UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One) X
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-14349
COMMERCIAL DEVELOPMENT FUND 85
(Exact name of registrant as specified in its charter)
Connecticut 06-1141277
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
3 World Financial Center, 29th Floor, New York, NY
ATTN: Andre Anderson 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area code)
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
Balance Sheets
June 30, December 31,
Assets 1995 1994
Land $ 639,650 $ 639,650
Building and personal property 8,060,290 8,038,682
Tenant improvements 1,198,299 1,003,171
9,898,239 9,681,503
Less-accumulated depreciation (2,976,361) (2,770,841)
6,921,878 6,910,662
Cash and cash equivalents 911,389 1,048,774
Accounts receivables 17,768 29,749
Prepaid expenses, net of accumulated amortization
of $139,802 in 1995 and $114,635 in 1994 186,867 197,788
Deferred rent receivable 240,734 298,572
--------- ---------
Total Assets $8,278,636 $8,485,545
========= =========
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 26,221 $ 76,354
Other payables 12,227 12,227
Due to affiliates 18,000 27,127
Tenant improvements payable 36,544 91,798
--------- ---------
Total Liabilities 92,992 207,506
Partners' Capital:
General Partner 67,237 61,579
Limited Partners 8,118,407 8,216,460
--------- ---------
Total Partners' Capital 8,185,644 8,278,039
--------- ---------
Total Liabilities and Partners' Capital $8,278,636 $8,485,545
========= =========
Statement of Partners' Capital
For the six months ended June 30, 1995
General Limited
Partner Partners Total
------- --------- ---------
Balance at December 31, 1994 $ 61,579 $8,216,460 $8,278,039
Net income 14,816 75,991 90,807
Cash distributions (9,158) (174,044) (183,202)
------ --------- ---------
Balance at June 30, 1995 $67,237 $8,118,407 $8,185,644
====== ========= =========
Statements of Operations
Three months ended Six months ended
June 30, June 30,
Income 1995 1994 1995 1994
------- ------- ------- ---------
Rental $292,574 $606,952 $604,414 $1,133,426
Tenant expense reimbursements 3,715 49,406 44,734 80,290
Interest and other 56,083 7,559 71,283 14,263
------- ------- ------- ---------
Total Income 352,372 663,917 720,431 1,227,979
Expenses
Property operating 174,812 326,733 340,177 655,627
Depreciation and amortization 115,967 189,777 230,687 378,006
General and administrative 16,947 23,664 36,991 40,163
Professional fees 13,946 9,091 21,769 18,538
------- ------- ------- ---------
Total Expenses 321,672 549,265 629,624 1,092,334
------- ------- ------- ---------
Net Income $ 30,700 $114,652 $ 90,807 $ 135,645
Net Income Allocated:
To the General Partner $ 6,654 $ 14,775 $ 14,816 $ 24,846
To the Limited Partners 24,046 99,877 75,991 110,799
------- ------- ------- -------
$ 30,700 $114,652 $ 90,807 $135,645
======= ======= ======= =======
Per limited partnership unit
(29,000 outstanding) $.83 $3.44 $2.62 $3.82
======= ======= ======= =======
Statements of Cash Flows
For the six months ended June 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
------- -------
Net income $ 90,807 $135,645
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 230,687 378,006
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivables 11,981 25,444
Prepaid expenses (14,246) (5,057)
Deferred rent receivable 57,838 111,093
Accounts payable and accrued expenses (50,133) 40,922
Other payables - 2,092
Due to affiliates (9,127) 11,474
------- -------
Net cash provided by operating activities 317,807 699,619
Cash Flows from Investing Activities:
Additions to real estate assets (271,990) (118,836)
------- -------
Net cash used for investing activities (271,990) (118,836)
Cash Flows from Financing Activities:
Cash distributions (183,202) (610,526)
------- -------
Net cash used for financing activities (183,202) (610,526)
Net decrease in cash and cash equivalents (137,385) (29,743)
Cash and cash equivalents at beginning of period 1,048,774 1,062,569
------- ---------
Cash and cash equivalents at end of period $911,389 $1,032,826
======= =========
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1994 audited financial statements within Form 10-K.
The unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of June 30, 1995, the results of operations for the three and six
months ended June 30, 1995 and 1994, the statements of cash flows for the six
months ended June 30, 1995 and 1994, and the statement of partners' capital for
the six months ended June 30, 1995. Results of operations for the period are
not necessarily indicative of the results to be expected for the full year.
