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 June 30, 1995Commission file number 0-12432
JMB INCOME PROPERTIES, LTD. - IX
(Exact name of registrant as specified in its charter)
Illinois 36-3126228
(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 . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K. . . . . . 18
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . $ 1,843,893 2,352,046
Short-term investments (note 1). . . . . . . . . . . . . . . 2,290,328 2,176,462
Interest, rents and other receivables. . . . . . . . . . . . 316,692 332,726
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . -- 15,351
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . 4,450,913 4,876,585
------------ -----------
Investment property, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899,298 899,298
Buildings and improvements . . . . . . . . . . . . . . . . . 26,059,027 26,023,152
------------ -----------
26,958,325 26,922,450
Less accumulated depreciation. . . . . . . . . . . . . . . . 13,227,108 12,728,252
------------ -----------
Total investment property,
net of accumulated depreciation . . . . . . . . . . . 13,731,217 14,194,198
Investment in unconsolidated venture, at equity (note 1) . . . 1,144,966 1,322,900
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 789,499 759,525
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 4,736,068 4,870,049
------------ -----------
$ 24,852,663 26,023,257
============ ===========
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . $ 15,644,421 15,784,297
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 154,104 367,067
Due to affiliates (note 5) . . . . . . . . . . . . . . . . . 446,983 446,983
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 155,710 156,238
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . 16,401,218 16,754,585
Tenant security deposits . . . . . . . . . . . . . . . . . . . 66,981 83,614
------------ -----------
Commitments and contingencies (notes 1, 2, 3 and 5)
Total liabilities . . . . . . . . . . . . . . . . . . . 16,468,199 16,838,199
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . (3,922,234) (3,890,210)
Cumulative cash distributions. . . . . . . . . . . . . . . (1,962,978) (1,962,978)
------------ -----------
(5,884,212) (5,852,188)
------------ -----------
Limited partners (77,132 interests):
Capital contributions, net of offering costs . . . . . . . 68,210,848 68,210,848
Cumulative net earnings. . . . . . . . . . . . . . . . . . 41,016,552 41,785,122
Cumulative cash distributions. . . . . . . . . . . . . . . (94,958,724) (94,958,724)
------------ -----------
14,268,676 15,037,246
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . 8,384,464 9,185,058
------------ -----------
$ 24,852,663 26,023,257
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------------------------------------
1995 1994 1995 1994
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . $ 803,904 830,404 1,633,275 1,671,867
Interest income. . . . . . . . . . . . . 60,482 36,148 120,296 74,681
----------- ---------- ----------- ----------
864,386 866,552 1,753,571 1,746,548
----------- ---------- ----------- ----------
Expenses:
Mortgage and other interest. . . . . . . 415,275 418,332 831,345 837,381
Depreciation . . . . . . . . . . . . . . 249,428 241,765 498,856 483,530
Property operating expenses. . . . . . . 351,777 333,466 713,790 701,818
Professional services. . . . . . . . . . 20,300 29,838 54,600 77,199
Amortization of deferred expenses. . . . 37,459 21,246 74,916 40,654
General and administrative . . . . . . . 39,301 32,120 65,682 50,243
----------- ---------- ----------- ----------
1,113,540 1,076,767 2,239,189 2,190,825
----------- ---------- ----------- ----------
Operating loss. . . . . . . . . . 249,154 210,215 485,618 444,277
Partnership's share of loss
from operations of uncon-
solidated venture (note 1) . . . . . . . 91,591 118,635 314,976 448,660
----------- ---------- ----------- ----------
Net loss. . . . . . . . . . . . . $ 340,745 328,850 800,594 892,937
=========== ========== =========== ==========
Net loss per limited
partnership interest. . . . . . $ 4.24 4.09 9.96 11.11
=========== ========== =========== ==========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . $ -- -- -- --
=========== ========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (800,594) (892,937)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 498,856 483,530
Amortization of deferred expenses. . . . . . . . . . . . . . . 74,916 40,654
Partnership's share of loss from operations
of unconsolidated venture. . . . . . . . . . . . . . . . . . 314,976 448,660
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . 16,034 1,797
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 15,351 15,783
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 133,981 111,535
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (219,653) 113,504
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . -- (14,086)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . (528) (474)
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . 6,690 138,593
Tenant security deposits . . . . . . . . . . . . . . . . . . . (16,633) --
