UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period
ended June 30, 1996 Commission File Number
2-99673
LINCAM PROPERTIES LTD. SERIES 85
(Exact name of registrant as specified in 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)
Registrants's telephone number, including area code: (312) 443-1477
Indicate by check ( X ) 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 ( )
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
-------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . $ 479,021 507,111
Receivable from tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . - 66,695
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,812 -
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . 5,982 150
------------ ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 518,815 573,956
------------ ----------
Note receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,485,000 5,485,000
------------ ----------
Investment properties, at cost (notes 2 and 3):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 816,616 2,399,174
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . 5,693,943 12,016,137
------------ ----------
6,510,559 14,415,311
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . (1,820,637) (2,920,741)
------------ ----------
Total investment properties, net of accumulated depreciation . . . . 4,689,922 11,494,570
Property held for sale, at estimated value (notes 1 and 2) . . . . . . . . . . 6,335,879 -
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,544 156,440
------------ ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,150,160 17,709,966
============ ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICITS)
--------------------------------------------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,735 30,906
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,270 -
Funds held for others (note 2) . . . . . . . . . . . . . . . . . . . . . . . 64,788 150,879
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 160,444 118,000
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 29,658 31,211
------------ ----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 282,895 330,996
------------ ----------
Partners' capital (deficits) (note 1):
General Partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000
Allocated portion of cumulative net income . . . . . . . . . . . . . . . . 105,576 103,112
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . (161,719) (154,139)
------------ ----------
(54,143) (49,027)
------------ ----------
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 . . . . . . . . . . . . . . . . 10,508,158 10,264,267
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . (16,066,395) (15,315,915)
------------ ----------
16,921,408 17,427,997
------------ ----------
Total partners' capital . . . . . . . . . . . . . . . . . . . . . . 16,867,265 17,378,970
------------ ----------
Total liabilities and partners' capital. . . . . . . . . . . . . . . . . . . $ 17,150,160 17,709,966
============ ==========
</TABLE>
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1996 1995 1996 1995
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . $ 195,501 469,988 587,080 1,447,523
Charges to tenants . . . . . . . . . . . . . . . . 30,708 42,021 80,256 76,116
Interest income. . . . . . . . . . . . . . . . . . 108,497 140,852 216,405 251,144
Other income . . . . . . . . . . . . . . . . . . . 6,163 8,957 10,955 31,493
----------- ---------- ---------- ----------
Total income . . . . . . . . . . . . . . . 340,869 661,818 894,696 1,806,276
----------- ---------- ---------- ----------
Expenses:
Property operating expenses. . . . . . . . . . . . 123,494 178,376 258,691 487,937
Depreciation . . . . . . . . . . . . . . . . . . . 43,449 92,337 126,294 248,175
Interest . . . . . . . . . . . . . . . . . . . . . - 15,233 - 128,434
Management fees paid to the
General Partner. . . . . . . . . . . . . . . . . 12,319 18,771 28,493 63,843
Professional services. . . . . . . . . . . . . . . 13,000 19,472 27,658 39,245
Amortization of deferred expenses. . . . . . . . . - 1,733 - 14,731
General and administrative . . . . . . . . . . . . 18,509 11,646 37,205 35,609
Provision for loss . . . . . . . . . . . . . . . . 170,000 - 170,000 -
----------- ---------- ---------- ----------
Total expenses . . . . . . . . . . . . . . 380,771 337,568 648,341 1,017,974
----------- ---------- ---------- ----------
Operating income (loss). . . . . . . . . . (39,902) 324,250 246,355 788,302
Gain on sale of investment property. . . . . . . . . - 4,769,685 - 4,769,685
Venture partner's share of
venture's operations . . . . . . . . . . . . . . . - (1,958,944) - (2,071,240)
----------- ---------- ---------- ----------
Net income (loss) before
extraordinary item . . . . . . . . . . . (39,902) 3,134,991 246,355 3,486,747
Extraordinary item:
Loss on early extinguishment of debt . . - 71,924 - 71,924
----------- ---------- ---------- ----------
Net income (loss). . . . . . . . . . . . . $ (39,902) 3,063,067 246,355 3,414,823
=========== ========== ========== ==========
Net income (loss) per limited
partnership unit:
Before extraordinary item. . . . . . . . (1.58) 124.07 9.75 137.99
Extraordinary item . . . . . . . . . . . - 2.85 - 2.85
----------- ---------- ---------- ----------
Net income (loss). . . . . . . . . . . . . $ (1.58) 121.22 9.75 135.14
=========== ========== ========== ==========
Cash distributions per limited
partnership interest . . . . . . . . . . $ 15.00 158.00 30.00 176.00
=========== ========== ========== ==========
</TABLE>
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 246,355 3,414,823
Adjustments to reconcile net income to net cash provided
by operating activities:
Gain on sale of investment property. . . . . . . . . . . . . . . . . . . . . . - (4,769,685)
Provision for loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,000 -
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . - 71,924
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,294 248,175
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 14,731
Venture Partner's share of income. . . . . . . . . . . . . . . . . . . . . . . - 2,071,240
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses and other current assets . . . . . . (5,832) 27,051
Decrease in receivable from tenant . . . . . . . . . . . . . . . . . . . . . 66,695 53,834
Increase in interest receivable. . . . . . . . . . . . . . . . . . . . . . . (33,812) -
Decrease in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 35,896 117,360
Decrease in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . (5,171) (52,445)
Increase in accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 2,270 -
Decrease in unearned income. . . . . . . . . . . . . . . . . . . . . . . . . - (1,952)
Decrease in accrued interest payable . . . . . . . . . . . . . . . . . . . . - (14,383)
Decrease in funds held for others. . . . . . . . . . . . . . . . . . . . . . (86,091) (50,723)
Increase in amounts due to affiliates. . . . . . . . . . . . . . . . . . . . - 61,552
Increase (decrease) in accrued real estate taxes . . . . . . . . . . . . . . 42,444 (286,953)
Increase (decrease) in tenant security deposits. . . . . . . . . . . . . . . (1,553) (80,315)
----------- -----------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 311,140 (2,590,589)
----------- -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . 557,495 824,234
----------- -----------
Cash flows from investing activities:
Additions to buildings and improvements. . . . . . . . . . . . . . . . . . . . . (8,040) (7,695)
Net cash proceeds from sale of investment property . . . . . . . . . . . . . . . - 14,531,569
Recovery of cost of property held for sale . . . . . . . . . . . . . . . . . . . 180,515 -
----------- -----------
Net cash provided by investing activities. . . . . . . . . . . . . . . . 172,475 14,523,874
----------- -----------
Cash flows for financing activities:
Cash distributions to Limited Partners . . . . . . . . . . . . . . . . . . . . . (750,480) (4,402,816)
Cash distributions to General Partners . . . . . . . . . . . . . . . . . . . . . (7,580) (44,472)
Cash distributions to Venture Partner. . . . . . . . . . . . . . . . . . . . . . - (6,177,469)
Decrease in note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (5,000,000)
----------- -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . (758,060) (15,624,757)
----------- -----------
Net decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . (28,090) (276,649)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . 507,111 823,430
----------- -----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . $ 479,021 546,781
=========== ===========
</TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995,
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
(1) ORGANIZATION AND BASIS OF ACCOUNTING
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. The balance sheets at June 30, 1996 and December
31, 1995 and the statements of operations and cash flows for the three and
six months ended June 30, 1996 and 1995 have been prepared by Management of
the Partnership and have not been audited by the Partnership's independent
auditors.
Included in the statement of operations and cash flows for the six
months ended June 30, 1995 are the operations of its consolidated joint
venture which was sold on April 12, 1995.
For purposes of reporting cash flows, cash and cash equivalents include
an investment in a money market account and other investments (having daily
availability) at cost which approximates market.
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:
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
----------------------- ------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Total assets . . . . . .$17,150,160 17,068,887 27,950,866 20,135,061
Partners' capital
(deficits):
General Partners . . .$ (54,143) (151,251) (37,992) (155,340)
Limited Partners . . .$16,921,408 15,812,341 18,520,430 15,407,323
Net income:
General Partners . . .$ 2,464 5,554 3,518 3,206
Limited Partners . . .$ 243,891 549,891 348,238 317,374
Net income per
limited part-
nership interest. . . .$ 9.75 21.98 13.92 12.69
=========== ========== ========== ==========
The net income and cash distributions per limited partnership interest,
as presented for the six month period ended June 30, 1996 and 1995 are
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 financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
On January 1, 1996, the Partnership adopted Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which
changes the Partnership's current method of accounting for its real estate
property investments when circumstances indicate that carrying amount of
the property may not be recoverable. Properties held for sale will
continue to be reflected at the lower of historical cost or estimated fair
value less anticipated selling costs. In addition, properties held for
sale will no longer be depreciated.
Losses in carrying values of investment assets are provided by
management when the losses become apparent and the investment asset is
considered impaired. Management evaluates its investment properties at
least quarterly to assess whether any impairment indications are present,
comparing undiscounted future cash flows with the carrying amount of the
asset. If any investment asset is considered impaired, a loss is provided
to reduce the carrying value of the property to its estimated value.
During the three months ended June 30, 1996 a loss of $170,000 was
recorded relating to the pending sale of the 1880 Country Farm Drive
facility, so that this property held for sale is carried at its estimated
fair value at June 30, 1996. Rental income of $182,500 net of $2,001
management fees has been treated as a partial recovery in the determination
of the estimated market value of this property. Accordingly, such amounts
are excluded from the operations for the three and six months ended June
30, 1996. Management believes that no other assets are impaired;
therefore, no other such losses have been required to be recognized or
provided for in the accompanying financial statements.
(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 acquired through the joint venture was sold in
1995.
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. Expenditures which materially add to the value or utility of the
property or appreciably prolong its useful life are capitalized and
depreciated over their estimated useful lives.
(B) OAK VIEW APARTMENTS
On September 30, 1986, the Partnership acquired the Oak View
Apartments, a recently constructed 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.
The Partnership's purchase price was $3,604,460, excluding closing
costs, fees, reserves and prorations, and was determined by arm's-length
negotiations.
An affiliate of the General Partners manages the apartment complex
for a fee equal to 5% of the gross revenue of the property.
(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. entered into a thirty-two month lease agreement which
commenced August 16, 1993. Under the terms of the lease the tenant
occupied approximately 41.67% of the distribution center and paid 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. 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.'s lease expired on May 31,
1996 at which time they vacated the 50% of the distribution center they had
occupied. The Partnership has contracted with an outside broker to
actively market the property for lease and/or sale.
On January 11, 1994, the Partnership leased the 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 of 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. Through June, 1996 the Partnership
received monthly payments of interest only, at an annual rate of 7.5% with
the note balance due October 1, 1997. The note may be prepaid without
penalty at any time. Pursuant to the note agreement the buyer is required
to deposit with the seller monthly payments for real estate taxes. At June
30, 1996 and 1995, $64,788 and $75,000, respectively, are recorded as funds
held for others.
On July 2, 1996, the buyer prepaid the note. The Partnership
intends to distribute the proceeds from collection of this note in
September 1996.
(E) 1880 COUNTRY FARM DRIVE FACILITY
On July 1, 1988, the Partnership acquired a recently completed,
approximately 162,000 square foot office and warehouse/research facility
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
Drive in Naperville, Illinois, and is leased to Babson Bros. for a ten-year
lease term commencing September, 1987. Babson Bros. Co. has two 5-year
options to renew its lease at market rates.
The Partnership's purchase price was $7,840,000 excluding closing
costs, fees, reserves and prorations, and was determined by arm's-length
negotiations.
An affiliate of the General Partners manages the property for a fee
equal to 1% of the gross revenue of the property.
The Partnership has contracted to sell this facility and the land on
which the building is located in an all cash transaction for $6,575,000.
The sale is expected to close in September 1996.
(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.
On April 12, 1995, the Joint Venture sold this apartment complex for
$14,871,600 in an all cash transaction. The Partnership received
approximately $8,950,000 in cash distributions from the joint venture which
was used to repay debt (see Note 4 of Notes to Financial Statements) and
make a special distribution of $3,537,616 or a $140 per limited partnership
interest.
(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) 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 six months ended June 30, 1996 and 1995 are summarized as follows:
SIX MONTHS SIX MONTHS UNPAID AT
ENDED ENDED JUNE 30,
JUNE 30, 1996 JUNE 30, 1995 1996
------------- ------------- --------
Property management fees. . . . $28,493 45,072 513
Reimbursement (at cost)
for:
Out-of-Pocket expenses . . . . $18,167 17,587 -
======= ====== =====
(6) ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
necessary for a fair presentation have been made to the accompanying
amounts as of June 30, 1996 and 1995 and for the six month periods ended
June 30, 1996 and 1995.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS 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 owned by the Partnership at June 30,
1996.
At June 30, 1996, the Partnership and its consolidated joint venture had
cash of $125,153 and short-term investments in asset management accounts of
$353,868, which will be utilized for distributions to partners and for
working capital requirements.
At June 30, 1996 the Partnership has total current assets of $518,815 and
current liabilities of $282,895 and a current ratio of 1.83. Including a
special distribution of the net proceeds from the sale of the Barton Creek
Landing Apartments equal to $140 per Limited Partnership Interest, cash
distributions were $206 per Limited Partnership Interest in 1995. Cash
distributions from operations for 1996 are being made at the 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 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 April 1995, the Partnership repaid in full its existing bank debt from
the proceeds of the sale of the Barton Creek Landing Apartments.
As described in Note 2(d) of Notes to 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 provided 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 cash from
the sale, together with working capital reserves, to pay its note payable
down to $5,000,000.
On July 2, 1996 the note receivable was prepaid. The Partnership intends
to distribute the proceeds from the collection of this note in September
1996.
The Corporate General Partner will continue to explore selling each of the
properties at a time when, from the standpoint of maximizing value, it
makes the most sense.
RESULTS OF OPERATIONS
At June 30, 1996, the Partnership owned three investment properties,
consisting of an apartment complex, a distribution center and a
warehouse/research facility.
