SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-14350
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BALCOR REALTY INVESTORS 85-SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Illinois 36-3333344
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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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
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BALCOR REALTY INVESTORS 85 - SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(AN ILLINOIS LIMITED PARTNERSHIP)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
ASSETS
1996 1995
------------ ------------
Cash and cash equivalents $ 9,176,263 $ 2,310,596
Escrow deposits 1,562,257 1,400,287
Accounts and accrued interest receivable 181,752 89,717
Prepaid expenses 361,704 361,640
Deferred expenses, net of accumulated
amortization of $433,036 in 1996 and
$362,375 in 1995 1,157,048 1,227,709
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12,439,024 5,389,949
------------ ------------
Investment in real estate:
Land 5,779,107 6,536,422
Buildings and improvements 47,193,909 56,884,371
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52,973,016 63,420,793
Less accumulated depreciation 19,556,913 22,411,326
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Investment in real estate, net of
accumulated depreciation 33,416,103 41,009,467
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$45,855,127 $46,399,416
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable $ 82,198 $ 96,080
Due to affiliates 37,402 19,310
Accrued real estate taxes 231,993
Security deposits 317,885 334,467
Loss in excess of investment in joint
venture with an affiliate 1,266,475 1,139,760
Mortgage notes payable 41,410,614 50,428,070
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Total liabilities 43,346,567 52,017,687
Affiliates' participation in joint ventures (271,943) (299,981)
------------ ------------
43,074,624 51,717,706
Limited Partners' capital (deficit) (59,092
Interests issued and outstanding) 3,265,176 (4,743,765)
General Partner's deficit (484,673) (574,525)
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Total Partners' capital (deficit) 2,780,503 (5,318,290)
------------ ------------
$45,855,127 $46,399,416
============ ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85 - SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Income:
Rental and service $ 5,827,968 $ 5,876,545
Interest on short-term investments 102,060 75,404
Participation in income (loss) of
joint venture with an affiliate 25,267 (15,735)
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Total income 5,955,295 5,936,214
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Expenses:
Interest on mortgage notes payable 2,046,311 2,133,630
Depreciation 851,550 873,693
Amortization of deferred expenses 70,661 70,662
Property operating 1,834,696 1,543,370
Real estate taxes 587,059 480,757
Property management fees 288,788 291,837
Administrative 234,848 216,166
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Total expenses 5,913,913 5,610,115
------------ ------------
Income before gain on sale, affiliates'
participation in joint ventures and
extraordinary items 41,382 326,099
Gain on sale of property 9,073,561
Affiliates' participation in income from
joint ventures before extraordinary items (4,770) (48,213)
------------ ------------
Income before extraordinary items 9,110,173 277,886
Extraordinary items:
Debt extinguishment expense (125,000)
Gain on forgiveness of debt 69,409
Affiliate's participation in gain on
forgiveness of debt (20,823)
Participation in debt extinguishment expense
of joint venture with an affiliate (58,521)
------------ ------------
Total extraordinary items (125,000) (9,935)
------------ ------------
Net income $ 8,985,173 $ 267,951
============ ============
Net income before extraordinary items
allocated to General Partner $ 91,102 $ 2,779
============ ============
Net income before extraordinary items
allocated to Limited Partners $ 9,019,071 $ 275,107
============ ============
Net income before extraordinary items per
Limited Partnership Interest (59,092 issued
and outstanding) $ 152.63 $ 4.66
============ ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85 - SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Extraordinary items allocated to
General Partner $ (1,250) $ (99)
============ ============
Extraordinary items allocated to
Limited Partners $ (123,750) $ (9,836)
============ ============
Extraordinary items per Limited Partnership
Interest (59,092 issued and outstanding) $ (2.10) $ (0.17)
============ ============
Net income allocated to General Partner $ 89,852 $ 2,680
============ ============
Net income allocated to Limited Partners $ 8,895,321 $ 265,271
============ ============
Net income per Limited Partnership
Interest (59,092 issued and outstanding) $ 150.53 $ 4.49
============ ============
Distributions to Limited Partners $ 886,380 NONE
============ ============
Distributions per Limited Partnership
Interest (59,092 issued and outstanding) $ 15.00 NONE
============ ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85 - SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1996 and 1995
(Unaudited)
1996 1995
------------ ------------
Income:
Rental and service $ 2,827,394 $ 2,966,095
Interest on short-term investments 68,809 32,925
Participation in income (loss) of joint
venture with an affiliate 21,526 (5,140)
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Total income 2,917,729 2,993,880
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Expenses:
Interest on mortgage notes payable 987,123 1,065,382
Depreciation 414,703 436,846
Amortization of deferred expenses 35,330 35,332
Property operating 884,431 813,649
Real estate taxes 318,909 240,379
Property management fees 140,541 147,438
Administrative 139,886 123,042
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Total expenses 2,920,923 2,862,068
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(Loss) income before gain on sale, affiliates'
participation in joint ventures and
extraordinary items (3,194) 131,812
Gain on sale of property 9,073,561
Affiliates' participation in income from
joint ventures before extraordinary items (12,953) (15,457)
------------ ------------
Income before extraordinary items 9,057,414 116,355
Extraordinary items:
Debt extinguishment expense (125,000)
Participation in debt extinguishment expense
of joint venture with an affiliate (58,521)
------------ ------------
Total extraordinary items (125,000) (58,521)
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Net income $ 8,932,414 $ 57,834
============ ============
Net income before extraordinary items
allocated to General Partner $ 90,574 $ 1,164
============ ============
Net income before extraordinary items
allocated to Limited Partners $ 8,966,840 $ 115,191
============ ============
Net income before extraordinary items per
Limited Partnership Interest (59,092 issued
and outstanding) $ 151.75 $ 1.95
============ ============
Extraordinary items allocated to
General Partner $ (1,250) $ (585)
============ ============
Extraordinary items allocated to
Limited Partners $ (123,750) $ (57,936)
============ ============
Extraordinary items per Limited Partnership
Interest (59,092 issued and outstanding) $ (2.10) $ (0.98)
============ ============
Net income allocated to General Partner $ 89,324 $ 579
============ ============
Net income allocated to Limited Partners $ 8,843,090 $ 57,255
============ ============
Net income per Limited Partnership
Interest (59,092 issued and outstanding) $ 149.65 $ 0.97
============ ============
Distribution to Limited Partners $ 443,190 NONE
============ ============
Distribution per Limited Partnership
Interests (59,092 issued and outstanding) $ 7.50 NONE
============ ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85 - SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(AN ILLINOIS LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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Operating activities:
Net income $ 8,985,173 $ 267,951
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of property (9,073,561)
Gain on forgiveness of debt (69,409)
Affiliate's participation in gain
on forgiveness of debt 20,823
Participation in debt extinguishment
expense 58,521
Affiliates' participation in income
from joint ventures 4,770 48,213
Participation in income (loss) of joint
venture with an affiliate (25,267) 15,735
Depreciation of properties 851,550 873,693
Amortization of deferred expenses 70,661 70,662
Net change in:
Escrow deposits (161,970) (278,710)
Accounts and accrued interest
receivable (92,035) (7,756)
Prepaid expenses (64) (57,425)
Accounts payable (13,882) (25,321)
Due to affiliates 18,092 (57,336)
Accrued real estate taxes 231,993 199,245
Security deposits (16,582) 29,711
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Net cash provided by operating activities 778,878 1,088,597
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Investing activities:
Proceeds from sale of property 15,950,000
Payment of selling costs (134,625)
Contribution to joint venture with an
affiliate (342,760)
Distributions from joint venture with
an affiliate 151,982 328,378
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Net cash provided by or used in investing
activities 15,967,357 (14,382)
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Financing activities:
Distributions to Limited Partners (886,380)
Principal payments on mortgage
notes payable (247,146) (248,223)
Repayment of mortgage note payable (8,770,310)
Distributions to joint venture
partners - affiliates (31,443) (107,793)
Contributions from joint venture
partners - affiliates 54,711
------------ ------------
Net cash used in financing activities (9,880,568) (356,016)
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Net change in cash and cash equivalents 6,865,667 718,199
Cash and cash equivalents at beginning
of period 2,310,596 1,965,737
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Cash and cash equivalents at end of period $ 9,176,263 $ 2,683,936
============ ============
The accompanying notes are an integral part of the financial statements.