----------- -----------
Net cash provided by operating activities. . . . . . . . 23,396 446,559
----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . (113,866) 2,101,928
Additions to investment property . . . . . . . . . . . . . . . . (35,875) (30,304)
Partnership's contributions to unconsolidated venture. . . . . . (137,044) (212,153)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . (104,888) (14,775)
----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . . . . . . (391,673) 1,844,696
----------- -----------
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1995 1994
----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . (139,876) (134,281)
----------- -----------
Net cash used in financing activities. . . . . . . . . . (139,876) (134,281)
----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . . . . . . (508,153) 2,156,974
Cash and cash equivalents, beginning of year . . . . . . 2,352,046 230,415
----------- -----------
Cash and cash equivalents, end of period . . . . . . . . $ 1,843,893 2,387,389
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . $ 831,873 837,856
Non-cash investing and financing activities. . . . . . . . . . . $ -- --
=========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 consolidated venture, Plaza/Seattle
Limited Partnership ("Plaza/Seattle"). The effect of all transactions
between the Partnership and the consolidated venture has been eliminated in
the consolidated financial statements. The equity method of accounting has
been applied in the accompanying consolidated financial statements with
respect to the Partnership's venture interest in T&C-JMB Partners ("T&C").
Accordingly, the accompanying consolidated financial statements do not
include the accounts of T&C and T&C's venture, H&M Associates, Ltd. -
Houston ("Town & Country") (notes 3(a) and 6).
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 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 six months ended
June 30:
1995 1994
----------------------- --------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net loss . . . . $800,594 1,327,312 892,937 1,245,360
Net loss
per limited
partnership
interest. . . . $ 9.96 16.52 11.11 15.50
======== ========= ======= =========
The net loss per limited partnership interest is based upon the number
of interests outstanding at the end of each period (77,132).
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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.
Partnership distributions from its unconsolidated venture 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
($1,751,095 and $2,348,978 at June 30, 1995 and December 31, 1994,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.
(2) LONG-TERM DEBT MODIFICATION
The long-term mortgage note secured by the Blanchard Plaza office
building located in Seattle, Washington was modified effective with the
payment due December 1, 1988 and provided for debt service to be paid at
reduced rates through the May 1, 1991 payment with the interest rate
differential being added monthly to the principal balance on the note. The
mortgage note balance includes cumulative deferred interest of $2,644,421
and $2,784,297 at March 31, 1995 and December 31, 1994, respectively. On
March 1, 1990 the contractual interest rate on the note was adjusted to
10.5% as provided for in the modification agreement. Beginning on June 1,
1991 the pay rate is at 11% per annum of the sum of the principal and
deferred interest payments as of June 1, 1991 ($16,221,063) until December
1, 1995, when the outstanding balance of principal and any remaining
deferred interest is due and payable (see note 3(b)). On April 1, 1992 and
on each April 1 thereafter, an additional principal payment is payable to
the extent of any annual net cash flow (as defined) for the immediately
preceding year. Based on the 1994 and 1993 annual cash flows, $79,589 and
$79,978 was paid in March 1995 and April 1994, respectively. Based on the
1992 annual cash flow, no additional payment was due on April 1, 1993.
(3) VENTURE AGREEMENTS
The Partnership at June 30, 1995 is a party to two operating joint
venture agreements. 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.
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(a) Town & Country Center
Commencing January 1, 1989 and through December 31, 1992, the
Partnership was entitled to receive a specified preferential distribution
from the T&C venture. As the Partnership did not receive its preferential
distribution through December 31, 1992, the Partnership is entitled to
recover such cumulative deficiency from first available cash flow from
operations in subsequent years or from sale proceeds. Town & Country's net
cash flow is distributable as follows: first, T&C is entitled to receive
the cumulative deficiency in its preferred cash return through 1992; next,
the developer is entitled to receive a cumulative amount equal to its
unreimbursed capital contributions used to fund operating deficits incurred
with respect to the property; any cash flow in excess of these preferred
amounts will be distributable 73.07% to T&C and 26.93% to the developer.
