SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K405/A
AMENDMENT NO. 1
Filed pursuant to Section 12, 13, or 15(d) of the
Securities Exchange Act of 1934
JMB/MANHATTAN ASSOCIATES, LTD.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
IRS Employer Identification
Commission File No. 0-14547 No. 36-3339372
The undersigned registrant hereby amends the following sections of its
Report for the year ended December 31, 1996 on Form 10-K405 as set forth in
the pages attached hereto:
PART I
ITEM 1. Business. Page 1 through 3
PART II
Item 6. Selected Financial Data. Pages 6 and 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Pages 8 and 9
Item 8. Financial Statements and Supplementary Data.
Pages 10 through 33
PART III
Item 10. Director and Executive Officers of the Partnership.
Pages 34 through 36
EXHIBIT 27
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/MANHATTAN ASSOCIATES, LTD.
By: JMB/Manhattan Investors, Inc.
Corporate General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Dated: March 17, 1998
<PAGE>
PART I
ITEM 1. BUSINESS
Unless otherwise indicated, all references to "Notes" are to Notes to
Financial Statements of JMB/Manhattan Associates, Ltd. contained in this
report. Capitalized items used herein, but not defined, have the same
meanings as used in the Notes.
The registrant, JMB/Manhattan Associates, Ltd. (the "Partnership"), is
a limited partnership formed during 1984 and currently governed by the
Revised Uniform Limited Partnership Act of the State of Illinois for the
purpose of acquiring and owning an approximate 25% interest in JMB/NYC
Office Building Associates, L.P. ("JMB/NYC"), an Illinois limited
partnership consisting indirectly of the Partnership and two partnerships
sponsored by an affiliate of the General Partners of the Partnership,
Carlyle Real Estate Limited Partnership - XIII ("Carlyle-XIII"), an
Illinois limited partnership, and Carlyle Real Estate Limited Partnership -
XIV ("Carlyle-XIV"), an Illinois limited partnership. JMB/NYC acquired
interests in three office buildings and the underlying land (the
"Buildings"), through various other joint ventures (each a "Joint Venture"
and collectively, the "Three Joint Ventures"), in New York, New York. On
April 30, 1985, the Partnership commenced a private offering of $62,700,000
of Limited Partnership Interests (the "Interests") pursuant to a Private
Placement Memorandum (the "Private Placement Memorandum") in accordance
with Rules 501-503 and 506 of Regulation D of the Securities Act of 1933.
A total of 1,000 Interests were sold at $62,700 per Interest of which
$14,053 per Interest was due upon admission, with the remaining purchase
price paid in annual installments from 1986 through 1988, except for 41.5
Interests paid for entirely upon subscription. The offering closed on
October 31, 1985. The Holders of Interests (herein after "Holders" or
Holders of Interests") in the Partnership share in their portion of the
benefits of ownership of the Partnership's real property investments
according to the number of Interests held. The Partnership has been
engaged, indirectly through other entities, in owning and leasing the
buildings located in New York, New York. Approximately $43,000,000 of the
net proceeds of the public offering was contributed to JMB/NYC related to
the acquisition of the interests in the Buildings and for working capital
requirements.
In October 1994, the Partnership and its affiliated partners (together
with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered
into an agreement (the "Agreement") with the affiliates (the "Olympia &
York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the
venture partners in the Joint Ventures which owned 237 Park Avenue, 1290
Avenue of the Americas and 2 Broadway, to resolve certain disputes among
the Affiliated Partners and the Olympia & York affiliates. In general, the
parties agreed to: (i) restructure the first mortgage loan; (ii) sell the
2 Broadway Building; (iii) reduce or eliminate approval rights of JMB/NYC
with respect to virtually all property management, leasing, sale or
refinancing; (iv) amend the Joint Ventures' agreements to eliminate any
funding obligations by JMB/NYC and (v) establish a new preferential cash
distribution level for the Olympia & York affiliates. In accordance with
the Agreement and in anticipation of the sale of the 2 Broadway Building,
the unpaid first mortgage indebtedness previously allocated to 2 Broadway
was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas.
As part of the Agreement, JMB/NYC and the Olympia & York affiliates
agreed to file a pre-arranged bankruptcy plan for reorganization under
Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring
of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and
the debt encumbering the two properties remaining after the sale of 2
Broadway. In June 1995, the 2 Broadway Joint Ventures filed their pre-
arranged bankruptcy plans for reorganization, and in August 1995, the
bankruptcy court entered an order confirming their plans of reorganization.
In September 1995, the sale of the 2 Broadway Building was completed. Such
sale did not result in any distributable proceeds to JMB/NYC or the Olympia
and York affiliates.
<PAGE>
Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue
and 1290 Avenue of the Americas properties were made in April 1996, and in
August 1996, an Amended Plan of Reorganization and Disclosure Statement
(the "Plan") was filed with the Bankruptcy Court for these Joint Ventures.
The Plan was accepted by the various classes of debt and equity holders and
confirmed by the Court on September 20, 1996 and became effective October
10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an
indirect limited partnership interest which, before taking into account
significant preferences to other partners, equals approximately 4.9% of the
reorganized and restructured ventures owning 237 Park and 1290 Avenue of
the Americas (the "Properties"). Neither O&Y nor any of its affiliates has
any direct or indirect continuing interest in the Properties. The new
ownership structure gives control of the Properties to a newly-organized
real estate investment trust which is owned primarily by holders of the
first mortgage debt which encumbered the Properties prior to the
bankruptcy. JMB/NYC has, under certain limited circumstances, through
January 1, 2001 rights of consent regarding sale of the Properties or the
consummation of certain other transactions that significantly reduce
indebtedness of the Properties.
The restructuring and reorganization discussed above eliminates any
potential additional obligation of the Partnership in the future to provide
additional funds under its previous joint venture agreements (other than
that related to a certain indemnification agreement provided in connection
with the restructuring). In 1995, the Partnership distributed to its
partners virtually all of its working capital funds leaving as the
Partnership's only asset its receivable from JMB Realty Corporation
("JMB"), an affiliate of the Corporate General Partner. This receivable
has been the Partnership's sole source of capital to fund continuing
operations of the Partnership. During 1996, such receivable was collected
and the proceeds thereof have been used by the Partnership toward funding
its portion of the collateral required pursuant to the $25 million
indemnification provided by the Affiliated Partners to the newly organized
REIT as of the Effective Date. The balance of the Partnership's share of
the collateral was advanced by JMB in order for the Partnership to satisfy
its full portion as discussed below. The Partnership's sole source of
capital to fund continuing operations are advances from JMB.
The Affiliated Partners entered into a joint and several obligation to
indemnify, through a date no later than January 2, 2001, the newly formed
real estate investment trust to the extent of $25 million to ensure their
compliance with the terms and conditions relating to JMB/NYC's indirect
limited partnership interest in the restructured and reorganized joint
ventures that own the Properties. The Affiliated Partners contributed
approximately $7.8 million (of which the Partnership's share was
approximately $1.9 million) to JMB/NYC which was deposited into an escrow
account as collateral for such indemnification. These funds have been
invested in stripped U.S. Government obligations with a maturity date of
February 15, 2001. The Partnership's share of the reduction of the maximum
unfunded obligation under the indemnification agreement recognized as
income, is a result of interest earned on amounts contributed by the
Partnership and held in escrow by JMB/NYC. Such income earned reduces the
Partnership's share of the maximum unfunded obligation under the
indemnification agreement which is reflected as a liability in the
accompanying financial statements.
Compliance with the provisions of the indemnification agreement
generally deal with impacting the operations of the newly organized real
estate investment trust. Compliance, therefore, is within the control of
the Affiliated Partners and non-compliance with such provisions by either
the Partnership or the Affiliated Partners is highly unlikely. Therefore,
it is highly likely that the Partnership's share of the collateral will be
returned (including interest earned) at the termination of the
indemnification agreement. Upon return of such funds, advances made by JMB
Realty Corporation (including accrued and deferred interest) will be
repaid. After establishing an appropriate working capital reserve, the
remainder, if any, would be available for distribution to the Limited
Partners.
