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, 1998 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 . . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings. . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . 6
PART II
Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters. . . . . . . 6
Item 6. Selected Financial Data. . . . . . . . . . . 7
Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 9
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 11
Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 12
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 36
PART III
Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 36
Item 11. Executive Compensation . . . . . . . . . . . 39
Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 40
Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 41
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 41
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 43
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"), was a limited partnership formed in 1986 and 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 made any additional capital
contribution after such date. The investors in the Partnership shared in
their portion of the benefits of ownership of the Partnership's real
property investments according to the number of Interests held.
The Partnership was engaged solely in the business of the acquisition,
operation, and sale and disposition of equity real estate investments.
Such equity investments were held by fee title and/or through joint venture
partnership interests. The Partnership's investments were located
throughout the nation 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 was not applicable and
wound not have been material to an understanding of the Partnership's
business taken as a whole. The Partnership was self-liquidating in
nature. At sale of a particular property, the net proceeds, if any, were
generally distributed to all partners or reinvested in existing properties
rather than invested in acquiring additional properties. As discussed
further in Item 7, during 1998 the Partnership sold its remaining
investment property, wound up its affairs and made a final liquidating
distribution of $21,121,251 including $1,140,254 to a liquidating trust
established for the benefit of the Holders of Interests and terminated its
operations and dissolved effective December 31, 1998.
The Partnership made the real property investments set forth in the
following table:
<PAGE>
<TABLE>
<CAPTION>
NAME, TYPE OF PROPERTY DATE OF SALE OR
AND LOCATION SIZE PURCHASE DISPOSITION DATE 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)
(a)(b)
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)
(a)(b)
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 (b)
g.l.a.
5. Fountain Valley
Industrial Park
Industrial Buildings
Fountain Valley
(Los Angeles),
California. . . . . 393,100 11/1/88 12/11/98 Fee ownership of land and
sq.ft. improvements (b)
b.a.
<PAGE>
NAME, TYPE OF PROPERTY DATE OF SALE OR
AND LOCATION SIZE PURCHASE DISPOSITION DATE 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 (b)
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. (a)(b)
<FN>
- -----------------------
(a) 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.
(b) The property has 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 was subject to
competition from similar types of properties (including properties owned by
affiliates of the General Partners) in the vicinity in which it was
located. Such competition was generally for the retention of existing
tenants. Additionally, the Partnership was in competition for new tenants.
Approximate occupancy levels for the properties owned during 1998 are set
forth in Item 2 below to which reference is hereby made. The Partnership
maintained the suitability and competitiveness of its property in its
market primarily on the basis of effective rents, tenant allowances and
service provided to tenants.
On December 11, 1998, the Partnership sold the remaining land,
buildings and related improvements of the Fountain Valley Industrial Park
located in Fountain Valley, California. Reference is made to the Notes for
a further description of such transaction.
The Partnership had 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 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 1998 and 1997 for the Partnership's remaining investment
property owned during 1998:
<PAGE>
<TABLE>
<CAPTION>
1997 1998
------------------------------ ------------------------------
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>
Fountain Valley
Industrial Park
Fountain Valley
(Los Angeles),
California (A). . . Retail/
Electronics
Repair/
Nuts and Bolts
Distributor 94% 100% 100% 100% 100% 100% 100% N/A
<FN>
- --------------------
An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter.
(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 1998 and 1997.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
Immediately prior to the dissolution of the Partnership, there were
8,533 record holders of Interests of the Partnership. On December 31,
1998, the Partnership made a liquidating distribution to its Limited
Partners including amounts to a liquidating trust established for the
benefit of Holders of Interests and subsequently terminated its operations
and dissolved effective December 31, 1998. There had been no public market
for Interests and it had not been anticipated that a public market for
Interests would develop. Upon request, the Managing General Partner
provided information relating to a prospective transfer of Interests to an
investor desiring to transfer his Interests. The price paid for the
Interests, as well as any other economic aspects of the transaction, was
subject to negotiation by the Investor.
