SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
June 30, 1998 Commission file #0-15966
JMB INCOME PROPERTIES, LTD. - XI
(Exact name of registrant as specified in its charter)
Illinois 36-3254043
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . 13
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 17
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 11,963,360 42,298,264
Rents and other receivables, net of allowance for doubtful
accounts of $125,292 in 1998 and $210,024 in 1997 . . . . . . . . . 2,212,960 2,552,231
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 14,563 88,948
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,938,866 1,171,271
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 16,129,749 46,110,714
------------ ------------
Property held for sale or disposition . . . . . . . . . . . . . . . . 61,135,106 60,929,336
Investment in unconsolidated ventures, at equity. . . . . . . . . . . . 1,823,411 6,711,162
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,609,398 4,830,813
------------ ------------
$ 83,697,664 118,582,025
============ ============
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1998 1997
------------- -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . $ 34,118,417 584,273
Accounts payable and other current liabilities. . . . . . . . . . . . 151,891 782,274
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 241,511 243,502
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . 689,206 --
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . 35,201,025 1,610,049
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 84,500 88,133
Long-term debt, less current portion. . . . . . . . . . . . . . . . . . -- 33,820,205
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 35,285,525 35,518,387
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 6,068,983 5,794,671
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (6,631,429) (6,631,429)
------------ ------------
(561,446) (835,758)
------------ ------------
Limited partners (173,411 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 156,493,238 156,493,238
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 70,554,861 49,295,508
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (178,074,514) (121,889,350)
------------ ------------
48,973,585 83,899,396
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . . 48,412,139 83,063,638
------------ ------------
$ 83,697,664 118,582,025
============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $ 3,128,417 3,323,967 6,264,593 6,688,490
Interest income . . . . . . . . . . . . . . . . 226,717 159,934 618,046 324,856
----------- ---------- ---------- ----------
3,355,134 3,483,901 6,882,639 7,013,346
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . 713,232 724,488 1,429,460 1,452,096
Depreciation. . . . . . . . . . . . . . . . . . -- 631,194 -- 1,260,322
Property operating expenses . . . . . . . . . . 1,772,097 1,836,945 3,468,567 3,774,483
Professional services . . . . . . . . . . . . . 8,164 55,662 104,596 112,828
Amortization of deferred expenses . . . . . . . 113,262 115,286 226,369 230,572
General and administrative. . . . . . . . . . . 101,815 153,808 232,231 255,849
----------- ---------- ---------- ----------
2,708,570 3,517,383 5,461,223 7,086,150
----------- ---------- ---------- ----------
646,564 (33,482) 1,421,416 (72,804)
Partnership's share of operations of
unconsolidated ventures . . . . . . . . . . . . 242,196 1,165,854 544,437 2,858,029
Partnership's share of gain on sale
of investment properties
of unconsolidated venture . . . . . . . . . . . -- -- 20,826,930 --
----------- ---------- ---------- ----------
Earnings (loss) before Partnership's
share of extraordinary item
from unconsolidated venture . . . . . . 888,760 1,132,372 22,792,783 2,785,225
Partnership's share of extraordinary
item from unconsolidated venture. . . . . . . . -- -- (1,259,118) --
----------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . . . . $ 888,760 1,132,372 21,533,665 2,785,225
=========== ========== ========== ==========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on sale of
investment properties and Partnership's
share of extraordinary item from
unconsolidated venture. . . . . . . . $ 4.92 6.27 10.88 15.42
Partnership's share of gain
on sale of investment properties
of unconsolidated venture . . . . . . -- -- 118.90 --
Partnership's share of extraordinary
item from unconsolidated venture. . . -- -- (7.19) --
----------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . $ 4.92 6.27 122.59 15.42
=========== ========== ========== ==========
Cash distributions per
limited partnership
interest. . . . . . . . . . . . . . . . $ 144.00 6.00 324.00 6.00
=========== ========== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,533,665 2,785,225
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,260,322
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 226,369 230,572
