SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1998 Commission file no. 0-15966
JMB INCOME PROPERTIES, LTD. - XI
(Exact name of registrant as specified in its charter)
Illinois 36-3254043
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Documents incorporated by reference: None
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings. . . . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a Vote
of Security Holders. . . . . . . . . . . . . . . 6
PART II
Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters. . . . . . . . . 6
Item 6. Selected Financial Data. . . . . . . . . . . . . 7
Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . 11
Item 7A. Quantitative and Qualitative
Disclosures about Market Risk. . . . . . . . . . 15
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . . . 16
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . 40
PART III
Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . . . 40
Item 11. Executive Compensation . . . . . . . . . . . . . 43
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . 44
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . . . 45
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . . . 45
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 48
i
<PAGE>
PART I
ITEM 1. BUSINESS
All references to "Notes" are to Notes to Financial Statements
contained in this report. Capitalized terms used herein, but not defined,
have the same meanings as used in the Notes.
The registrant, JMB Income Properties, Ltd. - XI (the "Partnership"),
is a limited partnership formed in 1983 and currently governed under the
Revised Uniform Limited Partnership Act of the State of Illinois to invest
in improved income-producing commercial and residential real property. The
Partnership sold $173,406,000 in limited partnership interests (the
"Interests") commencing on July 11, 1984, pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933 (Registration No.
2-90503). A total of 173,406 Interests were sold to the public at $1,000
per Interest. The offering closed on November 30, 1984. No Investor has
made any additional capital contribution after such date. The Investors in
the Partnership share in the benefits of ownership of the Partnership's
real property investments according to the number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are or have been held by fee title and/or through joint
venture partnership interests. The Partnership's real estate investments
have been located throughout the nation and it has no real estate
investments located outside the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an understanding
of the Partnership's business taken as a whole. Pursuant to the
Partnership agreement, the Partnership is required to terminate no later
than October 31, 2034. The Partnership is self-liquidating in nature. At
sale of a particular property, the net proceeds, if any, are generally
distributed or reinvested in existing properties rather than invested in
acquiring additional properties. As discussed further in Item 7, the
Partnership currently expects to conduct an orderly liquidation of its
remaining investment portfolio as quickly as practicable upon the sale of
its remaining investment property, the Riverside Square Mall, and the
subsequent expiration of any representations and warranties to a potential
purchaser that may be required in connection with a sale of the property.
Consequently, the Partnership expects to wind up its affairs in the 1999-
2000 time frame, barring any unforeseen economic developments.
The Partnership has made the real property investments set forth in
the following table:
<PAGE>
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1998,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (d) SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Riverside Square
Mall
Hackensack,
New Jersey . . . . . 341,000 10-19-83 15% fee ownership of land
sq.ft. and improvements (b)(d)(e)
g.l.a.
2. Bank of Delaware
Office Building
Wilmington,
Delaware . . . . . . 314,000 12-14-84 11-15-94 fee ownership of land
sq.ft. and improvements
n.r.a.
3. Genesee Valley
Center
Flint, Michigan. . . 358,000 12-21-84 6-29-90 fee ownership of land
sq.ft. and improvements
g.l.a.
4. Park Center
Financial Plaza
San Jose,
California . . . . . 408,000 06-20-85 2-24-98 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(g)(f)
5. Royal Executive
Park-II
Rye Brook,
New York . . . . . . 270,000 02-12-87 12-19-97 fee ownership of land
sq.ft. and improvements
n.r.a. (through a joint
venture partnership)
(c)(f)
<PAGE>
<FN>
- -----------------------
(a) The computation of this percentage for properties held at
December 31, 1998 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.
(b) Reference is made to the Notes and Schedule III for the current
outstanding principal balance and a description of the long-term mortgage
indebtedness secured by the Partnership's real property investments.
(c) Reference is made to the Notes for a description of the joint
venture partnership through which the Partnership had made this real
property investment.
(d) Reference is made to Item 8 - Schedule III filed with this annual
report for further information concerning real estate taxes and
depreciation.
(e) Reference is made to Item 6 - Selected Financial Data for
additional operating and lease expiration data concerning this investment
property.
(f) Reference is made to the Notes for a description of the sale of
this investment property.
(g) In March 1996, the joint venture sold the 190 San Fernando
building, one of the buildings in the Park Center Financial Plaza office
complex comprising approximately 5% of the total occupied space, to an
independent third party, and transferred title to one of the parking garages
to the City of San Jose. The original invested capital percentage reflected
for this property in the table has not been adjusted for such transactions.
Reference is made to the Notes for a description of such transactions.
</TABLE>
<PAGE>
The Partnership's remaining real property investment is subject to
competition from similar types of properties in the respective vicinity in
which it is located. Such competition is generally for the retention of
existing tenants. Reference is made to Item 7 below for a discussion of
competitive conditions and future renovation and capital improvement plans
of the Partnership and its investment property. Approximate occupancy
levels for the properties owned in 1998 are set forth in the table in Item 2
below to which reference is hereby made. The Partnership maintains the
suitability and competitiveness of its property in its market primarily on
the basis of tenant mix, property aesthetics, effective rents, tenant
allowances and service provided to tenants. In the opinion of the Managing
General Partner of the Partnership, the remaining investment property held
at December 31, 1998 is adequately insured. Although there is earthquake
insurance coverage for a portion of the value of the Partnership's
investment property, the Managing General Partner does not believe that such
coverage for the entire replacement cost of the investment property is
available on economic terms.
Reference is made to the Notes for a schedule of minimum lease payments
to be received in each of the next five years, and in the aggregate
thereafter, under leases in effect at the Partnership's remaining property
as of December 31, 1998.
On February 24, 1998, the Partnership, through its joint venture, sold
the remaining buildings in the Park Center Financial Plaza office complex
located in San Jose, California. Reference is made to the Notes for a
further description of such transaction.
The Partnership has no employees.
The terms of transactions between the Partnership, the General Partners
and their affiliates of the Partnership are set forth in Item 11 below to
which reference is hereby made for a description of such terms and
transactions.
ITEM 2. PROPERTIES
The Partnership owns or owned directly or through joint venture
partnerships the properties or interests in the properties referred to under
Item 1 above to which reference is hereby made for a description of said
properties.
The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1998 and 1997 for the Partnership's investment properties owned during
1998:
<PAGE>
<TABLE>
<CAPTION>
1997 1998
------------------------- -------------------------
Principal At At At At At At At At
Business 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> <C>
1. Park Center
Financial Plaza
San Jose,
California (1) . . . . . . . Accounting/
Telecommunications 86% 87% 87% 90% N/A N/A N/A N/A
2. Riverside Square Mall
Hackensack,
New Jersey . . . . . . . . . Retail 92% 92% 93% 93% 90% 90% 90% 90%
<FN>
- --------------
Reference is made to Item 6, Item 7 and to the Notes for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's investment property.
An "N/A" indicates that the property was sold and was not owned by the Partnership at the end of the quarter.
(1) Reference is made to the Notes for a description of the February 24, 1998 sale of this investment
property.
</TABLE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
1998 or 1997.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1998, there were 13,035 record holders of Interests
of the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Managing General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transaction, will be subject to negotiation by the
investor. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Managing General
Partner, which, may be granted or withheld in its sole and absolute
discretion. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests or have other
rights of a Limited Partner. No transfer will be effective until the first
day of the next succeeding calendar quarter after the requisite transfer
form, satisfactory to the Managing General Partner, has been received by
the Managing General Partner. The transferee, consequently, will not be
entitled to receive any cash distributions or any allocable share of
profits or losses for tax purposes until such succeeding calendar quarter.
Profits or losses from operations of the Partnership for a calendar year in
which a transfer occurs will be allocated between the transferor and the
transferee based upon the number of quarterly periods in which each was
recognized as the holder of Interests, without regard to the results of
Partnership's operations during particular quarterly periods and without
regard to whether cash distributions were made to the transferor or
transferee. Profits or losses arising from the sale or other disposition
of Partnership properties will be allocated to the recognized holder of the
Interests as of the last day of the quarter in which the Partnership
recognized such profits or losses. Cash distributions to a holder of
Interests arising from the sale or other disposition of Partnership
properties will be distributed to the recognized holder of the Interests as
of the last day of the quarterly period with respect to which distribution
is made.
Reference is made to Item 6 below for a discussion of cash distribu-
tions made to the Investors.
Reference is made to Item 7 for a discussion of unsolicited tender
offers received from unaffiliated third parties.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
YEARS ENDED DECEMBER 31, 1998, 1997, 1996, 1995 AND 1994
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1998 1997 1996 1995 1994
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . . $ 13,652,013 14,218,708 13,403,472 12,915,285 14,048,836
============ =========== =========== =========== ===========
Earnings (loss) before
gain on sale or
disposition of invest-
ment property . . . . . . $ 3,209,772 5,750,839 1,810,139 1,856,294 2,652,603
Partnership's share of
gain on sale of invest-
ment properties of
unconsolidated ventures. . 20,648,190 13,349,139 1,412,610 -- --
Gain on disposition of
investment property. . . . -- -- -- -- 447,650
------------ ----------- ----------- ----------- -----------
Earnings (loss) before
extraordinary item . . . . 23,857,962 19,099,978 3,222,749 1,856,294 3,100,253
Extraordinary items. . . . . (1,496,923) -- -- -- (2,206,791)
------------ ------------ ----------- ----------- -----------
Net earnings (loss). . . . . $ 22,361,039 19,099,978 3,222,749 1,856,294 893,462
============ ============ =========== =========== ===========
Net earnings (loss)
per Interest (b):
Earnings (loss)
before gain on
sale or disposition
of investment
property . . . . . . . $ 17.77 31.84 10.02 10.28 14.60
Partnership's share of
gain on sale of
investment properties
of unconsolidated
ventures . . . . . . . 117.88 76.21 8.06 -- --
Gain on disposition
of investment
property . . . . . . . -- -- -- -- 2.56
Extraordinary items. . . (8.50) -- -- -- (12.22)
------------ ------------ ----------- ----------- -----------
Net earnings (loss). . . . . $ 127.15 108.05 18.08 10.28 4.94
============ ============ =========== =========== ===========
<PAGE>
1998 1997 1996 1995 1994
------------ ----------- ----------- ----------- -----------
Total assets . . . . . . . . $ 83,984,649 118,582,025 102,106,160 106,800,004 106,201,665
Long-term debt . . . . . . . $ -- 33,820,205 34,404,477 34,942,100 35,436,797
Cash distributions
per Interest (c) . . . . . $ 324.00 12.00 15.00 12.00 12.00
============ ============ =========== =========== ===========
<FN>
- -------------
(a) The above selected financial data should be read in conjunction with the financial statements and the
related notes appearing elsewhere in this annual report.
(b) The net earnings (loss) per Interest is based upon the number of Interests outstanding at the end of the
period (173,411).
(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each Partner's taxable income (or loss) from the Partnership
in each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to
the cash generated or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners
since the inception of the Partnership have not resulted in taxable income to such Limited Partners and have
therefore represented a return of capital.
</TABLE>
<PAGE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1998
<CAPTION>
Property
- --------
Riverside Square
Mall a) The gross leasable area ("GLA") occupancy rate and average base rent per square foot as
of December 31 for each of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>
1994. . . . . . . 81% 18.10
1995. . . . . . . 80% 18.69
1996. . . . . . . 91% 17.15
1997. . . . . . . 93% 19.35
1998. . . . . . . 93% 17.80
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option
------------------- ----------- --------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Saks Fifth Avenue 107,000 $90,000 6/2012 N/A
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Riverside Square Mall:
Annualized Percent of
Number of Approx. Total Base Rent Total 1998
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1999 9 32,200 1,099,600 19.4%
2000 5 12,200 412,700 7.3%
2001 4 15,200 405,600 7.1%
2002 1 2,300 87,100 1.5%
2003 6 23,200 735,800 13.0%
2004 15 21,700 960,200 16.9%
2005 7 20,600 683,000 12.0%
2006 8 23,800 745,700 13.1%
2007 -- -- -- 0.0%
2008 1 10,500 437,600 7.7%
<FN>
(1) Excludes leases that expire in 1999 for which renewal leases or leases with
replacement tenants have been executed as of March 15, 1999.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering of interests as described in
Item 1, the Partnership had approximately $156,493,000 after deducting
selling expenses and other offering costs, with which to make investments
in commercial real property, to pay legal fees and other costs (including
acquisition fees) related to such investments and for working capital. A
portion of such proceeds was utilized to acquire the properties described
in Item 1 above.
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 1996, 1997 and 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 expired. As of the date of
this report, the Partnership is aware that 7.43% 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.
The Partnership has one remaining investment property, the Riverside
Square Mall Shopping Center, which it is actively marketing for sale.
There can be no assurance that the Partnership will be able to complete a
sale or liquidate the Partnership in the 1999-2000 time frame.
At December 31, 1998, the Partnership had cash and cash equivalents of
approximately $15,863,000. Such funds may be utilized for distributions to
partners and for working capital requirements including operating deficits,
costs of re-leasing vacant space, and certain capital improvements.
Additionally, funds may be utilized to fund a potential theater expansion
at the Riverside Square Mall investment property which 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. However, the expansion, including the theater lease, is subject
to many contingencies, including final documentation, and as such there can
be no assurance that the expansion will be completed on these or any other
terms. The Partnership's wholly-owned property has currently budgeted in
1999 approximately $4,274,000 for tenant improvements and other capital
expenditures including the first phase of the theater expansion. Actual
amounts expended in 1999 may vary depending on a number of factors
including actual leasing activity, results of property operations,
liquidity considerations, progression of the theater expansion and other
market conditions, including the possible sale of the shopping center in
1999, over the course of the year. The source of capital for such items
and for both short-term and long-term future liquidity and distributions is
expected to be through net cash generated by the Riverside Square Mall and
through its sale and/or refinancing. In such regard, reference is made to
the Partnership's property specific discussions below and also to the
Partnership's disclosure of certain property lease expirations in Item 6.
<PAGE>
In February 1998, the Partnership made a distribution of sale proceeds
related to the sale of the Royal Executive Park II office complex of
$28,439,404 ($164 per Interest) and paid a special operating distribution
of $2,774,576 ($16 per Interest), to the Limited Partners. In addition,
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 theater/restaurant expansion at the Riverside Square Mall. The
1998 annual operating distribution of $693,644 ($4 per Interest) was made
in May 1998. In addition, the Partnership made a distribution of sale
proceeds of $24,277,540 ($140 per Interest) in May 1998 related to the sale
in 1998 of the remaining assets of the Park Center Financial Plaza
investment property. The General Partners have been deferring receipt of
their distributions in accordance with the subordination requirements of
the Partnership Agreement as discussed in the Notes.
The Partnership's mortgage obligation is a separate non-recourse loan
secured individually by the investment property. The Partnership is not
personally liable for the payment of the mortgage indebtedness.
SAN JOSE
On February 24, 1998, San Jose sold the remaining assets of the Park
Center Financial Plaza office complex to an independent third party for
$76,195,000 (before selling costs). San Jose received approximately
$49,537,000 of net sale proceeds at closing (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), of
which the Partnership's share was approximately $24,768,500. Reference is
made to the Notes for a further description of such sale.
RIVERSIDE SQUARE MALL
As previously disclosed, the Partnership has reached an agreement in
principle with a theater operator to open a multiscreen theater 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. The Partnership received planning and zoning
board approval from the City of Hackensack for such expansion in October
1998. However, this expansion, including the theater lease, is subject to
many contingencies, including final documentation and the possible sale of
the shopping center in 1999. As such there can be no assurance that this
expansion will be completed on these or any other terms.
The mortgage loan on the property in the original amount of
$36,000,000 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. On November 24, 1998, the
Partnership finalized a new one-year mortgage loan in the amount of
$34,000,000. The proceeds of the new loan were utilized to retire the
previous mortgage loan with an outstanding balance of approximately
$33,871,000. The net cost to the Partnership of refinancing, including
costs and fees of approximately $255,000 was approximately $126,000.
Reference is made to the Notes for a further description of such
transaction.
<PAGE>
GENERAL
The Partnership continues to conserve its working capital. All
expenditures are carefully analyzed and certain capital projects are
deferred when appropriate. In an effort to reduce partnership operating
expenses, the Partnership elected to make annual rather than semi-annual
distributions of available operating cash flow commencing with the 1998
distribution. By conserving working capital, the Partnership will be in a
better position to meet the future needs of its remaining property since
the availability of satisfactory outside sources of capital may be limited
given current debt levels. The Partnership has held its remaining
investment property longer than originally anticipated in an effort to
maximize the return to the Limited Partners. However, 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 portfolio as quickly as practicable
upon the sale of its remaining investment property, the Riverside Square
Mall, and the subsequent expiration of any representations and warranties
to a potential purchaser that may be required in connection with a sale of
the property. Consequently, the affairs of the Partnership are expected to
be wound up in the 1999-2000 time frame, barring unforeseen economic
developments.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents at December 31, 1998 as
compared to December 31, 1997 is primarily due to the distribution in 1998
of sales proceeds related to the sale in 1997 of the Royal Executive Park
II office complex as more fully discussed in the Notes.