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
YEAR ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION),
AND YEARS ENDED DECEMBER 31, 1997, 1996, 1995 AND 1994
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1998 1997 1996 1995 1994
------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total income. . . . . . . .$ 2,380,865 8,483,213 11,973,382 12,545,834 11,984,676
============ ========== ========== =========== ===========
Earnings (loss) before
gains on sales or
disposition of invest-
ment properties . . . . .$ 658,782 1,524,818 3,785,085 (4,177,565) 959,484
Gains on sales of
investment properties
and Partnership's
share of gain on sale
of investment property
from unconsolidated
venture . . . . . . . . . 4,867,960 7,186,234 11,090,549 -- 298,917
------------ ---------- ---------- ----------- -----------
Earnings (loss) before
Partnership's share
of extraordinary items. . 5,526,742 8,711,052 14,875,634 (4,177,565) 1,258,401
Extraordinary items . . . . (328,184) (89,545) -- -- (375,000)
------------ ---------- ---------- ----------- -----------
Net earnings (loss) . . . .$ 5,198,558 8,621,507 14,875,634 (4,177,565) 883,401
============ ========== ========== =========== ===========
<PAGE>
1998 1997 1996 1995 1994
------------ ----------- ---------- ----------- -----------
Net earnings (loss) per
Limited Partner Interest
(b):
Earnings (loss) before
gains on sales or
disposition of invest-
ment properties. . . . .$ 5.00 11.58 28.74 (31.72) 7.29
Gains on sales of
investment properties
and Partnership's
share of gain on
sale of investment
property from uncon-
solidated venture . . . 32.21 56.28 86.85 -- 2.34
Extraordinary items . . . (2.49) (.68) -- -- (2.85)
------------ ---------- ---------- ----------- -----------
Net earnings (loss)
per Limited
Partner Interest. . .$ 34.72 67.18 115.59 (31.72) 6.78
============ ========== ========== =========== ===========
Total assets. . . . . . . .$ 21,121,251 22,059,131 80,097,683 99,483,214 109,171,952
Long-term debt. . . . . . .$ -- 5,976,472 25,482,974 26,146,638 26,436,573
Cash distributions per
Limited Partner
Interest (c)(d) . . . . .$ 4.00 355.00 261.00 44.00 41.00
============ ========== ========== =========== ===========
<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 were 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 was 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.
(d) This amount does not include the final liquidating cash distribution of $19,980,997 ($158.06 per
Interest) to the Limited Partners and $1,140,254 to a liquidating trust established for the benefit of the Holders
of Interests.
</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.
The board of directors of JMB Realty Corporation ("JMB") the managing
general partner of the Partnership, had 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 retained independent counsel to advise it in connection
with any potential tender offers for Interests and had retained Lehman
Brothers Inc. as financial advisor to assist the Special Committee in
evaluating and responding to potential tender offers for Interests.
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. During the
first half of 1998 unaffiliated third parties made unsolicited tender
offers to purchase up to 4.9% of the outstanding Interests in the
Partnership for up to $65 per Interest. The Special Committee recommended
against acceptance of these offers on the basis that, among other things,
the offer price was inadequate. Such offers have expired. The Partnership
was aware that 6.04% of the Interests of the Partnership had been purchased
by all such unaffiliated third parties either pursuant to all such tender
offers or through negotiated purchases.
On December 11, 1998, the Partnership sold the Fountain Valley
Industrial Park to an unaffiliated third party for $21,475,000. Reference
is made to the notes for a further description of such event.
Pursuant to the terms of the Partnership Agreement, upon liquidation
of the Partnership the Special Limited Partner of the Partnership was
required to contribute to the Holders of Interests the amount of all
distributions it previously received from operating cash and sales and
refinancing proceeds due to the fact that the Holders of Interests had not
received sale or refinancing proceeds in an aggregate amount equal to their
capital contributions. In December 1998, the Special Limited Partner
contributed $1,349,489 in accordance with this provision, which amount was
distributed to the Holders of Interests in conjunction with the final
liquidating distribution in December 1998.
In connection with the liquidation and termination of the Partnership,
the Managing General Partner formed a liquidating trust into which all of
the Partnership's remaining assets of $1,140,254, subject to liabilities,
were transferred by means of the final liquidating distribution on
December 31, 1998. Such transferred amount represents the maximum
estimated potential obligation (including administrative costs) of the
Partnership due to certain representations and warranties issued to the
buyer of the Fountain Valley Industrial Park investment property. Although
there can be no assurance, the Partnership does not expect to incur any
amounts in connection with such representations and warranties (which are
scheduled to expire June 11, 1999). The initial trustees of the
liquidating trust are individuals who are officers of the Managing General
Partner. Each Holder of Interests in the Partnership is deemed to be the
<PAGE>
beneficial owner of a comparable share of the aggregate beneficial
interests in the liquidating trust. It is anticipated that the liquidating
trust will permit the realization of substantial cost savings in
administrative and other expenses until the remaining funds are distributed
to the beneficial owners of the liquidating trust. The liquidating trust
is expected to be in existence for approximately one year, subject to
extension under certain circumstances.
The Partnership made a final liquidating cash distribution of
$19,980,997 ($158.06 per Interest) to its Holders of Interests and wound up
its affairs and dissolved effective December 31, 1998.
In accordance with the subordination requirements of the Partnership
Agreement, the General Partners deferred payment of certain of their
distributions of net cash flow and sale proceeds from the Partnership. The
cumulative amount of such deferred distributions was approximately
$5,767,000 immediately prior to the final liquidating distribution.
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, the sales of the two land parcels and
related buildings at the Fountain Valley Industrial Park in December 1996
and May 1997, and the sale of the remaining portion of the Fountain Valley
Industrial Park in December 1998.
