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 March 31, 1995 Commission File No. 0-9555
JMB INCOME PROPERTIES, LTD. - VII
(Exact name of registrant as specified in its charter)
Illinois 36-2999384
(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. . . . . . . . . . 12
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 15
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . $ 5,560,358 3,483,861
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . 222,846 1,956,495
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . . 1,027,538 1,011,048
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,575 18,412
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653,050 798,114
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 7,478,367 7,267,930
------------ -----------
Investment properties, at cost (note 2):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,394,540 1,394,540
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . 59,105,306 59,101,445
------------ -----------
60,499,846 60,495,985
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . 36,411,613 35,834,904
------------ -----------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . . . . . . 24,088,233 24,661,081
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,025,257 1,005,658
2Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,069,930 2,056,774
Venture partners' deficit in venture . . . . . . . . . . . . . . . . . . . . . 2,263,566 2,219,108
------------ -----------
$ 36,925,353 37,210,551
============ ===========
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . . $ 12,611,433 12,603,179
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 942,442 1,031,081
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,303 284,080
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . 2,275,346 2,175,872
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . 16,112,524 16,094,212
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,559 92,429
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . 20,985,788 21,059,132
------------ -----------
Commitments and contingencies (notes 2, 3 and 4)
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 37,207,871 37,245,773
------------ -----------
Venture partners' subordinated equity in venture . . . . . . . . . . . . . . . 1,910,403 1,961,141
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . 1,078,724 1,081,208
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . (7,937,926) (7,924,480)
------------ -----------
(6,858,202) (6,842,272)
------------ -----------
Limited partners (60,505 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . . . 54,676,276 54,676,276
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . 49,608,272 49,667,890
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . (99,619,267) (99,498,257)
------------ -----------
4,665,281 4,845,909
------------ -----------
Total partners' capital accounts (deficits). . . . . . . . . . . . (2,192,921) (1,996,363)
------------ -----------
$ 36,925,353 37,210,551
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,808,084 2,734,803
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,671 52,182
------------ -----------
2,898,755 2,786,985
------------ -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 943,011 950,464
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576,709 575,190
Property operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,373,971 1,435,482
Professional services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,219 43,766
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . 41,753 44,837
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,915 28,086
------------ -----------
2,999,578 3,077,825
------------ -----------
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (100,823) (290,840)
Venture partners' share of ventures' operations. . . . . . . . . . . . . . . . . . 38,721 82,328
------------ -----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (62,102) (208,512)
============ ===========
Net loss per limited partnership interest. . . . . . . . . . . . . . . . $ (.99) (3.31)
============ ===========
Cash distributions per limited partnership interest. . . . . . . . . . . $ 2.00 2.00
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (62,102) (208,512)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 576,709 575,190
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 41,753 44,837
Amortization of discounts on long-term debt. . . . . . . . . . . . . . . . . . 52,910 50,175
Venture partners' share of ventures' operations. . . . . . . . . . . . . . . . (38,721) (82,328)
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . (29,646) 202,604
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,837 (5,995)
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,064 231,735
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (88,639) (170,111)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (777) (711)
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 99,474 (475,156)
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,130 (12,276)
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . 716,992 149,452
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . . . . . . . . . 1,733,649 (99,965)
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . (3,861) (168,112)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . (61,352) (39,188)
------------ -----------
Net cash provided by (used in) investing activities. . . . . . . . . . . 1,668,436 (307,265)
------------ -----------
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1995 1994
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . (118,000) (107,937)
Distributions to venture partners. . . . . . . . . . . . . . . . . . . . . . . . (56,475) (192,759)
Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . . (121,010) (121,010)
Distributions to general partners. . . . . . . . . . . . . . . . . . . . . . . . (13,446) (13,446)
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . (308,931) (435,152)
------------ -----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . 2,076,497 (592,965)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . 3,483,861 1,386,270
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . $ 5,560,358 793,305
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . $ 890,878 901,000
============ ===========
Non-cash investing and financing activities. . . . . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995 AND 1994
Readers of this 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 ventures, One Woodfield Lake
("Woodfield"), Westdale Associates ("Westdale") and Properties Partners.
The effect of all transactions between the Partnership and the ventures has
been eliminated.
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 reflect the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the ventures as described
above. Such adjustments are not recorded on the records of the
Partnership. The net effect of these items for the three months ended
March 31, 1995 and 1994 is summarized as follows:
1995 1994
----------------------- -------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net loss . . . . . . $(62,102) (36,488) (208,512) (157,012)
Net loss
per limited
partnership
interest. . . . . . $ (.99) (.58) (3.31) (2.49)
======== ======= ======== ========
The net loss per limited partnership interest is based upon the
limited partnership interests outstanding at the end of each period
(60,505). Deficit capital accounts will result, through the duration of
the Partnership, in net gain for financial reporting and Federal income tax
reporting purposes.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement. 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 ($4,483,745 and $2,644,833 at March 31,
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.
