SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1997 Commission file no. 000-19496
JMB INCOME PROPERTIES, LTD. - XIII
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3426137
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- -------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
Documents incorporated by reference: None
<PAGE>
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . 5
Item 3. Legal Proceedings. . . . . . . . . . . . . . 7
Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . 7
PART II
Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters. . . . . . . 7
Item 6. Selected Financial Data. . . . . . . . . . . 8
Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 12
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 15
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 16
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 44
PART III
Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 44
Item 11. Executive Compensation . . . . . . . . . . . 47
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 48
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 49
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 49
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 51
i
<PAGE>
PART I
Item 1. Business
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report. Capitalized terms used herein, but
not defined, have the same meanings as used in the Notes.
The registrant, JMB Income Properties, Ltd. - XIII (the
"Partnership"), is a limited partnership formed in 1986 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in income-producing properties, primarily existing
commercial real properties. On August 20, 1986, the Partnership commenced
an offering to the public of $100,000,000 (subject to increase by up to
$250,000,000) in Limited Partnership Interests (the "Interests") pursuant
to a Registration Statement on Form S-11 under the Securities Act of 1933
(Registration No. 33-4107). A total of 126,409 Interests (at an offering
price of $1,000 per Interest, before discounts) were sold to the public
during 1987. The offering closed on April 14, 1987. No investor has made
any additional capital contribution after such date. The investors in the
Partnership share in their portion of the benefits of ownership of the
Partnership's real property investments according to the number of
Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation, and sale and disposition of equity real estate investments.
Such equity investments are held by fee title and/or through joint venture
partnership interests. The Partnership's remaining real property
investment is located in California, and it had no real estate investments
located outside the United States. A presentation of information about
industry segments, geographic regions, raw materials or seasonality is not
applicable and would not be material to an understanding of the
Partnership's business taken as a whole. Pursuant to the Partnership
Agreement, the Partnership is required to terminate no later than October
31, 2036. The Partnership is self-liquidating in nature. At sale of a
particular property, the net proceeds, if any, are generally distributed or
reinvested in existing properties rather than invested in acquiring
additional properties. As discussed further in Item 7, the Partnership
currently expects to conduct an orderly liquidation of its remaining
investment property as quickly as practicable and to wind up its affairs no
later than December 31, 1999, barring any unforeseen economic developments.
The Partnership has made the real property investments set forth in
the following table:
<PAGE>
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Mid Rivers Mall
St. Peters
(St. Louis),
Missouri. . . . . . 323,100 12/12/86 1/30/92 Fee ownership of land and
sq.ft. improvements (through
g.l.a. joint venture partnerships)
2. First Financial Plaza
Office Building
Encino
(Los Angeles),
California. . . . . 216,000 5/20/87 9/11/96 Fee ownership of land and
sq.ft. improvements (through
n.r.a. joint venture partnerships)
(c)(e)
3. Miami International
Mall
Miami, Florida. . . 967,300 1/1/88 4/8/96 Fee ownership of land and
sq.ft. improvements (through
g.l.a. joint venture partnerships)
(c)(e)
4. Rivertree Court
Shopping Center
Vernon Hills
(Chicago),
Illinois. . . . . . 297,000 10/20/88 7/17/97 Fee ownership of land and
sq.ft. improvements (e)
g.l.a.
5. Fountain Valley
Industrial Park
Industrial Buildings
Fountain Valley
(Los Angeles),
California. . . . . 393,100 11/1/88 16% Fee ownership of land and
sq.ft. improvements (b)(d)(f)
b.a.
<PAGE>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1997,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- -------- ---------------------- ---------------------
6. Cerritos Industrial
Park Industrial
Buildings
Cerritos
(Los Angeles),
California. . . . . 197,100 11/1/88 5/29/97 Fee ownership of land and
sq.ft. improvements (e)
b.a.
7. Adams/Wabash
Self Park
Chicago, Illinois . 671 spaces and 10/1/90 8/11/97 Fee ownership of land and
28,800 improvements (through
sq.ft. joint venture partnership)
g.l.a. (c)(e)
<PAGE>
<FN>
- -----------------------
(a) The computation of this percentage for properties held at
December 31, 1997 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.
(b) Reference is made to the Notes and to Schedule III filed with
this annual report for the current outstanding principal balances and a
description of the long-term mortgage indebtedness secured by the
Partnership's real property investments.
(c) Reference is made to the Notes filed with this annual report
for a description of the joint venture partnerships through which the
Partnership made this real property investment.
(d) Reference is made to Item 8 - Schedule III filed with the
annual report for further information concerning real estate taxes and
depreciation.
(e) The property has been sold. Reference is made to the Notes for
a description of the sale of such real property investment.
(f) Two buildings and their related land parcels have been sold.
Reference is made to the Notes for a description of the sale of such real
property investment.
</TABLE>
<PAGE>
The Partnership's remaining real property investment is subject to
competition from similar types of properties (including properties owned by
affiliates of the General Partners) in the vicinity in which it is located.
Such competition is generally for the retention of existing tenants.
Additionally, the Partnership is in competition for new tenants. Reference
is made to Item 7 below for a discussion of competitive conditions, the
future renovation and capital improvement plans of the Partnership at its
investment property. Approximate occupancy levels for the properties owned
during 1997 are set forth in Item 2 below to which reference is hereby
made. The Partnership maintains the suitability and competitiveness of its
property in its market primarily on the basis of effective rents, tenant
allowances and service provided to tenants.
In the opinion of the Managing General Partner of the Partnership, the
investment property held at December 31, 1997 is adequately insured.
Although there is earthquake insurance coverage for a portion of the value
of the Partnership's investment property, the Managing General Partner does
not believe that such coverage for the entire replacement cost of the
investment property is available on economic terms.
On May 29, 1997, the Partnership sold the land, building, related
improvements and personal property of the Cerritos Industrial Park located
in Cerritos, California and one of the land parcels that composes the
Fountain Valley Industrial Park located in Fountain Valley, California as
described further in the Notes.
On July 17, 1997, the Partnership sold the land, building and related
improvements of the Rivertree Court Shopping Center located in Vernon
Hills, Illinois. Reference is made to the Notes for a further description
of such transaction.
On August 11, 1997, the Partnership, through the Adam/Wabash joint
venture, sold the land, building and related improvements of the
Adams/Wabash Self Park located in Chicago, Illinois. Reference is made to
the Notes for a further description of such transaction.
Reference is made to the Notes for a schedule of minimum lease
payments to be received in each of the next five years, and in the
aggregate thereafter, under leases in effect at the Partnership's
consolidated property as of December 31, 1997.
The Partnership has no employees other than personnel performing on-
site duties at certain of the Partnership's properties, none of whom are
officers or directors of the Managing General Partner of the Partnership.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
Item 2. Properties
The Partnership owns or owned directly or through joint venture
partnerships the properties or interests in the properties referred to
under Item 1 above to which reference is hereby made for a description of
said properties.
The following is a listing of principal businesses or occupations
carried on in and approximate physical occupancy levels by quarter during
fiscal years 1997 and 1996 for the Partnership's investment properties
owned during 1997:
<PAGE>
<TABLE>
<CAPTION>
1996 1997
------------------------------ ------------------------------
Principal At At At At At At At At
Business 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> <C>
1. Rivertree Court
Shopping Center
Vernon Hills
(Chicago),
Illinois. . . . . Retail 84% 83% 89% 90% 96% 96% N/A N/A
2. Fountain Valley
Industrial Park
Fountain Valley
(Los Angeles),
California (A). . Retail/
Electronics
Repair/
Nuts and Bolts
Distributor 93% 100% 94% 94% 94% 100% 100% 100%
3. Cerritos
Industrial Park
Cerritos
(Los Angeles),
California. . . . Aircraft Parts
Manufacturer/
Tire Distributor 100% 100% 100% 100% 100% N/A N/A N/A
4. Adams/Wabash
Self Park
Chicago,
Illinois. . . . . Parking Garage * * * * * * N/A N/A
<FN>
- --------------------
An asterisk indicates that the property is primarily 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, 1997
was 39%.
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
Reference is made to Item 6, Item 7 and to the Notes for further information regarding property occupancy,
competitive conditions and tenant leases at the Partnership's investment properties.
(A) The occupancy percentages reflected in this table are computed based upon the remaining square footage
of the complex owned as of the respective dates as portions of the complex were sold in December 1996 and May
1997.
</TABLE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of holders of Interests
during fiscal years 1997 and 1996.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1997, there were 8,599 record holders of Interests
of the Partnership. There is no public market for Interests, and it is not
anticipated that a public market for Interests will develop. Upon request,
the Managing General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any other
economic aspects of the transaction, will be subject to negotiation by the
investor. There are certain conditions and restrictions on the transfer of
Interests, including, among other things, the requirement that the
substitution of a transferee of Interests as a Limited Partner of the
Partnership be subject to the written consent of the Managing General
Partner, which, may be granted or withheld in its sole and absolute
discretion. The rights of a transferee of Interests who does not become a
substituted Limited Partner will be limited to the rights to receive his
share of profits or losses and cash distributions from the Partnership, and
such transferee will not be entitled to vote such Interests or have other
rights of a Limited Partner. No transfer will be effective until the first
day of the next succeeding calendar quarter after the requisite transfer
form satisfactory to the Managing General Partner has been received by the
Managing General Partner. The transferee consequently will not be entitled
to receive any cash distributions or any allocable share of profits or
losses for tax purposes until such next succeeding calendar quarter.
Profits or losses from operations of the Partnership for a calendar year in
which a transfer occurs will be allocated between the transferor and the
transferee based upon the number of quarterly periods in which each was
recognized as the holder of the Interests, without regard to the results of
the Partnership's operations during particular quarterly periods and
without regard to whether cash distributions were made to the transferor or
transferee. Profits or losses arising from the sale or other disposition
of Partnership properties will be allocated to the recognized holder of the
Interests as of the last day of the quarter in which the Partnership
recognized such profits or losses. Cash distributions to a holder of
Interests arising from the sale or other disposition of Partnership
properties will be distributed to the recognized holder of the Interests as
of the last day of the quarterly period with respect to which such
distribution is made.
