SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
September 30, 1997 Commission file #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 [ ]
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . 13
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K. . . . . . 17
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 24,766,023 22,821,808
Rents and other receivables, net of allowance for
doubtful accounts of $12,010 at September 30,
1997 and $255,866 at December 31, 1996 . . . . . . . . . . 633,844 774,707
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 522,382 282,111
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . 1,164,203 1,053,916
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . 27,086,452 24,932,542
------------ -----------
Investment property:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 1,765,194
Buildings and improvements . . . . . . . . . . . . . . . . . -- 22,602,302
------------ -----------
-- 24,367,496
Less accumulated depreciation. . . . . . . . . . . . . . . . -- 14,873,703
------------ -----------
Property held for investment, net of
accumulated depreciation . . . . . . . . . . . . . . -- 9,493,793
Properties held for sale or disposition. . . . . . . . . . . 101,118,834 90,811,933
------------ -----------
Total investment properties. . . . . . . . . . . . . . 101,118,834 100,305,726
Investment in unconsolidated ventures, at equity . . . . . . . 5,972,528 4,848,158
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 5,987,340 6,491,467
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 2,864,497 2,096,052
------------ -----------
$143,029,651 138,673,945
============ ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . $ 494,577 458,557
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 964,727 1,601,488
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 521,717 503,951
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . 364,863 595,723
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . 2,345,884 3,159,719
Tenant security deposits . . . . . . . . . . . . . . . . . . . 270,447 200,990
Long-term debt, less current portion . . . . . . . . . . . . . 63,255,159 63,630,727
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . 65,871,490 66,991,436
Venture partners' subordinated equity in ventures. . . . . . . 17,772,441 16,922,369
Partners' capital accounts:
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . 11,123 11,123
Cumulative net earnings (losses) . . . . . . . . . . . . . 1,138,567 915,607
------------ -----------
1,149,690 926,730
------------ -----------
Limited partners (189,684 interests):
Capital contributions, net of offering costs . . . . . . . 171,306,452 171,306,452
Cumulative net earnings (losses) . . . . . . . . . . . . . (18,949,380) (24,300,420)
Cumulative cash distributions. . . . . . . . . . . . . . . (94,121,042) (93,172,622)
------------ -----------
58,236,030 53,833,410
------------ -----------
Total partners' capital accounts . . . . . . . . . . . 59,385,720 54,760,140
------------ -----------
$143,029,651 138,673,945
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- ------------------------
1997 1996 1997 1996
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . $ 6,411,836 7,379,950 19,086,511 21,949,421
Interest income. . . . . . . . . . . . . 307,565 297,925 906,888 867,965
----------- ---------- ---------- ----------
6,719,401 7,677,875 19,993,399 22,817,386
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . . 1,596,525 1,870,157 4,641,263 6,150,810
Depreciation . . . . . . . . . . . . . . -- 1,095,958 328,493 3,551,435
Property operating expenses. . . . . . . 2,509,467 3,119,609 7,230,983 9,553,949
Professional services. . . . . . . . . . 21,676 91,256 191,024 246,116
Amortization of deferred expenses. . . . 228,364 269,435 806,855 887,733
General and administrative . . . . . . . 88,128 102,361 367,880 358,143
----------- ---------- ---------- ----------
4,444,160 6,548,776 13,566,498 20,748,186
----------- ---------- ---------- ----------
Operating earnings (loss). . . . . 2,275,241 1,129,099 6,426,901 2,069,200
Partnership's share of operations of
unconsolidated ventures. . . . . . . . . 336,177 93,771 1,124,370 323,000
Venture partners' share of ventures'
operations before extraordinary gain. . . (795,813) (461,558) (2,370,976) (653,696)
----------- ---------- ---------- ----------
Net operating earnings (loss). . . 1,815,605 761,312 5,180,295 1,738,504
Partnership's share of gain on
sale of investment properties
of unconsolidated venture. . . . . . . . -- -- -- 1,412,610
Gain on sale of investment property,
net of venture partner's share of
$1,270,596 . . . . . . . . . . . . . . . -- 1,611,977 -- 1,611,977
---------- ---------- ---------- ----------
Net earnings (loss) before
