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, 1996
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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
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Commission file number 0-14352
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BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Illinois 36-3344227
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(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 [ ]
<PAGE>
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
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Balcor Current Income Fund-85 A Real Estate Limited Partnership (the
"Registrant") is a limited partnership formed in 1985 under the laws of the
State of Illinois. The Registrant raised $57,074,000 from sales of Limited
Partnership Interests. The Registrant's operations consist exclusively of
investment in and operation of income producing real property, and all
financial information included in this report relates to this industry segment.
The Registrant utilized the net offering proceeds to acquire five real property
investments. The Registrant sold two properties during 1996 and the remaining
three properties described under "Item 2. Properties" were sold in 1997. The
Partnership Agreement generally provides that the proceeds of any sale or
refinancing will not be reinvested in new acquisitions, except that proceeds
may be used to purchase or finance improvements or additions to any of the
Registrant's properties.
Real estate values, especially for good quality, well located property,
increased significantly during 1996 due to a combination of readily available
capital, low interest rates, and decreased vacancy rates resulting from steady
demand and an acceptable level of new construction. While 1996 proved to be an
excellent year to sell real estate, projected yields by buyers on new
acquisitions have declined significantly due to competition and rising prices.
Although there will be variances by asset class and geographic area, the
investment climate is expected to remain strong for 1997. However, values
could begin to level off as they approach replacement cost triggering new
construction and an increase in capitalization rates.
The investment market for apartments was excellent during 1996 due to a number
of factors. Investor interest was strong, driven primarily by institutions, as
Real Estate Investment Trusts aggressively expanded their portfolios and
pension funds viewed apartments as an attractive asset class due to their
perceived low volatility and the emergence of large professional property
management companies. Operationally, existing apartment properties registered
on a national basis occupancy in the mid 90's and rental rate increases of 3-4%
in 1996. While above the rate of inflation, the rate of rental growth in 1996
was below that of the previous two years suggesting that the apartment cycle
may have plateaued, especially as the impact of new construction in many areas
is being felt. While 1997 is projected to be another solid year, values should
begin to level off as capitalization rates move upward continuing a trend which
began during the second half of 1996.
The outlook for the retail sector of the investment real estate industry is
uncertain for 1997. The retail industry is being simultaneously impacted by a
number of factors which are likely to affect values for quite some time. As
retailers battle to gain market dominance, tenant bankruptcies have grown.
Consolidation among retailers has and is expected to continue to occur. Unlike
other asset classes, new construction of power centers went unabated in the
early 1990's, creating an oversupply of space including "big box" anchor tenant
<PAGE>
space. Regional malls, which are not the dominant center in the market, face
continued out-migration of retailers to the power centers. Finally shopping
patterns continue to shift due to the aging baby boomers, high consumer debt,
alternative distribution channels, and the greater emphasis on entertainment.
As a result, the capital requirements necessary to maintain a shopping center's
competitiveness are all significant, but with uncertain returns. The
Registrant believes there is significant risk to holding retail assets for
future upside potential.
During August 1996, the Registrant sold the El Dorado Hills Apartments and the
Willow Lawn Self-Storage Facility for $29,350,000 and $5,603,470, respectively.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" for additional
information.
During January 1997, the Registrant sold the American Way Mall in an all cash
sale for $5,500,000. During February 1997, the Registrant sold the Providence
Square Apartments and the Storage USA of Norcross Self-Storage Facility for
$25,010,000 and $3,250,000, respectively. See Item 1. "Other Information" and
"Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations Liquidity and Capital Resources" for additional
information.
The Registrant sold its remaining properties during 1997. The timing of the
termination of the Registrant and final distribution of cash will depend upon
the nature and extent of liabilities and contingencies which exist or may
arise. Such contingencies may include legal and other fees stemming from
litigation involving the Registrant including, but not limited to, the lawsuits
discussed in Item 3. "Legal Proceedings". 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 arises, reserves may be held by the
Registrant for a longer period of time.
The Registrant, by virtue of its ownership of real estate is subject to federal
and state laws and regulations covering various environmental issues.
Management of the Registrant utilizes the services of environmental consultants
to assess a wide range of environmental issues and to conduct tests for
environmental contamination as appropriate. The General Partner is not aware of
any potential liability due to environmental issues or conditions that would be
material to the Registrant.
The officers and employees of Balcor Current Income Partners-85, the General
Partner of the Registrant, and its affiliates perform services for the
Registrant. The Registrant currently has no employees engaged in its
operations.
<PAGE>
Other Information
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American Way Mall
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As previously reported, on June 7, 1996, the Registrant contracted to sell
American Way Mall, Fairfield, New Jersey, to an unaffiliated party, Robert
Heidenberg. The sale closed on January 21, 1997. The sale price was $5,500,000.
The purchaser assigned its rights under the agreement of sale and title to the
property was conveyed to three parties, Closter Fairfield Associates, L.L.C.,
Fairfield NJ Commercial Associates Limited Partnership and Albemarle Fairfield
LLC. From the proceeds of the sale, the Registrant paid $156,000 to an
unaffiliated party as a brokerage commission and $48,082 in closing costs. In
addition, the agreement of sale provided that, if the purchaser transfers any
portion of the property to a specified third party prior to February 25, 1997,
the Registrant is entitled to a specified portion of the net proceeds from the
transfer. The Registrant received $421,737 pursuant to this provision. The
Registrant received the remaining proceeds of approximately $5,296,000.
Providence Square Apartments
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As previously reported, on October 17, 1996, the Registrant contracted to sell
Providence Square Apartments, Charlotte, North Carolina, to an unaffiliated
party, Group One Investments, Inc., an Illinois corporation, for a sale price
of $20,510,000. The Registrant also executed an agreement to sell to the
purchaser the personal property located at the property for a net sale price of
$4,500,000. The purchaser assigned its rights under the agreement of sale and
the personal property sale agreement to three affiliates, The Corners Limited
Partnership, Indian Ridge Limited Partnership, and 101 East Oak, L.L.C. The
closing was extended and the sale closed on February 19, 1997. The purchaser
acquired the real property subject to the existing first mortgage loan which
had an outstanding principal balance of $16,789,620 at closing. From the
proceeds of the sale, the Registrant paid $167,896 in fees relating to the
assumption of the mortgage loan by the purchaser, $312,938 to an unaffiliated
party as a brokerage commission, $191,325 to an affiliate of the third party
providing property management services for the property as a fee for services
rendered in connection with the sale of the property and $79,500 in closing
costs. The Registrant received the remaining proceeds of approximately
$7,469,000. Of such proceeds, $250,000 will not be available for use or
distribution by the Registrant until May 1997.
Storage USA of Norcross Self-Storage Facility
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As previously reported, on September 26, 1996, the Registrant contracted to
sell Storage USA of Norcross Self-Storage Facility, Norcross, Georgia, to an
unaffiliated party, Storage Trust Properties, L.P., a Delaware limited
partnership, for a sale price of $3,300,000. The Registrant and the purchaser
agreed to reduce the sale price to $3,250,000. The Registrant and the purchaser
<PAGE>
also agreed to extend the closing date from December 10, 1996 and the sale
closed on February 26, 1997. From the proceeds of the sale, the Registrant
paid $24,803 in closing costs and received the remaining proceeds of
approximately $3,225,000.
Item 2. Properties
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As of December 31, 1996, the Registrant owned the three properties described
below, all of which are owned in fee simple:
Location Description of Property
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Fairfield, New Jersey * American Way Mall: a neighborhood shopping center
containing approximately 140,210 square feet
located on approximately 13 acres.
Charlotte, North Carolina * Providence Square Apartments: a 473-unit
apartment complex located on approximately 69
acres.
Norcross, Georgia * Storage USA of Norcross Mini-Warehouse: a
self-storage facility containing 586 units on
approximately 4 acres.
* This property was sold during 1997. See Note 14 of Notes to the Financial
Statements for additional information.
Providence Square Apartments was held subject to a mortgage loan.
The average occupancy rates and effective average rent per unit for each of the
last five years for the residential property owned by the Registrant at
December 31,1996, are below. Apartment units in this property are rented with
leases of one year or less, with no tenant occupying greater than 10% of the
property.
1996 1995 1994 1993 1992
Providence Square
Occupancy rate 94% 93% 96% 93% 82%
Effective rent $776 $777 $716 $663 $599
The average occupancy rates and the effective average rate per square foot for
each of the last five years for the two commercial properties owned by the
Registrant at December 31, 1996, are described below. No tenant occupies 10% or
more of the leasable square feet of any commercial property.
1996 1995 1994 1993 1992
American Way Mall
Occupancy rate 31% 45% 63% 95% 88%
Effective rate $7.27 $8.54 $12.31 $9.40 $10.44
<PAGE>
Storage USA of Norcross
Occupancy rate 78% 88% 96% 94% 89%
Effective rate $7.79 $8.18 $7.68 $7.35 $6.99
Real estate taxes incurred in 1996 for the above residential and commercial
properties totaled $482,652.
The Federal tax basis of the Registrant's properties totaled $30,044,161 as of
December 31, 1996. For Federal income tax purposes, the acquisition costs of
the properties are depreciated over useful lives ranging from 15 to 18 years,
using the ACRS method. Other minor assets are depreciated over their applicable
recovery periods.
In the opinion of the General Partner, the Registrant has provided for adequate
insurance coverage for its real estate investment properties.
See Notes to Financial Statements for other information regarding real property
investments.
Item 3. Legal Proceedings
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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 Registrant, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnerships"), American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by he predecessor of
Lehman Brothers, Inc. (together with the Registrant and the Affiliated
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the actions. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
things, 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 Partnerships by the proposed class plus interest; general damages for
injuries arising from the defendants' alleged actions; equitable relief,
certain counts; recovery from the defendants of all profits received by them as
a result of their alleged 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. The Registrant believes it has 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
Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of the Limited Partners of the Registrant
during 1996.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
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Matters
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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 Financial Statements, Statements of
Partners' Capital, and Item 7. Liquidity and Capital Resources, below.
As of December 31, 1996, the number of record holders of Limited Partnership
Interests of the Registrant was 3,735.
