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, 1994Commission file number 000-19496
JMB INCOME PROPERTIES, LTD. - XIII
(Exact name of registrant as specified in its charter)
Illinois 36-3426137
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . 15
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . 19
Item 6. Exhibits and Reports on Form 8-K. . . . . . 20
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . $ 658,313 1,301,466
Short-term investments (note 1). . . . . . . . . . . . . . . . . 12,840,193 11,520,463
Interest, rents and other receivables (net of allowance
for doubtful accounts of $134,143 in 1994 and $90,074
in 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . 849,062 1,039,884
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 108,017 67,608
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . 414,975 --
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . 14,870,560 13,929,421
Investment properties, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,566,702 23,566,702
Buildings and improvements . . . . . . . . . . . . . . . . . . . 75,040,330 74,953,712
------------ ------------
98,607,032 98,520,414
Less accumulated depreciation. . . . . . . . . . . . . . . . . . (13,492,711) (11,626,188)
------------ ------------
Total investment properties, net of
accumulated depreciation . . . . . . . . . . . . . . . . 85,114,321 86,894,226
Investment in unconsolidated ventures,
at equity (note 7) . . . . . . . . . . . . . . . . . . . . . . . 10,032,111 10,779,381
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 921,870 805,423
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . 1,342,034 1,173,482
------------ ------------
$112,280,896 113,581,933
============ ============
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
Liabilities and Partners' Capital Accounts (Deficits)
-----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . $ 266,167 --
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 68,178 127,112
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 198,777 212,168
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . 111,604 88,601
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . 1,257,480 1,155,752
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . 1,902,206 1,583,633
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . 282,915 310,468
Long-term debt, less current portion . . . . . . . . . . . . . . . 26,507,859 26,700,000
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . 28,692,980 28,594,101
------------ ------------
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . 701,884 600,395
Cumulative cash distributions. . . . . . . . . . . . . . . . (1,194,760) (1,088,351)
------------ ------------
(472,876) (467,956)
------------ ------------
Limited partners (126,414 interests):
Capital contributions, net of offering costs . . . . . . . . 113,741,315 113,741,315
Cumulative net earnings. . . . . . . . . . . . . . . . . . . 21,879,757 19,444,026
Cumulative cash distributions. . . . . . . . . . . . . . . . (51,560,280) (47,729,553)
------------ ------------
84,060,792 85,455,788
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . 83,587,916 84,987,832
------------ ------------
Commitments and contingencies (notes 3 and 5) $112,280,896 113,581,933
============ ============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------------------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . $ 3,129,147 3,347,178 8,611,360 8,864,201
Interest income. . . . . . . . . . . . 152,836 102,517 364,075 302,668
----------- ---------- ---------- ----------
3,281,983 3,449,695 8,975,435 9,166,869
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . 596,722 636,503 1,802,145 1,909,508
Depreciation . . . . . . . . . . . . . 622,175 618,832 1,866,523 1,856,500
Property operating expenses. . . . . . 975,236 943,449 2,686,343 2,657,555
Professional services. . . . . . . . . 2,060 -- 135,183 115,666
Amortization of deferred expenses. . . 54,639 48,382 153,581 131,330
General and administrative . . . . . . 49,400 24,865 160,240 97,420
----------- ---------- ---------- ----------
2,300,232 2,272,031 6,804,015 6,767,979
----------- ---------- ---------- ----------
Operating earnings . . . . . . . 981,751 1,177,664 2,171,420 2,398,890
Partnership's share of operations
from unconsolidated ventures (note 7). 142,478 (54,981) 365,800 (253,828)
----------- ---------- ---------- ----------
Net operating earnings . . . . . 1,124,229 1,122,683 2,537,220 2,145,062
Partnership's share of gain on sale
of land from unconsolidated venture
(note 3(c)). . . . . . . . . . . . . . -- -- -- 346,208
----------- ---------- ---------- ----------
Net earnings . . . . . . . . . . $ 1,124,229 1,122,683 2,537,220 2,491,270
=========== ========== ========== ==========
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------------------------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
Net earnings per limited
partnership interest
(note 1):
Net operating earnings . . . . $ 8.54 8.53 19.27 16.29
Partnership's share of
gain on sale of land
from unconsolidated
venture. . . . . . . . . . . -- -- -- 2.71