<PAGE>
The level of any future distributable cash is dependent upon the
amount of advances made by JMB Realty Corporation. The Partnership's sole
source of capital to pay for continuing operations is advances from JMB
Realty Corporation. Advances made by JMB Realty Corporation are evidenced
by a promissory note with a maximum principal sum of $2 million and are due
June 30, 1999. The note bears interest at the applicable Federal rate
which ranged between 5.67% and 5.98% per annum in 1996.
While the Partnership is not expected to terminate in the near term,
it currently appears unlikely that any significant distributions will be
made by the Partnership at any time due to the level of indebtedness
remaining on the Properties, the original purchase money notes payable by
JMB/NYC, the significant preference levels within the reorganized structure
and the liabilities of the Partnership.
The Partnership has no employees.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below and in the
Notes to which reference is hereby made for a description of such terms and
transactions.
ITEM 2. PROPERTIES
The Partnership had owned, indirectly through JMB/NYC and the Joint
Ventures, an interest in the properties referred to in Item 1 above. Upon
the effective date of the Plan ownership interests in the remaining
properties were converted to limited partnership interests.
The following is a listing of principal businesses or occupations
carried on in and approximate occupancy levels by quarter during fiscal
years 1996 and 1995 for the Partnership's investment properties owned
during 1996:
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1996 1995 1994 1993 1992
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . . $ 120,331 405,719 1,649,889 1,500,142 1,380,338
============ ============ ============ ============ ============
Operating earnings
(loss). . . . . . . . . . $ (166,985) (1,006,925) 1,382,820 1,257,032 1,212,777
Partnership's share of
the reduction of the
maximum unfunded
obligation under the
indemnification
agreement . . . . . . . . 33,563 -- -- -- --
Partnership's share of
income (loss) from
unconsolidated venture
(including income
from restructuring
of $72,073,760 in
1996) . . . . . . . . . . 71,825,434 (6,794,224) (6,266,667) (22,166,989) (7,124,283)
Partnership's share
of loss on sale
of investment
property by uncon-
solidated venture . . . . -- (14,789,529) -- -- --
Partnership's share of
extraordinary gain on
forgiveness of
indebtedness
of unconsolidated
venture . . . . . . . . . -- 15,632,407 -- -- --
------------ ------------ ------------ ------------ ------------
Net earnings (loss) . . . . $ 71,692,012 (6,958,271) (4,883,847) (20,909,957) (5,911,506)
============ ============ ============ ============ ============
Net earnings (loss)
per Interest:
Net operating
earnings (loss). . . . . $ 68,824 (7,489) (4,688) (20,494) (5,675)
Share of loss on sale
of investment
property by uncon-
solidated venture. . . . -- (14,642) -- -- --
<PAGE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992 - CONTINUED
1996 1995 1994 1993 1992
------------- ------------- ----------- ------------ ------------
Share of gain on
forgiveness of
indebtedness
of unconsolidated
venture . . . . . . . . . -- 15,476 -- -- --
------------ ------------ ------------ ------------ ------------
Net earnings (loss)
per Interest (b). . . . . $ 68,824 (6,655) (4,688) (20,494) (5,675)
============ ============ ============ ============ ============
Total assets. . . . . . . . $ 1,679 1,688,536 18,043,225 16,555,044 15,267,890
Cash distributions per
Interest (b)(c) . . . . . $ -- 15,000 -- -- --
============ ============ ============ ============ ============
<FN>
- ----------
(a) The above selected financial data should be read in conjunction with the financial statements of the
Partnership and the related notes appearing elsewhere in this annual report.
(b) The net earnings (loss) and cash distributions per Interest are based upon the number of Interests
outstanding at the end of each period (1,000).
(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each Partner's taxable income (or loss) from the Partnership
in each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to
the cash generated or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners
since the inception of the Partnership have represented a return of capital for financial reporting purposes.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are to Notes to Financial Statements of
JMB/Manhattan Associates, Ltd. contained in this report.
On April 30, 1985, the Partnership commenced a private offering of
$62,700,000 in Limited Partnership Interests pursuant to a Private
Placement Memorandum as described in Item 1. The net offering proceeds
were utilized primarily for the payment of the Partnership's bank
borrowings and related interest, additional contributions to JMB/NYC and
working capital requirements.
In February 1995, the Partnership distributed $15,000,000 to the
Holders of Interests ($15,000 per Interest) and $625,000 to the General
Partners and made a related payment of management fees to the General
Partners of $1,041,667. Such amounts were made out of excess working
capital reserves plus $2,850,000 received from JMB Realty Corporation
("JMB") (an affiliate of the Corporate General Partner) under its working
capital minimum guarantee. The Partnership believed that the working
capital reserves were in excess of the amount necessary for the future
operations of the Partnership as a result of the agreement entered into
with the Olympia & York affiliates. Subsequent to the $2,850,000 funding
made in March 1995, JMB funded an additional $65,000 in December 1995 to
pay for 1995 operating costs. During 1996, JMB funded its remaining
obligation under the working capital minimum guarantee of approximately
$1,800,000 and advanced the Partnership an additional $530,000 pursuant to
the terms of a promissory note. Such funds were used to fund 1996
operating costs and to fund the Partnership's share of the collateral
required pursuant to the terms of the restructuring of the Partnership's
indirect ownership interest in the properties as described more fully in
the Notes.
Advances made by JMB Realty Corporation are evidenced by a promissory
note with a maximum principal sum of $2 million and is due June 30, 1999.
The note bears interest at the applicable Federal rate which ranged between
5.67% and 5.98% per annum in 1996. The balance of the note including
accrued interest as of December 31, 1996 is $536,685. The Partnership's
sole source of capital to fund continuing operations is advances from JMB
Realty Corporation.
Based upon the restructured joint ventures, it is unlikely that the
Partnership will be able to make any significant additional distributions
to the Holders of Interests. It should be noted, however, that in the
future, the Holders of Interest will be allocated substantial net gain for
Federal income tax purposes even though the Partnership would not be able
to make any significant additional amounts of distributions. Such gain may
be offset by suspended losses from prior years that have been allocated to
the Limited Partners.
The Affiliated Partners entered into a joint and several
indemnification obligation to ensure their compliance with certain terms
and conditions relating to the restructuring as more fully described in the
Notes.
RESULTS OF OPERATIONS
The results of operations for the years ended December 31, 1996, 1995
and 1994 are primarily attributable to the operations of the real property
investments owned by the Partnership through JMB/NYC and restructuring of
the Joint Ventures as described in the Notes, and interest earned on the
Partnership's working capital.
The bank overdraft at December 31, 1995 and the decrease in amounts
due from affiliates as of December 31, 1996 as compared to December 31,
1995 are the result of the timing of fundings received from JMB relating to
<PAGE>
its agreement to guarantee a minimum return on the Partnership's working
capital. Such guarantee has been fully funded in order to secure
compliance by the Affiliated Partners with the terms of the restructuring
of certain of the Joint Ventures during 1996 as described more fully in the
Notes.
The Partnership's proportionate share of the maximum unfunded
obligation under the indemnification agreement at December 31, 1996 was
$4,265,635. During 1996, the Partnership contributed $1,950,802 to JMB/NYC
which, along with additional contributions of $5,852,406 from the other
Affiliated Partners of JMB/NYC, is held in escrow pursuant to the terms of
the indemnification agreement. These funds have been invested in stripped
U.S. Government obligations with a maturity date of February 15, 2001. The
Partnership's share of the reduction of the maximum unfunded obligation
under the indemnification agreement recognized as income during 1996 of
$33,563 is a result of interest earned on amounts contributed by the
Partnership and held in escrow by JMB/NYC. Such income earned reduces the
Partnership's proportionate share of the maximum unfunded obligation under
the indemnification agreement.
