SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q/A
AMENDMENT NO. 1
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
JMB INCOME PROPERTIES, LTD. - V
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
IRS Employer Identification
Commission File No. 0-8716 No. 36-2897158
The undersigned registrant hereby amends the following section of its
Report for the quarter ended March 31, 1999 on Form 10-Q as set forth in
the pages attached hereto:
ITEM 1. FINANCIAL STATEMENTS
Pages 1 through 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Pages 12 and 13
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.
JMB INCOME PROPERTIES, LTD. - V
BY: JMB Realty Corporation
Managing General Partner
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
and Principal Accounting Officer
Dated: May 27, 1999
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
ASSETS
------
MARCH 31, DECEMBER 31,
1999 1998
------------ -----------
Current assets:
Cash and cash equivalents . . . . . $ 23,305,735 5,859,549
Interest, rents and other
receivables . . . . . . . . . . . 150,396 267,050
Prepaid expenses. . . . . . . . . . 11,398 59,954
------------ ------------
Total current assets. . . . . 23,467,529 6,186,553
------------ ------------
Properties held for sale or
disposition . . . . . . . . . . . . 7,338,243 25,944,030
Deferred expenses . . . . . . . . . . 86,440 269,195
Accrued rents receivable. . . . . . . -- 200,311
------------ ------------
$ 30,892,212 32,600,089
============ ============
<PAGE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1999 1998
------------ -----------
Current liabilities:
Current portion of long-term debt . $ 373,911 898,612
Accounts payable. . . . . . . . . . 1,938,296 1,792,206
Accrued interest. . . . . . . . . . 151,899 212,781
Accrued real estate taxes . . . . . 62,402 --
------------ ------------
Total current liabilities . . 2,526,508 2,903,599
Tenant security deposits. . . . . . . 9,291 22,721
Construction loan payable . . . . . . -- 2,802,626
Long-term debt, less current
portion . . . . . . . . . . . . . . 18,712,912 23,219,926
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . 21,248,711 28,948,872
Venture partner's subordinated
equity in venture . . . . . . . . . 11,929,459 11,891,331
Partners' capital accounts
(deficits):
General partners:
Capital contributions . . . . . . 1,000 1,000
Cumulative net earnings (loss). . 1,599,163 1,537,012
Cumulative cash distributions . . (3,096,315) (3,096,315)
------------ ------------
(1,496,152) (1,558,303)
------------ ------------
Limited partners (38,505 interests):
Capital contributions, net of
offering costs. . . . . . . . . 34,926,505 34,926,505
Cumulative net earnings (loss). . 36,667,892 30,775,887
Cumulative cash distributions . . (72,384,203) (72,384,203)
------------ ------------
(789,806) (6,681,811)
------------ ------------
Total partners' capital
accounts (deficits) . . . . (2,285,958) (8,240,114)
------------ ------------
$ 30,892,212 32,600,089
============ ============
See accompanying notes to consolidated financial statements.
