SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 1995 Commission file #0-8716
JMB INCOME PROPERTIES, LTD. - V
(Exact name of registrant as specified in its charter)
Illinois 36-2897158
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
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
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . 14
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 19
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1). . . . . . . . . . . . . . . . . . . $ 10,419,847 3,722,315
Short-term investments (note 1) . . . . . . . . . . . . . . . . . . . . -- 4,780,996
Interest, rents and other receivables . . . . . . . . . . . . . . . . . 616,895 861,340
Prepaid expenses and other current assets . . . . . . . . . . . . . . . 60,668 60,918
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . 11,097,410 9,425,569
------------ ------------
Investment properties, at cost:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,751,617 2,751,617
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . 29,752,645 29,738,353
------------ ------------
32,504,262 32,489,970
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . 17,651,329 16,993,790
------------ ------------
Total investment properties, net of accumulated depreciation. . . 14,852,933 15,496,180
------------ ------------
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,792 127,153
------------ ------------
$ 26,038,135 25,048,902
============ ============
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------
Current liabilities:
Bank overdraft. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 703,449
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . 725,327 678,292
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,428 134,613
Due to affiliates (note 5). . . . . . . . . . . . . . . . . . . . . . . 1,219,866 1,141,052
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 202,392 204,215
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . 483,137 --
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . 20,120 41,352
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 2,692,270 2,902,973
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . 19,766 13,016
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . . 25,877,306 26,426,311
------------ ------------
Commitments and contingencies (notes 2, 3, 4 and 6)
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 28,589,342 29,342,300
Venture partner's subordinated equity in venture. . . . . . . . . . . . . 10,499,044 9,607,142
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . . 1,383,949 1,358,440
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (3,089,066) (3,089,066)
------------ ------------
(1,704,117) (1,729,626)
------------ ------------
Limited partners (38,505 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . . 34,926,505 34,926,505
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . . 25,826,821 25,002,041
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (72,099,460) (72,099,460)
------------ ------------
(11,346,134) (12,170,914)
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . . . (13,050,251) (13,900,540)
------------ ------------
$ 26,038,135 25,048,902
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $ 2,672,354 2,685,198 7,855,169 8,007,060
Interest income . . . . . . . . . . . . . . . . 133,355 205,583 370,251 488,881
----------- ---------- ----------- -----------
2,805,709 2,890,781 8,225,420 8,495,941
----------- ---------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . 608,465 710,998 1,839,720 2,145,301
Depreciation. . . . . . . . . . . . . . . . . . 225,846 236,471 657,539 682,069
Property operating expenses . . . . . . . . . . 1,321,849 1,247,873 3,762,381 3,665,290
Professional services . . . . . . . . . . . . . -- 168 80,080 82,539
Amortization of deferred expenses . . . . . . . 13,120 15,107 39,361 45,323
General and administrative. . . . . . . . . . . (698) 9,168 25,397 49,933
----------- ---------- ----------- -----------
2,168,582 2,219,785 6,404,478 6,670,455
----------- ---------- ----------- -----------
Operating earnings . . . . . . . . . . . . 637,127 670,996 1,820,942 1,825,486
Partnership's share of operations of
unconsolidated venture. . . . . . . . . . . . . -- -- -- (68,090)
Venture partner's share of venture's
operations. . . . . . . . . . . . . . . . . . . (319,855) (335,004) (970,653) (970,547)
----------- ---------- ----------- -----------
Net operating earnings . . . . . . . . . . 317,272 335,992 850,289 786,849
Gain on sale or disposition of
investment properties . . . . . . . . . . . . . -- 9,851 -- 447,582
----------- ---------- ----------- -----------
Net earnings . . . . . . . . . . . . . . . $ 317,272 345,843 850,289 1,234,431
=========== ========== =========== ===========
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- -----------
Net earnings per limited partnership
interest:
Net operating earnings . . . . . . . $ 7.99 8.46 21.42 19.82
Gain on sale or disposition of
investment properties. . . . . . . -- .25 -- 11.51
----------- ---------- ----------- -----------
$ 7.99 8.71 21.42 31.33
=========== ========== =========== ===========
Cash distributions per limited
partnership interest . . . . . . . . . . $ -- -- -- --
=========== ========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 850,289 1,234,431
