SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission File Number
2-99673
LINCAM PROPERTIES LTD. SERIES 85
(Exact name of registrant as specified in its charter)
Illinois 36-3377785
(State of Organization) (I.R.S. Employer Identification No.)
125 South Wacker Drive, Suite 3100, Chicago, Illinois 60606
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 443-1477
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
________________ ____________________
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(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 [ ]
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]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
The prospectus of the registrant dated October 23, 1985 as supplemented
April 22, 1986 and filed with the Commission pursuant to Rules 424(b) and
424(c) under the Securities Act of 1933 is incorporated by reference in
Parts I and III of this Annual Report on Form 10-K.
TABLE OF CONTENTS
PAGE
PART I
Item 1. Business 1
Item 2. Properties 3
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 3
PART II
Item 5. Market for the Partnership's Limited Partnership Interests
and Related Security Holder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
Item 8. Financial Statements and Supplementary Data 9
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 23
PART III
Item 10. Directors and Executive Officers of the Partnership 24
Item 11. Executive Compensation 28
Item 12. Security Ownership of Certain Beneficial Owners and
Management 28
Item 13. Certain Relationships and Related Transactions 29
PART IV
Item 14. Exhibits, Financial Statement Schedule,
and Reports on Form 8-K 30
Signatures 31
PART I
ITEM 1. BUSINESS
The registrant, LincAm Properties Ltd. Series 85 (the "Partnership")
is a limited partnership formed in August 1985 under the Uniform Limited
Partnership Act of the State of Illinois to invest in income-producing real
estate such as garden apartment complexes and smaller commercial
properties, including neighborhood shopping centers, office/service centers
and industrial buildings, located primarily in the Midwestern, Southwestern
and Southeastern United States. The Partnership sold $25,015,000 in
Limited Partnership Interests (the "Interests") to the public commencing on
October 23, 1985 pursuant to a Registration Statement on Form S-11 under
the Securities Act of 1933 (No. 2-99673).
The Partnership is engaged solely in the business of real estate
investment. A presentation of information about industry segments is not
applicable and would not be material to an understanding of the
Partnership's business taken as a whole.
The Partnership has made the real property investments set forth in
the following table:
<TABLE>
<CAPTION>
Name, Type of Property and Date of
Location Size Purchase Type of Ownership
__________________________ ______ ________ _________________
<S> <C> <C> <C> <C>
1. Barton Creek Landing 250 units 5/21/86 fee ownership of land and
Apartments improvements (through
Austin, TX joint venture
partnership) (a) (d)
2. Oak View Apartments 124 units 9/30/86 fee ownership of land and
Augusta, GA improvements (b)
3. 5521 Meadowbrook Court 50,000 sq. ft. 1/12/87 fee ownership of land and
Distribution Center g.l.a. improvements (b)
Rolling Meadows, IL
4. Walker's Mark Apartments 164 units 7/29/87 fee ownership of land and
Dallas, TX improvements (c)
5. 1880 Country Farm Road 162,000 sq. ft. 7/1/88 fee ownership of land and
Warehouse/Research Facility improvements (b)
Naperville, IL
<FN>
_______________________
(a) Reference is made to Note 3 of Notes to Consolidated Financial Statements filed with this
annual report for a description of the joint venture partnership through which the Partnership has made
this real property investment.
(b) Reference is made to Note 2 of Notes to Consolidated Financial Statements filed with this
annual report for a description of this real property investment.
(c) This property has been sold. Reference is made to Note 2 of Notes to Consolidated Financial
Statements filed with this annual report for a description of the sale of such real property investment.
(d) This property has been sold. Reference is made to Note 3 of Notes to Consolidated Financial
Statements filed with this annual report for a description of the sale of such real property investment.
</TABLE>
_______________________
In December 1986, the Partnership and its joint venture partner
made additional capital contributions totalling $8,750,000 to the LincAm
Barton Venture, as described in the Partnership's Report on Form 8-K for
December 19, 1986, a copy of which report is hereby incorporated herein by
reference. Reference is also made to Note 3 of Notes to Consolidated
Financial Statements filed with this annual report for a further
description of such transaction.
In January 1987, the Partnership acquired the 5521 Meadowbrook
Court Distribution Center, as described in the Partnership's Report on Form
8-K for December 19, 1986, a copy of which report is hereby incorporated
herein by reference. Reference is also made to Note 2 of Notes to
Consolidated Financial Statements filed with this annual report for a
further description of such transaction.
In July 1987, the Partnership acquired the Walker's Mark
Apartments, as described in the Partnership's Report on Form 8-K for July
29, 1987, a copy of which report is hereby incorporated herein by
reference. Reference is also made to Note 2 of Notes to Consolidated
Financial Statements filed with this annual report for a further
description of such transaction.
In January 1988, the Partnership's fiscal year-end was changed
from October 31, to December 31, as described in the Partnership's Report
on Form 8-K for January 29, 1988, a copy of which report is hereby
incorporated herein by reference.
In July 1988, the Partnership acquired the 1880 Country Farm Road
Facility, as described in the Partnership's Report on Form 8-K filed June
11, 1988, a copy of which report is hereby incorporated herein by
reference. Reference is also made to Note 2 of Notes to Consolidated
Financial Statements filed with this annual report for a further
description of such transaction.
In August 1993, the Partnership sold the Walker's Mark
Apartments, as described in the Partnership Report on Form 8-K/A No. 1
filed August 19, 1993, a copy of which report is hereby incorporated herein
by reference. Reference is also made to Note 2 of Notes to Consolidated
Financial Statements filed with this annual report for further description
of such transaction.
In April 1995, the Joint Venture sold the Barton Creek Landing
Apartments, as described in the Partnership Report on Form 8-K/A No. 1
filed June 22, 1995, a copy of which report is hereby incorporated herein
by reference. Reference is also made to Note 3 of Notes to Consolidated
Financial Statements filed with this annual report for further description
of such transaction.
The Partnership has no employees.
The terms of the transactions between the Partnership and
affiliates of the General Partners are set forth in Item 11 to which
reference is hereby made for description of such terms and transactions.
ITEM 2. PROPERTIES
The Partnership owns directly the unsold properties referred to
in Item 1 to which reference is hereby made for a description of said
properties.
Included below is a list of approximate occupancy levels by
quarter for the Partnership's investment properties during fiscal years
1994 and 1995:
<TABLE>
<CAPTION>
1994 1995
_________________________________________ ____________________________________________
at at at at at at at at
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
_________________________________________ ____________________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barton Creek Landing Apts.
Austin, TX . . . . . . . . . . . . . . 90% 98% 99% 94% 96% N/A N/A N/A
Oak View Apartments
Augusta, GA. . . . . . . . . . . . . . 98% 98% 98% 98% 99% 88% 87% 85%
5521 Meadowbrook Court
Distribution Center
Rolling Meadows, IL 100% 100% 100% 100% 100% 100% 100% 100%
1880 Country Farm Road
Naperville, IL . . . . . . . . . . . . 100% 100% 100% 100% 100% 100% 100% 100%
<FN>
An "N/A" indicates the property was not owned by the Partnership at the end of the quarter.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders
during fiscal years 1994 and 1995.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND
RELATED SECURITY HOLDER MATTERS
As of December 31, 1995, there were 791 record holders of
Interests of the Partnership. There is no public market for Interests and
it is not anticipated that a public market for Interests will develop.
Upon request, the General Partners will endeavor to assist an investor
desiring to transfer his Interests and may utilize the services of broker-
dealers in this regard. The price to be paid for the Interests as well as
the commission to be received by the broker-dealer will be subject to
negotiation by the investor. The General Partners will not redeem or
repurchase Interests.
Reference is made to Item 6 on the following page for a
discussion of cash distributions made to the Limited Partners.