The decrease in interest income for the twelve months ended
December 31, 1998, as compared to the twelve months ended December 31,
1997, and the increase in interest income for the twelve months ended
December 31, 1997, as compared to the twelve months ended December 31, 1996
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,
1998 and December 31, 1997 as compared to the twelve months ended
December 31, 1996 is primarily due to the timing of the classification of
the investment properties as properties held for sale, and therefore, not
subject to continued depreciation.
The increase in professional services for the year ended December 31,
1998 as compared to the years ended December 31, 1997 and December 31, 1996
is primarily due to environmental groundwater testing done at the Fountain
Valley Industrial Park in 1998.
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 decrease in Partnership's share of operations from unconsolidated
ventures for the twelve months ended December 31, 1998 and the twelve
months ended December 31, 1997 as compared to the twelve months ended
December 31, 1996 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.
<PAGE>
The gain on sale of investment properties reported for the twelve
months ended December 31, 1998 and 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, the sale of the Rivertree Court Shopping Center investment
property on July 17, 1997 the sale of a land parcel and related building at
the Fountain Valley Industrial Park investment property on May 1, 1997, and
the sale of the remaining land and relating buildings at the Fountain
Valley Industrial Park on December 11, 1998.
The extraordinary items reported for the twelve months ended
December 31, 1998 and the twelve months ended December 31, 1997 represent
the prepayment premiums on the early termination of debt in 1998 and 1997
and the write-off of deferred mortgage expense in 1998 in conjunction with
the sales of certain of the Partnership's investment properties in 1998 and
1997.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on the operations of the
Partnership. Inflation in future periods is not applicable since the
Partnership wound up its affairs and dissolved effective December 31, 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Partnership wound up its affairs and dissolved in 1998. As a
result, there is no meaningful disclosure for this item.
YEAR 2000
The Partnership wound up its affairs and dissolved in 1998.
<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, 1998
(Immediately prior to final liquidating distribution)
and December 31, 1997
Consolidated Statements of Operations, year ended
December 31, 1998 (Immediately prior to final liquidating distribution)
and years ended December 31, 1997 and 1996
Consolidated Statements of Partners' Capital Accounts (Deficits),
year ended December 31, 1998 (Immediately prior to final
liquidating distribution) and years ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows, year ended December 31, 1998
(Immediately prior to final liquidating distribution)
and years ended December 31, 1997 and 1996
Notes to Consolidated Financial Statements
SCHEDULES NOT FILED:
All schedules have been omitted as the required information is
inapplicable or the information is presented in the 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. These consolidated financial statements
are the responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements 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,
1998 (immediately prior to final liquidating distribution) and December 31,
1997, and the results of their operations and their cash flows for the year
ended December 31, 1998 (immediately prior to final liquidating
distribution) and for the years ended December 31, 1997 and 1996, in
conformity with generally accepted accounting principles.
As discussed in the Notes to the consolidated financial statements, in
1996 the Partnership and its consolidated venture 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 LLP
Chicago, Illinois
March 10, 1999
<PAGE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL
LIQUIDATING DISTRIBUTION) AND 1997
ASSETS
------
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 21,121,251 4,666,891
Interest, rents and other receivables . . . . . . . . . . . . . . . -- 1,093,810
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . -- 25,047
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . -- 69,470
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 21,121,251 5,855,218
Properties held for sale or disposition . . . . . . . . . . . . . . . -- 15,480,159
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . -- 371,870
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . -- 351,884
------------ -----------
$ 21,121,251 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)
----------------------------------------------------
1998 1997
------------ -----------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ -- 200,366
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . -- 140,099
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . -- 37,679
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 478,255
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . -- 856,399
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . -- 160,403
Long-term debt, less current portion. . . . . . . . . . . . . . . . . -- 5,976,472
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . -- 6,993,274
------------ -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions.. . . . . . . . . . . . . . . . . . . . 52,299 20,000
Cumulative net earnings . . . . . . . . . . . . . . . . . . . 1,663,865 853,929
Cumulative cash distributions . . . . . . . . . . . . . . . . (1,716,164) (1,701,976)