<PAGE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
---------- ----------
Income:
Rental income . . . . . . . . . . . . . $1,689,136 2,964,522
Interest income . . . . . . . . . . . . 150,658 61,695
---------- ----------
1,839,794 3,026,217
---------- ----------
Expenses:
Mortgage and other interest . . . . . . 568,307 702,326
Property operating expenses . . . . . . 993,277 1,272,989
Professional services . . . . . . . . . 49,494 44,138
Amortization of deferred expenses . . . 7,971 10,441
General and administrative. . . . . . . 51,842 33,665
---------- ----------
1,670,891 2,063,559
---------- ----------
168,903 962,658
Venture partner's share of
venture's operations. . . . . . . . . . (38,437) (418,202)
---------- ----------
Earnings (loss) before gain on
sale of investment property. . . 130,466 544,456
Gain on sale of investment property . . . 5,998,474 --
---------- ----------
Earnings (loss) before extra-
ordinary item. . . . . . . . . . 6,128,940 544,456
Extraordinary item - write-off of
unamortized deferred financing costs. . (174,784) --
---------- ----------
Net earnings (loss). . . . . . . . $5,954,156 544,456
========== ==========
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on
sale of investment property . $ 3.29 13.72
Gain on sale of investment
property. . . . . . . . . . . 154.23 --
Extraordinary item. . . . . . . (4.49) --
---------- ----------
Net earnings (loss) per
limited partnership interest . . $ 153.03 13.72
========== ==========
Cash distributions per limited
partnership interest . . . . . . $ -- --
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
------------ -----------
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . .$ 5,954,156 544,456
Items not requiring (providing) cash
or cash equivalents:
Amortization of deferred expenses . . 7,971 10,441
Venture partner's share of venture's
operations. . . . . . . . . . . . . 38,437 418,202
Gain on sale of investment property . (5,998,474) --
Extraordinary item. . . . . . . . . . 174,784 --
Rental income applied to construc-
tion loan payable . . . . . . . . . (17,166) (5,864)
Changes in:
Interest, rents and other receivables 116,654 37,405
Prepaid expenses. . . . . . . . . . . 48,556 --
Accrued rents receivable. . . . . . . 5,003 12,052
Accounts payable. . . . . . . . . . . 146,090 101,468
Accrued interest . . . . . . . . . . (60,882) 575
Accrued real estate taxes . . . . . . 62,402 104,393
Tenant security deposits. . . . . . . (13,430) 2,000
------------ -----------
Net cash provided by (used in)
operating activities. . . . . 464,101 1,225,128
Cash flows from investing activities:
Additions to investment properties,
net of related payables . . . . . . . (200,000) (626,425)
Proceeds from sale of investment
property. . . . . . . . . . . . . . . 17,356,162 --
------------ -----------
Net cash provided by (used in)
investing activities. . . . . 17,156,162 (626,425)
------------ -----------
Cash flows from financing activities:
Cash proceeds from construction loan. . -- 332,045
Principal payments on long-term debt. . (173,768) (198,331)
Venture partner's contributions to
venture . . . . . . . . . . . . . . . 207,256 207,284
Distributions to venture partners . . . (207,565) (207,566)
------------ -----------
Net cash provided by (used in)
financing activities. . . . . (174,077) 133,432
------------ -----------
Net increase (decrease) in cash
and cash equivalents. . . . . 17,446,186 732,135
Cash and cash equivalents,
beginning of year . . . . . . 5,859,549 5,407,496
------------ -----------
Cash and cash equivalents,
end of period . . . . . . . .$ 23,305,735 6,139,631
============ ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1999 1998
------------ -----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other
interest. . . . . . . . . . . . . $ 629,189 701,751
============ ===========
Non-cash investing and financing
activities:
Rental income applied to
construction loan payable . . . .$ 17,166 --
============ ===========
Sale of investment property:
Total sales proceeds, net of
selling expenses . . . . . . . . . . .$ 24,216,567 --
Principal balance on mortgage
loan payable . . . . . . . . . . . . . (4,074,945) --
Principal balance on construction
loan payable . . . . . . . . . . . . . (2,785,460) --
------------ ------------
Cash sales proceeds from
sale of investment property,
net of selling expenses . . . . . .$ 17,356,162 --
============ ============
See accompanying notes to consolidated financial statements.
<PAGE>
JMB INCOME PROPERTIES, LTD. - V
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1998 which are
included in the Partnership's 1998 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell such property and active marketing activity has commenced or is
expected to commence in the near term. The Partnership has concluded that
it may dispose of a property by no longer funding operating deficits or
debt service requirements thus allowing the lender to realize upon its
security. In accordance with SFAS 121, any properties identified as "held
for sale or disposition" are no longer depreciated. As of March 31, 1999,
the Partnership and its consolidated venture have previously committed to
plans to sell its remaining investment property. Accordingly, such
consolidated property has been classified as held for sale or disposition
in the accompanying consolidated financial statements as of the respective
date of such plan's adoption. The results of operations, net of venture
partners' share, for this property and the property that was sold were
$581,102 and $1,060,119, respectively, for the three months ended March 31,
1999 and 1998.