ITEM 6. SELECTED FINANCIAL DATA(a)
<TABLE>
<CAPTION>
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
Years ended December 31, 1995, 1994, 1993, 1992, and 1991
(not covered by Independent Auditors' Report)
1995 1994 1993 1992 1991
______________ ______________ ______________ ______________ _______________
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . . . . . . $ 2,907,891 4,380,033 4,640,228 4,696,992 4,443,356
Gain on sale of investment
property .. . . . . . . . . . . . . $ 4,768,875 - 1,300,556 - -
Net income . . . . . . . . . . . . . $ 3,998,801 1,351,167 2,662,473 1,213,493 602,930
Net income per Interest(b) $ 158.25 53.47 105.37 48.02 23.86
Total assets . . . . . . . . . . . . $17,709,966 28,452,075 28,923,077 30,187,869 30,307,461
Long-term debt . . . . . . . . . . . $ - 5,000,000 5,000,000 - 7,250,000
Cash distributions per Interest(c). $ 206.00 70.00 64.00 52.00 36.00
=========== ============ ============== ============== =============
<FN>
__________________
(a) The above summary of selected financial data should be read in conjunction with the consolidated financial statements and the
related notes appearing elsewhere in this annual report.
(b) The net income per Interest is based upon the number of Interests outstanding at the end of each year (25,016).
(c) Prior to 1991, cash distributions to the Limited Partners of the Partnership have not resulted in taxable income to such
Limited Partners and have therefore represented a return of capital for income tax purposes. In 1991, the Partnership generated
taxable income of $8.14 per unit and distributed $36.00 per unit. In 1992, the Partnership generated taxable income of $36.26 per
unit and distributed $52.00 per unit. In 1993, the Partnership generated taxable income of $54.60 per unit and distributed $64.00
per unit. In 1994, the Partnership generated taxable income of $47.64 per unit and distributed $70.00 per unit. In 1995, the
Partnership generated taxable income of $224.62 per unit and distributed $206.00 per unit.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
___________________________
On October 23, 1985, the Partnership commenced an offering of
$25,000,000 (subject to increase by up to $15,000,000) of Limited
Partnership Interests pursuant to a Registration Statement on Form S-11
under the Securities Act of 1933. The offering of Limited Partnership
Interests terminated April 15, 1986. A total of 25,015 Interests were
assigned to the public between October 23, 1985 and May 16, 1986.
After deducting selling expenses and other offering costs, the
Partnership had approximately $22,500,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments, and to satisfy working capital requirements. A portion of the
proceeds was utilized to acquire the properties described in Item 1.
At December 31, 1995, the Partnership and its consolidated
venture had short-term investments in asset management accounts of $507,111
which will be utilized for distributions to partners and for working
capital requirements.
At December 31, 1995 the Partnership had total current assets of
$573,956, current liabilities of $330,996 and a current ratio of 1.73. The
Partnership distributed $64 per Limited Partnership Interest in 1993. This
distribution increased 9% to $70 per Limited Partnership Interest in 1994.
Including a special distribution of the net proceeds from the sale of
Barton Creek Landing Apartments equal to $140 per Limited Partnership
Interest, cash distributions increased to $206 per Limited Partnership
Interest in 1995. The Partnership anticipates that 1996 distributions will
not exceed the current quarterly rate of $15 per Limited Partnership
Interest.
On April 12, 1995, the Joint Venture sold Barton Creek Landing
Apartments for $14,871,600 in an all cash transaction. As described in
Notes 3 and 4 of Notes to Consolidated Financial Statements, the
Partnership received approximately $9,060,000 in cash of which $5,000,000
was used to retire the Partnership's bank debt. Of the remaining proceeds,
$140 per limited partnership interest was distributed to the partners via a
special distribution. The remaining cash of approximately $520,000 was
used to pay expenses of the sale or is being used for working capital
needs.
In August 1993, the Partnership replaced its existing bank debt.
This note was repaid in full in April 1995 from the proceeds of the sale of
Barton Creek Landing Apartments.
On January 30, 1993, Komori America, Inc. entered into a new
lease agreement to occupy 20,833 square feet of the 50,000 square foot
distribution center. The lease became effective on August 16, 1993, upon
expiration of their previous lease for 100% of the space of the
distribution center. In February 1994 Komori America, Inc. amended their
lease to occupy an additional 4,167 square feet of the distribution center
bringing their total occupancy to 25,000 square feet. Samsung America,
Inc. has leased the remaining 25,000 square feet of the distribution center
effective March 6, 1994. See Note 2(c) of Notes to Consolidated Financial
Statements.
As described in Note 2(d) of Notes to Consolidated Financial
Statements, the Partnership sold Walker's Mark Apartments in Dallas, Texas
for $6,585,000 on August 19, 1993. The Partnership received $911,617 in
cash (net of closing costs) at closing and a note receivable for
$5,485,000. The note provides for monthly payments of interest only in the
amount of $34,281 for 50 months, at which time the note balance is due.
The Partnership used the funds from the sale, together with working capital
reserves, to pay its note payable down to $5,000,000.
The Corporate General Partner will continue to explore selling
each of the remaining properties at a time when, from the standpoint of
maximizing value, it makes the most sense.
Results of Operations
__________________
At December 31, 1995, the Partnership owned three investment
properties, consisting of one apartment complex, a distribution center and
a warehouse/research facility. Barton Creek Landing Apartments, owned
through a joint venture, was sold in April, 1995 for $14,871,600 in an all
cash transaction. The Partnership received approximately $9,060,000 in
cash distributions from the joint venture which was used to repay the note
payable and made a special distribution ($140 per limited partnerships
interest) to the partners.
The decrease in rental income for the twelve months ended
December 31, 1995 compared to 1994 of approximately $1,511,000 (40.5%) is
primarily due to less rental income collected at Barton Creek Landing
Apartments ($1,520,300) due to its being sold on April 12, 1995. This
decrease was partially offset by an increase in rental income at the
Rolling Meadows distribution center ($35,100). Rental income at Oak View
Apartments also decreased by approximately $25,800 due to lower occupancy.
The increase in charges to tenants for the twelve months ended December 31,
1995 compared to 1994 of approximately $47,000 (37.2%) is attributable to
1) the distribution center being fully occupied in 1995 ($10,150) as
Samsung America, Inc.'s lease for 50% of the distribution center commenced
March 6, 1994; and 2) increased real estate taxes and maintenance costs
being paid directly by the Partnership and reimbursed by the tenants
($36,850). Interest income increased approximately $39,900 (9.2%) for the
twelve months ended December 31, 1995 compared to 1994. This increase is
primarily attributable to increased amounts held in interest bearing
short-term asset management accounts from April 12, 1995 until
May 31, 1995. The decrease in other income of approximately $48,000
(55.2%) is primarily due to the sale of Barton Creek Landing Apartments.
Property operating expenses decreased approximately $567,300 (43.6%) for
the twelve months ended December 31, 1995 compared to 1994. This decrease
is primarily attributable to the Barton Creek Landing Apartments being sold
($603,700). This decrease was partially offset by increases in property
operating expenses at Oak View Apartments of approximately $20,600 and at
the Rolling Meadows distribution center of approximately $15,800. The
decrease in depreciation expense of approximately $196,500 (32%) for the
twelve months ended December 31, 1995 compared to 1994 is primarily due to
Barton Creek Landing Apartments being sold ($205,375). This decrease was
partially offset by increases in property placed in service during the
second quarter of 1995 at the distribution center ($10,600). The repayment
of the $5,000,000 note payable on April 12, 1995 resulted in a decrease in
interest expense of approximately $241,518 (65.3%) for the twelve months
ended December 31, 1995 compared to 1994. Management fees paid to an
affiliate of the General Partners decreased approximately $73,600 (43.3%)
for the twelve months ended December 31, 1995 compared to 1994. The sale
of the Barton Creek Landing Apartments accounted for approximately a
$77,300 decrease in management fees. This decrease was partially offset by
an increase in management fees due to the increases in rental income and
charges to tenants at the distribution center. Professional services have
remained essentially flat for the twelve months ended December 31, 1995
compared to 1994. General and administrative expenses increased
approximately $6,900 (10%) for the twelve months ended December 31, 1995
compared to 1994. Amortization of deferred expenses decreased
approximately $37,300 for the twelve months ended December 31, 1995
compared to 1994 due to the early repayment of the note payable. This
write-off of deferred expenses is captioned as a loss on early
extinguishment of debt ($71,924) on the consolidated statement of
operations.
