SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the fiscal year
ended December 31, 1997 Commission File Number 0-13545
JMB/245 PARK AVENUE ASSOCIATES, LTD.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3265541
(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 312-915-1960
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
(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: Portions of the Private Placement
Memorandum of the Registrant dated May 7, 1984 are incorporated by
reference in Parts I and III of this Annual Report on Form 10-K.
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . 3
Item 3. Legal Proceedings. . . . . . . . . . . . . . 3
Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . 3
PART II
Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters. . . . . . . 3
Item 6. Selected Financial Data. . . . . . . . . . . 4
Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 6
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 9
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 10
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 38
PART III
Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 38
Item 11. Executive Compensation . . . . . . . . . . . 40
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 41
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 42
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 42
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 45
i
<PAGE>
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements of JMB/245 Park Avenue Associates, Ltd.
contained in this report. Capitalized terms used herein, but not defined,
have the same meanings as used in the Notes.
The registrant, JMB/245 Park Avenue Associates, Ltd. (the
"Partnership"), is a limited partnership formed in 1983 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois for the original purpose of acquiring and owning an approximate
48.25% interest in 245 Park Avenue Company, a New York general partnership,
("245 Park" or the "Joint Venture") which owned and operated an office
building located at 245 Park Avenue, New York, New York. The Partnership
was admitted to the Joint Venture through the purchase of one of the
existing unaffiliated joint venture partner's interests. The unaffiliated
venture partners (the "O&Y partners") were affiliates of Olympia & York
Developments, Ltd. ("O&Y"). On May 7, 1984, the Partnership commenced a
private offering of $124,300,000 in Limited Partnership Interests (the
"Interests") pursuant to a Private Placement Memorandum (the "Private
Placement Memorandum") in accordance with Rules 501-503 and 506 of
Regulation D of the Securities Act of 1933. A total of 1,000 Interests
were sold at $124,300 per Interest (except for twenty interests which were
sold net of any selling commission) of which $10,500 per Interest was due
upon admission, with the remaining purchase price paid in annual
installments from 1985 through 1990. The offering closed on June 28, 1984.
The holders of Interests (herein after "Holders" or "Holders of Interests")
in the Partnership share in their portion of the benefits of ownership of
the Partnership's real property investment according to the number of
Interests held.
As a result of the financial difficulties of the O&Y partners, in
October 1995 each of the O&Y partners and certain other O&Y affiliates (but
not the Joint Venture) filed for bankruptcy protection from creditors under
Chapter 11 of the United States Bankruptcy Code. During 1996, the O&Y
partners and these certain other O&Y affiliates restructured their
ownership interest in various office buildings, including their interest in
the 245 Park Avenue office building. In connection with such
restructuring, the Joint Venture filed for bankruptcy under Chapter 11 of
the United States Bankruptcy Code in April 1996 seeking approval of a plan
of reorganization by its creditors and the partners of the Joint Venture,
including the Partnership, and in August 1996, the Third Amended Joint Plan
of Reorganization and Disclosure Statement (the "Plan") was filed with the
Bankruptcy Court. The Plan was accepted by the various classes of claims
and equity holders and confirmed by the Court on September 20, 1996. The
Plan became effective on November 21, 1996 ("Effective Date") upon
completion of several additional steps. The conditions to the Plan
included, but were not limited to, the completion of significant
refinancing and capital transactions regarding 245 Park Avenue as well as
other properties. Pursuant to the terms of the Plan, the Partnership owns
(through a limited liability company of which the Partnership is a 99%
member) an approximate 5.56% general partner interest in World Financial
Properties, L.P. ("WFP, LP"). The managing general partner of WFP, LP is
an entity affiliated with certain O&Y creditors and the proponents of the
Plan and, subject to the partnership agreement, has full authority to
manage its affairs. WFP, LP's principal assets are majority and
controlling interests in the following six office buildings:
<PAGE>
PROPERTY AND LOCATION NET RENTABLE AREA
One World Financial Center 1,510,987 square feet
New York, New York
Two World Financial Center 2,581,228 square feet
New York, New York
Four World Financial Center 1,813,659 square feet
New York, New York
One Liberty Plaza 2,124,000 square feet
New York, New York
245 Park Avenue 1,617,779 square feet
New York, New York
53 State Street 1,120,162 square feet
Boston, Massachusetts
The Plan was conditioned upon refinancings of the first and junior
mortgage loans secured by 245 Park Avenue in the aggregate principal amount
of approximately $383,000,000. As previously reported, the first mortgage
loan matured January 1, 1994 and the junior mortgage loans matured on
October 1, 1994. The Joint Venture and the first mortgage lender continued
to negotiate a modification and extension of the first mortgage loan.
While negotiations with the first mortgage lender were taking place, such
lender refrained from taking any actions or exercising any of its remedies
as a result of the loan having matured on January 1, 1994, and the Joint
Venture continued to make monthly payments of principal and interest
through the Effective Date. The holder of the junior mortgage loans also
refrained from taking any action or exercising any of its remedies as a
result of the loans maturing on October 1, 1994, and the Joint Venture
continued to make, and the holder of the junior loans continued to accept,
monthly payments of interest through the Effective Date. On November 21,
1996, the first mortgage lender and junior mortgage lender modified and
extended the respective mortgage loans. The Partnership recognized
forgiveness of indebtedness of $9,486,508 as its share of an extraordinary
item of the Joint Venture related to the restructuring of the mortgage
loans in 1996 for default interest which was forgiven.
WFP, LP and the Partnership each have a substantial amount of
indebtedness outstanding. If any of the buildings are sold, any proceeds
would be first applied to repayment of the mortgage and other indebtedness
of WFP, LP. In any event, any net proceeds obtained by the Partnership
would then be used to satisfy notes payable and accrued interest
(aggregating $65,558,439 at December 31, 1997) to JMB Realty Corporation.
Only after such applications would any remaining proceeds be available to
be distributed to the Holders of Interests. As a result, it is unlikely
that the Holders of Interests ever will receive any significant portion of
their original investment.
However, in the event of a sale or other disposition of the property
(including a transfer to the lenders), or of the Partnership's interest in
WFP, LP, the Holders of Interest may be allocated substantial gain for
Federal income tax purposes (corresponding to all or most of their deficit
capital accounts for tax purposes) without any corresponding proceeds from
such sale or transfer. The actual tax liability of each Holder of
Interests will depend on such Holder's own tax situation.
The Partnership has no employees.
The terms of transactions between the Partnership and the General
Partners and their affiliates are set forth in Item 11 below and in the
Notes, to which reference is hereby made for a description of such
transactions.
<PAGE>
ITEM 2. PROPERTIES
The Partnership owns an indirect interest in the properties referred
to under Item 1 above to which reference is hereby made for a description
of said properties. Reference is made to Note 5 of the Notes to the
Consolidated Financial Statements of World Financial Properties, L.P.
included with this Report for a discussion of the long-term debt secured by
the properties.
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
1996 and 1997.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1997, there were 882 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. The Interests
have not been registered under the Securities Act of 1933, as amended, or
(with certain exceptions) under state securities laws. Transfers of the
Interests must be made in compliance with applicable federal and state
securities laws and are subject to the restrictions on transfers set forth
in Article 14 (pages 15-17) of the Amended and Restated Agreement of
Limited Partnership of the Partnership, which is incorporated herein by
reference to Exhibit 99.1 to this annual report.
The Partnership has not made any distributions since 1989. Reference
is made to the Notes for a discussion of the restrictions on the
distributions (if any) to the Partnership from its real estate investment.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1997 1996 1995 1994 1993
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $ 483,445 47,854 100 200 76,233
============ ============ =========== =========== ===========
Earnings (loss)
before extraordinary
item . . . . . . . . . . $ 2,617,872 (2,827,164) (7,558,349) (5,841,403) (6,476,977)
Extraordinary item:
Partnership's share of
gain on forgiveness of
indebtedness . . . . . . -- 9,486,508 -- -- --
------------ ------------ ----------- ----------- -----------
Net earnings (loss) . . . $ 2,617,872 6,659,344 (7,558,349) (5,841,403) (6,476,977)
============ ============ =========== =========== ===========
Net earnings (loss)
per Interest (b):
Earnings (loss)
before extraordinary
item . . . . . . . . . $ 2,461 (2,657) (7,105) (5,490) (6,088)
Extraordinary item. . . -- 8,917 -- -- --
------------ ------------ ----------- ----------- -----------
Net earnings
(loss). . . . . . $ 2,461 6,260 (7,105) (5,490) (6,088)
============ ============ =========== =========== ===========
Total assets. . . . . . . $ 372,955 156,838 4,275 -- 420,811
============ ============ =========== =========== ===========
Bank obligations
and notes payable -
long-term. . . . . . . . $ -- (c) 43,236,631 43,236,631 40,319,631 44,694,631
============ ============ =========== =========== ===========
<PAGE>
<FN>
- ----------
(a) The above financial information should be read in conjunction with the consolidated financial
statements of the Partnership and the related notes appearing elsewhere in this report.
(b) The net earnings (loss) per Interest are based upon the number of Interests outstanding at the end of
each period (1,000).
(c) Such loans are classified as a current liability at December 31, 1997 due to their scheduled maturity
of December 1998.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Capitalized terms used but not defined in this Item 7 have the same
meanings as used in Item 1. Business or in the Notes.
On May 7, 1984, the Partnership commenced a private offering of
$124,300,000 in Limited Partnership Interests pursuant to a Private
Placement Memorandum. A total of 1,000 Interests were sold at $124,300 per
Interest (except for twenty Interests which were sold net of any selling
commission) of which $10,500 per Interest was due upon admission, with the
remaining purchase price paid in annual installments from 1985 through 1990
(all of which have been received). The purchase price installments have
been utilized primarily for the payment of the Partnership's bank
borrowings and related interest.
