SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K405/A
AMENDMENT NO. 1
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
JMB INCOME PROPERTIES, LTD. - XI
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
IRS Employer Identification
Commission File No. 0-15966 No. 36-3254043
The undersigned registrant hereby amends the following sections of its
Report for the year ended December 31, 1996 on Form 10-K405 as set forth in
the pages attached hereto:
PART II
Item 6. Selected Financial Data. Pages 7-12.
Item 8. Financial Statements and Supplementary Data. Pages 19 to 59.
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. - XI
By: JMB Realty Corporation
Managing General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Dated: March 20, 1998
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1996 1995 1994 1993 1992
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income, including
gain on sale or
disposition of
investment property
in 1994 . . . . . . . . . $ 13,403,472 12,915,285 14,496,486 14,496,486 15,185,097
============ =========== =========== =========== ===========
Earnings (loss) before
extraordinary item. . . . $ 3,222,749 1,856,294 3,100,253 (2,584,139) (10,876,916)
Extraordinary item. . . . . -- -- (2,206,791) -- --
------------ ------------ ----------- ----------- -----------
Net earnings (loss) . . . . $ 3,222,749 1,856,294 893,462 (2,584,139) (10,876,916)
============ ============ =========== =========== ===========
Net earnings (loss)
per Interest (b):
Earnings (loss) before
sale or disposition
of investment
properties . . . . . . $ 10.02 10.28 14.60 (15.65) (62.90)
Gain on sale or
disposition of
investment property. . 8.06 -- 2.56 -- --
Extraordinary item. . . -- -- (12.22) -- --
------------ ------------ ----------- ----------- -----------
Net earnings (loss) . . . . $ 18.08 10.28 4.94 (15.65) (62.90)
============ ============ =========== =========== ===========
7
<PAGE>
1996 1995 1994 1993 1992
------------ ----------- ----------- ----------- -----------
Total assets. . . . . . . . $102,106,160 106,800,004 106,201,665 88,391,802 93,648,467
Long-term debt. . . . . . . $ 34,404,477 34,942,100 35,436,797 11,297,315 21,104,127
Cash distributions
per Interest (c). . . . . $ 15.00 12.00 12.00 12.00 12.00
============ ============ =========== =========== ===========
<FN>
- -------------
(a)The above selected financial data should be read in conjunction with the 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 the
period (173,411).
(c)Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. 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. Accordingly, 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.
</TABLE>
8
<PAGE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1996
<CAPTION>
Property
- --------
Riverside Square
Mall a) The gross leasable area ("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> <C>
1992 . . . . . 84% $26.90
1993 . . . . . 81% 31.26
1994 . . . . . 81% 18.10 (2)
1995 . . . . . 80% 18.69
1996 . . . . . 91% 17.15
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
(2) Average base rent per square foot decreased in 1994 due to the Saks Fifth Avenue
space (acquired in 1994) being included in the gross leasable area beginning in 1994.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option
------------------- ----------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Saks Fifth Avenue 107,000 $90,000 6/2012 N/A
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Riverside Square Mall:
Annualized Percent of
Number of Approx. Total Base Rent Total 1996
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1997 3 7,400 $ 129,700 2.4%
1998 4 12,400 446,900 8.4%
1999 5 13,500 458,500 8.6%
2000 5 12,200 412,700 7.7%
2001 5 15,200 418,500 7.8%
2002 1 2,300 87,100 1.6%
2003 7 25,700 851,500 15.9%
2004 17 30,500 1,157,400 21.6%
2005 8 22,800 773,000 14.5%
2006 10 24,900 456,300 8.5%
<FN>
(1) Excludes leases that expire in 1997 for which renewal leases or leases with
replacement tenants have been executed as of March 21, 1997.
</TABLE>
10
<PAGE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1996
<CAPTION>
Property
- --------
Royal Executive
Park II
Office Complex a) The net rentable area ("NRA") rate and average base rent per square foot as of December
31 for each of the last five years were as follows:
NRA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>
1992 . . . . . 92% $17.35
1993 . . . . . 92% 20.73
1994 . . . . . 97% 19.92
1995 . . . . . 97% 19.28
1996 . . . . . 98% 20.82
<FN>
(1) Average base rent per square foot is based on NRA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option
------------------- ----------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
MCI 90,000 $2,416,500 1/2001 N/A
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Royal Executive Park II Office Complex:
Annualized Percent of
Number of Approx. Total Base Rent Total 1996
Year Ending Expiring NRA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1997 1 2,500 $ 56,300 1.0%
1998 4 26,500 468,100 8.4%
1999 5 39,000 875,200 15.8%
2000 3 22,800 507,700 9.1%
2001 1 90,000 2,416,500 43.5%
2002 3 77,100 1,172,200 21.1%
2003 -- -- -- --
2004 1 8,700 156,900 2.8%
2005 -- -- -- --
2006 -- -- -- --
<FN>
(1) Excludes leases that expire in 1997 for which renewal leases or leases with
replacement tenants have been executed as of March 21, 1997.
</TABLE>
12
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
INDEX
Independent Auditors' Report
Balance Sheets, December 31, 1996 and 1995
Statements of Operations, years ended December 31,
1996, 1995 and 1994
Statements of Partners' Capital Accounts (Deficit),
years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows, years ended December 31,
1996, 1995 and 1994
Notes to Financial Statements
SCHEDULE
--------
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 financial statements or related notes.
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
INDEX
Independent Auditors' Report
Balance Sheets, December 31, 1996 and 1995
Statements of Operations, years ended December 31,
1996, 1995 and 1994
Statements of Partners' Capital Accounts, years ended
December 31, 1996, 1995 and 1994
Statements of Cash Flows, years ended December 31,
1996, 1995 and 1994
Notes to Financial Statements
SCHEDULE
--------
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 financial statements or related notes.
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
INDEX
Independent Auditors' Report
Balance Sheets, December 31, 1996 and 1995
Statements of Operations, years ended December 31, 1996, 1995 and 1994
Statements of Partners' Capital Accounts, years ended December 31, 1996,
1995 and 1994
Statements of Cash Flows, years ended December 31, 1996, 1995 and 1994
Notes to Financial Statements.
SCHEDULE
--------
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.