Item 6. Selected Financial Data
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Year ended December 31,
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1996 1995 1994 1993 1992
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Total income $8,187,202 $10,007,275 $10,366,096 $10,016,645 $ 9,112,704
Provision for
investment
property
write-downs None None 6,700,000 None 3,400,000
Loss before
gains on sales
of properties
and extraordinary
item (388,289) (436,493) (7,389,060) (1,075,433) (5,549,632)
Net income
(loss) 8,986,361 (975,964) (7,389,060) (1,075,433) (4,989,632)
Net income (loss)
per Limited
Partnership
Interest 155.88 (16.93) (128.17) (18.65) (86.55)
Total assets 22,779,071 52,642,536 50,448,385 57,538,005 59,087,119
Mortgage notes
payable 16,803,395 33,824,504 29,854,081 29,560,964 29,657,223
Distributions per
Limited Partner-
ship Interest (A) 389.62 12.31 None None None
(A) These amounts include a distribution of original capital of $367.81 per
Limited Partnership Interest for 1996.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Operations
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Summary of Operations
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During 1996, Balcor Current Income Fund-85 A Real Estate Limited Partnership
(the "Partnership") sold the El Dorado Hills Apartments and the Willow Lawn
Self-Storage Facility and recognized significant gains on these sales which
resulted in net income during 1996 as compared to a net loss during each of
1995 and 1994. During 1994, the Partnership determined that the asset value of
the American Way Mall had been impaired. Accordingly, the Partnership
recognized a provision for investment property write-down which contributed to
the net loss generated by the Partnership during 1994. Further discussion of
the Partnership's operations are summarized below.
1996 Compared to 1995
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Rental and service income decreased in 1996 as compared to 1995 primarily due
to the sales of El Dorado Hills Apartments and Willow Lawn Self-Storage
Facility in August 1996 and a decrease in occupancy at American Way Mall.
Interest expense on mortgage notes payable decreased in 1996 as compared to
1995 due to the sale of El Dorado Hills Apartments and due to lower interest
rates as a result of the 1995 refinancing described below. In September 1995,
the Partnership refinanced the mortgage loan secured by the Providence Square
Apartments, Storage USA of Norcross and Willow Lawn self-storage facilities.
The Partnership obtained a new mortgage loan secured by the Providence Square
Apartments, which carried a lower interest rate than the prior financing.
Depreciation expense decreased in 1996 as compared to 1995 due to the sales of
El Dorado Hills Apartments and Willow Lawn Self-Storage Facility.
Amortization of deferred expenses decreased in 1996 as compared to 1995 due to
the sale of El Dorado Hills Apartments and due to the 1995 refinancing.
Real estate tax expense decreased during 1996 as compared to 1995 due to the
sales of El Dorado Hills Apartments and Willow Lawn Self-Storage Facility and
due to a reduction in the assessed value of American Way Mall received from the
taxing authority in the second quarter of 1996.
Property management fees decreased in 1996 as compared to 1995 due to the sales
of El Dorado Hills Apartments and Willow Lawn Self-Storage Facility.
Administrative expenses decreased in 1996 as compared to 1995 due to lower
portfolio management, professional and legal fees relating to the unsuccessful
sale negotiations for American Way Mall in 1995.
<PAGE>
The Partnership sold the El Dorado Hills Apartments and the Willow Lawn
Self-Storage Facility and recognized gains on the sales of these properties
totaling $9,666,645 in 1996.
In connection with the sale of El Dorado Hills Apartments, the Partnership
wrote off the remaining unamortized 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
the Storage USA at Norcross and Willow Lawn self-storage facilities were
refinanced, and prepayment penalties of $490,747 were incurred. In conjunction
with the refinancing of the Partnership's mortgage loans, the remaining
unamortized deferred expenses of $48,724 relating to the previous loans were
written off. These amounts were recognized as an extraordinary item and
classified as debt extinguishment expenses in 1995.
1995 Compared to 1994
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Rental and service income decreased during 1995 as compared to 1994 primarily
as a result of a decrease in occupancy at American Way Mall. The lower
occupancy at American Way Mall resulted in overall decrease of approximately
$809,000 in rental income which was partially offset by an increase of
approximately $321,000 in rental income at Providence Square Apartments, due to
increased average rental rates and occupancy.
Increased cash available for short-term investment, primarily from the net
proceeds received in connection with the Partnership's mortgage loan
refinancings, and higher average interest rates were the primary reasons for an
increase in interest income on short-term investments during 1995 as compared
to 1994.
During the latter part of 1994, the Partnership determined that the value of
the American Way Mall had been impaired. As a result, the property was written
down to the Partnership's best estimate of the property's fair value, and a
$6,700,000 provision for investment property write-down was recognized in 1994.
Due to the property write-down recognized in 1994 on American Way Mall,
depreciation expense decreased in 1995 as compared to 1994.
The Partnership refinanced its mortgage loans during 1995 and the fees
associated with the refinancing are being amortized over the term of the new
mortgage loans. Since the terms of the new mortgage loans were longer than the
terms of the prior mortgage loans, amortization of deferred expenses decreased
during 1995 as compared to 1994.
Due to the completion of the repair and renovation program at the Providence
Square Apartments, property operating expense decreased in 1995 as compared to
1994.
Real estate tax expense increased during 1995 as compared to 1994 due to an
increase in the tax rates at the American Way Mall and refunds of 1992 and 1993
real estate taxes received in 1994 resulting from a reduction in the assessed
value of the El Dorado Hills apartment complex.
<PAGE>
Administrative expense increased during 1995 as compared to 1994 due to
increases in accounting fees and additionally, legal and professional fees
relating primarily to the potential sale of American Way Mall.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $2,966,000 as
of December 31, 1996 when compared to December 31, 1995 primarily due to the
distribution of cash reserves and proceeds from the August 1996 property sales.
In 1996, the Partnership received cash totaling approximately $1,604,000 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 proceeds received from the sales of the El
Dorado Hills Apartments and Willow Lawn Self-Storage Facility. The Partnership
used cash of approximately $22,021,000 to fund its financing activities which
consisted primarily of the payment of distributions of approximately
$22,237,000 to Limited Partners.
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 had underlying debt at December 31, 1996, and El Dorado Hills Apartments
had underlying debt prior to its sale in August 1996. During 1996 and 1995,
the Providence Square Apartments and the Storage USA at Norcross Self-Storage
Facility 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 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 December
31, 1996, the occupancy rates at the Providence Square Apartments, Storage USA
of Norcross Self-Storage Facility and American Way Mall were 91%, 78% and 31%,
respectively. These properties were sold in 1997.
As discussed below, during 1996, the Partnership sold the El Dorado Hills
Apartments and the Willow Lawn Self-Storage Facility and during 1997, sold its
remaining properties, the American Way Mall, Providence Square Apartments and
Storage USA of Norcross Self-Storage Facility. A majority of the proceeds from
the sales will be distributed to Limited Partners in 1997. The Partnership will
retain a portion of the cash to satisfy obligations of the Partnership as well
as establish a reserve for contingencies. 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
<PAGE>
involving the Partnership including, but not limited to, the lawsuit discussed
in Item 3 "Legal Proceedings". 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 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 for
$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 10 of Notes to Financial Statements
for additional information.
In August 1996, the Partnership sold the Willow Lawn Storage Facility in an all
cash sale for $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 10 of Notes
to Financial Statements for additional information.
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 will be distributed to
the Limited Partners in 1997. See Note 14 of Notes to the Financial Statements
for additional information.
In February 1997, the Partnership sold the Providence Square Apartments and the
personal property located thereon for a net 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
$751,659 in selling costs. Pursuant to the terms of the sale, $250,000 of the
proceeds will be retained by the Partnership until May 1997. A majority of the
remaining available proceeds will be distributed to the Limited Partners in
1997. See Note 14 of Notes to the 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 will be distributed to the Limited Partners in 1997. See Note 14 of
Notes to the Financial Statements for additional information.
The Partnership made distributions totaling $389.62 and $12.31 per Interest in
1996 and 1995, respectively. See Statement of Partner's Capital for additional
information. Distributions were comprised of $21.81 per Interest of Net Cash
Receipts and $367.81 per Interest of Net Cash Proceeds in 1996 and, $12.31 per
Interest of Net Cash Receipts in 1995.
In January 1997, the Partnership made a distribution of $240,650 ($4.22 per
Interest) to the holders of Limited Partnership Interests representing a
quarterly distribution of Net Cash Receipts. Including the January 1997
<PAGE>
distribution, Limited Partners have received distributions of Net Cash Receipts
of $173.34 and Net Cash Proceeds of $382.81, totaling $556.15 per $1,000
Interest. In light of results to date, 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.
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
See Index to Financial Statements and Schedule in 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
returns is summarized as follows:
December 31, 1996 December 31, 1995
----------------------- -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
---------- --------- ---------- ---------
Total assets $22,779,071 $14,575,700 $52,642,536 $51,594,818
Partners' capital
accounts (deficit):
General Partner (153,527) (125,316) (243,391) 33,943
Limited Partners 5,355,042 11,211,506 18,695,717 17,393,870
Net (loss) income:
General Partner 89,864 (159,259) (9,759) 91,956
Limited Partners 8,896,497 16,054,808 (966,205) (1,611,892)
Per Limited Part-
nership Interest 155.88 281.30 (16.93) (28.24)
Item 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
- --------------------
On September 14, 1995 the Registrant approved the engagement of Coopers &
Lybrand L.L.P. as its independent auditors for the fiscal year ending December
31, 1995 to replace the firm of Ernst & Young LLP, who were dismissed as
auditors of the Registrant effective September 14, 1995. The General Partner
of the Registrant approved the change in auditors.
<PAGE>
The reports of Ernst & Young LLP on the Registrant's financial statements for
each of the two fiscal years ended December 31, 1994 did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope, or accounting principles.
In connection with the audits of the Registrant's financial statements for each
of the two fiscal years ended December 31, 1994, and in the subsequent interim
period, there were no disagreements with Ernst & Young LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope and procedures which, if not resolved to the satisfaction of Ernst &
Young LLP would have caused Ernst & Young LLP to make reference to the matter
in their report.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
(a) Neither the Registrant nor Balcor Current Income Partners-85, its General
Partner, has a Board of Directors.
(b, c & e) The names, ages and business experience of the executive officers
and significant employees of the General Partner of the Registrant are as
follows:
TITLE OFFICERS
Chairman, President and Chief
Executive Officer Thomas E. Meador
Senior Vice President Alexander J. Darragh
Senior Vice President James E. Mendelson
Senior Vice President John K. Powell, Jr.
