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 June 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 . . . . 13
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K. . . . . . 17
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1994 AND DECEMBER 31, 1993
(UNAUDITED)
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,136,519 1,301,466
Short-term investments (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . 6,376,910 11,520,463
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . 957,924 1,039,884
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,219 67,608
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311,230 --
------------ ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,797,802 13,929,421
Investment properties, at cost:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,566,702 23,566,702
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,998,375 74,953,712
------------ ------------
98,565,077 98,520,414
Less accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,870,536) (11,626,188)
------------ ------------
Total investment properties, net of accumulated depreciation. . . . . . . . . 85,694,541 86,894,226
Investment in unconsolidated ventures, at equity (note 7). . . . . . . . . . . . . . . 10,077,333 10,779,381
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 875,732 805,423
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,285,850 1,173,482
------------ ------------
$112,731,258 113,581,933
============ ============
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
Liabilities and Partners' Capital Accounts (Deficits)
-----------------------------------------------------
JUNE 30, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . . . . . . . . . . . $ 261,354 --
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,627 127,112
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,165 212,168
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,234 88,601
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,424,604 1,155,752
------------ ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 2,097,984 1,583,633
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280,975 310,468
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . 26,576,234 26,700,000
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,955,193 28,594,101
------------ ------------
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 656,915 600,395
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . (1,159,291) (1,088,351)
------------ ------------
(482,376) (467,956)
------------ ------------
Limited partners (126,414 interests):
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . 113,741,315 113,741,315
Cumulative net earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,800,497 19,444,026
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . (50,283,371) (47,729,553)
------------ ------------
84,258,441 85,455,788
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . . . . . . . 83,776,065 84,987,832
------------ ------------
Commitments and contingencies (notes 3 and 4) $112,731,258 113,581,933
============ ============
<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 SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------------------------
1994 1993 1994 1993
------------ ---------- ------------------------
<S> <C> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,841,881 2,829,910 5,482,213 5,517,023
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . 108,933 105,681 211,239 200,151
----------- ---------- ---------- ----------
2,950,814 2,935,591 5,693,452 5,717,174
----------- ---------- ---------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . . 597,877 636,503 1,205,423 1,273,005
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . 622,174 620,739 1,244,348 1,237,668
Property operating expenses. . . . . . . . . . . . . . . . . . . . 822,744 908,434 1,711,107 1,714,106
Professional services. . . . . . . . . . . . . . . . . . . . . . . 52,476 46,585 133,123 134,071
Amortization of deferred expenses. . . . . . . . . . . . . . . . . 51,215 42,966 98,942 82,948
General and administrative . . . . . . . . . . . . . . . . . . . . 36,552 35,187 110,840 72,555
----------- ---------- ---------- ----------
2,183,038 2,290,414 4,503,783 4,514,353
----------- ---------- ---------- ----------
Operating earnings . . . . . . . . . . . . . . . . . . . . 767,776 645,177 1,189,669 1,202,821
Partnership's share of operations from unconsolidated ventures 97,118 (84,223) 223,322 (198,847)
(note 7)
----------- ---------- ---------- ----------
Net operating earnings . . . . . . . . . . . . . . . . . . 864,894 560,954 1,412,991 1,003,974
Partnership's share of gain on sale of land from unconsolidated
venture (note 3(c)). . . . . . . . . . . . . . . . . . . . . . . . -- 346,208 -- 346,208
----------- ---------- ---------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 864,894 907,162 1,412,991 1,350,182
=========== ========== ========== ==========
Net earnings per limited partnership interest (note 1):
Net operating earnings . . . . . . . . . . . . . . . . . . 6.57 4.26 10.73 7.62
Partnership's share of gain on sale of land from
unconsolidated venture . . . . . . . . . . . . . . . . . -- 2.71 -- 2.71
----------- ---------- ---------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . 6.57 6.97 10.73 10.33
=========== ========== ========== ==========
Cash distributions per limited partnership interest (note 1)$ 10.00 10.00 20.00 20.00
=========== ========== ========== ==========
<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
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,412,991 1,350,182
Items not requiring (providing) cash or cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,244,348 1,237,668
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,942 82,948
Partnership's share of operations and gain on sale of investment property of
unconsolidated ventures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (223,322) (147,361)
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . 81,960 (45,739)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,389 (98,093)
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (112,368) (46,889)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,515 84,235
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,003) --
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,367) --
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268,852 116,025
