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, 1999 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 Part I of this Annual Report on Form 10-K.
<PAGE>
TABLE OF CONTENTS
Page
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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. . . . . . . . . . . . . . 36
PART III
Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . . . 36
Item 11. Executive Compensation. . . . . . . . . . . . . 38
Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . . . . . 40
Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 41
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . . . 41
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 44
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% general partner interest (slightly diluted from
the original ownership percentage by notes converted to equity) in
Brookfield Financial Properties, L.P. ("BFP, LP"), formerly known as World
Financial Properties, L.P. ("WFP, LP"). The managing general partner of
BFP, LP is an entity affiliated with certain O&Y creditors and the
proponents of the Plan governing the restructuring and, subject to the
partnership agreement of BFP, LP and the JMB Transaction Agreement
(discussed below), has full authority to manage its affairs. BFP, LP's
principal assets are majority and controlling interests in the following
seven 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 2,581,288 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
75 State Street 767,096 square feet
Boston, Massachusetts
(acquired 9/15/98)
As part of the restructuring, the Partnership received certain limited
rights with respect to BFP, LP, pursuant to a separate agreement ("JMB
Transaction Agreement") with BFP, LP. These include, among other things,
the right to receive one-third of the property management fees earned at
the 245 Park Avenue property through December 2001, subject to certain
limitations, and the right, except under certain circumstances, to prohibit
(i) the sale of the 245 Park Avenue property prior to January 2, 2000 and
(ii) a reduction of the indebtedness secured by the 245 Park Avenue
property below a certain level prior to January 2, 2003.
BFP, 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 BFP, LP. In any event, any net proceeds obtained by the Partnership
would then be used to satisfy notes payable and deferred interest
(aggregating $71,594,391 at December 31, 1999) 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, it is expected that over
the remaining term of the Partnership, as a result of sale or other
disposition of the properties (including a transfer to the lenders), or of
the Partnership's interest in BFP, LP, the Holders of Interests will be
allocated substantial gain for Federal income tax purposes (corresponding
at a minimum to all or most of their deficit capital accounts for tax
purposes) without a significant amount of proceeds from such sale or
disposition. Such gain may be offset by suspended losses from prior years
(if any) that have been allocated to the Holders of Interests. 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 also made to Note 3 of the Notes to the
Consolidated Financial Statements of Brookfield Financial Properties, L.P.
included with this Report for a further description of the properties.
BFP, LP has mortgage loans secured by its properties. The Partnership's
interest in BFP, LP is pledged as collateral for certain notes payable with
deferred interest (aggregating $71,594,391 at December 31, 1999) to JMB.
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during
1998 and 1999.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1999, there were 881 record holders of the 997
outstanding 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. The
Partnership's interest in BFP, LP is pledged as collateral for certain
notes payable with deferred interest (aggregating $71,594,391 at
December 31, 1999) to JMB, which require mandatory payment of principal and
interest out of any distributions received from BFP, L.P. Reference is
made to the Notes and Item 7 for a discussion of the restrictions on the
distributions (if any) to the Partnership from BFP, LP.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
DECEMBER 31, 1999, 1998, 1997, 1996 AND 1995
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1999 1998 1997 1996 1995
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . . $ 515,284 496,426 483,445 47,854 100
============ ============ =========== =========== ===========
Earnings (loss)
before extraordinary
item. . . . . . . . . . . $ 6,171,054 2,906,029 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). . . . $ 6,171,054 2,906,029 2,617,872 6,659,344 (7,558,349)
============ ============ =========== =========== ===========
Net earnings (loss)
per Interest (b):
Earnings (loss)
before extraordinary
item. . . . . . . . . . $ 5,818 2,734 2,461 (2,657) (7,105)
Extraordinary item . . . -- -- -- 8,917 --
------------ ------------ ----------- ----------- -----------
Net earnings
(loss) . . . . . . $ 5,818 2,734 2,461 6,260 (7,105)
============ ============ =========== =========== ===========
Total assets . . . . . . . $ 207,090 734,338 372,955 156,838 4,275
============ ============ =========== =========== ===========
Bank obligations
and notes payable -
long-term . . . . . . . . $ -- (c) -- (c) -- (c) 43,236,631 43,236,631
============ ============ =========== =========== ===========
<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.
(c) Such loans are classified as a current liability at December 31, 1999, 1998 and 1997 due to their
scheduled maturity in December 1998. JMB is considering a possible resolution related to the term loan notes.
</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 had 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. 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
("JMB"), an affiliate of the Corporate General Partner, 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 accrued 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") were 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 which was 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, 1999, 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 and advances
to pay operating costs of the Partnership. Interest accrues on these
advances at the annual rate of prime plus 1% (9.50% at December 31, 1999
and 8.75% at December 31, 1998). 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 BFP, LP. In the fourth quarter of
<PAGE>
1999, the Partnership made an interest payment to JMB of $850,000 related
to this demand note. 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 was
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 were 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. The scheduled maturity of the term loans was December 31,
1998. However, JMB has not pursued its remedies under these notes as a
result of the non-payment of interest under the LIBOR Note or the maturity
of these notes. JMB is considering a possible resolution related to the
term loan notes. These loans and the demand loan payable to JMB are cross-
defaulted, are secured by the Partnership's interest in BFP, LP and are
subject to mandatory payment of principal and interest out of any
distributions received by the Partnership from BFP, LP.
Prior to November 1996, the Partnership was a partner with certain
affiliates of Olympia & York Developments, Ltd. ("O&Y") in 245 Park, which
owned the 245 Park Avenue office building in New York, New York. As a
result of a 1996 bankruptcy reorganization of 245 Park, the Partnership
owns (through a limited liability company of which the Partnership is a 99%
member) an approximate 5% general partner interest (slightly diluted from
the original ownership percentage by notes convertible to equity) in
Brookfield Financial Properties, L.P. ("BFP, LP") formerly known as World
Financial Properties, L.P. ("WFP, LP"). The managing general partner of
BFP, LP is an entity affiliated with certain O&Y creditors and the
proponents of the Plan governing the restructuring and, subject to the
partnership agreement of BFP, LP and the JMB Transaction Agreement, has
full authority to manage its affairs. BFP, LP's principal assets are
majority and controlling interests in the seven office buildings located in
New York, New York and Boston, Massachusetts.