Partnership's share of operations of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . . . . . . . . . . . . . (544,437) (1,207,029)
Partnership's share of gain on sale of investment properties
of unconsolidated venture . . . . . . . . . . . . . . . . . . . . . . (20,826,930) --
Partnership's share of extraordinary item from unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,259,118 --
Changes in:
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . 339,271 (130,427)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,385 91,506
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . (767,595) (227,807)
Accounts payable and other current liabilities. . . . . . . . . . . . . (630,383) (453,776)
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . . (1,991) (1,832)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . 689,206 --
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (3,633) (22,797)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . 1,347,045 2,323,957
------------ -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (205,770) (187,522)
Partnership's distributions from unconsolidated venture . . . . . . . . . 25,000,000 --
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (4,954) --
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . 24,789,276 (187,522)
------------ -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . (286,061) (263,220)
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . (56,185,164) (1,040,466)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . . (56,471,225) (1,303,686)
------------ -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . (30,334,904) 832,749
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 42,298,264 11,548,195
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 11,963,360 12,380,944
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 1,431,451 1,453,928
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1997
which are included in the Partnership's 1997 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. 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 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. As of June 30, 1998, the Partnership has committed to a plan
to sell or dispose of Riverside Square Mall, its last remaining investment
property. Accordingly, the property has been classified as held for sale
or disposition in the accompanying financial statements as of June 30,
1998. The results of operations for this property and for properties sold
or disposed of in the past two years were $1,181,832 and $42,091,
respectively, for the six months ended June 30, 1998 and 1997. In
addition, the accompanying financial statements include $544,437 and
$2,858,029, respectively of the Partnership's share of total property
operations of $1,088,874 and $3,637,020 for the six months ended June 30,
1998 and 1997 of unconsolidated properties held for sale or disposition or
sold or disposed of during the past two years.
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 June 30, 1998 and for the six months ended June 30,
1998 and 1997 were as follows:
<PAGE>
Unpaid at
June 30,
1998 1997 1998
-------- ------- ---------
Property management
and leasing fees . . . . . . $144,027 120,565 --
Insurance commissions . . . . 34,300 39,807 --
Reimbursement (at cost)
for out-of-pocket salary
and salary-related expenses
related to the on-site and
other costs for the Partner-
ship and its investment
properties . . . . . . . . . 32,922 24,926 6,586
-------- ------- ------
$211,249 185,298 6,586
======== ======= ======
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 that was owned by a venture in which the
Partnership owns an interest. The fees earned by such company from such
venture attributable to the Partnership for the six months ended June 30,
1998 and 1997 were approximately $5,400 and $15,037, respectively, all of
which has been paid at June 30, 1998. As such property has been sold, no
further fees are expected to be paid by such venture to such company.
The General Partners have deferred receipt of certain of their
distributions of net cash flow of the Partnership. The amount of such
deferred distributions was approximately $2,152,000 as of June 30, 1998.
The amount is being deferred in accordance with the subordination
requirements of the Partnership Agreement. 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.
An affiliate of the General Partners of the Partnership manages the
Riverside Square Mall for a fee equal to 4% of the fixed and percentage
rents of the shopping center plus leasing and operating covenant
commissions. Such fees and commissions are subject to deferral to the
extent they are in excess of an aggregate annual maximum amount of 6% of
the gross receipts of the property. In this regard, an affiliate of the
General Partner deferred $300,000 in 1994 of leasing fees at the Riverside
Square Mall pursuant to the management agreement, of which the final
$33,000 was paid in February 1997.
