SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1994Commission file number 0-16108
JMB INCOME PROPERTIES, LTD. - XII
(Exact name of registrant as specified in its charter)
Illinois 36-3337796
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . .
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . .
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . .
Item 6. Exhibits and Reports on Form 8-K. . . . . .
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 914,894 1,470,860
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,021,276 21,966,316
Rents and other receivables, net of allowance for doubtful accounts of
$609,162 at March 31, 1994 and $481,694 at December 31, 1993 . . . . . . . . . . . . . . 2,054,987 2,025,743
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618,579 267,718
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,407,757 1,393,527
Casualty insurance receivable (note 3(d)). . . . . . . . . . . . . . . . . . . . . . . . . 905,453 --
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,922,946 27,124,164
------------ -----------
Investment properties, at cost (note 2):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,074,253 23,074,253
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176,273,951 176,419,717
------------ -----------
199,348,204 199,493,970
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,124,986 41,724,753
------------ -----------
Total investment properties, net of accumulated depreciation. . . . . . . . . . . . 156,223,218 157,769,217
Investment in unconsolidated ventures, at equity (notes 1 and 6) . . . . . . . . . . . . . . . 3,893,167 3,720,296
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,698,697 4,788,858
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,685,916 1,649,035
------------ -----------
$193,423,944 195,051,570
============ ===========
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
MARCH 31, DECEMBER 31,
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 6,989,970 6,972,571
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,797,197 969,433
Construction costs payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,975 537,400
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346,406 --
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,819 17,803
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,581,367 8,497,207
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488,398 410,232
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,456,950 87,612,869
Advances from affiliates (note 3(d)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735,000 735,000
------------ -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,261,715 97,255,308
Venture partners' subordinated equity in ventures. . . . . . . . . . . . . . . . . . . . . . . 21,046,629 22,872,422
Partners' capital accounts:
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,123 11,123
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549,364 642,630
------------ -----------
560,487 653,753
------------ -----------
Limited partners (189,684 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . . . . . 171,306,452 171,306,452
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,023,223)(23,784,830)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (73,728,116)(73,251,535)
------------ -----------
71,555,113 74,270,087
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 72,115,600 74,923,840
------------ -----------
Commitments and contingencies (notes 2, 3 and 5)
$193,423,944 195,051,570
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,731,911 7,109,883
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,841 200,772
----------- ----------
6,910,752 7,310,655
----------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,372,978 2,306,846
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400,233 1,295,898
Property operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,545,953 3,360,692
Professional services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,597 98,600
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254,980 114,952
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92,383 71,310
----------- ----------
7,749,124 7,248,298
----------- ----------
Operating earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (838,372) 62,357
Partnership's share of operations of unconsolidated ventures (notes 1 and 6) . . . . . . . . . 172,871 233,637
Venture partners' share of ventures' operations before extraordinary item (note 1) . . . . . . 387,042 154,387
----------- ----------
Net operating earnings (loss) before extraordinary item. . . . . . . . . . . . . . . (278,459) 450,381
Extraordinary item (net of venture partners' share of $1,486,800) (note 3(d)). . . . . . . . . (2,053,200) --
----------- ----------
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(2,331,659) 450,381
=========== ==========
Net earnings (loss) per limited partnership interest (note 1):
Net operating earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . $ (1.41) 2.28
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10.39) --
----------- ----------
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (11.80) 2.28
=========== ==========
Cash distributions per limited partnership interest. . . . . . . . . . . . . . . . . $ 2.50 5.00
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(2,331,659) 450,381
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400,233 1,295,898
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254,980 114,952
Partnership's share of operations of unconsolidated ventures, net of distributions . . . . (172,871) (233,637)
Venture partners' share of ventures' operations and extraordinary item . . . . . . . . . . (1,873,842) (154,387)
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,540,000 --
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,244) (99)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (350,861) (461,099)
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,230) --
Casualty insurance receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (905,453) --
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,881) 32,022
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461,889 (102,856)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (157,651)
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346,406 333,230
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,016 (233,581)
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,166 (5,205)
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . 370,649 877,968
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . . . . . . . . . . . . . . . 945,040 (1,581,615)
Additions to investment properties, net of related payables. . . . . . . . . . . . . . . . . (1,139,784) (3,926,327)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (164,819) (110,335)
------------ -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . . . (359,563) (5,618,277)
------------ -----------
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . (138,520) (51,018)
Increase (decrease) in other long-term liabilities . . . . . . . . . . . . . . . . . . . . . -- (9,650,000)
Proceeds from refinancings of debt (note 3(d)) . . . . . . . . . . . . . . . . . . . . . . . -- 18,400,000
Advances from affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 3,209,609
Venture partners' contributions to venture . . . . . . . . . . . . . . . . . . . . . . . . . 48,049 32,147
Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (476,581) (953,162)
------------ -----------
Net cash provided by (used in) financing activities. . . . . . . . . . . . . . . . . (567,052) 10,987,576
------------ -----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . .$ (555,966) 6,247,267
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . .$ 2,372,978 2,306,846
============ ===========
Non-cash investing and financing activities:
Write-off of assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 1,174,125 --
Change in accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,365,875 --
------------ -----------
Total extraordinary item - earthquake damage at Topanga Mall (note 3(d)) . . . . . .$ 3,540,000 --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994 AND 1993
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1993 which
are included in the Partnership's 1993 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the accounts
of the Partnership and its ventures, Topanga Plaza Partnership ("Topanga"),
JMB-40 Broad Street Associates ("Broad Street"), JMB First Financial
Associates ("First Financial") and First Financial's venture, JMB Encino
Partnership, ("Encino") (note 3). The effect of all transactions between the
Partnership and its ventures have been eliminated in the consolidated
financial statements. The equity method of accounting has been applied in the
accompanying consolidated financial statements with respect to the
Partnership's venture interest in JMB/San Jose Associates ("San Jose").