Any operating deficits generally will be funded by contributions to the
venture by the venture partners in the ratio of their respective residual
ownership percentages.
Through June 30, 1995, the Partnership and its affiliated joint
venture partner have made interest-bearing loans aggregating $4,340,437 to
the T & C venture to fund operating deficits at the property pursuant to an
amendment to the Town & Country partnership agreement under negotiation.
However, there can be no assurance that such an amendment will be executed.
The Partnership's portion of these loans have been reflected as
contributions to unconsolidated venture in the accompanying consolidated
financial statements.
Town & Country also is obligated under a 12% promissory note payable
($991,689 outstanding as of June 30, 1995) to an affiliate of the developer
which matured June 30, 1993. The Partnership and the affiliated joint
venture partner have reached an agreement in principle with the developer
to extend the original due date of the promissory note. Although no
interest payments are being made currently, the venture continues to accrue
interest on the note at the original contract rate. As of the date of this
report, the specific terms of this agreement are still being finalized.
However, there can be no assurance that such extension will be executed.
An affiliate of the Managing General Partner of the Partnership has
responsibility for management and leasing of the Town & Country Center
under a management agreement which provides for a management fee equal to a
percentage of gross income (as defined) from the property's operations not
to exceed 5% in the aggregate.
(b) Plaza/Seattle
The terms of the joint venture partnership agreement provide that the
joint venture partners will not be obligated to make any cash contributions
to the joint venture; however, the value of the joint venture partners'
contribution of their interest in the land to the joint venture has been
taken into account in determining the terms of the joint venture
partnership agreement. Distribution of annual cash flow (after debt
service) is to be made first to the Partnership as reimbursement for its
aggregate additional capital contributions; then the joint venture partners
are entitled to receive the next $90,000 per annum of annual cash flow; the
Partnership is entitled to receive the next $1,078,838 and any excess
annual cash flow will be distributable 92.3% to the Partnership and 7.7% to
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
the joint venture partners. Distributions of annual cash flow to the
Partnership and to the joint venture partners ceased in September 1987.
The Partnership has funded 100% of all subsequent deficits at the Blanchard
Plaza office building. Consequently, operating profits and losses are
allocated 100% to the Partnership.
The joint venture partnership agreement provides that the net
proceeds, if any, from any sale or refinancing of the property will be
allocated as follows: first to the Partnership as reimbursement for its
aggregate additional capital contributions; then the Partnership shall be
paid the outstanding balance of its $2,000,000 loan to the venture (such
loan has been eliminated in consolidated financial statements, see note 1)
plus any accrued interest thereon (monthly payments of interest only are
due and have been made at the rate of 10.88%); the joint venture partners
are entitled to receive the next $1,250,000 of such proceeds; the
Partnership is entitled to receive the next $15,225,000 and any remaining
proceeds will be distributable 92.3% to the Partnership and 7.7% to the
joint venture partners. The joint venture partnership agreement provides
for gain or loss on the disposition of the property to be allocated to the
extent needed to equalize the capital accounts of the joint venture
partners, to the extent of any net proceeds distributed to the joint
venture partners and any remaining gain or loss 92.3% to the Partnership
and 7.7% to the joint venture partners.
An affiliate of the Managing General Partner had responsibility for
management and leasing of the Blanchard Plaza office building under a
management agreement which provided for a management fee equal to 4% of
gross income (as defined) from the property's operations. In December
1994, such affiliate sold substantially all of its assets and assigned its
interest in its management contracts, including the agreement for the
Blanchard Plaza office building, to an unaffiliated third party (note 5).
The long-term debt at the property is scheduled to mature in December
1995. There can be no assurance that the joint venture will be able to
extend, refinance or obtain alternative financing for all or substantially
all of the mortgage loan when the debt matures. The Partnership continues
to examine a possible sale should a refinancing not take place. There can
be no assurance that a sale of the property will occur.
(4) PARTNERSHIP AGREEMENT
The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of real property by the Partnership
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 second fiscal quarter of 1983.
