $ (534,077)
============== ===============
Extraordinary item per Limited
Partnership Interest (57,074
issued and outstanding) $ (5.06) $ (9.36)
============== ===============
Net income (loss) allocated to General
Partner $ 90,435 $ (7,730)
============== ===============
Net income (loss) allocated to Limited
Partners $ 8,953,080 $ (765,336)
============== ===============
Net income (loss) per Limited Partnership
Interest (57,074 issued and outstanding) $ 156.87 $ (13.41)
============== ===============
Distribution to Limited Partners $ 285,370 None
============== ===============
Distribution per Limited Partnership
interest (57,074 issued and outstanding) $ 5.00 None
============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
-------------- ---------------
Operating activities:
Net income (loss) $ 8,980,296 $ (864,528)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Extraordinary item:
Debt extinguishment expense 291,995 48,724
Gains on sales of properties (9,666,645)
Depreciation of properties 1,233,672 1,312,180
Amortization of deferred expenses 66,149 129,040
Net change in:
Escrow deposits 109,916 (474,965)
Accounts receivable 58,672 (63,720)
Prepaid expenses (37,796) (142,797)
Accounts payable 256,700 (16,966)
Due to affiliates 46,474 (43,273)
Accrued liabilities 182,469 242,682
Security deposits (156,930) 891
-------------- ---------------
Net cash provided by operating activities 1,364,972 127,268
-------------- ---------------
Investing activities:
Proceeds from sales of properties 18,181,721
Payment of selling costs (729,629)
--------------
Net cash provided by investing
activities 17,452,092
--------------
Financing activities:
Distributions to Limited Partners (4,555,076)
Repayment of mortgage notes payable (29,427,232)
Proceeds from issuance of mortgage
notes payable 33,900,000
Principal payments on mortgage notes
payable (208,549) (426,849)
Payment of deferred expenses (654,726)
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
(Continued)
Release of improvement escrows 286,530
Funding of improvement escrows (591,988)
-------------- ---------------
Net cash (used) in or provided by
financing activities (4,477,095) 2,799,205
-------------- ---------------
Net change in cash and cash equivalents 14,339,969 2,926,473
Cash and cash equivalents at beginning
of period 5,475,539 2,872,521
-------------- ---------------
Cash and cash equivalents at end of period $ 19,815,508 $ 5,798,994
============== ===============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.
2. Interest Expense:
During the nine months ended September 30, 1996 and 1995, the Partnership
incurred and paid interest expense on mortgage notes payable of $1,795,730 and
$2,225,698, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 are:
Paid
-----------------------
Nine Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $74,075 $13,122 $69,690
4. Property Sales:
(a) In August 1996, the Partnership sold the El Dorado Hills Apartments in an
all cash sale of $29,350,000. The purchaser of the El Dorado Hills Apartments
took title subject to the existing first mortgage loan in the amount of
$16,771,749. From the proceeds of the sale, the Partnership paid $707,859 in
selling costs. The basis of the property was $22,380,642, which is net of
accumulated depreciation of $10,703,315. For financial statement purposes, the
Partnership recognized a gain of $6,261,499 from the sale of this property.
(b) In August 1996, the Partnership sold the Willow Lawn Self-Storage Facility
in an all cash sale of $5,603,470. From the proceeds of the sale, the
Partnership paid $21,770 in selling costs. The basis of the property was
$2,176,554, which is net of accumulated depreciation of $835,594. For financial
statement purposes, the Partnership recognized a gain of $3,405,146 from the
sale of this property.
5. Extraordinary Item:
In August 1996, the Partnership sold the El Dorado Hills Apartments. In
connection with the sale, the Partnership fully amortized the remaining
deferred financing fees in the amount of $291,995. This amount was recognized
as an extraordinary item and classified as debt extinguishment expense.
<PAGE>
6. Subsequent Event:
In October 1996, the Partnership made a distribution of $17,682,096 ($309.81
per Interest) to the holders of Limited Partnership Interests representing a
quarterly distribution of Net Cash Receipts of $4.00 per Interest for the third
quarter of 1996, and a special distribution of Net Cash Proceeds of $305.81 per
Interest from proceeds received from the August 1996 sale of the El Dorado
Hills Apartments and the Willow Lawn Self-Storage Facility.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Current Income Fund-85 A Real Estate Limited Partnership (the
"Partnership") is a limited partnership formed in 1985 to invest in and operate
income-producing real property. The Partnership raised $57,074,000 through the
sale of Limited Partnership Interests and utilized these proceeds to acquire
five real property investments. The Partnership sold the El Dorado Hills
Apartments and the Willow Lawn Self-Storage Facility in August 1996. The
Partnership continues to operate the three remaining properties.