19
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
JMB INCOME PROPERTIES, LTD. - XI:
We have audited the financial statements of JMB Income Properties,
Ltd. - XI (a limited partnership) as listed in the accompanying index. In
connection with our audits of the financial statements, we also have
audited the financial statement schedule as listed in the accompanying
index. These 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 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 financial statements referred to above present
fairly, in all material respects, the financial position of JMB Income
Properties, Ltd. - XI at December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1996, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in the Notes to the financial statements, in 1996, the
Partnership changed its method of accounting for long-lived assets and
long-lived assets to be disposed of to conform with Statement of Financial
Accounting Standards No. 121.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 21, 1997
20
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
------
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 11,548,195 5,523,514
Rents and other receivables, net of allowance for
doubtful accounts of $642,633 in 1996 and
$511,404 in 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,010,246 2,319,003
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,506 79,621
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786,706 10,105,790
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . 14,436,653 18,027,928
------------ -----------
Investment property, at cost - Schedule III:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,796,561 3,796,561
Building and improvements . . . . . . . . . . . . . . . . . . . . . . . 75,476,781 70,665,239
------------ -----------
79,273,342 74,461,800
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . 17,321,842 14,927,070
------------ -----------
Property held for investment, net of accumulated
depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . 61,951,500 59,534,730
Investment in unconsolidated ventures, at equity. . . . . . . . . . . . . 20,367,302 23,487,628
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,350,705 5,749,718
------------ -----------
$102,106,160 106,800,004
============ ===========
21
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
----------------------------------------------------
1996 1995
------------ -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . $ 537,623 494,697
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 774,790 501,970
Construction costs payable. . . . . . . . . . . . . . . . . . . . . . . -- 673,008
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 243,139 246,581
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 1,555,552 1,916,256
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . 101,539 84,131
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 4,434,509
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . . 34,404,477 34,942,100
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 36,061,568 41,376,996
Partners' capital accounts (deficit):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . 5,431,146 5,344,614
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (6,631,429) (6,631,429)
------------ -----------
(1,199,283) (1,285,815)
------------ -----------
Limited partners (173,411 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 156,493,238 156,493,238
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . 30,559,055 27,422,838
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (119,808,418) (117,207,253)
------------ -----------
67,243,875 66,708,823
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . . . . . . 66,044,592 65,423,008
------------ -----------
$102,106,160 106,800,004
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
22
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . $12,711,885 11,822,997 13,022,234
Interest income . . . . . . . . . . . . . . . . . . 691,587 1,092,288 1,026,602
Gain on disposition of investment
property. . . . . . . . . . . . . . . . . . . . . -- -- 447,650
----------- ----------- -----------
13,403,472 12,915,285 14,496,486
----------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . 2,936,882 2,976,655 2,803,351
Depreciation. . . . . . . . . . . . . . . . . . . . 2,394,772 1,975,902 1,726,612
Property operating expenses . . . . . . . . . . . . 8,835,327 8,110,731 8,778,556
Professional services . . . . . . . . . . . . . . . 262,322 277,837 343,023
Amortization of deferred expenses . . . . . . . . . 458,744 191,592 86,376
General and administrative. . . . . . . . . . . . . 308,471 399,979 275,525
----------- ----------- -----------
15,196,518 13,932,696 14,013,443
----------- ----------- -----------
(1,793,046) (1,017,411) 35,393
Partnership's share of operations of
unconsolidated ventures . . . . . . . . . . . . . . 3,603,185 2,873,705 2,617,210
Partnership's share of gain on sale of investment
properties of unconsolidated venture. . . . . . . . 1,412,610 -- --
----------- ----------- -----------
Earnings (loss) before extraordinary item . . 3,222,749 1,856,294 3,100,253
Extraordinary item. . . . . . . . . . . . . . . . . . -- -- (2,206,791)
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . . . $ 3,222,749 1,856,294 893,462
=========== =========== ===========
23
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
1996 1995 1994
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before sale or disposition
of investment property and extraordinary
item. . . . . . . . . . . . . . . . . . . $ 10.02 10.28 14.60
Gain on sale or disposition of
investment property . . . . . . . . . . . 8.06 -- 2.56
Extraordinary item. . . . . . . . . . . . . -- -- (12.22)
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . $ 18.08 10.28 4.94
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
24
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------------- --------------------------------------------------
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
(deficit)
at Decem-
ber 31,
1993 . . . . . $1,000 5,233,888 (6,631,429) (1,396,541) 156,493,238 24,783,808 (113,045,389) 68,231,657
Cash distri-
butions
($12 per
limited
partnership
interest). . . -- -- -- -- -- -- (2,080,932) (2,080,932)
Net earnings
(loss) . . . . -- 36,474 -- 36,474 -- 856,988 -- 856,988
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------
Balance
(deficit)
at Decem-
ber 31,
1994 . . . . . 1,000 5,270,362 (6,631,429) (1,360,067) 156,493,238 25,640,796 (115,126,321) 67,007,713
Cash distri-
butions
($12 per
limited
partnership
interest). . . -- -- -- -- -- -- (2,080,932) (2,080,932)
Net earnings
(loss) . . . . -- 74,252 -- 74,252 -- 1,782,042 -- 1,782,042
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------
25
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------------- --------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
Balance
(deficit)
at Decem-
ber 31,
1995 . . . . . 1,000 5,344,614 (6,631,429) (1,285,815) 156,493,238 27,422,838 (117,207,253) 66,708,823
Cash distri-
butions
($15 per
limited
partnership
interest). . . -- -- -- -- -- -- (2,601,165) (2,601,165)
Net earnings
(loss) . . . . -- 86,532 -- 86,532 -- 3,136,217 -- 3,136,217
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------
Balance
(deficit)
at Decem-
ber 31,
1996 . . . . . $1,000 5,431,146 (6,631,429) (1,199,283) 156,493,238 30,559,055 (119,808,418) 67,243,875
====== ========== ========== ========== =========== =========== ============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
26
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . $ 3,222,749 1,856,294 893,462
Items not requiring (providing) cash or
cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . 2,394,772 1,975,902 1,726,612
Amortization of deferred expenses . . . . . . . . . 458,744 191,592 86,376
Amortization of discounts on long-term debt . . . . -- -- 101,110
Partnership's share of operations of uncon-
solidated ventures, net of distributions. . . . . 944,935 1,008,416 (827,598)
Partnership's share of gain on sale of invest-
ment properties of unconsolidated venture . . . . (1,412,610) -- --
Total gain on disposition of investment
property. . . . . . . . . . . . . . . . . . . . . -- -- (1,128,591)
Extraordinary item. . . . . . . . . . . . . . . . . -- -- 2,206,791
Changes in:
Rents and other receivables . . . . . . . . . . . . 308,757 (334,608) (511,436)
Prepaid expenses. . . . . . . . . . . . . . . . . . (11,885) -- 205,931
Escrow deposits . . . . . . . . . . . . . . . . . . (64,859) (820,114) (330,151)
Accounts payable. . . . . . . . . . . . . . . . . . 272,820 16,506 229,990
Accrued interest payable. . . . . . . . . . . . . . (3,442) (3,167) 1,006,931
Tenant security deposits. . . . . . . . . . . . . . 17,408 4,249 18,578
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . 6,127,389 3,895,070 3,678,005
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of
short-term investments. . . . . . . . . . . . . . . -- 7,530,660 16,150,680
Net escrow draws for construction
related costs . . . . . . . . . . . . . . . . . . . 4,949,435 2,223,117 --
Additions to investment properties. . . . . . . . . . (5,484,550) (11,813,978) (19,596,334)
Partnership's distributions from
unconsolidated ventures . . . . . . . . . . . . . . 3,588,000 1,250,000 --
Partnership's contributions to
unconsolidated ventures . . . . . . . . . . . . . . -- (1,233,436) (1,557,469)
Payment of deferred expenses. . . . . . . . . . . . . (59,731) (577,118) (760,391)
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . 2,993,154 (2,620,755) (5,763,514)
----------- ----------- -----------
27
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995 1994
----------- ----------- -----------
Cash flows from financing activities:
Cash proceeds from refinancing of
long-term debt. . . . . . . . . . . . . . . . . . . -- -- 11,102,785
Bank overdraft. . . . . . . . . . . . . . . . . . . . -- (415,003) 415,003
Principal payments on long-term debt. . . . . . . . . (494,697) (455,199) (418,141)
Distributions to limited partners . . . . . . . . . . (2,601,165) (2,080,932) (2,080,932)
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . . (3,095,862) (2,951,134) 9,018,715
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents. . . . . . . . . . . . 6,024,681 (1,676,819) 6,933,206
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . . 5,523,514 7,200,333 267,127
----------- ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . . . $11,548,195 5,523,514 7,200,333
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . $ 2,940,324 2,979,823 1,695,310
=========== =========== ===========
Non-cash investing and financing activities:
Disposition of investment property:
Balance due on long-term debt cancelled. . . . . . $ -- -- 9,500,000
Accrued interest expense on accelerated
long-term debt . . . . . . . . . . . . . . . . . -- -- 862,422
Reduction of investment property . . . . . . . . . -- -- (8,955,641)
Reduction of deferred expenses . . . . . . . . . . -- -- (29,099)
Reduction of other assets. . . . . . . . . . . . . -- -- (249,091)
----------- ----------- ----------
Non-cash gain recognized due to
lender realizing upon security. . . . . . . $ -- -- 1,128,591
=========== =========== ==========
Increase in deferred costs due to escrow
of funds for payment of inducement . . . . . . . . $ -- 5,000,000 --
Net increase in other liabilities. . . . . . . . . -- (4,434,509) --
----------- ----------- ----------
Payments of inducement from
escrowed funds. . . . . . . . . . . . . . . $ -- 565,491 --
=========== =========== ==========
28
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995 1994
----------- ----------- -----------
Refinancing of long-term debt:
Proceeds of refinancing, net of
refinancing costs . . . . . . . . . . . . . . . . $ -- -- 35,913,859
Retirement of debt, net of discount . . . . . . . . -- -- (12,983,269)
Proceeds escrowed . . . . . . . . . . . . . . . . . -- -- (11,178,642)
Prepayment penalty. . . . . . . . . . . . . . . . . -- -- (649,163)
----------- ----------- -----------
Cash proceeds from refinancing of
long-term debt. . . . . . . . . . . . . . . $ -- -- 11,102,785
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
29
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership holds (either directly or through joint ventures) an
equity investment portfolio of United States real estate. Business
activities consist of rentals to a variety of commercial and retail
companies, and the ultimate sale or disposition of such real estate. The
Partnership currently expects to conduct an orderly liquidation of its
remaining investment portfolio and wind up its affairs not later than
December 31, 1999.
The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's interest in Royal
Executive Park II ("Royal Executive") and JMB/San Jose Associates ("San
Jose"). Accordingly, the accompanying financial statements do not include
the accounts of Royal Executive and San Jose.