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
(2) VENTURE AGREEMENTS
(a) General
The Partnership at March 31, 1995 is currently a party to two
operating joint venture agreements which acquired one office building and
one regional shopping center. Under certain circumstances, either pursuant
to the venture agreements or due to the Partnership's obligations as a
general partner, the Partnership may be required to make additional cash
contributions to the ventures.
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.
(b) One Woodfield Lake
The Partnership owns an 80% general partnership interest in an
existing joint venture whose sole investment is an office building in
Schaumburg, Illinois. The venture agreement, as amended, provides that the
Partnership has a cumulative annual preference in the distribution of net
cash receipts (as defined) of $546,000. The next $136,500 of annual net
cash receipts is to be distributed to the venture partners; any remaining
net cash receipts are to be distributed 80% to the Partnership and 20% to
the venture partners. As of March 31, 1995 cumulative preference payments
to the Partnership are in arrears in the amount of $4,723,000.
Operating deficits are scheduled to be funded 80% by the Partnership
and 20% by the joint venture partner. The Partnership and the joint
venture partner have executed an amendment to the venture agreement which
specifies that each partner make contributions to the venture in their
respective partnership interests to fund the venture's operating deficits
and provides for the repayment of such contributions (as defined) prior to
the distributions of the cumulative annual preferences of net cash
receipts. In 1994, the joint venture made distributions of $450,000 which
were allocated 80% to the Partnership and 20% to the joint venture partner
as repayment of prior period contributions as defined by the amended joint
venture agreement as discussed above. For the three months ended March 31,
1995, the Partnership has received $120,000 in operating distributions from
the venture per the amended joint venture agreement. Operating profits and
losses are allocated 80% to the Partnership and 20% to the joint venture
partner.
The joint venture is presently engaged in discussion with the mortgage
lender regarding a possible extension of the June 1, 1995 maturity date of
the mortgage loan from the lender. However, there can be no assurance that
an extension of the mortgage loan will be obtained. As the leases of
existing tenants expire, there will likely be a negative impact on cash
flow due to the downward pressure on net effective market rental rates.
The joint venture may decide not to commit any significant additional
amounts of capital to this property due to the fact that recovery of such
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
amounts may be unlikely. As a result, the joint venture would no longer
have an ownership interest in the property. In such event, the joint
venture would recognize a gain for financial reporting and Federal income
tax reporting purposes without any net realizable proceeds.
An affiliate of the developer manages the property pursuant to a long-
term agreement which provides for a management fee of approximately $65,000
for 1995, subject to annual increases based upon a formula relating to the
Consumer Price Index.
(c) Westdale
During September 1980, the Partnership acquired, through a joint
venture partnership with the seller, an interest in Westdale Mall shopping
center. The venture agreement provides that the first $1,267,500 of annual
net cash receipts shall be distributed 64.7% to the Partnership and 35.3%
to the venture partner; all remaining annual net cash receipts are to be
distributed 45.5% to the Partnership, 24.8% to the venture partner and
29.7% to the ground lessor as additional rent. The Partnership has a
preferred position (related to the Partnership's cash investment in the
venture) with respect to distributions of sale or refinancing proceeds from
the venture, after payment to the ground lessor of the amounts entitled
under the lease. As required by the venture agreement, any deficit from
operations is to be funded 45.5% by the Partnership and 54.5% by the
venture partner.
Venture operating profits and losses are allocated 64.7% to the
Partnership and 35.3% to the venture partner.
Effective August 1, 1994, the venture partner transferred its interest
in Westdale Mall to another company affiliated with the venture partners'
parent company. The property is managed by the new venture partner
pursuant to an assignment of the previous agreement which provides for a
management fee equal to a portion of the tenants' contributions toward
operating costs plus the lesser of $120,000 per year or 3% of the minimum
rent received from tenants.
(3) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or
refinancing of investment properties are to be allocated to the General
Partners to the greater of 1% of such profits or the amount of cash
distributable to the General Partners from any such sale or refinancing (as
described below). Losses from the sale or refinancing of investment
properties are to be allocated 1% to the General Partners. The remaining
sale or refinancing profits and losses will be allocated to the Limited
Partners.
An amendment to the Partnership Agreement, effective January 1, 1991,
generally provides that notwithstanding any allocation contained in the
Agreement, if at any time profits are realized by the Partnership, any
current or anticipated event that would cause the deficit balance in
absolute amount in the Capital Account of the General Partners to be
greater than their share of the Partnership's indebtedness (as defined)
after such event, then the allocation of profits to the General Partners
shall be increased to the extent necessary to cause the deficit balance in
the Capital Account of the General Partners to be no less than their
respective shares of the Partnership's indebtedness after such event. In
general, the effect of this amendment is to allow the deferral of the
recognition of taxable gain to the Limited Partners.
