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 September 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 ( )
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,077,323 507,111
Receivable from tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 66,695
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . 2,875 150
------------ ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 12,080,198 573,956
------------ ----------
Note receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 5,485,000
------------ ----------
Investment properties, at cost (notes 2 and 3):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 816,616 2,399,174
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . 5,694,427 12,016,137
------------ ----------
6,511,043 14,415,311
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . (1,864,344) (2,920,741)
------------ ----------
Total investment properties, net of accumulated depreciation . . . . 4,646,699 11,494,570
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,705 156,440
------------ ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,739,602 17,709,966
============ ===========
2
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL (DEFICITS)
--------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- ------------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,600 30,906
Funds held for others (note 2) . . . . . . . . . . . . . . . . . . . . . . . -- 150,879
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 140,007 118,000
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 20,517 31,211
------------ ----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . 201,124 330,996
------------ ----------
Partners' capital (deficits) (note 1):
General Partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000
Allocated portion of cumulative net income . . . . . . . . . . . . . . . . 106,078 103,112
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . (165,510) (154,139)
------------ ----------
(57,432) (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 . . . . . . . . . . . . . . . . 10,557,900 10,264,267
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . (16,441,635) (15,315,915)
------------ ----------
16,595,910 17,427,997
------------ ----------
Total partners' capital . . . . . . . . . . . . . . . . . . . . . . 16,538,478 17,378,970
------------ ----------
Total liabilities and partners' capital. . . . . . . . . . . . . . . . . . . $ 16,739,602 17,709,966
============ ==========
</TABLE>
3
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1996 1995 1996 1995
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . $ 149,802 395,308 736,882 1,842,831
Charges to tenants . . . . . . . . . . . . . . . . 23,031 35,882 103,287 111,998
Interest income. . . . . . . . . . . . . . . . . . 90,755 110,689 307,160 361,833
Other income . . . . . . . . . . . . . . . . . . . 6,083 5,157 17,038 36,650
----------- ---------- ---------- ----------
Total income . . . . . . . . . . . . . . . 269,671 547,036 1,164,367 2,353,312
----------- ---------- ---------- ----------
Expenses:
Property operating expenses. . . . . . . . . . . . 123,023 105,873 381,714 593,810
Depreciation . . . . . . . . . . . . . . . . . . . 43,707 83,919 170,001 332,094
Interest . . . . . . . . . . . . . . . . . . . . . -- 56 -- 128,490
Management fees paid to the
General Partner. . . . . . . . . . . . . . . . . 9,347 16,221 37,840 80,064
Professional services. . . . . . . . . . . . . . . 13,522 21,223 41,180 60,468
Amortization of deferred expenses. . . . . . . . . -- -- -- 14,731
General and administrative . . . . . . . . . . . . 19,294 19,195 56,499 54,804
Provision for loss . . . . . . . . . . . . . . . . 10,534 -- 180,534 --
----------- ---------- ---------- ----------
Total expenses . . . . . . . . . . . . . . 219,427 246,487 867,768 1,264,461
----------- ---------- ---------- ----------
Operating income . . . . . . . . . . . . . 50,244 300,549 296,599 1,088,851
Gain (loss) on sale of investment property . . . . . -- (810) -- 4,768,875
Venture partner's share of
venture's operations . . . . . . . . . . . . . . . -- 3,953 -- (2,067,287)
----------- ---------- ---------- ----------
Net income before
extraordinary item . . . . . . . . . . . 50,244 303,692 296,599 3,790,439
Extraordinary item:
Loss on early extinguishment of debt . . -- -- -- 71,924
----------- ---------- ---------- ----------
Net income . . . . . . . . . . . . . . . . $ 50,244 303,692 296,599 3,718,515
=========== ========== ========== ==========
4
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1996 1995 1996 1995
----------- ---------- ----------- ----------
Net income per limited
partnership unit:
Before extraordinary item. . . . . . . . $ 1.99 12.02 11.74 150.01
Extraordinary item . . . . . . . . . . . -- -- -- (2.85)
----------- ---------- ---------- ----------
Net income . . . . . . . . . . . . . . . . $ 1.99 12.02 11.74 147.16
=========== ========== ========== ==========
Cash distributions per limited
partnership interest . . . . . . . . . . $ 15.00 15.00 45.00 191.00
=========== ========== ========== ==========
</TABLE>
5
<TABLE>
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 296,599 3,718,515
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loss on sale of investment property. . . . . . . . . . . . . . . 180,534 (4,768,875)
Loss on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . -- 71,924
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,001 332,094
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 14,731
Venture Partner's share of income. . . . . . . . . . . . . . . . . . . . . . . -- 2,067,287
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses and other current assets . . . . . . (2,725) 4,089
Decrease in receivable from tenant . . . . . . . . . . . . . . . . . . . . . 66,695 53,834
Decrease in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 36,615 129,655
