SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended
March 31, 1998 Commission file #000-19496
JMB INCOME PROPERTIES, LTD. - XIII
(Exact name of registrant as specified in its charter)
Illinois 36-3426137
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office)(Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . 10
PART II OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . 13
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . $ 4,741,468 4,666,891
Interest, rents and other receivables (net of allowance
for doubtful accounts of $72,019 in 1998 and 1997) . . . . 1,153,975 1,093,810
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . 10,019 25,047
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . 119,678 69,470
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . 6,025,140 5,855,218
Investment properties held for sale or disposition . . . . . . 15,480,360 15,480,159
------------ -----------
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . 352,465 371,870
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 340,460 351,884
------------ -----------
$ 22,198,425 22,059,131
============ ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1998 1997
------------- -----------
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . . . . $ 204,055 200,366
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 192,137 140,099
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 37,382 37,679
Accrued real estate taxes. . . . . . . . . . . . . . . . . . 51,132 --
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . 515,661 478,255
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . 1,000,367 856,399
Tenant security deposits . . . . . . . . . . . . . . . . . . . 160,403 160,403
Long-term debt, less current portion . . . . . . . . . . . . . 5,924,053 5,976,472
------------ -----------
Commitments and contingencies
Total liabilities. . . . . . . . . . . . . . . . . . . 7,084,823 6,993,274
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings (losses) . . . . . . . . . . . . 855,839 853,929
Cumulative cash distributions. . . . . . . . . . . . . . (1,701,976) (1,701,976)
------------ -----------
(826,137) (828,047)
------------ -----------
Limited partners (126,414 interests):
Capital contributions, net of offering costs . . . . . . 113,741,315 113,741,315
Cumulative net earnings (losses) . . . . . . . . . . . . 39,439,304 39,393,469
Cumulative cash distributions. . . . . . . . . . . . . . (137,240,880)(137,240,880)
------------ -----------
15,939,739 15,893,904
------------ -----------
Total partners' capital accounts (deficits). . . . . . 15,113,602 15,065,857
------------ -----------
$ 22,198,425 22,059,131
============ ===========
<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
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 534,624 2,996,030
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . 54,588 42,564
----------- ----------
589,212 3,038,594
----------- ----------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . 112,443 583,922
Property operating expenses. . . . . . . . . . . . . . . . . . . 208,867 896,616
Professional services. . . . . . . . . . . . . . . . . . . . . . 93,481 95,763
Amortization of deferred expenses. . . . . . . . . . . . . . . . 19,405 5,955
General and administrative . . . . . . . . . . . . . . . . . . . 94,118 130,392
----------- ----------
528,314 1,712,648
----------- ----------
60,898 1,325,946
Venture partners' share of venture operations. . . . . . . . . . . (13,153) --
----------- ----------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . 47,745 1,325,946
=========== ==========
Net earnings (loss) per limited
partnership interest:
Net earnings . . . . . . . . . . . . . . . . . . . . . . $ .36 10.07
========== ==========
Cash distributions per
limited partnership interest . . . . . . . . . . . . . . $ -- --
========== ==========
</TABLE>
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . . . . $ 47,745 1,325,946
Items not requiring cash or cash equivalents:
Amortization of deferred expenses. . . . . . . . . . . . . . . 19,405 5,955
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . (60,165) 205,488
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . 15,028 59,755
Accrued rents receivable . . . . . . . . . . . . . . . . . . . 11,424 7,987
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 52,038 (70,889)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . (297) (465)
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . 37,406 150,883
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . 51,132 90,311
Tenant security deposits . . . . . . . . . . . . . . . . . . . -- (1,446)
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . (50,208) (78,029)
----------- -----------
Net cash provided by (used in) operating activities. . . 123,508 1,695,496
----------- -----------
Cash flows from investing activities:
Additions to investment properties, net. . . . . . . . . . . . . (201) (47,134)
Payment of deferred expenses . . . . . . . . . . . . . . . . . . -- (3,533)
----------- -----------
Net cash provided by (used in) investing activities. . . (201) (50,667)
----------- -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997
----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . . . . . (48,730) (76,283)
Distributions to limited partners. . . . . . . . . . . . . . . . -- --
Distributions to general partners. . . . . . . . . . . . . . . . -- --
----------- -----------
Net cash provided by (used in) financing activities. . . (48,730) (76,283)
----------- -----------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . 74,577 1,568,546
Cash and cash equivalents, beginning of year . . . . . . 4,666,891 3,743,541
----------- -----------
Cash and cash equivalents, end of period . . . . . . . . $ 4,741,468 5,312,087
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest. . . . . . . . . . . . $ 112,740 584,387
=========== ===========
<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
MARCH 31, 1998 AND 1997
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1997
which are included in the Partnership's 1997 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. 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 such property and active marketing activity has commenced or is
expected to commence in the near term. In accordance with SFAS 121, any
properties identified as held for sale or disposition are no longer
depreciated. The Partnership has committed to a plan to sell the Fountain
Valley Industrial Park. The Fountain Valley Industrial Park was classified
as held for sale or disposition in the accompanying consolidated financial
statements. The results of operations for the consolidated property
classified as held for sale or disposition as of March 31, 1998 or sold or
disposed of during the past two years were $182,222 and $1,534,890,
respectively, for the three months ended March 31, 1998 and 1997.