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
The General Partners are not required to make any capital contribu-
tions except under certain limited circumstances upon termination of the
Partnership. Distributions of "cash flow" of the Partnership are allocated
90% to the Limited Partners and 10% to the General Partners. However,
portions of such distributions to the General Partners are subordinated to
the Limited Partners' receipt of a stipulated return on capital.
The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership an amount equal to 3% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, the Limited Partners shall receive 100% of such net sale proceeds
until the Limited Partners (i) have received cash distributions of sale or
refinancing proceeds in an amount equal to the Limited Partners' aggregate
initial capital investment in the Partnership and (ii) have received
cumulative cash distributions from the Partnership's operations which, when
combined with sale or refinancing proceeds previously distributed, equal a
6% annual return on the Limited Partners' average capital investment for
each year (their initial capital investment as reduced by sale or
refinancing proceeds previously distributed) commencing with the fourth
fiscal quarter of 1980. Two-thirds of the 3% General Partner distribution
discussed above is further subordinated to the Limited Partners receiving
out of sales proceeds an amount equal to 110% of their initial capital
investment in the Partnership. The Limited Partners have received cash
distributions that satisfied the requirements in (i) and (ii) above. Also,
the Limited Partners have received an amount equal to 110% of their initial
capital investment with the August 1993 cash distribution. Therefore,
approximately $4,500,000 of sale proceeds have been distributed to the
General Partners pursuant to the distribution levels described above.
(4) 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,
1995 and for the three months ended March 31, 1995 and 1994 are as follows:
Unpaid at
March 31,
1995 1994 1995
------ ------ -------------
Reimbursement (at cost) for
out-of-pocket expenses . . . . $2,524 2,813 --
====== ====== =======
(5) 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,
1995 and for the three months ended March 31, 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 March 31, 1995, the Partnership and its consolidated ventures had
cash and cash equivalents of approximately $5,560,000 and short-term
investments of approximately $223,000. Such funds are available for
distributions to partners and for working capital requirements including
costs to be incurred for capital additions and tenant improvements at
Westdale Mall and the Partnership's portion of tenant improvement costs
which may be incurred at One Woodfield Lake. The Partnership and its
consolidated ventures have currently budgeted in 1995 approximately
$1,101,000 for tenant improvements and other capital expenditures primarily
at Westdale Mall (approximately $4,000 has been incurred at March 31,
1995). The Partnership's share of such items in 1995 is currently budgeted
to be approximately $554,000. Actual amounts expended may vary depending
on a number of factors including actual leasing activity, results of
property operations, liquidity considerations and other market conditions
over the course of the year. The sources of capital (in addition to the
cash and cash equivalents and short-term investments noted above) for such
items and for both short-term and long-term future liquidity and distribu-
tions are expected to be through net cash generated by the Partnership's
investment properties and through the sale of such investments. However,
the Partnership does not consider The One Woodfield Lake investment
property to be a significant source of short or long-term liquidity. In
such regard, reference is made to the Partnership's property specific
discussions below. The Partnership and its ventures' 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.
One of the Partnership's investment properties, the One Woodfield Lake
building, currently operates in a market which is characterized by lower
than normal occupancies and reduced net effective rent levels. Such
competitive conditions have resulted in operating deficits during recent
periods though the property is now generating a nominal cash flow for the
Partnership. The joint venture is presently engaged in discussions with
the mortgage lender regarding a possible extension of the June 1, 1995
maturity date of the mortgage loan. However, there can be no assurance
that an extension of the mortgage loan will be obtained. As the leases of
existing tenants expire, there will likely be a negative impact on cash
flow due to the downward pressure on net effective market rental rates.
Should the property not produce sufficient cash flow to service its
indebtedness and if the joint venture is unable to secure an additional
modification to the mortgage loan, the joint venture may decide not to
commit any significant additional amounts of capital to this property due
to the fact that recovery of such amounts may be unlikely. As a result,
the joint venture would no longer have an ownership interest in the
property. In such event, the joint venture would recognize a gain for
financial reporting and Federal income tax reporting purposes without any
distributable proceeds.
Although the area surrounding the Westdale Mall in Cedar Rapids, Iowa
has shown some signs of commercial and residential growth, the mall
continues to operate in a very competitive retail environment. Currently,
as leases at Westdale Mall expire, lease renewals and new leases are likely
to be at rental rates equal to or slightly below rates on existing leases.