The decrease in rents and other receivables as of December 31, 1998 as
compared to December 31, 1997 is primarily due to the lower occupancy
levels and the timing of payment of rentals at the Riverside Square Mall
investment property.
The decrease in escrow deposits at December 31, 1998 as compared to
December 31, 1997 is primarily due to the termination of the escrow
accounts in conjunction with the November 1998 refinancing of the mortgage
loan at the Riverside Square Mall investment property.
The decrease in investment in unconsolidated ventures, at equity at
December 31, 1998 as compared to December 31, 1997 is primarily due to the
sale in 1998 of the remaining assets of the Park Center Financial Plaza
investment property.
The increase in current portion of long-term debt and corresponding
decrease in long-term debt, less current portion as of December 31, 1998 as
compared to December 31, 1997 is primarily due to the November 1999
maturity of the new mortgage loan secured by the Riverside Square Mall
investment property.
The decrease in accounts payable and other current liabilities as of
December 31, 1998 as compared to December 31, 1997 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 is
also due to an overfunding of approximately $136,000 in sale proceeds in
December 1997 related to the Royal Executive Park II joint venture, which
was returned to London and Leeds in January of 1998.
The decrease in accrued interest payable as of December 31, 1998 as
compared to December 31, 1997 is due to the variable interest rate on the
new mortgage loan at the Riverside Square Mall investment property which is
currently lower than the previous loan's rate.
The increase in rental income for the year ended December 31, 1997 as
compared to the year ended December 31, 1996 is primarily due to an
increase in base rentals as a result of an increase in tenant occupancies
in 1997 at the Riverside Square Mall investment property.
<PAGE>
The increase in interest income for the twelve months ended
December 31, 1998 as compared to the twelve months ended December 31, 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 remaining assets of 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 depreciation expense for the twelve months ended
December 31, 1998 as compared to the twelve months ended December 31, 1997
and for the twelve months ended December 31, 1997 as compared to the twelve
months ended December 31, 1996 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 twelve months
ended December 31, 1998 as compared to the twelve months ended December 31,
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 during 1998 at the Riverside Square Mall investment property.
The decrease in property operating expenses for the year ended December 31,
1997 as compared to the year ended December 31, 1996 is primarily due to
the decrease in snow removal and other administrative expenses and certain
maintenance and repair projects (partially recoverable from tenants) at the
Riverside Square Mall investment property. However, the decrease is
partially offset by an increase in certain other property operating
expenses as a result of higher tenant occupancies in 1997 at the Riverside
Square Mall investment property.
The decrease in professional services for the year ended December 31,
1997 as compared to the year ended December 31, 1996 is primarily due to
expenses incurred in 1996 in connection with tender offer matters as
discussed above.
The increase in general and administrative expenses for the year ended
December 31, 1997 as compared to the year ended December 31, 1996 is
primarily due to the timing of the incurrence of reimbursable costs to
affiliates of the General Partners.
The decrease in the Partnership's share of operations of
unconsolidated ventures for the twelve months ended December 31, 1998 as
compared to the twelve months ended December 31, 1997 is primarily due to
the sales of the Royal Executive Park II office complex and the remaining
assets of the Park Center Financial Plaza office complex in December 1997
and February 1998, respectively. The increase in the Partnership's share
of operations of unconsolidated ventures for the year ended December 31,
1997 as compared to the year ended December 31, 1996 is primarily due to
such unconsolidated ventures being identified as held for sale or
disposition as of December 31, 1996, and therefore, no longer subject to
depreciation beyond such date.
The Partnership's share of gain on sale of investment properties of
unconsolidated venture of $20,648,190 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 gain on
sale of investment properties of unconsolidated ventures of $13,349,139 in
1997 is due to the gain recognized on the sale of the Royal Executive Park
II office complex. The Partnership's share of gain on sale of investment
properties of unconsolidated ventures of $1,412,610 in 1996 is due to the
gain recognized on the sale of the 190 San Fernando Building and one of the
parking structures at the Park Center Financial Plaza investment property.
<PAGE>
The Partnership's extraordinary item from investment property is due
to the write off of $237,805 of deferred mortgage expense in conjunction
with the new mortgage loan put in place at the Riverside Square Mall
investment property in November 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
remaining assets of the Park Center Financial Plaza investment property in
February 1998.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
Inflation is not expected to significantly impact future operations
due to the expected liquidation of the Partnership in the 1999-2000 time
frame. However, to the extent that inflation in future periods would have
an adverse impact on property operating expenses, the effect would
generally be offset by amounts recovered from tenants as many of the
long-term leases at the Partnership's remaining commercial property have
escalation clauses covering increases in the cost of operating and main-
taining the property as well as real estate taxes. Therefore, there should
be little effect from inflation on operating earnings if the property
remains substantially occupied. In addition, substantially all of the
leases at the Partnership's shopping center investment contain provisions
which entitle the Partnership to participate in gross receipts of tenants
above fixed minimum amounts.
YEAR 2000
The Corporate General Partner has determined that it does not expect
that the consequences of the Partnership's Year 2000 issues would have a
material effect on the Partnership's business, results of operations or
financial condition.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership has identified interest rate changes as a potential
market risk. The Riverside Square Mall mortgage loan which matures on
November 24, 1999 provides for interest only payments based on the 30 day
LIBOR rate plus 1.3%.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
INDEX
Independent Auditors' Report
Balance Sheets, December 31, 1998 and 1997
Statements of Operations, years ended December 31, 1998, 1997 and 1996
Statements of Partners' Capital Accounts (Deficit), years ended
December 31, 1998, 1997 and 1996
Statements of Cash Flows, years ended December 31, 1998, 1997 and 1996
Notes to Financial Statements
SCHEDULE
--------
Real Estate and Accumulated Depreciation III
SCHEDULES NOT FILED:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
JMB INCOME PROPERTIES, LTD. - XI:
We have audited the financial statements of JMB Income Properties,
Ltd. - XI (a limited partnership) as listed in the accompanying index. In
connection with our audits of the financial statements, we also have
audited the financial statement schedule as listed in the accompanying
index. These financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of JMB Income
Properties, Ltd. - XI at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG LLP
Chicago, Illinois
March 24, 1999
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS
------
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . $ 15,863,283 42,298,264
Rents and other receivables, net of allowance for
doubtful accounts of $293,856 in 1998 and
$210,024 in 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,601,179 2,552,231
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,040 88,948
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,171,271
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 17,561,502 46,110,714
------------ -----------
Investment property held for sale or disposition . . . . . . . . . . . . . 62,040,706 60,929,336
------------ -----------
Investment in unconsolidated ventures, at equity . . . . . . . . . . . . . -- 6,711,162
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,382,441 4,830,813
------------ -----------
$ 83,984,649 118,582,025
============ ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
----------------------------------------------------
1998 1997
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . $ 34,000,000 584,273
Accounts payable and other current liabilities . . . . . . . . . . . . . 475,107 782,274
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181,029 243,502
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . 34,656,136 1,610,049
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . 89,000 88,133
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . -- 33,820,205
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 34,745,136 35,518,387
Partners' capital accounts (deficit):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . 6,107,441 5,794,671
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . (6,631,429) (6,631,429)
------------ -----------
(522,988) (835,758)
------------ -----------
Limited partners (173,411 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . 156,493,238 156,493,238
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . 71,343,777 49,295,508
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . (178,074,514) (121,889,350)
------------ -----------
49,762,501 83,899,396
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . . . . . . 49,239,513 83,063,638
------------ -----------
$ 83,984,649 118,582,025
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . $12,718,155 13,500,646 12,711,885
Interest income. . . . . . . . . . . . . . . . . . . . 933,858 718,062 691,587
----------- ----------- -----------
13,652,013 14,218,708 13,403,472
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . 2,741,140 2,897,399 2,936,882
Depreciation . . . . . . . . . . . . . . . . . . . . . -- 1,892,003 2,394,772
Property operating expenses. . . . . . . . . . . . . . 7,189,436 7,851,075 8,835,327
Professional services. . . . . . . . . . . . . . . . . 214,735 190,646 262,322
Amortization of deferred expenses. . . . . . . . . . . 478,558 519,892 458,744
General and administrative . . . . . . . . . . . . . . 380,455 440,946 308,471
----------- ----------- -----------
11,004,324 13,791,961 15,196,518
----------- ----------- -----------
2,647,689 426,747 (1,793,046)
Partnership's share of operations of
unconsolidated ventures. . . . . . . . . . . . . . . . 562,083 5,324,092 3,603,185
----------- ----------- -----------
Earnings (loss) before gain on sale or
disposition of investment property . . . . . . 3,209,772 5,750,839 1,810,139
Partnership's share of gains on sale of investment
properties of unconsolidated ventures. . . . . . . . . 20,648,190 13,349,139 1,412,610
----------- ----------- -----------
Earnings (loss) before extraordinary
items. . . . . . . . . . . . . . . . . . . . . 23,857,962 19,099,978 3,222,749
Extraordinary items:
Deferred mortgage expense on retirement of
long-term debt . . . . . . . . . . . . . . . . . . . (237,805) -- --
Partnership's share of deferred mortgage
expense and prepayment premium of
unconsolidated venture . . . . . . . . . . . . . . . (1,259,118) -- --
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . . . . $22,361,039 19,099,978 3,222,749
=========== =========== ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
1998 1997 1996
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on sale or
disposition of investment property . . . . . $ 17.77 31.84 10.02
Partnership's share of gains on sale
of investment properties of
unconsolidated ventures. . . . . . . . . . . 117.88 76.21 8.06
Extraordinary items. . . . . . . . . . . . . . (8.50) -- --
----------- ----------- -----------
Net earnings (loss). . . . . . . . . . . . . $ 127.15 108.05 18.08
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------------- --------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
at Decem-
ber 31,
1995. . . . . 1,000 5,344,614 (6,631,429) (1,285,815) 156,493,238 27,422,838 (117,207,253) 66,708,823
Cash distri-
butions
($15 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,601,165) (2,601,165)
Net earnings
(loss). . . . -- 86,532 -- 86,532 -- 3,136,217 -- 3,136,217
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------
Balance
(deficit)
at Decem-
ber 31,
1996. . . . . 1,000 5,431,146 (6,631,429) (1,199,283) 156,493,238 30,559,055 (119,808,418) 67,243,875
Cash distri-
butions
($12 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,080,932) (2,080,932)
Net earnings
(loss). . . . -- 363,525 -- 363,525 -- 18,736,453 -- 18,736,453
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICIT) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS
--------------------------------------------------- --------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ------------- ----------- ----------- ---------- ------------- -----------
Balance
(deficit)
at Decem-
ber 31,
1997. . . . . 1,000 5,794,671 (6,631,429) (835,758) 156,493,238 49,295,508 (121,889,350) 83,899,396
Cash distri-
butions
($324 per
limited
partnership
interest) . . -- -- -- -- -- -- (56,185,164)(56,185,164)
Net earnings
(loss). . . . -- 312,770 -- 312,770 -- 22,048,269 -- 22,048,269
------ ---------- ---------- ---------- ----------- ----------- ------------ -----------
Balance
(deficit)
at Decem-
ber 31,
1998. . . . . $1,000 6,107,441 (6,631,429) (522,988) 156,493,238 71,343,777 (178,074,514) 49,762,501
====== ========== ========== ========== =========== =========== ============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . $22,361,039 19,099,978 3,222,749
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . -- 1,892,003 2,394,772
Amortization of deferred expenses. . . . . . . . . . 478,558 519,892 458,744
Partnership's share of operations of uncon-
solidated ventures, net of distributions . . . . . (562,083) (5,324,092) 944,935
Partnership's share of gain on sale of invest-
ment properties of unconsolidated ventures . . . . (20,648,190) (13,349,139) (1,412,610)
Extraordinary items. . . . . . . . . . . . . . . . . 1,496,923 -- --
Changes in:
Rents and other receivables. . . . . . . . . . . . . 951,052 (541,985) 308,757
Prepaid expenses . . . . . . . . . . . . . . . . . . (8,092) 2,558 (11,885)
Escrow deposits. . . . . . . . . . . . . . . . . . . 320,236 (384,565) (64,859)
Accounts payable . . . . . . . . . . . . . . . . . . (307,167) 7,484 272,820
Accrued interest payable . . . . . . . . . . . . . . (62,473) 363 (3,442)
Tenant security deposits . . . . . . . . . . . . . . 867 (13,406) 17,408
----------- ----------- -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . . 4,020,670 1,909,091 6,127,389
----------- ----------- -----------
Cash flows from investing activities:
Net escrow draws for construction
related costs. . . . . . . . . . . . . . . . . . . . -- -- 4,949,435
Additions to investment properties . . . . . . . . . . (1,111,370) (869,839) (5,484,550)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . . . . . 26,662,317 32,329,371 3,588,000
Payment of deferred expenses . . . . . . . . . . . . . (12,636) -- (59,731)
----------- ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . 25,538,311 31,459,532 2,993,154
----------- ----------- -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
----------- ----------- -----------
Cash flows from financing activities:
Release of escrow for payoff of old debt . . . . . . . 851,035 -- --
Net cost of refinancing of new long-term debt. . . . . (126,127) -- --
Principal payments on long-term debt . . . . . . . . . (533,706) (537,622) (494,697)
Distributions to limited partners. . . . . . . . . . . (56,185,164) (2,080,932) (2,601,165)
----------- ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . . . . . . (55,993,962) (2,618,554) (3,095,862)
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . . . . (26,434,981) 30,750,069 6,024,681
Cash and cash equivalents,
beginning of year. . . . . . . . . . . . . . 42,298,264 11,548,195 5,523,514
----------- ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . . . . . . $15,863,283 42,298,264 11,548,195
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . $ 2,803,613 2,897,036 2,940,324
=========== =========== ===========
Non-cash investing and financing activities:
Refinancing of long-term debt:
Proceeds of new debt. . . . . . . . . . . . . . . . $34,000,000 -- --
Retirement of old debt. . . . . . . . . . . . . . . (33,870,772) -- --
Deferred mortgage costs . . . . . . . . . . . . . . (255,355) -- --
----------- ----------- ----------
Net cost of refinancing of long-term debt. . . $ (126,127) -- --
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership holds (either directly or through joint ventures)
investments in United States real estate. Business activities consist of
rentals to a variety of commercial and retail companies, and the ultimate
sale or disposition of such real estate. The Partnership currently expects
to conduct an orderly liquidation of its remaining investment property and
wind up its affairs not later than December 31, 1999, barring unforeseen
economic developments.
The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's interest in Royal
Executive Park II ("Royal Executive") (which investment was sold in
December 1997) and JMB/San Jose Associates ("San Jose") (which investment
was sold in February 1998). Accordingly, the accompanying financial
statements do not include the accounts of Royal Executive and San Jose.
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying financial statements have been prepared from such records
after making appropriate adjustments to present the Partnership's accounts
in accordance with generally accepted accounting principles ("GAAP"). Such
GAAP adjustments are not recorded on the records of the Partnership. The
net effect of these items for the years ended December 31, 1998 and 1997 is
summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1998 1997
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . . $ 83,984,649 83,828,667 118,582,025 130,569,209
Partners' capital accounts
(deficit):
General partners . . . . . . . . . (522,988) -- (835,758) (1,339,241)
Limited partners . . . . . . . . . 49,762,501 49,443,874 83,899,396 96,831,579
Net earnings (loss):
General partners . . . . . . . . . 312,770 1,339,240 363,525 111,760
Limited partners . . . . . . . . . 22,048,269 8,797,458 18,736,453 10,708,610
Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . . . 127.15 50.73 108.05 61.75
=========== ============ =========== ===========
</TABLE>
<PAGE>
The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of the
period (173,411). Deficit capital accounts will result, through the
duration of the Partnership, in net gain for financial reporting and income
tax purposes.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from unconsolidated ventures are considered cash
flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. Government obligations at cost, which approximates market. For the
purposes of these statements, the Partnership's policy is to consider all
such amounts held with original maturities of three months or less
($16,123,277 and $42,703,440 at December 31, 1998 and 1997, respectively)
as cash equivalents, which includes investments in an institutional mutual
fund which holds U.S. Government obligations, with any remaining amounts
(generally with original maturities of one year or less) reflected as
short-term investments being held to maturity.
Deferred expenses consist primarily of loan fees and lease commissions
and tenant allowances to tenants which are amortized over the terms
stipulated in the related agreements using the straight-line method.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in the
minimum lease payments over the term of the lease, rental income is accrued
for the full period of occupancy on a straight-line basis.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the Partners rather than the
Partnership. However, in certain instances, the Partnership has been
required or may in the future be required under applicable law to remit
directly to the tax authorities amounts representing withholding from
distributions paid to partners.