----------- ---------- ---------- ----------
Net earnings . . . . . . . . . $ 8.54 8.53 19.27 19.00
=========== ========== ========== ==========
Cash distributions per
limited partnership
interest (note 1). . . . . . $ 10.00 10.00 30.00 30.00
=========== ========== ========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,537,220 2,491,270
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . 1,866,523 1,856,500
Amortization of deferred expenses. . . . . . . . . . . . . . . 153,581 131,330
Partnership's share of operations and gain on sale of
investment property of unconsolidated ventures . . . . . . . (365,800) (92,380)
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . 190,822 (104,759)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . (40,409) (29,299)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . (168,552) (70,334)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (58,934) (12,135)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . (13,391) --
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . 23,003 50,868
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . 101,728 (49,639)
Tenant security deposits . . . . . . . . . . . . . . . . . . . (27,553) (65,503)
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . (284,506) --
------------ -----------
Net cash provided by operating activities. . . . . . . . 3,913,732 4,105,919
------------ -----------
Cash flows from investing activities:
Net purchases of short-term investments. . . . . . . . . . . . . (1,319,730) (1,427,672)
Additions to investment properties . . . . . . . . . . . . . . . (86,618) (672,500)
Partnership's distributions from unconsolidated ventures
and proceeds from sale of investment property. . . . . . . . . 1,145,000 93,750
Partnership's contributions to unconsolidated ventures . . . . . (31,930) (10,322)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . (200,497) (313,943)
------------ -----------
Net cash used in investing activities. . . . . . . . . . (493,775) (2,330,687)
------------ -----------
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . (125,974) --
Distributions to limited partners. . . . . . . . . . . . . . . . (3,830,727) (3,830,727)
Distributions to general partners. . . . . . . . . . . . . . . . (106,409) (106,409)
------------ -----------
Net cash used in financing activities. . . . . . . . . . (4,063,110) (3,937,136)
------------ -----------
Net decrease in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . $ (643,153) (2,161,904)
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . $ 1,815,536 1,909,508
============ ===========
Non-cash investing and financing activities:
Refinancing of long-term debt (note 4):
Proceeds of new debt . . . . . . . . . . . . . . . . . . . . $ 11,200,000 --
Retirement of old debt . . . . . . . . . . . . . . . . . . . (11,000,000) --
Deferred mortgage costs. . . . . . . . . . . . . . . . . . . (69,531) --
Funding of escrow. . . . . . . . . . . . . . . . . . . . . . (130,469) --
------------ -----------
Net proceeds from refinancing of
long-term debt . . . . . . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1993
which are included in the Partnership's 1993 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and one of its ventures, Adams/Wabash Limited
Partnership ("Adams/Wabash"). The effect of all transactions between the
Partnership and Adams/Wabash have been eliminated in the consolidated
financial statements. The equity method of accounting has been applied in
the accompanying financial statements with respect to the Partnership's
interests in JMB First Financial Associates ("First Financial") and
JMB/Miami International Associates ("JMB/Miami"). Accordingly, the
accompanying financial statements do not include the accounts of First
Financial and JMB/Miami.
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments where applicable to reflect
the Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP"). Such adjustments are not recorded on the records of
the Partnership.
The net effect of these items is summarized as follows for the nine
months ended September 30:
1994 1993
----------------------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net earnings . $2,537,220 2,490,281 2,491,270 2,062,364
Net earnings
per limited
partnership
interest. . . $ 19.27 18.92 19.00 15.66
========== ========= ========= =========
The net earnings per limited partnership interest is based upon the
limited partnership interests outstanding at the end of the period
(126,414). Deficit capital accounts will result, through the duration of
the Partnership, in net gain for financial reporting and income tax
purposes.
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from its unconsolidated ventures are considered
cash flow from operating activities only to the extent of the Partnership's
cumulative share of net earnings. The Partnership records amounts held in
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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
($296,589 at September 30, 1994 and none at December 31, 1993) 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.