extraordinary gain. . . . . . . . 1,815,605 2,373,289 5,180,295 4,763,091
Extraordinary gain (net of venture
partner's share of $285,096) . . . . . . 393,705 -- 393,705 --
----------- ---------- ---------- ----------
Net earnings (loss). . . . . . . . $ 2,209,310 2,373,289 5,574,000 4,763,091
=========== ========== ========== ==========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------ ------------------------
1997 1996 1997 1996
----------- ---------- ----------- ----------
Net earnings (loss) per
limited partnership interest:
Net operating earnings (loss). . $ 9.19 3.85 26.22 8.80
Partnership's share of gain
on sale of investment
properties of uncon-
solidated venture. . . . . . . -- -- -- 7.37
Gain on sale of investment
property, net . . . . . . . . -- 8.41 -- 8.41
Extraordinary gain, net. . . . . 1.99 -- 1.99 --
----------- ---------- ---------- ----------
Net earnings (loss). . . . . $ 11.18 12.26 28.21 24.58
=========== ========== ========== ==========
Cash distributions per
limited partnership
interest . . . . . . . . . . . . $ -- -- 5.00 22.50
=========== ========== ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
<CAPTION> 1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . .$ 5,574,000 4,763,091
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 328,493 3,551,435
Amortization of deferred expenses. . . . . . . . . . . . . . . 806,855 887,733
Partnership's share of operations of unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . (1,124,370) (323,000)
Partnership's share of gain on sale of investment
properties of unconsolidated venture . . . . . . . . . . . . -- (1,412,610)
Venture partners' share of ventures' operations,
gain on sale and extraordinary gain. . . . . . . . . . . . . 2,656,072 1,924,292
Total gain on sale of investment property. . . . . . . . . . . -- (2,882,574)
Extraordinary gain . . . . . . . . . . . . . . . . . . . . . . (678,801) --
Changes in:
Rents and other receivables. . . . . . . . . . . . . . . . . . 140,863 629,883
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . (240,271) (319,197)
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . (110,287) (115,095)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . (768,445) 356,012
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 42,040 (16,973)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . 17,766 (6,431)
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . (230,860) 7,125
Tenant security deposits . . . . . . . . . . . . . . . . . . . 69,457 (296,224)
------------ -----------
Net cash provided by (used in) operating activities. . . . 6,482,512 6,747,467
------------ -----------
Cash flows from investing activities:
Additions to investment properties . . . . . . . . . . . . . . . (1,141,601) (1,409,730)
Cash proceeds on sale of investment property . . . . . . . . . . -- 12,985,931
Partnership's distributions from unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 3,588,000
Payment of deferred expenses . . . . . . . . . . . . . . . . . . (302,728) (446,023)
------------ -----------
Net cash provided by (used in) investing activities. . . . (1,444,329) 14,718,178
------------ -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . (339,548) (515,032)
Venture partners' contributions to venture . . . . . . . . . . . -- 100,648
Distributions to venture partners. . . . . . . . . . . . . . . . (1,806,000) (7,015,736)
Distributions to limited partners. . . . . . . . . . . . . . . . (948,420) (4,289,229)
------------ -----------
Net cash provided by (used in) financing activities. . . . (3,093,968) (11,719,349)
------------ -----------
Net increase (decrease) in cash and cash equivalents . . . 1,944,215 9,746,296
Cash and cash equivalents, beginning of year . . . . . . . 22,821,808 21,456,552
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . .$ 24,766,023 31,202,848
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . .$ 4,623,497 6,157,241
============ ===========
Non-cash investing and financing activities:
Total sales proceeds from sale of investment property,
net of selling expenses. . . . . . . . . . . . . . . . . . .$ -- 37,674,329
Principal balance due on mortgage payable. . . . . . . . . . . -- (24,704,555)
Closing costs payable. . . . . . . . . . . . . . . . . . . . . -- 16,157
------------ -----------
Cash proceeds from sale of investment property,
net of selling expenses. . . . . . . . . . . . . . . . .$ -- 12,985,931
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1996
which are included in the Partnership's 1996 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell or dispose of such property and active marketing activity has
commenced or is expected to commence in the near term. In accordance with
SFAS 121, any properties identified as "held for sale or disposition" are
no longer depreciated.
