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, 1996 Commission file #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 . . . . . . . . . . . 10
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . 13
<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, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 1,795,915 4,183,046
Interest, rents and other receivables. . . . . . . . . . . . 306,669 44,668
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . -- 15,457
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . 2,102,584 4,243,171
------------ -----------
Investment property, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899,298 899,298
Buildings and improvements . . . . . . . . . . . . . . . . . 26,105,619 26,075,228
------------ -----------
27,004,917 26,974,526
Less accumulated depreciation. . . . . . . . . . . . . . . . 14,226,601 13,726,829
------------ -----------
Total investment property,
net of accumulated depreciation . . . . . . . . . . . 12,778,316 13,247,697
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 688,910 740,785
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 4,358,631 4,602,086
------------ -----------
$ 19,928,441 22,833,739
============ ===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . $ 15,228,791 15,565,705
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 662,206 521,551
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 133,252 136,200
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . 16,024,249 16,223,456
Tenant security deposits . . . . . . . . . . . . . . . . . . . 63,309 66,982
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . 16,087,558 16,290,438
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses) . . . . . . . . . . . . . (4,054,097) (4,023,132)
Cumulative cash distributions. . . . . . . . . . . . . . . (1,962,978) (1,962,978)
------------ -----------
(6,016,075) (5,985,110)
------------ -----------
Limited partners (77,132 interests):
Capital contributions, net of offering costs . . . . . . . 68,210,848 68,210,848
Cumulative net earnings (losses) . . . . . . . . . . . . . 38,533,134 39,276,287
Cumulative cash distributions. . . . . . . . . . . . . . . (96,887,024) (94,958,724)
------------ -----------
9,856,958 12,528,411
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . 3,840,883 6,543,301
------------ -----------
$ 19,928,441 22,833,739
============ ===========
<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, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- ------------------------
1996 1995 1996 1995
----------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . $ 648,618 803,904 1,382,474 1,633,275
Interest income. . . . . . . . . . . . . 36,581 60,482 89,745 120,296
---------- ---------- --------- ----------
685,199 864,386 1,472,219 1,753,571
---------- ---------- --------- ----------
Expenses:
Mortgage and other interest. . . . . . . 400,156 415,275 808,096 831,345
Depreciation . . . . . . . . . . . . . . 250,012 249,428 499,772 498,856
Property operating expenses. . . . . . . 348,208 351,777 707,400 713,790
Professional services. . . . . . . . . . 20,235 20,300 55,268 54,600
Amortization of deferred expenses. . . . 35,071 37,459 69,271 74,916
General and administrative . . . . . . . 34,964 39,301 106,530 65,682
---------- ---------- --------- ----------
1,088,646 1,113,540 2,246,337 2,239,189
---------- ---------- --------- ----------
Operating earnings (loss) . . . . (403,447) (249,154) (774,118) (485,618)
Partnership's share of earnings
(loss) from operations of
unconsolidated venture . . . . . . . . . -- (91,591) -- (314,976)
---------- ---------- --------- ----------
Net earnings (loss) . . . . . . . $ (403,447) (340,745) (774,118) (800,594)
========== ========== ========= ==========
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . $ (5.02) (4.24) (9.63) (9.96)
========== ========== ========= ==========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . $ 25.00 -- 25.00 --
========== ========== ========= ==========
<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, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . $ (774,118) (800,594)
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 499,772 498,856
Amortization of deferred expenses. . . . . . . . . . . . . . . 69,271 74,916
Partnership's share of loss from operations
of unconsolidated venture. . . . . . . . . . . . . . . . . . -- 314,976
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . (262,001) 16,034
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 15,457 15,351
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 243,455 133,981
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 140,655 (212,963)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . (2,948) (528)
Tenant security deposits . . . . . . . . . . . . . . . . . . . (3,673) (16,633)
----------- -----------
Net cash provided by (used in) operating activities. . . (74,130) 23,396
----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term
investments. . . . . . . . . . . . . . . . . . . . . . . . . . -- (113,866)
Additions to investment property . . . . . . . . . . . . . . . . (30,391) (35,875)
Partnership's contributions to unconsolidated venture. . . . . . -- (137,044)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . (17,396) (104,888)
----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . . . . . . (47,787) (391,673)
----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . (336,914) (139,876)
Distributions to limited partners. . . . . . . . . . . . . . . . (1,928,300) --
----------- -----------
Net cash provided by (used in) financing activities. . . (2,265,214) (139,876)
----------- -----------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . (2,387,131) (508,153)
Cash and cash equivalents, beginning of year . . . . . . 4,183,046 2,352,046
----------- -----------
Cash and cash equivalents, end of period . . . . . . . . $ 1,795,915 1,843,893
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . $ 811,044 831,873
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, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1995, which
are included in the Partnership's 1995 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.