BALCOR REALTY INVESTORS 85-SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the six months and quarter
ended June 30, 1996, and all such adjustments are of a normal and recurring
nature.
2. Interest Expense:
During the six months ended June 30, 1996 and 1995, the Partnership incurred
interest expense on mortgage notes payable of $2,046,311 and $2,133,630 and
paid interest expense of $2,046,311 and $2,133,173, respectively.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1996 are:
Paid
-----------------------
Six Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $55,871 $36,650 $37,402
4. Property Sale:
In June 1996, the Partnership sold the Country Ridge Apartments in an all cash
sale for $15,950,000. From the proceeds of the sale, the Partnership paid
$8,770,310 to the third party mortgage holder in full satisfaction of the first
mortgage loan, and paid $134,625 in selling costs. The basis of the property
was $6,741,814, which is net of accumulated depreciation of $3,705,963. For
financial statement purposes, the Partnership recognized a gain of $9,073,561
from the sale of this property.
5. Extraordinary Item:
In connection with the sale of Country Ridge Apartments in June 1996, the
Partnership recognized an unamortized deferred expense of $125,000 which was
recognized as an extraordinary item and classified as debt extinguishment
expense.
6. Subsequent Event:
In July 1996, the Partnership made a distribution of $7,238,770 ($122.50 per
Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of available Cash Flow of $7.50 per Interest and
a special distribution of Net Cash Proceeds of $115.00 per Interest from the
June 1996 sale of the Country Ridge apartment complex.
BALCOR REALTY INVESTORS 85-SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Realty Investors 85-Series III A Real Estate Limited Partnership (the
"Partnership") was formed in 1984 to invest in and operate income-producing
real property. The Partnership raised $59,092,000 from the sale of Limited
Partnership Interests and utilized these proceeds to acquire eight real
properties and a minority joint venture interest in one additional real
property. Prior to 1996, title to three of these properties were relinquished
through foreclosure. During 1996, the Partnership sold one additional property.
The Partnership continues to operate its four remaining properties and holds a
minority interest in one joint venture.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.
Summary of Operations
- ---------------------
The Partnership sold the Country Ridge Apartments during June 1996. As a result
of the gain recognized on this sale, the Partnership generated substantially
higher income during the six months and quarter ended June 30, 1996, as
compared to the same periods in 1995. Further discussion of the Partnership's
operations are summarized below.
1996 Compared to 1995
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Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the six months and quarters ended June 30, 1996 and 1995.
Due to higher average cash balances as a result of the June 1996 sale of
Country Ridge Apartments, interest income on short-term investments increased
during 1996 as compared to 1995.
The Partnership holds a minority interest in the Lakeville Resort Apartments.
The Partnership recognized income from participation in joint venture with an
affiliate during 1996 as compared to a loss in 1995 due to a decrease in the
amortization of deferred expenses and interest expense related to the
property's mortgage loan as a result of the June 1995 loan refinancing. In
connection with this transaction, the Partnership recognized an extraordinary
debt extinguishment expense of $58,521 in 1995.
Property operating expense increased during 1996 as compared to 1995 due to
higher roof repair and utility expenses at North Hill Apartments and carpet
replacement expenditures at the Country Ridge and Shadowridge apartment
complexes.
Real estate tax expense increased during 1996 as compared to 1995 as a result
of increases in the assessed values at the North Hill and Country Ridge
apartment complexes.
In June 1996, the Partnership sold the Country Ridge Apartments and recognized
a gain on sale of $9,073,561. In addition, the Partnership recognized debt
extinguishment expense of $125,000.
The Shadowridge and North Hill apartment complexes are both owned by joint
ventures consisting of the Partnership and an affiliate. Increases in roof
repair, utility and real estate tax expenses at North Hill Apartments and
increases in carpet replacement expenditures at Shadowridge Apartments resulted
in a reduction of affiliates' participation in income from joint ventures
during 1996 as compared to 1995.