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 1995 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership sold the El Dorado Hills Apartments and the Willow Lawn
Self-Storage Facility during August 1996 and recognized significant gains on
these sales which resulted in an increase in net income during the nine months
and quarter ended September 30, 1996 as compared to a loss during the same
periods in 1995. Further discussion of the Partnership's operations is
summarized below.
1996 Compared to 1995
- ---------------------
Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the nine months and quarters ended September 30, 1996 and 1995.
The Partnership sold the El Dorado Hills Apartments and the Willow Lawn
Self-Storage Facility in August 1996 and recognized gains on the sales of these
properties totaling $9,666,645 in 1996. These sales also resulted in decreases
in rental and service income, interest expense on mortgage notes payable,
depreciation, amortization, real estate taxes and property management fees
during 1996 as compared to 1995. Costs were incurred for exterior painting and
roof repairs at the El Dorado Hills Apartments during the third quarter of 1996
to prepare the property for sale. In addition, higher advertising and insurance
costs at the Willow Lawn Self-Storage Facility were incurred during 1996. These
costs resulted in increased property operating expenses during 1996 as compared
to 1995.
In addition to the decrease resulting from the 1996 sales discussed above,
rental and service income also decreased during 1996 as compared to 1995 as a
result of a decrease in occupancy at American Way Mall.
<PAGE>
Proceeds received in connection with the August 1996 sales of the El Dorado
Hills Apartments and the Willow Lawn Self-Storage Facility were invested in
short-term investments prior to their distribution to Limited Partners in
October 1996. As a result, interest income on short-term investments increased
during 1996 as compared to 1995.
In September 1995, the Partnership refinanced the mortgage loan secured by the
Providence Square Apartments, Storage USA of Norcross and Willow Lawn
Self-Storage facility. The Partnership obtained a new mortgage loan secured by
the Providence Square Apartments, which carries a lower interest rate than the
prior financing. In addition, fees associated with the new mortgage loan are
being amortized over a longer term than the prior mortgage loan. This
refinancing contributed to the decrease in interest expense on mortgage notes
payable and amortization of deferred expenses for 1996 as compared to 1995.
Real estate tax expense also decreased during 1996 as compared to 1995 due to a
reduction in the assessed value of American Way Mall received from the taxing
authority in the second quarter of 1996. This decrease was partially offset by
increased tax rates at Providence Square Apartments.
Due primarily to lower audit, portfolio management, and professional fees,
administrative expense decreased during 1996 as compared to 1995.
In August 1996, the Partnership sold the El Dorado Hills Apartments. In
connection with the sale, the Partnership fully amortized the remaining
deferred expenses in the amount of $291,995. This amount was recognized as an
extraordinary item and is classified as debt extinguishment expense in 1996.
During 1995, the first mortgages collateralized by El Dorado Hills and
Providence Square apartment complexes and Storage USA at Norcross and Willow
Lawn Self-Storage Facility were refinanced, and prepayment penalties of
$490,747 were incurred. In conjunction with the refinancing of the
Partnership's mortgage loans, the remaining deferred expenses of $48,724
relating to the previous loans were recognized. For financial statement
purposes, these two amounts were classified as debt extinguishment expenses in
1995.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $14,340,000 as
of September 30, 1996 when compared to December 31, 1995 primarily due to
proceeds received from the August 1996 property sales. The Partnership received
cash totaling approximately $1,365,000 from its operating activities which
consisted primarily of cash flow generated from property operations which was
partially offset by the payment of administrative expenses. The Partnership
also received cash of approximately $17,452,000 from investing activities
consisting of net proceeds received from the August 1996 sales of the El Dorado
Hills Apartments and Willow Lawn Self-Storage Facility. The Partnership used
cash to fund its financing activities which consisted primarily of the payment
of distributions of approximately $4,555,000 to Limited Partners. The
Partnership also made a special Net Cash Proceeds distribution to Limited
Partners in October 1996 as described below.
