<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________to ___________________
Commission File No. 0-7798
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FIRST WILKOW VENTURE
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
ILLINOIS 36-6169280
- -------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
180 NORTH MICHIGAN AVENUE, CHICAGO, ILLINOIS 60601
- -------------------------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 726-9622
-------------------------
NOT APPLICABLE
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed
all reports to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
---- ----
<PAGE> 2
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
---------------- --------------
ASSETS
REAL ESTATE AND INVESTMENTS IN REAL ESTATE PARTNERSHIPS
Real Estate:
<S> <C> <C>
Land $ 5,998,791 $ 6,230,711
Buildings and Improvements 46,824,785 46,862,244
Fixtures and Equipment 113,105 116,955
----------- -----------
Total 52,936,681 53,209,910
Less-Accumulated Depreciation 18,322,999 17,955,658
----------- -----------
Net Real Estate 34,613,682 35,254,252
Investment in Real Estate Partnerships 3,450,639 3,642,820
----------- -----------
Total 38,064,321 38,897,072
----------- -----------
LOANS RECEIVABLE 1,675,705 849,934
----------- -----------
OTHER ASSETS
Cash 434,437 966,660
Certificates of Deposit 5,355,000 2,220,000
Receivable 534,074 702,567
Prepaid Expenses 2,978 818
Deposits 1,456,898 836,567
Deferred Charges 1,368,964 911,756
----------- -----------
Total 9,152,351 5,638,368
----------- -----------
TOTAL ASSETS $48,892,377 $45,385,374
=========== ===========
<CAPTION>
LIABILITIES AND PARTNERS' CAPITAL
MORTGAGES AND LOANS PAYABLE
Mortgages Payable $33,237,087 $30,653,730
Notes Payable 454,488 672,975
----------- -----------
Total 33,691,575 31,326,705
----------- -----------
OTHER LIABILITIES
Accounts Payable and Accrued Expenses 52,256 69,092
Accrued Property Taxes 2,761,910 2,378,995
Deferred State Income Taxes 200,000 200,000
Security Deposits and Prepaid Rent 459,119 539,698
Accrued Interest 73,623 72,847
----------- -----------
Total 3,546,908 3,260,632
----------- -----------
MINORITY INTEREST 1,565,136 1,685,777
----------- -----------
PARTNERS' CAPITAL (170,916 units authorized and issued) 10,088,758 9,112,260
----------- -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $48,892,377 $45,385,374
=========== ===========
</TABLE>
Note: Balance Sheet at 12/31/97 has been taken from the audited financial
statements at that date.
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<PAGE> 3
FIRST WILKOW VENTURE
CONSOLIDATED STATEMENT OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------------- -------------------------
1998 1997 1998 1997
------------- ------------- ------------ ------------
REVENUES
<S> <C> <C> <C> <C>
Rental Income $2,401,336 $2,474,001 $7,286,889 $7,037,207
Interest Income 103,388 63,050 245,332 162,766
Other Income 1,363,791 17,953 1,363,791 53,996
---------- ---------- ---------- ----------
3,868,515 2,555,004 8,896,012 7,253,969
---------- ---------- ---------- ----------
PARTNERSHIP INVESTMENTS' INCOME (LOSS)
Share of Net Income (Loss) 29,693 501,443 41,640 1,082,979
---------- ---------- ---------- ----------
29,693 501,443 41,640 1,082,979
---------- ---------- ---------- ----------
EXPENSES
Operating Expenses 699,952 638,097 1,913,705 2,020,129
Real Estate Taxes 466,468 636,179 1,715,870 1,843,800
Depreciation and Amortization 492,223 433,363 1,390,733 1,304,527
Interest Expense 469,229 675,539 1,797,704 2,046,314
General and Administrative 195,637 127,958 478,465 433,808
---------- ---------- ---------- ----------
2,323,509 2,511,136 7,296,477 7,648,578
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE
MINORITY INTEREST
AND TAXES 1,574,699 545,311 1,641,175 688,370
MINORITY INTEREST IN
SUBSIDIARIES NET INCOME/LOSS 56,520 (60,489) 10,440 (57,486)
PROVISION FOR STATE INCOME TAXES 0 0 0 0
---------- ---------- ---------- ----------
NET INCOME (LOSS) $1,631,219 $ 484,822 $1,651,615 $ 630,884
========== ========== ========== ==========
UNITS USED TO COMPUTE PER UNIT AMOUNTS 170,916 178,972 170,916 178,972
NET INCOME (LOSS)/PER UNIT $ 9.54 $ 2.71 $ 9.66 $ 3.53
========== ========== ========== ==========
DISTRIBUTION PER UNIT $ 0.00 $ 0.25 $ 3.95 $ 2.50
========== ========== ========== ==========
</TABLE>
NOTE 1: No provision for Federal Income Taxes has been made since First Wilkow
Venture is a partnership and the partners report their pro-rata share
of income or loss individually.