For the twelve months ended December 31, 1995, net operating
income was $1,369,137 or $54.18 per limited partnership interest. The
partnership also recognized a gain on sale of investment property, net of
minority interest of $2,861,325 or $113.24 per limited partnership
interest. After an extraordinary loss of $71,924 on early extinguishment
of debt, the net income for the twelve months ended December 31, 1995 was
$3,998,801 or $158.25 per limited partnership interest.
The decrease in rental income for the twelve months ended
December 31, 1994 compared to 1993 of approximately $535,000 (12.5%) is
primarily due to the sale of Walker's Mark Apartments ($640,300) in August
1993. This decrease was partially offset by increases in rental income at
Barton Creek Landing Apartments in Austin, Texas ($73,500) and at Oak View
Apartments in August, Georgia ($33,500). Rental income at the distribution
center and at the warehouse/research facility remained essentially flat for
the twelve months ended December 31, 1994 as compared to 1993. The
increase in charges to tenant for the twelve months ended December 31, 1994
compared to 1993 of approximately $40,000 (46%) is primarily due to more
maintenance costs being paid directly by the Partnership and reimbursed by
tenants at the distribution center. Interest income increased
approximately $237,700 (122%) for the twelve months ended December 31, 1994
compared to 1993. This increase is primarily attributable to interest
income generated from the note receivable the
Partnership obtained from the sale of Walker's Mark Apartments.
Property operating expenses decreased approximately $218,800 (14%) for the
twelve months ended December 31, 1994 compared to 1993. This decrease is
primarily attributable to the Walker's Mark Apartments being sold. The
decrease in depreciation expense of approximately $72,400 (10.5%) for the
twelve months ended December 31, 1994 compared to 1993 is also primarily
attributable to the Walker's Mark Apartments being sold. The pay down of
the note payable from $7,250,000 to $5,000,000 coupled with higher interest
rates has resulted in a net increase in interest expense of approximately
$58,700 (19%) for the twelve months ended December 31, 1994 as compared to
1993. Management fees paid to an affiliate of General Partner decreased
approximately $27,000 (14%) for the twelve months ended December 31, 1994
as compared to 1993. This decrease is primarily attributable to the
Walker's Mark Apartments being sold. Deferred financing costs associated
with the 1993 bank loan caused amortization expense to increase by
approximately $24,000 (86%) for the twelve months ended December 31, 1994
as compared to 1993. Operating income for the twelve months ended December
31, 1994 as compared to 1993 increased by $2,300 to $1,734,860.
Inflation
________
Since inflation levels in the United States have been relatively
low over the ten years the Partnership has been in existence, inflation and
changing prices have had a minimal effect on income from operations.
Inflation in future periods will tend to increase rental income
levels (from leases to new tenants or renewals of existing leases) in
accordance with normal market conditions. Such increases in rental income
will tend to offset the adverse impact that inflation has on property
operating expenses.
Continued inflation could also tend to cause capital appreciation
of the Partnership's investment properties over a period of time as rental
rates and replacement costs of properties continue to increase.
Impact of Accounting Pronouncements Not Yet Adopted
_______________________________________________
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Life Assets to be Disposed Of," was issued in
March 1995 and is effective for fiscal years beginning after December 15,
1995.
This accounting pronouncement is not expected to have a material
effect on the financial position or results of operations of the
Partnership.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
INDEX
_______
PAGE
_____
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .10
Consolidated Balance Sheets, December 31, 1995 and 1994. . . . . . . . . .11
Consolidated Statements of Operations, years ended December 31, 1995,
1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1995, 1994 and 1993 . . . . . . . . . . . . . .13
Consolidated Statements of Cash Flows, years ended December 31, 1995,
1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . .15
SCHEDULE
Consolidated Real Estate and Accumulated Depreciation. . . . . . . . . . .III
Schedules not filed:
All schedules other than those indicated in the above index have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
LincAm Properties Ltd. Series 85:
We have audited the consolidated financial statements of LincAm Properties
Ltd. Series 85 (a limited partnership) and consolidated venture as listed
in the accompanying index. In connection with our audits of the
consolidated financial statements, we also have audited the financial
statement schedule as listed in the accompanying index. These consolidated
financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and 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 the General Partners, 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of LincAm
Properties Ltd. Series 85 and consolidated venture as of December 31, 1995
and 1994, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
/S/ KPMG Peat Marwick LLP
Chicago, Illinois
February 14, 1996
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
<CAPTION>
1995 1994
____ ____
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . $ 507,111 823,430
Prepaid expenses and other. . . . . . . . . . . . . . . . . . 150 37,901
Receivable from tenant. . . . . . . . . . . . . . . . . . . . 66,695 61,679
____________ ____________
Total current assets. . . . . . . . . . . . . . . . . . . 573,956 923,010
____________ ____________
Note receivable. . . . . . . . . . . . . . . . . . . . . . . . . 5,485,000 5,485,000
Investment properties, at cost (notes 2 and 3): ____________ ____________
Land . . . . . . . . . . . . . . . . . . . . . . . 2,399,174 4,933,945
Building and improvements . . . . . . . . . . . . . . . . . . 12,016,137 22,307,104
____________ ____________
14,415,311 27,241,049
Less accumulated depreciation . . . . . . . . . . . . . . . . (2,920,741) (5,588,495)
____________ ____________
Total investment properties, net of accumulated depreciation 11,494,570 21,652,554
Deferred expenses, net . . . . . . . . . . . . . . . . . . . . . - 86,655
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 156,440 304,856
____________ ____________
Total assets. . . . . . . . . . . . . . . . . . . . . . . $17,709,966 28,452,075
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICITS)
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . 30,906 77,063
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . - 14,383
Funds held for others (note 2). . . . . . . . . . . . . . . . 150,879 126,586
Accrued real estate taxes . . . . . . . . . . . . . . . . . . 118,000 427,116
Tenant security deposits. . . . . . . . . . . . . . . . . . . 31,211 113,228
Unearned income . . . . . . . . . . . . . . . . . . . . . . . - 1,952
____________ ____________
Total current liabilities . . . . . . . . . . . . . . . . 330,996 760,328
Note payable (note 4). . . . . . . . . . . . . . . . . . . . . . - 5,000,000
____________ ____________
Total liabilities . . . . . . . . . . . . . . . . . . . . 330,996 5,760,328
____________ ____________
Venture partner's investment in venture. . . . . . . . . . . . . - 4,106,229
____________ ____________
Partners' capital (deficits) (note 1):
General Partners:
Capital contributions . . . . . . . . . . . . . . . . . . 2,000 2,000
Allocated portion of cumulative net income. . . . . . . . 103,112 63,124
Cumulative cash distributions . . . . . . . . . . . . . . (154,139) (102,086)
____________ ____________
(49,027) (36,962)
____________ ____________
Limited Partners:
Interests of $1,000. Authorized 40,001 Interests;
issued and outstanding 25,016 Interests . . . . . . . . . 22,479,645 22,479,645
Allocated portion of cumulative net income. . . . . . . . . . 10,264,267 6,305,454
Cumulative cash distributions . . . . . . . . . . . . . . . . (15,315,915) (10,162,619)