Since the Partnership has not been receiving operating cash flow
distributions from its original investment property, the Partnership
initially utilized its cash reserves to make the payments on the
Partnership's bank obligations. Effective with the first quarter of 1990,
the Partnership elected to suspend cash distributions to the partners and
retain funds for its cash requirements. These reserves were exhausted, and
consequently, the Partnership was not able to pay the interest payment due
on the bank obligations for September 1993 in the approximate amount of
$223,000. In addition, the Partnership did not have adequate reserves to
pay a lump sum interest swap payment due February 1, 1994 in the amount of
$2,194,631. In this regard, the Partnership and its bank lender reached a
modification and extension agreement regarding the $50,000,000 term loans
that matured in October 1993. These term loans were secured by the
Partnership's interest in its real estate investment, and a guaranty by JMB
Realty Corporation, an affiliate of the Corporate General Partner ("JMB"),
of $25,000,000 of the term loans. The terms of the modification and
extension generally provided for (i) an extension period through December
1998; (ii) interest payable currently on one-half of the principal amount
of the term loans at a rate related to the London Interbank Offer Rate
(LIBOR) while interest on the balance of the term loans accrues at an
annual rate of 2%; (iii) one-half of the original principal amount of the
term loans bearing interest at a rate related to LIBOR (the "LIBOR Note")
was subject to periodic amortization through payment of quarterly
installments of principal (principal in the amount of $2,500,000 per annum
in 1994 and $2,707,000 in 1995); and (iv) the past due lump sum interest
swap payment in the amount of $2,194,631 converted to a note payable due
December 1998 with interest accruing at an annual rate of 2%.
In December 1993, approximately $5,647,000 was paid to the lenders
under the term loans (all of which was advanced on behalf of the
Partnership by JMB), which included a $5,000,000 principal paydown of the
LIBOR Note and the interest payable for the period September through
December 1993. During the year ended December 31, 1994, an additional
amount of approximately $2,479,000 was paid to the lenders under the term
loans which included a $1,251,000 principal paydown of the LIBOR Note and
the interest payable for the period January through December 1994. An
additional $1,249,000 and two payments of $729,000 each were paid in
January through June 1995, respectively. All payments of principal and
interest made by JMB under its guaranty of the $25,000,000 portion of the
Partnership's term loans have been treated as advances to the Partnership.
As of December 31, 1997, JMB has advanced approximately $12,376,000,
evidenced by a demand note which reflects the principal and interest
payments made related to the loan modification discussed above, advances to
pay operating costs of the Partnership and accrued and deferred interest on
the demand note. Interest accrues on these advances (and accrued and
deferred interest thereon) at the annual rate of prime (8.5% at
December 31, 1997 and 8.25% at December 31, 1996) plus 1%. The demand note
payable to JMB, which allows a maximum principal sum of a specified amount,
had been subordinate to payment of the LIBOR Note but is no longer
subordinated and is now secured by the Partnership's interest in its real
<PAGE>
estate investment. Reference is made to the Notes for further information
concerning borrowings incurred by the Partnership.
In July 1995, JMB purchased from the lenders the term loans (including
the note representing the interest swap payment) and their security
interests in the related collateral, including the JMB guarantee, which has
been terminated. JMB continues to hold the notes for these loans generally
under the same terms and conditions that were in effect prior to the
purchase. However, no scheduled principal payments are required prior to
maturity of the LIBOR Note. Interest on the LIBOR Note accrues and is
payable monthly at a floating rate which, at the option of the Partnership,
is related to either LIBOR or the prime rate of Bank of America. No
payments of interest on the LIBOR Note have been made subsequent to
July 31, 1995. However, JMB has not given a notice of default under the
LIBOR Note. These loans and the demand loan payable to JMB are secured by
the Partnership's interest in its real estate investment and are subject to
mandatory prepayment of principal and interest out of any distributions
received by the Partnership from its real estate investment. The
Partnership expects to seek a modification or extension of the term loan
notes prior to their maturity in December 1998.
The O&Y partners had granted security interests in their interests in
245 Park to a syndicate of banks in order to secure certain loan
obligations of certain O&Y affiliates. In August 1992, the Partnership
received notice from the lead bank of the syndicate alleging that such O&Y
affiliates were in default under these loan obligations and directing that
all payments and distributions due to the O&Y partners from 245 Park be
delivered to the lead bank. According to published reports, an investor
group purchased participations in these obligations from the original
syndicate of banks. In September 1995, the holder of the loan obligations
issued a notice of sale for, among other things, the interests of the O&Y
partners in 245 Park in an effort to realize upon the collateral for the
loan obligations. In October, 1995, each of the O&Y partners, as well as
other O&Y affiliates, filed for protection from creditors under Chapter 11
of the United States Bankruptcy Code.
During November 1996, the Third Amended Joint Plan of Reorganization
and Disclosure Statement for the restructuring of the ownership interests
in the properties became effective. Reference is made to Item 1 Business
and to the Notes for a further description of the restructuring.
WFP, LP and the Partnership each have a substantial amount of
indebtedness outstanding. If any of the buildings are sold, any proceeds
would be first applied to repayment of the mortgage and other indebtedness
of WFP, LP. In any event, any net proceeds obtained by the Partnership
would then be used to satisfy notes payable and accrued interest
(aggregating $65,558,439 at December 31, 1997 including accrued and unpaid
interest) to JMB. Only after such applications would any remaining
proceeds be available to be distributed to the Holders of Interests. As a
result, it is unlikely that the Holders of Interests ever will receive any
significant portion of their original investment. However, in the event of
a sale or other disposition of the property (including a transfer to the
lenders), or of the Partnership's interest in WFP, LP, the Holders of
Interest may be allocated substantial gain for Federal income tax purposes
(corresponding to all or most of their deficit capital accounts for tax
purposes) without any corresponding proceeds from such sale or transfer.
The actual tax liability of each Holder of Interests will depend on such
Holder's own tax situation.
The Partnership's liquidity and ability to continue as a going concern
is dependent upon additional advances from JMB under the demand note
discussed above as well as receipt of one-third of the property management
fees earned at the 245 Park Avenue property. Pursuant to the terms of the
JMB Transaction Agreement dated November 21, 1996, the Partnership is
entitled to receive one third of the monthly management fees earned at the
245 Park Avenue property through December 2001. Amounts received may not
be less than $400,000 or exceed $600,000 for any twelve month period and
may not be less than $2,300,000 over the term of the agreement. The
agreement further provided for the Partnership to receive reimbursements of
<PAGE>
professional costs of $375,000 incurred in connection with the
reorganization and restructuring of the Partnership's interest in 245 Park,
which was received in 1996.
RESULTS OF OPERATIONS
The increase in cash at December 31, 1997 as compared to December 31,
1996 is due to receipt of one third of the monthly management fees earned
at the 245 Park Avenue property, a portion of which have been used to fund
Partnership operating expenses.
The increase in deferred interest payable to an affiliate as of
December 31, 1997 as compared to December 31, 1996 is due to the interest
accruals on the term loans and the demand note payable to JMB.
The increase in the current portion of long-term debt and demand note
payable to an affiliate and decrease in notes payable to an affiliate long-
term as of December 31, 1997 compared to December 31, 1996, is due to the
classification of notes payable with a maturity date of December 31, 1998
as current liabilities at December 31, 1997.
The increase in interest and other income for the years ended
December 31, 1997 and 1996 as compared to the year ended December 31, 1995
is a result of income from the Partnership's share of the property
management fees from the 245 Park Avenue property. Pursuant to the terms
of the JMB Transaction Agreement described above, commencing in November,
1996, the Partnership is entitled to one third of the monthly property
management fees earned at the 245 Park Avenue property.
The increase in interest expense for the year ended December 31, 1997
compared to the year ended December 31, 1996 is due to an increase in the
aggregate amounts outstanding on the Partnership's term loans and demand
note during 1997. In addition, the increase is also the result of an
increase in the interest rates on the variable rate notes during 1997.
The decrease in interest expense for the year ended December 31, 1996
compared to the year ended December 31, 1995 is due to a reduction of
interest rates during 1996 on the Partnership's variable rate notes
payable.
The increase in professional services and general and administrative
expenses for the years ended December 31, 1997 and 1996 as compared to the
year ended December 31, 1995 is primarily attributable to the legal fees
and other professional services in connection with the restructuring of the
Partnership's interest in 245 Park, net of any reimbursements. Pursuant to
the Plan of Reorganization, during 1996, the Partnership received
reimbursements of $375,000 for legal fees incurred related to the
restructuring of the Partnership's interest in 245 Park.
The Partnership's share of income (loss) from operations of
unconsolidated venture for the year ended December 31, 1997 compared to the
year ended December 31, 1996 is due to the restructuring of the
Partnership's interest in 245 Park and refinancing of the debt for certain
of the properties owned by the WFP, LP. Pursuant to the restructuring,
effective November 21, 1996, the Partnership's 46.5% interest in 245 Park
was exchanged for an approximate 5.56% interest in WFP, LP, which has a
majority and controlling interests in the 245 Park Avenue office building
and five other office buildings.
The Partnership's share of income from operations of unconsolidated
venture for the year ended December 31, 1996 as compared to the loss from
operations of unconsolidated venture for the year ended December 31, 1995
is primarily due to recognition of termination fees of approximately
$13,000,000 related to certain tenants vacating 245 Park during 1996 prior
to the Effective Date. In addition, the Partnership's share of income from
<PAGE>
operations is also due to a reduction in interest expense on loans from the
O&Y partners and their affiliates. During 1996, 245 Park ceased accruing
interest on these loans when it filed for bankruptcy protection.
Subsequent to the Effective Date, the Partnership's consolidated venture
received an allocation of income of approximately $500,000 related to
operations of the restructured unconsolidated venture, which consisted of
the consolidated venture's proportionate share of earnings of WFP, LP and
the amortization of the underlying basis difference.
The Partnership's share of gain on forgiveness of indebtedness
recognized by 245 Park related to the restructuring of the junior mortgage
loan in 1996 for default interest which was forgiven.
INFLATION
Due to the decrease in the levels of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
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 commercial properties have escalation clauses covering
increases in the cost of operating the properties as well as real estate
taxes. Therefore, there should be little effect on operating earnings if
the properties remain substantially occupied.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1997 and 1996
Consolidated Statements of Operations, years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows, years ended
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
Schedules not filed:
All schedules have been omitted as the required information is
inapplicable, not available or the information is presented in the
consolidated financial statements or related notes.
WORLD FINANCIAL PROPERTIES, L.P.