The decrease in the deficit balance of the investment in
unconsolidated venture is due to capital contributions of approximately
$2,009,000 during the year and the Partnership's share of income from
unconsolidated venture recognized during 1996, which includes income from
restructuring of $72,073,760.
The Partnership's share of income from unconsolidated venture of
$71,825,434 for the year ended December 31, 1996, compared to a loss of
$6,794,224 for the year ended December 31, 1995, is primarily the result of
the restructuring of JMB/NYC's interests in the joint ventures owning the
Properties during 1996. Pursuant to the terms of the Plan, JMB/NYC
converted its general partnership interest in the joint ventures which
owned the Properties to a limited partnership interest and accordingly no
longer has a commitment to provide financial support to the joint ventures
owning the Properties. As a result, the Partnership recognized income from
restructuring of $72,073,760 from the reversal of those previously
recognized losses that it is no longer obligated to fund (net of capital
contributions). The Partnership's share of income from operations of
unconsolidated venture is partially offset by loss from operations prior to
such reorganization of $248,326.
The decrease in interest income for the year ended December 31, 1996
as compared to the year ended December 31, 1995 and for the year ended
December 31, 1995 as compared to 1994 and the increase in management fees
paid to general partners for the year ended December 31, 1995 as compared
to the year ended December 31, 1996 and December 31, 1994 is primarily due
to a reduction in amounts invested in U.S. Government securities during
1996 and 1995 as compared to 1994 resulting from the Partnership's
distribution to partners of $15,625,000 and the related payment of
management fees to the General Partners of $1,041,667 in February 1995.
The increase in the Partnership's share of loss from operations of
unconsolidated venture for the twelve months ended December 31, 1995 as
compared to the twelve months ended December 31, 1994 is primarily due to
the loss of rental income as a result of the sale of 2 Broadway in
September 1995.
The Partnership's share of loss on sale of investment property and the
Partnership's share of gain from the extinguishment of indebtedness of
unconsolidated venture for the year ended December 31, 1995 is primarily
due to the Partnership's share of loss from the sale of the 2 Broadway
Building and the related share of the gain on the extinguishment of
indebtedness.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
INDEX
Independent Auditors' Report
Balance Sheets, December 31, 1996 and 1995
Statements of Operations, years ended December 31,
1996, 1995 and 1994
Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows, years ended December 31,
1996, 1995 and 1994
Notes to Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the financial statements or
related notes.
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
INDEX
Independent Auditors' Report
Balance Sheet, December 31, 1996
Statement of Operations, year ended December 31, 1996
Statement of Partners' Capital Accounts (Deficits), year ended
December 31, 1996
Statement of Cash Flows, year ended December 31, 1996
Notes to Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the financial statements or
related notes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
JMB/Manhattan Associates, Ltd.:
We have audited the financial statements of JMB/Manhattan Associates,
Ltd., a limited partnership (the Partnership), as listed in the
accompanying index. These financial statements are the responsibility of
the General Partners of the Partnership. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our report dated March 25, 1996, we did not express an opinion on
the Partnership's 1995 and 1994 financial statements due to material
uncertainties relating to the Partnership's ability to continue as a going
concern and certain unresolved disputes between the Partnership and the
unaffiliated venture partners in the Partnership's real estate investments.
As disclosed in the notes to the financial statements, the joint ventures
owning the Partnership's real estate investments were restructured during
1996. As a result of the restructuring, the Partnership now holds a
nominal indirect interest in the real estate investments. The
restructuring and reorganization also eliminated any potential additional
obligations of the Partnership to provide additional funds under the
previous joint venture agreements. Accordingly, although such
restructuring did not eliminate the uncertainty as to the Partnership's
ability to continue as a going concern, our present opinion on the 1995 and
1994 financial statements, as presented herein, is different from our
previous report.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of JMB/Manhattan
Associates, Ltd. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Partnership will continue as a going concern. As discussed in the
notes to the financial statements, the Partnership has suffered recurring
losses form operations and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going concern. The
General Partners' plans in regard to these matters are also described in
the notes to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 21, 1997
<PAGE>
<TABLE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
------
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,679 --
Amounts due from affiliates . . . . . . . . . . . . . . . . . . . . . . -- 354,082
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 1,679 354,082
------------ -----------
Amounts due from affiliates . . . . . . . . . . . . . . . . . . . . . . . -- 1,334,454
------------ -----------
$ 1,679 1,688,536
============ ===========
<PAGE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
1996 1995
------------ -----------
Current liabilities:
Bank overdraft. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- 155,322
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,274 9,922
Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . . 1,205,330 1,888,718
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 1,206,604 2,053,962
Note payable to an affiliate - long-term. . . . . . . . . . . . . . . . 536,685 --
Partnership's share of the maximum unfunded obligation
under the indemnification agreement . . . . . . . . . . . . . . . . . 4,265,635 --
------------ -----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 6,008,924 2,053,962
Investment in unconsolidated venture. . . . . . . . . . . . . . . . . . . -- 77,333,831
Commitments and contingencies
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,500
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . (1,377,137) (4,244,817)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (737,500) (737,500)
------------ -----------
(2,113,137) (4,980,817)
------------ -----------
Limited partners (1,000 Interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 57,042,489 57,042,489
Cumulative net losses . . . . . . . . . . . . . . . . . . . . . . . (42,936,597) (111,760,929)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (18,000,000) (18,000,000)
------------ -----------
(3,894,108) (72,718,440)
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . . . (6,007,245) (77,699,257)
------------ -----------
$ 1,679 1,688,536
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Interest. . . . . . . . . . . . . . . . . . . . . . $ 120,331 405,719 1,649,889
------------ ------------ ------------
Expenses:
Interest. . . . . . . . . . . . . . . . . . . . . . 123,461 131,272 110,620
Professional services . . . . . . . . . . . . . . . 86,822 185,439 99,596
Management fees paid to general partners. . . . . . -- 1,041,667 --
General and administrative. . . . . . . . . . . . . 77,033 54,266 56,853
------------ ------------ ------------
287,316 1,412,644 267,069
------------ ------------ ------------
Operating earnings (loss) . . . . . . . . . . . (166,985) (1,006,925) 1,382,820
Partnership's share of the reduction of
the maximum unfunded obligation under
the indemnification agreement . . . . . . . . . . . 33,563 -- --
Partnership's share of income (loss)
from unconsolidated venture (including
income from restructuring of $72,073,760
in 1996). . . . . . . . . . . . . . . . . . . . . . 71,825,434 (6,794,224) (6,266,667)
------------ ------------ ------------
Net operating earnings (loss) . . . . . . . . . 71,692,012 (7,801,149) (4,883,847)
Partnership's share of earnings (loss)
on sale of investment property by
unconsolidated venture. . . . . . . . . . . . . . . -- (14,789,529) --
------------ ------------ ------------
Earnings (loss) before extraordinary item . . . 71,692,012 (22,590,678) (4,883,847)
Extraordinary item:
Partnership's share of gain on
forgiveness of indebtedness of
unconsolidated venture. . . . . . . . . . . . . . -- 15,632,407 --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . . . . $ 71,692,012 (6,958,271) (4,883,847)