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying 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"). Such
GAAP adjustments are not recorded on the records of the Partnership. The
net effect of these items for the years ended December 31, 1996 and 1995 is
summarized as follows:
30
<PAGE>
<TABLE>
<CAPTION>
1996 1995
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . . $102,106,160 122,747,292 106,800,004 129,176,609
Partners' capital accounts
(deficit):
General partners. . . . . . . . . (1,199,283) (1,451,001) (1,285,815) (1,478,591)
Limited partners. . . . . . . . . 67,243,875 88,203,901 66,708,823 89,438,466
Net earnings (loss):
General partners. . . . . . . . . 86,532 27,590 74,252 46,294
Limited partners. . . . . . . . . 3,136,217 1,366,601 1,782,042 1,111,065
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . . 18.08 7.88 10.28 6.41
=========== ============ =========== ===========
</TABLE>
31
<PAGE>
The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of the
period (173,411). Deficit capital accounts will result, through the
duration of the Partnership, in net gain for financial reporting and income
tax purposes.
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 those
estimates.
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
($8,217,261 and $3,987,126 at December 31, 1996 and 1995, respectively) as
cash equivalents, which includes investments in an institutional mutual
fund which holds U.S. Government obligations, with any remaining amounts
(generally with original maturities of one year or less) reflected as
short-term investments being held to maturity.
Deferred expenses consist primarily of loan fees and lease commissions
and a tenant lease inducement which are amortized over the terms stipulated
in the related agreements using the straight-line method.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in the
minimum lease payments over the term of the lease, rental income is accrued
for the full period of occupancy on a straight-line basis.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments" (as amended),
requires certain large public entities to disclose the SFAS 107 value of
all financial assets and liabilities for which it is practicable to
estimate. Value is defined in the Statement as the amount at which the
instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership
believes the carrying amount of its financial instruments classified as
current assets and liabilities (excluding current portion of long-term
debt) approximates SFAS 107 value due to the relatively short maturity of
these instruments. There is no quoted market value available for any of
the Partnership's other instruments. The debt, with a carrying balance of
$34,942,100, has been calculated to have an SFAS 107 value of $35,225,726
by discounting the scheduled loan payments to maturity. Due to
restrictions on transferability and prepayment and the inability to obtain
comparable financing due to current levels of debt, previously modified
debt terms or other property specific competitive conditions, the
Partnership would be unable to refinance these properties to obtain such
calculated debt amounts reported. The Partnership has no other significant
financial instruments.
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.
32
<PAGE>
The Partnership has acquired, either directly or through joint
ventures, two shopping centers and three office complexes. In June 1990,
the Partnership sold its interest in the Genesee Valley Shopping Center.
In November 1994, the lender realized upon its security interest and took
title to the Bank of Delaware building via a deed in lieu of foreclosure.
In March 1996, the San Jose venture sold its interest in the 190 San
Fernando Building and one of the parking structures at the Park Center
Financial Plaza investment property. All of the remaining properties were
in operation at December 31, 1996. The cost of the investment properties
represents the total cost to the Partnership plus miscellaneous acquisition
costs.
Depreciation on the properties has been provided over the estimated
useful lives of the various components as follows:
YEARS
-----
Building and 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.
Maintenance and repairs are generally charged to operations as
incurred. Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives.
Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
requires that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the property's carrying value and the
property's estimated fair value. The Partnership's policy is to consider a
property to be held for sale or disposition when the Partnership has
committed to a plan to sell or dispose of such property and active
marketing activity has commenced or is expected to commence in the near
term. In accordance with SFAS 121, any properties identified as "held for
sale or disposition" are no longer depreciated. Adjustments for impairment
loss for such properties (subsequent to the date of adoption of SFAS 121)
are made in each period as necessary to report these properties at the
lower of carrying value or fair value less costs to sell.
The results of operations for the Bank of Delaware office building
sold or disposed of during 1994 was a loss of $775,146 for the year ended
December 31, 1994. In addition, the accompanying consolidated financial
statements include $3,603,185, $2,873,705 and $2,607,188, respectively, of
the Partnership's share of total property operations of $4,209,143,
$3,435,566 and total loss of $22,339,724 of unconsolidated properties held
for sale or disposition as of December 31, 1996 or sold or disposed of in
the past three years.
INVESTMENT PROPERTIES
RIVERSIDE SQUARE MALL
During October 1983, the Partnership acquired an existing enclosed
regional shopping center in Hackensack, New Jersey. The Partnership's
purchase price for the mall was $36,236,282. The Partnership made a cash
down payment at closing of $20,000,000 with the balance of the purchase
price represented by a first mortgage loan. During the third quarter of
1994, the Partnership finalized a refinancing of the first mortgage loan
with a new loan in the amount of $36,000,000 which resulted in net proceeds
33
<PAGE>
of approximately $22,300,000. The new loan has an interest rate of 8.35%
per annum, requires monthly principal and interest payments of $286,252
beginning September 1, 1994, and matures December 1, 2006, when the unpaid
principal and interest balance is due. Of such proceeds, approximately
$11,200,000 was escrowed by the lender pursuant to the loan agreement and
released as required, including interest, to fund certain costs of the
renovation and restoration as discussed below. The full amount of the
escrow has been released as of December 31, 1996. The remaining
$11,100,000 of loan proceeds were used to replenish the Partnership's
working capital reserve for amounts paid to or escrowed on behalf of Saks
and Bloomingdale's for their store renovations as discussed below.
Additionally, the Partnership recorded, in 1994, an extraordinary loss on
refinancing of $2,206,791 representing the write-off of unamortized
discount on the original mortgage loan of $1,557,628 and a $649,163
prepayment penalty.
The Partnership completed its renovation of the Riverside Square Mall
as well as its restoration of the parking deck (at final costs of
approximately $13,500,000 and $7,000,000, respectively) and is continuing
to remerchandise the center. In such regard, the Partnership has budgeted
in 1997 approximately $5,386,000 for tenant improvements and capital
expenditures. In connection with the renovation, the Partnership, in early
1994, signed 15-year operating covenant extensions with both Saks and
Bloomingdale's, the latter of which owns its own store. In return for the
additional 15-year commitment to the center, the Partnership reimbursed
Saks for its store renovation in the amount of $6,100,000; and in August
1995, the Partnership escrowed $5,000,000, reflected as a deferred leasing
cost, (the full amount of which has been released as of December 31, 1996)
for Bloomingdale's store renovation, which is scheduled to be completed in
1997. The Partnership had accrued the unfunded amount payable to
Bloomingdale's as of December 31, 1995 and recorded such amounts as a
deferred expense in the accompanying balance sheet. Interest earned on the
escrowed funds was remitted to the Partnership upon termination of the
escrow account. In connection with the payment to Saks, the Partnership
also acquired title to the Saks building which had previously been owned by
Saks.
An affiliate of the General Partners of the Partnership manages the
shopping center for a fee equal to 4% of the fixed and percentage rents of
the shopping center plus leasing and operating covenant commissions,
subject to deferral if in excess of an aggregate annual maximum amount of
6% of the gross receipts of the property.
BANK OF DELAWARE - OFFICE BUILDING
In December 1984, the Partnership acquired an interest in an existing
office building in Wilmington, Delaware. The Partnership's purchase price
for the building was $20,900,000, of which approximately $5,945,000, was
represented by an existing first mortgage loan. In February 1989, the
Partnership refinanced the existing first mortgage loan and received net
refinancing proceeds of approximately $4,696,000 which were utilized
primarily to pay for the substantially completed renovation program and
other capital improvements.
The Partnership assigned title to the property in November 1994 to the
mortgage lender as described below.
Due to the competitive nature of this marketplace, the property had
been operating at a cash deficit and as a result, the Partnership had
commenced discussions with the building's first mortgage lender in order to
seek a loan modification. In connection with these discussions, effective
January 1994, the Partnership had suspended payment of debt service to the
lender. Under the terms of a mortgage and security agreement, the
Partnership, in its capacity as mortgagor of the building, agreed to
indemnify the mortgage lender, under certain circumstances, against
damages, claims, liabilities and expenses incurred by or asserted against
the mortgage lender in relation to asbestos in the building. Asbestos had
34
<PAGE>
been abated or encapsulated in approximately 62% of the building's space.