In December 1999, BFP, LP executed an option agreement pursuant to
which a third party agreed to an option to purchase a 49% limited
partnership interest in the entities that own the 53 State Street and 75
State Street office buildings. If certain conditions are satisfied and
approvals are obtained by BFP, LP, the third party will be obligated to
close by the end of the option period in December 2000.
BFP, LP and the Partnership each have a substantial amount of
indebtedness remaining. If any of the buildings (or interests therein) are
sold, any proceeds would be first applied to repayment of the mortgage or
other indebtedness of BFP, LP. In any event, any net proceeds obtained by
the Partnership would then be required to be used to satisfy notes payable
and deferred interest (aggregating $71,594,391 at December 31, 1999) 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, it is expected that over
the remaining term of the Partnership, as a result of sale or other
disposition of the properties (including a transfer to the lenders), or of
the Partnership's interest in BFP, LP, the Holders of Interests will be
allocated substantial gain for Federal income tax purposes (corresponding
at a minimum to all or most of their deficit capital accounts for tax
purposes) without a significant amount of proceeds from such sale or
disposition. Such gain may be offset by suspended losses from prior years
(if any) that have been allocated to the Holders of Interests. The actual
tax liability of each Holder of Interests will depend on such Holder's own
tax situation.
<PAGE>
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. In addition, pursuant to the JMB
Transaction Agreement, the Partnership has the right, except under certain
circumstances, to prohibit (i) a sale of the 245 Park Avenue property prior
to January 2, 2000, and (ii) a reduction of the indebtedness secured by the
245 Park Avenue property below a certain level prior to January 2, 2003.
The Partnership's liquidity and ability to continue as a going concern
is dependent upon the successful resolution related to the scheduled
maturity date (December 31, 1998) of the term loans, the receipt of one-
third of the property management fees earned at the 245 Park Avenue
property and, if necessary, additional advances from JMB under the demand
loan. To the extent that the share of the property management fees
received by the Partnership exceed the costs of operating the Partnership,
and after establishing an appropriate cash reserve, the Partnership will
make payments to JMB on the demand note or the term loan notes.
JMB is considering a possible resolution related to the term loan
notes, which had a scheduled maturity of December 31, 1998. Such a
resolution, which could include a modification or restructuring of the
indebtedness owed by the Partnership, a possible restructuring of the
Partnership's interest in BFP, LP and/or other transaction, may result in
the Partnership (and the Holders of Interests) recognizing taxable income
for Federal income tax purposes with no corresponding distributable
proceeds from such transaction. However, there is no assurance that any
such transaction, or any resolution of the term loan notes satisfactory to
the Partnership, will occur.
RESULTS OF OPERATIONS
The decrease in cash at December 31, 1999 as compared to December 31,
1998 is primarily due to a fourth quarter interest payment of $850,000 on
the demand note payable to JMB.
The increase in other assets at December 31, 1999 as compared to
December 31, 1998 is primarily due to the timing of payments for certain
professional services related to the operations of the Partnership.
The increase in deferred interest payable to an affiliate as of
December 31, 1999 as compared to December 31, 1998 is due to the interest
accruals on the term loans and the demand note payable to JMB partially
offset by a fourth quarter interest payment of $850,000 on the demand note
payable to JMB.
Interest and other income for the years ended December 31, 1999, 1998
and 1997 primarily consists of 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.
The increase in interest expense for the year ended December 31, 1998
as compared to the year ended December 31, 1997 is primarily due to an
increase in the aggregate amounts outstanding on the Partnership's term
loans due to accrued interest, which is deferred and accrues additional
interest.
The increase in professional services for the year ended December 31,
1999 as compared to the year ended December 31, 1998 is primarily due to
legal fees in connection with a possible resolution being considered by JMB
related to the term loan notes payable to JMB. The decrease in
professional services for the year ended December 31, 1998 as compared to
the year ended December 31, 1997 is primarily attributable to the legal
fees and other professional services incurred in 1997 in connection with
the restructuring of the Partnership's interest in 245 Park.
<PAGE>
The increase in Partnership's share of income (loss) from operations
of unconsolidated venture for the year ended December 31, 1999 as compared
to the years ended December 31, 1998 and December 31, 1997 is primarily due
to an increase in the net income of BFP, LP for the year ended December 31,
1999.
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.
YEAR 2000
The Partnership has not experienced any material disruption in its
operations or those of its properties in connection with the century change
and does not expect any such disruption in the future. The Partnership has
not needed to implement contingency plans, has not had any material
remediation costs and does not anticipate that its future costs of
remediation will be material. However, there can be no assurance that
disruption may not occur in the future or that the cost of any required
remediation may not be material.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership has identified interest rate changes as a potential
market risk. Since the Partnership has certain notes payable that bear
interest at variable rates, an increase in interest rates would increase
the Partnership's cost of borrowings under these notes. Reference is made
to the Notes for further information concerning borrowings incurred by the
Partnership.
<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, 1999 and 1998
Consolidated Statements of Operations, years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows, years ended
December 31, 1999, 1998 and 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.
BROOKFIELD FINANCIAL PROPERTIES, L.P.
