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, 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
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) . . . . . . . . . . . . . $ 4,064,652 2,352,046
Short-term investments (note 1). . . . . . . . . . . . . . . 96,890 2,176,462
Interest, rents and other receivables. . . . . . . . . . . . 313,803 332,726
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 6,221 15,351
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . 4,481,566 4,876,585
------------ -----------
Investment property, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899,298 899,298
Buildings and improvements . . . . . . . . . . . . . . . . . 26,046,234 26,023,152
------------ -----------
26,945,532 26,922,450
Less accumulated depreciation. . . . . . . . . . . . . . . . 12,977,680 12,728,252
------------ -----------
Total investment property,
net of accumulated depreciation . . . . . . . . . . . 13,967,852 14,194,198
Investment in unconsolidated venture, at equity (note 1) . . . 1,236,559 1,322,900
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 826,956 759,525
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 4,803,059 4,870,049
------------ -----------
$ 25,315,992 26,023,257
============ ===========
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1995 1994
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . $15,674,958 15,784,297
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 167,312 367,067
Due to affiliates (note 5) . . . . . . . . . . . . . . . . . 446,983 446,983
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 155,977 156,238
Accrued real estate taxes. . . . . . . . . . . . . . . . . . 64,939 --
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . 16,510,169 16,754,585
Tenant security deposits . . . . . . . . . . . . . . . . . . . 80,614 83,614
------------ -----------
Commitments and contingencies (notes 1, 2, 3 and 5)
Total liabilities . . . . . . . . . . . . . . . . . . . 16,590,783 16,838,199
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net losses. . . . . . . . . . . . . . . . . . . (3,908,604) (3,890,210)
Cumulative cash distributions. . . . . . . . . . . . . . . (1,962,978) (1,962,978)
------------ -----------
(5,870,582) (5,852,188)
------------ -----------
Limited partners (77,132 interests):
Capital contributions, net of offering costs . . . . . . . 68,210,848 68,210,848
Cumulative net earnings. . . . . . . . . . . . . . . . . . 41,343,667 41,785,122
Cumulative cash distributions. . . . . . . . . . . . . . . (94,958,724) (94,958,724)
------------ -----------
14,595,791 15,037,246
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . 8,725,209 9,185,058
------------ -----------
$ 25,315,992 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 MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
---------- -----------
<S> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 829,371 841,463
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . 59,814 38,533
---------- -----------
889,185 879,996
---------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . 416,070 419,049
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . 249,428 241,765
Property operating expenses. . . . . . . . . . . . . . . . . . . 362,013 368,352
Professional services. . . . . . . . . . . . . . . . . . . . . . 34,300 47,361
Amortization of deferred expenses. . . . . . . . . . . . . . . . 37,457 19,408
General and administrative . . . . . . . . . . . . . . . . . . . 26,381 18,123
---------- -----------
1,125,649 1,114,058
---------- -----------
Operating loss. . . . . . . . . . . . . . . . . . . . . . 236,464 234,062
Partnership's share of loss from operations
of unconsolidated venture (note 1) . . . . . . . . . . . . . . . 223,385 330,025
---------- -----------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . $ 459,849 564,087
========== ===========
Net loss per limited partnership interest . . . . . . . . $ 5.72 7.02
========== ===========
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
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (459,849) (564,087)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 249,428 241,765
Amortization of deferred expenses. . . . . . . . . . . . . . . 37,457 19,408
Partnership's share of loss from operations
of unconsolidated venture. . . . . . . . . . . . . . . . . . 223,385 330,025
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . 18,923 (128,907)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 9,130 9,470
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 66,990 55,787
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (199,755) 44,935
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . -- 8,481
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . (261) (235)
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . 64,939 51,997
Tenant security deposits . . . . . . . . . . . . . . . . . . . (3,000) --
----------- -----------
Net cash provided by operating activities. . . . . . . . 7,387 68,639
----------- -----------
Cash flows from investing activities:
Net sales and maturities of short-term investments . . . . . . . 2,079,572 146,099
Additions to investment property . . . . . . . . . . . . . . . . (23,082) (46)
Partnership's contributions to unconsolidated venture. . . . . . (137,044) (92,718)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . (104,888) (8,460)
----------- -----------
Net cash provided by investing activities. . . . . . . . 1,814,558 44,875
----------- -----------
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 . . . . . . . . . . . . . . (109,339) (106,775)
----------- -----------
Net cash used in financing activities. . . . . . . . . . (109,339) (106,775)
----------- -----------
Net increase in cash and cash equivalents. . . . . . . . 1,712,606 6,739
Cash and cash equivalents, beginning of period . . . . . 2,352,046 230,415
----------- -----------
Cash and cash equivalents, end of period . . . . . . . . $ 4,064,652 237,154
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . $ 416,331 419,284
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
MARCH 31, 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
2records 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 three months
ended March 31:
1995 1994
----------------------- -------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net loss . . . . $459,849 663,656 564,087 722,103
Net loss
per limited
partnership
interest. . . . $ 5.72 8.26 7.02 9.36
======== ======= ======== =======
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
($4,039,167 and $2,348,978 at March 31, 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 $2,674,958
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. 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 March 31, 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. 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.