Managing Director, Chief Jayne A. Kosik
Financial Officer, Treasurer
and Assistant Secretary
Thomas E. Meador (age 49) 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 Director 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 42) joined Balcor in September 1988 and is
responsible for due diligence analysis and real estate advisory services for
Balcor and American Express Company. He also has supervisory responsibility for
Balcor's environmental matters. Mr. Darragh received masters' degrees in Urban
Geography from Queen's University and in Urban Planning from Northwestern
University.
James E. Mendelson (age 34) joined Balcor in July 1984 and is responsible for
Balcor's property sales activities. He also has supervisory responsibility for
Balcor's accounting, financial, treasury, investor services and investment
administration functions. From 1989 to 1995, Mr. Mendelson was Vice President -
Transaction Management and Vice President - Senior Transaction Manager and had
responsibility for various asset management matters relating to real estate
investments made by Balcor, including negotiations for the restructuring of
mortgage loan investments. Mr. Mendelson received his M.B.A. degree from the
University of Chicago.
<PAGE>
John K. Powell, Jr. (age 46) 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 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 39) 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 Managing Director of The Balcor
Company. Ms. Kosik is a Certified Public Accountant.
(d) There is no family relationship between any of the foregoing officers.
(f) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1996.
Item 11. Executive Compensation
- -------------------------------
The Registrant paid $1,390 in 1996 with respect to one of the executive
officers and directors of Balcor Current Income Partners-85, the General
Partner. The Registrant has not paid and does not propose to pay any
remuneration to the remaining executive officers and directors of the General
Partner. Certain of the remaining officers receive compensation from The Balcor
Company (but not from the Registrant) for services performed for various
affiliated entities, which may include services performed for the Registrant.
However, the General Partner believes that any such compensation attributable
to services performed for the Registrant is immaterial to the Registrant. See
Note 9 of Notes to Financial Statements for the information relating to
transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
(a) No person owns of record or is known by the Registrant to own beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant.
(b) Balcor Current Income Partners-85 and its officers and partners own as a
group the following Limited Partnership Interests of the Registrant:
Amount
Beneficially
Title of Class Owned Percent of Class
-------------- ------------- ----------------
Limited Partnership
Interests 158 Interests Less than 1%
<PAGE>
Relatives and affiliates of the officers and partners of the General Partner do
not own any additional Interests.
(c) The Registrant is not aware of any arrangements, the operation of which
may result in a change of control of the Registrant.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 4 of Notes to Financial Statements for information relating to
the Partnership Agreement and the allocation of distributions and profits and
losses.
See Note 9 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 Schedule, and Reports on Form 8-K
- -------------------------------------------------------------------------
(a)
(1 & 2) See Index to Financial Statements and Schedule in this Form 10-K.
(3) Exhibits:
(3) Amended and Restated Agreement and Certificate of Limited Partnership,
previously filed as Exhibit 3 to Amendment No. 5 to the Registrant's
Registration Statement on Form S-11 dated August 16, 1985 (Registration No.
2-95910), is hereby incorporated herein by reference.
(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
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.
(iv) Third Amendment to Agreement of Sale relating to the sale of American Way
Mall, Fairfield, New Jersey, is attached hereto.
<PAGE>
(v) Fourth Amendment to Agreement of Sale relating to the sale of American Way
Mall, Fairfield, New Jersey, is attached hereto.
(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)
to the Registrant'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,
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.
(v) Amendment No. 2 to Agreement of Sale relating to the sale of Providence
Square Apartments, Charlotte, North Carolina, is attached hereto.
(vi) Letter dated December 17, 1996 relating to the sale of Providence Square
Apartments, Charlotte, North Carolina, is attached hereto.
(vii) Amendment No. 3 to Agreement of Sale relating to the sale of Providence
Square Apartments, Charlotte, North Carolina, is attached hereto.
(16) Letter from Ernst & Young L.L.P. dated September 19, 1995 regarding the
change in the Registrant's certifying accountant previously filed as Exhibit to
the Registrant's Report on Form 8-K/A dated October 27, 1995 (Commission File
No. 0-14352) is hereby incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for 1996 is attached hereto.
(99)(a)(i)Third Amendment to Agreement of Sale relating to the sale of Storage
USA of Norcross Self-Storage Facility, Norcross, Georgia, is attached hereto.
(ii) Fourth Amendment to Agreement of Sale relating to the sale of Storage USA
of Norcross Self-Storage Facility, Norcross, Georgia, is attached hereto.
(iii) Fifth Amendment to Agreement of Sale relating to the sale of Storage USA
of Norcross Self-Storage Facility, Norcross, Georgia, is attached hereto.
(iv) Sixth Amendment to Agreement of Sale relating to the sale of Storage USA
of Norcross Self-Storage Facility, Norcross, Georgia, is attached hereto.
(v) Seventh Amendment to Agreement of Sale relating to the sale of Storage USA
of Norcross Self-Storage Facility, Norcross, Georgia, is attached hereto.
<PAGE>
(vi) Eighth Amendment to Agreement of Sale relating to the sale of Storage USA
of Norcross Self-Storage Facility, Norcross, Georgia, is attached hereto.
(vii) Ninth Amendment to Agreement of Sale relating to the sale of Storage USA
of Norcross Self-Storage Facility, Norcross, Georgia, is attached hereto.
(b) Reports on Form 8-K: 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
Self-Storage Facility, 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 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 CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
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: March 26, 1997
--------------
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
- --------------------- ------------------------------- ------------
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Current Income
/s/ Thomas E. Meador Partners-85, the General Partner March 26, 1997
- -------------------- ---------------
Thomas E. Meador
Managing Director and Chief
Financial Officer (Principal
Accounting Officer) of Balcor
Current Income Partners-85,
/s/ Jayne A. Kosik the General Partner March 26, 1997
- -------------------- ---------------
Jayne A. Kosik
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants
Report of Independent Auditors
Financial Statements:
Balance Sheets, December 31, 1996 and 1995
Statements of Partners' Capital, for the years ended December 31, 1996, 1995
and 1994
Statements of Income and Expenses, for the years ended December 31, 1996, 1995
and 1994
Statements of Cash Flows, for the years ended December 31, 1996, 1995 and 1994
Notes to Financial Statements
Schedule:
III - Real Estate and Accumulated Depreciation, as of December 31, 1996
Financial Statement Schedules, other than that listed, are omitted for the
reason that they are inapplicable or equivalent information has been included
elsewhere herein.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Balcor Current Income Fund-85
A Real Estate Limited Partnership:
We have audited the accompanying balance sheets of Balcor Current Income
Fund-85 A Real Estate Limited Partnership (An Illinois Limited Partnership) as
of December 31, 1996 and 1995 and the related statements of partners' capital,
income and expenses, and cash flows for each of the two years in the period
ended December 31, 1996. We have also audited the accompanying financial
statement schedule. These financial statements and the financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule 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 Current Income Fund-85
A Real Estate Limited Partnership at December 31, 1996 and 1995, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
As described in Note 2 to the financial statements, the partnership agreement
provides for the dissolution of the Partnership upon disposition of all its
interests in real estate. On February 26, 1997, the Partnership disposed of its
remaining real estate asset. Upon resolution of the litigation described in
Note 13 to the financial statements, the Partnership intends to cease
operations and dissolve.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 20, 1997
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Balcor Current Income Fund-85
A Real Estate Limited Partnership:
We have audited the accompanying statements of partners' capital, income and
expenses and cash flows of Balcor Current Income Fund-85 A Real Estate Limited
Partnership (An Illinois Limited Partnership) for the year ended December 31,
1994. 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 audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Balcor
Current Income Fund-85 A Real Estate Limited Partnership for the year ended
December 31, 1994, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 1, 1995
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
1996 1995
------------- -------------
Cash and cash equivalents $ 2,509,984 $ 5,475,539
Escrow deposits 416,773 909,293
Prepaid expenses 54,726 35,463
Accounts and accrued interest receivable 102,578 157,490
Deferred expenses, net of accumulated
amortization of $56,916 in 1996 and
$23,383 in 1995 261,816 631,343
------------- -------------
3,345,877 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 13,544,703 23,640,594
------------- -------------
Investment in real estate, net of
accumulated depreciation 19,433,194 45,433,408
------------- -------------
$ 22,779,071 $ 52,642,536
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 291,536 $ 61,352
Due to affiliates 97,071 23,216
Other liabilities 294,801 23,314
Security deposits 90,753 257,824
Mortgage notes payable 16,803,395 33,824,504
------------- -------------
Total liabilities 17,577,556 34,190,210
------------- -------------
Commitments and contingencies
Limited Partners' capital (57,074
Interests issued and outstanding) 5,355,042 18,695,717
General Partner's deficit (153,527) (243,391)
------------- -------------
Total partners' capital 5,201,515 18,452,326
------------- -------------
$ 22,779,071 $ 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 PARTNERS' CAPITAL
for the years ended December 31, 1996, 1995 and 1994
Partners' Capital (Deficit) Accounts
------------- ------------- -------------
General Limited
Total Partner Partners
------------- ------------- -------------
Balance at December 31, 1993 $ 27,519,931 $ (159,741) $ 27,679,672
Net loss for the year
ended December 31, 1994 (7,389,060) (73,891) (7,315,169)
------------- ------------- -------------
Balance at December 31, 1994 20,130,871 (233,632) 20,364,503
Cash distribution (A) (702,581) (702,581)
Net loss for the year
ended December 31, 1995 (975,964) (9,759) (966,205)
------------- ------------- -------------
Balance at December 31, 1995 18,452,326 (243,391) 18,695,717
Cash distributions (A) (22,237,172) (22,237,172)
Net income for the year
ended December 31, 1996 8,986,361 89,864 8,896,497
------------- ------------- -------------
Balance at December 31, 1996 $ 5,201,515 $ (153,527) $ 5,355,042
============= ============= =============
(A) Summary of cash distributions paid per Interest:
1996 1995
------------ ------------
First Quarter $47.31 None
Second Quarter 27.50 None
Third Quarter 5.00 None
Fourth Quarter 309.81 $12.31
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 years ended December 31, 1996, 1995 and 1994
