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, 1994 Commission File No. 0-12140
JMB INCOME PROPERTIES, LTD. - X
(Exact name of registrant as specified in its charter)
Illinois 36-3235999
(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 . . . . 16
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . 22
Item 6. Exhibits and Reports on Form 8-K. . . . . . 23
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 2,520,713 1,061,308
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,196,183 3,189,979
Rents and other receivables, net of allowance for doubtful accounts of
$93,679 in 1994 and $113,363 in 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . 541,920 631,960
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 233,119
Escrow deposits (note 3(b)). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,933 18,943
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,291,749 5,135,309
------------ -----------
Investment properties, at cost (notes 2 and 3):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,777,474 19,826,661
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,729,057 135,014,936
------------ -----------
156,506,531 154,841,597
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,184,394 43,945,824
------------ -----------
Total investment properties, net of accumulated depreciation . . . . . . . . . . . . 110,322,137 110,895,773
Investment in unconsolidated ventures, at equity (notes 1, 3 and 6). . . . . . . . . . . . . . 22,509,027 22,662,962
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,725 344,696
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,121,269 1,866,812
------------ -----------
$140,527,907 140,905,552
============ ===========
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (notes 2(a) and 3(b)). . . . . . . . . . . . . . . . . . .$ 41,642,758 27,294,320
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843,940 784,617
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,902,263 3,003,805
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,326,251 2,547,126
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,715,212 33,629,868
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,191 31,878
Long-term debt, less current portion (notes 2 and 3(b)). . . . . . . . . . . . . . . . . . . . 32,310,146 46,800,991
------------ -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,050,549 80,462,737
Partners' capital accounts:
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,035,904 963,664
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (250,000) (250,000)
------------ -----------
786,904 714,664
------------ -----------
Limited partners (150,005 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . . . . . 135,651,080 135,651,080
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,924,564 15,762,221
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (92,885,190)(91,685,150)
------------ -----------
60,690,454 59,728,151
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 61,477,358 60,442,815
------------ -----------
Commitments and contingencies (notes 2 and 3)
$140,527,907 140,905,552
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------------------------
1994 1993 1994 1993
------------ ---------- ------------------------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . $7,356,489 7,307,873 15,112,472 14,798,566
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . 34,806 23,456 62,494 89,684
---------- --------- ---------- ----------
7,391,295 7,331,329 15,174,966 14,888,250
---------- --------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . . 2,048,754 2,361,368 4,201,083 4,724,436
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,120,965 1,068,524 2,238,570 2,137,048
Property operating expenses. . . . . . . . . . . . . . . . . . . . 3,499,887 3,476,204 7,180,187 6,837,080
Professional services. . . . . . . . . . . . . . . . . . . . . . . 44,760 19,068 111,050 166,870
Amortization of deferred expenses. . . . . . . . . . . . . . . . . 37,270 41,919 73,981 82,692
General and administrative . . . . . . . . . . . . . . . . . . . . 86,633 121,630 134,914 163,626
---------- --------- ---------- ----------
6,838,269 7,088,713 13,939,785 14,111,752
---------- --------- ---------- ----------
Operating earnings. . . . . . . . . . . . . . . . . . . . . 553,026 242,616 1,235,181 776,498
Partnership's share of operations of unconsolidated
ventures (note 1). . . . . . . . . . . . . . . . . . . . . . . . . 264,790 729,972 427,974 1,286,885
---------- --------- ---------- ----------
Net operating earnings. . . . . . . . . . . . . . . . . . . 817,816 972,588 1,663,155 2,063,383
Gain on sale or disposition of investment properties (note 2(c)) . . -- -- 571,428 --
---------- --------- ---------- ----------
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . $ 817,816 972,588 2,234,583 2,063,383
========== ========= ========== ==========
Net earnings per limited partnership interest (note 1):
Net operating earnings. . . . . . . . . . . . . . . . . . $ 5.24 6.22 10.65 13.21
Gain on disposition of investment properties. . . . . . . -- -- 3.77 --
---------- --------- ---------- ----------
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . $ 5.24 6.22 14.42 13.21
========== ========= ========== ==========
Cash distributions per limited partnership interest . . . . $ 4.00 4.00 8.00 14.00
========== ========= ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,234,583 2,063,383
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,238,570 2,137,048
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,981 82,692
Partnership's share of operations of unconsolidated ventures, net of distributions . . . . 153,935 (316,082)
Gain on sale or disposition of investment property . . . . . . . . . . . . . . . . . . . . (571,428) --
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,040 698,444
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,990) (13,457)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233,119 (199,004)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (254,457) (449,573)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,323 429,716
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (101,542) 302,053
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,220,875) (1,328,349)
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (212,778)
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,687) (10,058)
---------- -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . 2,914,572 3,184,035
---------- -----------
Cash flows from investing activities:
Cash proceeds from sale of investment property, net of selling expenses. . . . . . . . . . . 620,615 --
Net sales and maturities of short-term investments . . . . . . . . . . . . . . . . . . . . . 993,796 815,877
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,714,121) (2,100,382)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,010) (42,619)
---------- -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . . . (112,720) (1,327,124)
---------- -----------
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993
---------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . (142,407) (125,148)
Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,200,040) (2,100,070)
---------- -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . . . . . (1,342,447) (2,225,218)
---------- -----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . $1,459,405 (368,307)
========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . . $4,201,083 4,422,383
========== ===========
Non-cash investing and financing activities. . . . . . . . . . . . . . . . . . . . . . . . . $ -- --
========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994 AND 1993
Readers of this report should refer to the Partnership's audited
financial statements for the year ended December 31, 1993, which are included
in the Partnership's 1993 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 venture, Animas Valley Mall Associates ("Animas").
The effect of all transactions between the Partnership and its 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 interests in Royal
Executive Park - I ("Royal Executive Park") and JMB-40 Broad Street Associates
("Broad Street"). Accordingly, the accompanying consolidated financial
statements do not include the accounts of Royal Executive Park, or of Broad
Street.
The Partnership records are maintained on the accrual basis of accounting
as adjusted for Federal income tax reporting purposes. The accompanying
consolidated financial statements have been prepared from such records after
making appropriate adjustments to present 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 for the six months ended June 30 is summarized as follows:
1994 1993
----------------------------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net earnings
(loss). . . .$2,234,583 (104,502) 2,063,383 (268,556)
Net earnings
(loss) per
limited partner-
ship interest 14.42 (.62) 13.21 (1.72)
========== ======== ========= ========
The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of each
period (150,005).
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 unconsolidated ventures 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. Therefore, for the purposes
of these statements, the Partnership's policy is to consider all such amounts
held with original maturities of three months or less, ($1,831,905 at June 30,
1994 and none at December 31, 1993, 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.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(2) INVESTMENT PROPERTIES
(a) Pasadena Town Square Mall
The Partnership continues to explore the possibility of adding another
major department store to the Pasadena Town Square. In order to add another
department store at this center, the Partnership may need to commit a
substantial amount of capital. Given the Partnership's current lack of
substantial working capital, the Partnership may be unable to undertake the
addition of a department store without an alternative source of capital. The
Partnership is continuing discussions with a major department store owner
concerning the opening of a store at the property. There is no assurance that
the addition of a department store will ultimately occur.
In 1993, the Partnership commenced a minor mall enhancement program which
includes a food court remodel. The program is expected to cost approximately
$500,000 with completion during 1994. In addition, commencing in 1994 and
continuing for the next four years, the Partnership is undertaking a program
to repair the property's roof and parking lot. The total cost of the repair
work is expected to be approximately $1,700,000. Such amount will be
partially recoverable from tenants pursuant to provisions in their leases.
The Partnership is currently seeking a refinancing and/or extension of
the mortgage loan on the property in order to obtain a lower interest rate and
to provide additional funds to the Partnership. However, there is no
assurance that the Partnership will obtain a refinancing and/or extension of
the mortgage note which matures in January 1995.
(b) Collin Creek Mall
In 1992 and 1993 the Partnership completed the renovation of the food
court and main floor common area, added escalators at two locations and
upgraded the mall's interior and exterior signage. The total cost of these
enhancement programs was approximately $4,400,000. In addition, in 1994 the
Partnership has commenced a parking lot repair project which will take five
years to complete and cost approximately $1,300,000. Such amount will be
partially recoverable from tenants pursuant to provisions in their leases.
The Partnership has entered into a non-binding letter of intent to sell
its interest in the Collin Creek Mall. The prospective purchaser (an
independent third party) is currently conducting its due diligence review with
respect to the shopping center and the proposed transaction and is expected to
complete such review by the middle of August, 1994. Upon the completion of
such review, assuming that the transaction is to proceed, the Partnership and
the prospective purchaser would enter into a binding agreement for the sale of
the Partnership's interest in the shopping center, with the closing of the
transaction expected to be in the fall of 1994. The Partnership has agreed
that, provided that the prospective purchaser is proceeding in good faith with
respect to the proposed transaction, until August 15, 1994 and during the term
of an executed sale agreement, the Partnership will not offer to sell to a
third-party or solicit from a third-party any offers to purchase or finance
the Partnership's interest in the shopping center or negotiate with a third-
party for the sale, financing or disposition of the Partnership's interest in
the shopping center. Accordingly, the Partnership has ceased its efforts to
seek a refinancing of the mortgage loan (which has a maturity of July 1995)
secured by its interest in the shopping center. The letter of intent executed
by the Partnership and the prospective purchaser is non-binding with respect
to the sale of the Partnership's interest in the shopping center, and
consummation of the proposed transaction is subject to the satisfaction of
various conditions, including the satisfactory completion by the purchaser of
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
its due diligence review and the negotiation and execution of a sale
agreement. Therefore, there can be no assurance that a sale will be
consummated on any terms.
(c) North Hills Mall
The Partnership continues to explore the replacement of a major tenant,
which owns its own store, with another major tenant and/or adding another
major tenant to the center. The major tenant, which is currently using only
the first level of its two-story store, has expressed an interest in closing
its store. In order to replace the major tenant with another and/or add
another major tenant, the Partnership may need to commit substantial capital.
