SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission file #0-16252
JMB MORTGAGE PARTNERS, LTD. - II
(Exact name of registrant as specified in its charter)
Illinois 36-3252916
(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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . 12
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB MORTGAGE PARTNERS, LTD. - II
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 436,815 1,391,904
Interest and other receivables. . . . . . . . . . . . . . . . . . . . . 1,321 6,421
----------- -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . 438,136 1,398,325
----------- -----------
Investment in unconsolidated venture, at equity . . . . . . . . . . . . . 695,314 679,476
----------- -----------
$ 1,133,450 2,077,801
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,036 11,144
----------- -----------
Total current liabilities.. . . . . . . . . . . . . . . . . . . . 35,036 11,144
----------- -----------
Commitments and contingencies
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (loss). . . . . . . . . . . . . . . . . . . . 1,864,962 1,873,934
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (2,020,671) (1,932,819)
----------- -----------
(154,709) (57,885)
----------- -----------
Limited partners (22,590.5 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . . 19,272,546 19,272,546
Cumulative net earnings (loss). . . . . . . . . . . . . . . . . . . . 19,926,081 20,006,833
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . (37,945,504) (37,154,837)
----------- -----------
1,253,123 2,124,542
----------- -----------
Total partners' capital accounts. . . . . . . . . . . . . . . . 1,098,414 2,066,657
----------- -----------
$ 1,133,450 2,077,801
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - II
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- -------------------------
1996 1995 1996 1995
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Income:
Interest income . . . . . . . . . . . . . . . . $ 12,005 207,347 35,850 428,463
----------- ---------- --------- ---------
Expenses:
Mortgage investment servicing fees. . . . . . . -- 1,395 -- 6,680
Professional services . . . . . . . . . . . . . 10,634 13,240 28,634 32,540
Amortization of deferred expenses . . . . . . . -- 2,057 -- 5,794
General and administrative. . . . . . . . . . . 49,747 26,680 112,778 49,556
----------- ---------- --------- ---------
60,381 43,372 141,412 94,570
----------- ---------- --------- ---------
Operating earnings (loss) . . . . . . . (48,376) 163,975 (105,562) 333,893
Partnership's share of operations
of unconsolidated venture . . . . . . . . . . . 6,368 10,817 15,838 24,055
----------- ---------- --------- ---------
Net earnings (loss) . . . . . . . . . . $ (42,008) 174,792 (89,724) 357,948
=========== ========== ========= =========
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . . . $ (1.67) 6.06 (3.57) 13.72
=========== ========== ========= =========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . . . . $ 35.00 44.00 35.00 48.00
=========== ========== ========= =========
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - II
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (89,724) 357,948
Items not requiring (providing) cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . -- 5,794
Partnership's share of operations of unconsolidated venture,
net of distributions. . . . . . . . . . . . . . . . . . . . . . . . . . (15,838) 3,945
Changes in:
Interest and other receivables. . . . . . . . . . . . . . . . . . . . . . . 5,100 532
Amount due from affiliate . . . . . . . . . . . . . . . . . . . . . . . . . -- 35,000
Deferred interest receivable. . . . . . . . . . . . . . . . . . . . . . . . -- 1,481,618
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,892 (1,450)
---------- ----------
Net cash provided by (used in) operating activities . . . . . . . . (76,570) 1,883,387
---------- ----------
Cash flows from investing activities:
Net purchases of short-term investments . . . . . . . . . . . . . . . . . . -- (9,303,373)
Prepayment of first mortgage loan . . . . . . . . . . . . . . . . . . . . . -- 6,643,000
Collection of principal on promissory note received in connection
with mortgage loan prepayment . . . . . . . . . . . . . . . . . . . . . . -- 963,454
Costs in connection with investment in unconsolidated venture . . . . . . . -- (776)
---------- ----------
Net cash provided by (used in) investing activities . . . . . . . . -- (1,697,695)
---------- ----------
Cash flows from financing activities:
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . . (790,667) (1,084,344)
Distributions to general partners . . . . . . . . . . . . . . . . . . . . . (87,852) (48,027)
---------- ----------
Net cash provided by (used in) financing activities . . . . . . . . (878,519) (1,132,371)
---------- ----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . (955,089) (946,679)
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 1,391,904 1,069,818
---------- ----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 436,815 123,139
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . . $ -- --
========== ==========
Non-cash investing and financing activities:
Balance due on mortgage note receivable . . . . . . . . . . . . . . . . . $ -- 702,100
Deferred interest receivable. . . . . . . . . . . . . . . . . . . . . . . -- 85,044
Provision for loan loss . . . . . . . . . . . . . . . . . . . . . . . . . -- (116,000)
Capitalized costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 776
---------- ----------
Initial investment in unconsolidated venture, at equity . . . . . . $ -- 671,920
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
JMB MORTGAGE PARTNERS, LTD. - II
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
Certain amounts in the 1995 financial statements have been
reclassified to conform to the 1996 presentation.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Such costs required to be paid
by the Partnership to the General Partners and their affiliates for the six
months ended June 30, 1996 and 1995 aggregated $24,581 and $26,520,
respectively, of which $21,274 was unpaid at June 30, 1996.
Payment of approximately $308,000 of distributions from Partnership
operations to the General Partners has been deferred in accordance with the
Partnership Agreement. All amounts deferred or currently payable to the
General Partners or their affiliates do not bear interest.