As of September 30, 1997, the Partnership and its consolidated
ventures have or have previously committed to plans to sell or dispose of
all their remaining investment properties. Accordingly, all consolidated
properties have been classified as held for sale or disposition in the
accompanying consolidated financial statements as of the respective date of
such plan's adoption. The results of operations for the nine months ended
September 30, 1997 and 1996 for consolidated properties classified as held
for sale or disposition or sold or disposed of during the past two years
were $6,918,775 and $2,011,105, respectively. In addition, the
accompanying consolidated financial statements include $1,124,370 and
$323,000, respectively, of the Partnership's share of total property
operations of $2,248,741 and $645,997 for the nine months ended September
30, 1997 and 1996, respectively, for unconsolidated properties which are
held for sale or disposition or have been sold or disposed of during the
past two years.
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. As the Partnership's
capital structure only has general and limited partnership interests, the
Partnership does not expect any significant impact on its consolidated
financial statements upon adoption of these standards when required at the
end of 1997.
Certain amounts in the 1996 consolidated financial statements have
been reclassified to conform with the 1997 presentation.
<PAGE>
TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Managing General Partner
and its affiliates, including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of September 30, 1997 and for the nine months ended
September 30, 1997 and 1996 were as follows:
Unpaid at
September 30,
1997 1996 1997
-------- ------ -------------
Property management
and leasing fees. . . . . $ 61,500 76,190 --
Insurance commissions. . . 23,257 33,233 --
Reimbursement (at cost)
for out-of-pocket
salary and salary-
related expenses
related to the on-site
and other costs for the
Partnership and its
investment properties . . 43,593 59,984 25,659
-------- ------- ------
$128,350 169,407 25,659
======== ======= ======
Certain of the Partnership's properties are managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of certain rents received by the properties.
During 1994, certain officers and directors of the Managing General
Partner acquired interests in a company which provides certain property
management services to a property owned by the Partnership. The fees
earned by such company from the Partnership for the nine months ended
September 30, 1997 and 1996 were approximately $23,474 and $29,071,
respectively, all of which has been paid at September 30, 1997.
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.
The amount of such deferred distributions was approximately $8,154,000 as
of September 30, 1997. The Partnership does not expect that the
subordination requirements of the Partnership Agreement will be satisfied
to permit payment of the majority of these amounts. All amounts deferred
or currently payable do not bear interest.
40 BROAD STREET
The building's occupancy decreased to 88% at the end of the quarter,
down from 90% at the end of the previous quarter due to the lease
expiration and subsequent move-out by U.S. Fidelity & Guaranty (5,572
square feet or 2% of the building). A majority of the remaining vacancy is
contained on the upper floors of the building. After payment of costs
associated with recent leasing, the building is expected to produce a small
amount of cash flow for the Partnership and its affiliated partner in 1997.
During the quarter, the Partnership and its affiliated partner
commenced marketing this property for sale. In November 1997, the
Partnership and affiliated partner executed a non-binding letter of intent
with an unaffiliated third party to sell the property. The letter of
intent contemplates a closing prior to the end of the year. However, the
<PAGE>
finalization of the sale is subject to numerous conditions, including due
diligence review by the prospective purchaser and final documentation
acceptable to both parties. Therefore, there are no assurances that this
or any sale of the property will be finalized. If the sale is completed on
the proposed terms, the Partnership and the affiliated partner would
recognize a gain for financial reporting purposes (predominantly due to
provisions for value impairment totaling approximately $52,000,000 recorded
in 1990 and 1991) and a loss for Federal income tax reporting purposes.
