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, 1995 Commission file #0-16599
JMB MORTGAGE PARTNERS, LTD. - IV
(Exact name of registrant as specified in its charter)
Illinois 36-3426138
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . 15
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 19
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1). . . . . . . . . . . . . . . . . . . . . . . . . $ 5,508,884 4,337,357
Short-term investments (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . 634,465 --
Interest and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . 13,806 79,317
------------ ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,157,155 4,416,674
------------ ------------
Mortgage notes receivable (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . 22,253,456 22,253,456
Deferred interest receivable (net of allowance for loan
loss of $436,021 in 1994 and 1995 (notes 4(a) and (b)). . . . . . . . . . . . . . . 969,926 722,882
Investment in unconsolidated ventures, at equity
(notes 2 and 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,040,420 10,437,237
Deferred costs in connection with mortgage investments. . . . . . . . . . . . . . . . 225,709 250,477
------------ ------------
$ 37,646,666 38,080,726
============ ============
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 168,266 174,175
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,357 51,543
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,507 139,613
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 496,130 365,331
------------ ------------
Commitments and contingencies (notes 2, 3, 4, and 5)
Partners' capital accounts (note 3):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,314 1,310,379
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . . . . . (1,455,924) (1,265,989)
------------ ------------
45,390 45,390
------------ ------------
Limited partners (43,276.25 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . . . . . . . . 37,619,348 37,619,348
Cumulative net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,894,700 16,706,863
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . . . . . . . . (18,408,902) (16,656,206)
------------ ------------
37,105,146 37,670,005
------------ ------------
Total partners' capital accounts. . . . . . . . . . . . . . . . . . . . . . 37,150,536 37,715,395
------------ ------------
$ 37,646,666 38,080,726
============ ============
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Income:
Interest income . . . . . . . . . . . . . . . . . . . . . $ 658,833 609,414 1,949,601 1,728,276
----------- ---------- ----------- ----------
Expenses:
Mortgage investment
servicing fees (note 5). . . . . . . . . . . . . . . . . 14,023 13,748 41,611 41,028
Professional services . . . . . . . . . . . . . . . . . . -- 2,202 44,432 48,290
Amortization of deferred expenses . . . . . . . . . . . . 9,028 8,383 27,085 25,149
General and administrative. . . . . . . . . . . . . . . . 67,354 20,405 155,446 71,498
----------- ---------- ----------- ----------
90,405 44,738 268,574 185,965
----------- ---------- ----------- ----------
Operating earnings. . . . . . . . . . . . . . . . 568,428 564,676 1,681,027 1,542,311
Partnership's share of operations (loss) of
unconsolidated ventures (notes 2, 4(a) and 4(b)). . . . . (632,428) 133,355 (303,255) 447,868
----------- ---------- ----------- ----------
Net earnings (loss) . . . . . . . . . . . . . . . $ (64,000) 698,031 1,377,772 1,990,179
=========== ========== =========== ==========
Net earnings (loss) per limited
partnership interest (note 1) . . . . . . . . . $ (2.98) 14.74 27.45 41.82
=========== ========== =========== ==========
Cash distributions per
limited partnership
interest (note 1) . . . . . . . . . . . . . . . $ 13.50 12.50 40.50 37.50
=========== ========== =========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,377,772 1,990,179
Items not requiring cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,085 25,149
Partnership's share of operations of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,547,482 (447,868)
Changes in:
Interest and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65,511 (75,138)
Deferred interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (247,044) (208,408)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,909) (126,640)
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,814 (31,385)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37,106) 173,273
------------ -----------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . 2,901,605 1,299,162
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments. . . . . . . . . . . . . . (634,465) 284,408
Partnership's distributions from unconsolidated ventures. . . . . . . . . . . . . . . . . 849,335 --
Receipt of principal on mortgage notes receivable
(note 4(b)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 213,974
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,317) --
------------ -----------
Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . 212,553 498,382
------------ -----------
Cash flows from financing activities:
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,752,696) (1,622,866)
Distributions to general partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . (189,935) (180,318)
------------ -----------
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . (1,942,631) (1,803,184)
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . . . . . 1,171,527 (5,640)
Cash and cash equivalents, beginning of year. . . . . . . . . . . . . . . . . . . 4,337,357 573,346
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . . . . . . . . . $ 5,508,884 567,706
============ ===========
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS - CONTINUED
1995 1994
------------ -----------
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . . . . . . . . . $ -- --
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1994
which are included in the Partnership's 1994 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
The equity method of accounting has been applied in the accompanying
financial statements with respect to the Partnership's interest in Calibre
Pointe Associates and North Rivers Market Associates (note 2).
