SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended
December 31, 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) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12 of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K -
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant. Not applicable.
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings . . . . . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . 8
PART II
Item 5. Market for the Partnership's Limited
Partnership Interests and Related
Security Holder Matters . . . . . . . . . . 8
Item 6. Selected Financial Data . . . . . . . . . . 9
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations17
Item 8. Financial Statements and Supplementary Data 25
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . 53
PART III
Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . 53
Item 11. Executive Compensation. . . . . . . . . . . 56
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . 57
Item 13. Certain Relationships and Related Transactions58
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . 58
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 60
i
PART I
ITEM 1. BUSINESS
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
The registrant, JMB Income Properties, Ltd. - X (the "Partnership"),
is a limited partnership formed in 1983 and currently governed by the
Revised Uniform Limited Partnership Act of the State of Illinois to invest
in improved income-producing commercial and residential real property. The
Partnership sold $150,000,000 in limited partnership interests (the
"Interests") commencing on June 29, 1983, pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933 (Registration No.
2-83599). A total of 150,000 Interests were sold to the public at $1,000
per Interest and the holders of 150,000 Interests were admitted to the
Partnership in fiscal 1984. The offering closed on November 1, 1983. No
Limited Partner has made any additional capital contribution after such
date. The Limited Partners of the Partnership share in their portion of
the benefits of ownership of the Partnership's real property investments
according to the number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation, and sale and disposition of equity real estate investments.
Such equity investments are held by fee title and/or through joint venture
partnership interests. The Partnership's real estate investments are
located throughout the nation and it has no real estate investments located
outside of the United States. A presentation of information about industry
segments, geographic regions, raw materials or seasonality is not
applicable and would not be material to an understanding of the
Partnership's business taken as a whole. Pursuant to the Partnership
agreement, the Partnership is required to terminate on or before October
31, 2033. Accordingly, the Partnership intends to hold the real properties
it acquires for investment purposes until such time as sale or other
disposition appears to be advantageous. Unless otherwise described, the
Partnership expects to hold its properties for long-term investment where,
due to current market conditions, it is impossible to forecast the expected
holding period. At sale of a particular property, the proceeds, if any,
are generally distributed or reinvested in existing properties rather than
invested in acquiring additional properties.
The Partnership has made the real property investments set forth in
the following table:
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Pylon Plaza,
Phase I & II
office building
Boca Raton,
Florida. . . . . . 49,400 sq.ft. 10/12/83 Phase I fee ownership of land and
n.r.a. 8/9/90 improvements
Phase II
12/9/91
2. North Hills Mall
shopping center
North Richland
Hills, Texas . . . 221,000 sq.ft.
g.l.a. 10/19/83 12% fee ownership of land and
improvements (f)
3. Pasadena Town Square
shopping center
Pasadena, Texas. . 245,000 sq.ft.
g.l.a. 10/19/83 14% fee ownership of land and
improvements (f)
4. Collin Creek Mall
shopping center
Plano, Texas . . . 332,000 sq.ft.
g.l.a. 10/19/83 12/29/94 fee ownership of land and
improvements (d)
5. Animas Valley Mall
shopping center
Farmington,
New Mexico . . . . 460,000 sq.ft.
g.l.a. 10/24/83 8% fee ownership of land and
improvements (through joint
venture partnership) (c)(f)
6. Royal Executive Park
office complex
Ryebrook,
New York . . . . . 270,000 sq.ft.
n.r.a. 12/16/83 22% fee ownership of land and
improvements (through joint
venture partnership) (c)(f)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b)
---------------------- ---------- -------- ---------------------- ---------------------
7. Towne Square Mall
shopping center
Owensboro,
Kentucky . . . . . 357,000 sq.ft.
g.l.a. 03/01/84 08/13/87 fee ownership of land and
improvements (through joint
venture partnership)
8. 40 Broad Street
office building
New York,
New York . . . . . 247,800 sq.ft.
n.r.a. 12/31/85 18% fee ownership of land and
improvements (through joint
venture partnership) (c)(f)
<FN>
-----------------------
(a) The computation of this percentage for properties held at December
31, 1994 does not include amounts invested from sources other than the
original net proceeds of the public offering as described above and in Item
7.
(b) Reference is made to Note 4 and to Schedule III for the current
outstanding principal balances and a description of the long-term mortgage
indebtedness secured by the Partnership's real property investments.
(c) Reference is made to Note 3 and to Schedule III for a description of
the joint venture partnership through which the Partnership has made this
real property investment.
(d) Reference is made to Note 7 for a description of the disposition of
this real property investment.
(e) Reference is made to Item 8 - Schedule III filed with this annual
report for further information concerning real estate taxes and
depreciation.
(f) Reference is made to Item 6 - Selected Financial Data for additional
operating and lease expiration data concerning this investment property.
</TABLE>
The Partnership's real property investments are subject to competition
from similar types of properties (including, in certain areas, properties
owned or advised by affiliates of the General Partners) in the respective
vicinities in which they are located. Such competition is generally for
the retention of existing tenants. Additionally, the Partnership is in
competition for new tenants in markets where significant vacancies are
present. Reference is made to Item 7 below for a discussion of competitive
conditions and future renovation and capital improvement plans of the
Partnership and certain of its significant investment properties.
Approximate occupancy levels for the properties are set forth in the table
in Item 2 below to which reference is hereby made. The Partnership
maintains the suitability and competitiveness of its properties in its
markets primarily on the basis of effective rents, tenant allowances and
service provided to tenants. In the opinion of the Managing General
Partner of the Partnership, all of the investment properties held at
December 31, 1994 are adequately insured.
In July 1994, a former affiliate of the General Partner assumed the
property management responsibilities for the joint venture at the Royal
Executive Park office building. Reference is made to Notes 3(c) and 6 for
a further description of such transaction.
In December 1994, the Partnership sold the land, related improvements
and personal property of the Collin Creek Mall located in Plano, Texas, as
described in the Partnership's Report on Form 8-K (File No. 0-12140) for
January 13, 1995. Reference is made to Note 7 for a further description of
such transaction.
Reference is made to Note 8 for a schedule of minimum lease payments
to be received in each of the next five years, and in the aggregate
thereafter, under leases in effect at the Partnership's properties as of
December 31, 1994.
The Partnership has 57 full-time personnel and 23 part-time
individuals performing on-site duties at certain of the Partnership's
properties, none of whom are officers or directors of the Managing General
Partner of the Partnership.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
ITEM 2. PROPERTIES
The Partnership owns directly or through joint venture partnerships
the properties or interests in the properties referred to under Item 1
above to which reference is hereby made for a description of said
properties.
The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1994 and 1993 for the Partnership's investment properties owned
during 1994:
<TABLE>
<CAPTION>
1993 1994
--------------------------------------------------
At At At At At At At At
Principal Business 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> <C>
1. North Hills Mall
North Richland Hills,
Texas (a). . . . . . . . Retail 92% 91% 95% 99% 95% 95% 96% 95%
2. Pasadena Town Square
Pasadena, Texas. . . . . Retail 85% 85% 85% 85% 84% 80% 73% 72%
3. Collin Creek Mall
Plano, Texas . . . . . . Retail 92% 94% 93% 96% 92% 91% 97% N/A
4. Animas Valley Mall
Farmington, New Mexico . Retail 90% 90% 90% 90% 90% 90% 90% 90%
5. Royal Executive Park
Ryebrook, New York (b) . Telecommuni-
cations 97% 97% 97% 78% 78% 78% 78% 78%
6. 40 Broad Street
New York, New York . . . Financial
Services 82% 82% 67% 79% 80% 86% 83% 83%
<FN>
--------------------
Reference is made to Item 6, Item 7 and Note 7 for further information
regarding property occupancy, competitive conditions and tenant leases at
the Partnership's investment properties.
An "N/A" indicates that the property was sold and was not owned by the
Partnership at the end of the period.
(a) The percentage represents physical occupancy. 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, 87% at June 30, 1994, 85% at
September 30, 1994 and 88% at December 31, 1994.
(b) The percentage represents physical occupancy. New York Telephone
Company (90,000 square feet or 33% of the building) vacated a portion of
its space in 1992 prior to its lease expiration of October 1993. New York
Telephone Company continued to pay rent pursuant to its lease obligation
until the lease expired. Therefore, the rent paying occupancy remained at
100% until October 1993.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of holders during fiscal
years 1993 or 1994.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1994, there were 15,490 record holders of Interests
of the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Managing General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transaction, will be subject to negotiation by the
investor.
There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Managing General
Partner. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests. No transfer
will be effective until the first day of the next succeeding calendar
quarter after the requisite transfer from satisfactory to the Managing
General Partner has been received by the Managing General Partner. The
transferee consequently will not be entitled to receive any cash
distributions or any allocable share of profits or losses for tax purposes
until such next succeeding calendar quarter. Profits or losses from
operations of the Partnership for a calendar year in which a transfer
occurs will be allocated between the transferor and the transferee based
upon the number of quarterly periods in which each was recognized as the
holder of the Interests, without regard to the results of the Partnership's
operations during particular quarterly periods and without regard to
whether cash distributions were made to the transferor or transferee.
Profits or losses arising from the sale or other disposition of Partnership
properties will be allocated to the recognized holder of the Interests as
of the last day of the quarter in which the Partnership recognized such
profits or losses. Cash distributions to a holder of Interests arising
from the sale or other disposition of Partnership properties will be
distributed to the recognized holder of the Interests as of the last day of
the quarterly period with respect to which such distribution is made.
Reference is made to Item 6 below for a discussion of cash
distributions made to the Limited Partners.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
YEARS ENDED DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . $ 29,251,376 31,189,187 28,537,104 29,489,719 29,958,308
============ ============ =========== =========== ===========
Operating earnings (loss)$ (7,172,383) 2,189,882 347,102 (5,371,951) 858,978
Partnership's share of
operations of uncon-
solidated ventures . . 1,116,541 2,405,822 (4,744,175) (6,945,209) 2,913,705
Venture partner's share
of consolidated
venture's operations . -- -- 200,393 3,977,004 760,214
Gain on sale of interest
in unconsolidated
venture and disposi-
tion of investment
properties . . . . . . 64,571,942 150,443 -- 71,311 122,534
------------ ------------- ----------- ----------- -----------
Net earnings (loss). . . $ 58,516,100 4,746,147 (4,196,680) (8,268,845) 4,655,431
============ ============ =========== =========== ===========
Net earnings (loss)
per Interest (b):
Net operating earnings
(loss) . . . . . . . $ (38.76) 29.41 (26.85) (55.85) 29.01
Gain on sale of interest
in unconsolidated
venture and disposi-
tion of investment
properties . . . . . 426.16 .99 -- .47 .81
------------ ------------- ----------- ----------- -----------
Net earnings (loss). . . $ 387.40 30.40 (26.85) (55.38) 29.82
============ ============ =========== =========== ===========
Total assets . . . . . . $170,327,264 140,905,552 139,176,753 149,275,407 170,269,336
Long-term debt . . . . . $ -- 46,800,991 74,095,311 74,353,958 76,025,168
Cash distributions
per Interest (c) . . . $ 16.00 22.00 40.00 47.50 70.00
============ ============ =========== =========== ===========
<FN>
-------------
(a) The above selected financial data should be read in conjunction
with the consolidated financial statements and the related notes appearing
elsewhere in this annual report.
(b) The net earnings (loss) per Interest is based upon the number of
Interests outstanding at the end of each period (150,005).
(c) Cash distributions to the Limited Partners since the inception of
the Partnership have not resulted in taxable income to such Limited
Partners and have therefore represented a return of capital. Each
Partner's taxable income (or loss) from the Partnership in each year is
equal to his allocable share of the taxable income (loss) of the
Partnership, without regard to the cash generated or distributed by the
Partnership.
</TABLE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1994
<CAPTION>
Property
--------
Animas Valley
Mall a) The GLA occupancy rate and average base rent per square foot as of December 31 for each
of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>
1990 . . . . . 87% 6.92
1991 . . . . . 89% 6.71
1992 . . . . . 89% 6.58
1993 . . . . . 90% 6.50
1994 . . . . . 90% 6.46
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
JC Penney 50,749 $165,438 4/1998 N/A
(Department Store)
Dillards 72,212 288,848 1/2010 N/A
(Department Store)
Sears 65,856 159,590 8/2032 N/A
(Department Store)
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Animas Valley Mall:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 6 15,567 236,429 8.85%
1996 2 5,222 15,845 .59%
1997 10 44,237 336,610 12.59%
1998 3 59,687 267,309 10.00%
1999 2 1,845 31,900 1.19%
2000 3 7,039 66,569 2.49%
2001 1 2,081 30,000 1.12%
2002 8 79,230 587,974 22.00%
2003 3 8,218 123,930 4.64%
2004 1 800 21,000 .79%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
<TABLE>
<CAPTION>
Property
--------
North Hills
Mall a) The GLA occupancy rate and average base rent per square foot as of December 31 for each
of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>
1990 . . . . . 93% 14.64
1991 . . . . . 86% 18.13
1992 . . . . . 87% 15.90
1993 . . . . . 99% 15.57
1994 . . . . . 95% 15.94
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
General Cinema 28,472 $347,000 6/2005 N/A
(Movie Theatre)
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the North Hills Mall:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 19 30,009 619,871 18.52%
1996 11 14,699 354,660 10.60%
1997 5 16,706 292,070 8.73%
1998 4 6,723 142,000 4.24%
1999 4 6,755 143,766 4.30%
2000 4 11,715 255,275 7.63%
2001 3 10,182 159,282 4.76%
2002 4 7,099 152,451 4.56%
2003 3 10,916 121,744 3.64%
2004 3 11,284 139,233 4.16%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
<TABLE>
<CAPTION>
Property
--------
Pasadena Town
Square a) The GLA occupancy rate and average base rent per square foot as of December 31 for
each of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>
1990 . . . . . 88% 15.19
1991 . . . . . 89% 14.96
2 1992 . . . . . 86% 14.14
1993 . . . . . 85% 16.15
1994 . . . . . 72% 16.73
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
Palais Royal
(Womens Clothing) 19,161 $116,602 3/1997 N/A
Oshman's 9,600 $81,600 3/2003 N/A
(Sporting Goods)
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at Pasadena Town Square:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 10 25,147 418,333 14.18%
1996 7 16,676 208,475 7.07%
1997 9 31,902 377,930 12.81%
1998 3 8,528 123,513 4.19%
1999 10 16,173 280,007 9.49%
2000 3 5,200 111,877 3.79%
2001 7 18,653 272,439 9.23%
2002 4 10,152 155,997 5.29%
2003 4 20,058 250,436 8.49%
2004 3 3,116 96,505 3.27%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On June 29, 1983, the Partnership commenced an offering of
$150,000,000 of Limited Partnership Interests pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. All Interests
were subscribed and issued between June 29, 1983 and November 1, 1983
pursuant to the public offering from which the Partnership received gross
proceeds of $150,000,000.
After deducting selling expenses and other offering costs, the
Partnership had approximately $135,651,000 with which to make investments
in income-producing commercial and residential real property, to pay legal
fees and other costs (including acquisition fees) related to such
investments and for working capital. A portion of such proceeds was
utilized to acquire the properties described in Item 1 above.
At December 31, 1994, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $84,486,000. During February
1995, approximately $68,100,000 was distributed to the Limited Partners,
substantially all of which comprised sales proceeds from the December 1994,
sale of the Collin Creek Mall as discussed below. The Partnership has
retained a portion of the Collin Creek Mall sales proceeds as working
capital as discussed below. Reference is made to Note 11. Such remaining
funds and short-term investments of approximately $2,881,000 are available
for distributions to partners and for working capital requirements
including tenant and capital improvements, to the extent not funded from
future operations, any payments to the Animas joint venture partner should
the property be disposed without any proceeds to the Partnership of as
discussed below and to fund any cash flow deficits at Royal Executive Park
as discussed below. The Partnership and its consolidated venture have
currently budgeted in 1995 approximately $1,899,000 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 1995 is
currently budgeted to be approximately $4,009,000. Actual amounts expended
in 1995 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. However, the Partnership does not consider the Pasadena Town
Square and the Animas Valley Mall investment properties to be a significant
source of long-term liquidity. In such regard, reference is made to the
Partnership's property specific discussions below and also to the
Partnership's disclosure of certain property lease expirations in Item 6.
As more fully described in Note 7, the Partnership sold the Collin Creek
Mall in December 1994. In addition, the Animas joint venture has entered
into a non-binding letter of intent to sell the Animas Valley Mall, as more
fully discussed below. The Partnership's and its ventures' mortgage
obligations are all non-recourse. Therefore, the Partnership and its
ventures are not obligated to pay mortgage indebtedness unless the related
property produces sufficient net cash flow from operations or sale.
As more fully discussed below, the Partnership reduced operating
distributions effective as of the first quarter of 1993 in order to pay for
enhancement programs at the Collin Creek Mall, North Hills Mall and
Pasadena Town Square in 1993. These enhancements programs were paid from
the investment properties cash flow and the Partnership's cash on hand. In
addition, the Partnership anticipated an increase in vacancies and higher
leasing costs at the Royal Executive Park and 40 Broad Street investment
properties. At that time, the Partnership projected that these leasing
costs were to be paid from the investment properties cash flow and
contributions by the Partnership for its respective share of such costs.
As a result, the Partnership expected to receive a reduced level of
distributions from these investment properties in the future.
Currently, as more fully discussed below, the Partnership is exploring
the addition of a major department store at each of the North Hills Mall
and the Pasadena Town Square shopping center and if undertaken may require
the Partnership to commit a substantial amount of capital. Also, the
Partnership may need to commit capital for its share of leasing costs
associated with the vacant space at the Royal Executive Park office
building as discussed below. In addition, the Partnership may decide to
pay down portions of indebtedness in order to achieve loan extensions on
the non-recourse mortgage loans at Pasadena Town Square (which matured
January 1995) and North Hills Mall (which matures in July 1995).
Consequently any decision to commit additional amounts to these investment
properties for any purpose will be based on, among other things, the high
likelihood of return of such additional investment plus a reasonable profit
thereon. Future distributions from sales or operations will be dependent
upon a combination of the operating cash flow from the remaining investment
properties and the longer term capital requirements of the Partnership.
The Partnership currently expects, however, to maintain a $4 per interest
per quarter distribution from operations to the Limited Partnership in
1995.
As of December 31, 1994, the General Partners have continued to defer
the receipt of certain of their distributions of net cash flow from
operations and sales ($13,100,794 at December 31, 1994 and $9,594,118 at
December 31, 1993, respectively, or approximately $87 and $64 per interest)
from the Partnership as required by the Partnership agreement as more fully
described in Note 9.
Overall cash flow returns at 40 Broad Street for the next few years
are expected to be lower than originally projected because an additional
15% of the space leased and occupied currently 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. Furthermore, 40 Broad Street had renewed and
expanded another tenant, effective July 1, 1993, whose lease was scheduled
to expire in December 1994. This tenant had expanded from approximately
18,000 square feet to approximately 41,000 square feet at a market
effective rental rate which is lower than its previous 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
addition, new leases will likely require expenditures for lease commissions
and tenant improvements prior to tenant occupancy. This anticipated
decline in rental rates, the anticipated increase in re-leasing time and
the costs upon re-leasing will result in a decrease in cash flow from
operations over the near term. Therefore, Broad Street recorded a
provision for value impairment of $22,908,606 at December 31, 1992 to
reduce the net book value of the property to the then estimated valuation
of $7,800,000. Reference is made to Note 3(d) for further discussion of
the current status of this investment property.
In 1992 and 1993, the Partnership completed the renovation of 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 were approximately $4,400,000.
In addition, in 1994, the Partnership had commenced a parking lot repair
project which was expected to take five years to complete and cost
approximately $1,300,000. The Partnership sold the Collin Creek Mall on
December 29, 1994. The mortgage loan was satisfied in full from proceeds
of the sale. Reference is made to Note 7 for a further description of this
sale.
The Partnership continues to seek the replacement of a major tenant,
which owns its own store, at the North Hills Mall 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. Any decision to commit additional
funds to this investment property for these purposes will be based on,
among other things, the high likelihood of the return of such additional
investment plus a reasonable profit thereon. However, there can be no
assurance that such replacement and/or addition will ultimately occur.
Nevertheless, the Partnership continues to commit modest amounts of capital
for renovation purposes. 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 third 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 scheduled to be
incurred in 1995 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 which matures in July 1995. However,
there is no assurance that the Partnership will obtain a refinancing of the
mortgage note. In February 1994, the Partnership sold its sole remaining
land outparcel to an unaffiliated third party (see Note 2(c)). The
purchaser is building a restaurant on the site. 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 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. In 1995 and 1996, tenant leases covering approximately
42,000 square feet or approximately 17% 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 72%
at December 31, 1994 from 85% at December 31, 1993. Several other tenants
whose leases are not due to expire in the near term, have approached the
Partnership seeking reductions in the amount of rent they must pay. The
Partnership has granted relief to certain tenants which could demonstrate
that without a reduction in their rent, they would no longer be able to
remain in business in the Mall. Any decision to grant rent reductions is
made on a case by case basis. As a result of these market and property
operating conditions, the property's cash flow from operations prior to
capital expenditures declined in 1994 and is expected to continue to
decline for a period of time.
The Partnership has taking certain measures and is exploring others in
an attempt to stem recent operating declines at the Pasadena Town Square
Shopping Center. 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 this
will ultimately occur or that it will have an immediate positive impact on
occupancy or the rental rates achieved upon releasing vacant or expiring
space at the property. The Partnership is continuing discussions with a
major department store owner concerning the opening of a store at the
property. In order to add another department store at this center, the
Partnership would likely need to commit a substantial amount of capital.