Certain amounts in the 1993 consolidated financial statements have
been reclassed to conform to the 1994 presentation.
(2) INVESTMENT PROPERTIES
The Partnership has acquired, either directly or through joint
ventures (note 3), three shopping centers, two multi-tenant industrial
properties, an office complex and a parking/retail structure. All of the
properties owned at September 30, 1994 were operating.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at September 30, 1994 is a party to three operating
joint venture agreements. Pursuant to such agreements, the Partnership has
made capital contributions of approximately $56,789,000 through September
30, 1994. Under certain circumstances, either pursuant to the venture
agreements or due to the Partnership's obligations as general partner, the
Partnership may be required to make additional cash contributions to the
ventures.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
(b) First Financial
On May 20, 1987, the Partnership, acquired an interest in an office
building in Encino (Los Angeles), California. First Financial is obligated
to make an initial investment to Encino in the aggregate amount of
$49,850,000 of which approximately $49,812,000 of such contributions have
been made. The Partnership's share of the remaining amounts, approximately
$14,000, will be contributed when the venture partner complies with certain
requirements.
All of Encino's operating profits and losses before depreciation have
been allocated to First Financial in 1994 and 1993.
(c) JMB/Miami
On January 26, 1988, the Partnership through JMB/Miami, a joint
venture with JMB/Miami Investors L.P., a partnership sponsored by an
affiliate of the General Partners of the Partnership, acquired an interest
in an existing partnership ("West Dade" in which JMB/Miami is a general
partner) with an affiliate of the developer which owns an enclosed regional
shopping center in Miami, Florida known as the Miami International Mall.
During February 1989, IDS/JMB Balanced Income Growth, Ltd., a partnership
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
sponsored by an affiliate of the General Partners of the Partnership, made
a capital contribution to JMB/Miami to acquire an interest therein. During
October 1993, JMB/Miami Investors L.P. transferred its interest in
JMB/Miami to Urban Shopping Centers, L.P., a partnership controlled by
Urban Shopping Centers, Inc. (a public corporation organized by an
affiliate of the General Partners of the Partnership).
In December 1993, West Dade obtained a new mortgage loan in the
principal amount of $47,500,000 replacing the existing first mortgage loan
at the property. The new mortgage loan bears interest at 6.91% per annum
and matures December 21, 2003. The loan provides for monthly interest-only
payments for years one through three and monthly principal and interest
payments based on a twenty-year amortization period for years four through
ten. The non-recourse loan is secured by a first mortgage on the Miami
International Mall.
During the third quarter of 1992, the property experienced storm
damage caused by Hurricane Andrew. All repairs necessary to continue
operations and replacement of the landscaping have been completed and West
Dade has been fully reimbursed in 1994 by insurance proceeds for such
repairs.
West Dade sold a 3.9 acre outparcel of land at the Miami International
Mall in June 1993 for a net sale price of approximately $1,560,000 after
certain selling costs, of which the Partnership's share was approximately
$390,000. For financial reporting purposes, West Dade has recognized a
gain in 1993 of approximately $1,385,000, of which the Partnership's share
is approximately $346,000. For income tax purposes, West Dade has
recognized a gain in 1993 of approximately $325,000, of which the
Partnership's share is a loss of approximately $37,000. West Dade is
currently negotiating the sale of an additional 4 acre outparcel of land.
(d) Adams/Wabash
On April 19, 1988, an affiliate of the Partnership entered into a
forward commitment on behalf of the Partnership to make a total cash
investment to a maximum of $25,750,000 in the Adams/Wabash Limited
Partnership ("Adams/Wabash"), which constructed a parking garage and retail
structure (the "Project") in Chicago, Illinois. The Project contains 671
parking spaces and approximately 28,800 square feet of leasable retail
area. The Partnership has funded approximately $24,994,000 of its total
cash commitment and does not anticipate further increasing its cash
investment.