<PAGE>
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit, each after
consideration of debt service payments, unless otherwise indicated. A deficit
is considered significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. The Partnership defines cash flow
generated from its properties as an amount equal to the property's revenue
receipts less property related expenditures, which include debt service
payments where applicable. Providence Square Apartments is the only property
that currently has underlying debt, El Dorado Hills Apartments had underlying
debt prior to its sale in August 1996. During the nine months ended September
30, 1996 and 1995, the Providence Square Apartments and the Storage USA of
Norcross self-storage facility both generated positive cash flow after
applicable debt service payments. The American Way Mall, which does not have
underlying debt, generated a significant cash flow deficit during the nine
months ended September 30, 1996 as compared to a marginal cash flow deficit
during the same period in 1995 due to lower rental and service income resulting
from lower occupancy. The El Dorado Hills Apartments and the Willow Lawn
Self-Storage Facility, which were sold in August 1996, both generated positive
cash flow in 1995, and during 1996 prior to their sale. As of September 30,
1996, the occupancy rates at the Providence Square Apartments and the Storage
USA of Norcross Storage Facility were 95% and 83%, respectively. The American
Way Mall had an occupancy rate of 31% at September 30, 1996. After evaluating
alternative strategies to sell or redevelop this property, the Partnership has
entered into a contract to sell this property.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties including improving property
operating performance and seeking rent increases where market conditions allow.
The General Partner believes that the markets for multifamily housing
properties and storage facilities are favorable to sellers of these properties.
During August 1996, the Partnership sold the El Dorado Hills Apartments and the
Willow Lawn Self-Storage Facility. Currently, the Partnership has entered into
contracts to sell the Providence Square Apartments, Storage USA of Norcross
Self-Storage Facility and the American Way Mall for sales prices of
$20,510,000, $3,300,000 and $5,200,000, respectively. The timing of the
termination of the Partnership and final distribution of cash will depend upon
the nature and extent of liabilities and contingencies which exists or may
arise. Such contingencies may include legal and other fees stemming from
litigation involving the Partnership. In the absence of any such contingency,
the reserves will be paid within twelve months of the last property being sold.
In the event a contingency arises, reserves may be held by the Partnership for
a longer period of time.
In August 1996, the Partnership sold the El Dorado Hills Apartments in an all
cash sale of $29,350,000. The purchaser of the El Dorado Hills Apartments took
title subject to the existing first mortgage loan in the amount of $16,771,749.
From the proceeds of the sale, the Partnership paid $707,859 in selling costs.
The remainder of the proceeds were distributed as a special distribution to the
Limited Partners in October 1996. See Note 4 of Notes to Financial Statements
for additional information.
<PAGE>
Also, in August 1996, the Partnership sold the Willow Lawn Storage Facility in
an all cash sale of $5,603,470. From the proceeds of the sale, the Partnership
paid $21,770 in selling costs. The remainder of the proceeds were distributed
as a special distribution to Limited Partners in October 1996. See Note 4 of
Notes to Financial Statements for additional information.
Providence Square Apartments is the Partnership's only remaining property that
is owned through the use of third-party mortgage loan financing, and therefore,
the Partnership is subject to the financial obligations required by this loan.
The loan matures in 2002.
In October 1996, the Partnership made a distribution of $17,682,096 ($309.81
per Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of Net Cash Receipts of $4.00 per Interest for
the third quarter of 1996 and a special distribution of Net Cash Proceeds of
$305.81 per Interest primarily from the all cash sales of El Dorado Hills
Apartments and the Willow Lawn Self-Storage Facility. The level of the third
quarter 1996 Net Cash Receipts distribution increased from the prior quarter's
level due to improved operations at Providence Square Apartments and the
remaining storage facility. Including the October 1996 distribution, Limited
Partners have received distributions of Net Cash Receipts of $169.12 and Net
Cash Proceeds of $382.81, totaling $551.93 per $1,000 Interest. The General
Partner expects to continue quarterly distributions to Limited Partners.
However, the level of future distributions will depend on cash flow from the
Partnership's remaining properties and proceeds from property sales, as to all
of which there can be no assurances. In light of results to date and current
conditions, the General Partner does not anticipate that investors will recover
all of their original investment.
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 CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
On August 30, 1996, a proposed class action complaint was filed, Lenore Klein
vs. Lehman Brothers, Inc., et al. (Superior Court of New Jersey, Law Division,
Union County, Docket No. Unn-L-5162-96). The Partnership, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnership", American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by the predecessor of
Lehman Brothers, Inc. (together with the Partnership and the Affiliated
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the action. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
thins, common law fraud and deceit, negligent misrepresentation, breach of
contract, breach of fiduciary duty and violation of certain New Jersey statutes
relating to the disclosure of information in the offering of limited
partnership interests in the Defendant Partnerships. The amended complaint
seeks judgment for compensatory damages equal to the amount invested in the
Defendant Partnership by the proposed class plus interest accrued thereon;
general damages for injuries arising from the defendant's actions; punitive
damage; equitable relief, including rescission, on certain counts; punitive
damages; treble damages on certain accounts; recovery from the defendants of
all profits received by them as a result of their actions relating to the
Defendant Partnerships; attorneys' fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims. It is not determinable at this
time whether or not an unfavorable decision in this action would have a
material adverse impact on the Partnership.