INDEX
Independent Auditors' Report
Consolidated Balance Sheet, December 31, 1997
Consolidated Statement of Operations, for the year ended
December 31, 1997
Consolidated Statement of Partners' Capital Accounts,
for the year ended December 31, 1997
Consolidated Statement of Cash Flows, for the year ended December 31, 1997
Notes to Consolidated Financial Statements
Schedules not filed:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the consolidated financial
statements or related notes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
JMB/245 Park Avenue Associates, Ltd.:
We have audited the consolidated financial statements of JMB/245 Park
Avenue Associates, Ltd., a limited partnership (the "Partnership"), and
consolidated venture as listed in the accompanying index. These
consolidated financial statements are the responsibility of the General
Partners of the Partnership. Our responsibility is to express an opinion
on these consolidated financial statements 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
JMB/245 Park Avenue Associates, Ltd. and consolidated venture as of
December 31, 1997 and 1996, and the results of their operations and their
cash flows for each of the years in the three-year period ended December
31, 1997, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that JMB/245 Park Avenue Associates, Ltd. will continue as a going
concern. As described in the notes to the financial statements, the
Partnership is dependent upon additional advances from JMB Realty
Corporation and has a net capital deficiency that raise substantial doubt
about its ability to continue as a going concern. The General Partners'
plans in regard to these matters are also described in the notes to the
financial statements. The accompanying consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1998
<PAGE>
<TABLE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
------
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 318,105 109,644
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . 54,850 47,194
----------- -----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . $ 372,955 156,838
=========== ===========
<PAGE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1997 1996
------------ -----------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,271 35,918
Deferred and unpaid interest payable to an affiliate. . . . . . . . 9,946,217 6,640,810
Current portion of notes payable to an affiliate
and demand note payable to affiliate. . . . . . . . . . . . . . . 55,612,222 12,375,591
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . 65,592,710 19,052,319
Notes payable to an affiliate - long-term, less current portion . . . -- 43,236,631
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . 65,592,710 62,288,950
Investment in unconsolidated venture, at equity . . . . . . . . . . . 60,512,968 66,276,110
Venture partner's equity in venture . . . . . . . . . . . . . . . . . 62,663 5,036
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative cash distributions . . . . . . . . . . . . . . . . . (480,000) (480,000)
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (12,556,766) (12,713,838)
------------ -----------
(13,035,766) (13,192,838)
------------ -----------
Limited partners (1,000 Interests):
Capital contributions, net of offering costs. . . . . . . . . . 113,057,394 113,057,394
Cumulative cash distributions . . . . . . . . . . . . . . . . . (7,520,000) (7,520,000)
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . (218,297,014) (220,757,814)
------------ -----------
(112,759,620) (115,220,420)
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . (125,795,386) (128,413,258)
------------ -----------
$ 372,955 156,838
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Interest and other income . . . . . . . . . . . . $ 483,445 47,854 100
------------ ------------ ------------
Expenses:
Interest. . . . . . . . . . . . . . . . . . . . . 3,305,407 3,134,509 3,154,676
Professional services . . . . . . . . . . . . . . 178,451 129,720 96,059
General and administrative. . . . . . . . . . . . 87,230 85,400 38,579
------------ ------------ ------------
3,571,088 3,349,629 3,289,314
------------ ------------ ------------
(3,087,643) (3,301,775) (3,289,214)
Partnership's share of income (loss)
from operations of unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . 5,763,142 479,647 (4,269,135)
Venture partner's share of venture
operations. . . . . . . . . . . . . . . . . . . . (57,627) (5,036) --
------------ ------------ ------------
Earnings (loss) before extraordinary item . . . 2,617,872 (2,827,164) (7,558,349)
Extraordinary item:
Partnership's share of gain on
forgiveness of indebtedness. . . . . . . . . . . -- 9,486,508 --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . . . $ 2,617,872 6,659,344 (7,558,349)
============ ============ ============
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before extraordinary item . . $ 2,461 (2,657) (7,105)
Extraordinary item. . . . . . . . . . . . . . -- 8,917 --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . $ 2,461 6,260 (7,105)
============ ============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(a limited partnership)
and Consolidated Venture
Consolidated Statements of Partners' Capital Accounts (Deficits)
Years Ended December 31, 1997, 1996 AND 1995
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (1,000 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
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
(deficits)
Decem-
ber 31,
1994 . . . .$1,000 (12,659,898) (480,000) (13,138,898) 113,057,394 (219,912,749) (7,520,000) (114,375,355)
Net earnings
(loss) . . . -- (453,501) -- (453,501) -- (7,104,848) -- (7,104,848)
------ ----------- --------- ----------- ----------------------- ------------ ------------
Balance
(deficits)
Decem-
ber 31,
1995 . . . .1,000 (13,113,399) (480,000) (13,592,399) 113,057,394 (227,017,597) (7,520,000) (121,480,203)
Net earnings
(loss) . . . -- 399,561 -- 399,561 -- 6,259,783 -- 6,259,783
------ ----------- --------- ----------- ----------- ------------ ----------- ------------
<PAGE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(a limited partnership)
and Consolidated Venture
Consolidated Statements of Partners' Capital Accounts (Deficits) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (1,000 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------- ------------- ----------- ----------- ----------- ------------- ------------
Balance
(deficits)
Decem-
ber 31,
1996 . . . .$1,000 (12,713,838) (480,000) (13,192,838) 113,057,394 (220,757,814) (7,520,000) (115,220,420)
Net earnings
(loss) . . . -- 157,072 -- 157,072 -- 2,460,800 -- 2,460,800
------ ----------- --------- ----------- ----------------------- ------------ ------------
Balance
(deficits)
Decem-
ber 31,
1997 . . . .$1,000 (12,556,766) (480,000) (13,035,766) 113,057,394(218,297,014) (7,520,000) (112,759,620)
====== =========== ========= =========== =========== ============ =========== ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 2,617,872 6,659,344 (7,558,349)
Items not requiring cash or cash equivalents:
Partnership's share of (income) loss from
operations of unconsolidated venture . . . . (5,763,142) (479,647) 4,269,135
Extraordinary item . . . . . . . . . . . . . . -- (9,486,508) --
Venture partner's share of venture
operations . . . . . . . . . . . . . . . . . 57,627 5,036 --
Changes in:
Other receivables. . . . . . . . . . . . . . . (7,656) (47,194) --
Accounts payable . . . . . . . . . . . . . . . (1,647) (26,171) 11,105
Deferred and unpaid interest
payable to an affiliate. . . . . . . . . . . 3,305,407 3,134,509 2,141,885
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . 208,461 (240,631) (1,136,224)
----------- ----------- -----------
Cash flows from investing activities:
-- -- --
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on bank obligations payable. . -- -- (2,707,000)
Fundings of demand note payable . . . . . . . . . -- 346,000 3,847,499
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . -- 346,000 1,140,499
----------- ----------- -----------
<PAGE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996 1995
----------- ----------- -----------
Net increase (decrease) in cash . . . . . 208,461 105,369 4,275
Cash, beginning of year . . . . . . . . . 109,644 4,275 --
----------- ----------- -----------
Cash, end of year . . . . . . . . . . . . $ 318,105 109,644 4,275
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . $ -- -- 1,065,109
Non-cash investing and financing activities . . $ -- -- --
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
JMB/245 Park Avenue Associates, Ltd. (the "Partnership") owns a 99%
interest in a limited liability company (described below) that holds,
through a joint venture, an equity investment in commercial office
buildings located in New York, New York and Boston, Massachusetts.
Business activities consist of rentals to a variety of commercial companies
and the ultimate sale or disposition of such real estate. The accompanying
consolidated financial statements include the accounts of the Partnership
and its majority-owned limited liability company, JMB/245 Park Avenue
Holding Company, LLC, ("JMB/245 LLC") as of its formation date,
November 21, 1996. Through November 21, 1996, the Partnership held an
approximate 48.25% interest in 245 Park Avenue Company ("245 Park" or the
"Joint Venture"), which owned the 245 Park Avenue office building in New
York, New York (see "Investment in Unconsolidated Venture" below). The
effect of all transactions between the Partnership and its venture has been
eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
interest in 245 Park through the effective date of the restructuring
(November 21, 1996 ("Effective Date")) and the Partnership's 5.56% interest
in World Financial Properties, L.P. ("WFP, LP") subsequent to the Effective
Date. Accordingly, the financial statements do not include the accounts of
245 Park or WFP, L.P. The results of operations of the unconsolidated
venture prior to the Effective Date is exclusive of approximately $12.7
million of contractual interest expense not recorded and not paid by 245
Park due to its bankruptcy and in accordance with SOP 90-7, "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code".
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to reflect the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of JMB/245 LLC as described above.
Such GAAP and consolidation adjustments are not recorded on the records of
the Partnership. The net effect of these items for the years ended
December 31, 1997 and 1996 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1997 1996
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $ 372,955 (121,182,633) 156,838 (121,306,795)
Partners' capital
accounts (deficits):
General partners. . . . . . . . . (13,035,766) (27,974,338) (13,192,838) (27,981,888)
Limited partners. . . . . . . . . (112,759,620) (150,404,312) (115,220,420) (150,522,585)
Net earnings (losses):
General partners. . . . . . . . . 157,072 7,550 399,561 579,729
Limited partners. . . . . . . . . 2,460,800 118,273 6,259,783 9,082,422
Net earnings (loss) per
limited partnership
interest. . . . . . . . . . . . . 2,461 118 6,260 9,082
============ =========== ============= ============
</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 (1,000). The above-noted deficit capital accounts will result,
through the duration of the Partnership, in net gain for financial
reporting and income tax purposes.
During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. These standards became
effective for reporting periods after December 15, 1997. As the
Partnership's capital structure only has general and limited partnership
interests, the Partnership will not experience any significant impact on
its consolidated financial statements.
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 and its unconsolidated joint venture 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. SFAS 121 requires that the
Partnership and its unconsolidated joint venture 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 sell (or dispose of) such property and active marketing
activity has commenced or is expected to commence in the near term (or the
Partnership has concluded that it may dispose of the property by no longer
funding operating deficits or debt service requirements of the property
thus allowing the lender to realize upon its security). 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 adoption of SFAS 121 did not have any effect
on the Partnership's and its unconsolidated joint venture's financial
position, results of operations or liquidity.
No provision for Federal or state income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership.
INVESTMENT IN UNCONSOLIDATED VENTURE
The Partnership acquired an interest in 245 Park, which owned a
46-story office building located at 245 Park Avenue, New York, New York.
