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
September 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 1. Legal Proceedings. . . . . . . . . . . . . . . . . 14
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
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 39,291,118 15,863,283
Restricted Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 --
Rents and other receivables, net of allowance for
doubtful accounts of $293,856 in 1998 . . . . . . . . . . . . . . . 180,502 1,601,179
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 97,040
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 40,471,620 17,561,502
------------ ------------
Property held for sale or disposition . . . . . . . . . . . . . . . . -- 62,040,706
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 4,382,441
------------ ------------
$ 40,471,620 83,984,649
============ ============
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -----------
Current liabilities:
Mortgage note payable . . . . . . . . . . . . . . . . . . . . . . . . $ -- 34,000,000
Accounts payable and other current liabilities. . . . . . . . . . . . 57,979 475,107
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 181,029
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . 57,979 34,656,136
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . -- 89,000
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 57,979 34,745,136
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 5,773,392 6,107,441
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (6,631,429) (6,631,429)
------------ ------------
(857,037) (522,988)
------------ ------------
Limited partners (173,411 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 156,493,238 156,493,238
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . 63,545,598 71,343,777
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (178,768,158) (178,074,514)
------------ ------------
41,270,678 49,762,501
------------ ------------
Total partners' capital accounts (deficits) . . . . . . . . . . 40,413,641 49,239,513
------------ ------------
$ 40,471,620 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 NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1999 1998 1999 1998
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . $ 1,011,831 3,272,541 7,243,594 9,537,134
Interest income . . . . . . . . . . . . . . . . 390,935 157,664 724,934 775,710
Gain on sale of investment property . . . . . . 292,002 -- 292,002 --
----------- ---------- ---------- ----------
1,694,768 3,430,205 8,260,530 10,312,844
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . 230,646 710,174 1,362,041 2,139,634
Property operating expenses . . . . . . . . . . 970,002 1,823,263 4,351,577 5,291,830
Professional services . . . . . . . . . . . . . 27,364 519 132,708 105,115
Amortization of deferred expenses . . . . . . . 66,106 113,185 404,574 339,554
General and administrative. . . . . . . . . . . 53,848 94,224 265,368 326,455
Provision for value impairment. . . . . . . . . -- -- 9,800,000 --
----------- ---------- ---------- ----------
1,347,966 2,741,365 16,316,268 8,202,588
----------- ---------- ---------- ----------
346,802 688,840 (8,055,738) 2,110,256
Partnership's share of operations of
unconsolidated ventures . . . . . . . . . . . . -- 6,918 -- 551,355
----------- ---------- ---------- ----------
Earnings (loss) before gain on sale of
investment property of unconsolidated
venture . . . . . . . . . . . . . . . . 346,802 695,758 (8,055,738) 2,661,611
Partnership's share of gain on sale of
investment property of
unconsolidated venture. . . . . . . . . . . . . -- -- -- 20,826,930
----------- ---------- ---------- ----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1999 1998 1999 1998
----------- ---------- ----------- ----------
Earnings (loss) before
extraordinary items . . . . . . . . . . 346,802 695,758 (8,055,738) 23,488,541
Extraordinary item and Partnership's
share of extraordinary item
from unconsolidated venture . . . . . . . . . . (76,490) -- (76,490) (1,259,118)
----------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . . . . $ 270,312 695,758 (8,132,228) 22,229,423
=========== ========== ========== ==========
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on
sale of investment property
venture . . . . . . . . . . . . . . . $ .30 3.85 (46.21) 14.73
Gain on sale of investment property . . 1.67 -- 1.67 --
Partnership's share of gain on sale
of investment property of
unconsolidated venture. . . . . . . . -- -- -- 118.90
Extraordinary item and Partnership's
share of extraordinary item from
unconsolidated venture. . . . . . . . (.42) -- (.42) (7.19)
----------- ---------- ---------- ----------
Net earnings (loss) . . . . . . . . $ 1.55 3.85 (44.96) 126.44
=========== ========== ========== ==========
Cash distributions per limited
partnership interest. . . . . . . . . . $ -- -- 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
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (8,132,228) 22,229,423
Items not requiring (providing) cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 404,574 339,554
Provision for value impairment. . . . . . . . . . . . . . . . . . . . . 9,800,000 --
Gain on sale of investment property . . . . . . . . . . . . . . . . . . (292,002) --
Partnership's share of operations of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . . . . . . . . . . . . . -- (551,355)
Partnership's share of gain on sale of investment properties
of unconsolidated venture . . . . . . . . . . . . . . . . . . . . . . -- (20,826,930)
Extraordinary item and Partnership's share of extraordinary
item from unconsolidated venture. . . . . . . . . . . . . . . . . . . 76,490 1,259,118
Changes in:
Rents and other receivables . . . . . . . . . . . . . . . . . . . . . . 106,770 862,285
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,040 (54,804)
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (862,173)
Accounts payable and other current liabilities. . . . . . . . . . . . . (417,128) (557,950)
Accrued interest payable. . . . . . . . . . . . . . . . . . . . . . . . (181,029) (3,017)
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . -- 591,205
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (89,000) (3,633)
------------ -----------
Net cash provided by (used in) operating activities . . . . . . . . 1,373,487 2,421,723
------------ -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . . . . . . . . . . . . . (1,008,906) (577,215)
Cash proceed from sale of investment property, net
of selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 24,758,322 --
Partnership's distributions from unconsolidated venture . . . . . . . . . -- 25,000,000
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (1,424) (38,954)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . . . 23,747,992 24,383,831
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . -- (433,617)
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . (693,644) (56,185,164)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . . . (693,644) (56,618,781)
------------ -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(UNAUDITED)
1999 1998
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . 24,427,835 (29,813,227)
Cash and cash equivalents, beginning of year. . . . . . . . . . . . 15,863,283 42,298,264
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . $ 40,291,118 12,485,037
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 1,543,070 2,142,651
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ===========
Total sale proceeds from sale of
investment property:
Total sale proceeds, net of
selling expenses . . . . . . . . . . . . . . . . . . . . . . . . 58,758,322 --
Repayment of mortgage loan . . . . . . . . . . . . . . . . . . . . . . 34,000,000 --
------------ -----------
Cash proceeds from sale
of investment property. . . . . . . . . . . . . . . . . . . . . 24,758,322 --
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 had committed to a
plan to sell or dispose of Riverside Square Mall, its last remaining
investment property. Accordingly, the property had 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 $(8,620,074) and $1,837,026, respectively,
for the nine months ended September 30, 1999 and 1998. In addition, the
accompanying financial statements include $0 and $551,355, respectively of
the Partnership's share of total property operations of $0 and $1,102,709
for the nine months ended September 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 September 30, 1999 and for the nine months ended
September 30, 1999 and 1998 were as follows:
<PAGE>
Unpaid at
September 30,
1999 1998 1999
-------- ------- -------------
Property management
and leasing fees . . . . . . $ 188,831 185,820 --
Insurance commissions . . . . 30,209 34,560 --
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 . . . . . . . . . 61,593 77,720 --
-------- ------- ------
$280,633 298,100 --
======== ======= ======
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 nine months ended
September 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 September 30, 1999.
The amount is being deferred in accordance with the subordination
requirements of the Partnership Agreement and has not been reflected in the
accompanying consolidated financial statements. The Partnership does not
expect that the subordination requirements of the Partnership Agreement
will be satisfied to permit payment of these amounts.
An affiliate of the General Partners of the Partnership managed 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 were subject to deferral to the
extent they were 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
On August 5, 1999, the Partnership sold the Riverside Square mall to
an unaffiliated third party for a sale price of $59,500,000 (before selling
expenses and prorations). The Partnership realized 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 $750,000. 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 was
expected to result in a loss of approximately $9,800,000 for financial
reporting purposes, as a matter of prudent accounting practice the
Partnership recognized this amount as a provision for value impairment at
June 30, 1999. The Partnership has recognized a gain of approximately
$292,000 for financial reporting purposes at September 30, 1999. In
connection with the sale, the Partnership recorded at September 30, 1999 an
extraordinary loss for financial reporting purposes of $76,490 as a result
of the write off of the remaining deferred mortgage balance. 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 and sale 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 which expires July 31, 2000.