Payment of the portion of sale and refinancing proceeds allocable to the
General Partners pursuant to the above is deferred until such time as the
Limited Partners have received cash distributions, of sale and refinancing
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
proceeds and of Partnership operations, in an amount equal to the Limited
Partners' initial capital investment in the Partnership plus a 10% annual
return on the Limited Partners' average capital investment. Approximately
$3,197,000 has been deferred by the General Partners pursuant to the
distribution levels described above.
(5) TRANSACTIONS WITH AFFILIATES
The Partnership's properties are managed by affiliates of the General
Partners or their assignees for fees computed as a percentage of certain
rents received by the properties. 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. In
addition, certain of the management personnel of the property manager
became management personnel of the purchaser and its affiliates. The
successor to the affiliated property manager continues to act as the
property manager of the Blanchard Plaza office building after the sale on
the same terms as existed prior to the sale.
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of June 30,
1995 and for the six months ended June 30, 1995 and 1994 are as follows:
Unpaid at
June 30,
1995 1994 1995
------- ------ -------------
Property management and
leasing fees . . . . . . $ -- 96,136 431,972
Insurance commissions. . . -- 4 --
Reimbursement (at cost) for
out-of-pocket expenses . 45,354 58,166 --
------- ------- -------
$45,354 154,306 431,972
======= ======= =======
The Managing General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Managing General Partner and its affiliates relating to the
administration of the Partnership and the operation of Partnership
investment properties. The amount of salaries and direct expenses
aggregated $40,843 for the six months ended June 30, 1995 and $163,343 for
the year ended December 31, 1994, of which $15,011 were unpaid as of June
30, 1995. Pursuant to the Partnership Agreement, the amount of
compensation paid to affiliates of the General Partners for property
management and leasing services is subject to certain limitations and are
currently being repaid in accordance with such limitations. All amounts
payable to the General Partners and their affiliates do not bear interest
and may be repaid in future periods.
Subsequent to June 30, 1995, the Managing General Partner of the
Partnership has determined to use an independent third-party or parties to
perform certain of these administrative services beginning in late 1995.
Use of a third-party, (rather than reimbursement to the Managing General
Partner and its affiliates), is not expected to have a material effect on
the operations of the Partnership.
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(6) UNCONSOLIDATED VENTURE - SUMMARY INFORMATION
The summary income statement information for the Town & Country
venture for the six months ended June 30, 1995 and 1994 are as follows:
1995 1994
---------- ----------
Total income . . . . . . . . . . . . .$3,877,411 3,149,265
========== ==========
Operating loss . . . . . . . . . . . .$1,459,099 1,976,641
========== ==========
Net loss to Partnership. . . . . . . .$ 314,976 448,660
========== ==========
(7) 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 June 30, 1995
and for the three and six months ended June 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 to Notes to Consolidated Financial
Statements contained in this report.
At June 30, 1995, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $1,844,000. Such funds and
short-term investments of approximately $2,290,000 are available for
capital improvements, future distributions to partners, payment of certain
deferrals to affiliates of the General Partners and for working capital
requirements including operating deficits at the Blanchard Plaza office
building and the Partnership's share of operating deficits, re-leasing
costs and capital costs at the Town & Country Center. Reference is made to
Note 3. The Partnership is also examining a mall enhancement program at
the Town & Country Center. As a result of certain limitations in the
Partnership Agreement, an affiliate of the General Partners of the
Partnership is deferring payment of certain management and leasing fees as
more fully described in Note 5. The Partnership and its consolidated
venture have currently budgeted in 1995 approximately $377,000 for tenant
improvements and other capital expenditures. The Partnership's share of
such items and its share of such similar items for its unconsolidated
venture in 1995 is budgeted to be approximately $3,331,000, which includes
a portion of a mall enhancement program at the Town & Country Center.
There is no certainty that any or all of the costs budgeted for the mall
enhancement program (of which the Partnership's share is budgeted to be
approximately $2,954,000 in 1995) at the Town & Country Center will be
incurred. The amounts and timing may vary depending on a number of factors
including actual leasing activity, results of operations, liquidity
considerations and other market conditions. Effective the second quarter
of 1993, the Partnership suspended its quarterly distribution so that
future cash requirements of the Partnership's properties may be met. The
source of capital for such items and for long-term future liquidity and
distributions is dependent on cash generated by the Partnership's
investment properties and through the sale of such investments. In such
regard, reference is made to the Partnership's property - specific
discussions below and to Note 2. The properties' operations are not
expected to generate any short-term liquidity as described below. The
Partnership's 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.