Accordingly, the accompanying consolidated financial statements do not include
the accounts of San Jose.
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax purposes. The accompanying
consolidated financial statements have been prepared from such records after
making appropriate adjustments to present the Partnership's accounts in
accordance with generally accepted accounting principles ("GAAP") and to
consolidate the accounts of the ventures as described above. Such adjustments
are not recorded on the records of the Partnership. The net effect of these
items is summarized as follows for the three months ended March 31:
1994 1993
------------------------------------------
GAAP BASIS TAX BASIS GAAP BASISTAX BASIS
---------- --------- -------------------
Net earnings
(loss). . . . . .$(2,331,659)(1,120,321) 450,381 (408,924)
Net earnings
(loss) per
limited partner-
ship interest . .$ (11.80) (5.67) 2.28 (2.07)
=========== ========= ======= ========
The net earnings (loss) per limited partnership interest is based on the
number of limited partnership interests outstanding at the end of each period
(189,684).
Certain amounts in the 1993 consolidated financial statements have been
reclassified to conform with the 1994 presentation.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies cash receipts and payments
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement. Partnership
distributions from its unconsolidated ventures are considered cash flow from
operating activities only to the extent of the Partnership's cumulative share
of net earnings. The Partnership records amounts held in U.S. Government
obligations at cost, which approximates market. For the purposes of these
statements, the Partnership's policy is to consider all such amounts held with
original maturities of three months or less as cash equivalents with any
remaining amounts (generally with original maturities of one year or less)
reflected as short-term investments being held to maturity. None of the
Partnership's investments in U.S. Government obligations were classified as
cash equivalents at March 31, 1994 and December 31, 1993.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership has acquired, either directly or through joint ventures,
three shopping centers, two office buildings and an office complex. The
Partnership sold, through JMB/Rivers, its interest in Mid Rivers Mall in
January 1992. All the remaining properties were in operation at March 31,
1994.
(b) Plaza Hermosa
During September 1986, the Partnership acquired a multi-building
neighborhood shopping center in Hermosa Beach, California. The Partnership's
purchase price for the shopping center was $18,290,000, of which $11,890,000
was paid in cash at closing. The balance of the purchase price is represented
by bond financing in the amount of $6,400,000. This financing is secured by a
letter of credit facility which is ultimately secured by a deed of trust on
the property. The letter of credit facility expired December 31, 1993;
however, the Partnership subsequently signed an agreement with the issuer of
the letter of credit to extend its expiration date to December 31, 1994. The
Partnership is currently evaluating its alternatives, including seeking a
long-term extension of the existing letter of credit, replacing the bond
financing with a conventional mortgage or retiring the debt with current cash
reserves. The existing bond financing is due and payable upon the expiration
of the letter of credit, and accordingly, has been classified as a current
liability at March 31, 1994 and December 31, 1993. There can be no assurance
that any such replacement financing will be secured.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at March 31, 1994 is a party to four operating venture
agreements. The terms of the joint venture agreements generally provide that
the Partnership will be allocated or distributed profit and losses, cash flow
from operations and sale or refinancing proceeds in the ratio of its interest
in the joint ventures as determined by the relative value of the partners'
respective capital contributions. Under certain circumstances, either
pursuant to the venture agreements or due to the Partnership's obligations as
a general partner, the Partnership may be required to make additional cash
contributions to the ventures. There are certain risks associated with the
Partnership's investments made through joint ventures including the
possibility that the Partnership's joint venture partners in an investment
might become unable or unwilling to fulfill their financial or other
obligations, or that such joint venture partners may have economic or business
interests or goals that are inconsistent with those of the Partnership.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(b) San Jose
The Partnership has acquired, through San Jose, an interest in an
existing office building complex in San Jose, California (Park Center
Financial Plaza) consisting of ten office buildings, a parking and retail
building (185 Park Avenue) and two parking garage structures.
The partners of San Jose are the Partnership and JMB Income Properties,
Ltd.-XI, another partnership sponsored by the Managing General Partner of the
Partnership ("JMB-XI"). The terms of San Jose's partnership agreement
generally provide that contributions, distributions, cash flow, sale or
refinancing proceeds and profits and losses will be distributed or allocated
to the Partnership and JMB-XI in their respective 50% ownership percentages.
The venture partners notified the tenants in and invitees to the Park
Center complex in San Jose that some of the buildings, particularly the 100-130
Park Center Plaza Buildings and the garage below them, could pose a life
safety hazard under certain unusually intense earthquake conditions. While
the buildings and the garage were designed to comply with the applicable codes
for the period in which they were constructed, and there is no legal
requirement to upgrade the buildings for seismic purposes, the venture
partners are working with consultants to analyze ways in which such a
potential life safety hazard could be eliminated. In addition, tenants
occupying approximately 110,000 square feet (approximately 26% of the
building) of the Park Center Plaza investment property have leases that expire
in 1995, for which there can be no assurance of renewals. However, since the
costs of both re-leasing space and any seismic program could be substantial,
the Partnership has commenced discussions with the appropriate lender for
additional loan proceeds to pay for all or a portion of these costs. The
venture is also continuing to discuss terms for a possible loan extension
(which would likely include a partial paydown of the outstanding principal
balance) with the mortgage lender on the 150 Almaden and 185 Park Avenue
buildings and certain parking areas as the mortgage loan secured by this
portion of the complex matured in October 1993 and was only extended to
December 1, 1993. However, the Partnership and the lender have not been able
to agree upon mutually acceptable terms for a further loan extension and the
lender has accelerated the loan. Should an agreement not be reached and as
the venture does not have its share of the outstanding loan balance in its
reserves in order to retire the loan, it is possible that the lender would
exercise its remedies and seek to acquire title to this portion of the
complex. Furthermore, should lender assistance be required to fund
significant costs at the 100-130 Park Center Plaza buildings but not be
obtained, the venture has decided not to commit any additional significant
amounts to this portion of the complex since the likelihood of recovering such
funds through increased capital appreciation is remote. The result would be
that the Partnership would no longer have an ownership interest in this
portion of the complex.