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.
UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for JMB/San Jose Associates
for the nine months ended September 30, 1998 is as follows:
1998
-----------
Total income . . . . $ 2,463,992
===========
Operating income . . 1,102,709
===========
Net earnings to the
Partnership. . . . 551,355
===========
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 September 30,
1999 and for the three and nine months ended September 30, 1999 and 1998.
<PAGE>
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 and 1999, some of the Limited Partners in the Partnership
received from unaffiliated third parties unsolicited tender offers to
purchase less than 5% of the Interests in the Partnership at between $125
and $400 per Interest. The Special Committee 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 7.66% 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 September 30, 1999, the Partnership had cash and cash equivalents
of approximately $40,291,000. Such funds will be utilized for
distributions to partners and for working capital requirements of the
Partnership. The Partnership will make a distribution in November 1999 of
$34,682,200 ($200 per Interest) to the Holders and $1,156,073 to the
General Partners. In addition, in accordance with the Riverside Square
purchase and sale agreement, $1,000,000 will be held in reserve for the
purpose of paying any specified liabilities (as defined) relating to the
representations, warranties and covenants agreed to in the sale and arising
during the survival period that ends on July 31, 2000. Reference is made
to the Notes for a further description of such sale.
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. Additionally, the Partnership will make a distribution
of sales proceeds received from the sale of the Riverside Square Mall of
$140 per Interest and a distribution of previously undistributed cash flow
from operations of $60 per interest in November 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.
<PAGE>
In connection with the sale of the Riverside Square Mall, as is
customary in similar transactions, the Partnership agreed to certain
representations and warranties with a stipulated survival period which
expires in July 2000. Due to these representations and warranties, as well
as certain unrelated pending litigation related to one of the Partnership's
investment properties, the Partnership had considered establishing a
liquidating trust by December 31, 1999, which was expected to save a
substantial amount in administrative and other expenses. However, the
formation of a liquidating trust was subject to the satisfaction of certain
contingencies prior to year end, including certain regulatory review and
the ability of the Partnership to make certain arrangements with regard to
the pending litigation and to resolve a pending real estate tax appeal
relating to the Riverside Square Mall, which now appear unlikely to be
achieved by December 31, 1999. Consequently, the Partnership does not
anticipate forming the liquidating trust. The Partnership currently
expects to wind up its affairs during the year 2000. However, this will
depend upon the Partnership's ability to resolve the pending litigation and
the real estate tax appeal discussed above. Reference is made to Item 1.
Legal Proceedings of Part II Other Information in this report for a
discussion of the pending litigation.
RESULTS OF OPERATIONS
Significant variances between periods reflected in the accompanying
consolidated financial statements not otherwise reported are primarily the
result of the sale of the Riverside Square Mall in August 1999.
The restricted funds at September 30, 1999 represent the funds held in
reserve in accordance with the Riverside Square Mall purchase and sale
agreement.
The gain on sale of investment property of $292,002 in 1999, is due to
the sale of the Riverside Square Mall in August 1999.
The increase in interest income for the three months ended
September 30, 1999 as compared to the three months ended September 30, 1998
is primarily due to the temporary investment of proceeds during the third
quarter of 1999, related to the August 1999 sale of the Riverside Square
Mall.
The increase in amortization of deferred expenses for the three and
nine months ended September 30, 1999 as compared to the three and nine
months ended September 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.
The provision for value impairment of $9,800,000 for the nine months
ended September 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 uncon-
solidated ventures for the three and nine months ended September 30, 1999
as compared to the three and nine months ended September 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 extraordinary loss of $76,490 in 1999 is due to the write off of
the deferred mortgage balance resulting from the sale of the Riverside
Square Mall in August 1999. 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>
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,
individual personal computers and other administrative systems, which
include both hardware and software, provided by affiliates of the Corporate
General Partner and certain third party vendors. 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.
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.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 23, 1996, plaintiff Eric Von Butler filed a complaint
against the Partnership, and others, entitled Eric Von Butler v.
