SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
September 30, 2000 Commission file #0-15966
JMB INCOME PROPERTIES, LTD. - XI
(Exact name of registrant as specified in its charter)
Illinois 36-3254043
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . . . . 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 10
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(UNAUDITED)
ASSETS
------
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- -----------
Current assets:
Cash and cash equivalents. . . . . . . $ 1,665,260 3,778,146
Restricted funds . . . . . . . . . . . -- 1,000,000
Other receivables. . . . . . . . . . . 25,448 37,444
------------ ------------
Total assets . . . . . . . . . . $ 1,690,708 4,815,590
============ ============
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Current liabilities:
Accounts payable and other
current liabilities. . . . . . . . . $ 6,398 62,112
------------ ------------
Total current liabilities. . . . 6,398 62,112
------------ ------------
Commitments and contingencies
Total liabilities. . . . . . . . 6,398 62,112
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . 1,000 1,000
Cumulative net earnings (losses) . . 5,775,659 5,780,516
Cumulative cash distributions. . . . (8,134,316) (7,787,502)
------------ ------------
(2,357,657) (2,005,986)
------------ ------------
Limited partners (173,396 interests):
Capital contributions,
net of offering costs. . . . . . . 156,493,238 156,493,238
Cumulative net earnings (losses) . . 63,600,027 63,716,584
Cumulative cash distributions. . . . (216,051,298) (213,450,358)
------------ ------------
4,041,967 6,759,464
------------ ------------
Total partners' capital
accounts (deficits). . . . . . 1,684,310 4,753,478
------------ ------------
$ 1,690,708 4,815,590
============ ============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
2000 1999 2000 1999
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . $ -- 1,011,831 -- 7,243,594
Interest income. . . . . . . . . . . . . . . . . . 37,142 390,935 131,520 724,934
Gain on sale of investment property. . . . . . . . -- 292,002 -- 292,002
Other income . . . . . . . . . . . . . . . . . . . 8,494 -- 111,363 --
----------- ---------- ---------- ----------
45,636 1,694,768 242,883 8,260,530
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . -- 230,646 -- 1,362,041
Property operating expenses. . . . . . . . . . . . -- 970,002 50,116 4,351,577
Professional services. . . . . . . . . . . . . . . 23,656 27,364 91,800 132,708
Amortization of deferred expenses. . . . . . . . . -- 66,106 -- 404,574
General and administrative . . . . . . . . . . . . 53,378 53,848 222,381 265,368
Provision for value impairment . . . . . . . . . . -- -- -- 9,800,000
----------- ---------- ---------- ----------
77,034 1,347,966 364,297 16,316,268
----------- ---------- ---------- ----------
Earnings (loss) before extraordinary
items. . . . . . . . . . . . . . . . . . . (31,398) 346,802 (121,414) (8,055,738)
Extraordinary item and Partnership's share
of extraordinary item from unconsolidated
venture. . . . . . . . . . . . . . . . . . . . . . -- (76,490) -- (76,490)
----------- ---------- ---------- ----------
Net earnings (loss). . . . . . . . . . . . . $ (31,398) 270,312 (121,414) (8,132,228)
=========== ========== ========== ==========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
2000 1999 2000 1999
----------- ---------- ----------- ----------
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before gain on sale
of investment property venture . . . . . $ (.17) .30 (.67) (46.21)
Gain on sale of investment property. . . . -- 1.67 -- 1.67
Extraordinary item . . . . . . . . . . . . -- (.42) -- (.42)
----------- ---------- ---------- ----------
Net earnings (loss). . . . . . . . . . $ (.17) 1.55 (.67) (44.96)
=========== ========== ========== ==========
Cash distributions per limited
partnership interest . . . . . . . . . . $ 5.00 -- 15.00 4.00
=========== ========== ========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
2000 1999
----------- -----------
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . $ (121,414) (8,132,228)
Items not requiring (providing) cash
or cash equivalents:
Amortization of deferred expenses. . . . -- 404,574
Provision for value impairment . . . . . -- 9,800,000
Gain on sale of investment property. . . -- (292,002)
Extraordinary item and Partnership's
share of extraordinary item from
unconsolidated venture . . . . . . . . -- 76,490
Changes in:
Restricted funds . . . . . . . . . . . . 1,000,000 --
Rents and other receivables. . . . . . . 11,996 106,770
Prepaid expenses . . . . . . . . . . . . -- 97,040
Accounts payable and other current
liabilities. . . . . . . . . . . . . . (55,714) (417,128)
Accrued interest payable . . . . . . . . -- (181,029)
Tenant security deposits . . . . . . . . -- (89,000)
----------- -----------
Net cash provided by (used in)
operating activities . . . . . . . 834,868 1,373,487
----------- -----------
Cash flows from investing activities:
Additions to investment properties . . . . -- (1,008,906)
Cash proceeds from sale of investment
property, net of selling expenses. . . . -- 24,758,322
Payment of deferred expenses . . . . . . . -- (1,424)
----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . -- 23,747,992
----------- -----------
Cash flows from financing activities:
Distributions to limited partners. . . . . (2,600,940) (693,644)
Distributions to general partners. . . . . (346,814) --
----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . (2,947,754) (693,644)
----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . (2,112,886) 24,427,835
Cash and cash equivalents,
beginning of year. . . . . . . . . 3,778,146 15,863,283
----------- -----------
Cash and cash equivalents,
end of period. . . . . . . . . . . $ 1,665,260 40,291,118
=========== ===========
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other
interest . . . . . . . . . . . . . . . . $ -- 1,543,070
=========== ===========
See accompanying notes to financial statements.