INDEX
Independent Auditors' Report
Consolidated Balance Sheet, December 31, 1999
Consolidated Statement of Operations, for the year ended December 31, 1999
Consolidated Statement of Partners' Capital Accounts, for the year ended
December 31, 1999
Consolidated Statement of Cash Flows, for the year ended December 31, 1999
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, 1999 and 1998, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1999, 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 the successful resolution related to the
scheduled maturity date (December 31, 1998) of the term loans due to JMB
Realty Corporation. This uncertainty and the fact that the Partnership has
a net capital deficiency 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 LLP
Chicago, Illinois
May 9, 2000
<PAGE>
<TABLE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
------
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 135,664 695,066
Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . 71,426 39,272
----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 207,090 734,338
=========== ===========
<PAGE>
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1999 1998
------------ -----------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,290 41,346
Deferred interest payable to an affiliate. . . . . . . . . . . . . . . 15,982,169 13,397,009
Current portion of notes payable to an affiliate
and demand note payable to affiliate . . . . . . . . . . . . . . . . 55,612,222 55,612,222
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . 71,632,681 69,050,577
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . 71,632,681 69,050,577
Investment in unconsolidated venture, at equity. . . . . . . . . . . . . 45,075,682 54,449,825
Venture partner's equity in venture. . . . . . . . . . . . . . . . . . . 217,030 123,293
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . (480,000) (480,000)
Cumulative net losses. . . . . . . . . . . . . . . . . . . . . . . (12,012,141) (12,382,404)
------------ -----------
(12,491,141) (12,861,404)
------------ -----------
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. . . . . . . . . . . . . . . . . . . . . . . (209,764,556) (215,565,347)
------------ -----------
(104,227,162) (110,027,953)
------------ -----------
Total partners' capital accounts (deficits). . . . . . . . . . (116,718,303) (122,889,357)
------------ -----------
$ 207,090 734,338
============ ===========
<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, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Interest and other income. . . . . . . . . . . . . . $ 515,284 496,426 483,445
------------ ------------ ------------
Expenses:
Interest . . . . . . . . . . . . . . . . . . . . . . 3,435,161 3,450,792 3,305,407
Professional services. . . . . . . . . . . . . . . . 109,709 62,800 178,451
General and administrative . . . . . . . . . . . . . 79,766 79,318 87,230
------------ ------------ ------------
3,624,636 3,592,910 3,571,088
------------ ------------ ------------
(3,109,352) (3,096,484) (3,087,643)
Partnership's share of income (loss)
from operations of unconsolidated
venture. . . . . . . . . . . . . . . . . . . . . . . 9,374,143 6,063,143 5,763,142
Venture partner's share of venture
operations . . . . . . . . . . . . . . . . . . . . . (93,737) (60,630) (57,627)
------------ ------------ ------------
Net earnings (loss). . . . . . . . . . . . . . . . $ 6,171,054 2,906,029 2,617,872
============ ============ ============
Net earnings (loss) per limited
partnership interest:
Earnings (loss) before extraordinary item. . . . $ 5,818 2,734 2,461
Extraordinary item . . . . . . . . . . . . . . . -- -- --
------------ ------------ ------------
Net earnings (loss). . . . . . . . . . . . . $ 5,818 2,734 2,461
============ ============ ============
<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, 1999, 1998 AND 1997
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------- ------------- ----------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficits)
December 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)
December 31,
1997. . . . 1,000 (12,556,766) (480,000) (13,035,766) 113,057,394 (218,297,014) (7,520,000) (112,759,620)
Net earnings
(loss). . . -- 174,362 -- 174,362 -- 2,731,667 -- 2,731,667
------ ----------- --------- ----------- ----------- ------------ ------------ ------------
Balance
(deficits)
December 31,
1998. . . . 1,000 (12,382,404) (480,000) (12,861,404) 113,057,394 (215,565,347) (7,520,000) (110,027,953)
Net earnings
(loss). . . -- 370,263 -- 370,263 -- 5,800,791 -- 5,800,791
------ ----------- --------- ----------- ----------- ------------ ------------ ------------
Balance
(deficits)
December 31,
1999. . . . $1,000 (12,012,141) (480,000) (12,491,141) 113,057,394 (209,764,556) (7,520,000) (104,227,162)
====== =========== ========= =========== =========== ============ =========== ============
<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, 1999, 1998 AND 1997
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . $ 6,171,054 2,906,029 2,617,872
Items not requiring cash or cash equivalents:
Partnership's share of (earnings) loss from
operations of unconsolidated venture. . . . . . (9,374,143) (6,063,143) (5,763,142)
Venture partner's share of venture
operations. . . . . . . . . . . . . . . . . . . 93,737 60,630 57,627
Changes in:
Other receivables . . . . . . . . . . . . . . . . (32,154) 15,578 (7,656)
Accounts payable. . . . . . . . . . . . . . . . . (3,056) 7,075 (1,647)
Deferred interest payable to an affiliate . . . . 2,585,160 3,450,792 3,305,407
----------- ----------- -----------
Net cash provided by (used in)
operating activities . . . . . . . . . . . (559,402) 376,961 208,461
----------- ----------- -----------
Net increase (decrease) in cash. . . . . . . (559,402) 376,961 208,461
Cash, beginning of year. . . . . . . . . . . 695,066 318,105 109,644
----------- ----------- -----------
Cash, end of year. . . . . . . . . . . . . . $ 135,664 695,066 318,105
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . $ 850,000 -- --
=========== =========== ===========
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, 1999, 1998 AND 1997
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
As a result of the 1996 restructuring, JMB/245 Park Avenue Associates,
Ltd. (the "Partnership") owns (through a limited liability company of which
the Partnership is a 99% member, described below) an approximate 5% general
partner interest (slightly diluted from the original ownership percentage
by notes converted to equity) in Brookfield Financial Properties, L.P.
("BFP, LP"), formerly known as World Financial Properties, L.P. ("WFP,
LP"), a joint venture that holds 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 ("Effective Date"). Prior to the Effective Date, 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
consolidated venture has been eliminated.
The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
approximate 5% interest in BFP, LP subsequent to the Effective Date.
Accordingly, the financial statements do not include the accounts of BFP,
LP.