============ ============ ============
<PAGE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS - CONTINUED
1996 1995 1994
------------ ------------ ------------
Net earnings (loss) per limited
partnership interest:
Net operating earnings (loss). . . . . . . . $ 68,824 (7,489) (4,688)
Partnership's share of earnings
(loss) on sale of investment
property by unconsolidated
venture . . . . . . . . . . . . . . . . . . -- (14,642) --
Partnership's share of gain on
forgiveness of indebtedness
of unconsolidated venture . . . . . . . . . -- 15,476 --
------------ ------------ ------------
Net earnings (loss) . . . . . . . . . . . $ 68,824 (6,655) (4,688)
============ ============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (1,000 INTERESTS)
--------------------------------------------- -------------------------------------------------
CONTRI-
BUTIONS
NET CASH NET OF NET
CONTRI- EARNINGS DISTRI- OFFERING EARNINGS CASH
BUTIONS (LOSS) BUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ----------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficits)
December 31,
1993 . . . . . $1,500 (3,745,846) (112,500) (3,856,846) 57,042,489 (100,417,782) (3,000,000) (46,375,293)
Net earnings
(loss) . . . . -- (195,354) -- (195,354) -- (4,688,493) -- (4,688,493)
------ ---------- --------- ----------- ----------- ----------- ----------- -----------
Balance
(deficits)
December 31,
1994 . . . . . 1,500 (3,941,200) (112,500) (4,052,200) 57,042,489 (105,106,275) (3,000,000) (51,063,786)
Cash distri-
butions
($15,000 per
limited
partnership
interest). . . -- -- (625,000) (625,000) -- -- (15,000,000) (15,000,000)
Net earnings
(loss) . . . . -- (303,617) -- (303,617) -- (6,654,654) -- (6,654,654)
------ ---------- --------- ----------- ----------- ----------- ----------- -----------
<PAGE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (1,000 INTERESTS)
--------------------------------------------- -------------------------------------------------
CONTRI-
BUTIONS
NET CASH NET OF NET
CONTRI- EARNINGS DISTRI- OFFERING EARNINGS CASH
BUTIONS (LOSS) BUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------- ----------- ----------- ----------- ---------- ------------- -----------
Balance
(deficits)
December 31,
1995 . . . . . 1,500 (4,244,817) (737,500) (4,980,817) 57,042,489 (111,760,929) (18,000,000) (72,718,440)
Net earnings
(loss) . . . . -- 2,867,680 -- 2,867,680 -- 68,824,332 -- 68,824,332
------ ---------- --------- ----------- ----------- ----------- ----------- -----------
Balance
(deficits)
December 31,
1996 . . . . . $1,500 (1,377,137) (737,500) (2,113,137) 57,042,489 (42,936,597) (18,000,000) (3,894,108)
====== ========== ========= =========== =========== =========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . $ 71,692,012 (6,958,271) (4,883,847)
Items not requiring (providing) cash or
cash equivalents:
Partnership's share of the reduction of
the maximum unfunded obligation under
the indemnification agreement . . . . . . . . . . (33,563) -- --
Partnership's share of (income) loss from
unconsolidated venture (including
income from restructuring
of $72,073,760 in 1996) . . . . . . . . . . . . . (71,825,434) 6,794,224 6,266,667
Partnership's share of loss on sale
of investment property by
unconsolidated venture. . . . . . . . . . . . . . -- 14,789,529 --
Partnership's share of gain from
forgiveness of indebtedness of
unconsolidated venture. . . . . . . . . . . . . . -- (15,632,407) --
Changes in:
Interest and other receivables. . . . . . . . . . . -- 20,397 28,332
Accounts payable . . . . . . . . . . . . . . . . . (8,648) (9,359) (1,259)
Amounts due to affiliates . . . . . . . . . . . . . 123,461 131,273 106,620
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . (52,172) (864,614) 1,516,513
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities of
short-term investments. . . . . . . . . . . . . . . -- 9,912,520 1,091,305
Partnership's contributions to
unconsolidated venture. . . . . . . . . . . . . . . (2,009,199) -- --
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . (2,009,199) 9,912,520 1,091,305
----------- ----------- -----------
Cash flows from financing activities:
Bank overdraft. . . . . . . . . . . . . . . . . . . (155,322) 155,322 --
Distributions to limited partners . . . . . . . . . -- (15,000,000) --
Distributions to general partners . . . . . . . . . -- (625,000) --
Amounts received from affiliates. . . . . . . . . . 2,218,372 2,637,697 (1,139,570)
----------- ----------- -----------
<PAGE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1996 1995 1994
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . . 2,063,050 (12,831,981) (1,139,570)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . 1,679 (3,784,075) 1,468,248
Cash, beginning of year . . . . . . . . . . . -- 3,784,075 2,315,827
----------- ----------- -----------
Cash, end of year . . . . . . . . . . . . . . $ 1,679 -- 3,784,075
=========== =========== ===========
Supplemental disclosure of
cash flow information:
Cash paid for mortgage and
other interest. . . . . . . . . . . . . . . . . . . $ -- -- --
=========== =========== ===========
Non-cash investing and financing activities:
Reduction in investment in unconsolidated
venture . . . . . . . . . . . . . . . . . . . . . $ 800,000 -- --
=========== =========== ===========
Reduction in amounts due to affiliates. . . . . . . $ (800,000) -- --
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
JMB/MANHATTAN ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership holds an approximate 25% interest in JMB/NYC Office
Building Associates, L.P. ("JMB/NYC") which in turn owns an indirect
approximate 4.9% interest in commercial real estate in the city of New
York, New York consisting of the 237 Park Avenue and 1290 Avenue of the
Americas properties (the "Properties").
The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's 25% indirect
interest in JMB/NYC through Property Partners, L.P.through the confirmation
and acceptance of the Amended Plan of Reorganization and Disclosure
Statement on October 10, 1996 ("Effective Date"). Accordingly, the
financial statements do not include the accounts of JMB/NYC or Property
Partners, L.P. The share of income from unconsolidated venture in the
accompanying Partnership financial statements includes the Partnership's
proportionate share of the operations of the Properties through the
Effective Date, as well as income from restructuring, consisting primarily
of the reversal of previously recognized losses and adjustments necessary
to record the restructuring. The Partnership reversed those previously
recognized losses resulting from its interest in JMB/NYC that it is no
longer obligated to fund due to the conversion of JMB/NYC's general
partnership interest in the joint ventures which owned the Properties to a
limited partnership interest and the terms of the restructuring. The
Partnership has no future funding obligations (other than that related to a
certain indemnification agreement provided in connection with the
restructuring) and has no influence or control over the day-to-day affairs
of the joint ventures which own the Properties subsequent to the Effective
Date. Accordingly, the Partnership has discontinued the application of the
equity method of accounting for the indirect interests in the Properties
and additional losses from the investment in unconsolidated venture will
not be recognized. Should the unconsolidated venture subsequently report
income, the Partnership will resume applying the equity method on its share
of such income only after such income exceeds net losses not previously
recognized, including those previous losses reversed due to the
restructuring.
The Partnership records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying 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"). Such
GAAP and consolidation adjustments are not recorded on the records of the
Partnership. The net effect of these items for the years ended December 31,
1996 and 1995 is summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1996 1995
------------------------------- ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . . $ 1,679 9,164,644 1,688,536 12,083,306
Partners' capital accounts
(deficits):
General partners. . . . . . . . . . (2,113,137) (21,452,634) (4,980,817) (22,805,104)
Limited partners. . . . . . . . . . (3,894,108) (71,303,843) (72,718,440) (75,295,495)
Net income (loss):
General partners. . . . . . . . . . 2,867,680 1,352,470 (303,617) (171,131)
Limited partners. . . . . . . . . . 68,824,332 3,991,652 (6,654,654) (14,486,657)
Net income (loss) per
limited partnership
interest. . . . . . . . . . . . . . 68,824 3,992 (6,655) (14,487)
============ ============ ============ ============
</TABLE>
<PAGE>
The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of each
period (1,000). Deficit capital accounts will result, through the duration
of the Partnership, in the recognition of net gain for financial reporting
and Federal income tax purposes to the Limited Partners.