The Partnership believes that the addition of another department store to
this property would enhance the competitive position of this property
within the immediate retail market resulting in improved operating results.
There is no assurance, however, that the addition of a department store
will ultimately occur. In 1993, the Partnership commenced a minor mall
enhancement program which included remodeling the food court. The program
cost approximately $500,000 and was completed in 1994. In addition, the
Partnership is considering 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 1995 has been
included in the budgeted improvement costs described above. The total
five-year project cost would be partially recoverable from tenants pursuant
to provisions in their leases. Any decision to commit additional funds to
this investment property for any purpose will be based on, among other
things, the high likelihood of the return of such additional investment
plus a reasonable profit thereon.
The Partnership has initiated discussions with the mortgage lender
regarding a refinancing and/or extension of the mortgage loan on Pasadena
Town Square (which matured in January 1995). However, there is no
assurance that the Partnership will obtain a refinancing and/or extension
of such mortgage note. The Partnership continues to remit to the lender
debt service payments under the original terms of the loan. The lender has
notified the Partnership of its demand for payment of all sums owed to it.
Based on the property operating and market conditions discussed above and
if the Partnership is unable to obtain a loan refinancing and/or extension
on economic terms which would provide for a high likelihood of return of
any additional investment plus a reasonable profit thereon, the Partnership
may decide not to commit any significant further amounts of capital to this
property. As a result, the lender would likely obtain title to the
property and the Partnership would no longer have an ownership interest.
Therefore, due to the factors discussed above and due to the uncertainty of
the Partnership's ability to recover the net carrying value of the Pasadena
Town Square investment property through future operations and sales, as of
December 31, 1994, the Partnership recorded, as a matter of prudent
accounting practice, a provision for value impairment of such investment of
$8,434,103. Such provisions were recorded to reduce the net carrying value
of the investment property to the then outstanding balance of the related
non-recourse financing. In such event, the Partnership would recognize a
gain for financial reporting and a gain for Federal income tax reporting
purposes without any net realizable proceeds.
In April 1992, the Partnership and its joint venture partner settled
certain legal disputes regarding the Animas joint venture agreement and
management at the Animas Valley Mall. Under the terms of the settlement,
the unaffiliated venture partner has contributed approximately $404,000 to
the 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 joint venture partner a certain settlement amount in connection with
the disposition of the property. Such disposition payment, approximated
$153,000 at March 31, 1995, 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). As of
the date of this report, no excess cash flow has been paid to the lender.
In addition, the joint venture 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 has been actively marketing the
property for sale. In February 1995, the joint venture entered into a non-
binding letter of intent to sell its interest in the Animas Valley Mall.
The prospective purchaser (an independent third party) is currently
completing its due diligence review with respect to the shopping center and
the proposed transaction. In addition, the joint venture has initiated
discussions with the mortgage lender regarding a loan extension to June 30,
1995 and a modification to increase the joint ventures' participation in
sale proceeds if the property is sold (Note 4(b)). 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. If the Partnership is
unsuccessful in its efforts to sell or refinance the property, 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 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
(Note 3(b)).
During the fourth quarter 1993, New York Telephone Company's lease
(90,000 square feet) expired and it, along with certain of its subtenants,
vacated the Royal Executive Park I 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 January, 2001 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 foot lease. During the second quarter of 1994, 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 provided a tenant
improvement allowance of $1,500,000 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 1994 costs associated with MCI's expansion and modification were
paid for from cash generated by the property in 1993 and 1994 net capital
contributions by the Partnership and the joint venture partner totalling
$503,844 contributed in their respective ownership percentages.
The property was 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 through November 1994 (Note 6), an
affiliate of the General Partner of the Partnership assumed the property
management responsibilities for the joint venture on essentially the same
terms. In addition, effective July 1, 1994, the same affiliate of the
General Partner assumed certain leasing responsibilities for the property.
The Southern Westchester County office market (the competitive market
for the building) is extremely competitive with a current vacancy rate of
approximately 22%. 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 has been 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, and in order to not have to rely upon
external financing sources, the Partnership has decided to retain
approximately $15.7 million of the Collin Creek Mall sale proceeds (Note 7)
in its working capital. These funds will be available, if necessary or
deemed appropriate by the General Partners, for the programs to enhance the
Partnership's properties, as discussed above.
RESULTS OF OPERATIONS
The net increase in cash and the decreases in rents and other
receivables, prepaid expenses, land, building and improvements, accumulated
depreciation, deferred expenses, accrued rents receivable, accounts
payable, accrued interest, accrued real estate taxes and tenant security
deposits at December 31, 1994 as compared to December 31, 1993 are
primarily due to the sale of the Collin Creek Mall in December 1994. In
addition, a portion of the increase in cash and the decrease in land is due
to the sale of an outparcel piece of land at the North Hills Mall in
February 1994. Reference is made to Notes 7 and 2(c).
The increase in escrow deposits at December 31, 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 investments in unconsolidated ventures at December 31,
1994 as compared to December 31, 1993 is primarily due to the Partnership's
contributions of $424,150 for its share of tenant improvement costs at the
Royal Executive Park office building.
The increase in current portion of long-term debt and the
corresponding decrease in long-term debt less current portion at December
31, 1994 as compared to December 31, 1993 is primarily due to the
reclassification of the mortgage notes scheduled to mature in January 1995
at the Pasadena Town Square and in July 1995 at the North Hills Mall
investment properties. In addition, the remaining decrease in long-term
debt is due to the pay off of the Collin Creek Mall mortgage loan of
$24,546,213 upon sale from sales proceeds in December 1994. Reference is
made to Notes 4 and 7.
The decrease in rental income for the year ended December 31, 1994 as
compared to the year ended December 31, 1993 is primarily the result of
lower effective rents obtained upon lease renewal by tenants and lower
occupancy at the Pasadena Town Square. The increase in rental income for
the year ended December 31, 1993 as compared to the year ended December 31,
1992 is primarily the result of increased occupancy at the Collin Creek
Mall and the North Hills Mall.
Interest income increased in 1994 as compared to 1993 primarily due to
higher yields and a higher average balance held in interest-bearing U.S.
Government obligations. Interest income decreased in 1993 as compared to
1992 primarily due to lower yields and a lower average balance held in
interest-bearing U.S. Government obligations.
The decrease in mortgage and other interest for the year ended
December 31, 1994 as compared to December 31, 1993 and 1992 is due
primarily to the lower interest rate charged on the Animas Valley mortgage
loan based on the loan modification in 1994 (Note 4(b)).
The increase in amortization of deferred expenses for the year ended
December 31, 1994 as compared to December 31, 1993 and 1992 is due
primarily to the sale of the Collin Creek Mall in December 1994 (note 7).
The provision for value impairment of $8,434,103 in 1994 is due to the
reduction of the net carrying value of the Pasadena Town Square investment
property as of December 31, 1994.
The decrease in Partnership's share of operations of unconsolidated
ventures for 1994 as compared to 1993 is primarily the result of lower
operating income at the Royal Executive Park office building due to the
lease modification with MCI Realty as discussed above. The increase in
Partnership's share of operations of unconsolidated ventures for 1993 as
compared to 1992 is primarily the result of the election to establish a
provision for value impairment of $22,908,606 at December 31, 1992 in
connection with the 40 Broad Street Building as discussed above. See Note
3(d).
The gain of $64,571,942 on sale of investment properties during 1994
is the result of the outparcel sale at the North Hills Mall ($517,128) in
February 1994 and the sale of the Collin Creek Mall ($64,054,814) in
December 1994. See Notes 2(c) and 7.
The gain of $150,443 on sale of investment properties during 1993 is
the result of the outparcel sale at the Animas Valley Mall as more fully
described in Note 3(b).
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
To the extent that inflation in future periods does have an adverse
impact on property operating expenses, the effect will generally be offset
by amounts recovered from tenants as many of the long-term leases at the
Partnership's properties have escalation clauses covering increases in the
cost of operating and maintaining the properties as well as real estate
taxes. Therefore, there should be little effect on operating results if
the properties remain substantially occupied. In addition, substantially
all of the leases at the Partnership's shopping center investments contain
provisions which entitle the Partnership to participate in gross receipts
of tenants above fixed minimum amounts.
Future inflation may also cause capital appreciation of the
Partnership's investment properties over a period of time to the extent
that rental rates and replacement costs of properties increase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations, years ended December 31, 1994, 1993
and 1992
Consolidated Statements of Partners' Capital Accounts,
years ended December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows, years ended December 31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
SCHEDULE
--------
Consolidated Real Estate and Accumulated Depreciation III
SCHEDULES NOT FILED:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
JMB INCOME PROPERTIES, LTD. - X:
We have audited the consolidated financial statements of JMB Income
Properties, Ltd. - X (a limited partnership) and consolidated venture as
listed in the accompanying index. In connection with our audits of the
consolidated financial statements, we also have audited the financial
statement schedule as listed in the accompanying index. These consolidated
financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
JMB Income Properties, Ltd. - X and consolidated venture as of December 31,
1994 and 1993, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1994, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
<TABLE>
JMB INCOME PROPERTIES, LTD, - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . $ 84,486,464 1,061,308
Short-term investments (note 1). . . . . . . . . . . . . . . . . 2,880,712 3,189,979
Rents and other receivables, net of allowance for doubtful
accounts of $109,345 in 1994 and $113,363 in 1993 . . . . . . 455,293 631,960
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 88,265 233,119
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . 35,190 18,943
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . 87,945,924 5,135,309
------------ -----------
Investment properties, at cost (notes 2 and 3) - Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,486,896 19,826,661
Buildings and improvements . . . . . . . . . . . . . . . . . . . 80,610,282 135,014,936
------------ -----------
89,097,178 154,841,597
Less accumulated depreciation. . . . . . . . . . . . . . . . . . 31,896,865 43,945,824
------------ -----------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . 57,200,313 110,895,773
Investments in unconsolidated ventures, at equity
(notes 1, 3 and 10). . . . . . . . . . . . . . . . . . . . . . . 24,030,924 22,662,962
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 78,319 344,696
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . 1,071,784 1,866,812
------------ -----------
$170,327,264 140,905,552
============ ===========
JMB INCOME PROPERTIES, LTD, - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (notes 2 and 4). . . . . . . . $ 49,254,780 27,294,320
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 400,600 784,617
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 2,644,247 3,003,805
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . 1,448,958 2,547,126
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . 53,748,585 33,629,868
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . 19,844 31,878
Long-term debt, less current portion (note 4). . . . . . . . . . . -- 46,800,991
------------ -----------
Commitments and contingencies (notes 2, 3, 4 and 9)
Total liabilities. . . . . . . . . . . . . . . . . . . . 53,768,429 80,462,737
Partners' capital accounts (note 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . 1,367,150 963,664
Cumulative cash distributions. . . . . . . . . . . . . . . . (250,000) (250,000)
------------ -----------
1,118,150 714,664
------------ -----------
Limited partners (150,005 interests):
Capital contributions, net of offering costs . . . . . . . . 135,651,080 135,651,080
Cumulative net earnings. . . . . . . . . . . . . . . . . . . 73,874,835 15,762,221
Cumulative cash distributions. . . . . . . . . . . . . . . . (94,085,230) (91,685,150)
------------ -----------
115,440,685 59,728,151
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . 116,558,835 60,442,815
------------ -----------
$170,327,264 140,905,552
============ ===========
<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
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . $29,048,572 31,068,579 28,249,198
Interest income. . . . . . . . . . . . . . . . 202,804 120,608 287,906
----------- ----------- -----------
29,251,376 31,189,187 28,537,104
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . 8,291,721 9,547,844 9,537,173
Depreciation . . . . . . . . . . . . . . . . . 4,471,238 4,361,608 4,192,447
Property operating expenses. . . . . . . . . . 14,459,130 14,290,240 13,668,261
Professional services. . . . . . . . . . . . . 198,131 346,151 319,726
Amortization of deferred expenses. . . . . . . 305,061 165,918 161,370
General and administrative . . . . . . . . . . 264,375 287,544 311,025
Provision for value impairment (note 1). . . . 8,434,103 -- --
----------- ----------- -----------
36,423,759 28,999,305 28,190,002
----------- ----------- -----------
Operating earnings (loss). . . . . . . . . (7,172,383) 2,189,882 347,102
Partnership's share of operations of
unconsolidated ventures (note 1) . . . . . . . 1,116,541 2,405,822 (4,744,175)
Venture partner's share of consolidated
venture's operations (note 3). . . . . . . . . -- -- 200,393
----------- ----------- -----------
Net operating earnings (loss). . (6,055,842) 4,595,704 (4,196,680)
Gain on sale of investment
properties (notes 2(c), 3(b) and 7). . . . . . 64,571,942 150,443 --
----------- ----------- -----------
Net earnings (loss). . . . . . . $58,516,100 4,746,147 (4,196,680)
=========== =========== ===========
Net earnings (loss) per limited partnership
interest (note 1):
Net operating earnings (loss) . . . . . . . $ (38.76) 29.41 (26.85)
Gain on sale of investment properties . . . 426.16 .99 --
----------- ----------- -----------
Net earnings (loss). . . . . . . $ 387.40 30.40 (26.85)
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (150,005 INTERESTS) (note 1)
--------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------------------- ----------- ----------- ---------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
at Decem-
ber 31,
1991. . . . . 1,000 946,199 (250,000) 697,199 135,651,080 15,230,219 (82,384,840)68,496,459
Cash distri-
butions
($40 per
limited
partnership
interest) . . -- -- -- -- -- (6,000,200)(6,000,200)
Net earnings
(loss)
(note 5). . . -- (167,867) -- (167,867) -- (4,028,813) -- (4,028,813)
------ --------- ---------- -------- ----------- ---------- ----------- ----------
Balance
at Decem-
ber 31,
1992. . . . . 1,000 778,332 (250,000) 529,332 135,651,080 11,201,406 (88,385,040)58,467,446
Cash distri-
butions
($22 per
limited
partnership
interest) . . -- -- -- -- -- -- (3,300,110)(3,300,110)
Net earnings
(note 5). . . -- 185,332 -- 185,332 -- 4,560,815 -- 4,560,815
------ --------- ---------- -------- ----------- ---------- ----------- ----------
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (150,005 INTERESTS) (note 1)
--------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------------------- --------- ----------- ---------- ------------------------
Balance
at Decem-
ber 31,
1993. . . . . $1,000 963,664 (250,000) 714,664 135,651,080 15,762,221 (91,685,150)59,728,151
Cash distri-
butions
($16 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,400,080)(2,400,080)
Net earnings
(note 5). . . -- 403,486 -- 403,486 -- 58,112,614 -- 58,112,614
------ --------- ---------- --------- ----------- ---------- ----------------------
Balance
at Decem-
ber 31,
1994. . . . . $1,000 1,367,150 (250,000) 1,118,150 135,651,080 73,874,835 (94,085,230)115,440,685
====== ========= ========== ========= =========== ========== ======================
<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
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . $ 58,516,100 4,746,147 (4,196,680)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . 4,471,238 4,361,608 4,192,447
Amortization of deferred expenses. . . . . . . 305,061 165,918 161,370
Provision for value impairment (note 1). . . . 8,434,103 -- --
Partnership's share of operations of
unconsolidated ventures, net of
distributions. . . . . . . . . . . . . . . . (943,809) (701,307) 6,530,578
Venture partners' share of ventures'
operations . . . . . . . . . . . . . . . . . -- -- (200,393)
Gain on sale of investment properties. . . . . (64,571,942) (150,443) --
Changes in:
Rents and other receivables. . . . . . . . . . 176,667 213,526 400,731
Prepaid expenses . . . . . . . . . . . . . . . 144,854 (35,293) (2,340)
Escrow deposits. . . . . . . . . . . . . . . . (16,247) 127 (19,070)
Accrued rents receivable . . . . . . . . . . . 795,028 (1,500,623) (366,189)
Accounts payable . . . . . . . . . . . . . . . (384,017) (210,612) (243,474)
Accrued interest . . . . . . . . . . . . . . . (359,558) 848,342 756,914
Accrued real estate taxes. . . . . . . . . . . (1,098,168) (89,713) 343,123
Tenant security deposits . . . . . . . . . . . (12,034) (6,608) 9,700
------------ ----------- -----------
Net cash provided by operating
activities . . . . . . . . . . . . . . 5,457,276 7,641,069 7,366,717
Cash flows from investing activities:
Net sales and maturities of short-term
investments. . . . . . . . . . . . . . . . . . 309,267 113,429 3,587,421
Cash sales proceeds from sale of investment
property, net of selling expenses. . . . . . . 108,385,182 188,432 --
Additions to investment properties
(including changes in related payables). . . . (3,006,843) (4,658,162) (5,167,856)
Partnership distributions from
unconsolidated ventures. . . . . . . . . . . . -- 237,176 1,267,023
Partnership's contribution to
unconsolidated ventures. . . . . . . . . . . . (424,153) -- --
Payment of deferred expenses . . . . . . . . . . (54,962) (60,961) (94,765)
------------ ----------- -----------
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . 105,208,491 (4,180,086) (408,177)
------------ ----------- -----------
Cash flows from financing activities:
Bank overdrafts. . . . . . . . . . . . . . . . . -- -- (540,731)
Principal payments on long-term debt . . . . . . (24,840,531) (258,647) (227,306)
Venture partner's contribution to venture. . . . -- -- 404,652
Distributions to limited partners. . . . . . . . (2,400,080) (3,300,110) (6,000,200)
------------ ----------- -----------
Net cash used in financing activities. . (27,240,611) (3,558,757) (6,363,585)
------------ ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . 83,425,156 (97,774) 594,955
Cash and cash equivalents,
beginning of year. . . . . . . . . . . 1,061,308 1,159,082 564,127
------------ ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . . $ 84,486,464 1,061,308 1,159,082
============ =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest,
net of amount capitalized ($136,915 in
1993 and $87,500 in 1992). . . . . . . . . . . $ 8,651,279 8,699,502 8,780,259
============ =========== ===========
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
DECEMBER 31, 1994, 1993 AND 1992
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its venture, Animas Valley Mall Associates
("Animas") (note 3(b)). 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) (note 3(c)) and JMB-40 Broad Street Associates ("Broad
Street") (note 3(d)). 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 years ended December 31, 1994 and 1993 is
summarized as follows:
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
1994 1993
------------------------------ ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . $170,327,264 151,765,387 140,905,552 100,871,400
Partners' capital accounts
(deficits) (note 5):
General partners. . . . . . . 1,118,150 (132,634) 714,664 (906,450)
Limited partners. . . . . . . 115,440,685 127,796,690 59,728,151 51,418,252
Net earnings (note 5):
General partners. . . . . . . 403,486 773,816 185,332 14,986
Limited partners. . . . . . . 58,112,614 78,778,519 4,560,815 484,955
Net earnings per limited
partnership interest . . . . . . 387.40 525.17 30.40 3.23
============ =========== =========== ===========
</TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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. 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
($84,486,464 and none at December 31, 1994 and 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.
As more fully discussed in Item 7 and in Note 2(d), due to the
uncertainty of the Partnership's ability to recover the net carrying value
of the Pasadena Town Square investment property through future operations
and sales, as of December 31, 1994, the Partnership recorded, as a matter
of prudent accounting practice, a provision for value impairment of such
investment of $8,434,103. Such provisions were recorded to reduce the net
carrying value of the investment property to the then outstanding balance
of the related non-recourse financing.
Deferred loan fees are amortized over the term of the respective loan
agreement.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
prorated rental income for the full period of occupancy on a straight-line
basis.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the Partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership had acquired, either directly or through joint venture
arrangements (note 3), interests in three office buildings and five
shopping centers. Three properties have been sold or disposed of by the
Partnership. All of the remaining properties owned at December 31, 1994
were operating. The cost of the investment properties represents the total
cost to the Partnership or its consolidated venture plus miscellaneous
acquisition costs.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Depreciation on the consolidated investment properties has been
provided over the estimated useful lives of the various components as
follows:
YEARS
-----
Improvements--straight line. . . 30
Personal property--straight line 5
==
The investment properties are pledged as security for the long-term
debt, for which there is no recourse to the Partnership, as described in
note 4.
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and depreciated
over their estimated useful lives. Provisions for value impairment are
recorded with respect to the investment properties whenever the estimated
future cash flows from a property's operations and projected sale are less
than the property's net carrying value.
(b) Collin Creek Mall
During October 1983, the Partnership acquired a two-level existing
enclosed mall regional shopping center in Plano (Dallas), Texas. The
Partnership's purchase price for the mall was $49,000,000, which was paid
in cash at closing. In addition, the Partnership initially reserved an
additional $1,754,000 for capital improvements, tenant improvements, lease-
up expenses, financing fees and other expenditures. Also, in 1985, the
Partnership obtained a permanent loan in the amount of $25,000,000 (note
4), secured by the property.
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 had commenced a parking lot repair project which was to
take five years to complete and cost approximately $1,300,000. In December
1994, the Partnership sold the Collin Creek Mall. Reference is made to
note 7 for a further description of this sale.
(c) North Hills Mall
During October 1983, the Partnership acquired an existing enclosed
mall regional shopping center in North Richland Hills (Fort Worth), Texas.
The Partnership's purchase price for the mall was $13,000,000 which was
paid in cash at closing. In addition, the Partnership initially reserved
an additional $465,000 for capital improvements, tenant improvements,
lease-up expenses, financing fees and other expenditures.
In 1985, the Partnership obtained a permanent loan in the amount of
$8,000,000 (note 4), secured by the property. The Partnership's aggregate
cash investment, including additional capital improvements and other
expenditures, is approximately $14,690,000.