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, 1999 and 1998 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1999 1998
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . . $ 207,090 (117,231,782) 734,338 (119,978,577)
Partners' capital
accounts (deficits):
General partners . . . . . . . . . (12,491,141) (27,686,529) (12,861,404) (27,902,520)
Limited partners . . . . . . . . . (104,227,162) (145,895,299) (110,027,953) (149,279,160)
Net earnings (losses):
General partners . . . . . . . . . 370,263 215,992 174,362 71,818
Limited partners . . . . . . . . . 5,800,791 3,383,862 2,731,667 1,125,152
Net earnings (loss) per
limited partnership
interest . . . . . . . . . . . . . 5,818 3,394 2,734 1,125
============ =========== ============= ============
</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. 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% general partner interest
(slightly diluted from the original ownership percentage by notes converted
to equity) in a newly formed partnership, BFP, LP. The managing general
partner of BFP, LP is an entity affiliated with certain O&Y creditors and
the proponents of the Plan governing the restructuring. BFP, LP's
principal assets are wholly-owned or majority and controlling interests in
seven office buildings (including 245 Park Avenue office building).
BFP, 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 BFP, LP. In any event, any net proceeds obtained by the Partnership
would then be used to satisfy notes payable and accrued interest
(aggregating $71,594,391 at December 31, 1999) to JMB Realty Corporation
("JMB"), which are secured by the Partnership's interest in BFP, LP. 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, it is expected that over the remaining term of the
Partnership, as a result of sale or other disposition of the properties
(including a transfer to the lenders), or of the Partnership's interest in
BFP, LP, the Holders of Interests will be allocated substantial gain for
Federal income tax purposes (corresponding at a minimum to all or most of
their deficit capital accounts for tax purposes) without a significant
amount of proceeds from such sale or disposition. Such gain may be offset
by suspended losses from prior years (if any) that have been allocated to
the Holders of Interests. 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
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, 1999 and 1998) 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 required 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 accrues 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
<PAGE>
in the amount of $2,194,631 was converted to a note payable which was 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% (9.50% at December
31, 1999 and 8.75% at December 31, 1998). As of December 31, 1999, 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 and advances to pay operating costs of the
Partnership. 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 BFP, LP. In the fourth quarter of 1999, the
Partnership made an interest payment to JMB of $850,000 on this demand
note.
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 was
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 were required prior to
the scheduled 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. The scheduled maturity of the term loans was
December 31, 1998. However, JMB has not pursued any remedies under these
notes as a result of the non-payment of monthly interest under the LIBOR
Note or the maturity of the term loan notes in December 1998. JMB is
considering a possible resolution related to the term loan notes. These
loans and the demand note payable to JMB are cross-defaulted, are secured
by the Partnership's interest in BFP, LP and are subject to mandatory
payment of principal and interest out of any distributions received by the
Partnership from BFP, LP. It currently appears unlikely, however, that any
significant operating distributions will be received by the Partnership
from BFP, LP due to the level of indebtedness remaining on the properties
owned by BFP, LP. Accordingly, the Partnership's primary sources of
capital to pay for continuing operations are receipt of one-third of the
property management fees earned at the 245 Park Avenue property and, if
necessary, additional advances from JMB under the demand loan.
NOTES PAYABLE TO AN AFFILIATE
Notes payable to an affiliate consist of the following at December 31,
1999 and 1998:
1999 1998
----------- -----------
Note payable (term loan) bearing
interest at a variable rate related
to LIBOR (7.806% per annum at
December 31, 1999); secured by the
Partnership's interest in BFP, LP;
interest payable monthly; scheduled
maturity (discussed above) was
December 1998 . . . . . . . . . . . . . $16,042,000 16,042,000
Note payable (term loan) bearing
interest at 2% per annum; secured
by the Partnership's interest in
BFP, LP; no payments until
December 1998 when the entire
principal amount and accrued
compounded interest were scheduled
to be due (as discussed above). . . . . 25,000,000 25,000,000
<PAGE>
1999 1998
----------- -----------
Note payable (term loan)
bearing interest at 2% per
annum; secured by the
Partnership's interest in
BFP, LP; no payments until
December 1998 when the entire
principal amount and accrued
compounded interest were scheduled
to be due (as discussed above). . . . . 2,194,631 2,194,631
Demand note payable bearing
interest at prime plus 1%
(9.50% per annum at December 31,
1998); advanced by JMB; maximum
principal sum of a specified
amount secured by the Partner-
ship's interest in BFP, LP. . . . . . . 12,375,591 12,375,591
----------- -----------
$55,612,222 55,612,222
=========== ===========
In addition, deferred and unpaid interest payable was $15,982,169,
$13,397,009 and $9,946,217 as of December 31, 1999, 1998 and 1997,
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
BFP, LP or of all or substantially all of the 245 Park Avenue office
building or other real property owned by BFP, LP 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
BFP, LP or of all or substantially all of the 245 Park Avenue office
building or other real property owned by BFP, LP 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, 1999, 1998 and
1997 are as follows:
UNPAID AT
DECEMBER 31,
1999 1998 1997 1999
------- ------ ------ ------------
Insurance commissions. . . $ 792 792 -- --
Reimbursement (at cost)
for legal services. . . . 2,063 2,796 1,267 --
Reimbursement (at cost)
for accounting services . 680 2,056 1,521 --
Reimbursement (at cost)
for portfolio manage-
ment services . . . . . . -- -- 2,380 --
Reimbursement (at cost)
for out-of-pocket
expenses. . . . . . . . . -- 14 -- --
------- ------ ------ ------
$ 3,535 5,658 5,168 --
======= ====== ====== ======
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.