Item 5. Other Information
- --------------------------
Storage USA of Norcross
- -----------------------
As previously reported, on September 26, 1996, the Partnership contracted to
sell Storage USA of Norcross, Norcross, Georgia, to an unaffiliated party,
Storage Trust Property, L.P., a Delaware limited partnership. On November 8,
1996, the Partnership and the purchaser agreed to extend the closing date from
November 15, 1996 to December 10, 1996.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits:
(4) Amended and Restated Form of Subscription Agreement set forth as
Exhibit 4.1 to Amendment No. 5 to the Registrant's Registration Statement on
Form S-11 dated August 16, 1985 (Registration No. 2-95910), and Form of
Confirmation regarding Interests in the Partnership set forth as Exhibit 4.2 to
the Registrant's Report on Form 10-Q for the quarter ended September 30, 1992
(Commission File No. 0-14352) are incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachment thereto relating to the sale of the
El Dorado Hills Apartments previously filed as Exhibit 2(a) to the Registrant's
Current Report on Form 8-K dated June 7, 1996 is incorporated herein by
reference.
(ii) First Amendment to Agreement of Sale relating to the sale of El Dorado
Hills Apartments previously filed as Exhibit (10)(a)(ii) to the Partnership's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, is
incorporated herein by reference.
(iii) Second Amendment to Agreement of Sale and Escrow Agreement relating to
the sale of El Dorado Hills Apartments previously filed as Exhibit (10)(a)(iii)
to the Partnership's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996, is incorporated herein by reference.
(b)(i) Agreement of Sale and attachment thereto relating to the sale of the
American Way Mall previously filed as Exhibit 2(b) to the Registrant's Current
Report on Form 8-K dated June 7, 1996 is incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the American
Way Mall previously filed as Exhibit (10)(b)(ii) to the Partnership's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1996, is incorporated herein
by reference.
(iii) Second Amendment to Agreement of Sale relating to the sale of the
American Way Mall previously filed as Exhibit (99)(b) to the Registrant's
Current Report on Form 8-K dated September 26, 1996, is incorporated herein by
reference.
(c)(i) Agreement of Sale and attachment thereto relating to the sale of
Providence Square Apartments previously filed as Exhibit (2)(a) to the
Registrant's Current Report on Form 8-K dated September 26, 1996 is
incorporated herein by reference.
(ii) Agreement relating to the sale of Providence Square Apartments, Charlotte,
North Carolina, previously filed as Exhibit (2)(b) to the Registrant's Current
Report on Form 8-K dated September 26, 1996 is incorporated herein by
reference.
(iii) Amendment No. 1 to Agreement of Sale relating to the sale of Providence
Square Apartments, Charlotte, North Carolina, previously filed as Exhibit
(2)(c) to the Registrant's Current Report on Form 8-K dated September 26, 1996
is incorporated herein by reference.
<PAGE>
(iv) Letter Agreement relating to the sale of Providence Square Apartments,
Charlotte, North Carolina, previously filed as Exhibit (2)(d) to the
Registrant's Current Report on Form 8-K dated September 26, 1996 is
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1996 is attached hereto.
(99) Second Amendment to Agreement of Sale relating to the sale of Storage USA
of Norcross, Norcross, Georgia, is attached hereto.
(b) Reports on Form 8-K: (i) A Current Report on Form 8-K dated August 19,
1996 was filed reporting the sale of the Willow Lawn Self-Storage Facility,
Richmond, Virginia, and the sale of the El Dorado Hills Apartments, San Diego,
California
(ii) A Current Report on Form 8-K dated September 26, 1996 was filed reporting
the execution of contracts for the sale of Providence Square Apartments,
Charlotte, North Carolina, and Storage USA of Norcross, Norcross, Georgia, and
the extension of the closing date of the sale of American Way Mall, Fairfield,
New Jersey.