Additionally, an affiliate of the General Partners of the Partnership
obtained for the Partnership's benefit a right of first refusal from the
seller to acquire two additional parcels of land (approximately 10-acres)
adjacent to the shopping center.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership continues to seek 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. Any decision to commit additional funds to this
investment property for these purposes will be based on, among other
things, the high likelihood of the return of such additional investment
plus a reasonable profit thereon. The Partnership believes the replacement
of the major tenant and/or addition of another major department store to
this center would greatly enhance the competitive 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 third
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 which matures in July 1995. However,
there is no assurance that the Partnership will obtain a refinancing of the
mortgage note.
In February 1994, the Partnership sold its sole remaining land
outparcel to an unaffiliated third party. The sale price for the outparcel
was $700,000 (before selling costs and prorations). The Partnership will
retain these net sale proceeds in its working capital reserve. The
Partnership recognized a gain of $517,128 for financial reporting purposes
and a gain of $518,710 for Federal income tax purposes in 1994.
(d) Pasadena Town Square Mall
During October 1983, the Partnership acquired an existing enclosed
mall regional shopping center in Pasadena (Houston), Texas. The
Partnership's purchase price for the mall was $30,200,000 which was paid in
cash at closing. In addition, the Partnership initially reserved an
additional $1,081,000 for capital improvements, tenant improvements,
lease-up expenses, financing fees and other expenditures. In 1985, the
Partnership obtained a permanent loan in the amount of $15,150,000 (note
4), secured by the property. The Partnership's aggregate cash investment,
including additional capital improvements and other expenditures, is
approximately $16,131,000.
The Partnership is continuing discussions with a major department
store owner concerning the opening of a store at the Pasadena Town Square.
In order to add another department store at this center, the Partnership
would likely need to commit a substantial amount of capital. The
Partnership believes that the addition of another department store to this
property would enhance the competitive position of this property within the
immediate retail market resulting in improved operating results. In 1993,
the Partnership commenced a minor mall enhancement program which included
remodeling the food court. The program (with a cost of approximately
$500,000) was completed in 1994. In addition, the Partnership is
considering a program to repair the property's roof and parking lot. The
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
total cost of the repair work would be approximately $1,700,000. Such
amount would be partially recoverable from tenants pursuant to provisions
in their leases. Any decision to commit additional funds to this
investment property for any purpose will be based on, among other things,
the high likelihood of the return of such additional investment plus a
reasonable profit thereon. Consequently, there is no assurance that the
addition of a department store or the commencement of the capital repair
projects will ultimately occur.
The Partnership has initiated discussions with the mortgage lender
regarding a refinancing and/or extension of the mortgage loan on the
property (which matured in January 1995). However, there is no assurance
that the Partnership will obtain a refinancing of the mortgage note. The
Partnership continues to remit to the lender debt service payments under
the original terms of the loan. The lender has notified the Partnership of
its demand for payment of all sums owed to it. Based on the property
operating and market conditions and if the Partnership is unable to obtain
a loan refinancing and/or extension on economic terms which would provide
for a high likelihood of return of any additional investment plus a
reasonable profit thereon, the Partnership may decide not to commit any
significant further amounts of capital to this property. As a result, the
lender would likely obtain title to the property and the partnership would
no longer have an ownership interest. Therefore, due to the factors
discussed above and due to the uncertainty of the Partnership's ability to
recover the net carrying value of the Pasadena Town Square investment
property through future operations and sales, as of December 31, 1994, the
Partnership recorded, as a matter of prudent accounting practice, a
provision for value impairment of such investment of $8,434,103. Such
provisions were recorded to reduce the net carrying value of the investment
property to the then outstanding balance of the related non-recourse
financing. In such event, the Partnership would recognize a gain for
financial reporting and a gain for Federal income tax reporting purposes
without any net realizable proceeds.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at December 31, 1994 is a party to three operating
joint venture agreements. Pursuant to such agreements, the Partnership
made initial capital contributions of approximately $62,760,000 (before
legal and other acquisition costs and its share of operating deficits as
discussed below). 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.
The Partnership has acquired, through the above ventures, one shopping
mall and two office buildings. The venture properties have been financed
under various long-term debt arrangements as described in note 4. 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 its 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
In October 1983, the Partnership acquired through a joint venture with
the developer, an interest in a newly constructed enclosed mall regional
shopping center in Farmington, New Mexico, known as the Animas Valley Mall.
The Partnership contributed $9,000,000 in cash to the venture.
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 Animas joint venture agreement and
management at 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,
approximately $153,000 at March 27, 1995, 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 (see
note 4(b)).
In December 1993, the joint venture sold a land outparcel at the
Animas Valley Mall to an unaffiliated third party. The sale price for the
outparcel was approximately $194,000 (before selling costs and prorations).
The joint venture has retained these net sale proceeds as working capital.
The property is presently being managed under an agreement between the
Partnership and an affiliate of the General Partners of the Partnership
which provides for management fees calculated at 3% of fixed and percentage
rent from the shopping center.
(c) Royal Executive Park
In December 1983, the Partnership acquired through a joint venture
with the developer, an interest in a completed three-building office
complex in Ryebrook, New York known as Royal Executive Park.
The Partnership contributed the sum of $25,948,000 to the joint
venture which was used to repay an interim construction loan secured by the
property. The developer was obligated to contribute to the joint venture
amounts required to complete construction including tenant improvements.
The acquisition of the venture interest resulted in an excess of the
Partnership's basis in the property over its proportionate share of the
venture's assets of approximately $10,000,000. Such excess is being
amortized over the remaining useful life of the Venture's property through
an adjustment of the Partnership's share of the Venture's operations. Such
amortization each year was approximately $189,000, for 1994, 1993 and 1992,
respectively.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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
$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 was 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, through November 1994 (note 6) a
affiliate of the General Partner of the Partnership assumed the property
management responsibilities for the joint venture on essentially the same
terms. In addition, effective July 1, 1994, the same affiliate of the
General Partner assumed certain leasing responsibilities for the property.
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 January, 2001 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 second 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 provided a tenant improvement allowance of $1,500,000 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 a contribution towards enhancement of MCI's space in return
for a long term extension of its lease will maximize the property's cash
flow over the long term. The 1994 costs associated with MCI's expansion
and modification were paid for from cash generated by the property in 1993
and 1994 and net capital contributions by the Partnership and the joint
venture partner totalling $503,844 contributed in their respective
ownership percentages.
(d) Broad Street
During December 1985, the Partnership acquired, through a joint
venture partnership (the "Affiliated Joint Venture") with JMB Income
Properties, Ltd.-XII (a partnership sponsored by the Managing General
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Partner of the Partnership) a 31.44% interest in an existing 24-story
office building located at 40 Broad Street in New York, New York. The
Affiliated Joint Venture's purchase price for the building was $65,100,000
(net of prorations and miscellaneous closing costs), of which the
Partnership provided approximately $20,470,000, which was paid in cash at
closing.
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 the Affiliated Joint Venture which is 31.44%.
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. Therefore, due to the uncertainty of Broad
Street's ability to recover the net carrying value of the investment
property through future operations or sale, the Broad Street joint venture
recorded a provision for value impairment of $22,908,606 at December 31,
1992 to further reduce the net book value of the property to the then
estimated valuation of $7,800,000.
The property was managed by an affiliate of the General Partners of
the Partnership for a fee calculated as 2% of gross receipts of the
property (see note 6).
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(4) LONG-TERM DEBT
(a) Long-term debt consists of the following at December 31, 1994 and 1993:
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
12-1/2% mortgage note, secured by the North Hills Mall in
North Richland Hills (Fort Worth), Texas, payable in monthly
installments of $85,400 (including interest) until July 1995
when the outstanding balance of $7,832,745 is due and payable;
prepayable beginning in August 1990 for a fee which decreases
over time. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,854,788 7,894,967
13-5/8% mortgage note, secured by the Pasadena Town Square Mall
in Pasadena (Houston), Texas, payable in monthly installments of
$175,022 (including interest) until January 1995 when the
outstanding balance of $14,399,992 was due and payable
(note 2(d)). . . . . . . . . . . . . . . . . . . . . . . . . . . 14,399,992 14,528,571
12-1/2% mortgage note, secured by the Collin Creek Mall in
Plano (Dallas), Texas. The mortgage loan was paid in
full upon sale in December 1994 (note 7) . . . . . . . . . . . . -- 24,671,773
12-1/2% mortgage note, secured by the Animas Valley Mall
Shopping Center in Farmington, New Mexico, providing for
monthly payments of interest only aggregating $2,767,500
per annum until January 1994 when the remaining interest
and outstanding balance of $27,000,000 was due and payable;
(modified and extended to March 1995 in April 1992,
note 4(b)) . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000,000 27,000,000
----------- ------------
Total debt. . . . . . . . . . . . . . . . . . . . . . . . . . 49,254,780 74,095,311
Less current portion of long-term debt. . . . . . . . . . . . 49,254,780 27,294,320
----------- ------------
Total long-term debt . . . . . . . . . . . . . . . . . . $ -- 46,800,991
=========== ============
</TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Five year maturities of long-term debt are summarized as follows:
1995. . . . . . . . $49,254,780
1996. . . . . . . . --
1997. . . . . . . . --
1998. . . . . . . . --
1999. . . . . . . . --
===========
(b) Debt Modification
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 has paid debt service in 1991, 1992, 1993 and
through February 1994 in accordance with these modified terms. In
addition, under the terms of the modification, the joint venture was
required to make monthly real estate tax escrow deposits. 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 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 has been actively marketing the
property for sale. In February 1995, the joint venture entered into a non-
binding letter of intent to sell its interest in the Animas Valley Mall.
The prospective purchaser (an independent third party) is currently
completing its due diligence review with respect to the shopping center and
the proposed transactions. In addition, the joint venture has initiated
discussions with the mortgage lender regarding a loan extension to June 30,
1995 and a modification to increase the joint ventures participation in
sale proceeds if the property is sold (note 3(b)). The joint venture
continues to remit debt service at the 8% pay rate. 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. If the
Partnership is unsuccessful in its efforts to sell or refinance the
property, the Partnership has decided not to commit additional capital to
the joint venture. Therefore, 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 in note 2(b).
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(5) 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 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 contribu-
tions 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 December 31, 1994, a portion of the General Partners'
distributions have been deferred (note 9).
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 disbursable 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, in accordance
with the Partnership Agreement, the General Partners have deferred the
receipt of certain sale proceeds ($3,481,080 or approximately $23 per
interest) from the Partnership in connection with the sale of the Towne
Square Mall and Collin Creek Mall.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(6) MANAGEMENT AGREEMENTS
The North Hills Mall, Pasadena Town Square and Collin Creek Mall
shopping centers are managed by an affiliate of the General Partners
pursuant to management agreements which provide for leasing commissions and
an annual fee based upon a percentage of rental income of the property, the
aggregate of such commission and fee not to exceed 6% of the gross receipts
of the property. The Royal Executive Park office building had 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, a former 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, a former affiliate of the General Partners assumed the leasing
responsibilities for the property.
In December 1994, one of the affiliated property managers sold
substantially all of its assets and assigned its interest in its management
contracts to an unaffiliated third party. In addition, certain of the
management personnel of the property manager became management personnel of
the purchaser and its affiliates. The successor to the affiliated property
manager's assets is acting as the property manager of the Royal Executive
Park office building and the 40 Broad Street office building after the sale
on the same terms that existed prior to the sale.
(7) SALE OF INVESTMENT PROPERTY
On December 29, 1994, the Partnership sold the land, related
improvements and personal property of the Collin Creek Mall located in
Plano, Texas. The purchaser was not affiliated with the Partnership or its
General Partners and the sale price was determined by arm's-length
negotiations. The sale price of the land, related improvements and
personal property was $108,000,000 (before selling costs and prorations),
all of which was paid in cash at closing. A portion of the cash proceeds
($24,546,213) was utilized to retire the first mortgage secured by the
property. An affiliate of the General Partner has retained management of
the property. The Partnership recognized a gain of $64,054,814 for
financial reporting purposes and has recognized a gain of $79,757,206 for
Federal income tax purposes in 1994.
(8) LEASES
As Property Lessor
At December 31, 1994, the Partnership and its consolidated venture's
principal assets are three shopping centers. The Partnership has
determined that all leases relating to these properties are properly
classified as operating leases; therefore, rental income is reported when
earned and the cost of the properties, excluding the cost of the land, is
depreciated over the estimated useful lives. Leases with tenants range in
term from one to thirty years and provide for fixed minimum rent and
partial reimbursement of operating costs. In addition, leases with
shopping center tenants provide for additional rent based upon percentages
of tenants' sales volumes. With respect to the Partnership's shopping
center investments, a substantial portion of the ability of retail tenants
to honor their leases is dependent upon the retail economic sector.
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit, to be received
in the future under the operating leases are as follows:
1995. . . . . . . . . $ 7,721,541
1996. . . . . . . . . 6,721,512
1997. . . . . . . . . 6,144,482
1998. . . . . . . . . 5,317,381
1999. . . . . . . . . 4,886,112
Thereafter. . . . . . 27,720,853
-----------
Total. . . . . . $58,511,881
===========
Contingent rent (based on sales by property tenants) included in
consolidated rental income was as follows for the years ended December 31,
1994, 1993 and 1992:
1992. . . . . . . . . $852,600
1993. . . . . . . . . 861,927
1994. . . . . . . . . 935,162
========
(9) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of December 31,
1994 and for the years ended December 31, 1994, 1993, and 1992 are as
follows:
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees (note 6). . . . . . . $695,178 667,066 686,719 1,254
Insurance commissions. . . . . . . . 42,296 83,329 58,440 --
Reimbursement (at cost) for
out-of-pocket expenses . . . . . . 30,004 -- 16,628 174
Reimbursement (at cost) for
out-of-pocket salary related
expenses relating to on-site
and other costs for the
Partnership and its investment
properties . . . . . . . . . . . . 157,209 100,924 113,769 18,196
-------- -------- -------- ------
$924,687 851,319 875,556 19,624
======== ======= ======== ======
</TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
The General Partners have deferred (in accordance with the Partnership
agreement, see note 5) payment of certain of their distributions of net
cash flow from the Partnership. Accordingly, $9,619,714 (approximately $64
per interest) of distributable cash and $3,481,080 (approximately $23 per
interest) of sale proceeds has been deferred by the General Partners.
These amounts, together with the unpaid fees and expenses set forth in the
chart above, do not bear interest and may be paid in future periods in
accordance with the Partnership agreement to the extent of sufficient
distributable proceeds from property operations, sales or refinancings.
(10) INVESTMENTS IN UNCONSOLIDATED VENTURES
Summary financial information for Royal Executive Park and Broad
Street (notes 3(c) and 3(d), respectively) as of and for the years ended
December 31, 1994 and 1993 are as follows:
1994 1993
------------ ------------
Current assets . . . . . . . . . $ 3,504,488 4,549,126
Current liabilities. . . . . . . (201,656) (262,234)
------------ ------------
Working capital . . . . . . 3,302,832 4,286,892
------------ ------------
Investment property, net . . . . 31,330,567 28,545,111
Other assets, net. . . . . . . . 3,965,694 1,959,574
Other liabilities, net . . . . . (122,397) (42,397)
Venture partners' equity . . . . (14,445,775) (12,082,218)
------------ ------------
Partners' capital . . . . . $ 24,030,921 22,662,962
============ ============
Represented by:
Invested capital. . . . . . $ 50,147,684 49,723,531
Cumulative cash distributions (35,455,238) (35,282,503)
Cumulative net earnings . . 9,338,475 8,221,934
------------ ------------
$ 24,030,921 22,662,962
============ ============
Total income . . . . . . . . . . $ 12,321,252 16,077,877
============ ============
Expenses applicable to operations $ 9,079,579 10,052,562
============ ============
Net earnings . . . . . . . . . . $ 3,223,673 6,025,315
============ ============
Also, for the year ended December 31, 1992, total income, expenses
applicable to operations and net earnings were $16,577,816, $10,481,968 and
($16,812,758), respectively, for the unconsolidated ventures listed above.
(11) SUBSEQUENT EVENT
In February 1995, the Partnership paid an operating distribution of
$600,020 ($4.00 per Interest) and a sale distribution from the sale of
Collin Creek Mall (note 7) of $67,502,250 ($450.00 per Interest) to the
Limited Partners.
<TABLE>
SCHEDULE III
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
------------------------------------------------------------------------------
BUILDINGS BUILDINGS BUILDINGS
AND AND AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (E)
----------- ----------- ----------- -------------------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING
CENTERS:
North Richland
Hills,
Texas (D) . .$ 7,854,788 3,170,275 9,829,725 13,072,523 2,642,818 22,902,248 25,545,066
Pasadena,
Texas (E) . . 14,399,992 4,491,435 25,708,565 (4,362,900) 3,169,859 21,345,665 24,515,524
Farmington
New Mexico
(C) . . . . . 27,000,000 3,139,022 41,209,334 (4,846,965) 2,674,219 36,362,369 39,036,588
----------- ---------- ----------- ----------- ----------- ----------- -----------
Total. .$49,254,780 10,800,732 76,747,624 3,862,658 8,486,896 80,610,282 89,097,178
=========== ========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DESCRIPTION DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
----------- ---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTERS:
North Richland Hills,
Texas (D). . . . . . . . $ 6,878,663 1979 10/19/83 5-30 years 659,770
Pasadena, Texas. . . . . . 10,143,326 1982 10/19/83 5-30 years 727,850
Farmington
New Mexico (C) . . . . . 14,874,876 1983 10/24/83 5-30 years 191,215
----------- ---------
Total. . . . . . . . . $31,896,865 1,578,835
=========== =========
<FN>
------------------
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the properties,
including amounts incurred subsequent to acquisition which were contemplated at the time the property was
acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
approximately $79,980,560.
(C) The property is owned and operated by joint venture; see Note 3.
(D) Reflects reallocation of initial costs between land and buildings and improvements.
(E) The Partnership recorded a provision for value impairment of $8,434,103 (which included a reduction
of deferred costs of $16,278); see Note 1 and 2(d).
</TABLE>
<TABLE> SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
(F) Reconciliation of real estate owned at December 31, 1994, 1993 and 1992:
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . $154,841,597 150,221,424 145,053,568
Additions. . . . . . . . . . . . . . . . . . 3,006,843 4,658,162 5,167,856
Reductions during period (notes 2(c), 3(b)
and 7). . . . . . . . . . . . . . . . . . . (60,333,437) (37,989) --
Provision for value impairment (E) . . . . . (8,417,825) -- --
------------ ------------ ------------
Balance at end of period . . . . . . . . . . $ 89,097,178 154,841,597 150,221,424
============ ============ ============
(G) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . $ 43,945,824 39,584,216 35,391,769
Depreciation expense . . . . . . . . . . . . 4,471,238 4,361,608 4,192,447
Reductions during period (notes 2(c), 3(b)
and 7). . . . . . . . . . . . . . . . . . . (16,520,197) -- --
------------ ------------ ------------
Balance at end of period . . . . . . . . . . $ 31,896,865 43,945,824 39,584,216
============ ============ ============
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with, auditors during fiscal
year 1993 and 1994.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Managing General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. JMB has responsibility for
all aspects of the Partnership's operations, subject to the requirement
that sales of real property must be approved by the Associate General
Partner of the Partnership, Income Associates-X, L.P., an Illinois limited
partnership with JMB as the sole general partner. The Associate General
Partner shall be directed by a majority in interest of its limited partners
(who are generally officers, directors and affiliates of JMB or its
affiliates) as to whether to provide its approval of any sale of real
property (or any interest therein) of the Partnership. The Partnership is
subject to certain conflicts of interest arising out of its relationships
with the General Partners and their affiliates as well as the fact that the
General Partners and their affiliates are engaged in a range of real estate
activities. Certain services have been and may in the future be provided
to the Partnership or its investment properties by affiliates of the
General Partners, including property management services and insurance
brokerage services. In general, such services are to be provided on terms
no less favorable to the Partnership than could be obtained from
independent third parties and are otherwise subject to conditions and
restrictions contained in the Partnership Agreement. The Partnership
Agreement permits the General Partners and their affiliates to provide
services to, and otherwise deal and do business with, persons who may be
engaged in transactions with the Partnership, and permits the Partnership
to borrow from, purchase goods and services from, and otherwise to do
business with, persons doing business with the General Partners or their
affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The names, positions held and length of service therein of each
director and executive officer and certain officers of the Managing General
Partner of the Partnership are as follows at December 31, 1994:
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 8/01/93
Executive Vice President 1/02/87
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Glenn E. Emig Executive Vice President 1/02/87
Chief Operating Officer 1/01/95
Jeffrey R. Rosenthal Chief Financial Officer 8/01/93
Managing Director-Corporate 4/22/91
Douglas Cameron Executive Vice President 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/17/84
Ira J. Schulman Executive Vice President 6/01/88
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve one-year
term until the annual meeting of the Managing General Partner to be held on
June 7, 1995. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Managing General Partner to be held on June 7,
1995. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-
XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB
Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage Partners,
Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"),JMB
Income Properties, Ltd.-VIII ("JMB Income-VIII"), JMB Income Properties,
Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-XI ("JMB
Income-XI"), JMB Income Properties, Ltd.-XII ("JMB Income-XII"), and JMB
Income Properties Ltd.-XIII ("JMB Income-XIII"). Most of the foregoing
directors and officers are also officers and/or directors of various
affiliated companies of JMB including Arvida/JMB Managers, Inc. (the
general partner of Arvida/JMB Partners, L.P. ("Arvida")), Arvida/JMB
Managers-II, Inc. (the general partner of Arvida/JMB Partners, L.P.-II
("Arvida-II") and Income Growth Managers, Inc. (the corporate general
partner of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG")). Most of such
directors and officers are also partners of certain partnerships which are
associate general partners in the following real estate limited
partnerships: Carlyle-VII, Carlyle-IX, Carlyle-X, Carlyle-XI, Carlyle-XII,
Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB
Income-VI, JMB Income-VII, JMB Income-VIII, JMB Income-IX, JMB Income-XI,
JMB Income-XII, JMB Income-XIII, Mortgage Partners, Mortgage Partners-II,
Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle
Income Plus-II and IDS/BIG.