SUMMARY FINANCIAL INFORMATION OF UNCONSOLIDATED VENTURE
Summary financial information for BFP, LP as of and for the years
ended December 31, 1999 and 1998:
1999 1998
----------- -----------
(000's) (000's)
Assets:
Commercial properties. . . . . . . $ 3,129,906 3,122,191
Other assets . . . . . . . . . . . 186,255 149,979
----------- -----------
Total assets. . . . . . . . . . $ 3,316,161 3,272,170
=========== ===========
Liabilities and Partners Capital:
Accounts payable and
other liabilities. . . . . . . . $ 252,788 223,909
Long and short term debt . . . . . 2,240,405 2,352,825
Venture Partners' equity . . . . . 778,013 656,771
----------- -----------
Total liabilities . . . . . . . $ 3,271,206 3,233,505
=========== ===========
Partnership's capital . . . . . $ 44,955 38,665
=========== ===========
<PAGE>
1999 1998
----------- -----------
(000's) (000's)
Represented by:
Invested capital . . . . . . . . . $ 31,725 31,725
Cumulative distributions
and other. . . . . . . . . . . . (605) 24
Cumulative net earnings. . . . . . 13,835 6,916
----------- -----------
$ 44,955 38,665
=========== ===========
Total income . . . . . . . . . . . . $ 544,393 451,441
Expenses . . . . . . . . . . . . . . 419,190 386,481
----------- -----------
Net income (loss). . . . . . . . . . $ 125,203 64,960
=========== ===========
Partnership's share:
Equity in earnings of BFP, LP. . . $ 6,919 3,608
----------- -----------
$ 6,919 3,608
=========== ===========
The Partnership's capital in BFP, LP differs from its investment in
unconsolidated venture, primarily due to the adoption of fresh start
accounting by BFP, 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 BFP, LP on the Effective Date) over a period
not to exceed forty years. The amortization for the years ended
December 31, 1999, 1998 and 1997 was $2,455,143, $2,455,143 and $2,455,142,
respectively. Such amounts may be written off sooner in the event of the
sale or disposition of the properties owned by BFP, LP or the Partnership's
interest in BFP, LP.
The total income, expenses and net income (loss) for the year ended
December 31, 1997 were $405,993,000, $346,087,000, and $59,906,000,
respectively.
BFP, LP's financial statements follow. These statements were received
by the Partnership on May 9, 2000.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
Brookfield Financial Properties, L.P.
New York, New York
We have audited the accompanying consolidated balance sheet of
Brookfield Financial Properties, L.P. (the Company) as of December 31,
1999, and the related consolidated statements 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 consolidated financial statements present fairly,
in all material respects, the financial position of Brookfield Financial
Properties, L.P. as of December 31, 1999, and the results of its operations
and its cash flows for the year ended in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
February 28, 2000
<PAGE>
BROOKFIELD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
(000's)
ASSETS
NOTE
----
Commercial properties. . . . . . . . . . . 2a, 2b, 3 $3,129,906
Cash and cash equivalents (including
restricted cash and cash equivalents
of $94,640) . . . . . . . . . . . . . . . 2d 111,118
Accounts receivable. . . . . . . . . . . . 41,107
Other assets . . . . . . . . . . . . . . . 7a 34,030
----------
Total Assets . . . . . . . . . . . . . . . $3,316,161
==========
LIABILITIES AND PARTNERS' CAPITAL
Long term commercial property debt . . . . 4 $2,230,988
Short term debt. . . . . . . . . . . . . . 5 9,417
Accounts payable and other liabilities . . 7b,8c 252,788
----------
2,493,193
----------
Partners' capital. . . . . . . . . . . . . 1,4 822,968
----------
Total Liabilities and Partners' Capital. . $3,316,161
==========
The accompanying notes are an integral part
of this financial statement.
<PAGE>
BROOKFIELD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(000's)
NOTE
----
REVENUES:
Rental income. . . . . . . . . . . . . . 2g,6 $ 528,436
Equity earnings from joint venture . . . 3 8,878
Interest and other income. . . . . . . . 7a 7,079
----------
544,393
----------
EXPENSES:
Property operations. . . . . . . . . . . . 163,028
Interest . . . . . . . . . . . . . . . . . 4,5,7b 181,178
Administrative and development . . . . . . 10,181
Depreciation and amortization. . . . . . . 2b 64,803
----------
419,190
----------
NET INCOME . . . . . . . . . . . . . . . . $ 125,203
==========
The accompanying notes are an integral part
of this financial statement.
<PAGE>
<TABLE>
BROOKFIELD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 1999
(000's)
<CAPTION>
Units
Balance Transferred Balance
12/31/98 (Retired) Net Income 12/31/99
---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
GENERAL PARTNERS
Brookfield Financial Properties, Inc.. . $ 6,996 $ 22 $ 1,260 $ 8,278
JMB 245 Park Avenue Holding
Company, LLC . . . . . . . . . . . . . 38,665 (629) 6,919 44,955
LIMITED PARTNERS
Brookfield Properties Corporation:
Brookfield Properties Holdings Inc.. . 282,099 2,634 50,868 335,601
Olympia & York Tower B Company . . . . 55,266 110 9,935 65,311
Battery Park Partners (Note 1) . . . . 267,292 2,030 47,997 317,319
Emerald LP Holdings, Inc. (Note 1) . . . 36,309 170 6,708 43,187
Other. . . . . . . . . . . . . . . . . . 8,809 (2,008) 1,516 8,317
-------- ------- -------- --------
$695,436 $ 2,329 $125,203 $822,968
======== ======= ======== ========
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
<PAGE>
BROOKFIELD FINANCIAL PROPERTIES, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
(000's)
OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 125,203
Adjustments to reconcile net income to net
cash provided (used by) operating activities:
Depreciation and amortization. . . . . . . . . . . . . . 64,803
Equity earnings from joint venture . . . . . . . . . . . (8,878)
Accrued interest income. . . . . . . . . . . . . . . . . (108)
Accrued interest expense . . . . . . . . . . . . . . . . 15,262
Increase in straight-line receivable . . . . . . . . . . (20,570)
Changes in other operating assets and liabilities:
Increase in restricted cash. . . . . . . . . . . . . . (27,017)
Increase in accounts receivable. . . . . . . . . . . . (7,103)
Increase in other assets . . . . . . . . . . . . . . . (11,898)
Increase in accounts payable and other liabilities . . 2,343
---------
NET CASH PROVIDED BY OPERATING ACTIVITIES. . . . . . 132,037
---------
INVESTING ACTIVITIES:
Additions to commercial properties . . . . . . . . . . . . (33,678)
Distributions from joint ventures. . . . . . . . . . . . . 1,322
Other assets . . . . . . . . . . . . . . . . . . . . . . . 18,879
---------
NET CASH PROVIDED BY INVESTING ACTIVITIES. . . . . . (13,477)
---------
FINANCING ACTIVITIES:
Equity units transferred . . . . . . . . . . . . . . . . . 2,329
Repayments of short term debt. . . . . . . . . . . . . . . (36,708)
Repayments of long term debt . . . . . . . . . . . . . . . (73,168)
---------
NET CASH USED IN FINANCING ACTIVITIES. . . . . . . . (107,547)
---------
Increase in cash and cash equivalents. . . . . . . . . . . 11,013
Cash and cash equivalents - beginning of year. . . . . . . 5,465
---------
Cash and cash equivalents
- end of year. . . . . . . . . . . . . . . . . . . . . . $ 16,478
=========
The accompanying notes are an integral part
of this financial statement.