1996 1995 1994
------------- ------------- -------------
Income:
Rental and service $ 7,937,839 $ 9,774,233 $ 10,261,850
Interest on short-term
investments 249,363 233,042 104,246
------------- ------------- -------------
Total income 8,187,202 10,007,275 10,366,096
------------- ------------- -------------
Expenses:
Interest on mortgage
notes payable 2,112,567 2,893,638 3,018,612
Depreciation 1,443,018 1,749,574 2,015,073
Amortization of deferred
expenses 77,532 152,423 182,173
Property operating 3,406,567 3,715,619 4,231,189
Real estate taxes 700,127 931,134 690,010
Property management fees 399,491 492,664 533,154
Administrative 436,189 508,716 384,945
Provision for investment
property writedown 6,700,000
------------- ------------- -------------
Total expenses 8,575,491 10,443,768 17,755,156
------------- ------------- -------------
Loss before gains on sales of
properties and extraordinary
item (388,289) (436,493) (7,389,060)
Gains on sales of properties 9,666,645
------------- ------------- -------------
Income (loss) before extraordinary
item 9,278,356 (436,493) (7,389,060)
Extraordinary item:
Debt extinguishment expenses (291,995) (539,471)
------------- ------------- -------------
Net income (loss) $ 8,986,361 $ (975,964) $ (7,389,060)
============= ============= =============
Income (loss) before extraordinary
item allocated to General
Partner $ 92,784 $ (4,365) $ (73,891)
============= ============= =============
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the years ended December 31, 1996, 1995 and 1994
(Continued)
Income (loss) before extraordinary
item allocated to Limited
Partners $ 9,185,572 $ (432,128) $ (7,315,169)
============= ============= =============
Income (loss) before extraordinary
item per Limited Partnership
Interest (57,074 issued
and outstanding) $ 160.94 $ (7.57) $ (128.17)
============= ============= =============
Extraordinary item allocated
to General Partner $ (2,920) $ (5,394) NONE
============= ============= =============
Extraordinary item allocated
to Limited Partners $ (289,075) $ (534,077) NONE
============= ============= =============
Extraordinary item per Limited
Partnership Interest (57,074
issued and outstanding) $ (5.06) $ (9.36) NONE
============= ============= =============
Net income (loss) allocated to
General Partner $ 89,864 $ (9,759) $ (73,891)
============= ============= =============
Net income (loss) allocated to
Limited Partners $ 8,896,497 $ (966,205) $ (7,315,169)
============= ============= =============
Net income (loss) per Limited
Partnership Interest (57,074
issued and outstanding) $ 155.88 $ (16.93) $ (128.17)
============= ============= =============
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 years ended December 31, 1996, 1995 and 1994
1996 1995 1994
------------- ------------- -------------
Operating activities:
Net income (loss) $ 8,986,361 $ (975,964) $ (7,389,060)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Extraordinary item:
Debt extinguishment
expenses 291,995 48,724
Gains on sales of properties (9,666,645)
Depreciation of properties 1,443,018 1,749,574 2,015,073
Amortization of deferred
expenses 77,532 152,423 182,173
Provision for investment
property writedown 6,700,000
Net change in:
Escrow deposits 27,480 (265,498)
Accounts and accrued
interest receivable 54,912 57,628 (56,505)
Prepaid expenses (19,263) (35,463)
Accounts payable 230,184 (26,645) (11,211)
Due to affiliates 73,855 (49,106) 19,037
Other liabilities 271,487 23,314
Security deposits (167,071) (45,290) (1,503)
------------- ------------- -------------
Net cash provided by
operating activities 1,603,845 633,697 1,458,004
------------- ------------- -------------
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 (22,237,172) (702,581)
Repayment of mortgage notes
payable (29,427,232)
Principal payments on
mortgage notes payable (249,360) (502,345) (600,028)
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
(Continued)
Proceeds from issuance of
mortgage notes payable 33,900,000 893,145
Payment of deferred expenses (654,726)
Release of improvement escrows 465,040
Funding of improvement escrows (643,795)
------------- ------------- -------------
Net cash provided by or used
in financing activities (22,021,492) 1,969,321 293,117
------------- ------------- -------------
Net change in cash and cash
equivalents (2,965,555) 2,603,018 1,751,121
Cash and cash equivalents at
beginning of year 5,475,539 2,872,521 1,121,400
------------- ------------- -------------
Cash and cash equivalents at
end of year $ 2,509,984 $ 5,475,539 $ 2,872,521
============= ============= =============
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. Nature of the Partnership's Business:
Balcor Current Income Fund-85 A Real Estate Limited Partnership (the
"Partnership") was engaged in the operation of residential, retail and
mini-storage real estate located in various markets within the United States.
The Partnership sold its last property in February 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 the El Dorado Hills Apartments
and the Willow Lawn Self-Storage Facility and during 1997, 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 exists or may arise. Such
contingencies may include legal and other fees stemming from litigation
involving the Partnership including, but not limited to, the lawsuit discussed
in Note 13 of Notes to the 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 arises, reserves may be held by the
Partnership for a longer period of time.
3. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could vary from those estimates.
(b) Depreciation expense is computed using the straight-line method. Rates used
in the determination of depreciation are based upon the following estimated
useful lives:
Years
-----
Buildings and improvements 27 to 30
Furniture and fixtures 5
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements were charged to the related asset account.
<PAGE>
(c) Effective January 1, 1995 the partnership adopted Statement of Financial
Accounting Standards, No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of." Under SFAS 121, the
Partnership records its investments in real estate at the lower of cost or fair
value, and periodically assesses, but not less than on an annual basis,
possible impairment to the value of its properties. The General Partner
estimates the fair value of its properties based on the current sales price
less estimated closing costs. In the event the General Partner determines an
impairment in value has occurred, and the carrying amount of the real estate
asset will not be recovered, a provision is recorded to reduce the carrying
basis of the property to its estimated fair value. The General Partner
considers the method referred to above to result in a reasonable measurement of
a property's fair value, unless other factors affecting the property's value
indicate otherwise.
(d) Deferred expenses consist of mortgage loan refinancing fees which are
amortized over the terms of the respective agreements. Upon sale, any remaining
balance is recognized as debt extinguishment expense and classified as an
extraordinary item.
(e) The Financial Accounting Standard Board's Statement No. 107, "Disclosures
About Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments for which it is practicable to estimate
that value. Since quoted market prices are not available for the Partnership's
financial instruments, fair values have been based on estimates using present
value techniques. These techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, may not
be realized in immediate settlement of the instrument. Statement No. 107 does
not apply to all balance sheet items and excludes certain financial instruments
and all non-financial instruments such as real estate from its disclosure
requirements.
(f) Cash equivalents include all highly liquid investments with an original
maturity of three months or less when purchased.
(g) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership income or loss in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
(h) Revenue is recognized on an accrual basis in accordance with generally
accepted accounting principles. Income from operating leases with significant
abatements and/or scheduled rent increases is recognized on a straight line
basis over the respective lease term. Service income included reimbursements
for operating costs such as real estate taxes, maintenance and insurance and is
recognized as revenue in the period the applicable costs are incurred.
(i) A reclassification has been made to the previously reported 1994 financial
statements to conform with the classification used in 1995 and 1996. This
reclassification has not changed the 1994 results.
<PAGE>
4. Partnership Agreement:
The Partnership was organized in February 1985. The Partnership Agreement
provides for Balcor Current Income Partners-85 to be the General Partner and
for the admission of Limited Partners through the sale of up to 125,000 Limited
Partnership Interests at $1,000 per Interest, 57,074 of which were sold on or
prior to August 19, 1986, the termination date of the offering.
The Partnership Agreement provides that profits and losses will be allocated 1%
to the General Partner and 99% to the Limited Partners.
To the extent that Net Cash Receipts are available, distributions will be made
90% to the Limited Partners and 10% to the General Partner, 9% as its
Partnership management fee and 1% as its distributive share. The General
Partner's share of distributed Net Cash Receipts is subordinated to receipt by
the Limited Partners of a Cumulative Distribution of 6% through March 1988,
6.5% thereafter through March 1989 and 7% thereafter through March 1990. No
subordination of the General Partner's share of distributed Net Cash Receipts
is required after March 1990. Since Cumulative Distribution levels to the
Limited Partners specified in the Partnership Agreement were not attained, the
General Partner was required to subordinate its receipt of its share of Net
Cash Receipts of approximately $650,000 through March 1990. This amount has
been deferred and will be paid only from Net Cash Proceeds as described below.
When and as the Partnership sells or refinances its properties, the Net Cash
Proceeds resulting therefrom which are available for distribution will be
distributed only to holders of Interests until such time as holders of
Interests have received an amount equal to their Original Capital plus a 7% per
annum non-compounded Cumulative Distribution. Thereafter, if any portion of the
General Partner's share of Net Cash Receipts has been deferred as a result of
the subordination to the Cumulative Distribution, available Net Cash Proceeds
shall be distributed to the General Partner to the extent of the deferred
amount. Any remaining Net Cash Proceeds available for distribution will be
distributed 85% to the Limited Partners and 15% to the General Partner.
5. Mortgage Notes Payable:
Mortgage notes payable at December 31, 1996 and 1995 consisted of the
following:
Carrying Carrying Current Final
Property Amount of Amount of Inter- Matur- Current Estimated
Pledged as Notes at Notes at est ity Monthly Balloon
Collateral 12/31/96 12/31/95 Rate Date Payment Payment
- ------------ ----------- ----------- -------------- --------- -----------
El Dorado Hills
Apartments (A)(B) None $16,862,363 (B) (B) (B) (B)
Providence
Square Apart-
ments (A)(C) $16,803,395 16,962,141 7.53% 2002 $119,216 $15,639,631
----------- -----------
Total $16,803,395 $33,824,504
=========== ===========
<PAGE>
(A) In September 1995, the Partnership refinanced the mortgage loan
collateralized by the El Dorado Hills Apartments and the mortgage loan
collateralized by Providence Square Apartments, Storage USA of Norcross and
Willow Lawn Self-Storage Facilities. The Partnership obtained two new mortgage
loans of $16,900,000 and $17,000,000 which are collateralized by El Dorado
Hills and Providence Square Apartments, respectively. The interest rates
decreased from 10.02% to 7.53%, the maturity dates were extended from December
1995 to October 2002 and the total monthly payments decreased from $311,038 to
$237,731. A portion of the proceeds from the new El Dorado Hills and Providence
Square loans was used to repay the existing mortgage loans of $16,039,332 and
$13,387,900, as well as prepayment penalties of $490,747.
