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, 1996 Commission File #2-79095
JMB MORTGAGE PARTNERS, LTD.
(Exact name of registrant as specified in its charter)
Illinois 36-3198533
(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. . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 12
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB MORTGAGE PARTNERS, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 2,605,733 2,410,051
Rents, interest and other receivables . . . . . . . . . . . . . . . . 160,463 149,359
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,026 8,377
----------- -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 2,771,222 2,567,787
----------- -----------
Investment property:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000 2,400,000
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . 7,270,711 7,233,901
----------- -----------
9,670,711 9,633,901
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . 300,918 240,433
----------- -----------
Total investment property,
net of accumulated depreciation . . . . . . . . . . . . . . 9,369,793 9,393,468
Mortgage note receivable (net of allowance for loan loss
of $1,145,000 in 1996 and 1995) . . . . . . . . . . . . . . . . . . . 1,297,000 1,332,000
Settlement note receivable. . . . . . . . . . . . . . . . . . . . . . . 83,500 86,500
Deferred costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,595 9,816
----------- -----------
$13,540,110 13,389,571
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
------------------------------------------------------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56,181 20,116
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,470 16,668
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . 156,453 124,203
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . 965,652 957,006
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 1,195,756 1,117,993
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 56,879 56,879
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 1,252,635 1,174,872
Venture partners' subordinated equity in venture. . . . . . . . . . . . 3,892,798 3,839,288
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 473,865 473,672
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (667,968) (667,968)
----------- -----------
(193,103) (193,296)
----------- -----------
Limited partners (39,695 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 34,918,348 34,918,348
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 16,825,985 16,806,912
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (43,156,553) (43,156,553)
----------- -----------
8,587,780 8,568,707
----------- -----------
Total partners' capital accounts. . . . . . . . . . . . . . . 8,394,677 8,375,411
----------- -----------
$13,540,110 13,389,571
=========== ===========
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 306,978 329,704
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,176 34,407
----------- ----------
348,154 364,111
----------- ----------
Expenses:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,485 60,000
Property operating expenses . . . . . . . . . . . . . . . . . . . . . 117,389 80,757
Mortgage investment servicing fees. . . . . . . . . . . . . . . . . . 7,113 22,270
Professional services . . . . . . . . . . . . . . . . . . . . . . . . 20,000 32,525
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . 842 --
General and administrative. . . . . . . . . . . . . . . . . . . . . . 69,549 27,297
----------- ----------
275,378 222,849
----------- ----------
Operating earnings (loss) . . . . . . . . . . . . . . . . . . 72,776 141,262
Venture partners' share of venture's operations . . . . . . . . . . . . (53,510) (74,796)
----------- ----------
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . $ 19,266 66,466
=========== ==========
Net earnings (loss) per limited partnership interest. . . . . $ .48 1.60
=========== ==========
Cash distributions per limited partnership interest . . . . . $ -- 22.50
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,266 66,466
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,485 60,000
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 842 --
Venture partners' share of venture's operations . . . . . . . . . . . . 53,510 74,796
Changes in:
Rents, interest and other receivables . . . . . . . . . . . . . . . . . . (11,104) (7,244)
Amount due from affiliate . . . . . . . . . . . . . . . . . . . . . . . . -- 302,250
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,351 --
Deferred interest receivable. . . . . . . . . . . . . . . . . . . . . . . -- 48
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,065 5,611
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 802 --
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . 32,250 26,750
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . 8,646 6,850
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . -- 17,764
----------- -----------
Net cash provided by (used in) operating activities . . . . . . . 204,113 553,291
----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments. . . . . . -- 1,353,736
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (36,810) (6,699)
Reduction in loan carrying value due to borrower payments . . . . . . . . 35,000 40,000
Payments received on settlement note from former loan guarantor . . . . . 3,000 --
Payment of deferred costs . . . . . . . . . . . . . . . . . . . . . . . . (9,621) --
----------- -----------
Net cash provided by (used in) investing activities . . . . . . . (8,431) 1,387,037
----------- -----------
Cash flows from financing activities:
Bank overdraft. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (296,763)
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . -- (893,138)
Distributions to general partners . . . . . . . . . . . . . . . . . . . . -- (3,069)
----------- -----------
Net cash provided by (used in) financing activities . . . . . . . -- (1,192,970)
----------- -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . 195,682 747,358
Cash and cash equivalents, beginning of year. . . . . . . . . . . 2,410,051 1,104,277
----------- -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 2,605,733 1,851,635
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ -- --
=========== ===========
Non-cash investing and financing activities:
Balance due on mortgage note receivable . . . . . . . . . . . . . . . . $ -- 6,063,135
Deferred interest receivable. . . . . . . . . . . . . . . . . . . . . . -- 735,567
Provision for loan loss . . . . . . . . . . . . . . . . . . . . . . . . -- (1,002,000)
Capitalized costs . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 6,699
Venture partners' interests . . . . . . . . . . . . . . . . . . . . . . -- 3,796,599
----------- -----------
Net initial carrying value of investment property . . . . . . . . $ -- 9,600,000
=========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB MORTGAGE PARTNERS, LTD.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal 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 these
estimates.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
Certain amounts in the 1995 consolidated financial statements have
been reclassified to conform to the 1996 presentation.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate 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 General Partners and their
affiliates as of March 31, 1996 and for the three months ended March 31,
1996 and 1995 are as follows:
UNPAID AT
MARCH 31,
1996 1995 1996
------- ------ ---------
Property management
and leasing fees . . . . . . $11,329 13,038 4,609
Reimbursement (at cost)
for salaries, salary-
related expenses and
other out-of-pocket
expenses . . . . . . . . . . 29,639 17,935 24,772
------- ------ ------
$40,968 30,973 29,381
======= ====== ======
Cumulative unpaid mortgage investment servicing fees aggregate
$936,271 (of which $929,159 is subordinated) at March 31, 1996, all of
which have been accrued in the accompanying consolidated financial
statements.
The General Partners have continued to defer payment of their share of
distributions of repayment proceeds amounting to $611,385.
All amounts deferred or currently payable to the General Partners or
their affiliates do not bear interest.
SPRING HILL FASHION CENTER, WEST DUNDEE, ILLINOIS
Occupancy at the shopping center was 67% at March 31, 1996, down from
75% at December 31, 1995. A major tenant, which occupied approximately 24%
of the leasable space at the property and which was operating under Chapter
11 bankruptcy protection, did not exercise its renewal option when its
lease expired in October 1995 and vacated its space. The Spring Hill joint
venture, however, executed a ten-year lease (in February 1996) with a
replacement tenant for this space at rental rates lower than those of the
former tenant, resulting in the property currently being 94% leased. The
Spring Hill joint venture is conserving its working capital in order to
fund the costs associated with this replacement tenant's expected occupancy
in the summer of 1996. Although, the Spring Hill joint venture is actively
pursuing the sale of this property, there can be no assurance that a
satisfactory sale transaction will be completed by the end of 1996.
OAK COURT OF WESTMONT SHOPPING CENTER, WESTMONT, ILLINOIS
Occupancy at the shopping center was 76% at March 31, 1996, up from
73% at December 31, 1995. However, the borrower executed a ten-year lease
with a tenant for approximately 7,300 square feet (24% of the leasable
space) at the property, with an expected May 1996 occupancy, which will
increase the property's occupancy to 100%.
Due to the property's previous high levels of vacancy, the borrower
has made only partial interest payments since July, 1989 to the extent of
cash generated by the property, with $1,607,000 of basic interest ($92,500
of which is due for 1996) remaining uncollected at March 31, 1996. The
manager of the property, an affiliate of the borrower, is currently
deferring a portion of its management fees in order to increase the cash
flow available to the Partnership. The borrower has been unable to either
sell the property or to obtain replacement long-term financing in order to
repay the loan on its scheduled maturity date of January 14, 1995. The
Partnership has worked closely with the borrower in an effort to lease up
the vacant space at the property and is currently working with the borrower
to either sell or obtain replacement financing. Accordingly, the
Partnership has classified this mortgage note receivable as a noncurrent
asset in the accompanying consolidated balance sheets.
ADJUSTMENTS
In the opinion of the Corporate 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,
1996 and for the three months ended March 31, 1996 and 1995.
PART 1. 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 consolidated
financial statements for additional information concerning the
Partnership's investments.
After reviewing the remaining investments and their competitive
marketplace, the General Partners of the Partnership expect to be able to
liquidate as quickly as practicable. Therefore, the affairs of the
Partnership are expected to be wound up as soon as it is feasibly possible,
barring unforeseen economic developments.