The Partnership did not believe that any remaining asbestos in the building
presented a hazard and did not believe that such asbestos would have been
required to be removed. The Partnership estimated that the cost of
asbestos abatement in a portion of the building that could be incurred
under certain circumstances in the future would have been approximately
$800,000. In November 1994, due to the Partnership's default in payment of
debt service, the mortgage lender concluded proceedings to realize upon its
mortgage security interest represented by the land, building, and related
improvements of the property via a deed in lieu of foreclosure. As a
result of the disposition of the property, the Partnership recognized a
gain in 1994 for financial reporting purposes of $447,650 and a loss for
Federal income tax purposes of $4,756,937 with no corresponding
distributable proceeds. In conjunction with the transfer of title, the
Partnership paid the mortgage lender a sum of approximately $681,000 which
included the net cash flow of the property since the suspension of debt
service and an indemnification release fee for which the mortgage lender
released the Partnership from all liabilities respecting the property,
including those related to asbestos.
An affiliate of the General Partner of the Partnership managed the
office building through the November 1994 date of property title assignment
for a fee equal to 3% of the gross revenues of the building plus leasing
commissions, subject to an aggregate annual maximum amount of 6% of the
gross receipts of the property.
VENTURE AGREEMENTS - GENERAL
The Partnership at December 31, 1996 is a party to two operating
venture agreements (San Jose and Royal Executive) and has made capital
contributions to the respective ventures 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.
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.
SAN JOSE
The Partnership acquired, through San Jose, an interest in an existing
office building complex in San Jose, California (Park Center Financial
Plaza) consisting of ten office buildings, a parking and retail building
(185 Park Avenue) and two parking garage structures.
In September 1986, San Jose obtained a mortgage loan in the amount of
$25,000,000 secured by the 150 Almaden and 185 Park Avenue buildings and
certain parking areas. Due to the scheduled maturity of the loan, San
Jose, during the fourth quarter of 1994, finalized a loan extension and
modification with the mortgage lender. The refinancing resulted in the
1994 partial paydown of the outstanding principal balance in the amount of
$2,500,000.
After reviewing and analyzing San Jose's potential options with regard
to its investment in the 100-130 Park Center Plaza portion of the complex,
San Jose determined that it was in the best interest of the venture to
repay the mortgage obligations secured by this portion of the complex and
did so in October 1995. The outstanding principal balances, at the time of
repayment, were $2,418,722 of which the Partnership's share was $1,209,361.
35
<PAGE>
The property was managed by an affiliate of the General Partners of
the Partnership for a fee calculated as 3% of gross receipts until December
1994 when the affiliated property manager sold substantially all of its
assets and assigned its interests in its management contracts to an
unaffiliated third party.
The partners of San Jose are the Partnership and JMB Income
Properties, Ltd.-XII, another partnership sponsored by the Managing General
Partner of the Partnership ("JMB-XII"). The terms of San Jose's
partnership agreement generally provide that contributions, distributions,
cash flow, sale or refinancing proceeds and profits and losses will be
distributed or allocated to the Partnership and JMB-XII in their respective
50% ownership percentages.
During August 1994, San Jose received notification from the
Redevelopment Agency of the City of San Jose of its offer to purchase one
of the parking garage structures in the office building complex, for an
approved Agency project for $4,090,000. The price offered was deemed by
the Agency to be just compensation in compliance with applicable laws
concerning eminent domain. During 1995, the Agency filed a condemnation
action in court to proceed to obtain the garage pursuant to such laws. In
late 1995, San Jose and the Agency reached a mutually acceptable agreement
on the transfer of the garage. In March 1996, the sale was consummated.
Under the transfer agreement, San Jose received replacement parking spaces
for its tenants in a nearby city-owned parking structure for a term of
fifty-five years in addition to the aforementioned purchase price of
$4,090,000. San Jose recognized a gain of approximately $2,036,000 and
$1,857,000, respectively, for financial reporting and Federal income tax
purposes in 1996, of which approximately $1,018,000 and $928,500,
respectively, was allocated to the Partnership.
In March 1996, San Jose sold the 190 San Fernando Building to an
independent third party. The sale price of the building was $1,753,000
(before selling costs), and was paid in cash at closing. San Jose
recognized a gain of approximately $789,000 and $21,000, respectively, for
financial reporting and Federal income tax purposes in 1996, of which
approximately $394,500 and $10,500, respectively, was allocable to the
Partnership.
At September 30, 1994, San Jose made provisions for value impairment
on the 100-130 Park Center Plaza buildings and certain parking areas and
the 170 Almaden building of $944,335 in the aggregate. Such provisions
were recorded to reduce the net carrying values of these buildings to the
then outstanding balances of the related non-recourse financing.
As San Jose had committed to a plan to sell the properties, the 190
San Fernando Building and the parking structure were classified as held for
sale or disposition as of January 1, 1996 and therefore were not subject to
continued depreciation. The San Jose venture has subsequently committed to
a plan to sell the balance of the complex, and has classified the remaining
assets as held for sale as of December 31, 1996 and these assets will
therefore no longer be subject to continued depreciation.
ROYAL EXECUTIVE PARK II
In December 1985, the Partnership entered into a commitment to fund a
$27,000,000 convertible first mortgage note on a three building office park
then under construction in Rye Brook, New York (Royal Executive Park II).
The first mortgage note called for monthly installments of interest only at
a rate of 10% through the period of equity conversion.
36
<PAGE>
During February 1987, the Partnership exercised its option of
converting the $27,000,000 mortgage into an ownership position. Upon the
conversion of the mortgage note, the Partnership entered into a joint
venture (Royal Executive) with the borrower (joint venture partners).
Pursuant to the terms of the venture agreement, until certain rental
achievement levels are attained, the Partnership is entitled to a
cumulative preferred annual return equal to $2,430,000 per year. The next
$2,439,732 of annual cash flow is distributable to the joint venture
partners, on a non-cumulative basis, with any remaining cash flow
distributable 49.9% to the Partnership and 50.1% to the joint venture
partners. Therefore, the Partnership's receipt of cash distributions is
subject to the actual operations of the property. The Partnership is
entitled to any deficiency in its preferred annual return plus interest at
9% on a cumulative basis as an annual priority distribution from future
available operating cash flow before any cash flow distributions are made
to the venture partner. The cumulative deficiency in the preferred annual
return is approximately $3,100,000 at December 31, 1996. The Royal
Executive venture agreement further provides that the Partnership is
entitled to priority level of distribution of sale and refinancing proceeds
of $27,000,000 plus the cumulative deficiency in its preferred annual
return.
Net operating income (as defined) of the joint venture, in general,
will be allocated in proportion to, and to the extent of, distributions and
then based on relative ownership percentages. Operating losses, in
general, will be first allocated to the joint venture partners to the
extent of any additional contributions made to fund operations or the
Partnership's guaranteed return. Remaining losses, if any, will be
allocated based upon relative ownership interests. Depreciation and
amortization will be allocated based upon the relative ownership interests.
Due to uncertainty about the ability to recover the net carrying value
of the property through future operations and sale, Royal Executive made a
provision for value impairment of $25,378,894 at September 30, 1994 to
reduce the net carrying value of the property to the then estimated fair
value. The provision for value impairment has been allocated fully to the
venture partner to reflect their subordination to the Partnership in
distributions with regard to future operation and sale or financing
proceeds as discussed above.
Occupancy of this property increased slightly to 98% as of December
31, 1996. As there has been a commitment to sell this property, the Royal
Executive Venture has classified this property as held for sale or
disposition at December 31, 1996, and therefore, the property will no
longer be subject to continued depreciation.
During the latter part of 1996 and continuing through the date of this
report, leasing activity in the market has increased dramatically. This
improvement is due to a combination of no new office building developments,
fewer major corporation layoffs and consolidations, and a generally
improving business climate resulting in increased space needs for tenants
within the market. Consequently, market net effective rental rates have
also improved. Overall, however, net effective rental rates have not yet
recovered to a level achieved prior to the real estate depression
experienced in the late 1980's and early 1990's. The vacancy rate for the
Eastern Westchester office market in which the property participates
remains in the mid-teens. The Partnership received its preferred level of
return for 1996 in addition to a partial recovery of its cumulative
shortfall in this return since 1989.
During the fourth quarter, Royal Executive became aware that fuel oil
believed to be from the property's underground storage tanks has been
discharged into the ground. Royal Executive believes that such discharge
has been the result of normal operations of the property and not the
actions of tenants or other third parties. Royal Executive is currently
37
<PAGE>
performing tests to determine the nature and extent of the contamination.
Royal Executive believes that no nearby underground water supplies were
affected nor does it appear likely that any will be affected in the future.
At this time, it is not possible to reasonably estimate what the cost of
any required remediation will be. Royal Executive does not expect that the
value of the property has been materially impaired; however, there can be
no assurance that the contamination will not have a material impact on the
Partnership's financial condition until more information becomes available.