In addition, new leases will likely require expenditures for lease
commissions and tenant improvements prior to tenant occupancy. This
anticipated decline in rental rates, an anticipated increase in re-leasing
time and the costs upon re-leasing will result in a decrease in cash flow
from operations over the near term. The joint venture is also evaluating
the competitive positioning of this property in its market. The joint
venture intends to provide the resources necessary for the manager of the
mall to continue to attract new tenants.
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
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 much 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. Due to these factors, the Partnership has held certain of its
investment properties longer than originally anticipated in an effort to
maximize the return to the Limited Partners.
RESULTS OF OPERATIONS
The increase in cash and cash equivalents and the decrease in short-
term investments at March 31, 1995 as compared to December 31, 1994 is
primarily due to all of the Partnership's investments in U.S. Government
obligations being classified as short-term investments at December 31, 1994
and the majority of the Partnership's investments in U.S. Government
obligations classified as cash equivalents at March 31, 1995. Reference is
made to Note 1.
The decrease in accounts payable at March 31, 1995 as compared to
December 31, 1994 is primarily due to the timing of payments for property
operating expenses at the Westdale investment property.
The increase in accrued real estate taxes at March 31, 1995 as
compared to December 31, 1994 is primarily due to the timing of payments of
real estate taxes at the Westdale investment property.
The increase in rental income for the three months ended March 31,
1995 as compared to the same period in 1994 is primarily due to the
increase in occupancy in 1995 at the Westdale Mall investment property.
The increase in interest income for the three months ended March 31,
1995 as compared to the same period in 1994 is primarily due to the higher
yields received in 1995 related to investments in interest-bearing U.S.
Government obligations held by the Partnership.
The decrease in property operating expenses for the three months ended
March 31, 1995 as compared to the same period in 1994 is primarily due to
the decrease in repair and maintenance expenses at the Partnership's
investment properties.
The decrease in venture partners' share of ventures' operations for
the three months ended March 31, 1995 as compared to the same period in
1994 is primarily due to the increase in rental income resulting from the
increase in occupancy along with the decrease in property operating
expenses at the Westdale investment property.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate physical 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. One Woodfield Lake
Schaumburg, Illinois . . . 90% 93% 93% 87% 88%
2. Westdale Mall
Cedar Rapids, Iowa . . . . 88% 90% 89% 92% 93%
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4-A. Mortgage loan agreement relating to the purchase by the
Partnership of an interest in the One Woodfield Lake Office Building in
Schaumburg, Illinois is hereby incorporated by reference to the
Partnership's report on Form 8-K (File No. 0-9555) dated June 17, 1980.
4-B. Mortgage loan agreement relating to the purchase by the
Partnership of an interest in Westdale Mall in Cedar Rapids, Iowa is hereby
incorporated by reference to the Partnership's report on Form 8-K (File No.
0-9555) dated October 3, 1980.
10-A. Acquisition documents including the venture agreement
relating to the purchase by the Partnership of an interest in the One
Woodfield Lake Office Building in Schaumburg, Illinois are hereby
incorporated by reference to the Partnership's report on Form 8-K (File No.
0-9555) dated June 17, 1980.
10-B. Acquisition documents including the venture agreement
relating to the purchase by the Partnership of an interest in Westdale Mall
in Cedar Rapids, Iowa are hereby incorporated by reference to the
Partnership's report on Form 8-K (File No. 0-9555) dated October 3, 1980.
10-C. Sale documents and exhibits thereto relating to the
Partnership's sale of the Clackamas Town Center in Clackamas County, Oregon
are hereby incorporated herein by reference to the Partnership's report on
Form 8-K (File No. 0-9555) dated February 13, 1992.
27. Financial Data Schedule
--------------------
(b) No reports on Form 8-K have been filed for the quarter 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. - VII
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: May 11, 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: May 11, 1995
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS
ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000313019
<NAME> JMB INCOME PROPERTIES, LTD. - VII
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 5,560,358
<SECURITIES> 222,846
<RECEIVABLES> 1,695,163
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,478,367
<PP&E> 60,499,846
<DEPRECIATION> 36,411,613
<TOTAL-ASSETS> 36,925,353
<CURRENT-LIABILITIES> 16,112,524
<BONDS> 20,985,788
<COMMON> 0
0
0
<OTHER-SE> (2,192,421)
<TOTAL-LIABILITY-AND-EQUITY> 36,925,353
<SALES> 2,808,084
<TOTAL-REVENUES> 2,898,755
<CGS> 0
<TOTAL-COSTS> 1,992,433
<OTHER-EXPENSES> 64,134
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 943,011
<INCOME-PRETAX> (100,823)
<INCOME-TAX> 0
<INCOME-CONTINUING> (62,102)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (62,102)
<EPS-PRIMARY> (.99)
<EPS-DILUTED> 0
</TABLE>