SAN JOSE
On February 24, 1998, San Jose sold the land, buildings, related
improvements and personal property of the remaining assets of the Park
Center Financial Plaza office complex to an unaffiliated third party for a
sale price of $76,195,000 (before selling costs and prorations). San Jose
received approximately $49,537,000 of net sale proceeds at closing (of
which the Partnership's share was approximately $24,768,500), after the
repayment by San Jose of the mortgage loans secured by the 170 Almaden, 150
Almaden and 185 Park Avenue buildings with a balance of approximately
$23,281,000, loan prepayment premiums of approximately $2,422,000 and
closing costs. The sale resulted in a gain in 1998 of approximately
$41,654,000 and $22,600,000 for financial reporting and Federal income tax
purposes, respectively, of which approximately $20,827,000 and $11,300,000
of gain was allocated to the Partnership, respectively. The gain for
financial reporting purposes includes the effects of previously recorded
provisions for value impairment for all buildings in the complex of
approximately $24,600,000, of which the Partnership's share was
approximately $12,300,000. In connection with the sale, San Jose recorded
in 1998 an extraordinary loss for financial reporting purposes totaling
approximately $2,518,000 as a result of loan prepayment premiums of
approximately $2,422,000 and the write-off of the deferred mortgage balance
of approximately $96,000, of which the Partnership's share is approximately
<PAGE>
$1,211,000 and $48,000, respectively. In addition, in connection with the
sale of the property, as is customary in such transactions, San Jose agreed
to certain representations, warranties and covenants with a stipulated
survival period that expires November 15, 1998. Although it is not
expected, San Jose may ultimately have some liability under such
representations, warranties and covenants, but such liability has been
limited in the sale agreement to actual damages in an amount not to exceed
$2,500,000 in the aggregate, of which the Partnership's share is limited to
$1,250,000.
RIVERSIDE SQUARE MALL
Occupancy at the portion of the mall owned by the Partnership remained
at 90% during the quarter. The Partnership is continuing to remerchandise
the mall and has currently budgeted in 1998 approximately $2,300,000 for
tenant improvements and capital expenditures.
The Partnership has reached an agreement in principle with a theatre
operator to open a multiscreen theatre complex at the mall. This expansion
would add approximately 20,000 square feet of space and would include new
restaurants. The Partnership intends to fund the estimated cost of
approximately $7.6 million for the expansion from its working capital
reserves. This expansion, including the theatre lease, is subject to many
contingencies, including final documentation, and as such there can be no
assurance that this expansion will be completed on these or any other
terms. The Partnership is actively marketing the property for sale.
However, there can be no assurance that a sale will be consummated.
The mortgage loan on the property provides for rate adjustments every
four years, beginning November 1, 1998. In addition, the loan allows the
Partnership to prepay the loan without penalty for a 60 day period every
four years starting October 1, 1998. On May 1, 1998, in accordance with
the loan documents, the lender notified the Partnership of the rate
adjustment effective November 1, 1998. Given that the Partnership is
actively marketing the property for sale and that the prepayment penalty
would be substantial if the property were sold outside of the 60 day window
provided in the loan documents, the Partnership elected not to accept the
lender's rate adjustment. The election accelerated the maturity date of
the loan to December 1, 1998, from December 1, 2006. The Partnership is
currently pursuing alternative financing on a short-term basis, with no
prepayment penalty, to replace the current loan. There can be no assurance
that such financing will be available on these or any other terms. In the
event the replacement financing is not obtained prior to December 1, 1998,
it is possible that the existing lender would commence to pursue its
remedies under the applicable loan documents, if interim terms could not be
reached with such existing lender until either such replacement financing
is obtained or the property is sold.
As the Partnership had committed to a plan to sell the property, the
property was classified as held for sale or disposition as of September 30,
1997, and therefore, has not been subject to continued depreciation beyond
such date.
ROYAL EXECUTIVE PARK II
On December 19, 1997, the Royal Executive venture sold the land,
buildings, related improvements and personal property of the Royal
Executive Park office complex to an unaffiliated third party for a sale
price of $36,000,000 (before selling expenses and prorations). The sale
resulted in a gain in 1997 of $13,905,818 (due to the provision for value
impairment recorded in 1994, of $25,378,894) and $18,927,388 for financial
reporting and Federal income tax purposes, respectively, of which
$13,349,139 and $10,701,810 of gain was allocated to the Partnership,
respectively. In addition, in connection with the sale of the property, as
<PAGE>
is customary in such transactions, the joint venture agreed to certain
representations, warranties and covenants with a stipulated survival period
that expires November 15, 1998. Although it is not expected, the joint
venture may ultimately have some liability under such representations,
warranties and covenants, but such liability has been limited in the sale
agreement to actual damages in an amount not to exceed $2,000,000 in the
aggregate, of which the Partnership's share is limited to approximately
$444,000.
UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for JMB/San Jose Associates
and Royal Executive Park II for the six months ended June 30, 1998 and 1997
is as follows:
1998 1997
----------- ----------
Total income . . . . . . . . . . . $ 2,402,629 8,149,678
=========== ==========
Operating income . . . . . . . . . $ 1,088,874 3,637,020
=========== ==========
Net earnings to the Partnership. . $ 544,437 2,858,029
=========== ==========
Partnership's share of
gain on sale . . . . . . . . . . $20,826,930 --
=========== ==========
Partnership's share of
extraordinary item . . . . . . . $(1,259,118) --
=========== ==========
ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments (con-
sisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1998
and for the three and six months ended June 30, 1998 and 1997.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning certain of the
Partnership's investments.
The board of directors of JMB Realty Corporation ("JMB") the managing
general partner of the Partnership, has established a special committee
(the "Special Committee") consisting of certain directors of JMB to deal
with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers. The
Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to these and any additional potential tender
offers for Interests.
During 1997 and early 1998, some of the Limited Partners in the
Partnership received from unaffiliated third parties unsolicited tender
offers to purchase up to 4.9% of the Interests in the Partnership at
between $200 and $400 per Interest. The Partnership recommended against
acceptance of these offers on the basis that, among other things, the offer
prices were inadequate. All of such offers have expired. As of the date
of this report, the Partnership is aware that 6.80% of the Interests have
been purchased by such unaffiliated third parties either pursuant to such
tender offers or through negotiated purchases. It is possible that other
offers for Interests may be made by unaffiliated third parties in the
future, although there is no assurance that any other third party will
commence an offer for Interests, the terms of any such offer or whether any
such offer, if made, will be consummated, amended or withdrawn.
At June 30, 1998, the Partnership had cash and cash equivalents of
approximately $11,963,000. Such remaining funds may be utilized for
distributions to partners, potential obligations related to representations
and warranties given pursuant to the sales of investment properties in 1997
and 1998 as more fully described in the Notes, and for working capital
requirements including operating deficits, costs of re-leasing vacant
space, and certain capital improvements at the Riverside Square Mall.
Additionally, funds may be utilized to fund a potential theatre expansion
at the Riverside Square Mall investment property, as more fully discussed
in the Notes.
Effective in 1998, the Partnership changed from a semi-annual
distribution of cash flow from operations of $6 per Interest to an annual
distribution of $4 per Interest as a result of (a) the Partnership's
reduction in cash flow from operations after the sales of the Royal
Executive Park II office complex in December 1997 and the Park Center
Financial Plaza office complex in February 1998 and (b) the need to reserve
funds necessary for the potential theatre/restaurant expansion at the
Riverside Square Mall. The operating distribution of $4 per Interest was
made in May 1998 and no further distributions of cash flow from operations
are anticipated to be made for 1998. In addition, the Partnership made a
distribution of sale proceeds of $140 per Interest in May 1998 related to
the sale in 1998 of the Park Center Financial Plaza investment property as
more fully described in the Notes.
After reviewing the remaining property and the marketplace in which it
operates, the General Partners of the Partnership expect to be able to
conduct an orderly liquidation of its remaining investment property as
quickly as practicable. Therefore, the affairs of the Partnership are
expected to be wound up no later than December 31, 1999, barring unforeseen
economic developments.
<PAGE>
RESULTS OF OPERATIONS
The decrease in rents and other receivables as of June 30, 1998 as
compared to December 31, 1997 is primarily due to the timing of payment of
rentals at the Riverside Square Mall investment property.