SAN JOSE
Occupancy of the office complex remained at 87% during the quarter.
The joint venture entered into several new leases in the third quarter,
bringing the property's leased occupancy to 95%.
In February 1997, the venture entered into a simultaneous lease
termination agreement with Hopkins & Carley in the 150 Almaden building and
a lease expansion agreement with Price Waterhouse, an existing tenant in
the building, to take approximately 27,500 square feet occupied by Hopkins
& Carley which was scheduled to expire on December 31, 1998. The terms of
the Price Waterhouse expansion call for increased rent over that in the
Hopkins & Carley lease and an extended lease term until February 2005.
Full occupancy by Price Waterhouse took place during the third quarter.
The venture incurred approximately $700,000 in tenant improvement costs for
the Price Waterhouse expansion, which is expected to be paid during the
fourth quarter, and incurred approximately $207,000 in lease commission
costs associated with this transaction, offset partially by a lease
termination fee of approximately $168,000 paid by Hopkins & Carley.
The venture is actively marketing the office complex for sale. There
are no assurances that a sale will be finalized.
PLAZA HERMOSA SHOPPING CENTER
Occupancy at the Plaza Hermosa Shopping Center remained at 91% during
the third quarter of 1997. However, included in the occupancy percentage
is a tenant who filed for bankruptcy and whose lease expired in 1995
(approximately 6,800 square feet or 7% of the property), but remains in the
center and pays percentage rent pursuant to an amendment of its original
lease terms on a month-to-month basis. Pursuant to Chapter 11 of the
Federal bankruptcy code, the tenant reorganized effective January 31, 1997.
Additionally, a tenant vacated on December 31, 1996, prior to the
expiration of its lease (approximately 8,900 square feet or 9% of the
property) due to financial difficulties. The Partnership entered into a
settlement agreement with the tenant, whereby the tenant agreed to pay a
lease termination fee of approximately $201,000 which constituted a
majority of the amounts owed. Upon the closing of the escrow related to
the sale of the tenant's business to the replacement tenant, the remaining
$100,000 due under the settlement agreement is to be paid. The Partnership
recently executed a lease with the replacement tenant for this location.
Such closing is anticipated to take place during the fourth quarter of
1997. The property is producing cash flow for the Partnership.
The letter of credit enhancing the $6,400,000 loan at the Plaza
Hermosa Shopping Center will require renegotiation or reissuance upon its
expiration in December 1997. Although an agreement has been reached with
the letter of credit holder to extend the letter of credit to December
1999, it is subject to final documentation and, as such, there can be no
assurance that such extension will be finalized.
<PAGE>
The Partnership is actively marketing the property for sale. In July
1997, the Partnership entered into a sale agreement with an unaffiliated
third party, subject to certain conditions (as defined in the sale
agreement). The sale, however, did not materialize. In October 1997, the
Partnership executed a non-binding letter of intent, subject to certain
contingencies, with a different unaffiliated third party to sell the
property. There can be no assurance that a sale will be consummated on
these or any terms. If the property is sold under the proposed terms, the
Partnership would recognize a gain for financial reporting and Federal
income tax purposes, all of which will be allocable to the Partnership.
TOPANGA PLAZA
The property is producing cash flow for the Partnership in 1997.
Sales at the center during 1996 and 1997 have been less than 1995 levels
which were, in part, achieved prior to the reopening in August 1995 of a
nearby competing mall which had been totally destroyed in the 1994
earthquake.
During March 1997, Topanga received approximately $176,000 from The
Broadway, a department store at the shopping center. Such proceeds relate
to the tenant's prorata share of expenses and costs for repairs and
restorations to the Topanga Plaza Shopping Center following the earthquake.