The Partnership acquired its approximate 48.25% ownership interest in 245
Park for approximately $63,927,000 from an affiliate of the joint venture
partners. In addition to the Partnership, the other partners (the "O&Y
partners") of 245 Park included Olympia & York 245 Park Ave. Holding
Company, L.P., Olympia & York Equity Company, L.P., and Olympia & York 245
Corp., all of which were affiliates of Olympia & York Developments, Ltd.
("O&Y").
As a result of the financial difficulties of the O&Y partners, in
October 1995 each of the O&Y partners and certain other O&Y affiliates (but
not the Joint Venture) filed for bankruptcy protection from creditors under
<PAGE>
Chapter 11 of the United States Bankruptcy Code. During 1996, the O&Y
partners and these certain other O&Y affiliates restructured their
ownership interests in various office buildings, including their interest
in the 245 Park Avenue office building. In connection with such
restructuring, 245 Park filed for bankruptcy under Chapter 11 of the United
States Bankruptcy Code in April 1996 seeking approval of a plan of
reorganization by its creditors and the partners of 245 Park, including the
Partnership, and in August 1996, the Third Amended Joint Plan of
Reorganization and Disclosure Statement (the "Plan") was filed with the
Bankruptcy Court. The Plan was accepted by the various classes of claims
and equity holders and confirmed by the Court on September 20, 1996. The
Plan became effective on November 21, 1996 ("Effective Date") upon
completion of several additional steps. The conditions to the Plan
included, but were not limited to, the completion of significant
refinancing and capital transactions regarding the 245 Park Avenue office
building as well as other properties. Pursuant to the terms of the Plan,
the Partnership owns (through a limited liability company of which the
Partnership is a 99% member) an approximate 5.56% general partner interest
in a newly formed partnership, WFP, LP. The managing general partner of
WFP, LP is an entity affiliated with certain O&Y creditors and the
proponents of the Plan. WFP, LP's principal assets are majority and
controlling interests in six office buildings (including 245 Park Avenue
office building).
The Plan was conditioned upon refinancings of the first and junior
mortgage loans secured by the 245 Park Avenue office building in the
aggregate principal amount of approximately $383,000,000. As previously
reported, the first mortgage loan matured January 1, 1994 and the junior
mortgage loans matured on October 1, 1994. 245 Park and the first mortgage
lender continued to negotiate a modification and extension of the first
mortgage loan. While negotiations with the first mortgage lender were
taking place, such lender refrained from taking any actions or exercising
any of its remedies as a result of the loan having matured on January 1,
1994, and 245 Park continued to make monthly payments of principal and
interest through the Effective Date. The holder of the junior mortgage
loans also refrained from taking any action or exercising any of its
remedies as a result of the loans maturing on October 1, 1994, and 245 Park
continued to make, and the holder of the junior loans continued to accept,
monthly payments of interest through the Effective Date. On November 21,
1996, the first mortgage lender and junior mortgage lender modified and
extended the respective mortgage loans. The Partnership recognized
forgiveness of indebtedness of $9,486,508 as an extraordinary item related
to the restructuring of the mortgage loans in 1996 for default interest
which was forgiven.
WFP, LP and the Partnership each have a substantial amount of
indebtedness remaining. If any of the buildings are sold, any proceeds
would be first applied to repayment of the mortgage and other indebtedness
of WFP, LP. In any event, any net proceeds obtained by the Partnership
would then be used to satisfy notes payable and accrued interest
(aggregating $65,558,439 at December 31, 1997) to JMB Realty Corporation
("JMB"). Only after such applications would any remaining proceeds be
available to be distributed to the Holders of Interests. As a result, it
is unlikely that the Holders of Interests ever will receive any significant
portion of their original investment.
However, in the event of a sale or other disposition of the property
(including a transfer to the lenders), or of the Partnership's interest in
WFP, LP, the Holders of Interest may be allocated substantial gain for
Federal income tax purposes (corresponding to all or most of their deficit
capital accounts for tax purposes) without any corresponding proceeds from
such sale or transfer. The actual tax liability of each Holder of
Interests will depend on such Holder's own tax situation.
The Partnership and its lender had reached a modification and
extension agreement regarding the former $50,000,000 term loans that
matured in October 1993. These term loans (described below) were secured
<PAGE>
by the Partnership's interest in its real estate investment, and
$25,000,000 (current principal outstanding balance of $16,042,000 at
December 31, 1997 and 1996) of the term loans required interest only
payments. The terms of the modification and extension generally provided
for (i) an extension period through December 1998; (ii) one-half of the
principal amount of the term loans requires interest to be paid currently
at a rate related to either the London Interbank Offer Rate (LIBOR) or the
prime rate while interest on the balance of the term loans will accrue at
an annual rate of 2%; (iii) the term loan bearing interest at a rate
related to either LIBOR (the "LIBOR Note") or the prime rate was subject to
periodic amortization; and (iv) the past due lump sum interest swap payment
in the amount of $2,194,631 was converted to a note payable due December
1998 with interest accruing at an annual rate of 2%. Payments of principal
and interest made by JMB under its guaranty of the $25,000,000 portion of
the Partnership's term loans were treated as advances to the Partnership.
Interest accrues on these advances (and accrued and deferred interest
thereon) at the annual rate of prime plus 1% (9.5% at December 31, 1997).
As of December 31, 1997, JMB has advanced approximately $12,376,000,
evidenced by a demand note, which includes the principal and interest
payments made related to the loan modification discussed above, advances to
pay operating costs of the Partnership and accrued and deferred interest on
the demand note. The demand note payable to JMB, which allows a maximum
principal sum of a specified amount, had been subordinate to payment of the
LIBOR Note but is no longer subordinated and is now secured by the
Partnership's interest in its real estate investment.
In July 1995, JMB purchased from the lenders the term loans (including
the note representing the interest swap payment) and their security
interests in the related collateral, including the JMB guarantee, which has
been terminated. JMB continues to hold the notes for these loans generally
under the same terms and conditions that were in effect prior to the
purchase. However, no scheduled principal and interest payments are
required prior to maturity of the LIBOR Note. Interest on the LIBOR Note
accrues and is payable monthly at a floating rate which, at the option of
the Partnership, is related to either LIBOR or the prime rate of Bank of
America. No payments of interest on the LIBOR Note have been made
subsequent to July 31, 1995. These loans and the demand loan payable to
JMB are secured by the Partnership's interest in its real estate investment
and are subject to mandatory prepayment of principal and interest out of
any distributions received by the Partnership from its real estate
investment. It currently appears unlikely, however, that any significant
operating distributions will be received by the Partnership from its real
estate investment due to the level of indebtedness remaining on the
properties owned by WFP, LP. Accordingly, the Partnership's primary source
of capital to pay for continuing operations are continued advances from JMB
under the demand loan and receipt of one-third of the property management
fees earned at the 245 Park Avenue property.
NOTES PAYABLE TO AN AFFILIATE
Notes payable to an affiliate consist of the following at December 31,
1997 and 1996:
1997 1996
----------- -----------
Note payable (term loan)
bearing interest at a variable
rate related to LIBOR (8.344%
per annum at December 31, 1997);
secured by the Partnership's
interest in its real estate
investment; interest payable
monthly until December 1998
when the remaining amount
is due; . . . . . . . . . . . . . . $16,042,000 16,042,000
<PAGE>
1997 1996
----------- -----------
Note payable (term loan)
bearing interest at 2% per
annum; secured by the Partnership's
interest in its real estate
investment; no payments until
December 1998 when the entire
principal amount and accrued
compounded interest are due; . . . . 25,000,000 25,000,000
Note payable (term loan)
bearing interest at 2% per
annum; secured by the
Partnership's interest in
its real estate investment;
no payments until December
1998 when the entire principal
amount and accrued compounded
interest are due;. . . . . . . . . . 2,194,631 2,194,631
Demand note payable bearing
interest at prime plus 1%
(9.50% per annum at December 31,
1997); advanced by JMB; maximum
principal sum of a specified
amount secured by the Partner-
ship's interest in its real
estate investment. . . . . . . . . . 12,375,592 12,375,592
----------- -----------
$55,612,223 55,612,223
=========== ===========
In addition, deferred and unpaid interest payable was $9,946,217 and
$6,640,810 as of December 31, 1997 and 1996, respectively.
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are generally allocated 94% to
the Holders and 6% to the General Partners. Profits from the sale or other
disposition of all or substantially all of the Partnership's interest in
its real estate investment will be allocated to the General Partners in an
amount equal to the greater of 1% of such profits or any cash from the
proceeds of such sale or other disposition distributed to the General
Partners, plus an additional amount of such profits to eliminate deficits,
if any, in the General Partners' capital accounts. The remainder of such
profits will be allocated to the Holders. All losses from the sale of all
or substantially all of the Partnership's interest in its real estate
investment will be allocated 99% to the Holders and 1% to the General
Partners. All such profits or losses will be allocated among the Holders
in proportion to the number of Interests held.
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership. Distributions of "Distributable Cash"
(as defined) of the Partnership generally will be made 94% to the Holders
of Interest and 6% to the General Partners. Distributions of "Sale
Proceeds" or "Financing Proceeds" (as defined) will be made first to the
Holders in an amount equal to their contributed capital, next to the
General Partners in an amount equal to their capital contributions, and the
balance 70% to the Holders and 30% to the General Partners. Distributions
would be made to the General Partners and Holders of Interests only after
the satisfaction of all Partnership liabilities.
<PAGE>
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate 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 real property investments. Fees,
commissions and other expenses required to be paid by the Partnership to
the General Partners and their affiliates as of December 31, 1997, 1996 and
1995 are as follows:
UNPAID AT
DECEMBER 31,
1997 1996 1995 1997
------- ------ ------ ------------
Reimbursement (at cost)
for legal services . . . $ 1,267 1,455 3,892 --
Reimbursement (at cost)
for accounting services. 1,521 750 8,423 --
Reimbursement (at cost)
for portfolio manage-
ment services. . . . . . 2,380 518 -- --
Reimbursement (at cost)
for out-of-pocket
expenses . . . . . . . . -- 9,860 1,817 --
------- ------ ------ ------
$ 5,168 12,583 14,132 --
======= ====== ====== ======
Any reimbursable amounts currently payable to the General Partners and
their affiliates do not bear interest.