Given the Partnership's current lack of substantial working capital, the
Partnership may be unable to undertake the replacement or addition of the
major tenant(s) without an outside source of capital. The Partnership is
exploring its alternatives in this regard. The Partnership believes the
replacement of the major tenant and/or addition of another major department
store to this center would greatly enhance the position of this center within
the North Richland Hills retail market. However, there can be no assurance
that such replacement and/or addition will ultimately occur.
In 1993, the Partnership completed a mall enhancement program which
included the replacement of the floor in a portion of the mall, a food court
remodel, and certain lighting improvements. The program cost approximately
$1,000,000. In addition, the Partnership is in the second year of a five year
program to repair the property's roof and parking lot. The total cost of the
repair is expected to be approximately $1,500,000. Such amounts are partially
recoverable from tenants pursuant to provisions in their leases.
The Partnership is currently seeking a refinancing and/or extension of
the mortgage loan on the property in order to obtain a lower interest rate and
to provide additional funds to the Partnership. However, there is no
assurance that the partnership will obtain a refinancing and/or extension of
the mortgage note which matures in July 1995.
In February 1994, the Partnership sold its remaining land outparcel to an
unaffiliated third party. The purchaser is building a restaurant on the site
which is expected to open in the third quarter of 1994. The sale price for
the outparcel was $700,000 (before selling costs and prorations). The
Partnership will retain the net sale proceeds in its working capital. The
Partnership will recognize a gain of $571,428 for Financial reporting purposes
and expects to recognize a gain for Federal income tax purposes in 1994.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at June 30, 1994 is a party to three 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 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. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(b) Animas Valley Mall
Operating profits and losses are allocated to the Partnership and the
joint venture partner according to their respective contributions to fund
operating deficits with any remaining losses allocated to the Partnership.
In April 1992, the Partnership and its joint venture partner settled
certain legal disputes regarding the joint venture agreement and management of
the property. Under the terms of the settlement, the joint venture partner
has contributed approximately $404,000 to the joint venture and relinquished
its approval rights in connection with the business affairs of the joint
venture. The joint venture partner has retained certain approval rights in
connection with a sale or refinancing of the property. The Partnership, in
return, has agreed to pay the joint venture partner a certain settlement
amount in connection with the disposition of the property. Such disposition
payment, $300,000 at June 30, 1994, decreases annually on January 1 to $92,000
in 1996 and thereafter. Under certain limited disposition events, the
disposition payment amount can be further reduced or eliminated.
In April 1992, the joint venture finalized a modification of the existing
long-term mortgage note secured by the Animas Valley Mall. Under the terms of
the modification, the joint venture, commencing with the January 1991 payment,
was obligated to pay debt service of interest only installments at a rate of
10.25% per annum, through the original term of the note, with the deferred
interest (2.25%) accruing at 12.5% and payable monthly to the extent of any
excess cash flow (as defined) or upon the earlier of the sale of the property
or maturity of the note in January 1994. The joint venture had paid debt
service in 1991, 1992, 1993 and through February 1994 in accordance with these
modified terms. In April 1994, the joint venture and the existing lender
finalized an amendment to the loan (effective March 1, 1994) providing for the
extension of its maturity to March 1995 and lowering the pay and accrual rate
on the principal balance to 8% per annum. Any excess cash flow generated by
the property during this period is payable to the lender quarterly towards
interest accrued as of December 31, 1993 (approximately $2,100,000). In
addition, the joint venture has agreed to market this property for sale during
the extension period. The lender has agreed to allow the joint venture to
retain a portion of the net sale proceeds (as defined) in excess of the
current principal balance of $27,000,000. In addition, the lender has
expressed a willingness to finance a portion of the purchase price for a
potential purchaser. The Partnership will commence actively marketing the
property for sale within the next sixty days. There are no assurances that
the joint venture will be successful in selling the property at the level
whereby it will share in any sale proceeds. The Partnership has decided not
to commit additional capital to the joint venture. Therefore, if upon
maturity, assuming a sale cannot be achieved, and the lender is unwilling to
provide further extensions to the loan, the joint venture will transfer title
to the property to the lender. This would result in the Partnership
recognizing a gain for Federal income tax and financial reporting purposes
with no distributable proceeds. In addition, a disposition through a sale to
a third party or transfer of title to the lender would result in a disposition
payment to the joint venture partners as discussed above.
In December 1993, the joint venture sold a land outparcel to an
unaffiliated third party. The purchaser intends to build a bank on the site.
The sale price for the outparcel was approximately $194,000 (before selling
costs and prorations). The joint venture has retained the net sale proceeds
in its working capital reserve.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(c) Royal Executive Park
Annual cash flow is distributed 49.9% to the Partnership and 50.1% to the
joint venture partner. However, since the joint venture partner did not
receive $2,605,200 of cash flow for each of the initial five years, the joint
venture partner will be entitled to receive such deficiency, up to a total of
$400,000 from annual cash flow, if any, available for distribution to the
partners after the Partnership and the joint venture partners have received
$2,594,800 and $2,605,200, respectively, per annum. Operating profits and
losses are generally allocated to the joint venture partners in the same ratio
that annual cash flow is distributed to the partners.
The joint venture agreement further provides that proceeds from sale or
refinancing of the complex will be distributed 49.9% to the Partnership and
50.1% to the joint venture partner.
The property has been managed by an affiliate of the joint venture
partner under an agreement which provided for fees equal to 2% of the base
rent paid by tenants. Effective July 1, 1994, an affiliate of the General
Partner of the Partnership assumed the property management responsibilities
for the joint venture. The new manager essentially assumed the previous
management agreement with the exception that a portion of the 2% management
fee will be paid to the previous manager annually by the new manager as
compensation to the previous manager for relinquishing management of the
property. In addition, it is expected that an affiliate of the General
Partners will assume the leasing responsibilities for the property in the near
term. Currently, an independent leasing agent performs such duties.
Occupancy of this office building has decreased to 78% compared to 97% at
October 31, 1993. As anticipated, during the fourth quarter of 1993 New York
Telephone Company's lease (90,000 square feet) expired and it, along with
certain of its subtenants, vacated the building. MCI Realty Inc. (180,000
square feet), which had been subleasing a portion of the New York Telephone
space, entered into a direct lease with the joint venture for 30,000 square
feet. The lease term expires in April, 1998 and provides for an effective
rental rate at market, which is substantially less than the rental rate paid
previously by New York Telephone. The joint venture continues to actively
market the remaining New York Telephone Company space to prospective tenants.
As previously reported, MCI had approached the joint venture seeking a current
rent reduction in return for a lease extension beyond its prior lease
expiration date of March 31, 1998 on its 180,000 square foot lease. During
the quarter, the joint venture finalized a modification and extension of MCI's
180,000 square foot lease. The terms of the agreement provide for a reduction
in MCI's rental rate, effective July 1994, to a rental rate which approximates
current market rental rates. The agreement provides for set rental rate
increases in April 1998 and in April 2002. The extended lease expiration date
is June 2006. In addition, the joint venture has agreed to provide funds to
MCI in 1994 to enhance its leased space. The joint venture's decision to
modify MCI's 180,000 square foot lease was based upon an analysis of current
and expected future market conditions. The joint venture believes, given the
risk of losing this tenant in 1998 and the resulting potential downtime and
costs associated with releasing the space, that a current reduction in the
rental rate and contribution towards enhancement of its space in return for a
long term extension of its lease will maximize the property's cash flow over
the long term. The costs associated with MCI's expansion and modification are
expected to be paid for from cash on hand generated in 1993 and the cash
generated by the property in 1994.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(d) Broad Street
The Broad Street venture agreement provides that the Partnership will be
allocated or distributed profits and losses, cash flow from operations and
sale or refinancing proceeds in the ratio of its capital contributions to
Broad Street which is 31.44%. The Partnership and the venture partner (JMB
Income Properties, Ltd. - XII, a partnership sponsored by the Managing General
Partner of the Partnership) are current with respect to their required capital
contributions to Broad Street.
The downtown New York City market remains extremely competitive due to
the significant amount of space available primarily resulting from the
layoffs, cutbacks and consolidations by financial service companies and
related businesses which dominated this market. Rental rates in the downtown
market are currently at depressed levels and this can be expected to continue
for the foreseeable future while the current vacant space is gradually
absorbed. Little, if any, new construction is planned for downtown over the
next few years and it is expected that the building will continue to be
adversely affected by the lower than originally projected effective rental
rates now achieved upon releasing of existing leases which expire over the
next few years.
Occupancy is 86% at June 30, 1994 at Broad Street in New York, New York.
Overall cash flow returns for this property for the next few years are
expected to be lower than originally projected because an additional 13% of
the leased and occupied expires during the next two years. In addition, a
tenant, occupying approximately 37,000 square feet (approximately 15% of the
building), did not renew its lease when it expired in September 1993.
However, subtenants occupying approximately 21,000 square feet whose leases
also expired in September 1993 have held over while Broad Street continues to
negotiate leases with them. Furthermore, Broad Street has renewed and
expanded another tenant, effective July 1, 1993, whose lease was scheduled to
expire in December 1994. This tenant has expanded from approximately 18,000
square feet to approximately 35,000 square feet at a market effective rental
rate which is lower than its existing lease. The joint venture will continue
its aggressive leasing program; however, the downtown New York City market
remains extremely competitive due to the significant amount of space available
primarily resulting from the layoffs, cutbacks and consolidations by financial
service companies and related businesses which dominated this market. In
addition to competition for tenants in the downtown Manhattan market from
other buildings in the area, there is increasing competition from less
expensive alternatives to Manhattan. In order to enhance the building's
competitive position in the marketplace, the joint venture partners are
proceeding with certain modest upgrades to the building's main lobby and
elevators. Rental rates in the downtown market are currently at depressed
levels and this can be expected to continue for the foreseeable future while
the current vacant space is gradually absorbed. Little, if any new
construction is planned for downtown over the next few years and it is
expected that the building will continue to be adversely affected by the lower
than originally expected effective rental rates achieved upon releasing of
existing leases which expire over the next few years.
(4) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or losses
of the Partnership from operations are allocated 96% to the Limited Partners
and 4% to the General Partners. Profits from the sale or refinancing of
investment properties are to be allocated to the General Partners to the
greater of 1% of such profits or the amount of cash distributable to the
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
General Partners from any such sale or refinancing (as described below).
