SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 13, 1995
JMB INCOME PROPERTIES, LTD. - IX
(Exact name of registrant as specified in its charter)
Illinois 0-12432 36-3126228
(State or other) (Commission (IRS Employer
File Number) Identification No.)
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
TOWN AND COUNTRY CENTER
Houston, Texas
ITEM 5. OTHER EVENTS. JMB Income Properties, Ltd.-IX (the "Partnership"), in
a joint venture with an affiliated partnership, JMB Income Properties, Ltd.-
VIII, owns an interest in Town and Country Center (the "Property"), a
1,054,000 square foot regional shopping center located in Houston, Texas,
through another joint venture ("T&C") with the developer of the center. The
center includes six free-standing buildings and a three-level enclosed mall,
of which T&C owns approximately 370,000 square feet of mall space (the
"Property"). Anchor department stores for the center include Dillard's
(180,000 square feet), Neiman-Marcus (141,900 square feet), Marshall Field's
(137,800 square feet) and J.C. Penney (152,300 square feet), which own their
respective stores.
The Property faces strong competition from, among others, the Town and
Country Village, a multi-building retail project encompassing over sixty acres
contiguous to the Property. Town and Country Village is undergoing a
redevelopment and is currently approximately 80% pre-leased. Although not all
tenants at this project will compete directly with the mall tenants at the
Property, a number of tenants that in the past have occupied space in enclosed
regional malls have recently signed leases for free-standing space in Town and
Country Village, and these stores are now scheduled to open in 1996.
Over the past year, T&C has prepared and been evaluating a plan for an
extensive renovation and re-merchandising of the Property for the long-term
stability and enhancement of the Property's occupancy and revenue potential.
In connection with the plan, T&C approached a number of national and regional
tenants to lease space at the Property. In discussions with these tenants, a
majority of them indicated that, in addition to significant tenant leasing
incentives, a major renovation of the Property would be essential for them to
lease space at the Property. Accordingly, T&C worked extensively with an
architectural firm and marketing personnel to determine the most effective
redevelopment plan to improve the Property. Focus group studies on the area
residents further supported this concept. A condition to undertaking a
redevelopment of the Property was to have been T&C's obtaining extensions of
the agreements for the department stores to continue operating their stores at
the Property. The Partnership believed that the renovation and re-
merchandising of the Property was viable and that it would be the best
strategy to enhance value. Accordingly, it remained the Partnership's intent
to hold the Property as a long-term investment.
T&C completed its evaluation of an extensive redevelopment of the center
in early September 1995. The total cost for such a redevelopment, including
obtaining tenant leases for the mall space and extensions of the department
store operating agreements, was estimated to be in excess of $25 million.
However, many of the retail tenants considered integral to a successful re-
merchandising of the Property upon completion of a renovation were now
unwilling to take further space in the Houston market even if given
significant tenant leasing incentives. The continued sluggishness in the
Houston economy in recovering from the previous recession, as well as the
intense competition in the Property's trade area, appear to be among the
factors dissuading prospective retail tenants from committing to lease space
at the Property. In addition, the projected return on the estimated cost was
not expected to be sufficient to warrant an investment of this magnitude.
Given T&C's current level of debt, the strong competition that the
Property faces, and the significant cost that would be required to lease,
renovate and re-merchandise the Property, T&C decided in September 1995 not to
commit any additional capital to pay continued operating deficits of the
Property, including funding for debt service payments, without obtaining a
modification to the existing non-recourse mortgage loan. Consequently, T&C
remitted to the lender only the amount of cash flow from property operations
after expenses rather than the full debt service payment required for the
month of September 1995. T&C approached the lender to discuss the possibility
of a modification to the existing loan to eliminate, or reduce significantly,
future operating deficits. However, the lender was unwilling to modify the
loan. On September 13, 1995, the lender notified T&C that it is in default
and that the lender intends to realize upon its security for the mortgage loan
as soon as possible. Upon the lender's obtaining title to the Property, T&C,
and consequently the Partnership, will recognize a gain for federal income tax
reporting purposes with no corresponding distributable proceeds. T&C will
make a provision for value impairment of the Property of approximately
$30,000,000 (of which the Partnership's share is approximately $7,000,000) for
financial reporting purposes as of September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - IX
By: JMB Realty Corporation
Managing General Partner
By: GAILEN J. HULL
Gailen J. Hull
Senior Vice President
Dated: November 2, 1995