The increase in escrow deposits and the corresponding increase in
accrued real estate taxes at June 30, 1998 as compared to December 31, 1997
is primarily due to the timing of payment of real estate taxes at the
Riverside Square Mall investment property.
The decrease in investment in unconsolidated ventures, at equity at
June 30, 1998 as compared to December 31, 1997 is primarily due to the sale
in 1998 of the Park Center Financial Plaza investment property. The
remaining balance of $1,823,411 represents primarily the Partnership's
share of remaining undistributed cash generated from operations.
The increase in current portion of long-term debt and corresponding
decrease in long-term debt, less current portion as of June 30, 1998 as
compared to December 31, 1997 is primarily due to the Partnership's
election not to accept the lender's rate adjustment beginning November 1,
1998 on the mortgage loan at the Riverside Square Mall investment property,
which accelerated the maturity date of the loan to December 1, 1998 from
December 1, 2006, as more fully discussed in the Notes.
The decrease in accounts payable and other current liabilities as of
June 30, 1998 as compared to December 31, 1997 is primarily due to a
decrease in unearned rents due to the prepayment of approximately $440,000
of rental income by tenants in 1997 at the Riverside Square Mall investment
property.
The decrease in rental income for the three and six months ended
June 30, 1998 as compared to the three and six months ended June 30, 1997
is primarily due to a decrease in tenant occupancies at the Riverside
Square Mall investment property.
The increase in interest income for the three and six months ended
June 30, 1998 as compared to the three and six months ended June 30, 1997
is primarily due to the temporary investment of proceeds related to the
1997 sale of the Royal Executive Park II office complex and the 1998 sale
of the Park Center Financial Plaza office complex, which were subsequently
distributed to the Limited Partners in February and May 1998, respectively.
The decrease in depreciation expense for the three and six months
ended June 30, 1998 as compared to the three and six months ended June 30,
1997 is primarily due to the Riverside Square Mall investment property
being identified as held for sale or disposition as of September 30, 1997,
and therefore, no longer subject to depreciation beyond such date.
The decrease in property operating expenses for the three and six
months ended June 30, 1998 as compared to the three and six months ended
June 30, 1997 is primarily due to a decrease in advertising expense due to
the timing of promotional campaigns and also to a decrease in snow removal
and certain maintenance and repair projects at the Riverside Square Mall
investment property. The decrease is also due to a decrease in tenant
occupancies at the Riverside Square Mall investment property.
The decrease in the Partnership's share of operations of
unconsolidated ventures for the three and six months ended June 30, 1998 as
compared to the three and six months ended June 30, 1997 is primarily due
to the sales of the Royal Executive Park II office complex and the Park
Center Financial Plaza office complex in December 1997 and February 1998,
respectively.
<PAGE>
The Partnership's share of gain on sale of investment properties of
unconsolidated venture of $20,826,930 in 1998, is due to the gain
recognized on the sale of the remaining assets of the Park Center Financial
Plaza investment property in February 1998.
The Partnership's share of extraordinary loss from unconsolidated
venture of $1,259,118 in 1998 comprises loan prepayment premiums of
$1,211,062 and the write-off of the deferred mortgage balance of $48,056
resulting from the sale of the Park Center Financial Plaza investment
property in February 1998.
<PAGE>
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment
properties owned during 1998.
<CAPTION>
1997 1998
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Park Center Financial Plaza
San Jose, California. . . . . 86% 87% 87% 90% N/A N/A
2. Riverside Square Mall
Hackensack, New Jersey. . . . 92% 92% 93% 93% 90% 90%
<FN>
An "N/A" indicates that the property was sold and not owned by the Partnership at the end of the quarter.
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
3-A. The Prospectus of the Partnership dated July 11,
1984 as supplemented July 24, 1984 and November 26, 1984, as filed with the
Commission pursuant to Rules 424(b) and 424(c), is hereby incorporated
herein by reference to Exhibit 3-A to the Partnership's Report on Form 10-K
for December 31, 1992 (File No. 0-15966) dated March 19, 1993.