Losses from the sale or refinancing of investment properties are to be
allocated 1% to the General Partners. The remaining sale or refinancing
profits and losses will be allocated to the Limited Partners.
An amendment to the Partnership Agreement, effective January 1, 1991,
generally provides that notwithstanding any allocation contained in the
Agreement, if at any time profits are realized by the Partnership, any current
or anticipated event would cause the deficit balance in absolute amount in the
Capital Account of the General Partners to be greater than their share of the
Partnership's indebtedness (as defined) after such event, then the allocation
of Profits to the General Partners shall be increased to the extent necessary
to cause the deficit balance in the Capital Account of the General Partners to
be no less than their respective shares of the Partnership's indebtedness
after such event. In general, the effect of this amendment is to allow the
deferral of the recognition of taxable gain to the Limited Partners.
The General Partners are not required to make any capital contributions
except under certain limited circumstances upon termination of the
Partnership. Distributions of "cash flows" of the Partnership are allocated
90% to the Limited Partners and 10% to the General Partners. However,
portions of such distributions to the General Partners are subordinated to the
Limited Partners' receipt of a stipulated return on capital. Through June 30,
1994, a portion of the General Partners' distributions have been deferred
(note 5).
The Partnership Agreement provides that the General Partners shall receive
as a distribution from the sale of a real property by the Partnership 3% of
the selling price and any cumulative deferrals of their 10% distribution of
disburseable cash, subject to certain limitations. Any remaining proceeds
(net after expenses and retained working capital) will 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 10% 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 first fiscal quarter of 1984. Therefore, the
General Partners have deferred certain sale proceeds ($241,080 or $1.60 per
interest) from the Partnership.
(5) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates for the six months
ended June 30, 1994 and 1993 are as follows:
Unpaid at
1994 1993 June 30, 1994
-------- -------- -------------
Property management and
leasing fees. . . . . $332,241 359,554 5,526
Insurance commissions. 38,087 79,576 --
Reimbursement (at cost) for
out-of-pocket expenses 11,527 8,968 --
-------- ------- ------
$381,855 448,098 5,526
======== ======= ======
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
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 operation of Partnership investment properties. In
1993 and through the second quarter of 1994, such costs aggregated $100,051
and $45,827, respectively, of which $111,445 and $11,394 were unpaid at June
30, 1994 and at the date of this report, respectively.
The General Partners have deferred (in accordance with the Partnership
agreement) payment of certain of their distributions of net cash flow from the
Partnership. The cumulative amount of such distributions aggregated
$9,486,376 at June 30, 1994 (approximately $63 per interest). In addition,
the General Partners have deferred certain sale proceeds of $241,080 from the
Partnership as more fully described in note 4. All amounts due to the General
Partner do not bear interest and are expected to be paid, if allowable, in
accordance with the Partnership Agreement, from cash generated from future
operations and sales.
(6) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for the Royal Executive Park
and Broad Street ventures for the six months ended June 30, 1994 and 1993 is
as follows:
1994 1993
---------- ---------
Total income. . . . . . . . . . . .$6,282,229 8,041,793
========== =========
Operating earnings. . . . . . . . .$ 969,345 3,365,935
========== =========
Net earnings to Partnership . . . .$ 427,974 1,286,885
========== =========
(7) ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1994
and for the three and six months ended June 30, 1994 and 1993.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
At June 30, 1994, the Partnership and its consolidated venture had cash
and cash equivalents of approximately $2,500,000. Such funds and short-term
investments of approximately $2,200,000 are available for distributions to
partners and for working capital requirements including tenant and capital
improvements, to the extent not funded from future operations, and any
payments to the Animas Venture Partner should the property be disposed of as
discussed below. The Partnership and its consolidated venture have currently
budgeted in 1994 approximately $3,673,000 for tenant improvements and other
capital expenditures. The Partnership's share of such items and its share of
such similar items for its unconsolidated ventures in 1994 is currently
budgeted to be approximately $6,061,000. Actual amounts expended in 1994 may
vary depending on a number of factors including actual leasing activity,
results of property operations, liquidity considerations and other market
conditions over the course of the year. The source of capital for such items
and for both short-term and long-term future liquidity and distributions is
expected to be through net cash generated by the Partnership's investment
properties and through the sale of such investments. 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.
Overall cash flow returns at Broad Street for the next few years are
expected to be lower than originally projected because an additional 13% of
the leased and occupied expires during the next two years. In addition, a
tenant, occupying approximately 37,000 square feet (approximately 15% of the
building), did not renew its lease when it expired in September 1993.
However, subtenants occupying approximately 21,000 square feet whose leases
also expired in September 1993 have held over while Broad Street continues to
negotiate leases with them. Furthermore, Broad Street has renewed and
expanded another tenant, effective July 1, 1993, whose lease was scheduled to
expire in December 1994. This tenant has expanded from approximately 18,000
square feet to approximately 35,000 square feet at a market effective rental
rate which is lower than its existing lease. The Partnership will continue
its aggressive leasing program; however, the downtown New York City market
remains extremely competitive due to the significant amount of space available
primarily resulting from the layoffs, cutbacks and consolidations by financial
service companies and related businesses which dominated this market. In
addition to competition for tenants in the downtown Manhattan market from
other buildings in the area, there is increasing competition from less
expensive alternatives to Manhattan. Rental rates in the downtown market are
currently at depressed levels and this can be expected to continue for the
foreseeable future while the current vacant space is gradually absorbed.
Little, if any new construction is planned for downtown over the next few
years and it is expected that the building will continue to be adversely
affected by the lower than originally expected effective rental rates achieved
upon releasing of existing leases which expire over the next few years.
In 1993, the Partnership completed the renovation at the Collin Creek
Mall's food court and main floor common area, added escalators at two
locations, and upgraded the mall's interior and exterior signage. The total
cost of these enhancement programs was approximately $4,400,000. In addition,
in 1994, the Partnership has commenced a parking lot repair project which will
take five years to complete and cost approximately $1,300,000. The work to be
incurred in 1994 has been included in the budgeted improvement costs described
above. The total five-year project cost will be partially recoverable from
tenants pursuant to provisions in their lease.
The Partnership has entered into a non-binding letter of intent to sell
its interest in the Collin Creek Mall. The prospective purchaser is currently
conducting its due diligence review with respect to the shopping center and
the proposed transaction and is expected to complete such review by the middle
of August, 1994. Upon the completion of such review, assuming that the
transaction is to proceed, the Partnership and the prospective purchaser would
enter into a binding agreement for the sale of the Partnership's interest in
the shopping center, with the closing of the transaction expected to be in the
fall of 1994. The Partnership has agreed that, provided that the prospective
purchaser is proceeding in good faith with respect to the proposed
transaction, until August 15, 1994 and during the term of an executed sale
agreement, the Partnership will not offer to sell to a third-party or solicit
from a third-party any offers to purchase or finance the Partnership's
interest in the shopping center or negotiate with a third-party for the sale,
financing or disposition of the Partnership's interest in the shopping center.
Accordingly, the Partnership has ceased its efforts to seek a refinancing of
the mortgage loan (which has a maturity of July 1995) secured by its interest
in the shopping center. The letter of intent executed by the Partnership and
the prospective purchaser is non-binding with respect to the sale of the
Partnership's interest in the shopping center, and consummation of the
proposed transaction is subject to the satisfaction of various conditions,
review and the negotiation and execution of a sale agreement. Therefore,
there can be no assurance that a sale will be consummated on any terms.
The Partnership continues to explore the replacement of a major tenant at
the North Hills Mall which owns its own store, with another major tenant
and/or adding another major tenant to the center. The major tenant, which is
currently using only the first level of its two-story store, has expressed an
interest in closing its store. In order to replace the major tenant with
another and/or add another major tenant, the Partnership may need to commit
substantial capital. Given the Partnership's current lack of substantial
working capital, the Partnership may be unable to undertake the replacement
and/or addition of the major tenant(s) without an outside source of capital.
The Partnership is exploring its alternatives in this regard. However, there
can be no assurance that such replacement and/or addition will ultimately
occur. In 1993, the Partnership completed a mall enhancement program at the
North Hills Mall which included the replacement of the floor in a portion of
the mall, a food court remodel, and certain lighting improvements. The
program cost was approximately $1,000,000. In addition, the Partnership is in
the second year of a five year program to repair the property's roof and
parking lot. The total cost of the repair is expected to be approximately
$1,500,000. The work to be incurred in 1994 has been included in the budgeted
improvement costs described above. The total five-year costs will be
partially recoverable from tenants pursuant to provisions in their leases.
The Partnership is currently seeking a refinancing and/or extension of
the mortgage loan on North Hills Mall in order to obtain a lower interest rate
and to provide additional funds to the Partnership. However, there is no
assurance that the Partnership will obtain a refinancing and/or extension of
the mortgage note which matures in July 1995. In February 1994, the
Partnership sold its sole remaining land outparcel to an unaffiliated third
party. The purchaser is building a restaurant on the site which is expected
to open in the third quarter of 1994. The sale price for the outparcel was
$700,000 (before selling costs and prorations). The Partnership has retained
the net sale proceeds in its working capital.
The Pasadena Town Square trade area population consists primarily of
lower to moderate income residents. The local economy had been severely
affected by the recent nationwide recession and has been slower to recover.