Effective July 1, 1994, management and leasing activities at the
complex were transferred to an affiliate of the General Partners of the
Partnership, who managed the property until December 1994 for a fee
computed as a percentage of certain revenues. In December 1994, this
affiliated property manager 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 is acting as the manager of the
property on the same terms that existed prior to the assignment.
LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1996 and
1995:
1996 1995
---------- ----------
8.35% mortgage note, secured by Riverside
Square Mall in Hackensack, New Jersey;
payable in monthly installments of
principal and interest of $286,252
through December 1, 2006, the scheduled
maturity date at which time the unpaid
principal and interest is due. . . . . . . . $34,942,100 35,436,797
Less current portion of long-term debt. . . . 537,623 494,697
----------- ----------
Total long-term debt. . . . . . . . $34,404,477 34,942,100
=========== ==========
Five year maturities of long-term debt are summarized as follows for
the years ending:
1997. . . . . . . . . . . $537,623
1998. . . . . . . . . . . 584,273
1999. . . . . . . . . . . 634,971
2000. . . . . . . . . . . 690,068
2001. . . . . . . . . . . 749,945
========
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 will be allocated to the General
Partners: (i) to the greater of 1% of such profits or the amount of cash
distributable to the General Partner from any such sale or refinancing (as
described below); and (ii) in order to reduce deficits, if any, in the
General Partners' capital accounts to a level consistent with the gain
anticipated to be realized from the sale of properties. Losses from the
sale or refinancing of investment properties will be allocated 1% to the
General Partners. The remaining sale or refinancing profits and losses
will be allocated to the Limited Partners.
38
<PAGE>
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon termination
of the Partnership. In general, distributions of cash from operations will
be made 90% to the Limited Partners and 10% to the General Partners.
However, a portion of such distributions to the General Partners is
subordinated to the Limited Partners' receipt of a stipulated return on
capital.
The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership amounts equal to the cumulative deferrals of any portion of
their 10% cash distribution and 3% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, notwithstanding such allocations, 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, (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with sale or refinancing
proceeds previously distributed, equal a 7% 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 1985 and (iii)
have received cash distributions of sale and refinancing proceeds and of
the Partnership operations, in an amount equal to the Limited Partners'
initial capital investment in the Partnership plus a 10% annual return on
the Limited Partners' average capital investment. As the above levels of
return are not expected to be achieved, approximately $3,270,000 of sale
proceeds from the sale of the Partnership's interest in the Genesee Valley
Center has been deferred by the General Partners.
LEASES
At December 31, 1996, the Partnership's principal asset is one
shopping center. The Partnership has determined that all leases relating
to this property are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of the property,
excluding the cost of the land, is depreciated over the estimated useful
life. Leases with tenants range in term from one to thirty-five years and
provide for fixed minimum rent and partial reimbursement of operating
costs. In addition, substantially all of the leases with shopping center
tenants provide for additional rent based upon percentages of tenants'
sales volumes. A substantial portion of the ability of retail tenants to
honor their leases is dependant upon the retail economic sector.
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:
1997 . . . . . . . . . . . $ 5,750,070
1998 . . . . . . . . . . . 5,761,989
1999 . . . . . . . . . . . 5,457,849
2000 . . . . . . . . . . . 4,963,342
2001 . . . . . . . . . . . 4,731,268
Thereafter . . . . . . . . 18,010,428
-----------
Total. . . . . . . . . $44,674,946
===========
Contingent rent (based on sales by property tenants) included in
rental income was as follows:
1994. . . . . . . . $274,431
1995. . . . . . . . 210,903
1996. . . . . . . . 312,727
========
39
<PAGE>
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Managing General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of December 31, 1996, 1995 and 1994 are as follows:
UNPAID AT
DECEMBER 31,
1996 1995 1994 1996
-------- -------- -------- ------------
Property management
and leasing fees . . . . . $229,333 236,845 608,703 33,000
Insurance commissions . . . 42,093 44,370 45,765 --
Reimbursement (at cost)
for accounting services. . 9,825 99,195 74,653 988
Reimbursement (at cost)
for portfolio manage-
ment services. . . . . . . 23,498 19,685 30,506 6,167
Reimbursement (at cost)
for legal services . . . . 4,691 4,942 33,071 1,158
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses . . -- 124,906 6,002 --
-------- -------- -------- -------
$309,440 529,943 798,700 41,313
======== ======== ======== =======
During 1994, certain officers and directors of the Managing General
Partners acquired interests in a company which provides certain property
management services to a property owned by the Partnership. The fees
earned by such company from the Partnership for the years ended December
31, 1996 and 1995 were approximately $39,000 and $30,000, respectively, all
of which has been paid at December 31, 1996.
The General Partners have deferred receipt of certain of their
distributions of net cash flow of the Partnership. The amount of such
deferred distributions aggregated $1,844,000 as of December 31, 1996. The
amount is being deferred in accordance with the subordination requirements
of the Partnership Agreement as discussed above. The Partnership does not
expect that the subordination requirements of the Partnership agreement
will be satisfied to permit payment of the majority of these amounts. In
addition, in 1994, an affiliate of the General Partner deferred $300,000 in
leasing fees at Riverside Square Mall pursuant to the management agreement.
Of this amount, $75,000 and $192,000 was paid during 1996 and 1995,
respectively. The remaining deferred amount of $33,000 or other amounts
deferred do not bear interest and may be paid in future periods.
40
<PAGE>
INVESTMENT IN UNCONSOLIDATED VENTURES
Summary of combined financial information for San Jose and Royal
Executive as of and for the years ended December 31, 1996 and 1995 are as
follows:
1996 1995
------------ -----------
Current assets. . . . . . . . . . $ 5,535,189 6,893,093
Current liabilities . . . . . . . (625,146) (579,280)
------------ -----------
Working capital . . . . . . . 4,910,043 6,313,813
------------ -----------
Investment property, net. . . . . 49,157,299 52,505,109
Other assets, net . . . . . . . . 1,287,622 1,287,438
Long-term debt. . . . . . . . . . (23,338,875) (23,431,863)
Other liabilities . . . . . . . . (247,868) (216,518)
Venture partners' equity. . . . . (11,400,919) (12,970,351)
------------ -----------
Partnership's capital . . . . $ 20,367,302 23,487,628
============ ===========
Represented by:
Invested capital. . . . . . . . $ 77,738,617 77,738,617
Cumulative distributions. . . . (49,501,766) (41,365,645)
Cumulative losses . . . . . . . (7,869,549) (12,885,344)
------------ -----------
$ 20,367,302 23,487,628
============ ===========
Total income. . . . . . . . . . . $ 16,333,533 15,525,621
============ ===========
Expenses. . . . . . . . . . . . . $ 12,124,390 12,090,055
============ ===========
Gain on sale or disposition
of investment property. . . . . $ 2,825,220 --
============ ===========
Net earnings (loss) . . . . . . . $ 7,034,363 3,435,566
============ ===========
Reference is made to the notes regarding the provision for value
impairment of $944,335 which was recorded in 1994 by San Jose and to notes
regarding the provision for value impairment of $25,378,894 which was
recorded in 1994 by Royal Executive.
The total income, expenses related to loss before gain on sale or
disposition of investment property and net loss for the above-mentioned
ventures for the year ended December 31, 1994 were $15,799,775, $38,119,456
and $22,319,680, respectively.
41
<PAGE>
<TABLE>
SCHEDULE III
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) ACQUISITION(B) AT CLOSE OF PERIOD
----------------------- -------------- -------------------------------
BUILDINGS BUILDINGS BUILDINGS
AND AND AND
ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (C)
----------- ----------- ------------ -------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Hackensack,
New Jersey. . . $34,942,100 3,796,561 30,880,649 44,596,132 3,796,561 75,476,781 79,273,342
=========== ========= ========== ========== ========= ========== ==========
</TABLE>
42
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1996
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DEPRECIATION(D) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Hackensack,
New Jersey. . . . . . . . . . . . . $17,321,842 1977 10-19-83 5-30 years 2,138,399
=========== =========
- -------------
<FN>
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the
properties (net of unamortized discount based upon an imputed interest rate), 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, 1996 for Federal income tax
purposes was $82,313,453.
