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, 1997
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the transition period from to
------------ ------------
Commission file number 0-14352
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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
----- -----
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
September 30, 1997 and December 31, 1996
(UNAUDITED)
ASSETS
1997 1996
-------------- --------------
Cash and cash equivalents $ 1,886,559 $ 2,509,984
Escrow deposits 416,773
Accounts and accrued interest receivable 8,290 102,578
Prepaid expenses 54,726
Deferred expenses, net of accumulated
amortization of $56,916 in 1996 261,816
-------------- --------------
1,894,849 3,345,877
-------------- --------------
Investment in real estate:
Land 3,440,509
Buildings and improvements 29,537,388
--------------
32,977,897
Less accumulated depreciation 13,544,703
--------------
Investment in real estate, net of
accumulated depreciation 19,433,194
-------------- --------------
$ 1,894,849 $ 22,779,071
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 10,667 $ 291,536
Due to affiliates 77,352 97,071
Accrued real estate taxes 294,801
Security deposits 90,753
Mortgage notes payable 16,803,395
-------------- --------------
Total liabilities 88,019 17,577,556
Commitments and contingencies
Limited Partners' capital (57,074
Interests issued and outstanding) 1,876,761 5,355,042
General partner's deficit (69,931) (153,527)
-------------- --------------
Total Partners' capital 1,806,830 5,201,515
-------------- --------------
$ 1,894,849 $ 22,779,071
============== ==============
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, 1997 and 1996
(UNAUDITED)
1997 1996
-------------- --------------
Income:
Rental and service $ 603,951 $ 6,723,787
Interest on short-term investments 239,124 180,085
Other income 572,227
-------------- --------------
Total income 1,415,302 6,903,872
-------------- --------------
Expenses:
Interest on mortgage notes payable 176,932 1,795,730
Depreciation 105,764 1,233,672
Amortization of deferred expenses 6,324 66,149
Property operating 400,835 2,946,955
Real estate taxes 48,500 579,963
Property management fees 31,378 339,666
Administrative 174,516 336,091
-------------- --------------
Total expenses 944,249 7,298,226
-------------- --------------
Income (loss) before gain on sales of
properties and extraordinary item 471,053 (394,354)
Gain on sales of properties 13,452,026 9,666,645
-------------- --------------
Income before extraordinary item 13,923,079 9,272,291
Extraordinary item:
Debt extinguishment expense (255,492) (291,995)
-------------- --------------
Net income $ 13,667,587 $ 8,980,296
============== ==============
Income before extraordinary item
allocated to General Partner $ 85,222 $ 92,723
============== ==============
Income before extraordinary item
allocated to Limited Partners $ 13,837,857 $ 9,179,568
============== ==============
Income before extraordinary item per
Limited Partnership Interest (57,074
issued and outstanding) $ 242.46 $ 160.84
============== ==============
<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, 1997 and 1996
(UNAUDITED)
(Continued)
1997 1996
-------------- --------------
Extraordinary item allocated to General
Partner $ (1,626) $ (2,920)
============== ==============
Extraordinary item allocated to Limited
Partners $ (253,866) $ (289,075)
============== ==============
Extraordinary item per Limited Partnership
Interest (57,074 issued and outstanding) $ (4.45) $ (5.06)
============== ==============
Net income allocated to General Partner $ 83,596 $ 89,803
============== ==============
Net income allocated to Limited Partners $ 13,583,991 $ 8,890,493
============== ==============
Net income per Limited Partnership
Interest (57,074 issued and outstanding) $ 238.01 $ 155.77
============== ==============
Distributions to Limited Partners $ 17,062,272 $ 4,555,076
============== ==============
Distributions per Limited Partners Interest
(57,074 issued and outstanding) $ 298.95 $ 79.81
============== ==============
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, 1997 and 1996
(UNAUDITED)
1997 1996
-------------- --------------
Income:
Rental and service $ 1,917,634
Interest on short-term investments $ 25,521 109,523
Other income 13,515
-------------- --------------
Total income 39,036 2,027,157
-------------- --------------
Expenses:
Interest on mortgage notes payable 524,656
Depreciation 358,885
Amortization of deferred expenses 19,383
Property operating 1,062,154
Real estate taxes 174,628
Property management fees 103,141
Administrative 33,308 115,445
-------------- --------------
Total expenses 33,308 2,358,292
-------------- --------------