Many of the trade area residents are employed by local petro-chemical plants
which continue to reduce their labor force as that industry continues to
restructure and consolidate in order to be more competitive. In addition, the
property has been subjected to increased competition for shoppers and tenants
from new and recently renovated retail properties within the trade area. As a
result, tenant sales at the property have decreased over the last several
years and year-to-date in 1994. In 1994 and 1995, tenant leases covering
approximately 76,000 square feet or approximately 31% of the Partnership's
owned leasable square footage, expire. Due to recent poor sales performance,
many of these tenants are electing not to renew their leases or are renewing
at lower rental rates. In fact, occupancy of the property has declined to 80%
at June 30, 1994 down from 85% at December 31, 1993. Therefore, the
property's cash flow from operations prior to capital expenditures is expected
to decline in 1994 and thereafter for a period of time as compared to previous
years. The Partnership is taking measures to attempt to stem recent operating
declines at the property. Such measures include, as discussed more fully
below, the performance of certain enhancement programs and the possible
addition of a third major department store. There are no assurances, however,
that the enhancement programs or the addition of another major department
store, if it occurs, will have an immediate positive impact on occupancy or
the rental rates achieved upon releasing vacant or expiring space at the
property. The Partnership continues to explore the possibility of adding
another major department store to the Pasadena Town Square. In order to add
another department store at this center, the Partnership may need to commit a
substantial amount of capital. Given the Partnership's current lack of
substantial working capital, the Partnership may be unable to undertake the
addition of a department store without an alternative source of capital. The
Partnership is continuing discussions with a major department store owner
concerning the opening of a store at the property. There is no assurance that
the addition of a department store will ultimately occur. In 1993, the
Partnership commenced a minor mall enhancement program which includes a food
court remodel. The program is expected to cost approximately $500,000 with
completion during 1994. In addition, commencing in 1994 and continuing for
the next four years, the Partnership is undertaking a program to repair the
property's roof and parking lot. The total cost of the repair work is
expected to be approximately $1,700,000. The work to be incurred in 1994 has
been included in the budgeted improvement costs described above. The total
five-year project cost will be partially recoverable from tenants pursuant to
provisions in their leases. The Partnership is currently seeking a
refinancing and/or extension of the mortgage loan on Pasadena Town Square in
order to obtain a lower interest rate and to provide additional funds to the
Partnership. However, there is no assurance that the Partnership will obtain
a refinancing and/or extension of the mortgage note which matures in January
1995.
In April 1992, the Partnership and the joint venture partner settled
certain legal disputes regarding the Animas joint venture agreement and
management of the property. Under the terms of the settlement, the
unaffiliated venture partner has contributed approximately $404,000 to the
joint venture and relinquished its approval rights in connection with the
business affairs of the joint venture. The unaffiliated venture partner has
retained certain approval rights in connection with a sale or refinancing of
the property. The Partnership, in return, has agreed to pay the unaffiliated
venture partner a certain settlement amount in connection with the disposition
of the property. Such disposition payment, $300,000 at March 31, 1994,
decreases annually on January 1 to $92,000 in 1996 and thereafter. Under
certain limited disposition events, the disposition payment amount can be
further reduced or eliminated.
In April 1992, the joint venture finalized a modification of the existing
long-term mortgage note secured by the Animas Valley Mall. Under the terms of
the modification, the joint venture, commencing with the January 1991 payment,
was obligated to pay debt service of interest only installments at a rate of
10.25% per annum, through the original term of the note, with the deferred
interest (2.25%) accruing at 12.5% and payable monthly to the extent of any
excess cash flow (as defined) or upon the earlier of the sale of the property
or maturity of the note in January 1994. The joint venture had paid debt
service in 1991, 1992, 1993 and through February 1994 in accordance with these
modified terms. In April 1994, the joint venture and the existing lender
finalized an amendment to the loan (effective March 1, 1994) providing for the
extension of the maturity to March 1995 and lowering the pay and accrual rate
on the principal balance to 8% per annum. Any excess cash flow generated by
the property during this period is payable to the lender quarterly towards the
interest accrued as of December 31, 1993 (approximately $2,100,000). In
addition, the joint venture has agreed to market this property for sale during
the extension period. The lender has agreed to allow the joint venture to
retain a portion of the net sale proceeds (as defined) in excess of the
current principal balance of the loan of $27,000,000. In addition, the lender
has expressed a willingness to finance a portion of the purchase price for a
potential purchaser. The Partnership will commence actively marketing the
property for sale within the next sixty days. There are no assurances that
the joint venture will be successful in selling the property at a level
whereby it will share in any sale proceeds. The Partnership has decided not
to commit additional capital to the joint venture. Therefore, if upon
maturity, assuming a sale cannot be achieved and the lender is unwilling to
provide further extensions to the loan, the joint venture will transfer title
to the property to the lender. This would result in the Partnership
recognizing a gain for Federal income tax and financial reporting purposes
with no distributable proceeds. In addition, a disposition through a sale to
a third party or transfer of title to the lender would result in a disposition
payment to the joint venture partners as discussed above.
In December 1993, the joint venture sold a land outparcel at the Animas
Valley Mall to an unaffiliated third party. The purchaser intends to build a
bank on the site. The sale price for the outparcel was approximately $194,000
(before selling costs and prorations). The joint venture has retained the net
sale proceeds as working capital.
Occupancy of the Royal Executive Park I office building decreased to 78%
from 97% in the previous year. As anticipated, during the fourth quarter of
1993 New York Telephone Company's lease (90,000 square feet) expired and it,
along with certain of its subtenants, vacated the building. MCI Realty Inc.
(180,000 square feet), which had been subleasing a portion of the New York
Telephone space, entered into a direct lease with the joint venture for 30,000
square feet. The lease term expires in April, 1998 and provides for an
effective rental rate at market, which is substantially less that the rental
rate paid previously by New York Telephone. The joint venture continues to
actively market the remaining New York Telephone Company space to prospective
tenants. As previously reported, MCI had approached the joint venture seeking
a current rent reduction in return for a lease extension beyond its current
lease expiration date of March 31, 1998 on its existing 180,000 square feet
lease. During the quarter, the joint venture finalized a modification and
extension of MCI's 180,000 square foot lease. The terms of the agreement
provide for a reduction in MCI's rental rate, effective July 1994, to a rental
rate which approximates current market rental rates. The agreement provides
for set rental rate increases in April 1998 and in April 2002. The extended
lease expiration date is June 2006. In addition, the joint venture has agreed
to provide funds to MCI in 1994 to enhance its leased space. The joint
venture's decision to modify MCI's 180,000 square foot lease was based upon an
analysis of current and expected future market conditions. The joint venture
believes, given the risk of losing this tenant in 1998 and the resulting
potential downtime and costs associated with releasing the space, that a
current reduction in the rental rate and contribution towards enhancement of
its space in return for a long term extension of its lease will maximize the
property's cash flow over the long term. The costs associated with MCI's
expansion and modification are expected to be paid for from cash generated in
1993 and the cash generated by the property in 1994. The property has been
managed by an affiliate of the joint venture partner under an agreement which
provided for fees equal to 2% of the base rent paid by tenants. Effective
July 1, 1994, an affiliate of the General Partner of the Partnership assumed
the property management responsibilities for the joint venture. The new
manager essentially assumed the previous management agreement with the
exception that a portion of the 2% management fee will be paid to the previous
manager annually by the new manager as compensation to the previous manager
for relinquishing management of the property. In addition, it is expected that
an affiliate of the General Partners will assume the leasing responsibilities
for the property in the near term. Currently, an independent leasing agent
performs such duties. The Southern Westchester County office market (the
competitive market for the building) is extremely competitive with a current
vacancy rate of 21%. While office building development in this market is
virtually at a standstill, significant improvement in the competitive market
conditions is not expected for several years. The competitive market
conditions have resulted in lower than originally anticipated effective rental
rates that can be achieved and high releasing costs that will be incurred in
conjunction with releasing space which expires. Consequently, the property
cash flow will be significantly reduced as a result of the lease expiration
and subsequent move-out of New York Telephone, and the modification and
extension of MCI's lease. In addition, the property cash flow will be
adversely affected by the increased vacancy.
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.
Though the economy has recently shown signs of improvement and financing
is generally becoming more available for certain types of higher-quality
properties in healthy markets, real estate lenders are typically requiring a
lower loan-to-value ratio for mortgage financing than in the past. This has
made it difficult for owners to refinance real estate assets at their current
debt levels unless the value of the underlying property has appreciated
significantly. As a consequence, and due to the weakness of some of the local
real estate markets in which the Partnership's properties operate, the
Partnership is taking steps to preserve its working capital including the
reduction in regular quarterly distributions to partners as described above.
Therefore, the Partnership is carefully scrutinizing the appropriateness of
any discretionary expenditures, particularly in relation to the amount of
working capital it has available. By conserving working capital, the
Partnership will be in a better position to meet future needs of its
properties without having to rely on external financing sources.
RESULTS OF OPERATIONS
The aggregate increase in cash and cash equivalents and short-term
investments, at June 30, 1994 as compared to December 31, 1993 is primarily
due to the increased revenues at Collin Creek Mall as a result of increased
percentage rents and due to increased occupancy at the North Hills Mall. This
increase is partially offset by the related increase in buildings and
improvements at June 30, 1994 as compared to December 31, 1993 that is
primarily due to the Partnership's use of funds for renovations at certain of
the Partnership's investment properties as discussed above.
The decrease in rents and other receivables as of June 30, 1994 as
compared to December 31, 1993 is primarily due to the timing of rental
receipts at certain of the Partnership's properties.
The decrease in the balance of prepaid expenses at June 30, 1994 as
compared to December 31, 1993 is primarily due to the timing of payment of
insurance premiums at certain of the Partnership's investment properties.
The increase in escrow deposits at June 30, 1994 as compared to December
31, 1993 is primarily due to the timing of payment of real estate taxes from
escrow deposits at Animas Valley Mall.
The increase in accrued rents receivable at June 30, 1994 as compared to
December 31, 1993 is primarily due to the Partnership accruing prorated rental
income on a straight-line basis at certain of the Partnership's investment
properties.
The increase in current portion of long-term debt and the corresponding
decrease in long-term debt less current portion at June 30, 1994 as compared
to December 31, 1993 is primarily due to the reclassification of the
$14,466,458 mortgage note that is scheduled to mature January 1995 at the
Pasadena Town Square investment property, as discussed above and in Note 2(a).
The decrease in accrued interest at June 30, 1994 as compared to December
31, 1993 and the related decrease in mortgage and other interest for the three
and six months ended June 30, 1994 as compared to the same period in 1993 is
primarily due to the amended debt agreement at the Animas Valley Mall
investment property. See Note 3(b).
The decrease in accrued real estate taxes at June 30, 1994 as compared to
December 31, 1993 is primarily due to the timing of real estate tax payments
at certain of the Partnership's investment properties.
The increase in rental income for the three and six months ended June 30,
1994 as compared to the three and six months ended June 30, 1993 is primarily
the result of increased occupancy at the North Hills Mall partially offset in
the second quarter due to decreased occupancy at the Pasadena Town Square
Shopping Center as discussed above.