(B) This property was sold in August 1996. See Note 10 of Notes to the
Financial Statements for additional information.
(C) This property was sold in February 1997. See Note 14 of Notes to the
Financial Statements for additional information.
The Partnership's loans described above required current monthly payments of
principal and interest.
Real estate with an aggregate carrying value of $13,708,677 at December 31,
1996 was pledged as collateral for repayment of mortgage loans.
During 1996, 1995 and 1994, the Partnership incurred and paid interest expense
on mortgage notes payable of $2,112,567, $2,893,638 and $3,018,612.
6. Management Agreements:
The El Dorado Hills and Providence Square apartment complexes were managed by a
third-party management company. These management agreements provide for annual
fees of 5% of gross operating revenues.
American Way Mall was also managed by a third-party management company for fees
that ranged from 3% to 6% of adjusted gross operating revenues.
Willow Lawn Self-Storage Facility was managed by a third-party management
company for annual fees equal to the greater of 5% of gross operating revenues
or $12,000.
The Storage USA of Norcross Self-Storage Facility was managed by a third-party
management company for annual fees of 6% of gross operating revenues.
7. Provision for Investment Property Writedown:
The northern New Jersey retail market where the American Way Mall is located is
very competitive. During 1994 the Partnership determined that the property
needed to be reconfigured and retenanted with strong anchor tenants to compete
in the local retail market. The property was written down to the Partnership's
best estimate of the property's fair value, and a $6,700,000 provision for
investment property writedown was recognized in 1994.
<PAGE>
8. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder and existing interpretations
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, will differ from the
tax returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences is that
the net income for 1996 in the financial statements is $6,909,188 less than the
tax income of the Partnership for the same period.
9. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94
--------------- ---------------- ----------------
Paid Payable Paid Payable Paid Payable
-------- ------- -------- ------- -------- -------
Property management fees None None None None $535,138 None
Reimbursement of expenses
to the General Partner,
at cost:
Accounting $15,706 $14,891 $39,422 $2,844 71,533 $28,892
Data processing 911 None 14,844 429 30,877 8,303
Investment processing 1,950 1,849 12,424 849 7,275 2,939
Investor communication None None 7,062 None 12,205 4,929
Legal 9,219 8,742 17,181 1,605 8,179 3,303
Portfolio management 76,789 71,589 147,085 17,489 59,347 23,956
The Partnership participates in an insurance deductible program with other
affiliated partnerships in which the program pays claims up to the amount of
the deductible under the master insurance policies for its properties. The
program is administered by an affiliate of the General Partner who receives no
fee for administering the program; however, the General Partner is reimbursed
for program expenses. The Partnership paid premiums to the deductible insurance
program of $11,764, $55,606 and $86,566 for 1996, 1995 and 1994, respectively.
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed
three of the Partnership's properties until the affiliate was sold to a third
party in November 1994.
<PAGE>
10. Property Sales:
(a) In August 1996, the Partnership sold the El Dorado Hills Apartments for
$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 for $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.
11. Extraordinary Item:
(a) In August 1996, the Partnership sold the El Dorado Hills Apartments. In
connection with the sale, the Partnership wrote off the remaining unamortized
deferred financing fees in the amount of $291,995. This amount was recognized
as an extraordinary item and classified as debt extinguishment expense.
(b) As discussed in Note 5 of Notes to the Financial Statements, during
September 1995 the mortgages collateralized by El Dorado Hills and Providence
Square apartment complexes and Storage USA at Norcross and Willow Lawn
Self-Storage facilities were refinanced and prepayment penalties of $490,747
were incurred. In conjunction with the refinancing of the mortgage loans, the
remaining unamortized deferred expenses of $48,724 relating to the previous
loans were written off. These amounts were recognized as extraordinary items
and classified as debt extinguishment expenses.
12. Fair Value of Financial Instruments:
The carrying amounts and fair values of the Partnership's financial instruments
at December 31, 1996 and 1995 are as follows:
The carrying value of cash and cash equivalents, accounts and accrued interest
receivable and accounts payable approximates fair value.
Based on borrowing rates available to the Partnership at the end of 1996 and
1995 for mortgage loans with similar terms and maturities, the fair value of
the mortgage notes payable approximates the carrying value.
<PAGE>
13. 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.
14. Subsequent Events:
(a) In January 1997, the Partnership made a distribution of $240,650 ($4.22 per
Interest) to the holders of Limited Partnership Interests representing a
distribution of Net Cash Receipts of $4.22 per Interest for the fourth quarter
of 1996.
(b) 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. For financial statement purposes, the Partnership
will recognize a gain of approximately $1,600,000 from the sale of this
property during the first quarter 1997.
(c) In February 1997, the Partnership sold the Providence Square Apartments for
$25,010,000. The purchaser of the Providence Square Apartments 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 $751,659 in selling costs. For
financial statement purposes, the Partnership will recognize a gain of
approximately $10,600,000 from the sale of this property during the first
quarter 1997.
(d) 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. For financial
statement purposes, the Partnership will recognize a gain of approximately
$1,200,000 from the sale of this property during the first quarter 1997.
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
<TABLE> SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1996
<CAPTION>
Col. A Col. B Col. C Col. D
- ------------------------ ------- ---------------------- ---------------------------------
Initial Cost Cost Adjustments
to Partnership Subsequent to Acquisition
---------------------- ---------------------------------
Buildings Carrying Reduction
Encum- and Im- Improve- Costs of Basis
Description brances Land provements ments (a) (b)
- ------------------------ ------- ---------- ----------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Providence Square
Apts., 473 units in
Charlotte, NC (e) $2,000,000 $20,026,060 $47,979
Storage USA of Norcross,
a 586 unit self-
storage facility in
Norcross, GA (e) 430,000 2,571,410 10,401 $ (187,984)
American Way Mall
a 140,210 sq.
ft. shopping center
in Fairfield, NJ (e) 2,200,000 14,000,000 1,016,424 963,607 (10,100,000)
--------- ----------- ---------- ---------- -------------
Total $4,630,000 $36,597,470 $1,016,424 $1,021,987 $(10,287,984)
========== =========== ========== ========== =============
</TABLE>
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
<TABLE> SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1996
(Continued)
<CAPTION>
Col. A Col. E Col. F Col. G Col. H Col. I
- ----------------------- ------------------------------------ ------------ --------- ------ --------------
Gross Amounts at Which Life Upon
Carried at Close of Period Which Depre-
------------------------------------ ciation in
Buildings Accumulated Date Date Latest Income
and Im- Total Deprecia- of Con- Acq- Statement
Description Land provements (c)(d) tion(d) struction uired is Computed
- ----------------------- ----------- ---------- ------------ ----------- --------- ------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Providence Square
Apts., 473 units in
Charlotte, NC (j) $2,000,000 $20,074,039 $22,074,039 $8,365,362 (g) 11/85 (f)
Storage USA of Norcross,
a 586 unit self-
storage facility in
Norcross, GA (j) 404,549 2,419,278 2,823,827 826,251 (h) 12/86 (f)
American Way Outlet
Mall, a 140,210 sq.
ft. shopping center
in Fairfield, NJ (i) 1,035,960 7,044,071 8,080,031 4,353,090 1982 12/86 (f)
----------- ----------- ----------- -----------
Total $3,440,509 $29,537,388 $32,977,897 $13,544,703
=========== =========== =========== ===========
</TABLE>
<PAGE>
BALCOR CURRENT INCOME FUND-85
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO SCHEDULE III
(a) Consists of legal fees, appraisal fees, title costs and other related
professional fees.
(b) The carrying basis of the American Way Mall was reduced during each of 1994
and 1992 due to a permanent impairment in the value of the property. In
addition, guaranteed income earned on properties under the terms of certain
management and guarantee agreements was recorded by the Partnership as a
reduction of the basis of the property to which the guaranteed income relates.
(c) The aggregate cost of land for Federal income tax purposes is $4,762,347
and the aggregate cost of buildings and improvements for Federal income tax
purposes is $25,281,814. The total of these is $30,044,161.
(d) Reconciliation of Real Estate
------------------------------
1996 1995 1994
---------- ---------- ----------
Balance at beginning of year $69,074,002 $69,074,002 $75,774,002
Deduction during the year:
Investment property write-down (6,700,000)
Cost of properties sold (36,096,105)
----------- ----------- -----------
Balance at end of year $32,977,897 $69,074,002 $69,074,002
=========== =========== ===========
Reconciliation of Accumulated Depreciation
-------------------------------------------
1996 1995 1994
---------- ---------- ----------
Balance at beginning of year $23,640,594 $21,891,020 $19,875,947
Depreciation expense for the year 1,443,018 1,749,574 2,015,073
Accumulated depreciation of
properties sold (11,538,909)
----------- ----------- -----------
Balance at end of year $13,544,703 $23,640,594 $21,891,020
=========== =========== ===========
(e) See description of Mortgage Notes Payable in Note 5 of Notes to Financial
Statements.
<PAGE>
(f) Depreciation expense is computed based upon the following estimated useful
lives:
Years
-----
Buildings and improvements 27 to 30
Furniture and fixtures 5
(g) This apartment complex was completed in three phases from 1971 to 1972.
(h) Phase I was completed in November 1983 and Phase II was completed in April
1987.
(i) In January 1997, this property was sold. See Note 14 of Notes to the
Financial Statements for additional information.
(j) In February 1997, this property was sold. See Note 14 of Notes to the
Financial Statements for additional information.
<PAGE>
THIRD AMENDMENT TO AGREEMENT OF SALE
This Third Amendment ("Third Amendment") is entered into as of November
7th, 1996 between ROBERT HEIDENBERG ("Purchaser") and AMERICAN WAY PARTNERS, an
Illinois limited partnership ("Seller").
R E C I T A L S:
A. Purchaser and Seller have entered into a certain Agreement of Sale
("Agreement") dated as of June 6, 1996.
B. The Agreement was modified pursuant to that First Amendment to
Agreement of Sale entered into as of June 26, 1996 and was further amended by
that Second Amendment to Agreement of Sale entered into as of September 24,
1996.