<PAGE>
JMB INCOME PROPERTIES, LTD. - XI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1999
which are included in the Partnership's 1999 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell such property and active marketing activity has commenced or is
expected to commence in the near term. In accordance with SFAS 121, any
properties identified as "held for sale or disposition" are no longer
depreciated. The results of operations for properties sold or disposed of
in the past two years were $0 and ($8,378,733), respectively, for the nine
months ended September 30, 2000 and 1999.
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Managing General Partner
and its affiliates, including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of September 30, 2000 and for the nine months ended
September 30, 2000 and 1999 were as follows:
Unpaid at
September 30,
2000 1999 2000
------- ------- -------------
Property management and
leasing fees . . . . . . . . . . . $ -- 188,831 --
Insurance commissions. . . . . . . . 872 30,209 --
Reimbursement (at cost) for
out-of-pocket salary and
salary-related expenses and
other costs for the Partnership
and its investment properties. . . 26,221 61,593 5,185
------- ------- -----
$27,093 280,633 5,185
======= ======= =====
<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 $2,229,000 as of September 30, 2000. The
amount was being deferred in accordance with the subordination requirements
of the Partnership Agreement and has not been reflected in the accompanying
consolidated financial statements. As a result of the distribution of
sales proceeds to the Limited Partners in November 1999, the subordination
requirements of the Partnership Agreement were satisfied to permit payment
to the General Partners their share of current, but not previously
deferred, distributions of cash flow from operations commencing with the
third quarter of 1999. The General Partners received a cash distribution
of previously undistributed cash flow from operations and reserves of
$250,483 in February 2000, $57,804 of which represented a correction of the
November 1999 cash distribution to the General Partners and a distribution
of previously undistributed of cash flow from operations and reserves of
$96,331 in August 2000. However, pursuant to additional subordination
requirements, including an additional return to the Limited Partners on the
Limited Partners' average adjusted capital contribution and the return of
the Limited Partners original capital contribution, the Partnership does
not expect that such additional subordination requirements will be
satisfied to permit payment of the $2,229,000 of previously deferred
distributions of net cash flow.
An affiliate of the General Partners of the Partnership managed the
Riverside Square Mall for a fee equal to 4% of the fixed and percentage
rents of the shopping center plus leasing and operating covenant
commissions. Such fees and commissions were subject to deferral to the
extent they were in excess of an aggregate annual maximum amount of 6% of
the gross receipts of the property. As such property was sold in 1999, no
further fees are expected to be paid to such affiliate.
RIVERSIDE SQUARE MALL
The Partnership has filed, in recent years, real estate tax appeals on
behalf of the Riverside Square Mall property for the tax years 1994 through
1998. The Partnership had been in negotiations to resolve this matter with
the taxing authority. In June 2000, the Tax Court approved the settlement
between the Partnership and the taxing authority. In late July 2000, the
Partnership received approximately $518,000 from the taxing authority in
full settlement of all prior real estate tax appeals. The Partnership
realized approximately $109,000 after issuing refunds to tenants at the
mall and payment of expenses associated with the litigation.