The decrease in interest income for the six months ended June 30, 1994 as
compared to the same period in 1993 is primarily due to the decrease in the
Partnership's average balance in U.S. Government obligations in 1994 as
discussed above and lower average return on such investments in the first
quarter of 1994. The increase in interest income for the three months ended
June 30, 1994 as compared to the same period in 1993 is primarily due to a
modest increase in interest rates during the second quarter of 1994.
Property operating expenses increased in the three and six months ended
June 30, 1994 as compared to the same period in 1993 primarily due to higher
repairs and maintenance expenses at certain of the Partnership's investment
properties which are partially recoverable from tenants.
The decrease in Partnership's share of operations of unconsolidated
ventures for the three and six months ended June 30, 1994 as compared to the
same period in 1993 is due primarily to the decrease in occupancy at the Royal
Executive Park investment property.
The gain of $571,428 on disposition of investment property during 1994 is
the result of the outparcel sale at the North Hills Mall as more fully
described in Note 2(c).
<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 investment properties.
<CAPTION>
1993 1994
-------------------------------------------------------------
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. North Hills Mall
North Richland Hills, Texas (a). . . . . . . . . 92% 91% 95% 99% 95% 95%
2. Pasadena Town Square
Pasadena, Texas. . . . . . . . . . . . . . . . . 85% 85% 85% 85% 84% 80%
3. Collin Creek Mall
Plano, Texas . . . . . . . . . . . . . . . . . . 92% 94% 93% 96% 92% 91%
4. Animas Valley Mall
Farmington, New Mexico . . . . . . . . . . . . . 90% 90% 90% 90% 90% 90%
5. Royal Executive Park
Ryebrook, New York (b) . . . . . . . . . . . . . 97% 97% 97% 78% 78% 78%
6. 40 Broad Street
New York, New York . . . . . . . . . . . . . . . 82% 82% 67% 79% 80% 86%
- - - -----------------
<FN>
(a) The occupancy has been restated for the first quarter 1993 to reflect occupancy by
temporary tenants which were not previously included. Occupancy without the temporary tenants is 84%
at June 30, 1993, 86% at September 30, 1993, 88% at December 31, 1993, 87% at March 31, 1994 and
87% at June 30, 1994.
(b) A major tenant has vacated a major portion of its space; however, the tenant continued to pay rent
pursuant to the terms of the lease until expiration in October 1993. Therefore, the rent paying occupancy
remained at 100% until October 1993.
</TABLE>
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
Response:
(a) Exhibits:
4-A. Document relating to the mortgage loan secured by the Collin
Creek Mall in Plano, Texas is hereby incorporated by reference to the
Partnership's report for December 31, 1992 on Form 10-K (File No. 0-12432)
dated March 19, 1993.
4-B. Document relating to the mortgage loan secured by the
Pasadena Town Square shopping center in Pasadena, Texas is hereby incorporated
by reference to the Partnership's report for December 31, 1992 on Form 10-K
(File No. 0-12432) dated March 19, 1993.
4-C. Modification document relating to the mortgage loan secured
by the Animas Valley Mall in Farmington, New Mexico is hereby incorporated by
reference to the Partnership's report for December 31, 1992 on Form 10-K (File
No. 0-12432) dated March 19, 1993.
4-D. Modification document relating to the mortgage loan secured
by the Animas Valley Mall in Farmington, New Mexico a copy of which is filed
herewith.
10-A. Acquisition documents relating to the purchase by the
Partnership of an interest in the 40 Broad Street office building in new York,
New York are hereby incorporated by reference to the Partnership's report on
Form 8-K (File No. 0-12432) dated December 31, 1985.
10-B. Acquisition documents relating to the purchase by the
Partnership of an interest in the Royal Executive Park office complex in
Ryebrook, New York are hereby incorporated by reference to the Partnership's
report on Form 8-K (File No. 0-12432) dated December 30, 1983.
10-C. Acquisition documents relating to the purchase by the
Partnership of the Collin Creek Mall in Plano, Texas are hereby incorporated
by reference to the Partnership's Registration Statement on Post-Effective
Amendment No. 2 to Form S-11 (File No. 2-83599) dated June 29, 1983.
10-D. Acquisition documents relating to the purchase by the
Partnership of the North Hills Mall in North Richland Hills, Texas are hereby
incorporated by reference to the Partnership's Registration Statement on Post-
Effective Amendment No. 2 to Form S-11 (File No. 2-83599) dated June 29, 1983.
10-E. Acquisition documents relating to the purchase by the
Partnership of the Pasadena Town Square shopping center in Pasadena, Texas are
hereby incorporated by reference to the Partnership's Registration Statement
on Post-Effective Amendment No. 2 to Form S-11 (File No. 2-83599) dated June
29, 1983.
10-F. Acquisition documents including the venture agreement
relating to the purchase by the Partnership of an interest in the Animas
Valley Mall in Farmington, New Mexico are hereby incorporated by reference to
the Partnership's Registration Statement on Post-Effective Amendment No. 2 to
Form S-11 (File No. 2-83599) dated June 29, 1983.
10-G. Sale documents relating to the outparcel sale at the Animas
Valley Mall in Farmington, New Mexico are hereby incorporated by reference to
the Partnerships report for December 31, 1993 on Form 10-K (File No. 0-12432)
dated March 25, 1994.
10-H. Sale documents relating to the outparcel sale at the North
Hills Mall in North Richard Hills, Texas are hereby incorporated by reference
to the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-
12432) dated March 25, 1994.
(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. - X
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:August 12, 1994
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 12, 1994
SECOND AMENDMENT TO FINANCING DOCUMENTS
This Second Amendment to Financing Documents is executed as of the
day of March, 1994, to be effective as of January 1, 1993,
by and between ANIMAS VALLEY MALL ASSOCIATES, an Illinois general
partnership ("Borrower" or "Mortgagor"), and CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, a Connecticut corporation ("Lender" or "Mortgagee").
R E C I T A L S
A. Lender made a loan (the "Loan") to Borrower evidenced by that
certain Promissory Noted dated as of December 29, 1983 and thereafter
amended as hereinafter described (the "Note") from Borrower to Lender in
the original principal amount of Twenty-seven Million Dollars
($27,000,000).
B. The Note is secured by (i) that certain Mortgage dated as of
December 29, 1983 and recorded in Book 982, Page 576 in the Office of
the County Clerk of San Juan County, New Mexico (the "San Juan County
Records"), and thereafter amended as hereinafter described (the
"Mortgage"), on certain real property of Borrower and improvements
thereon (the "Property") located in San Juan County, New Mexico which
Property is more particularly described in the Mortgage, (ii) that
certain Assignment of Leases and Rents dated as of December 29, 1983 and
thereafter amended as hereinafter described (the "Assignment of Leases")
and recorded in Book 982, Page 577 in the San Juan County Records, (iii)
that certain Security Assignment of Contracts, Guaranties and Warranties
dated as of December 29, 1983 and thereafter amended as hereinafter
described (the "Security Assignment") and recorded in Book 982, Page 578
in the San Juan County Records, (iv) that certain Security Agreement
(General) (the"Security Agreement") dated as of December 29, 1983,
between Borrower and Lender, as Secured Party, and (v) that certain
letter agreement (the "Side Letter") dated December 29, 1983, pertaining
to waiver of the tax and insurance escrow requirements of the Mortgage.
C. The Note, the Mortgage, the Assignment of Leases, the Security
Assignment, the Security Agreement and the Side Letter were amended by
that certain First Amendment to Financing Documents (the "First
Amendment") dated as of April 22, 1992. In addition, Borrower and
Lender entered into that certain Escrow and Security Agreement dated as
of April 22, 1992 with LaSalle National Trust, N.A. Such instruments
and agreements, as amended by the First Amendment, shall be hereinafter
collectively referred to as the "Financing Documents". Capitalized
terms shall have the meanings set forth in the Financing Documents,
unless the contrary is expressly stated.
D. The Loan matured on January 1, 1994 and the parties now wish to
amend the Financing Documents to extend the maturity thereof and to make
certain other agreements as hereinafter set forth.
NOW THEREFORE, in consideration of Lender's recision of its demand
for payment in full of the Loan, to forbear from enforcing its right to
foreclose the lien of the Mortgage and Lender's agreement to extend the
maturity of the Loan, the mutual promises hereinafter set forth and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Lender acknowledges receipt of the sum of ONE HUNDRED THOUSAND AND
NO/1000 DOLLARS ($100,000) and has applied the same to the Total Accrued
Amount due under the Note.
2. The Note is hereby further amended by inserting the following
immediately after subparagraph "g" which was added to the Note by the
First Amendment:
"a. "Revised Rate" shall mean eight percent (8%) per annum.
b. "Revised Excess Cash Flow" shall mean Excess Cash Flow
calculated by deducting interest on the Original Principal Balance at
the Revised Rate instead of the Pay Rate.
c. "Revised Incremental Cash Flow" shall mean Incremental Cash
Flow calculated on the basis of Revised Excess Cash Flow instead of
Excess Cash Flow."
3. The Note is hereby further amended by adding the following at the
end of the language which was added by paragraph 1 of the First
Amendment:
a. On March 1, 1995, the Original Principal Balance,
together with all accrued and unpaid interest at the Revise Rate, shall
be due and payable. The Total Accrued Amount ($2,097,577) shall be due
and payable only to the extent set forth in the Mortgage.
b. The Original Principal Balance shall bear interest at
the Pay Rate for the period commencing January 1, 1994 and ending
January 31, 1994. A payment of interest only in the amount of $230,625
shall be due and payable on February 1, 1994.
c. Commencing on February 1, 1994, and continuing
thereafter until March 1, 1995, the Original Principal Balance shall
bear interest at the Revised Rate. Payments in the amount of $180,000
shall be due and payable on each Monthly Payment Date commencing March
1, 1994.
d. Commencing with the payment due on March 1, 1994, and
continuing thereafter to and including February 1, 1995, Maker shall pay
into the Cash Flow Escrow a sum equal to the amount of Revised
Incremental Cash Flow then due and owing."