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 657,539 682,069
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . 39,361 45,323
Amortization of discount on mortgage notes receivable . . . . . . . . . . -- (7,553)
Partnership's share of operations of unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 68,090
Venture partner's share of venture's operations . . . . . . . . . . . . . 970,653 970,547
Gain on sale or disposition of investment property. . . . . . . . . . . . -- (447,582)
Changes in:
Interest, rents and other receivables . . . . . . . . . . . . . . . . . . 244,445 (83,438)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 (33,906)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (93,185) (101,882)
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,814 85,542
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,823) (4,073)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . 483,137 476,419
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . (21,232) 6,182
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . 6,750 (1,000)
------------ -----------
Net cash provided by operating activities . . . . . . . . . . . . . 3,214,998 2,889,169
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments. . . . . . . 4,780,996 (1,769,279)
Additions to investment properties. . . . . . . . . . . . . . . . . . . . . (14,292) (593,494)
Principal payments on mortgage notes receivable . . . . . . . . . . . . . . -- 74,533
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . 4,766,704 (2,288,240)
------------ -----------
Cash flows from financing activities:
Bank overdraft. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (703,449) --
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . . (501,970) (542,125)
Venture partner's contributions to venture. . . . . . . . . . . . . . . . . 622,696 622,696
Distributions to venture partners . . . . . . . . . . . . . . . . . . . . . (701,447) (701,447)
------------ -----------
Net cash used in financing activities . . . . . . . . . . . . . . . (1,284,170) (620,876)
------------ -----------
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1995 1994
------------ ------------
Net increase (decrease) in cash
and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . 6,697,532 (19,947)
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . . . . . . . . . . . . . 3,722,315 555,369
------------ -----------
Cash and cash equivalents,
end of period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,419,847 535,422
============ ===========
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 1,841,543 2,149,374
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1994 which are
included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its venture, Wachovia Building Associates
("Wachovia") (note 3(b)). The effect of all significant transactions
between the Partnership and this venture has been eliminated. The equity
method of accounting had been applied in the accompanying consolidated
financial statements with respect to the Partnership's former interest in
Fishkill Associates ("Fishkill") (note 3(c)). Accordingly, the
accompanying consolidated financial statements do not include the accounts
of Fishkill.
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the venture as described above.
Such adjustments are not recorded on the records of the Partnership. The
net effect of these items is summarized as follows for the nine months
ended September 30:
1995 1994
------------------------ ----------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
----------- --------- ---------- ---------
Net earnings. . . . $850,289 785,929 1,234,431 1,405,257
Net earnings
per limited
partnership
interest . . . . . $ 21.42 19.80 31.33 35.58
======== ======== ========= =========
The net earnings per limited partnership interest is based upon the
number of limited partnership interests outstanding at the end of each
period (38,505). Deficit capital accounts will result, through the
duration of the Partnership, in net gain for financial reporting and income
tax purposes.
Certain amounts in the 1994 consolidated financial statements have
been reclassed to conform to the 1995 presentation.
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Partnership distributions from unconsolidated ventures are considered
cash flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. Government obligations at cost, which approximates market. For the
purposes of these statements, the Partnership's policy is to consider all
such amounts held with original maturities of three months or less
($9,909,651 and $3,722,315 at September 30, 1995 and December 31, 1994,
respectively) as cash equivalents with any remaining amounts (generally
with maturities of one year or less) reflected as short-term investments
being held to maturity.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership acquired, either directly or through joint ventures,
two office building complexes and nine shopping centers. Nine properties
have been sold or disposed of by the Partnership. The remaining two
properties owned at September 30, 1995 were operating. The cost of the
investment properties represents the total cost to the Partnership or its
ventures plus miscellaneous acquisition costs.