In connection with a settlement reached with the seller of the Shadowridge
Apartments, the Partnership recognized an extraordinary gain on forgiveness of
debt in 1995 of $69,409, of which $20,823 represents the affiliate's share.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $6,865,000 as
of June 30, 1996, when compared to December 31, 1995, primarily as a result of
the sale of Country Ridge Apartments during June 1996. Cash flow of
approximately $779,000 was provided by operating activities during 1996
consisting of cash flow from the operations of the Partnership's properties and
interest income on short-term investments, which were partially offset by the
payment of administrative expenses. Cash provided by investing activities of
approximately $15,967,000 consisted of proceeds from the sale of Country Ridge
Apartments less selling costs and distributions received from the joint venture
with an affiliate. Cash used in financing activities of approximately
$9,881,000 consisted of distributions to the Limited Partners, the repayment of
the mortgage note payable on Country Ridge Apartments and principal payments on
mortgage notes payable, which were partially offset by net contributions
received from the joint venture partners. Additionally, the Partnership made a
special distribution to the Limited Partners in July 1996 from proceeds
received from the June 1996 sale of Country Ridge Apartments.
The Partnership defines cash flow generated from its properties as an amount
equal to the properties' revenue receipts less property related expenditures,
which include debt service payments. During 1996 and 1995, all of the
Partnership's remaining properties, including Lakeville Resort Apartments, in
which the Partnership holds a minority joint venture interest, generated
positive cash flow. As of June 30, 1996, the occupancy rates of the
Partnership's properties ranged from 96% to 98%.
While the cash flow of certain of the Partnership's properties has improved,
the General Partner continues to pursue a number of actions aimed at improving
the cash flow of the Partnership's properties including improving operating
performance and seeking rent increases where market conditions allow.
The General Partner believes that the market for multifamily housing properties
is favorable to sellers of these properties. During June 1996, the Partnership
sold the Country Ridge apartment complex. Currently, the Partnership has
entered into contracts to sell the Park Place - Phase II, Shadowridge and North
Hill apartment complexes for sales prices of $12,125,000, $12,600,000 and
$24,000,000, respectively. In addition, the General Partner has entered into a
contract to sell the Lakeville Resort Apartments, in which the Partnership
holds a minority joint venture interest, for a sale price of $27,200,000. The
Partnership is also actively marketing the Howell Station Apartments, which is
the remaining property in its portfolio. If current market conditions remain
favorable and the General Partner can obtain an appropriate sale price, the
Partnership's liquidation strategy will be accelerated.
In June 1996, the Partnership sold the Country Ridge apartment complex in an
all cash sale for $15,950,000. From the proceeds of the sale, the Partnership
paid $8,770,310 to the third party mortgage holder in full satisfaction of the
first mortgage loan, and paid $134,625 in selling costs. Pursuant to the terms
of the sale, $500,000 of the proceeds will be retained by the Partnership until
October 1996. The remainder of the proceeds were distributed to the Limited
Partners in July 1996. See Note 4 of Notes to Financial Statements for
additional information.
Each of the Partnership's properties is owned through the use of third party
mortgage loan financing and, therefore, the Partnership is subject to the
financial obligations required by such loans. The Partnership does not own any
properties with third-party financing which matures prior to 1998.
In July 1996, the Partnership made a distribution of $7,238,770 ($122.50 per
Interest) to the holders of Limited Partnership Interests for the second
quarter of 1996. The regular quarterly distribution of $443,190 ($7.50 per
Interest) remained unchanged from the amount distributed for the first quarter
of 1996. In addition, Net Cash Proceeds of $6,795,580 ($115.00 per Interest)
were distributed to the Limited Partners in connection with the June 1996 sale
of Country Ridge Apartments. To date, including the July 1996 distribution,
investors have received cumulative distributions of Net Cash Receipts of $30.00
per $1,000 Interest, and Net Cash Proceeds of $115.00 per $1,000 Interest. The
General Partner expects to continue quarterly distributions to Limited Partners
based on the current performance of the Partnership's properties. However, the
level of future distributions will depend on cash flow from the Partnership's
remaining properties and proceeds from future property sales, as to all of
which there can be no assurances. In light of results to date and current
market conditions, the General Partner does not anticipate that investors will
recover all of their original investment.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
BALCOR REALTY INVESTORS 85-SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
- --------------------------
As previously reported, on July 5, 1996, the joint venture between the
Partnership and an affiliate which owns Shadowridge Apartments, Las Vegas,
Nevada, contracted to sell the property for a sale price of $12,750,000 to an
unaffiliated party, Sherman Oaks Limited Partnership. The joint venture and the
purchaser have agreed to reduce the sale price to $12,600,000.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
to the Registrant's Registration Statement on Form S-11 dated August 2, 1985
(Registration No. 2-97249), and Form of Confirmation regarding Interests in the
Partnership set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q
for the quarter ended September 30, 1992 (Commission File No. 0-14350) are
incorporated herein by reference.