Montgomery Ward, a major department store which owns its own facility,
filed for bankruptcy protection pursuant to Chapter 11 of the Federal
bankruptcy code on July 7, 1997. The store continues to operate and
fulfill its obligations under its operating agreement. The venture is
considering the possibility of purchasing the Ward store to protect the
value of the shopping center.
During the third quarter, approximately $679,000 of the approximate
$770,000 remaining previously accrued costs related to earthquake damage in
1994 was reversed and recognized as an extraordinary gain. This liability
was established in 1994 for Topanga's share of the estimated repair costs
due to the earthquake damage. The approximate $679,000 reversal is
attributable to repairs which are no longer considered necessary as a
result of previously overestimated repair costs.
On October 30, 1997, Topanga made a distribution of operating cash
flow for 1997 of $1,200,000, of which the Partnership's share was $696,000.
The Partnership is currently in discussions with the joint venture
partner to explore the possibility of the joint venture partner buying the
Partnership's interest in the venture. There can be no assurance that any
agreement will be reached in this regard.
UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for JMB/San Jose Associates
for the nine months ended September 30, 1997 and 1996 is as follows:
1997 1996
---------- ----------
Total income. . . . . . $6,682,547 6,697,166
========== ==========
Operating income. . . . $2,248,741 645,997
========== ==========
Net earnings to the
Partnership . . . . . $1,124,370 323,000
========== ==========
Partnership's share
of gain on sale . . . $ -- 1,412,610
========== ==========
<PAGE>
ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments (con-
sisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
1997 and for the three and nine months ended September 30, 1997 and 1996.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning certain of the
Partnership's investments.
Beginning in the second quarter of 1996 and throughout 1997 some of
the Limited Partners in the Partnership received from unaffiliated third
parties unsolicited tender offers to purchase up to 4.9% of the Interests
in the Partnership at prices ranging from between $150 and $210 per
Interest. The Partnership recommended against acceptance of these offers
on the basis that, among other things, the offer prices were inadequate.
One of the offers is scheduled to expire in mid November. All other such
offers have expired. As of the date of this report, the Partnership is
aware that 4.89% of the Interests in the Partnership have been purchased by
such unaffiliated third parties either pursuant to such tender offers or
through negotiated purchases. The Partnership has been notified that an
unaffiliated third party intends to commence an offer for approximately
6,500 Interests (approximately 3.4% of the outstanding Interests) at $305
per Interest, and it is possible that other offers for Interests may be
made by unaffiliated third parties in the future. However, there is no
assurance that any other third party will commence an offer for Interests,
the terms of any such offer or whether any such offer, if made, will be
consummated, amended or withdrawn. The board of directors of JMB Realty
Corporation ("JMB") the managing general partner of the Partnership, has
established a special committee (the "Special Committee") consisting of
certain directors of JMB to deal with all matters relating to tender offers
for Interests in the Partnership, including any and all responses to such
tender offers. The Special Committee has retained independent counsel to
advise it in connection with any potential tender offers for Interests and
has retained Lehman Brothers Inc. as financial advisor to assist the
Special Committee in evaluating and responding to any additional potential
tender offers for Interests.
As of September 30, 1997, the Partnership had consolidated cash and
cash equivalents of approximately $24,766,000, of which approximately
$20,487,000 is held by the Partnership. Of the remaining $4,279,000 (held
by the Partnership's consolidated joint ventures), approximately $2,635,000
represents the Partnership's share of undistributed cash. During October
1997, $696,000 of such previously undistributed cash was received from the
Topanga venture. These funds are available for distribution to partners,
tenant and capital improvements, leasing commissions, and other
expenditures including the Partnership's share of the costs for a possible
expansion and mall enhancement at Topanga Plaza Shopping Center and/or a
possible reduction of the letter of credit enhancing the $6,400,000 loan at
the Plaza Hermosa Shopping Center as such letter of credit will require
renegotiation or reissuance upon its expiration in December 1997. Although
an agreement has been reached with the letter of credit holder to extend
the letter of credit to December 1999, it is subject to final documentation
and, as such, there can be no assurance that such extension will be
finalized.