The Partnership has acquired, either directly or through joint
ventures, two shopping centers and three office complexes. In June 1990,
the Partnership sold its interest in the Genesee Valley Shopping Center.
In November 1994, the lender realized upon its security interest and took
title to the Bank of Delaware building via a deed in lieu of foreclosure.
In March 1996, the San Jose venture sold its interest in the 190 San
Fernando Building and one of the parking structures at the Park Center
Financial Plaza investment property. In December 1997, the Royal Executive
venture sold the Royal Executive Park II office complex. In February 1998,
the San Jose venture sold its remaining interest in the Park Center
Financial Plaza office complex. The remaining property, the Riverside
Square Mall investment property, was in operation at December 31, 1998.
The cost of the investment properties represents the total cost to the
Partnership plus miscellaneous acquisition costs.
Depreciation on the properties has been provided over the estimated
useful lives of the various components as follows:
YEARS
-----
Building and Improvements -- straight-line . . . . . 30
Personal property -- straight-line . . . . . . . . . 5
==
<PAGE>
The investment property is pledged as security for the long-term debt,
for which there is no recourse to the Partnership.
Maintenance and repairs are generally charged to operations as
incurred. Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives.
Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
requires that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the property's carrying value and the
property's estimated fair value. The Partnership's policy is to consider a
property to be held for sale or disposition when the Partnership has
committed to a plan to sell or dispose of such property and active
marketing activity has commenced or is expected to commence in the near
term. In accordance with SFAS 121, any properties identified as "held for
sale or disposition" are no longer depreciated. Adjustments for impairment
loss for such properties (subsequent to the date of adoption of SFAS 121)
are made in each period as necessary to report these properties at the
lower of carrying value or fair value less costs to sell.
The results of operations for properties held for sale or disposition
as of December 31, 1998 or sold or disposed of during the past three years
were $2,172,556, $443,271 and ($1,551,773), respectively, for the years
ended December 31, 1998, 1997 and 1996. In addition, the accompanying
financial statements include $562,084, $5,324,092 and $3,603,185,
respectively, of the Partnership's share of total property operations of
$1,124,167, $6,901,490 and $4,209,143 of unconsolidated properties held for
sale or disposition as of December 31, 1998 or sold or disposed of in the
past three years.
Certain 1996 amounts have been reclassed to conform to 1997
presentation.
INVESTMENT PROPERTIES
RIVERSIDE SQUARE MALL
During October 1983, the Partnership acquired an existing enclosed
regional shopping center in Hackensack, New Jersey. The Partnership's
purchase price for the mall was $36,236,282. The Partnership made a cash
down payment at closing of $20,000,000 with the balance of the purchase
price represented by a first mortgage loan. During the third quarter of
1994, the Partnership finalized a refinancing of the first mortgage loan
with a new loan in the amount of $36,000,000 which resulted in net proceeds
of approximately $22,300,000. Of such proceeds, approximately $11,200,000
was escrowed by the lender pursuant to the loan agreement and released as
required, including interest, to fund certain costs of the renovation and
restoration as discussed below. The full amount of the escrow had been
released as of December 31, 1996. The remaining $11,100,000 of loan
proceeds were used to replenish the Partnership's working capital for
amounts paid to or escrowed on behalf of Saks and Bloomingdale's for their
store renovations as discussed below.
The 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. The Partnership
reached an agreement with another lender to obtain replacement financing,
in the amount of $34,000,000, for a one-year term with no prepayment
penalty, to replace the current loan. On November 24, 1998, the
Partnership closed on the new mortgage loan. The new mortgage loan matures
November 24, 1999, with an option for a six month extension, and provides
for interest only payments based on the 30 day LIBOR rate (approximately
5.1% at December 31, 1998) 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. The net cost to the Partnership of the refinancing, including
costs and fees of approximately $255,000, was approximately $126,000.
The Partnership completed its renovation of the Riverside Square Mall
as well as its restoration of the parking deck (at final costs of
approximately $13,500,000 and $7,000,000, respectively) and is continuing
to remerchandise the center. In such regard, the Partnership has budgeted
in 1999 approximately $4,274,000 for tenant improvements and capital
expenditures, which includes a portion of the theater/restaurant expansion
discussed below.
In connection with the renovation, the Partnership, in early 1994,
signed 15-year operating covenant extensions with both Saks and
Bloomingdale's, the latter of which owns its own store. In return for the
additional 15-year commitment to the center, the Partnership reimbursed
Saks for its store renovation in the amount of $6,100,000; and in August
1995, the Partnership escrowed $5,000,000, reflected as a deferred expense
in the accompanying balance sheet, (the full amount of which was released
as of December 31, 1996) for Bloomingdale's store renovation, which was
fully completed in September 1997. Interest earned on the escrowed funds
was remitted to the Partnership upon termination of the escrow account. In
connection with the payment to Saks, the Partnership also acquired title to
the Saks building which had previously been owned by Saks.
During 1998, the Partnership reached an agreement in principle with a
theater operator to open a multiscreen theater 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. The Partnership received planning and zoning board
approval from the City of Hackensack for such expansion in October 1998.
However, this expansion, including the theater lease, is subject to many
contingencies, including final documentation and the possible sale of the
shopping center in 1999. As such there can be no assurance that this
expansion will be completed on these or any other terms.
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.
An affiliate of the General Partners of the Partnership manages the
shopping center for a fee equal to 4% of the fixed and percentage rents of
the shopping center plus leasing and operating covenant commissions,
subject to deferral if in excess of an aggregate annual maximum amount of
6% of the gross receipts of the property.
<PAGE>
VENTURE AGREEMENTS - GENERAL
The Partnership, at December 31, 1998, is no longer a party to any
operating venture agreements. The Partnership had made capital
contributions to the respective ventures as discussed below.
SAN JOSE
The Partnership acquired, through San Jose, an interest in an existing
office building complex in San Jose, California (Park Center Financial
Plaza) consisting of ten office buildings, a parking and retail building
(185 Park Avenue) and two parking garage structures.
The property was managed by an unaffiliated third party for a fee
calculated as 3% of gross receipts.
The partners of San Jose were the Partnership and JMB Income
Properties, Ltd.-XII, another partnership sponsored by the Managing General
Partner of the Partnership ("JMB-XII"). The terms of San Jose's
partnership agreement generally provided that contributions, distributions,
cash flow, sale or refinancing proceeds and profits and losses would be
distributed or allocated to the Partnership and JMB-XII in their respective
50% ownership percentages.
During August 1994, San Jose received notification from the
Redevelopment Agency of the City of San Jose of its offer to purchase one
of the parking garage structures in the office building complex, for an
approved Agency project for $4,090,000. The price offered was deemed by
the Agency to be just compensation in compliance with applicable laws
concerning eminent domain. During 1995, the Agency filed a condemnation
action in court to proceed to obtain the garage pursuant to such laws. In
late 1995, San Jose and the Agency reached a mutually acceptable agreement
on the transfer of the garage. In March 1996, the sale was consummated.
Under the transfer agreement, San Jose received replacement parking spaces
for its tenants in a nearby city-owned parking structure for a term of
fifty-five years in addition to the aforementioned purchase price of
$4,090,000. San Jose recognized a gain of approximately $2,036,000 and
$1,857,000, respectively, for financial reporting and Federal income tax
purposes in 1996, of which approximately $1,018,000 and $928,500,
respectively, was allocated to the Partnership.
In March 1996, San Jose sold the 190 San Fernando Building to an
independent third party. The sale price of the building was $1,753,000
(before selling costs), and was paid in cash at closing. San Jose
recognized a gain of approximately $789,000 and $21,000, respectively, for
financial reporting and Federal income tax purposes in 1996, of which
approximately $394,500 and $10,500, respectively, was allocated to the
Partnership.
As San Jose had committed to a plan to sell the properties, the 190
San Fernando Building and the parking structure were classified as held for
sale or disposition as of January 1, 1996 and therefore were not subject to
continued depreciation. The San Jose venture subsequently committed to a
plan to sell the balance of the complex, and classified the remaining
assets as held for sale as of December 31, 1996 and these assets were no
longer subject to continued depreciation beyond such date.
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
<PAGE>
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.
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 expired
November 15, 1998 with no liability to the partnership.
In May and December of 1998, the San Jose venture made distributions
of $50,000,000 and $3,324,635, of which the Partnership's share was
$25,000,000 and $1,662,317, respectively. In May 1998, the Partnership
made a distribution of sales proceeds relating to the sale of the remaining
assets of the Park Center Financial Plaza office complex of $24,277,540
($140 per Interest) to the Limited Partners.
ROYAL EXECUTIVE PARK II
In December 1985, the Partnership entered into a commitment to fund a
$27,000,000 convertible first mortgage note on a three building office park
then under construction in Rye Brook, New York (Royal Executive Park II).
The first mortgage note called for monthly installments of interest only at
a rate of 10% through the period of equity conversion.
During February 1987, the Partnership exercised its option of
converting the $27,000,000 mortgage into an ownership position. Upon the
conversion of the mortgage note, the Partnership entered into a joint
venture (Royal Executive) with the borrower (joint venture partners).
Pursuant to the terms of the venture agreement, until certain rental
achievement levels were attained, the Partnership was entitled to a
cumulative preferred annual return equal to $2,430,000 per year. The next
$2,439,732 of annual cash flow was distributable to the joint venture
partners, on a non-cumulative basis, with any remaining cash flow
distributable 49.9% to the Partnership and 50.1% to the joint venture
partners. Therefore, the Partnership's receipt of cash distributions was
subject to the actual operations of the property. The Partnership was
entitled to any deficiency in its preferred annual return plus interest at
9% on a cumulative basis as an annual priority distribution from future
available operating cash flow before any cash flow distributions were made
to the venture partner. The cumulative deficiency in the preferred annual
return was approximately $1,498,000 at the December 19, 1997 sale date. In
accordance with the Royal Executive venture agreement, the Partnership
received its priority level of distribution of sale and refinancing
proceeds of $27,000,000 plus the cumulative deficiency in its preferred
annual return, in the amount of $1,498,000 upon sale of the property, as
discussed below.
Net operating income (as defined) of the joint venture, in general,
was allocated in proportion to, and to the extent of, distributions and
then based on relative ownership percentages. Operating losses, in
general, were first allocated to the joint venture partners to the extent
of any additional contributions made to fund operations or the
Partnership's guaranteed return. Remaining losses, if any, were allocated
based upon relative ownership interests. Depreciation and amortization
were allocated based upon the relative ownership interests.
<PAGE>
As there had been a commitment to sell this property, the Royal
Executive venture classified this property as held for sale or disposition
at December 31, 1996, and therefore, the property was not subject to
continued depreciation beyond such date.
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, as discussed above) 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
is customary in such transactions, the joint venture agreed to certain
representations, warranties and covenants with a stipulated survival period
that expired November 15, 1998 with no liability to the Partnership.
Concurrently with the sale of Royal Executive Park-II, two other
office parks, Royal Executive Park I ("Royal I") and Royal Executive Park
III ("Royal III") were sold. Royal I was owned by a joint venture between
JMB Income Properties-X (a partnership sponsored by the Partnership's
General Partner) and the Partnership's unaffiliated venture partner in
Royal Executive Park-II. Royal III was owned entirely by the unaffiliated
venture partner in Royal Executive Park-II and Royal I. The purchase price
for each office park was separately negotiated with the buyer.
During the fourth quarter of 1996, the joint venture had determined
that one of the property's underground storage tanks had discharged an
amount of fuel oil into the ground. The joint venture believed that such
discharge had been the result of normal operations of the property and not
the result of actions of tenants or other third parties. The joint venture
had received a cost estimate of approximately $200,000 for remediation of
the contaminated soil, of which approximately $121,000 was incurred through
the date of sale. As part of the sale agreement discussed above, the
purchaser is required to hold the joint venture harmless for any future
clean-up costs or claims resulting from the contaminated soil.
In February 1998, the Partnership made a distribution of sale proceeds
related to the sale of the Royal Executive Park II office complex of
$28,439,404 ($164 per Interest).
LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1998 and
1997:
1998 1997
---------- ----------
8.35% mortgage note, secured by the Riverside
Square Mall in Hackensack, New Jersey;
payable in monthly installments of principal
and interest of $286,252 through December 1,
2006, the scheduled maturity date at which
time the unpaid principal and interest was
to be due, refinanced in November 1998 by
the Loan described below. . . . . . . . . . . . $ -- 34,404,478
30 day LIBOR Rate (approximately 5.1% at
December 31, 1998) plus 1.3% mortgage note,
secured by the Riverside Square Mall, payable
in monthly installments of interest only
until November 24, 1999 (with an option for
a six month extension) when the outstanding
principal and accrued and unpaid interest
thereon is due . . . . . . . . . . . . . . . . 34,000,000 --
Less current portion of long-term debt . . . . . 34,000,000 584,273
----------- ----------
Total long-term debt . . . . . . . . . $ -- 33,820,205
=========== ==========
<PAGE>
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or
refinancing of investment properties will be allocated to the General
Partners: (i) to the greater of 1% of such profits or the amount of cash
distributable to the General Partner from any such sale or refinancing (as
described below); and (ii) in order to reduce deficits, if any, in the
General Partners' capital accounts to a level consistent with the gain
anticipated to be realized from the sale of properties. Losses from the
sale or refinancing of investment properties will be allocated 1% to the
General Partners. The remaining sale or refinancing profits and losses
will be allocated to the Limited Partners.
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon termination
of the Partnership. In general, distributions of cash from operations will
be made 90% to the Limited Partners and 10% to the General Partners.
However, a portion of such distributions to the General Partners is
subordinated to the Limited Partners' receipt of a stipulated return on
capital.
The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership amounts equal to the cumulative deferrals of any portion of
their 10% cash distribution and 3% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, notwithstanding such allocations, the Limited Partners shall
receive 100% of such net sale proceeds until the Limited Partners (i) have
received cash distributions of sale or refinancing proceeds in an amount
equal to the Limited Partners' aggregate initial capital investment in the
Partnership, (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with sale or refinancing
proceeds previously distributed, equal a 7% annual return on the Limited
Partners' average capital investment for each year (their initial capital
investment as reduced by sale or refinancing proceeds previously
distributed) commencing with the first fiscal quarter of 1985 and (iii)
have received cash distributions of sale and refinancing proceeds and of
the Partnership operations, in an amount equal to the Limited Partners'
initial capital investment in the Partnership plus a 10% annual return on
the Limited Partners' average capital investment. As the above levels of
return are not expected to be achieved, the General Partners have waived
their right to receive any portion of the proceeds from the sales of
property by the Partnership.
LEASES
At December 31, 1998, the Partnership's principal asset is one
shopping center. The Partnership has determined that all leases relating
to this property are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of the property,
excluding the cost of the land, is depreciated over the estimated useful
life until such time the property is considered held for sale or
disposition at which time depreciation is no longer taken. Leases with
tenants range in term from one to thirty-five years and provide for fixed
minimum rent and partial reimbursement of operating costs. In addition,
substantially all of the leases with shopping center tenants provide for
additional rent based upon percentages of tenants' sales volumes. A
substantial portion of the ability of retail tenants to honor their leases
is dependent upon the retail economic sector.
<PAGE>
Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit, to be received
in the future under the operating leases are as follows:
1999. . . . . . . . . . . . $ 5,623,041
2000. . . . . . . . . . . . 5,098,435
2001. . . . . . . . . . . . 4,873,118
2002. . . . . . . . . . . . 4,709,667
2003. . . . . . . . . . . . 4,082,344
Thereafter. . . . . . . . . 12,813,631
-----------
Total . . . . . . . . . $37,200,236
===========
Contingent rent (based on sales by property tenants) included in
rental income was as follows:
1996 . . . . . . . . $312,727
1997 . . . . . . . . 203,448
1998 . . . . . . . . 390,624
========
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Managing General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of December 31, 1998 and for the years ended
December 31, 1998, 1997 and 1996 are as follows:
UNPAID AT
DECEMBER 31,
1998 1997 1996 1998
-------- ------- ------- ------------
Property management
and leasing fees. . . . . . $246,957 244,256 229,333 --
Insurance commissions. . . . 34,614 44,126 42,093 --
Reimbursement (at cost)
for accounting services . . 15,306 22,452 9,825 15,306
Reimbursement (at cost)
for portfolio manage-
ment services . . . . . . . 56,590 35,743 23,498 16,265
Reimbursement (at cost)
for legal services. . . . . 7,646 7,442 4,691 2,501
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses. . . 7,035 208 -- --
-------- ------- ------- -------
$368,148 354,227 309,440 34,072
======== ======= ======= =======
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 the Partnership. The
fees earned by such company from the Partnership for the years ended
December 31, 1998, 1997 and 1996 were approximately $5,400, $32,500 and
$39,000, respectively, all of which has been paid at December 31, 1998.