Reference is made to Item 6 for a discussion of cash distributions
made to the Limited Partners.
Reference is made to Item 7 for a discussion of unsolicited tender
offers received from unaffiliated third parties.
<PAGE>
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
YEARS ENDED DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1997 1996 1995 1994 1993
------------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . $ 8,483,213 11,973,382 12,545,834 11,984,676 12,292,002
============ ========== ========== =========== ===========
Earnings (loss)
before gains on
sales or disposition
of investment
properties. . . . . . . $ 1,524,818 3,785,085 (4,177,565) 959,484 3,021,663
Partnership's share of
gains on sale of
investment properties
and gain on sale of
investment property
from unconsolidated
venture . . . . . . . . 7,186,234 11,090,549 -- 298,917 346,208
------------ ---------- ---------- ----------- -----------
Earnings (loss)
before Partnership's
share of extra-
ordinary item from
unconsolidated
venture . . . . . . . . 8,711,052 14,875,634 (4,177,565) 1,258,401 3,367,871
Extraordinary items and
Partnership's share of
extraordinary items
from sale of invest-
ment property of
unconsolidated venture. (89,545) -- -- (375,000) (521,183)
------------ ---------- ---------- ----------- -----------
Net earnings (loss) . . . $ 8,621,507 14,875,634 (4,177,565) 883,401 2,846,688
============ ========== ========== =========== ===========
<PAGE>
1997 1996 1995 1994 1993
------------- ----------- ---------- ----------- -----------
Net earnings (loss)
per Limited Partner
Interest (b):
Earnings (loss)
before gains on
sales or disposition
of investment
properties . . . . . . $ 11.58 28.74 (31.72) 7.29 22.95
Partnership's share
of gains on sale of
investment properties
and share of gain on
sale of investment
property from
unconsolidated
venture . . . . . . . 56.28 86.85 -- 2.34 2.71
Extraordinary items and
Partnership's share
of extraordinary
items from sale of
investment property
of unconsolidated
venture . . . . . . . (.68) -- -- (2.85) (3.96)
------------ ---------- ---------- ----------- -----------
Net earnings (loss)
per Limited
Partner Interest. . $ 67.18 115.59 (31.72) 6.78 21.70
============ ========== ========== =========== ===========
Total assets. . . . . . . $ 22,059,131 80,097,683 99,483,214 109,171,952 113,581,933
Long-term debt. . . . . . $ 5,976,472 25,482,974 26,146,638 26,436,573 26,700,000
Cash distributions
per Limited
Partner Interest (c). . $ 355.00 261.00 44.00 41.00 40.00
============ ========== ========== =========== ===========
<FN>
- -------------
(a) The above selected financial data should be read in conjunction with the financial statements and the
related notes appearing elsewhere in this annual report.
(b) The net earnings per Interest is based upon the Interests outstanding at the end of each period
(126,414).
(c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for
financial reporting or Federal income tax purposes. Each partner's taxable income (loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the
cash generated or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners since
the inception of the Partnership have not resulted in taxable income to such Limited Partners and have therefore
represented a return of capital.
</TABLE>
<PAGE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1997
<CAPTION>
Property
- --------
Fountain Valley
Industrial Park a) The building area ("BA") occupancy rate and average base rent per square foot as of
December 31 for each of the last five years were as follows:
BA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>
1993 . . . . . 85% 5.31
1994 . . . . . 100% 4.41
1995 . . . . . 88% 5.58
1996 . . . . . 94% 5.00
1997 . . . . . 100% 5.14
<FN>
(1) Average base rent per square foot is based on BA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled Lease Lease
b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option(s)
------------------- ----------- --------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Fry's Electronics 77,028 $434,438 7/2005 7/2010
(Retail) 7/2015
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Fountain Valley Industrial Park:
Annualized Percent of
Number of Approx. Total Base Rent Total 1997
Year Ending Expiring BA of Expiring of Expiring Base Rent
December 31, Leases Leases Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1998 2 45,026 248,556 13%
1999 2 38,580 199,224 10%
2000 - -- -- 0%
2001 1 26,240 113,352 6%
2002 6 134,246 716,244 36%
2003 - -- -- 0%
2004 2 49,770 270,132 14%
2005 1 77,028 434,436 22%
2006 - -- -- 0%
2007 - -- -- 0%
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
As a result of the public offering of Interests as described in
Item 1, the Partnership had approximately $113,741,000 (after deducting
selling expenses and other offering costs) with which to make investments
(primarily in existing commercial real property), to pay legal fees and
other costs (including acquisition fees) related to such investments and to
satisfy working capital requirements. A portion of such proceeds was
utilized to acquire the properties described in Item 1 above.
During 1996 and early 1997, some of the Limited Partners in the
Partnership received unsolicited tender offers to purchase up to 4.9% of
the Interests in the Partnership from unaffiliated third parties with
offers ranging between $270 and $350 per Interest. The Partnership
recommended against acceptance of these offers on the basis that, among
other things, the offer price was inadequate. The aforementioned offers
have expired. In November 1996, an unaffiliated third party made an
unsolicited tender offer for up to 4.9% of the Interests in the Partnership
at $400 per Interest. The Partnership was neutral in its recommendation to
accept or reject such offer. The offer expired in December 1996. In the
last six months of 1997, additional unaffiliated third parties made
unsolicited tender offers for up to 4.9% of the Interests in the
Partnership with offers ranging between $245 and $350 per Interest. The
Special Committee recommended against acceptance of these offers, all of
which have expired. In early 1998, an unaffiliated third party made an
unsolicited tender offer for up to 4% of the Interests in the Partnership
for $60 per Interest. The special committee recommended against acceptance
of this offer on the basis that, among other things, the offer price was
inadequate. The offer is scheduled to expire in April 1998. As of the
date of this report, the Partnership is aware that 4.27% of the Interests
of the Partnership have been purchased by all such unaffiliated third
parties either pursuant to such tender offers or through negotiated
purchases.
It is possible that other offers for Interests may be made by
unaffiliated third parties in the future, although there is no assurance
that any other third party will commence an offer for Interests, the terms
of any such offer or whether any such offer, if made, will be consummated,
amended or withdrawn. The board of directors of JMB Realty Corporation
("JMB") the managing general partner of the Partnership, has established a
special committee (the "Special Committee") consisting of certain directors
of JMB to deal with all matters relating to tender offers for Interests in
the Partnership, including any and all responses to such tender offers.
The Special Committee has retained independent counsel to advise it in
connection with any potential tender offers for Interests and has retained
Lehman Brothers Inc. as financial advisor to assist the Special Committee
in evaluating and responding to any additional potential tender offers for
Interests.
At December 31, 1997, the Partnership had cash and cash equivalents of
approximately $4,667,000. Such funds are available for future distri-
butions to partners and working capital requirements. As more fully
described in the Notes, distributions to the General Partners have been
deferred in accordance with the subordination requirements of the
Partnership Agreement. The Partnership has currently budgeted in 1998,
approximately $87,000 for tenant improvements and other capital
expenditures at its remaining investment property, the Fountain Valley
Industrial Park. Actual amounts expended in 1998 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 remaining investment
property and through the sale of such investment. In 1996, in an effort to
reduce Partnership operating expenses, the Partnership elected to make
semi-annual, rather than quarterly, distributions of operating cash flow in
<PAGE>
the months of May and November of each year. In May 1997, the Partnership
made a semi-annual distribution of cash generated from operations of $16
per Interest ($8 per Interest for each of the first and second quarters of
1997). In August, 1997, the Partnership made a distribution of $35 per
Interest of cash generated from sales of certain parcels at the Fountain
Valley Industrial Park in 1996 and 1997 and the sale of the Cerritos
Industrial Park in 1997. In late November 1997, the Partnership made a
semi-annual distribution of cash generated from operations of $4 per
Interest ($2 per Interest for each of the third and fourth quarters of
1997) and a distribution of cash generated from the sales of the
Adams/Wabash Self Park and the Rivertree Court Shopping Center of $300 per
Interest. The net reduction in distributions from prior distribution
levels was necessary primarily due to reductions in operating cash flow
resulting from the sale of the Partnership's interest in the above
mentioned properties.
JMB/MIAMI
Effective March 31, 1996, JMB/Miami International Associates was
voluntarily dissolved by an agreement of its partners and its 50% ownership
interest in West Dade County Associates ("West Dade") and related assets
were distributed to its partners based on their respective ownership
percentages. Accordingly, the Partnership acquired a direct 25% ownership
interest in West Dade. The Partnership then sold its entire 25% interest
in West Dade for $13,436,731 (before selling costs). Reference is made to
the Notes for a further description of such sale.
FIRST FINANCIAL
On September 11, 1996, the joint venture sold the First Financial
office building for $37,900,000 (before selling costs). Reference is made
to the Notes for a further description of such sale.
CERRITOS INDUSTRIAL PARK
On May 29, 1997, the Partnership sold the land and related
improvements known as the Cerritos Industrial Park for $7,500,000.
Reference is made to the Notes for a further description of such
transaction.
RIVERTREE COURT SHOPPING CENTER
On July 17, 1997, the Partnership sold the land and related
improvements known as the Rivertree Court Shopping Center for approximately
$14,915,000. Reference is made to the Notes for a further description of
such transaction.
ADAMS/WABASH
On August 11, 1997, the Adams/Wabash Limited Partnership sold the
Adams/Wabash self-park for $25,000,000. Reference is made to the Notes for
a further description of the transaction.
FOUNTAIN VALLEY INDUSTRIAL PARK
Fountain Valley is currently 100% leased and occupied. The Partnership
in 1997, leased vacant space of 22,826 square feet, has renewed 57,490
square feet, re-leased 30,250 square feet and sold, in December 1996 and
1997, 22,202 square feet of the 154,968 square feet of space under tenant
leases originally scheduled to expire in 1997 and 1998 (39% of the park's
original square footage of 393,092 square feet). The strong Orange County
(Los Angeles) industrial market continues to put upward pressure on tenant
demand and consequently, market rents. As a result, the Partnership has
been able to convert several buildings which had been previously leased to
tenants on a temporary basis to permanent leases at significantly higher
rents than the tenants were paying previously. Two tenant leases
representing in total, approximately 45,000 square feet, are scheduled to
expire in 1998. There can be no assurance that the tenants will renew
their leases upon expiration.