(b) Bristol
During the fourth quarter of 1989, the Partnership consummated a lease
which provides for the addition of an approximately 90,000 square foot
anchor store at the Bristol Mall shopping center located in Bristol,
Virginia. Pursuant to the terms of the lease, the Partnership or its
assignee is required to build the anchor store and complete a mall
enhancement program. Even though the Partnership has reached an agreement
in principle with the anchor store to fund the majority of the remaining
costs to build the anchor store, it appears likely that Partnership funds
will be required to fund the remainder of the cost of the anchor store and
pay for the enhancement program (currently estimated to total approximately
$4,000,000). The decision to commit Partnership funds to these items will
depend upon the Partnership's ability to reach definitive agreements with
the anchor store, which would include an amendment of its lease.
Construction of the anchor store would also require certain agreements with
the existing mortgage lender. There is no assurance that the Partnership
will obtain the necessary binding agreements with the anchor store and the
mortgage lender, and in the event they are not obtained, the Partnership
may decide not to build the anchor store and complete the mall enhancement.
If the Partnership does not commit the additional funds necessary for the
mall enhancement, the anchor store has the right to terminate the existing
lease agreement and the Partnership would be required to absorb the amount
of the initial development costs incurred for this investment. To explore
the Partnership's options respecting this property, the Partnership is also
currently marketing the property for sale. However, there can be no
assurance that a sale of the property can be consummated.
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(3) VENTURE AGREEMENTS
(a) General
The Partnership at September 30, 1995 is a party to one operating
joint venture agreement. Under certain circumstances, either pursuant to
the venture agreement or due to the Partnership's obligations as general
partner, the Partnership may be required to make additional cash
contributions to the venture.
There are certain risks associated with the Partnership's investment
made through a joint venture including the possibility that the
Partnership's joint venture partner in an investment might become unable or
unwilling to fulfill its financial or other obligations, or that such joint
venture partner may have economic or business interests or goals that are
inconsistent with those of the Partnership.
(b) Wachovia
In July 1986, the Partnership contributed its 100% ownership interest
in the Wachovia Bank Building and Phillips Building to Wachovia, a newly
formed joint venture partnership. The Partnership's venture partner has
agreed to contribute $10,700,000, before applicable interest, to the
venture pursuant to a payment schedule from the closing date through August
1, 1996. As of September 30, 1995, a total of $10,752,724, including
interest, has been contributed.
The venture agreement provides for a preferred return of annual cash
flow to the Partnership and the venture partner with any remaining annual
cash flow allocated, in general, 65% to the Partnership and 35% to the
venture partner through December 1995. Subsequent to December 1995, annual
cash flow is distributable 65% and 35% to the Partnership and venture
partner, respectively. For Federal income tax purposes and financial
reporting purposes, profits and losses are allocated 65% to the Partnership
and 35% to the venture partner.
The property is managed for a management fee calculated at 3-1/2% of
the gross receipts of the property and a leasing fee of $50,000 per year.
Payment of 1-1/2% of the 3-1/2% management fee is deferred (as required in
the agreement with the venture partner) until the sale of the property and
is subordinated to certain distributions of net sale or refinancing
proceeds (note 5).