<PAGE>
The General Partners have deferred receipt of certain of their
distributions of net cash flow of the Partnership. The amount of such
deferred distributions aggregated $2,152,225 as of December 31, 1998. The
amount is being deferred in accordance with the subordination requirements
of the Partnership Agreement as discussed above. The Partnership does not
expect that the subordination requirements of the Partnership agreement
will be satisfied to permit payment of the majority of these amounts.
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 in 1994 deferred $300,000 of leasing fees at the Riverside
Square Mall pursuant to the management agreement, of which the final
$33,000 was paid in February 1997.
INVESTMENT IN UNCONSOLIDATED VENTURES
Summary combined financial information for San Jose as of and for the
years ended December 31, 1998 and 1997 and Royal Executive for the year
ended December 31, 1997 are as follows:
1998 1997
------------ -----------
Current assets . . . . . . . . . . $ -- 5,677,624
Current liabilities. . . . . . . . -- (792,509)
------------ -----------
Working capital. . . . . . . . -- 4,885,115
------------ -----------
Investment property, net . . . . . -- 30,803,149
Other assets, net. . . . . . . . . -- 1,204,478
Long-term debt . . . . . . . . . . -- (22,961,889)
Other liabilities. . . . . . . . . -- (181,229)
Venture partners' equity . . . . . -- (7,038,462)
------------ -----------
Partnership's capital. . . . . $ -- 6,711,162
============ ===========
Represented by:
Invested capital . . . . . . . . $ 77,738,617 77,738,617
Cumulative distributions . . . . (108,493,454) (81,831,137)
Cumulative losses. . . . . . . . 30,754,837 10,803,682
------------ -----------
$ -- 6,711,162
============ ===========
Total income . . . . . . . . . . . $ 2,482,154 16,288,755
============ ===========
Expenses applicable to
operating earnings . . . . . . . $ 1,357,987 9,387,265
============ ===========
Gain on disposition of
investment property. . . . . . . $ 39,135,624 13,905,818
============ ===========
Net earnings (loss). . . . . . . . $ 40,259,791 20,807,308
============ ===========
The total income, expenses related to operating earnings, gain on
disposition of investment property and net earnings for the above-mentioned
ventures for the year ended December 31, 1996 were $16,333,533,
$12,124,390, $2,825,220 and $7,034,363, respectively.
<PAGE>
<TABLE>
SCHEDULE III
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) ACQUISITION AT CLOSE OF PERIOD (B)
----------------------- -------------- -------------------------------------
BUILDINGS BUILDINGS BUILDINGS
AND AND AND
ENCUMBRANCE LAND IMPROVEMENTS IMPROVEMENTS LAND IMPROVEMENTS TOTAL (C)
----------- ----------- ------------ -------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Hackensack,
New Jersey . . . $34,000,000 3,796,561 30,880,649 46,577,341 3,796,561 77,457,990 81,254,551
=========== ========= ========== ========== ========= ========== ==========
</TABLE>
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1998
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DEPRECIATION(D) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTER:
Hackensack,
New Jersey . . . . . . . . . . . . . $19,213,845 1977 10-19-83 5-30 years 2,339,661
=========== =========
- -------------
<FN>
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the
properties (net of unamortized discount based upon an imputed interest rate), including amounts
incurred subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1998 for Federal income tax
purposes was $84,294,663.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(C) Reconciliation of real estate owned:
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . . . . . . $80,143,181 79,273,342 74,461,800
Additions during period. . . . . . . . . . . . . . . . 1,111,370 869,839 4,811,542
Dispositions during period . . . . . . . . . . . . . . -- -- --
----------- ----------- ----------
Balance at end of period . . . . . . . . . . . . . . . $81,254,551 80,143,181 79,273,342
=========== =========== ==========
(D) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . . . . . . $19,213,845 17,321,842 14,927,070
Depreciation expense . . . . . . . . . . . . . . . . . -- 1,892,003 2,394,772
----------- ----------- ----------
Balance at end of period . . . . . . . . . . . . . . . $19,213,845 19,213,845 17,321,842
=========== =========== ==========
</TABLE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with accountants during 1997
and 1998.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Managing General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. Substantially all of the
outstanding shares of JMB are owned, directly or indirectly, by certain of
its officers, directors, members of their families and their affiliates.
JMB, as the Managing General Partner, has responsibility for all aspects of
the Partnership's operations. The Associate General Partner of the
Partnership is Income Associates-XI, L.P., an Illinois limited partnership
with JMB as its sole general partner. The limited partners of Income
Associates-XI, L.P. are generally officers, directors and affiliates of JMB
or its affiliates and an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership or its investment properties
by affiliates of the General Partners, including property management
services and insurance brokerage services. In general, such services are
to be provided on terms no less favorable to the Partnership than could be
obtained from independent third parties and are otherwise subject to
conditions and restrictions contained in the Partnership Agreement. The
Partnership Agreement permits the General Partners and their affiliates to
provide services to, and otherwise deal and do business with, persons who
may be engaged in transactions with the Partnership, and permits the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants and/or for the sale of property.
Because the timing and amount of cash distributions and profits and losses
of the Partnership may be affected by various determinations by the General
Partners under the Partnership Agreement, including whether and when to
sell a property, the establishment and maintenance of reasonable reserves
and the determination of the sources (i.e., offering proceeds, cash
generated from operations or sale proceeds) and uses of such reserves, the
timing of expenditures and the allocation of certain tax items under the
Partnership Agreement, the General Partners may have a conflict of interest
with respect to such determinations.
The names, positions held and length of service therein of each
director and the executive and certain other officers of the Managing
General Partner of the Partnership are as follows:
<PAGE>
SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Managing General Partner to be held on
June 2, 1999. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Managing General Partner to be held on June 2,
1999. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"),
and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the
managing general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"),
JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties,
Ltd.-X ("JMB Income-X") and JMB Income Properties, Ltd.-XI ("JMB Income-
XI"). JMB is also the sole general partner of the associate general
partner of most of the foregoing partnerships. Most of the foregoing
directors and officers are also officers and/or directors of various
affiliated companies of JMB including Arvida/JMB Managers, Inc. (the
general partner of Arvida/JMB Partners, L.P. Most of such directors and
officers are also partners, directly or indirectly, of certain partnerships
which are associate general partners in the following real estate limited
partnerships: the Partnership, Carlyle-XI, Carlyle-XIII, Carlyle-XIV,
Carlyle-XV, JMB Income-VII, JMB Income-X and Carlyle Income Plus-II.
The business experience during the past five years of each such
director and officer of the Managing General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 61) is an individual general partner of JMB Income
- - V. Mr. Malkin has been associated with JMB since October, 1969.
Mr. Malkin is also a director of Urban Shopping Centers, Inc., an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of Chisox
Corporation, which is the general partner of a limited partnership that
owns the Chicago White Sox Major League Baseball team, and CBLS, Inc.,
which is the general partner of the general partner of a limited
partnership that owns the Chicago Bulls National Basketball Association
Team.
<PAGE>
Neil G. Bluhm (age 61) is an individual general partner of JMB Income
- - V. Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm
is also a principal of Walton Street Capital, L.L.C., which sponsors real
estate investment funds, and a director of Urban Shopping Centers, Inc. He
is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Burton E. Glazov (age 60) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December of
1990. He is a member of the Bar of the State of Illinois. Mr. Glazov is
currently retired.
Stuart C. Nathan (age 57) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 65) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 52) has been associated with JMB since
December, 1970 and served as an Executive Vice President for JMB until
December, 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
which is engaged in the real estate investing business. He is also a
senior advisor and partner of Blackstone Real Estate Advisors L.P., an
affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a director
of Urban Shopping Centers, Inc., Host Marriott Corporation, the Brickman
Group, Ltd., which is engaged in the landscape maintenance business, and a
number of investment companies advised or managed by T. Rowe Price
Associates, Inc. and its affiliates and a trustee of Amli Residential
Property Trust. He holds a Masters degree in Business Administration from
Harvard University Graduate School of Business.
H. Rigel Barber (age 50) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 51) has been associated with JMB since December,
1979. It is expected that Mr. Emig will leave his positions with JMB on or
about May 31, 1999 and his responsibilities will be taken over by various
other officers of JMB. Prior to becoming Executive Vice President of JMB
in 1993, Mr. Emig was Executive Vice President and Treasurer of JMB
Institutional Realty Corporation. He holds a Masters Degree in Business
Administration from the Harvard University Graduate School of Business and
is a Certified Public Accountant.
Gary Nickele (age 46) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 50) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 63) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The General Partners of
the Partnership are entitled to receive a share of cash distributions, when
and as cash distributions are made to the Investors, and a share of profits
or losses. Reference is also made to the Notes for a description of such
transactions, distributions and allocations. In 1998, 1997 and 1996, no
cash distributions were paid to the General Partners.
Affiliates of the Managing General Partner provide property management
services to the Partnership for the Riverside Square Mall in Hackensack,
New Jersey at a fee not to exceed 4% of the fixed and percentage rent of
property, plus leasing commissions. In 1998, such affiliates earned
property management and leasing fees amounting to $246,957 which was paid
as of December 31, 1998. As set forth in the Prospectus of the
Partnership, the Managing General Partner must negotiate such agreements on
terms no less favorable to the Partnership than those customarily charged
for similar services in the relevant geographical area (but in no event at
rates greater than 6% of the gross receipts from a property), and such
agreements must be terminable by either party thereto, without penalty,
upon 60 days' notice.
JMB Insurance Agency, Inc., an affiliate of the Managing General
Partner, earned and received insurance brokerage commissions in 1998
aggregating $32,436 in connection with the provision of insurance coverage
for certain of the real property investments of the Partnership and its
venture. Such commissions are at rates set by insurance companies for the
classes of coverage provided. In addition, JMB Insurance Agency, Inc.
earned and received insurance brokerage commissions in 1998 of $2,178 in
connection with insurance coverage for professional liability for the
Partnership.
The General Partners of the Partnership may be reimbursed for their
salaries, salary-related and direct expenses relating to the administration
of the Partnership and the operation of the Partnership's real property
investments. In 1998, an affiliate of the General Partners earned
reimbursement for such expenses in the amount of $86,577, all of which was
paid at December 31, 1998.
The Partnership is permitted to engage in various transactions
involving affiliates of the Managing General Partner of the Partnership.
The relationship of the Managing General Partner (and its directors and
officers) to its affiliates is set forth above in Item 10 above and
Exhibit 21 hereto.
<PAGE>
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Managing General Partner, its officers and directors and the Associate General Partner beneficially
own the following Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership JMB Realty Corporation 5 Interests (1) Less than 1%
Interests and Assignee indirectly
Interests Therein
Limited Partnership Managing General 5 Interests (1) Less than 1%
Interests and Assignee Partner, its indirectly
Interests Therein officers and
directors and
the Associate
General Partner
as a group
<FN>
- --------------
(1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB Realty
Corporation, as its indirect majority shareholder, is deemed to have shared voting and investment power.
No officer or director of the Managing General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
Reference is made to Item 10 for information concerning ownership of the Managing General Partner.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
</TABLE>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Managing General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements (See Index to Financial Statements
filed with this annual report).
2. 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. Certain pages of the prospectus are 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 relating to Riverside Square Mall 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 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 is
hereby incorporated herein by reference to the Partnership's Report of
Form 10-K for December 31, 1994 (File No. 0-15966) dated March 27, 1995.
4-D. Loan agreement and mortgage note between JMB
Income Properties, Ltd. - XI and Dresdner Bank AG, New York Branch and
Grand Cayman Branch relating to Riverside Square Mall dated November 24,
1998 are filed herewith.
<PAGE>
10-A. Acquisition documents relating to the purchase by
the Partnership of Riverside Square in Hackensack, New Jersey are hereby
incorporated 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 by reference to the
Partnership's Report on Form 8-K (File No. 0-15966) dated June 20, 1985.
10-C. Deed in Lieu of Foreclosure Agreement and
Memorandum of Mutual Releases dated November 15, 1994 between Three Hundred
Delaware Avenue Associates, L.P. and EML Associates are hereby incorporated
by reference to the Partnership's Report on Form 8-K (File No. 0-15966)
dated November 15, 1994.
10-D. Request for Full Reconveyance relating to the
repayment of the mortgage indebtedness by San Jose to Connecticut General
Life Insurance Company dated October 31, 1995 is hereby incorporated herein
by reference to the Partnership's Report on Form 10-K (File No. 0-15966)
dated March 25, 1996.
10-E. 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-F. 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-G. 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.
<PAGE>
21. List of Subsidiaries
24. Powers of Attorney
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.
No annual report or proxy material for the year 1998 has been sent to
the Partners of the Partnership. An annual report will be sent to the
Partners subsequent to this filing.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XI
By: JMB Realty Corporation
Managing General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 22, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Managing General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 22, 1999
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 22, 1999
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 22, 1999
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 22, 1999
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 22, 1999
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 22, 1999
By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 22, 1999
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 22, 1999
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE Page
------------ ----
3-A. Certain pages of the Prospectus
dated July 11, 1984 Yes --
3-B. Amended and Restated Agreement
of Limited Partnership Yes --
4-A. 1994 Mortgage loan agreement
related to Riverside Square Yes --
4-B. Mortgage loan agreement
related to Park Center
Financial Center Yes --
4-C. Mortgage loan agreement
related to Park Center Plaza Yes --
4-D. 1998 Mortgage Loan agreement
related to Riverside Square No
10-A. Acquisition documents
related to Riverside Square Yes --
10-B. Acquisition documents
related to Park Center Plaza Yes --
10-C. Disposition documents related
to Bank of Delaware Yes --
10-D. Request for Full Reconveyance
related to San Jose Yes --
10-E. Purchase and Sale Agreement related to
the Royal Executive Park office complex Yes --
10-F. First Amendment to the Purchase
and Sale Agreement related
to San Jose Yes --
10-G. Purchase and Sale Agreement with
exhibits related to San Jose Yes --
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
EXHIBIT 4-D
- -----------
LOAN AGREEMENT
dated as of
November 24, 1998
between
JMB INCOME PROPERTIES, LTD. - XI
and
DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH
<PAGE>
LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT (this "Agreement") is dated as of the 24th day of
November, 1998 by and between JMB INCOME PROPERTIES, LTD. - XI, an Illinois
limited partnership ("Borrower"), and DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH and its permitted successors and assigns ("Lender").
R E C I T A L S:
---------------
A. Borrower is the owner of certain Property (as hereinafter
defined) located in Hackensack, New Jersey.
B. Borrower has requested Lender to make a loan (the "Loan") to
Borrower in the aggregate principal amount of Thirty Four Million Dollars
($34,000,000) in connection with a fully enclosed, regional shopping mall
located on the Property and known as the Riverside Square Mall (the
"Mall").
C. The Loan is evidenced by a certain Mortgage Note dated as of
even date herewith in the aggregate principal amount of Thirty Four Million
Dollars ($34,000,000) (the "Note").
D. The Note is secured by, among other things, (i) that certain
Mortgage, Assignment of Leases and Security Agreement executed by Borrower)
dated as of even date herewith in favor of Lender (the "Mortgage"); (ii)
that certain Assignment of Leases and Rents executed by Borrower as of even
date herewith in favor of Lender (the "Assignment of Leases"); (iii) that
certain Environmental Indemnity Agreement executed by Borrower dated as of
even date herewith in favor of Lender (the "Indemnity Agreement"); (iv)
that certain Subordination of Management Agreement executed by the manager
of the Property as of even date herewith in favor of Lender (the
"Subordination of Management Agreement"); and (v) certain other loan
documents.
E. Subject to the terms and conditions of this Agreement, Lender
has agreed to make the Loan to Borrower.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements herein contained, the sufficiency of
which is hereby acknowledged, the parties hereto represent and agree as
follows:
ARTICLE 1
---------
INCORPORATION AND DEFINITIONS
-----------------------------
1.1 INCORPORATION AND DEFINITIONS: The foregoing recitals and all
exhibits attached hereto are hereby made a part of this Agreement. The
following terms shall have the following meanings in this Agreement:
(a) BUSINESS DAY: Any day on which national banking
associations are required to be open for business in Chicago, Illinois, New
York City and London, England.
<PAGE>
(b) DEBT AMORTIZATION CHARGES: An amount reasonably
determined by Lender to be the monthly payment which would be required to
amortize the portion of the principal amount of the Loan outstanding during
such month over a period of twenty-five (25) years using an interest rate
equal to the ten (10) year United States Treasury note annual yield as of
the date Lender determines Total Interest Expense based upon published
quotes for Treasury notes having ten (10) years to maturity, as published
in the Wall Street Journal, subject, however, to a minimum annual constant
of 9.25%.
(c) DEFAULT: As defined in Section 6.1 hereof.