TRANSACTIONS WITH AFFILIATES
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 March 31, 1998 and for the three months ended
March 31, 1998 and 1997 were as follows:
Unpaid at
March 31,
1998 1997 1998
------- ------ -------------
Property management and
leasing fees. . . . . . . $ -- 38,522 --
Reimbursement (at cost)
for out-of-pocket
salary and salary
related expenses
related to the on-site
and other costs for the
Partnership and its
investment properties . . 17,106 17,931 1,476
------- ------- ------
$17,106 56,453 1,476
======= ======= ======
<PAGE>
During 1994, certain officers and directors of the Managing General
Partner acquired interests in a company which provided certain property
management services to certain of the properties owned by the Partnership.
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.
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 are approximately
$5,725,000 at March 31, 1998. 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 this
amount. Additionally, the General Partners waived their right to receive
their allocation of sale proceeds, which otherwise would have been deferred
per the subordination requirements of the Partnership agreement, from the
sale of the Partnership's interest in the Miami International Mall, the
sale of First Financial Plaza in 1996, the sales of the two parcels of the
Fountain Valley Industrial Park investment property in 1996 and 1997 and
the sale in 1997 of Adams/Wabash Self-Park, Rivertree Court Shopping Center
and the Cerritos Industrial Park.
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 may be
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to Partners.
FOUNTAIN VALLEY INDUSTRIAL PARK
During the quarter, occupancy of this industrial park remained at
100%. The Partnership has been able to convert several buildings which had
been previously leased to tenants on a temporary basis to permanent leases
at higher rents. The property is producing cash flow for the Partnership.
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. A preliminary assessment of the initial testing to
determine the extent of the contamination has been submitted to the state
regulatory agency. Further testing is needed to determine the extent of
the contamination, which will require further state review and approval.
At this time, the Partnership has accrued $100,000 as its preliminary
estimate of assessing the contamination. 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 two outparcels
at the Fountain Valley Industrial Park in 1996 and 1997. In conjunction
with the property sales, 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.
ADJUSTMENTS
In the opinion of the Managing General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1998 and for the three months ended March 31, 1998 and 1997.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying consolidated
financial statements for additional information concerning certain of the
Partnership's investments.
During 1997 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
expired in April 1998. As of the date of this report, the Partnership is
aware that 4.2% of the Interests of the Partnership have been purchased by
all such unaffiliated third parties either pursuant to all 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 March 31, 1998, the Partnership and its consolidated venture had
cash and cash equivalents of approximately $4,741,000. Such funds are
available for future distributions to partners and working capital
requirements including costs related to assessing, and if necessary,
remediating the potential contamination of Fountain Valley Industrial Park.
In May 1998, the Partnership expects to make a semi-annual
distribution of cash generated from operations of $2 per interest.
<PAGE>
After reviewing the remaining property and the marketplace in which it
operates, the General Partners of the Partnership expects to remarket its
remaining investment property, the Fountain Valley investment property,
after environmental testing permits the Partnership to estimate the cost of
any required remediation of the ground water contamination. The
Partnership expects to liquidate its remaining net assets and wind up the
affairs of the Partnership no later than the end of 1999, barring
unforeseen economic developments.
RESULTS OF OPERATIONS
Significant variances between the periods reflected in the
accompanying consolidated balance sheets and statements of operations 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 increase in escrow deposits and accrued real estate taxes at March
31, 1998 as compared to December 31, 1997 is primarily due to the timing of
payment of real estate taxes at the Fountain Valley investment property.
The increase in accounts payable at March 31, 1998 as compared to
December 31, 1997 is primarily due to the first quarter accrual of $100,000
as the Partnership's preliminary estimate of the cost of assessing the
extent of the underground contamination at the Fountain Valley Industrial
Park.
<PAGE>
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate physical occupancy levels by quarter for the Partnership's
investment property owned during 1998.
<CAPTION>
1997 1998
-------------------------------------------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Fountain Valley
Industrial Park
Fountain Valley
(Los Angeles),
California (a) . . . . . 94% 100% 100% 100% 100%
<FN>
- ---------------
(a) On December 31, 1996, a parcel of land and a related building (9,500 square feet) were sold decreasing
Fountain Valley Industrial Park's total building area from 393,092 square feet to 383,592 square feet. On May 29,
1997, another parcel of land and a related building (12,702 square feet) were sold decreasing total building area
to 370,890 square feet. Occupancy percentages for 1997 reflect such revised available square footage in the
applicable periods.
</TABLE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 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 Report for December
31, 1992 on Form 10-K (File No. 000-19496) 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 herein
by reference to Exhibit 3-B to the Partnership's Report for December 31,
1992 on Form 10-K (File No. 000-19496) 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 herein by reference to Exhibits 1 and 2 to the
Partnership's Form 8-K (File No. 000-19496) dated November 15, 1988.
27. Financial Data Schedule
Although certain long-term debt instruments of the Registrant have been
excluded from Exhibit 4 above, pursuant to Rule (b)(4)(iii), the Registrant
commits to provide copies of such agreements to the Securities and Exchange
Commission upon request.
(b) No reports on Form 8-K was required to be filed during the last
quarter of the period covered by this quarterly report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XIII
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date:May 13, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
By: GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date:May 13, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 4,741,468
<SECURITIES> 0
<RECEIVABLES> 1,283,672
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,025,140
<PP&E> 15,480,360
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,198,425
<CURRENT-LIABILITIES> 1,000,367
<BONDS> 5,924,053
<COMMON> 0
0
0
<OTHER-SE> 15,113,602
<TOTAL-LIABILITY-AND-EQUITY>22,198,425
<SALES> 534,624
<TOTAL-REVENUES> 589,212
<CGS> 0
<TOTAL-COSTS> 228,272
<OTHER-EXPENSES> 187,599
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 112,443
<INCOME-PRETAX> 60,898
<INCOME-TAX> 0
<INCOME-CONTINUING> 47,745
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,745
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