Income (loss) before gain on sales of
properties and extraordinary item 5,728 (331,135)
Gain on sales of properties 9,666,645
-------------- --------------
Income before extraordinary item 5,728 9,335,510
Extraordinary item:
Debt extinguishment expenses (291,995)
-------------- --------------
Net income $ 5,728 $ 9,043,515
============== ==============
Income before extraordinary item
allocated to General Partner None $ 93,355
============== ==============
Income before extraordinary item
allocated to Limited Partners $ 5,728 $ 9,242,155
============== ==============
Income before extraordinary item Per
Limited Partnership Interest
(57,074 issued and outstanding) $ 0.10 $ 161.94
============== ==============
Extraordinary item allocated to General
Partner None $ (2,920)
============== ==============
<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, 1997 and 1996
(UNAUDITED)
(Continued)
1997 1996
-------------- --------------
Extraordinary item allocated to Limited
Partners None $ (289,075)
============== ==============
Extraordinary item allocated per Limited
Partnership Interest
(57,074 issued and outstanding) None $ (5.06)
============== ==============
Net income allocated to General
Partner None $ 90,435
============== ==============
Net income allocated to Limited
Partners $ 5,728 $ 8,953,080
============== ==============
Net income per Limited Partnership
Interest (57,074 issued and outstanding) $ 0.10 $ 156.87
============== ==============
Distribution to Limited Partners None $ 285,370
============== ==============
Distribution per Limited Partners Interest
(57,074 issued and outstanding) None $ 5.00
============== ==============
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, 1997 and 1996
(UNAUDITED)
1997 1996
-------------- --------------
Operating activities:
Net income $ 13,667,587 $ 8,980,296
Adjustments to reconcile net
income to net cash provided
by operating activities:
Extraordinary item:
Debt extinguishment expense 255,492 291,995
Gain on sales of properties (13,452,026) (9,666,645)
Depreciation of properties 105,764 1,233,672
Amortization of deferred expenses 6,324 66,149
Net change in:
Escrow deposits 288,785 109,916
Accounts receivable 94,288 58,672
Prepaid expenses 54,726 (37,796)
Accounts payable (280,869) 256,700
Due to affiliates (19,719) 46,474
Accrued liabilities (294,801) 182,469
Security deposits (90,753) (156,930)
-------------- --------------
Net cash provided by operating activities 334,798 1,364,972
-------------- --------------
Investing activities:
Proceeds from sales of properties 16,970,380 18,181,721
Payment of selling costs (980,544) (729,629)
-------------- ------------
Net cash provided by investing activities 15,989,836 17,452,092
-------------- ------------
Financing activities:
Distributions to Limited Partners (17,062,272) (4,555,076)
Principal payments on mortgage notes (13,775) (208,549)
Release of improvement escrows 127,988 286,530
-------------- --------------
Net cash used in financing activities (16,948,059) (4,477,095)
-------------- --------------
Net change in cash and cash equivalents (623,425) 14,339,969
Cash and cash equivalents at beginning
of period 2,509,984 5,475,539
-------------- --------------
Cash and cash equivalents at end of period $ 1,886,559 $ 19,815,508
============== ==============
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 Policies:
(a) 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, 1997, and all such adjustments are of a normal
and recurring nature.
(b) 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 Partner
and Limited Partners to appropriately reflect their remaining economic
interests as provided for in the Partnership Agreement, the income allocations
between the partners have been adjusted for financial statement purposes during
1997.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1996, the Partnership sold two properties. During 1997, the
Partnership sold its remaining properties, the American Way Mall, Providence
Square Apartments, and Storage USA of Norcross Self-Storage Facility. 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
exist or may arise. The Partnership has retained a portion of the cash from the
property sales to satisfy obligations of the Partnership as well as establish a
reserve for contingencies. Such contingencies may include legal and other fees
and costs stemming from litigation involving the Partnership including, but not
limited to, the lawsuit discussed below in Note 8 of Notes to Financial
Statements. In the absence of any such contingency, the reserves will be paid
within twelve months of the last property sale. In the event a contingency
continues to exist or arises, reserves may be held by the Partnership for a
longer period of time.