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<PAGE> 4
FIRST WILKOW VENTURE
CONSOLIDATED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
------------------------------
1998 1997
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 1,651,615 $ 630,884
Non Cash Items Included in Net Income
Minority Interest in Subsidiaries Net Income/Loss (10,440) 57,486
Depreciation and Amortization 1,390,733 1,304,528
Amortization of Debt Forgiveness Income (257,436) (53,996)
Net (gain) loss on disposal of land, building and (1,827,048) --
improvements
(Decrease) Increase in Net Payable and Accrued Expense (167,721) (169,570)
Share of Partnership's Net (Income) Loss (41,640) (1,082,979)
------------ ------------
Total Cash Provided (Used) from Operating Activities 738,063 686,353
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Partnership Investment Draws 677,528 293,956
Partnership Investment Sale Proceeds -- 2,333,956
Cash Proceeds from Sale of Real Estate 1,827,048 --
(Increase) in Land and Buildings (431,482) (710,709)
Investment in Partnerships (443,707) (73,438)
(Decrease) Increase in Minority Interest (110,200) (82,650)
(Decrease) Increase in Mortgage and Notes (218,487) (247,893)
Payable
(Increase) Decrease in Mortgage and Notes (825,771) 303,161
Receivable
Investment in Deferred Charges (775,890) (197,902)
------------ ------------
Total Cash Provided (Used) from Investing Activites (300,961) 1,618,481
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Distribution to Partners (675,118) (447,430)
Proceeds from Mortgage Financing 21,806,000 --
Mortgage Principal Payments (18,965,207) (358,581)
------------ ------------
Total Cash Provided (Used) from Financing Activities 2,165,675 (806,011)
------------ ------------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 2,602,777 1,498,823
CASH AND EQUIVALENTS - BEGINNING OF PERIOD 3,186,660 1,306,870
------------ ------------
CASH AND EQUIVALENTS - END OF PERIOD $ 5,789,437 $ 2,805,693
============ ============
</TABLE>
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<PAGE> 5
FIRST WILKOW VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. Financial Statements
The financial statements have been prepared in accordance with
generally accepted accounting principles. Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
Reference is made to the Partnership's annual report for the year ended
December 31, 1997, for a description of other accounting policies and additional
details for the Partnership's financial condition, results of operations,
changes in partners' capital and statement of cash flows for the year then
ended. The details provided in the notes thereto have not changed as a result of
normal transactions in the interim.
2. Subsequent Events
On October 8, 1998, the Partnership made an additional loan of $20,626
to Arlington LLC.
On October 10, 1998, the Partnership paid off a loan payable to a
general partner and certain limited partners in the principal amount of $410,000
and $8,784 in accrued interest.
On October 10, 1998, the Partnership made a distribution in the amount
of $59,821, or $.35 per unit.
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<PAGE> 6
FIRST WILKOW VENTURE
FORM 10-Q
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SEPTEMBER 30, 1998
Overview
Reference is made to Partnership's annual report for the year ended
December 31, 1997 for a discussion of the Partnership's business.
On January 10, 1998, the Partnership made a distribution in the amount
of $42,729, or $.25 per unit.