As a result, there is uncertainty about the ability to recover the net
carrying value of the property through future operations and sale and
accordingly, the JMB/San Jose joint venture has made a provision for value
impairment on the 150 Almaden and 185 Park Avenue buildings and certain
parking areas of $15,549,935. Such provision at September 30, 1993 was
recorded to reduce the net carrying value of these buildings to the then
outstanding balance of the related non-recourse financing. In the event the
lender on any portion of the complex exercised its remedies as discussed
above, the result would likely be that JMB/San Jose joint venture would no
longer have an ownership interest in such portion.
The property is managed by an affiliate of the General Partners of the
Partnership for a fee calculated as 3% of gross receipts.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(c) Broad Street
The Broad Street venture agreement provides that the Partnership will be
allocated or distributed profits and losses, cash flow from operations and
sale or refinancing proceeds in the ratio of its capital contributions to
Broad Street, which is 68.56%. The Partnership and the venture partner (JMB
Income Properties, Ltd-X, a partnership sponsored by the Managing General
Partner of the Partnership) are current with respect to their required capital
contributions to Broad Street.
The downtown New York City market remains extremely competitive due to
the significant amount of space available primarily resulting from the
layoffs, cutbacks and consolidations by financial service companies and
related businesses which dominated this market. Rental rates in the downtown
market are currently at depressed levels and this can be expected to continue
for the foreseeable future while the current vacant space is gradually
absorbed. Little, if any, new construction is planned for downtown over the
next few years and it is expected that the building will continue to be
adversely affected by the lower than originally projected effective rental
rates now achieved upon releasing of existing leases which expire over the
next few years.
The property is managed by an affiliate of the General Partners of the
Partnership for a fee calculated as 2% of gross receipts of the property.
(d) Topanga
In December 1985, the Partnership acquired, through a joint venture
partnership with an affiliate of the developer, a 58% interest in an existing
two-level enclosed mall regional shopping center known as Topanga Plaza in the
Woodland Hills area of Los Angeles, California. The aggregate purchase price
for the Partnership's interest in the venture was approximately $25,263,000,
which was paid in cash at closing. Under the terms of the joint venture
agreement, the Partnership generally will be allocated or distributed 58% of
profits and losses, cash flow from operations and sale or refinancing
proceeds.
The shopping center is subject to a long-term management agreement with
an affiliate of the joint venture partner. Under the terms of the management
agreement, the manager is entitled to receive a management fee based on a
formula which relates to direct and general overhead costs and expenses
incurred in the operation of the property.
On January 17, 1994, an earthquake occurred in Los Angeles, California.
The epicenter was located in the town of Northridge which is approximately 6
miles from Topanga Plaza Shopping Center. Consequently, significant portions
of the mall, including the four major department store tenants who own their
own buildings, suffered some casualty damage. The approximately 360,000
square feet of mall shops owned by the Topanga Partnership did not suffer
major structural damage. The estimated cost of the repairs at Topanga for
which the joint venture is responsible is approximately $9.3 million. The
majority of this cost will be subject to recovery under the joint venture's
earthquake insurance policy. The deductible on the earthquake casualty, and
business interruption coverages is approximately $2.1 million. The
Partnership anticipates that it will pay for its share of costs subject to
insurance deductibles from its reserves without any material effect on its
projected operations for 1994. As of March 31, 1994, Topanga has incurred
approximately $2 million of the estimated $9.3 million of costs to repair the
mall. Approximately $1.1 million has been reimbursed through insurance
proceeds. The remaining amount of approximately $900,000 has been classified
as a casualty insurance receivable in the accompanying consolidated financial
statements.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
As of the date of this report, 102 of the mall's 114 shops have opened,
and the remaining shops are expected to open during the upcoming weeks as
tenants complete their repairs. Only one of the four major department stores
(who own their own stores) has been able to open and it may take several
months before the entire center is again open and operating. One department
store, Robinson-May, has had a portion of their store condemned by city
inspectors. One consequence of this partial condemnation is that Robinson-May
has taken back the approximately 25,000 square feet of that store which was
leased to the joint venture in 1989. Pursuant to the terms of the lease
agreement with the joint venture, Robinson-May was allowed to terminate the
lease in the event there was substantial damage to its existing store (as
defined). This is expected to represent a loss of approximately $150,000 in
annual net income from subleases of the eight tenants which had subleased this
space. As a result of the termination of the leasehold for this space from
Robinson-May, Topanga has written off approximately $1.2 million which
primarily relates to unamortized leasehold improvements. Topanga has recorded
an extraordinary loss of $3,540,000 which includes Topanga's share of repair
cost of $2.1 million, the write-off of approximately $1.2 million of
unamortized leasehold improvements and approximately $240,000 of other
contingencies. The earthquake will result in some adverse effect on the
operations of the center in the near term; the extent and length of which is
not presently determinable.
The Partnership and its joint venture partner refinanced in January 1992,
the existing mortgage notes with replacement financing from the existing
mortgage holder in the amount of approximately $59,000,000 which was funded in
four stages. Included in the initial funding was the $1,600,000 repayment of
advances by an affiliate of the venture partner, the $1,500,000 refinancing of
a portion of the existing mortgage and $2,300,000 representing a return to the
Partnership of prior contributions used to fund previous costs incurred
relating to fire, life and safety regulations and certain releasing costs.