Reference is made to the Notes, "Investment in Unconsolidated Venture"
and "Notes Payable to an Affiliate" above for a discussion of certain loans
and notes payable by the Partnership to JMB and related collateral held by
JMB.
INVESTMENT IN UNCONSOLIDATED VENTURE
Summary financial information for WFP, LP and 245 Park as of and for
the years ended December 31, 1997 and 1996 (inclusive of results of
operations for 245 Park through the Effective Date and WFP, LP subsequent
to the Effective Date):
1997 1996
------------ ------------
(000's) (000's)
Assets:
Commercial properties . . . . . . $ 2,514,362 2,401,880
Other assets. . . . . . . . . . . 115,771 215,843
----------- -----------
Total assets . . . . . . . . . $ 2,630,133 2,617,723
=========== ===========
Liabilities and Partners Capital:
Accounts payable and
other payables. . . . . . . . . $ 62,935 69,547
Long and short term debt. . . . . 1,935,461 1,983,566
Venture Partners' equity. . . . . 596,691 532,885
----------- -----------
Total liabilities. . . . . . . $ 2,595,087 2,585,998
=========== ===========
Partnership's capital. . . . . $ 35,046 31,725
=========== ===========
<PAGE>
1997 1996
------------ ------------
(000's) (000's)
Represented by:
Invested capital. . . . . . . . . $ 31,725 31,426
Cumulative distributions
and other . . . . . . . . . . . 13 --
Cumulative net earnings . . . . . 3,308 299
----------- -----------
$ 35,046 31,725
=========== ===========
Total income. . . . . . . . . . . . $ 405,993 162,984
Expenses. . . . . . . . . . . . . . 346,087 137,932
----------- -----------
Net income (loss) . . . . . . . . . $ 59,906 25,052
=========== ===========
Partnership's share:
Gain on forgiveness of debt . . . $ -- 9,487
Equity in earnings of 245 Park. . -- (24)
Equity in earnings of WFP, LP . . 3,308 503
----------- -----------
$ 3,308 9,966
=========== ===========
The Partnership's capital in WFP, LP differs from its investment in
unconsolidated venture, primarily due to the adoption of fresh start
accounting by WFP, LP in connection with the restructuring, and the
resultant restatement of all of its assets and liabilities to reflect their
reorganization value. The Partnership is amortizing the difference between
its historical basis in 245 Park and its underlying equity (which was
transferred to the basis in WFP, LP on the Effective Date) over a period
not to exceed forty years. The amortization for the year ended December
31, 1997 was $2,455,142. Such amounts may be written off sooner in the
event of the sale or disposition of the properties owned by WFP, LP or the
Partnership's interest in WFP, LP.
Total income and net income (loss) for the year ended December 31,
1996 includes an extraordinary gain on forgiveness of indebtedness of
$19,661,157 related to the restructuring of 245 Park Avenue.
The total income, expenses and net income (loss) for the year ended
December 31, 1995 were $100,360,354, $109,093,114, and ($8,732,760),
respectively.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
World Financial Properties, L.P.
New York, New York
We have audited the accompanying consolidated balance sheet of World
Financial Properties, L.P. (the Company) as of December 31, 1997, and the
related consolidated statement of operations, partners' capital and cash
flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all
material respects, the financial position of World Financial Properties,
L.P. as of December 31, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
March 5, 1998
<PAGE>
WORLD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(000's)
ASSETS
NOTE
1997
-----------
Commercial properties . . . . . . . . . . . 1-3 $ 2,514,362
Cash and cash equivalents
(including restricted cash and
cash equivalents of $53,416). . . . . . . 2d 56,945
Accounts receivable . . . . . . . . . . . . 20,303
Other assets. . . . . . . . . . . . . . . . 9a 38,523
-----------
Total Assets. . . . . . . . . . . . . . . . $ 2,630,133
===========
LIABILITIES AND PARTNERS' CAPITAL
Long term commercial property debt. . . . . 5 $ 1,926,461
Short term debt . . . . . . . . . . . . . . 6 9,000
Accounts payable and deferred credits . . . 7 62,935
-----------
1,998,396
-----------
Commitments and contingencies . . . . . . . 10 --
Partners' capital . . . . . . . . . . . . . 1,4 631,737
-----------
Total Liabilities and
Partners' Capital . . . . . . . . . . . . $ 2,630,133
===========
The accompanying notes are an integral part
of this financial statement.
<PAGE>
WORLD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(000's)
NOTE
REVENUES:
1997
----------
Rental income . . . . . . . . . . . . . . . 2g,8 $ 384,747
Equity earnings from joint ventures . . . . 8,725
Interest and other income . . . . . . . . . 9b 12,521
----------
405,993
----------
EXPENSES:
Property operations . . . . . . . . . . . . 132,863
Interest. . . . . . . . . . . . . . . . . . 5,6 156,500
Administrative and development. . . . . . . 11,057
Depreciation and amortization . . . . . . . 2b 45,667
-------
346,087
-------
NET INCOME. . . . . . . . . . . . . . . . . $59,906
=======
The accompanying notes are an integral part
of this financial statement.
<PAGE>
<TABLE>
WORLD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1997
(000's)
<CAPTION>
Additional
Balance Units Issued Balance
12/31/96 (Transfers) Net Income 12/31/97
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
GENERAL PARTNERS
World Financial Properties, Inc.. . . $ 5,646 $ 94 $ 601 $ 6,341
JMB 245 Park Avenue Holding
Company, LLC. . . . . . . . . . . . 31,725 13 3,308 35,046
LIMITED PARTNERS
Brookfield Properties Corporation:
Battery Park Holdings Inc.. . . . . 205,009 27,988 22,689 255,686
Olympia & York Tower B Company. . . 45,315 54 4,728 50,097
Canadian Imperial Bank of Commerce. . 116,251 3,121 12,413 131,785
WFP Holdings Limited Partnership. . . 19,376 (20,785) 1,409 --
Emerald LP Holdings, Inc. . . . . . . 126,422 3,468 13,504 143,394
Other . . . . . . . . . . . . . . . . 14,866 (6,732) 1,254 9,388
-------- ------- ------- --------
$564,610 $ 7,221 $59,906 $631,737
======== ======= ======= ========
<FN>
The accompanying notes are an integral part
of this financial statement.
</TABLE>
<PAGE>
WORLD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
(000's)
OPERATING ACTIVITIES:
1997
----------
Net income. . . . . . . . . . . . . . . . . . . . . $ 59,906
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization . . . . . . . . . . 45,667
Equity earnings from joint ventures . . . . . . . (8,725)
Accrued interest income . . . . . . . . . . . . . (112)
Accrued interest expense. . . . . . . . . . . . . 1,798
Changes in other operating assets
and liabilities:
Increase in accounts receivable . . . . . . . . (50,541)
Increase in other assets. . . . . . . . . . . . (108)
Decrease in accounts payable
and other payables. . . . . . . . . . . . . . (14,281)
---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES. . . . . . . . . . . . 33,604
---------
INVESTING ACTIVITIES:
Additions to commercial properties. . . . . . . . . (35,286)
Distributions from joint ventures . . . . . . . . . 2,623
Advances to joint ventures. . . . . . . . . . . . . (9,526)
Other assets, net . . . . . . . . . . . . . . . . . (640)
---------
NET CASH USED BY
INVESTING ACTIVITIES. . . . . . . . . . . . (42,829)
---------
FINANCING ACTIVITIES:
Equity units issued . . . . . . . . . . . . . . . . 7,221
Repayment of unsecured note payable . . . . . . . . (33,417)
Additions to long term debt . . . . . . . . . . . . 275,000
Additions to short term debt. . . . . . . . . . . . 9,000
Repayments of long term debt. . . . . . . . . . . . (302,500)
---------
NET CASH USED BY
FINANCING ACTIVITIES. . . . . . . . . . . . (44,696)
---------
Decrease in cash and cash equivalents . . . . . . . (53,921)
Cash and cash equivalents
- beginning of year . . . . . . . . . . . . . . . 110,866
---------
Cash and cash equivalents
- end of year . . . . . . . . . . . . . . . . . . $ 56,945
=========
The accompanying notes are an integral part
of this financial statement.
<PAGE>
WORLD FINANCIAL PROPERTIES, L.P.
(A Delaware Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000's)
1. ORGANIZATION
World Financial Properties, L.P. (the Company) is a Delaware limited
partnership organized as of November 21, 1996 by and among World Financial
Properties, Inc., a Delaware corporation wholly owned by the Co-Proponents
(as defined below), as a general partner, JMB 245 Park Avenue Holding
Company, LLC (JMB), as a general partner, and Battery Park Holdings Inc.,
Olympia & York Tower B Company (both of which are subsidiaries of
Brookfield Properties Corporation and are collectively referred to as
BPHI), Canadian Imperial Bank of Commerce (CIBC), WFP Holdings Limited
Partnership (Dragon), Emerald LP Holdings, Inc. (Citibank) and various
other partners as limited partners. BPHI, CIBC, Dragon and Citibank are
collectively referred to as the Co-Proponents. On September 10, 1997, BPHI
acquired the interests of Dragon. Furthermore, BPHI and CIBC have also
reached an agreement whereby BPHI will acquire a significant portion of the
interests of CIBC.
The Company was formed pursuant to the Third Amended Joint Plan of
Reorganization of Olympia & York Realty Corp., et.al. (the Plan) filed with
the U.S. Bankruptcy Court for the Southern District of New York (the
Bankruptcy Court). Olympia & York Realty Corp., et.al. comprised the
principal entities which formerly owned and operated real estate under the
name "The U.S. Operations of Olympia & York" (O&Y) (U.S.). The Plan was
confirmed by the Bankruptcy Court on September 21, 1996 and consummated on
November 21, 1996 (Consummation).
The Company accounted for the reorganization using "fresh-start
accounting", pursuant to the American Institute of Certified Public
Accountants Statement of Position No. 90-7, as of the Consummation date.
Accordingly, all assets and liabilities were restated to reflect their
reorganization value, which approximated fair value at the date of
Consummation.
2. SIGNIFICANT ACCOUNTING POLICIES
a. Principals of consolidation and accounting presentation
(i) The consolidated financial statements include the accounts of
the Company and all of its subsidiaries, as well as joint ventures and
partnerships which the Company controls, after elimination of intercompany
accounts and transactions.