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 reflect the Partnership's accounts
in accordance with generally accepted accounting principles ("GAAP"). Such
adjustments are not recorded in the records of the Partnership. The net
effect of these items is summarized as follows for the nine months ended
September 30:
<TABLE>
<CAPTION>
1995 1994
----------------------- -------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net earnings. . . . . . $1,377,772 2,366,275 1,990,179 2,339,748
Net earnings
per limited
partnership
interest . . . . . . . $ 27.45 50.29 41.82 50.73
========== ========= ========= =========
</TABLE>
The net earnings per limited partnership interest is based upon the
number of Interests outstanding at the end of the period (43,276.25).
Certain reclassifications have been made to the 1994 financial
statements in order to conform with the 1995 presentation.
Partnership distributions from unconsolidated ventures are considered
cash flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
U.S. Government obligations at cost which approximates market. For the
purposes of these statements, the Partnership's policy is to consider all
such amounts held with original maturities of three months or less
($5,175,812 at September 30, 1995 and $3,997,773 at December 31, 1994) as
cash equivalents with any remaining amounts (generally with original
maturities of one year or less) reflected as short-term investments being
held to maturity.
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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. However, in certain instances, the Partnership has been
required under applicable law to remit directly to the taxing authorities
amounts representing withholding from distributions paid to partners.
Basic and simple interest income on mortgage notes receivable is being
recognized using the effective interest method which results in a level
effective yield on the outstanding principal balance. The Partnership is
recognizing interest income only as collected on one of its mortgage loans
(note 4(a)).
Provisions for value impairment are recorded with respect to
investment properties whenever the estimated future cash flows from a
property's operations and projected sale are less than the property's net
carrying value. Due to the uncertainty of the Partnership's ability to
recover the net carrying value of the North Rivers Market investment
property through future operations or sale as the Partnership has shortened
its intended holding period for this investment to no later than 1999, the
Partnership, as a matter of prudent accounting practice and for financial
reporting purposes has recorded a provision for value impairment of
$2,300,000 (of which $770,000 has been allocated to the Partnership and was
reflected in the Partnership's share of operations of unconsolidated
ventures). Such provision, made as of September 30, 1995 was recorded to
reduce the net carrying value of North Rivers Market to its then estimated
recoverable value.
(2) VENTURE AGREEMENT
(a) Calibre Pointe Associates
Reference is made to Note 2(a) of Notes to Financial Statements
included in the Partnership's 1994 Annual Report for a description of the
former $13,250,000 loan funded 37.736% by the Partnership and 62.264% by
Mortgage Partners, Ltd.-III ("Mortgage Partners-III"), a partnership
affiliated with the General Partners (jointly the "Lenders") and secured by
the Calibre Point Apartments located in Atlanta, Georgia.
Due to competitive market conditions, the borrower defaulted in 1991
on the mortgage note and the Lenders obtained legal title to the property.
The Lenders contributed the property to a newly formed joint venture
between themselves (Calibre Pointe Associates) to own and operate the
complex. The terms of the venture agreement provide in general, that the
benefits of ownership, including tax effects, net cash receipts and sale
proceeds are allocated or distributed as the case may be, between the
Partnership and Mortgage Partners-III in proportion to their respective
capital contributions to the venture (37.736% by the Partnership). The
Partnership recorded its net carrying value (including liabilities of the
property assumed at acquisition) in the property contributed to the venture
in an amount not in excess of its then estimated fair value. The
Partnership is currently examining a potential sale of the property.