The business experience during the past five years of each such
director and officer of the Managing General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers, and a director of
Catellus Development Corporation, a major diversified real estate
development company. He is a Certified Public Accountant.
Neil G. Bluhm (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 56) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Stuart C. Nathan (age 53) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 61) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 48) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has also
served as a Trustee of Amli Residential Property Trust, a publicly-traded
real estate investment trust that invests in multi-family properties. In
addition, Mr. Schreiber is a director of Urban Shopping Centers, Inc. an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers, and a director of a
number of investment companies advised or managed by T. Rowe Price
Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 45) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 47) has been associated with JMB since December
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Jeffrey R. Rosenthal (age 43) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.
Douglas Cameron (age 45) has been associated with JMB since April,
1997. Prior to becoming Executive Vice President of JMB in 1995, Mr.
Cameron was Managing Director of Capital Markets-Property Sales from June,
1990. He holds a Masters degree in Business Administration from the
University of Southern California.
Gary Nickele (age 42) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Ira J. Schulman (age 43) has been associated with JMB since February,
1983. He holds a Masters degree in Business Administration from the
University of Pittsburgh.
Gailen J. Hull (age 46) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 59) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The General Partners of
the Partnership are entitled to receive a share of cash distributions, when
and as cash distributions are made to the Limited Partners, and a share of
profits or losses as described in Notes 5 and 9 for a description of such
transactions, distributions and allocations. In 1994, 1993 and 1992 cash
distributions of $0, $0 and $0 were paid, respectively to the General
Partners.
Affiliates of the Managing General Partner provided property
management services to the Partnership for the North Hills Mall in North
Richland Hills, Texas, the Pasadena Town Square shopping center in
Pasadena, Texas, the Collin Creek Mall in Plano, Texas, beginning in fiscal
1985 for the Animas Valley Mall in Farmington, New Mexico and beginning in
fiscal 1986 through the date of disposition, December 9, 1991, for the
Pylon Plaza Office Building-Phase I and II in Boca Raton, Florida. Fees
are calculated at 3% of fixed and percentage rents from Animas Valley Mall,
5% of gross rents from Pylon Plaza, and 4% of fixed and percentage rents
from North Hills Mall, Pasadena Town Square and Collin Creek Mall,
respectively. In 1994, such affiliate earned property management and
leasing fees amounting to $695,178, of which $1,254 was unpaid as of
December 31, 1994. As set forth in the Prospectus of the Partnership, the
Managing General Partner must negotiate such agreements on terms no less
favorable to the Partnership than those customarily charged for similar
services in the relevant geographical area (but in no event at rates
greater than 6% of the gross receipts from a property), and such agreements
must be terminable by either party thereto, without penalty, upon 60 days'
notice.
JMB Insurance Agency, Inc., an affiliate of the Managing General
Partner, earned and received insurance brokerage commissions in 1994
aggregating $42,296 in connection with the provision of insurance coverage
for certain of the real property investments of the Partnership. Such
commissions are at rates set by insurance companies for the classes of
coverage provided.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses or out-of-pocket expenses and salaries
relating to the administration of the partnership and operation of the
Partnership's real property investments. In 1994, the Managing General
Partner incurred such out-of-pocket expenses and salaries in the amount of
$157,209 of which $139,013 was paid at December 31, 1994.
The Partnership is permitted to engaged in various transactions
involving affiliates of the Managing General Partner of the Partnership, as
described in Item 10 and Exhibit 21 hereto.
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Managing General Partner and its officers and directors own the following Interests of the
Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
-------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership JMB Realty Corporation 5 Interests Less than 1%
Interests directly
Limited Partnership Managing General Partner 5 Interests Less than 1%
Interests and its officers and directors directly
as a group
<FN>
No officer or directors of the Managing General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
(c) There exists no arrangements, known to the Partnership, the operations of which may at a subsequent date
result in a change in control of the Partnership.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the General
Partners, the executive officers and directors of the Managing General Partner and persons who own more than ten
percent of the Interests to file an initial report of ownership or changes in ownership of Interests on Form 3, 4
or 5 with the Securities and Exchange Commission (the "SEC"). Such persons are also required by SEC rules to
furnish the Partnership with copies of all Section 16(a) forms they file. Timely filing of an initial report of
ownership on Form 3 or Form 5 was not made on behalf of Glenn Emig.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Managing General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements and Supplementary Data (See
Index to Financial Statements filed with this annual report)
2. Exhibits.
3-A.* The Prospectus of the Partnership dated June 29, 1983 as
supplemented September 12, 1983 and October 21, 1983, as filed with the
Commission pursuant to Rules 424(b) and 424(c), is hereby incorporated
herein by reference. Copies of pages 8-12, 57-59 and A-7 to A-11 are
hereby incorporated herein by reference.
3-B.* Amended and Restated Agreement of Limited Partnership
set forth as Exhibit A to the Prospectus, which agreement is hereby
incorporated herein by reference.
4-A.* Document relating to the mortgage loan secured by the
Collin Creek Mall in Plano, Texas is hereby incorporated herein by
reference.
4-B.* Document relating to the mortgage loan secured by the
Pasadena Town Square shopping center in Pasadena, Texas is hereby
incorporated herein by reference.
4-C.* Modification document relating to the mortgage loan
secured by the Animas Valley Mall in Farmington, New Mexico is hereby
incorporated herein by reference.
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 Partnership's report on Form 10-K (File No. 0-12140) dated
March 25, 1994.
10-H. Sale documents relating to the sale of the Collin Creek
Mall in Plano, Texas are hereby incorporated by reference to the
Partnership's report on Form 8-K (File No. 0-12140) dated January 13, 1995.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule.
99-A. The Partnership's report on Form 8-K (File No. 0-12140)
for January 13, 1994, a copy of which is filed herewith.
___________
* Previously filed as Exhibits 3-A, 3-B, 4-A, 4-B and 4-C,
respectively, to the Partnership's Report for December 31, 1992 on Form 10-
K (File No. 0-12432) dated March 19, 1993.
Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the Securities and Exchange Commission upon request.
(b) The following report on Form 8-K has been filed for the quarter
covered by this report.
(1) The Partnership's report on Form 8-K (File No. 0-12140)
for December 29, 1994 (describing under Item 2 of such report the
Partnership's sale of the Collin Creek Mall) was filed. The report is
dated January 13, 1995. No financial statements were required to be filed
therewith.
No annual report or proxy material for the fiscal year 1994 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership 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
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and Director
Date: March 27, 1995
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 27, 1995
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 27, 1995
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 27, 1995
JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date: March 27, 1995
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 27, 1995
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 27, 1995
By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 27, 1995
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 27, 1995
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE Page
------------ ----
3-A. Pages 8-12, 57-59 and A-7 to
A-11 of the Prospectus of the
Partnership dated June 29, 1983,
as supplemented September 12,
1983 and October 21, 1983 Yes
3-B. Amended and Restated Agreement of
Limited Partnership Yes
4-A. Mortgage loan documents related
to Collin Creek Mall Yes
4-B. Mortgage loan documents related
to Pasadena Town Square
shopping center Yes
4-C. Mortgage loan modification documents
related to Animas Valley Mall Yes
10-A. Acquisition documents related to
the 40 Broad Street office building Yes
10-B. Acquisition documents related to
the Royal Executive Park office
complex Yes
10-C. Acquisition documents related to
the Collins Creek Mall Yes
10-D. Acquisition documents related to
the North Hills Mall Yes
10-E. Acquisition documents related to
the Pasadena Town Square shopping
center Yes
10-F. Acquisition documents related to
the Animas Valley Mall Yes
10-G. Sale documents related to the
Animas Valley Mall Yes
10-H. Sale documents related to the
Collin Creek Mall Yes
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
99-A. Form 8-K for January 13, 1995 No
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a general partner in Animas Valley Mall Associates,
an Illinois limited partnership which holds title to the Animas Valley
Mall. The Partnership is a general partner in JMB-40 Broad Street
Associates, an Illinois general partnership which holds title to the 40
Broad Street Building. The Partnership is a general partner in Royal
Executive Park-I, a New York general partnership which holds title to the
Royal Executive Park Office Complex. Reference is made to Note 3 for a
summary description of the terms of such partnership agreements. The
Partnership's interest in the foregoing joint venture partnerships, and the
results of their operations are included in the consolidated financial
statements of the Partnership filed with this annual report.
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of JMB
INCOME PROPERTIES, LTD. - X, do hereby nominate, constitute and appoint
GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officer or directors a Report on Form 10-K
of said partnership for the fiscal year ended December 31, 1994, and any
and all amendments thereto, hereby ratifying and confirming all that said
attorneys and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
JUDD D. MALKIN
-----------------------
Judd D. Malkin Chairman and Director
NEIL G. BLUHM
-----------------------
Neil G. Bluhm President and Director
H. RIGEL BARBER
-----------------------
H. Rigel Barber Chief Executive Officer
JEFFREY R. ROSENTHAL
-----------------------
Jeffrey R. Rosenthal Chief Financial Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of JMB
INCOME PROPERTIES, LTD. - X, do hereby nominate, constitute and appoint
GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officer or directors a Report on Form 10-K
of said partnership for the fiscal year ended December 31, 1994, and any
and all amendments thereto, hereby ratifying and confirming all that said
attorneys and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
STUART C. NATHAN
-----------------------
Stuart C. Nathan Executive Vice President,
Director of General Partner
A. LEE SACKS
-----------------------
A. Lee Sacks Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of JMB
Realty Corporation, the corporate general partner of JMB INCOME PROPERTIES,
LTD. - X, does hereby nominate, constitute and appoint GARY NICKELE, GAILEN
J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the
undersigned with full power of authority to sign in the name and on behalf
of the undersigned officer, a Report on Form 10-K of said partnership for
the fiscal year ended December 31, 1994, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents
and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 20th day of February, 1995.
GLENN E. EMIG
-----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1994,
and any and all amendments thereto, the 20th day of February, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000719244
<NAME> JMB INCOME PROPERTIES, LTD. - X
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 84,486,464
<SECURITIES> 2,880,712
<RECEIVABLES> 455,293
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 87,945,924
<PP&E> 89,097,178
<DEPRECIATION> 31,896,865
<TOTAL-ASSETS> 170,327,264
<CURRENT-LIABILITIES> 53,748,585
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 116,558,835
<TOTAL-LIABILITY-AND-EQUITY> 170,327,264
<SALES> 29,048,572
<TOTAL-REVENUES> 29,251,376
<CGS> 0
<TOTAL-COSTS> 19,235,429
<OTHER-EXPENSES> 8,896,609
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,291,721
<INCOME-PRETAX> (7,172,383)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,055,842)
<DISCONTINUED> 64,571,942
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,516,100
<EPS-PRIMARY> 387.40
<EPS-DILUTED> 0
</TABLE>
January 13, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: JMB INCOME PROPERTIES, LTD. - X
Commission File No. 0-12140
Form 8-K
Gentlemen:
Transmitted, for the above-captioned registrant, is the electronically filed
executed copy of registrant's current report on Form 8K dated January 13,
1995.
Thank you.
Very truly yours,
JMB INCOME PROPERTIES, LTD. - X
BY: JMB Realty Corporation
(Managing General Partner)
By: C. SCOTT NELSON
________________________________
C. Scott Nelson, Vice President
Accounting Officer
CSN:sf
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 1994
JMB INCOME PROPERTIES, LTD. - X
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 0-12140 36-3235999
------------------- -------------- --------------------
(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
-----------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
-------------------------------------------------------------------
COLLIN CREEK MALL
Plano Texas
-------------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On December 29, 1994 JMB
Income Properties Limited - X ("The Partnership") sold the land, building,
related improvements and personal property of the Collin Creek Mall ("Collin")
located in Plano, Texas. The Purchaser, Collin Creek Mall Limited
Partnership, a Texas limited partnership, is not affiliated with the
Partnership or its General Partners and the sale price was determined by arm's
- length negotiations. Collin is a 1,122,000 square feet two - level enclosed
regional shopping center of which the Partnership owns approximately 332,000
square feet of mall space. Department stores at the shopping center include
Foley's (197,000 square feet), Dillards (176,000 square feet), Sears (162,000
square feet), J C Penny (157,000 square feet) and Mervyn's (98,000 square
feet), each of which owns its own store. At the time of the sale, the
property was approximately 97% occupied.
The purchase price of the land, building, related improvements and
personal property was $108,000,000 (before closing costs and prorations) which
was paid in cash at closing. The Partnership used a portion of the proceeds
to repay in full the existing first mortgage note of approximately $24,546,000
plus related accrued interest.
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 deferrals of their 10% distribution of
disburseable cash from the Partnership's operations, 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, prior to any such distributions, the Limited
Partners shall receive 100% of such net sale proceeds until the Limited
Partners (i) have received cash distributions of net 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 the
net 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 net sale or refinancing
proceeds previously distributed) commencing with the first fiscal quarter of
1984. The Limited Partners have not yet received cash distributions of net
sale or refinancing proceeds in an amount equal to their initial capital
investment in the Partnership.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a). Financial Statements - Not Applicable.
(b). Pro Forma Financial Information - Narrative
As a result of the sale of Collin, after December 29, 1994 there
will be no further rental income, mortgage and other interest, depreciation,
property operating expenses, or amortization of deferred expenses recorded in
the consolidated financial statements of the Partnership, attributable to the
Partnership's investment in Collin, which for the Partnership's most recent
fiscal year (the year ended December 31, 1993) were approximately $13,189,000,
$3,009,000, $1,609,000, $5,910,000, and $66,000 respectively. Rental income,
mortgage and other interest, depreciation, property operating expenses, and
amortization of deferred expenses were approximately $3,265,000, $768,000,
$414,000, $1,413,000, $14,000 respectively, for the three months ended
September 30,1994 and $9,613,000, $2,308,000, $1,241,000, $4,315,000, and
$44,000 respectively for the nine months ended September 30, 1994. Also, as a
result of the sale of Collin, there are no further assets and liabilities,
attributable to the Partnership's investment in Collin, which at September 30,
1994 consisted of cash and other current assets of approximately $1,447,000
land and buildings and improvements (net of accumulated depreciation) of
approximately $43,831,000; deferred expenses of approximately $167,000;
current liabilities of $26,047,000; and other liabilities of approximately
$13,000. The Partnership expects to recognize a gain in 1994 for financial
reporting and federal income tax reporting purposes.
(c). Exhibits
1. Purchase Agreement between JMB Income Properties,
LTD. - X and Collin Creek Mall Limited Partnership dated November 18, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - X
BY: JMB Realty Corporation
(Managing General Partner)
By: C. SCOTT NELSON
________________________________
C. Scott Nelson, Vice President
Director of Partnership
Financial Reporting
Dated: January 13, 1995
PURCHASE AGREEMENT
(Collin Creek Mall, Plano, Texas)
THIS AGREEMENT ("Agreement") is made and entered into as of the 18th day
of November, 1994, by and between JMB INCOME PROPERTIES, LTD.-X, an Illinois
limited partnership (hereinafter called "Seller"), and COLLIN CREEK MALL,
L.P., a Texas limited partnership (hereinafter called "Purchaser").
RECITALS:
A. Seller is the owner of that certain real property located at the
northwest corner of North Central Expressway (U.S. Highway 75) and Plano
Parkway, in the City of Plano, County of Collin, State of Texas, together with
the improvements thereon consisting primarily of an enclosed two-level
regional mall sometimes known as "Collin Creek Mall" and referred to herein as
the "Subject Property" (as hereinafter defined).
B. Purchaser desires to purchase and Seller desires to sell the
Subject Property on the terms and conditions hereinafter documented.
NOW, THEREFORE, in consideration of the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
1. PURCHASE AND SALE. Seller shall sell to Purchaser, and Purchaser
shall purchase from Seller the following (collectively, the "Subject
Property"):
(i) the land described in Exhibit "A" attached hereto and made a
part hereof, together with the buildings situated thereon and all tenements,
hereditaments, appurtenances, and rights used in connection therewith, rights,
easements and rights-of-way incident thereto and means of access thereto,
including strips and gores adjoining or adjacent thereto and the income rents,
issues, profits and proceeds from any and all of said tracts or parcels of
land, together with all and singular the rights, members and appurtenances
whatsoever, in anyway belonging, relating or appertaining to the said
interests in said tracts or parcels of land (collectively, (the "Real
Property");
(ii) All of the fixtures, appliances, personalty and equipment
owned by Seller and situated on or about the Real Property and used in
connection with the operation and/or maintenance or management of Collin Creek
Mall (excluding any such items owned by tenants of Collin Creek Mall),
including, without limitation, those items identified on Exhibit "B" attached
hereto (collectively, the "Personal Property") (it being understood that the
Personal Property does not include any computer equipment, computer programs
or related software of Seller); and
(iii) Any and all right, title and interest of Seller in and to:
all intangible property directly relating to the Real Property and the
Personal Property, including, but not limited to, all leases, licenses or
other occupancy agreements ("Leases") (including deposits, prepaid rent and
other payments made or to be made under the Leases or the Contracts,) together
with the right to receive the same); contract rights and agreements
("Contracts") identified on Exhibit "C" attached hereto and made a part
hereof; tenant lists; telephone exchange numbers; business licenses relating
to Collin Creek Mall; the name "Collin Creek Mall"; advertising materials;
percolation and other soil and topographical and traffic studies; plans and
specifications relating to the Real Property ("Plans"); consents,
authorizations, variances, waivers, licenses, permits and approvals from any
Federal, state, courts, municipal or other governmental or quasi-governmental
agency, department, board, commission, bureau or other entity or
instrumentality in respect of the Real Property or the Personal Property;
development rights and all choses in action related to any of the foregoing
(collectively, the "Intangible Property").
Purchaser acknowledges that the Subject Property does not include the store
sites owned by the "Anchor Stores" (as hereinafter defined).
2. PURCHASE PRICE. The purchase price (the "Purchase Price") for
the Subject Property shall be the sum of One Hundred Eight Million and No/100
Dollars ($108,000,000.00).
3. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to
Seller by Purchaser as follows:
A. Escrow Deposits. Purchaser shall deliver not later than two (2)
business days after the date hereof, by wire transfer, by bank or cashier's
check or by other delivery of good funds, an amount equal to Two Million and
No/100 Dollars ($2,000,000.00) (which sum, together with any interest earned
on the same, is herein called the "Escrow Deposit") to Ticor Title Insurance
Company at its offices located at 203 North LaSalle Street, Suite 1400,
Chicago, Illinois 60601, Attention: Mr. John Wunderlich (which company, in its
capacity as escrow holder hereunder, is called "Escrow Holder"). The proceeds
of such check shall be deposited and held by Escrow Holder as a deposit
against the Purchase Price in accordance with the terms and provisions of this
Agreement. At all times in which the Escrow Deposit is being held by the
Escrow Holder, the Escrow Deposit shall be invested by Escrow Holder in one or
more of the following investments ("Approved Investments") as directed by
Purchaser: (i) United States Treasury obligations, (ii) United States
Treasury-backed repurchase agreements issued by a major national money center
banking institution reasonably acceptable to Purchaser and Seller, or (iii)
such other manner as may be reasonably agreed to by Seller and Purchaser. The
Escrow Deposit shall be disposed of by Escrow Holder only as provided in this
Agreement.
B. Existing Debt. Subject to the provisions of paragraph 4.D. below,
payment of a portion of the Purchase Price shall be evidenced by Purchaser
taking title to the Subject Property subject to the "Existing Encumbrance" and
the "Existing Note" secured thereby (as such terms are defined in Exhibit "D"
attached hereto) held by Teachers Insurance and Annuity Association of America
("Lender"), such payment being in an amount equal to the outstanding principal
balance of the Existing Note as of the Closing Date. Assuming the Closing
Date occurs in December, 1994, the outstanding principal balance of the
Existing Note is anticipated to be approximately $24,557,283.
C. Closing Payment. The balance of the Purchase Price (i.e., the
Purchase Price less the sum of the Escrow Deposit and the amounts, if any,
deemed paid pursuant to paragraph 3.B. above, as such amounts shall be
adjusted by the prorations and credits specified herein) shall be paid by
wire transfer of immediately available federal funds on the Closing Date to
Escrow Holder for disbursement in accordance with the terms hereof (the amount
to be paid under this paragraph 3.C. being herein called the "Closing
Payment"). Assuming the Closing Date occurs in December, 1994 (and the
Existing Note is not paid off), the Closing Payment is anticipated to be
approximately $83,442,717, less the Escrow Deposit and adjusted by the
prorations and credits specified herein (i.e., $108,000,000 less the
anticipated principal balance of the Existing Note of approximately
$24,557,283).
4. CONDITIONS PRECEDENT.
A. Completed Due Diligence.
(1) Price Reflective of Reviews. Purchaser has completed all
of Purchaser's due diligence examinations, reviews and inspections of all
matters pertaining to the purchase of the Subject Property, including all
leases, service contracts, survey and title matters, and all physical,
environmental and compliance matters and conditions respecting the Subject
Property. Purchaser and Seller have discussed the results of Purchaser's due
diligence examinations, reviews and inspections and the Purchase Price has
been adjusted to appropriately take such due diligence matters into account to
Purchaser's satisfaction. However, notwithstanding anything contained herein
to the contrary (but subject to the last sentence of paragraph 7.D. hereof),
the completion of such due diligence and the resultant adjustment to the
Purchase Price shall not invalidate or diminish in any manner any covenant,
warranty or representation made by Seller herein or in any agreement,
certificate, instrument or other document delivered in connection with this
Agreement (the "Closing Documents") nor be deemed a waiver of any rights or
remedies of Purchaser hereunder.