____________ ____________
17,427,997 18,622,480
____________ ____________
Total partners' capital . . . . . . . . . . . . . . . . . . . 17,378,970 18,585,518
Total liabilities and partners' capital . . . . . . . . . . . $17,709,966 28,452,075
=========== ===========
<FN>
See accompanying notes to consolidated financial statement
</TABLE>
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
____ ____ ____
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . $ 2,222,426 3,733,479 4,268,470
Charges to tenants. . . . . . . . . . . . . . . . . . . . . . 173,299 126,333 86,303
Interest income . . . . . . . . . . . . . . . . . . . . . . . 473,252 433,354 195,608
Other income. . . . . . . . . . . . . . . . . . . . . . . . . 38,914 86,867 89,847
___________ ___________ ___________
Total income. . . . . . . . . . . . . . . . . . . . . . . 2,907,891 4,380,033 4,640,228
___________ ___________ ___________
Expenses:
Property operating expenses . . . . . . . . . . . . . . . . . 732,961 1,300,283 1,519,126
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . 417,432 613,936 686,322
Interest expense. . . . . . . . . . . . . . . . . . . . . . . 128,493 370,010 311,308
Management fees paid to affiliate
of general partner (note 7) . . . . . . . . . . . . . . . 96,386 170,002 196,983
Professional services . . . . . . . . . . . . . . . . . . . . 72,990 70,090 66,507
Amortization of deferred expenses 14,731 51,993 27,914
General and administrative. . . . . . . . . . . . . . . . . . 75,761 68,859 99,491
___________ ___________ ___________
Total expenses. . . . . . . . . . . . . . . . . . . . . . 1,538,754 2,645,173 2,907,651
___________ ___________ ___________
Operating income. . . . . . . . . . . . . . . . . . . . . . . 1,369,137 1,734,860 1,732,577
Gain on sale of investment
property (note 3) . . . . . . . . . . . . . . . . . . . . . . 4,768,875 - 1,300,566
Venture partner's share of venture's
operations and sale (note 3). . . . . . . . . . . . . . . . . (2,067,287) (383,693) (370,660)
___________ ___________ ___________
Net income before extraordinary
item. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,070,725 1,351,167 2,662,473
Extraordinary item:
Loss on early extinguishment of
debt. . . . . . . . . . . . . . . . . . . . . . . . . 71,924 - -
___________ ___________ ___________
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,998,801 1,351,167 2,662,473
=========== =========== ===========
Net income per limited
partnership interest:
Before extraordinary item . . . . . . . . . . . . . . $161.10 53.47 105.37
Extraordinary item. . . . . . . . . . . . . . . . . . $ 2.85 - -
___________ ___________ ___________
Net income. . . . . . . . . . . . . . . . . . . . . . $158.25 53.47 105.37
=========== =========== ===========
Cash distributions per limited
partnership interest. . . . . . . . . . . . . . . . . . . $206.00 70.00 64.00
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
Years ended December 31, 1995, 1994, and 1993
<CAPTION>
Limited Partners
General Partners (25,016 Interests)
_____________________________________ ______________________________________________
Contri-
butions,
Cash Net of Cash
Contri- Net Distri- Offering Net Distri-
butions Income butions Total Costs Income butions Total
_____ _____ ______ _____ ________ ______ _______ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance (deficit) at
December 31, 1992 $2,000 22,988 (68,226) (43,238) 22,479,645 2,331,950 (6,810,475) 18,001,120
Net income - 26,625 - 26,625 - 2,635,848 - 2,635,848
Cash distributions - - (16,172) (16,172) - - (1,601,024) (1,601,024)
________ ________ _________ ________ __________ ---------- ----------- -----------
Balance (deficit) at
December 31, 1993 2,000 49,613 (84,398) (32,785) 22,479,645 4,967,798 (8,411,499) 19,035,944
Net income - 13,511 - 13,511 - 1,337,656 - 1,337,656
Cash distributions - - (17,688) (17,688) - - (1,751,120) (1,751,120)
_______ ________ ________ ________ __________ __________ ___________ __________
Balance (deficit) at
December 31, 1994 2,000 63,124 (102,086) (36,962) 22,479,645 6,305,454 (10,162,619) 18,622,480
Net income - 39,988 - 39,988 - 3,958,813 - 3,958,813
Cash distributions - - (52,053) (52,053) - - (5,153,296) (5,153,296)
_______ ________ ________ ________ __________ ___________ ___________ ___________
Balance (deficit) at
December 31, 1995 $2,000 103,112 (154,139) (49,027) 22,479,645 10,264,267 (15,315,915) 17,427,997
======= ======= ======== ======== ========== =========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
____ ____ ____
<S> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,998,801 1,351,167 2,662,473
Adjustments to reconcile net income
to net cash provided by operating activities:
Straight-line of rent adjustment . . . . . . . . . . . . . . . . . . . 52,041 29,214 7,053
Loss on early extinguishment of debt 71,924 - -
Gain on sale of investment property (4,768,875) - (1,300,556)
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417,432 613,936 686,322
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,731 51,993 27,914
Venture partner's share of venture's operations 2,067,287 383,693 370,660
Changes in assets and liabilities:
Increase (decrease) in prepaid expenses and other 37,751 (1,517) (10,845)
Increase in receivable from tenant (5,016) (61,679) -
(Increase) decrease in other assets 96,375 (3,483) 38,725
Increase (decrease) in accounts payable (46,157) 12,348 8,416
Increase (decrease) in accrued interest payable (14,383) 3,493 (14,777)
Increase in funds held for others 24,293 13,282 113,304
Increase (decrease) in accrued real estate taxes (309,116) 14,446 (97,886)
Increase (decrease) in security deposits (82,017) 1,256 (37,907)
Decrease in unearned income . . . . . . . . . . . . . . . . . . . . (1,952) (1,879) (1,879)
____________ ____________ ____________
Total adjustments (2,445,682) 1,055,103 (211,456)
____________ ____________ ____________
Net cash provided by operating activities 1,553,119 2,406,270 2,451,017
____________ ____________ ____________
Cash flows from investing activities:
Additions to buildings and improvements (21,332) (159,402) (66,124)
Net cash proceeds from sale of investment property 14,530,759 - 911,617
____________ ____________ ____________
Net cash provided by (used in) investing activities 14,509,427 (159,402) 845,493
____________ ____________ ____________
Cash flows for financing activities:
Cash distributions to Limited Partners (5,153,296) (1,751,120) (1,601,024)
Cash distributions to General Partners (52,053) (17,688) (16,172)
Cash distributions to Venture Partner (6,173,516) (480,000) (400,000)
Proceeds from note payable . . . . . . . . . . . . . . . . . . . . . . . . - - 6,000,000
Repayments of notes payable. . . . . . . . . . . . . . . . . . . . . . . . (5,000,000) - (8,250,000)
Increase in deferred expenses. . . . . . . . . . . . . . . . . . . . . . . - - (158,454)
___________ ___________ ___________
Net cash used in financing activities (16,378,865) (2,248,808) (4,425,650)
____________ ___________ ____________
Net decrease in cash and cash equivalents (316,319) (1,940) (1,129,140)
Cash and cash equivalents at beginning of year 823,430 825,370 1,954,510
____________ ___________ ____________
Cash and cash equivalents at end of year $ 507,111 823,430 825,370
============ =========== ============
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest $ 142,876 366,517 326,086
<FN> ============ =========== ============
See accompanying notes to consolidated financial statements.
</TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1995, 1994 and 1993
(1) Organization and Basis of Accounting
The Partnership was formed August 9, 1985 by filing a Certificate
of Limited Partnership under the Uniform Limited Partnership Act of the
State of Illinois. The initial capital was $3,000 including capital
contributions of $2,000 by the General Partners and the subscription and
payment for one Limited Partnership Interest of $1,000. The Agreement of
Limited Partnership authorized the issuance of up to 25,000 additional
Limited Partnership Interests (subject to increase by up to 15,000
Interests) pursuant to a public offering. A total of 25,015 Interests were
subscribed for and issued between October 23, 1985 and May 16, 1986.