On April 8, 1998, M&J/Retail Limited Partnership acquired a 64.95%
investment in M & J/Clarkfair L.P., which has a 9% interest in Clarkfair LLC.
Clarkfair LLC is the sole owner of two limited liability companies, namely
Marketfair North LLC and Shops at Clark's Pond LLC, which were formed to acquire
the following described properties:
Marketfair North - a 136,989 square foot shopping center in
Clay, New York
Shops at Clark's Pond - a 208,325 square foot shopping center in
South Portland, Maine
M&J/Retail Limited Partnership's interest is based on a capital contribution of
$315,000 funded as follows:
As of March 31, 1998 $ 75,000.00
At the April 8, 1998 closing 84,927.59
May 13, 1998 funding 155,072.41
-----------
Total initial Capital $315,000.00
===========
In addition to the above cash contributions, M&J/Retail Limited Partnership has
posted two letters of credit totaling $500,000. These letters of credit, which
expire on March 16, 1999, renew automatically until the underlying obligations
are satisfied. The general partner of M&J/Clarkfair, L.P. has indemnified
M&J/Retail Limited Partnership for 10% or $50,000 of these letters of credit. In
the event that the letters of credit are drawn, M&J/Retail Limited Partnership
will be required to fund $450,000 in lieu of the letters of credit. At that time
M&J/Retail Limited Partnership's interest in M&J/Clarkfair L.P. will increase
from 64.95% to 82.74%.
On April 10, 1998, the Partnership made a distribution in the
amount of $230,737 or $1.35 per unit.
On April 10, 1998, the Partnership invested $64,000 to obtain
a 26.44% ownership in M&J/Eden Prairie L.P. which has a 10% interest
in Eden Prairie LLC which acquired a 70,689 square foot shopping
center in Eden Prairie, Minnesota.
On April 30, 1998, three properties owned by M&J/Retail Limited
Partnership, Archer & Central, Irving & Kimball, and Melrose & Kimball, had
their mortgages refinanced with Criimi Mae, Inc. The principal terms of the
three loans are as follows:
<TABLE>
<CAPTION>
Date of Principal Annual Amortization
Property Refinance Amount Interest Rate Schedule Maturity
- -------- --------- ------ ------------- -------- --------
<S> <C> <C> <C> <C> <C>
Archer & Central 4/30/98 $2,350,000 7.40% 30 years 4/30/08
Irving & Kimball 4/30/98 $1,325,000 7.58% 30 years 4/30/08
Melrose & Kimball 4/30/98 $ 991,000 7.58% 30 years 4/30/08
</TABLE>
The existing mortgages in the amounts of $1,997,870, $1,316,725, and $1,135,099,
respectively, were paid off resulting in net refinancing proceeds of $54,621.38.
By virtue of these refinancings, the aggregate annual debt service will be
reduced from $475,464 to $391,101.
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<PAGE> 7
On May 22, 1998, the Partnership made a loan of $125,175 to Arlington
LLC. On July 8, 1998, August 11, 1998, and September 1, 1998, loans in the
amount of $375,179, $14,800, and $314,649 respectively were made for a total
loan receivable of $829,803. The loan proceeds were used to facilitate the
purchase of contiguous land parcels adjacent to a shopping center in Arlington
Heights, Illinois. Once the required land is assembled, the shopping center will
be expanded and re-developed, and the Partnership's loan will be converted to an
equity position.
On June 8, 1998, a property owned by the Partnership, Naperville Office
Court in Naperville, Illinois, was refinanced with Column Financial. The
principal amount of the new first mortgage loan is $4,500,000 bearing interest
at an annual rate of 7.13%. The loan is to be amortized over a 30-year schedule,
with a balloon payment of the unpaid principal balance due on August 1, 2008.
The existing mortgage loan of $2,690,185 was paid off resulting in net
refinancing proceeds of $1,642,123.
On June 26, 1998, the Partnership made a distribution in the amount of
$401,653, or $2.35 per unit.