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 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. SFAS 121 requires that the Partnership record an
impairment loss on its properties to be held for investment whenever their
carrying value cannot be fully recovered through estimated undiscounted
future cash flows from their operations and sale. The amount of the
impairment loss to be recognized would be the difference between the
property's carrying value and the property's estimated fair value. The
Partnership's policy is to consider a property to be held for sale or
disposition when the Partnership has committed to sell (or dispose) of such
property and active marketing activity has commenced or is expected to
commence in the near term (or the Partnership has concluded that it may
dispose of the property by no longer funding operating deficits or debt
service requirements of the property thus allowing the lender to realize
upon its security). In accordance with SFAS 121, any properties identified
as "held for sale or disposition" are no longer depreciated. Adjustments
for impairment loss for such properties (subsequent to the date of adoption
of SFAS 121) are made in each period as necessary to report these
properties at the lower of carrying value or fair value less costs to sell.
The adoption of SFAS 121 did not have any effect on the Partnership's
financial position, results of operations or liquidity.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership.
JMB/NYC
JMB/NYC is a limited partnership among Property Partners, L.P.,
Carlyle-XIV Associates, L.P. and Carlyle-XIII Associates, L.P. as limited
partners and Carlyle Managers, Inc. as the sole general partner. The
Partnership is a 20% shareholder of Carlyle Managers, Inc. and related to
this investment, has an obligation to fund, on demand, $200,000 (reduced
from $600,000 during 1996) of additional paid-in capital to Carlyle
Managers, Inc. (reflected in amounts due to affiliates in the accompanying
financial statements). The Partnership currently holds, indirectly as a
limited partner of Property Partners, L.P., an approximate 25% limited
partnership interest in JMB/NYC. The sole general partner of Property
Partners, L.P. is Carlyle Investors, Inc., of which the Partnership is a
20% shareholder. Related to this investment, the Partnership has an
obligation to fund, on demand, $200,000 (reduced from $600,000 during 1996)
of additional paid-in capital (reflected in amounts due to affiliates in
the accompanying financial statements). The general partner in each of
JMB/NYC and Property Partners, L.P. is an affiliate of the Partnership.
<PAGE>
In October 1994, the Partnership and its affiliated partners (together
with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered
into an agreement (the "Agreement") with the affiliates (the "Olympia &
York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the
venture partners in the Joint Ventures which owned 237 Park Avenue, 1290
Avenue of the Americas and 2 Broadway, to resolve certain disputes among
the Affiliated Partners and the Olympia and York affiliates. In general,
the parties agreed to: (i) restructure the first mortgage loan; (ii) sell
the 2 Broadway Building; (iii) reduce or eliminate approval rights of
JMB/NYC with respect to virtually all property management, leasing, sale or
refinancing; (iv) amend the Joint Ventures' agreements to eliminate any
funding obligations by JMB/NYC and (v) establish a new preferential cash
distribution level for the Olympia & York affiliates. In accordance with
the Agreement and in anticipation of the sale of the 2 Broadway Building,
the unpaid first mortgage indebtedness previously allocated to 2 Broadway
was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas.
As part of the Agreement, JMB/NYC and the Olympia & York affiliates
agreed to file a pre-arranged bankruptcy plan for reorganization under
Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring
of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and
the debt encumbering the two properties remaining after the sale of 2
Broadway. In June 1995, the 2 Broadway Joint Ventures filed their pre-
arranged bankruptcy plans for reorganization, and in August 1995, the
bankruptcy court entered an order confirming their plans of reorganization.
In September 1995, the sale of the 2 Broadway Building was completed. Such
sale did not result in any distributable proceeds to JMB/NYC or the Olympia
& York affiliates.
Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue
and 1290 Avenue of the Americas properties were made in April 1996, and in
August 1996, an Amended Plan of Reorganization and Disclosure Statement
(the "Plan") was filed with the Bankruptcy Court for these Joint Ventures.
The Plan was accepted by the various classes of debt and equity holders and
confirmed by the Court on September 20, 1996 and became effective October
10, 1996 ("Effective Date"). The Plan provides that JMB/NYC has an
indirect limited partnership interest which, before taking into account
significant preferences to other partners, equals approximately 4.9% of the
reorganized and restructured ventures owning 237 Park and 1290 Avenue of
the Americas. Neither O&Y nor any of its affiliates has any direct or
indirect continuing interest in the Properties. The new ownership
structure gives control of the Properties to a newly-organized real estate
investment trust which is owned primarily by holders of the first mortgage
debt which encumbered the Properties prior to the bankruptcy. JMB/NYC has,
under certain limited circumstances, through January 1, 2001 rights of
consent regarding sale of the Properties or the consummation of certain
other transactions that significantly reduce indebtedness of the
Properties.
The restructuring and reorganization discussed above eliminates any
potential additional obligation of the Partnership in the future to provide
additional funds under its previous joint venture agreements (other than
that related to a certain indemnification agreement). In 1995, the
Partnership distributed to its partners virtually all of its working
capital funds leaving as the Partnership's only asset its receivable from
JMB Realty Corporation ("JMB"), an affiliate of the Corporate General
Partner. This receivable has been the Partnership's sole source of capital
to fund continuing operations of the Partnership. During 1996, such
receivable was collected and the proceeds thereof have been used by the
Partnership toward funding its portion of the collateral required pursuant
to the $25 million indemnification provided by the Partnership and the
Affiliated Partners to the newly organized REIT as of the Effective Date.
The balance of the Partnership's share of the collateral was advanced by
JMB in order for the Partnership to satisfy its full portion as discussed
below. The Partnership's sole source of capital to fund continuing
operations are advances from JMB.
<PAGE>
The Affiliated Partners entered into a joint and several obligation to
indemnify, through a date no later than January 2, 2001, the newly formed
real estate investment trust to the extent of $25 million to ensure their
compliance with the terms and conditions relating to JMB/NYC's indirect
limited partnership interest in the restructured and reorganized joint
ventures that own the Properties. The Affiliated Partners contributed
approximately $7.8 million (of which the Partnership's share was
approximately $1.9 million) to JMB/NYC which was deposited into an escrow
account as collateral for such indemnification. These funds have been
invested in stripped U.S. Government obligations with a maturity date of
February 15, 2001. The Partnership's share of the reduction of the maximum
unfunded obligation under the indemnification agreement recognized as
income, is a result of interest earned on amounts contributed by the
Partnership and held in escrow by JMB/NYC. Such income earned reduces the
Partnership's proportionate share of the maximum unfunded obligation under
the indemnification agreement which is reflected as a liability in the
accompanying financial statements.
Compliance with the provisions of the indemnification agreement
generally deal with impacting the operations of the newly organized real
estate investment trust. Compliance, therefore, is within the control of
the Affiliated Partners and non-compliance with such provisions by either
the Partnership or the Affiliated Partners is highly unlikely. Therefore,
it is highly likely that the Partnership's share of the collateral will be
returned (including interest earned) at the termination of the
indemnification agreement. Upon return of such funds, advances made by JMB
Realty Corporation (including accrued and deferred interest) will be
repaid. After establishing an appropriate working capital reserve, the
remainder, if any, would be available for distribution to the Limited
Partners.
The level of any future distributable cash is dependent upon the
amount of advances made by JMB. The Partnership's sole source of capital
to pay for continuing operations is advances from JMB. Advances made by
JMB are evidenced by a promissory note with a maximum principal sum of $2
million and are due June 30, 1999. The note bears interest at the
applicable Federal rate which ranged between 5.67% and 5.98% per annum in
1996.
While the Partnership is not expected to terminate in the near term,
it currently appears unlikely that any significant distributions will be
made by the Partnership at any time due to the level of indebtedness
remaining on the Properties, the original purchase money notes payable by
JMB/NYC, the significant preference levels within the reorganized structure
and the liabilities of the Partnership.