(c) Fishkill
The Partnership owned a 10% interest in Fishkill, which owned an 80%
interest in Dutchess Mall Associates ("Dutchess"), the former owner of
Dutchess Mall located in Fishkill, New York. Dutchess had been actively
negotiating with the first mortgage lender to seek a modification of the
terms of the current mortgage loan to provide the funds necessary for a
much needed renovation of the center. During 1993, Dutchess received a
notice of default and acceleration from the first mortgage lender. In this
regard, Dutchess and the lender reached a six-month standstill agreement
(which expired on July 31, 1993) whereby Dutchess proceeded with an
aggressive leasing and remerchandising program in order to re-position the
mall to better compete within its market. Pursuant to the terms of the
agreement, Dutchess had remitted the monthly net cash flow (as defined) to
the lender as debt service. Upon expiration of the standstill agreement,
interest on the mortgage was accrued at a default rate of 18% as opposed to
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
the contract rate of 13.75% in 1993. Efforts to lease the center did not
meet with lender approval and on May 13, 1994 the property title was
transferred to the lender. However, pursuant to the agreement to transfer
title, the management agreement with the affiliate of the General Partners
of the Partnership was assigned to the lender and therefore such affiliate
continues to manage the property on the lender's behalf.
As a result of the transfer of title to the lender as discussed above,
Dutchess no longer has an ownership interest in the property and recognized
a gain for financial reporting purposes of $3,858,247 (of which $414,823 is
allocated to the Partnership) and recognized a gain of $3,558,767 (of which
approximately $391,096 is allocated to the Partnership) for Federal income
tax purposes during 1994 with no corresponding distributable proceeds.
Accordingly, Dutchess and Fishkill terminated their affairs in 1994.
(4) SALE OF INVESTMENT PROPERTY - TOWNE SOUTH PLAZA
In 1983, the Partnership sold the Towne South Plaza. The sale price
was $8,213,500, consisting of $2,833,500 in cash, a promissory note in the
amount of $600,000 and a $4,780,000 purchase price wrap-around promissory
note secured by the property. For financial reporting purposes, the sale
is being accounted for by the installment method. Gain recognized in 1993
and 1992 aggregated $39,297 and $35,965, respectively.
On October 17, 1994, the wrap-around mortgage note receivable secured
by the Towne South Plaza shopping center was paid in full by the borrower.
The Partnership received $4,064,393, consisting of the unpaid principal,
accrued interest and a $77,469 prepayment penalty based upon the
outstanding mortgage note receivable at the time of the retirement.
Concurrently, the Partnership paid in full the underlying mortgage
indebtedness of the property. The Partnership remitted $3,829,451,
consisting of the principal, accrued interest and a $37,764 prepayment
penalty based upon the outstanding loan balance at the time of the
retirement. The remaining balance of the gain on sale recognized in 1994
for financial reporting purposes was $1,569,911.
(5) TRANSACTIONS WITH AFFILIATES
Certain of the Partnership's properties are managed by affiliates of
the General Partners. In December 1994, one of the affiliated property
managers sold substantially all of its assets and assigned its interest in
its management contracts to an unaffiliated third party.
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of September
30, 1995 and for the nine months ended September 30, 1995 and 1994 are as
follows:
Unpaid at
September 30,
1995 1994 1995
-------- ------- -------------
Property management
and leasing fees . . . . . . . $181,288 345,615 1,219,195
Insurance commissions . . . . . 22,173 22,595 --
Reimbursement (at cost)
for out-of-pocket
expenses . . . . . . . . . . . 52,970 17,052 671
-------- ------- ---------
$256,431 385,262 1,219,866
======== ======= =========
All amounts deferred or currently payable to the General Partners and
their affiliates do not bear interest. The General Partners and their
affiliates have deferred receipt of approximately $1,172,000 as of
September 30, 1995 of property management and leasing fees (approximately
$30 per Interest) pursuant to the Wachovia agreement with its venture
partner. Such amounts are deferred until the sale of the property and are
subordinated to certain distributions of net sale and refinancing proceeds.
The Managing General Partner of the Partnership has determined to use
independent third parties to perform certain administrative services
beginning in the fourth quarter of 1995. Use of such third parties is not
expected to have a material effect on the operations of the Partnership.
(6) ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
1995 and for the three and nine months ended September 30, 1995 and 1994.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are Notes to Consolidated Financial
Statements contained in this report.