C. The parties hereto now wish to further amend the Agreement.
NOW, THEREFORE, in consideration of the above recitals and the covenants
contained herein, the parties hereby amend the Agreement effective as of the
date hereof as follows:
1. The first sentence of Paragraph 25 of the Agreement is hereby deleted
and the following is substituted in its place:
"In consideration of Seller executing this Agreement with Purchaser and
agreeing to convey the Property on the Closing Date in accordance with the
terms hereof to Purchaser, Purchaser agrees that if at any time on or
before February 25, 1997 Purchaser transfers any of the Property to
Target, then in connection with said transfer, Purchaser shall deliver and
pay to Seller twenty-five percent (25%) of the net sales proceeds in
excess of $5,400,000.00 received by Purchaser from Target on the date of
receipt by Purchaser of said net proceeds."
2. All capitalized terms used herein shall have the same meaning as in
the Agreement.
3. Except as modified herein, all other terms and conditions of the
Agreement shall remain in full force and effect.
4. This Third Amendment may be executed in multiple facsimile
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER:
/s/ Robert Heindenberg
----------------------------
ROBERT HEIDENBERG
SELLER:
AMERICAN WAY PARTNERS, an
Illinois limited partnership
By: Balcor Current Income Partners-85,
an Illinois general partnership
By: The Balcor Company, a Delaware
corporation, its general partner
By: /s/ James E. Mendelson
-----------------------------
<PAGE>
FOURTH AMENDMENT TO AGREEMENT OF SALE
This Fourth Amendment ("Fourth Amendment") is entered into as of December
19th, 1996 between ROBERT HEIDENBERG ("Purchaser") and AMERICAN WAY PARTNERS,
an Illinois limited partnership ("Seller").
R E C I T A L S:
A. Purchaser and Seller have entered into a certain Agreement of Sale
("Agreement") dated as of June 6, 1996.
B. The Agreement was modified pursuant to that First Amendment to
Agreement of Sale entered into as of June 26, 1996 and was further amended by
that Second Amendment to Agreement of Sale entered into as of September 24,
1996 and was further amended by that Third Amendment to Agreement of Sale
entered into as of November 7, 1996.
C. The parties hereto now wish to further amend the Agreement.
NOW, THEREFORE, in consideration of the above recitals and the covenants
contained herein, the parties hereby amend the Agreement effective as of the
date hereof as follows:
1. The first sentence of Paragraph 25 of the Agreement, as amended, is
hereby deleted and the following is substituted in its place:
"In consideration of Seller executing this Agreement with Purchaser and
agreeing to convey the Property on the Closing Date in accordance with the
terms hereof to Purchaser, Purchaser agrees that if at any time on or
before February 25, 1997 Purchaser transfers any of the Property to
Target, then in connection with said transfer, Purchaser shall deliver and
pay to Seller twenty-five percent (25%) of the net sales proceeds in
excess of $5,500,000.00 received by Purchaser from Target on the date of
receipt by Purchaser of said net proceeds."
2. All capitalized terms used herein shall have the same meaning as in
the Agreement.
3. Except as modified herein, all other terms and conditions of the
Agreement shall remain in full force and effect.
4. This Fourth Amendment may be executed in multiple facsimile
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
PURCHASER:
/s/ Robert Heinenberg
-------------------------------
Robert Heinberg
SELLER:
AMERICAN WAY PARTNERS, an
Illinois limited partnership
By: Balcor Current Income Partners-85,
an Illinois general partnership
By: The Balcor Company, a Delaware
corporation, its general partner
By: /s/ James E. Mendelson
------------------------------
<PAGE>
AMENDMENT NO. 2 TO AGREEMENT OF SALE
THIS AMENDMENT NO. 2 TO AGREEMENT OF SALE (this "Amendment") is dated as
of November , 1996 by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser"), and 100 PROVIDENCE SQUARE LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
WITNESSETH:
A. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement of Sale dated as of October 17, 1996, as amended by that
certain Amendment No. 1 to Agreement of Sale dated as of October 17, 1996,
providing for the sale by Seller to Purchaser of certain real property and
other related property located in Charlotte, North Carolina and known as
Providence Square Apartments (the "Property") (said Agreement of Sale, as
amended by Amendment No. 1 thereto, is hereinafter referred to as the
"Agreement"); and
B. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement dated as of October 17, 1996 providing for the sale by Seller
to Purchaser of certain personal property located at the Property (the
"Personal Property") (said Agreement is hereinafter referred to as the
"Agreement" hereinafter referred to as the ("Personal Property Agreement"); and
C. WHEREAS, the parties heretofore desire to amend the terms and
conditions of the Agreement in certain respects, in accordance with the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the recitals set forth, the covenants
and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
all parties, Purchaser and Seller hereby agree as follows:
1. Preambles. The Preambles to this Amendment are fully incorporated
herein by this reference thereto with the same force and effect as though
restated herein.
2. Defined Terms. To the extent not otherwise defined herein to the
contrary, all capitalized terms and/or phrases used in this Amendment shall
have the respective meanings ascribed to them in the Agreement, as modified
hereby.
3. Extension of Closing Date. Paragraph 8 of the Agreement is amended
to provide that the Closing Date shall be extended from December 2, 1996 to
December 19, 1996, and that all references to the Closing Date in both the
Agreement and the Personal Property Agreement shall mean December 19, 1996.
<PAGE>
4. Miscellaneous. Except as may be expressly set forth herein to the
contrary, the Agreement remains unmodified and all of the terms and conditions
of the Agreement shall remain in full force and effect. Notwithstanding
anything to the contrary contained herein, to the extent that the terms and
conditions of this Amendment conflict with the terms and conditions of the
Agreement, this Amendment shall control.
5. Governing Law. This Amendment shall be governed and construed
under the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
GROUP ONE INVESTMENTS, INC.,
an Illinois corporation
By: /s/ Robert H. Weitzman
-----------------------------
Name: Robert H. Weitzman
------------------------------
Its: President
------------------------------
SELLER:
100 PROVIDENCE SQUARE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Current Income Partners-85,Inc.,
an Illinois corporation,
its general partner
By: /s/ James E. Mendelson
-------------------------------
Name: James E. Mendelson
-------------------------------
Its: Authorized Rep.
-------------------------------
<PAGE>
December 17, 1996
BY FACSIMILE
100 Providence Square Limited Partnership
c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A-200
Bannockburn, IL 60015
ATTN: Ilona Adams
The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A-200
Bannockburn, IL 60015
ATTN: James Mendelson
Katten Muchin & Zavis
525 W. Monroe Street, Suite 1600
Chicago, IL 60661
ATTN: Daniel J. Perlman, Esq.
RE: Providence Square Apartments
Charlotte, North Carolina
Ladies and Gentlemen:
Reference is made to that certain Agreement of Sale dated as of October
17, 1996 by and between Group One Investments, Inc., an Illinois corporation
("Purchaser"), and 100 Providence Square Limited Partnership, an Illinois
limited partnership ("Seller"), as amended by (i) that certain Amendment No. 1
to the Agreement of Sale dated as of October 17, 1996, (ii) that certain letter
agreement dated October 30, 1996, and (iii) that certain Amendment No. 2 to
Agreement of Sale dated as of November 22, 1996 by and between Purchaser and
Seller (collectively the "Agreement"), pertaining to the purchase and sale of
the captioned property.
As you know, Berkshire Mortgage Finance Limited Partnership has issued a
conditional assumption approval letter dated December 5, 1996 (the "Conditional
Approval Letter"). As of this date, the Conditional Approval Letter does not
constitute an assumption by Purchaser of Seller's obligations under the Loan
Documents on terms reasonably acceptable to Purchaser as contemplated in
paragraph 25 of the Agreement. Certain terms and provisions in the Conditional
Approval Letter must still be modified or deleted to Purchaser's reasonable
satisfaction in order for such letter to be acceptable. We have been and are
continuing to work with Berkshire to achieve a resolution of the unacceptable
terms and provisions.
Be advised that, pursuant to paragraph 25 of the Agreement, Purchaser will
not by the "Closing Date" satisfy the "Lender's Conditions Precedent" (both as
defined in paragraph 25 of the Agreement). Accordingly, by this letter
Purchaser exercises its right to extend the Closing Date to January 18, 1997 in
order to satisfy the Lender's Conditions Precedent.
<PAGE>
Very truly yours,
GROUP ONE INVESTMENTS, INC.
an Illinois corporation
By: /s/ Robert H. Weitzman
------------------------------------
Robert H. Weitzman
President
RHW:bir
cc: Barry A. Comin, Esq. (by facsimile)
<PAGE>
AMENDMENT NO. 3 TO AGREEMENT OF SALE
THIS AMENDMENT NO. 3 TO AGREEMENT OF SALE (this "Amendment") is dated as
of January 28, 1997 by and between GROUP ONE INVESTMENTS, INC., an Illinois
corporation ("Purchaser"), and 100 PROVIDENCE SQUARE LIMITED PARTNERSHIP, an
Illinois limited partnership ("Seller").
WITNESSETH:
A. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement of Sale dated as of October 17, 1996, as amended, providing
for the sale by Seller to Purchaser of certain real property and other related
property located in Charlotte, North Carolina and known as Providence Square
Apartments (the "Property") (said Agreement of Sale, as amended, is hereinafter
referred to as the "Agreement"); and
B. WHEREAS, Purchaser and Seller have heretofore entered into that
certain Agreement dated as of October 17, 1996, as amended, providing for the
sale by Seller to Purchaser of certain personal property located at the
Property (said Agreement, as amended, is hereinafter referred to as the
"Personal Property Agreement"); and
C. WHEREAS, the parties hereto desire to amend the terms and conditions of
the Agreement and the Personal Property Agreement in certain respects, in
accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the recitals set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
all parties, Purchaser and Seller hereby agree as follows:
1. Preambles. The Preambles to this Amendment are fully incorporated
herein by this reference thereto with the same force and effect as though
restated herein.
2. Defined Terms. To the extent not otherwise defined herein to the
contrary, all capitalized terms and/or phrases used in this Amendment shall
have the respective meanings ascribed to them in the Agreement, as modified
hereby.
3. Extension of Closing Date. Paragraph 8 of the Agreement is amended to
provide that the Closing Date shall be extended to February 17, 1997, and that
all references to the Closing Date in both the Agreement and the Personal
Property Agreement shall mean February 17, 1997.