The second funding occurred on December 2, 1992 in the amount of $16,000,000,
which was used to paydown interim lines of credit used for certain renovation
costs and operational capital expenditures. The third funding of $18,400,000
occurred on February 1, 1993, a portion of which was used to paydown interim
lines of credit used for certain renovation costs and the remainder to fund
additional renovation costs. The fourth stage refinanced the remaining
portion of the existing mortgage of $14,000,000 upon its maturity in June
1993. The loan, aggregating $59,000,000, represents the new loan of
$43,500,000 and the refinancing of the existing loans of $15,500,000. The
term of the new loan began June 1, 1993 with monthly principal and interest
payments and matures January 31, 2002. It carries an interest rate of 10.125%.
The Topanga joint venture funded certain renovation costs through a line of
credit bearing interest at 10.125% with various maturity dates. The line of
credit was paid by the additional loan fundings discussed above.
The joint venture partner has agreed to advance the joint venture funds
for expenses incurred for certain redevelopment costs related to the expansion
of Topanga Plaza. The balance of these advances was $735,000 at March 31,
1994 and December 31, 1993, respectively. Such advances will be repaid to the
joint venture partner as funds are made available from operations.
Construction period interest of approximately $0 and $80,800, has been
capitalized for the three months ended March 31, 1994 and 1993, respectively.
The shopping center is subject to fire, life and safety code and
ordinance requirements, which have changed since the property's original
construction. Accordingly, the Partnership intends to comply with such
revised regulations and fund certain retrofit costs. In conjunction with the
renovation, a substantial portion of certain retrofit costs have been
completed. The Partnership will fund any remaining costs from operations over
the next several years, as tenant leases expire, until the entire building
conforms to such requirements.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(e) First Financial
On May 20, 1987, the Partnership, through First Financial, a joint
venture with JMB Income Properties, Ltd.-XIII (a partnership sponsored by an
affiliate of the Managing General Partner), acquired an interest in a general
partnership ("Encino") with an affiliate of the developer ("Venture Partner")
which owns an office building in Encino (Los Angeles), California. First
Financial is obligated to make an initial investment in the aggregate amount
of $49,850,000 of which approximately $49,812,000 of such contributions have
been made to Encino. The Partnership's share of the remaining amounts,
approximately $24,000, will be contributed when the Venture Partner complies
with certain requirements.
All of Encino's operating profits and losses before depreciation have
been allocated to First Financial in 1994 and 1993.
The terms of the First Financial partnership agreement provide that
annual cash flow, net sale or refinancing proceeds, and tax items will be
distributed or allocated, as the case may be, to the Partnership in proportion
to its 62.5% share of capital contributions.
The office building is managed by an affiliate of the Venture Partner for
a fee based upon a percentage of rental receipts (as defined) of the property.
(4) PARTNERSHIP AGREEMENT
The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the Partnership
amounts equal to the cumulative deferrals of any portion of their 10% cash
distribution and 2-1/2% of the selling price, and that the remaining proceeds
(net after expenses and retained working capital) be distributed 85% to the
Limited Partners and 15% to the General Partners. However, the Limited
Partners shall receive 100% of such net sale proceeds until the Limited
Partners (i) have received cash distributions of sale or refinancing proceeds
in an amount equal to the Limited Partners' aggregate initial capital
investment in the Partnership, (ii) have received cumulative cash
distributions from the Partnership's operations which, when combined with sale
or refinancing proceeds previously distributed, equal a 6% annual return on
the Limited Partners' average capital investment for each year (their initial
capital investment as reduced by sale or refinancing proceeds previously
distributed) commencing with the second fiscal quarter of 1986 and (iii) have
received cash distributions of sale and refinancing proceeds and of the
Partnership's operations, in an amount equal to the Limited Partners' initial
capital investment in the Partnership plus a 10% annual return on the Limited
Partners' average capital investment. Accordingly, approximately $773,000 of
sale proceeds from the sale of the Partnership's interest in Mid Rivers Mall
during 1992 has been deferred by the General Partners (note 5).
(5) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of March 31, 1994
and for the three months ended March 31, 1994 and 1993 are as follows:
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
Unpaid at
1994 1993 March 31, 1994
------- ------ ---------------
Property management and
leasing fees. . . . . $42,393 59,141 --
Insurance commissions. -- 80 --
Reimbursement (at cost)
for out-of-pocket
expenses. . . . . . . 340 4,878 86
------- ------ ---
$42,733 64,099 86
======= ====== ===
The Managing General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Managing General Partner and its affiliates relating to the administration
of the Partnership and the operation of the Partnership's investment
properties. The amount of such salaries and direct expenses aggregated
$14,595 and $72,561 for the three months ended March 31, 1994 and for the
twelve months ended December 31, 1993, respectively, of which $72,561 is
unpaid as of March 31, 1994.
In accordance with the subordination requirements of the Partnership
Agreement, the General Partners have deferred payment of their distributions
of net cash flow and sales proceeds from the Partnership. All amounts
deferred or currently payable do not bear interest.
The Topanga venture has incurred approximately $17,000 and $173,000 of
interest expense on affiliated venture partner advances (note 3(d)) for the
three months ended March 31, 1994 and 1993, respectively, all of which was
paid to an affiliate of the venture partner as of March 31, 1994.