At September 30, 1995, the Partnership and its consolidated venture
had cash and cash equivalents of approximately $10,420,000. Such funds are
available for distributions to partners, for working capital requirements
and operating deficits (including capital improvements) at Bristol Mall.
In addition, the Partnership has funded, from its working capital, all of
the initial costs incurred to date related to the planned Bristol Mall
expansion (as described below), however, it is probable that additional
Partnership funds may be required. Accordingly, the Partnership suspended
regular quarterly distributions effective with the fourth quarter 1991.
The Partnership and its consolidated venture have currently budgeted in
1995 approximately $573,000 for tenant improvements and other capital
expenditures (excluding any amounts for the enhancement program described
below). Actual amounts expended in 1995 may vary depending on a number of
factors including actual leasing activity, results of property operations,
the timing of the Bristol expansion, liquidity considerations and other
market conditions over the course of the year. The source of capital for
the aforementioned items and for both short-term and long-term future
liquidity and distributions is expected to be from the cash and short-term
investments noted above, through net cash generated by the Partnership's
investment properties and through the sale of such investments. However,
due to the re-leasing issues and the 1996 maturity of the mortgage loan the
Wachovia Bank Building and Phillips Building is not expected to be a source
of long-term future liquidity. In such regard, reference is made to the
Partnership's property specific discussions below. The Partnership's and
its Venture's mortgage obligations are all non-recourse. Therefore, the
Partnership and its Ventures are not obligated to pay mortgage indebtedness
unless the related property produces sufficient net cash flow from
operations or sale.
The General Partners and their affiliates have deferred payment of
certain property management and leasing fees of approximately $1,172,000
(approximately $30 per Interest) as of September 30, 1995 pursuant to the
Wachovia agreement with its venture partner (as more fully discussed in
Notes 3(b) and 5).
During the fourth quarter of 1989, the Partnership consummated a lease
which provides for the addition of an approximately 90,000 square foot
anchor store at the Bristol Mall shopping center located in Bristol,
Virginia. Pursuant to the terms of the lease, the Partnership or its
assignee is required to build the anchor store and complete a mall
enhancement program. Even though the Partnership has reached an agreement
in principle with the anchor store to fund the majority of the remaining
costs to build the anchor store, it appears likely that Partnership funds
will be required to fund the remainder of the cost of the anchor store and
pay for the enhancement program (currently estimated to total approximately
$4,000,000). The decision to commit Partnership funds to these items will
depend upon the Partnership's ability to reach definitive agreements with
the anchor store, which would include an amendment of its lease.
Construction of the anchor store would also require certain agreements with
the existing mortgage lender. There is no assurance that the Partnership
will obtain the necessary binding agreements with the anchor store and the
mortgage lender, and in the event they are not obtained, the Partnership
may decide not to build the anchor store and complete the mall enhancement.
If the Partnership does not commit the additional funds necessary for the
mall enhancement, the anchor store has the right to terminate the existing
lease agreement and the Partnership would be required to absorb the amount
of the initial development costs incurred for this investment. To explore
the Partnership's options respecting this property, the Partnership is also
currently marketing the property for sale. However, there can be no
assurance that a sale of the property can be consummated.