(2) Conduct of Reviews. Purchaser will indemnify, defend, and
hold Seller and the Subject Property harmless from and against any damage,
loss, cost or expense (the foregoing obligation surviving any termination of
this Agreement) to persons or the Real Property caused by Purchaser or its
agents in connection with the Purchaser exercising its right and privilege to
go on the Real Property other than such as results from the discovery of
existing conditions. The foregoing indemnity obligation of Purchaser shall
survive the Closing or earlier termination of this Agreement. Purchaser
represents and warrants to Seller that Purchaser did not make any intrusive
physical testing (environmental, structural or otherwise) at the Subject
Property without Seller's prior consent. Seller and Purchaser shall keep all
information or data received or discovered in connection with any of the
inspections, reviews or examinations in accordance with the provisions of that
certain confidentiality agreement dated June 24, 1994 between Seller and CGR
Advisors, Purchaser's investment advisor; however, no provision of said
confidentiality agreement shall be deemed extended, modified or amplified by
the statement made in this sentence. Seller acknowledges that it has no
knowledge of any acts by Purchaser which would result in any indemnification
obligation pursuant to this paragraph 4.A.(2).
B. Title Matters.
(1) Title Report. Purchaser has received a copy of Title
Commitment Number 44-903-80-452676, issued on July 5, 1994, revised on
("Ticor Commitment"), covering the Subject Property from Ticor
Title Insurance Company (which company, in its capacity as title insurer
hereunder, is herein called "Ticor Title Company") and a copy of Title
Commitment Number D-364366-C, issued on June 10, 1994, revised on
("Commonwealth Commitment"), covering the Subject Property from
Commonwealth Land Title Insurance Company (which company, in its capacity as
title insurer hereunder, is herein called "Commonwealth Title Company") (Ticor
Title Company and Commonwealth Title Company, in their capacities as title
insurers hereunder are collectively herein called the "Title Companies", and
the Ticor Commitment and the Commonwealth Commitment are collectively called
the "Title Commitments"). In addition, Seller has delivered a survey of the
Subject Property last revised _______, 1994, prepared by Needham Wright Laskey
Engineering, Inc. ("Survey").
(2) Approval of Title Exceptions. Purchaser has approved those
exceptions to title and those matters disclosed on the Survey, which are
specified in Exhibit "E-1" attached hereto and made a part hereof
(collectively, the "Permitted Exceptions") and disapproved those matters set
forth on Exhibit "E-2" attached hereto and made a part hereof ("Disapproved
Matters"). Approval by Purchaser of any Disapproved Matters which have not
been cured and any additional exceptions to title or survey matters disclosed
after the date hereof shall be a condition precedent to Purchaser's obligation
to purchase the Subject Property. In the event Purchaser does not give written
notice that it approves any such additional exceptions to title or survey
matters, on or before the sooner to occur of 20 days after receipt of written
notice thereof or the Closing Date, Purchaser shall be deemed to have
disapproved said exceptions.
(3) Removal of Title Exceptions. In the event that at the Closing
the Subject Property is subject to encumbrances, including any Disapproved
Matters, other than the Permitted Exceptions and Seller shall not have cured
or insured over the same as provided herein, then Purchaser may elect to (i)
waive any objection to such encumbrances and proceed to Closing, subject to
the obligation of Seller to pay and remove all Monetary Encumbrances (as
hereinafter defined), or (ii) terminate this Agreement, in which event the
Escrow Deposit shall be returned to Purchaser, and, upon the receipt thereof
by Purchaser, all obligations hereunder shall be null and void and of no
further force or effect, or (iii) deliver written notice to Seller, within the
time periods set forth hereinabove in paragraph 4.B.(2), of Purchaser's
objections to such encumbrances, in which event Seller shall be obligated to
take all such reasonable action as shall be necessary to remove such
encumbrances; provided, however, that Seller's obligation to pay sums of money
in connection therewith shall be limited to (a) the payment and discharge of
all mortgages, deeds of trust, deeds to secure debt (other than the Existing
Mortgage) and security agreements entered into by Seller, mechanic's and
materialmen's liens for work done by or on behalf of Seller, tax or judgment
liens against Seller and, subject to the proration provisions contained
herein, assessments encumbering the Subject Property (collectively, "Monetary
Encumbrances"), and (b) the payment of sums of money not to exceed $150,000 in
the aggregate for the removal of encumbrances other than Monetary
Encumbrances; provided, however, Seller shall have the right to bond or insure
over any such liens or assessments subject to Purchaser's consent. If, on or
before the Closing, Seller is unable to satisfy any valid title or survey
objections as aforesaid, Seller shall have the right to extend the date of
Closing for such time period as it may select, not to exceed thirty (30) days.
If Seller fails to satisfy any such valid objections on or before the date of
Closing, Purchaser may, at Purchaser's election, (i) extend the date of
Closing for such time period as it may select, not to exceed thirty (30) days;
(ii) waive such objections and proceed to Closing; (iii) terminate this
Agreement, in which event the Escrow Deposit shall be returned to Purchaser,
and upon the receipt thereof by Purchaser, all obligations hereunder shall be
null and void and of no further force and effect; or (iv) deduct the amount of
any unsatisfied Monetary Encumbrances from the Closing Payment and proceed to
Closing. In the event of any extension of the date of Closing by Purchaser
under clause (i) above, and a subsequent failure of Seller to cure any valid
title objection, Purchaser may then elect between the alternatives specified
in clauses (ii), (iii) and (iv) of the preceding sentence. Any title
objections that Purchaser waives shall be deemed to be included in the
Permitted Exceptions.
(4) Exceptions to Title. Purchaser shall be obligated to
accept title to the Real Property, subject to the following exceptions to
title:
(a) Real estate taxes and assessments for 1995 and
subsequent years which are not yet due and payable (Purchaser acknowledging
that it intends to cause taxes for 1994 to be paid concurrently with Closing);
(b) The printed exceptions which appear in the standard
Texas form owner's policy of title insurance (with the survey exception
modified to reflect "shortages in area" only;
(c) The Permitted Exceptions; and
(d) Such other exceptions to title as may be approved or
deemed approved by Purchaser pursuant to the provisions of this paragraph 4.B.
Conclusive evidence of the availability of such title shall be the
unconditional commitment of the Title Companies to issue to Purchaser on the
Closing Date standard Texas form Owner's Title Insurance Policies on a co-
insurance basis (with the survey exception modified to reflect shortages in
area only) ("Owner's Policies"), with aggregate coverage in the amount of the
Purchase Price, which Owner's Policies shall show (i) title to the Real
Property to be vested of record in Purchaser, and (ii) the above exceptions to
be the only exceptions to title. Attached as Exhibit "E-3" hereto and made a
part hereof are Purchaser's requirements regarding co-insurance and
reinsurance requirements, the insurers and the amounts the lead insurer and
the other insurers will carry. The delivery of Owner's Policies to Purchaser
at Closing shall be a condition precedent to Purchaser's obligation to close.
C. Hart-Scott-Rodino. Seller and Purchaser acknowledge that the
transactions contemplated by this Agreement are subject to pre-clearance under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Act"). Each party agrees to furnish such information, and to make such
filings, as may be required under the Act. Seller and Purchaser each hereby
agree to reasonably cooperate with each other to timely file all such required
materials and to utilize good faith efforts to cause all necessary filings to
be made as soon as reasonably possible. It shall be a condition to the
closing of the transactions hereunder that all required waiting periods under
the Act shall have expired or been terminated. Seller and Purchaser will each
pay one-half of the filing or other similar fees due in connection with the
matters contemplated herein at the time such filing is made. Each party will
pay its own attorneys' fees in connection with the preparation of the
appropriate filings.
D. Existing Loan Matters. Receipt of an estoppel certificate
("Lender's Estoppel") from Lender dated not more than 30 days prior to the
Closing Date substantially in the form of Exhibit "G", attached hereto and
made a part hereof (which Lender's Estoppel shall also include the consent of
Lender to the transactions contemplated by the terms of this Agreement), shall
be a condition precedent to Seller's obligation to sell, and Purchaser's
obligation to purchase, the Subject Property. In the event that on or before
the Closing Date such Lender's Estoppel is not delivered or fails to include
any required consent or contains such consent but only upon the condition that
the terms of such instruments be modified in a manner unacceptable to
Purchaser in Purchaser's sole discretion, then the obligation of Seller to
sell, and Purchaser to buy, the Subject Property as herein provided shall
terminate. Purchaser shall provide to Lender all information reasonably
required by Lender (including, without limitation, financial statements of
Purchaser and its principals). Neither Purchaser nor Seller shall have any
obligation to expend any money to obtain the Lender Estoppel. Because of the
terms of the Existing Note and Existing Encumbrance, neither Seller nor
Purchaser anticipates the payment to the Lender of assumption fees or other
material costs in order to cause the assumption of the Existing Note and
Existing Encumbrance as contemplated herein. Seller's sole obligation
hereunder with respect to obtaining a Lender's Estoppel shall be to utilize
reasonable efforts to obtain such Lender's Estoppel (such reasonable efforts
not including any obligation to institute legal proceedings or to expend any
additional monies therefor, other than for minor administrative charges).
Notwithstanding anything to the contrary contained in this Agreement, Seller
shall have the right to pay off and satisfy the Existing Note and Existing
Encumbrance at the Closing, in which event the Closing Payment shall be the
full $108,000,000 Purchase Price less the Escrow Deposit and adjusted by the
prorations and credits specified herein. Seller shall pay any prepayment
penalties or premiums in connection with any such payoff. In the event of
such payoff of the Existing Note and Existing Encumbrance, no estoppel
certificate shall be required of Lender, it being acknowledged that the sole
condition hereunder in such event shall be the delivery by Lender of a payoff
statement and such release documentation sufficient to enable the Title
Company to remove the Existing Encumbrance from the Owner's Policy.
E. Estoppel Certificates. Receipt of estoppel certificates dated not
more than 30 days prior to the Closing Date from (i) Dillards, Foleys, Sears,
J.C. Penneys and Mervyns (each, an "Anchor Store", and collectively, the
"Anchor Stores"), and (ii) all tenants under the control of Woolworth, U.S.
Shoe, The Limited and Gap stores, and from a sufficient number of the balance
of the tenants in the mall shop premises at the Subject Property so that
estoppel certificates from such tenants shall be received with respect to not
less than 80% of the gross leasable area (excluding the Anchor Stores), in the
aggregate, covered by leases respecting the mall shop premises at the Subject
Property in effect as of the date hereof, is a condition precedent to
Purchaser's obligation to purchase the Subject Property hereunder. The
estoppel certificate delivered to each Anchor Store shall be substantially in
the form for such store as set forth in Exhibit "H", attached hereto and made
a part hereof, and each tenant estoppel certificate delivered shall be
substantially in the form of Exhibit "I", attached hereto and made a part
hereof; provided, however, (x) with respect to the Anchor Stores and any major
national tenant, the applicable estoppel certificate may be returned in the
standard form otherwise required by such entity or, if the "Operating
Agreement" (as hereinafter defined) or applicable tenant lease prescribes the
required form of estoppel certificate, then the receipt of such required form
shall be deemed acceptable, (y) those provisions of the applicable estoppel
certificates respecting (A) defaults, defenses, disputes, claims, offsets,
abatements, concessions and recaptures against payment obligations which are
limited to the knowledge of the applicable tenant or Anchor Store, and (B)
environmental matters which are limited to knowledge or deleted entirely will
not be deemed unacceptable by virtue of such knowledge limitation or deletion.
Seller's sole obligation hereunder shall be to utilize reasonable efforts to
obtain such estoppel certificates (such reasonable efforts obligation not
including any obligation to institute legal proceedings or to expend any
monies therefor, other than for minor administrative charges, whether imposed
by tenants or incurred by Seller). Purchaser shall have no obligation to
expend any money to obtain any such estoppel certificates. Purchaser shall
have the option to waive the condition precedent set forth in this paragraph
4.E. by written notice to Seller (whereupon such condition will be deemed
satisfied). In the event that prior to the Closing Date such condition is not
satisfied (or waived as aforesaid), the obligations of Purchaser to purchase,
the Subject Property hereunder shall terminate and the Escrow Deposit shall be
returned to Purchaser and, upon receipt thereof by Purchaser.
F. Performance by Seller; No Change. The performance and observance
in all material respects (it being understood that covenants and agreements
which are already limited as to materiality by their terms shall not be
further limited by the foregoing) by Seller of all covenants and agreements of
this Agreement to be performed or observed by Seller prior to or on the
Closing Date shall be a condition precedent to Purchaser's obligation to
purchase the Subject Property. In addition, in the event that the "Seller
Closing Certificate" (as hereinafter defined) shall disclose any changes in
the representations and warranties of Seller contained in paragraph 7.A. below
in any material respects (it being understood that representations and
warranties which are already limited as to materiality by their terms shall
not be further limited by the foregoing) which are not otherwise permitted or
contemplated by the terms of this Agreement, or in the event any warranty or
representation of Seller shall prove to be untrue or inaccurate without regard
to any qualification of Seller such as to materiality or the like, then
Purchaser shall have the right to terminate this Agreement. Purchaser shall
have the option to waive the condition precedent set forth in this paragraph
4.F. by written notice to Seller. In the event of such waiver, such condition
shall be deemed satisfied.
G. Performance by Purchaser; No Change. The performance and
observance, in all material respects, by Purchaser of all covenants and
agreements of this Agreement to be performed or observed by it prior to or on
the Closing Date shall be a condition precedent to Seller's obligation to sell
the Subject Property. In addition, in the event that the "Purchaser Closing
Certificate" (as hereinafter defined) shall disclose any changes in any
material respect in the representations and warranties of Purchaser contained
in paragraph 7.B. below which are not permitted or contemplated by the terms
of this Agreement, then Seller shall have the right to terminate this
Agreement. Seller shall have the option to waive the condition precedent set
forth in this paragraph 4.G. by written notice to Purchaser. In the event of
such waiver, such condition shall be deemed satisfied.
5. CLOSING.
A. Closing Procedure. The sale and purchase herein provided shall be
consummated on the Closing Date at the offices of Escrow Holder in Dallas,
Texas or at such other place as may be mutually agreed upon by Seller and
Purchaser. As used herein, "Closing Date" means the later to occur of (i)
thirty (30) days after the date of this Agreement (i.e., December 18, 1994),
or (ii) seven (7) days after all conditions precedent to Seller's and
Purchaser's obligation to close have either been satisfied or waived;
provided, however, in no event shall the Closing Date occur later than
December 31, 1994.
B. Delivery to Parties.
(1) Seller Deliveries. Seller shall deliver to Purchaser at the
Closing the following documents, the execution, delivery, accuracy and, where
appropriate, acknowledgment of each of which shall be a condition to
Purchaser's obligation to consummate the purchase and sale herein:
(a) Special Warranty Deed ("Deed") in form of Exhibit "J"
attached hereto, duly executed by Seller and conveying to Purchaser the
Subject Property with legal description provided in the Owner's Policies
accompanied by any real property transfer tax returns required by any
governmental authority;
(b) assignment and assumption of the Operating Agreement
("Operating Agreement Assignment and Assumption") in the form of Exhibit "K";
(c) the originals or, to the extent such originals are not
in the possession of Seller, true, correct and complete copies, including all
amendments and modifications thereto, of all Leases, Contracts, Financing
Documents (as hereinafter defined), Operating Agreement, Service Contracts (as
hereinafter defined) and all other Subject Property documentation (if not
previously delivered to Purchaser and receipt thereof acknowledged by
Purchaser);
(d) an assignment and assumption of tenant leases ("Lease
Assignment and Assumption") in the form of Exhibit "L", attached hereto and
made a part hereof;
(e) an assignment and assumption of Service Contracts
("Contract Assignment and Assumption") in the form of Exhibit "M", attached
hereto;
(f) a bill of sale and assignment ("Bill of Sale") in the
form of Exhibit "N" attached hereto and made a part hereof;
(g) a certificate of Seller ("Seller Closing
Certificate"), updating the representations and warranties contained in
paragraph 7.A. hereof to the Closing Date (and including an updated certified
rent roll) and noting any changes thereto;
(h) notices ("Tenant Notices") to the tenants under the
tenant leases in form reasonably satisfactory to Seller and Purchaser that
Purchaser is the new owner of the Subject Property and has been assigned the
security deposits;
(i) a certificate regarding the "non-foreign" status of
Seller in the form of Exhibit "O" attached hereto;
(j) evidence reasonably satisfactory to Purchaser and the
Title Companies respecting the due organization of Seller and the due
authorization and execution of this Agreement and the documents required to be
delivered hereunder;
(k) an assignment of the taxes and insurance escrow held
by Lender;
(l) such additional documents and affiliates as may be
reasonably required by Purchaser or the Title Companies in order to consummate
the transactions hereunder and issue the Title Policies (provided the same do
not materially increase the costs to, or liability or obligations of, Seller
in a manner not otherwise provided for herein) including an affidavit in form
reasonably acceptable to the Title Companies in order to remove as exceptions
to Owner's Policies the standard exceptions for mechanics and materialmen's
liens and for rights of tenants in possession (other than tenants under
Leases); and
(m) any building permits, certificates of occupancy, keys
and plans and specifications respecting the Subject Property (to the extent
the same are in Seller's possession or control).
(2) Purchaser Deliveries. Purchaser shall deliver to Seller at
the Closing the following monies and the following documents, the due
execution, delivery, accuracy and, where appropriate, the acknowledgment of
which shall be a condition to Seller's obligation to consummate the purchase
and sale herein contemplated:
(a) the Closing Payment in immediately available federal
funds;
(b) the Operating Agreement Assignment and Assumption;
(c) the Lease Assignment and Assumption;
(d) the Contract Assignment and Assumption;
(e) a certificate of Purchaser ("Purchaser Closing
Certificate") updating the representations and warranties contained in
paragraph 7.B. hereof to the Closing Date and noting any changes thereto;
(f) the Tenant Notices;
(g) evidence reasonably satisfactory to Seller and the
Title Companies respecting the due organization of Purchaser and the due
authorization and execution of this Agreement and the documents required to be
delivered hereunder; and
(h) such additional documents as may be reasonably
required by Seller or the Title Companies in or to consummate the transactions
hereunder (provided the same do not materially increase the costs to, or
liability or obligations of, Purchaser in a manner not otherwise provided for
herein).
(3) Delivery of Management Agreement. Purchaser shall execute
and deliver, and Seller shall cause JMB Retail Properties Company ("Manager")
to execute and deliver, a management agreement ("Management Agreement") in the
form of Exhibit "P" attached hereto and made a part hereof.
C. Closing Costs. Purchaser shall pay (i) all charges for or in
connection with the recording and filing of any instrument or document
provided herein to be recorded or filed to transfer the Subject Property
excluding any instrument or document required to be filed in connection with
the Existing Encumbrance, (ii) the premiums for the Owner's Policies herein
provided (including any costs or premiums for any preliminary title reports or
commitments or "date down" required in connection therewith and any
endorsements requested by Purchaser), (iii) all fees, costs and expenses in
connection with Purchaser's due diligence reviews hereunder (including,
without limitation, all engineers', accountants', environmental consultants'
and other fees associated therewith), and (iv) all costs associated with any
financing obtained by Purchaser (including, without limitation, all attorneys'
fees and title insurance costs in connection therewith), but specifically
excluding the Existing Encumbrance. Seller shall pay all charges for or in
connection with obtaining a final revision of the Survey in ALTA form and
reasonably acceptable to Purchaser. All costs associated with the Hart-Scott-
Rodino filings contemplated herein shall be paid in accordance with the
provisions of paragraph 4.C. hereof. Purchaser and Seller shall each pay its
own attorney's fees and expenses. All other costs or expenses of performance
of obligations hereunder and of the consummation of the transactions
contemplated herein that have not been specifically assumed by either party
under the terms hereof shall be borne by the party incurring such cost or
expense.
D. Prorations. All prorations, adjustments and allocations shall be
made as of 11:59 p.m. on the Closing Date. Purchaser and Seller agree and
acknowledge that the prorations made as of the Closing Date (the "Closing
Prorations") are to be determined so as to allocate to Seller the share of all
income and expense generated or incurred by the Subject Property on or before
the Closing Date to which Seller is entitled or for which Seller is obligated
by virtue of its ownership of Subject Property. Said share is hereinafter
referred to as "Seller's Interest Share". Notwithstanding anything contained
herein to the contrary, prorations provided for in this paragraph 5.D. shall
not be limited by the provisions of paragraph 9 or paragraph 10.B.(1),
10.B.(2) and 10.B.(3) hereof. The Closing Prorations are to be calculated on
or before Closing by Seller in consultation with Purchaser based upon the best
information available as of the Closing Date and shall be adjusted post-
closing to incorporate all information necessary to make the Closing
Prorations accurate, including, without limitation, post-Closing payment of
expenses and receipt or allocation of income of the Subject Property allocable
to the period on or prior to the Closing Date in the manner herein provided.