(6) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for the San Jose venture for the
three months ended March 31, 1994 and 1993 is as follows:
1994 1993
---------- ---------
Total income. . . . . . . . . . . .$2,305,345 2,586,452
========== =========
Operating earnings. . . . . . . . .$ 345,742 467,274
========== =========
Net earnings to the Partnership . .$ 172,871 233,637
========== =========
(7) ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31, 1994
and for the three months ended March 31, 1994 and 1993.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
At March 31, 1994, the Partnership had cash and cash equivalents of
approximately $915,000. Such funds and short-term investments of
approximately $21,021,000 are available for working capital requirements
including the funding of the Partnership's share of earthquake repair costs at
the Topanga Plaza and of releasing costs and capital improvements at the Park
Center Financial Plaza, 40 Broad Street and First Financial Plaza properties
investment as discussed below and any funds which may be required at the Plaza
Hermosa Shopping Center if the Partnership retires the debt when the letter of
credit facility, which secures the property, expires as discussed in Note
2(b). The Partnership and its consolidated ventures have currently budgeted
in 1994 approximately $4,271,000 for tenant improvements and other capital
expenditures which does not include the improvements or additions related to
the renovation of Topanga Plaza to be funded through the existing loan as
discussed below and in Note 3(d). Such budgeted amounts also exclude the
Partnership's share of the January 17, 1994 earthquake repair costs at Topanga
Plaza which are estimated to be approximately $2,100,000 (as discussed below
and in Note 3(d)). The Partnership's share of such items and its share of
similar items for its unconsolidated ventures in 1994 is currently budgeted to
be approximately $3,056,000. Actual amounts expended in 1994 may vary
depending on a number of factors including actual leasing activity, results of
property operations, liquidity considerations and other market conditions over
the course of the year. Due to these commitments, the Partnership reduced the
operating distribution beginning with the first quarter of 1993.
Additionally, as more fully described in Notes 4 and 5, distributions to the
General Partners have been deferred in accordance with the subordination
requirements of the Partnership agreement. The source of capital for such
items and for both short-term and long-term future liquidity and distributions
is expected to be through cash generated by the Partnership's investment
properties and through the sale of such investments. To the extent that a
property does not produce adequate amounts of cash to meet its needs, the
Partnership may withdraw funds from the working capital reserve which it
maintains. The Partnership's and its ventures' mortgage obligations are all
non-recourse. Therefore, the Partnership and its Ventures are not obligated
to pay mortgage indebtedness unless the related property produces sufficient
net cash flow from operations or sale.
Overall cash flow returns at Broad Street for the next few years are
expected to be lower than originally projected because an additional 13% of
the leased and occupied expires during the next two years. In addition, a
tenant, occupying approximately 37,000 square feet (approximately 15% of the
building), did not renew its lease when it expired in September 1993.
However, subtenants occupying approximately 21,000 square feet whose leases
also expired in September 1993 have held over while Broad Street continues to
negotiate leases with them. Furthermore, Broad Street has renewed and
expanded another tenant, effective July 1, 1993, whose lease was scheduled to
expire in December 1994. This tenant has expanded from approximately 18,000
square feet to approximately 35,000 square feet at a market effective rental
rate which is lower than its previous lease. The Partnership will continue
its aggressive leasing program; however, the downtown New York City market
remains extremely competitive due to the significant amount of space available
primarily resulting from the layoffs, cutbacks and consolidations by financial
service companies and related businesses which dominated this market. In
addition to competition for tenants in the downtown Manhattan market from
other buildings in the area, there is increasing competition from less
expensive alternatives to Manhattan. Rental rates in the downtown market are
currently at depressed levels and this can be expected to continue for the
foreseeable future while the current vacant space is gradually absorbed.
Little, if any, new construction is planned for downtown over the next few
years and it is expected that the building will continue to be adversely
affected by the lower than originally projected effective rental rates now
achieved upon releasing of existing leases which expire over the next few
years. Reference is made to Note 3(c) for further discussion of the current
status of this investment property.
The venture partners notified the tenants in and invitees to the Park
Center complex in San Jose that some of the buildings, particularly the 100-130
Park Center Plaza Buildings and the garage below them, could pose a life
safety hazard under certain unusually intense earthquake conditions. While
the buildings and the garage were designed to comply with the applicable codes
for the period in which they were constructed, and there is no legal
requirement to upgrade the buildings for seismic purposes, the venture
partners are working with consultants to analyze ways in which such a
potential life safety hazard could be eliminated. In addition, tenants
occupying approximately 110,000 square feet (approximately 26% of the
building) of the Park Center Plaza investment property have leases that expire
in 1995, for which there can be no assurance of renewals. However, since the
costs of both re-leasing space and any seismic program could be substantial,
the Partnership has commenced discussions with the appropriate lender for
additional loan proceeds to pay for all or a portion of these costs.
The Partnership is also continuing to discuss terms for a possible loan
extension (which would likely include a partial paydown of the outstanding
principal balance) with the mortgage lender on the 150 Almaden and 185 Park
Avenue buildings and certain parking areas as the mortgage loan secured by
this portion of the complex matured on October 1, 1993 and was only extended
to December 1, 1993. However, the Partnership and the lender have not been
able to agree upon mutually acceptable terms for a loan further extension and
the lender has accelerated the loan. Should an agreement not be reached and
as the Partnership does not have its share of the outstanding loan balance in
its reserves in order to retire the loan, it is possible that the lender would
exercise its remedies and seek to acquire title to this portion of the
complex. Furthermore, should lender assistance be required to fund
significant costs at the 100-130 Park Center Plaza buildings but not be
obtained, the Partnership has decided not to commit any additional amounts to
this portion of the complex since the likelihood of recovering such funds
through increased capital appreciation is remote. The result would be that
the Partnership would no longer have an ownership interest in this portion of
the complex.
As a result, there is uncertainty about the ability to recover the net
carrying value of the property through future operations and sale and
accordingly, the JMB/San Jose joint venture has made a provision for value
impairment on the 150 Almaden and 185 Park Avenue buildings and certain
parking areas of $15,549,935. Such provision at December 31, 1993 is recorded
to reduce the net carrying value of these buildings to the then outstanding
balance of the related non-recourse financing. The provision was in addition
to similar impairments to other portions of the complex taken in earlier years
and previously reported. In the event the lender on any portion of the
complex exercised its remedies as discussed above, the result would likely be
that JMB/San Jose joint venture would no longer have an ownership interest in
such portion. In addition, tenants occupying approximately 110,000 square
feet (approximately 26% of the buildings) of the Park Center Plaza investment
property have leases that expire in 1995, for which there can be no assurance
of renewals. See Note 3(b) for further discussion of this investment
property.