<PAGE>
On May 1, 1997, the Partnership sold a 12,702 square foot building and
related land parcel within the park to the current tenant for a sales price
of $970,000. Reference is made to the Notes for a further description of
such sale.
During the first quarter of 1998, the Partnership entered into an
agreement to sell the remainder of the property in 1998 to an unaffiliated
third party. However, in March 1998, the sale agreement terminated without
completion of the sale. An environmental issue was discovered in
connection with the potential buyer's due diligence investigation of the
property. Based on preliminary testing, there currently appears to be some
contamination of the groundwater under the property. The Partnership has
temporarily suspended the active marketing of the property for sale while
it undertakes an assessment of the source, nature and extent of the
contamination. Based upon its preliminary information the Partnership does
not believe that the costs of assessing and, if necessary, remediating the
contamination will be material, although there is no assurance that such
will be the case. The Partnership expects to remarket the property after
such testing permits it to estimate the cost, if any, to remediate such
condition, and continues to expect to liquidate its remaining net assets no
later than the end of 1999.
GENERAL
In accordance with the subordination requirements of the Partnership
Agreement, 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 is approximately
$5,725,000 at December 31, 1997. All amounts deferred or currently payable
do not bear interest.
RESULTS OF OPERATIONS
Significant variances between the periods reflected in the
accompanying consolidated financial statements are the result of the sales
of the Cerritos Industrial Park, Rivertree Court Shopping Center and
Adams/Wabash Self-Park in 1997 and the sales of the two land parcels and
related buildings at the Fountain Valley Industrial Park in December 1996
and May 1997.
The decrease in rental income for the year ended December 31, 1996 as
compared to the year ended December 31, 1995 is primarily due to the loss
of the Palmer House parking contract at Adams/Wabash investment property.
The increase in interest income for the twelve months ended
December 31, 1997, as compared to the twelve months ended December 31, 1996
and 1995 is primarily due to the fluctuation of the Partnership's average
invested balance due to the timing of receipts of cash generated from the
various sales of the Partnership's investment properties in 1996 and 1997
and the timing of the Partnership's subsequent distribution of sales
proceeds to the Holders of Interests.
The decrease in depreciation for the twelve months ended December 31,
1997 as compared to the twelve months ended December 31, 1996 and 1995 is
primarily due to the timing of the classification of the investment
properties as properties held for sale, and therefore, not being subject to
continued depreciation.
The $2,500,000 provision for value impairment reported for the twelve
months ended December 31, 1997 was recorded as of June 30, 1997 based upon
the expected sale price for the Rivertree Court Shopping Center investment
property, which was sold July 17, 1997. The provision for value impairment
for the year ended December 31, 1995 is due to the provisions for value
impairment recorded at September 30, 1995 for both the Fountain Valley and
Cerritos Industrial Park investment properties of $4,200,000 and
$4,000,000, respectively. Such provisions were recorded to reduce the net
carrying value of the investment properties to their then estimated
recoverable values.
<PAGE>
The decrease in Partnership's share of operations from unconsolidated
ventures for the twelve months ended December 31, 1997 as compared to the
twelve months ended December 31, 1996 and the decrease in Partnership's
share of operations from unconsolidated ventures and the increase in the
Partnership's share of the gain on sale of investment property of
unconsolidated venture for the year ended December 31, 1996 as compared to
the year ended December 31, 1995 is due to the sale of the Partnership's
interest in the Miami International Mall in April 1996 and the sale of the
First Financial Plaza office building in September 1996.
The gain on sale of investment properties reported for the twelve
months ended December 31, 1997 is due to the sale of the Cerritos
Industrial Park investment property on May 29, 1997, the sale of the
Adams/Wabash investment property on August 11, 1997 and the sale of the
Rivertree Court Shopping Center investment property on July 17, 1997. In
addition, the Partnership recognized a gain on sale due to the sale of a
land parcel and related building at the Fountain Valley Industrial Park
investment property on May 1, 1997.
The extraordinary item reported for the twelve months ended
December 31, 1997 represents the prepayment premiums on the early
termination of debt in conjunction with the sales of certain of the
Partnership's investment properties in 1997.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
Inflation is not expected to significantly impact future operations
due to the expected liquidation of the Partnership by 1999. However, to
the extent that inflation in future periods would have an adverse impact on
property operating expenses, the effect would generally be offset by
amounts recovered from tenants as many of the long-term leases at the
Partnership's remaining investment property have escalation clauses
covering increases in the cost of operating and maintaining the property as
well as real estate taxes. Therefore, there should be little effect from
inflation on operating earnings if the property remains substantially
occupied.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1997 and 1996
Consolidated Statements of Operations, years ended December 31,
1997, 1996 and 1995
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows, years ended December 31,
1997, 1996 and 1995
Notes to Consolidated Financial Statements
SCHEDULE
--------
Consolidated Real Estate and Accumulated Depreciation III
SCHEDULES NOT FILED:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
JMB INCOME PROPERTIES, LTD. - XIII:
We have audited the consolidated financial statements of JMB Income
Properties, Ltd. - XIII (a limited partnership) and consolidated venture as
listed in the accompanying index. In connection with our audits of the
consolidated financial statements, we also have audited the financial
statement schedule as listed in the accompanying index. These consolidated
financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
JMB Income Properties, Ltd. - XIII and consolidated venture at December 31,
1997 and 1996, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1997, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
As discussed in the Notes to the consolidated financial statements, in
1996 the Partnership and its consolidated ventures changed their method of
accounting for long-lived assets and long-lived assets to be disposed of to
conform with Statement of Financial Accounting Standards No. 121.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1998
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
------
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 4,666,891 3,743,541
Interest, rents and other receivables . . . . . . . . . . . . . . . 1,093,810 1,232,970
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 25,047 71,674
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 69,470 144,050
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 5,855,218 5,192,235
Properties held for sale or disposition - Schedule III. . . . . . . . 15,480,159 72,718,307
------------ -----------
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 371,870 732,036
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 351,884 1,455,105
------------ -----------
$ 22,059,131 80,097,683
============ ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
----------------------------------------------------
1997 1996
------------ -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 200,366 313,664
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 140,099 300,262
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 37,679 194,950
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . -- 1,201,572
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 478,255 444,575
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 856,399 2,455,023
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 160,403 314,124
Long-term debt, less current portion. . . . . . . . . . . . . . . . . 5,976,472 25,482,974
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 6,993,274 28,252,121
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions.. . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings . . . . . . . . . . . . . . . . . . . 853,929 721,969
Cumulative cash distributions . . . . . . . . . . . . . . . . (1,701,976) (1,631,037)
------------ -----------
(828,047) (889,068)
------------ -----------
Limited partners (126,414 interests):
Capital contributions, net of offering costs. . . . . . . . . 113,741,315 113,741,315
Cumulative net earnings . . . . . . . . . . . . . . . . . . . 39,393,469 30,903,922
Cumulative cash distributions . . . . . . . . . . . . . . . . (137,240,880) (91,910,607)
------------ -----------
15,893,904 52,734,630
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . . . . 15,065,857 51,845,562
------------ -----------
$ 22,059,131 80,097,683
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $ 7,583,750 11,279,441 11,715,228
Interest income . . . . . . . . . . . . . . . . . 899,463 693,941 830,606
----------- ----------- -----------
8,483,213 11,973,382 12,545,834
----------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . 1,422,849 2,370,249 2,369,963
Depreciation. . . . . . . . . . . . . . . . . . . -- 1,721,808 2,468,066
Property operating expenses . . . . . . . . . . . 2,314,081 3,561,629 3,608,455
Professional services . . . . . . . . . . . . . . 216,694 271,487 206,307
Amortization of deferred expenses . . . . . . . . 131,498 191,354 234,401
General and administrative. . . . . . . . . . . . 373,273 330,407 397,120
Provision for value impairment. . . . . . . . . . 2,500,000 -- 8,200,000
----------- ----------- -----------
6,958,395 8,446,934 17,484,312
----------- ----------- -----------
1,524,818 3,526,448 (4,938,478)
Partnership's share of operations of uncon-
solidated ventures. . . . . . . . . . . . . . . . -- 258,637 760,913
----------- ----------- -----------
Earnings (loss) before gains
on sale of investment properties. . . . . 1,524,818 3,785,085 (4,177,565)
Gains on sale of investment properties. . . . . . . 7,186,234 217,690 --
Partnership's share of gain on sale of
investment property from unconsolidated venture . -- 10,872,859 --
----------- ----------- -----------
Earnings (loss) before Partner-
ship's share of extraordinary
item from sale of investment
property of unconsolidated venture. . . . 8,711,052 14,875,634 (4,177,565)
Extraordinary items . . . . . . . . . . . . . . . . (89,545) -- --
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . . $ 8,621,507 14,875,634 (4,177,565)
=========== =========== ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1997 1996 1995
------------ ------------ ------------
Net earnings (loss) per limited partnership
interest:
Earnings (loss) before gains on sales
of investment properties. . . . . . . . . . . . $ 11.58 28.74 (31.72)
Gains on sale of investment properties. . . . . . 56.28 1.70 --
Partnership's share of gain on sale
of investment property from unconsolidated
venture . . . . . . . . . . . . . . . . . . . . -- 85.15 --
Partnership's share of extra-
ordinary items from sale of
investment property of
unconsolidated venture. . . . . . . . . . . . . (.68) -- --
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . . $ 67.18 115.59 (31.72)
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (126,414 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
-------- ---------- ------------- -------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
(deficit)
at Decem-
ber 31,