Certain amounts in the 1998 consolidated financial statements have
been reclassified to conform with the 1999 presentation.
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of March 31,
1999 and for the three months ended March 31, 1999 and 1998 were as
follows:
Unpaid at
March 31,
1999 1998 1999
------- ------ ----------
Property management
and leasing fees . . . . . . $54,575 73,002 1,570,300
Insurance commissions . . . . (2,773) -- --
Reimbursement (at cost) for
out-of-pocket expenses . . . -- 69 --
------- ------ ---------
$51,802 73,071 1,570,300
======= ====== =========
<PAGE>
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 property management and leasing fees
pursuant to the venture agreement for the Wachovia Bank Building and
Phillips Building. Prior to 1995, an affiliate of the Managing General
Partner provided management and leasing services. In December 1994, the
affiliate sold all of its assets and assigned its interest in the
management contracts, including the one for the Wachovia Bank Building and
Phillips Building to an unaffiliated third party. In connection with such
sale, an affiliate of the General Partners guaranteed payment to the
unaffiliated third party of the portion of the fees currently deferred as
discussed above. Such amounts are deferred until the sale or disposition
of the property or upon the termination of the property management
agreement and are expected to be paid at that time. As of March 31, 1999,
the General Partners and their affiliates have deferred receipt of
approximately $1,531,000 (approximately $39 per interest) of such fees.
This amount is reflected in accounts payable in the accompanying
consolidated financial statements.
BRISTOL MALL
During 1989, the Partnership entered into a lease with the J.C. Penney
Company ("J.C. Penney") for an 86,000 square foot addition at the Bristol
Mall shopping center. For the lease to commence, an addition and
associated mall enhancement program was required to be completed. This led
to protracted negotiations with J.C. Penney and the property's mortgage
lender to determine how these capital costs would be funded. As a result,
in July 1996, the Partnership and J.C. Penney executed an amendment to the
existing lease and the Partnership began construction of the anchor store
and the mall enhancement.
The cost of the construction of the anchor store, as well as the mall
enhancement was approximately $12,080,000 (including pre-development
costs). The Partnership had also budgeted for certain tenant improvement
costs (approximately $1,860,000) in connection with the mall enhancement.
However, as a result of the sale of the property discussed below, the
Partnership will not incur such costs.
The Partnership was utilizing a construction loan provided by J.C.
Penney for certain construction costs up to $4,665,200, which was fully
funded at March 31, 1998.
The construction loan (prior to it being paid in full in February 1999
as discussed below) bore an interest rate of 10% per annum and interest
accrued on the funds from the date of the advance. The Partnership was not
required to make any payments on the loan until the first month after the
opening date of the new anchor store (in August 1997). The Partnership was
required to make monthly interest only payments for five years on the total
amount advanced under the loan plus any accrued, but unpaid interest from
the construction period. Thereafter, for the remaining 5-year term of the
loan, the Partnership would have been required to make payments of both
principal and interest based on a ten-year amortization schedule with the
balance of unpaid principal due upon maturity. All rental amounts due from
the tenant to the Partnership under the terms of the lease amendment were
first applied against these debt service payments with any monthly rental
amounts owed by J.C. Penney in excess of the Partnership's monthly payment
applied as a principal reduction of the loan. Prior to the loan being paid
in full, approximately $17,000 had been applied to principal in 1999.
Pursuant to the loan agreement, the Partnership could repay all or any
portion of the construction loan discussed above at any time without
penalty. The Partnership repaid $2,000,000 in the second quarter of 1998.