Upon acquisition, the Partnership was admitted to an existing
partnership with a 49.9% ownership interest, which increased to 74.9%
effective October 1, 1993 pursuant to the terms of the Adams/Wabash Limited
Partnership Agreement. The Managing General Partner of the Partnership has
a .1% interest with the remaining 25% held by the developers. The
Partnership is entitled to a cumulative annual preferred return, payable
from operating cash flow, of 10% of its capital contributions to the
existing partnership. Any distributable cash flow in excess of the
Partnership's preferred return will be distributed in accordance with the
ownership interests of Adams/Wabash. The Partnership also has a preferred
position with respect to distributions of sales and financing proceeds.
Items of profit and loss are, in general, allocated in accordance with
distributions of cash flow. The Partnership is expected to receive its
preferred return for 1994.
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(4) LONG-TERM DEBT REFINANCING
In February 1994, the Partnership extended and increased the first
mortgage loan, which is secured by the Fountain Valley and Cerritos
Industrial Parks, to the principal amount of $11,200,000. The extended
loan bears interest at a rate of 7.32% per annum, provides for monthly
payments of principal and interest based on a twenty-year amortization
schedule and matures March 1, 2001. After payment of costs and fees
related to the refinancing, there were no distributable proceeds from the
loan extension. Prior to the extension, the Partnership had entered into a
forbearance agreement with the lender providing, among other things, that
the lender agreed not to exercise its rights and remedies under the
original loan documents from November 2, 1993, the original maturity date,
until January 31, 1994. The Partnership continued to pay interest only at
an annual rate of 8.83% on the original $11,000,000 principal balance
through the effective date of the refinancing.
(5) PARTNERSHIP AGREEMENT
The General Partners have made capital contributions to the
Partnership aggregating $20,000. The General Partners are not required to
make any additional capital contributions except under certain limited
circumstances upon dissolution and termination of the Partnership.
Disbursable cash from operations, as defined in the Partnership Agreement,
will be distributed 90% to the Limited Partners and 10% to the General
Partners, subject to certain limitations. Sale or refinancing proceeds
will be distributed 100% to the Limited Partners until the Limited Partners
have received their contributed capital plus a stipulated return thereon.
The General Partners will then receive 100% of the sale or refinancing
proceeds until they receive amounts equal to the sum of (i) the cumulative
deferral of their 10% distribution of disbursable cash and (ii) 2% of the
selling prices of all properties which have been sold, subject to certain
limitations. Any remaining sale or refinancing proceeds will then be
distributed 85% to the Limited Partners and 15% to the General Partners.
Accordingly, approximately $3,584,000 of disbursable cash and approximately
$618,000 of sale proceeds have been deferred by the General Partners.
(6) TRANSACTIONS WITH AFFILIATES
Certain of the Partnership's properties are managed by affiliates of
the General Partners. In October 1994, one of the affiliated property
managers agreed to sell substantially all of its assets to an unaffiliated
third party. In addition, substantially all of the management personnel of
the property manager will also become management personnel of the purchaser
or its affiliates if the sale is completed. The sale is subject to certain
closing conditions. In the event that the sale is completed, it is
expected that the successor to the affiliated property manager's assets
would act as the property manager of the Fountain Valley and Cerritos
Industrial Parks after the sale on the same terms that existed prior to the
sale.
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of September
30, 1994 and for the nine months ended September 30, 1994 and 1993 are as
follows:
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Unpaid at
September 30,
1994 1993 1994
-------- ------- -------------
Property management
fees. . . . . . . . . . . . $158,828 178,793 3,872
Insurance commissions. . . . -- 10,861 --
Reimbursement
(at cost) for
out-of-pocket
expenses. . . . . . . . . . 2,284 15,888 1,122
-------- ------- ------
$161,112 205,542 4,994
======== ======= ======
During 1994, certain officers and directors of the Corporate General
Partner acquired interests in a company which provides certain property
management services to certain of the properties owned by the Partnership.
The fees earned by such company from the Partnership for the nine months
ended September 30, 1994 were approximately $116,000, all of which have
been paid.
In accordance with the subordination requirements of the Partnership
Agreement (note 5), the General Partners have deferred payment of certain
of their distributions of net cash flow and sale proceeds from the
Partnership. The cumulative amount of such deferred distributions was
approximately $4,202,000 at September 30, 1994. All amounts deferred or
currently payable do not bear interest.