4. Article IV, Section Q, of the Mortgage is hereby amended by
adding the following at the end thereof:
"Notwithstanding the foregoing, the following transfers shall
not require the approval of Mortgagee or constitute a default under the
Financing Documents. JMB Income Properties, Ltd. - X ("JMB Income") or
any member of the "JMB Group" (as hereinafter defined) may acquire all
or any portion of the interest of Animas Holdings, Limited Partnership
(or its successors or assigns) in Mortgagor. As used herein, "JMB
Group" means (a) JMB Realty Corporation, a Delaware corporation ("JMB"),
(b) JMB Institutional Realty Corporation ("Institutional"), (c) an
"affiliate" or subsidiary of JMB or Institutional, (d) JMB Realty Trust,
a real estate investment trust ("Trust"), (e) a general or a limited
partnership in which Mortgagor, Trust, JMB, Institutional or an
affiliate or a subsidiary of JMB or Institutional is the manager, (g)
JMB Group Trust, and Illinois common law trust, or (h) any trust or
common fund in which JMB or Institutional or an affiliate of or
subsidiary of JMB or Institutional is an advisor. As used herein an
"affiliate" includes any corporation in which JMB Institutional or their
respective shareholders, individually or collectively, own or control
directly or indirectly , more than 50% of the common stock.
Mortgagee acknowledges that Mortgagor intends to sell or refinance
the Property prior to maturity of the Note. Mortgagor and Mortgagee
agree that any such sale or refinance shall be subject to the following
additional terms and conditions:
(a) Any free and clear sale or refinance in which
(i) the net proceeds (as described in clause (c) below) to
Mortgagee are not less than $26,900,000, and
(ii) the fees and expenses of sale or refinances are arms'
length, reasonable and customary (in the reasonable opinion of
Mortgagee, which approval shall not be unreasonably withheld),
shall require no further approval of Mortgagee. Any other
free and clear sale or refinance shall be subject to the prior approval
of Mortgagee in its sole discretion.
(b) Mortgagee will make available purchase money financing
for a term of five (5) years at an interest rate equal to 250 basis
points plus the then current rate of interest borne by 5-year U.S.
Treasury obligations, provided that:
(i) the purchaser is acceptable to Mortgagee in its sole
discretion,
(ii) the purchaser pays down the Note by not less than
$4,050,000, and
(iii) the sum of the paydown and the purchase money loan
shall not exceed $27,000,000
(c) Sales or refinance proceeds (which shall include the principal
amount of any purchase money financing and principal paydown described
in clause (b) preceding, and the amount of any funds held by the Escrow
Holder under the Escrow Agreement) shall be distributed in the following
order of priority:
(i) $26,900,000 to Mortgagee; then
(ii) $100,000 to Mortgagor; then
(iii) Fifty per cent (50%) each to Mortgagor and Mortgagee
until Mortgagee has recovered the sum of Two Million Ninety-Seven
Thousand Five Hundred Fifty-Seven Dollars ($2,097,557), representing the
remaining Total Accrued Amount under the Note; then
(iv) Any remaining amount to Mortgagor."
5. Borrower and Lender hereby agree that in the event Borrower has not
closed the sale or refinancing of the Property on the terms set forth in
Article IV, Section Q of the Mortgage prior to the maturity date of the
Note, Borrower shall convey the Property to Lender in lieu of
foreclosure. Contemporaneously herewith, (a) Borrower has deposited a
Special Warranty Deed, Assignment of Leases and Bill of Sale (the
"Deed"), and a Release, and (b) Lender has deposited a Covenant Not to
Sue (collectively, the "Conveyance Documents"), in escrow with
(the "Escrow Agent"). The Escrow Agent has been instructed to
hold the Conveyance Documents until the earlier to occur of (x) sale or
refinancing of the Property in accordance with the provisions hereof in
which case the Conveyance Documents in escrow shall be returned to the
appropriate party or destroyed in accordance with those certain Joint
Escrow Instructions from Borrower and Lender to the Escrow Agent of even
date herewith, or (y) unless paid off, the maturity of the Note in which
case the Conveyance Documents shall be delivered and recorded, as
appropriate.
Borrower makes the following representations with respect to the
execution and delivery of the Conveyance Documents as of the date hereof
and as of the date the Escrow Holder is authorized to deliver the
Conveyance Documents:
(i) Borrower is a sophisticated real estate investor,
knowledgeable with respect to shopping center properties.
(ii)Borrower was represented by legal counsel and other
professionals relating to financial, tax and other matters arising from
the transactions contemplated herein.
(iii) Borrower acknowledges that the Loan matured on January
1, 1994 and that Lender's agreement to rescind its demand for payment in
full, to forbear from enforcing its right to foreclose the lien of the
Mortgage and to extend the maturity of the Loan are good and valuable
consideration and confer a material benefit upon Borrower.
(iv)Borrower acknowledges that the transactions contemplated
herein affect commercial property and do not affect residential real
property.
(v) Borrower acknowledges and agrees that upon delivery to Lender
in accordance with the terms hereof the Deed is an absolute conveyance
and grant of title and not a security transaction, and is for fair and
adequate consideration, including, but not limited to, execution and
delivery by Lender of the Covenant Not to Sue.
(vi)Borrower acknowledges that the deed and the Release are freely
and fairly made, not in reliance on any representations, warranties or
covenants of Lender or any employee or agent of Lender except as
expressly provided in the Covenant Not to Sue; that the conveyance
effected by the Deed constitutes a waiver of all cure rights with
respect to the Loan and of any statutory right of redemption to which
Borrower may have been entitled with respect to the Mortgage; and that
fair and adequate consideration was given for such waiver.
(vii) Borrower acknowledges that Lender is relying upon
Borrower's agreement to convey its equity of redemption and will suffer
a substantial detriment if Borrower attempts in the future to
recharacterize the conveyance.
6. All references in the Escrow Agreement and Security Agreement
to "Incremental Cash Flow" shall be changed to "Revised Incremental Cash
Flow."<PAGE>
7. From and after the effective date of this Second Amendment,
Whenever any of the Financing Documents refers to the debt evidenced by
the Note, it shall be deemed to refer to the debt as described in this
Second Amendment; and whenever any of the Financing Documents refers to
the Note, Mortgage, Security Assignment, Security Agreement, Side
Letter, Escrow Agreement, or any other Financing Document, it shall be
deemed to refer to such Financing Document as amended hereby.
8. Not withstanding any provisions of the Financing Documents
to the contrary, including, without limitation, the provisions of the
seventh paragraph of the Note, Article VIII, Section 0, of the Mortgage,
Section 14 of the Security Agreement, Section 11.D of the Assignment of
Leases, and Section 9 of the Security Assignment (collectively, the
"Exculpatory Provisions"), Mortgagor shall be personally liable to
Lender if, and to the extent that, Mortgagor intentionally
misappropriates for itself or its constituent partners any revenues from
the Property (as defined in the Mortgage) or funds in the Cash Flow
Escrow or tax escrow account and knowingly fails to apply such revenues
or funds as required under the provisions of this Second Amendment or
otherwise for the benefit of the Property or to pay the Loan. However,
Mortgagor's personal liability shall be limited to the amount of
revenues or escrowed funds so intentionally misappropriated and the cost
of collection, including reasonable attorney's fees, related to
collection of such amounts by Lender. In addition, and notwithstanding
anything to the contrary under the Financing Documents or this
paragraph, no direct or indirect partner in JMB Income Properties, Ltd.
- - - - X. shall have any personal liability under the Financing Documents,
the liability of such partners being limited to their respective
interests in JMB Income Properties, Ltd. - X. Without limitation on the
foregoing, neither the negative capital account of any constituent
partner in Mortgagor, nor any obligation of any constituent partner in
Mortgagor, nor any obligation of any constituent partner in Mortgagor to
restore a negative capital account or to contribute capital to Mortgagor
or to any other constituent partner of Mortgagor, shall at any time be
deemed to be the property or an asset of Mortgagor or any such other
constituent partner (and neither Lender nor any of its successors or
assignees shall have any right to collect, enforce or proceed against or
with respect to any such negative capital account or the partner's
obligation to restore or contribute). As used herein, a "constituent
partner" in Mortgagor means a partner in Mortgagor or in any partnership
that has a direct or indirect interest (through one or more
partnerships) in Mortgagor.
9. In all other respects, the Financing Documents, including,
without limitation, the Exculpatory Provisions, shall remain unmodified
and in full force and effect.
10. If any one or more of the provisions hereof is invalid,
illegal or unenforceable in any respect, the validity of the remaining
provisions of will in no way be affected, prejudiced or disturbed.
IN WITNESS WHEREOF, the parties have executed this Second
Amendment to Financing Documents as of the date first above written, to
be effective as of January 1, 1994.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc.
Its Authorized Agent
By:
Name:
Its:
ANIMAS VALLEY MALL ASSOCIATES
By: JMB Income Properties, Ltd. - X, its
managing general partner
By: JMB Realty Corporation,
Its General Partner
By: S/DOUGLAS J. WELKER
Name: Douglas J. Welker
Title: SVP
By: Animas Holdings, Limited Partnership,
a Missouri limited partnership,
general partner
By: Farmington Associates, Inc.
a Missouri corporation,
general partner
By: S/FRED R. STUCKEY
Fred R. Stuckey,
President
STATE OF CONNECTICUT)
)
COUNTY OF HARTFORD)
On this _____________ day of April, 1992, before me personally
appeared _____________________________________ , to me personally
known, who, being by me duly sworn, did say that he is _______________
_______________________________________________________________________
_________________ of CIGNA Investments, Inc., authorized agent in behalf
of Connecticut General Life Insurance Company, and that the seal affixed
to said instrument is the corporate seal of said corporation, and that
said instrument was signed and sealed in behalf of said corporation by
authority of its board of directors, and said ________________________
_______________________________________________________________________
_______ acknowledged said instrument to be the free act and deed of said
corporation.
Notary Public
My Commission Expires:
STATE OF ILLINOIS)
)
COUNTY OF COOK)
On this ___________ day of April, 1992, before me appeared
_____________________________________________ , to me personally know,
who, being by me duly sworn, did say that he is _____________________
______________________ of JMB Realty Corporation, which is general
partner of JMB Income Properties, Ltd. - X, which is a general partner
of Animas Valley Mall Associates, an Illinois general partnership, and
that the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed an sealed in behalf of
said corporation by authority of its board of directors, and said
___________________________________________________ acknowledged said
instrument to be the free act and deed of said corporation.