------------ -----------
-- (828,047)
------------ -----------
Limited partners (126,414 interests):
Capital contributions, net of offering costs. . . . . . . . . 115,090,804 113,741,315
Cumulative net earnings . . . . . . . . . . . . . . . . . . . 43,782,091 39,393,469
Cumulative cash distributions . . . . . . . . . . . . . . . . (137,751,644) (137,240,880)
------------ -----------
21,121,251 15,893,904
------------ -----------
Total partners' capital accounts. . . . . . . . . . . . . . . 21,121,251 15,065,857
------------ -----------
$ 21,121,251 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
YEARS ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO
FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . $ 2,125,282 7,583,750 11,279,441
Interest income . . . . . . . . . . . . . . . . . 255,583 899,463 693,941
----------- ----------- -----------
2,380,865 8,483,213 11,973,382
----------- ----------- -----------
Expenses:
Mortgage and other interest . . . . . . . . . . . 423,631 1,422,849 2,370,249
Depreciation. . . . . . . . . . . . . . . . . . . -- -- 1,721,808
Property operating expenses . . . . . . . . . . . 501,987 2,314,081 3,561,629
Professional services . . . . . . . . . . . . . . 331,813 216,694 271,487
Amortization of deferred expenses . . . . . . . . 73,153 131,498 191,354
General and administrative. . . . . . . . . . . . 378,346 373,273 330,407
Provision for value impairment. . . . . . . . . . -- 2,500,000 --
----------- ----------- -----------
1,708,930 6,958,395 8,446,934
----------- ----------- -----------
671,935 1,524,818 3,526,448
Partnership's share of operations of uncon-
solidated ventures. . . . . . . . . . . . . . . . (13,153) -- 258,637
----------- ----------- -----------
Earnings (loss) before gains
on sales of investment properties . . . . 658,782 1,524,818 3,785,085
Gains on sales of investment properties . . . . . . 4,867,960 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
items . . . . . . . . . . . . . . . . . . 5,526,742 8,711,052 14,875,634
Extraordinary items . . . . . . . . . . . . . . . . (328,184) (89,545) --
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . . $ 5,198,558 8,621,507 14,875,634
=========== =========== ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1998 1997 1996
------------ ------------ ------------
Net earnings (loss) per limited partnership
interest:
Earnings (loss) before gains on sales
of investment properties. . . . . . . . . . . . $ 5.00 11.58 28.74
Gains on sales of investment properties . . . . . 32.21 56.28 1.70
Partnership's share of gain on sale
of investment property from unconsolidated
venture . . . . . . . . . . . . . . . . . . . . -- -- 85.15
Extraordinary items . . . . . . . . . . . . . . . (2.49) (.68) --
----------- ----------- -----------
Net earnings (loss) . . . . . . . . . . . . $ 34.72 67.18 115.59
=========== =========== ===========
<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, 1998 (IMMEDIATELY PRIOR TO
FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
<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,
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)
------- --------- ---------- -------- ----------- ---------- ------------ ----------
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)
------- --------- ---------- -------- ----------- ---------- ------------ ----------
<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,
1997 . . . . 20,000 853,929 (1,701,976) (828,047) 113,741,315 39,393,469 (137,240,880) 15,893,904
Capital con-
tributions . 32,299 -- -- 32,299 1,349,489 -- -- 1,349,489
Net earnings
(loss) . . . -- 809,936 -- 809,936 -- 4,388,622 -- 4,388,622
Cash distri-
butions
($4.00 per
Interest). . -- -- (14,188) (14,188) -- -- (510,764) (510,764)
------- --------- ---------- -------- ----------- ---------- ------------ ----------
Balance
(deficit)
at Decem-
ber 31,
1998 . . . . $52,299 1,663,865 (1,716,164) -- 115,090,804 43,782,091 (137,751,644) 21,121,251
======= ========= ========== ======== =========== ========== ============ ==========
<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, 1998 (IMMEDIATELY PRIOR TO
FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . $ 5,198,558 8,621,507 14,875,634
Items not requiring (providing) cash
or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . -- -- 1,721,808
Amortization of deferred expenses . . . . . . . 73,153 131,498 191,354
Partnership's share of operations
of unconsolidated ventures,
net of distributions. . . . . . . . . . . . . -- -- 318,805
Partnership's gain on sales of investment
properties. . . . . . . . . . . . . . . . . . (4,867,960) (7,186,234) (217,690)
Partnership's share of gain on sale
of investment property from unconsolidated
venture . . . . . . . . . . . . . . . . . . . -- -- (10,872,859)
Extraordinary items . . . . . . . . . . . . . . 328,184 89,545 --
Provision for value impairment. . . . . . . . . -- 2,500,000 --
Changes in:
Interest, rents and other receivables . . . . . 1,093,810 145,445 (111,700)
Prepaid expenses. . . . . . . . . . . . . . . . 25,047 46,627 (2,773)
Escrow deposits . . . . . . . . . . . . . . . . 69,470 74,580 (41,370)
Accrued rents receivable. . . . . . . . . . . . 40,709 42,194 211,577
Accounts payable . . . . . . . . . . . . . . . (140,099) (160,129) 102,497
Accrued interest. . . . . . . . . . . . . . . . (37,679) (157,271) (1,779)
Accrued real estate taxes . . . . . . . . . . . -- (1,201,572) 30,231
Unearned rents. . . . . . . . . . . . . . . . . (478,255) 33,680 (167,507)
Tenant security deposits. . . . . . . . . . . . (160,403) (133,806) (14,498)
----------- ----------- -----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . 1,144,535 2,846,064 6,021,730
----------- ----------- -----------
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