(d) ERISA: The Employee Retirement Income Security Act of
1974, as amended from time to time and any regulations promulgated
thereunder.
(e) GAAP: Generally accepted accounting principles,
uniformly applied.
(f) JMB: JMB Realty Corporation, a Delaware corporation, and
the managing general partner of Borrower.
(g) LAND: The real property subject to the lien of the
Mortgage, legally described on Exhibit A of the Mortgage.
(h) LEASE: Any lease, whether written or oral, now or
hereafter entered into by or on behalf of Borrower with respect to any
portion of the Property.
(i) LOAN AMOUNT: Thirty Four Million Dollars
($34,000,000.00).
(j) LOAN DOCUMENTS: This Agreement, the Note, the Mortgage,
the Assignment of Leases, the Indemnity Agreement, the Subordination of
Management Agreement and such other documents as may now or hereafter be
executed by Borrower to Lender to evidence or secure the Note, together
with all modifications, amendments, substitutions and renewals thereof.
(k) MALL: As defined in Recital B of this Agreement.
(l) MAJOR LEASE: Any Lease covering an aggregate square
footage in excess of 5,000 square feet.
(m) MATERIAL ADVERSE EFFECT: A material adverse effect on (a)
the business, operations, property or condition (financial or otherwise) of
Borrower taken as a whole which would materially impair Borrower's ability
to repay the Loan to the extent required by the Loan Documents or otherwise
perform its obligations under this Agreement or any of the other Loan
Documents or (b) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of Lender thereunder or
hereunder.
<PAGE>
(n) MORTGAGE: As defined in the Preamble.
(o) NET OPERATING INCOME: With respect to any fiscal period
of Borrower, the gross rental and other ordinary income from the operation
of the Property, less all expenses incurred in connection with the
operation of the Property during such fiscal period (including, without
limitation, real estate taxes, management fees and bad debt expenses), but
before payment of or provision for Total Interest Expense for such fiscal
period, income taxes for such period, tenant allowances, lease commissions,
capital additions and depreciation, amortization, and other non-cash
expenses for such fiscal period, all as determined in accordance with GAAP.
(p) NOTE: As defined in the Preamble.
(q) PERSON: Any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government (whether
national, federal, state, provincial, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body
or department thereof).
(r) PROPERTY: The Land which is legally described on Exhibit
A attached hereto together with all improvements thereon and all rights
appurtenant thereto.
(s) TOTAL DEBT SERVICE: For any fiscal period of Borrower,
the sum (without double-counting) of (i) Total Interest Expense for such
period, plus (ii) Debt Amortization Charges of Borrower.
(t) TOTAL INTEREST EXPENSE: For any fiscal period of
Borrower, the aggregate amount of interest required in accordance with GAAP
to be paid or accrued by Borrower during such period under the Note.
(u) YEAR 2000 PROBLEM: Any significant risk that computer
hardware, software or equipment containing embedded microchips essential to
the business or operations of Borrower will not, in the case of dates or
time periods occurring after December 31, 1999, function at least as
reliably and effectively as in the case of time periods occurring before
January 1, 2000, including the making of accurate Leap Year calculations.
ARTICLE 2
---------
THE LOAN
--------
2.1 AGREEMENT TO BORROW AND LEND; NOTE. Borrower agrees to borrow
from Lender, and Lender agrees to lend to Borrower, Thirty Four Million
Dollars ($34,000,000) on the terms of and subject to the conditions of this
Agreement and the other Loan Documents.
<PAGE>
2.2 PRINCIPAL AND INTEREST; EXTENSION OPTION. Payments of
principal and interest shall be due and payable to Lender as described in
the Note. The entire principal balance of the Note and all accrued and
unpaid interest thereon shall be due, if not sooner paid, on November 24,
1999 (the "Maturity Date"). Borrower shall have the option to extend the
Maturity Date to May 24, 2000, provided that (i) Borrower shall notify
Lender in writing (the "Extension Notice") of its election to extend the
Maturity Date not less than thirty (30) days prior to the original Maturity
Date; (ii) Borrower shall deliver to Lender, with the Extension Notice, a
non-refundable extension fee in the amount of $34,000; (iii) on the date
Borrower notifies Lender of its intent to extend the Maturity Date and on
the original Maturity Date, there shall be no Default or any event or
circumstance which, with the giving of notice or passage of time, would
constitute a Default under the Loan Agreement or any other Loan Document;
(iv) on the date Borrower notifies Lender of its intent to extend the
Maturity Date and on the original Maturity Date, there shall have been no
Material Adverse Effect; (v) on the date Borrower notifies Lender of its
intent to extend the original Maturity Date, Borrower shall deliver to
Lender annual projections for the following year prepared by Borrower of
operating expenses, cash flows, capital expenditures, tenant improvements
and other income expenses of Borrower relating to the Property in form and
substance reasonably acceptable to Lender; and (vi) Borrower shall deliver
a certification from an authorized officer of Borrower to Lender,
simultaneously with the delivery of the Extension Notice, stating that the
ratio of Net Operating Income (estimated by Borrower and approved by Lender
in its reasonable discretion based upon all executed Leases at the
Property) for the twelve-month period following the original Maturity Date
to estimated Total Debt Service for the same period shall be 1.85 to 1.00
or greater (the "Income Ratio"), which certification shall include
Borrower's calculation of estimated Net Operating Income and estimated
Total Debt Service and a current copy of a certified rent roll for the
Property.
Notwithstanding the foregoing, in the event that the Property does
not generate the foregoing Income Ratio at the time the extension is
requested and at the original Maturity Date, then Borrower may pay down the
outstanding principal balance of the Loan on or before the original
Maturity Date in order to achieve such ratio and qualify for the extension
of the Maturity Date.
Borrower shall not be permitted to prepay all or any portion of the
Note except as provided in the Note.
2.3 LOAN FEE. In consideration of Lender's agreement to make the
Loan, as provided in paragraph 2.1 hereof, Borrower shall pay to Lender a
non-refundable fee in the amount of $68,000 as a condition precedent to
funding the proceeds of the Loan.
<PAGE>
2.4 CONDITIONS PRECEDENT. The loan proceeds shall be disbursed by
Lender to Borrower only upon satisfaction of the following conditions
precedent, as determined by Lender in its sole discretion:
(a) Delivery by Borrower to Lender of the original executed
Note, as described in the Recitals.
(b) Delivery to Lender of a fully executed copy of this
Agreement and the other Loan Documents.
(c) Delivery to Lender of the Mortgage.
(d) Delivery to Lender of a pro-forma ALTA-1992 loan title
insurance policy for the Property (the "Loan Policy"), which Loan Policy
shall (i) insure that the Mortgage creates a valid perfected first lien
against title to the Property to the extent of the stated amount of the
Note, (ii) provide such endorsements as Lender may reasonably request and
as are available in the jurisdiction where the Property is located, and
(iii) raise only such exceptions to title on the Property as Lender may
approve.
(e) Delivery to Lender of a comprehensive phase I
environmental report, in form and substance acceptable to Lender and
prepared by Versar, Inc.
(f) Delivery to Lender of an appraisal satisfactory to Lender
prepared by an appraiser who is a member of the American Institute of Real
Estate Appraisers and who is approved by Lender. The appraisal must show
an appraised value of the Property, such that the ratio of the appraised
value of the Property to the principal amount of the Loan shall be no more
than fifty-five percent (55%) at stabilization.
(g) Delivery to Lender of an ALTA Survey reasonably
satisfactory to Lender prepared by BOSWELL Engineering.
(h) Delivery to Lender of copies of all existing contracts
providing for the management, operation or leasing of the Property or any
improvements thereon, including, without limitation, that certain Property
Management Agreement (the "Management Agreement") entered into between
Borrower and Urban Retail Properties Co. ("Urban"), together with the
Subordination of Management Agreement.
(i) Delivery to Lender of tenant estoppel letters or
operating agreement estoppel letters, as the case may be, and
subordination, non-disturbance and attornment agreements ("SNDA"), in form
and substance reasonably satisfactory to Lender, from Major Tenants at the
Property occupying at least fifty percent (50%) in the aggregate of the
gross leasable area of the Property; provided, however, that although no
SNDA shall be delivered by Bloomingdale's Real Estate, Inc., as it is not a
tenant under a Lease, the gross leasable area of the Bloomingdales store
shall be included in determining whether or not the fifty percent (50%)
threshold has been met.
<PAGE>
(j) Payment to Lender of (i) the loan fee described above,
which fee shall be due and payable upon delivery of this Agreement by
Borrower to Lender, and (ii) the expenses described in paragraph 9.2
hereof.
(k) Receipt and approval by Lender of all opinion letters,
authorization and other due diligence items previously requested by Lender
with respect to the Property.
(l) Receipt and approval by Lender of certificates of
insurance on the Property, as required by the Mortgage.
(m) Delivery to and approval by Lender of Borrower's annual
projections for calendar years 1998 and 1999 prepared by Borrower of
operating expenses, cash flows, capital expenditures, tenant improvements
and other income expenses of Borrower relating to the Property.
(n) Delivery to and approval by Lender of a certified rent
roll for the Property.
(o) Delivery to Lender of all Leases requested by Lender,
which Leases shall be satisfactory to Lender in its reasonable discretion.
(p) Delivery to and approval by Lender of such other papers
and documents regarding Borrower or the Property as
Lender may reasonably require.
ARTICLE 3
---------
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
3.1 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Lender as of the date hereof:
(a) Borrower has good and insurable fee simple title to the
Land and is the owner of the Property, subject only to liens and
encumbrances described in the Loan Policy, rights of existing tenants in
possession and such other liens, encumbrances and exceptions as may be
reasonably approved or permitted by Lender.
(b) Borrower is duly organized and validly existing under the
laws of the State of Illinois. Borrower has full power and authority to
conduct its business as presently conducted, to enter into the Loan
Documents and to perform all of its duties and obligations thereunder.
Such execution and performance have been duly authorized by all necessary
corporate, shareholder, member or partnership approval. The ownership and
operation of the Property and the operation of Borrower's partnership in
accordance with Borrower's partnership agreement, is the sole business of
Borrower.
<PAGE>
(c) This Agreement, the Mortgage, the Note, the other Loan
Documents and any other documents and instruments required to be executed
and delivered by Borrower in connection with the Loan, when executed and
delivered, will constitute the duly authorized, valid and legally binding
obligations of the party required to execute the same and will be enforce-
able strictly in accordance with their respective terms (except to the
extent that enforceability may be affected or limited by equitable
remedies, applicable bankruptcy, insolvency, fraudulent conveyance and
other similar debtor relief laws affecting the enforcement of creditors'
rights generally). No basis presently exists for any claim by Borrower
against Lender under this Agreement, the Note, the Mortgage, the other Loan
Documents or with respect to the Loan and to the actual knowledge of
Borrower, enforcement of the Mortgage and the Loan Documents in accordance
with their respective terms is subject to no defenses of any kind.
(d) The execution, delivery and performance of this
Agreement, the Mortgage, the Note, the other Loan Documents and any other
documents or instruments to be executed and delivered by Borrower pursuant
to or in connection with this Loan will not, in any material respect:
(i) violate any provisions of law or any applicable regulation, order,
writ, injunction or decree of any court or governmental authority, or
(ii) conflict with, be inconsistent with, or result in any breach or
default of any of the terms, covenants, conditions or provisions of any
indenture, mortgage, deed of trust, instrument, document, agreement or
contract of any kind to which Borrower is a party or by which Borrower may
be bound. To the actual knowledge of Borrower, Borrower is not in default
(without regard to grace or cure periods) under any contract or agreement
to which it is a party, the effect of which default would materially and
adversely affect the performance by Borrower of its obligations pursuant to
and as contemplated by the terms and provisions of the Mortgage and the
other Loan Documents.
(e) To the actual knowledge of Borrower, no agreement,
document, instrument, restriction, litigation or proceeding (or, to
Borrower's actual knowledge, threatened litigation or proceeding or basis
therefor) exists which could adversely affect the validity or priority of
the liens and security interests granted Lender hereunder or under the Loan
Documents or which could materially and adversely affect the ability of
Borrower to perform its obligations under the Loan Documents.
(f) To the actual knowledge of Borrower, the Property does
not violate or conflict with, in any material respects, any applicable law,
statute, ordinance, rule, regulation or order of any kind, including, with-
out limitation, environmental laws, zoning, building, land use, noise
abatement, occupational health and safety or other laws, any building
permit or any condition, grant, easement, covenant, condition or
restriction, whether recorded or not, except to the extent that such
violation would not constitute a Material Adverse Effect.
<PAGE>
(g) To the actual knowledge of Borrower, except as disclosed
to Lender in that certain Environmental Site Assessment Report dated
October 9, 1998, prepared by Versar, Inc. (the "Report") with respect to
the Property delivered to Lender, there are no facilities on the Property
which are subject to reporting under Section 312 of the Federal Emergency
Planning and Community Right-to-Know Act of 1986 (42 U.S.C. Section 11022),
and federal regulations promulgated thereunder and the Premises do not
contain any underground storage tanks.
(h) As of the respective dates of certification or
preparation, all historical financial statements submitted by Borrower to
Lender in connection with this Loan are true and correct in all material
respects and fairly present the cash flows of the entities or property
which are their subjects.
(i) As of the respective dates of certification or
preparation, all financial statements, budgets, schedules, opinions,
certificates, statements, applications, rent rolls, affidavits, agreements,
contracts, and other materials submitted to Lender in connection with or in
furtherance of the Loan by Borrower or any of Borrower's agents or
contractors fully and fairly, in all material respects, state the matters
with which they purport to deal.
(j) Borrower has timely filed all federal, state and other
governmental tax and similar returns which it is required by law to file
with respect to Borrower and/or the Property and the operation and business
thereof, and all taxes and other sums which are shown to be payable under
such returns have been fully paid or, if Borrower is contesting or
disputing payment thereof, Borrower had timely filed all extensions,
protests, objections and other documentation necessary to contest or
dispute such taxes before penalties are assessed thereto.
(k) To the actual knowledge of Borrower, Borrower now
possesses and holds all necessary and material licenses, franchises,
governmental permits, certificates, consents and other approvals required
to conduct and operate the business of the Property as presently conducted
thereon except to the extent such violation would not constitute a Material
Adverse Effect.
(l) Except as disclosed in writing to Lender, or as may
hereafter be disclosed to Lender in the engineering reports, if any, to be
delivered to Lender, any and all material improvements, fixtures, equipment
and facilities on the Property are in good operating condition and repair
and the Property is free from material structural defects and the parking
areas have adequate drainage.
(m) Borrower has not incurred any material accumulated
funding deficiency within the meaning of ERISA or any material liability to
the Pension Benefit Guaranty Corporation established under ERISA, or any
successor thereto, in connection with any employee benefit plan established
or maintained by Borrower; the execution and delivery by Borrower of this
Agreement, the Note and the other Loan Documents will not involve any pro-
hibited transaction within the meaning of ERISA or Section 4975 of the
International Revenue Code of 1986, as amended.
<PAGE>
(n) Borrower has reviewed, or will expeditiously review, its
operations with a view to assessing whether its business will be vulnerable
to a Year 2000 Problem or will be vulnerable to the effects of a Year 2000
Problem suffered by any of Borrower's major commercial counter-parties.
Borrower shall take all commercially reasonable actions necessary to assure
that its computer-based and other systems are able to effectively process
data, including dates before, on and after January 1, 2000, without
experiencing any Year 2000 Problem that could cause a Material Adverse
Effect. At the written request of Lender, Borrower will provide Lender
with assurances and substantiations (including, but not limited to, the
results of internal or external audit reports prepared in the ordinary
course of business) reasonably acceptable to Lender as to the capability of
Borrower to conduct its business and operations before, on and after
January 1, 2000 without experiencing a Year 2000 Problem causing a Material
Adverse Effect. Borrower represents and warrants that it has a reasonable
basis to believe that no Year 2000 Problem will cause a Material Adverse
Effect.
(o) Borrower has removed, or has caused the removal of, that
certain 55-gallon drum containing waste oil, previously located on the
Property. Such removal was conducted in a commercially reasonable manner
in compliance with all laws, ordinances and regulations and no leakage or
spillage occurred on or about the Property.
All representations and warranties contained in this Agreement or any
of the other Loan Documents shall survive the execution and delivery of
this Agreement for as long as any portion of the Loan remains outstanding.
3.2 COVENANTS. To induce Lender to make the Loan, Borrower hereby
covenants to Lender, for as long as any portion of the Loan shall be
outstanding, as follows:
(a) From and after the date hereof, Borrower shall not engage
in any business other than the ownership and operation of the Property,
without the prior written consent of Lender.
(b) All financial statements to be submitted by Borrower to
Lender in connection with the Loan will, for the periods covered thereby,
be true and correct in all material respects and fairly present the
respective cash flows of the entities or property which are their subjects.