In the event any Closing Prorations made at Closing or thereafter shall prove
to be incorrect for any reason, then either party shall at any time and from
time to time be entitled to an adjustment to correct same and each shall pay
the same. Each party agrees to make available to the other party, on request,
for review and photocopying, necessary information and documentation to enable
the other party to ascertain or confirm to its satisfaction the final amounts
to be prorated hereunder. Purchaser and Seller agree to work together after
Closing in good faith to promptly resolve all outstanding or continuing
proration and allocation matters. Purchaser and Seller agree to finalize all
adjustments to Closing Prorations arising out of normal recurring income
(e.g., base rental income) and expense (e.g. operating expenses) items not
later than three (3) months from the Closing Date and all other adjustments
not later than one (1) year from the Closing Date. Failure to make payment of
amounts due by the other party shall bear interest at the rate of the lesser
of 18% per annum or the maximum rate allowed by applicable law from the later
to occur of (i) the date all relevant information is available and (ii) the
date such payment was due. The provisions of this paragraph 5.D. shall
survive the Closing. The following shall be prorated between Seller and
Purchaser as of the Closing Date:
(1) Taxes. All real estate taxes and assessments on the Subject
Property for the current year. In no event shall Seller be charged with or be
responsible for any increase in the taxes on the Subject Property resulting
from the sale of the Subject Property or from any improvements made after the
Closing Date. In the event that any existing improvement assessments for the
period on or before Closing respecting the Subject Property are payable in
installments, then the installments for the applicable period shall be paid on
or before Closing, even if otherwise payable after Closing. In the event that
any new assessments for improvements assessments are levied prior to the
Closing respecting the Property, either party may terminate this Agreement
unless the other party shall agree to pay such assessments (or other
adjustment therefor mutually agreed upon).
(2) Rentals.
(a) Accounts Receivable. Seller shall not receive credit
for any accounts receivable by Purchaser (including specifically, but without
limitation, all standard monthly billed items such as minimum or base rentals,
CAM, utilities, taxes and the like) which are outstanding as of the Closing
Date until such time as they are collected by the Purchaser. To Seller's
knowledge, attached hereto as Exhibits "S-1" and "V-1" are true and correct
lists of all accounts receivable as of the date hereof and such lists shall be
updated on the Closing Date. All such amounts (other than percentage rent and
expense reimbursement amounts) and other tenant charges which are delinquent
as of the Closing Date (or which are otherwise not to be treated as current as
aforesaid) shall not be prorated hereunder but Purchaser shall include such
delinquencies in its normal billing and shall for a period of one (1) year
from the Closing Date ("Collection Period") bill the tenants for all such
arrearages or expenses allocable to the period on or prior to the Closing
Date. To the extent Purchaser receives any such delinquent amounts, such
payments shall be applied first toward then current obligations owed to
Purchaser in connection with the applicable tenant Lease and any excess monies
received shall be applied toward the payment of any such delinquent amounts
owed for the period on or prior to the Closing Date and delivered to Seller.
During the Collection Period, Purchaser may not waive any such delinquent
amounts nor modify a tenant Lease so as to reduce or otherwise affect such
amounts owed under such tenant Lease for any period in which Seller is
entitled to receive a share of charges or amounts, without first obtaining
Seller's written consent. Purchaser shall have the exclusive right to collect
all amounts and exercise other rights under the Leases after the Closing Date.
Purchaser shall not be required to litigate or declare a default in any tenant
Lease. After the Closing Date, Seller shall not attempt to collect rent or
any other charges or amounts from any existing tenants of the Subject
Property. With respect to delinquent amounts of any kind owed by tenants for
the period prior to the Closing Date who are no longer tenants of the Subject
Property as of the Closing Date, Seller shall retain all rights relating
thereto.
(b) Percentage Rent. Any percentage rent received by
Seller with respect to a tenant's Lease year, all or part of which lease year
was on or before the Closing Date, shall be prorated as set forth in this
paragraph: All such amounts received by Seller or billed by Seller on or
before the Closing Date and received thereafter shall be retained by Seller
until the final adjustments provided hereafter in this paragraph 5.D.(2); all
such amounts received by Purchaser after the Closing Date shall be retained by
Purchaser until such final adjustments. The aggregate amount of percentage
rent payable under the Leases for the lease year in which the Closing occurs
shall be calculated and Seller shall be entitled to its "allocable share" of
such amount. As used herein, Seller's "allocable share" with respect to a
tenant Lease means a fraction, the numerator of which is the number of days in
the Applicable Period (i.e., the lease year as defined in such lease to which
the applicable billing applies being herein called the "Applicable Period") in
which such lease is in effect on or before the Closing Date and the
denominator of which is the aggregate number of days in which such Lease is in
effect during the entire Applicable Period. To the extent that either party
has retained amounts in excess of the amount to which it is entitled
hereunder, such party shall remit such excess amount to the other party within
15 days of such determination.
(c) Cost Recoveries. Any cost recoveries for taxes, HVAC
charges, common area maintenance contributions, insurance contributions and
other charges collected from tenants and allocable in whole or in part to the
period on or before the Closing Date, shall be allocated to such period based
on a ratio of (a) the total of the corresponding category of expenses accrued
on or before the Closing Date to (b) the total of such category of expenses
for the entire period to which the reimbursement relates; provided that, to
the extent any such charges are fixed dollar amounts, such charges shall be
apportioned on a per diem basis. If Seller shall have collected any cost
recovery amounts prior to the Closing which are allocable to a period beyond
the Closing Date then such amounts shall be properly allocated to the period
after the Closing Date. If the Purchaser collects any cost recovery amounts
subsequent to the Closing which are allocable to a period on or before the
Closing Date, then such amounts shall be properly allocated to the period on
or before the Closing Date. Each party will promptly remit to the other party
any amounts in excess of the amount to which it is entitled following a final
determination of such cost recoveries.
(3) Security Deposits. Seller shall deliver or provide a credit
in an amount equal to all prepaid rentals for periods after the Closing Date,
all credit amounts due to tenants for overpayments of cost recovery amounts
prior to the Closing Date, and all security deposits (to the extent the
foregoing are held by Seller and are not applied or forfeited prior to the
Closing Date) to Purchaser on the Closing Date.
(4) Existing Note Payments and Credit. If the Existing Note is
to be assumed by Purchaser hereunder, interest under the Existing Note shall
be prorated as of the Closing Date. In addition, in the event that the
Existing Note is to be assumed by Purchaser hereunder, Purchaser shall be
entitled to a credit in an amount equal to $4,000.00 times the number of days
from the Closing Date through January 3, 1995. By way of example, if title to
the Subject Property shall be subject to the Existing Note and Existing
Encumbrance, and the Closing Date shall be December 15, 1994, then Purchaser
shall be entitled to a credit hereunder equal to $80,000.00 (i.e., $4,000.00
times 20, the number of days from the Closing Date through January 3, 1995).
Seller shall be entitled to a credit in the amount of the tax, insurance and
other escrow or impound accounts maintained under the Existing Note and
Existing Encumbrance (provided such escrow or impound accounts are transferred
for the benefit of Purchaser).
(5) Operating Expenses. All operating expenses with respect to
the Subject Property.
(6) Certain Tenant Allowances. Seller shall pay the cost of
the tenant allowances incurred or expected to be incurred in connection with
the leases specified in Exhibit "Q") (such payment obligation being herein
called the "Seller Tenant Allowance Obligation"). If the Seller Tenant
Allowance Obligations have not been paid to the applicable tenants by Seller
as of the Closing Date, then Purchaser shall be entitled to a credit equal to
the difference between the applicable portion of the Seller Tenant Allowance
Obligations to be paid to such tenant and the amount actually paid by Seller
to such tenant with respect thereto on or before the Closing Date. Purchaser
agrees that it will pay or reimburse Seller or the tenant, as applicable, for
all tenant improvement and leasing commission obligations of the landlord
under the leases listed on Exhibit "R" attached hereto and made a part hereof
("Pending Leases") (with any amounts due to Seller being credited on the
Closing Date) and that it will acquire the Subject Property subject to any
other provisions of such Pending Leases (including any free rent provisions
contained therein).
6. CONDEMNATION OR DESTRUCTION OF SUBJECT PROPERTY.
A. Substantial Condemnation or Casualty. In the event that on or
prior to the Closing Date, either any portion of the Subject Property is
condemned or threatened to be condemned or any of the improvements on the
Subject Property are damaged or destroyed by any casualty, Seller shall notify
Purchaser immediately in writing of such event. To the extent that the cost
of repairing such damage shall reasonably be $250,000.00 or more, including
the amount of any deductible, then, and in any of such events, Purchaser may
(i) terminate this Agreement by notice in writing to Seller delivered at least
five (5) days prior to the last day for Closing or if Purchaser receives
Seller's notice of such event within said 5-day period, then on the Closing
Date, and thereupon the parties shall be released and discharged from any
further obligations to each other, this Agreement shall become null and void,
and the Escrow Deposit shall be refunded to Purchaser; or (ii) proceed to
Closing, in which event the Purchase Price shall be reduced by the total of
any awards or other proceeds received by Seller on or before the date of
Closing with respect to any such taking, fire or other casualty (as
applicable) which were not used to restore the Property, and at Closing Seller
shall assign to Purchaser all of Seller's right to any and all awards or other
proceeds paid or payable thereafter by reason of any such taking, fire or
other casualty (as applicable); or (iii) postpone the Closing until not later
than twenty (20) days after the date that the condemnation or taking becomes
final and non-appealable and the proceeds therefor have been paid to Seller,
or until not later than twenty (20) days after the date that the amount of the
insurance proceeds attributable to such fire or other casualty is finally
determined and paid to Seller. In the event of any such postponement by
Purchaser, Purchaser shall thereafter again have the right to elect to proceed
under items (i) or (ii) above by written notice to Seller given no later than
five (5) days prior to the postponed date of Closing determined in accordance
with item (iii) above. Seller shall have no responsibility for the
restoration and repair of that portion of the Subject Property condemned,
destroyed or damaged as aforesaid. Seller shall be liable for the payment of
any deductible due in connection with any such insurance proceeds and shall
not be limited by paragraph 10.B.(3) hereof.
B. Insubstantial Condemnation or Casualty. In the event that, on or
prior to the Closing Date, either any portion of the Subject Property is
condemned or threatened to be condemned or any improvements on the Subject
Property are damaged or destroyed by casualty, Seller shall notify Purchaser
immediately in writing of such event. To the extent that the cost of
repairing same shall be less than $250,000.00, then, in any such event, the
Purchase Price shall be reduced by the total of any awards or other proceeds
received by Seller on or before the date of Closing with respect to any such
taking, fine or casualty (as applicable) which were not used to restore the
Property, and Seller shall at Closing assign Purchaser all of Seller's right
to any and all awards or other proceeds paid or payable thereafter by reason
of any such taking, fire or other casualty (as applicable). Seller shall have
no responsibility for the restoration and repair of that portion of the
Subject Property condemned, destroyed or damaged as aforesaid. Seller shall
be liable for the payment of any deductible due in connection with any such
insurance proceeds and shall not be limited by paragraph 10.B.(3) hereof.
With respect to any claims to be assigned to Purchaser pursuant to this
Agreement, Seller agrees that it will not settle such claims without
Purchaser's participation and consent (which shall not be unreasonably
withheld). The provisions of this paragraph 6 shall survive Closing (subject
to the one-year survival limitations set forth in paragraph 7.C. hereof).
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. Representations, Warranties and Covenants of Seller.
(1) General Disclaimer. To induce Seller to enter into this
Agreement, Purchaser acknowledges that: (a) except as set forth in this
Agreement and any other Closing Document, no representation, warranty,
guarantee, promise, statement or estimate of any nature whatsoever upon which
Purchaser is relying, whether written or oral, express or implied, in fact or
in law, has been made by Seller, any agent, employee, attorney-in-fact or at
law, or other person representing or purporting to represent Seller or
otherwise; (b) Purchaser has examined, reviewed and inspected all matters
which in Purchaser's judgment bear upon the Subject Property and its value and
suitability for Purchaser's purposes; and (c) except as to matters
specifically set forth in this Agreement or in the other Closing Documents,
Purchaser will acquire the Subject Property solely on the basis of its own
physical and financial examinations, reviews and inspections and the title
insurance protection afforded by the Owner's Policies.
(2) DTPA Waiver. Purchaser hereby acknowledges that Purchaser
has waived and relinquished all provisions of the Texas Deceptive Trade
Practice-Consumer Protection Act (Chapter 17, Subchapter E, of the Texas
Business and Commerce Code) in connection with the sales transaction
contemplated by this Agreement. Purchaser represents and warrants to the
Seller that: (a) Purchaser is not in a significantly disparate bargaining
position; (b) Purchaser is represented by legal counsel in connection with the
sale contemplated by this Agreement; and (c) Purchaser is knowledgeable and
experienced in the purchase, operation, ownership, refurbishing and sale of
regional shopping mall properties, and is fully able to evaluate the merits
and risks of this transaction.
(3) Representations and Warranties of Seller. To induce
Purchaser to enter into this Agreement, Seller hereby makes the
representations, warranties and covenants hereinafter set forth; each of which
is material to and is relied upon by Purchaser. Seller hereby represents,
warrants and covenants that, as of the date hereof:
(a) Rent Roll. Attached as Exhibit "S" and made a part
hereof, is a true, complete and accurate list, as of the date thereof, of all
tenant leases respecting the Subject Property, and a rent roll ("Rent Roll")
which is true, complete and accurate as to the matters set forth therein. No
party is entitled to any leasing commissions or leasing fees chargeable to the
landlord under any of the Leases except as expressly set forth on the Rent
Roll.
(b) Status of Leases.
(i) To the knowledge of Seller, all Leases are in full
force and effect;
(ii) Seller has not received any written notice of a
material default under any of such tenant Leases that remains uncured or
asserting any material claim or losses for any material claim for reduction,
deduction, or set-off against the rent under any Lease;
(iii) Except as disclosed on Exhibit "S-1" attached hereto
and by this reference made a part hereof, all rental and other payments due
under the Leases are current as of the date of the report attached as Exhibit
"S-1" and no rent has been paid more than one (1) month in advance;
(iv) Seller has the sole right to collect the rents under
the Leases and neither such right nor any of the Leases is presently assigned,
pledge, hypothecated or otherwise encumbered by Seller (or any predecessor)
except as provided in the documents evidencing the Existing Note (as to which
the Lender has not asserted nor exercised any right to collect such rents);
(v) Except as disclosed on Exhibit "S-1" (as to monetary
defaults) or Exhibit "S-2" (as to non-monetary defaults), to the knowledge of
Seller, there is no existing default by any tenant under any Lease in the
performance of any material obligations under the Leases or any event that
with notice or passage of time, or both, would constitute such a default by
any tenant under any Lease;
(vi) Except in connection with the Seller Tenant Allowance
Obligations or the Pending Leases, there is no tenant improvement work under
any of the Leases required to be completed by Seller as landlord which has not
been completed, and no tenant improvement work presently being performed which
is required to be completed by Seller as landlord after Closing; and
(vii)Seller has not received notice, written or oral, that
any tenant or Anchor Store will vacate all or part of its premises, other than
as shown on Exhibit "S-3".
Notwithstanding anything to the contrary contained herein, Seller shall have
no obligation or liability to Purchaser with respect to any of the foregoing
matters which shall be confirmed as correct without enforceable restrictions
on Purchaser's ability to rely thereon in any estoppel certificate which may
be delivered by any of the tenants under the tenant Leases (it being
understood that matters which are not known to any such tenant which limits
its estoppel certificate with respect to such matters to knowledge shall not
be deemed confirmed by such tenant for the foregoing purposes).
(c) Litigation; Condemnation; Bankruptcy. Except as set
forth in Exhibit "T" attached hereto and by this reference made a part hereof,
there is no pending or, to the knowledge of Seller, threatened action,
litigation, condemnation or other proceeding against the Subject Property or
against Seller with respect to the Subject Property nor are there any pending
or, to the knowledge of Seller, threatened bankruptcy or insolvency
proceedings against Seller.
(d) Compliance. Except for the Hart-Scott-Rodino filing
and except for compliance with certain reporting requirement obligations under
the rules and regulations of the Securities and Exchange Commission, no action
or filing with any governmental or public body or authority by Seller is
required to authorize, or is otherwise required in connection with, the
execution, delivery and performance of this Agreement by Seller. Seller has
received no written notice of any actual or pending imposition of any
assessments or rollback taxes upon the Subject Property or any portion thereof
which are not of record. Seller has not received any written notice or order
of any government authority having jurisdiction over any of the Subject
Property not fully and duly complied with, affecting, in any material respect,
the use or operation of any part thereof, or requiring, as of the date hereof
or a specified date in the future, any material repairs or alterations or
additions or improvements thereof. Seller has received no written notice
from, and has no knowledge that, any governmental authority having
jurisdiction over the Subject Property considers the Subject Property not to
be in compliance with applicable laws or ordinances.
(e) Service Contracts. Seller has not entered into any
service agreements or contracts ("Service Contracts") or other agreements
(other than as set forth in this Agreement) relating to the Subject Property
which will be in force on the Closing Date, except as described in Exhibit "U"
attached hereto, and Seller has not received any written notice of any
material default thereunder that remains uncured.
(f) Existing Financing. As of November 1, 1994, the
outstanding principal balance of the Existing Note is approximately
$24,557,283. Seller has not received any written notice of a monetary default
or a material non-monetary default under the Existing Note that remains
uncured. Notwithstanding anything to the contrary contained herein, Seller
shall have no obligation or liability to Purchaser with respect to any of the
foregoing matters which shall be confirmed as correct in any estoppel
certificate which is delivered by Lender to Purchaser without enforceable
restrictions on Purchaser's ability to rely thereon (it being understood that
matters which are not known to Lender with respect to matters as to which
Lender has limited its estoppel to its knowledge shall not be deemed confirmed
by Lender for the foregoing purposes). Seller is not in monetary default
under the Existing Note or the other documents evidencing or securing the
Existing Note ("Financing Documents"). Seller is not in default of any
material non-monetary obligation under the Financing Documents nor has any
event occurred that with the passage of time or the giving of notice, or both,
would become a default by Seller of any non-monetary obligation under the
Financing Documents (not heretofore substantially cured by Seller in all
respects or waived by the Lender). Lender has not permitted any moratorium or
other postponement or forgiveness of the payment of principal or interest
payable under the Financing Documents.
(g) Operating Agreement. Attached hereto as Exhibit "V"
and made a part hereof is a description of the Restated Operating Agreement
(the "Operating Agreement") between Seller's predecessor-in-interest and the
Anchor Stores (or their predecessors-in-interest). Seller has not received
any written notice of a default under the Operating Agreement that remains
uncured. Seller is not in default of any monetary or material non-monetary
obligation under the Operating Agreement, nor has any event occurred that with
the lapse of time or the giving of notice or both would become a default by
Seller of any monetary or material non-monetary obligation under the Operating
Agreement not heretofore substantially cured by Seller in all respects or
waived by the parties thereto, the effect of which cure or waiver is to have
terminated any further right of the parties thereto to exercise any rights or
remedies under the Operating Agreement as a result of such default. Except as
disclosed on Exhibit "V-1", all payments due under the Operating Agreement are
current as of the date set forth in the report attached as Exhibit "V-1", and
no such payments have been paid more than one month in advance. Seller has
the sole right to collect any amounts collectible from the Anchor Stores under
the Operating Agreement. The only agreements that Seller has entered into
with any of the Anchor Stores, other than the Operating Agreement, are set
forth on Exhibit "V-2". Notwithstanding anything to the contrary contained
herein, Seller shall have no obligation or liability to Purchaser with respect
to any of the foregoing matters which shall be confirmed as correct without
enforceable restrictions on Purchaser's ability to rely thereon in any
estoppel certificate which may be delivered by any of the Anchor Stores (it
being understood that matters which are not known to any such Anchor Store
which limits its estoppel certificate with respect to such matters to
knowledge shall not be deemed confirmed by such Anchor Store for the foregoing
purposes).
(h) Environmental Matters.
(i) Except as disclosed in the "Environmental
Reports" identified on Exhibit "W", to the Seller's knowledge, the Subject
Property contains no Hazardous Material (as hereinafter defined) which are in
violation of any applicable Environmental Laws (as hereinafter defined) and
which, as of the date hereof, would give rise to an Environmental Compliance
Cost (as hereinafter defined).
(ii) Except as disclosed in the Environmental
Reports, to Seller's knowledge neither Seller, nor any user or occupant of the
Subject Property during Seller's period of ownership of the Subject Property,
nor any prior owner of any user or occupant of the Subject Property prior to
the Seller's ownership of the Subject Property, has conducted or authorized
the use, generation, transportation, storage, handling, treatment, or disposal
of any Hazardous Material at or near the Subject Property in violation of any
applicable Environmental Laws which, as of the date hereof, would give rise to
an Environmental Compliance Cost; and, except as disclosed in the
Environmental Reports, to Seller's knowledge, neither the Seller nor the
Subject Property is subject to any liability or obligation which could, as of
the date hereof, give rise to an Environmental Compliance Cost as a result of
(a) the environmental conditions on or under the Subject Property (whether
originating on the Subject Property or from any other property); or (b) the
past or present use, management, transportation, treatment, generation,
storage, disposal, or release of Hazardous Material on, at, or from the
Subject Property.
(iii) Except as disclosed in the Environmental
Reports, to Seller's knowledge, neither during the period that Seller has
owned the Subject Property nor prior thereto, has there been any spill,
discharge, release, emission, or contamination of the Subject Property by any
Hazardous Material in violation of Environmental Laws which would, as of the
date hereof, give rise to an Environmental Compliance Cost.
(iv) There is no pending or, to Seller's knowledge,
threatened claim, litigation or proceeding before any court or any
governmental or administrative body in which any person or entity alleges the
presence, discharge, spill, release, or threat of release of any Hazardous
Material which, if determined adversely, would, as of the date hereof, give
rise to an Environmental Compliance Cost.
(v) There are no agreements between the Seller and
any governmental body or agency (Federal, state or local) or any private
entity concerning the Environmental Laws or relating in any way to the
presence, spill, discharge, release, threat of release, storage, treatment or
disposal of any Hazardous Material.