On January 17, 1994, an earthquake occurred in Los Angeles, California.
The epicenter was located in the town of Northridge which is approximately 6
miles from Topanga Plaza Shopping Center. Consequently, the entire mall,
including the 4 major department stores who own their own buildings, suffered
some casualty damage. The approximately 360,000 square feet of mall shops
owned by the Topanga Partnership did not suffer major structural damage. The
estimated cost of the repairs at Topanga for which the joint venture is
responsible is approximately $9.3 million. The majority of this cost will be
subject to recovery under the joint venture's earthquake insurance policy.
The deductible on the building improvements, furniture and fixtures, and
business interruption coverages due to loss of rents is approximately $2.1
million. The Partnership anticipates that it will pay for its share of
insurance deductibles from its reserves without any material effect on its
projected operations for 1994. As of March 31, 1994, Topanga has incurred
approximately $2 million of the estimated $9.3 million of costs to repair the
mall. Approximately $1.1 million has been reimbursed through insurance
proceeds. The remaining amount of approximately $900,000 has been classified
as a casualty insurance receivable in the accompanying consolidated financial
statements. As of the date of this report, 102 of the mall's 114 shops have
opened, and the remaining shops are expected to open during the upcoming weeks
as tenants complete their repairs. Only one of the four major department
stores has been able to open and it may take several weeks or months before
the entire center is open and operating. One department store, Robinson-May,
has had a portion of their store condemned by city inspectors. One
consequence of this partial condemnation is that Robinson-May has taken back
the approximately 25,000 square feet of that store which was leased to the
joint venture in 1989. Pursuant to the terms of the lease agreement with the
joint venture, Robinson-May is allowed to terminate the lease in the event
there is substantial damage to its existing store (as defined). This is
expected to represent the loss of approximately $150,000 in annual net income
from subleases of the eight tenants which had subleased this space. As a
result of the termination of the leasehold for this space from Robinson-May,
Topanga has written off approximately $1.2 million which primarily relates to
unamortized leasehold improvements. Topanga has recorded an extraordinary
loss of $3,540,000 which includes Topanga's share of repair cost of $2.1
million, the write-off of approximately $1.2 million of unamortized leasehold
improvements and approximately $240,000 of other contingencies. The
earthquake will result in some adverse effect on the operations of the center
in the near term; the extent and length of which is not presently
determinable.
The Partnership and its joint venture partner completed a renovation at
the Topanga Plaza Shopping Center during 1992 of approximately $40,000,000.
In conjunction with this renovation and remerchandising, the Partnership
secured an extension of the operating covenant for the Nordstrom's department
store to the year 2000 from an original expiration date in 1994. In addition,
the Broadway store has also committed to operate in the center until the year
2000. The Partnership and its joint venture partner have refinanced the
existing mortgage notes with replacement financing from the existing mortgage
holder in the aggregate amount of approximately $59,000,000 which was funded
in four stages. See Note 3(d) for further discussion of the refinancing of
this loan.
The Plaza Hermosa Shopping Center was developed with proceeds raised
through a municipal bond financing. This financing, with an outstanding
balance of $6,400,000 at March 31, 1994, is secured by a letter of credit
facility which is ultimately secured by a deed of trust on the property. The
letter of credit facility expired December 31, 1993; however, the Partnership
signed an agreement with the issuer of the letter of credit to extend its
expiration date to December 31, 1994. The Partnership is continuing to
evaluate its long-term alternatives, which including a long-term extension of
the existing letter of credit, replacing the bond financing with a
conventional mortgage or retiring the debt with current cash reserves. The
existing bond financing is due and payable upon the expiration of the letter
of credit, and accordingly, has been classified as a current liability at
March 31, 1994. There can be no assurance that any such replacement financing
will be secured.
In 1995, the leases of tenants occupying approximately 33,000 square feet
(approximately 35% of the property) at the Plaza Hermosa Shopping Center
expire. Although the Partnership has received indications that some of these
tenants will renew, there can be no assurance that such renewals will take
place.
In July 1993, at the First Financial Plaza office building, a tenant,
Mitsubishi vacated its approximate 8,100 square feet prior to its lease
expiration of January 1997 and continues to pay rent pursuant to its lease
obligation. In 1994, leases representing approximately 20% of the leasable
square footage are scheduled to expire. Although renewal discussions with the
majority of these tenants have been favorable, there can be no assurance that
these tenants will renew their leases upon expiration. The Los Angeles office
market in general and the Encino submarket in particular have become
extremely competitive resulting in higher rental concession granted to tenants
and flat or decreasing market rental rates. Furthermore, due to the recession
in southern California and to concerns regarding certain tenants' ability to
perform under current lease terms, the venture has granted rent deferrals and
other forms of rent relief to several tenants including First Financial
Housing, an affiliate of the unaffiliated venture partner. The property
incurred minimal damage as a result of the earthquake in southern California
on January 17, 1994.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the Partnership's
joint venture partners in an investment might become unable or unwilling to
fulfill their financial or other obligations, or that such joint venture
partners may have economic or business interests or goals that are
inconsistent with those of the Partnership.
Though the economy has recently shown signs of improvement and financing
is generally becoming more available for certain types of higher-quality
properties in healthy markets, real estate lenders are typically requiring a
lower loan-to-value ratio for mortgage financing than in the past. This has
made it difficult for owners to refinance real estate assets at their current
debt levels unless the value of the underlying property has appreciated
significantly. As a consequence, and due to the weakness of some of the local
real estate markets in which the Partnership's properties operate, the
Partnership is taking steps to preserve its working capital.
