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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
October 15, 1999
CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP
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(Exact name of small business issuer as specified in its charter)
Maryland
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(State or other jurisdiction of incorporation)
0-23766 52-1388957
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(Commission File Number) (IRS Employer Identification No.)
11200 Rockville Pike, Rockville, Maryland 20852
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(Address of principal executive offices) (Zip Code)
(301) 468-9200
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(Issuer's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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On September 30, 1999, Devonshire Development Limited Partnership, one of
the Local Partnerships in which Capital Realty Investors-85 Limited Partnership
(CRI-85) has invested, sold Devonshire Apartments, located in Kirkland,
Washington, to Kirkland Rrestoration LLC, an unaffiliated party. During 1997
and the first quarter of 1998, CRICO of Devonshire, Inc. (CRICO), the managing
general partner of the Local Partnership and a wholly owned affiliate of C.R.I.,
Inc., the Managing General Partner (MGP) of CRI-85, had received several
unsolicited offers to purchase the Devonshire property. Due to the level of
interest of potential purchasers, CRICO solicited offers from numerous real
estate companies owning apartment complexes; it was as a result of this
solicitation that Devonshire Apartments was sold. The sale price of the
property, which contains 140 rental units, was $8,525,000.
The sale resulted in a financial statement gain of approximately $3.40
million (unaudited), an estimated Federal tax gain of approximately $6 million
(unaudited), and cash proceeds of approximately $3.43 million (unaudited) to
CRI-85. As a result of the successful outcome, CRICO received an additional
management fee of approximately $270,000 (unaudited), pursuant to the Local
Partnership Agreement.
The MGP is currently reviewing the tax and financial impact of the sale
transaction on the holders of CRI-85 Beneficial Assignee Certificates (BACs) to
determine a distribution amount. It is the intent of the MGP to distribute, at
a minimum, an amount sufficient to cover any potential federal tax liability to
BAC holders as a result of the Devonshire sale. The MGP is also reviewing the
future cash requirements of CRI-85 to determine whether a portion of the
proceeds of the sale should be retained by CRI-85 to pay or reduce purchase
money note debt obligations related to other partnership interests held by CRI-
85.
Following the sale, CRI-85 continues to hold interests in four local
partnerships, each of which owns an apartment complex containing, in the
aggregate, 829 rental units.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(b) Pro Forma Financial Information (unaudited)
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On September 30, 1999, Devonshire Development Limited Partnership, one
of the Local Partnerships in which CRI-85 has invested, sold
Devonshire Apartments located in Kirkland, Washington, to Kirkland
Rrestoration LLC, an unaffiliated party. The sale price of the
property was $8,525,000; after reduction for the outstanding mortgage
balance, costs of the sale, escrows and reserves, and fees, CRI-85
received cash proceeds of approximately $3,433,000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS - Continued
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Since a limited number of pro forma adjustments are required and are
easily described, narrative descriptions of the pro forma effects of
the transaction are furnished below. Narrative pro forma effects on
the income statement are provided for the year ended December 31,
1998, and for the six month period ended June 30, 1999, both assuming
that the sale was consummated January 1, 1998. Narrative pro forma
effects on the balance sheet are provided at June 30, 1999, assuming
the sale was consummated as of that date. The pro forma information
is meant to reflect the continuing impact of the sale by showing how
it might have affected the historical financial statements if the sale
had been consummated at an earlier time.
Narrative Pro Forma Income Statement Effects for the Year Ended
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December 31, 1998 (unaudited)
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"Share of income from partnerships" would decrease by $209,000, from
$649,000 $440,000. "Net loss" would increase by $209,000, from
$(515,000) to $(724,000). Finally, "Net loss per BAC, based on 21,158
BACs outstanding," would increase by $9.48, from $(23.37) to $(32.85).
Narrative Pro Forma Income Statement Effects for the Six
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Month Period Ended June 30, 1999 (unaudited)
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"Share of income from partnerships" and "Loss before gain on
disposition" would each change by $136,000, from $360,000 and
$(214,000), respectively, to $224,000 and $(350,000), respectively.
"Net income" would decrease by $136,000, from $5,910,000 to
$5,774,000. "Net income per BAC based on 21,158 BACs outstanding,"
would change by $(6.17), from $268.14 to $261.97.
Narrative Pro Forma Balance Sheet Effects at
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June 30, 1999 (unaudited)
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During the second quarter of 1999, the investment of CRI-85 in
Devonshire Development Limited Partnership was reclassified from
"Acquisition fees and property purchase costs" to "Investment in
partnership held for sale." At June 30, 1999, "Investment in
partnership held for sale" would decrease from $32,000 to $0. "Cash
and cash equivalents" would increase by $3,433,000, from $6,479,000 to
$9,912,000. "Accumulated losses" and "Total partners' deficit" would
each change by $3,401,000, from $(18,540,000) and $(2,403,000),
respectively, to $(15,139,000) and $998,000, respectively. "Total
assets" and "Total liabilities and partners' deficit" would each
increase by $3,401,000, from $7,328,000 to $10,729,000.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS - Continued
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(c) Exhibits (listed according to the number assigned in the table
in Item 601 of Regulation S-K).
Exhibit No. 4. - Instruments defining the rights of security
holders, including indentures.
a. Limited Partnership Agreement of Capital Realty Investors-85
Limited Partnership. (Incorporated by reference from Exhibit 4 to
Registrant's Registration Statement on Form S-11, as amended,
dated June 12, 1985.)
Exhibit No. 99. - Additional Exhibits.
a. Prospectus of the Partnership, dated November 11, 1985.
(Incorporated by reference to Registrant's Registration Statement
on Form S-11, as amended, dated June 12, 1985.)
The remaining exhibits are omitted because they are not applicable or
not required.
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SIGNATURE
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 hereunto duly authorized.
CAPITAL REALTY INVESTORS-85 LIMITED PARTNERSHIP
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(Registrant)
by: C.R.I., Inc.
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Managing General Partner
October 15, 1999 by: /s/ Michael J. Tuszka
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DATE Michael J. Tuszka
Vice President
and Chief Accounting Officer
(Principal Financial Officer
and Principal Accounting Officer)
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