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.
Through March 31, 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.
The Partnership's portion of these loans have been reflected as
contributions to unconsolidated venture in the accompanying consolidated
financial statements. However, there can be no assurance that such an
amendment will be executed.
Town & Country also is obligated under a 12% promissory note payable
($991,689 outstanding as of March 31, 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 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's assets is
acting as the property manager of the Blanchard Plaza office building after
the sale on the same terms that 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 March 31,
1995 and for the three months ended March 31, 1995 and 1994 are as follows:
Unpaid at
March 31,
1995 1994 1995
------- ------ -------------
Property management and
leasing fees . . . . . . $ -- 41,291 431,972
Insurance commissions. . . -- 4 --
Reimbursement (at cost) for
out-of-pocket expenses . 28,672 31,485 --
------- ------ -------
$28,672 72,780 431,972
======= ====== =======
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 $27,787 for the three months ended March 31, 1995 and $163,343
for the year ended December 31, 1994, of which $15,051 was unpaid as of
March 31, 1995. Pursuant to the Partnership Agreement, the amount of
compensation paid to affiliates of the General Partners for property
management and leasing services is subject to certain limitations and are
currently being repaid in accordance with such limitations. All amounts
payable to the General Partners and their affiliates do not bear interest
and may be repaid in future periods.
(6) UNCONSOLIDATED VENTURE - SUMMARY INFORMATION
The summary income statement information for the Town & Country
venture for the three months ended March 31, 1995 and 1994 are as follows:
1995 1994
----------- ----------
Total income . . . . . . . . . . . . .$ 1,642,942 1,152,979
=========== ==========
Operating loss . . . . . . . . . . . .$(1,016,429)(1,467,048)
=========== ==========
Net loss to Partnership. . . . . . . .$ (223,385) (330,025)
=========== ==========
JMB INCOME PROPERTIES, LTD. - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(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 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 to Notes to Consolidated Financial
Statements contained in this report.
At March 31, 1995, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $4,065,000. Such funds and
short-term investments of approximately $97,000 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 $400,000 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 $3,354,000, 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. There is no
assurance that the venture will be able to 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 7%. 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.
The Town & Country Center investment property currently operates in a
market which is characterized by low occupancies, reduced rent levels and
significant tenant leasing concessions such as free rent and tenant
allowances. Such competitive conditions have contributed to operating
deficits and resulted in a significant decrease in the occupancy of the
property during the quarter. The manager of the mall is continuing its
aggressive leasing program and continues to seek new tenants. Based upon
recent lease negotiations, it is hopeful that there will be increased
leasing activity by national retailers in this marketplace. The joint
venture is examining a mall enhancement program at the center as discussed
above.
The Town & Country joint venture also is obligated under a 12%
promissory note (with a balance of $991,689 and accrued interest of
$506,000 as of March 31, 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 increase in cash and cash equivalents and corresponding decrease
in short-term investments at March 31, 1995 as compared to December 31,
1994 is primarily due to approximately $4,039,000 of the Partnership's U.S.
Government obligations being classified as cash equivalents at March 31,
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 decrease in short-term investments is also due to the
Partnership's continued funding of deficits incurred at the Town & Country
Center. Reference is made to Note 3(a).
The decrease in accounts payable at March 31, 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 increase in the balance of accrued real estate taxes at March 31,
1995 as compared to December 31, 1994 is primarily due to the timing of
real estate tax payments at the Blanchard Plaza office building.
The increase in interest income for the three months ended March 31,
1995 as compared to the three months ended March 31, 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 months
ended March 31, 1995 as compared to the three months ended March 31, 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 months ended March 31, 1995 as
compared to the three months ended March 31, 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%
2. Blanchard Plaza Building
Seattle, Washington 96% 96% 91%(a) 93%(a) 96%
- - --------------------
<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: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> <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> 0000355472
<NAME> JMB INCOME PROPERTIES, LTD.-IX
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 4,064,652
<SECURITIES> 96,890
<RECEIVABLES> 320,024
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,481,566
<PP&E> 26,945,532
<DEPRECIATION> 12,977,680
<TOTAL-ASSETS> 25,315,992
<CURRENT-LIABILITIES> 16,510,169
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 8,725,209
<TOTAL-LIABILITY-AND-EQUITY> 25,315,992
<SALES> 829,371
<TOTAL-REVENUES> 889,185
<CGS> 0
<TOTAL-COSTS> 648,898
<OTHER-EXPENSES> 60,681
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 416,070
<INCOME-PRETAX> (236,464)
<INCOME-TAX> 0
<INCOME-CONTINUING> (459,849)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (459,849)
<EPS-PRIMARY> (5.72)
<EPS-DILUTED> 0
</TABLE>