(vi) Except as disclosed in the Environmental
Reports, to Seller's knowledge, any above-ground or underground storage tanks
on the Subject Property or adjacent property have been properly registered
with the applicable federal, state and local governmental authorities and are
in compliance with the standards for stationary tanks contained in applicable
state and local statues and regulations and regulations for underground
storage tanks promulgated by the U.S. Environmental Protection Agency in 40
CFR Part 280; and, except as disclosed in the Environmental Reports, to
Seller's knowledge, there has never been a discharge of any pollutants,
contaminants or petroleum products from any of the above ground or underground
storage tanks which would, as of the date hereof, give rise to an
Environmental Compliance Cost and neither the Subject Property nor any
adjacent property has ever been the subject of a petroleum contamination site
cleanup or remediation under any Environmental Law.
(vii) For purposes of this Agreement: (aa)
"Environmental Laws" means the Resource Conservation and Recovery Act, 42,
U.S.C. Section 6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"),
the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42
U.S.C. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 Section 136
et seq. and all other applicable federal, state, county, municipal,
administrative or other environmental, health and/or safety laws, ordinances,
rules, regulations and requirements pertaining to the environmental, health,
safety or ecological conditions; and (bb) "Hazardous Material" means (1) any
"hazardous substance" defined as such in (or for purposes of) CERCLA, or any
so-called "superfund" or "superlien" law, including the judicial
interpretation thereof; (2) any "pollutant or contaminant" as defined in 42
U.S.C.A. Section 9601(33); (3) any material now defined as "hazardous waste"
pursuant to 40 C.F.R. Part 260; (4) any petroleum, including crude oil or any
fraction thereof; (5) natural gas, natural gas liquids, liquefied natural gas,
or synthetic gas usable for fuel; (6) any "hazardous chemical" as defined
pursuant to 29 C.F.R. Part 1910; and (7) any other substance, regardless of
physical form, that is subject to any other law or other past, present or
future requirement of a governmental authority regulating, relating to, or
imposing obligations, liability , or standards, of conduct, concerning the
protection of human health, plant life, animal life, natural resources, or
property; provided that "Hazardous Material" shall not be deemed to include
(i) ordinary cleaning supplies and office supplies, customarily used in the
operation of a regional mall or retail stores located in a regional mall and
kept in such quantities as is customarily found in such space provided the
same are stored and disposed of in accordance with all laws regulating the
same, or (ii) motor oil and gasoline contained in or discharged from vehicles
not primarily used for the transport of motor oil or gasoline.
(viii) The term "Environmental Compliance Cost" means
any out-of-pocket cost, fee or expense incurred directly to satisfy any
requirement or liability imposed by a governmental authority having
jurisdiction over the Subject Property or by a third party in any final non-
appealable judgment, to the extent the same is required to bring the Subject
Property into compliance with, or results from any violation or liability by
Seller or the Property under, applicable Federal, State and local laws and
regulations dealing with Hazardous Materials.
(i) Existence; Binding Effect; Due Authority. This
Agreement and all agreements, instruments and documents herein provided to be
executed or to be caused to be executed by Seller are and on the Closing Date
will be duly authorized, executed and delivered by and are binding upon Seller
and enforceable in accordance with the terms thereof. Seller is a limited
partnership, duly organized and validly existing under the laws of the State
of Illinois, and is duly authorized and qualified to transact the business it
presently conducts and to do all things required of it under this Agreement,
and performance of this Agreement will not require any additional consent or
approval by the partners in Seller. Seller has the power, capacity and
authority to make, deliver and perform this Agreement and to consummate the
transactions herein provided.
(j) Financial Statements. For informational purposes only
(without representation or warranty), Seller has provided to Purchaser copies
of unaudited summaries of cash receipts and disbursements for the Subject
Property as at December 31 in the years 1990 through 1993, inclusive, and a
year-to-date summary of cash receipts and disbursement statements for the
period ended September 30, 1994 (with updated year-to-date summaries to be
delivered in connection with the closing hereunder). In addition, Seller has
delivered true and correct copies of Seller's financial statements for 1991
through 1993, together with true and correct copies of unaudited 10Qs for the
first three quarters of calendar year 1994.
(k) No Conflict. Neither the execution and delivery of
this Agreement and the other Closing Documents executed by Seller in
connection with the Closing nor the performance by Seller of its obligations
thereunder will (i) violate in any material manner any provision of law or
rule or regulation thereunder or any order, injunction or decree of any court
or other governmental body to which Seller is a party or by which it is bound,
(ii) conflict with in any material manner or result in a material breach
(which has not been waived) of any of the terms, conditions or provisions of
any agreement or instrument to which Seller is a party or by which it is
bound, or constitute a material default thereunder, (iii) violate in any
material manner any restriction to which Seller is subject or (iv) result in
the creation of any lien, charge or encumbrance upon the Subject Property, or
any portion thereof.
(l) No Latent Defects. To Seller's knowledge, except as
disclosed in the reports described in Exhibit "X" hereto, there are no "latent
defects" to the Improvements. As used herein, "latent defects" means material
defects to the structural integrity of the Improvements which could not be
discovered by a prudent buyer diligently inspecting the Improvements (such
inspections including structural and engineering inspections by appropriate
professionals) and that, though not so discoverable, were known to Seller.
(m) Agreements. Seller has not entered into, nor to
Seller's knowledge is the Subject Property subject to, any other agreement,
option or lease (including any agreement for the sale, mortgage, pledge,
hypothecation, lease or other transfer (written or oral) with respect to the
Subject Property which will survive the Closing hereunder except the Leases,
the Financing Documents, the Service Contracts, the Operating Agreement, the
agreements, if any, listed in Exhibit "Y" attached hereto and by this
reference made a part hereof, and any other matters of record. Seller has
furnished or made available or caused to be furnished or made available to
Purchaser a true and correct copy of each such agreement or other instrument
in Seller's possession. Seller is not in material default thereunder and no
event has occurred which with the giving of notice or the passage of time will
constitute a material default thereunder.
(n) Agreements with Related Persons. Seller is not now,
nor upon consummation of the transactions contemplated herein will the Seller
be a party to any transaction or agreement with any Related Person to Seller
directly relating to the Subject Property or any portion thereof, except for
the Manager and the JMB Insurance Agency providing insurance coverage for the
Subject Property. For purposes hereof, "Related Person" shall mean any person
or entity ("Person") that has any of the following relationships with the
Seller (the "Subject Person"): (i) any corporation, partnership, trust or
other Person or entity controlling, controlled by or under common control with
the Subject Person without regard to percentage of ownership; or (ii) any
Person or entity which shares with the Subject Person, directly or indirectly,
more than a five percent (5%) common ownership interest, in the aggregate (for
example only, (a) if the Subject Person owns a twenty-five percent (25%)
interest in Person A, then Person A shall be a Related Person with respect to
the Subject Person by reason of a direct twenty-five percent (25%) ownership
interest in Person A; (b) if Person A owns a twenty percent (20%) interest in
Person B, then Person B shall be a Related Person with respect to the Subject
Person by reason of an indirect five percent (5%) ownership interest, in the
aggregate, in Person B; or (c) if Person X owns a thirty percent (30%)
interest in the Subject Person and Person X owns a sixty percent (60%)
interest in Person C, then Person C shall be a Related Person with respect to
the Subject Person by reason of a common ownership interest of Person X of
more than five percent (5%) in each of the Subject Person and Person C)."
(o) Rights to Acquire Property. Neither Seller nor any
Related Person of Seller currently owns, has any right, option or right of
refusal to acquire, whether exercisable currently or in the future, by
purchase, lease or otherwise, any interest in any tenants in the Subject
Property, any Anchor Store, or any other property within ten (10) miles of the
Subject Property which has been developed for, or is suitable or upon the
razing of improvements thereon would be suitable for development for, a
regional shopping center, nor has any such Person any right to delay, impair
or prevent any expansion of the Subject Property.
(p) Merchant's Fund. All fees and monies owed by Seller
on behalf of the Merchant's Fund and, to Seller's knowledge, from tenants have
been made (it being understood that all such amounts shall be expended by
Closing and no amounts prorated or credited to Purchaser at Closing therefor).
(q) ERISA; Personnel. As of the date hereof, Seller does
not employ any person at the Subject Property nor is Seller a party, or
obligated to become a party, to any union or other collective bargaining
contract pertaining to the operation and maintenance of the Subject Property,
and there are no labor disputes which pertain to the operation or maintenance
of the Subject Property. There are no employees of Seller to whom Purchaser
shall, at or after Closing, have any obligation in a capacity as a successor
employer. No portion of the Subject Property constitutes "plan assets" of any
"Employee Benefit Plan" (as defined by Section 3(3) of the Employee Retirement
Income Security Act of 1974 - 'ERISA') within the meaning of 29 C.F.R. Section
2510.3-101. There are no circumstances under which the Purchaser could be
liable for any tax, lien, liability, penalty, cost, interest, assessment or
other similar type of expense relating to any Employee Benefit Plan maintained
by the Seller which has employees who would otherwise be treated pursuant to
Section 4001(a)(14) of ERISA and/or Section 14(b), (c), (m) or (o) of the Code
as employees of a single employer which includes the Seller (an "ERISA
Affiliate") (assuming a like definition of "Employee Benefit Plan" were
applicable to each ERISA Affiliate).
(4) Seller's Knowledge. Any and all uses of the phrases "to
Seller's knowledge" or other references to Seller's knowledge in this
Agreement shall mean the actual, present, conscious knowledge of James M.
Whittington, Douglas Welker and Joyce Irwin (the "Seller Knowledge
Individuals"). Purchaser acknowledges that, for purposes of the
representations and warranties set forth in the Agreement, such individuals
have not performed and are not obligated to perform any investigation or
review of any files in the possession of Seller with respect to the subject
matter addressed in the representations and warranties of Seller set forth in
this Agreement and that the actual, present, conscious knowledge of any other
individual or entity, shall not be imputed to the Seller Knowledge
Individuals.
B. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants that:
(1) This Agreement and all agreements, instruments and documents
herein provided to be executed or to be caused to be executed by Purchaser and
are and on the Closing Date will be duly authorized, executed and delivered by
and are binding upon Purchaser and enforceable in accordance with the terms
thereof.
(2) Purchaser is a limited partnership, duly organized and
validly existing under the laws of the State of Texas, and is duly authorized
and qualified to transact the business it presently conducts and to do all
things required of it under this Agreement, and the performance of this
Agreement will not require any additional consent or approval by the parties
in Purchaser.
(3) Purchaser has the power, capacity and authority to make,
deliver and perform this Agreement and to consummate the transactions herein
provided.
(4) Except for the Hart-Scott-Rodino filing, no action or filing
with any governmental or public body or authority by Purchaser is required to
authorize, or is otherwise required in connection with the execution, delivery
and performance of this Agreement by Purchaser.
(5) No Conflict. Neither the execution and delivery of this
Agreement and the other Closing Documents executed by Purchaser in connection
with the Closing nor the performance by Purchaser of its obligations
thereunder will (i) violate in any material manner any provision of law or
rule or regulation thereunder or any order, injunction or decree of any court
or other governmental body to which Purchaser is a party or by which it is
bound, (ii) conflict with in any material manner or result in a material
breach (which has not been waived) of any of the terms, conditions or
provisions of any agreement or instrument to which Purchaser is a party or by
which it is bound, or constitute a material default thereunder, or (iii)
violate in any material manner any restriction to which Purchaser is subject.
(6) Litigation; Bankruptcy. There is no pending or, to the
knowledge of Purchaser, threatened action, litigation or other proceeding
against Purchaser nor are there any pending or, to the knowledge of Purchaser,
threatened bankruptcy or insolvency proceedings against Purchaser.
C. Survival. Any cause of action of a party for a breach of the
foregoing representations and warranties shall survive for a one year period
commencing on the Closing Date, at which time such representations and
warranties (and any cause of action resulting from a breach thereof of which
notice thereof has not been delivered to the party against which a claim is
made shall terminate. All other provisions of this Agreement shall survive in
accordance with the terms hereof.
D. Purchaser's Knowledge. Purchaser warrants and represents that
none of Stanley A. Warnick and Lisa J. Saylor (the "Purchaser Knowledge
Individuals") has any actual, present, conscious knowledge that any warranty
or representation made by Seller in Paragraph 7.A. is untrue or inaccurate in
any material respect. Seller acknowledges that, for purposes of the
representation set forth in the preceding sentence, such individuals have not
performed and are not obligated to perform any investigation or review of any
files in the possession of Purchaser with respect to the subject matter
addressed in the representations and warranties of Seller set forth in
Paragraph 7.A. above and that the actual, present, conscious knowledge of any
other individual or entity, shall not be imputed to the Purchaser Knowledge
Individuals. If, at Closing, any of Purchaser Knowledge Individuals had
actual, present, conscious knowledge of the untruth or inaccuracy which is the
basis of Seller's breach of a specific warranty or representation, then with
respect only to such specific warranty or representation, Purchaser shall be
deemed to have waived any cause of action or claim for damage against Seller
arising out of Seller's breach of such specific warranty or representation.
E. Interim Covenants of Seller. Until the Closing Date or sooner
termination of this Agreement:
(1) Seller shall maintain the Subject Property in the same
manner as prior hereto pursuant to its normal course of business (such
maintenance obligations not including extraordinary capital expenditures or
expenditures not incurred in such normal course of business), subject to
reasonable wear and tear and further subject to destruction by casualty or
other events beyond the control of Seller;
(2) Seller shall not enter into any additional Service Contracts
or other similar agreements without the prior consent of Purchaser, except
those deemed reasonably necessary by Seller which are cancelable on 30 days'
notice;
(3) Seller shall continue to offer the Subject Property for
lease in the same manner as prior hereto pursuant to its normal course of
business and shall keep Purchaser reasonably informed as to the status of
leasing prior to the Closing Date. During the term of this Agreement, Seller
shall not enter into any new leases or modifications of existing Leases
without the consent of Purchaser; provided, however, Seller may enter into the
Pending Leases. Purchaser hereby acknowledges its approval of such Pending
Leases. In no event shall Seller have any obligation to enter into any new
lease or modify any existing lease unless Purchaser shall agree to pay or
reimburse Seller or the tenant, as applicable, in the event of Closing all
tenant improvement and leasing commission obligations of the landlord under or
in connection therewith (with any amounts due Seller being credited on the
Closing Date); provided, however, nothing in the foregoing shall limit or
modify the obligations of the parties under paragraph 5.D.(6) above;
(4) Seller has, simultaneously herewith, delivered to Purchaser
a summary of its insurance coverage respecting the Subject Property including
any deductibles. Seller agrees during the term of this Agreement to keep such
insurance coverage (or substantially similar coverage) current and in full
force and effect;
(5) Seller shall not grant nor consent to any new encumbrance or
other documents of record (such as easements or the like) covering the Subject
Property which will survive the Closing without the prior written consent of
Purchaser;
(6) Seller shall not remove any equipment or other items from
the Subject Property, except for items that are replaced by an item of equally
suitable value free and clear of any lien or claim;
(7) Seller shall use good faith efforts to notify Purchaser of
any pending litigation which is not covered by insurance, arbitration or
administrative hearing affecting the Subject Property reasonably promptly
following receipt of notice thereof by Seller;
(8) Seller shall keep Purchaser reasonably informed with respect
to leasing activity and other actions of a material nature in respect of or
affecting the Subject Property; and
(9) Seller shall submit to Purchaser for Purchaser's approval
all new leases, modifications, amendments for termination of or to leases, the
Operating Agreements or Service Contracts.
8. INDEMNIFICATION.
A. By Purchaser. In addition to the indemnification set forth in
paragraph 4.A.(2), Purchaser shall hold harmless, indemnify and defend Seller
from and against: (1) any and all third party claims for Purchaser's torts or
breaches of contract related to the Subject Property and occurring on or after
the Closing Date; and (2) all costs and expenses, including reasonable
attorneys' fees, incurred by Seller as a result of the foregoing. The
foregoing indemnifications shall not be construed to release Seller from any
obligations or liabilities of Seller arising prior to the Closing Date.
B. By Seller. Seller shall hold harmless, indemnify and defend
Purchaser from and against: (1) any and all third party claims for Seller's
torts or breaches of contract related to the Subject Property and occurring
prior to the Closing Date; and (2) all costs and expenses, including
reasonable attorneys' fees, incurred by the Purchaser as a result of such
claims. The foregoing indemnifications shall not be construed to release
Purchaser from any obligations or liabilities of Purchaser arising from and
after the Closing Date.
C. Generally. Each indemnification under this Agreement shall be
subject to the following provisions: the indemnitee shall notify indemnitor of
any such claim against indemnitee within 30 days after it has notice of such
claim, but failure to notify indemnitor shall in no case prejudice the rights
of indemnitee under this Agreement unless indemnitor shall be prejudiced by
such failure and then only to the extent of such prejudice. Should indemnitor
fail to discharge or undertake to defend indemnitee against such liability
within 10 days after indemnitee gives indemnitor written notice of the same,
then indemnitee may settle or defend such liability, and indemnitor's
liability to indemnitee shall be conclusively established by such settlement
or by any judgment incurred, the amount of such liability to include both the
settlement consideration or judgment amount, as applicable, and the reasonable
costs and expenses, including attorneys' fees, incurred by indemnitee in
effecting such settlement or defense. The provisions of this Paragraph 8
shall survive Closing and shall not be merged into the Closing Documents.
9. DISPOSITION OF DEPOSITS. IF THE TRANSACTION HEREIN PROVIDED
SHALL NOT BE CLOSED BY REASON OF THE FAILURE OF ANY CONDITION PRECEDENT TO
PURCHASER'S OBLIGATION TO CLOSE OR THE TERMINATION OF THIS AGREEMENT IN
ACCORDANCE WITH PARAGRAPHS 4.B. OR 6 HEREOF, THEN THE ESCROW DEPOSIT SHALL BE
RETURNED TO PURCHASER, AND NEITHER PARTY SHALL HAVE ANY FURTHER OBLIGATION OR
LIABILITY TO THE OTHER. IF THE TRANSACTIONS HEREUNDER SHALL FAIL TO CLOSE
SOLELY BY REASON OF SELLER'S DEFAULT, AND PURCHASER SHALL HAVE FULLY PERFORMED
ITS OBLIGATIONS HEREUNDER AND SHALL BE READY, WILLING AND ABLE TO CLOSE, THEN
(1) PURCHASER SHALL BE ENTITLED TO SPECIFICALLY ENFORCE THIS AGREEMENT, OR (2)
IF SELLER SHALL WILLFULLY TAKE ACTIONS SO AS TO PREVENT THE AVAILABILITY OF
SPECIFIC ENFORCEMENT REMEDIES TO PURCHASER, PURCHASER SHALL BE ENTITLED, AT
PURCHASER'S ELECTION, TO EITHER (X) A RETURN OF THE ESCROW DEPOSIT AND
REIMBURSEMENT OF ITS ACTUAL OUT-OF-POCKET COSTS INCURRED IN CONNECTION WITH
THE TRANSACTIONS HEREUNDER (SUCH COSTS NOT TO EXCEED $2,000,000 INCLUDING
LEGAL FEES AND EXPENSES AND FEES AND EXPENSES OF ITS CONSULTANTS, SUCH AS
ENGINEERS, ENVIRONMENTAL CONSULTANTS, ACCOUNTANTS) OR (Y) DAMAGES EQUAL TO THE
DIFFERENCE BETWEEN THE EXCESS, IF ANY, OF THE VALUE OF THE SUBJECT PROPERTY AT
THE TIME OF PURCHASER'S DEFAULT HEREUNDER AND THE PURCHASE PRICE SPECIFIED
HEREUNDER. EXCEPT AS SPECIFICALLY SET FORTH ABOVE, NO OTHER ACTION, FOR
DAMAGES OR OTHERWISE, SHALL BE PERMITTED; PROVIDED, HOWEVER, PURCHASER SHALL
ALSO BE ENTITLED TO LEGAL FEES AND EXPENSES, IF ANY, INCURRED BY PURCHASER TO
ENFORCE ITS RIGHTS TO RECEIVE EITHER SUCH AMOUNTS UNDER (X) OR (Y) OF THE
IMMEDIATELY PRECEDING SENTENCE.
IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL NOT CLOSE BY REASON
OF PURCHASER'S DEFAULT UNDER THIS AGREEMENT, THEN THE ESCROW DEPOSIT SHALL BE
DELIVERED TO SELLER AS FULL COMPENSATION AND LIQUIDATED DAMAGES UNDER AND IN
CONNECTION WITH THIS AGREEMENT. IN THE EVENT THE TRANSACTION HEREIN PROVIDED
SHALL CLOSE, THE ESCROW DEPOSIT SHALL BE APPLIED AS A PARTIAL PAYMENT OF THE
PURCHASE PRICE. IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE THAT
SELLER WILL INCUR EXPENSE IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY
THIS AGREEMENT AND THAT THE SUBJECT PROPERTY HAS BEEN AND WILL CONTINUE TO BE
REMOVED FROM THE MARKET, FURTHER, THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER CAUSED BY THE
BREACH BY PURCHASER UNDER THIS AGREEMENT AND THE FAILURE OF THE CONSUMMATION
OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE AMOUNT OF
COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF PURCHASER'S BREACH OR
DEFAULT. IN THE EVENT THE SALE OF THE SUBJECT PROPERTY SHALL NOT BE
CONSUMMATED ON ACCOUNT OF PURCHASER'S DEFAULT, THEN THE RETENTION OF THE
ESCROW DEPOSIT SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS
AGREEMENT BY REASON OF SUCH DEFAULT (PROVIDED, HOWEVER, SELLER SHALL ALSO BE
ENTITLED TO LEGAL FEES AND EXPENSES, IF ANY, INCURRED BY SELLER TO ENFORCE ITS
RIGHTS TO RECEIVE SUCH ESCROW DEPOSIT HEREUNDER).