On August 5, 1999, the Partnership sold the Riverside Square Mall to
an unaffiliated third party for a sale price of $59,500,000 (before selling
expenses and prorations). In connection with the sale of the property, as
is customary in such transactions, the Partnership agreed to certain
representations, warranties and covenants with a stipulated survival period
that expired July 31, 2000 with no liability to the Partnership. In
accordance with the purchase and sale agreement, the Partnership was
required to establish reserves of at least $1,000,000 in cash or reasonably
liquid investments as of the closing date for the purpose of paying any
specified liabilities (as defined) during the survival period. Such
survival period expired July 31, 2000 with no liability to the Partnership.
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.
ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments (con-
sisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
2000 and for the three and nine months ended September 30, 2000 and 1999.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
All references to Notes are to Notes to the accompanying financial
statements. Reference is made to the Notes for additional information
concerning certain of the Partnership's investments.
The board of directors of JMB Realty Corporation ("JMB") the managing
general partner of the Partnership, has established a special committee
(the "Special Committee") consisting of certain directors of JMB to deal
with all matters relating to tender offers for Interests in the
Partnership, including any and all responses to such tender offers.
During 1999, 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 for $150 per Interest. Such
offers have expired. As of the date of this report, the Partnership is
aware that 7.92% of the Interests have been purchased by various
unaffiliated third parties either pursuant to tender offers or through
negotiated purchases. It is possible that other offers for Interests may
be made by unaffiliated third parties in the future, although there is no
assurance that any other third party will commence an offer for Interests,
the terms of any such offer or whether any such offer, if made, will be
consummated, amended or withdrawn.
At September 30, 2000, the Partnership had cash and cash equivalents
of approximately $1,665,000. Such funds will be utilized for distributions
to partners, potential settlement of outstanding lawsuits as described in
Part II, Item 1 below, and for working capital requirements of the
Partnership. In addition, in accordance with the Riverside Square purchase
and sale agreement, $1,000,000 was held in reserve for the purpose of
paying any specified liabilities (as defined) relating to the
representations, warranties and covenants agreed to in the sale and arising
during the survival period. Such survival period ended on July 31, 2000
with no liability to the Partnership. Reference is made to the Notes for a
further description of such sale.
In February 2000, the Partnership made a cash distribution of
previously undistributed cash flow from operations and reserves of
$1,733,960 ($10 per interest) to the Limited Partners and $250,483 to the
General Partners, of which $57,804 represented a correction of the November
1999 distribution to the General Partners. As a result of the expiration
of the representations, warranties and covenants relating to the sale of
Riverside Square, the Partnership made a determination to distribute
previously undistributed cash flow from operations and reserves of
approximately $867,000 ($5 per interest) to the Limited Partners and
approximately $96,000 to the General Partners in August 2000. No further
distributions of cash flow are anticipated to be made until the final
liquidation of the Partnership.
The Partnership has filed, in recent years, real estate tax appeals on
behalf of the Riverside Square Mall property for the tax years 1994 through
1998. The Partnership had been in negotiations to resolve this matter with
the taxing authority. In June 2000, the Tax Court approved the settlement
between the Partnership and the taxing authority. In late July 2000, the
Partnership received approximately $518,000 from the taxing authority in
full settlement of all prior real estate tax appeals. The Partnership
realized approximately $109,000 after issuing refunds to tenants at the
mall and payment of expenses associated with the litigation.
The Partnership intends to conduct an orderly liquidation as quickly
as practicable. Consequently, the Partnership currently expects to wind up
its affairs in 2000. However, this will depend upon the Partnership's
ability to resolve pending litigation relating to the Riverside Square
Mall. Reference is made to Item 1. Legal Proceedings of Part II Other
Information in this report for a discussion of the pending litigation.
<PAGE>
RESULTS OF OPERATIONS
Significant variances between periods reflected in the accompanying
consolidated financial statements not otherwise reported are primarily the
result of the sale of the Riverside Square Mall in August 1999.
The restricted funds at December 31, 1999 represent the funds that
were held in reserve for the purpose of paying any specified liabilities
(as defined) during the survival period that expired July 31, 2000 in
accordance with the Riverside Square Mall purchase and sale agreement.
The decrease in accounts payable at September 30, 2000 as compared to
December 31, 1999 is due to the timing of payment of certain costs of the
Partnership as of September 30, 2000.
The decrease in interest income for the three and nine months ended
September 30, 2000 as compared to the three and nine months ended
September 30, 1999 is primarily due to a higher average cash balance
available for temporary investment in 1999 prior to the distribution of
previously undistributed cash flow from operations and reserves to the
Limited Partners and General Partners in November 1999 and February and
August 2000.
The other income for the three and nine months ended September 30,
2000 is primarily due to the real estate tax refund relating to the
Riverside Square Mall which was received by the Partnership in late July
2000.