The Blanchard Plaza investment property currently operates at a small
deficit. This deficit results from the modification of the property's
mortgage note which provides for an annual cash flow payment to the lender
which reduces the principal balance of the loan as described in Note 2.
The Partnership expects to continue to utilize the remaining proceeds from
the sale of the Lynnhaven Mall to cover these operating deficits. The
mortgage note is scheduled to mature in December 1995. Although
discussions have commenced with the existing lender to extend the mortgage
loan, there is no assurance that the venture will be able to obtain such an
extension, refinance all or substantially all of the loan or obtain
alternative financing when the note matures. The Partnership continues to
examine a possible sale of the property should a refinancing not take
place. There can also be no assurance that a sale of the property will
occur. The property's long-term contributions to the Partnership's
liquidity depends upon the mortgage being refinanced at a more favorable
rate or the property being sold should a refinancing not take place. The
Seattle office market is showing significant improvement as vacancy rates
continue to decline. The current vacancy rate for the sub-market in which
the property operates is approximately 5%. Of the approximately 39,900
square feet of leases (17% of the building's leasable square footage)
originally scheduled to expire in 1995, the Partnership has been successful
in signing new and renewing leases of approximately 22,900 square feet. In
addition, the Partnership signed a new lease for another approximately
3,000 square feet for space which had never been occupied. Although there
can be no assurance, the Partnership is actively pursing the renewal or re-
lease of the remaining space in the building. In addition, the Partnership
amended the lease with the General Services Administration ("GSA") in 1994.
In exchange for certain rent concessions, this amendment eliminated the
GSA's option to terminate the lease at any time after October 1998. The
GSA lease expires in October 2002.
During the quarter, occupancy of the mall decreased to 63%. Occupancy
at the Town & Country Center has been steadily decreasing over the past few
years due in part to the slow recovery of Houston's economy, which had been
severely affected by the recent nation wide recession and the intense
competition which exists in the Center's trade area. Such competitive
conditions have contributed to operating deficits and have resulted in
significant tenant leasing concessions such as free rent, tenant allowances
and rental abatements. The manager of the mall is continuing its
aggressive leasing program to retain existing tenants and to seek new
tenants. In an effort to increase occupancy and to reduce operating
deficits, the joint venture is examining a mall enhancement program at the
Center.
The Town & Country joint venture also is obligated under a 12%
promissory note (with a balance of $991,689 and accrued interest of
$536,000 as of June 30, 1995) payable to an affiliate of the developer
which matured June 30, 1993. The Partnership and the affiliated joint
venture partner have reached an agreement in principle with the developer
to extend the original due date of the promissory note. Although no
interest payments are being made currently, the venture continues to accrue
interest on the note at the original contract rate. As of the date of this
report, the specific terms of this agreement are still being finalized.
However, there can be no assurance that such extension will be executed.
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. The Partnership
has also sought or is seeking additional loan modifications where
appropriate. As previously reported, the Partnership's properties are not
currently generating operating cash flow. The Partnership is examining its
potential cash requirements at the Town and Country Center for the re-
leasing program and potential mall enhancement program as described above.
Due to these factors, the Partnership had previously reduced the regular
quarterly distributions to the partners and beginning the second quarter of
1993, has suspended such distributions for an unknown period of time. By
conserving working capital, the Partnership will be in a better position to
meet future needs of its properties since outside sources of capital may be
limited.
As we have reported previously, due to these factors, the Partnership
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 decrease in cash and cash equivalents and corresponding increase
in short-term investments at June 30, 1995 as compared to December 31, 1994
is primarily due to approximately $1,751,000 of the Partnership's U.S.
Government obligations being classified as cash equivalents at June 30,
1995 whereas approximately $2,350,000 of such U.S. Government obligations
were classified as cash equivalents at December 31, 1994. Reference is
made to Note 1. The aggregate decrease in cash and cash equivalents and
short-term investments is also due to the Partnership's continued funding
of deficits incurred at the Town & Country Center and Blanchard Plaza
office building. Reference is made to Note 3(a).