__________________ ____________________
Seller's Initials Purchaser's Initials
10. MISCELLANEOUS.
A. Brokers. Seller represents and warrants to Purchaser, and
Purchaser represents and warrants to Seller, that no broker or finder has
been engaged by it, respectively, in connection with any of the transactions
contemplated by this Agreement or to its knowledge in any way connected with
any of such transactions. Seller hereby agrees to indemnify and hold
Purchaser harmless from any and all claims, liabilities, costs and expenses
(including, without limitation, court costs and attorney's fees) arising out
of a claim of any broker, agent or consultant claiming through Seller.
Purchaser hereby agrees to indemnify and hold Seller harmless from any and all
claims, liabilities, costs and expenses (including, without limitation, court
costs and attorney's fees) arising out of a claim of any broker, agent,
consultant, claiming through Purchaser. Notwithstanding any provision
contained to the contrary, the provisions of this paragraph shall survive the
Closing or the earlier termination hereof.
B. Limitations of Liability.
(1) Notwithstanding anything to the contrary contained herein,
if the Closing of the transactions hereunder shall have occurred (and
Purchaser shall not have waived, relinquished or released any applicable
rights in further limitation), the aggregate liability of Seller arising
pursuant to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express or implied)
of Seller under this Agreement (or any document executed or delivered in
connection herewith) shall not exceed $8,000,000. Without limitation on the
foregoing, in no event shall Seller have any liability for damages hereunder
other than for actual damages (and in no event shall Seller have any liability
for consequential or contingent damages or the like) and, in the case of
Hazardous Materials, any liability of Seller related thereto shall be further
limited to Environmental Compliance Costs.
(2) Notwithstanding anything to the contrary contained herein,
if the Closing of the transactions hereunder shall have occurred (and Seller
shall not have waived, relinquished or released any applicable rights in
further limitation), the aggregate liability of Purchaser arising pursuant to
or in connection with the representations, warranties, indemnifications,
covenants or other obligations (whether express or implied) of Purchaser under
this Agreement (or any document executed or delivered in connection herewith)
shall not exceed $8,000,000. Without limitation on the foregoing, (x) prior
to Closing, in no event shall Purchaser have any liability for damages
hereunder except to the extent of the Escrow Deposit (and legal fees related
to litigation in connection therewith as provided in paragraph 9 above), and
(y) after Closing in no event shall Purchaser have any liability for damages
hereunder other than for actual damages (and in no event shall Purchaser have
any liability for consequential or contingent damages or the like after the
Closing).
(3) In no event shall either party hereto have any liability
pursuant to or in connection with this Agreement or any Closing Document
unless and until such liabilities exceed $200,000 in the aggregate; provided,
however, nothing contained in this paragraph 10.B. shall limit Seller's or
Purchaser's liability for any proration amounts provided for in this Agreement
or Seller's liability for insurance proceeds or condemnation proceeds required
to be turned over to Purchaser under paragraph 6 hereof or Seller's rights to
obtain the Escrow Deposit under paragraph 9 above.
(4) Notwithstanding anything to the contrary contained in this
Agreement or in the other Closing Documents, no constituent partner in or
agent of Seller, nor any advisor, trustee, director, officer, employee,
beneficiary, shareholder, participant, representative or agent of any
corporation or trust that is or becomes a constituent partner in Seller
(including, but not limited to, JMB Realty Corporation and the individuals
listed in paragraph 7.A.(3)) (collectively, "Seller Excluded Parties") shall
have any personal liability, directly or indirectly, under or in connection
with this Agreement or any other Closing Document, or any agreement,
representation, warranty or other statement made or entered into under or
pursuant to the provisions of this Agreement or any other Closing Document, or
any amendment or amendments to any of the foregoing made at any time or times,
heretofore or hereafter, and Purchaser and its successors and assigns and,
without limitation, all other persons and entities, shall look solely to
Seller's assets for the payment of any claim or for any performance, and
Purchaser, on behalf of itself and its successors and assigns, hereby waives
and releases any and all such personal liability as to such Seller Excluded
Parties. Notwithstanding anything to the contrary contained in this Agreement
or any other Closing Document, neither the negative capital account of any
constituent partner in Seller (or in any other constituent partner of Seller),
nor any obligation of any constituent partner in Seller (or in any other
constituent partner of Seller) to restore a negative capital account or to
contribute capital to Seller (or to any other constituent partner of Seller),
shall at any time be deemed to be the property or an asset of Seller or any
such other constituent partner (and neither Purchaser nor any of its
successors or assigns shall have any right to collect, enforce or proceed
against or with respect to any such negative capital account of partner's
obligation to restore or contribute). The foregoing limitations are in
addition to, and not in limitation of, any other limitations on liability
contained in this Agreement or any other Closing Document or provided by law.
(5) Notwithstanding anything to the contrary contained in this
Agreement or in the other Closing Documents, no constituent partner in or
agent of Purchaser, nor any advisor, trustee, director, officer, employee,
beneficiary, shareholder, participant, representative or agent of any
corporation or trust that is or becomes a constituent partner in Purchaser
(including, but not limited to, Rodamco North America B.V., Hexalon Real
Estate, Inc. or CGR Advisors and the individuals listed in paragraph 7.D.)
(collectively, "Purchaser Excluded Parties") shall have any personal
liability, directly or indirectly, under or in connection with this Agreement
or any other Closing Document, or any agreement, representation, warranty or
other statement made or entered into under or pursuant to the provisions of
this Agreement or any other Closing Document, or any amendment or amendments
to any of the foregoing made at any time or times, heretofore or hereafter,
and Seller and its successors and assigns and, without limitation, all other
persons and entities, shall look solely to Purchaser's assets (including the
Escrow Deposit) for the payment of any claim or for any performance, and
Seller, on behalf of itself and its successors and assigns, which prior to
Closing shall not exceed the Escrow Deposit and which after Closing shall not
exceed $8,000,000. Seller hereby waives and releases any and all such
personal liability as to such Purchaser Excluded Parties. Notwithstanding
anything to the contrary contained in this Agreement, or any other Closing
Document neither the negative capital account of any constituent partner in
Purchaser (or in any other constituent partner of Purchaser), nor any
obligation of any constituent partner in Purchaser (or in any other
constituent partner of Purchaser) to restore a negative capital account or to
contribute capital to Purchaser (or to any other constituent partner of
Purchaser), shall at any time be deemed to be the property or an asset of
Purchaser or any such other constituent partner (and neither Purchaser nor any
of its successors or assigns shall have any right to collect, enforce or
proceed against or with respect to any such negative capital account of
partner's obligation to restore or contribute). The foregoing limitations are
in addition to, and not in limitation of, any other limitations on liability
contained in this Agreement or any other Closing Document or provided by law.
C. Entire Agreement. This Agreement contains the entire agreement
between the parties respecting the matters herein set forth and supersedes all
prior agreements between the parties hereto respecting such matters. This
Agreement may not be modified or amended except by written agreement signed by
both parties.
D. Time of the Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
Without limitation thereon, and notwithstanding anything to the contrary
contained herein, in no event shall any extension right provided in this
Agreement result in the Closing being extended beyond January 31, 1995.
E. Interpretation. Each party acknowledges that such party and its
counsel, after negotiation and consultation, have reviewed and revised this
Agreement. As such, the terms of this Agreement shall be fairly construed and
the usual rule of construction, to the effect that any ambiguities herein
should be resolved against the drafting party, shall not be employed in the
interpretation of this Agreement or any amendments, modifications or exhibits
hereto or thereto. Any reference to "Dollars" or "$" herein shall mean U.S.
Dollars.
F. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
G. Successors and Assigns. Purchaser may not assign or transfer its
rights or obligations under this Agreement without the prior written consent
of Seller (in which event such transferee shall assume in writing all of the
transferor's obligationS hereunder, but such transferor shall not be released
from its obligations hereunder); provided, however, Purchaser may assign its
interest in this Agreement to a limited partnership in which Purchaser or an
affiliate of Purchaser (i.e., an entity controlling, controlled by or under
common control with Purchaser) is the managing general partner and has not
less than a 51% interest in capital and profits in such limited partnership.
No consent given by Seller to any transfer or assignment of Purchaser's rights
or obligations hereunder shall be construed as a consent to any other transfer
or assignment of Purchaser's rights or obligations hereunder. No transfer or
assignment in violation of the provisions hereof shall be valid or
enforceable. Subject to the foregoing, this Agreement and the terms and
provisions hereof shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
H. Notices. Any notice which a party is required or may desire to
give the other shall be in writing and shall be sent by personal delivery or
by mail (either (i) by United States registered or certified mail, return
receipt requested, postage prepaid, or (ii) by Federal Express or similar
generally recognized overnight carrier regularly providing proof of delivery),
addressed as follows (subject to the right of a party to designate a different
address for itself by notice similarly given):
To Purchaser:
Collin Creek Mall, L.P.
950 East Paces Ferry Road
Suite 2275
Atlanta, Georgia 30326
Attention: Mr. Dale R. Gilomen
With Copy To:
Arnall Golden & Gregory
2800 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: Paula A. Ball, Esq.
To Seller:
JMB Income Properties, Ltd.-X
900 North Michigan Avenue
19th Floor
Chicago, Illinois 60611
Attention: Mr. James M. Whittington
With Copy To:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (GML)
Any notice so given by mail shall be deemed to have been given as of the date
of delivery (whether accepted or refused) established by U.S. Post Office
return receipt or the overnight carrier's proof of delivery, as the case may
be. Any such notice not so given shall be deemed given upon receipt of the
same by the party to whom the same is to be given.
I. Legal Costs. The parties hereto agree that they shall pay
directly any and all legal costs which they have incurred on their own behalf
in the preparation of this Agreement, all deeds and other agreements
pertaining to this transaction and that such legal costs shall not be part of
the closing costs. In addition, if either Purchaser or Seller brings any suit
or other proceeding with respect to the subject matter or the enforcement of
this Agreement, the prevailing party (as determined by the court, agency or
other authority before which such suit or proceeding is commenced), in
addition to such other relief as may be awarded, shall be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation actually
incurred. The foregoing includes, but is not limited to, attorneys' fees,
expenses and costs of investigation (including, without limitation, those
incurred in appellate proceedings), costs incurred in establishing the right
to indemnification, or in any action or participation in, or in connection
with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code
(11 United States Code Sections 101 et seq.), or any successor statutes.
J. Nonrefundable Consideration. Contemporaneously with the execution
and delivery of this Agreement, Purchaser has delivered to Seller and Seller
hereby acknowledges the receipt of cash in the amount of $100.00 ("Independent
Contract Consideration"), which amount the parties bargained for and agreed to
as consideration for Purchaser's rights to inspect and purchase the Subject
Property pursuant to this Agreement and for Seller's execution, delivery and
performance of this Agreement. The Independent Contract Consideration is in
addition to and independent of any other consideration or payment provided in
this Agreement, is nonrefundable, and it is fully earned and shall be retained
by Seller notwithstanding any other provision of this Agreement.
K. Counterparts. This Agreement may be executed in two or more
counterparts, each of which when fully executed shall be an original, and all
of said counterparts taken together shall be deemed to constitute one and the
same agreement. It shall not be necessary for each party to execute all
counterparts so long as each party executes at least one counterpart.
L. Severability. If any provision hereof or the application thereof
to any party or circumstance shall be invalid or unenforceable to any extent,
the remainder of this Agreement and the application of such provisions to
other parties or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law. It is the intention of the
parties hereto that in lieu of each provision of this Agreement which is
determined to be invalid or unenforceable, there shall be added, as part of
this Agreement, such an alternative clause or provision as may be valid or
enforceable but otherwise as close to the applicable original provision as
possible.
M. Sole Benefit. Except as specifically provided in Paragraph 10.G.
hereof, the rights and benefits set forth in this Agreement and in all the
other Closing Documents are for the sole and exclusive benefit of the parties
thereto and may be relied upon only by them and no other.
N. Headings; Pronouns. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles or headings of Articles, Paragraph, Sections and
Subsections in this Agreement are for convenience only, and neither limit nor
amplify the provisions of this Agreement, and all references in this Agreement
to Articles, Sections, Subsection, paragraphs, clauses, subclauses, or
Exhibits or Schedules shall refer to the corresponding Article, Section,
Subsection, paragraph, clause, subclause of, or Exhibit or Schedule attached
to, this Agreement, unless a specific reference is made to the articles,
sections or other subdivisions, divisions of or Exhibit or Schedule to,
another document or instrument. The term "hereof", "herein" or words of
similar import shall be deemed to refer to this Agreement unless the context
otherwise specifies. The phrase "including" shall be deemed to mean
"including, without limitation."
O. Exhibits/Schedules. All Exhibits and Schedules attached hereto
are by this reference made a part hereof.
P. Subsequent Documentation. Purchaser and Seller each agrees that
it will, at any time, at or after Closing, duly execute and deliver to the
other any additional documents and instruments that shall be reasonably
necessary in connection with the consummation of the transactions contemplated
herein (provided the same do not materially increase the costs to, or
liability or obligations of, such party in a manner not otherwise contemplated
herein).
Q. Conflict. In the event of any conflict between any provision of
this Agreement and any provision of any of the other Closing Documents, such
Closing Document shall control and shall not be limited by the provisions
hereof.
R. Remedies Cumulative. Except as otherwise set forth in this
Agreement, each and every one of the rights, benefits and remedies to Seller
or Purchaser by this Agreement, or any instrument or documents executed
pursuant to this Agreement, are cumulative and shall not be exclusive of any
other of said rights, remedies and benefits allowed by law or equity to Seller
or Purchaser.
S. Consent to Jurisdiction. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto
shall be governed by and construed in accordance with the laws of the State of
Texas and shall be brought in the courts of the State of Texas or of the
United States of America for the Districts of Texas as appropriate, and the
parties hereto accept for themselves and in respect of their property,
generally and unconditionality, the jurisdiction of the aforesaid courts, and
consent to the recognition and enforcement of any judgment duly entered
therein by any court of any jurisdiction in which the party against which any
such judgment may have been entered, or its property may be found. The
parties each irrevocably consent to the service of process out of any of the
aforementioned courts in any action or proceeding hereunder by any means
permitted by applicable law. Nothing herein shall affect the right to serve
process in any other manner permitted by law.
T. Business Day. In the event that any time period set forth herein
expires, or other identified date occurs, on a date that is not a business
day, then such date shall be extended until the next following business day.
The term "business day" as used herein shall mean every day, excluding
Saturdays, Sundays and legal or banking holidays.
JMB INCOME PROPERTIES, LTD.-X,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By: _________________________
Name: __________________
Title: _________________
"Seller"
COLLIN CREEK MALL, L.P.,
a Texas limited partnership
By: ______________________________
a ____________________________
General Partner
By: _________________________
Name: __________________
Title: _________________
"Purchaser"
ESCROW HOLDER'S ACKNOWLEDGMENT
The undersigned hereby executed this Agreement to evidence its agreement
to act as Escrow Holder in accordance with the terms of this Agreement.
Date: _______________TICOR TITLE INSURANCE COMPANY,
a ____________________________
By: _________________________
Name: __________________
Title: _________________
"Escrow Holder"
EXHIBIT LIST
(Collin Creek Mall, Plano, Texas)
"A" - Description of Land
"B" - Personal Property
"C" - Contracts
"D" - Existing Encumbrance and Existing Note
"E-1" - Permitted Exceptions and Survey Matters
"E-2" - Disapproved Title and Survey Matters
"E-3" - Co-Insurance and Reinsurance Requirements
"G" - Lender's Estoppel Certificate
"H" - Anchor Estoppel Certificate
"I" - Tenant Estoppel Certificate
"J" - Special Warranty Deed
"K" - Operating Agreement Assignment and Assumption
"L" - Lease Assignment and Assumption
"M" - Contract Assignment and Assumption
"N" - Bill of Sale
"O" - FIRPTA Certificate
"P" - Management Agreement
"Q" - Seller Tenant Allowance Obligations
"R" - Pending Leases
"S" - List of Tenant Leases and Rent Roll
"S-1" - Current Tenant Delinquencies
"S-2" - Tenant Non-Monetary Defaults
"S-3" - Notices from Tenants or Anchor Stores re: Vacation of
Premises
"T" - List of Litigation
"U" - Service Contracts
"V" - Description of Operating Agreement
"V-1" - Operating Agreement Delinquencies
"V-2" - Additional Anchor Store Agreements
"W" - Environmental Reports
"Y" - Additional Agreements Affecting Subject Property
"X" - Physical Reports
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . 2
3. PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . 2
A. Escrow Deposits. . . . . . . . . . . . . . . . . . . 2
B. Existing Debt. . . . . . . . . . . . . . . . . . . . 3
C. Closing Payment. . . . . . . . . . . . . . . . . . . 3
4. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . 3
A. Completed Due Diligence. . . . . . . . . . . . . . . 3
B. Title Matters. . . . . . . . . . . . . . . . . . . . 4
C. Hart-Scott-Rodino. . . . . . . . . . . . . . . . . . 6
D. Existing Loan Matters. . . . . . . . . . . . . . . . 6
E. Estoppel Certificates. . . . . . . . . . . . . . . . 7
F. Performance by Seller; No Change . . . . . . . . . . 8
G. Performance by Purchaser; No Change. . . . . . . . . 8
5. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 9
A. Closing Procedure. . . . . . . . . . . . . . . . . . 9
B. Delivery to Parties. . . . . . . . . . . . . . . . . 9
C. Closing Costs. . . . . . . . . . . . . . . . . . . . 11
D. Prorations . . . . . . . . . . . . . . . . . . . . . 11
7. REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . 16
A. Representations, Warranties and Covenants of Seller. 16
B. Representations and Warranties of Purchaser. . . . . 25
8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 27
A. By Purchaser . . . . . . . . . . . . . . . . . . . . 27
B. By Seller. . . . . . . . . . . . . . . . . . . . . . 27
C. Generally. . . . . . . . . . . . . . . . . . . . . . 28
9. DISPOSITION OF DEPOSITS . . . . . . . . . . . . . . . . . 28
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 29
A. Brokers. . . . . . . . . . . . . . . . . . . . . . . 29
B. Limitations of Liability . . . . . . . . . . . . . . 29
C. Entire Agreement . . . . . . . . . . . . . . . . . . 31
D. Time of the Essence. . . . . . . . . . . . . . . . . 31
E. Interpretation . . . . . . . . . . . . . . . . . . . 32
F. Governing Law. . . . . . . . . . . . . . . . . . . . 32
G. Successors and Assigns . . . . . . . . . . . . . . . 32
H. Notices. . . . . . . . . . . . . . . . . . . . . . . 32
I. Legal Costs. . . . . . . . . . . . . . . . . . . . . 33
J. Nonrefundable Consideration. . . . . . . . . . . . . 34
K. Counterparts . . . . . . . . . . . . . . . . . . . . 34
L. Severability . . . . . . . . . . . . . . . . . . . . 34
M. Sole Benefit . . . . . . . . . . . . . . . . . . . . 34
N. Headings; Pronouns . . . . . . . . . . . . . . . . . 34
O. Exhibits/Schedules . . . . . . . . . . . . . . . . . 35
P. Subsequent Documentation . . . . . . . . . . . . . . 35
Q. Conflict . . . . . . . . . . . . . . . . . . . . . . 35
R. Remedies Cumulative. . . . . . . . . . . . . . . . . 35
S. Consent to Jurisdiction. . . . . . . . . . . . . . . 35
T. Business Day . . . . . . . . . . . . . . . . . . . . 35
SUMMARY OF DEFINED TERMS
TERM PAGE
"Act" 6
"Agreement" 1
"Anchor Store" 7
"Anchor Stores" 7
"Applicable Period" 13
"Approved Investments" 2
"Bill of Sale" 9
"CERCLA" 21
"Closing Date" 9
"Closing Documents" 3
"Closing Payment" 3
"Closing Prorations" 11
"Collection Period" 13
"Commonwealth Commitment" 4
"Commonwealth Title Company" 4
"Contract Assignment and Assumption" 9
"Contracts" 2
"Deed" 9
"Disapproved Matters" 4
"Environmental Compliance Cost" 22
"Environmental Laws" 21
"ERISA Affiliate" 24
"Escrow Deposit" 2
"Escrow Holder" 2
"Existing Encumbrance" 3
"Existing Note" 3
"Financing Documents" 19
"Hazardous Material" 21
"Independent Contract Consideration" 34
"Intangible Property" 2
"Lease Assignment and Assumption" 9
"Leases" 2
"Lender" 3
"Lender's Estoppel" 6
"Management Agreement" 11
"Manager" 11
"Monetary Encumbrances" 5
"Operating Agreement Assignment and Assumption" 9
"Operating Agreement" 19
"Owner's Policies" 6
"Pending Leases" 15
"Permitted Exceptions" 4
"Person" 23
"Personal Property" 1
"Plans" 2
"Purchase Price" 2
"Purchaser Closing Certificate" 10
"Purchaser Excluded Parties" 31
"Purchaser Knowledge Individuals" 26
"Purchaser" 1
"Real Property" 1
"Rent Roll" 17
"Seller Closing Certificate" 9
"Seller Excluded Parties" 30
"Seller Knowledge Individuals" 24
"Seller Tenant Allowance Obligation" 14
"Seller" 1
"Seller's Interest Share" 11
"Service Contracts" 18
"Subject Person" 23
"Subject Property" 1
"Survey" 4
"Tenant Notices" 10
"Ticor Commitment" 4
"Ticor Title Company" 4
"Title Commitments" 4
"Title Companies" 4
PURCHASE AGREEMENT
Between
JMB INCOME PROPERTIES, LTD.-X
and
COLLIN CREEK MALL, L.P.
Dated: November __, 1994