The property operating expenses for the nine months ended
September 30, 2000 represents final re-prorations in conjunction with the
sale of the Riverside Square Mall in August 1999.
The decrease in general and administrative expenses for the nine
months ended September 30, 2000 as compared to the nine months ended
September 30, 1999 is primarily due to cost savings resulting from the sale
of the Partnership's remaining investment property in 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On December 23, 1996, plaintiff Eric Von Butler filed a complaint
against the Partnership, and others, entitled Eric Von Butler v.
SpectaGuard Inc. "SpectaGuard", JMB Income Properties, Ltd. and Urban
Retail Properties Co. (the "Property Manager") in the Superior Court of New
Jersey Law Division, Bergen County, Case No. BER-L-12161-96. In the three
count complaint, plaintiff alleges that his employment as a security guard
at the Riverside Square Mall was wrongfully terminated in September 1995 as
a result of his race and that the Partnership allegedly participated in
various acts and practices which discriminated against plaintiff on the
basis of his race. At the time of the events complained of, plaintiff was
employed by SpectaGuard, a contractor hired to provide security services to
the mall. Plaintiff seeks, among other things, compensatory damages,
punitive damages, reasonable attorneys' fees and costs. The Partnership
believes it has meritorious defenses and has filed an answer denying the
substantive allegations of the complaint and raising various affirmative
defenses, including the affirmative defense that plaintiff was not an
employee of the Partnership, but was employed and terminated by
SpectaGuard. In addition, the Partnership has filed cross-claims for
indemnity and contribution from SpectaGuard. In June 2000, SpectaGuard
agreed to assume the defense of the Von Butler litigation and indemnify the
Partnership and the Property Manager for any judgment entered against
either of them pursuant to the security contract between SpectaGuard and
the Partnership. Additionally, an agreement in principle has been reached
among the plaintiff and all of the defendants in full settlement of this
matter. However, as such agreement is subject to final documentation,
there can be no assurance that any agreement will be reached.
<PAGE>
In separate litigation, on April 6, 1999, plaintiffs filed a suit
entitled Bertha Atkinson, individually and as guardian ad litem for the
infant plaintiff Cortney Atkinson and Tiffany Atkinson v. Riverside Square
Mall et al., in the Superior Court of New Jersey Law Division, Bergen
County, Case No. L-2203-99. The complaint is filed against the "Riverside
Square Mall", as owner and operator of the mall, Federated Department
Stores, Inc. d/b/a/ Bloomingdale's, Inc., SpectaGuard, Inc., and others.
In the five count complaint, plaintiffs allege that on July 18, 1998, they
were stopped outside the mall by several Hackensack Police Department
officers based on a complaint from Bloomingdale store personnel that one or
more of the plaintiffs had stolen merchandise from the store. Plaintiffs
allege that the police, mall security or employees of SpectaGuard Inc., a
security firm, further detained them while an attempt was made to contact
security at the Bloomingdale store. Plaintiffs claim that they were
detained for approximately thirty minutes and allowed to proceed when no
one from the Bloomingdale store appeared. Plaintiffs allege that there was
no rational basis to believe that any one of them had stolen any property.
Plaintiffs sue for false imprisonment, invasion of their rights of privacy,
slander, a violation of the New Jersey Law Against Discrimination, and
defendants' alleged failure to properly hire, train and supervise its
security personnel. Plaintiffs seek compensatory damages, punitive
damages, reasonable attorney's fees, costs, and such other relief as the
court may deem proper. The Partnership believes that it has meritorious
defenses. The Partnership and the other defendants are attempting to
expeditiously resolve this litigation.
The Partnership may be required to delay a final distribution of its
remaining funds and the winding up of the Partnership until its involvement
in the lawsuits discussed above has been resolved.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
3-A. The Prospectus of the Partnership dated July 11,
1984 as supplemented July 24, 1984 and November 26, 1984, as filed with the
Commission pursuant to Rules 424(b) and 424(c), is hereby incorporated
herein by reference to Exhibit 3-A to the Partnership's Report on Form 10-K
for December 31, 1992 (File No. 0-15966) dated March 19, 1993.
3-B. Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, which agreement is
hereby incorporated herein by reference to Exhibit 3-B to the Partnership's
Report on Form 10-K for December 31, 1992 (File No. 0-15966) dated
March 19, 1993.
27. Financial Data Schedule
--------------
(b) No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XI
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: November 10, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
By: GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 10, 2000