(10) Material Contracts:
(a)(i) Agreement of Sale and attachment thereto relating to the sale of Country
Ridge Apartments previously filed as Exhibit (2)(a) to the Registrant's Current
Report on Form 8-K dated April 23, 1996, is incorporated herein by reference.
(a)(ii) Master Amendment and Agreement dated May 22, 1996 relating to the sales
of Country Ridge Apartments, Lakeville Resort Apartments, and Park Place
Apartments, Phase II previously filed as Exhibit (99)(a) to the Registrant's
Current Report on Form 8-K dated July 5, 1996, is incorporated herein by
reference.
(a)(iii) Master Amendment and Agreement #2 dated May 22, 1996 relating to the
sales of Country Ridge Apartments, Lakeville Resort Apartments, and Park Place
Apartments, Phase II previously filed as Exhibit (99)(b) to the Registrant's
Current Report on Form 8-K dated July 5, 1996, is incorporated herein by
reference.
(b)(i) Agreement of Sale and attachment thereto relating to the sale of
Lakeville Resort Apartments previously filed as Exhibit (2)(b) to the
Registrant's Current Report on Form 8-K dated April 23, 1996, is incorporated
herein by reference.
(b)(ii) Letter Agreements dated May 22, 1996 and July 8, 1996 relating to the
sale of Lakeville Resort Apartments previously filed as Exhibit (99)(c) to the
Registrant's Current Report on Form 8-K dated July 5, 1996, is incorporated
herein by reference.
(c)(i) Agreement of Sale and attachment thereto relating to the sale of Park
Place Apartments - Phase II previously filed as Exhibit (2)(c) to the
Registrant's Current Report on Form 8-K dated April 23, 1996, is incorporated
herein by reference.
(c)(ii) Letter Agreements dated May 22, 1996 and July 8, 1996 relating to the
sale of Park Place Apartments, Phase II previously filed as Exhibit (99)(d) to
the Registrant's Current Report on Form 8-K dated July 5, 1996, is incorporated
herein by reference.
(d) Agreement of Sale and attachment thereto relating to the sale of
Shadowridge Apartments previously filed as Exhibit (2)(a) to the Registrant's
Current Report on Form 8-K dated July 5, 1996, is incorporated herein by
reference.
(e) Agreement of Sale and attachments thereto relating to the sale of North
Hill Apartments previously filed as Exhibit (2)(b) to the Registrant's Current
Report on Form 8-K dated July 5, 1996, is incorporated herein by reference.
(27) Financial Data schedule of the Registrant for the six months ended June
30, 1996 is attached hereto.
(99) First Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Shadowridge Apartments is attached hereto.
(b) Reports on Form 8-K:
(i) A Current Report on Form 8-K dated April 23, 1996 was filed reporting the
contracts to sell the Country Ridge Apartments in Farmington Hills, Michigan,
the Park Place Apartments - Phase II in Plymouth, Minnesota and the Lakeville
Resort Apartments in Petaluma, California.
(ii) A Current Report on Form 8-K dated July 5, 1996 was filed reporting the
contracts to sell the Shadowridge Apartments in Las Vegas, Nevada and the North
Hill Apartments in DeKalb County, Georgia, the closing of the sale of the
Country Ridge Apartments in Farmington Hills, Michigan and the extensions of
the closing dates of the sales of the Park Place Apartments - Phase II in
Plymouth, Minnesota and the Lakeville Resort Apartments in Petaluma,
California.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BALCOR REALTY INVESTORS 85-SERIES III
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Thomas E. Meador
---------------------------------
Thomas E. Meador
President and Chief Executive Officer (Principal
Executive Officer) of Balcor Partners-XVIII, the
General Partner
By: /s/Brian D. Parker
---------------------------------
Brian D. Parker
Senior Vice President, and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Partners-XVIII, the General
Partner
Date: August 13, 1996
-----------------------