The Managing General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Managing General Partner and its affiliates relating to the
administration of the Partnership and the operation of Partnership's
investment properties. The amount of such salaries and direct expenses
aggregated $67,647 and $78,408 for the nine months ended September 30, 1994
and the twelve months ended December 31, 1993, respectively, all of which
has been paid as of September 30, 1994.
(7) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for the First Financial and
JMB/Miami ventures for the nine months ended September 30, 1994 and 1993 is
as follows:
1994 1993
----------- ----------
Total income . . . . . . . $13,911,102 14,460,623
=========== ==========
Operating earnings
(loss). . . . . . . . . . $ 1,674,088 (644,233)
=========== ==========
Gain on sale of land . . . $ -- 1,267,894
=========== ==========
Net earnings . . . . . . . $ 1,674,088 623,661
=========== ==========
Net earnings to
Partnership . . . . . . . $ 365,800 92,380
=========== ==========
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
(8) ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of September 30,
1994 and for the three and nine months ended September 30, 1994 and 1993.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
All references to "Notes" are to Notes to Financial Statements
contained in this report.
At September 30, 1994, the Partnership and its consolidated venture
had cash and cash equivalents of approximately $658,000. Such funds and
short-term investments of approximately $12,840,000 are available for
future distributions to partners, working capital requirements and to make
additional investments in the venture which owns the First Financial Plaza
Office Building as described in Note 3(b). As more fully described in Note
5, distributions to the General Partners have been deferred in accordance
with the subordination requirements of the Partnership Agreement. The
Partnership and its consolidated venture have currently budgeted in 1994
approximately $381,000 for tenant improvements and other capital
expenditures. The Partnership's share of such items and its share of
similar items for its unconsolidated ventures in 1994 is currently budgeted
to be approximately $547,000. Actual amounts expended in 1994 may vary
depending on a number of factors including actual leasing activity, results
of property operations, liquidity considerations and other market
conditions over the course of the year. The source of capital for such
items and for both short-term and long-term future liquidity and
distributions is expected to be through cash generated by the Partnership's
investment properties and through the sale of such investments. Due to an
increase in cash flows from operations at certain of the Partnership's
properties, the Partnership has increased its quarterly cash flow
distribution to partners effective with the third quarter of 1994 from $10
per limited Partnership interest ("Interest") to $11 per Interest. The
Partnership's and its ventures' mortgage obligations are all non-recourse.
Therefore, the Partnership and its ventures are not obligated to pay
mortgage indebtedness unless the related property produces sufficient net
cash flow from operations or sale.
From 1995 through 1997, leases at the Cerritos Industrial Park
representing 95% of the rentable square footage are scheduled to expire,
not all of which are expected to renew. In February 1994, True Form
(42,750 s.f.), a major tenant, filed for bankruptcy protection under
Chapter 11 of the United States Bankruptcy Code. It is unlikely that the
Partnership will fully collect the approximately $80,000 owed by True Form
as of the date of the filing. However, the tenant remains in operation and
is current with respect to their ongoing monthly rental obligations as of
the date of this report. True Form's lease expires June 1995 and the
Partnership is pursuing potential replacement tenants for this space.
The Fountain Valley Industrial Park currently operates in a market
with industrial vacancy rates of approximately 12%. Fountain Valley is
currently 100% leased (including temporary tenants) and 91% occupied. The
Partnership and the Newport Corporation, which vacated in March 1992 prior
to its 1995 lease expiration, entered into an agreement to terminate one of
Newport's leases for approximately 77,000 square feet (representing
approximately 20% of the rentable square footage at the property) in July
1993 for a $487,000 fee paid to the Partnership. The space was leased to
Fry's Electronics, an electronics retailer, for a twelve-year term
effective July 1993. International Tile vacated its approximate 36,000
square feet in August 1993 prior to its lease expiration in 1997. In
January 1994, International Tile filed for protection under Chapter 11 of
the United States Bankruptcy Code. The Partnership has filed a claim,
however, is unlikely to fully collect the approximate $90,000 owed by
International Tile at September 30, 1994. The space is leased by Circuit
City service center effective June 1994.