Certain amounts in the 1995 consolidated financial statements have
been reclassed to conform to the 1996 presentation.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Managing General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees and other expenses
required to be paid by the Partnership to the Managing General Partner and
their affiliates as of June 30, 1996 and for the six months ended June 30,
1996 and 1995 are as follows:
Unpaid at
June 30,
1996 1995 1996
------- ------ -------------
Property management and
leasing fees . . . . . . $ -- -- 467,897
Reimbursement (at cost)
for out-of-pocket salary,
salary-related expenses
and other costs for the
Partnership and its
investment property. . . 18,074 45,354 13,129
------- ------- -------
$18,074 45,354 481,026
======= ======= =======
PLAZA/SEATTLE (BLANCHARD PLAZA)
The Blanchard Plaza investment property currently operates at a small
deficit. This deficit results from a 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. The Partnership expects
to continue to utilize the remaining proceeds from the sale of the
Lynnhaven Mall to cover these operating deficits. The joint venture is
actively marketing the Blanchard Plaza office building for sale. There can
be no assurance that a sale of the property will occur. Also, it is
currently expected that any such sale would result in the return of only a
modest portion of the Partnership's original cash invested in the property.
The mortgage note was scheduled to mature December 1, 1995 and has since
been extended to December 1, 1996. In the event that a sale cannot be
consummated before such time, the joint venture would seek to further
extend the mortgage note or obtain other financing. Such extension or
alternative financing may require the use of Partnership funds to partially
pay down the outstanding balance of the mortgage loan. There can be no
assurance that the joint venture will be able to further extend, refinance
or obtain alternative financing for all or substantially all of the
mortgage loan when the debt matures. If such a refinancing or sale cannot
be achieved prior to such time, the lender may realize upon its security
and take title to the property. This action would result in a gain for
financial reporting and Federal income tax purposes with no corresponding
distributable proceeds.
The joint venture received notification from the General Services
Administration ("GSA"), a major tenant at the property, that it was due
approximately $423,000 in minimum rent credits relating to the alleged
overpayment of real estate taxes from 1989 to 1995. Although, the joint
venture disputed this claim, the GSA began offsetting its monthly rent
payments in January 1996 in an amount equal to 1/12 of the amount in
dispute. The joint venture filed an appeal with the General Services Board
of Contract Appeals. Subsequent to June 30, 1996, the joint venture
executed an agreement in settlement of this claim, whereby GSA is allowed
to withhold the settlement amount from rental payments in 1996. The joint
venture is bound by a confidentiality provision in the settlement agreement
which does not permit disclosure of the terms of the settlement; however,
the joint venture believes the settlement was in the best interest of the
joint venture and has reflected the portion of the settlement relating to
the first six months of 1996 in the accompanying consolidated financial
statements.
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, 1996
and for the three and six months ended June 30, 1996 and 1995 (assuming the
Partnership continues as a going concern).
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 financial
statements for additional information concerning the Partnership's
investment.
During the second quarter some of the Limited Partners in the
Partnership received from an unaffiliated third party an unsolicited tender
offer to purchase up to 3,379 Interests in the Partnership at between $50
and $60 per Interest. The Partnership recommended against acceptance of
this offer on the basis that, among other things, the offer price was
inadequate. In June such offer expired with approximately 1,508 Interests
being purchased by such unaffiliated third party pursuant to such offer.
In addition, the Partnership has, from time to time, received inquires from
other third parties that may consider making offers for Interests,
including requests for the list of Limited Partners in the Partnership.
These inquiries are generally preliminary in nature. 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 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.
The Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests. Expenses incurred in connection with the previous tender offer
and additional potential tender offers for Interests are expected to
increase Partnership operating expenses in the third quarter.
At June 30, 1996, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $1,796,000. Such funds 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 and the possible
paydown of the mortgage loan at the Blanchard Plaza office building.
There is substantial doubt about the Partnership's ability to continue
as a going concern due to the mortgage indebtedness secured by the
Partnership's final remaining property maturing in December 1996.