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are allocated 96% to the Holders
of Interests and 4% to the General Partners. However, certain provisions
of the Federal income tax law prohibit the allocation of net tax losses to
the Holders of Interests if the net tax losses exceed the Holders of
Interests' current basis in the Partnership. The Holders of Interests'
basis in the Partnership is essentially equal to their initial capital
contributions less cumulative cash distributions and tax losses incurred
plus the Holders of Interests' share of the minimum taxable gain from a
hypothetical disposition of the properties. For the years ended December
31, 1994 and 1995, the Holders of Interests were allocated tax losses in an
amount equal their share of the increase in the Partnership's minimum
taxable gain during 1994 and 1995. In 1996, the Holders of interests were
allocated ordinary income and also capital gain in an amount, when
combined, equal their share of the decrease in the Partnership's minimum
taxable gain during 1996. Profits from the sale or other disposition of
all or substantially all of the Partnership's interest in JMB/NYC or of the
Properties are to be allocated to the General Partners to the greater of 1%
of such profits or the amount of cash distributable to the General Partners
from any such sale or disposition (as described below), plus an additional
<PAGE>
amount of such profits, if necessary, to reduce deficits in the General
Partners' capital accounts to a level consistent with the gain anticipated
to be realized from future sales. Losses from the sale of all or
substantially all of the Partnership's interest in JMB/NYC or of the
Properties are to be allocated 1% to the General Partners. The remaining
sale or disposition profits and losses are allocable to the Holders of
Interests. All such profits or losses generally will be allocated among
the Holders of Interests in proportion to their percentage interests in the
Partnership, subject to allocations of taxable gain among the Holders of
Interests in order to equalize their capital accounts as a result of
disproportionate allocations of losses during the offering period.
The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership. Distributions of "Distributable Cash"
(as defined) of the Partnership are allocated 90% to the Holders of
Interests and 10% to the General Partners (of which 6.25% constitutes a
management fee).
TRANSACTIONS WITH AFFILIATES
In accordance with the Partnership Agreement, the General Partners are
required to loan back to the Partnership, for distribution to the Holders
of Interests, their share of Distributable Cash (as defined) if a
distribution made to all partners in a particular quarter does not result
in a distribution to the Holders of Interests which equates to a 7% per
annum return on their adjusted capital investment. Consequently, for the
distributions made to the partners in 1989 and 1990, the General Partners
have loaned $300,000 of Distributable Cash, as defined, (including such
amounts reflected as a management fee to the General Partners) to the
Partnership for distribution to the Holders of Interests. Any amounts
loaned bear interest at a rate not to exceed 10% per annum (currently 10%
per annum). As of December 31, 1996, $268,401 represented interest earned
on such loans, all of which was unpaid. These loans and accrued interest
can be repaid upon sale or refinancing only after the Holders of Interests
have received an amount equal to their contributed capital plus any
deficiency in a stipulated return thereon.
The Corporate General Partner and its affiliates are entitled to
reimbursement for direct expenses and out-of-pocket expenses relating to
the administration of the Partnership and operation of the Partnership's
real property investments. Additionally, the Corporate General Partner and
its affiliates are entitled to reimbursements for portfolio management,
legal and accounting services. Such costs were $3,146, $16,393 and $15,058
for 1996, 1995 and 1994, $2,026 of which was unpaid at December 31, 1996.
The Partnership had obligations to fund, on demand, $600,000 and
$600,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc.,
respectively, of additional paid-in capital (reflected in the amounts due
to affiliates in the accompanying financial statements). These obligations
were reduced to $200,000 and $200,000, respectively. As of December 31,
1996, the obligations bore interest of 5.93% per annum and cumulative
interest accrued on these obligations was $236,929.
JMB advanced the Partnership $529,835 during 1996. Advances made by
JMB are evidenced by a promissory note with a maximum principal sum of $2
million and is due June 30, 1999. The note bears interest at the
applicable Federal rate which ranged between 5.67% and 5.98% per annum in
1996. The balance of the note including accrued interest as of December
31, 1996 is $536,685. The Partnership's sole source of capital to pay for
continuing operations is advances from JMB.
JMB has guaranteed that the Partnership will receive a certain minimum
return on its working capital (as defined), including amounts previously
accrued under the minimum return guarantee. In March 1995, JMB paid
$2,850,000 of the accrued amount due under this agreement to the
Partnership. During 1996, JMB funded its remaining obligation under the
<PAGE>
working capital minimum guarantee of approximately $1,800,000 which was
used to fund 1996 operating costs and to fund the Partnership's share of
the collateral required pursuant to the terms of the restructuring of the
Partnership's indirect ownership interests in the properties.
INVESTMENT IN UNCONSOLIDATED VENTURE
Summary financial information for JMB/NYC as of and for the years
ended December 31, 1996 and 1995 (combined to include its unconsolidated
ventures through December 31, 1995) is as follows:
1996 1995
------------ ------------
Current assets. . . . . . . . . . . . . . $ 27,859 13,898,980
Current liabilities (includes
$902,603,491 of current portion
of long-term debt at December 31,
1995) . . . . . . . . . . . . . . . . . -- (930,523,456)
------------ ------------
Working capital (deficit). . . . . . . 27,859 (916,624,476)
------------ ------------
Investment property, net. . . . . . . . . -- 649,606,970
Escrow deposits . . . . . . . . . . . . . 7,937,459 --
Accrued rent receivable . . . . . . . . . -- 52,194,637
Deferred expenses . . . . . . . . . . . . -- 18,168,925
Other liabilities . . . . . . . . . . . . (91,313,934) (85,039,094)
Maximum obligation under the
indemnification agreement . . . . . . . (25,000,000) --
Venture partners' deficit . . . . . . . . 86,068,182 213,270,871
------------ ------------
Partnership's capital (deficit). . . . $(22,280,434) (68,422,167)
============ ============
Represented by:
Invested capital . . . . . . . . . . . . $ 54,596,097 52,586,784
Cumulative net losses. . . . . . . . . . (67,502,782) (111,635,202)
Cumulative cash
distributions . . . . . . . . . . . . (9,373,749) (9,373,749)
------------ ------------
$(22,280,434) (68,422,167)
============ ============
Total income. . . . . . . . . . . . . . . $228,184,030 163,838,267
============ ============
Expenses applicable to operating loss . . $ 11,202,134 180,511,256
============ ============
Net income (loss) (including income
from restructuring of $220,431,722
in 1996) . . . . . . . . . . . . . . . . $216,981,896 (16,672,989)
============ ============
During 1996, as a result of the adoption of the Plan, JMB/NYC
discontinued the application of the equity method of accounting for its
investments in unconsolidated ventures and reversed those previously
recognized losses from the unconsolidated ventures except for an amount
equal to the maximum obligation under the indemnification agreement of
$25,000,000. The net income for the year ended December 31, 1996 includes
$7,618,056 of income from operations through the Effective Date of which
the Partnership's share is $1,904,514. The Partnership's capital (deficit)
in JMB/NYC differs from its investment in unconsolidated venture as
reflected in the accompanying financial statements due to the Partnership's
1996 reversal of previously recognized losses in JMB/NYC as a result of the
restructuring of partnership interests.
Total income and net loss for the year ended December 31, 1995
includes a loss on sale of investment property of $38,214,703, offset by an
extraordinary gain on forgiveness of indebtedness of $62,529,627 related to
the sale of the 2 Broadway building in September 1995.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
JMB/Manhattan Associates, Ltd.:
We have audited the financial statements of JMB/NYC Office Building
Associates, L.P. (JMB/NYC) as of December 31, 1996, and the related
statements of operations, partners' capital accounts (deficits), and cash
flows for the year then ended. These financial statements are the
responsibility of the General Partners of JMB/Manhattan Associates, Ltd.