S/MARY J. TORRES
Notary Public
My Commission Expires:
(Seal)
STATE OF ARKANSAS)
)
COUNTY OF BENTON)
On this eleventh day of April, 1992, before me appeared Fred R.
Stuckey, to me personally known, who, being by me duly sworn, did say
that he is president of Farmington Associated, Inc., a Missouri
corporation which is a general partner of Animas Holdings, Limited
Partnership, a Missouri limited partnership, which is a general partner
of Animas Valley Mall Associates, an Illinois general partnership, and
that the seal affixed to said instrument is the corporate seal of said
corporation, and that said instrument was signed and sealed in behalf of
said corporation by authority of its board of directors, and said Fred
R. Stuckey acknowledged said instrument to be the free act and deed of
said corporation.
S/DYANNE CARITHERS
Notary Public
My Commission Expires: 6/16/03
(Seal)
COVENANT NOT TO SUE
This Covenant Not to Sue ("Covenant") is made as of April 1,
1994, by and between ANIMAS VALLEY MALL ASSOCIATES ("Borrower"), and
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut corporation
("Lender").
Lender and Borrower have entered into that certain Second
Amendment to Financing Documents (the "Second Amendment") dated as of
April 1, 1994. The Second Amendment provides that this Covenant shall
be held in escrow and delivered to Lender in the event Borrower has not
closed a sale of the Property (as therein defined) prior to March 1,
1995, and upon the further conditions that simultaneously therewith (i)
Borrower shall convey the Property to Lender in lieu of foreclosure,
(ii) Borrower shall execute and deliver a Release (as defined in the
Second Amendment) to be effective as of the date of its delivery.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and for the purposes
stated in the preceding paragraph, it is hereby agreed as follows:
1. Lender, for itself and its predecessors, successors and
assigns, hereby covenants and agrees that it shall not sue, commence,
assert, bring or file, in any court or other tribunal, in any
jurisdiction, any suit, action, litigation, complaint, counterclaim,
cross-claim, cross-complaint, third-part complaint or other pleading
setting forth any claim or cause of action, or otherwise seeking
affirmative relief, against Borrower and each of its subsidiaries and
affiliates and each of its/their respective past, present or future
partners, stockholders, beneficiaries, directors, officers, employees,
servants, attorneys, agents or representatives, or any or all executors,
administrators, successors, personal representatives, heirs or assigns
of any kin of the foregoing (collectively, the "Borrower Related
Parties"), for any claims or causes of action of any kind or nature
whatsoever, known or unknown, which Lender has, has had or may have
against any or all of the Borrower Related Parties in any way arising
from or connected with the Financing Documents (as defined in the Second
Amendment) or the Property; provided, however, that this Covenant shall
not apply to the covenants, agreements, representations and obligations
of Borrower under the Second Amendment, any liability of any of the
borrower Related Parties, if any, arising out of or connected with any
other transactions or dealings between any of the Borrower Related
Parties relating to any property other than the Property (as defined in
the Second Amendment) and any Lender Related Parties or any obligations
of Borrower to third parties arising out of Borrower's ownership of the
Property prior to the Closing but asserted against Lender. The Covenant
shall not affect any right of the Lender to realize on the collateral
securing the Loans. Lender Related Parties shall mean Lender, any
entity for which Lender is agent, and each of its subsidiaries and
affiliates and each of its respective past, present or future partners,
stockholders, beneficiaries, directors, officers, employees, servants,
attorneys, agents or representatives or any or all executors,
administrators, successors, personal representatives, heirs, or assigns
of any kind of the foregoing.
2. Lender, for and on behalf of itself and the Lender Related
Parties, represents and warrants that it is the sole holder and owner of
the Loan Documents and that they have not sold, assigned or transferred,
to any person any claim or cause or action of any kind or nature
whatsoever, known or unknown, which Lender has, has had or may have
against any of the Borrower Related Parties in any way arising from or
connected with the Loan Documents, or Project.
3. Notwithstanding anything contained in this Covenant to the
contrary, if in any insolvency, bankruptcy or reorganization
proceedings, or other proceedings similar to the foregoing, which may be
instituted in any state or federal court or other tribunal by or against
Borrower, the Conveyance Documents, any of the other Financing Documents
(as each is defined in the Second Amendment) or any other documents or
instruments to be executed and delivered by Borrower pursuant to the
terms of the Second Amendment are canceled, nullified or set aside by
operation of law or by a final nonappealable decision of a state or
federal court then this Covenant shall be void ab initio and of no
further force and effect. In such event, Lender shall have any and all
rights remedies, actions and defenses available under the Financing
Documents, at law, in equity or by statute.
4. Borrower, by its execution and delivery of this instrument,
acknowledges (but does not warrant) that notwithstanding the covenants
not to sue contained herein, the parties hereto intend that (i) the
indebtedness evidenced by the Loan Documents shall continue in full
force and effect (but without any recourse whatsoever to Borrower or any
Borrower Related Party (after conveyance of the Project to Lender), and
(ii) the right, title and interest of Lender as the continuing holder of
the aforementioned Loan Documents have not merged with Lender's title to
and ownership of the property subject to said Loan Documents and nothing
contained herein shall impair Lender's right at its option to foreclose
on said Loan Documents, provided that Lender shall have recourse only
through the mortgaged property and no deficiency or other judgement
shall be entered against Borrower.
5. Nothing in this instrument shall constitute a release or
discharge by Lender of any surviving claim it may have under the Letter
Agreement, or any other instrument or document executed pursuant thereto
or in connection with the closing of the transaction contemplated
thereby.
6. Terms used in this Covenant but not specifically defined
herein shall have the same meaning as terms defined in that certain
Letter Agreement by and between Borrower and Lender dated March 15,
1994.
IN WITNESS WHEREOF, this Covenant has been executed on the day
and year first above written.
LENDER: CONNECTICUT GENERAL LIFE
INSURANCE COMPANY
By: CIGNA Investments, Inc.
By:
Name:
Its:Vice President
BORROWER: ANIMAS VALLEY MALL ASSOCIATES
By:JMB Income Properties,
Ltd. - X, its managing
general partner
By: JMB Realty Corporation,
Its General Partner
By:S/DOUGLAS J. WELKER
Name: Douglas J. Welker
Its: Sr. Vice President
By: Animas Holdings, Limited
Partnership, a Missouri
limited partnership, general
partner
By: Farmington Associates,
Inc., a Missouri
corporation, general
partner
By:S/FRED R. STUCKNEY
Fred R. Stuckney,
President
RELEASE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, the undersigned, ANIMAS VALLEY MALL ASSOCIATES,
an Illinois general partnership, ("Releasor"), for and on behalf of
itself and each of its subsidiaries and affiliates and each of its/their
respective past, present or future partners, stockholders,
beneficiaries, directors, officers, employees, servants, attorneys,
agents or representatives, or any or all executors, administrators,
successors, personal representatives, heirs or assigns or any kind of
the foregoing (collectively, the "Borrower Related Parties"), does
hereby forever release, discharge and acquit CONNECTICUT GENERAL LIFE
INSURANCE COMPANY, a Connecticut corporation ("Lender"), and any entity
for which Lender is agent, and each of its subsidiaries and affiliates
and each of its respective past, present or future partners,
stockholders beneficiaries, directors, officers, employees, servants,
attorneys, agents or representatives or any or all executors,
administrators, successors, personal representatives, heirs, or assigns
of any kind of the foregoing (collectively, the "Lender Related
Parties") of and from any and all claims, demands, obligations,
liabilities, indebtedness, breaches of contract, breaches of duty or any
relationship, acts, omissions, misfeasance, malfeasance, cause or causes
of action, debts, sums of money, accounts, compensations, contracts,
controversies, promises, damages, costs, losses and expenses, of every
type, kind, nature, description or character, and irrespective of how,
why, or by reason of what facts, whether heretofore, now existing or
hereafter arising, or which could, might, or may be claimed to exist, of
whatever kind or name, whether known or unknown, suspected or
unsuspected, liquidated or unliquidated, each as though fully set forth
herein at length, including without limitation, such claims and defenses
as fraud, mistake, duress, usury and any other claim of so-called
"lender liability" which in any way arise out of, are connected with or
relate to the loan described with more particularity in that certain
Letter Agreement dated as of March 15, 1994, by and between Releasor, as
borrower, and Lender (the "Loan"), as well as any action or inaction of
any person or entity released hereunder with respect to the Loan, and
acknowledges that it has no defenses, offsets or counterclaims under the
Loan Documents (as defined in the Letter Agreement) against Lender.
RELEASOR SPECIFICALLY WAIVES ANY STATUTORY RIGHT OF REDEMPTION
WHICH RELEASOR MAY HAVE WITH RESPECT THE MORTGAGE SECURING THE LOAN AND
ACKNOWLEDGES FAIR AND ADEQUATE CONSIDERATION GIVEN BY LENDER FOR SUCH
WAIVER.
IT IS HEREBY FURTHER UNDERSTOOD AND AGREED that the acceptance of
delivery of this Release by the parties released hereby shall not be
deemed or construed as an admission of liability by any party released
by the terms hereof, and each such party hereby expressly denies
liability of any nature whatsoever arising from or related to the
subject of the within Release.
DATED: April 1, 1994
RELEASOR:
ANIMAS VALLEY MALL ASSOCIATES
By:JMB Income Properties, Ltd. - X
its managing general partner
By: JMB Realty Corporation,
its general partner
By:S/DOUGLAS J. WELKER
Name:Douglas J. Welker
Title:Sr. Vice President
By: Animas Holdings, Limited
Partnership, a Missouri limited
partnership, general partner
By: Farmington Associates, Inc.
a Missouri corporation,
general partner
By:S/FRED R. STUCKNEY
Fred R. Stuckney,
President
NON-COMPULSORY INSURANCE NOTICE
The undersigned hereby acknowledges it has been informed by
Connecticut General Life Insurance Company, a Connecticut corporation,
that under New Mexico law, it is not required, either as a condition
precedent, concurrent or subsequent to the:
(1) Sale of any real or personal property to it; or
(2) Financing of any purchase of real or personal property for
it; or
(3) Lending of any money to it upon the security of a mortgage
on real or personal property; or
(4) Renewal or extension for it of any loan or mortgage; or
(5) Performance of any other act in connection therewith;
to negotiate any policy of insurance or renewal thereof, except
automobile, credit life and accident, and personal property insurance,
covering the property that has been pledged as security, through a
particular insurance company, agent, solicitor or broker.