Increase (decrease) in accounts payable. . . . . . . . . . . . . . . . . . . 9,694 (39,465)
Decrease in unearned income. . . . . . . . . . . . . . . . . . . . . . . . . -- (1,952)
Decrease in accrued interest payable . . . . . . . . . . . . . . . . . . . . -- (14,383)
Decrease in funds held for others. . . . . . . . . . . . . . . . . . . . . . (150,879) (25,707)
Increase (decrease) in accrued real estate taxes . . . . . . . . . . . . . . 22,007 (246,414)
Decrease in tenant security deposits . . . . . . . . . . . . . . . . . . . . (10,694) (80,425)
----------- -----------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 321,248 (2,503,607)
----------- -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . 617,847 1,214,908
----------- -----------
Cash flows from investing activities:
Additions to buildings and improvements. . . . . . . . . . . . . . . . . . . . . (8,524) (9,462)
Net cash proceeds from sale of investment property . . . . . . . . . . . . . . . 6,239,950 14,530,759
Collection of note receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 5,485,000 --
Recovery of cost of property held for sale . . . . . . . . . . . . . . . . . . . 373,030 --
----------- -----------
Net cash provided by investing activities. . . . . . . . . . . . . . . . 12,089,456 14,521,297
----------- -----------
6
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995
------------ -----------
Cash flows for financing activities:
Cash distributions to Limited Partners . . . . . . . . . . . . . . . . . . . . . (1,125,720) (4,778,056)
Cash distributions to General Partners . . . . . . . . . . . . . . . . . . . . . (11,371) (48,263)
Cash distributions to Venture Partner. . . . . . . . . . . . . . . . . . . . . . -- (6,173,516)
Decrease in note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (5,000,000)
----------- -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . (1,137,091) (15,999,835)
----------- -----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . 11,570,212 (263,630)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . 507,111 823,430
----------- -----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . $12,077,323 559,800
=========== ===========
</TABLE>
7
LINCAM PROPERTIES LTD. SERIES 85
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 September 30, 1996 and
December 31, 1995 and the statements of operations and cash flows for the
three and nine months ended September 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 nine
months ended September 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:
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------------ ----------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Total assets . . . . . $16,739,602 16,755,743 17,829,696 17,399,105
Partners' capital
(deficits):
General Partners . . $ (57,432) (140,978) (48,039) (148,459)
Limited Partners . . $16,595,910 16,829,175 17,525,753 16,088,588
Net income:
General Partners . . $ 2,966 19,616 37,185 53,802
Limited Partners . . $ 293,633 1,941,965 3,681,330 5,326,407
Net income per
limited part-
nership interest. . . $ 11.74 77.63 147.16 212.92
=========== ========== ========== ==========
The net income and cash distributions per limited partnership interest,
as presented for the nine month period ended September 30, 1996 and 1995
are based upon the limited partnership interests outstanding at the end of
the periods (25,016).
8
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.
The 1880 Country Farm Drive facility was sold in September, 1996. For
the period from April 1, 1996 through September 30, 1996, rental income of
$358,696 net of $3,763 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 nine months ended September 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
During the years 1986 through 1988, the Partnership 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. The warehouse/research facility was sold
in September, 1996.
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.
9
(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.
10
On July 2, 1996, the buyer prepaid the note. The Partnership
distributed the proceeds from collection of this note on October 1, 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 managed the property for a fee
equal to 1% of the gross revenue of the property.
On September 20, 1996, the Partnership sold this facility and the
land on which the building is situated for $6,575,000 in an all cash
transaction. The Partnership received $6,239,950 (after closing costs and
commissions). The Partnership used these proceeds and the proceeds from
the collection of the $5,485,000 note from the sale of the Walker's Mark
Apartments to make a special distribution of $450 per limited partnership
interest on October 1, 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.
11
(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 nine months ended September 30, 1996 and 1995 are summarized as
follows:
NINE MONTHS NINE MONTHS UNPAID AT
ENDED ENDED SEPT. 30,
SEPT. 30, 1996 SEPT. 30, 1995 1996
-------------- -------------- --------
Property management fees. . . . $37,840 80,064 --
Reimbursement (at cost)
for:
Out-of-Pocket expenses . . . . $54,649 53,584 --
======= ====== =====
(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 September 30, 1996 and 1995 and for the nine month periods
ended September 30, 1996 and 1995.
12
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 September 30, 1996, the Partnership and its consolidated joint venture
had cash of $87,715 and short-term investments in asset management accounts
of $11,989,608, which will be utilized for distributions to partners and
for working capital requirements.
At September 30, 1996 the Partnership has total current assets of
$12,080,198 and current liabilities of $201,124 and a current ratio of
60.06. 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. The
Partnership also made a special distribution of $450 per Limited
Partnership Interest on October 1, 1996.