(the Partnership). Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of JMB/NYC as of
December 31, 1996, and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 21, 1997
<PAGE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
------
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . $ 27,859
-----------
Total current assets. . . . . . . . . . . . 27,859
-----------
Escrow deposits . . . . . . . . . . . . . . . . . . . 7,937,459
-----------
$ 7,965,318
===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Liabilities:
Maximum obligation under the
indemnification agreement . . . . . . . . . . . . $25,000,000
Notes payable and accrued interest. . . . . . . . . 91,313,934
-----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . 116,313,934
Partners' capital accounts (deficits):
JMB/Manhattan Associates, Ltd.:
Capital contributions . . . . . . . . . . . . . . 54,596,097
Cumulative net losses . . . . . . . . . . . . . . (67,502,782)
Cumulative cash distributions . . . . . . . . . . (9,373,749)
------------
(22,280,434)
------------
Venture partners:
Capital contributions . . . . . . . . . . . . . . 606,073,597
Cumulative net losses . . . . . . . . . . . . . . (610,257,029)
Cumulative cash distributions . . . . . . . . . . (81,884,750)
------------
(86,068,182)
------------
Total partners' capital accounts (deficits) (108,348,616)
------------
$ 7,965,318
============
See accompanying notes to financial statements.
<PAGE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
Income:
Interest income. . . . . . . . . . . . . . . . . . . $ 134,252
------------
134,252
------------
Expenses:
Interest expense . . . . . . . . . . . . . . . . . . 10,876,797
Depreciation . . . . . . . . . . . . . . . . . . . . 133,362
Other general and administrative . . . . . . . . . . 191,975
------------
11,202,134
------------
Income from unconsolidated ventures (including
income from restructuring of $220,431,722). . . . . 228,049,778
------------
Net earnings (loss) . . . . . . . . . . . . $216,981,896
============
See accompanying notes to financial statements.
<PAGE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
STATEMENT OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEAR ENDED DECEMBER 31, 1996
JMB/MANHATTAN VENTURE
ASSOCIATES, LTD. PARTNERS
---------------- ------------
Balance (deficits) at
December 31, 1995. . . . . . . . . $(78,535,221) (254,834,908)
Capital contributions . . . . . . . 2,009,313 6,030,304
Net earnings (loss) . . . . . . . . 54,245,474 162,736,422
------------ ------------
Balance (deficits) at
December 31, 1996. . . . . . . . . $(22,280,434) (86,068,182)
============ ============
See accompanying notes to financial statements.
<PAGE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . $216,981,896
Items not requiring (providing) cash:
Depreciation. . . . . . . . . . . . . . . . . . . 133,362
Income from unconsolidated ventures
(including income from restructuring
of $220,431,722). . . . . . . . . . . . . . . . (228,049,778)
Changes in:
Escrow deposits . . . . . . . . . . . . . . . . . (134,252)
Accounts payable and other accrued expenses . . . (21,576)
Accrued interest. . . . . . . . . . . . . . . . . 10,876,797
------------
Net cash (used in) provided by
operating activities . . . . . . . . . . . (213,551)
------------
Cash flows from investing activities:
Amounts deposited into escrow . . . . . . . . . . . (7,803,207)
------------
Net cash provided by (used in)
investing activities . . . . . . . . . . . (7,803,207)
------------
Cash flows from financing activities:
Capital contributions . . . . . . . . . . . . . . . 8,039,617
------------
Net cash provided by (used in)
financing activities . . . . . . . . . . . 8,039,617
------------
Net increase (decrease)
in cash. . . . . . . . . . . . . . . . . . 22,859
Cash, beginning of year. . . . . . . . . . . 5,000
------------
Cash, end of year. . . . . . . . . . . . . . $ 27,859
============
Supplemental disclosure of cash flow information:
Cash paid for interest. . . . . . . . . . . . . . $ --
============
Non-cash investing and financing activities . . . $ --
============
See accompanying notes to financial statements.
<PAGE>
JMB/NYC OFFICE BUILDING ASSOCIATES, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The accompanying financial statements have been prepared for the
purpose of complying with Rule 3.09 of Regulation S-X of the Securities and
Exchange Commission. The Partnership owns an indirect ownership interest
in JMB/NYC Office Building Associates, L.P. ("JMB/NYC") through Property
Partners, L.P. JMB/NYC is a limited partnership among Property Partners,
L.P., Carlyle-XIV Associates, L.P. and Carlyle-XIII Associates, L.P. as
limited partners and Carlyle Managers, Inc. as the sole general partner.
JMB/NYC holds an approximate 4.9% indirect interest (before taking
into account certain preferences to other partners) in commercial real
estate in the city of New York, New York through 237/1290 Upper Tier
Associates, L.P. ("Upper Tier"), a Delaware limited partnership, in which
JMB/NYC is a 99% limited partner. Prior to October 10, 1996 ("Effective
Date"), JMB/NYC utilized the equity method of accounting for such
investments. The share of income from unconsolidated ventures in the
accompanying financial statements includes JMB/NYC's proportionate share of
the operations of the Properties through the effective Date, as well as
income from restructuring, consisting primarily of the reversal of
previously recognized losses and adjustments necessary to record the
restructuring. JMB/NYC reversed those previously recognized losses
resulting from its interest in the Properties that it is no longer
obligated to fund due to the conversion of its general partnership interest
in the joint ventures which owned the Properties to a limited partnership
interest and the terms of the restructuring. As a limited partner, JMB/NYC
has no future funding obligations and has no influence or control over the
day-to-day affairs of the joint ventures which own the Properties
subsequent to the Effective Date. Accordingly, JMB/NYC has discontinued
the application of the equity method of accounting for the indirect
interests in the Properties and additional losses from the Properties will
not be recognized. Should JMB/NYC subsequently be allocated income through
its investment in Upper Tier, JMB/NYC will resume applying the equity
method only after such income exceeds net losses not previously recognized,
including those previous losses reversed due to the restructuring.
Reference is made to the Notes to the Partnership's Financial Statements
filed with this annual report. Such notes are incorporated herein by
reference.
The records of JMB/NYC are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying financial statements have been prepared from such records
after making appropriate adjustments to present the accounts in accordance
with generally accepted accounting principles ("GAAP"). Such adjustments
are not recorded on the records of the JMB/NYC.
The preparation of financial statements in accordance with GAAP
requires JMB/NYC 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.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the venture partners rather than the
ventures.
<PAGE>
ESCROW DEPOSITS
The Affiliated Partners entered into a joint and several obligation to
indemnify the newly formed real estate investment trust to the extent of
$25 million to ensure their compliance with the terms and conditions
relating to JMB/NYC's indirect limited partnership interest in the
restructured and reorganized joint ventures that own the Properties. The
Affiliated Partners contributed approximately $7.8 million (of which the
Partnership's share was approximately $1.9 million) to JMB/NYC which was
deposited into an escrow account as collateral for such indemnification.
These funds have been invested in stripped U.S. Government obligations with
a maturity date of February 15, 2001. Compliance with the provisions of the
indemnification agreement is within the control of the Affiliated Partners
and non-compliance with such provisions by either the Partnership or the
other Affiliated Partners is highly unlikely. Therefore, it is highly
likely that the Partnership's share of the collateral will be returned to
it at the termination of the indemnification agreement. The maximum
obligation under the indemnification agreement of $25,000,000 is reflected
as a liability in the accompanying financial statements at December 31,
1996.
NOTES PAYABLE
Notes payable consist of the following at December 31, 1996.
1996
------------
Promissory notes payable, bearing interest at 12.75%
per annum; cross-collaterally secured by JMB/NYC's
indirect interest in the Properties, interest accrues
and is deferred, compounded monthly, until December 31,
1991; monthly payments of accrued interest, based
upon the level of distributions to JMB/NYC,
thereafter until maturity; principal and accrued
interest due January 2, 2001. Accrued deferred
interest of $58,041,342 is outstanding at
December 31, 1996. . . . . . . . . . . . . . . . . . . . . $91,313,934
-----------
Less current portion of notes payable. . . . . . . . . --
-----------
Long-term notes payable . . . . . . . . . . . . . $91,313,934
===========
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants during 1996
and 1995.