SpectaGuard Inc., JMB Income Properties, Ltd. and Urban Retail Properties
Co. in the Superior Court of New Jersey Law Division, Bergen County, Case
No. BER-L-12161-96. In the three count complaint, plaintiff alleges that
his employment as a security guard at the Riverside Square Mall was
wrongfully terminated in September 1995 as a result of his race and that
the Partnership allegedly participated in various acts and practices which
discriminated against plaintiff on the basis of his race. At the time of
the events complained of, plaintiff was employed by SpectaGuard, Inc., a
contractor hired to provide security services to the mall. Plaintiff
seeks, among other things, compensatory damages, punitive damages,
reasonable attorneys' fees and costs. The Partnership believes it has
meritorious defenses and has filed an answer denying the substantive
allegations of the complaint and raising various affirmative defenses,
including the affirmative defense that plaintiff was not an employee of the
Partnership, but was employed and terminated by SpectaGuard, Inc. In
addition, the Partnership has filed cross-claims for indemnity and
contribution from SpectaGuard, Inc.
On April 6, 1999, plaintiffs filed a suit entitled Bertha Atkinson,
individually and as guardian ad litem for the infant plaintiff Cortney
Atkinson and Tiffany Atkinson v. Riverside Square Mall et al., in the
Superior Court of New Jersey Law Division, Bergen County, Case No. L-2203-
99. The complaint is filed against the "Riverside Square Mall", as owner
and operator of the mall, Federated Department Stores, Inc. d/b/a/
Bloomingdale's, Inc., SpectaGuard, Inc., and others. In the five count
complaint, plaintiffs allege that on July 18, 1998, they were stopped
outside the mall by several Hackensack Police Department officers based on
<PAGE>
a complaint from Bloomingdale store personnel that one or more of the
plaintiffs had stolen merchandise from the store. Plaintiffs allege that
the police, mall security or employees of SpectaGuard Inc., a security
firm, further detained them while an attempt was made to contact security
at the Bloomingdale store. Plaintiffs claim that they were detained for
approximately thirty minutes and allowed to proceed when no one from the
Bloomingdale store appeared. Plaintiffs allege that there was no rational
basis to believe that any one of them had stolen any property. Plaintiffs
sue for false imprisonment, invasion of their rights of privacy, slander, a
violation of the New Jersey Law Against Discrimination, and defendants'
alleged failure to properly hire, train and supervise its security
personnel. Plaintiffs seek compensatory damages, punitive damages,
reasonable attorney's fees, costs, and such other relief as the court may
deem proper. The Partnership believes that it has meritorious defenses.
The Partnership may be required to delay a final distribution of its
remaining funds and the winding up of the Partnership until its involvement
in the lawsuits discussed above has been resolved.
<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% N/A
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.
10-A. Purchase Agreement between JMB Income Properties,
Ltd. - XI and Shopco Advisory Corp., dated July
22, 1999 is hereby incorporated by reference to
the Partnership's Report for August 6, 1999 on
Form 8-K (File No. 0-15966) dated August 20,
1999.
27. Financial Data Schedule
--------------
(b) The following report on Form 8-K was filed since the
beginning of the last quarter of the period covered by this report.
The Partnership's Report on Form 8-K (File No. 0-
15966) for August 6, 1999 (describing the sale of the
Riverside Square Mall) was filed. This report was dated August 20, 1999.
(Item 2)
<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: November 10, 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: November 10, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 40,291,118
<SECURITIES> 0
<RECEIVABLES> 180,502
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 40,471,620
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 40,471,620
<CURRENT-LIABILITIES> 57,979
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 40,413,641
<TOTAL-LIABILITY-AND-EQUITY> 40,471,620
<SALES> 7,243,594
<TOTAL-REVENUES> 8,260,530
<CGS> 0
<TOTAL-COSTS> 4,756,151
<OTHER-EXPENSES> 398,076
<LOSS-PROVISION> 9,800,000
<INTEREST-EXPENSE> 1,362,041
<INCOME-PRETAX> (8,055,738)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,055,738)
<DISCONTINUED> 0
<EXTRAORDINARY> (76,490)
<CHANGES> 0
<NET-INCOME> (8,132,228)
<EPS-BASIC> (44.96)
<EPS-DILUTED> (44.96)
</TABLE>