The accompanying consolidated financial statements include the
accounts of the Partnership and its consolidated venture, LincAm Barton
Venture (Note 3). The effect of all transactions between the Partnership
and the Venture has been eliminated.
The estimated fair values of the Company's financial instruments
(as defined) presented in these Notes to Financial Statements have been
determined by management based on pertinent information available as of
December 31, 1995 and 1994, using appropriate methodologies. These
estimates are not necessarily indicative of the amounts the Company could
ultimately realize.
The Company's financial instruments consist primarily of its cash
equivalents, trade receivable and operating payables. The carrying amounts
of the Company's cash equivalents, trade receivables, and operating
payables are considered to be a reasonable estimate of fair value due to
the short-term nature of these instruments.
For purposes of the statement of cash flows, the Partnership
considers all investments purchased with original maturity of three months
or less to be cash equivalents.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying financial statements have been prepared from such records
after making appropriate adjustments to reflect the Partnership's accounts
in accordance with generally accepted accounting principles (GAAP). Such
adjustments are not recorded on the records of the Partnership. The net
effect of these items is summarized below:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
___________________ ___________________
GAAP TAX GAAP TAX
BASIS BASIS BASIS BASIS
______ ______ ______ ______
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . . . . . . . . . . $17,709,966 17,320,863 28,452,075 21,918,339
Partners' capital (deficits):
General partners . . . . . . . . . . . . . . . . . . $ (49,027) (149,223) (36,962) (153,927)
Limited partners . . . . . . . . . . . . . . . . . . $ 17,427,997 16,012,930 18,622,480 15,547,247
Net income:
General partners . . . . . . . . . . . . . . . . . . $ 39,988 56,757 13,511 12,160
Limited partners . . . . . . . . . . . . . . . . . . $ 3,958,813 5,618,979 1,337,656 1,203,842
============ =========== ============ ===========
</TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The net income per Limited Partnership Interest as presented is
based upon the Limited Partnership Interests outstanding at the end of the
periods (25,016).
No provision for Federal income taxes has been made as any
liability for such taxes is that of the partners rather than the
Partnership.
Management of the Partnership has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
consolidated financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.
(2) Investment Properties
(a) General
The Partnership has acquired, either directly or through a joint
venture (Note 3), three apartment complexes, a distribution center, and a
warehouse/research facility. One apartment complex was sold in 1993.
Another apartment complex was sold in 1995. All three properties owned at
December 31, 1995 were completed and in operation.
Depreciation on the investment properties acquired has been
provided over the estimated useful lives of five to forty years using the
straight-line method.
Maintenance and repair expenses are charged to operations as
incurred. Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives.
(b) Oak View Apartments
On September 30, 1986, the Partnership acquired for $3,604,460
the Oak View Apartments, a 124 unit apartment complex located in the
Augusta, Georgia metropolitan area and title to the approximately twenty
acre parcel of land on which the complex is situated.
An affiliate of the General Partners of the Partnership manages
the apartment complex for a fee equal to 5% of the gross revenue of the
property.
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(c) 5521 Meadowbrook Court Distribution Center
On January 12, 1987, the Partnership acquired for $2,492,500 an
approximately 50,000 square foot distribution center and the approximately
110,000 square foot parcel of land on which the building is situated. The
property is located at 5521 Meadowbrook Court in Rolling Meadows, Illinois,
and has been leased to Komori America , Inc. since February 11, 1991.
Komori America, Inc. has entered into a thirty-two month lease agreement
which commenced August 16, 1993. Under the terms of the lease the tenant
will occupy approximately 41.67% of the distribution center and pay a base
rent of $4.85 per square foot in year one. The base rent increased to
$4.90 on August 1, 1994. Komori America, Inc. has amended their lease
effective February 1, 1994 to occupy an additional 4,167 square feet
(8.33%) for $2.75 per square foot. Komori America, Inc. currently occupies
50% of the distribution center and is responsible for 50% of all operating
expenses including real estate taxes, during 1995.
On January 11, 1994, the Partnership leased the remaining 25,000
square feet of the distribution center to Samsung America, Inc. The
thirty-eight month lease commenced March 6, 1994 and provides for an annual
base rent of $3.75 per square foot in year one. The terms of the lease
provide for three percent annual increases in the base rent. The terms of
the lease also provide that the tenant be responsible for their
proportionate share of all operating expenses, including real estate taxes,
during the term of the lease.
An affiliate of the General Partners manages and provides leasing
services for the distribution center for a fee equal to 6% of the gross
revenue for the property.
(d) Walker's Mark Apartments
On July 29, 1987, the Partnership acquired for $5,950,000 the
Walker's Mark Apartments, a 164 unit apartment complex located in Dallas,
Texas, and title to the approximately seven acre parcel of land on which
the complex is situated.
On August 19, 1993, the Partnership sold this apartment complex
for $6,585,000. The Partnership received $911,617 in cash (after closing
costs and commissions) and a note receivable for $5,485,000 which is
secured by a first mortgage on the property. The Partnership is receiving
monthly payments of interest only, at an annual rate of 7.5% with the note
balance due October 1, 1997. Pursuant to the note agreement the buyer is
required to deposit with the seller monthly payments for real estate taxes.
At December 31, 1994 and 1993, $126,586 and $113,304 are recorded as funds
held for others, respectively.
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(e) 1880 Country Farm Road Facility
On July 1, 1988, the Partnership acquired for $7,840,000 an
approximately 162,000 square foot office and warehouse/research building
and title to the approximately 354,000 square foot parcel of land on which
the building is situated. The property is located at 1880 Country Farm
Road in Naperville, Illinois, and is leased to Babson Bros. Co. for a ten-
year lease term which commenced September 1987. Babson Bros. Co. has two
five-year options to renew its lease at market rates. The terms of the
lease also provide that the tenant be responsible for payment of all
operating expenses, including real estate taxes, during the term of the
lease.
An affiliate of the General Partners manages the property for a
fee equal to 1% of the gross revenue of the property.
(3) Venture Agreement - LincAm Barton Venture
On May 21, 1986, the Partnership entered into a joint venture
agreement with an affiliate of the General Partners of the Partnership to
acquire a 60% interest in Barton Creek Landing Apartments, a 250 unit
apartment complex located in Austin, Texas, and title to the approximately
nineteen acre parcel of land on which the complex is situated. The
Partnership and its venture partner made initial cash capital contributions
of $2,496,000 and $1,664,000, respectively, to the joint venture
partnership (the "Joint Venture"), which also received a loan from the
Partnership's venture partner in the amount of $8,750,000. These funds
were used to pay the property's purchase price of $12,500,000. On December
22, 1986, the Joint Venture replaced the loan with additional equity
totalling $8,750,000 contributed to the Joint Venture by the Partnership
and its venture partner in proportion to their respective ownership
percentages.
Under the terms of the Joint Venture Agreement, all costs
incurred by the Joint Venture and all profits and losses and cash
distributions will be shared by the Partnership and its venture partner in
proportion to their ownership percentages (60% and 40%, respectively).
On April 12, 1995, the Joint Venture sold this apartment complex
for $14,871,600 in an all cash transaction. The Partnership received
approximately $9,060,000 in cash distributions from the joint venture which
was used to repay debt (see Note 4 of Notes to Consolidated Financial
Statements) and made a special distribution of $3,537,616 or $140 per
limited partnership interest.
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(4) Note Payable
The Partnership paid the $5,000,000 note which was owed to a bank
in full in April 1995 upon closing of the sale of the Barton Creek Landing
Apartments.