<PAGE>
In the third quarter of 1998, the Partnership began negotiating a
contract to sell the Bristol Mall with an unaffiliated third party. On
February 17, 1999, the Partnership consummated such sale. The purchase
price of the Property was $24,577,000. Upon closing, the Partnership
received cash of approximately $17,400,000 (net of closing costs but before
operating prorations). The cash received by the Partnership was also net
of the repayment of the mortgage loan secured by the Property of
approximately $4,100,000 and repayment of the construction loan of
approximately $2,800,000. The Partnership recognized a gain of
approximately $6,000,000 for financial reporting and expects to recognize a
gain of approximately $7,600,000 for Federal income tax purposes in 1999.
In addition, in connection with the sale of the Property and as is
customary in such transactions, the Partnership agreed to certain
representations, warranties and covenants with stipulated survival periods
which expire on November 17, 1999 or earlier, as defined. Although it is
not expected, the Partnership may ultimately have some liability under such
representations, warranties and covenants which are limited to actual
damages and shall in no event exceed $880,000 in the aggregate. The
Property was classified as held for sale as of September 30, 1997 and
therefore has not been subject to continued depreciation from such date for
financial reporting purposes.
WACHOVIA BANK BUILDING AND PHILLIPS BUILDING
Occupancy at the Wachovia Bank Building and Phillips Building was 49%
at the March 31, 1999. Prior to December 31, 1995, substantially all of
the Wachovia Bank Building was leased to one tenant, the Wachovia Bank. In
1996 and part of 1997, the Wachovia Bank retained approximately 117,000
square feet it had previously leased under the lease that expired on
December 31, 1995. Beginning in the second quarter of 1997, the Wachovia
Bank periodically approached the Partnership about leasing additional
space. This resulted in the bank leasing approximately 82,000 square feet
(approximately 9% of the buildings). In the first quarter of 1998, the
Wachovia Bank notified the Partnership that it expected to vacate all, or
substantially all of its space in the Wachovia Bank Building beginning in
the third quarter of 1998. The Wachovia Bank is expected to retain its
space in the Phillips Building (approximately 269,000 square feet) through
the expiration of their current lease in February 2002. However, the
Partnership expects the remaining space leased at March 31, 1999 to the
Wachovia Bank in the Wachovia Bank Building (approximately 33,000 square
feet) to be vacated prior to December 31, 1999.
Re-leasing the vacant space in the building 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, it is unlikely
that the Partnership will commit any additional funds to the property for
leasing or re-leasing activity. This may result in the Partnership no
longer having an ownership interest in the two office buildings. This
action would result in a gain for financial reporting and Federal income
tax purposes with no corresponding distributable proceeds. Additionally,
the Partnership could be required to remit to the state tax authorities
withholding for taxes due as a result of this action. This withholding
amount is currently estimated to be approximately $650,000.
The Partnership's venture partner had 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, when it
would owe the balance of its obligation (approximately $7,600,000). The
venture partner has continued to make contributions based on the old
payment schedule rather than making the balloon payment in August 1996 as
required. As a result, the venture partner is currently approximately
$7,200,000 in arrears for such contributions as of the date of this report.
The venture partner's obligation to make such payment is secured only by
its interest in the venture. In the fourth quarter of 1996, the
Partnership notified the venture partner of its default effective August
1996. The Partnership has reached an agreement in principle with the
venture partner whereby the Partnership would receive an option to purchase
<PAGE>
the venture partner's interest in the venture for $450,000. Under the
option agreement, upon the closing of the purchase of such interest, the
venture partner would also release the Partnership and the venture from any
and all claims that the venture partner may have against the Partnership
and the venture, including, without limitation, any amounts which may have
accrued or been distributable prior to such closing date, and the
Partnership and the venture would release the venture partner from any
further liabilities under the Partnership Agreement, including, without
limitation, the aforementioned obligation to make additional capital
contributions. The Partnership expects that it would exercise the option
to purchase the venture partner's interest immediately prior to the sale or
other disposition of the property by the venture.