PART III
ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Corporate General Partner of the Partnership, JMB/Manhattan
Investors, Inc., is a wholly-owned subsidiary of JMB Investment Holdings-I,
Inc., a Delaware corporation, the outstanding shares of stock of which are
owned 25% by Northbrook Corporation, a Delaware corporation, and 75% by JMB
Realty Corporation, a Delaware corporation ("JMB"). Substantially all of
the outstanding shares of Northbrook Corporation are owned by JMB and
certain of its officers, directors, members of their families and their
affiliates. Substantially all of the shares of JMB are owned by its
officers, directors, members of their families and their affiliates. The
Corporate General Partner has responsibility for all aspects of the
Partnership's operations, subject to the requirement that generally the
sale of all or any substantial portion of the Partnership's interest in
JMB/NYC or of all or any substantial portion of JMB/NYC's interests in the
Properties, unless required by an agreement or instrument relating to such
interests, must be approved by an Associate General Partner of the
Partnership, BPA Associates, L.P., an Illinois limited partnership with
JMB/Manhattan Investors, Inc. as the sole general partner. BPA Associates,
L.P. shall be directed by a majority in interest of its limited partners
(who are generally officers, directors and affiliates of JMB or its
affiliates) as to whether to provide its approval of any such sale. BPA
Associates, L.P. is also the sole general partner of APB Associates, an
Illinois limited partnership, that is the other Associate General Partner
of the Partnership.
The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership by affiliates of the General
Partners. In general, such services are to be provided on terms no less
favorable to the Partnership than could be obtained from independent third
parties and are otherwise subject to conditions and restrictions contained
in the Partnership Agreement. The Partnership Agreement permits the
General Partners and their affiliates to provide services to, and otherwise
deal and do business with, persons who may be engaged in transactions with
the Partnership, and permits the Partnership to borrow from, purchase goods
and services from, and otherwise to do business with, persons doing
business with the General Partners or their affiliates. The General
Partners and their affiliates may be in competition with the Partnership
under certain circumstances, including, for tenants for properties and/or
for the sale of properties. Because the timing and amount of cash
distributions and profits and losses of the Partnership may be affected by
various determinations by the General Partners under the Partnership
Agreement, including whether and when to sell an investment property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The directors and the executive and certain other officers of the
Corporate General Partner are as follows:
<PAGE>
NAME OFFICE
- ---- ------
Judd D. Malkin Chairman and Director
Neil G. Bluhm President
Stuart C. Nathan Vice President and Director
Howard Kogen Vice President and Treasurer
Gary Nickele Vice President, General Counsel and Director
H. Rigel Barber Vice President
Gailen J. Hull Vice President
There is no family relationship among any of the foregoing officers or
director. The foregoing director has been elected to serve a one-year term
until the annual meeting of the Corporate General Partner to be held on
August 13, 1997. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Corporate General Partner to be held on
August 13, 1997. All of the forgoing officers have served in the
capacities indicated since the date of incorporation of the Corporate
General Partner on December 27, 1984, except that Judd D. Malkin and Gary
Nickele became Directors on August 8, 1995, Neil G. Bluhm was Vice
President (rather than President) from October 14, 1993, until August 8,
1995, Stuart C. Nathan was President (rather than Vice President) from
October 14, 1993, until August 8, 1995, and has been a Director for
approximately the past five years and Howard Kogen became Treasurer on
January 1, 1991. There are no arrangements or understandings between or
among any of said director or officers and any other person pursuant to
which the director or any officer was elected as such.
The foregoing director and officers are also officers and/or directors
of JMB. JMB is the corporate general partner of Carlyle Real Estate
Limited Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited
Partnership-IX ("Carlyle-IX"), Carlyle Real Estate Limited Partnership-XI
("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII ("Carlyle-
XII"), Carlyle Real Estate Limited Partnership-XIII ("Carlyle-XIII"),
Carlyle Real Estate Limited Partnership-XIV ("Carlyle-XIV"), Carlyle Real
Estate Limited Partnership-XV ("Carlyle-XV"), Carlyle Real Estate Limited
Partnership-XVI ("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-
XVII ("Carlyle-XVII"), JMB Mortgage Partners, Ltd.-III ("Mortgage
Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage Partners-IV"),
Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and Carlyle Income Plus,
Ltd.-II ("Carlyle Income Plus-II") and the managing general partner of JMB
Income Properties, Ltd.-IV ("JMB Income-IV"), JMB Income Properties, Ltd.-V
("JMB Income-V"), JMB Income Properties, Ltd.-VI ("JMB Income-VI"), JMB
Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties
Ltd.-X ("JMB Income-X"), JMB Income Properties, Ltd.-XI, ("JMB Income-XI"),
JMB Income Properties, Ltd.-XII ("JMB Income-XII"), and JMB Income
Properties, Ltd.-XIII, ("JMB Income-XIII"). JMB is also the sole general
partner of the associate general partners of most of the foregoing
partnerships.
The foregoing director and officers are also officers and/or directors
of various affiliated companies of JMB including Income Growth Managers,
Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")), Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB
Partners, L.P. ("Arvida")), and Arvida/JMB Managers-II, Inc. (the general
partner of Arvida/JMB Partners, L.P.-II ("Arvida-II")). Most of such
officers and the director are also partners, directly or indirectly, of
certain partnerships which are associate general partners in the following
real estate limited partnerships: the Partnership, Carlyle-VII,
Carlyle-IX, Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV,
Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB Income-X, JMB
Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage Partners-III, Mortgage
Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
Certain of such officers are also officers and the sole director of Carlyle
Managers, Inc., the general partner of JMB/NYC.
The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership in
addition to that described above is as follows:
<PAGE>
Judd D. Malkin (age 59) is Chairman of the Board and a director of JMB
and its Chief Financial Officer. He is also an individual general partner
of JMB Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB
since October, 1969. Mr. Malkin is a director of Urban Shopping Centers,
Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment
trust in the business of owning, managing and developing shopping centers.
He is a Certified Public Accountant.
Neil G. Bluhm (age 59) is President and a director of JMB. He is also
an individual general partner of JMB Income-IV and JMB Income-V. Mr. Bluhm
has been associated with JMB since August, 1970. Mr. Bluhm is a director
of USC, Inc. He is a member of the Bar of the State of Illinois and a
Certified Public Accountant.
Stuart C. Nathan (age 55) is Executive Vice President and a director
of JMB. He has been associated with JMB since July, 1972. Mr. Nathan is
also a director of Sportmart, Inc., a retailer of sporting goods. He is a
member of the Bar of the State of Illinois.
Howard Kogen (age 61) is Senior Vice President and Treasurer of JMB.
He has been associated with JMB since March, 1973. He is a Certified
Public Accountant.
Gary Nickele (age 44) is Executive Vice President and General Counsel
of JMB. He has been associated with JMB since February, 1984. Mr. Nickele
holds a J.D. degree from the University of Michigan Law School and is a
member of the Bar of the State of Illinois.
H. Rigel Barber (age 48) is Chief Executive Officer of JMB. He has
been associated with JMB since March, 1982. Mr. Barber received a J.D.
degree from the Northwestern Law School. He is a member of the Bar of the
State of Illinois.
Gailen J. Hull (age 48) is Senior Vice President of JMB. Mr. Hull has
been associated with JMB since March, 1982. He holds a Masters degree in
Business Administration from Northern Illinois University and is a
Certified Public Accountant.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,679
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,679
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,679
<CURRENT-LIABILITIES> 1,206,604
<BONDS> 536,685
<COMMON> 0
0
0
<OTHER-SE> (6,007,245)
<TOTAL-LIABILITY-AND-EQUITY> 1,679
<SALES> 0
<TOTAL-REVENUES> 120,331
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 163,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 123,461
<INCOME-PRETAX> (166,985)
<INCOME-TAX> 0
<INCOME-CONTINUING> 71,692,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,692,012
<EPS-PRIMARY> 68,824
<EPS-DILUTED> 68,824
</TABLE>