1994 . . . . $20,000 626,763 (1,233,777) (587,014) 113,741,315 20,301,059 (52,964,880) 81,077,494
Net earnings
(loss) . . . -- (167,103) -- (167,103) -- (4,010,462) -- (4,010,462)
Cash distri-
butions
($44.00 per
Interest). . -- -- (156,067) (156,067) -- -- (5,618,400) (5,618,400)
------- -------- ---------- -------- ----------- ---------- ----------- ----------
Balance
(deficit)
at Decem-
ber 31,
1995 . . . . 20,000 459,660 (1,389,844) (910,184) 113,741,315 16,290,597 (58,583,280) 71,448,632
Net earnings
(loss) . . . -- 262,309 -- 262,309 -- 14,613,325 -- 14,613,325
Cash distri-
butions
($261.00 per
Interest). . -- -- (241,193) (241,193) -- -- (33,327,327)(33,327,327)
------- -------- ---------- -------- ----------- ---------- ----------- ----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (126,414 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
-------- ---------- ------------- -------- ----------- ---------- ------------- ----------
Balance
(deficit)
at Decem-
ber 31,
1996 . . . . 20,000 721,969 (1,631,037) (889,068) 113,741,315 30,903,922 (91,910,607) 52,734,630
Net earnings
(loss) . . . -- 131,960 -- 131,960 -- 8,489,547 -- 8,489,547
Cash distri-
butions
($355.00 per
Interest). . -- -- (70,939) (70,939) -- -- (45,330,273)(45,330,273)
------- -------- ---------- -------- ----------- ---------- ----------- ----------
Balance
(deficit)
at Decem-
ber 31,
1997 . . . . $20,000 853,929 (1,701,976) (828,047) 113,741,315 39,393,469 (137,240,880) 15,893,904
======= ======== ========== ======== =========== ========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 8,621,507 14,875,634 (4,177,565)
Items not requiring (providing) cash
or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . -- 1,721,808 2,468,066
Amortization of deferred expenses . . . . . . . 131,498 191,354 234,401
Partnership's share of operations
of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . -- 318,805 (760,913)
Partnership's gain on sale of investment
property. . . . . . . . . . . . . . . . . . . (7,186,234) (217,690) --
Partnership's share of gain on sale
of investment property from unconsolidated
venture . . . . . . . . . . . . . . . . . . . -- (10,872,859) --
Extraordinary items . . . . . . . . . . . . . . 89,545 -- --
Provision for value impairment. . . . . . . . . 2,500,000 -- 8,200,000
Changes in:
Interest, rents and other receivables . . . . . 145,445 (111,700) (290,577)
Prepaid expenses. . . . . . . . . . . . . . . . 46,627 (2,773) (2,973)
Escrow deposits . . . . . . . . . . . . . . . . 74,580 (41,370) (2,803)
Accrued rents receivable. . . . . . . . . . . . 42,194 211,577 (228,961)
Accounts payable . . . . . . . . . . . . . . . (160,129) 102,497 65,817
Accrued interest. . . . . . . . . . . . . . . . (157,271) (1,779) (1,653)
Accrued real estate taxes . . . . . . . . . . . (1,201,572) 30,231 (59,886)
Unearned rents. . . . . . . . . . . . . . . . . 33,680 (167,507) 541,674
Tenant security deposits. . . . . . . . . . . . (133,806) (14,498) (11,591)
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . 2,846,064 6,021,730 5,973,036
----------- ----------- -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996 1995
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases)
of short-term investments . . . . . . . . . . . -- -- 9,214,950
Additions to investment properties. . . . . . . . (127,500) (678,815) (280,626)
Partnership's distributions from
unconsolidated ventures and cash
proceeds from sale of investment
property, net of selling expenses . . . . . . . 43,972,567 18,908,480 1,346,250
Partnership's contributions to uncon-
solidated ventures. . . . . . . . . . . . . . . -- (64,710) (1,539,075)
Payment of deferred expenses. . . . . . . . . . . (84,769) (182,206) (80,931)
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . 43,760,298 17,982,749 8,660,568
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . (281,800) (291,589) (271,067)
Distributions to limited partners . . . . . . . . (45,330,273) (33,327,327) (5,618,400)
Distributions to general partners . . . . . . . . (70,939) (241,193) (156,067)
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . (45,683,012) (33,860,109) (6,045,534)
----------- ----------- -----------
Net increase (decrease) in
cash and cash equivalents . . . . . . . . 923,350 (9,855,630) 8,588,070
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . 3,743,541 13,599,171 5,011,101
----------- ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . . $ 4,666,891 3,743,541 13,599,171
=========== =========== ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996 1995
----------- ----------- -----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest . . . . $ 1,580,120 2,372,028 2,371,616
=========== =========== ===========
Non-cash investing and financing activities:
Total sales proceeds from sale of
investment property:
Total sales proceeds, net of
selling expenses. . . . . . . . . . . . . . $63,400,112 -- --
Prepayment premium. . . . . . . . . . . . . . (89,545) -- --
Payoff of mortgage loans. . . . . . . . . . . (19,338,000) -- --
----------- ----------- -----------
Cash proceeds from sale of
investment properties . . . . . . . . . $43,972,567 -- --
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
The Partnership holds an equity investment in an industrial park in
Fountain Valley, California. Business activities consist of rentals to a
variety of commercial and retail companies, and the ultimate sale or
disposition of such real estate. Subject to the sale of its last property,
the Partnership currently expects to conduct an orderly liquidation of its
remaining investment portfolio and wind up its affairs not later than
December 31, 1999, barring unforeseen economic circumstances.
The accompanying consolidated financial statements include the
accounts of the Partnership and its majority-owned venture, Adams/Wabash
Limited Partnership ("Adams/Wabash") (prior to its sale in August 1997).
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") (prior to its sale in September
1996) and JMB/Miami International Associates ("JMB/Miami") (prior to the
Partnership's sale of its Partnership interest therein in April 1996).
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 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") (and to consolidate the accounts of its majority owned
venture in 1996). Such GAAP and consolidation adjustments are not recorded
on the records of the Partnership.
The net effect of these items is summarized as follows for the years
ended December 31, 1997 and 1996:
<PAGE>
<TABLE>
<CAPTION>
1997 1996
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $22,059,131 38,163,238 80,097,683 98,913,009
Partners' capital accounts
(deficits):
General partners. . . . . . . . . (828,047) 235,083 (889,068) 180,325
Limited partners. . . . . . . . . 15,893,904 30,716,105 52,734,630 71,153,760
Net earnings (loss):
General partners. . . . . . . . . 131,960 125,696 262,309 1,103,238
Limited partners. . . . . . . . . 8,489,547 4,892,617 14,613,325 13,511,562
Net earnings (loss)
per Interest. . . . . . . . . . . 67.18 38.70 115.59 106.88
=========== =========== =========== ============
</TABLE>
<PAGE>
The net earnings (loss) 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.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
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 original maturities of three months or less
($4,380,270 and $2,576,773 at December 31, 1997 and 1996, respectively) as
cash equivalents, which includes investments in an institutional mutual
fund which holds United States Government obligations, with any remaining
amounts (generally with original maturities of one year or less) reflected
as short-term investments being held to maturity.
Deferred expenses consist primarily of deferred lease commissions and
loan fees which are amortized over their respective terms using the
straight-line method.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrues
rental income for the full period of occupancy on a straight-line basis.
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 tax authorities
amounts representing withholding from distributions paid to Partners.
The Partnership has acquired, either directly or through joint
ventures, three shopping centers, two multi-tenant industrial buildings, an
office complex and a parking/retail structure. In January 1992, the
Partnership's interest in the Mid Rivers Mall was sold. In 1996, the
Partnership's interest in the First Financial office building and the Miami
International Mall were sold. In 1997, the Partnership's interest in the
Cerritos Industrial Park, Rivertree Court Shopping Center, one of the land
parcels that compose the Fountain Valley Industrial Park located in
Fountain Valley, California, and the Adams/Wabash Self-Park were sold. The
remaining property owned at December 31, 1997 is in operation. The cost of
the investment properties represents the total cost to the Partnership plus
miscellaneous acquisition costs.
Depreciation on the properties has been provided over the estimated
useful lives of the various components as follows:
YEARS
-----
Building and improvements -- straight-line. . 30
Personal property -- straight-line. . . . . . 5
==
<PAGE>
Maintenance and repairs are generally charged to operations as
incurred. Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives.
Statement of Financial Accounting Standards No. 121 ("SFAS 121")
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" was issued in March 1995. The Partnership
adopted SFAS 121 as required in the first quarter of 1996. SFAS 121
requires that the Partnership record an impairment loss on its properties
to be held for investment whenever their carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized
would be the difference between the property's carrying value and the
property's estimated fair value. The Partnership's policy is to consider a
property to be held for sale or disposition when the Partnership has
committed to a plan to sell or dispose of such property and active
marketing activity has commenced or is expected to commence in the near
term or the Partnership has concluded that it may dispose of the property
by no longer funding operating deficits or debt service requirements of the
property thus allowing the lender to realize upon its security. In
accordance with SFAS 121, any properties identified as "held for sale or
disposition" are no longer depreciated. Adjustments for impairment loss
for such properties (subsequent to the date of adoption of SFAS 121) are
made in each period as necessary to report these properties at the lower of
carrying value or fair value less costs to sell. In certain situations,
such estimated fair value could be less than the existing non-recourse debt
which is secured by the property. There can be no assurance that any
estimated fair value of the remaining property would ultimately be realized
by the Partnership in any future sale or disposition transaction.
The remaining property was classified as held for sale as of December
31, 1996, and therefore, has not been subject to continued depreciation.
The results of operations for consolidated properties classified as held
for sale or disposition as of December 31, 1997 or sold or disposed of
during the past three years were $1,254,195, $3,468,110 and ($5,149,790),
respectively, for the years ended December 31, 1997, 1996 and 1995. In
addition, the accompanying consolidated financial statements include $0,
$258,637 and $760,913, respectively, of the Partnership's share of total
property operations of $0, $1,016,511 and $3,519,977 of unconsolidated
properties held for sale or disposition as of December 31, 1997 or sold or
disposed of in the past three years.
During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. These standards became
effective for reporting periods after December 15, 1997. As the
Partnership's capital structure only has general and limited partnership
interests, the Partnership will not experience any significant impact on
its consolidated financial statements.
The remaining investment property is pledged as security for the long-
term debt, for which there is no recourse to the Partnership.