The undersigned hereby acknowledges receipt of a true copy of this
notice on the 1st day of April, 1994.
ANIMAS MALL ASSOCIATES, an Illinois
general partnership
By: JMB Income Properties, Ltd. - X,
its managing general partner
By: JMB Realty Corporation.
its general partner
By:S/DOUGLAS J.WELKER
Name:Douglas J. Welker
Title:Sr. Vice President
By: Animas Holdings, Limited
Partnership, a Missouri limited
partnership, its general partner
By: Farmington Associates,
Inc., a Missouri
corporation, its general
partner
By:S/FRED R. STUCKNEY
Fred R. Stuckney,
President
JOINT ESCROW INSTRUCTIONS
THESE JOINT ESCROW INSTRUCTIONS are given by CONNECTICUT GENERAL
LIFE INSURANCE COMPANY ("Connecticut") and ANIMAS VALLEY MALL ASSOCIATES
("Associates") to L. J. MELODY & COMPANY, ("Escrow Agent").
1. Connecticut and Associates hae caused to be delivered to Escrow
Agent, and Escrow Agent acknowledges delivery of the following documents
(the "Conveyance Documents"):
(a) One (1) Special Warranty Deed, Assignment of Leases and Bill
of Sale (the "Deed"), executed by Associates and in
recordable form.
(b) Two (2) counterpart original Covenant Not to Sue (the
"covenant") executed by Connecticut and Associates.
(c) One (1) Release executed by Associates.
2. Escrow Agent agrees to hold the Conveyance Documents in trust, and
to release and deliver them in accordance with the provisions hereof:
(a) Upon receipt of a written statement certified by an officer
of Connecticut to the effect that Associates has not sold or refinanced
the Property within the timeperiod and, otherwise in accordance with the
requirements of the Financing Documents, Escrow Agent shall
(i) record the Deed in the records of San Juan
County, New Mexico;
(ii) deliver one (1) Covenant Not to Sue to each of
Connecticut and Associates; and
(iii) deliver the Release to Associates.
(b) Upon receipt of a written statement certified by an officer
of Connecticut to the effect that Associates has sold or refinanced the
Property within the time periodand otherwise in accordance with the Financing
Documents, Escrow Agent shall destroy the Conveyance Documents.
(c) Escrow Agent shall be entitled to rely upon the aforesaid
certified statements in executing this trust, and shall have no duty of
further inquiry when presentedwith such a statement.
3. Escrow Agent shall have liability for actions undertaken in good
faith in executing these joint escrow instructions. Connecticut and
Associates agree to indemnify and save harmless Escrow Agent, its agents
and employees, from and against any and all loss, damage or liability
arising from the execution of these escrow instructions, except for
loss, damage or liability arising from the negligence of Escrow Agent,
its agents or employees.
4. If any one or more of the provisions hereof is invalid, illegal or
unenforceable in any respect, the validity of the remaining provisions
of will in no way be affected, prejudiced or disturbed.
5. The liability of Associates hereunder shall be limited to its
interest in the property described in the Deed, and accordingly no
partner in Associates, or any partner which is a partner in Associates,
shall have any personal liability hereunder.
IN WITNESS WHEREOF, the parties have executed the Joint Escrow
Instructions as of _______________, 1994.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc.,
Its Authorized Agent
By:
Name:
Its:
ANIMAS VALLEY MALL ASSOCIATES
By: JMB Income Properties, Ltd. - X,
its managing general partner
By: JMB Realty Corporation, Its
General Partner
By: Animas Holdings, Limited Partnership,
a Missouri limited partnership, general
partner
By: Farmington Associates, Inc., a
Missouri limited partnership,
general partner
By: S/FRED R. STUCKEY
Fred R. Stuckey
President
I.J. MELODY & COMPANY
By:
Name:
Title:
MUTUAL RELEASE
This Mutual Release is made as of ____________, 1994, by and
between ANIMAS VALLEY MALL ASSOCIATES, an Illinois general partnership
("Borrower"), and CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a
Connecticut corporation ("Lender").
R E C I T A L S
A. Lender made a loan (the "Loan) to Borrower evidenced by that
certain Promissory Note dated as of December 29, 1983 and thereafter
amended as herinafter described (the "Note") from Borrower to Lender in
the original principal amount of Twenty-seven Million Dollars
($27,000,000).
B. The Note is secured by (i) that certain Mortgage dated as of
December 29, 1983 and recorded in Book 982, Page 576, in the Office of
the County Clerk of San Juan County, New Mexico (the "San Juan County
Records") and thereafter amended as hereinafter described (the
"Mortgage"), on certain real property of Borrower and improvements
thereon (the "Property") located in San Juan County, New Mexico which
Property is more particularly described in the Mortgage, (ii) that
certain Assignment of Leases and Rents dated as of December 29, 1983 and
thereafter amended as hereinafter described (the "Assignment of Leases")
and recorded in Book 982, Page 577 in the San Juan County Records, (iii)
that certain Security Assignment of Contracts, Guaranties and Warranties
dated as of December 29, 1983 and thereafter amended as hereinafter
described (the "Security Assignment") and recorded in Book 982, Page 578
in the San Juan County Records, (iv) that certain Security Agreement
(General) (the "Security Agreement") dated as of December 29, 1983,
between Borrower and Lender, as Secured Party, and (v) that certain
letter agreement (the "Side Letter") dated December 29, 1983, pertaining
to waiver of the tax and insurance escrow requirements of the Mortgage.
C. The Note, the Mortgage, the Assignment of Leases, the Security
Assignment, the Security Agreement and the Side Letter were amended by
that certain First Amendment to Financing Documents (the "First
Amendment") dated as of April 22, 1992. In addition, Borrower and
Lender entered into that certain Escrow and Security Agreement dated as
of April 22, 1992 with LaSalle National Trust, N.A. Such instruments
and agreements, as amended by the First Amendment, shall be hereinafter
collectively referred to as the "Financing Documents". Capitalized
terms shall have the meanings set forth in the Financing Documents,
unless the contrary is expressly stated.
D. By letter agreement dated March 15, 1994 (the Commitment"), Lender
and Borrower agreed to extend the maturity of the Note and modify the
Financing Documents in certain respects, and the parties are executing
and delivering contemporaneously herewith a certain Second Amendment to
Financing Documents (the "Second Amendment") and certain other
documents, in order to effect the modifications required under the terms
of the Commitment.
NOW THEREFORE, in consideration of Lender's recision of its demand
for payment in full of the Loan, to forbear from enforcing its right to
foreclose the lien of the Mortgage and Lender's agreement to extend the
maturity of the Loan, the mutual promises hereinafter set forth and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Borrower, for itself and its successors and assigns, hereby
waives, and releases Lender from all claims, actions, suits, causes of
action, counterclaims, and defenses (collectively, "Claims") that
Borrower now has and that arise out of any state of facts that is
actually known to Borrower and pertains to the Loan or to the Financing
Documents, the Commitment, the Second Amendment, or any other documents
executed pursuant to the Commitment (collectively, the "Documents")
including, without limitation Claims related to Lender's actions in
administering the Loan and negotiating the Commitment or any of the
documents executed pursuant to the Commitment and Claims pertaining to
lender liability.
2. Lender, for itself and its successors and assigns, hereby
waives, and release Borrower form, all existing monetary defaults under
the Financing Documents, all existing nonmonetary defaults under the
Documents that arise out of any state of facts that is actually known to
Lender, and all rights, late charges, and default interest resulting
from any of the foregoing.
3. Notwithstanding the foregoing, the mutual waivers and
releases set forth above shall not release or modify the terms and
provisions of this Mutual Release, the Loan, or the Financing Documents,
all such terms and provisions being hereby ratified and confirmed by
Borrower and Lender, including, without limitation, the seventh
paragraph of the Note, Article VIII, Section O, of the Mortgage, Section
14 of the Security Agreement, Section 11.D of the Assignment of Leases,
Section 9 of the Security Assignment, Section 6 of the First Amendment
to Financing Documents and Section 21 of the Escrow and Security
Agreement, to the extent that any or all of the above have been amended
by the Second Amendment.
4. This Mutual Release may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF this Mutual Release is executed and delivered
as of the date first above written.
LENDER:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc.
By:
Name:
Its:
BORROWER:
By: JMB Income Properties, Ltd. - X, its
managing general partner
By: JMB Realty Corporation, Its General
Partner
By:
Name:
Title:
By: Animas Holdings, Limited Partnership, a
Missouri limited partnership, general
partner
By: Farmington Associates, Inc. a Missouri
corporation, general partner
By:
April 8, 1994
LaSalle National Trust, N.A.
135 South LaSalle Street
Chicago, IL 60690
Attention: Margaret M. Maddux
Re: Animas Valley Mall
Escrow and Security Agreement
Ladies and Gentlemen:
Please find enclose a coy of an Escrow and Security Agreement whereby
you act as escrow holder for the benefit of the undersigned. Also
enclosed is a copy of a Second Amendment to Financing Documents by which
the undersigned have agreed to amend the Escrow and Security Agreement
will respect to the definition of "Incremental Cash Flow."
Please indicate your acknowledgement and acceptance of the amendment to
the Escrow and Security Agreement by your signature below. Please
direct any questions to Alan Innes, Esq. (203-726-6737). Thank you for
your cooperation.
Respectfully,
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc., Its Authorized
Agent
By:
Name:
Its:
ANIMAS VALLEY MALL ASSOCIATES
By: JMB Income Properties, Ltd. - X, its
managing general partner
By: JMB Realty Corporation, Its
General Partner
By:
Name:
Title:
By: Animas Holdings, Limited
Partnership, a Missouri limited
partnership, general partner
By:
Fred R. Stuckey, Pres.
Animas Valley Mall
April 8, 1994
Page 2
LaSalle National Trust, N.A. hereby acknowledges and accepts the
amendment to the Escrow and Security Agreement effected by the Second
Amendment to Financing Documents, a copy of which is attached hereto.
LASALLE NATIONAL TRUST, N.A.
By:
Name
Title:
