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, 1999 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. . . . . . . . . . . . . . . 12
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, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 15,851,633 15,863,283
Rents and other receivables, net of allowance for doubtful
accounts of $90,830 in 1999 and $293,856 in 1998. . . . . . . . . . 1,583,600 1,601,179
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 17,881 97,040
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 17,453,114 17,561,502
------------ ------------
Property held for sale or disposition . . . . . . . . . . . . . . . . 53,213,796 62,040,706
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,047,386 4,382,441
------------ ------------
$ 74,714,296 83,984,649
============ ============
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1999 1998
------------- -----------
Current liabilities:
Mortgage note payable . . . . . . . . . . . . . . . . . . . . . . . . $ 34,000,000 34,000,000
Accounts payable and other current liabilities. . . . . . . . . . . . 311,048 475,107
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 176,635 181,029
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . 34,487,683 34,656,136
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 83,284 89,000
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 34,570,967 34,745,136
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 5,771,339 6,107,441
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (6,631,429) (6,631,429)
------------ ------------
(859,090) (522,988)
------------ ------------
Limited partners (173,411 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 156,493,238 156,493,238
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 63,277,339 71,343,777
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (178,768,158) (178,074,514)
------------ ------------
41,002,419 49,762,501
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . . 40,143,329 49,239,513
------------ ------------
$ 74,714,296 83,984,649
============ ============
<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, 1999 AND 1998
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1999 1998 1999 1998
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $ 3,040,019 3,128,417 6,231,763 6,264,593
Interest income . . . . . . . . . . . . . . . . 167,905 226,717 333,999 618,046
----------- ---------- ---------- ----------
3,207,924 3,355,134 6,565,762 6,882,639
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . 535,146 713,232 1,131,395 1,429,460
Property operating expenses . . . . . . . . . . 1,613,600 1,772,097 3,381,575 3,468,567
Professional services . . . . . . . . . . . . . 42,133 8,164 105,344 104,596
Amortization of deferred expenses . . . . . . . 169,585 113,262 338,468 226,369
General and administrative. . . . . . . . . . . 93,856 101,815 211,520 232,231
Provision for value impairment. . . . . . . . . 9,800,000 -- 9,800,000 --
----------- ---------- ---------- ----------
12,254,320 2,708,570 14,968,302 5,461,223
----------- ---------- ---------- ----------
(9,046,396) 646,564 8,402,540) 1,421,416
Partnership's share of operations of
unconsolidated ventures . . . . . . . . . . . . -- 242,196 -- 544,437
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. . . . . . . . . (9,046,396) 888,760 (8,402,540) 22,792,783
Partnership's share of extraordinary item
from unconsolidated venture . . . . . . . . . . -- -- -- (1,259,118)
----------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . . . .$ (9,046,396) 888,760 (8,402,540) 21,533,665
=========== ========== ========== ==========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1999 1998 1999 1998
----------- ---------- ----------- ----------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on
sale of investment property
and Partnership's share of extra-
ordinary item from unconsolidated
venture . . . . . . . . . . . . . . . $ (50.08) 4.92 (46.52) 10.88
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) . . . . . . . .$ (50.08) 4.92 (46.52) 122.59
=========== ========== ========== ==========
Cash distributions per limited
partnership interest. . . . . . . . . . $ 4.00 144.00 4.00 324.00
=========== ========== ========== ==========
<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, 1999 AND 1998
(UNAUDITED)
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (8,402,540) 21,533,665
Items not requiring (providing) cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 338,468 226,369
Provision for value impairment. . . . . . . . . . . . . . . . . . . . . 9,800,000 --
Partnership's share of operations of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . . . . . . . . . . . . . -- (544,437)
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 . . . . . . . . . . . . . . . . . . . . . . 17,579 339,271
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,159 74,385
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (767,595)
Accounts payable and other current liabilities. . . . . . . . . . . . . (164,059) (630,383)
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . . (4,394) (1,991)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . -- 689,206
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (5,716) (3,633)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . 1,658,497 1,347,045
------------ -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (973,090) (205,770)
Partnership's distributions from unconsolidated venture . . . . . . . . . -- 25,000,000
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (3,413) (4,954)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . (976,503) 24,789,276
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . -- (286,061)
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . (693,644) (56,185,164)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . . (693,644) (56,471,225)
------------ -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
1999 1998
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . (11,650) (30,334,904)
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 15,863,283 42,298,264
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 15,851,633 11,963,360
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 1,135,789 1,431,451
============ ===========
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, 1999 AND 1998
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1998
which are included in the Partnership's 1998 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 September 30, 1997, 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. The
results of operations for this property and for properties sold or disposed
of in the past two years were $(8,433,434) and $1,181,832, respectively,
for the six months ended June 30, 1999 and 1998. In addition, the
accompanying financial statements include $0 and $544,437, respectively of
the Partnership's share of total property operations of $0 and $1,088,874
for the six months ended June 30, 1999 and 1998 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, 1999 and for the six months ended June 30,
1999 and 1998 were as follows:
<PAGE>
Unpaid at
June 30,
1999 1998 1999
-------- ------- -------------
Property management
and leasing fees . . . . . . $121,333 144,027 --
Insurance commissions . . . . 30,209 34,300 --
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 . . . . . . . . . 48,032 32,922 --
-------- ------- ------
$199,574 211,249 --
======== ======= ======
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 owned an interest. The fees earned by such company from such
venture attributable to the Partnership for the six months ended June 30,
1998 were approximately $5,400, all of which has been paid. 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 $2,229,000 at June 30, 1999. 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. No such deferred fees or commissions
were outstanding during the periods reported in the accompanying financial
statements.
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 (before extraordinary items) and $22,500,000 for financial
reporting and Federal income tax purposes, respectively, of which
approximately $20,827,000 and $11,250,000 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 $1,211,000 and $48,000, respectively.
<PAGE>
RIVERSIDE SQUARE MALL
Occupancy at the portion of the mall owned by the Partnership was 89%
at June 30, 1999. As discussed below, the partnership sold its interest in
the mall to an unaffiliated third party in August 1999.
During 1998, the Partnership reached an agreement in principle with a
theatre operator to open a multiscreen theatre complex at the mall. This
expansion would have added approximately 20,000 square feet of space and
would have included new restaurants. The Partnership intended to fund the
estimated cost of approximately $7.6 million for the expansion from its
working capital reserves. The Partnership received planning and zoning
board approval from the City of Hackensack for such expansion in October
1998 and from the County of Bergen in April 1999. However, this expansion,
including the theatre lease, was subject to many contingencies, including
final documentation and the potential sale of the shopping center in 1999.
The previous mortgage loan on the property provided for rate
adjustments every four years, beginning November 1, 1998. In addition, the
loan allowed 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
was 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. In 1998, the
Partnership obtained alternative financing for $34,000,000, with no
prepayment penalty, to replace the current loan. The new mortgage loan was
to mature November 24, 1999, with an option for a six month extension, and
provided for interest only payments based on the 30 day LIBOR rate
(approximately 5.2% at June 30, 1999) plus 1.3%. The proceeds from the
mortgage loan were used to pay the outstanding balance of the old loan of
approximately $33,871,000 plus a portion of the refinancing costs. The net
cost to the Partnership of the refinancing, including costs and fees of
approximately $255,000, was approximately $126,000.
In July 1999, the Partnership finalized a contract with a potential
purchaser for the sale of the mall and on August 5, 1999, the Partnership
sold the mall to an unaffiliated third party for a sale price of
$59,500,000 (before selling expenses and prorations). The Partnership is
expected to realize net sale proceeds of approximately $24,700,000 after
repayment of the mortgage loan securing the property in the amount of
$34,000,000 and payment of selling expenses of approximately $800,000. The
sale is estimated to result in a gain for Federal income tax reporting
purposes in 1999 of approximately $8,500,000. As the sale value of the
property as indicated by the sales contract resulted in a loss of
approximately $9,800,000 for financial reporting purposes, as a matter of
prudent accounting practice the Partnership has recognized this amount as a
provision for value impairment at June 30, 1999. In addition, in
connection with the sale of the property, as is customary in such
transactions, the Partnership agreed to certain representations, warranties
and covenants with a stipulated survival period that expires July 31, 2000.
Although it is not expected, the Partnership may ultimately have some
liability under such representations, warranties and covenants which are
limited to actual damages and in no event exceed $1,000,000 in the
aggregate. Also, in accordance with the purchase agreement, the
Partnership was required to establish reserves of at least $1,000,000 in
cash or reasonably liquid investments as of the closing date for the
purpose of paying any specified liabilities (as defined) during the
survival period.
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.
<PAGE>
UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for JMB/San Jose Associates
for the six months ended June 30, 1998 is as follows:
1998
-----------
Total income . . . . . . . . . . . . . . . . . $ 2,402,629
===========
Operating income . . . . . . . . . . . . . . . $ 1,088,874
===========
Net earnings to the Partnership. . . . . . . . $ 544,437
===========
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, 1999
and for the three and six months ended June 30, 1999 and 1998.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
All references to Notes are to Notes to the accompanying financial
statements. Reference is made to the Notes 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.
During 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 $125 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. In April 1999, some of the Limited
Partners in the Partnership received from an unaffiliated third party an
unsolicited tender offer to purchase up to 4.9% of the Interests in the
Partnership at $150 per Interest. The offer was scheduled to expire in
late May 1999 but was extended through mid August 1999. The Partnership
recommended against acceptance of this offer on the basis that, among other
things, the offer price is inadequate. As of the date of this report, the
Partnership is aware that 7.45% 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, 1999, the Partnership had cash and cash equivalents of
approximately $15,852,000. Such funds will be utilized for distributions
to partners and for working capital requirements of the Partnership.
<PAGE>
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 1999.
On August 5, 1999, the Partnership sold the Riverside Square Mall to
an unaffiliated third party for $59,500,000. In conjunction with the sale
of the mall, the Partnership contracted to certain representations,
warranties and covenants which expire July 31, 2000. Reference is made to
the Notes for a further description of such sale. Accordingly, the General
Partners potentially could terminate the affairs of the Partnership by the
end of 1999, barring unforeseen economic developments.
In connection with the potential liquidation and termination of the
Partnership, the Managing General Partner may form a liquidating trust on
or before December 31, 1999, in which all of the Partnership's remaining
assets, subject to liabilities, would be transferred. The initial trustees
of the liquidating trust would be individuals who are officers of the
Managing General Partner. Each Holder of Interest in the Partnership
would, upon the establishment of the liquidating trust, be deemed to be the
beneficial owner of a comparable share of the aggregate beneficial
interests in the liquidating trust. It is anticipated that the liquidating
trust, if formed, would permit the realization of substantial cost savings
in administrative and other expenses until any residual liabilities
(including contingent liabilities) of the Partnership are paid or otherwise
determined to be extinguished and any remaining funds are distributed to
the beneficial owners of the liquidating trust. The liquidating trust
would be expected to be in existence for a period not to exceed one year,
subject to extension under certain circumstances. The formation of the
liquidating trust is subject to certain contingencies, and there is no
assurance that the liquidating trust will be formed.
RESULTS OF OPERATIONS
The decrease in accounts payable and other current liabilities as of
June 30, 1999 as compared to December 31, 1998 is primarily due to a
decrease in unearned rents due to the timing of the collection of rental
income at the Riverside Square Mall investment property.
The decrease in interest income for the three and six months ended
June 30, 1999 as compared to the three and six months ended June 30, 1998
is primarily due to the temporary investment of proceeds during the first
quarter of 1998, related to the December 1997 sale of the Royal Executive
Park II office complex and the February 1998 sale of the Partnership's
interest in the Park Center Financial Plaza office complex, which proceeds
were subsequently distributed to the Limited Partners in February and May
1998, respectively.
The decrease in mortgage and other interest for the three and six
months ended June 30, 1999 as compared to the three and six months ended
June 30, 1998 is primarily due to the decreased interest rate on the
replacement financing relating to the Riverside Square Mall investment
property.
The increase in amortization of deferred expenses for the three and
six months ended June 30, 1999 as compared to the three and six months
ended June 30, 1998 is due to the amortization of costs associated with the
refinancing in the fourth quarter of 1998 of the mortgage debt secured by
the Riverside Square Mall investment property.