SPRING HILL FASHION CENTER, WEST DUNDEE, ILLINOIS
A major tenant, which occupied approximately 24% of the leasable space
at the property and which was operating under Chapter 11 bankruptcy
protection, did not exercise its renewal option when its lease expired in
October 1995 and vacated its space. The Spring Hill joint venture (the
"venture"), however, executed a ten-year lease (in February 1996) with a
replacement tenant for this space at rental rates lower than those of the
former tenant. The replacement tenant's occupancy in late June 1996 has
resulted in the property being 93% occupied at June 30, 1996, up from 67%
at March 31, 1996. The venture is conserving its working capital in order
to fund certain costs associated with the replacement tenant's move-in.
Although the venture is actively pursuing the sale of this property, there
can be no assurance that any satisfactory sale transaction will be
completed by the end of 1996.
UNCONSOLIDATED VENTURE - SUMMARY INFORMATION
Summary income statement information for JMB/Spring Hill Associates
for the six months ended June 30, 1996 and 1995 is as follows:
1996 1995
-------- --------
Total income . . . . . . . . . . $574,290 748,827
======== ========
Operating earnings . . . . . . . $226,263 343,648
======== ========
Partnership's share
of earnings. . . . . . . . . . $ 15,838 24,055
======== ========
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1996
and for the three and six months ended June 30, 1996 and 1995.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investment.
During the second quarter some of the Limited Partners in the
Partnership received from an unaffiliated third party an unsolicited tender
offer to purchase up to 1,006 Interests in the Partnership at $35 per
Interest. The Partnership recommended against acceptance of this offer on
the basis that, among other things, the offer price was inadequate. In
June such offer expired with approximately 56 Interests being purchased by
such unaffiliated third party pursuant to such offer. In addition, the
Partnership has, from time to time, received inquires from other third
parties that may consider making offers for Interests, including requests
for the list of Limited Partners in the Partnership. These inquiries are
generally preliminary in nature. There is no assurance that any other
third party will commence an offer for Interests, the terms of any such
offer or whether any such offer, if made, will be consummated, amended or
withdrawn. The board of directors of JMB Realty Corporation ("JMB") the
corporate general partner of the Partnership, has established a special
committee (the "Special Committee") consisting of certain directors of JMB
to deal with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers. The
Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests. Expenses incurred in connection with the previous tender
offer(s) and additional potential tender offers for Interests are expected
to increase Partnership operating expenses in the third quarter.
After reviewing the remaining property and its competitive
marketplace, the General Partners of the Partnership expect to be able to
liquidate as quickly as practicable. Therefore, the affairs of the
Partnership are expected to be wound up as soon as it is feasibly possible,
barring unforeseen economic developments.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents at June 30, 1996 as compared
to December 31, 1995 is attributable primarily to the Partnership's
distribution in May 1996 of approximately $879,000 ($35 per Interest to the
Limited Partners and the General Partners' share of such distribution).
Interest income decreased for the three and six months ended June 30,
1996 as compared to the three and six months ended June 30, 1995 primarily
as a result of the April 1995 prepayment of the loan secured by the Plaza
at Shelter Cove shopping center. Additional decreases in interest income
are attributable to the March 1995 repayment of amounts due relating to the
loan secured by the Valley Lo Towers Apartments and to lower average
balances in the Partnership's interest-bearing cash equivalents in 1996.
The increases in general and administrative expenses for the three and
six months ended June 30, 1996 as compared to the three and six months
ended June 30, 1995 are attributable primarily to the timing of the
recognition of costs for certain outsourcing services, the recognition of
certain prior year reimbursable costs to affiliates of the General Partners
and the timing of the recognition of certain printing costs in 1996.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's owned or
reflected as owned investment property.
<CAPTION>
1995 1996
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Spring Hill
Fashion Center
Shopping Center
West Dundee, Illinois . . . 94%* 94% 92% 75% 67% 93%
<FN>
- --------------------
* This property was reflected as owned at March 31, 1995 although title did not transfer to the Partnership
and its affiliated lenders (through a joint venture) pursuant to a deed in lieu of foreclosure until May 1995.
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10-A. Agreement for Deed in Lieu of Foreclosure and
related agreements dated as of April 4, 1995 between borrower and lenders
relating to Spring Hill Fashion Center are incorporated herein by reference
to the Partnership's Report for December 31, 1995 on Form 10-K (File No. 0-
16252) dated March 25, 1996.
10-B. Agreement of General Partnership of JMB/Spring Hill
Associates dated May 1, 1995 between JMB Mortgage Partners, Ltd., JMB
Mortgage Partners, Ltd.-II and JMB Mortgage Partners, Ltd.-III is
incorporated herein by reference to the Partnership's Report for December
31, 1995 on Form 10-K (File No. 0-16252) dated March 25, 1996.
27. Financial Data Schedule.
(b) No reports on Form 8-K were required or have been filed for
the quarter covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
JMB MORTGAGE PARTNERS, LTD. - II
BY: JMB Realty Corporation
(Corporate General Partner)
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Date: August 9, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull
Principal Accounting Officer
Date: August 9, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000730206
<NAME> JMB MORTGAGE PARTNERS, LTD. - II
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 436,815
<SECURITIES> 0
<RECEIVABLES> 1,321
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 438,136
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,133,450
<CURRENT-LIABILITIES> 35,036
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,098,414
<TOTAL-LIABILITY-AND-EQUITY> 1,133,450
<SALES> 0
<TOTAL-REVENUES> 35,850
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 141,412
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (105,562)
<INCOME-TAX> 0
<INCOME-CONTINUING> (89,724)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (89,724)
<EPS-PRIMARY> (3.57)
<EPS-DILUTED> (3.57)
</TABLE>