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,493) (34,692)
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (180,761) --
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . . . . . 2,597,683 2,498,284
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments . . . . . . . . . . . . . . . 5,143,553 (1,550,584)
Additions to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44,663) (493,889)
Partnership's distributions from unconsolidated ventures . . . . . . . . . . . . . . . . . . 950,000 75,000
Partnership's contributions to unconsolidated ventures . . . . . . . . . . . . . . . . . . . (24,630) (6,196)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (99,720) (102,680)
------------ -----------
Net cash provided by (used in) investing activities. . . . . . . . . . . . . . . . . 5,924,540 (2,078,349)
------------ -----------
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (62,412) --
Distributions to limited partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,553,818) (2,553,818)
Distributions to general partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70,940) (70,940)
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . . . . . (2,687,170) (2,624,758)
------------ -----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . .$ 5,835,053 (2,204,823)
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . . . . . . . . . . . . . . .$ 1,218,426 1,273,005
============ ===========
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
JUNE 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 six months
ended June 30:
1994 1993
------------------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
-------------------- --------------------
Net earnings . . . . $1,412,991 1,660,187 1,350,182 1,367,387
Net earnings per
limited partnership
interest. . . . . . $ 10.73 12.61 10.33 10.38
==================== ====================
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 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
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
original maturities of three months or less ($6,185,600 at June 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
June 30, 1994 were operating.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at June 30, 1994 is a party to three operating joint
venture agreements. Pursuant to such agreements, the Partnership has made
capital contributions of approximately $56,782,000 through June 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 (the "Venture Partner") which owns an enclosed
regional shopping center in Miami, Florida known as Miami International Mall.
During February 1989, IDS/JMB Balanced Income Growth, Ltd., a partnership
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).
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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. Although structural damage to the building was
minimal, the landscaping surrounding the building, including the irrigation
system and street curbs, was impacted more severely. All repairs necessary to
continue operations and replacement of the landscaping have been completed and
West Dade has been substantially reimbursed in 1994 by insurance proceeds for
such repairs.
West Dade sold a 3.9 acre outparcel of land at 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. As of June 30, 1994, the
Partnership has received its preferred return.
(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 period 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
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 $3,478,000 of
disbursable cash and approximately $618,000 of sale proceeds have been
deferred by the General Partners.
(6) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of June 30, 1994
and for the six months ended June 30, 1994 and 1993 are as follows:
Unpaid at
1994 1993 June 30, 1994
-------- ------- -------------
Property management fees $101,473 109,808 2,364
Insurance commissions. 7,811 10,861 --
Reimbursement (at cost)
for out-of-pocket
expenses . . . . . . 769 5,909 1,177
-------- ------- ------
$110,053 126,578 3,541
======== ======= ======
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 six months ended
June 30, 1994 were approximately $74,600, 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
$4,096,000 at June 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
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
of the Partnership and the operation of Partnership's investment properties.
The amount of such salaries and direct expenses aggregated $42,599 and $78,408
for the six months ended June 30, 1994 and the twelve months ended December
31, 1993, respectively, of which $78,408 is unpaid as of June 30, 1994.
(7) UNCONSOLIDATED VENTURES - SUMMARY INFORMATION
The summary income statement information for the First Financial and
JMB/Miami ventures for the six months ended June 30, 1994 and 1993 is as
follows:
1994 1993
----------- ----------
Total income . . . . . . . . . . . . . .$ 9,146,251 9,776,516
=========== ==========
Operating earnings (loss). . . . . . . .$ 979,791 (579,235)
=========== ==========
Gain on sale of land . . . . . . . . . .$ -- 1,267,894
=========== ==========
Net earnings . . . . . . . . . . . . . .$ 979,791 688,659
=========== ==========
Net earnings to Partnership. . . . . . .$ 223,322 147,361
=========== ==========
(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 June 30, 1994
and for the three and six months ended June 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 June 30, 1994, the Partnership and its consolidated venture had cash
and cash equivalents of approximately $7,137,000. Such funds and short-term
investments of approximately $6,377,000 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 $202,000
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 $423,000. 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.
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.
In 1995 and 1996, leases at the Cerritos Industrial Park representing 33%
and 22%, respectively, of the rentable square footage are scheduled to expire,
not all of which are expected to renew. In March 1994, True Form, a major
tenant (42,750 s.f.) filed a reorganization plan under Chapter 11 of the
United States Bankruptcy Code. It is likely that the Partnership will collect
at least a substantial portion of the $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.