(c) Borrower shall hereafter continue to timely file all
federal, state and other governmental tax and similar returns which it is
required by law to file with respect to Borrower and/or the Property and
the operation and business thereof, and Borrower shall continue to pay all
taxes and other sums which are shown to be due and payable by Borrower
under such returns, if any; or, if Borrower elects to contest the payment
or amount of any such taxes, Borrower shall comply with the provisions of
Article 4.2 of the Mortgage.
<PAGE>
(d) During the term of the Loan, Borrower shall promptly
furnish to Lender a written notice of any litigation in which Borrower is
named a defendant or any litigation which, if adversely determined, would
constitute a Material Adverse Effect.
(e) Borrower shall pay Total Interest Expense when due
and punctually perform and observe all of the requirements of (i) this
Agreement; (ii) the Note; (iii) the Mortgage; (iv) the Assignment of
Leases; (v) the Indemnity Agreement; (vi) the Subordination of Management
Agreement; and (vii) the other Loan Documents. Borrower shall have the
privilege of making prepayments on the principal amount of the Note (in
addition to the required payments thereunder) in accordance with the terms
and conditions set forth in the Note, but not otherwise.
(f) Borrower shall cause the Property to be owned, operated
and maintained in compliance, in all material respects, with applicable
laws, statutes, ordinances, rules, regulations and orders, including,
without limitation, environmental laws, zoning, building land use, noise
abatement, occupational health and safety and other laws, building permits,
grants, easements, covenants and restrictions.
(g) From and after the date hereof, Borrower shall maintain a
ratio of Net Operating Income to Total Debt Service of 1.75:1 or more, as
determined by Borrower's accountant to the reasonable satisfaction of
Lender, at the end of each fiscal quarter of Borrower.
(h) Without the prior written consent of Lender, Borrower
shall not incur any direct or contingent debts other than the Loan;
provided, however, nothing contained herein shall prohibit Borrower from
acquiring goods, supplies or merchandise for the Property on normal trade
credit, including equipment leases and purchase money financing on
equipment and personalty, and debts in existence on the date of this
Agreement as disclosed to Lender in writing.
(i) From and after the date hereof, Borrower shall not
create, assume, allow or permit any lien, security interest or other
encumbrance to attach to all or any portion of the Property nor grant,
pledge, lien or assign any interest in Borrower nor merge the assets of
Borrower with any other entity, except to the extent permitted under
Section 7.2 hereof.
(j) From and after the date hereof, JMB shall not create,
assume, allow or permit any lien or security interest to attach to all or
any portion of its partnership interest in Borrower.
(k) From after the date hereof, Borrower shall not allow or
permit any lien or security interest to attach to all or any portion of
JMB's partnership interest in Borrower.
(l) Borrower shall cause any and all management fees payable
with respect to the Property to be fully subordinated to the rights of
Lender under the Note and the other Loan Documents pursuant to the
Subordination of Management Agreement.
<PAGE>
(m) Borrower shall not change the person or entity
responsible for managing the Property without the prior written consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding the foregoing, Lender acknowledges and consents
to Urban as manager of the Property.
(n) Borrower shall keep books of account and prepare
financial statements and shall cause to be furnished to Lender the
following financial information, all of which shall be kept and prepared in
accordance with GAAP, consistently applied, unless Borrower's certified
public accountants concur in any changes therein and such changes are
disclosed to Lender in writing and reasonably acceptable to Lender:
(i) Promptly after becoming available, but not later
than forty-five (45) days after the end of each fiscal quarter of Borrower,
commencing with the fiscal quarter ending December 31, 1998, unaudited
balance sheets of Borrower as of the end of such quarter, and the related
statements of income and statement of cash flow for that portion of the
fiscal year of Borrower ending as of the end of such quarter, certified by
Borrower's chief financial officer or accounting officer as prepared in
accordance with GAAP, consistently applied, and fairly presenting the
financial position and operations of Borrower for such period, subject,
however, to ordinary and customary year-end adjustments and the absence of
footnotes;
(ii) Concurrently with the delivery of the financial
statement described in Subsection (i) above, a statement in reasonable
detail showing the calculations used in determining compliance with the
financial covenants contained herein (which calculations shall be subject
to Lender's review and approval), and a certificate of Borrower's chief
financial officer or accounting officer certifying to Lender that there
does not exist any Default or, if such officer is aware of a Default, the
nature thereof;
(iii) Within forty-five (45) days after the end of each
fiscal quarter of Borrower during the term of the Loan, a certification
from an authorized officer of Borrower stating Borrower's calculation of
the ratio of Net Operating Income to Total Debt Service, together with the
financial information and calculations used by Borrower to obtain its
results;
(iv) As soon as available but in any event not later
than forty-five (45) days after the end of calendar year 1998, and
subsequent years thereafter during the term of the Loan, annual projections
for the following year prepared by Borrower of operating expenses, cash
flows, capital expenditures, tenant improvements and other income expenses
of Borrower relating to the Property;
(v) Within forty-five (45) days after the end of each
fiscal quarter of Borrower during the term of the Loan, a certified rent
roll for the Property; and
<PAGE>
(vi) Such other data and information (financial and
otherwise) as Lender may, from time to time, reasonably request, relating
to the Property, Borrower's financial condition or the results of
operations.
(o) Borrower shall notify Lender as promptly as possible if
Borrower has actual knowledge of (i) the occurrence of any Default,
(ii) any litigation, claim or proceeding against or affecting Borrower
seeking the payment of money by Borrower in excess of One Million Dollars
($1,000,000), whether in the form of damages, fines, penalties or costs,
(iii) any action, claim, proceeding or dispute involving Borrower and any
court, board, commission, agency or instrumentality of any federal, state
or local government or any agency or subdivision thereof, which if
adversely resolved could be reasonably expected to result in a Material
Adverse Effect, or (iv) any Material Adverse Effect.
(p) Except to the extent permitted under Section 7.2 hereof,
Borrower shall not fail to maintain its organizational existence, or
dissolve or liquidate all or substantially all of its assets, or merge or
consolidate with any other corporation or entity or purchase any stock or
assets of any other person, association, partnership, corporation or
entity, other than assets used in the ordinary course of business of
Borrower or enter into any pool, joint venture or syndicate with any other
party.
(q) Borrower shall permit Lender, its agents and
representatives, to inspect the Property and inspect, audit and make
extracts from Borrower's records, files, books of account, computer
software and disks during normal business hours and upon not less than 48
hours prior notice at the place where such books and records are
customarily kept.
(r) Based upon the recommendations set forth in the Report,
Borrower has requested and Saks Fifth Avenue ("Saks") has relocated the
majority of certain chemicals, previously located in the mechanical room in
the demised premises of Saks as described in the Report, to an area of the
Saks premises without floor drains; to the actual knowledge of Borrower,
such relocation was conducted in a commercially reasonable manner in
compliance with all laws, ordinances and regulations without leakage or
spillage occurring on or about the Property. As to the remainder of such
chemicals which for practical reasons shall remain in the mechanical room,
Borrower has requested that Saks utilize a form of secondary containment in
order to safeguard against any potential leakage, spillage or discharge of
such chemicals and to ensure storage in compliance with all applicable
laws, ordinances and regulations. Borrower agrees to use commercially
reasonable efforts to ensure compliance by Saks with such request.
<PAGE>
ARTICLE 4
---------
THEATER LEASE/LEASING COSTS
---------------------------
Lender acknowledges that Borrower is currently engaged in, or
hereafter may enter into negotiations for the construction and leasing of a
theater to be located in the Mall (the "Theater"). Borrower agrees that it
shall not enter into a lease for the Theater without the prior written
consent of Lender; provided, however, that Lender hereby approves of the
terms and conditions with respect to such lease as set forth on Exhibit A
attached hereto and incorporated herein. Lender's consent shall not be
required with respect to such lease provided that the material terms and
conditions thereof are substantially similar to those set forth in
Exhibit A as determined by Lender in its reasonable discretion. Lender
shall be deemed to have approved any such lease after the 10th business day
after the date Lender has received such lease if no changes or objections
thereto are sent to Borrower within such time period. In the event that
Borrower enters into a lease for the Theater, and if Borrower is
responsible for the cost of tenant's build-out (not to exceed $4,600,000)
or leasing commissions (not to exceed $80,000) in connection therewith
(collectively referred to as the "Leasing Costs"), Borrower shall deposit,
with a title insurance company reasonably acceptable to Lender, the amount
necessary or required to fully satisfy the Leasing Costs (the "Construction
Escrow"), together with such other documents and materials reasonably
requested by Lender, including, without limitation, (i) a project budget
for construction of the Theater and (ii) plans and specifications detailing
the construction of the Theater. To secure payment of the Note and
performance of Borrower's obligations under the Loan Documents, Borrower
agrees to execute and deliver to Lender, such documents and agreements
reasonably requested by Lender, in a form reasonably approved by Borrower,
pledging and granting to Lender a continuing security interest in any
amounts required to be deposited with the title company pursuant to this
Section, including without limitation, a Deposit, Pledge and Security
Agreement, in a form reasonably approved by Borrower, together with any
other documents or instruments reasonably requested by Lender to perfect a
continuing security interest in such monies. Amounts held in the
Construction Escrow shall be disbursed pursuant to the terms, and subject
to the conditions of, a construction escrow agreement in form and substance
reasonably acceptable to Lender and Borrower.
ARTICLE 5
---------
INTENTIONALLY DELETED
---------------------
<PAGE>
ARTICLE 6
---------
DEFAULTS; REMEDIES
------------------
6.1 DEFAULTS. If one or more of the following events (herein
called "Defaults") shall occur and be continuing:
(a) If any default is made in the due and punctual payment of
principal due on the Maturity Date (as such date may be extended pursuant
the extension option set forth in Section 2.2) or if any default is made in
the due and punctual payment of interest within five (5) business days
after the date such payment is due under the Note;
(b) Except as otherwise provided under this Paragraph 6.1, if
a default shall exist and be continuing in the performance or observance of
any other covenant or agreement of Borrower under the Note, the Mortgage,
this Agreement or any other document or instrument regulating, evidencing
or securing the Loan, including, but not limited to, any of the Loan
Documents, which default continues for a period of fifteen (15) business
days after written notice thereof is given to Borrower; provided that if
Borrower shall commence to cure such default and thereafter diligently
pursue such cure, and such default does not have a Material Adverse Effect,
then Borrower shall have up to thirty (30) days to cure such default;
(c) The occurrence of a Prohibited Transfer (as defined in
the Mortgage);
(d) If any representation or warranty contained herein or in
any other Loan Document or if any of the information contained in any
documentation provided to Lender by Borrower in conjunction with the Loan
shall not be true and accurate in all material respects as of the date
made;
(e) If:
(i) Borrower shall file a voluntary petition in
bankruptcy or for relief under the federal Bankruptcy Act or any similar
state or federal law;
(ii) Borrower shall file a pleading in any proceeding
admitting insolvency;
(iii) Within ninety (90) days after the filing against
Borrower of any involuntary proceeding under the federal Bankruptcy Act or
similar state or federal law, such proceedings shall not have been vacated;
<PAGE>
(iv) All or substantially all of Borrower's assets are
attached, seized, subjected to a writ or distress warrant, or are levied
upon, unless such attachment, seizure, writ, warrant or levy is vacated
within ninety (90) days;
(v) Borrower shall make an assignment for the benefit
of creditors or shall consent to the appointment of a receiver or trustee
or liquidator of all or substantially all of its property, or the Property;
or
(vi) Any order appointing a receiver, trustee or
liquidator of Borrower or all or substantially all of Borrower's property
or the Property is not vacated within ninety (90) days following the entry
thereof;
(f) If a notice of lien, levy or assignment is filed or
recorded with respect to the Property or with respect to all or any of the
assets of Borrower by the United States government or any department,
agency or instrumentality thereof or by any state, county, municipal or
other governmental agency, or if any taxes or debts owing at any time or
times hereafter to any one of them becomes a lien or encumbrance upon the
Property or any other of Borrower's assets and any of the foregoing is not
released, bonded or otherwise secured to Lender's reasonable satisfaction
within thirty (30) days after the same becomes a lien or encumbrance;
(g) The dissolution of Borrower;
(h) Any Major Lease which exceeds 20,000 square feet, or
Major Leases which in the aggregate exceed 20,000 square feet, shall
terminate or be canceled due to the default or breach of obligations
thereunder by the landlord; provided, however, that termination or
cancellation due to rights of tenants set forth in their leases to
terminate in the event that certain co-tenancy conditions have not been met
shall not be deemed a Default hereunder; or
(i) If Borrower shall enter into a lease for the Theater
which has Leasing Costs, and Borrower shall fail to pay such Leasing Costs
as and when required by the lease and such failure continues beyond any
applicable periods of notice or cure under the lease;
then Lender, at its option and without affecting the lien created by the
Mortgage or any other Loan Document or the priority of said lien or any
other right of Lender hereunder, may declare, without further notice, all
indebtedness owing to Lender under the Loan Documents immediately due with
interest thereon at the Default Rate, and Lender may immediately proceed
to foreclose the Mortgage and to exercise any right provided by the
Mortgage, the Note, the other Loan Documents or otherwise.
<PAGE>
ARTICLE 7
---------
ASSIGNMENTS
-----------
7.1 LENDER'S RIGHT TO ASSIGN. Lender shall have the right, at any
time and from time to time during the term of the Loan, to sell, assign,
transfer or convey all or any portion of its interest in the Loan, the
Note, and the other Loan Documents and may sell participation interests in
such rights and security therein to any bank, insurance company or other
financial institution (a "Transferee") and Borrower agrees that it shall
fully cooperate with Lender and such Transferee to facilitate such
transfer, at Lender's sole cost and expense. In no event shall such sale
increase Borrower's liability or obligations under the Loan Documents.
Upon a sale of all or any portion of Lender's interest in the Loan and
security therefor and assumption of such interest by a Transferee, Borrower
agrees that Lender shall have no further liability with respect to the
interest or interests so sold. If requested, Borrower agrees that it shall
execute such documents, estoppels, confirmations and agreements, including,
without limitation, a replacement note or notes in favor of Lender and any
such Transferee(s), to evidence their respective rights in the Loan and the
Loan Documents.
7.2 BORROWER'S RIGHT TO ASSIGN. Except as specifically permitted
below, Borrower shall not have the right to sell, assign, convey or
otherwise transfer all or any portion of its interests in the Loan or the
Loan Documents without the prior written consent of Lender; provided,
however, that the following transfers shall be permitted without Lender's
consent: (i) the transfer of partnership interests in Borrower among the
existing partners of Borrower, (ii) transfers of limited partnership
interests in Borrower, in whole or in part, (iii) the transfer of JMB's
existing general partnership interest in Borrower, in whole or in part, to
any partnership, corporation or other entity that is directly or indirectly
controlling, controlled by or under common control with JMB (each such
entity a "JMB Affiliate"), (iv) the transfer or assignment (including,
without limitation, the pledging or
granting of a lien, mortgage, security interest or other encumbrance or
alienation) of the ownership
interests in the limited partners of Borrower, and (v) the transfer or
assignment of the ownership interest in the general partnership interest in
Borrower, provided that JMB or a JMB Affiliate has retained or will retain
(A) the existing general partnership interest in Borrower and (B) the
ability to control, directly or indirectly, the day-to-day operations and
management of Borrower. In addition to the foregoing, Borrower shall be
permitted a sale of the Property on one occasion to an unaffiliated bona-
fide purchaser, provided that Lender, in its sole and absolute discretion,
approves such bona-fide purchaser prior to such sale.
<PAGE>
ARTICLE 8
---------
INDEMNITY
---------
8.1 INDEMNITY. Borrower hereby indemnifies Lender, and its
directors, officers, employees, affiliates, agents, successors and assigns
(collectively, "Indemnified Persons") against, and agrees to hold each such
Indemnified Person harmless from, any and all losses, claims, damages and
liabilities, actually incurred (excluding speculative and consequential
damages) including expenses relating to such claims, including reasonable
counsel fees and expenses, incurred by such Indemnified Person arising out
of any claim, litigation, investigation or proceeding (whether or not such
Indemnified Person is a party thereto) relating to any transactions,
services or matters that are the subject of this Agreement or the other
Loan Documents; provided, however, that such indemnity shall not apply to
any such losses, claims, damages, or liabilities or related expenses
determined by a court of competent jurisdiction to have arisen from the
gross negligence or willful misconduct of such Indemnified Person. The
agreements of Borrower in this Section 8.1 shall be in addition to any
liability that Borrower may otherwise have. All amounts due under this
Section 8.1 shall be payable as incurred upon written demand therefor.