INVESTMENT PROPERTIES
CERRITOS INDUSTRIAL PARK
On May 29, 1997, the Partnership sold the land and related
improvements known as the Cerritos Industrial Park to an unaffiliated
third-party for $7,500,000. The Partnership realized net sale proceeds of
approximately $4,074,000 after repayment of the mortgage loan securing the
property in the amount of $3,168,000, the payment of the prepayment premium
and reconveyance fee on such loan of approximately $78,700 (which was
included as an extraordinary item in the Partnership's 1997 consolidated
financial statements) and the payment of selling expenses of approximately
$180,000. The sale of the property resulted in an approximate $1,474,000
gain on sale to the Partnership in 1997 for financial reporting purposes.
The Partnership recognized a loss of approximately $2,228,000 for Federal
<PAGE>
income tax purposes in 1997. In addition, in connection with the sale of
this property and as is customary in such transactions, the Partnership
agreed to certain representations and warranties, with a stipulated
survival period which expired December 15, 1997 with no liability to the
Partnership. The property was 100% occupied at the date of sale. The
Partnership made a cash distribution of $35 per Interest from the sale
proceeds in August 1997.
The Cerritos Industrial Park investment property was classified as
held for sale or disposition at October 1, 1996, and therefore, has not
been subject to continued depreciation since that date.
As of September 30, 1995, due to the uncertainty at such time of the
Partnership's ability to recover the net carrying value of the Cerritos
Industrial Park investment property through future operations and sale,
given the expected holding period not being in excess of December 31, 1999,
the Partnership recorded, as a matter of prudent accounting practice, a
provision for value impairment of such investment of $4,000,000. Such
provision was recorded to reduce the net carrying value of the investment
property to its then estimated fair value based upon an analysis of
discounted estimated future cash flows over the projected holding period.
FOUNTAIN VALLEY INDUSTRIAL PARK
On December 31, 1996, the Partnership sold one of the buildings and
related land parcel at the Fountain Valley Industrial Park to the
unaffiliated tenant that had been leasing the building. The sale price was
$665,000 and the net sale proceeds, after paying down $350,000 of the
outstanding mortgage as required by the Lender and closing costs, were
$255,723. The sale resulted in approximately $218,000 and $121,000 of gain
for financial reporting and Federal income tax purposes, respectively, in
1996.
On May 1, 1997, the Partnership sold a 12,702 square foot building and
related land parcel within the park to the current tenant for a sales price
of $970,000. As a result of this sale, the lender required a $470,000
prepayment of the outstanding mortgage and a prepayment premium of
approximately $11,000 (which was included as an extraordinary item in the
Partnership's 1997 consolidated financial statements). The net sale
proceeds to the Partnership were approximately $436,000 after payment of
closing costs and the prepayment premium to the lender. The sale of the
building and related land parcel resulted in an approximate $375,000 gain
on sale to the Partnership for financial reporting purposes and
approximately $253,000 for Federal income tax purposes in 1997.
During the first quarter of 1998, the Partnership entered into an
agreement to sell the remainder of the property in 1998 to an unaffiliated
third party. However, in March 1998, the sale agreement terminated without
completion of the sale. An environmental issue was discovered in
connection with the potential buyer's due diligence investigation of the
property. Based on preliminary testing, there currently appears to be some
contamination of the groundwater under the property. The Partnership has
temporarily suspended the active marketing of the property for sale while
it undertakes an assessment of the source, nature and extent of the
contamination. Based upon preliminary information, the Partnership does
not believe that the costs of assessing and, if necessary, remediating the
contamination will be material, although there is no assurance that such
will be the case. The Partnership expects to remarket the property after
such testing permits it to estimate the cost, if any, to remediate such
condition, and continues to expect to liquidate its remaining net assets no
later than the end of 1999.
<PAGE>
Effective June 1, 1997, the Partnership's 7.32% mortgage note,
originally secured by both the Fountain Valley Industrial Park and the
Cerritos Industrial Park investment properties, was modified due to the
sales of the Cerritos Industrial Park in 1997 and sales of the outparcels
at the Fountain Valley Industrial Park in 1996 and 1997. In conjunction
with the property sales described above, the Partnership was required to
repay principal of approximately $3,988,000 on the outstanding mortgage
note. Accordingly, the $88,998 monthly loan installments of principal and
interest were recast downward to $53,823. The loan is currently solely
collateralized by the remainder of the Fountain Valley Industrial Park
owned by the Partnership.
The Fountain Valley Industrial Park investment property has been
classified as held for sale or disposition at December 31, 1996, and
therefore, will not be subject to continued depreciation after that date.
New and renewal leases at the Fountain Valley Industrial Park may
continue to require expenditures for lease commissions and tenant
improvements prior to tenant occupancy. The costs incurred upon releasing
may result in a decrease in cash flow from operations over the near term.
As of September 30, 1995, due to the uncertainty at such time of the
Partnership's ability to recover the net carrying value of the Fountain
Valley Industrial Park investment property through future operations and
sale, given the expected holding period not being in excess of December 31,
1999, the Partnership recorded, as a matter of prudent accounting practice,
a provision for value impairment of $4,200,000. Such provision was
recorded to reduce the net carrying value of the investment property to its
then estimated fair value based upon an analysis of discounted estimated
future cash flows over the projected holding period. There can be no
assurance that the then estimated fair value of the property would
ultimately be realized by the Partnership in any future sale or disposition
transaction.
RIVERTREE COURT SHOPPING CENTER
The property was classified as held for sale or disposition at July 1,
1996, and therefore, has not been subject to continued depreciation since
that date.
On July 17, 1997, the Partnership sold the land and related
improvements known as the Rivertree Court Shopping Center to an
unaffiliated third-party for $31,175,000. The Partnership received
approximately $14,915,000 of net sales proceeds at closing (which reflected
the assumption by the buyer of the mortgage loan which had a current
balance of approximately $15,700,000 and the payment of selling expenses
and closing costs of approximately $560,000). Based upon the proposed sale
price, the Partnership recognized a provision for value impairment of
$2,500,000 on June 30, 1997. The sale resulted in a nominal gain for
financial reporting purposes and the Partnership recognized an approximate
loss of $965,000 for Federal income tax purposes in 1997. In addition, in
connection with the sale of this property and as is customary in such
transactions, the Partnership agreed to certain representations and
warranties, with a stipulated survival period which expired on December 1,
1997 with no liability to the Partnership.
VENTURE AGREEMENTS
FIRST FINANCIAL
On May 20, 1987, the Partnership, through First Financial, a joint
venture with JMB-XII, acquired an interest in a general partnership
("Encino") with an affiliate of the developer ("Encino Venture Partner").
Encino owned an office building in Encino (Los Angeles), California. First
Financial made an initial investment in the aggregate amount of
approximately $49,812,000 to Encino.
<PAGE>
In November 1987, First Financial caused Encino to obtain a third
party first mortgage loan in the amount of $30,000,000. The proceeds of
such loan were distributed to First Financial to reduce its contribution
and to the Encino Venture Partner who subsequently repaid a $15,500,000
loan from First Financial. Thus, the total cash investment of First
Financial for its interest in the office building, after consideration of
the funding of the $30,000,000 permanent financing, was approximately
$20,000,000, of which the Partnership's share was approximately $7,500,000.
The first mortgage loan on the property matured November 1, 1995.
Effective November 1, 1995, Encino and the existing lender amended and
restated the existing mortgage loan. The new principal balance of the
amended note at November 1, 1995 was $24,970,148. This amount was
comprised of the then outstanding principal portion of $28,970,148 on the
original $30,000,000 note less a required $4,000,000 principal paydown by
Encino, all of which was advanced by First Financial at closing of which
the Partnership's share of such paydown was $1,500,000. The amended loan
had an interest rate of 8.67% and a term of two years resulting in a
maturity date of November 1, 1997.
In order to finalize the loan extension described above, the
Partnership and its affiliated partner advanced approximately $4.0 million
(approximately $1.5 million by the Partnership) to the joint venture to
fund the required principal paydown and related loan fees. A capital call
had been made on the unaffiliated joint venture partner for its share of
the total required amount; however, the unaffiliated joint venture partner
indicated that it did not intend to fund its required share. The
Partnership and its affiliated partner reached an agreement with the
unaffiliated partner to modify the joint venture agreement. In April 1996,
the unaffiliated partner became a limited partner as a result of this
modification.
Due to the uncertainty of Encino's ability to recover the net carrying
value of the First Financial office building investment property through
future operations and sale during the estimated holding period, Encino
recorded, as a matter of prudent accounting practice, a provision for value
impairment of such investment of approximately $6,475,000, all of which was
allocated to First Financial. The Partnership's share of such provision to
First Financial was approximately $2,428,000. Such provision was recorded
at December 31, 1994 to reduce the net carrying value of the investment
property to its then estimated fair value based upon an analysis of the
property's discounted estimated future cash flows over the projected
holding period.
The First Financial office building appeared to have experienced only
minor cosmetic damage as a result of the January 17, 1994 Northridge
earthquake in southern California. On February 22, 1995, the city council
of the city of Los Angeles passed an ordinance requiring certain buildings
(identified by building type and location) to perform testing on the welded
steel moment connections to determine if the earthquake had weakened such
joint weldings and to repair such joint weldings if weakness is detected.
This property qualified for the testing under the ordinance, and therefore,
Encino retained a structural engineer to perform the testing. Results of
the testing by the structural engineer indicated that some of the
building's joint weldings suffered damage which, in accordance with the
ordinance, were required to be repaired. Encino's structural engineer
informed Encino that the damage detected did not pose a life safety risk
for the building's tenants. All testing and repairs necessary to comply
with such ordinance were completed as of October 1995. The total cost of
such testing and repairs was approximately $826,000 (of which the
Partnership's share was approximately $309,750).
The First Financial office building was classified as held for sale as
of April 1, 1996 and therefore was not subject to continued depreciation
since that time.
<PAGE>
On September 11, 1996, the joint venture sold the First Financial
office building to an unaffiliated third-party for a sale price of
$37,900,000 (before selling expenses and prorations). The joint venture
received approximately $13,000,000 of net sale proceeds at closing (which
reflected the assumption by the buyer of the mortgage loan with a current
balance of approximately $24,700,000 and closing costs), substantially all
of which were allocable to JMB/First Financial pursuant to the Encino
venture agreement. The sale resulted in approximately $2,880,000 and
$18,800,000 of gain for financial reporting purposes and Federal income tax
purposes in 1996, respectively, of which approximately $1,268,000 and
$28,000 of gain was allocated to the Partnership, respectively.