(ii) The Company accounts for its investments in joint ventures and
partnerships in which it does not have the controlling interest on the
equity method.
b. Depreciation and amortization
Depreciation of office buildings and improvements is provided on the
straight-line method over the estimated lives of the buildings which
Management has estimated to be 40-50 years from Consummation. Amortization
of tenant improvements and other leasing costs is provided on the straight-
line method over the terms of the related leases.
<PAGE>
c. Income taxes
The Company, as a partnership, is not subject to Federal, state and
city income taxes, with the exception of certain corporate subsidiaries.
Accordingly, the Company makes no provision for income taxes in its
financial statements except for the aforementioned corporate subsidiaries,
where income taxes are provided as required. The Company's taxable income
or loss, excluding the taxable income or loss of the corporate
subsidiaries, is reportable by the partners.
d. Cash
For financial reporting purposes, the Company considers all highly
liquid investments that have original maturities of three months or less,
to be cash equivalents.
Restricted cash and cash equivalents represents amounts of $51.9
million which are subject to certain loan agreements, as well as amounts of
$1.5 million which remains from reserves set aside for bankruptcy claim
resolution.
e. Financial instruments
Statement of Financial Accounting Standards No. 107 "Disclosures About
Fair Value of Financial Instruments" requires disclosures of fair values of
financial instruments for which it is practicable to estimate that value.
Based on available market information, the Company estimates that the fair
value of its financial assets and liabilities approximates their carrying
value.
In connection with a proposed refinancing of 53 State Street, for
which the Company has an agreement to acquire the co-venturer's interest
(see 3.(vi)), the Company has entered into a swap contract in order to fix
the interest rate the Company will pay on the proposed refinancing. Since
the Company has designated this contract as a hedge, no current gain or
loss will be recognized based on the market value of the swap contract. If
the Company were to have terminated this contract at December 31, 1997, the
Company would have incurred a cost of approximately $2.5 million.
f. Use of estimates in the preparation of financial statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires Management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates.
g. Rental income
Rental income from leases providing for periodic increases in base
rent is recognized on a straight-line basis over the noncancelable term of
the respective leases, and are recorded as adjustments to rental income.
<PAGE>
3. COMMERCIAL PROPERTIES
Description
The Company, through its subsidiaries and joint ventures, is primarily
involved in the operation of commercial real estate located in New York
City and whose tenants are principally large financial and professional
service institutions. The properties owned by the Company, in whole or in
part, are as follows:
(i) WORLD FINANCIAL CENTER - TOWER A, NEW YORK, NEW YORK
Tower A is a 40-story commercial office building which was
completed in 1985 and has a net rentable area of 1,510,987 square feet. The
property is owned in a general partnership with an affiliate of CIBC, a
major tenant in Tower A, who holds a 26% partnership interest. At
December 31, 1997 the property is 99% leased.
(ii) WORLD FINANCIAL CENTER - TOWER B, NEW YORK, NEW YORK
Tower B is a 45-story commercial office building which was
completed in 1985 and has a net rentable area of 2,581,288 square feet. The
property is currently 99% leased, on a net basis, to an affiliate of
Merrill Lynch & Co. (Merrill).
(iii) WORLD FINANCIAL CENTER - TOWER D, NEW YORK, NEW YORK
Tower D is a 34-story commercial office building which was
completed in 1987 and has a net rentable area of 1,813,659 square feet. The
property is 99% leased, on a net basis, to an affiliate of Merrill. The
property is owned in a general partnership with Merrill, with the Company
owning a 51% interest and Merrill holding a 49% interest.
(iv) ONE LIBERTY PLAZA, NEW YORK, NEW YORK
One Liberty Plaza is a 53-story commercial office building
which was completed in 1971 and has a net rentable area of 2,124,000 square
feet. At December 31, 1997 the property is 99% leased.
(v) 245 PARK AVENUE, NEW YORK, NEW YORK
245 Park Avenue is a 45-story commercial office building which
was completed in 1970 and has a net rentable area of 1,617,779 square feet.
At December 31, 1997 the property is 92% leased.
(vi) 53 STATE STREET, BOSTON, MASSACHUSETTS
53 State Street is a 40-story commercial office building which
was completed in 1985 and has a net rentable area of 1,120,162 square feet.
The building is owned in a limited partnership with an affiliate of Nomura,
Babcock & Brown (NBB), with each partner having a 50% interest. An
affiliate of NBB has also provided financing for the building. The
financing, which is due in 1998, is secured by a mortgage and a pledge of
the Company's interest in the building. The Company reached agreement on
December 21, 1997 to purchase the NBB partnership interest as well as to
retire the existing financing. The closing for this transaction is
scheduled for April 1, 1998. At December 31, 1997, the property is 99%
leased.
Included in Commercial Properties at December 31, 1997 are
consolidated commercial properties of $2,401.4 million, joint venture
investments of $68.8 million, and straight-line rent receivables of $44.1
million.
<PAGE>
CONSOLIDATED COMMERCIAL PROPERTIES:
The Company's consolidated commercial properties at December 31, 1997
are as follows:
Land . . . . . . . . . . . . $ 348,179
Buildings and improvements . 2,102,137
----------
2,450,316
Accumulated depreciation
and amortization. . . . . . (48,901)
----------
Total. . . . . . . . . . . . $ 2,401,415
===========
JOINT VENTURES - COMMERCIAL PROPERTIES:
The combined condensed balance sheets and combined condensed
statements of operations of joint venture partnerships at and for the year
ended December 31, 1997 are as follows:
53 STATE
TOWER D STREET TOTAL
---------- -------- --------
ASSETS
Commercial properties . . . . $657,593 $182,889 $840,482
Other assets. . . . . . . . . 25,920 9,678 35,598
-------- -------- --------
Total assets. . . . . . . . . $683,513 $192,567 $876,080
======== ======== ========
LIABILITIES
Long term debt. . . . . . . . $434,346 $145,000 $579,346
Accounts payable and other. . 4,014 4,545 8,559
-------- -------- --------
Total liabilities . . . . . . 438,360 149,545 587,905
-------- -------- --------
CAPITAL
World Financial Properties,
L.P.. . . . . . . . . . . . 58,310 10,499 68,809
Co-venturer . . . . . . . . . 186,843 32,523 219,366
-------- -------- --------
245,153 43,022 288,175
-------- -------- --------
Total liabilities and
partners' capital . . . . . $683,513 $192,567 $876,080
======== ======== ========
Revenues. . . . . . . . . . . . $ 81,051 $ 42,460 $123,511
Operating expenses. . . . . . . (50,568) (31,950) (82,518)
Depreciation and amortization . (13,441) (5,503) (18,944)
-------- -------- --------
Net income. . . . . . . . . . $ 17,042 $ 5,007 $ 22,049
======== ======== ========
4. PARTNERS CAPITAL
During 1997, the Company acquired 401 partnership units which were
subsequently retired. Furthermore, the Company issued 1727 units to the
Co-Proponents, which represented a conversion of unsecured notes which were
reserved at Consummation pending resolution of certain outstanding claims.
Pursuant to the Plan, to the extent these claims were extinguished, any
notes recovered reverted to the Co-Proponents, which in turn would be
converted into partnership units.
<PAGE>
5. LONG TERM DEBT
Long term debt of $1,884.6 million at December 31, 1997 carries a
weighted average interest rate of 7.65% and is secured by mortgages and
other security interests which are collateralized by consolidated
commercial properties. Total interest paid for the year ended December 31,
1997 aggregated $154.7 million. The scheduled repayments of long term debt
at December 31, 1997 are as follows:
Years ending December 31,
1998. . . . . . . . . $ 22,776
1999. . . . . . . . . 50,306
2000. . . . . . . . . 64,150
2001. . . . . . . . . 75,018
2002. . . . . . . . . 71,969
Thereafter. . . . . . 1,600,372
----------
$1,884,591
==========
In addition, included in long term debt is subordinated long term debt
which represents the net carrying value of a non-interest bearing
promissory note (the Note) payable by WFP Tower B Co., L. P. (the Obligor),
a subsidiary of World Financial Properties, L.P. and which matures in 2014.
The Note carries a face amount of $150 million and is convertible by the
Obligor at maturity into a 25% interest in Tower B, provided that the fair
market value of Tower B, taking into account the then outstanding principal
indebtedness secured by the leasehold interest in Tower B, is at least $600
million. The carrying amount represents the current value of the Note based
upon the estimated residual value of the building discounted at 9.5%.
6. SHORT TERM DEBT
Pursuant to a demand Note, the Company has borrowed $9.0 million from
Carena Bancorp U.S., Inc., an affiliate of BPHI. The note bears interest
at a rate equal to LIBOR plus 1.00%, and is payable quarterly in arrears.
Interest accrued through December 31, 1997 aggregated $21,986.
7. ACCOUNTS PAYABLE AND OTHER PAYABLES
Included in accounts payable and other payables is $6.9 million due to
the City and State of New York relating to a tax settlement agreement
between O&Y (U.S.) and the City and State of New York in connection with
the settlement of amounts due for corporate taxes. This balance is payable
in semi-annual installments through 2000, with interest at 9%.
8. RENTALS UNDER OPERATING LEASES
Rental revenues are derived from the leasing of space in the buildings
to commercial and retail tenants. The leases are for fixed terms of varying
length and generally provide for annual rentals and expense escalations to
be paid in monthly installments. Rental income includes additional rentals
for operating expense reimbursements and escalations amounting to $86.1
million for the period ended December 31, 1997.
The following is a schedule of minimum future rental income under
noncancelable operating leases during the next five years and thereafter
presented on a straight-line basis.
Years ending December 31,
1998. . . . . . . . . $ 323,962
1999. . . . . . . . . 322,201
2000. . . . . . . . . 317,804
2001. . . . . . . . . 315,664
2002. . . . . . . . . 313,135
Thereafter. . . . . . 2,026,006
----------
Total future minimum rentals. . . . . . $3,618,772
==========
<PAGE>
9. OTHER RELATED PARTY TRANSACTIONS
a. Included in other assets is a note receivable from the Co-
proponents in the amount of $1.3 million. This note bears interest at 9%
and is due in 2001.
b. World Financial Properties, L.P. performs management services for
certain of its properties and certain affiliates pursuant to separate
agreements. For the year ended December 31, 1997, $16.1 million in fees
were earned, of which $13.3 million has been eliminated within this
financial statement.
c. During 1997, an affiliate of CIBC merged with Oppenheimer Co., a
tenant in Tower A. The merged entity, CIBC Oppenheimer Corp., leases
approximately 528,000 square feet under lease agreements expiring through
2005. Rental income under these agreements aggregated $37.3 million for
the year ended December 31, 1997.