On July 6, 1998, the property owned by the Partnership at 23 East
Flagler Street in Miami, Florida was sold to G.S. Holding Company of South
Florida for net cash proceeds of $1,827,048 resulting in a gain on sale of
$1,363,791, classified as Other Income on the Consolidated Statement of
Operations.
On July 8, 1998, a property owned by M&J/Retail Limited Partnership,
the Harlem & North shopping center in Oak Park, Illinois, was refinanced with
Criimi Mae, Inc. The principal amount of the new first mortgage loan is
$2,550,000 bearing interest at an annual rate of 7.27%. The loan is to be
amortized over a 30-year schedule, with a balloon payment of the unpaid
principal balance on July 1, 2008. The existing mortgage loan of $2,104,641 was
paid off resulting in net refinancing proceeds of $440,500.
On July 30, 1998, a property owned by the Partnership at 180 North
Michigan Avenue, Chicago, Illinois was refinanced with Column Financial. The
principal amount of the new first mortgage loan is $7,300,000 bearing interest
at an annual rate of 7.13%. The loan is to be amortized over a 30-year schedule,
with a balloon payment of the unpaid principal balance due on September 1, 2008.
The existing mortgage loan of $6,733,888 was paid off resulting in net
refinancing proceeds of approximately $400,000.
On September 8, 1998, a property owned by M&J/Retail Limited
Partnership, Oak Lawn Promenade shopping center in Oak Lawn, Illinois, was
refinanced with WMF Huntoon Paige Associates Ltd. The principal of the new first
mortgage loan is $2,790,000 bearing interest at an annual rate of 7.25%. The
loan is to be amortized over a 30-year schedule, with a balloon payment of the
unpaid principal balance on October 1, 2008. The existing mortgage loan of
$2,542,752 was paid off resulting in net refinancing proceeds of $31,675.
Year 2000 Issue
The Partnership is working to resolve the potential impact of the year
2000 on the ability of the Partnership's computerized information systems to
accurately process information that may be date-sensitive. Any of the
Partnership's programs that recognize a date using "00" as the year 1900 rather
than the year 2000 could result in error or system failures. The Partnership
utilizes a number of computer programs across its entire operation. The
Partnership has not completed its assessment, but currently believes that costs
of addressing this will not have a material adverse impact on the Partnership's
financial position. However, no estimates can be made as to the potential
adverse impact resulting from the failure of third party service providers and
vendors to prepare for the year 2000. The Partnership is attempting to identify
those risks as well as to receive compliance certificates from all third parties
that have a material impact on the Partnership's operations.
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<PAGE> 8
REMARKS
In the opinion of the General Partners, the financial information of
this report includes all adjustments, including estimated provisions for items
normally settled at year end, and is a fair statement of the results for the
interim ended September 30, 1998 and 1997.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FIRST WILKOW VENTURE
By: Marc R. Wilkow
------------------------------------
Marc R. Wilkow, General Partner and
President of M & J Wilkow, Ltd., its
Managing Agent
DATED: November 10, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant, in the capacities indicated, on November 10, 1998
Clifton J. Wilkow
--------------------------------------
Clifton J. Wilkow, General Partner and
Executive Vice President of
M & J Wilkow, Ltd.
Thomas Harrigan
--------------------------------------
Thomas Harrigan, Vice President of
M & J Wilkow, Ltd.
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,789,437
<SECURITIES> 0
<RECEIVABLES> 2,209,779
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,783,387
<PP&E> 52,936,681
<DEPRECIATION> 18,322,999
<TOTAL-ASSETS> 48,892,377
<CURRENT-LIABILITIES> 2,814,166
<BONDS> 33,691,575
0
0
<COMMON> 0
<OTHER-SE> 10,088,758
<TOTAL-LIABILITY-AND-EQUITY> 48,892,377
<SALES> 7,286,889
<TOTAL-REVENUES> 8,896,012
<CGS> 0
<TOTAL-COSTS> 1,913,705
<OTHER-EXPENSES> 2,194,335
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,797,704
<INCOME-PRETAX> 1,651,615
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,651,615
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,651,615
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