The Encino partnership agreement generally provided that First
Financial was entitled to receive (after any participating amounts due to
Pepperdine University pursuant to its tenant lease) from cash flow from
operations (as defined) an annual cumulative preferred return equal to
9.05% through April 30, 1995 (and 8.9% thereafter) of its capital contri-
butions. Any remaining cash flow was to be split equally between First
Financial and the Encino Venture Partner. Pepperdine University, under its
tenant lease, was entitled to an amount based on 6.6% of the Venture
Partner's share of the office building's net operating profit and net sale
profit (as defined). All of Encino's operating profits and losses before
depreciation were allocated to First Financial in 1995 and 1996.
The Encino partnership agreement also generally provided that net sale
proceeds and net refinancing proceeds (as defined), after any amounts due
to Pepperdine University pursuant to its tenant lease, were to be
distributed: first, to First Financial in an amount equal to the
deficiency, if any, in its cumulative preferred return as described above;
next, to First Financial in the amount of its capital contributions; next,
to the Encino Venture Partner in an amount equal to $400,000; any remaining
proceeds were to be split equally between First Financial and the Encino
Venture Partner.
The terms of the First Financial partnership agreement provided that
annual cash flow, net sale or refinancing proceeds, and tax items were to
be distributed or allocated, as the case may be, to the Partnership in
proportion to its 37.5% share of capital contributions.
The office building was managed by an affiliate of the Encino Venture
Partner for a fee based upon a percentage of rental receipts (as defined)
of the property.
JMB/MIAMI
On January 26, 1988, the Partnership, through JMB/Miami International
Associates ("JMB/Miami"), a general partnership 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
County Associates ("West Dade") in which JMB/Miami was a general partner,
with an affiliate of the developer (the "Venture Partner"), which owned an
enclosed regional shopping center in Miami, Florida known as the Miami
International Mall. During February 1989, IDS/JMB Balanced Income Growth,
Ltd. ("IDS/JMB"), 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.
("Urban"), a partnership controlled by Urban Shopping Centers, Inc. (a
public corporation organized by an affiliate of the General Partners of the
Partnership). The Partnership's cash investment in JMB/Miami was
$10,402,500. The terms of JMB/Miami partnership agreement provided that
annual cash flow, net sale or refinancing proceeds, and tax items were to
be distributed or allocated, as the case may be, to the Partnership in
proportion to its 50% share of capital contributions.
<PAGE>
JMB/Miami invested $17,678,694 for a 50% interest in West Dade and
$1,126,306 as a contribution for initial working capital requirements of
West Dade. The West Dade venture agreement provided that JMB/Miami and the
Venture Partner generally were each entitled to receive 50% of profits and
losses, net cash flow and net sale or refinancing proceeds of West Dade and
were each obligated to advance 50% of any additional funds required under
the terms of the West Dade venture agreement.
West Dade sold a 4 acre outparcel of land at the Miami International
Mall in December 1994 for a net sales price of approximately $1,466,000
after certain selling costs, of which the Partnership's share was
approximately $367,000. For financial reporting purposes, West Dade has
recognized a gain in 1994 of approximately $1,195,000, of which the
Partnership's share is approximately $299,000. For income tax purposes,
West Dade has recognized a gain in 1994 of approximately $985,000, of which
the Partnership's share is a gain of approximately $274,000.
On April 8, 1996, effective March 31, 1996, JMB/Miami was voluntarily
dissolved by agreement of its partners and its 50% ownership interest in
West Dade and related assets were distributed to its partners based on
their respective ownership percentages. Accordingly, the Partnership
acquired a direct 25% ownership interest in West Dade. The Partnership
then sold its entire 25% interest in West Dade as described below.
On April 8, 1996, the Venture Partner purchased 29.812% (i.e., a
7.453% interest) of the Partnership's interest in West Dade for $4,005,624
(paid in cash at closing), subject to proration. The Venture Partner also
assumed a proportionate share of the Partnership's obligations and
liabilities of West Dade from and after March 31, 1996, the effective date
of the transaction. The Venture Partner is not affiliated with the
Partnership or its General Partners, and the terms of the sale were
determined by arm's-length negotiations.
Concurrently, Urban exercised its right of first refusal and purchased
the other 70.188% of the Partnership's interest (i.e., a 17.547% interest)
in West Dade for $9,431,107 (paid in cash at closing), subject to
proration. Urban also assumed a proportionate share of the Partnership's
share of obligations and liabilities of West Dade from and after the
effective date of the transaction. The price of the interest sold to Urban
was in proportion to that sold to the Venture Partner, and the other terms
of the sale with Urban were based on those applicable to the sale with the
Venture Partner. In addition, West Dade agreed to indemnify the
Partnership generally from and against claims and liabilities incurred by
the Partnership in connection with West Dade or its property after the
effective date of the transaction. The Partnership recognized an
approximate $9,604,000 gain for financial reporting purposes and recognized
a gain of approximately $11,475,000 for Federal income tax purposes in
1996.
The shopping center was managed by an affiliate of the Venture
Partner. The manager is paid an annual fee equal to 4-1/2% of the net
operating income of the shopping center.
ADAMS/WABASH
On April 19, 1988, an affiliate of the Partnership entered into a
forward commitment on behalf of the Partnership to make a cash investment
in the Adams/Wabash Limited Partnership ("Adams/Wabash"), which constructed
a parking garage and retail space structure (the "Project") in Chicago,
Illinois. The Project contained 671 parking spaces and approximately
28,800 square feet of rentable retail area. The Partnership funded
approximately $24,994,000 in full satisfaction of its total cash
commitment.
<PAGE>
Upon acquisition, the Partnership was admitted to Adams/Wabash with a
49.9% ownership interest, which increased to 74.9% effective October 1,
1993, pursuant to the terms of the Adams/Wabash Partnership Agreement. The
Managing General Partner of the Partnership had a .1% interest with the
remaining 25% held by the developers. The Partnership was 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
would have been distributed in accordance with the ownership interests of
Adams/Wabash. The Partnership also had a preferred position with respect
to distributions of sales and financing proceeds. Items of profit and loss
were, in general, allocated in accordance with distributions of cash flow.
Accordingly, for financial reporting purposes, for the years ended
December 31, 1996 and 1995, the Partnership was allocated 100% of the
operating profits of Adams/Wabash. Although the Partnership received its
preferred returns for 1994 and 1995, as of December 31, 1997, the
Partnership had a cumulative deficiency in its annual preferred return of
approximately $1,000,000. Effective November 1, 1996, an affiliate of the
General Partners assumed the management of the retail portion of the
property for an annual fee equal to 5% of the gross revenue of the retail
portion of the property, the same terms as the previous unaffiliated
manager.
The property was classified as held for sale or disposition at
December 31, 1996, and therefore, was not subject to continued depreciation
after that time. On August 11, 1997, the Adams/Wabash joint venture sold
the Adams/Wabash Self-Park to an unaffiliated third party. The sale price
of the land and improvements, determined by arm's-length negotiations, was
$25,000,000. Net cash proceeds from the sale, net of closing costs and
selling expenses of approximately $454,000, were approximately $24,546,000.
The retail portion of the Property was 39% occupied at the date of sale.
The Adams/Wabash joint venture reported a gain on sale of approximately
$5,146,000, all of which is allocable to the Partnership for financial
reporting purposes, in 1997. The Adams/Wabash joint venture recognized a
gain of approximately $5,442,000 for Federal income tax reporting purposes,
substantially all of which is allocable to the Partnership, in 1997. In
addition, in connection with the sale of this property and as is customary
in such transactions, the Adams/Wabash joint venture agreed to certain
representations and warranties, with a stipulated survival period which
expired on December 15, 1997 with no liability to the Partnership. In
November 1997, the Partnership made a cash distribution of proceeds from
the sales of the Adams/Wabash Self Park and the Rivertree Court Shopping
Center totaling $300 per Interest.
The Partnership was entitled to a cumulative annual preferred return,
payable from operating cash flow, of 10% of its capital contributions to
Adams/Wabash. Any distributable cash flow in excess of the Partnership's
preferred return would have been distributed in accordance with the
ownership interests of Adams/Wabash. The Adams/Wabash partnership
agreement stipulated that sale or financing proceeds would be distributed
such that the Partnership shall first receive any deficit in its cumulative
annual preferred return followed by the return of the Partnership's
original capital investment in Adams/Wabash of approximately $24,994,000.
Since there was a deficit in the Partnership's cumulative preferred annual
return and net sale proceeds were below the Partnership's original capital
investment, all distributable sale proceeds were distributed to the
Partnership.
<PAGE>
LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1997 and
1996:
1997 1996
----------- -----------
10.03% mortgage note; secured by
the Rivertree Court Shopping
Center located in Vernon Hills
(Chicago), Illinois; payable
monthly, interest only;
originally due January 1, 1999
but assumed by the buyer at
sale of the property in
July 1997. . . . . . . . . . . . $ -- 15,700,000
7.32% mortgage note; secured by the
Fountain Valley Industrial Park
located in Fountain Valley
California; payable in monthly
installments of principal and
interest of $53,823, remaining
principal balance of approximately
$5,489,000 plus accrued interest
due on March 1, 2001 partially
repaid in 1997 as described
below. . . . . . . . . . . . . . 6,176,838 10,096,638
----------- ----------
Total debt. . . . . . . . . . 6,176,838 25,796,638
Less current portion of
long-term debt . . . . . . . 200,366 313,664
----------- ----------
Total long-term debt. . . . . $ 5,976,472 25,482,974
=========== ==========
Five year maturities of long-term debt are summarized as follows:
1998 . . . . . . . . $ 200,366
1999 . . . . . . . . 215,535
2000 . . . . . . . . 231,853
2001 . . . . . . . . 5,529,084
2002 . . . . . . . . --
===========
FOUNTAIN VALLEY INDUSTRIAL PARK AND CERRITOS INDUSTRIAL PARK
In December 1996, the Partnership sold one of the parcels and related
building that compose the Fountain Valley Industrial Park investment
property for a sale price of $665,000. The lender required a principal
paydown of the loan in the amount of $350,000 which reduces the balloon
payment due on March 1, 2001. Reference is made to the Fountain Valley
footnote above for a further discussion of the sale.