RESULTS OF OPERATIONS
The decrease in mortgage note receivable at March 31, 1996 as compared
to December 31, 1995 is the result of a $35,000 reduction in the carrying
value of the loan secured by the Oak Court of Westmont Shopping Center,
such amount representing a payment received from the borrower in 1996,
pursuant to the Partnership's policy of reflecting all payments collected
on this loan as principal payments.
Rental income decreased for the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995 primarily as a result of
a decrease in average occupancy arising from the vacating of a major tenant
during the fourth quarter of 1995 at the Spring Hill Fashion Center. Such
decrease was partially offset by the collection of a tenant lease
termination fee in 1996 and by the timing of the recognition of recoverable
real estate taxes and other property expenses due from tenants in 1996 as
compared to 1995.
Property operating expenses increased for the three months ended March
31, 1996 as compared to the three months ended March 31, 1995 primarily as
a result of an increase in tenant-related legal fees, allowances for
doubtful accounts and real estate tax expense at the Spring Hill Fashion
Center.
Mortgage investment servicing fees decreased for the three months
ended March 31, 1996 as compared to the three months ended March 31, 1995
as a result of the lenders (including the Partnership) obtaining legal
title to the Spring Hill Fashion Center in early May 1995.
The increase in general and administrative expenses for the three
months ended March 31, 1996 as compared to the three months ended March 31,
1995 is attributable primarily to the timing of the recognition of costs
for certain outsourcing services, the recognition of certain prior year
reimbursable costs to affiliates of the General Partners and the timing of
the recognition of certain printing costs in 1996.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's
owned or reflected as owned investment property.
<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>
Spring Hill Fashion Center
Shopping Center
West Dundee, Illinois. . . 94%* 94% 92% 75% 67%
<FN>
- --------------------
* This property was reflected as owned at March 31, 1995 although title did not transfer to the Partnership
(through a joint venture) pursuant to a deed in lieu of foreclosure until May 1995.
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10-A. Promissory Note ($2,495,000) for the Oak Court of Westmont
Shopping Center, dated January 14, 1985, between WBR Westmont Associates,
an Illinois limited partnership, LaSalle National Bank, Trustee, and JMB
Mortgage Partners, Ltd., an Illinois limited partnership is hereby
incorporated herein by reference to the Partnership's report on Form 10-K
(File No. 2-79095) for December 31, 1992, dated March 19, 1993.
10-B. Promissory Note ($350,000) for the Oak Court of Westmont
Shopping Center, dated January 14, 1985, between WBR Westmont Associates,
an Illinois limited partnership, LaSalle National Bank, Trustee, and JMB
Mortgage Partners, Ltd., an Illinois limited partnership is hereby
incorporated herein by reference to the Partnership's report on Form 10-K
(File No. 2-79095) for December 31, 1992, dated March 19, 1993.
10-C. Agreement for Deed in Lieu of Foreclosure and related
agreements dated as of April 4, 1995 between borrower and lenders relating
to Spring Hill Fashion Center are incorporated herein by reference to the
Partnership's Report for December 31, 1995 on Form 10-K (File No. 2-79095)
dated March 25, 1996.
10-D. Agreement of General Partnership of JMB/Spring Hill
Associates dated May 1, 1995 between JMB Mortgage Partners, Ltd., JMB
Mortgage Partners, Ltd.-II and JMB Mortgage Partners, Ltd.-III is
incorporated herein by reference to the Partnership's Report for December
31, 1995 on Form 10-K (File No. 2-79095) dated March 25, 1995.
27. Financial Data Schedule.
(b) No reports on Form 8-K were required or have been filed for
the quarter covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Partnership has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
JMB MORTGAGE PARTNERS, LTD.
BY: JMB Realty Corporation
(Corporate General Partner)
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Date: May 10, 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: May 10, 1996
<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, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,605,733
<SECURITIES> 0
<RECEIVABLES> 160,463
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,771,222
<PP&E> 9,670,711
<DEPRECIATION> 300,918
<TOTAL-ASSETS> 13,540,110
<CURRENT-LIABILITIES> 1,195,756
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 8,394,677
<TOTAL-LIABILITY-AND-EQUITY> 13,540,110
<SALES> 306,978
<TOTAL-REVENUES> 348,154
<CGS> 0
<TOTAL-COSTS> 178,716
<OTHER-EXPENSES> 96,662
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 72,776
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,266
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,266
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
</TABLE>