</TABLE>
43
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(C) Reconciliation of real estate owned:
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . . . . . . $74,461,800 65,406,740 57,782,585
Additions during period . . . . . . . . . . . . . . . 4,811,542 9,055,060 23,028,260
Dispositions during period. . . . . . . . . . . . . . -- -- (15,404,105)
----------- ----------- ----------
Balance at end of period. . . . . . . . . . . . . . . $79,273,342 74,461,800 65,406,740
=========== =========== ==========
(D) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . . . . . . . $14,927,070 12,951,168 17,673,020
Depreciation expense. . . . . . . . . . . . . . . . . 2,394,772 1,975,902 1,726,612
Accumulated depreciation written-off at
Bank of Delaware. . . . . . . . . . . . . . . . . . -- -- (6,448,464)
----------- ----------- ----------
Balance at end of period. . . . . . . . . . . . . . . $17,321,842 14,927,070 12,951,168
=========== =========== ==========
</TABLE>
44
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Royal Executive Park II:
We have audited the financial statements of Royal Executive Park II (a
general partnership) as listed in the accompanying index. In connection
with our audits of the financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
financial statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
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 financial statements referred to above present
fairly, in all material respects, the financial position of Royal Executive
Park II at December 31, 1996 and 1995, and the results of its operations
and its cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
As discussed in the Notes to the financial statements, in 1996 the
Partnership changed its method of accounting for long-lived assets and
long-lived assets to be disposed of to conform with Statement of Financial
Accounting Standards No. 121.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 21, 1997
45
<PAGE>
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
------
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 439,499 707,938
Rents and other receivables, net of allowance for
doubtful accounts of $82,032 in 1996 and
$59,660 in 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 557,570 1,018,348
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 11,316
----------- -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 997,069 1,737,602
----------- -----------
Investment property, at cost - Schedule III:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 2,569,125
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . -- 32,937,958
----------- -----------
-- 35,507,083
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . -- 13,957,866
----------- -----------
Total investment property,
net of accumulated depreciation . . . . . . . . . . . . . . -- 21,549,217
Property held for sale or disposition . . . . . . . . . . . . . . . . 20,726,634 --
----------- -----------
Total investment property . . . . . . . . . . . . . . . . . . 20,726,634 21,549,217
----------- -----------
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,630 413,431
----------- -----------
$22,051,333 23,700,250
=========== ===========
46
<PAGE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1996 1995
------------ ------------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 168,640 256,235
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 168,640 256,235
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 168,269 167,648
----------- -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 336,909 423,883
Partners' capital accounts. . . . . . . . . . . . . . . . . . . . . . . 21,714,424 23,276,367
----------- -----------
$22,051,333 23,700,250
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
47
<PAGE>
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . $ 7,044,108 6,281,703 6,517,638
Interest income . . . . . . . . . . . . . . . . . . 51,257 61,472 11,318
----------- ----------- -----------
7,095,365 6,343,175 6,528,956
----------- ----------- -----------
Expenses:
Depreciation. . . . . . . . . . . . . . . . . . . . 915,666 912,943 897,428
Property operating expenses . . . . . . . . . . . . 3,107,719 3,041,478 3,355,481
Amortization of deferred expenses . . . . . . . . . 85,802 371,516 100,234
Provision for value impairment. . . . . . . . . . . -- -- 25,378,894
----------- ----------- -----------
4,109,187 4,325,937 29,732,037
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . . $ 2,986,178 2,017,238 (23,203,081)
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
48
<PAGE>
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
UNAFFILIATED
VENTURE JMB-XI TOTAL
------------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1993. . . . . . . . . . . . . . . . $31,320,181 18,049,764 49,369,945
Capital contributions . . . . . . . . . . . . . . . . . . . 459,138 -- 459,138
Cash distributions. . . . . . . . . . . . . . . . . . . . . -- (1,789,612) (1,789,612)
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . (25,378,591) 2,175,510 (23,203,081)
----------- ----------- -----------
Balance at December 31, 1994. . . . . . . . . . . . . . . . 6,400,728 18,435,662 24,836,390
Capital contributions . . . . . . . . . . . . . . . . . . . 304,860 -- 304,860
Cash distributions. . . . . . . . . . . . . . . . . . . . . -- (3,882,121) (3,882,121)
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . (147,303) 2,164,541 2,017,238
----------- ----------- -----------
Balance at December 31, 1995. . . . . . . . . . . . . . . . 6,558,285 16,718,082 23,276,367
Cash distributions. . . . . . . . . . . . . . . . . . . . . -- (4,548,121) (4,548,121)
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . (5,524) 2,991,702 2,986,178
----------- ----------- -----------
Balance at December 31, 1996. . . . . . . . . . . . . . . . $ 6,552,761 15,161,663 21,714,424
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
49
<PAGE>
<TABLE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . $ 2,986,178 2,017,238 (23,203,081)
Items not requiring (providing) cash:
Depreciation. . . . . . . . . . . . . . . . . . . 915,666 912,943 897,428
Amortization of deferred expenses . . . . . . . . 85,802 371,516 100,234
Provision for value impairment. . . . . . . . . . -- -- 25,378,894
Changes in:
Rents and other receivables . . . . . . . . . . . 460,777 561,279 (607,899)
Prepaid expenses. . . . . . . . . . . . . . . . . 11,316 4,370 (1,110)
Accounts payable. . . . . . . . . . . . . . . . . (87,595) (156,596) (145,199)
Tenant security deposits. . . . . . . . . . . . . 621 -- 47,111
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . 4,372,765 3,710,750 2,466,378
Cash flows from investing activities:
Net sales and maturities (purchases)
of short-term investments . . . . . . . . . . . . -- 98,281 (98,281)
Additions to investment property. . . . . . . . . . (93,083) (186,896) (525,677)
Payment of deferred expenses. . . . . . . . . . . . -- (65,900) (231,425)
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . (93,083) (154,515) (855,383)
----------- ----------- -----------
50
<PAGE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995 1994
----------- ----------- -----------
Cash flows from financing activities:
Capital contributed to venture. . . . . . . . . . . -- 304,860 459,138
Distributions to partners . . . . . . . . . . . . . (4,548,121) (3,882,121) (1,789,612)
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . . (4,548,121) (3,577,261) (1,330,474)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . (268,439) (21,026) 280,521
Cash and cash equivalents,
at beginning of year. . . . . . . . . . . . 707,938 728,964 448,443
----------- ----------- -----------
Cash and cash equivalents,
at end of year. . . . . . . . . . . . . . . $ 439,499 707,938 728,964
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . $ -- -- --
=========== =========== ===========
Non-cash investing and financing activity . . . . . $ -- -- --
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
51
<PAGE>
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The accompanying financial statements have been prepared for the
purpose of complying with Rule 3.09 of Regulation S-X of the Securities and
Exchange Commission. They include the accounts of the unconsolidated joint
venture, Royal Executive Park II venture ("Royal Executive"), in which JMB
Income Properties, Ltd.-XI ("JMB Income-XI") and an unaffiliated venture
are the partners.
Royal Executive holds an equity investment in commercial real estate
property in the City of Rye Brook, New York. Business activities consist
of rentals to a wide variety of commercial companies, and the ultimate sale
or disposition of such real estate.
As the Royal Executive venture has subsequently determined to sell the
property, the property was classified as held for sale or disposition as of
December 31, 1996, and therefore, will not be subject to continued
depreciation. The results of operations of the property included in the
accompanying financial statements were profits of $2,986,178, $2,017,238,
and a loss of $23,203,081 for the years ended December 31, 1996, 1995 and
1994, respectively.
52
<PAGE>
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 those
estimates.
The accounting policies, of Royal Executive are the same as those of
the Partnership. Accordingly, reference is made to the Notes to the
Partnership's Consolidated Financial Statements filed with this annual
report. Such notes are incorporated herein by reference.
VENTURE AGREEMENT
A description of the acquisition of the property and the venture
agreement and the management agreement is contained in the Notes of the
financial statements of JMB Income - XI. Such notes are incorporated
herein by reference.
MANAGEMENT AGREEMENT
Effective July 1, 1994, management and leasing activities at the
complex were transferred to an affiliate of the General Partners of the
Partnership, who managed the property until December 1994. In December
1994, this affiliated property manager 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.
LEASES
At December 31, 1996, Royal Executive's principal asset is an office
building complex. Royal Executive has determined that all leases relating
to this property are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of the property,
excluding the cost of the land, was depreciated over the estimated useful
life prior to being classified as held for sale as described above. Leases
with tenants range in term from one to twenty-five years and provide for
fixed minimum rent and partial reimbursement of operating costs.
