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, 2000 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 [ ]
<PAGE>
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 . . . . . . . . . . . . . . . . 10
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . 13
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
ASSETS
------
MARCH 31, DECEMBER 31,
2000 1999
------------ -----------
Current assets:
Cash and cash equivalents. . . . . . $ 6,226,299 6,815,891
Interest, rents and
other receivables. . . . . . . . . 981,383 859,993
Escrow deposits and restricted
funds. . . . . . . . . . . . . . . 390,098 399,978
------------ -----------
Total current assets . . . . 7,597,780 8,075,862
------------ -----------
Investment properties, at cost:
Buildings and improvements . . . . . 42,539,581 42,587,581
------------ -----------
Less accumulated depreciation. . . . 33,707,152 33,245,964
------------ -----------
Total investment proper-
ties, net of accumulated
depreciation . . . . . . . 8,832,429 9,341,617
Deferred expenses . . . . . . . . . . 804,336 808,567
Accrued rents receivable . . . . . . . 863,161 888,233
Venture partner's deficit in venture . 550,900 404,271
------------ -----------
$ 18,648,606 19,518,550
============ ===========
<PAGE>
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,
2000 1999
------------ -----------
Current liabilities:
Current portion of long-term debt. . $ 509,918 494,921
Accounts payable . . . . . . . . . . 1,236,692 1,607,586
Accrued interest . . . . . . . . . . 5,419 1,434
Accrued real estate taxes. . . . . . 1,109,884 1,418,382
------------ -----------
Total current liabilities. . 2,861,913 3,522,323
Tenant security deposits . . . . . . . 53,517 56,397
Long-term debt, less current portion . 18,918,711 19,077,717
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . 21,834,141 22,656,437
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . 1,000 1,000
Cumulative net earnings (loss) . . 2,155,097 2,157,003
Cumulative cash distributions. . . (9,321,696) (9,321,696)
------------ -----------
(7,165,599) (7,163,693)
------------ -----------
Limited partners:
Capital contributions,
net of offering costs. . . . . . 54,676,276 54,676,276
Cumulative net earnings (loss) . . 54,912,615 54,958,357
Cumulative cash distributions. . . (105,608,827) (105,608,827)
------------ -----------
3,980,064 4,025,806
------------ -----------
Total partners' capital
accounts (deficits). . . . (3,185,535) (3,137,887)
------------ -----------
$ 18,648,606 19,518,550
============ ===========
See accompanying notes to consolidated financial statements.
<PAGE>
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
2000 1999
----------- -----------
Income:
Rental income. . . . . . . . . . . . $ 2,037,988 2,063,345
Interest income. . . . . . . . . . . 86,582 55,083
----------- -----------
2,124,570 2,118,428
----------- -----------
Expenses:
Mortgage and other interest. . . . . 564,498 528,034
Depreciation . . . . . . . . . . . . 461,188 --
Property operating expenses. . . . . 1,088,592 1,073,570
Professional services. . . . . . . . 21,200 63,622
Amortization of deferred expenses. . 36,384 37,358
General and administrative . . . . . 33,430 48,889
----------- ----------
2,205,292 1,751,473
----------- ----------
(80,722) 366,955
Venture partners' share of
ventures' operations . . . . . . . . 33,074 (150,853)
----------- ----------
Net earnings (loss). . . . . $ (47,648) 216,102
=========== ==========
Net earnings (loss) per
limited partnership
interest . . . . . . . . . $ (.76) 3.43
=========== ==========
Cash distributions per
limited partnership
interest . . . . . . . . . $ -- --
=========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
2000 1999
---------- -----------
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . $ (47,648) 216,102
Items not requiring (providing)
cash or cash equivalents:
Depreciation . . . . . . . . . . . 461,188 --
Amortization of deferred
expenses . . . . . . . . . . . . 36,384 37,358
Amortization of discounts on
long-term debt . . . . . . . . . 66,069 63,641
Venture partners' share of
ventures' operations . . . . . . (33,074) 150,853
Changes in:
Interest, rents and other
receivables. . . . . . . . . . . (96,318) 116,800
Escrow deposits and
restricted funds . . . . . . . . 9,880 9,796
Accounts payable . . . . . . . . . (322,894) 86,195
Accrued interest . . . . . . . . . 3,985 141,164
Accrued real estate taxes. . . . . (308,498) (351,661)
Tenant security deposits . . . . . (2,880) --
---------- -----------
Net cash provided by
(used in) operating
activities . . . . . . . . (233,806) 470,248
---------- -----------
Cash flows from investing activities:
Additions to investment
properties. . . . . . . . . . . . . -- (16,855)
Payment of deferred expenses . . . . (32,153) --
---------- -----------
Net cash provided by
(used in) investing
activities . . . . . . . . (32,153) (16,855)
---------- -----------
Cash flows from financing activities:
Principal payments on long-term
debt . . . . . . . . . . . . . . . (210,078) (164,154)
Distributions to venture partners. . (113,555) (10,344)
---------- -----------
Net cash provided by
(used in) financing
activities . . . . . . . . (323,633) (174,498)
---------- -----------
Net increase (decrease)
in cash and cash
equivalents. . . . . . . . (589,592) 278,895
Cash and cash equivalents,
beginning of year. . . . . 6,815,891 5,611,560
---------- -----------
Cash and cash equivalents,
end of period. . . . . . . $6,226,299 5,890,455
========== ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
2000 1999
---------- -----------
Supplemental disclosure of
cash flow information:
Cash paid for mortgage
and other interest . . . . . . . . $ 518,991 323,229
========== ===========
Non-cash investing and
financing activities . . . . . . . $ -- --
========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
JMB INCOME PROPERTIES, LTD. - VII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999
(Unaudited)
GENERAL
Readers of this report should refer to the Partnership's audited
financial statements for the year ended December 31, 1999 which are
included in the Partnership's 1999 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. In accordance with SFAS 121, any
properties identified as "held for sale or disposition" are no longer
depreciated. As of December 31, 1996, the Partnership committed to a plan
to sell the Westdale Mall investment property or its interest in the
property. Accordingly, the consolidated property had been classified as
held for sale or disposition in the accompanying consolidated financial
statement at March 31, 1999. The results of operations, net of venture
partners share, for Westdale Mall for the three months ended March 31, 1999
was $276,492. While the Partnership continues its marketing efforts, its
commitment to a plan for sale or disposal has to date, however, not
resulted in a sale or disposition. As a result, the Partnership made an
adjustment to record the depreciation expense as of June 30, 1999 that
would have been recognized had the Westdale Mall investment property not
been considered to be "held for sale or disposition". Further, the
Partnership began recording depreciation expense for the Westdale Mall
investment property commencing July 1, 1999.
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 may be
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
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,
2000 and for the three months ended March 31, 2000 and 1999 are as follows:
Unpaid at
March 31,
2000 1999 2000
------ ------ ----------
Insurance commissions. . . . . . . . . $ 647 553 647
Reimbursement (at cost) for
out-of-pocket expenses . . . . . . . -- -- --
------ ----- -----
$ 647 553 647
====== ===== =====
<PAGE>
WESTDALE MALL
Westdale Mall continues to operate in a very competitive retail
environment, which may adversely affect its operations due to various
circumstances. Econofoods, which occupies 48,400 square feet of space on
the periphery of the site, has started construction of a new, larger store
across the street from Westdale Mall, and will not renew its lease upon
expiration in July 2000. The operator of the cinema at Westdale Mall
opened a 12-screen multiplex cinema in a nearby development. Furthermore,
Westdale Mall is subject to greater competition, particularly from a
shopping center that opened approximately 20 miles from Westdale Mall.
During the first quarter of 2000, occupancy decreased to 93%, and 1% of the
property is leased to tenants on a month-to-month basis. As leases 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
Partnership is also evaluating certain capital improvement projects and the
competitive positioning of this property in its market. The joint venture
intends to allocate the resources necessary for the manager of the mall to
continue to attract new tenants, subject to working capital sources and
reserves.
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,
2000 and the three months ended March 31, 2000 and 1999.
<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 consolidated
financial statements for additional information concerning the
Partnership's investments.
At March 31, 2000, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $6,226,000. Such funds are
available for distributions to partners (including venture partners), and
working capital requirements, of which approximately $1,169,000 is being
held at the Westdale Mall for potential costs to be incurred including
capital additions and tenant improvements to the extent not funded by the
venturers. The Partnership and its consolidated venture have currently
budgeted in 2000 approximately $500,000 for tenant improvements and other
capital expenditures at Westdale Mall. Actual amounts expended may vary
depending on a number of factors including actual leasing activity, results
of property operations, the extent of unaffiliated venture partner
compliance with its obligation to share in the funding of such
requirements, liquidity considerations and other market conditions over the
course of the year. The sources of capital (in addition to the cash and
cash equivalents noted above) for such items and for both short-term and
long-term future liquidity and distributions are expected to be through net
cash generated by the Partnership's remaining investment property and
through the sale of such investment. The Partnership's venture's mortgage
obligations are all non-recourse.
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.
In April 1999, some of the Limited Partners received from an
unaffiliated third party an unsolicited tender offer to purchase up to 4.9%
of the Interests in the Partnership at $100 per interest. The Special
Committee advised the Limited Partners to accept this offer. Additionally,
in June 1999, some of the Limited Partners in the Partnership received from
an unaffiliated third party an unsolicited tender offer to purchase up to
4.78% of the Interests in the Partnership at an amount of $50 per Interest.