(5) Partnership Agreement
Pursuant to the terms of the Partnership Agreement, net profits
and losses of the Partnership from operations for income tax purposes
through the initial 1986 admission date of additional limited partners
(April 23, 1986) were allocated 99% to the General Partners and 1% to the
initial Limited Partner. Thereafter, the agreement provides that net
profits and losses of the Partnership from operations are allocated 99% to
the Limited Partners and 1% to the General Partners. Profits from the sale
of investment properties will be allocated first to the General Partners in
an amount equal to the greater of the General Partners' share of cash
distributions from the proceeds of any such sale (as described below) or 1%
of the total profits from any sale, plus an amount which will reduce the
General Partners' capital accounts' (deficits), if any, to a level
consistent with the future gain anticipated to be realized from the sale of
properties. Losses from the sale of investment properties will be
allocated 1% to the General Partners. The remaining profits and losses
from sales of the Partnership's properties will be allocated to the Limited
Partners.
Net profits or losses in the accompanying financial statements
are allocated 99% to the Limited Partners and 1% to the General Partners.
Differences may therefore result between allocations among the partners on
the financial statement basis and the tax basis.
The General Partners are not required to make any additional
capital contributions except under certain limited circumstances upon
dissolution and termination of the Partnership. "Net cash receipts" from
operations of the Partnership are allocated (a) 99% to the Limited
Partners and 1% to the General Partners, until the Limited Partners have
received a non-cumulative 10% per annum return on their Adjusted Capital
Contributions (which is equal to their Capital Contributions reduced by any
previous distributions of sale or repayment proceeds to them) and (b)
then, 90% to the Limited Partners and 10% to the General Partners.
Distributions of "sale proceeds" and "repayment proceeds" are to be
allocated 99% to the Limited Partners and 1% to the General Partners until
receipt by the Limited Partners of their initial contributed capital plus a
cumulative cash return of 10% per annum (on a non-compounded basis) on
their Adjusted Capital Contributions. Thereafter, distributions of "sale
proceeds" and "repayment proceeds" are to be allocated to the General
Partners until the General Partners have received distributions in an
amount equal to 3% of the gross sales price of all properties sold, subject
to certain limitations, with the balance distributable 85% to the Limited
Partners and 15% to the General Partners.
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(6) Leases
At December 31, 1995, the Partnership's principal assets are one
apartment complex, one distribution center and one warehouse/research
facility. The Partnership has determined that all leases relating to these
properties are properly classified as operating leases; therefore, rental
income is reported when earned and the cost of each of the properties,
excluding cost of land, is depreciated over the estimated useful lives.
Apartment complex leases in effect at December 31, 1995 are
generally for a term of one year or less and provide for total annual rents
of approximately $695,300.
The commercial leases for the distribution center commenced
August 16, 1993 and March 6, 1994 and provide for scheduled rent increases
during the term of the leases. The office and warehouse/research building
lease also contains provisions providing for scheduled rent increases
during the term of the lease. Generally accepted accounting principles
require that rental income be recorded for the period of occupancy using
the effective monthly rent, which is the average monthly rent for the
entire period of occupancy during the term of the lease. Included in other
assets at December 31, 1995 and 1994 is deferred rent receivable of
$141,461 and $193,502, respectively, and included in rental income for the
years ended December 31, 1995, 1994, and 1993 is $52,041, $29,214, and
$7,053, respectively, related to amortization of deferred rent receivable.
LINCAM PROPERTIES LTD. SERIES 85
(a limited partnership) and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The commercial leases call for minimum lease payments to be
received in the future as follows:
1996 944,194
1997 618,983
__________
Total $1,563,177
==========
Cost and accumulated depreciation of the leased assets are
summarized as follows at December 31, 1995:
Apartment complex:
Cost . . . . . . . . . . . . . . . . . . . . . . $ 3,825,847
Accumulated depreciation . . . . . . . . . . . . (1,214,857)
___________
2,610,990
___________
Distribution center:
Cost . . . . . . . . . . . . . . . . . . . . . . $ 2,676,672
Accumulated depreciation . . . . . . . . . . . . (519,050)
___________
2,157,622
___________
Warehouse/research facility:
Cost . . . . . . . . . . . . . . . . . . . . . . $ 7,912,792
Accumulated depreciation . . . . . . . . . . . . (1,186,834)
___________
6,725,958
___________
Total. . . . . . . . . . . . . . . . . . . . . . $11,494,570
===========
(7) Transactions with Affiliates
Fees, commissions and other expenses required to be paid by the
Partnership to the Corporate General Partner and its affiliates as of and
for the years ended December 31, 1995, 1994 and 1993 are as follows:
1995 1994 1993
__________ __________ __________
Property management fees $96,386 170,002 196,983
Out-of-pocket expenses $70,502 69,822 68,965
========== ========== ==========
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85 SCHEDULE III
(a limited partnership)
and Consolidated Venture
Consolidated Real Estate and Accumulated Depreciation
<CAPTION>
December 31, 1995
Cost
Capitalized Subsequent Gross Amount at Which Life on
Initial Cost to Partnership (A) to Acquisition Carried at End of Period (B) which
---------------------------- ------------------------ ---------------------------- Deprec.
Date in Income
Encumb- Buildings & Bldgs & Bldgs & Accum. of Date Stmt is
rances Land Improvements Land Improvem. Land Improvem. Total Deprec. Constr. Acqrd. Computed
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Augusta, GA $-- 254,077 3,406,950 -- 164,820 254,077 3,571,770 3,825,847 1,214,857 1986 9/30/86 5-40 yrs
Rolling Mdws, IL -- 562,537 1,998,816 -- 115,319 562,537 2,114,135 2,676,672 519,050 1986 1/12/87 5-40 yrs
Naperville, IL -- 1,576,958 6,307,823 5,602 22,409 1,582,560 6,330,232 7,912,792 1,186,834 1987 7/01/88 5-40 yrs
----- --------- ---------- ----- ------- --------- ---------- ---------- ---------
Total $-- 2,393,572 11,713,589 5,602 302,548 2,399,174 12,016,137 14,415,311 2,920,741
===== ========= ========== ===== ======= ========= ========== ========== =========
<FN>
(A)The initial cost represents the original purchase price of the properties, including closing costs.
(B)The aggregate cost of the above real estate at December 31, 1995 for Federal Tax purposes is $14,415,311.
</TABLE>
<TABLE>
<CAPTION>
(C) Reconciliation of real estate owned:
December 31 December 31 December 31
1995 1994 1993
----------- ----------- -----------
<S> <C> <C>
Balance at beginning of period $ 27,241,049 27,081,647 33,366,285
Additions during period 16,291 159,402 66,124
Less dispositions during period (12,842,029) -- 6,350,762
------------- ----------- ----------
Balance at end of period $ 14,415,311 27,241,049 27,081,647
============= =========== ==========
</TABLE>
<TABLE>
<CAPTION>
(C) Reconciliation of accumulated depreciation:
<S> <C> <C> <C>
Balance at beginning of period $ 5,588,495 4,974,559 5,542,938
Additions during period 417,432 613,936 686,322
Less dispositions during period (3,085,186) -- 1,254,701
------------- --------- ---------
Balance at end of period $ 2,920,741 5,588,495 4,974,559
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes of auditors during fiscal years of 1995,
1994 or 1993.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership is owned 50% by
Amli Realty Co., a Delaware Corporation, and 50% by Lincoln National
Corporation, a publicly held, diversified financial services company. Both
companies are affiliates of the officers and directors of LincAm Associates
Ltd., the Associate General Partner of the Partnership. The Corporate
General Partner has responsibility for all aspects of the Partnership's
operations, subject to the requirement that purchases and sales of real
property must be approved by the Managing General Partners of the Associate
General Partner of the Partnership. The relationship of the Corporate
General Partner to its affiliates is described under the caption "Conflicts
of Interest" at pages 15-20 of the Prospectus, a copy of which description
is filed herewith and hereby incorporated herein by reference.