----------- ----------- -----------
Cash flows from investing activities:
Additions to investment properties. . . . . . . . (20,336) (127,500) (678,815)
Partnership's distributions from
unconsolidated ventures and cash
proceeds from sales of investment
properties, net of selling expenses . . . . . . 14,698,015 43,972,567 18,908,480
Partnership's contributions to uncon-
solidated ventures. . . . . . . . . . . . . . . -- -- (64,710)
Payment of deferred expenses. . . . . . . . . . . (24,324) (84,769) (182,206)
----------- ----------- -----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . 14,653,355 43,760,298 17,982,749
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . (200,366) (281,800) (291,589)
Distributions to limited partners . . . . . . . . (510,764) (45,330,273) (33,327,327)
Distributions to general partners . . . . . . . . (14,188) (70,939) (241,193)
Special Limited Partner contributions of
prior year distributions. . . . . . . . . . . . 1,349,489 -- --
Contributions from general partners . . . . . . . 32,299 -- --
----------- ----------- -----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . 656,470 (45,683,012) (33,860,109)
----------- ----------- -----------
Net increase (decrease) in
cash and cash equivalents . . . . . . . . 16,454,360 923,350 (9,855,630)
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . 4,666,891 3,743,541 13,599,171
----------- ----------- -----------
Cash and cash equivalents,
end of year . . . . . . . . . . . . . . . $21,121,251 4,666,891 3,743,541
=========== =========== ===========
<PAGE>
JMB INCOME PROPERTIES, LTD. - XIII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1998 1997 1996
----------- ----------- -----------
Supplemental disclosure of cash flow
information:
Cash paid for mortgage and other interest . . . . $ 461,310 1,580,120 2,372,028
=========== =========== ===========
Non-cash investing and financing activities:
Total sales proceeds from sales of
investment properties:
Total sales proceeds, net of
selling expenses. . . . . . . . . . . . . . $20,969,649 63,400,112 --
Prepayment premium. . . . . . . . . . . . . . (295,162) (89,545) --
Payoff of mortgage loans. . . . . . . . . . . (5,976,472) (19,338,000) --
----------- ----------- -----------
Cash proceeds from sales of
investment properties . . . . . . . . . $14,698,015 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, 1998 (IMMEDIATELY PRIOR TO
FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
OPERATIONS AND BASIS OF ACCOUNTING
GENERAL
During 1998, the Partnership held an equity investment in an
industrial park in Fountain Valley, California. Business activities
consisted of rentals to a variety of commercial and retail companies, and
the ultimate sale or disposition of such real estate.
The accompanying consolidated financial statements include the
accounts of the Partnership and its majority-owned venture, Adams/Wabash
Limited Partnership ("Adams/Wabash") (prior to the sale of the property 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 the sale of the
property 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 were 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, 1998 (immediately prior to final liquidating
distribution) and 1997:
<PAGE>
<TABLE>
<CAPTION>
1998 1997
------------------------------ ------------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . $21,121,251 21,121,251 22,059,131 38,163,238
Partners' capital accounts
(deficits):
General partners. . . . . . . . . -- -- (828,047) 235,083
Limited partners. . . . . . . . . 21,121,251 21,121,251 15,893,904 30,716,105
Net earnings (loss):
General partners. . . . . . . . . 809,936 (253,194) 131,960 125,696
Limited partners. . . . . . . . . 4,388,622 (10,433,578) 8,489,547 4,892,617
Net earnings (loss)
per Interest. . . . . . . . . . . 34.72 82.53 67.18 38.70
=========== =========== =========== ============
</TABLE>
<PAGE>
The net earnings (loss) per limited partnership interest was based
upon the limited partnership interests outstanding at the end of the period
(126,414). Also, because net earnings (loss) was computed immediately
prior to dissolution, Holders of Interests may have, on dissolution, an
additional capital gain or loss depending on the Holders' basis for Federal
income tax purposes.
The preparation of financial statements in accordance with GAAP
required 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 have differed from those
estimates.
Statement of Financial Accounting Standards No. 95 required 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 had been segregated and accumulated
according to the classifications specified in the pronouncement. The
Partnership recorded amounts held in U.S. Government obligations at cost,
which approximates market. For the purposes of these statements, the
Partnership's policy was to consider all such amounts held with original
maturities of three months or less (none and $4,380,270 at December 31,
1998 and 1997, respectively) as cash equivalents, which included
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 consisted primarily of deferred lease commissions
and loan fees which were amortized over their respective terms using the
straight-line method.
Although certain leases of the Partnership provided for tenant
occupancy during periods for which no rent was due and/or increases in
minimum lease payments over the term of the lease, the Partnership accrued
rental income for the full period of occupancy on a straight-line basis.
No provision for State or Federal income taxes had been made as the
liability for such taxes was that of the Partners rather than the
Partnership. However, in certain instances, the Partnership had been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to Partners.