<PAGE>
BROOKFIELD FINANCIAL PROPERTIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
(000's)
1. ORGANIZATION
Brookfield Financial Properties, L.P. (formerly World Financial
Properties, L.P.) (the Company) is a Delaware limited partnership organized
by and among Brookfield Financial Properties, Inc., a subsidiary of
Brookfield Properties Holdings, Inc., a Delaware corporation, as a general
partner, JMB 245 Park Avenue Holding Company, LLC, as a general partner,
and Brookfield Properties Holdings, Inc., Olympia & York Tower B Company,
Battery Park Partners (which are subsidiaries of Brookfield Properties
Corporation and are collectively referred to as BPHI), Emerald LP Holdings,
Inc. (a subsidiary of Citigroup) and various other partners as limited
partners.
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. Amortization of tenant
improvements and other leasing costs is provided on the straight-line
method over the terms of the related leases.
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 and Cash Equivalents
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 principally represents amounts which are restricted
pursuant to the terms of certain loan agreements.
<PAGE>
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.
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 noncancellable term of
the respective leases, and are recorded as adjustments to rental income.
3. COMMERCIAL PROPERTIES
Description
The Company, through its subsidiaries and joint venture, is primarily
involved in the operation of commercial real estate located in New York
City and Boston 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 World
Markets, Inc., a major tenant in Tower A, who holds a 26% partnership
interest. At December 31, 1999, the property is 95% leased.
(ii) WORLD FINANCIAL CENTER - TOWER B, NEW YORK, NEW YORK
Tower B is a 45-story commercial office building which was
completed in 1988 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
holding 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, 1999, the property is 91% leased.
<PAGE>
(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, 1999, the property is 99% 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.
At December 31, 1999, the property is 90% leased.
(vii) 75 STATE STREET, BOSTON, MASSACHUSETTS
75 State Street is a 31-story commercial office building. The
property was completed in 1989 and contains 767,096 rentable square feet of
office and retail space and 235,000 square feet of parking space. At
December 31, 1999, the property is 99% leased.
On December 31, 1999, the Company executed an option agreement
(the Agreement) with a subsidiary of Deutsche Bank (Deutsche) whereby
Deutsche agreed to an option to purchase a 49% limited partnership interest
in the entities which own 53 State Street and 75 State Street. Pursuant to
the Agreement, Deutsche made a $17 million deposit. If certain conditions
are satisfied and approvals are obtained by the Company, Deutsche will be
obligated to close by December 15, 2000 which corresponds with the end of
the option period. The Company subsequently pledged $168 million of
expected proceeds from Deutsche to a lender in satisfaction of certain
short term debt the Company had outstanding (see Footnote 8c).
Included in Commercial Properties at December 31, 1999 are
consolidated commercial properties of $2,952 million, a joint venture
investment of $74 million, and straight-line rent receivables of $104
million.
CONSOLIDATED COMMERCIAL PROPERTIES:
The Company's consolidated commercial properties at December 31, 1999
are as follows:
Land. . . . . . . . . . . . . . $ 406,561
Buildings and improvements. . . 2,717,501
----------
3,124,062
Accumulated depreciation
and amortization . . . . . . . (171,486)
----------
Total . . . . . . . . . . . . . $2,952,576
==========
<PAGE>
Joint Venture - Commercial Property
The condensed balance sheet and condensed statement of operations of
Tower D, in which the Company has a joint venture investment, at and for
the year ended December 31, 1999 is as follows:
BALANCE SHEET
ASSETS
Commercial property . . . . . . . . . . . $630,754
Other assets. . . . . . . . . . . . . . . 63,277
--------
Total assets. . . . . . . . . . . . . . . $694,031
========
LIABILITIES
Long-term debt. . . . . . . . . . . . . . $434,346
Accounts payable and other. . . . . . . . 5,525
--------
Total liabilities . . . . . . . . . . . . 439,871
--------
PARTNERS' CAPITAL
Brookfield Financial Properties, L.P. . . 73,442
Co-venturer . . . . . . . . . . . . . . . 180,718
--------
254,160
--------
Total liabilities and
partners' capital . . . . . . . . . . . $694,031
========
STATEMENT OF OPERATIONS
Revenues. . . . . . . . . . . . . . . . . . $ 81,463
Operating expenses. . . . . . . . . . . . . (50,825)
Depreciation and amortization . . . . . . . (13,444)
--------
Net income. . . . . . . . . . . . . . . . $ 17,194
========
4. LONG-TERM DEBT
Long-term debt secured by mortgages and other security interests which
are collateralized by commercial properties of $2,181.0 million at
December 31, 1999 carries a weighted average interest rate of 7.3%. Total
interest paid on long-term debt obligations for the year ended December 31,
1999 aggregated $162.2 million.