The Wachovia Bank Building and Phillips Building in Winston-Salem,
North Carolina, containing approximately 692,000 square feet, has an
occupancy of 100% and is producing cash flow for the Partnership and the
venture partner. Wachovia Bank occupies approximately 369,000 square feet
in the Wachovia Bank Building and approximately 269,000 square feet in the
Phillips Building. In June 1992, Wachovia Bank announced its intent to
relocate its headquarters and not to renew its lease at the Wachovia Bank
Building which expires in December 1995. The Phillips Building lease is
scheduled to expire in 2002. During the third quarter of 1995, the
Partnership signed a short-term (two year) lease extension with
Wachovia Bank covering a portion (approximately 115,000 square feet) of
their existing space. Due to this, it is expected that the property will
operate at a modest positive cash flow. However, the property's mortgage
loan is due in late 1996 and due to the short-term nature of the renewal,
it is considered unlikely that the Partnership would be able to secure
replacement financing or receive an extension from the existing lender on
favorable terms at that time. The Partnership is currently marketing the
remaining space in the Wachovia Bank Building to prospective replacement
tenants but has not been successful in its efforts due to the lack of large
space users in this market. Re-leasing the remaining space in the building
or any additional extensions of the Wachovia Bank lease would likely
require major renovation to the building as well as significant tenant
improvements which, in turn, would be contingent upon the Partnership
obtaining financing for these tenant replacement costs. Unless replacement
tenants are secured on acceptable terms for the remaining space in the
Wachovia Bank Building, it is unlikely that the Partnership will commit any
additional funds to the property. This may result in the Partnership no
longer having an ownership interest in the two office buildings upon
maturity of the mortgage loan as they are both subject to one mortgage
note. This action would result in a gain for Federal income tax and
financial reporting purposes with no corresponding distributable proceeds.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
While the real estate markets are recuperating, highly competitive
market conditions continue to exist in most locations. The Partnership's
philosophy and approach has been to aggressively and creatively manage the
Partnership's real estate assets to attract and retain tenants. Net
effective rents to the landlord from renewal tenants are generally more
favorable than lease terms which can be negotiated with new tenants.
However, the Partnership's capital resources must also be preserved and
allocated in such a manner as to maximize the total value of the portfolio.
As a result of the real estate market conditions discussed above, the
Partnership continues to conserve its working capital. All expenditures
are carefully analyzed and certain capital projects are deferred when
appropriate. By conserving working capital, the Partnership will be in a
better position to meet the future needs of its properties since outside
sources of capital may be limited.
As previously reported, due to these factors, the Partnership has held
its remaining investment properties longer than originally anticipated in
an effort to maximize the return to the Limited Partners. After reviewing
the remaining properties and their competitive marketplace, the General
Partners of the Partnership expect to be able to liquidate the remaining
assets as quickly as practicable. The affairs of the Partnership are
expected to be wound up no later than 1999 (sooner if the properties are
sold or disposed of in the nearer term), barring unforeseen economic
developments.
RESULTS OF OPERATIONS
The increase in cash and cash equivalents and the corresponding
decrease in short-term investments as of September 30, 1995 as compared to
December 31, 1994 is due to the majority of the Partnership's investments
in U.S. Government obligations being classified as cash equivalents at
September 30, 1995 rather than as short-term investments. Reference is
made to Note 1. The aggregate increase in cash, cash equivalents and
short-term investment as of September 30, 1995 as compared to December 31,
1994 is primarily due to cash generated at the Wachovia Bank Building and
Phillips Building.
The decrease in interest, rents and other receivables at September 30,
1995 as compared to December 31, 1994 is primarily due to the timing of the
receipt of interest related to certain U.S. Government obligations
classified as short-term investments in 1994.
The decrease in bank overdraft at September 30, 1995 as compared to
December 31, 1994 is primarily due to the January 1995 repayment of the
$703,449 overdraft in the Partnership bank account at December 1994.
The decrease in accounts payable at September 30, 1995 as compared to
December 31, 1994 is primarily due to the timing of payments of certain
operating expenses at the Wachovia Bank Building and Phillips Building and
Bristol Mall.
The increase in accrued real estate taxes at September 30, 1995 as
compared to December 31, 1994 is primarily due to the timing of real estate
tax payments at the Wachovia Bank Building and Phillips Building and the
Bristol Mall.
The decrease in rental income for the nine months ended September 30,
1995 as compared to the nine months ended September 30, 1994 is primarily
due to a payment received in May 1994 by the Partnership resulting from a
bankruptcy settlement from a tenant at a former Partnership investment
property (approximately $54,000) and a lease termination fee received in
May 1994 from a former tenant at Bristol Mall (approximately $57,000).