<PAGE>
After reviewing the remaining properties and the marketplaces in which
they operate, the General Partners of the Partnership expect to be able to
conduct an orderly liquidation of its remaining investment portfolio as
quickly as practicable. Therefore, the affairs of the Partnership are
expected to be wound up no later than December 31, 1999, perhaps in the
1998 timeframe, barring unforeseen economic developments.
RESULTS OF OPERATIONS
Significant variances between periods reflected in the accompanying
consolidated financial statements are primarily the result of the sale of
the First Financial Plaza office building in September 1996.
The increase in prepaid expenses at September 30, 1997 as compared to
December 31, 1996 is primarily due to the timing of payment of insurance
premiums at the Topanga Plaza investment property.
The increase in accrued rents receivable at September 30, 1997 as
compared to December 31, 1996 is primarily due to accrued rents on new
leases recently executed at the 40 Broad Street investment property.
The decrease in accounts payable at September 30, 1997 as compared to
December 31, 1996, and the related extraordinary gain for the three and
nine months ended September 30, 1997, is primarily due to the reversal of
approximately $679,000 of accrued costs related to earthquake damage in
1994 at the Topanga Plaza investment property, as more fully discussed in
the Notes.
The decrease in unearned rents at September 30, 1997 as compared to
December 31, 1996 is primarily due to the timing of rental receipts at the
Topanga Plaza investment property.
The decrease in rental income for the three and nine months ended
September 30, 1997 as compared to the three and nine months ended September
30, 1996 is primarily due to the sale of the First Financial Plaza office
building in September 1996. This decrease is partially offset by the
receipt of proceeds totaling approximately $176,000 during the first
quarter of 1997 from The Broadway, relating to its prorata share of
expenses and costs for repairs and restorations at the Topanga Plaza
Shopping Center following the earthquake in early 1994.
The decrease in depreciation expense for the three and nine months
ended September 30, 1997 as compared to the three and nine months ended
September 30, 1996 is primarily due to the sale of the First Financial
Plaza office building in September 1996. In addition, the decrease is also
due to the Topanga Plaza and Plaza Hermosa investment properties being
identified as held for sale or disposition as of December 31, 1996, and the
40 Broad Street investment property being identified as held for sale or
disposition as of July 1, 1997, and therefore, no longer subject to
depreciation beyond such date.
The decrease in professional services for the three and nine months
ended September 30, 1997 as compared to the three and nine months ended
September 30, 1996 is primarily due to expenses incurred in 1996 in
connection with tender offer matters as discussed above.
The increase in Partnership's share of operations of unconsolidated
ventures for the three and nine months ended September 30, 1997 as compared
to the three and nine months ended September 30, 1996 is primarily due to
an increase in earnings of the San Jose venture due to the San Jose
properties being identified as held for sale or disposition as of December
31, 1996 and therefore no longer subject to depreciation beyond such date.
<PAGE>
The increase in venture partners' share of ventures' operations for
the three and nine months ended September 30, 1997 as compared to the three
and nine months ended September 30, 1996 is primarily due to the Topanga
Plaza and 40 Broad Street investment properties being identified as held
for sale or disposition as of December 31, 1996 and July 1, 1997,
respectively, and therefore, no longer subject to depreciation beyond such
dates. In addition, the increase is due to higher tenant occupancies
causing an increase in base rentals during 1997 at the 40 Broad Street
investment property. Such increase is also due to a reduction in assessed
real estate taxes for 1997 at the 40 Broad Street investment property.
However, this increase is partially offset by the sale of the First
Financial Plaza office building in September 1996.