Currently, as leases at the Fountain Valley and Cerritos Industrial
Parks expire, lease renewals and new leases are likely to be at rental
rates less than the rates on existing leases. The previous decline in
rental rates appears to have stabilized in 1994 and leasing activity has
increased. The Partnership is also evaluating the competitive positioning
of the properties in the market in which it operates. Fountain Valley
incurred minimal damage and Cerritos incurred no damage as a result of the
earthquake in southern California on January 17, 1994.
In February 1994, the Partnership extended and increased the first
mortgage loan, which is secured by the Fountain Valley and Cerritos
Industrial Parks in the principal amount to $11,200,000 as described in
Note 4. The extended loan bears interest at a rate of 7.32% per annum,
provides for monthly payments of principal and interest based on a twenty-
year amortization period and matures March 1, 2001. After payment of costs
and fees related to the re-financing, there were no distributable proceeds
from the loan extension.
The Rivertree Court Shopping Center operates in a market which is
experiencing significant growth in the commercial and residential sectors.
The growth in the area is expected to continue in the next several years.
In August 1994, Office Depot reopened the approximately 26,000 square foot
store previously occupied by Filene's Basement which closed in January
1994. Under the terms of the assignment of the Filene's lease, Office
Depot has continued to pay rent on the space pursuant to the terms of the
lease. In August 1992, Phar-Mor (which occupies approximately 14% of the
center) filed for protection under Chapter 11 of the United States
Bankruptcy Code. The Phar-Mor store has continued to operate and pay rent
under its lease obligation since its bankruptcy filing. The Phar-Mor store
closed in October 1994 and the Partnership recently received notification
of Phar-Mor's intention to assign its lease in bankruptcy to another
national tenant.
During the third quarter of 1992, the Miami International Mall
experienced storm damage caused by Hurricane Andrew. All repairs necessary
to continue operations and replacement of the landscaping have been
completed and West Dade has been fully reimbursed in 1994 by insurance
proceeds for such repairs.
West Dade joint venture, which owns the Miami International Mall, sold
a 3.9 acre outparcel of land at Miami International Mall in June 1993 for a
net purchase price of approximately $1,560,000, after certain selling
costs, of which the Partnership's share was approximately $390,000. For
financial reporting purposes, West Dade has recognized a gain in 1993 of
approximately $1,385,000, of which the Partnership's share is approximately
$346,000. For income tax purposes, West Dade has recognized a gain in 1993
of approximately $325,000, of which the Partnership's share is a loss of
approximately $37,000. West Dade is currently negotiating the sale of an
additional 4 acre outparcel of land.
At September 30, 1994, the First Financial Plaza office building is
approximately 89% occupied. In July 1993, Mitsubishi vacated its
approximate 8,100 square feet prior to its lease expiration of January 1997
and continues to pay rent pursuant to its lease obligation. Including the
Mitsubishi lease, the building is 93% leased as of the date of this report.
The Los Angeles office market in general and the Encino submarket in
particular remain extremely competitive resulting in higher rental
concessions granted to tenants and decreased market rental rates. The
decline in rental rates has stabilized in 1994. Furthermore, due to the
continued recession in southern California and concerns regarding certain
tenants' ability to perform under their current leases, the venture has
granted rent deferrals and other forms of rent relief to several tenants,
including First Financial Housing, an affiliate of the unaffiliated venture
partner. The property incurred minimal damage as a result of the
earthquake in southern California on January 17, 1994. However, the
venture has begun to conduct inspections of certain joints in the steel
frame of the building. It is not possible to predict the extent of
repairs, if any, that may be required. The mortgage note is scheduled to
mature in November 1995. There is no assurance that the venture will be
able to extend, refinance or obtain alternative financing when the note
matures. The Partnership is examining a possible sale of the property
should the refinancing not take place. There can be no assurance that a
sale of the property will occur.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
past. This has made it difficult for owners to refinance real estate
assets at their current debt levels unless the value of the underlying
property has appreciated significantly. As a consequence, and due to the
weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital.