4. Earnest Money. Within one business day after the date of execution
hereof, Purchaser shall increase the Earnest Money by One Hundred Thousand and
no/100 Dollars ($100,000.00).
5. Lender's Consent. Seller and Purchaser each acknowledge and agree
that the Lender's Consent has been obtained and waive any right to terminate
the Agreement due to the failure to obtain the Lender's Consent.
<PAGE>
6. Miscellaneous. Except as may be expressly set forth herein to the
contrary, the Agreement and the Personal Property Agreement remain unmodified,
and all of the terms and conditions of the Agreement shall remain in full force
and effect. Notwithstanding anything to the contrary contained herein, to the
extent that the terms and conditions of this Amendment conflict with the terms
and conditions of the Agreement or the Personal Property Agreement, this
Amendment shall control.
7. Governing Law. This Amendment shall be governed and construed under
the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
GROUP ONE INVESTMENTS, INC.,
an Illinois corporation
By: /s/ Robert H. Weitzman
--------------------------------
Name:
--------------------------------
Its: President
--------------------------------
SELLER:
100 PROVIDENCE SQUARE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Current Income Partners-85, Inc., an
Illinois corporation, its general partner
By: /s/ James E. Mendelson
--------------------------------
Name:
--------------------------------
Its: Authorized Rep.
--------------------------------
<PAGE>
THIRD AMENDMENT TO AGREEMENT OF SALE
This Amendment to Agreement of Sale (this "Amendment") is made and entered
on this 26th 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 (i) an Amendment to
the Agreement on the 9th day of October, 1996; and (ii) a Second Amendment to
Agreement of Sale on the 8th day of November, 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 December 15, 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 23, 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
<PAGE>
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
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: CEO
--------------------------------
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/ James E. Mendelson
--------------------------------
Name: James E. Mendelson
--------------------------------
Its: Authorized Representative
--------------------------------
<PAGE>
FOURTH AMENDMENT TO AGREEMENT OF SALE
This Fourth Amendment to Agreement of Sale (this "Amendment") is made and
entered on this 13th day of December, 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")
B. The Purchaser and the Seller previously entered into (i) an Amendment to
the Agreement on the 9th day of October, 1996; and (ii) a Second Amendment to
Agreement of Sale on the 8th day of November, 1996; and (iii) a Third Amendment
to Agreement of Sale on the 26th day of November, 1996.
C. 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 January 22, 1997 (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, 1996, and year-to-date 1997
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 January
30, 1997 (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
<PAGE>
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 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/ Daniel Charleston
--------------------------------
Name:
--------------------------------
Its: Authorized Agent
--------------------------------
<PAGE>
FIFTH AMENDMENT TO AGREEMENT OF SALE
This Fifth Amendment to Agreement of Sale (this "Amendment") is made and
entered into on this 22nd day of January, 1997, 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:
Recitals of Fact
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").
B. The Purchaser and the Seller previously entered into: (i) an Amendment to
the Agreement on the 9th day of October, 1996; (ii) a Second Amendment to
Agreement of Sale on the 8th day of November, 1996; (iii) a Third Amendment to
Agreement of Sale on the 26th day of November, 1996; and (iv) a Fourth
Amendment to Agreement of Sale on the 13th day of December, 1996.
C. 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. The above recitals of fact are incorporated as substantive provisions
of this Amendment.
2. Capitalized Terms: Unless otherwise defined herein, capitalized terms
shall have the same meanings ascribed to them within the Agreement.
3. Inspection and As-Is Condition: The first paragraph within Paragraph
7.1 of the Agreement is hereby deleted in its entirety 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 January 23, 1997, (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, 1996, and year-to-date
1997 operating statements."
Except as amended hereby, the terms and conditions of the Agreement as
previously amended shall remain in full force and effect.
<PAGE>
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 partnership, ("Purchaser")
By: Storage Trust Realty,
a Maryland real estate investment trust,
its sole general partner
By: /s/ Michael G. Burman
------------------------------
Name: Michael G. Burman
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/ James E. Mendelson
-----------------------------------
Name: James E. Mendelson
-----------------------------------
Its. Authorized representative
-----------------------------------
<PAGE>
SIXTH AMENDMENT TO AGREEMENT OF SALE
This Sixth Amendment to Agreement of Sale (the "Amendment") is made and
entered into on this 23rd day of January, 1997, 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:
Recitals of Fact
A. Purchaser and Seller previously entered into that certain Agreement of
Sale dated as of the 26th day of September, 1996 (the "Original Agreement").
B. Purchaser and Seller previously entered into (i) an Amendment to the
Agreement on the 9th day of October, 1996; (ii) a Second Amendment to Agreement
of Sale on the 8th day of November, 1996; (iii) a Third Amendment to Agreement
of Sale on the 26th day of November, 1996; (iv) a Fourth Amendment to Agreement
of sale on the 13th day of December, 1996, and (v) a Fifth Amendment to
Agreement of sale on the 22nd day of January, 1996. The Original Agreement, as
amended by such amendments, is referred to herein as the "Agreement".
C. Purchaser and Seller desire to amend the Agreement on this date in order
to reduce the purchase price, modify certain provisions relating to the
Inspection Period, and alter certain dates contained in 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. The above recitals of fact are incorporated as substantive provisions
of this Amendment.
2. Capitalized Terms: Unless otherwise defined herein, capitalized
terms shall have the same meanings ascribed to them within the Agreement.
3. Purchase Price: All references in the Agreement to Purchase Price
shall mean Three Million Two Hundred Fifty Thousand And No/100 Dollars
($3,250,000.00).
4. Survey: The following sentence is hereby added to the end of
Paragraph 3.2 of the Agreement:
"Purchaser hereby acknowledges that (i) Purchaser has received the Updated
Survey, and (ii) all matters disclosed by the Updated Survey are acceptable to
Purchaser, except matters related to title exceptions 6, 7, 8, 10, 11(c) or
11(f) set forth on Schedule B of the Title Commitment dated August 23, 1996, as
revised November 19, 1996, matters related to documents recorded in Deed Book
592, Page 149 and Deed Book 2444, Page 140, matters related to surface
drainage, and matters related to encroachments over set back lines
(collectively, the "Existing Exceptions"). Purchaser has ordered a survey of
the "Swap Parcel" legally described on Exhibit A attached hereto (the "Swap
Parcel Survey").
<PAGE>
5. Inspection and As-Is Condition:
A. The first paragraph within Paragraph 7.1 of the Agreement is hereby
deleted in its entirety 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 February 17, 1997, (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 complete a
Phase I environmental survey of the Property and the Swap Parcel
('Environmental Report')."
B. The fourth paragraph within Paragraph 7.1 of the Agreement is hereby
deleted in its entirety and the following provision is substituted in its
place:
"Solely in the event that, in the reasonable discretion of Purchaser,
either
(i) the Swap Parcel Survey reveals any matter which would have
a materially adverse effect on the use or value of the Swap
Parcel,
(ii) any matter related to the Existing Exceptions has a
materially adverse effect on the use or value of the
Property,
(iii) the Environmental Report reveals the existence of any
matter which would have a materially adverse effect on the
use or value of the Property or Swap Parcel,
(iv) the self-storage special use permit for the Property is
determined to be terminable (x) upon transfer of the
Property to Purchaser, or (y) upon casualty to greater
than 50% of the improvements located on the Property,
then Purchaser shall have the right to terminate this Agreement by
giving written notice of such termination to Seller at any time prior
to the expiration of the Inspection Period with respect to items (i),
(ii) and (iii) above, and 5:00 p.m. Chicago time on January 30, 1997
with respect to item (iv) above. If written notice is not given by
Purchaser pursuant to this Paragraph 7.1 prior to the expiration of
the time periods set forth in the previous sentence, then the right
of Purchaser to terminate this Agreement pursuant to this Paragraph
7.1 shall be waived. If Purchaser terminates this Agreement by
written notice to Seller in accordance with this Paragraph 7.1, (i)
Purchaser shall promptly deliver to Seller copies of all studies,
reports and other investigations obtained by Purchaser in connection
with its due diligence during the Inspection Period; and (ii) the
Earnest Money deposited by Purchaser shall be immediately paid to
<PAGE>
Purchaser, together with any interest earned thereon, and neither
Purchaser nor Seller shall have any right, obligation or liability
under this Agreement, except for Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in this
Paragraph 7.1. Notwithstanding anything contained herein to the
contrary, Purchaser's obligation to indemnify Seller and restore the
Property, as more fully set forth in this Paragraph 7.1, shall
survive the Closing and the delivery of the Deed and termination of
this Agreement."
6. Closing: Notwithstanding anything to the contrary contained in the
Agreement, the Closing shall occur on February 20, 1997, and Closing Date shall
mean February 20, 1997.
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 partnership, ("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/ Jerry M. Ogle
--------------------------------
Name: Jerry M. Ogle
--------------------------------
Its: Managing Director
--------------------------------
<PAGE>
SEVENTH AMENDMENT TO AGREEMENT OF SALE
This Seventh Amendment to Agreement of Sale (this "Amendment") is made and
entered into on this 17 day of February, 1997, 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:
Recitals of Fact
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").
B. The Purchaser and the Seller previously entered into (i) an Amendment to
the Agreement on the 9th day of October, 1996; (ii) a Second Amendment to
Agreement of Sale on the 8th day of November, 1996; (iii) a Third Amendment to
Agreement of Sale on the 26th day of November, 1996; (iv) a Fourth Amendment to
Agreement of Sale on the 13th day of December, 1996; (v) a Fifth Amendment to
Agreement of Sale on the 22nd day of January 1997; and (vi) a Sixth Amendment
to Agreement of Sale on the 23rd day of January, 1997.
C. 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. The above recitals of fact are incorporated as substantive provisions
of this Amendment.
2. Capitalized Terms: Unless otherwise defined herein, capitalized terms
shall have the same meanings ascribed to them within the Agreement.
3. Survey: The following sentence is hereby added to the end of
Paragraph 3.2 of the Agreement.