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(b) North Rivers Market Associates
Reference is made to Notes 2(b) and 4(a) of Notes to Financial
Statements included in the Partnership's 1994 Annual Report for a
description of the former $17,350,000 loan funded 33.5065% by the
Partnership and 66.4935% by Mortgage Partners-III (jointly the "Lenders")
and secured by the North Rivers Market investment property. Due to the
significant vacancy level at the property, on May 17, 1993, the borrower,
pursuant to a deed in lieu of foreclosure, transferred legal title of the
property to North Rivers Market Associates ("NRMA") to own and operate the
complex. NRMA is a joint venture in which the Partnership and Mortgage
Partners-III own 33.5065% and 66.4935% each respectively. The terms of the
venture agreement provide in general that the benefits of ownership,
including tax effects, net cash receipts, sale proceeds, and future
contribution obligations are allocated or distributed, as the case may be,
between the Partnership and the venture partner in proportion to their
respective capital accounts. An affiliate assumed management of the
property under an agreement which provides for a fee computed as 6% of
gross income of the property. The Partnership, as a matter of prudent
accounting practice, has recorded a value impairment in the amount of
$2,300,000 (of which $770,000 has been allocated to the venture partner)
for financial reporting purposes at September 30, 1995. Reference is made
to Note 1.
(3) PARTNERSHIP AGREEMENT
Net profits of the Partnership from operations are generally allocated
to the General Partners in an amount equal to the greater of 1% of net
profits or the amount of net cash flow actually distributed to the General
Partners, with the remaining net profits allocated to the Limited Partners.
Any net losses from Partnership operations will be allocated 90% to the
Limited Partners and 10% to the General Partners. Net profits from the
repayment or other disposition of mortgage investments will generally be
allocated first to the General Partners in an amount equal to the greater
of 1% of such net profits or the cash distributions to the General Partners
from the proceeds of such repayment or other disposition (as described
below). The remaining net profits from any disposition of mortgage
investments will be allocated to the Limited Partners. Net losses from the
repayment or other disposition of mortgage investments will be allocated
99% to the Limited Partners and 1% to the General Partners.
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 "net cash flow" of
the Partnership will be made 90% to the Limited Partners and 10% to the
General Partners, with one-half of such net cash flow distributable to the
General Partners in the first twelve fiscal quarters following the close of
the offering subordinated to the receipt by the Limited Partners of a
stipulated return on their "current capital accounts" on a non-cumulative
basis. Distributions of "repayment proceeds" will be made 97% to the
Limited Partners and 3% to the General Partners (such 3% being subject to
certain limitations) until the Limited Partners have received repayment
proceeds equal to their capital investment plus a stipulated return on
their current capital account. Subject to the General Partners' receipt of
any deferred share of net cash flow, any remaining repayment proceeds will
be distributed 87% to the Limited Partners and 13% to the General Partners
until the Limited Partners have received repayment proceeds providing an
additional stipulated return on their current capital account. The
remaining repayment proceeds will be distributed 85% to the Limited
Partners and 15% to the General Partners.
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) MORTGAGE NOTES RECEIVABLE
The Partnership has participated in the funding of four participating
first mortgage loans for three shopping centers (North Rivers Market,
Riverpoint Center and Franklin Farm) and one apartment complex (Calibre
Pointe Apartments). The Partnership has taken title to the underlying
collateral for the North Rivers Market and the Calibre Pointe Apartments
(note 2). Generally, the remaining agreements provide for basic interest
payable monthly at certain specified interest rates along with annual
simple accrued interest (deferred until maturity) at rates ranging from 2%
to 3% per annum, and for additional interest in an amount equal to a
percentage of the gross receipts of the properties in excess of certain
specified levels, and for an amount equal to a percentage of any subsequent
increases in the value of the underlying properties in excess of certain
specified levels. Any payments of additional interest made by the
borrowers will be used to offset, on a dollar-for-dollar basis, the
borrower's obligation to pay simple accrued interest.