ARTICLE 9
---------
MISCELLANEOUS
-------------
9.1 NOTICES. Any notice, demand or other communication which any
party hereto may desire or may be required to give to any other party under
this Agreement or the other Loan Documents shall be in writing, and shall
be deemed given (i) if and when personally delivered, (ii) upon receipt or
refusal thereof if sent by Federal Express or any other nationally
recognized overnight courier addressed to a party at its address set forth
below, (iii) upon receipt or refusal thereof if deposited in United States
registered or certified mail, postage prepaid, or (iv) upon receipt if sent
by telecopy, addressed to a party at its address set forth below, or at
such other place as such party may have designated to all other parties by
notice in writing in accordance herewith:
(a) If to Borrower: JMB Income Properties, Ltd. - XI
c/o JMB Realty Corp.
900 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611-1582
Attention: Mr. Stephen A. Lovelette
Telecopy No.: (312) 915-2310
with a copy to: Pircher Nichols & Meeks
900 North Michigan Avenue
Chicago, Illinois 60611
Attention: Marc A. Benjamin, Esq.
Telecopy No.: (312) 915-3348
<PAGE>
(b) If to Lender: Dresdner Bank AG
190 South LaSalle Street
Suite 2700
Chicago, Illinois 60603
Attention: James W. Blessing
Telecopy No.: (312) 444-1301
with a copy to: Rudnick & Wolfe
203 North LaSalle Street
Suite 1800
Chicago, Illinois 60601
Attn: John T. Cusack, Esq.
Telecopy No.: (312) 236-7516
Except as otherwise specifically required herein, notice of the exercise of
any right or option granted to Lender by this Agreement is not required to
be given. Failure to deliver copies of notices shall not render the notice
invalid.
9.2 EXPENSES. Borrower shall be liable for payment of all
reasonable costs incurred by Lender in connection with making the Loan, the
preparation, execution and delivery of this Agreement and the other Loan
Documents, the enforcement of the Loan Documents and Lender's rights and
remedies thereunder, including, without limitation, reasonable attorneys'
fees and costs, consultants' fees and costs, recording fees, title
insurance premiums, environmental assessment fees and appraisal fees.
9.3 APPRAISAL. Upon the occurrence and continuation of a Default,
Lender may request a new or updated MAI appraisal for the Property and
Borrower shall cooperate with Lender in obtaining such appraisal. Borrower
shall be liable for the cost and expense of such appraisal during the term
of the Loan.
9.4 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement and
the other Loan Documents contain the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and the same
may not be amended, modified or discharged, nor may any of their terms be
waived, except by an instrument in writing signed by the party to be bound
thereby.
9.5 FURTHER ASSURANCES. The parties hereto each agree to do,
execute, acknowledge and deliver all such further acts, instruments and
assurances and to take all such further action, in good faith and in a
commercially reasonable manner as shall be necessary or desirable to fully
carry out this Agreement and to fully consummate and effect the transaction
contemplated hereby. Any consents or approvals required by or of the
parties hereto shall not be unreasonably withheld or delayed.
9.6 NO THIRD PARTY BENEFITS. This Agreement is for the sole and
exclusive benefit of the parties hereto and their respective permitted
successors and assigns, and no third party is intended to or shall have any
rights hereunder.
<PAGE>
9.7 ASSIGNS. The terms and provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective
permitted successors and assigns.
9.8 INTERPRETATION.
(a) The headings and captions herein are inserted for
convenient reference only and the same shall not limit or construe the
paragraphs or sections to which they apply or otherwise affect the
interpretation hereof.
(b) The terms "hereby," hereof," "herein," "hereunder" and
any similar terms shall refer to this Agreement, and the term "hereafter"
shall mean after, and the term "heretofore" shall mean before, the date of
this Agreement.
(c) Words of the masculine, feminine or neuter gender shall
mean and include the correlative words of other genders, and words
importing the singular number shall mean and include the plural number and
vice versa.
(d) Words importing persons shall include firms,
associations, partnerships (including limited partnerships), trusts,
corporations and other legal entities, including public bodies, as well as
natural persons.
(e) The terms "include," "including" and similar terms shall
be construed as if followed by the phrase "without being limited to."
9.9 COUNTERPARTS. This Agreement and any document or instrument
executed pursuant thereto may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.10 COMPUTATION OF TIME. Whenever under the terms of this Agree-
ment the time for performance of a covenant or condition falls upon a
Saturday, Sunday or holiday, such time for performance shall be extended to
the next Business Day. Otherwise all references herein to "days" shall
mean calendar days.
9.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, in which
the transactions contemplated herein were negotiated, the Note and other
Loan Documents were executed and delivered, and where the principal offices
of Lender are located.
9.12 TIME OF THE ESSENCE. Time is of the essence of this agreement.
9.13 SEVERABILITY. If any provision of this Agreement shall be
judicially or administratively held invalid or unenforceable for any
reason, such holding shall not be deemed to affect, alter, modify or impair
in any way any other provision hereof.
<PAGE>
9.14 SUBMISSION TO JURISDICTION; WAIVERS. Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of Illinois located in Chicago, Illinois, the courts of the
United States of America for the Northern District of Illinois, and
appellate courts from any thereof.
(b) to the extent permitted by applicable law, consents that
any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action
or proceeding in any such court or that such action or proceeding was
brought in an inconvenient court and agrees not to plead or claim the same.
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in paragraph 9.1 hereof
or at such other address of which Lender shall have been notified pursuant
thereof.
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this subsection any special, exemplary, punitive or
consequential damages.
9.15 ACKNOWLEDGMENTS. Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) Lender has no fiduciary relationship with or fiduciary
duty to Borrower arising out of or in connection with this Agreement or any
of the other Loan Documents, and the relationship between Lender and
Borrower in connection herewith or therewith is solely that of creditor and
debtor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among Lender or Borrower.
9.16 WAIVERS OF JURY TRIAL. BORROWER AND LENDER HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
<PAGE>
9.17 CONFLICTS. In the event of any conflict between the terms of
this Agreement and the terms of the Mortgage, the terms of this Agreement
shall control.
9.18 LIMITATION OF LIABILITY. No present or future partner of
Borrower, and no advisor, trustee, director, officer, member, partner,
employee, beneficiary, shareholder, participant or agent of any entity
which now or hereafter holds a direct or indirect interest in a partner of
Borrower, shall have any personal liability, directly or indirectly, under
or in connection with this Agreement or any agreement made or entered into
under or pursuant to or in connection with this Agreement, made at any time
or times, heretofore or hereafter, and Lender, its successors and assigns,
shall look solely to the collateral of Borrower given to Lender as security
for the Loan for the payment of any claim against, or for any performance
by, Borrower, and Lender hereby waives any and all such personal liability.
The limitations of liability provided in this paragraph are in addition to,
and not in limitation of, any limitation on liability applicable provided
by law or by any other contract, agreement or instrument.
[SIGNATURES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, this Agreement is effective as of the day and
year first above written.
BORROWER:
JMB INCOME PROPERTIES, LTD. - XI
By: JMB Realty Corporation,
Its Managing General Partner
By:
Name:
Title: Vice President
LENDER:
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
JOINDER
- -------
The undersigned hereby consents to, and joins in the terms and conditions
of the foregoing Loan Agreement solely for the purposes of the covenants
set forth in Section 3.2 (j) thereof, intending to be bound thereby as
fully and with the same effect as if the undersigned had executed such
instrument.
JMB Realty Corporation,
a Delaware corporation
By:
Name:
Title: Vice President
Dated as of November 24th 1998.
<PAGE>
EXHIBIT A
---------
SUMMARY OF THEATER LEASE TERMS
------------------------------
See Attached
<PAGE>
MORTGAGE NOTE
-------------
$34,000,000 Chicago, Illinois
November 24, 1998
THIS MORTGAGE NOTE ("Note") is dated as of the 24th day of November, 1998,
by JMB INCOME PROPERTIES, LTD. - XI, an Illinois limited partnership
("Borrower") to the order of DRESDNER BANK AG, NEW YORK BRANCH AND GRAND
CAYMAN BRANCH, its successors and assigns ("Lender").
FOR VALUE RECEIVED, Borrower hereby promises to pay to the order of
Lender in the manner provided hereinafter, the principal sum of Thirty Four
Million Dollars ($34,000,000) pursuant to the terms of this Note and that
certain Loan Agreement of even date herewith (as amended or replaced from
time to time, the "Loan Agreement"), between Borrower and Lender, and its
respective successors and assigns with interest thereon, as follows:
1. CERTAIN DEFINITIONS. As used herein, the following terms shall
have the indicated meanings:
A. ADDITIONAL COST. Any Funding Cost or any other cost
incurred by Lender after the date hereof as a result of (i) the
introduction of, (ii) any change in, or (iii) any changed effect of,
(iv) any change in the interpretation of any law, rule, regulation or other
requirement imposed, interpreted, administered and/or enforced by any
United States federal, state or other governmental or monetary authority
which increases Lender's direct cost (such as a reserve requirement), which
is, is deemed to be or is made applicable against any assets held by, or
deposits or accounts in or with, or credits extended by Lender and which
causes Lender to incur any cost in, or increases the effective cost to
Lender of, lending to Borrower at the LIBOR Based Rate, or decreases the
effective spread or yield of one and one-thirtieth of one percent (1.30%)
per annum which would be made by Lender between LIBOR and the LIBOR Based
Rate.
B. BUSINESS DAY. Any day on which national banking
associations are required to be open in Chicago, Illinois, New York City,
and London, England.
C. CONTRACT. Any contract for 30, 60, 90 or 180 days (as
available), as elected by Borrower (or any other period expressly agreed to
by Lender and Borrower), made by Lender, or available to be made by Lender,
in the London, Cayman Islands or Nassau Interbank Markets to obtain the
deposit with Lender of the sum required to fund a LIBOR Portion for the
respective Contract Period.
D. CONTRACT PAYMENT DATE. For each Contract, the date on
which it matures, except that if the Contract matures on a day which is not
a Business Day, with respect to a LIBOR Portion, the date shall be the next
succeeding day which is a Business Day.
<PAGE>
E. CONTRACT PERIOD. The term of a Contract, which shall be
30, 60, 90 or 180 days (as available or any other available period
expressly agreed to by Lender and Borrower) for which Borrower elects to be
charged interest on a LIBOR Portion at the LIBOR Based Rate. No Contract
Period shall extend beyond the Maturity Date. For any LIBOR Portion in
respect of which Lender chooses not to accept a deposit, the Contract
Period thereof shall mean the interest period for which Borrower has
elected to be charged at the LIBOR Rate for a LIBOR Portion.
F. CONVERSION DATE. For interest computation purposes, and
as may be appropriate, the effective date on which:
(i) a LIBOR Portion becomes a part or all of the
Floating Rate Based Funds; or
(ii) the whole or a portion of the principal balance
from time to time outstanding of the Loan which is Floating Rate Based
Funds becomes a part or all of a LIBOR Portion; or
(iii) an expiring LIBOR Portion is converted into a part
or all of another LIBOR Portion.
G. DEBT AMORTIZATION CHARGES. As defined in the Loan
Agreement.
H. DEFAULT. As defined in Article 6 of the Loan Agreement.
I. DEFAULT RATE. Four percent (4%) per annum plus the Prime
Rate with respect to Floating Rate Based Funds and four percent (4%) per
annum plus the LIBOR Based Rate with respect to any LIBOR Portion.
J. FLOATING RATE BASED FUNDS. At any time, the portion of
the outstanding principal balance of the Loan on which interest is being
charged at the Floating Interest Rate.
K. FLOATING INTEREST RATE. The Prime Rate from time to time
in effect, each computed based on the actual number of days elapsed and a
year of three hundred sixty (360) days.
L. FUNDING COSTS. Any costs, expenses, penalties and/or
charges incurred by Lender arising directly from or relating directly to,
as the case may be, the early termination, breakage or other disposition of
a Contract because of payment or prepayment of a LIBOR Portion prior to the
Contract Payment Date or termination of such LIBOR Rate Portion, all as
determined by Lender in good faith.
M. INDEBTEDNESS. All of Borrower's liabilities, obligations
and indebtedness to Lender of any kind and nature, including, without
limitation, all principal, interest, fees, charges and other expenses due
hereunder or under any of the other Loan Documents or any other agreement.
N. INTERBANK MARKET. Any interbank market, whether located
in London, England, or the Cayman Islands, or Nassau, the Bahamas, or in
any other location satisfactory to Lender, where Lender, or any branch,
subsidiary, parent or affiliate of Lender, may purchase or sell deposits of
U.S. dollars to other banks for fixed periods.
<PAGE>
O. LIBOR. For each Contract, the interest rate quoted by
Lender on such Contract, which shall be the rate of interest per annum
(computed on basis of a three hundred sixty (360)-day year) at which a
deposit in U.S. dollars in the sum equal to the corresponding LIBOR Portion
is offered to Lender in the Interbank Market for the Contract Period at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the
first day of a Contract Period. The use of such offered interest rate to
define the LIBOR Based Rate shall not obligate Lender to accept a deposit
in order to charge interest on a LIBOR Portion at the LIBOR Based Rate once
Borrower elects to be charged interest at such rate on a portion of the
principal balance of the Loan (a LIBOR Portion) for a definite period (the
Contract Period).
P. LIBOR BASED RATE. For any given LIBOR Portion for its
corresponding Contract Period, the sum of (1) the quotient of (a) LIBOR
divided by (b) one minus the Reserve Requirement, if required by present or
future regulations imposed by any United States federal, state or other
governmental monetary authority (expressed as a decimal and rounded upward,
if necessary, to the next higher 1/100 of 1%), plus (2) 1.30% per annum
computed on the actual number of days elapsed and a year computed on the
basis of a three hundred sixty (360)-day year.
Q. LIBOR PORTION. Each portion (if there is more than one
Contract in existence) of the principal balance from time to time
outstanding on which, as a result of Borrower's election, Borrower is
charged interest at the corresponding LIBOR Based Rate. No LIBOR Portion
shall be less than One Million Dollars ($1,000,000).
R. LOAN. A Thirty Four Million Dollar ($34,000,000) loan
made by Lender to Borrower as evidenced, in part, by this Note and secured
by the Loan Documents hereinafter described.
S. LOAN DOCUMENTS. As defined in the Loan Agreement.
T. MATURITY DATE. November 24, 1999, or such earlier date as
the entire outstanding principal balance of this Note and accrued and
unpaid interest thereon, and any other sums which are due and payable
pursuant to the terms and provisions of this Note are due and payable by
reason of the acceleration of the maturity of this Note; subject, however,
to Borrower's right to extend the Maturity Date to May 24, 2000, as
provided in the Loan Agreement.
U. MORTGAGE. As defined in the Loan Agreement.
V. PAYMENT DATE. The first day of December, 1998 and the
first day of each month thereafter during the term hereof.
W. PRIME RATE. The average of the prime rates or reference
rates announced or published by Citibank and The Chase Manhattan Bank, N.A.
The "Prime Rate" is a base reference rate of interest adopted by Lender as
a general benchmark from which the Lender determines the floating interest
rates chargeable on various loans to borrowers with varying degrees of
creditworthiness and Borrower acknowledges and agrees that Lender has made
no representations whatsoever that the "Prime Rate" is the interest rate
actually offered by Lender to borrowers of any particular creditworthiness.
X. REGULATION D. Regulation D of the Board of Governors of
the Federal Reserve System from time to time in effect, and any successor
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
<PAGE>
Y. RESERVE REQUIREMENT. With respect to any Contract
Period, the daily average during each such respective period of the maximum
aggregate reserve requirement (including, but not limited to, all basic
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements
during such period) which is imposed under Regulation D on nonpersonal time
deposits of One Hundred Thousand Dollars ($100,000.00) or more with a
maturity equal to the particular Contract Period.
2. PRINCIPAL AND INTEREST; ADDITIONAL COSTS. Principal and
interest thereon shall be due and payable by Borrower as follows:
A. INTEREST. Interest on each LIBOR Portion shall accrue at
the LIBOR Based Rate and shall be computed and payable monthly in arrears
on the first day of each calendar month during the term hereof. Interest
on each Floating Rate Based Funds Portion shall accrue at the Floating
Interest Rate and shall be computed and payable monthly in arrears on the
first day of each calendar month during the term hereof. Notwithstanding
anything in this Note or the Mortgage to the contrary, interest due on any
LIBOR Portion on the date of any termination, breakage or other disposition
of its covering Contract must and shall be paid to Lender and received by
Lender in good, cleared funds, at the place designated by Lender, by 12:00
noon eastern time on the date such interest is due from Lender by reason of
the termination, breakage or other disposition in accordance with the
foregoing, time being of the essence. With respect to any portion of the
Loan which is not bearing interest at the LIBOR Based Rate, interest shall
accrue on the amount of the principal balance outstanding hereunder from
time to time at the Floating Interest Rate. Any change in the Floating
Interest Rate shall become effective on the date of each change in the
Prime Rate. Such interest shall be paid monthly in arrears on the first
day of each calendar month of the term hereof. Interest shall accrue on
any LIBOR Portion of the Loan at the LIBOR Based Rate. Each determination
of LIBOR by Lender shall be conclusive and binding for all purposes hereof
in the absence of manifest error. From and after the occurrence of a
Default or the Maturity Date of this Note, whether by acceleration or
otherwise, interest shall accrue on the amount of the principal balance
outstanding hereunder at the Default Rate and shall be payable upon demand.