The directors, executive officers and other officers of the
Corporate General Partner of the Partnership and key officers of certain
affiliates are as follows:
NAME OFFICE
Gregory T. Mutz. . . . . . . . . . . . . Chairman and Director, and
President, Amli Management
Company
John E. Allen. . . . . . . . . . . . . . President and Director
Jon A. Boscia. . . . . . . . . . . . . . Director
C. Lawrence Edris. . . . . . . . . . . . Director
Gary R. McPhail. . . . . . . . . . . . . Director
Allan J. Sweet . . . . . . . . . . . . . Vice President, Assistant
Secretary and Director
Lawrence T. Kissko . . . . . . . . . . . Vice President
Marybeth Montgomery. . . . . . . . . . . Vice President and
Assistant Secretary
Charles C. Kraft . . . . . . . . . . . . Treasurer
Charlotte A. Sparrow . . . . . . . . . . Secretary
Susan S. Bersh . . . . . . . . . . . . . Investor Relations
Coordinator
Eric M. Friedler . . . . . . . . . . . . Assistant Secretary
Fred N. Shapiro. . . . . . . . . . . . . Assistant Secretary
Daniel W. Weber. . . . . . . . . . . . . Assistant Secretary
There are no family relationships among any of the foregoing
directors or officers. All directors and officers of the Corporate General
Partner have been elected to serve until the next annual meeting of its
stockholders to be held in 1995.
The business experience of each director and officer of the
Corporate General Partner of the Partnership is as follows:
Gregory T. Mutz (age 50) is the Chairman and a Director of
LincAm Properties, Inc. Mr. Mutz is also the President of Amli Management
Company. Mr. Mutz is also the Chairman of Amli Realty Co., a Director and
the Chairman of Amli Residential Properties Trust, a Director of Baldwin &
Lyons, Inc., a property and casualty insurance company, a Director of
Unique Indoor Comfort, Inc., a Chicago headquartered heating and air
conditioning contracting firm, and a general partner in numerous real
estate partnerships. Prior to the above associations, Mr. Mutz was an
officer with White, Weld & Co. Incorporated, a New York-based investment
banking firm (1976-78); and was associated with the law firm of Mayer,
Brown & Platt (1973-76). Mr. Mutz received a B.A. degree from DePauw
University in 1967 and a J.D. from the University of Michigan Law School in
1973.
John E. Allen (age 59) is the President and a Director of
LincAm Properties, Inc. Mr. Allen is also the President of Amli Realty Co.
and a Director and Vice Chairman of Amli Residential Properties Trust.
Prior to joining Amli, he was a partner in the law firm of Mayer, Brown &
Platt (1964-81). Mr. Allen received a B.S. degree in Business from Indiana
University in 1961 and a J.D. from the Indiana University School of Law in
1964. While with Mayer, Brown & Platt, Mr. Allen was extensively involved
with structuring international business transactions and the equity
financing of real estate, including hotels, apartments, warehouses and
office buildings.
Jon A. Boscia (age 43) is a Director of LincAm Properties,
Inc. He is also Chief Investment Officer of Lincoln National Corporation
and President of Lincoln National Convertible Securities Funds, Inc. and
Lincoln National Income Fund, Inc. He also serves as President of Lincoln
National Investment Management Company where he is responsible for the
company's total investment function. This includes the wholly-owned
investment advisory subsidiaries of Lincoln, Lynch & Mayer, Inc., and
Modern Portfolio Theory. Mr. Boscia joined Lincoln in 1983 as Vice
President of Strategic Planning. Prior to joining Lincoln, he served as
Vice President and Director of Marketing and Master Trust Sales for Mellon
Bank, Manager of Cash and Banking Relations with Westinghouse and Corporate
Planner with Consolidated Natural Gas, all located in Pittsburgh. He holds
a B.A. in Psychology from Point Park College, Pittsburgh and an M.B.A. in
Finance from Duquesne University, Pittsburgh. Mr. Boscia is a member of
the North American Society of Corporate Planners, Association of Business
Economists and Financial Analyst Society.
C. Lawrence Edris (age 54) is a Director of LincAm
Properties, Inc. He is also the Senior Vice President, Individual Products
Division of The Lincoln National Life Insurance Company (LNL), an affiliate
of Lincoln National Corporation. He is responsible for the manufacturing
and marketing of LNL's individual life insurance and disability income
products. Mr. Edris joined LNL in 1966 and has served in a number of
actuarial positions, including Director-Client Services in the Reinsurance
Division and Assistant Vice President in the Corporate Financial Division.
He was elected an Assistant Vice President in 1981, a
Second Vice President in 1982, a Vice President in 1985 and
Senior Vice President in 1987. In 1990 he was named Division Head of
Individual Products Division. Mr. Edris holds a Bachelor's degree from
Purdue University, West Lafayette, IN., and a Master's degree from the
University of Michigan, Ann Arbor. He is a Fellow of the Society of
Actuaries (FSA) and a member of the American Academy of Actuaries.
Gary R. McPhail (age 49) is a Director of LincAm Properties,
Inc. He is also an Executive Vice President of The Lincoln National Life
Insurance Company and President of Lincoln National Sales Corporation.
From 1985 to 1990, he served as Managing Director of Cannon Lincoln, the
corporation's affiliate in the United Kingdom. Mr. McPhail joined Lincoln
in 1981 as Vice President of Marketing and three years later became
responsible for managing the career-agency distribution system. A graduate
of the University of Illinois at Urbana, he has two decades of experience
in the insurance field, beginning his career as a producer in Chicago in
1970. Prior to joining LNL, Mr. McPhail was a Vice President in charge of
agencies at Union Mutual Life Insurance Company.
Allan J. Sweet (age 48) is a Director and a Vice President of
LincAm Properties, Inc. He is also the President and Director of Amli
Residential Properties Trust. Prior to joining Amli, Mr. Sweet was a
partner in the Chicago law firm of Schiff, Hardin & Waite, (1978-85) and
was associated with the law firm of McDermott, Will & Emery (1973-78). He
received a B.B.A. degree from the University of Michigan in 1968 and a J.D.
from the University of Michigan Law School in 1973.
Lawrence T. Kissko (age 47) is a Vice President of LincAm
Properties, Inc. He is also Senior Vice President and Director of Real
Estate Investment of Lincoln National Investment Management Company. In
this position Mr. Kissko is responsible for the management of the real
estate production effort. Prior to joining Lincoln in 1983, Mr. Kissko was
associated with Union Mutual Life Insurance Company of Portland, Maine.
Prior to that, he was associated with Massachusetts Mutual Life Insurance
Company. With both companies, Mr. Kissko was responsible for real estate
investment activities. Mr. Kissko holds a Master's degree in Business
Administration from State University of New York at Albany, and a
Bachelor's degree in Management from Rensselaer Polytechnic Institute in
Troy, New York.
Marybeth Montgomery (age 52) is a Vice President and an
Assistant Secretary of LincAm Properties, Inc. and is an Assistant Vice
President and Director of Real Estate Asset Management at Lincoln National
Corporation. Ms. Montgomery is responsible for Lincoln's apartment and
nursing home portfolio coast to coast. Ms. Montgomery joined Lincoln in
1983 after serving as a regional property manager for Gene B. Glick of
Indiana. She attended Indiana University and is a Certified Property
Manager, Certified Apartment Manager and holds a real estate broker's
license.
Charles C. Kraft (age 48) is Treasurer of LincAm Properties,
Inc. He is also Treasurer of Amli Realty Co. and Treasurer and Principal
Accounting Officer of Amli Residential Properties Trust. Prior to joining
Amli, he was associated with KPMG Peat Marwick in that firm's national real
estate practice (1972-83). He is a Certified Public Accountant and a
former Director of the Chicago Board of Realtors. Mr. Kraft is a 1968
graduate of Wabash College.
Charlotte A. Sparrow (age 37) is the Secretary of LincAm
Properties, Inc. She is also Secretary of Amli Realty Co. and Secretary of
Amli Residential Properties Trust. Prior to joining Amli, Ms. Sparrow was
a paralegal with the law firm of Mayer, Brown & Platt (1982-1993). Ms.