The Partnership had 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. In
December 1998, the Partnership's remaining interest in the Fountain Valley
Industrial Park was sold. The cost of the investment properties
represented 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 were generally charged to operations as
incurred. Significant betterments and improvements were 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
required 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 was to consider
a property to be held for sale or disposition when the Partnership had
committed to a plan to sell or dispose of such property and active
marketing activity had commenced or was expected to commence in the near
term or the Partnership had concluded that it might 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" were no longer depreciated. Adjustments for impairment loss
for such properties (subsequent to the date of adoption of SFAS 121) were
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 have been less than the existing non-
recourse debt which was secured by the property.
The remaining property was classified as held for sale as of
December 31, 1996, and therefore, had not been subject to continued
depreciation. The results of operations, net of venture partners' share,
for consolidated properties classified as held for sale or disposition as
of December 31, 1998 or sold or disposed of during the past three years
were $828,074, $1,254,195 and $3,468,110, respectively, for the years ended
December 31, 1998, 1997 and 1996. In addition, the accompanying
consolidated financial statements include $0, $0 and $258,637,
respectively, of the Partnership's share of total property operations of
$0, $0 and $1,016,511 of unconsolidated properties held for sale or
disposition as of December 31, 1998 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 had general and limited partnership
interests, the Partnership did not experience any significant impact on its
consolidated financial statements.
The Partnership's investment properties were generally pledged as
security for the Partnership's long-term debt, for which there was 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, was not
subject to continued depreciation after that date.
FOUNTAIN VALLEY INDUSTRIAL PARK
On December 31, 1996, the Partnership sold a 9,500 square foot
building 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.
In early 1998, groundwater contamination was discovered at the
property. The Partnership temporarily suspended the active marketing of
the property for sale while it undertook an assessment of the nature and
extent of the contamination. The Partnership completed its investigation
of the groundwater contamination in mid-1998 and submitted it to the state
regulatory agency for its review and approval. Based upon its review of
the groundwater investigation report, the state regulatory agency concluded
that no further action or remediation was required at the property.
On December 11, 1998, the Partnership sold the remaining land and
related improvements at the Fountain Valley Industrial Park to an
unaffiliated third-party for $21,475,000. The Partnership realized net
sale proceeds of approximately $14,698,000 after repayment of the mortgage
loan securing the property of approximately $5,976,000, the payment of the
prepayment premium on such loan of approximately $295,000 (which was
included as an extraordinary item in the Partnership's 1998 consolidated
financial statements) and the payment of selling expenses of approximately
$505,000. The sale of the property resulted in an approximate $4,868,000
gain on sale to the Partnership in 1998 for financial reporting purposes.
The Partnership recognized a gain of approximately $2,426,000 for Federal
income tax purposes in 1998.
<PAGE>
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
expires June 11, 1999. Although it is not expected, the Partnership may
ultimately have some liability under such representations and warranties
which are limited to actual damages and shall in no event exceed $1,000,000
in the aggregate. Also, in accordance with the purchase agreement, the
Partnership was required to establish reserves of at least $1,100,000 in
cash or reasonably liquid investments as of the closing date for the
purpose of paying any specified liabilities (as defined) during the
survival period. These reserves will be held in the liquidating trust.
The property was 100% occupied at the date of sale.
The Fountain Valley Industrial Park investment property was classified
as held for sale or disposition at October 1, 1996, and therefore, was not
subject to continued depreciation since that date.
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 was thereafter solely
collateralized by the remainder of the Fountain Valley Industrial Park
owned by the Partnership until it was sold in December, 1998.
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.
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 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 were 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.
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.
<PAGE>
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.
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.
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.
<PAGE>
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.
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
<PAGE>
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 was 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 was 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.
LONG-TERM DEBT
Long-term debt consisted of the following at December 31, 1998 and
1997:
1998 1997
----------- -----------
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, along with a
prepayment premium, as described
below, with the remaining balance
repaid in conjunction with the
Partnership's December 1998
sale of its interest in the
property . . . . . . . . . . . . $ -- 6,176,838
----------- ----------
Total debt. . . . . . . . . . -- 6,176,838
Less current portion of
long-term debt . . . . . . . -- 200,366
----------- ----------
Total long-term debt. . . . . $ -- 5,976,472
=========== ==========
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 reduced the balloon
payment due on March 1, 2001. Reference is made to the Fountain Valley
footnote above for a further discussion of the sale.
<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 was solely
collateralized by the remainder of the Fountain Valley Industrial Park
owned by the Partnership until it was repaid in December 1998, upon sale of
the property.
PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations generally were 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 were allocated 99% to the Limited Partners and 1% to the General
Partners. However, net profits from the sale of properties was
additionally allocated to the General Partners (i) to the extent that cash
distributions to the General Partners of sale proceeds from such sale
exceeded 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 made initial capital contributions to the
Partnership aggregating $20,000. The General Partners were 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,
was distributed 90% to the Limited Partners and 10% to the General
Partners, subject to certain limitations. Pursuant to the Partnership
Agreement, in December 1998, the General Partners made a capital
contribution of approximately $32,300, representing a partial return of
previously received disbursable cash from operations. Sale or refinancing
proceeds were distributed 100% to the Limited Partners until the Limited
Partners had received their contributed capital plus a stipulated return
thereon. The General Partners were then to receive 100% of the sale or
refinancing proceeds until they received 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 had been sold, subject to
certain limitations. Any remaining sale or refinancing proceeds were then
to be distributed 85% to the Limited Partners and 15% to the General
Partners. As the Limited Partners received less distributions than their
original investment, the General Partners' share of operating distributions
previously deferred of approximately $5,767,000 as of December 31, 1998 was
paid to the Holders of Interests (or used for other Partnership
obligations); furthermore, the General Partners did not receive any
distributions of sale or refinancing proceeds. Pursuant to the terms of
the Partnership Agreement, the Special Limited Partner of the Partnership
was required to contribute, to the Holders of Interests, the amount of all
distributions it previously received from operating cash and sales and
refinancing proceeds due to the fact that the Holders of Interests had not
received sale or refinancing proceeds in an aggregate amount equal to their
capital contributions. In December 1998, the Special Limited Partner
contributed $1,349,489 in accordance with this provision, which amount was
distributed to the Holders of Interests in conjunction with the final
liquidating distribution in 1998.
<PAGE>
TRANSACTIONS WITH AFFILIATES
Certain of the Partnership's properties were 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 was 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, was 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, 1998, 1997 and 1996 were as follows:
UNPAID AT
DECEMBER 31,
1998 1997 1996 1998
-------- ------- ------- ------------
Property management
and leasing fees . . . . $ -- 104,495 97,773 --
Insurance commissions . . 3,535 6,382 10,028 --
Reimbursement (at cost)
for accounting
services . . . . . . . . 8,230 5,823 4,416 --
Reimbursement (at cost)
for portfolio manage-
ment services. . . . . . 59,286 25,588 39,269 --
Reimbursement (at cost)
for legal services . . . 11,460 6,473 7,578 --
Reimbursement (at cost)
for administrative
charges and other
out-of-pocket expenses . 25,855 -- 1,099 --
Partnership winding
up fee . . . . . . . . . 4,634 -- -- --
-------- ------- ------- ------
$113,000 148,761 160,163 --
======== ======= ======= ======
In accordance with the subordination requirements of the Partnership
Agreement, the General Partners deferred payment of certain of their
distributions of net cash flow and sale proceeds from the Partnership. All
amounts deferred or payable did not bear interest.
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.
The fees earned by such company from the Partnership's consolidated venture
for the twelve months ended December 31, 1998 and 1997 were approximately
$0 and $71,000, respectively, all of which was paid at December 31, 1997.
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.
<PAGE>
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 during 1996 consisted of total income of $7,227,991,
operating expenses of $6,209,999, gain on sale of land and property of
$2,882,573 and net income of $3,900,565.
<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 1998 and 1997.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Managing General Partner of the Partnership was 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, as the Managing General Partner, had responsibility for all aspects of
the Partnership's operations. AGPP Associates, L.P., an Illinois limited
partnership, with JMB as its sole general partner, was 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 was the other Associate General
Partner of the Partnership.
The Partnership was 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 were provided to
the Partnership or its investment properties by affiliates of the General
Partners, including insurance brokerage services. In general, such
services were to be provided on terms no less favorable to the Partnership
than could be obtained from independent third parties and were otherwise
subject to conditions and restrictions contained in the Partnership
Agreement. The Partnership Agreement permitted the General Partners and
their affiliates to provide services to, and otherwise deal and do business
with, persons who may have been engaged in transactions with the
Partnership, and permitted 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 have been 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 have been 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 and the
determination of the sources (i.e., offering proceeds, cash generated from
operations or sale proceeds) and uses of such reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have had 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 2, 1999. 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 2,
1999. 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-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV ("Carlyle-
- -XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), and
Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II"), and the managing
general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB
Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties,
Ltd.-X ("JMB Income-X"), and JMB Income Properties, Ltd.-XI ("JMB
Income-XI"). 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")). Most of such directors and officers are also partners,
directly or indirectly, of certain partnerships which are or were associate
general partners in the following real estate limited partnerships, among
others: the Partnership, Carlyle-XI, Carlyle-XIII, Carlyle-XIV,
Carlyle-XV, JMB Income-VII, JMB Income-X, JMB Income-XI, and Carlyle Income
Plus-II.
<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 61) is an individual general partner of JMB
Income-V. Mr. Malkin has been associated with JMB since October, 1969.