In addition, included in long-term debt is subordinated long-term debt
of $50.0 million which represents the net carrying value of a zero coupon
note (the Note) payable by WFP Tower B Co., L.P. (the Partnership), a
subsidiary of the Company and which matures in 2014 (Maturity). The Note
carries a face amount of $150 million (the Face Principal Amount). On
maturity, the Partnership will pay the Face Principal Amount and, if any,
the Maturity Contingent Principal Amount (together, the Maturity Stated
Principal Amount). The Maturity Contingent Principal Amount is the lesser
of (a) 25% of amount by which Tower B fair market value exceeds $600
million and (b) $517,298,409. In lieu of paying in cash the Maturity
Stated Principal Amount, the Partnership may elect to deliver a 25%
interest in the building, provided the fair market value of the building
taking into account the then outstanding principal indebtedness secured by
the leasehold interest in the building, is at least $600 million. However,
if the lender elects to receive cash instead, the Partnership only has to
repay the Face Principal Amount. The carrying amount represents the
current value of the Note based upon the estimated residual value of the
building discounted at 9.5%.
<PAGE>
The scheduled repayments of long-term debt at December 31, 1999 are as
follows:
Years ending December 31, 2000. . . . . . $ 59,652
2001. . . . . . 79,564
2002. . . . . . 78,595
2003. . . . . . 474,102
2004. . . . . . 65,729
Thereafter. . . 1,473,346
----------
$2,230,988
==========
5. SHORT TERM DEBT
Pursuant to a demand note, the company has a $9.4 million loan
outstanding which accrues interest at a rate of 8%, and is payable on
March 10, 2000. Total interest paid on short term debt for the year ended
December 31, 1999 aggregated $3.2 million.
6. 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 $70.1 million for the year ended December 31, 1999.
The following is a schedule of minimum future rental payments under
noncancellable operating leases during the next five years and thereafter.
Years ending December 31, 2000. . . . . . $ 392,139
2001. . . . . . 388,644
2002. . . . . . 381,603
2003. . . . . . 339,317
2004. . . . . . 329,612
Thereafter. . . 1,783,982
----------
Total future
minimum
rentals . . . $3,615,297
==========
7. RELATED PARTY TRANSACTIONS
a. Included in other assets is a note receivable from BPHI in the
amount of $1.5 million. This note bears interest at 9% and is due in 2001.
b. Included in other liabilities is $22.9 million due to
Brookfield Properties, Inc., an affiliate of BPHI, which represents an
advance made December 31, 1999. Such advance bears interest at 8% and is
expected to be repaid in 2000. Additionally, during the year the Company
was indebted to affiliates of BPHI for certain short-term advances which
were repaid prior to year end. Such advances bore interest at 6.5%, which
totaled $8.9 million for the year ended December 31, 1999.
<PAGE>
8. 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, 2000. . . . . $ 11,220
2001. . . . . 11,220
2002. . . . . 11,220
2003. . . . . 11,220
2004. . . . . 11,220
Thereafter. . 696,385
--------
Total future
minimum
rentals . . . $752,485
========
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. SF was part of a group of entities
which had comprised the U.S. Operations of Olympia & York (O&Y(U.S.)).
O&Y(U.S.) was reorganized in 1996 pursuant to a Chapter 11 bankruptcy plan
(the Plan) pursuant to which the Company succeeded as the principal holder
of the assets of O&Y(U.S.). 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 comprise 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 $26 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. Included in other liabilities is $158 million loan. The
repayment of this loan is contingent on the sale of the partnership
interests in 53 State Street and 75 State Street as discussed in Note 3.
In the event the sale does not close, the Company will be liable to the
lender for the full amount of the loan.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in, or disagreements with, accountants during
1998 and 1999.
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 JMB
Investment Holdings - I, Inc., a Delaware corporation, the outstanding
shares of stock of which are owned, indirectly, by Northbrook Corporation,
a Delaware corporation, and JMB Realty Corporation, a Delaware corporation
("JMB"). Substantially all of the outstanding shares of stock of
Northbrook Corporation are owned by JMB and certain of its officers,
directors, members of their families and their affiliates. Substantially
all of the shares of JMB are owned, directly or indirectly, by certain of
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 BFP, LP or of all or
substantially all of the 245 Park Avenue office building, unless required
by the terms of the BFP, 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 JMB, current or former officers and directors of JMB, their
affiliates and an affiliate of Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership by affiliates of the General
Partners, including insurance brokerage and administrative services. In
general, such services are to be provided on terms no less favorable to the
Partnership than could be obtained from independent third parties and are
otherwise subject to conditions and restrictions contained in the
Partnership Agreement. The Partnership Agreement permits the General
Partners and their affiliates to provide services to, and otherwise deal
and do business with, persons who may be engaged in transactions with the
Partnership, and permits the Partnership to borrow from, purchase goods and
services from, and otherwise to do business with, persons doing business
with the General Partners or their affiliates. The General Partners and
their affiliates may be in competition with the Partnership or its
investment properties under certain circumstances, including for tenants
for properties and/or for the sale of properties. Because the timing and
amount of cash distributions and profits and losses of the Partnership may
be affected by various determinations by the General Partners under the
Partnership Agreement, including whether and when to sell (or consent to
the sale of) investment property, the establishment and maintenance of
reasonable reserves, the timing of expenditures and the allocation of
certain tax items under the Partnership Agreement, the General Partners may
have a conflict of interest with respect to such determinations. The
General Partners and their affiliates may also have a conflict of interest
in reaching a resolution with JMB with respect to the term loan notes,
which matured on December 31, 1998 and remain unpaid. Reference is made to
the discussions under "Investment in Unconsolidated Venture" and "Notes
Payable to an Affiliate" in the Notes for further information concerning
the term loan notes.
<PAGE>
The director and the executive 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 8, 2000. 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 8,
2000. 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.
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-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"),
and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and managing
general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB
Income Properties, Ltd.-VII ("JMB Income-VII"), and JMB Income Properties,
Ltd.-XI ("JMB Income-XI"). JMB is also the sole general partner of the
associate general partner of most of the foregoing partnerships.