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:
1997 . . . . . . . . . . . . . . $ 5,679,158
1998 . . . . . . . . . . . . . . 5,551,700
1999 . . . . . . . . . . . . . . 4,803,530
2000 . . . . . . . . . . . . . . 4,013,572
2001 . . . . . . . . . . . . . . 1,610,774
Thereafter . . . . . . . . . . . 1,101,082
-----------
$22,759,816
===========
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by Royal
Executive to the General Partners and their affiliates as of December 31,
1996 and for the years ended December 31, 1996, 1995 and 1994 were as
follows:
UNPAID AT
DECEMBER 31,
1996 1995 1994 1996
-------- -------- -------- ------------
Property management
and leasing fees . . . . . $ -- -- 14,268 --
------- ------- ------- -----
$ -- -- 14,268 --
======= ======= ======= =====
53
<PAGE>
<TABLE>
SCHEDULE III
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<CAPTION>
INITIAL COST TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) AT CLOSE OF PERIOD (B)
----------------------- COSTS -------------------------------------
BUILDINGS CAPITALIZED BUILDINGS
AND SUBSEQUENT TO AND
ENCUMBRANCE LAND IMPROVEMENTS ACQUISITION(C) LAND IMPROVEMENTS TOTAL (D)
----------- ----------- ------------ -------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE BUILDING:
Rye Brook,
New York. . . . $ -- 5,568,277 50,554,899 (20,523,010) 2,569,125 33,031,041 35,600,166
=========== ========== ========== =========== ========== ========== ==========
</TABLE>
54
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1996
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDING:
Rye Brook,
New York . . . . . . . . . . . . . $14,873,532 1986 2/12/87 5-30 years 779,119
=========== =======
<FN>
- --------------
Notes:
(A) The initial cost to Royal Executive represents the original purchase price of the
property, 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, 1996 for Federal income
tax purposes was $33,781,502.
(C) In 1994, Royal Executive recorded a provision for value impairment totalling $25,378,894,
as described more fully in the Notes.
</TABLE>
55
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
ROYAL EXECUTIVE PARK II
(A GENERAL PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(D) Reconciliation of real estate owned:
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . . . . $35,507,083 35,320,187 59,642,842
Additions during period . . . . . . . . . . . . . 93,083 186,896 525,677
Provision for value impairment (C). . . . . . . . -- -- (24,848,332)
----------- ----------- -----------
Balance at end of period. . . . . . . . . . . . . $35,600,166 35,507,083 35,320,187
=========== =========== ===========
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . . . . . $13,957,866 13,044,923 12,147,495
Depreciation expense. . . . . . . . . . . . . . . 915,666 912,943 897,428
----------- ----------- -----------
Balance at end of period. . . . . . . . . . . . . $14,873,532 13,957,866 13,044,923
=========== =========== ===========
</TABLE>
56
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
JMB/SAN JOSE ASSOCIATES:
We have audited the financial statements of JMB/San Jose Associates (a
general partnership) as listed in the accompanying index. In connection
with our audits of the financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
financial statements are the responsibility of the General Partners of the
Partnership. Our responsibility is to express an opinion on these
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 financial statements referred to above present
fairly, in all material respects, the financial position of JMB/San Jose
Associates at December 31, 1996 and 1995, and the results of its operations
and its cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a
whole, present fairly, in all material respects, the information set forth
therein.
As discussed in the Notes to the financial statements, in 1996 the
Partnership changed its method of accounting for long-lived assets and
long-lived assets to be disposed of to conform with Statement of Financial
Accounting Standards No. 121.
KPMG PEAT MARWICK
Chicago, Illinois
March 21, 1997
57
<PAGE>
<TABLE>
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
------
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 2,260,010 2,266,686
Rents and other receivables, net of allowance for
doubtful accounts of $1,648,319 in 1996 and
$1,058,859 in 1995. . . . . . . . . . . . . . . . . . . . . . . . . . 2,111,845 2,510,594
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,041 71,409
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,223 306,800
----------- -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 4,538,119 5,155,489
----------- -----------
Investment property - Schedule III:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 6,848,918
Buildings and improvements. . . . . . . . . . . . . . . . . . . . . . . -- 42,681,189
----------- -----------
-- 49,530,107
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . -- 18,574,214
----------- -----------
Total property held for investment,
net of accumulated depreciation . . . . . . . . . . . . . . . -- 30,955,893
----------- -----------
Property held for sale or disposition . . . . . . . . . . . . . . . . . . 28,430,666 --
----------- -----------
Total investment property . . . . . . . . . . . . . . . . . . . 28,430,666 30,955,893
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 959,992 874,007
----------- -----------
$33,928,777 36,985,389
=========== ===========
58
<PAGE>
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1996 1995
----------- -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . $ 92,988 85,989
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,955 72,930
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . . 163,563 164,125
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 456,506 323,044
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . . 79,599 48,870
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . . 23,338,875 23,431,863
----------- -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 23,874,980 23,803,777
Partners' capital accounts. . . . . . . . . . . . . . . . . . . . . . . . 10,053,797 13,181,612
----------- -----------
$33,928,777 36,985,389
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
59
<PAGE>
<TABLE>
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . $ 9,125,251 9,071,667 9,220,659
Interest income . . . . . . . . . . . . . . . . . . 112,917 110,779 50,160
Gain on sale of investment property . . . . . . . . 2,825,220 -- --
----------- ----------- -----------
12,063,388 9,182,446 9,270,819
----------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . 1,965,892 2,202,191 2,709,905
Depreciation. . . . . . . . . . . . . . . . . . . . 1,044,296 1,114,143 1,099,974
Property operating expenses . . . . . . . . . . . . 4,728,651 4,237,476 3,419,198
Amortization of deferred expenses . . . . . . . . . 276,364 210,308 214,006
Provision for value impairment. . . . . . . . . . . -- -- 944,335
----------- ----------- -----------
8,015,203 7,764,118 8,387,418
----------- ----------- -----------
Net earnings. . . . . . . . . . . . . . . . $ 4,048,185 1,418,328 883,401
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
59-a
<PAGE>
<TABLE>
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
AFFILIATED
JMB-XI PARTNER TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1993. . . . . $ 4,077,776 3,720,296 7,798,072
Capital contributions . . . . . . . . 1,557,468 1,557,469 3,114,937
Net earnings. . . . . . . . . . . . . 441,701 441,700 883,401
----------- ----------- -----------
Balance at December 31, 1994. . . . . 6,076,945 5,719,465 11,796,410
Capital contributions . . . . . . . . 1,233,436 1,233,437 2,466,873
Cash distributions. . . . . . . . . . (1,250,000) (1,250,000) (2,500,000)
Net earnings. . . . . . . . . . . . . 709,165 709,164 1,418,329
----------- ----------- -----------
Balance at December 31, 1995. . . . . 6,769,546 6,412,066 13,181,612
Cash distributions. . . . . . . . . . (3,588,000) (3,588,000) (7,176,000)
Net earnings. . . . . . . . . . . . . 2,024,093 2,024,092 4,048,185
----------- ----------- -----------
Balance at December 31, 1996. . . . . $ 5,205,639 4,848,158 10,053,797
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
59-b
<PAGE>
<TABLE>
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings. . . . . . . . . . . . . . . . . . . . . $ 4,048,185 1,418,328 883,401
Items not requiring (providing) cash:
Depreciation. . . . . . . . . . . . . . . . . . . . 1,044,296 1,114,143 1,099,974
Amortization of deferred expenses . . . . . . . . . 276,364 210,308 214,006
Provision for value impairment. . . . . . . . . . . -- -- 944,335
Gain on sale of investment property . . . . . . . . (2,825,220) -- --
Changes in:
Rents and other receivables . . . . . . . . . . . . 398,749 (19,820) (17,750)
Prepaid expenses. . . . . . . . . . . . . . . . . . (20,632) -- 4,561
Escrow deposits . . . . . . . . . . . . . . . . . . 232,577 (268,535) 18,703
Accounts payable. . . . . . . . . . . . . . . . . . 134,662 (323,557) 166,650
Accrued interest payable. . . . . . . . . . . . . . (562) (32,398) (42,928)
Tenant security deposits. . . . . . . . . . . . . . 30,729 (23,223) 1,796
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . . 3,319,148 2,075,246 3,272,748
Cash flows from investing activities:
Additions to investment property. . . . . . . . . . . (1,485,395) (156,254) (739,275)
Payment of deferred expenses. . . . . . . . . . . . . (402,481) (218,059) (259,242)
Proceeds from sale of investment property . . . . . . 5,824,041 -- --
Notes receivable. . . . . . . . . . . . . . . . . . . -- -- 5,836
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . . 3,936,165 (374,313) (992,681)
----------- ----------- -----------
59-c
<PAGE>
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995 1994
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . (85,989) (374,973) (372,045)
Paydowns on long-term debt. . . . . . . . . . . . . . -- (2,418,722) (2,500,000)
Capital contributed to venture. . . . . . . . . . . . -- 2,466,873 3,114,938
Distributions to partners . . . . . . . . . . . . . . (7,176,000) (2,500,000) --
----------- ----------- -----------
Net cash provided by (used in) financing
activities. . . . . . . . . . . . . . . . . . (7,261,989) (2,799,822) 242,893
----------- ----------- -----------
Net increase (decrease) increase
in cash and cash equivalents. . . . . . . . . (6,676) (1,098,889) 2,522,960
----------- ----------- -----------
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . . . 2,266,686 3,365,575 842,615
----------- ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . . . . $ 2,260,010 2,266,686 3,365,575
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . $ 1,966,455 2,234,589 2,752,833
Non-cash investing and financing activities:
Cash sale proceeds, net of selling expenses . . . . $ 5,824,041 -- --
Reduction in investment property, net . . . . . . . (2,966,325) -- --
Reduction in other assets and liabilities . . . . . (32,496) -- --
----------- ----------- -----------
Gain recognized on sale of property . . . . . $ 2,825,220 -- --
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
59-d
<PAGE>
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
OPERATIONS AND BASIS OF ACCOUNTING
The accompanying financial statements have been prepared for the
purpose of complying with Rule 3.09 of Regulation S-X of the Securities and
Exchange Commission. They include the accounts of the unconsolidated joint
venture, JMB/San Jose Associates ("San Jose"), in which JMB Income
Properties, Ltd.-XI ("JMB Income-XI" or "Partnership") and JMB Income
Properties, Ltd.-XII ("JMB Income-XII" or "Affiliated Partner") are the
partners.