On September 20, 1996, the Partnership sold the 1880 Country Farm Drive
facility for $6,575,000 in an all cash transaction. As described in Note
2(E) of Notes to Financial Statements, the Partnership received $6,239,950
(net of closing costs). The Partnership distributed the majority of these
proceeds to the partners via a special distribution on October 1, 1996.
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 down
payment 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
distributed the proceeds from the collection of this note on October 1,
1996.
The Corporate General Partner will continue to explore selling its
remaining properties at a time when, from the standpoint of maximizing
value, it makes the most sense.
13
RESULTS OF OPERATIONS
At September 30, 1996, the Partnership owned two investment properties,
consisting of an apartment complex, and a distribution center.
The decrease in rental income for the nine months ended September 30, 1996
compared to 1995 of approximately $1,105,900 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 ($61,500) due to lower occupancy; 3) less rental income at
Meadowbrook Court Distribution Center ($38,100) due to lower occupancy; and
4) less rental income recognized at the 1880 Country Farm Drive Facility
($365,360) due to the adoption of SFAS No. 121.
The decrease in charges to tenants for the nine months ended September 30,
1996 compared to 1995 of approximately $8,700 (7.8%) is primarily due to
lower occupancy with the Partnership being responsible for half of the real
estate taxes and maintenance expenses since June 1, 1996.
Interest income decreased approximately $54,700 (15.1%) for the nine months
ended September 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) early repayment of the note receivable ($101,400). These
decreases have been partially offset by having more funds held in interest
bearing short-term asset management accounts ($59,200).
Other income decreased approximately $19,600 (53.5%) for the nine months
ended September 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 $212,100 (35.7%) for
the nine months ended September 30, 1996 compared to 1995. A decrease of
approximately $269,300 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 $25,900)
and at Meadowbrook Court Distribution Center (approximately $32,400).
The decrease in depreciation expense of approximately $162,100 (48.8%) for
the nine months ended September 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
($79,100) due to the estimated fair value accounting in accordance with
SFAS No. 121.
The decrease in interest expense of $128,490 for the nine months ended
September 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 $42,200 (52.7%) for the nine months ended September 30, 1996
as compared to 1995. This decrease is primarily attributable to 1) the
sale of Barton Creek Landing Apartments (approximately $32,600); 2) less
rental income at Oakview Apartments ($3,000); 3) less rental income at
Meadowbrook Court Distribution Center ($2,700); and 4) less rental income
at 1880 Country Farm Drive Facility ($3,800).
Professional services decreased approximately $19,300 (31.9%) for the nine
months ended September 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 nine months ended
September 30, 1996 as compared to September 30, 1995.
Operating income for the nine months ended September 30, 1996 as compared
to 1995 decreased by $611,718 to $477,133.
14
<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 N/A
Oak View Apartments
Augusta, Georgia . . . . . . . 98% 88% 87% 85% 96% 88% 77%
5521 Meadowbrook Court
Distribution Center
Rolling Meadows, Illinois. . . 100% 100% 100% 100% 100% 50% 50%
1880 Country Farm Drive
Warehouse/Research Facility
Naperville, IL . . . . . . . . 100% 100% 100% 100% 100% 100% N/A
<FN>
An "N/A" indicates the property was not owned by the Partnership at the end of the quarter.
</TABLE>
15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: 27. Financial Data Schedule
(b) REPORTS ON FORM 8-K: None
16
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: November 13, 1996 By:/s/ CHARLES C. KRAFT
Charles C. Kraft, Treasurer
Principal Financial Officer and
Principal Accounting Officer
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: November 13, 1996 By:/s/ GREGORY T. MUTZ
Gregory T. Mutz
Chairman and Director
Principal Executive Officer
Date: November 13, 1996 By:/s/ JOHN E. ALLEN
John E. Allen
President and Director
Date: November 13, 1996 By:/s/ CHARLES C. KRAFT
Charles C. Kraft, Treasurer
Principal Financial Officer and
Principal Accounting Officer
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 12,077,323
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,080,198
<PP&E> 6,511,043
<DEPRECIATION> 1,864,344
<TOTAL-ASSETS> 16,739,602
<CURRENT-LIABILITIES> 201,124
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 16,538,478
<TOTAL-LIABILITY-AND-EQUITY> 16,739,002
<SALES> 6,575,000
<TOTAL-REVENUES> 7,739,367
<CGS> 6,355,534
<TOTAL-COSTS> 7,442,768
<OTHER-EXPENSES> 687,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 296,599
<INCOME-TAX> 0
<INCOME-CONTINUING> 296,599
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 296,599
<EPS-PRIMARY> 11.74
<EPS-DILUTED> 11.74
</TABLE>