(a) Riverpoint Center, Chicago, Illinois
In August, 1989, the Partnership participated in the funding of a non-
recourse participating first mortgage loan in the maximum principal amount
of $29,250,000. The Partnership had committed to fund a maximum of
$13,200,000, or approximately 45.128% of this loan. The remaining portion
of the loan was funded by Mortgage Partners-III, and IDS Life Account RE,
an entity advised by an affiliate of the General Partners (herein,
collectively called the "Lenders"). The loan is secured by a first
mortgage on a shopping center known as Riverpoint Center located in
Chicago, Illinois. The Lenders do not intend to make any additional
fundings beyond the $28,039,630 ($12,653,783 by the Partnership) now
funded. The ten-year loan bears basic interest at the rate of 8.884% per
annum for the first loan year, 8.75% per annum for loan years two and
three, increasing .50% per annum in the fourth and .25% per annum in the
seventh loan year to a maximum rate of 9.50% per annum, payable monthly in
advance.
Due to the uncertainty of the realization of the simple accrued
interest recognized through December 31, 1991 ($436,021) and the principal
balance of the loan ($12,653,783), the Partnership had, as a matter of
prudent accounting practice, made a provision for loan loss on the deferred
interest as of December 31, 1991 in the amount of $436,021. The
Partnership is recognizing interest income only as collected.
The Silo Electronic store (12,100 sq. ft.) at Riverpoint Center
vacated its space in the third quarter 1995, and the borrower is pursuing
its legal remedies regarding such unpaid amounts. The borrower has re-
leased the space to a book store for three months at a substantially lower
rent. The borrowers have a letter of intent from a prospective tenant to
lease the space for five years with rent commencing on July 1, 1996. As a
result of this vacancy, the borrower has notified the lender that it is
experiencing financial difficulties and has approached the Lenders
regarding a loan modification. The Lenders are considering the borrower's
request. As of the date of this report, certain escrow payments and
participation interest are due to the Lender; however, the borrower is
current in its monthly debt service payments.
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(b) Franklin Farm Village Center, Fairfax County, Virginia
In December 1991, the Partnership participated in the funding of a
non-recourse participating first mortgage loan in the maximum principal
amount of $16,600,000. The Partnership has committed to fund a maximum of
$11,000,000 or approximately 66.3% of the loan. The other lender is
Mortgage Partners - III (jointly the "Lenders"). The loan is secured by a
first mortgage on a shopping center known as Franklin Farm Village Center
(the "Center") located in Fairfax County, Virginia. The Lenders have
cumulatively funded approximately $14,809,000 of which the Partnership's
share was approximately $9,818,000. Up to an additional $1,791,000 (of
which the Partnership's share is $1,187,000) may be funded if the borrower
elects to pursue certain expansion/purchase options with respect to the
land surrounding the existing Center and its parking lot. There can be no
assurance, however, that terms and conditions for any subsequent fundings
will be met and, therefore, it is possible that additional subsequent
fundings will not be made or will be less than the maximum principal
amount.
In June, 1994, the Lenders received a partial return in the amount of
$322,907 of the original principal funding (of which the Partnership's
share was $213,974). These funds relate to an "earn down" provision in the
original purchase agreement between the borrower and the seller. Due to a
major tenant not generating a certain level of sales in 1993, the seller
was required to return a portion of the sale price it had received in 1991
at closing. The borrower subsequently remitted the proceeds back to the
Lenders as required by the terms of the loan agreement. The Lenders will
retain these proceeds due to the possibility of the borrower requesting
future additional fundings per the original loan agreement as discussed
above.