RESULTS OF OPERATIONS
The increase in prepaid expenses at March 31, 1994 as compared to
December 31, 1993 is primarily due to the prepayment of real estate taxes of
approximately $495,000 due at 40 Broad Street.
The casualty insurance receivable balance at March 31, 1994 represents a
portion of repair costs to be reimbursed through insurance proceeds. See Note
3(d).
The increase in accounts payable at March 31, 1994 as compared to
December 31, 1993 is primarily due to approximately $3 million of earthquake
repair costs accrued at Topanga Plaza.
The increase in accrued real estate taxes at March 31, 1994 as compared
to December 31, 1993 is primarily due to the timing of payments of
approximately $64,000 at the Plaza Hermosa Shopping Center, approximately
$121,000 at the First Financial Plaza and approximately $161,000 at the
Topanga Plaza.
The decrease in rental income for the three months ended March 31, 1994
as compared to the three months ended March 31, 1993 is primarily due to 40
Broad Street achieving lower effective rental rates upon re-leasing of vacant
space.
Depreciation expense increased for the three months ended March 31, 1994
as compared to the three months ended March 31, 1993 primarily due to fixed
asset additions during the last quarter of 1993 at Topanga Plaza and 40 Broad
Street.
The increase in property operating expenses at March 31, 1994 as compared
to March 31, 1993 is primarily due to increased repairs and maintenance at 40
Broad Street.
The increase in amortization of deferred expenses for the three months
ended March 31, 1994 as compared to the three months ended March 31, 1993 is
primarily due to the capitalization of certain expenses related to the
renovation of Topanga Plaza.
<PAGE>
The decrease in Partnership's share of operations of unconsolidated
ventures for the three months ended March 31, 1994 as compared to the three
months ended March 31, 1993 is primarily due to a decrease in parking income
at Park Center Plaza.
The increase in venture partners' share of ventures' operations for the
three months ended March 31, 1994 as compared to the three months ended March
31, 1993 is primarily due to losses resulting from the earthquake at Topanga
Plaza.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties.
<CAPTION>
1993 1994
-------------------------------------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Park Center Financial Plaza
San Jose, California . . . . . . . . . . . 89% 88% 84% 84% 83%
2. Topanga Plaza
Los Angeles, California. . . . . . . . . . 85% 82% 89% 94% 90%
3. 40 Broad Street
New York, New York . . . . . . . . . . . . 82% 82% 67% 79% 80%
4. Plaza Hermosa Shopping Center
Hermosa Beach, California. . . . . . . . . 95% 92% 92% 92% 81%
5. First Financial Plaza
Encino (Los Angeles), California . . . . . 85% 88% 84% 85% 84%
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4-A. Mortgage loan agreement between Topanga and
Connecticut General Life Insurance Company dated January 31, 1992 relating to
Topanga Plaza in Los Angeles, California is hereby incorporated herein by
reference to Exhibit 4-A to the Partnership's report on Form 10-K for
December 31, 1992 (File No. 0-16108) dated March 19, 1993.
4-B. Mortgage loan agreement between First Financial and
The Prudential Insurance Company of America dated November 2, 1987 relating to
First Financial Plaza in Encino, California is hereby incorporated herein by
reference to Exhibit 4-B to the Partnership's report on Form 10-K for December
31, 1992 (File No. 0-16108) dated March 19, 1993.
4-C. Mortgage loan modification agreement between
Topanga and Connecticut General Life Insurance dated January 31, 1993 relating
to Topanga Plaza in Los Angeles, California is hereby incorporated herein by
reference to Exhibit 4 of the Partnership's report on Form 10-Q (File No.
0-16108) dated November 11, 1993.
10-A. Acquisition documents including the venture
agreement relating to the purchase by the Partnership of Topanga Plaza in Los
Angeles, California, are hereby incorporated by reference to the Partnership's
report on Form 8-K (File No. 0-16108) dated December 31, 1985.
10-B. Acquisition documents including the venture
agreement relating to the purchase by the Partnership of First Financial Plaza
in Encino, California are hereby incorporated by reference to the Partnership's
report on Form 8-K (File No. 0-16108) dated June 3, 1987.
10-C. Acquisition documents including the venture
agreement relating to the purchase by the Partnership of 40 Broad Street in New
York, New York, are hereby incorporated by reference to the Partnership's report
on Form 8-K (File No. 0-16108) dated December 31, 1985.
10-D. Sale documents and exhibits thereto relating to the
sale of the Partnership's interest in Mid Rivers Mall in St. Peters (St. Louis),
Missouri are hereby incorporated by reference to the Partnership's
report on Form 8-K (File No. 0-16108) dated February 18, 1992.
(b) Reports on Form 8-K
The Partnership's report on Form 8-K dated February 28,
1994 describing the January 17, 1994 earthquake in Los Angeles, California, and
its impact on Topanga Plaza Shopping Center.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XII
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:May 11, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person in the capacity and on
the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date:May 11, 1994
March 3, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: JMB Income Properties Limited - XII
Commission File No. 0-16108
Form 8-K
Gentlemen:
Transmitted, for the above-captioned registrant, is the electronically filed
executed copy of registrant's current report on Form 8-K dated February
28, 1994.
Thank you.
Very truly yours,
JMB INCOME PROPERTIES LIMITED - XII
By: JMB Realty Corporation
Managing General Partner
By: C. SCOTT NELSON
_____________________________________
C. Scott Nelson, Vice President
Accounting Officer
CSN:jo
Enclosures
March 3, 1994
U.S. Securities and Exchange Commission
Operations Center, Stop 0-7
6432 General Green Way
Alexandria, Virginia 22312
Re: JMB Income Properties Limited - XII
Commission File No. 0-16108
Form 8-K
Gentlemen:
Enclosed, for the above-captioned registrant, is one paper copy of which is
manually executed of registrant's report on Form 8-K which is dated February
28, 1994.
