SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q/A
AMENDMENT NO. 1
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
JMB MORTGAGE PARTNERS, LTD. - III
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
IRS Employer Identification
Commission File No. 0-16253 No. 36-3346551
The undersigned registrant hereby amends the following sections of its
Report for the quarter ended June 30, 1996 on Form 10-Q as set forth in the
pages attached hereto:
ITEM 1. FINANCIAL STATEMENTS
Pages 3 to 12
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
JMB MORTGAGE PARTNERS, LTD. - III
By: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
and Principal Accounting Officer
Dated: August 26, 1996
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB MORTGAGE PARTNERS, LTD. - III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 16,232,071 7,538,476
Interest and other receivables . . . . . . . . . . . . . . . 318,263 340,674
Due from affiliates. . . . . . . . . . . . . . . . . . . . . 227,395 251,872
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 16,290 28,769
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . 16,794,019 8,159,791
Investment property:
Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,588,126 9,561,468
Building and improvements. . . . . . . . . . . . . . . . . . 6,717,800 13,743,821
------------ ------------
10,305,926 23,305,289
Less accumulated depreciation. . . . . . . . . . . . . . . . (925,196) (2,321,280)
------------ ------------
Total investment property, net of depreciation. . . . . . 9,380,730 20,984,009
Mortgage notes receivable (net of allowance for loan
loss of $175,165 in 1995) . . . . . . . . . . . . . . . . . . 29,221,861 29,221,861
Deferred interest receivable (net of allowances for
loan loss of $1,691,218 in 1996 and 1995) . . . . . . . . . . 1,182,375 1,096,251
Investment in unconsolidated venture, at equity. . . . . . . . 3,233,461 3,159,812
Deferred costs . . . . . . . . . . . . . . . . . . . . . . . . 168,344 185,368
------------ ------------
$ 59,980,790 62,807,092
============ ============
3
JMB MORTGAGE PARTNERS, LTD. - III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1996 1995
------------- -----------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . $ 141,816 88,880
Accrued real estate taxes. . . . . . . . . . . . . . . . . . 74,069 148,139
Other current liabilities. . . . . . . . . . . . . . . . . . 113,609 205,309
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . 329,494 442,328
------------ ------------
Tenant security deposits . . . . . . . . . . . . . . . . . . 14,000 34,073
------------ ------------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . 343,494 476,401
------------ ------------
Venture partner's equity in ventures . . . . . . . . . . . . . 3,907,639 8,199,483
Partners' capital accounts:
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . 3,181,937 2,948,423
Cumulative cash distributions . . . . . . . . . . . . . . (3,288,906) (3,071,447)
------------ ------------
(105,969) (122,024)
------------ ------------
Limited partners (65,237.69 interests):
Capital contributions, net of offering costs. . . . . . . 57,758,561 57,758,561
Cumulative net earnings . . . . . . . . . . . . . . . . . 35,621,345 32,031,226
Cumulative cash distributions . . . . . . . . . . . . . . (37,544,280) (35,536,555)
------------ ------------
55,835,626 54,253,232
------------ ------------
Total partners' capital accounts (deficits). . . . . . 55,729,657 54,131,208
------------ ------------
$ 59,980,790 62,807,092
============ ============
<FN>
See accompanying notes to consolidated financial statements.
4
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------------------------------------
1996 1995 1996 1995
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Interest income. . . . . . . . . . . . . $ 897,168 848,547 1,794,458 1,700,199
Rental income. . . . . . . . . . . . . . 906,235 892,634 1,789,713 1,816,387
----------- ---------- ----------- ----------
1,803,403 1,741,181 3,584,171 3,516,586
----------- ---------- ----------- ----------
Expenses:
Depreciation . . . . . . . . . . . . . . 58,086 161,173 116,466 322,346
Property operating expenses. . . . . . . 319,516 341,089 629,982 670,186
Mortgage investment servicing fees . . . 18,632 18,994 36,645 39,128
Professional services. . . . . . . . . . 22,621 24,920 43,621 56,329
Amortization of deferred expenses. . . . 8,512 8,002 17,024 26,759
General and administrative . . . . . . . 85,215 60,871 200,639 109,958
----------- ---------- ----------- ----------
512,582 615,049 1,044,377 1,224,706
----------- ---------- ----------- ----------
Operating earnings (loss). . . . 1,290,821 1,126,132 2,539,794 2,291,880
Partnership's share of
operations of uncon-
solidated venture. . . . . . . 29,609 50,300 73,648 111,858
Venture partner's share
of ventures' operations. . . . (195,768) (145,656) (395,337) (329,173)
----------- ---------- ----------- ----------
Net operating earnings (loss). . 1,124,662 1,030,776 2,218,105 2,074,565
5
JMB MORTGAGE PARTNERS, LTD. - III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
----------------------------------------------------
1996 1995 1996 1995
----------- ---------- ----------- ----------
Gain on sale of investment properties,
net of venture partner's share of
gain of $973,220 . . . . . . . . . . . . 1,605,528 -- 1,605,528 --
----------- ---------- ----------- ----------
Net earnings (loss)
$ 2,730,190 1,030,776 3,823,633 2,074,565
=========== ========== =========== ==========
Net earnings (loss) per
limited partnership
interest:
Net operating loss . . . . . . $ 13.91 14.14 30.67 28.47
Net gain on sale of
investment property. . . . . 24.36 -- 24.36 --
----------- ---------- ----------- ----------
$ 38.27 14.14 55.03 28.47
=========== ========== =========== ==========
Cash distributions per
limited partnership
interest . . . . . . . . . . . $ 30.00 15.00 30.00 30.00
=========== ========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
6
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . .$ 3,823,633 2,074,565
Items not requiring cash or cash equivalents:
Total gain on sale of investment property. . . . . . . . . . . (2,578,748) --
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 116,466 322,346
Amortization of deferred expenses. . . . . . . . . . . . . . . 17,024 26,759
Partnership's share of operations of unconsolidated venture,
net of distributions . . . . . . . . . . . . . . . . . . . . (73,648) 18,342
Venture partners' share of ventures' operations and
gain on sale of its investment property. . . . . . . . . . . 1,368,556 329,173
Changes in:
Interest and other receivables . . . . . . . . . . . . . . . . 21,886 (17,186)
Due from affiliates. . . . . . . . . . . . . . . . . . . . . . 24,477 --
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . -- 28,769
Deferred interest receivable . . . . . . . . . . . . . . . . . (86,124) (85,507)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 52,409 6,184
Due to affiliates. . . . . . . . . . . . . . . . . . . . . . . -- (382,428)
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . (74,070) 32,748
Other current liabilities. . . . . . . . . . . . . . . . . . . (91,700) (18,279)
Tenant security deposits . . . . . . . . . . . . . . . . . . . (20,661) (15,541)
------------ ------------
Net cash provided by (used in) operating activities. . . 2,499,500 2,319,945
------------ ------------
Cash flows from investing activities:
Partnership's distributions to venture partners. . . . . . . . . -- (2,093,562)
Net sales and maturities (purchases) of short-term investments . -- (3,732,378)
Cash proceeds from sale of investment property, net of
selling expenses . . . . . . . . . . . . . . . . . . . . . . . 14,178,883 --
Additions to investment properties . . . . . . . . . . . . . . . (99,204) (90,408)
Partnership's contribution to unconsolidated venture . . . . . . -- (3,607)
Refund of deferred costs . . . . . . . . . . . . . . . . . . . . -- 2,436
------------ ------------
Net cash provided in (used in) investing activities. . . 14,079,679 (5,917,519)
------------ ------------
7
JMB MORTGAGE PARTNERS, LTD. - III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995
------------ -----------
Cash flows from financing activities:
Distributions to venture partners. . . . . . . . . . . . . . . . (5,660,400) --
Distributions to limited partners. . . . . . . . . . . . . . . . (2,007,725) (1,957,132)
Distributions to general partners. . . . . . . . . . . . . . . . (217,459) (217,459)
------------ ------------
Net cash used in financing activities . . . . . . . . . . . . (7,885,584) (2,174,591)
------------ ------------
Net increase (decrease) in cash and cash equivalents. . . . . 8,693,595 (5,772,165)
Cash and cash equivalents, beginning of year. . . . . . . . . 7,538,476 10,278,236
------------ ------------
Cash and cash equivalents, end of period. . . . . . . . . . .$ 16,232,071 4,506,071
============ ============
Supplemental disclosure for cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . .$ -- --
============ ============
Non-cash investing and financing activities:
Balance due on mortgage note receivable (net of
allowance for loan loss of $99,000). . . . . . . . . . . . . .$ -- 3,121,072
Partnership contribution to unconsolidated venture. . . . . . . -- 3,607
------------ ------------
Net carrying value of investment property (reflected
as investment in unconsolidated venture) . . . . . . . . . . .$ -- 3,124,679
============ ============
<FN>
See accompanying notes to consolidated financial statements.