The Partnership's share of gain on sale of investment properties from
unconsolidated venture of $1,412,610 in 1996 is due to the gain recognized
on the sale of the 190 San Fernando building and one of the parking
structures at the San Jose investment property.
The gain on sale of investment property of $1,611,977 in 1996 is due
to the gain on the sale of the First Financial Plaza office building in
September 1996.
<PAGE>
<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 owned during 1997.
<CAPTION>
1996 1997
-------------------------------------------------------------
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 . . . 85% 85% 87% 85% 86% 87% 87%
2. Topanga Plaza
Los Angeles, California. . 98% 94% 98% 98% 97% 98% 98%
3. 40 Broad Street
New York, New York . . . . 75% 78% 81% 74% 82% 90% 88%
4. Plaza Hermosa
Shopping Center
Hermosa Beach, California. 95% 93% 92% 91% 91% 91% 91%
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3-A. The Prospectus of the Partnership dated August
23, 1985 as supplemented December 9, 1985 and January 10, pursuant to Rules
424 (b) and 424 (c), as filed with the Commission is hereby incorporated
herein by reference to Exhibit 3-A to the Partnership's Report for December
31, 1992 on Form 10-K (File No. 0-16108) dated March 19, 1993.
3-B. Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, which agreement is
hereby incorporated herein by reference to Exhibit 3-B to the Partnership's
Report for December 31, 1992 on Form 10-K (File No. 0-16108) dated March
19, 1993.
3-C. Acknowledgement of rights and duties of the
General Partners of the Partnership between ABPP Associates, L.P. (a
successor Associated General Partner of the Partnership) and JMB Realty
Corporation as of December 31, 1995 is hereby incorporated herein by
reference to the Partnership's Report for June 30, 1996 on Form 10-Q (File
No. 0-16108) dated August 9, 1996.
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 for December 31,
1992 on Form 10-K (File No. 0-16108) dated March 19, 1993.
4-B. 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 for September
30, 1993 on Form 10-Q (File No. 0-16108) dated November 11, 1993.
4-C. Letter of credit agreement between JMB Income
Properties, Ltd-XII and Dresdner Bank AG dated November 15, 1994 relating
to the letter of credit extension at Plaza Hermosa is hereby incorporated
herein by reference to the Partnership's Report on Form 10-K (File No. 0-
16108) dated March 27, 1995.
4-D. Mortgage loan agreement, Amended and Restated
Deed of Trust, Security Agreement with assignment of Rents and Fixture
Filing and Real Estate tax escrow and Security Agreement between San Jose
and Connecticut General Life Insurance Co. dated November 30, 1994 is
hereby incorporated herein by reference to the Partnership's Report on Form
10-K (File No. 0-16108) dated March 27, 1995.
<PAGE>
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 herein 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 40 Broad Street in
New York, New York, are hereby incorporated herein by reference to the
Partnership's Report on Form 8-K (File No. 0-16108) dated December 31,
1985.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last
quarter of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XII
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:November 12, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
By: GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date:November 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 24,766,023
<SECURITIES> 0
<RECEIVABLES> 2,320,429
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,086,452
<PP&E> 101,118,834
<DEPRECIATION> 0
<TOTAL-ASSETS> 143,029,651
<CURRENT-LIABILITIES> 2,345,884
<BONDS> 63,255,159
<COMMON> 0
0
0
<OTHER-SE> 59,385,720
<TOTAL-LIABILITY-AND-EQUITY> 143,029,651
<SALES> 19,086,511
<TOTAL-REVENUES> 19,993,399
<CGS> 0
<TOTAL-COSTS> 8,366,331
<OTHER-EXPENSES> 558,904
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,641,263
<INCOME-PRETAX> 6,426,901
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,180,295
<DISCONTINUED> 0
<EXTRAORDINARY> 393,705
<CHANGES> 0
<NET-INCOME> 5,574,000
<EPS-PRIMARY> 28.21
<EPS-DILUTED> 28.21
</TABLE>