10. COMMITMENTS AND CONTINGENCIES
a. The Company is obligated under various ground leases expiring
between 2069 and 2077. The following is a schedule of the future minimum
rental payments under these leases.
Years ending December 31,
1998. . . . . . . . . $ 10,648
1999. . . . . . . . . 10,648
2000. . . . . . . . . 10,648
2001. . . . . . . . . 10,648
2002. . . . . . . . . 10,648
Thereafter. . . . . . 708,598
--------
$761,838
========
b. A wholly-owned, consolidated corporate subsidiary of the Company
is currently involved in litigation (the SF Litigation) with Coopers &
Lybrand OYDL Inc. (Coopers) in connection with an action filed by Coopers
against Olympia & York Realty Corp. and Olympia & York SF Holdings
Corporation (collectively SF) in 1993. This action, which is pending in an
Ontario, Canada court, arose in connection with a claim by Coopers to
reinstate indebtedness (approximately $332 million) between SF Holdings and
Olympia & York Developments Ltd. (OYDL). In connection with this action
Coopers had filed with the Bankruptcy court various claims against SF.
These claims were filed along with various other claims by Coopers against
SF and certain of the entities which comprised O&Y (U.S.).
Pursuant to a settlement agreement dated September 10, 1996 between
Coopers and O&Y (U.S.), all claims were settled with the exception of the
SF litigation. In connection with the SF litigation, the parties agreed to
escrow the assets of SF Holdings (the Disputed SF Assets) pending the
outcome of the litigation. These assets consist of cash totaling
approximately $25 million, part of which is subject to certain security
interests which are expected to be released in connection with the Plan.
While the ultimate resolution of the SF Litigation cannot be assured,
Management believes that it will ultimately be successful in defending
these actions, and the Disputed SF Assets will be released to the Company.
c. Pursuant to the Plan, the Company, through Olympia & York Florida
Equity Corp., had a 50% interest in Miami Center Joint Venture, a joint
venture formed in 1981 to own and develop certain land in Miami, Florida.
The other 50% interest was held by Theodore Gould, whose interest was
transferred to a liquidating trustee. Pursuant to a separate bankruptcy
plan which was confirmed on September 18, 1997, the Company obtained
control of the property and all outside claims were settled. The Company
is in the process of selling the property.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in, or disagreements with, accountants during
1996 and 1997.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership, JMB Park Avenue,
Inc., an Illinois corporation, is a wholly-owned subsidiary of Northbrook
Corporation, a Delaware corporation, substantially all of the outstanding
shares of stock of which are owned by JMB Realty Corporation ("JMB"), a
Delaware corporation, and certain of its officers, directors, members of
their families and their affiliates. Substantially all of the shares of
JMB are owned by its officers, directors, members of their families and
their affiliates. The Corporate General Partner has responsibility for all
aspects of the Partnership's operations, subject to the requirement that
the sale of all or substantially all of the Partnership's interest in WFP,
LP or of all or substantially all of the 245 Park Avenue office building,
unless required by the terms of the WFP, LP venture agreement must be
approved by the Associate General Partner of the Partnership, Park
Associates, L.P., an Illinois limited partnership with JMB Park Avenue,
Inc. as the sole general partner. The limited partners of the Associate
General Partner are generally officers, directors and affiliates of JMB or
its affiliates. Various relationships of the Partnership to the Corporate
General Partner and its affiliates are described under the caption
"Conflicts of Interest" at pages 35-36 of the Private Placement Memorandum,
which description is incorporated herein by reference to Exhibit 99.1 to
this annual report.
The director and the executive and certain other officers of the
Corporate General Partner of the Partnership are as follows:
NAME OFFICE
- ---- ------
Judd D. Malkin Chairman
Neil G. Bluhm Vice President
Gary Nickele Vice President and General Counsel
Stuart C. Nathan President and Director
H. Rigel Barber Vice President
Gailen J. Hull Vice President
There is no family relationship among any of the foregoing director or
officers. The foregoing director has been elected to serve a one-year term
until the annual meeting of the Corporate General Partner to be held on
August 11, 1998. 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 Corporate General Partner to be held on
August 11, 1998. All of the foregoing officers have served in the
capacities indicated since the date of incorporation of the Corporate
General Partner on March 26, 1984 with the exception that Stuart C. Nathan,
who was a Vice President, was elected Director on December 18, 1990 and
President on August 8, 1993, and Gary Nickele was elected Vice President
and General Counsel on December 18, 1990. There are no arrangements or
understandings between or among any of said director or officers and any
other person pursuant to which any director or officer was elected as such.
<PAGE>
The foregoing director and officers are also officers and/or directors
of JMB. JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-XI
("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII
("Carlyle-XII"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"),
Carlyle Real Estate Limited Partnership-XVI ("Carlyle-XVI"), Carlyle Real
Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB Mortgage Partners,
Ltd.-III ("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV
("Mortgage Partners IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus")
and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VII
("JMB Income-VII"), JMB Income Properties, Ltd.-X ("JMB Income-X"), JMB
Income Properties, Ltd.-XI ("JMB Income-XI"), JMB Income Properties,
Ltd.-XII ("JMB Income-XII"), and JMB Income Properties, Ltd.-XIII ("JMB
Income-XIII"). JMB is also the sole general partner of the associate
general partner of most of the foregoing partnerships.
The foregoing director 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. ("Arvida")) and Income
Growth Managers, Inc. (the corporate general partner of IDS/JMB Balanced
Income Growth, Ltd. ("IDS/BIG")). Most of such officers and the director
are also partners, directly or indirectly, of certain partnerships which
are associate general partners in the following real estate limited
partnerships: the Partnership, Carlyle-VII, Carlyle-XI, Carlyle-XII,
Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB
Income-VII, JMB Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII,
Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle
Income Plus-II and IDS/BIG.
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership
includes the following:
Judd D. Malkin (age 60) is Chairman and a director of JMB. He is also
an individual general partner of JMB Income-IV and JMB Income-V.
Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin is
also a director of Urban Shopping Centers, Inc. ("USC, Inc.), an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is a Certified Public
Accountant.
Neil G. Bluhm (age 60) is President and a director of JMB. He is also
an individual general partner of JMB Income-IV and JMB Income-V. Mr. Bluhm
has been associated with JMB since August, 1970. Mr. Bluhm is also a
principal of Walton Street Real Estate Fund I, L.P. and a director of USC,
Inc. He is a member of the Bar of the State of Illinois and a Certified
Public Accountant.
Gary Nickele (age 45) is Executive Vice President and General Counsel
of JMB. Mr. Nickele has been associated with JMB since February 1984. He
is a member of the Bar of the State of Illinois.
Stuart C. Nathan (age 56) is Executive Vice President and a director
of JMB. Mr. Nathan has been associated with JMB since July, 1972. He is a
member of the Bar of the State of Illinois.
<PAGE>
H. Rigel Barber (age 48) is Executive Vice President and Chief
Executive Officer of JMB. Mr. Barber has been associated with JMB since
March, 1982. He is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 49) is Senior Vice President of JMB. Mr. Hull 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.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The General Partners
are entitled to receive a share of cash distributions, when and as cash
distributions are made to the Holders of Interests, and a share of profits
or losses as described in the Notes. No such cash distributions were paid
to the General Partners in 1997, 1996 or 1995. The General Partners were
allocated aggregate earnings for tax purposes of $7,550 from the
Partnership in 1997.
The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership,
as described under the captions "Compensation, Fees and Other Payments" at
pages 19-21, and "Management" at pages 31-38 of the Private Placement
Memorandum, which descriptions are hereby incorporated herein by reference
to Exhibit 99.1 to this annual report. Various relationships of the
Partnership to the Corporate General Partner (and its director and
officers) and its affiliates are also set forth above in Item 10.
The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses and out-of-pocket expenses relating to
the administration of the Partnership and operation of the Partnership's
real property investments. In 1997, the General Partners of the
Partnership and its affiliates were not due any reimbursements for such
out-of-pocket expenses.
The General Partners and their affiliates are entitled to
reimbursements of salary and salary related expenses for legal, accounting
and certain other services. Such reimbursements will not exceed the lesser
of the actual cost of such services or the amount which the Partnership
would be required to pay independent parties for comparable services. For
1997, an affiliate of the General Partners was entitled to reimbursements
for such expense in the amount of $5,168, all of which was paid at December
31, 1997.
As of December 31, 1997, JMB has advanced $12,375,592, evidenced by a
demand note, which relates primarily to principal and interest payments
made on the LIBOR Note since the closing of the term loan modification and
funding of Partnership operating expenses. The demand note payable to JMB
allows a maximum principal sum of a specified amount and bears interest at
the prime rate plus 1% per annum, which accrues and is deferred. The
demand note is secured by the Partnership's interest in its investment in
real estate. The amount of interest accrued and deferred on the demand
note for 1997 and in the aggregate through December 31, 1997 is $1,184,791
and $4,017,642, respectively. In July 1995, JMB purchased from the lenders
the term loans to the Partnership and their security interest in the
related collateral, which included the Partnership's interest in real
estate and the JMB guarantee, which has been terminated. JMB continues to
hold these notes generally under the same terms and conditions that were in
effect prior to the purchase. However, no scheduled principal payments are
required on any of these notes prior to maturity. No payments of interest
have been made on any of the notes since July 1995. The amount of interest
accrued and deferred or unpaid on these notes for the year ended December
1997 and in the aggregate through December 31, 1997, is $2,120,616 and
$5,928,575, respectively. The Partnership expects to seek a modification
or extension of the term loan notes prior to their maturity in December
1998. Reference is made to the Notes for a further discussion of these
notes.