8
</TABLE>
JMB MORTGAGE PARTNERS, LTD. - III
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995,
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
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 investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of June 30, 1996 and for the three months ended June
30, 1996 and 1995 were as follows:
Unpaid at
June 30,
1996 1995 1996
-------- ------ ---------
Mortgage investment
servicing fees . . . . . $ 36,646 39,128 18,827
Property management
fees. . . . . . . . . . . 51,311 52,757 --
Reimbursement (at cost)
for out-of-pocket
expenses and salaries
and salary-related
expenses. . . . . . . . . 44,127 37,690 35,659
-------- ------- ------
$132,084 129,575 54,486
======== ======= ======
The General Partners have deferred payment of $679,727 (approximately
$10 per Interest) of their distributions of prior net cash flow from the
Partnership at June 30, 1996, in accordance with the subordination
requirements of the Partnership Agreement. All amounts deferred or
currently payable do not bear interest.
9
SPRING HILL FASHION CENTER
A major tenant, which occupied approximately 24% of the leasable space
at the property and which was operating under Chapter 11 bankruptcy
protection, did not exercise its renewal option when its lease expired in
October 1995 and vacated its space. The Spring Hill joint venture (the
"venture"), however, executed a ten-year lease (in February 1996) with a
replacement tenant for this space at rental rates lower than those of the
former tenant. The replacement tenant's occupancy in late June 1996 has
resulted in the property being 93% leased occupied at June 30, 1996, up
from 67% at March 31, 1996. The venture is conserving its working capital
in order to fund certain costs associated with the replacement tenant's
move-in. Although, the venture is actively pursuing the sale of this
property, there can be no assurance that any satisfactory sale transaction
will be completed by the end of 1996.
RIVERPOINT CENTER
The Silo Electronic store (12,100 sq. ft.) at Riverpoint Center
vacated its space in the third quarter 1995 and subsequently filed for
bankruptcy. The borrower is pursuing its legal remedies regarding the
remaining amounts due. The borrowers leased the space to the Old Navy
Clothing Co., for five years with rent commencing July 1996. The borrower
had notified the Lenders that it was experiencing financial difficulties
and had approached the Lenders regarding a loan modification. During July
1996, the Lenders and borrowers reached an agreement in principle to defer
payment of a portion of the scheduled debt service payments from September
15, 1995 to July 15, 1996. In conjunction with the modification agreement
in principle, the scheduled maturity date of the loan would be accelerated
to December 31, 1997. Finally, the lenders have agreed to accept at
certain dates through June 30, 1997 repayment of the loan at specified
amounts. Repayment of the loan per such agreement would yield the Lenders,
when paid, an amount less than what would otherwise be due per the original
terms of the mortgage loan. However, there can be no assurance that such
agreement will be finalized under these terms or any others. As of the
date of this report, certain escrow and real estate tax payments are
delinquent; however, the borrower is current in its full monthly debt
service payments. The Partnership is recognizing interest income only as
collected.
Subsequent to the end of the quarter, the borrower notified the
Lenders that a tenant which operates a dry cleaning plant at the site has
leaked a chemical associated with the dry cleaning process that can cause
environmental problems if not handled properly. The borrower is currently
performing tests to assess the extent of the contamination. At this time,
it is not possible to reasonably estimate what the cost of any required
remediation. The Lenders do not currently expect that the value of the
borrower's property has been materially impaired; however, there can be no
assurance that the contamination will not have a material impact on the
value of the Lender's security until more information becomes available.