"Purchaser hereby acknowledges that: (i) Purchaser has received the
Updated Survey; and (ii) all matters disclosed by the Updated Survey
are acceptable to Purchaser, except matters related to the title
exception 10(c) set forth on Schedule B of the Title Commitment dated
August 23, 1996, as revised February 13, 1997, and matters related to
the encroachments over set back lines (collectively, the "Existing
Exceptions"). Purchaser has ordered a survey of the "Swap Parcel"
legally described on Exhibit "A" attached hereto (the "Swap Parcel
Survey").
4. Inspection and As-Is Condition:
a. The first paragraph within Paragraph 7.1 of the Agreement is hereby
deleted and the following provision is substituted in its place.
<PAGE>
"7.1 The period commencing on July 29, 1996, and ending at 5:00 p.m.
Chicago time on February 19, 1997, shall be herein referred to as the
"Inspection Period". Purchaser and the agents, engineers, and surveyors
retained by Purchaser may enter upon the Property, at any reasonable time
and upon reasonable prior notice to Seller, to finalize a survey of the
Property and the Swap Parcel Survey."
b. The fourth paragraph within Paragraph 7.1 of the Agreement is hereby
deleted in its entirety and the following provision is substituted in its
place:
"Solely in the event that, in the reasonable discretion of Purchaser,
either:
(i) the Swap Parcel reveals any matter which would have a materially
adverse effect on the use of value of the Swap Parcel; or
(ii) any matter related to the Existing Exceptions has a materially
adverse effect on the use or value of the Property,
then Purchaser shall have the right to terminate this Agreement by giving
written notice of such termination to Seller at any time prior to the
expiration of the Inspection Period with respect to items (i) and (ii)
above. If written notice is not given by Purchaser pursuant to this
Paragraph 7.1 prior to the expiration of the time periods set forth in the
previous sentence, then the right of Purchaser to terminate this Agreement
pursuant to this paragraph 7.1 shall be waived. If Purchaser terminates
this Agreement by written notice to Seller in accordance with this
Paragraph 7.1, (i) Purchaser shall promptly deliver to Seller copies of
all studies, reports and other investigations obtained by Purchaser in
connection with its due diligence during the Inspection Period; and (ii)
the Earnest Money deposited by Purchaser shall be immediately paid to
Purchaser, together with any interest earned thereon, and neither
Purchaser nor Seller shall have any right, obligation or liability under
this Agreement, except for Purchaser's obligation to indemnify Seller and
restore the Property as more fully set forth in this Paragraph 7.1.
Notwithstanding anything contained herein to the contrary, Purchaser's
obligation to indemnify Seller and restore the Property, as more fully set
forth in this Paragraph 7.1, shall survive the Closing and the delivery of
the Deed and termination of this Agreement."
5. Closing: Notwithstanding anything to the contrary contained in the
Agreement, the Closing shall occur on February 24, 1997, and Closing Date shall
mean February 24, 1997.
Except as amended hereby, the terms and conditions of the Agreement as
previously amended shall remain in fully force and effect.
<PAGE>
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 partnership, ("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/ James E. Mendelson
-----------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
<PAGE>
EIGHTH AMENDMENT TO AGREEMENT OF SALE
This Eighth Amendment to Agreement of Sale (this "Amendment") is made and
entered into on this 19th day of February, 1997, 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:
Recitals of Fact
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").
B. The Purchaser and the Seller previously entered into (i) an Amendment to
the Agreement on the 9th day of October, 1996; (ii) a Second Amendment to
Agreement of Sale on the 8th day of November, 1996; (iii) a Third Amendment to
Agreement of Sale on the 26th day of November, 1996; (iv) a Fourth Amendment to
Agreement of Sale on the 13th day of December, 1996; (v) a Fifth Amendment to
Agreement of Sale on the 22nd day of January 1997; (vi) a Sixth Amendment to
Agreement of Sale on the 23rd day of January, 1997; and (vii) a Seventh
Amendment to Agreement of Sale on the 17th day of February, 1997.
C. 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. The above recitals of fact are incorporated as substantive provisions
of this Amendment.
2. Capitalized Terms: Unless otherwise defined herein, capitalized terms
shall have the same meanings ascribed to them within the Agreement.
3. Survey: The following sentence is hereby added to the end of
Paragraph 3.2 of the Agreement.
"Purchaser hereby acknowledges that: (i) Purchaser has received the Updated
Survey; and (ii) all matters disclosed by the Updated Survey are acceptable to
Purchaser, except matters related to the encroachments over set back lines
(collectively, the "Existing Exceptions").
4. Inspection and As-Is Condition:
a. The first paragraph within Paragraph 7.1 of the Agreement is hereby
deleted and the following provision is substituted in its place.
"7.1 The period commencing on July 29, 1996, and ending at 5:00 p.m. Chicago
time on February 20, 1997, shall be herein referred to as the "Inspection
Period". Purchaser and the agents, engineers, and surveyors retained by
Purchaser may enter upon the Property, at any reasonable time and upon
reasonable prior notice to Seller, to finalize a survey of the Property.
<PAGE>
b. The fourth paragraph within Paragraph 7.1 of the Agreement is hereby
deleted in its entirety and the following provision is substituted in its
place:
"Solely in the event that, in the reasonable discretion of Purchaser, any
matter related to the Existing Exceptions has a materially adverse effect on
the use or value of the Property, then Purchaser shall have the right to
terminate this Agreement by giving written notice of such termination to Seller
at any time prior to the expiration of the Inspection Period with respect to
the above-described Existing Exceptions. If written notice is not given by
Purchaser pursuant to this Paragraph 7.1 prior to the expiration of the time
periods set forth in the previous sentence, then the right of Purchaser to
terminate this Agreement pursuant to this paragraph 7.1 shall be waived. If
Purchaser terminates this Agreement by written notice to Seller in accordance
with this Paragraph 7.1, (i) Purchaser shall promptly deliver to Seller copies
of all studies, reports and other investigations obtained by Purchaser in
connection with its due diligence during the Inspection Period; and (ii) the
Earnest Money deposited by Purchaser shall be immediately paid to Purchaser,
together with any interest earned thereon, and neither Purchaser nor Seller
shall have any right, obligation or liability under this Agreement, except for
Purchaser's obligation to indemnify Seller and restore the Property as more
fully set forth in this Paragraph 7.1. Notwithstanding anything contained
herein to the contrary, Purchaser's obligation to indemnify Seller and restore
the Property, as more fully set forth in this Paragraph 7.1, shall survive the
Closing and the delivery of the Deed and termination of this Agreement."
5. Closing: Notwithstanding anything to the contrary contained in the
Agreement, the Closing shall occur on February 26, 1997, and Closing Date shall
mean February 26, 1997.
Except as amended hereby, the terms and conditions of the Agreement as
previously amended shall remain in full force and effect.
<PAGE>
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 partnership, ("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/ Jerry M. Ogle
--------------------------------------
Name: Jerry M. Ogle
--------------------------------------
Its: Managing Director and Secretary
--------------------------------------
<PAGE>
NINTH AMENDMENT TO AGREEMENT OF SALE
This Ninth Amendment to Agreement of Sale (this "Amendment") is made and
entered into on this 20th day of February, 1997, 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:
Recitals of Fact
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").
B. The Purchaser and the Seller previously entered into (i) an Amendment to
the Agreement on the 9th day of October, 1996; (ii) a Second Amendment to
Agreement of Sale on the 8th day of November, 1996; (iii) a Third Amendment to
Agreement of Sale on the 26th day of November, 1996; (iv) a Fourth Amendment to
Agreement of Sale on the 13th day of December, 1996; (v) a Fifth Amendment to
Agreement of Sale on the 22nd day of January 1997; (vi) a Sixth Amendment to
Agreement of Sale on the 23rd day of January, 1997; (vii) a Seventh Amendment
to Agreement of Sale on the 17th day of February, 1997 and (viii) an Eighth
Amendment to Agreement of Sale on the 19th day of February, 1997.
C. The Purchaser and the Seller desire to amend the Agreement on this date.
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. The above recitals of fact are incorporated as substantive provisions
of this Amendment.
2. Capitalized Terms: Unless otherwise defined herein, capitalized terms
shall have the same meanings ascribed to them within the Agreement.
3. Survey: The following sentence is hereby added to the end of
Paragraph 3.2 of the Agreement.
"Purchaser hereby acknowledges that: (i) Purchaser has received the Updated
Survey; and (ii) all matters disclosed by the Updated Survey are acceptable to
Purchaser, except matters related to the encroachments over set back lines
(collectively, the "Existing Exceptions").
4. Inspection and As-Is Condition:
a. The first paragraph within Paragraph 7.1 of the Agreement is hereby
deleted and the following provision is substituted in its place.
"7.1 The period commencing on July 29, 1996, and ending at 5:00 p.m. Chicago
time on February 20, 1997, shall be herein referred to as the "Inspection
Period"."
<PAGE>
b. The fourth paragraph within Paragraph 7.1 of the Agreement is hereby
deleted in its entirety and the following provision is substituted in its
place:
"Purchaser agrees to purchase the Property with the Existing Exceptions. In
consideration of the Purchaser's purchase of the Property subject to the
Existing Exceptions, Seller shall provide to Purchaser a credit of Three
Thousand Five Hundred Dollars ($3,500.00) at the Closing which shall be
reflected on the Closing Statement as follows: "Credit provided by Seller -
$3,500.00."
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 partnership, ("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/ Jerry M. Ogle
--------------------------------------
Name: Jerry M. Ogle
--------------------------------------
Its: Managing Director and Secretary
--------------------------------------
<PAGE>
<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> 2510
<SECURITIES> 0
<RECEIVABLES> 103
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3084
<PP&E> 32978
<DEPRECIATION> 13545
<TOTAL-ASSETS> 22779
<CURRENT-LIABILITIES> 774
<BONDS> 16803
0
0
<COMMON> 0
<OTHER-SE> 5202
<TOTAL-LIABILITY-AND-EQUITY> 22779
<SALES> 0
<TOTAL-REVENUES> 17854
<CGS> 0
<TOTAL-COSTS> 4506
<OTHER-EXPENSES> 1957
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2113
<INCOME-PRETAX> 9278
<INCOME-TAX> 0
<INCOME-CONTINUING> 9278
<DISCONTINUED> 0
<EXTRAORDINARY> 292
<CHANGES> 0
<NET-INCOME> 8986
<EPS-PRIMARY> 155.88
<EPS-DILUTED> 155.88
</TABLE>