<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 CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/ Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Current Income Partners-85, the General
Partner
By: /s/ Jayne A. Kosik
------------------------------
Jayne A. Kosik
Vice President, and Chief Financial Officer
(Principal Accounting Officer) of Balcor
Current Income Partners-85, the General
Partner
Date: November 14, 1996
-----------------------------
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF SALE
This Amendment to Agreement of Sale (this "Amendment") is made and entered
on this 8th day of November, 1996, by and between Storage Trust Properties,
L.P., a Delaware limited partnership ("Purchaser"), and Jones Mill Road
Partners, an Illinois limited partnership ("Seller"). This Amendment is made
in view of the following facts:
A. The Purchaser and the Seller previously entered into that certain
Agreement of Sale entered into as of the 26th day of September, 1996 (the
"Agreement").
A. The Purchaser and the Seller previously entered into an Amendment to the
Agreement on the 9th day of October, 1996.
A. The Purchaser and the Seller desire to amend the Agreement on this date in
order to extend the Agreement and to alter certain dates contained within the
Agreement.
NOW, THEREFORE, in consideration of the promises and conditions herein
contained, and in view of the foregoing recital of facts. The parties hereto
agree as follows:
1. Capitalized Terms: Unless otherwise defined herein, capitalized terms
shall have the same meanings ascribed to them within the Agreement.
2. Inspection and As-Is Condition: The first paragraph within Paragraph
7.1 of the Agreement is hereby deleted in its entirely and the following
provision is substituted in its place:
"7.1 During the period commencing on July 29, 1996, and ending at 5:00 p.m.
Chicago time on November 30, 1996 (said period being herein referred to as the
"Inspection Period"), Purchaser and the agents, engineers, employees,
contractors and surveyors retained by Purchaser may enter upon the Property, at
any reasonable time and upon reasonable prior notice to Seller, to inspect the
Property, including a review of leases located at the Property, and to conduct
and prepare such studies, tests and surveys as Purchaser may deem reasonably
necessary and appropriate. In connection with Purchaser's review of the
Property, Seller agrees to deliver to Purchaser copies of the current rent roll
for the Property, the most recent tax and insurance bills, utility account
numbers, service contracts, and unaudited year-end 1995 and year-to-date 1996
operating statements."
3. Closing. Paragraph 8 of the Agreement is hereby deleted in its
entirety and the following provision is substituted in its place:
"The closing of this transaction (the "Closing") shall be on December 10, 1996
(the "Closing Date"), at the office of Title Insurer, Atlanta, Georgia, at
which time Seller shall deliver possession of the Property to Purchaser. This
transaction shall be closed through an escrow with Title Insurer, in accordance
with the general provisions of the usual and customary form of deed and money
escrow for similar transactions in Georgia, or at the option of either party,
the Closing shall be a "New York style" closing at which the Purchaser shall
<PAGE>
wire the Purchase Price to Title Insurer on the Closing Date and prior to the
release of the Purchase Price to Seller, Purchaser shall receive the Title
Policy or marked up commitment dated the date of the Closing Date. In the
event of a New York style closing, Seller shall deliver to Title insurer any
customary affidavit in connection with a New York style closing. All closing
and escrow fees shall be divided equally between the parties hereto._
Except as amended hereby, the terms and conditions of the Agreement as
previously amended shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.
Storage Trust Properties, L.P.,
a Delaware limited partners, ("Purchaser")
By: Storage Trust Realty, a Maryland real
estate investment trust, its sole
general partner
By: /s/ Michael G. Burnam
-------------------------------------
Name: Michael G. Burnam
-------------------------------------
Its: Chief Executive Officer
-------------------------------------
Jones Mill Road Partners,
an Illinois limited partnership, ("Seller")
By: Balcor Current Income Partners-85,
an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware corporation,
a partner
By: /s/ John K. Powell, Jr.
-------------------------------------
Name: John K. Powell, Jr.
-------------------------------------
Its: Sr. Vice President
-------------------------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 19816
<SECURITIES> 0
<RECEIVABLES> 99
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20500
<PP&E> 32978
<DEPRECIATION> 13335
<TOTAL-ASSETS> 40416
<CURRENT-LIABILITIES> 694
<BONDS> 16844
0
0
<COMMON> 0
<OTHER-SE> 22878
<TOTAL-LIABILITY-AND-EQUITY> 40416
<SALES> 0
<TOTAL-REVENUES> 16571
<CGS> 0
<TOTAL-COSTS> 3867
<OTHER-EXPENSES> 1636
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1796
<INCOME-PRETAX> 9272
<INCOME-TAX> 0
<INCOME-CONTINUING> 9272
<DISCONTINUED> 0
<EXTRAORDINARY> (292)
<CHANGES> 0
<NET-INCOME> 8980
<EPS-PRIMARY> 155.77
<EPS-DILUTED> 155.77
</TABLE>