FRANKLIN FARM VILLAGE CENTER
A tenant, which has a ground lease with the borrower, informed the
borrower and the appropriate state agencies that gasoline was discharged
into the ground. The Lenders were then informed by the borrower. The
Lenders have been informed that the tenant, which operates a gasoline
station at the site, is cooperating fully with all government agencies in
order to rectify this problem in a expeditious manner and that no nearby
underground water supplies were affected nor does it appear likely that any
will be affected in the future. The tenant (an affiliate of a national
gasoline marketer) appears to have the financial resources to fully pay for
the clean up at the property. At this time it is indeterminable what the
cost of the clean up will be. The Lenders do not currently expect that the
10
value of the borrower's property has been materially affected. However,
there can be no assurances that the gasoline leak, as reported, will not
have a material impact on the value of the Lenders' security in the future.
During July 1996, the Lenders executed an agreement with the borrower
regarding an early repayment of the mortgage loan. Such agreement allows
the borrower to repay the loan at a predetermined amount prior to October
8, 1996. If the loan is repaid pursuant to such agreement, the Lenders
will receive an amount less than what would otherwise be due under the
terms of the original mortgage loan. There can be no assurance that such
loan will be prepaid. However, effective July 1996, the Partnership is
recognizing income only as collected. As of the date of the report, no
amounts currently due from the borrower of this loan are in arrears.
CALIBRE POINT APARTMENTS
Calibre Pointe Associates entered into a purchase agreement in April
1996 with an independent third party to sell the property. The sale price
of the apartments was $14,450,000, paid in cash at closing on May 30, 1996.
Calibre Pointe Associates will recognize a gain of approximately $2,578,000
for financial reporting purposes in 1996, of which approximately $1,605,000
will be allocable to the Partnership. Calibre Pointe Associates expects to
recognize a gain of approximately $2,200,000 for Federal income tax
purposes in 1996 of which approximately $1,370,000 will be allocable to the
Partnership.
The property was classified as held for sale or disposition as of
January 1, 1996 and therefore has not been subject to continued
depreciation. The accompanying consolidated financial statements include
$983,667 and $904,947 of revenues and $379,002 and $594,373 of operating
expenses for the six months ended June 30, 1996 and 1995 (reflected as a
component of the Partnership's share of operations of unconsolidated
ventures). The property had a net carrying value of approximately
$11,580,000 at December 31, 1995.
NORTH RIVERS MARKET SHOPPING CENTER
Occupancy of North Rivers Market Shopping Center in North Charleston,
South Carolina was 83% at June 30, 1996. Phar Mor, a major tenant at the
center filed for protection under Chapter 11 of the bankruptcy code. The
Phar Mor store at the center has continued to operate since its bankruptcy
filing and has been current on all rent payments due subsequent to filing.
The manager is aggressively attempting to lease the vacant space in the
center. However, the competitiveness of the market given the Naval
facility closings in the nearby area is expected to make it difficult to
lease space in the center, thereby extending the period of time it will
take to complete the lease-up of the center and result in a decrease in
cash flow from operations over the near term.
SHOPPES AT RIVERGATE
In May 1995, a tornado touched down in Goodlettsville, Tennessee and
severely damaged a significant percentage (17% or 29,000 square feet) of
the Shoppes at Rivergate. The portion of the shopping center undamaged by
the tornado continued to operate while the damaged portion was being
repaired. Substantially all of the loss, including any loss caused by
business interruption, is expected to be covered by the borrower's
insurance. The borrower has substantially rebuilt the damaged portions of
the center with funds provided by the insurance company and the property is
currently 97% occupied. Subsequent to the end of the quarter, a tenant
which occupied approximately 15,400 square feet vacated its space prior to
its lease expiration, decreasing the occupancy to 89%. Total costs to
repair the center are estimated to be approximately $1,200,000, of which
approximately $1,080,000 has been spent as of June 30, 1996. As of the
date of this report, the borrower is current with all payments due to the
Partnership.
11
SELECTED FINANCIAL INFORMATION
Pursuant to the requirements of the Securities and Exchange
Commission, the following is a summary of historical income statement
information for Shoppes at Rivergate, Riverpoint Center and Franklin Farm
Village Center shopping centers for the six months ended June 30, 1996 and
1995. Such properties secure the participating first mortgage investments
made by the Partnership.
1996 1995
---------- ---------
Total revenues. . . . . . . . $4,147,591 4,053,636
========== =========
Net income (loss) . . . . . . $ 302,426 164,544
========== =========
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of June 30, 1996
and for the three and six months ended June 30, 1996 and 1995.
12