<PAGE>
The decrease in property held for sale or disposition as of June 30,
1999 as compared to December 31, 1998 and the corresponding provision for
value impairment of $9,800,000 for the three and six months ended June 30,
1999 is due to the reduction of the net carrying value of the Riverside
Square Mall as of June 30, 1999.
The decrease in the Partnership's share of operations of
unconsolidated ventures for the three and six months ended June 30, 1999 as
compared to the three and six months ended June 30, 1998 is primarily due
to the sale of the Park Center Financial Plaza office complex in February
1998.
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 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.
YEAR 2000
The year 2000 problem is the result of computer programs being written
with two digits rather than four to define a year. Consequently, any
computer programs that have time-sensitive software may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations
including, among other things, an inability to process transactions or
engage in other normal business activities. In addition, other date-
sensitive electronic devices could experience various operational
difficulties as a result of not being year 2000 compliant.
The Partnership uses the telephone, accounting, transfer agent and
other administrative systems, which include both hardware and software,
provided by affiliates of the Corporate General Partner and certain third
party vendors. Except as noted in the following sentence, the Partnership
or its affiliates have received representations to the effect that the
telephone, accounting, transfer agent and other administrative systems are
year 2000 compliant in all material respects. Both the hardware and
software for individual personal computers used in the Partnership's
administrative systems are expected to be tested for their year 2000
compliance during the summer of 1999.
The property manager for the Riverside Square Mall has conducted an
assessment of various aspects of the property's operating systems in regard
to their year 2000 compliance. In general, such assessment was performed
through written inquiries to third party vendors and service personnel for
the property. Based on the responses to these inquiries, the Partnership
believes that the major operating systems for the property, including HVAC
controls, elevators and escalators, and alarm and safety systems, are or
will be year 2000 compliant in all material respects. In addition, the
Partnership believes that the computer hardware and software used in the
administration of the property, including transaction processing and record
keeping, is or will be year 2000 compliant in all material respects.
The Partnership does not believe that the year 2000 problem presents
any material risks to its business, results of operations or financial
condition and has not developed, and does not intend to develop, any
contingency plans to address the year 2000 problem. Given its limited
operations, the Partnership believes that its accounting, transfer agent
and most of its other administrative systems functions could, if necessary,
be performed manually (i.e., without significant information technology)
for an extended period of time without a material increase in costs to the
Partnership. The Partnership has not incurred and does not expect to
incur, any material direct costs for year 2000 compliance.
<PAGE>
The Partnership is relying on the representation of various third
party vendors and service personnel for the Riverside Square Mall in regard
to that property's operating systems year 2000 compliance in all material
respects. The Partnership is also relying on the property manager's
assessment of the third party vendors and suppliers to be contacted in
regard to year 2000 compliance. In the event that the Riverside Square
Mall is not year 2000 compliant in all material respects, the property
could experience various operational difficulties or systems failures.
This could result in unanticipated remediation costs and, under certain
circumstances, possible other costs and expenses.
<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
property owned during 1999.
<CAPTION>
1998 1999
------------------------------------- ------------------------------
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>
Riverside Square Mall
Hackensack, New Jersey. . . . . 90% 90% 90% 90% 89% 89%
</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.
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 13, 1999
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 13, 1999
<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, 1999 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-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 15,851,633
<SECURITIES> 0
<RECEIVABLES> 1,601,481
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,453,114
<PP&E> 53,213,796
<DEPRECIATION> 0
<TOTAL-ASSETS> 74,714,296
<CURRENT-LIABILITIES> 34,487,683
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 40,143,329
<TOTAL-LIABILITY-AND-EQUITY> 74,714,296
<SALES> 6,231,763
<TOTAL-REVENUES> 6,565,762
<CGS> 0
<TOTAL-COSTS> 3,720,043
<OTHER-EXPENSES> 316,864
<LOSS-PROVISION> 9,800,000
<INTEREST-EXPENSE> 1,131,395
<INCOME-PRETAX> (8,402,540)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,402,540)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,402,540)
<EPS-BASIC> (46.52)
<EPS-DILUTED> (46.52)
</TABLE>