RESULTS OF OPERATIONS
The decrease in interest, rents and other receivables as of September
30, 1994 as compared to December 31, 1993 is primarily due to the timing of
rental receipts at certain of the Partnership's properties.
The increase in prepaid expenses as of September 30, 1994 as compared
to December 31, 1993 is primarily due to the timing of the payment of
insurance expenses for the Adams/Wabash Self Park, the Rivertree Court
Shopping Center and the Fountain Valley and Cerritos Industrial Parks.
The increase in escrow deposits as of September 30, 1994 as compared
to December 31, 1993 is due to the requirements of the mortgage loan
extension for the Fountain Valley and Cerritos Industrial Parks. Reference
is made to Note 4.
The decrease in investment in unconsolidated ventures as of September
30, 1994 as compared to December 31, 1993 is primarily due to the 1994
receipt of distributions from West Dade.
The increase in current portion of long-term debt and related decrease
in long-term debt at September 30, 1994 as compared to December 31, 1993 is
due to the terms of the extension of the loan secured by the Fountain
Valley and Cerritos Industrial Parks. Reference is made to Note 4.
The decrease in accounts payable as of September 30, 1994 as compared
to December 31, 1993 is primarily due to the timing of payments of
operating expenses at certain of the Partnership's operating properties.
The increase in accrued real estate taxes as of September 30, 1994 as
compared to December 31, 1993 is primarily due to the timing of the payment
of real estate taxes at the Adams/Wabash Self Park, Rivertree Court
Shopping Center and the Fountain Valley and Cerritos Industrial Parks.
The decrease in rental income for the three and nine months ended
September 30, 1994 as compared to the three and nine months ended September
30, 1993 is primarily due to the $487,000 fee received for the termination
of one of the Newport Corporation leases at the Fountain Valley Industrial
Park in July 1993. The decrease in rental income for the three months
ended September 30, 1994 as compared to the three months ended September
30, 1993 is partially offset by an increase in parking volume at the
Adams/Wabash Self Park.
The increase in interest income for the three and nine months ended
September 30, 1994 as compared to the three and nine months ended September
30, 1993 is due primarily to the Partnership having larger average invested
balances in U.S. Government obligations in 1994 (reference is made to
Note 1).
The increase in Partnership's share of operations of unconsolidated
ventures for the three and nine months ended September 30, 1994 as compared
to the three and nine months ended September 30, 1993 is primarily due to a
decrease in mortgage interest expense related to West Dade obtaining a new
mortgage loan (as described in Note 3(c)) and an increase in rental income
due to an increase in the average occupancy for the three and nine months
ended September 30, 1994 as compared to the same periods in 1993 at the
Miami International Mall.
The Partnership's gain on sale of land from unconsolidated venture for
the nine months ended September 30, 1993 is due to the sale of a 3.9 acre
outparcel of land at the Miami International Mall in June 1993.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's investment properties.
<CAPTION>
1993 1994
--------------------------------------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. First Financial Plaza
Encino (Los Angeles), California . . . . . . . . 85% 88% 84%(1) 85%(1) 84%(1) 91%(1) 89%(1)
2. Miami International Mall
Miami, Florida . . . . . . . . . . . . . . . . . 94% 95% 97% 98% 98% 96% 97%
3. Rivertree Court Shopping Center
Vernon Hills (Chicago), Illinois . . . . . . . . 98% 98% 98% 97% 88%(2) 89%(2) 98%
4. Fountain Valley Industrial Park
Fountain Valley
(Los Angeles), California. . . . . . . . . . . . 69%(3) 63%(3) 85% 85% 85% 85% 91%
5. Cerritos Industrial Park
Cerritos (Los Angeles), California . . . . . . . 93% 100% 100% 100% 100% 100% 100%
6. Adams/Wabash Self Park
Chicago, Illinois. . . . . . . . . . . . . . . . * * * * * * *
<FN>
- - ---------------
An asterisk indicates that the property is a parking garage and occupancy information is not applicable. However,
the approximate occupancy level for the retail portion of the structure as of September 30, 1994 is 47%.