The venture agreement was amended for fiscal 1998. The joint venture
is currently operating under such amendment, which provides for profit and
losses to be allocated based on the ratio of distributions to partners.
Such ratio for 1999 is expected to be approximately 95% to the Partnership
and 5% to the venture partner. A distribution of operating cash flow of
approximately $3,591,000 was received by the Partnership in March 1999.
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 March 31,
1999 and for the three months ended March 31, 1999 and 1998.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investments.
The board of directors of JMB Realty Corporation ("JMB") the managing
general partner of the Partnership, has established a special committee
(the "Special Committee") consisting of certain directors of JMB to deal
with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers.
During 1998, some of the Limited Partners in the Partnership received
from unaffiliated third parties unsolicited tender offers to purchase up to
4.9% of the Interests in the Partnership at prices ranging from between
$140 and $170 per Interest. The Partnership recommended against acceptance
of these offers on the basis that, among other things, the offer prices
were inadequate. All such offers have expired. As of the date of this
report, the Partnership is aware that 16.67% of the Interests in the
Partnership have been purchased by such unaffiliated third parties either
pursuant to such tender offers or through negotiated purchases. In
addition, it is possible that other offers for Interests may be made by
unaffiliated third parties in the future, although there is no assurance
that any other third party will commence an offer for Interests, the terms
of any such offer or whether any such offer, if made, will be consummated,
amended or withdrawn.
At March 31, 1999, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $23,306,000. Such funds are
available for distributions to partners, the potential purchase of the
venture partner's interest in the joint venture which owns the Wachovia
Bank and Phillips Buildings, and for working capital requirements.
The Partnership currently expects to distribute approximately
$14,439,000 ($375 per interest) to the Limited Partners of proceeds related
to the sale of the Bristol Mall and approximately $2,732,000 to the General
Partners in May 1999. A portion of the distribution to the General
Partners (approximately $184,000) was calculated based on the sale price of
the property.
The General Partners and their affiliates have deferred payment of
certain fees of approximately $1,531,000 (approximately $39 per interest)
as of March 31, 1999 pursuant to the venture agreement for the Wachovia
Bank Building and Phillips Building. Such amounts are deferred until the
sale or disposition of the property or upon the termination of the property
management agreement and are expected to be paid at that time.
The General Partners of the Partnership expect to be able to conduct
an orderly liquidation of its remaining investment portfolio as quickly as
practicable. Therefore, the affairs of the Partnership are expected to be
wound up in the near future, barring unforeseen economic developments. The
Partnership's only remaining real estate asset is its joint venture
interest in the Wachovia Bank and Phillips Buildings. The Partnership does
not expect to realize any proceeds from the disposition of the Wachovia
Bank and Phillips Buildings.
RESULTS OF OPERATIONS
Significant variances between periods are primarily due to the sale of
the Bristol Mall in February 1999.
The increase in accrued real estate taxes as of March 31, 1999 as
compared to December 31, 1998 is primarily due to the timing of payment for
real estate taxes at the Wachovia Bank Building.
<PAGE>
The decrease in rental income for the three months ended March 31,
1999 as compared to the same period in 1998 is primarily due to the sale of
the Bristol Mall and a decrease in occupancy at the Wachovia Bank Building.
The increase in interest income for the three months ended March 31,
1999 as compared to the same period in 1998 is primarily due to the
temporary investment of the proceeds from the sale of the Bristol Mall.
The decrease in venture partner's share of venture's operations for
the three months ended March 31, 1999 as compared to the same period in
1998 is primarily due to an amendment to the venture agreement which
provides for substantially less income to be allocated to the venture
partner.
YEAR 2000
The Corporate General Partner has determined that it does not expect
that the consequences of the Partnership's Year 2000 issues would have a
material effect on the Partnership's business, results of operations or
financial condition.