3. Interest Expense:
During the nine months ended September 30, 1997 and 1996, the Partnership
incurred and paid interest expense on mortgage notes payable of $176,932 and
$1,795,730, respectively.
4. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1997 are:
<PAGE>
Paid
----------------------
Nine Months Quarter Payable
------------ --------- ----------
Reimbursement of expenses to
the General Partner, at cost $ 59,100 $ 8,857 $ 77,352
5. Property Sales:
(a) In January 1997, the Partnership sold the American Way Mall in an all cash
sale for $5,500,000. From the proceeds of the sale, the Partnership paid
$204,082 in selling costs. The basis of the property was $3,718,717, which is
net of accumulated depreciation of $4,361,314. For financial statement
purposes, the Partnership recognized a gain of $1,577,201 from the sale of this
property.
(b) In February 1997, the Partnership sold the Providence Square Apartments for
a sales price of $25,510,000 less a credit of $500,000 related to the personal
property for a net sales price of $25,010,000. The purchaser of the property
took title subject to the existing first mortgage loan in the amount of
$16,789,620, which represents a noncash transaction to the Partnership.
Accordingly, the noncash aspect of this transaction is not presented in the
Partnership's Statements of Cash Flows. From the proceeds of the sale, the
Partnership paid $167,896 in fees relating to the assumption of the mortgage
loan by the purchaser and $583,763 in other selling costs. The basis of the
property was $13,623,514, which is net of accumulated depreciation of
$8,450,525. For financial statement purposes, the Partnership recognized a gain
of $10,634,827 from the sale of this property.
(c) In February 1997, the Partnership sold the Storage USA of Norcross
Self-Storage Facility in an all cash sale for $3,250,000. From the proceeds of
the sale, the Partnership paid $24,803 in selling costs. The basis of the
property was $1,985,199, which is net of accumulated depreciation of $838,628.
For financial statement purposes, the Partnership recognized a gain of
$1,239,998 from the sale of this property.
6. Extraordinary Item:
In February 1997, the Partnership sold the Providence Square Apartments. In
connection with the sale, the Partnership wrote off the remaining unamortized
deferred financing fees in the amount of $255,492. This amount was recognized
as an extraordinary item and classified as debt extinguishment expense.
7. Other Income:
The Partnership recognized other income in connection with the sale of the
American Way Mall during 1997. The agreement of sale provided that, if the
purchaser transferred any portion of the property to a specified third party
prior to February 25, 1997, the Partnership would be entitled to a portion of
the net proceeds from such a transfer. The purchaser transferred a portion of
the property and as a result, the Partnership received $421,774 in accordance
with the agreement of sale. In addition, the Partnership received a real
estate tax refund of $136,938 for American Way Mall's 1995 real estate taxes
and a refund of a prior year's insurance premium of $13,515 relating to the
Partnership's properties.
<PAGE>
8. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership and
certain affiliates have been named as defendants alleging certain federal
securities law violations with regard to the adequacy and accuracy of
disclosures of information concerning, as well as the marketing efforts related
to the offering of the Limited Partnership Interests of the Partnership. The
defendants continue to vigorously contest this action. A plaintiff class has
not yet been certified, and no determination of the merits have been made. It
is not determinable at this time whether or not an unfavorable decision in this
action would have a material adverse impact on the financial position,
operations and liquidity of the Partnership. The Partnership believes that it
has meritorious defenses to contest the claims.
<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 two properties during 1996
and the remaining three properties were sold in 1997.
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 1996 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
The Partnership sold its remaining three properties during the first quarter of
1997 and two properties during the third quarter of 1996 and recognized
significant gains in connection with these sales. The gains recognized in 1997
were higher than the gains recognized in 1996 resulting in an increase in net
income during the nine months ended September 30, 1997 as compared to the same
period in 1996. The gains recognized during the third quarter of 1996 resulted
in a decrease in net income during the quarter ended September 30, 1997 as
compared to the same period in 1996. Further discussion of the Partnership's
operations are summarized below.