Please acknowledge receipt of the Form 8-K filing by signing and returning the
enclosed self-addressed post card.
Thank you.
Very truly yours,
JMB INCOME PROPERTIES LIMITED - XII
By: JMB Realty Corporation
Managing General Partner
By: _____________________________________
C. Scott Nelson, Vice President
Accounting Officer
CSN:jo
Enclosures
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 17, 1994
JMB INCOME PROPERTIES LIMITED - XII
(Exact name of registrant as specified in its charter)
Illinois 0-16108 36-3337796
(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
TOPANGA PLAZA
Los Angeles, California
Item 5. Other Events. JMB Income Properties Limited - XII (the "Partnership")
owns an interest, through a joint venture ("Joint Venture"), in the Topanga
Plaza Shopping Center ("the Center") located in the Northern portion of Los
Angeles, California. On January 17, 1994, an earthquake occurred in the Los
Angeles, California area. The epicenter was located in the town of Northridge
which is approximately six miles from the Center. Consequently, the entire
Center, including the four major department stores who own their own buildings,
suffered some casualty damage. The approximately 360,000 square feet of the
Center's shops owned by the Joint Venture did not suffer major structural
damage. The Center's manager, an affiliate of the Partnership's venture
partner, was able to complete the clean-up and required life safety procedures
in order to open a portion of the Center to the public on January 28, 1994.
As of the date of this report, 97 of the Center's 115 shops have opened, and
the remaining shops are expected to open during the upcoming weeks as the
tenants complete their repairs. Only one of the four major department stores
has been able to open and, as further explained below, it may take several
weeks or months before the entire Center is open and operating once again.
Most of the tenant damage at the Center occurred on the second level,
where approximately 70% of the tenants lost their glass storefronts. The
costs to repair this damage are the responsibility of the various tenants
affected. The damage sustained by the Center, for which the Joint Venture
is responsible, consisted of, among other things, numerous cracks in the
floor tile (primarily at the expansion joints), some water damage from the
sprinkler risers being discharged, breaks in some of the water mains as well
as sewer lines, masonry cracks at one of the lower level entrances, loss of
glass in both the elevators and escalators, numerous cracks in the drywall in
the ceiling, and asphalt, sidewalk and curbing cracks in the surrounding
parking lot areas. The Joint Venture has commenced restoring the Center and
anticipates that it will take approximately four months to complete.
The estimated cost at this point of the repairs for which the Joint
Venture is responsible is approximately $8.8 million. The majority of this
cost will be subject to recovery under the Joint Venture's earthquake insurance
policy after payment of the required deductible on the Joint Venture's
building and improvements and furniture and fixtures. This deductible amounts
to $1,705,300, of which the Partnership's share is $989,074 or 58%. The Joint
Venture has filed an estimated claim for the above-referenced $8.8 million
with its insurer. In addition, the Joint Venture's portion of the Center is
insured for a twelve month period for loss of rents due to business interruption
caused by an earthquake. The deductible on this coverage is $445,150, of which
the Partnership's 58% share is $258,187. The Partnership anticipates that it
will pay for its share of the insurance deductibles from its reserves without
any material effect on its projected operations for 1994.
The most significant structural damage to the Center occurred in the four
department stores. Each department store owner is continuing to evaluate all
of the problems within its store and each has commenced its initial clean-up.
However, it may take a period of several months before all of the department
stores are open. As of the date of this report, only Nordstrom's department
store has opened. At this time, it appears that the Robinson - May store has
sustained the most damage and, in fact, certain areas of the store have been
condemned by city inspectors. That store owner's preliminary expectation for
a reopening date is sometime during November 1994.
Although the majority of the Center's shops either have opened or will be
able to do so within the next few weeks, it is likely that their sales volumes
will be reduced as compared to prior years due to the fact that the most
significant draw to the Center for many shoppers is the department stores.
Some tenants have requested rent concessions and until the entire Center is
open and operating again, it is likely additional tenants may request rent
concessions in order to continue to operate during the period of time until
the department stores open. The Joint Venture anticipates reviewing these
requests on a tenant by tenant basis. No final decisions have been made on
any requests. One other consequence of the partial condemnation to the
Robinson - May store is that Robinson - May has taken back the approximately
25,000 square feet of that store which was leased to the Joint Venture in 1989.
Pursuant to the terms of the lease agreement with the Joint Venture, Robinson
- - - May is allowed to terminate the lease in the event there is substantial
damage to its existing store (as defined). This would represent the loss of
approximately $150,000 in net income from subleases of the eight tenants
occupying this space. It is unclear at this time whether the Joint Venture's
insurance will cover this lost rent.
The damage that Topanga Plaza experienced was not unlike that experienced
by the other shopping centers in the area. One center, which was the subject
of many television news reports, sustained more significant damage than the
Center did and the owner is uncertain as to when it will be able to reopen the
mall. Another nearby center also sustained some damage to its mall area while
its major department stores sustained the most significant damage. To date,
that center's mall shops have begun to reopen; however, one department store
has announced it will not be rebuilding its store at this center and the
remaining department store has recently indicated it hopes to reopen within
the next few months.
There will be some adverse effect from this situation on the operations of the
Center in the near term, but it is too soon to tell how significant and long-
lasting the effect will be.
Item 7. Financial Statements and Exhibits
(a) Financial Statements. Not Applicable.
(b) Proforma financial information - Not Applicable.
(c) Exhibits - None.
SIGNATURES
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 INCOME PROPERTIES LIMITED - XII
By: JMB Realty Corporation
Managing General Partner
By: C. SCOTT NELSON
---------------------------------
C. Scott Nelson, Vice President
Accounting Officer
Dated: February 28, 1994