Mr. Malkin is also a director of Urban Shopping Centers, 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 61) is an individual general partner of JMB
Income-V. Mr. Bluhm has been associated with JMB since August, 1970.
Mr. Bluhm is also a principal of Walton Street Capital, L.L.C., which
sponsors real estate investment funds, and a director of Urban Shopping
Centers, Inc. He is a member of the Bar of the State of Illinois and a
Certified Public Accountant.
Burton E. Glazov (age 60) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December of
1990. Mr. Glazov is currently retired. He is a member of the Bar of the
State of Illinois.
Stuart C. Nathan (age 57) has been associated with JMB since July,
1972. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 65) has been associated with JMB since December,
1972. He is also President and a director of JMB Insurance Agency, Inc.
John G. Schreiber (age 52) 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.,
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 Urban Shopping Centers, 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, Inc. and its affiliates. He holds a Masters
degree in Business Administration from Harvard University Graduate School
of Business.
H. Rigel Barber (age 50) 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 51) 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 46) 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 50) 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 63) 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 1998, 1997 and 1996, the General
Partners received cash distributions in the amount of $14,188, $70,939 and
$241,193, respectively.
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 1998, the Managing General Partner was due reimbursement
for such expenses in the amount of $98,571, all of which was paid as of
December 31, 1998.
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 1998 aggregating $3,535 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 Managing General Partner also was entitled to and received a fee
of $4,634 in 1998, pursuant to a winding up agreement between the
Partnership and the Managing General Partner, in consideration of the
Managing General Partner's assumption of the obligation of potential
Partnership liabilities (as defined).
The Partnership was 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 was known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership immediately prior to its liquidation.
(b) The Managing General Partner, its officers and directors and the Associate General Partners beneficially
owned the following Interests of the Partnership immediately prior to its liquidation:
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) Included 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB Realty
Corporation, as its indirect majority shareholder, was deemed to have sole investment and voting power.
Reference is made to Item 10 for information concerning ownership of the Managing General Partner.
(c) There existed no arrangement, known to the Partnership, the operation of which may have resulted 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.
3-D. Liquidating Trust Agreement between JMB Income
Properties, Ltd. - XIII and the liquidating trustees dated as of December
29, 1998 is hereby incorporated herein by reference to Exhibit 10.2 to the
Partnership's Report for January 13, 1999 on Form 8-K (File No. 000-19496).
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).
<PAGE>
10-D. Purchase Agreement and related amendments to sell the
Fountain Valley Industrial Park, dated November 9, 1998 is hereby
incorporated by reference to Exhibits 1, 2 and 3 to the Partnership's
Report for December 11, 1998 on Form 8-K (File No. 0-19496).
21. List of Subsidiaries.
24. Powers of Attorney
27. Financial Data Schedule
Although certain long-term debt instruments of the Registrant have been
excluded from Exhibit 4 above, pursuant to Rule (b)(4)(iii), the
Registrants commits to provide copies of such agreements to the Securities
and Exchange Commission upon request.
(b) The following report on Form 8-K was filed since the beginning
of the last quarter of the period covered by this report.
The Partnership's report on Form 8-K for December 29, 1998
(File No. 0-19496) describing the Partnership's establishment of the
Liquidating Trust, final liquidating distribution and dissolution was
filed. No financial statements were required to be filed therewith.
The Partnership's report on Form 8-K for December 11, 1998
(File No. 0-19496) describing the Partnership's sale of the Fountain Valley
Industrial Park was filed.
No annual report or proxy material for the fiscal year 1998 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 22, 1999
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 22, 1999
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 22, 1999
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 22, 1999
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 22, 1999
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 22, 1999
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 22, 1999
STUART C. NATHAN*
By: Stuart C. Nathan, Executive Vice President
and Director
Date: March 22, 1999
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 22, 1999
<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 --
3-D. Liquidating Trust Agreement dated
dated November 9, 1998 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 --
10-D. Purchase Agreement to sell
the Fountain Valley Industrial
Park dated November 9, 1998 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, 1998, 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 29th day of January, 1999.
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, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
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, 1998, 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 29th day of January, 1999.
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, 1998,
and any and all amendments thereto, the 29th day of January, 1999.
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, 1998 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-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 21,121,251
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 21,121,251
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,121,251
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 21,121,251
<TOTAL-LIABILITY-AND-EQUITY> 21,121,251
<SALES> 2,125,282
<TOTAL-REVENUES> 2,380,865
<CGS> 0
<TOTAL-COSTS> 575,140
<OTHER-EXPENSES> 710,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 423,631
<INCOME-PRETAX> 671,935
<INCOME-TAX> 0
<INCOME-CONTINUING> 658,782
<DISCONTINUED> 4,867,960
<EXTRAORDINARY> (328,184)
<CHANGES> 0
<NET-INCOME> 5,198,558
<EPS-PRIMARY> 34.72
<EPS-DILUTED> 34.72
</TABLE>