The Special Committee recommended against acceptance of this offer on the
basis that, among other things, the offer price was inadequate. All such
offers have expired. As of the date of this report, the Partnership is
aware that, in the aggregate, 11.84% of the outstanding Interests 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.
The General Partners of the Partnership expect to be able to conduct
an orderly liquidation of its remaining investment property as quickly as
practicable. The affairs of the Partnership are expected to be wound up as
soon as practicable subsequent to the sale of the Partnership's remaining
investment property or its interest in the property. However, there can be
no assurance that any such sale will be consummated, or, if so, what the
terms of such sale will be.
<PAGE>
RESULTS OF OPERATIONS
The increase in interest, rents and other receivables at December 31,
1999 as compared to December 31, 1998 is primarily due to the timing of the
collection of certain recoverable expenses from tenants at the Westdale
Mall.
The decrease in accounts payable at March 31, 2000 as compared to
December 31, 1999 is primarily due to the timing of payments for certain
operating expenses at Westdale Mall.
The decrease in accrued real estate taxes at March 31, 2000 as
compared to December 31, 1999 is primarily due to the timing of real estate
tax payments at Westdale Mall.
The increase in interest income for the three months ended March 31,
2000 as compared to the three months ended March 31, 1999 is primarily due
to the timing of the receipt of certain receivables in 1999 resulting in a
higher average cash balance during the first three months of 2000 as
compared to the first three months of 1999 at Westdale Mall.
The increase in depreciation for the three months ended March 31, 2000
as compared to the three months ended March 31, 1999 is primarily due to
the commencement of continued depreciation at the Westdale Mall as a result
of the Partnership no longer classifying this property as held for sale or
disposition.
The decrease in professional services for the three months ended
March 31, 2000 as compared to the three months ended March 31, 1999 is
primarily due to consulting fees and legal fees incurred in 1999 related to
marketing costs for the potential sale of the Westdale Mall.
The decrease in general and administrative expense for the three
months ended March 31, 2000 as compared to the three months ended March 31,
1999 is primarily due to marketing expenses in 1999 for the potential sale
of the Westdale Mall.
<PAGE>
<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 property owned during 2000.
<CAPTION>
1999 2000
------------------------------------- ------------------------------
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. Westdale Mall
Cedar Rapids, Iowa (a) . . . 89% 91% 91% 94% 93%
<FN>
(a) The percentage represents physical occupancy which includes temporary tenants.
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3-A. The Prospectus of the Partnership dated January 18,
1980, as supplemented May 23, 1980, as filed with the Commission pursuant
to Rules 424(b) and 424(c), is hereby incorporated herein by reference to
Exhibit 3-A to the Partnership's Report for December 31, 1992 on Form 10-K
(File No. 0-9555) dated March 19, 1993.
3-B. Amended and Restated Agreement of Limited Partnership
set forth as Exhibit A to the Prospectus, which is hereby incorporated
herein by reference to Exhibit 3-B to the Partnership's Report for December
31, 1992 on Form 10-K (File No. 0-9555) dated March 19, 1993.
3-C. Acknowledgement of rights and duties of the General
Partners of the Partnership between AGPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is hereby incorporated herein by reference to the
Partnership's Report for September 30, 1996 on Form 10-Q, as amended, (File
No. 0-9555) dated November 8, 1996.
4-A. Mortgage loan agreement relating to the purchase by the
Partnership of an interest in Westdale Mall in Cedar Rapids, Iowa is hereby
incorporated herein by reference to the Partnership's Report on Form 8-K
(File No. 0-9555) dated October 3, 1980.
27. Financial Data Schedule
--------------------
(b) No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
<PAGE>
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 12, 2000
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.
By: GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 12, 2000
<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, 2000 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,226,299
<SECURITIES> 0
<RECEIVABLES> 1,371,481
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,597,780
<PP&E> 42,539,581
<DEPRECIATION> 33,707,152
<TOTAL-ASSETS> 18,648,606
<CURRENT-LIABILITIES> 2,861,913
<BONDS> 18,918,711
<COMMON> 0
0
0
<OTHER-SE> (3,185,535)
<TOTAL-LIABILITY-AND-EQUITY> 18,648,606
<SALES> 2,037,988
<TOTAL-REVENUES> 2,124,570
<CGS> 0
<TOTAL-COSTS> 1,586,164
<OTHER-EXPENSES> 54,630
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 564,498
<INCOME-PRETAX> (80,722)
<INCOME-TAX> 0
<INCOME-CONTINUING> (47,648)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47,648)
<EPS-BASIC> (.76)
<EPS-DILUTED> (.76)
</TABLE>