1997 Compared to 1996
- ---------------------
Discussions of fluctuations between 1997 and 1996 refer to the nine months and
quarters ended September 30, 1997 and 1996.
During the first quarter of 1997, the Partnership sold the American Way Mall,
Providence Square Apartments and Storage USA of Norcross Self-Storage Facility
and recognized gains in connection with these sales of $13,452,026. During the
third quarter of 1996, the Partnership sold the El Dorado Hills Apartments and
the Willow Lawn Self-Storage Facility and recognized gains in connection with
these sales of $9,666,645. These sales also resulted in decreases in rental and
service income, interest expense on mortgage notes payable, depreciation,
amortization, property operating expense, real estate taxes and property
management fees during 1997 as compared to 1996.
Due to higher cash balances as a result of proceeds received in connection with
the 1997 property sales prior to their distribution to Limited Partners in
<PAGE>
April 1997, interest income on short-term investments increased during the nine
months ended September 30, 1997 as compared to the same period in 1996. The
timing of the third quarter 1996 sales and subsequent distribution of proceeds
to Limited Partners resulted in a decrease in interest income on short-term
investments during the quarter ended September 30, 1997 as compared to the same
period in 1996.
The Partnership recognized other income in connection with the sale of the
American Way Mall during 1997. The agreement of sale provided that, if the
purchaser transferred any portion of the property to a specified third party
prior to February 25, 1997, the Partnership would be entitled to a portion of
the net proceeds from such a transfer. The purchaser transferred a portion of
the property and as a result, the Partnership received $421,774 in accordance
with the agreement of sale. In addition, the Partnership received a real
estate tax refund of $136,938 for American Way Mall's 1995 real estate taxes
and a refund of a prior year's insurance premium of $13,515 relating to the
Partnership's properties.
Administrative expenses decreased in 1997 as compared to 1996 primarily due to
lower portfolio management and legal fees as a result of the property sales.
In connection with the February 1997 sale of Providence Square Apartments and
the August 1996 sale of the El Dorado Hills Apartments, the Partnership wrote
off the remaining unamortized deferred expenses in the amounts of $255,492 and
$291,995, respectively. These amounts were recognized as extraordinary items
and classified as debt extinguishment expense in 1997 and 1996, respectively.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $623,000 as of
September 30, 1997 when compared to December 31, 1996 primarily due to the
April 1997 distribution of sale proceeds to Limited Partners which was offset
by the net proceeds received from the three property sales during 1997. The
Partnership generated cash totaling approximately $335,000 from its operating
activities which consisted primarily of cash flow generated from property
operations, interest income on short-term investments and other income, which
was partially offset by the payment of administrative expenses and operating
expenses on sold properties. The Partnership received cash of approximately
$15,990,000 from investing activities consisting of net proceeds received from
the sales of the American Way Mall, Providence Square Apartments and Storage
USA of Norcross Self-Storage Facility. The Partnership used cash of
approximately $16,948,000 to fund its financing activities which consisted
primarily of the payment of distributions to the Limited Partners.
In January 1997, the Partnership sold the American Way Mall in an all cash sale
for $5,500,000. From the proceeds of the sale, the Partnership paid $204,082 in
selling costs. The remainder of the available proceeds was distributed to the
Limited Partners in April 1997. In addition, the agreement of sale provided
that if the purchaser transferred any portion of the property to a specified
third party prior to February 25, 1997, the Partnership was entitled to a
portion of the net proceeds from the transfer. The purchaser transferred a
portion of the property and as a result, the Partnership received $421,774 in
accordance with the agreement of sale. See Notes 5 and 7 of Notes to Financial
Statements for additional information.