3-B. Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, which agreement is
hereby incorporated herein by reference to Exhibit 3-B to the Partnership's
Report on Form 10-K for December 31, 1992 (File No. 0-15966) dated
March 19, 1993.
4-A. Mortgage loan agreement, Mortgage and Security
Agreement, Secured Promissory Note B, Secured Promissory Note A and
Assignment of Leases and Rents between the Partnership and Principal Mutual
Life Insurance Company dated August 30, 1994 are hereby incorporated herein
by reference to the Partnership's Report on Form 10-K for December 31, 1994
(File No. 0-15966) dated March 27, 1995.
4-B. Mortgage loan agreement between San Jose and
Connecticut General Life Insurance Co. dated June 20, 1985 relating to Park
Center Plaza are hereby incorporated herein by reference to the
Partnership's Report on Form 8-K (File No. 0-15966) dated June 20, 1985.
4-C. Mortgage loan agreement, Amended and Restated
Deed of Trust, Security Agreement with assignment of Rents and Fixture
Filing and Real Estate tax escrow and Security Agreement between San Jose
and Connecticut General Life Insurance Co. dated November 30, 1994 are
hereby incorporated herein by reference to the Partnership's Report on
Form 8-K (File No. 0-15966) dated November 15, 1994.
10-A. Acquisition documents relating to the purchase by
the Partnership of Riverside Square in Hackensack, New Jersey are hereby
incorporated herein by reference to the Partnership's Prospectus on Form S-
11 (File No. 2-90503) dated July 11, 1984.
10-B. Acquisition documents including the venture
agreement relating to the purchase by the Partnership of Park Center Plaza
in San Jose, California are hereby incorporated herein by reference to the
Partnership's Report on Form 8-K (File No. 0-15966) dated June 20, 1985.
<PAGE>
10-C. Purchase - Sale Agreement with exhibits dated
December 5, 1997 relating to the sale by the Partnership, through its joint
venture, of the Royal Executive Park office complex in Rye Brook, New York
between Royal Executive Park I, Royal Executive Park II, Royal Executive
III and Reckson Operating Partnership, L.P. are hereby incorporated herein
by reference to the Partnership's Report on Form 10-K for December 31, 1997
(File No. 0-15966) dated March 25, 1998.
10-D. First Amendment to the Purchase - Sale Agreement
dated February 10, 1998 relating to the sale by San Jose of the Park Center
Financial Plaza office complex in San Jose, California between JMB/San Jose
Associates and Divco West Properties, LLC are hereby incorporated herein by
reference to the Partnership's Report on Form 10-K for December 31, 1997
(File No. 0-15966) dated March 25, 1998.
10-E. Purchase - Sale Agreement with exhibits dated
December 3, 1997 relating to the sale by San Jose of the Park Center
Financial Plaza office complex in San Jose, California between JMB/San Jose
Associates and Divco West Properties, LLC are hereby incorporated herein by
reference to the Partnership's Report on Form 10-K for December 31, 1997
(File No. 0-15966) dated March 25, 1998.
27. Financial Data Schedule
--------------
(b) No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XI
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: August 12, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
By: GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: August 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH
REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 11,963,360
<SECURITIES> 0
<RECEIVABLES> 4,166,389
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,129,749
<PP&E> 61,135,106
<DEPRECIATION> 0
<TOTAL-ASSETS> 83,697,664
<CURRENT-LIABILITIES> 35,201,025
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 48,412,139
<TOTAL-LIABILITY-AND-EQUITY> 83,697,664
<SALES> 6,264,593
<TOTAL-REVENUES> 6,882,639
<CGS> 0
<TOTAL-COSTS> 3,694,936
<OTHER-EXPENSES> 336,827
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,429,460
<INCOME-PRETAX> 1,965,853
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,965,853
<DISCONTINUED> 20,826,930
<EXTRAORDINARY> (1,259,118)
<CHANGES> 0
<NET-INCOME> 21,533,665
<EPS-PRIMARY> 122.59
<EPS-DILUTED> 122.59
</TABLE>