In late 1993, the Lenders were informed by the borrower that an
underground gasoline tank experienced a gasoline leak at the property. The
tenant, which has a ground lease with the borrower, informed the borrower
and the appropriate state agencies that gasoline was discharged into the
ground. The tenant, which operates a gasoline station at the site, is
cooperating fully with all government agencies in order to rectify this
problem in a expeditious manner. In addition, the Lenders were informed
that no underground nearby water supplies were affected nor does it appear
likely that any will be affected in the future. The tenant (an affiliate
of a national gasoline marketer) appears to have the financial resources to
fully pay for the clean up at the property. At this time, it is not
determinable what the cost of the clean up will be. In addition, at this
time, the Lenders believe the value of the borrower property has not been
materially affected. Therefore, no provision for loan loss has been
established at this time. However, there can be no assurances that the
gasoline leak, as reported, will not have a material impact on the value of
the Lenders' security in the future. As of the date of this report, no
amounts currently due from the borrower of this loan are in arrears.
The Corporate General Partner received $169,852 from the borrower as
fees for JMB's services in processing, reviewing and arranging the loan and
is entitled to receive additional fees in the event there are subsequent
fundings to this loan. The portions of such fees which are attributable to
the Partnership's participation in the loan constitutes Mortgage Investment
Application Fees (note 5).
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(5) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the Corporate General Partner and its affiliates as of
September 30, 1995 and for the nine months ended September 30, 1995 and
1994, are as follows:
<TABLE>
<CAPTION>
Unpaid at
September 30,
1995 1994 1995
------- ------ -------------
<S> <C> <C> <C>
Mortgage investment
servicing fees. . . . . . . . . . $41,611 41,028 26,757
Reimbursement (at cost) for
out-of-pocket expenses. . . . . . 548 735 --
------- ------ -------
$42,159 41,763 26,757
======= ====== =======
</TABLE>
The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of certain officers and
employees of the Corporate General Partner and its affiliates while
directly engaged in administration of the Partnership and the operation of
the Partnership's real property investments. In 1994 and for the nine
months ended September 30, 1995, such reimbursable costs aggregated $61,564
and $89,295, respectively, all of which were paid at September 30, 1995.
The Corporate General Partner of the Partnership has determined to use
independent third parties to perform certain of these administrative
services beginning in the fourth quarter of 1995. Use of such third
parties is not expected to have a material effect on the operations of the
Partnership.
The Corporate General Partner is entitled to receive mortgage
investment servicing fees from the Partnership at an annual rate of 1/4 of
1% of the maximum amount advanced by the Partnership and outstanding from
time to time with respect to mortgage investments. The cumulative amount
of such fees aggregated $402,224 of which $26,757 was unpaid at September
30, 1995.
The Corporate General Partners and its affiliates are entitled to
property management fees for the North Rivers Market Shopping Center. In
1995, the Partnership's proportionate share of these fees was $24,690, of
which $2,444 was unpaid at September 30, 1995.
The Corporate General Partner is entitled to distributions of net cash
flow from the Partnership. The cumulative amount of such distributions
aggregated $1,897,773 at September 30, 1995, of which approximately
$442,000 is being deferred in accordance with the subordination
requirements of the Partnership Agreement. All amounts deferred or
currently payable do not bear interest.
JMB MORTGAGE PARTNERS, LTD. - IV
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS - CONCLUDED
(6) SELECTED FINANCIAL INFORMATION
Pursuant to the requirements of the Securities and Exchange
Commission, the following is a summary of historical income statement
information for the Riverpoint Center and Franklin Farm Village shopping
centers for the nine months ended September 30, 1995 and 1994. Such
properties secure the participating first mortgage investments made by the
Partnership.
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Total revenues. . . . . . . . $4,546,665 4,922,725
========== ==========
Net loss. . . . . . . . . . . $ (258,359) (291,220)
========== ==========
</TABLE>
(7) ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
1995 and for the three and nine months ended September 30, 1995 and 1994.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are to Notes to the Consolidated Financial
Statements contained in this report.