<PAGE>
In February 1997, the Partnership sold the Providence Square Apartments for a
sales price of $25,510,000 less a credit of $500,000 related to the personal
property for a net sales price of $25,010,000. The purchaser of the property
took title subject to the existing first mortgage loan in the amount of
$16,789,620. From the proceeds of the sale, the Partnership paid $167,896 in
fees relating to the assumption of the mortgage loan by the purchaser and
$583,763 in other selling costs. Pursuant to the terms of the sale, $250,000 of
the proceeds was retained by the Partnership and was unavailable for
distribution until May 1997 at which time the funds were released in full. The
remainder of the available proceeds was distributed to the Limited Partners in
April 1997. See Note 5 of Notes to Financial Statements for additional
information.
In February 1997, the Partnership sold the Storage USA of Norcross Self-Storage
Facility in an all cash sale for $3,250,000. From the proceeds of the sale, the
Partnership paid $24,803 in selling costs. The remainder of the available
proceeds was distributed to the Limited Partners in April 1997. See Note 5 of
Notes to Financial Statements for additional information.
To date, Limited Partners have received distributions of Net Cash Receipts of
$173.34 and Net Cash Proceeds of $677.54, totaling $850.88 per $1,000 Interest.
Since all of the Partnership's properties have been sold, no additional
distributions are expected. Limited Partners will not recover all of their
original investment.
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership sold two properties in 1996. The Partnership sold
its three remaining properties during 1997, as described above. 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 exist or may
arise. The Partnership has retained a portion of the cash from property sales
to satisfy obligations of the Partnership as well as establish a reserve for
contingencies. Such contingencies may include legal and other fees and costs
stemming from litigation involving the Partnership including, but not limited
to, the lawsuit discussed in Note 8 of Notes to Financial Statements. In the
absence of any such contingency, the reserves will be paid within twelve months
of the last property sale. In the event a contingency continues to exist or
arises, reserves may be held by the Partnership for a longer period of time.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
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 Partnership's Report on Form 10-Q for the quarter ended September 30, 1992
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
Partnership'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 Partnership'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 Partnership's
Current Report on Form 8-K dated September 26, 1996, is incorporated herein by
reference.
(iv) Third Amendment to Agreement of Sale relating to the sale of American Way
Mall, previously filed as Exhibit (10)(b)(iv) to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1996, is incorporated
herein by reference.
<PAGE>
(v) Fourth Amendment to Agreement of Sale relating to the sale of American Way
Mall, previously filed as Exhibit (10)(b)(v) to the Partnership's Annual Report
on Form 10-K for the year ended December 31, 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
Partnership'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, previously
filed as Exhibit (2)(b) to the Partnership'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, previously filed as Exhibit (2)(c) to the Partnership's
Current Report on Form 8-K dated September 26, 1996 is incorporated herein by
reference.
(iv) Letter Agreement relating to the sale of Providence Square Apartments,
previously filed as Exhibit (2)(d) to the Partnership's Current Report on Form
8-K dated September 26, 1996 is incorporated herein by reference.
(v) Amendment No. 2 to Agreement of Sale relating to the sale of Providence
Square Apartments, previously filed as Exhibit (10)(c)(v) to the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1996, is
incorporated herein by reference.
(vi) Letter dated December 17, 1996 relating to the sale of Providence Square
Apartments, previously filed as Exhibit (10)(c)(vi) to the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1996, is incorporated
herein by reference.
(vii) Amendment No. 3 to Agreement of Sale relating to the sale of Providence
Square Apartments, previously filed as Exhibit (10)(c)(vii) to the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996,
is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the nine month period ending
September 30, 1997 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended September 30, 1997.
<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
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Current Income Partners-85, the
General Partner
Date: November 12, 1997
--------------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1887
<SECURITIES> 0
<RECEIVABLES> 8
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1895
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1895
<CURRENT-LIABILITIES> 88
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1807
<TOTAL-LIABILITY-AND-EQUITY> 1895
<SALES> 0
<TOTAL-REVENUES> 14867
<CGS> 0
<TOTAL-COSTS> 481
<OTHER-EXPENSES> 286
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 177
<INCOME-PRETAX> 13923
<INCOME-TAX> 0
<INCOME-CONTINUING> 13923
<DISCONTINUED> 0
<EXTRAORDINARY> (255)
<CHANGES> 0
<NET-INCOME> 13668
<EPS-PRIMARY> 238.01
<EPS-DILUTED> 238.01
</TABLE>
