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, 1997
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
- ---Exchange Act of 1934
For the Transition period from ______ to ______
Commission File Number: 0-14349
COMMERCIAL DEVELOPMENT FUND 85
------------------------------
Exact Name of Registrant as Specified in its Charter
Connecticut 06-1141277
- ------------- ------------
State or Other Jurisdiction I.R.S. Employer Identification No.
of Incorporation or Organization
3 World Financial Center, 29th Floor, 10285
New York, NY Attn: Andre Anderson
- ------------------------------------- -------
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 ____
Consolidated Balance Sheets At June 30, At December 31,
1997 1996
Assets
Real estate held for sale $6,501,297 $6,300,000
Cash and cash equivalents 90,960 38,638
Accounts receivable 4,608 20,583
Prepaid expenses 15,268 7,293
Total Assets $6,612,133 $6,366,514
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $139,415 $126,121
Security deposits 3,550 12,227
Tenant improvements payable 36,544 36,544
Total Liabilities 179,509 174,892
Partners' Capital:
General Partner 12,591 541
Limited Partners
(29,000 units outstanding) 6,420,033 6,191,081
Total Partners' Capital 6,432,624 6,191,622
Total Liabilities
and Partners' Capital $6,612,133 $6,366,514
Statement of Partners' Capital
For the six months ended June 30, 1997
General Limited
Partner Partners Total
Balance at December 31, 1996 $ 541 $ 6,191,081 $6,191,622
Net income 12,050 228,952 241,002
Balance at June 30, 1997 $12,591 $6,420,033 $6,432,624
Statements of Operations
Six months Three months
ended June 30, ended June 30,
1997 1996 1997 1996
Income
Rental $323,680 $322,143 $638,255 $656,854
Tenant expense reimbursements 19,509 21,147 22,470 18,209
Interest and other 1,094 8,236 16,662 16,983
Total Income 344,283 351,526 677,387 692,046
Expenses
Property operating 190,841 175,568 376,335 371,903
Depreciation and amortization -- 109,192 -- 218,770
General and administrative 26,631 20,637 46,753 41,366
Professional fees 6,975 8,277 13,297 20,428
Total Expenses 224,447 313,674 436,385 652,467
Net Income $119,836 $37,852 $241,002 $39,579
Net Income Allocated:
To the General Partner $5,992 $ 6,676 $12,050 $11,739
To the Limited Partners 113,844 31,176 228,952 27,840
$119,836 $37,852 $241,002 $39,579
Per limited partnership unit
(29,000 outstanding) $3.93 $1.08 $7.89 $.96
Statements of Cash Flows
For the six months ended June 30, 1997 1996
Cash Flows From Operating Activities
Net income $241,002 $39,579
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation -- 195,204
Amortization -- 23,566
Increase (decrease) in cash arising from changes in
operating assets and liabilities:
Accounts receivable 15,975 20,683
Prepaid expenses (7,975) (110,760)
Deferred rent receivable -- 31,796
Accounts payable and accrued expenses 13,294 5,736
Security deposits (8,677) 12
Net cash provided by operating activities 253,619 205,816
Cash Flows From Investing Activities
Additions to real estate (201,297) (125,016)
Net cash used for investing activities (201.297) (125,016)
Cash Flows From Financing Activities
Cash distributions -- (183,158)
Net cash used for financing activities -- (183,158)
Net increase (decrease) in cash
and cash equivalents 52,322 (102,358)
Cash and cash equivalents, beginning of period 38,638 676,893
Cash and cash equivalents, end of period $90,960 $574,535
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 1996 audited financial
statements within Form 10-K.
The unaudited financial statements include all normal and
reoccurring adjustments which are, in the opinion of management,
necessary to present a fair statement of financial position as of
June 30, 1997 and the results of operations for the three and six
months ended June 30, 1997 and 1996, cash flows for the six
months ended June 30, 1997 and 1996 and the statement of
partners' capital for the six months ended June 30, 1997.
Results of operations for the period are not necessarily
indicative of the results to be expected for the full year.