The decrease in rental income for the six months ended June 30, 1996
compared to 1995 of approximately $860,400 (59.4%) is primarily due to 1)
less rental income generated at Barton Creek Landing Apartments ($640,940)
due to its being sold in April 1995; 2) less rental income at Oak View
Apartments ($26,500) due to lower occupancy; 3) less rental income at
Meadowbrook Court Distribution Center ($10,500) due to lower occupancy; and
4) less rental income recognized at the 1880 Country Farm Drive Facility
($182,500) due to the adoption of SFAS No. 121.
The increase in charges to tenants for the six months ended June 30, 1996
compared to 1995 of approximately $4,100 (5.4%) is primarily due to an
increase in real estate taxes and maintenance expenses being paid by the
partnership and reimbursed by the tenants.
Interest income decreased approximately $34,700 (13.8%) for the six months
ended June 30, 1996 compared to 1995. This decrease is primarily
attributable to 1) less interest income earned at the joint venture level
($12,500); and 2) less funds held in interest bearing short-term asset
management accounts ($22,200).
Other income decreased approximately $20,500 (65.2%) for the six months
ended June 30, 1996 as compared to 1995. This decrease is primarily due to
Barton Creek Landing Apartments being sold in April, 1995.
Property operating expenses decreased approximately $229,200 (46.9%) for
the six months ended June 30, 1996 compared to 1995. This decrease of
approximately $277,700 is primarily attributable to Barton Creek Landing
Apartments being sold. This decrease was partially offset by increases is
property operating expenses at Oak View Apartments (approximately $23,200)
and at Meadowbrook Court Distribution Center (approximately $27,000).
The decrease in depreciation expense of approximately $121,900 (49.1%) for
the six months ended June 30, 1996 compared to 1995 is primarily
attributable to 1) the sale of Barton Creek Landing Apartments (80,600);
and 2) less depreciation charged at the 1880 Country Farm Drive Facility
($40,000) due to the pending sale of this property and estimated fair value
accounting in accordance with SFAS No. 121.
The decrease in interest expense of $128,434 for the six months ended June
30, 1996 as compared to 1995 is due to the note payable being repaid in
April, 1995.
Management fees paid to an affiliate of the General Partner decreased
approximately $35,300 (55.4%) for the six months ended June 30, 1996 as
compared to 1995. This decrease is primarily attributable to the sale of
Barton Creek Landing Apartments.
Professional services have decreased approximately $11,600 (29.5%) for the
six months ended June 30, 1996 as compared to 1995. This decrease is
primarily due to a decrease in tax and audit fees incurred by the
consolidated joint venture which is no longer in existence.
Early repayment of the note payable caused amortization of deferred
expenses to decrease by approximately $14,700 for the six months ended June
30, 1996 as compared to June 30, 1995.
Operating income for the six months ended June 30, 1996 as compared to 1995
decreased by $541,947 to $246,355.
<TABLE>
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the partnership's investment properties:
<CAPTION>
1995 1996
------------------------------------- ------------------------------
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 Apartments
Austin, Texas. . . . . . . . . 96% N/A N/A N/A N/A N/A
Oak View Apartments
Augusta, Georgia . . . . . . . 98% 88% 87% 85% 96% 88%
5521 Meadowbrook Court
Distribution Center
Rolling Meadows, Illinois. . . 100% 100% 100% 100% 100% 50%
1880 Country Farm Drive
Warehouse/Research Facility
Naperville, IL . . . . . . . . 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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: 27. Financial Data Schedule
(b) REPORTS ON FORM 8-K: None
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
Date: August 13, 1996 By: /s/ JOHN E. ALLEN
John E. Allen
President of Corporate
General Partner
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
Date: August 13, 1996 By: /s/ GREGORY T. MUTZ
Gregory T. Mutz
Chairman and Director
Principal Executive Officer
Date: August 13, 1996 By: /s/ JOHN E. ALLEN
John E. Allen
President and Director
Date: August 13, 1996 By: /s/ CHARLES C. KRAFT
Charles C. Kraft, Treasurer
Principal Financial Officer and
Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 479,021
<SECURITIES> 0
<RECEIVABLES> 5,518,812
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 518,815
<PP&E> 6,510,559
<DEPRECIATION> 1,820,637
<TOTAL-ASSETS> 17,150,160
<CURRENT-LIABILITIES> 282,895
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 16,867,265
<TOTAL-LIABILITY-AND-EQUITY> 17,150,160
<SALES> 0
<TOTAL-REVENUES> 894,696
<CGS> 0
<TOTAL-COSTS> 648,341
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 246,355
<INCOME-TAX> 0
<INCOME-CONTINUING> 246,355
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 246,355
<EPS-PRIMARY> 9.75
<EPS-DILUTED> 9.75
</TABLE>