The Fountain Valley Industrial Park currently operates in a market with
industrial vacancy rates of approximately 16%. Fountain Valley is currently
91% leased and 85% occupied. The Partnership and the Newport Corporation,
which vacated in March 1992 prior to its 1995 lease expiration and continues
to pay rent pursuant to its one remaining lease obligation, 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 June 30, 1994. In 1995 and 1996, leases representing 21% and 13%,
respectively, of the leasable square footage are scheduled to expire, not all
of which are expected to renew. The Partnership currently is finalizing
leases to renew or release approximately 69,000 square feet or 18% of the
total leasable square footage at the property.
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 supply of industrial space has caused
increased competition for tenants, a corresponding decline in rental rates and
a corresponding increase in time required to re-lease tenant space in these
markets which may result in a decrease in cash flow from operations over the
near term. In 1994, the decline in rental rates appears to have stabilized
and leasing activity has increased. 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
April 1994, Office Depot entered into an assignment agreement with Filene's
Basement (which continued to pay rent pursuant to its lease until the
assignment)to operate the approximately 26,000 square foot store which closed
in January 1994. Office Depot is currently paying rent, is remodeling the
store, and intends to reopen it in August 1994. 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 continued
to operate and pay rent under its lease obligation since its bankruptcy
filing. The Partnership recently received notification of Phar-Mor's
intention to reject its lease in bankruptcy and close all of its Chicago area
stores, including the one at the center, by late 1994. The Partnership had a
prospective tenant to replace Phar-mor, but these negotiations have ceased.
The Partnership is actively pursuing replacement tenants for this store.
During the third quarter of 1992, the Miami International Mall
experienced storm damage caused by Hurricane Andrew. It has been determined
that structural damage to the building was minimal; however, the landscaping
surrounding the building, including the irrigation system and street curbs,
was impacted more severely. All repairs necessary to continue operations and
replacement of the landscaping have been completed and West Dade has been
substantially 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 June 30, 1994, the First Financial Plaza office building is
approximately 91% 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
and other recently executed leases, the building is 94% leased. The Los
Angeles office market in general and the Encino submarket in particular have
been 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 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
structural steel frame of the building. It is too early to predict the extent
to which additional costs, if any, may be required.
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 prepaid expenses as of June 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 June 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 June 30, 1994
as compared to December 31, 1993 is primarily due to the receipt of
distributions from West Dade.
The increase in current portion of long-term debt and related decrease in
long-term debt at June 30, 1994 as compared to December 31, 1993 is due to the
extension of the loan secured by the Fountain Valley and Cerritos Industrial
Parks. Reference is made to Note 4.
The increase in accounts payable as of June 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 decrease in unearned rents as of June 30, 1994 as compared to
December 31, 1993 is primarily due to the timing of the collection of rents at
the Rivertree Court Shopping Center.
The increase in accrued real estate taxes as of June 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 and the Fountain Valley and
Cerritos Industrial Parks.
The decrease in property operating expenses for the three months ended
June 30, 1994 as compared to the three months ended June 30, 1993 is primarily
due to a decrease in repairs and maintenance costs at the Rivertree Court
Shopping Center.
The increase in Partnership's share of operations of unconsolidated
ventures for the six months ended June 30, 1994 as compared to the six months
ended June 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 six months ended June 30, 1994 as compared to the same
period in 1993 at the Miami International Mall. The decrease in Partnership's
share of operations of unconsolidated ventures for the three months ended June
30, 1994 as compared to the three months ended June 30, 1993 is primarily 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
---- ---- ---- ----- ---- ---- ----- -----
<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)
2. Miami International Mall
Miami, Florida . . . . . . . . . . . 94% 95% 97% 98% 98% 96%
3. Rivertree Court Shopping Center
Vernon Hills (Chicago), Illinois . . 98% 98% 98% 97% 88%(2) 89%(2)
4. Fountain Valley Industrial Park
Fountain Valley (Los Angeles),
California . . . . . . . . . . . . . 69%(3) 63%(3) 85% 85% 85% 85%
5. Cerritos Industrial Park
Cerritos (Los Angeles), California . 93% 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 June 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 has assumed Filene's
obligations under the lease and intends to open its store in August 1994. Therefore,
Rivertree Court Shopping Center is 98% leased as of June 30, 1994.
(3) The percentage represents physical occupancy. Newport Corporation (102,084 square feet) vacated its space
in March 1992, prior to its lease expiration of May 31, 1995: 77,028 square feet has been re-leased in the third
quarter of 1993 to Fry's Electronics, and 25,056 square feet had been leased to a sub-tenant until April 1994.
</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.
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:August 12, 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:August 12, 1994