The decrease in prepaid expenses at June 30, 1995 as compared to
December 31, 1994 is due to the timing of the payment of insurance premiums
at the Blanchard Plaza office building.
The decrease in accounts payable at June 30, 1995 as compared to
December 31, 1994 is primarily due to the timing of payment of certain
deferred expenses, including re-leasing costs, related to the Blanchard
Plaza office building.
The decrease in tenant security deposits at June 30, 1995 as compared
to December 31, 1994 is due to the refund of security deposits to certain
tenants and the replacement of such tenants with tenants under leases which
do not require security deposits at the Blanchard Plaza office building in
1995.
The increase in interest income for the three and six months ended
June 30, 1995 as compared to the three and six months ended June 30, 1994
is primarily due to higher effective yields being earned on U.S. Government
obligations held by the Partnership during 1995.
The increase in amortization of deferred expenses for the three and
six months ended June 30, 1995 as compared to the three and six months
ended June 30, 1994 is primarily due to the 1995 amortization of lease
commissions deferred at the Blanchard Plaza office building in December
1994.
The decrease in Partnership's share of loss from operations of
unconsolidated venture for the three and six months ended June 30, 1995 as
compared to the three and six months ended June 30, 1994 is primarily due
to the write-off of certain delinquent tenant receivables in 1994 at the
Town & Country Center.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels 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. Town and Country Center
Houston, Texas . . 73% 74% 76% 74% 65% 63%
2. Blanchard Plaza Building
Seattle, Washington 96% 96% 91%(a) 93%(a) 96% 95%
--------------------
<FN>
(a) The percentage represents physical occupancy. Transamerica (5,557 square feet or 3% of the building)
vacated its space prior to its lease expiration of January 31, 1995 but continued to pay rent pursuant to its
lease obligation until such expiration.
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4-A. Modification documents relating to the long-term
mortgage note secured by the Blanchard Plaza Building in Seattle,
Washington are hereby incorporated by reference to the Partnership's report
on Form 10-K (File No. 0-12432) for December 31, 1992 dated March 19, 1993.
4-B. Long-term mortgage note documents relating to the
mortgage note secured by the Town & Country Center in Houston, Texas are
hereby incorporated by reference to Post-Effective Amendment No. 4 to the
Partnership's Registration Statement on Form S-11 (File No. 2-73991) dated
April 14, 1982.
10-A. Acquisition documents relating to the purchase by the
Partnership of an interest in the Blanchard Plaza Building in Seattle,
Washington are hereby incorporated by reference to the Partnership's report
on Form 8-K (File No. 0-12432) dated July 29, 1983.
10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the Town & Country Center in Houston, Texas
are hereby incorporated by reference to Post-Effective Amendment No. 4 to
the Partnership's Registration Statement on Form S-11 (File No. 2-73991)
dated April 14, 1982.
10-C. Management Agreement between H&M Associates and JMB
Retail Properties Co., successor of JMB Properties Company, for management
services of the Town & Country Center in Houston, Texas dated April 1, 1991
is hereby incorporated by reference to the Partnership's report on Form 10-
Q (File No. 0-12432) for June 30, 1994 dated August 12, 1994.
27. Financial Data Schedule
(b) No reports on Form 8-K have been 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.-IX
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:August 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:August 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE
30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000355472
<NAME> JMB INCOME PROPERTIES, LTD.-IX
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,843,893
<SECURITIES> 2,290,328
<RECEIVABLES> 316,692
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,450,913
<PP&E> 26,958,325
<DEPRECIATION> 13,227,108
<TOTAL-ASSETS> 24,852,663
<CURRENT-LIABILITIES> 16,401,218
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 8,384,464
<TOTAL-LIABILITY-AND-EQUITY> 24,852,663
<SALES> 1,633,275
<TOTAL-REVENUES> 1,753,571
<CGS> 0
<TOTAL-COSTS> 1,287,562
<OTHER-EXPENSES> 120,282
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 831,345
<INCOME-PRETAX> (485,618)
<INCOME-TAX> 0
<INCOME-CONTINUING> (800,594)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (800,594)
<EPS-PRIMARY> (9.96)
<EPS-DILUTED> (9.96)
</TABLE>