Effective June 1, 1997, the Partnership's 7.32% mortgage note,
originally secured by both the Fountain Valley Industrial Park and the
Cerritos Industrial Park investment properties, was modified due to the
sales of the Cerritos Industrial Park in 1997 and sales of the outparcels
at the Fountain Valley Industrial Park in 1996 and 1997. In conjunction
with the property sales described above, the Partnership was required to
repay principal of approximately $3,988,000 on the outstanding mortgage
note. Accordingly, the $88,998 monthly loan installments of principal and
interest were recast downward to $53,823. The loan is currently solely
collateralized by the remainder of the Fountain Valley Industrial Park
owned by the Partnership.
<PAGE>
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations generally are allocated 96% to
the Limited Partners and 4% to the General Partners. Profits or losses for
Federal income tax purposes from the sale or refinancing of properties
generally will be allocated 99% to the Limited Partners and 1% to the
General Partners. However, net profits from the sale of properties will be
additionally allocated to the General Partners (i) to the extent that cash
distributions to the General Partners of sale proceeds from such sale
exceed the aforesaid 1% of such profits and (ii) in order to reduce
deficits, if any, in the General Partners' capital accounts to a level
consistent with the gain anticipated to be realized from the sale of
additional properties.
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 (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.
The cumulative amount of such deferred distributions are approximately
$5,725,000 at December 31, 1997. All amounts deferred or currently payable
do not bear interest. The Partnership does not expect that the
subordination requirements of the Partnership agreement will be satisfied
over the expected remaining term of the Partnership to permit payment of
the majority of these amounts. Accordingly, the General Partners waived
their right to receive the allocation of sale proceeds, which otherwise
would have been deferred per above, from the sale of the Partnership's
interest in the Miami International Mall and the First Financial Plaza in
1996 and the sale of the Cerritos Industrial Park, Adams/Wabash Parking
Garage, Rivertree Court Shopping Center and the Fountain Valley Industrial
Park outparcels in 1996 and 1997.
LEASES - AS PROPERTY LESSOR
The Partnership's principal asset is one multi-tenant industrial
building complex. The Partnership has determined that all leases relating
to this property are properly classified as operating leases; therefore,
rental income is reported when earned and the cost of the properties,
excluding the cost of the land, is depreciated over their estimated useful
lives. Leases with tenants range in term from one to fifteen years and
provide for fixed minimum rent and partial reimbursement of operating
costs.
Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1997:
Industrial Building Complex:
Cost . . . . . . . . . . . . . . . . . . . . $20,202,265
Accumulated depreciation . . . . . . . . . . 4,722,106
-----------
$15,480,159
===========
<PAGE>
Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit, to be received
in the future under the operating leases are as follows:
1998 . . . . . . . . . . . . . . . . . . . . . $ 1,922,837
1999 . . . . . . . . . . . . . . . . . . . . . 1,663,618
2000 . . . . . . . . . . . . . . . . . . . . . 1,552,206
2001 . . . . . . . . . . . . . . . . . . . . . 1,484,507
2002 . . . . . . . . . . . . . . . . . . . . . 1,039,017
Thereafter . . . . . . . . . . . . . . . . . . 1,565,701
-----------
Total . . . . . . . . . . . . . . . . . . $ 9,227,886
===========
TRANSACTIONS WITH AFFILIATES
Certain of the Partnership's properties are managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of certain rents received by the properties. In December 1994, one of the
affiliated property managers sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. In addition, certain of the management personnel of the property
manager became management personnel of the purchaser and its affiliates.
The successor to such affiliated property manager's assets is acting as the
property manager of the Fountain Valley and Cerritos Industrial Parks after
the assignment on the same terms that existed prior to the assignment.
Effective November 1, 1996, an affiliate of the General Partners assumed
the management of the retail portion of the Adams/Wabash Self Park for an
annual fee equal to 5% of the gross revenue of the retail portion of the
property, the same terms as the previous unaffiliated manager.
The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Managing General Partner
and its affiliates including the reimbursement for salaries and salary-
related expenses of its employees, certain of its officers, and other
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's investments. Fees, commissions and other
expenses required to be paid by the Partnership to the General Partners and
their affiliates as of December 31, 1997, 1996 and 1995 are as follows:
UNPAID AT
DECEMBER 31,
1997 1996 1995 1997
-------- ------- ------- ------------
Property management
and leasing fees . . . . $104,495 97,773 103,838 --
Insurance commissions . . 6,382 10,028 9,986 --
Reimbursement (at cost)
for accounting
services . . . . . . . . 5,823 4,416 76,545 1,444
Reimbursement (at cost)
for portfolio manage-
ment services. . . . . . 25,588 39,269 69,714 5,493
Reimbursement (at cost)
for legal services . . . 6,473 7,578 1,762 2,171
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses . -- 1,099 137,851 --
-------- ------- ------- ------
$148,761 160,163 399,696 9,108
======== ======= ======= ======
In accordance with the subordination requirements of the Partnership
Agreement, the General Partners have deferred payment of certain of their
distributions of net cash flow and sale proceeds from the Partnership. All
amounts deferred or currently payable do not bear interest.
<PAGE>
During 1994, certain officers and directors of the Managing 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's consolidated venture
for the twelve months ended December 31, 1997 and 1996 were approximately
$71,000 and $133,000, respectively, all of which was paid at December 31,
1997 and 1996. Effective November 1, 1996, and through its date of sale on
August 11, 1997, an affiliate of the General Partners assumed the
management of the retail portion of the Adams/Wabash Self Park for an
annual fee equal to 5% of the gross revenue of the retail portion of the
property, the same terms as the previous unaffiliated manager.
INVESTMENT IN UNCONSOLIDATED VENTURES
The Partnership sold its interests in First Financial and JMB/Miami
during 1996. Summary combined financial information for First Financial
and JMB/Miami for the years ended December 31, 1996 and 1995 are as
follows:
1996 1995
----------- ----------
Total income. . . . . . . . . . . . . . $ 7,227,991 19,328,590
=========== ==========
Operating expenses. . . . . . . . . . . $ 6,209,999 15,808,613
=========== ==========
Operating earnings. . . . . . . . . . . $ 1,017,992 3,519,977
=========== ==========
Gain on sale of land and property . . . $ 2,882,573 --
=========== ==========
Net income. . . . . . . . . . . . . . . $ 3,900,565 3,519,977
=========== ==========
<PAGE>
<TABLE>
SCHEDULE III
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) ACQUISITION (C) AT CLOSE OF PERIOD (B)
----------------------- -------------------------------------------------------------
BUILDINGS BUILDINGS BUILDINGS
ENCUM- AND AND AND
BRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS TOTAL (D)
------ -------- ----------------------- ------------ -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Industrial
Complex:
Fountain Valley
Industrial
Park . . . . . $6,176,838 6,751,729 16,589,910 (1,477,613) (1,661,761) 5,274,116 14,928,149 20,202,265
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Total . . . $6,176,838 6,751,729 16,589,910 (1,477,613) (1,661,761) 5,274,116 14,928,149 20,202,265
========== ========== ========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1997
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ------------ ---------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Industrial Complex:
Fountain Valley
Industrial Park. . . . . . . . . . $4,722,106 1967-1970 11/1/88 5-30 years 222,437
---------- --------
Total . . . . . . . . . . . . . $4,722,106 222,437
========== ========
<FN>
- ------------------
(A) The initial cost to the Partnership represents the original purchase price of the
properties, including amounts incurred subsequent to acquisition which were contemplated at
the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1997 for Federal income
tax purposes was $23,823,220.
(C) The Partnership recorded a provision for value impairment of $4,200,000 in 1995
which was recorded as a reduction to land and building and improvements.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(D) Reconciliation of real estate owned:
<CAPTION>
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . . . $91,023,463 90,740,661 98,660,035
Additions during period. . . . . . . . . . . . . 127,500 678,815 280,626
Reductions during period . . . . . . . . . . . . (68,448,698) (396,013) --
Provision for value impairment . . . . . . . . . (2,500,000) -- (8,200,000)
----------- ----------- -----------
Balance at end of period . . . . . . . . . . . . $20,202,265 91,023,463 90,740,661
=========== =========== ===========
(E) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . . . $18,305,156 16,583,348 14,115,282
Depreciation expense . . . . . . . . . . . . . . -- 1,721,808 2,468,066
Reductions during period . . . . . . . . . . . . (13,583,050) -- --
----------- ----------- -----------
Balance at end of period . . . . . . . . . . . . $ 4,722,106 18,305,156 16,583,348
=========== =========== ===========
</TABLE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of, or disagreements with, accountants during
fiscal years 1997 and 1996.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Managing General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware Corporation, substantially all of the
outstanding stock of which is owned, directly or indirectly, by certain of
its officers, directors, members of their families and their affiliates.
JMB has responsibility for all aspects of the Partnership's operations.
AGPP Associates, L.P., an Illinois limited partnership, with JMB as its
sole general partner, is an Associate General Partner of the Partnership.
The limited partners of AGPP Associates, L.P. are generally officers,
directors and affiliates of JMB or its affiliates. AGPP Associates, L.P.
is also the sole general partner of Income Partners-XIII, an Illinois
limited partnership that is the other Associate General Partner of the
Partnership.