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). 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-XI, Carlyle-XIII,
Carlyle-XIV, Carlyle-XV, JMB Income-VII, JMB Income-X, JMB Income-XI, and
Carlyle Income Plus-II.
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 62) is Chairman and a director of JMB and its
Chief Financial Officer and an officer and/or director of various JMB
affiliates. He is also an individual general partner of JMB Income-V.
Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin is
a director of Urban Shopping Centers, Inc., an affiliate of JMB that is a
real estate investment trust in the business of owning, managing and
developing shopping centers. He is also a director of Chisox Corporation,
which is the general partner of a limited partnership that owns the Chicago
White Sox, a Major League Baseball team, and CBLS, Inc., which is the
general partner of the general partner of a limited partnership that owns
the Chicago Bulls, a National Basketball Association team. He is a
Certified Public Accountant.
<PAGE>
Neil G. Bluhm (age 62) is President and a director of JMB and an
officer and/or director of various JMB affiliates. He is also an
individual general partner of JMB Income-V. Mr. Bluhm has been associated
with JMB since August, 1970. Mr. Bluhm is also a principal of Walton
Street Capital, L.L.C., which sponsors real estate investment funds, and a
director of Urban Shopping Centers, Inc. He is a member of the Bar of the
State of Illinois and a Certified Public Accountant.
Gary Nickele (age 47) is Executive Vice President and General Counsel
of JMB and an officer and/or director of various JMB affiliates. Mr.
Nickele has been associated with JMB since February 1984. He holds a J.D.
degree from the University of Michigan Law School and is a member of the
Bar of the State of Illinois.
Stuart C. Nathan (age 58) is Executive Vice President and a director
of JMB and an officer and/or director of various JMB affiliates. Mr.
Nathan has been associated with JMB since July, 1972. He is a member of
the Bar of the State of Illinois.
H. Rigel Barber (age 51) is Executive Vice President and Chief
Executive Officer of JMB and an officer of various JMB affiliates.
Mr. Barber has been associated with JMB since March, 1982. He holds a J.D.
degree from the Northwestern Law School and is a member of the Bar of the
State of Illinois.
Gailen J. Hull (age 51) is Senior Vice President of JMB and an officer
of various JMB affiliates. 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 1999, 1998 or 1997. The General Partners were
allocated aggregate profits for tax purposes of $215,992 from the
Partnership in 1999. Such allocation of profits reduces the deficit
balances in the capital accounts of the General Partners and an obligation
under the terms of the Partnership Agreement to make capital contributions
in the amount of the deficit balances in their capital accounts upon
termination of the Partnership.
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. Such transactions may involve
conflicts of interest for the General Partners or their affiliates,
including, among others, those discussed in Item 10. Various relationships
of the Partnership to the Corporate General Partner (and its director and
executive officers) and its affiliates are also set forth above in Item 10.
JMB Insurance Agency, Inc., an affiliate of the Corporate General
Partner, earned and received insurance brokerage commissions in 1999
aggregating $792 in connection with the provision of professional liability
insurance coverage for the Partnership. Such commissions are at rates set
by insurance companies for the classes of coverage involved.
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. No such expenses were reimbursed to the General
Partners during 1999.
<PAGE>
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
1999, an affiliate of the General Partners was entitled to reimbursements
for such expenses in the amount of $2,743, all of which was paid at
December 31, 1999.
As of December 31, 1999, JMB has advanced $12,375,992, evidenced by a
demand note, which relates primarily to principal and interest payments
made on the LIBOR Note (one of the term loan notes discussed below) in
connection with the closing of the term loan modification as well as
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 was being deferred.
During the fourth quarter of 1999, the Partnership made an interest payment
to JMB of $850,000. The demand note is secured by the Partnership's
interest in BFP, LP. The amount of interest accrued and deferred on the
demand note for 1999 and in the aggregate through December 31, 1999 is
$1,128,412 and $5,469,932, 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 was 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
were 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 31, 1999 and in the aggregate through December 31, 1999, is
$2,306,748 and $10,512,237, respectively. The term loan notes had a
scheduled maturity of December 31, 1999. JMB has not pursued its remedies
under these notes. The Partnership is discussing with JMB possible
resolutions related to the scheduled maturity of the term loan notes.
Reference is made to "Investment in Unconsolidated Venture" and "Notes
Payable to an Affiliate" in the Notes for a further discussion of the
demand and term loan 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 executive officers and director and the Associate General Partner
beneficially own the following Interests of the Partnership.
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership Corporate General 26 Interests 2.6%
Interests Partner, its (1)(2)
executive officers
and director and
the Associate
General Partner
as a group
<FN>
(1) Includes 24 Interests owned by an investment partnership of which two executive officers are the
managing general partners and have shared investment and voting power with respect to such Interests.
(2) Includes one Interest owned by an executive officer for which he has sole investment and voting power
and one Interest owned by an estate for which such officer acts as co-executor and for which such officer is
deemed to have shared investment and voting power.
No executive 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) No report on Form 8-K 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 1999 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: May 9, 2000
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: May 9, 2000
JUDD D. MALKIN
By: Judd D. Malkin, Chairman
Principal Financial Officer
Date: May 9, 2000
GAILEN J. HULL
By: Gailen J. Hull, Vice President
Principal Accounting Officer
Date: May 9, 2000
<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% in Brookfield Financial
Properties, L.P. formerly known as World Financial Properties, L.P.
Brookfield 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, 1999 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-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 135,664
<SECURITIES> 0
<RECEIVABLES> 71,426
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 207,090
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 207,090
<CURRENT-LIABILITIES> 71,632,681
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (116,718,303)
<TOTAL-LIABILITY-AND-EQUITY> 207,090
<SALES> 0
<TOTAL-REVENUES> 515,284
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 189,475
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,435,161
<INCOME-PRETAX> (3,109,352)
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,171,054
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,171,054
<EPS-BASIC> 5,818
<EPS-DILUTED> 5,818
</TABLE>