No significant events have occurred subsequent to fiscal year 1994 which
require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
On October 24, 1994, the Partnership sold North Pointe for a gross sales price
of $4,900,000 to the property's major tenant. The Partnership received
proceeds from the sale in the amount of $4,684,491 net of selling costs. The
Partnership recognized a gain on sale of $216,998.
At June 30, 1995, the Partnership had cash and cash equivalents totalling
$911,389 compared with $1,048,774 at December 31, 1994. The $137,385 decrease
is attributable to tenant and building improvements and cash distributions
exceeding net cash provided by operations. The cash and cash equivalents
balance includes a working capital reserve to cover anticipated costs
associated with the lease-up of vacant space at Atrium I.
At Atrium I, two leases totaling 6,456 square feet or approximately 7% of the
property's leasable area, are scheduled to expire during the third quarter of
1995. The General Partner has been in contact with these tenants regarding a
lease renewal, however, there can be no assurance that a renewal will be
executed.
Deferred rent receivable totaled $240,734 at June 30, 1995 compared with
$298,572 at December 31, 1994. The decrease is primarily attributable to the
amortization of rental concessions and step rents included in certain leases at
Atrium I.
Accounts payable and accrued expenses decreased to $26,221 at June 30, 1995
from $76,354 at December 31, 1994. The decrease is primarily attributable to
the payment of Partnership and property invoices which were outstanding at
year-end 1994. Tenant improvements payable decreased to $36,544 at June 30,
1995 from $91,798 at December 31, 1994 as a result of the timing of payments
for tenant improvements at Atrium I.
After reviewing the Partnership's operations for the 1995 second quarter, the
General Partner determined that an adequate cash reserve exists to fund
anticipated tenant improvements and leasing commission costs associated with
leasing efforts at Atrium, and a cash distribution to the Limited Partners.
Accordingly, a cash distribution in the amount of $3 per Unit will be paid to
Limited Partners during the 1995 third quarter. The timing and amount of
future distributions, if any, will be reviewed quarterly by the General
Partner. Future cash distributions may be reduced or suspended in anticipation
of significant lease expirations in 1995 at Atrium. In addition, distributions
may become more volatile since the Partnership has only one property.
Results of Operations
As a result of the sale of North Pointe during the fourth quarter of 1994, the
Partnership's results of operations for the three and six months ended June 30,
1995 are not comparable to the corresponding periods in 1994. Operations
resulted in net income of $30,700 and $90,807 for the three and six months
ended June 30, 1995, respectively, compared with $114,652 and $135,645 for the
respective periods in 1994. The decrease is primarily attributable to the sale
of North Pointe.
Rental income at Atrium I totaled $292,574 and $604,414 for the three and six
months ended June 30, 1995, respectively, compared with $322,817 and $634,492
for the respective periods in 1994, lower due to reduced occupancy at the
property. Tenant expense reimbursements at Atrium I totaled $3,715 and $44,734
for the three and six months ended June 30, 1995, compared with $22,686 and
$38,758 for the comparable periods in 1994. The decrease for the three-month
period is due to credits given to tenants and reduced occupancy, while the
increase for the six-month period reflects higher utility income at the
property.
Property operating expenses consist primarily of on-site personnel expenses,
utility costs, repair and maintenance costs, property management fees,
insurance and real estate taxes. Property operating expenses totaled $174,812
and $340,177 for the three and six months ended June 30, 1995, respectively,
compared to $211,716 and $435,787 at Atrium I for the respective periods in
1994. The decrease reflects lower utility and cleaning expenses largely due to
space reductions by certain tenants during 1994. Depreciation and amortization
expenses totaled $115,967 and $230,687 for the three and six months ended June
30, 1995, respectively, compared to $105,123 and $210,054 at Atrium I for the
respective periods in 1994. The increase resulted from a higher depreciable
asset base at Atrium I due to tenant and building improvements completed during
the past year.
Professional fees totaled $13,946 and $21,769 for the three and six months
ended June 30, 1995, compared with $9,091 and $18,538 for the corresponding
periods in 1994. The increase reflects higher legal fees which were offset
partly by lower appraisal costs.
The lease levels at Atrium I as of June 30, 1995 and June 30, 1994 were 83% and
95%, respectively.
PART II OTHER INFORMATION
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COMMERCIAL DEVELOPMENT FUND 85 A REAL
ESTATE LIMITED PARTNERSHIP
BY: CDF85 REAL ESTATE SERVICES INC.
General Partner
Date: August 11, 1995
BY: /s/Kenneth L. Zakin
Name: Kenneth L. Zakin
Title: Director and President
Date: August 11, 1995
BY: /s/William Caulfield
Name: William Caulfield
Title: Vice President and
Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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