At September 30, 1995, the Partnership had cash and cash equivalents
of approximately $5,509,000. Such funds and short-term investments of
approximately $634,000, will be utilized for future distributions to
partners, for working capital reserves and for additional amounts which are
expected to be funded under the participating first mortgage loan secured
by Franklin Farm Village Center, located in Fairfax County, Virginia as
described in Note 4(b). The Partnership's share of previously
undistributed operating cash flow related to the Calibre Pointe Apartments
and North Rivers Market Shopping Center of approximately $2,094,000 was
received in the second quarter of 1995. The capital expenditures for its
unconsolidated ventures is currently budgeted to be approximately $280,000
in 1995. The Partnership's share of such items is currently budgeted to be
approximately $99,000. Actual amounts expended in 1995 may vary depending
on a number of factors including actual leasing activity, results of
property operations, liquidity considerations and other market conditions
over the course of the year. The sources of future short-term and long-
term liquidity and distributions to the Limited and General Partners are
expected to be from the collection of interest and repayment of principal
of the Partnership's participating first mortgage loan investments.
Reference is made to Note 4(a) concerning the suspension of certain
interest accruals and the provisions for loan loss on the loans secured by
the Riverpoint Shopping Center located in Chicago, Illinois.
Additional sources of both short-term and long-term liquidity and
distributions are expected to be from net cash generated by the
Partnership's investment properties, the Calibre Pointe Apartments, and the
North Rivers Market Shopping Center, and from the sale of such investments.
Reference is made to Note 2 for a description of the events resulting in
the Partnership, through a joint venture, obtaining legal title to these
properties. The operations of the properties are expected to provide a
current return which is significantly less than the interest payments due
under the original mortgage loans.
Based upon the determination of the Corporate General Partner, the
Partnership has, commencing with the fourth quarter of 1994, increased the
distributions to $13.50 per $1,000 Interest per quarter from its previous
level of $12.50 per $1,000 Interest. In an effort to reduce partnership
operating expenses, the Partnership has elected to make a semi-annual
operating distribution each year beginning in November 1995.
The Partnership continues to examine a potential sale of the Calibre
Pointe Apartments, given the favorable conditions that exist in the Atlanta
market.
In June, 1994 the Lenders received a partial return in the amount of
$322,907 of the original principal funding (of which the Partnership's
share was $231,974) of the mortgage loan at Franklin Farm Village Center.
These funds relate to an "earn down" provision in the original purchase
agreement between the borrower and the seller. Due to a major tenant not
generating a certain level of sales last year, the seller had to return a
portion of the sale price it had received in 1991 at closing. The borrower
subsequently remitted the proceeds back to the Lenders as required by the
terms of the loan agreement. The Lenders will retain these proceeds due to
the possibility of the borrower requesting future additional fundings per
the original loan agreement as discussed in Note 4(b). In November, 1994
the Lenders finalized an agreement with the Borrower to fund the
acquisition of an outparcel and improvements adjacent to the center. The
Lenders provided permanent financing of approximately $659,000 (of which
the Partnership's share was approximately $437,000), including 90% of the
closing costs, toward the acquisition by the borrower of the outparcel land
and improvements. The loan bears basic interest payable monthly at the
rate of 9% per annum for the first four years of this funding and 10% per
annum thereafter through maturity in November, 2001. This represented the
second subsequent funding on this mortgage loan, which leaves approximately
$1,791,000 (of which the Partnership's share is approximately $1,187,000)
available to the Borrower to fund future expansion or purchase options.
One of the tenants at the center, a major oil company, continues to explore
the extent of the possible damage caused by a leak at one of its gasoline
pumps in late 1993. The borrower is monitoring the situation closely and
does not believe it will have a material impact on the value of the center.
Therefore, no provision for loan loss has been established at this time.