(1) The percentage represents physical occupancy. Mitsubishi (8,109 square feet) vacated its space in July 1993
prior to its lease expiration of January 1997 and continues to pay rent pursuant to its lease obligation.
(2) The percentage represents physical occupancy. Filene's Basement (26,555 square feet) vacated its space in
January 1994, prior to its lease expiration of January 31, 2007 and continued to pay rent pursuant to its lease obligation
until the assignment of its lease to Office Depot in April 1994. Office Depot reopened the store August 26, 1994.
(3) The percentage represents physical occupancy. Newport Corporation (102,084 square feet) vacated its space in
March 1992, but remained obligated on its leases as more fully described in Management's Discussion of Liquidity
and Capital Resources elsewhere in this report.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
4-A. Copy of documents relating to the mortgage loan secured
by the Rivertree Court Shopping Center, Vernon Hills (Chicago), Illinois
dated December 30, 1988 is hereby incorporated by reference to Exhibit 4-A
to the Partnership's report for December 31, 1992 on Form 10-K (File No.
000-19496) dated March 18, 1993.
4-B. Copy of documents relating to the mortgage loan secured
by a first mortgage on West Dade's interest in Miami International Mall,
Miami, Florida dated December 21, 1993 is hereby incorporated by reference
to Exhibit 4-B to the Partnership's report for December 31, 1993 on Form
10-K (File No. 000-19496) dated March 25, 1994.
10-A. Acquisition documents relating to the purchase by the
Partnership of Rivertree Court Shopping Center in Vernon Hills (Chicago),
Illinois, are hereby incorporated by reference to Exhibit 1 to the
Partnership's Form 8-K (File No. 000-19496) dated November 4, 1988.
10-B. Acquisition documents relating to the purchase by the
Partnership of Fountain Valley Industrial Buildings in Fountain Valley,
California and Cerritos Industrial Buildings in Cerritos, California, are
hereby incorporated by reference to Exhibits 1 and 2 to the Partnership's
Form 8-K (File No. 000-19496) dated November 15, 1988.
10-C. Acquisition documents relating to the acquisition by the
Partnership of an interest in the Adams/Wabash Parking Garage in Chicago,
Illinois are hereby incorporated by reference to Exhibit 3 to the
Partnership's Form 8-K (File No. 000-19496) dated October 15, 1990.
10-D. Sale documents and exhibits thereto relating to the sale
of the Partnership's interest in Mid Rivers Mall in St. Peters (St. Louis),
Missouri are hereby incorporated by reference to the Partnership's report
on Form 8-K (File No. 000-19496) dated February 18, 1992.
27. Financial Data Schedule
Although certain long-term debt instruments of the Registrant have been
excluded from Exhibit 4 above, pursuant to Rule (b)(4)(iii), the
Registrants commits to provide copies of such agreements to the Securities
and Exchange Commission upon request.
(b) No reports on Form 8-K were required to be filed during the last
quarter of the period 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 INCOME PROPERTIES, LTD. - XIII
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:November 10, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date:November 10, 1994
<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, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED
IN SUCH REPORT.
</LEGEND>
<CIK> 0000790603
<NAME> JMB INCOME PROPERTIES, LTD. - XIII
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 658,313
<SECURITIES> 12,840,193
<RECEIVABLES> 1,372,054
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 14,870,560
<PP&E> 98,607,032
<DEPRECIATION> (13,492,711)
<TOTAL-ASSETS> 112,280,896
<CURRENT-LIABILITIES> (1,902,206)
<BONDS> (26,507,859)
<COMMON> 0
0
0
<OTHER-SE> (83,587,916)
<TOTAL-LIABILITY-AND-EQUITY> (112,280,896)
<SALES> (8,611,360)
<TOTAL-REVENUES> (8,975,435)
<CGS> 0
<TOTAL-COSTS> 4,706,447
<OTHER-EXPENSES> 295,423
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,802,145
<INCOME-PRETAX> (2,171,420)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,537,220)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,537,220)
<EPS-PRIMARY> 19.27
<EPS-DILUTED> 0
</TABLE>