Reclassification. Certain prior year amounts have been
reclassified in order to conform to the current year's
presentation.
No significant events have occurred subsequent to fiscal year
1996, 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
The Partnership has engaged a real estate broker to assist with
the sale of Atrium I located in Mt. Laurel, New Jersey. The
General Partner currently anticipates that the sale of Atrium I
will be completed in 1997. However, there can be no assurance
that the property will be sold within this time frame or that any
sale, if completed, will result in a particular price.
Accordingly, the property has been reclassified on the balance
sheet as "Real estate held for sale."
At June 30, 1997, the Partnership had cash and cash equivalents
totaling $90,960, compared to $38,638 at December 31, 1996. 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. The increase is due to cash flow
from operations in excess of real estate additions.
Accounts receivable totaled $4,608 at June 30, 1997, compared to
$20,583 at December 31, 1996. The decrease is largely due to the
timing of rental payments. Prepaid expenses totaled $15,268 at
June 30, 1997, compared to $7,293 at December 31, 1996. The
increase is primarily attributable to the prepayment of insurance
premiums for 1997.
Accounts payable and accrued expenses totaled $139,415 at June
30, 1997, compared to $126,121 at December 31, 1996. The
increase is largely due to the timing of invoice payments.
Atrium I was 84% occupied at June 30, 1997, unchanged from
December 31, 1996.
Results of Operations
Operations resulted in net income of $119,836 and $241,002 for
the three and six months ended June 30, 1997, respectively,
compared with $37,852 and $39,579 for the three and six months ended
June 30, 1996, respectively. The increases are primarily
attributable to depreciation not being recorded during the first
six months of 1997 as a result of Atrium I being reclassified as
"Real estate held for sale."
Rental income totaled $638,255 for the six months ended
June 30, 1997, compared to $656,854 for the six months ended June
30, 1996. The decrease in 1997 is largely due to lower average
occupancy in 1997. Rental income totaled $323,680 for the three
months ended June 30, 1997, largely unchanged from $322,143 for
the comparable period in 1996.
Interest and other income totaled $1,094 and $16,662 for the
three and six months ended June 30, 1997, respectively, compared
with $8,236 and $16,983 for the comparable periods in 1996. The
decrease for the three-month period is mainly due to the
Partnership's lower average cash balances in 1997.
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 $190,841 and $376,335 for the
three and six months ended June 30, 1997, respectively, compared
with $175,568 and $371,903 for the comparable periods in 1996.
The slight increases are mainly due to higher cleaning costs,
associated with preparing the property for sale.
Depreciation and amortization expenses totaled $0 for the three
and six months ended June 30, 1997 compared with $109,192 and
$218,770 for the corresponding periods in 1996. Depreciation and
amortization were not recorded during the first six months of
1997 as a result of the property being reclassified as "Real
estate held for sale."
Professional fees totaled $6,975 and $13,297 for the three and
six months ended June 30, 1997, compared with $8,277 and $20,428
for the comparable periods in 1996. The decrease for the
six-month period in 1997 is mainly due to lower costs for tax and
appraisal services.
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, 1997.
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
BY: CDF85 Real Estate Services Inc.
General Partner
Date: August 13, 1997 BY: /s/Mark Marcucci
Director and President
Date: August 13, 1997 BY: /s/William Caulfield
Vice President and Chief Financial Officer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 90,960
<SECURITIES> 0
<RECEIVABLES> 4,608
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 110,836
<PP&E> 6,501,297
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,612,133
<CURRENT-LIABILITIES> 179,509
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 6,432,624
<TOTAL-LIABILITY-AND-EQUITY> 6,612,133
<SALES> 638,255
<TOTAL-REVENUES> 677,387
<CGS> 0
<TOTAL-COSTS> 376,335
<OTHER-EXPENSES> 60,050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 241,002
<INCOME-TAX> 0
<INCOME-CONTINUING> 241,002
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 241,002
<EPS-PRIMARY> 7.89
<EPS-DILUTED> 7.89
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