United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 30, 1996
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
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Exact Name of Registrant as Specified in its Charter
Connecticut 06-1141277
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State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer 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
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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
At June 30, At December 31,
1996 1995
Assets
Land $ 639,650 $ 639,650
Buildings and personal property 8,171,869 8,158,131
Tenant improvements 856,093 1,144,563
9,667,612 9,942,344
Less accumulated depreciation (2,706,736) (2,911,280)
6,960,876 7,031,064
Cash and cash equivalents 574,535 676,893
Accounts receivable 25,279 45,962
Prepaid expenses, net of accumulated
amortization of $100,874 in 1996 and
$164,640 in 1995 246,623 159,429
Deferred rent receivable 109,594 141,390
Total Assets $ 7,916,907 $ 8,054,738
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 76,334 $ 70,619
Due to affiliates 13,021 13,000
Other payables 12,239 12,227
Tenant improvements payable 36,544 36,544
Total Liabilities 138,138 132,390
Partners' Capital:
General Partner 66,686 64,105
Limited Partners (29,000 units
outstanding) 7,712,083 7,858,243
Total Partners' Capital 7,778,769 7,922,348
Total Liabilities and Partners'
Capital $ 7,916,907 $ 8,054,738
Statement of Partners' Capital
For the six months ended June 30, 1996
Limited General
Partners Partner Total
Balance at December 31, 1995 $ 7,858,243 $ 64,105 $ 7,922,348
Net income 27,840 11,739 39,579
Cash distributions (174,000) (9,158) (183,158)
Balance at June 30, 1996 $ 7,712,083 $ 66,686 $ 7,778,769
Statements of Operations
Three months ended June 30, Six months ended June 30,
1996 1995 1996 1995
Income
Rental $ 322,143 $ 292,574 $ 656,854 $ 604,414
Tenant expense
reimbursements 21,147 3,715 18,209 44,734
Interest and other 8,236 56,083 16,983 71,283
Total Income 351,526 352,372 692,046 720,431
Expenses
Property operating 175,568 174,812 371,903 340,177
Depreciation and
amortization 109,192 115,967 218,770 230,687
General and administrative 20,637 16,947 41,366 36,991
Professional fees 8,277 13,946 20,428 21,769
Total Expenses 313,674 321,672 652,467 629,624
Net Income $ 37,852 $ 30,700 $ 39,579 $ 90,807
Net Income Allocated:
To the General Partner $ 6,676 $ 6,654 $ 11,739 $ 14,816
To the Limited Partners 31,176 24,046 27,840 75,991
$ 37,852 $ 30,700 $ 39,579 $ 90,807
Per limited partnership
unit (29,000 outstanding)
$1.08 $.83 $.96 $2.62
Statements of Cash Flows
For the six months ended June 30, 1996 1995
Cash Flows From Operating Activities
Net income $ 39,579 $ 90,807
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 218,770 230,687
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Accounts receivable 20,683 11,981
Deferred rent receivable 31,796 57,838
Other payables 12 -
Prepaid expenses (110,760) (14,246)
Accounts payable and accrued expenses 5,715 (50,133)
Due to affiliates 21 (9,127)
Net cash provided by operating activities 205,816 317,807
Cash Flows From Investing Activities
Additions to real estate (125,016) (271,990)
Net cash used for investing activities (125,016) (271,990)
Cash Flows From Financing Activities
Cash distributions (183,158) (183,202)
Net cash used for financing activities (183,158) (183,202)
Net decrease in cash and cash equivalents (102,358) (137,385)
Cash and cash equivalents, beginning of period 676,893 1,048,774
Cash and cash equivalents, end of period $ 574,535 $ 911,389
Supplemental Schedule of Non-cash Investing Activity:
Write-off of fully depreciated tenant improvements $ 399,748 $ -
Notes to the Financial Statements
The unaudited interim financial statements should be read in conjunction with
the Partnership's annual 1995 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, 1996 and the results of operations for the three and
six months ended June 30, 1996 and 1995, the statements of cash flows for the
six months ended June 30, 1996 and 1995 and the statement of changes in
partners' capital for the six months ended June 30, 1996. 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 1995, and no
material contingencies exist which would 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
- --------------------------------
At June 30, 1996, the Partnership had cash and cash equivalents totaling
$574,535 compared with $676,893 at December 31, 1995. The decrease is due to
capital additions 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.
We are pleased to report the execution of a five-year lease totaling 8,000
square feet during the 1996 second quarter. In addition, as previously
reported, on April 15, 1996 an existing tenant extended its lease for five
years and took an additional 9,419 square feet. The tenant now occupies 13,833
square feet. As a result, Atrium I was 95% leased at June 30, 1996, compared to
83% at June 30, 1995. A lease with a tenant representing 11,674 square feet or
approximately 12% of the Property's total leasable area is scheduled to expire
in August 1996
Prepaid expenses increased to $246,623 at June 30, 1996 from $159,429 at
December 31, 1995, primarily due to leasing commissions associated with
increased leasing activity at the property. Deferred rent receivable totaled
$109,594 at June 30, 1996 compared with $141,390 at December 31, 1995. The
decrease is primarily attributable to the amortization of rental concessions
and step rents included in certain leases at Atrium I.
The Partnership will be using cash from operations and cash reserves to fund
leasing commissions and tenant improvement costs associated with recent leasing
activity. To ensure that the Partnership has sufficient funds available to
meet these expenses, cash distributions were suspended beginning with the 1996
second quarter distribution which would have been paid in August. The General
Partner will review the Partnership's operations and cash reserves on a
quarterly basis to determine when distributions may be reinstated, although it
is currently anticipated that distributions will not be reinstated during 1996.
Results of Operations
- ----------------------
Operations resulted in net income of $37,852 and $39,579 for the three and six
months ended June 30, 1996, respectively, compared with $30,700 and $90,807 for
the three and six months ended June 30, 1995, respectively. The decrease for
the six-month period is primarily attributable to lower tenant expense
reimbursements and interest and other income, and higher property operating
expenses, partially offset by higher rental income.
Rental income increased to $322,143 and $656,854 for the three and six months
ended June 30, 1996, respectively, compared with $292,574 and $604,414 for the
three and six months ended June 30, 1995, respectively. The increase is
largely due to higher lease rates.
Interest and other income totaled $8,236 and $16,983 for the three and six
months ended June 30, 1996, respectively, compared with $56,083 and $71,283 for
the three and six months ended June 30, 1995. The decrease is due to the
Partnership's lower average cash balances in 1996, and the receipt in 1995 of
an early lease termination payment. 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 $175,568 and $371,903 for the three and six
months ended June 30, 1996 compared with $174,812 and $340,177 for the
comparable periods in 1995. The increase for the six-month period in 1996 is
primarily attributable to higher snow removal and electric utility costs.
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended June 30, 1996.
SIGNATURES
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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
BY: CDF85 Real Estate Services Inc.
General Partner
Date: August 13, 1996 BY: /s/ Kenneth L. Zakin
---------------------
Director and President
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