After reviewing Blanchard Plaza and the marketplace in which it
operates, the General Partners of the Partnership expect to liquidate this
asset as quickly as practicable. Therefore, the affairs of the Partnership
are expected to be wound up no later than 1999 (sooner if the Blanchard
Plaza property is sold or disposed of in the nearer term), barring
unforeseen economic developments.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents and corresponding decrease
in current portion of long-term debt at June 30, 1996 as compared to
December 31, 1995 is primarily due to a principal payment of annual net
cash flow (as defined) for the Blanchard Plaza investment property in the
amount of $255,800, which was paid in March 1996. Also contributing to the
decrease in cash and cash equivalents was the payment of a distribution to
the limited partners in the amount of $1,928,300 in May 1996.
The increase in interest, rents and other receivables at June 30, 1996
as compared to December 31, 1995 is primarily due to the timing of
collections at the Blanchard Plaza investment property and the Blanchard
Plaza investment property accruing the monthly rent offsets taken by its
major tenant (GSA) in conjunction with the settlement of GSA's claim as
described in Notes to Consolidated Financial Statements.
The decrease in rental income for the three and six months ended June
30, 1996 as compared to the three and six months ended June 30, 1995 is
primarily due to lower average occupancy and to the Partnership recognizing
rental income for certain major tenant leases at the Blanchard Plaza
investment property over the life of the lease rather than as due per the
terms of their respective leases. Also contributing to the decrease in
rental income is the settlement of GSA's claim, under which GSA was allowed
to withhold a portion of its 1996 rental payments for the alleged
overpayment of real estate taxes for the period 1989 through 1995.
The increase in general and administrative expenses for the six months
ended June 30, 1996 as compared to the six months ended June 30, 1995 is
primarily due to the Partnership engaging independent third parties to
perform certain administrative services for the Partnership beginning in
October 1995.
The decrease in Partnership's share of loss from operations of
unconsolidated venture for the three and six months ended June 30, 1996 as
compared to the three and six months ended June 30, 1995 is due to the
disposition of the unconsolidated venture property due to the lender
realizing upon its security for its non-recourse loan related to the Town
and Country Center investment property in December 1995.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate physical occupancy levels for the Partnership's investment property
owned during 1996.
<CAPTION>
1995 1996
-------------------------------------------------------------------
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. Blanchard Plaza Building
Seattle, Washington 96% 95% 91% 92% 90% 92%
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3-A. The Prospectus of the Partnership dated April 14, 1982,
as supplemented September 23, 1982, January 11, 1983, February 22, 1983,
and March 28, 1983, and filed with the Commission pursuant to Rules 424(b)
and 424(c), is hereby incorporated herein by reference to Exhibit 3 to the
Partnership's report on Form 10-K (File No. 0-12432) for December 31, 1992
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 to the Partnership's report on Form 10-K
(File No. 0-12432) for December 31, 1992 dated March 19, 1993.
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. Modification documents relating to the extension of the
long-term mortgage note secured by the Blanchard Plaza Building in Seattle,
Washington are hereby incorporated by reference to Exhibit 4-B to the
Partnership's report on Form 10-K (File No. 0-12432) for December 31, 1995
dated March 25, 1996.
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. Disposition documents relating to the Partnership's
transferring its interest in the Town and Country Center in Houston, Texas
are hereby incorporated by reference to Exhibit 10-B to the Partnership's
report on Form 10-K (File No. 0-12432) for December 31, 1995 dated March
25, 1996.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed for the quarter covered
by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD.-IX
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:August 9, 1996
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, 1996
<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, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,795,515
<SECURITIES> 0
<RECEIVABLES> 306,669
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,102,584
<PP&E> 27,004,917
<DEPRECIATION> 14,226,601
<TOTAL-ASSETS> 19,928,441
<CURRENT-LIABILITIES> 16,024,249
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,840,883
<TOTAL-LIABILITY-AND-EQUITY>19,928,441
<SALES> 1,382,474
<TOTAL-REVENUES> 1,472,219
<CGS> 0
<TOTAL-COSTS> 1,276,443
<OTHER-EXPENSES> 161,798
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 808,096
<INCOME-PRETAX> (774,118)
<INCOME-TAX> 0
<INCOME-CONTINUING> (774,118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (774,118)
<EPS-PRIMARY> (9.63)
<EPS-DILUTED> (9.63)
</TABLE>