<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 Corporate General Partner, its officers and director and the Associate General Partner 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 Neil G. Bluhm 24 Interests (1) 2.4%
Interests indirectly
Limited Partnership Judd D. Malkin 24 Interests (1)(2) 2.4%
Interests indirectly
Limited Partnership Corporate General 26 Interests 2.6%
Interests Partner, its (1)(2)(3)
officers and director
and the Associate
General Partner
as a group
<FN>
(1) Includes 22 Interests owned by an investment partnership of which Messrs. Bluhm and Malkin are the
managing general partners and have shared investment and voting power with respect to such Interests.
(2) Includes one Interest owned by an officer for which he has sole investment and voting power.
(3) Includes one Interest owned by an estate for which an officer acts as co-executor and for which such
officer is deemed to have shared investment and voting power.
No officer or director of the Corporate 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 Corporate 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 Corporate General Partner, affiliates or their management other than
those described in Items 10, 11 and 12 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 and
Supplementary Data filed with this report).
(2) Exhibits.
3-A. Amended and Restated Agreement of Limited Partnership
of the Partnership is hereby incorporated by reference to Exhibit 3 to the
Partnership's Form 10-K Report for December 31, 1992 (File No. 0-13545)
filed on March 19, 1993.
3-B. Amendment to the Amended and Restated Agreement of
Limited Partnership of JMB/245 Park Avenue Associates, Ltd. by and between
JMB Park Avenue, Inc. and Park Associates, L.P. dated January 1, 1994 is
hereby incorporated by reference to Exhibit 3-B to the Partnership's Form
10-Q Report for March 31, 1995 (File No. 0-13545) filed May 11, 1995.
4-A. Loan agreement dated June 27, 1984 between JMB/245
Park Avenue Associates and Continental Illinois National Bank and Trust
Company of Chicago is hereby incorporated by reference to Exhibit 4-B to
the Partnership's Registration Statement on Form 10 (as amended) of the
Securities Exchange Act of 1934 (File No. 0-13545) filed on April 29, 1985.
4-B. $16,042,000 Second Amended and Restated Promissory
Note and related documents dated August 1, 1995 between JMB/245 Park Avenue
Associates and JMB Realty Corporation are hereby incorporated herein by
reference to Exhibit 4-U to the Partnership's Form 10-Q Report for
September 30, 1995, (File No. 0-13545) filed on November 9, 1995.
4-C. $25,000,000 Second Amended and Restated Promissory
Note and related documents dated August 1, 1995 between JMB/245 Park Avenue
Associates and JMB Realty Corporation, are hereby incorporated herein by
reference to Exhibit 4-V to the Partnership's Form 10-Q Report for
September 30, 1995, (File No. 0-13545) filed on November 9, 1995.
4-D. $2,194,631.25 Amended and Restated Promissory Note
and related documents dated August 1, 1995 between JMB/245 Park Avenue
Associates and JMB Realty Corporation, are hereby incorporated herein by
reference to Exhibit 4-W to the Partnership's Form 10-Q Report for
September 30, 1995, (File No. 0-13545) filed on November 9, 1995.
<PAGE>
4-E. Amended and Restated Demand Note dated August 1, 1995
between JMB/245 Park Avenue Associates and JMB Realty Corporation, are
hereby incorporated herein by reference to Exhibit 4-X to the Partnership's
Form 10-Q Report for September 30, 1995, (File No. 0-13545) filed on
November 9, 1995.
4-F. Fourth Amendment to Loan Documents dated August 1,
1995 between JMB/245 Park Avenue Associates, Ltd. and JMB Realty
Corporation detailing amendments to the term loans, are hereby incorporated
herein by reference to Exhibit 4-Y to the Partnership's Form 10-Q Report
for September 30, 1995, (File No. 0-13545) filed on November 9, 1995.
4-G. Consent Agreement dated December 29, 1983 from
JMB/245 Park Avenue Associates to Continental Illinois Bank of Chicago
(Continental) detailing the transactions for which the Partnership would
obtain Continental's consent, are hereby incorporated herein by reference
to Exhibit 4-Z to the Partnership's Form 10-Q Report for September 30,
1995, (File No. 0-13545) filed on November 9, 1995.
4-H. Third Amended and Restated Security Agreement dated
August 1, 1995 between JMB/245 Park Avenue Associates, Ltd. and JMB Realty
Corporation, are hereby incorporated herein by reference to Exhibit 4-AA to
the Partnership's Form 10-Q Report for September 30, 1995, (File No. 0-
13545) filed on November 9, 1995.
10-A. Third Amended Joint Plan of Reorganization dated
September 12, 1996 is hereby incorporated herein by reference to the
Partnership's report for September 31, 1996 on Form 10-Q (File No. 0-13545)
filed on November 8, 1996.
10-B. Limited Liability Company Agreement of JMB 245 Park
Avenue Holding Company, LLC dated as of November 12, 1996 is hereby
incorporated by reference to the Partnership's Report for November 21, 1996
on Form 8-K (File No. 0-13545) filed on December 6, 1996.
10-C. Amended and Restated Agreement of Limited Partnership
of World Financial Properties, L.P. dated as of November 21, 1996 is hereby
incorporated by reference to the Partnership's Report for November 21, 1996
on Form 8-K (File No. 0-13545) filed on December 6, 1996.
10-D. JMB Transaction Agreement dated as of November 21,
1996 is hereby incorporated by reference to the Partnership's Report for
November 21, 1996 on Form 8-K (File No. 0-13545) filed on December 6, 1996.
10-E. Consent and Substitution of Collateral dated
November 21, 1996 is hereby incorporated herein by reference to the
Partnership's Report for March 31, 1997 on Form 10-Q (File No. 0-13545)
filed on May 9, 1997.
21. List of Subsidiaries of the Partnership.
27. Financial Data Schedule
<PAGE>
99.1. Pages 19-21; and 31-38 from the Partnership's Private
Place Memorandum dated May 7, 1984 and Article 14 (pages 15-17) of the
Partnership's Amended and Restated Agreement of Limited Partnership are
hereby incorporated herein by reference to Exhibit 99.1 to the
Partnership's 10-K Report for December 31, 1994, (File No. 0-13545) filed
on March 27, 1995.
(b) The following report has been filed since the beginning of the
last quarter of the period covered by this report.
No annual report or proxy material for the fiscal year 1997 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
Exchange Act of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
JMB/245 PARK AVENUE ASSOCIATES, LTD.
By: JMB Park Avenue, Inc.
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Vice President
Date: March 25, 1998
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 Park Avenue, Inc.
Corporate General Partner
STUART C. NATHAN
By: Stuart C. Nathan, President and Director
Principal Executive Officer
Date: March 25, 1998
JUDD D. MALKIN
By: Judd D. Malkin, Chairman
Principal Financial Officer
Date: March 25, 1998
GAILEN J. HULL
By: Gailen J. Hull, Vice President
Principal Accounting Officer
Date: March 25, 1998
<PAGE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE
-------------
3-A. Amended and Restated Agreement of
Limited Partnership of the
Partnership. Yes
3-B. Amendment to the Amended Limited
Partnership Agreement of Partnership
of JMB/245 Park Avenue Associates, Ltd. Yes
4-A. Loan agreement dated June 27,
1984 between JMB/245 Park Avenue
Associates and Continental Illinois
National Bank and Trust Company of
Chicago. Yes
4-B. $16,042,000 Second Amended and
Restated Promissory Note and
related documents dated August 1,
1995 between JMB/245 Park Avenue
Associates and JMB Realty Corporation Yes
4-C. $25,000,000 Second Amended and
Restated Promissory Note and
related documents dated August 1,
1995 between JMB/245 Park Avenue
Associates and JMB Realty Corporation Yes
4-D. $2,194,631.25 Amended and Restated
Promissory Note and related documents
dated August 1, 1995 between
JMB/245 Park Avenue Associates and
JMB Realty Corporation Yes
4-E. Amended and Restated Demand Note
dated August 1, 1995 between JMB/245
Park Avenue Associates and JMB Realty
Corporation Yes
4-F. Fourth Amendment to Loan Documents
dated August 1, 1995 between JMB/245
Park Avenue Associates, Ltd. and
JMB Realty Corporation Yes
4-G. Consent Agreement dated December 29,
1983 from JMB/245 Park Avenue Associates
to Continental Illinois Bank of
Chicago (Continental) Yes
4-H. Third Amended and Restated Security
Agreement dated August 1, 1995 between
JMB/245 Park Avenue Associates, Ltd.
and JMB Realty Corporation Yes
10-A. Third Amended Joint Plan of Reorganiza-
tion dated September 12, 1996 Yes
<PAGE>
10-B. Limited Liability Company Agreement of
JMB 245 Park Avenue Holding Company, LLC
dated as of November 12, 1996. Yes
10-C. Amended and Restated Agreement of
Limited Partnership of World Financial
Properties dated as of November 21, 1996 Yes
10-D. JMB Transaction Agreement dated as of
November 21, 1996 Yes
10-E. Consent and Substitution of Collateral
dated November 21, 1996 Yes
21. List of Subsidiaries of the Partnership. No
27. Financial Data Schedule No
99.1. Pages 19-21; 31-38; and 55-57 from the
Partnership's Private Place Memorandum
dated May 7, 1984 and Article 14
(pages 15-17) of the Partnership's
Amended and Restated Agreement of
Limited Partnership Yes
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a member of JMB/245 Park Avenue Holding Company,
L.L.C., a Delaware limited liability company, which owns a general
partnership interest of approximately 5.56% in World Financial Properties,
L.P. World Financial Properties owns interests in several properties as a
result of the reorganized and restructured ventures formerly owned or
controlled by the O&Y Partners of their affiliates. The Partnership was a
partner in 245 Park Avenue Company, a New York general partnership which
held title to a building known as the 245 Park Avenue Building located at
245 Park Avenue, New York, New York.
<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, 1997 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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 318,105
<SECURITIES> 0
<RECEIVABLES> 54,850
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 372,955
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 372,955
<CURRENT-LIABILITIES> 65,592,710
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (125,795,386)
<TOTAL-LIABILITY-AND-EQUITY> 372,955
<SALES> 483,445
<TOTAL-REVENUES> 483,445
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 265,681
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,305,407
<INCOME-PRETAX> 2,617,872
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,617,872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,617,872
<EPS-PRIMARY> 2,461
<EPS-DILUTED> 2,461
</TABLE>