B. PRINCIPAL. The entire outstanding principal balance of
this Note and any accrued and unpaid interest thereon shall be due and
payable (if not sooner paid) on the Maturity Date, as such date may be
extended pursuant to the terms and subject to the conditions set forth in
the Loan Agreement (or on the first Business Day thereafter if such day is
not a Business Day) unless due and payable earlier by reason of the
acceleration of the maturity of this Note.
C. ADDITIONAL COSTS. Borrower agrees to pay to Lender
any Additional Costs incurred by Lender, from time to time and on demand
and all such Additional Costs shall be considered additional interest on
the principal sum outstanding under this Note. Any notice of Additional
Costs to be paid shall include a statement, in reasonable detail, as to the
basis upon which said sum(s) have been computed. Any such notices of
Additional Cost to be paid and any computations of such costs given or
submitted by Lender to Borrower shall be presumptively correct and
presumptive evidence of Borrower's obligation to pay such costs.
3. FLOATING INTEREST RATE OPTIONS. Unless a LIBOR option is
designated by Borrower on all or portions of the Loan as provided in
Section 4 below, the entire outstanding principal balance of the Loan shall
accrue interest at the Floating Interest Rate.
<PAGE>
4. LIBOR OPTIONS. Provided that no Default has occurred and is
continuing under this Note or any other Loan Document, Borrower shall have
the option to cause the entire outstanding principal balance of the Loan or
any portion thereof subject to the provisions of this Agreement, to be
covered by one or more LIBOR Portions. Borrower shall make such election,
subject to:
(i) Lender's receiving written notice of the election not less than
three (3) Business Days prior to the date requested by Borrower for
commencement of the Contract Period of the Contract required to cover the
LIBOR Portion;
(ii) the availability to Lender of a Contract to cover such LIBOR
Portion effective on the requested date of commencement for the Contract
Period; and
(iii) Borrower's paying any Additional Cost incurred by Lender from
time to time which is attributable to such LIBOR Portion.
If Borrower shall fail to elect a new Contract on or before any Contract
Payment Date, then so long as no Default has occurred and is continuing, on
the Contract Payment Date, Lender shall convert any expiring Contract to a
new LIBOR Portion having the same Contract Period as the expiring Contract.
However, no more than five (5) LIBOR Portions of the Loan may be
outstanding at any one time.
5. PREPAYMENT.
A. PREPAYMENTS. The portion of this Note comprised of Floating
Rate Based Funds may be prepaid, either in whole or in part, at any time,
upon three (3) Business Days' prior notice to Lender, provided, however,
that each prepayment shall be accompanied by a payment of all interest
accrued at the Floating Interest Rate as of that date on the principal
balance outstanding hereunder and provided further that any such prepayment
made within six (6) months after the effective date of this Note shall be
accompanied by payment of a premium equal to .10% of the principal balance
outstanding hereunder ("Prepayment Premium"). The portion of this Note
comprised of a LIBOR Portion may be prepaid only on the Contract Payment
Date applicable thereto, provided that if any such LIBOR portions are
prepaid during the first six (6) months after the effective date of this
Note, Borrower shall also remit to Lender an amount equal to the Prepayment
Premium. After the sixth (6th) month anniversary of this Note, no
Prepayment Premium shall be due or payable. If Borrower shall now or
hereafter have a right to prepay such LIBOR Portion by operation of law or
otherwise, or if Borrower shall elect to prepay a LIBOR Portion on a date
other than a Contract Payment Date, such prepayment must be accompanied by
a simultaneous payment of any Additional Cost, Funding Costs and accrued
interest on any covering Contract which Lender may incur, attributable to
any such LIBOR Portion which is being prepaid in whole or in part. For
purposes hereof, upon acceleration of this Note, the portion of this Note
comprised of a LIBOR Portion having a Contract Payment Date subsequent to
the date of acceleration shall nevertheless be due and payable, payment
therefor must be accompanied by payment of any such Additional Cost,
Funding Costs and accrued interest on any covering Contract attributable to
any such LIBOR Portion and any foreclosure decree entered with respect to
the Loan shall include such Additional Cost, Funding Costs and accrued
interest.
<PAGE>
B. APPLICATION OF PREPAYMENTS. Any prepayments of the Loan shall
be applied first to any Additional Cost then due and owing to Lender by
Borrower, second to any other expenses due Lender under the Loan Documents,
third to interest accrued at the Floating Interest Rate, fourth, to
interest accrued at the LIBOR Rate and last to a LIBOR Portion; provided,
however, that mandatory prepayments shall not be applied by Lender to a
LIBOR Portion until the Contract Payment Date. All payments shall be
applied to this Note.
All payments made on account of the indebtedness evidenced by this
Note shall be made in currency and coin of the United States of America
which shall be legal tender for public and private debts at the time of
payment. Said payments and prepayments are to be made by wire transfer of
Federal funds as follows:
Wire transfer to Dresdner Bank AG,
New York Branch and Grand Cayman Branch
75 Wall Street
New York, New York 10005
ABA No.: 026-008-303
Credit Account No.: 112537
Reference: JMB Income Properties, Ltd. - XI
(include type of payment)
Attn: Mr. Gary Jermansky
6. DEFAULT. The payment of this Note is secured by, among other
things, the Mortgage and the other Loan Documents, which are held by
Lender. By this reference, the Loan Agreement is incorporated by reference
as if fully set forth herein. It is agreed that upon occurrence and during
the continuance of any Default, then, at any time thereafter, at the
election of the holder or holders hereof and without additional notice to
Borrower, the principal sum remaining unpaid hereon, together with accrued
interest thereon, shall become at once due and payable at the place of
payment as aforesaid, and Lender may proceed to foreclose the Mortgage, to
exercise any other rights and remedies available to Lender under the
Mortgage and the other Loan Documents, and to exercise any other rights and
remedies against Borrower or with respect to this Note which Lender or the
holder hereof may have at law, in equity or otherwise.
7. WAIVER. The remedies of Lender, as provided herein or in the
Mortgage or any other Loan Document, shall be cumulative and concurrent,
and may be pursued singularly, successively or together, at the sole
discretion of Lender, and may be exercised as often as occasion therefor
shall arise. Failure of Lender, for any period of time or on more than one
occasion, to exercise the option to accelerate the Maturity Date of this
Note shall not constitute a waiver of the right to exercise the same at any
time thereafter or in the event of any subsequent Default unless such prior
Default giving rise to such right to accelerate the Maturity Date of this
Note has theretofore been cured. No act of omission or commission of
Lender, including specifically any failure to exercise any right, remedy or
recourse, shall be deemed to be a waiver or release of the same; any such
waiver or release is to be effected only through a written document
executed by Lender and then only to the extent specifically recited
therein. A waiver or release with reference to any one event shall not be
construed as a waiver or release of any subsequent event or as a bar to any
subsequent exercise of Lender's rights or remedies hereunder. Except as
otherwise specifically required herein, notice of the exercise of any right
or remedy granted to Lender by this Note is not required to be given.
<PAGE>
8. ENFORCEMENT COSTS. If (i) this Note or any Loan Document is
placed in the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding; (ii) an attorney is
retained to represent Lender in any bankruptcy, reorganization,
receivership, or other proceedings affecting creditors' rights and
involving a claim under this Note or any of the Loan Documents; (iii) an
attorney is retained to protect or enforce the lien of the Mortgage or any
of the Loan Documents; or (iv) an attorney is retained after the occurrence
of a Default to represent Lender in any other proceedings of the Borrower
whatsoever in connection with this Note, the Mortgage, any of the Loan
Documents or any property subject thereto, then Borrower shall pay to
Lender all reasonable attorneys' fees, costs and expenses incurred in
connection therewith, in addition to all other amounts due hereunder.
From and after the occurrence and during the continuance of a
Default, Lender is expressly authorized to apply payments made under this
Note as Lender may elect against any or all amounts, or portions thereof,
then due and payable hereunder or under the Mortgage or any other Loan
Document, the outstanding principal balance due under this Note, the unpaid
and accrued interest due under this Note, or any combination of the
foregoing.
9. WAIVER. Borrower and any and all others who are now or may
become liable for all or part of the obligations of Borrower, under this
Note (all of the foregoing being referred to collectively herein as
"Obligors") jointly and severally: (i) to the fullest extent allowed by
law, waive and renounce any and all redemption and exemption rights and the
benefit of all valuation and appraisement privileges against the
indebtedness evidenced by this Note or by any extension or renewal hereof;
(ii) to the fullest extent allowed by law, waive presentment and demand for
payment, notices of nonpayment and of dishonor, protest of dishonor, and
notice of protest; (iii) to the fullest extent allowed by law, waive all
notices in connection with the delivery and acceptance hereof and all other
notices in connection with the performance, default or enforcement of the
payment hereof or hereunder (except as otherwise expressly provided herein
or in the Loan Agreement); (iv) to the fullest extent allowed by law, waive
any and all lack of diligence and delays in the enforcement of the payment
hereof; (v) agree that the liability of each of the Obligors shall be
without regard to the liability of any other person or entity for the
payment hereof, and shall not be affected in any manner by any indulgence
or forbearance granted or consented to by Lender to any of them with
respect hereto; (vi) consent to any and all extensions of time, renewals,
waivers or modifications that may be granted by Lender with respect to the
payment or other provisions hereof, and to the release of any security at
any time given for the payment hereof, or any part thereof, with or without
substitution, and to the release of any person or entity liable for the
payment hereof; and (vii) consent to the addition of any and all other
makers, indorsers, guarantors and other Obligors for the payment hereof,
and to the acceptance of any and all other security for the payment hereof,
and agree that the addition of any such Obligors or security shall not
affect the liability of any of the Obligors for the payment hereof. Time
is of the essence hereof.
10. GOVERNING LAW AND OTHER AGREEMENTS. Borrower agrees that:
(i) this instrument and the rights and obligations of all parties hereunder
shall be governed by and construed under the substantive laws of the State
of Illinois, without reference to the conflicts of laws principles of such
state; (ii) the obligation evidenced by this Note is an exempted
transaction under the Truth In Lending Act, 15 U.S.C. Section 1601 et seq.;
and (iii) the proceeds of the indebtedness evidenced by this Note will not
be used for the purchase of registered equity securities within the purview
of Regulation "U" issued by the Board of Governors of the Federal Reserve
System.
<PAGE>
11. INTERPRETATION. The parties hereto intend and believe that
each provision in this Note comports with all applicable law. However, if
any provision in this Note is found by a court of law to be in violation of
any applicable law, and if such court should declare such provision of this
Note to be unlawful, void or unenforceable as written, then it is the
intent of all parties hereto that such provision shall be given full force
and effect to the fullest possible extent that it is legal, valid and
enforceable, that the remainder of this Note shall be construed as if such
unlawful, void or unenforceable provision were not contained therein, and
that the rights, obligations and interests of Borrower and the holder
hereof under the remainder of this Note shall continue in full force and
effect; provided, however, that if any provision of this Note which is
found to be in violation of any applicable law concerns the imposition of
interest hereunder, the rights, obligations and interests of Borrower and
Lender with respect to the imposition of interest hereunder shall be
governed and controlled by the provisions of the following paragraph.
12. EXCESS INTEREST. It being the intention of Lender and Borrower
to comply with the laws of the State of Illinois with regard to the rate of
interest charged hereunder, it is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of the other
Loan Documents, no such provision, including, without limitation, any
provision of this Note providing for the payment of interest or other
charges and any provision of the Loan Documents providing for the payment
of interest, fees, costs or other charges, shall require the payment or
permit the collection of any amount ("Excess Interest") in excess of the
maximum amount of interest permitted by law to be charged for the use or
detention, or the forbearance in the collection, of all or any portion of
the indebtedness evidenced by this Note. If any Excess Interest is
provided for, or is adjudicated to be provided for, in this Note, the
Mortgage, or any of the other Loan Documents, then in such event:
(a) the provisions of this Section shall govern and control;
(b) neither Borrower nor any of the other Obligors shall be
obligated to pay any Excess Interest;
(c) any Excess Interest that Lender may have received
hereunder at the option of Lender, shall be (i) applied as a credit against
the then outstanding principal balance due under this Note, accrued and
unpaid interest thereon not to exceed the maximum amount permitted by law,
or both, (ii) refunded to the payor thereof, or (iii) any combination of
the foregoing;
(d) the applicable interest rate or rates shall be
automatically subject to reduction to the maximum lawful rate allowed to be
contracted for in writing under the applicable usury laws of the aforesaid
State, and this Note, the Mortgage, and the other Loan Documents shall be
deemed to have been, and shall be, reformed and modified to reflect such
reduction in such interest rate or rates; and
(e) neither Borrower nor any of the other Obligors shall have
any action or remedy against Lender for any damages whatsoever or any
defense to enforcement of the Note, Mortgage or any other Loan Document
arising out of the payment or collection of any Excess Interest.
13. SUCCESSORS AND ASSIGNS. Upon any endorsement, assignment or
other transfer of this Note by Lender or by operation of law, the term
"Lender," as used herein, shall mean such endorsee, assignee or other
transferee or successor to Lender then becoming the holder of this Note.
This Note shall inure to the benefit of Lender and its successors and
assigns and shall be binding upon the undersigned and its successors and
assigns. The terms "Borrower" and "Obligors," as used herein, shall
include the respective successors, assigns, legal and personal
representatives, executors, administrators, devisees, legatees and heirs of
Borrower and any other Obligors.
<PAGE>
14. NOTICES. Any notice, demand or other communication which any
party hereto may desire or may be required to give to any other party
hereto shall be given in the manner provided in the Loan Agreement.
15. LIMITATION OF LIABILITY. No present or future partner of
Borrower, and no advisor, trustee, director, officer, member, partner,
employee, beneficiary, shareholder, participant or agent of any entity
which now or hereafter holds a direct or indirect interest in a partner of
Borrower, shall have any personal liability, directly or indirectly, under
or in connection with this Note, or any agreement made or entered into
under or pursuant to or in connection with this Note, made at any time or
times, heretofore or hereafter, and Lender, its successors and assigns,
shall look solely to the collateral of Borrower given to Lender as security
for the Loan for the payment of any claim against, or for any performance
by, Borrower, and Lender hereby waives any and all such personal liability.
The limitations of liability provided in this paragraph are in addition to,
and not in limitation of, any limitation on liability applicable provided
by law or by any other contract, agreement or instrument.
IN WITNESS WHEREOF, Borrower has executed this Note as of the day and
year first above written.
BORROWER:
JMB INCOME PROPERTIES, LTD. - XI
By: JMB Realty Corporation,
its Managing General Partner
By:
Name:
Title: Vice President
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership was a general partner in JMB/San Jose Associates, an
Illinois general partnership which held title to Park Center Financial
Plaza prior to its sale in February 1998. The Partnership was a general
partner in Royal Executive Park-II, a New York general partnership which
held title to Royal Executive Park II prior to its sale in December 1997.
Reference is made to the Notes to Financial Statements filed with this
annual report for a summary description of the terms of such partnership
agreements. The Partnership's interest in the foregoing joint venture
partnerships, and the results of their operations are included in the
financial statements of the Partnership filed with this annual report.
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the managing general partner of JMB INCOME PROPERTIES,
LTD. - XI, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN
J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the
undersigned with full power of authority to sign in the name and on behalf
of the undersigned officers a Report on Form 10-K of said partnership for
the fiscal year ended December 31, 1998, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents
and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 29th day of January, 1999.
H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer
GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the managing general partner of JMB INCOME PROPERTIES,
LTD. - XI, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN
J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the
undersigned with full power of authority to sign in the name and on behalf
of the undersigned officers a Report on Form 10-K of said partnership for
the fiscal year ended December 31, 1998, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents
and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 29th day of January, 1999.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 15,863,283
<SECURITIES> 0
<RECEIVABLES> 1,698,219
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,561,502
<PP&E> 62,040,706
<DEPRECIATION> 0
<TOTAL-ASSETS> 83,984,649
<CURRENT-LIABILITIES> 34,656,136
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 49,239,513
<TOTAL-LIABILITY-AND-EQUITY> 83,984,649
<SALES> 12,718,155
<TOTAL-REVENUES> 13,652,013
<CGS> 0
<TOTAL-COSTS> 7,667,994
<OTHER-EXPENSES> 595,190
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,741,140
<INCOME-PRETAX> 3,209,772
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,209,772
<DISCONTINUED> 20,648,190
<EXTRAORDINARY> (1,496,923)
<CHANGES> 0
<NET-INCOME> 22,361,039
<EPS-PRIMARY> 127.15
<EPS-DILUTED> 127.15
</TABLE>