However, there can be no assurances that the gasoline leak, as reported,
will not have a material impact on the value of the Lenders' security in
the future. As of the date of this report, no amounts currently due from
the borrower of this loan are in arrears.
Occupancy of North Rivers Market Shopping Center in North Charleston,
South Carolina remained at 80% at September 30, unchanged from June 30,
1995. Phar Mor, a major tenant at the center, filed for protection in
August 1992 under Chapter 11 of the bankruptcy code. The Phar Mor store at
the center has continued to operate since its bankruptcy filing and has
been current on all rent payments due subsequent to filing. The manager is
aggressively attempting to lease the vacant space in the center. However,
the competitiveness of the market given the Naval facility closing in the
nearby area is expected to make it difficult to lease space in the center
thereby extending the period of time it will take to complete the lease-up
of the center and result in a decrease in cash flow from operations over
the near term. Hechinger's, who vacated its store which it owns in 1989,
continues to attempt to lease the remaining vacancy in its store to other
suitable retailers. However, in early 1995, a tenant (Sportstown) that
occupied part of the vacated Hechinger's space filed for protection under
Chapter 11 of the bankruptcy code. They have sublet their space to Sports
Authority which is expected to open in late November.
As a result of the vacancies at the property and the competitiveness
of the market described above, there is uncertainty as to the Partnership's
ability to recover the net carrying value of the North Rivers market
investment property, over its revised expected holding period. As a
result, the Partnership, as a matter of prudent accounting practice,
recorded a provision for value impairment of $2,300,000 (of which $770,000
has been allocated to the Partnership and was reflected in the
Partnership's share of operations of unconsolidated ventures). Such
provision, made as of September 30, 1995 was recorded to reduce the net
carrying value of North Rivers Market to its estimated recoverable value.
The Silo Electronic store (12,100 sq. ft.) at Riverpoint Center
vacated its space in the third quarter 1995, and the borrower is pursuing
its legal remedies regarding such unpaid amounts. The borrower has re-
leased the space to a book store for three months at a substantially lower
rent. The borrowers have a letter of intent from a prospective tenant to
lease the space for five years with rent commencing on July 1, 1996. As a
result of this vacancy, the borrower has notified the lender that it is
experiencing financial difficulties and has approached the Lenders
regarding a loan modification. The Lenders are considering the borrower's
request. As of the date of this report, certain escrow payments and
participation interest are due to the Lender; however, the borrower is
current in its monthly debt service payments.
After reviewing the properties and competitive market places in the
portfolio, the General Partners of the Partnership expect to be able to
liquidate the remaining assets as quickly as practicable. Therefore, the
affairs of the Partnership are expected to be wound up no later than 1999
barring unforeseen economic developments including the inability to sell
the Franklin Farm Village Center note prior to its maturity in 2001.
RESULTS OF OPERATIONS
The overall increase in cash and cash equivalents and short term
investments and the related decrease in investment in unconsolidated
ventures at September 30, 1995 as compared to December 31, 1994 is
primarily due to the Partnership's share of the cash distributions of
approximately $2,094,000 received from the Calibre Point Apartments and
North Rivers Shopping Center in the second quarter of 1995 as discussed
above. The increase in short term investments at September 30, 1995 as
compared to December 31, 1994 is also due to all of the Partnership's U.S.
Government obligations being classified as cash and cash equivalents at
December 31, 1994 whereas $634,465 of the Partnership's U.S. Government
obligations were classified as short-term investments at September 30,
1995. Reference is made to Note 1.
The decrease in interest and other receivables at September 30, 1995
as compared to December 31, 1994 is primarily due to the timing of
collection of interest on the Partnership's U.S. Government obligations.
Deferred interest receivable increased at September 30, 1995 as
compared to December 31, 1994 as a result of the deferral of approximately
$247,000 of additional interest earned in 1995 under the terms of the
mortgage loan receivable secured by the Franklin Farm Village Center (Note
4(b)).