Sparrow received a B.A. from Ripon College in 1980.
Susan S. Bersh (age 32) is Investor Relations Coordinator for
LincAm Properties, Inc. She is also a Vice President and the Marketing and
Communications Coordinator for Amli Realty Co. and the Investor Relations
and Public Relations Director for Amli Residential Properties Trust. Ms.
Bersh is a Registered Representative for Direct Participation Programs and
has passed the Uniform Securities Agent State Law Exam. She graduated from
the University of Illinois with a B.A. degree in Economics in 1985.
Eric M. Friedler (age 41) is an Assistant Secretary of LincAm
Properties, Inc. He is also a Vice President of Amli Realty Co. Prior to
joining Amli, Mr. Friedler was associated with the law firm of Sachnoff,
Weaver & Rubenstein, Ltd. (1983-86). Mr. Friedler received a J.D. from the
University of Chicago Law School in 1983.
Fred N. Shapiro (age 47) is an Assistant Secretary of LincAm
Properties, Inc. He is also Vice President and Assistant Secretary of Amli
Residential Properties Trust. Mr. Shapiro received a B.A. degree from New
York University in 1971 and a J.D. from the John Marshall Law School in
Chicago in 1978.
Daniel W. Weber (age 38) is an Assistant Secretary of LincAm
Properties, Inc. He is also a Vice President of LNC Equity Sales. Mr.
Weber received a B.A. degree from Tri-State University in Angola, Indiana
and an M.S.B.A. from Indiana University in Fort Wayne, Indiana.
All of the outstanding shares of the Corporate General Partner
are owned 50% by Amli Realty Co. and 50% by Lincoln National Corporation.
The Corporate General Partner is not prohibited from paying dividends to
its shareholders. The Partnership Agreement provides that the purchasers
of Interests will acquire no interest in the stock or assets of the
Corporate General Partner or in any proceeds of any sales thereof (which
sales are not restricted in any respect), by virtue of acquiring or owning
Interests and becoming Limited Partners in the Partnership.
Purchasers of Interests will not participate in the election of
directors of the Corporate General Partner. Vacancies on the Board of
Directors of the Corporate General
Partner occurring between annual meetings may be filled by a
majority of the remaining directors. Directors of the Corporate General
Partner may be paid fees by the Corporate General Partner, but no such fees
will be charged to the Partnership.
ITEM 11. EXECUTIVE COMPENSATION
Officers and directors of the Corporate General Partner receive
no current or proposed direct remuneration in such capacities. The
Partnership is required to pay a management fee to the Corporate General
Partner and the General Partners are entitled to receive a share of cash
distributions, when and as cash distributions are made to the Limited
Partners, and a share of profits or losses which are described under the
captions "Compensation and Fees" at pages 10-14, "Cash Distributions" at
pages 69-70 and "Allocation of Profits or Losses for Tax Purposes" at page
70 of the Prospectus and at pages A-7 to A-12 of the Partnership Agreement,
included as an exhibit to the prospectus, a copy of which descriptions is
filed herewith and is hereby incorporated herein by reference. Reference
is also made to Note 5 of Notes to Consolidated Financial Statements filed
with this annual report for a description of such distributions and
allocations. In fiscal 1995, the General Partners received distributions
of $52,053.
The Partnership is permitted to engage in various transactions
involving affiliates of the General Partners of the Partnership, as
described under the captions "Compensation and Fees" at pages 10-14, and
"Conflicts of Interest" at pages 15-20 of the Prospectus and at pages A-15
to A-23 of the Partnership Agreement, included as an exhibit to the
Prospectus, a copy of which descriptions is filed herewith and hereby
incorporated herein by reference. The relationship of the Corporate
General Partner (and its directors and officers) to its affiliates is set
forth in Item 10.
In fiscal 1995, Amli Management Co., an affiliate of the General
Partners, earned property management fees aggregating $96,386 for its
services to the Partnership in connection with the operations of Barton
Creek Landing Apartments in Austin, Texas; and Oak View Apartments in
Augusta, Georgia.
The General Partners of the Partnership or their affiliates may
be reimbursed for their direct expenses or out-of-pocket expenses relating
to the administration of the Partnership and the acquisition and operating
of the Partnership's real property investments. In fiscal 1995, affiliates
of the General Partners of the Partnership were reimbursed for such out-of-
pocket expenses in the amount of $70,502 all of which was repaid as of
December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
(a) The following persons or groups are known by the Partnership
to own beneficially more than 5% of the outstanding Interests of the
Partnership:
<CAPTION>
AMOUNT AND NATURE
TITLE OF CLASS NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNER PERCENT OF CLASS
__________________ __________________________ ------------------- ----------------
<S> <C> <C> <C>
Limited Partnership LNL-IPD Par Life Portfolio 12,629 50.48%
Interests 1300 S. Clinton Street Interests directly
Fort Wayne, Indiana 46801
Limited Partnership LincAm Associates Ltd. 6,237 24.93%
Interests 125 South Wacker Drive Interests directly
Suite 3100
Chicago, Illinois 60606
</TABLE>
<TABLE>
(b) The officers and directors of the Corporate General Partner of the Partnership own as a
group the following Interests of the Partnership:
<CAPTION>
AMOUNT AND NATURE
TITLE OF CLASS NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNER PERCENT OF CLASS
__________________ __________________________ ------------------- ----------------
<S> <C> <C> <C>
Limited Partnership None No Interest directly 0%
Interests
</TABLE>
No officer or director of the Corporate General Partner of the
Partnership possesses a right to acquire beneficial ownership of Interests
of the Partnership.
All of the outstanding shares of the Corporate General Partner of
the Partnership are owned by an affiliate of its officers and directors as
set forth in Item 10.
(c) There exists no arrangement, known to the Partnership, the
operation of which may at a subsequent date result in a change in control
of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships
with the Corporate General Partner, affiliates, or their management other
than those described in Items 10 and 11.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements
filed with this annual report).
(2) Exhibits: 27. Financial Data Schedule.
(b) No Reports on Form 8-K were required or filed since the
beginning of the last quarter of the period covered by this report.
No annual report or proxy material for the fiscal year 1995 has
been sent to the Partners of the Partnership. An annual report will be
sent to the Partners subsequent to this filing and the Partnership will
furnish copies of such report to the commission when it is sent to the
Partners.
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.
LINCAM PROPERTIES LTD. SERIES 85
By: LINCAM PROPERTIES, INC.
Corporate General Partner
By: /S/ JOHN E. ALLEN
-----------------
John E. Allen
President of Corporate
General Partner
Date: February 14, 1996
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.
By: LINCAM PROPERTIES, INC.
Corporate General Partner
By: /S/ GREGORY T. MUTZ
-------------------
Gregory T. Mutz
Chairman and Director
Principal Executive Officer
Date: February 14, 1996
By: /S/ JOHN E. ALLEN
------------------
John E. Allen
President and Director
Date: February 14, 1996
By: /S/ CHARLES C. KRAFT
--------------------
Charles C. Kraft, Treasurer,
Principal Financial Officer and
Principal Accounting Officer
Date: February 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 507,111
<SECURITIES> 0
<RECEIVABLES> 66,695
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 573,956
<PP&E> 14,415,311
<DEPRECIATION> 2,920,741
<TOTAL-ASSETS> 17,709,966
<CURRENT-LIABILITIES> 330,996
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 17,378,970
<TOTAL-LIABILITY-AND-EQUITY> 17,709,966
<SALES> 4,768,875
<TOTAL-REVENUES> 2,907,891
<CGS> 0
<TOTAL-COSTS> 1,538,754
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128,493
<INCOME-PRETAX> 4,070,725
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,070,725
<DISCONTINUED> 0
<EXTRAORDINARY> (71,924)
<CHANGES> 0
<NET-INCOME> 3,998,801
<EPS-PRIMARY> 158.25
<EPS-DILUTED> 158.25
</TABLE>