San Jose holds an equity investment in a commercial office complex in
San Jose, California. Business activities consist of rentals to a wide
variety of commercial companies and governmental entities, and the ultimate
sale or disposition of such real estate.
As San Jose has determined to sell the complex, all portions of the
office complex have been classified as held for sale or disposition as of
or during the period ended December 31, 1996. Therefore, the complex is
not subject to continued depreciation. Certain portions of the office
complex were sold during 1996. The results of operations of the complex
included in the accompanying financial statements were earnings of
$1,110,048, $1,307,549, and $833,241 for the years ended December 31, 1996,
1995 and 1994, respectively.
As more fully described in the Notes to Consolidated Financial
Statements of JMB Income - XI which description is incorporated herein by
reference, San Jose recorded in 1994, as a matter of prudent accounting
practice, a provision for value impairment of $944,335 on the 170 Almaden
and on the 100-130 Park Center Plaza buildings and certain parking areas.
The Partnership uses the allowance method of accounting for doubtful
accounts. Provisions for uncollectible tenant receivables in the amounts
of $588,052, $783,417 and $236,397 were recorded in 1996, 1995 and 1994,
respectively. Bad debt expense is included in Property Operating Expenses.
The preparation of financial statements in accordance with GAAP
requires San Jose 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 amounts could differ from those
estimates.
The accounting policies of San Jose are the same as those of the
Partnership. Accordingly, reference is made to the Notes to the
Partnership's consolidated financial statements filed with this annual
report. Such notes are incorporated herein by reference.
VENTURE AGREEMENT
A description of the venture agreement and the management agreement
is contained in the Notes to Consolidated Financial Statements of JMB
Income - XI. Such note is incorporated herein by reference.
59-e
<PAGE>
MANAGEMENT AGREEMENT
In December 1994, the property manager, an affiliate of the General
Partners of the Partnership, sold substantially all of its assets and
assigned its interest in the management contracts to an unaffiliated third
party who continues to manage the complex. In addition, certain of the
management personnel of the property manager became management personnel of
the purchaser and its affiliates.
LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1996 and
1995:
1996 1995
---------- ----------
7.85% mortgage note; secured by
the 170 Almaden Building in
San Jose, California; principal
and interest payments of $13,537
are due monthly through
September 2003 when the remaining
principal of approximately
$169,000 is due. . . . . . . . . . $ 931,863 1,017,852
8.4% mortgage note; secured by the
150 Almaden and 185 Park Avenue
buildings, and certain related
parking improvements in San Jose,
California; interest only payments
of $157,500 are due monthly through
December 1997; principal and
interests payments of $179,663 are
due monthly through November 2001
when the entire principal of approx-
imately $21,421,000 is due . . . . 22,500,000 22,500,000
----------- ----------
Total debt. . . . . . . . . 23,431,863 23,517,852
Less current portion
of long-term debt. . . . . 92,988 85,989
----------- ----------
Total long-term debt. . . . $23,338,875 23,431,863
=========== ==========
Five year maturities of long-term debt are as follows:
1997. . . . . . . . . . . $ 92,988
1998. . . . . . . . . . . 376,986
1999. . . . . . . . . . . 409,305
2000. . . . . . . . . . . 444,398
2001. . . . . . . . . . . 21,723,357
===========
LEASES
At December 31, 1996, San Jose's principal asset is an office building
complex. San Jose has determined that all leases relating to this property
are properly classified as operating leases; therefore, rental income is
reported when earned and the cost of the property, excluding the cost of
the land, was depreciated over the estimated useful lives of the properties
prior to their being classified as held for sale or disposition as
described above. Leases with tenants range in term from one to twenty-five
years and provide for fixed minimum rent and partial reimbursement of
operating costs.
59-f
<PAGE>
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:
1997 . . . . . . . . . . . . . . $ 6,434,687
1998 . . . . . . . . . . . . . . 6,270,264
1999 . . . . . . . . . . . . . . 5,640,920
2000 . . . . . . . . . . . . . . 4,232,298
2001 . . . . . . . . . . . . . . 3,884,020
Thereafter . . . . . . . . . . . 12,589,967
-----------
$39,052,156
===========
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by San Jose
to the General Partners and their affiliates as of December 31, 1996 and
for the years ended December 31, 1996, 1995 and 1994 were as follows:
UNPAID AT
DECEMBER 31,
1996 1995 1994 1996
-------- -------- -------- ------------
Property management
and leasing fees. . . $77,870 60,000 281,748 --
Insurance commissions . 25,768 30,140 25,176 --
-------- ------- ------- ------
$103,638 90,140 306,924 --
======== ======= ======= ======
59-g
<PAGE>
<TABLE>
SCHEDULE III
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<CAPTION>
INITIAL COST TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) COSTS AT CLOSE OF PERIOD (B)
------------------------------ CAPITALIZED ------------------------------------------
BUILDINGS SUBSEQUENT TO BUILDINGS
AND ACQUISITION AND
ENCUMBRANCE LAND IMPROVEMENTS (C) (D) LAND IMPROVEMENTS TOTAL (D)
----------- ----------- ------------ -------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OFFICE BLDS:
San Jose,
California . $23,431,863 21,078,745 62,309,815 (37,204,551) 5,867,750 40,316,259 46,184,009
=========== ========== ========== =========== ========== ========== ===========
</TABLE>
59-h
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1996
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OFFICE BUILDINGS:
San Jose, 6/20/85
California . . . . . . . . $17,753,343 1970 and 5/2/86 5-30 years 553,747
=========== =======
<FN>
- --------------
Notes:
(A) The initial cost to San Jose represents the original purchase price of the property, 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, 1996 for Federal income tax purposes was approximately
$41,350,548.
(C) Through December 31, 1996, San Jose has recorded provisions for value impairment totaling $45,811,547.
(D) During 1996, San Jose sold the 190 San Fernando Building and one of the parking garage structures
in the complex in two separate transactions as described more fully in the Notes to Consolidated Financial
Statements of the Partnership.
</TABLE>
59-i
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB/SAN JOSE ASSOCIATES
(A GENERAL PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
(D) Reconciliation of real estate owned:
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . . . . . . $49,530,107 49,373,853 49,578,913
Additions during period . . . . . . . . . . . . . . 1,485,395 156,254 739,275
Provision for value impairment (C). . . . . . . . . -- -- (944,335)
Sales of investment property. . . . . . . . . . . . (4,831,493) -- --
----------- ----------- -----------
Balance at end of period. . . . . . . . . . . . . . $46,184,009 49,530,107 49,373,853
=========== =========== ===========
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . . . . . . $18,574,214 17,460,071 16,360,097
Sales of investment property. . . . . . . . . . . . (1,865,167) -- --
Depreciation expense. . . . . . . . . . . . . . . . 1,044,296 1,114,143 1,099,974
----------- ----------- -----------
Balance at end of period. . . . . . . . . . . . . . $17,753,343 18,574,214 17,460,071
=========== =========== ===========
</TABLE>
59-j