The increase in amounts due to affiliates at September 30, 1995 as
compared to December 31, 1994 is primarily due to the Partnership's payable
of approximately $151,000 to the other participating lender (Mortgage
Partners III) representing interest earned by the participating lender on
the loan secured by Franklin Farm Village Center. This amount was paid to
the participating lender in October 1995.
The decrease in other liabilities at September 30, 1995 as compared to
December 31, 1994 is due to a payment made from deposits held for real
estate taxes for the Riverpoint Shopping Center.
The increases in interest income for the three and nine months ended
September 30, 1995 as compared to the same periods in 1994 are primarily
due to the interest earned relating to the additional $437,000 funding in
November 1994 at the Franklin Farm Village Center as described in Note 4(b)
and to interest earned on the Partnership's investment of the $2,094,000
received from Calibre Point Apartments and North Rivers Market Shopping
Center as discussed above.
The increases in general and administrative expenses for the three and
nine months ended September 30, 1995 as compared to the same periods in
1994 are attributable primarily to an increase in reimbursable costs to
affiliates of the General Partners in 1995 and the recognition of certain
additional prior year reimbursable costs to such affiliates. Reference is
made to Note 5.
The decreases in Partnership's share of operations (loss) of
unconsolidated ventures for the three and nine months ended September 30,
1995 as compared to the same periods in 1994 are primarily due to the
provision for value impairment recorded at September 30, 1995 at North
Rivers Market (of which the Partnership's share is $770,000). Reference is
made to Notes 1 and 2.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties.
<CAPTION>
1994 1995
------------------------------- -------------------------------
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. Calibre Pointe Apartments
Atlanta, Georgia . . . . . . . . . . . . . . 96% 97% 99% 97% 98% 90% 98%
2. North Rivers Market Shopping Center
North Charleston, South Carolina. . . . . . 88% 88% 87% 88% 80% 80% 80%
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
10-A. Loan documents related to the Partnership's
participation in the funding of a first mortgage loan secured by a first
mortgage on Riverpoint Center Shopping Center located in Chicago, Illinois,
is hereby incorporated herein by reference to the Partnership's Form 8-K
(File No. 33-4036) dated September 5, 1989.
10-B. Loan documents related to the Partnership's
participation in the funding of a first mortgage loan secured by Franklin
Farm Village Shopping Center located in Fairfax County, Virginia, is hereby
incorporated herein by reference to the Partnership's Form 8-K (File No. 0-
16599) dated November 21, 1991.
10-C. First and Second Amendments to the loan documents dated
September 28, 1993 and November 23, 1994, respectively, between
Rosenfeld/Franklin Farm Village Center L.P. and Mortgage Partners, Ltd.-IV,
relating to additional loan amounts, are hereby incorporated herein by
reference to the Partnership's Report for December 31, 1994 on Form 10-K
(File No. 0-16599) dated March 27, 1995.
27. Financial Data Schedule
(b) No Reports on Form 8-K have been filed for the quarter covered
by this report.
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 MORTGAGE PARTNERS, LTD. - IV
BY: JMB Realty Corporation
(Corporate General Partner)
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Date: November 9, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull,
Principal Accounting Officer
Date: November 9, 1995
<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, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000790550
<NAME> JMB MORTGAGE PARTNERS, LTD. - IV
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,508,884
<SECURITIES> 634,465
<RECEIVABLES> 13,806
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,157,155
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,646,666
<CURRENT-LIABILITIES> 496,130
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 37,150,536
<TOTAL-LIABILITY-AND-EQUITY> 37,646,666
<SALES> 1,949,601
<TOTAL-REVENUES> 1,949,601
<CGS> 0
<TOTAL-COSTS> 68,696
<OTHER-EXPENSES> 199,878
<LOSS-PROVISION> 303,255
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,377,772
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,377,772
<EPS-PRIMARY> 27.45
<EPS-DILUTED> 27.45
</TABLE>