The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership or its investment properties
by affiliates of the General Partners, including insurance brokerage
services. In general, such services are to be provided on terms no less
favorable to the Partnership than could be obtained from independent third
parties and are otherwise subject to conditions and restrictions contained
in the Partnership Agreement. The Partnership Agreement permits the
General Partners and their affiliates to provide services to, and otherwise
deal and do business with, persons who may be engaged in transactions with
the Partnership, and permits the Partnership to borrow from, purchase goods
and services from, and otherwise to do business with, persons doing
business with the General Partners or their affiliates. The General
Partners and their affiliates may be in competition with the Partnership
under certain circumstances, including, in certain geographical markets,
for tenants and/or for the sale of property. Because the timing and amount
of cash distributions and profits and losses of the Partnership may be
affected by various determinations by the General Partners under the
Partnership Agreement, including whether and when to sell a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The names, positions held and length of service therein of each
director and the executive and certain other officers of the Managing
General Partner of the Partnership are as follows:
<PAGE>
SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 8/01/93
Executive Vice President 1/02/87
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Managing General Partner to be held on
June 3, 1998. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Managing General Partner to be held on June 3,
1998. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-XI
("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII
("Carlyle-XII"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV ("Carlyle-
- -XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), Carlyle
Real Estate Limited Partnership-XVI ("Carlyle-XVI"), Carlyle Real Estate
Limited Partnership-XVII ("Carlyle-XVII"), JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VII
("JMB Income-VII"), JMB Income Properties, Ltd.-X ("JMB Income-X"), JMB
Income Properties, Ltd.-XI ("JMB Income-XI") and JMB Income Properties,
Ltd.-XII ("JMB Income-XII"). JMB is also the sole general partner of the
associate general partner of most of the foregoing partnerships.
Most of the foregoing directors and officers are also officers and/or
directors of various affiliated companies of JMB including Arvida/JMB
Managers, Inc. (the general partner of Arvida/JMB Partners, L.P.
("Arvida")) and Income Growth Managers, Inc. (the corporate general partner
of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG")). Most of such
directors and officers are also partners, directly or indirectly, of
certain partnerships which are associate general partners in the following
real estate limited partnerships: the Partnership, Carlyle-VII,
Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV,
Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB Income-X, JMB
Income-XI, JMB Income-XII, Mortgage Partners-III, Mortgage Partners-IV,
Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
<PAGE>
The business experience during the past five years of each such
director and officer of the Managing General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 60) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is also a director of Urban Shopping Centers,
Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment
trust in the business of owning, managing and developing shopping centers.
He is a Certified Public Accountant.
Neil G. Bluhm (age 60) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is also a principal of Walton Street Real Estate
Fund I, L.P. and a director of USC, Inc. He is a member of the Bar of the
State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 59) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December of
1990. He is a member of the Bar of the State of Illinois and a Certified
Public Accountant.
Stuart C. Nathan (age 56) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 64) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 51) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Advisors L.P.,
an affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a
director of USC, Inc., a trustee of Amli Residential Property Trust and a
director of a number of investment companies advised or managed by T. Rowe
Price Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 48) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 50) has been associated with JMB since December,
1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig
was Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters Degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Gary Nickele (age 45) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 49) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 62) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The officers and director of the Managing General Partner receive no
current or proposed direct remuneration in such capacities. Pursuant to
the Partnership Agreement, the General Partners of the Partnership are
entitled to receive a share of cash distributions, when and as cash
distributions are made to the Investors, and a share of profits or losses.
Reference is also made to the Notes for a description of such transactions,
distributions and allocations. In 1997, 1996 and 1995, the General
Partners received cash distributions in the amount of $70,939, $241,193 and
$156,067, respectively. As of December 31, 1997, the General Partners have
deferred payment of distributions in the aggregate amount of approximately
$5,725,000.
The General Partners of the Partnership may be reimbursed for their
direct expenses relating to the offering, the administration of the
Partnership and the operation of the Partnership's real property
investments.
The General Partners may be reimbursed for salaries and salary-related
direct expenses of officers and employees of the Managing General Partner
and its affiliates while directly engaged in the administration of the
Partnership and the operation of the Partnership's real property
investments. In 1997, the Managing General Partner was due reimbursement
for such expenses in the amount of $37,884 of which $9,108 was unpaid as of
December 31, 1997.
Affiliates of the General Partners have provided property management
services for the Rivertree Court Shopping Center and the retail portion of
the Adams/Wabash Self Park during 1997. In 1997, such affiliates earned
aggregate property management fees amounting to $104,495, all of which was
paid as of December 31, 1997.
Certain directors and officers of the General Partners have an equity
interest in a company that provided property management services for the
Adams/Wabash Self Park during 1997. In 1997, such company earned aggregate
property management fees amounting to $93,684, all of which was paid at
December 31, 1997.
JMB Insurance Agency, Inc., an affiliate of the Managing General
Partner of the Partnership, earned and received insurance brokerage
commissions in 1997 aggregating $6,382 in connection with the providing of
insurance coverage for certain of the real property investments of the
Partnership. Such commissions are at rates set by insurance companies for
the classes of coverage provided.
The Partnership is permitted to engage in various transactions
involving affiliates of the Managing General Partner of the Partnership.
The relationship of the Managing General Partner (and its directors and
officers) to its affiliates is set forth in Item 10 above and Exhibit 21
hereto.
<PAGE>
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Managing General Partner, its officers and directors and the Associate General Partners own the
following Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests and
Assignee Interests
Therein JMB Realty Corporation 5 Interests (1) Less than 1%
indirectly
Limited Partnership
Interests Managing General Partner, 5 Interests (1) Less than 1%
its officers and indirectly
directors and the
Associate General Partners
as a group
<FN>
(1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB Realty
Corporation, as its indirect majority shareholder, is deemed to have sole investment and voting power.
All of the outstanding shares of the Managing General Partner of the Partnership are owned by an affiliate of
its officers and directors as set forth above in Item 10.
Reference is made to Item 10 for information concerning ownership of the Managing General Partner.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
</TABLE>
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Managing General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements (See Index to Financial Statements filed
with this annual report).
(2) Exhibits.
3-A. The Prospectus of the Partnership dated August 20, 1986
as supplemented October 31, 1986 and January 26, 1987 as filed with the
Commission pursuant to Rules 424(b) and 424(c) is hereby incorporated
herein by reference to Exhibit 3-A to the Partnership's Form 10-K dated
March 18, 1993.
3-B. Amended and Restated Agreement of Limited Partnership set
forth as Exhibit A to the Prospectus, which is hereby incorporated by
reference to Exhibit 3-B to the Partnership's From 10-K dated March 18,
1993.
3-C. Acknowledgement of rights and duties of the General
Partners of the Partnership between AGPP Associates, L.P. (a successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is hereby incorporated herein by reference to the
Partnership's report for June 30, 1996 on Form 10-Q (File No. 000-19496)
dated August 9, 1996.
10-A. 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 dated November 15, 1988.
10-B. Option Agreement to sell Adams/Wabash Self Park, dated
June 27, 1997, is hereby incorporated by reference to Exhibit 10.1 to the
Partnership's Report for August 11, 1997 on Form 8-K (File No. 000-19496).
10-C. Agreement to purchase Rivertree Court Shopping Center,
dated June 11, 1997, and exhibits thereto are hereby incorporated herein by
reference to Exhibit 10.1 to the Partnership's Report for July 17, 1997 on
Form 8-K (File No. 000-19496).
21. List of Subsidiaries.
24. Powers of Attorney
27. Financial Data Schedule
<PAGE>
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 annual report.
No annual report or proxy material for the fiscal year 1997 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership 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
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Managing General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1998
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1998
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1998
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1998
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1998
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 25, 1998
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1998
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1998
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------ ----
3-A. Pages 8-19, 64-70, A-7 to A-16,
A-34 to A-35 of the Prospectus
of the Partnership dated August 20,
1986, as supplemented on October 31,
1986, and January 26, 1987 Yes --
3-B. Amended and Restated Agreement of
Limited Partnership Yes --
3-C. Acknowledgement of rights and duties
of the General Partners of the
Partnership Yes --
10-A. Acquisition documents relating to
the Fountain Valley Industrial
Buildings and Cerritos Industrial
Buildings Yes --
10-B. Option Agreement to sell
Adams/Wabash Self Park,
dated June 27, 1997 Yes --
10-C. Agreement to purchase
Rivertree Court Shopping
Center, dated June 11, 1997 Yes --
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership was a limited partner in Adams/Wabash Limited
Partnership, an Illinois limited partnership. Adams/Wabash Limited
Partnership held title to the Adams/Wabash Self Park.
Reference is made to the Notes to Financial Statements filed with this
annual report for a summary description of the terms of such partnership
agreement. The Partnership's interest in the foregoing joint venture
partnership and the results of its operations are included in the
Consolidated Financial Statements of the Partnership filed with this annual
report.
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the managing general partner of JMB INCOME PROPERTIES,
LTD. - XIII, do hereby nominate, constitute and appoint GARY NICKELE,
GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the
undersigned with full power of authority to sign in the name and on behalf
of the undersigned officers a Report on Form 10-K of said partnership for
the fiscal year ended December 31, 1997, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents
and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 30th day of January, 1998.
H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer
GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1997,
and any and all amendments thereto, the 30th day of January, 1998.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB
Realty Corporation, the managing general partner of JMB INCOME PROPERTIES,
LTD. - XIII, do hereby nominate, constitute and appoint GARY NICKELE,
GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the
undersigned with full power of authority to sign in the name and on behalf
of the undersigned officers a Report on Form 10-K of said partnership for
the fiscal year ended December 31, 1997, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents
and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 30th day of January, 1998.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officers, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1997,
and any and all amendments thereto, the 30th day of January, 1998.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,666,891
<SECURITIES> 0
<RECEIVABLES> 1,188,327
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,855,218
<PP&E> 15,480,159
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,059,131
<CURRENT-LIABILITIES> 856,399
<BONDS> 5,976,472
<COMMON> 0
0
0
<OTHER-SE> 15,065,857
<TOTAL-LIABILITY-AND-EQUITY> 22,059,131
<SALES> 7,583,750
<TOTAL-REVENUES> 8,483,213
<CGS> 0
<TOTAL-COSTS> 2,445,579
<OTHER-EXPENSES> 3,089,967
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,422,849
<INCOME-PRETAX> 1,524,818
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,524,818
<DISCONTINUED> 7,186,234
<EXTRAORDINARY> (89,545)
<CHANGES> 0
<NET-INCOME> 8,621,507
<EPS-PRIMARY> 67.18
<EPS-DILUTED> 67.18
</TABLE>