The decrease in interest income for the three and nine months ended
September 30, 1995 as compared to the three and nine months ended September
30, 1994 is primarily due to the retirement of the Towne South wrap-around
mortgage note receivable in 1994.
The decrease in mortgage and other interest for the three and nine
months ended September 30, 1995 as compared to the three and nine months
ended September 30, 1994 is primarily due to the retirement of the Towne
South Plaza mortgage payable in October 1994.
The increase in property operating expenses for the three and nine
months ended September 30, 1995 as compared to the same periods in 1994 is
primarily due to an increase in a maintenance contract and increased
utility costs being incurred at the Wachovia Bank Building and Phillips
Building.
The decrease in general and administrative for the three and nine
months ended September 30, 1995 as compared to the same periods in 1994 is
primarily due to the reversal of amounts expenses in prior years.
The decrease in Partnership's share of unconsolidated venture loss
from operations and the gain on sale or disposition of investment
properties for the three and nine months ended September 30, 1995 as
compared to the three and nine months ended September 30, 1994 is primarily
due to the transfer of title for Dutchess Mall in May 1994.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties:
<CAPTION>
1994 1995
-------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Wachovia Bank Building and
Phillips Building
Winston-Salem,
North Carolina. . . . . . . 100% 100% 100% 100% 100% 100% 100%
2. Bristol Mall
Bristol, Virginia. . . . . . 82% 82% 82% 82% 82% 83% 82%
3. Dutchess Mall
Fishkill, New York . . . . . 83% N/A N/A N/A N/A N/A N/A
<FN>
- - --------------------
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
</TABLE>
PART IV
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4-A. Documents relating to the refinancing of the mortgage
loan, dated October 17, 1986, secured by the Wachovia Bank Building and
Phillips Building office buildings in Winston-Salem, North Carolina are
hereby incorporated by reference to the Partnership's report for December
31, 1992 on Form 10-K (File No. 0-8716) dated March 19, 1993.
4-B. Documents relating to the mortgage loan secured by the
Bristol Mall shopping center in Bristol, Virginia are hereby incorporated
by reference to the Partnership's report on Form 8-K (File No. 0-8716)
dated October 17, 1977.
10-A. Acquisition documents relating to the purchase by the
Partnership of an interest in the Wachovia Bank Building and Phillips
Building in Winston Salem, North Carolina are hereby incorporated by
reference to the Partnership's Registration Statement on Form S-11 (File
No. 2-58026) dated September 20, 1977.
10-B. Acquisition documents relating to the purchase by the
Partnership of the Bristol Mall shopping center in Bristol, Virginia are
hereby incorporated by reference to the Partnership's report on Form 8-K
(File No. 0-8716) dated October 17, 1977.
27. Financial Data Schedule
--------------------
Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the Securities and Exchange Commission upon request.
(b) No Reports on Form 8-K was filed since the beginning of the
last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - V
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 9, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 9, 1995
<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, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000202240
<NAME> JMB INCOME PROPERTIES, LTD. - V
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 10,419,847
<SECURITIES> 0
<RECEIVABLES> 677,563
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,097,410
<PP&E> 32,504,262
<DEPRECIATION> 17,651,329
<TOTAL-ASSETS> 26,038,135
<CURRENT-LIABILITIES> 2,692,270
<BONDS> 25,877,306
<COMMON> 0
0
0
<OTHER-SE> (13,050,251)
<TOTAL-LIABILITY-AND-EQUITY> 26,038,135
<SALES> 7,855,169
<TOTAL-REVENUES> 8,225,420
<CGS> 0
<TOTAL-COSTS> 4,459,281
<OTHER-EXPENSES> 105,477
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,839,720
<INCOME-PRETAX> 1,820,942
<INCOME-TAX> 0
<INCOME-CONTINUING> 850,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 850,289
<EPS-PRIMARY> 21.42
<EPS-DILUTED> 21.42
</TABLE>
