SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1996 Commission file number 0-17699
IDS/JMB BALANCED INCOME GROWTH, LTD.
(Exact name of registrant as specified in its charter)
Illinois 36-3498972
(State of organization) (IRS Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . 10
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . . 11
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 12
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 527,161 619,423
Interest, rents and other receivables . . . . . . . . . . . . . . . . 74,819 88,498
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,975 35,287
----------- -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 614,955 743,208
----------- -----------
Investment property, at cost:
Land . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,781,028 2,781,028
Building and improvements . . . . . . . . . . . . . . . . . . . . . . 8,750,692 8,750,692
----------- -----------
11,531,720 11,531,720
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . 2,602,204 2,529,282
----------- -----------
Total investment property,
net of accumulated depreciation . . . . . . . . . . . . . . 8,929,516 9,002,438
Investment in unconsolidated venture, at equity . . . . . . . . . . . . 573,882 605,872
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 211,230 223,818
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,237,955 1,136,563
----------- -----------
$11,567,538 11,711,899
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
Current liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 62,591 37,649
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 22,302 28,252
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,074 23,796
Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . 432,682 592,656
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 583,649 682,353
----------- -----------
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . 12,374 12,374
Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,800,000 6,800,000
----------- -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 7,396,023 7,494,727
----------- -----------
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (263,368) (258,802)
----------- -----------
(243,368) (238,802)
----------- -----------
Limited partners (47,534 interests):
Capital contributions, net of offering costs. . . . . . . . . . . . 10,284,207 10,284,207
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . . (2,342,892) (2,301,801)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . . (3,526,432) (3,526,432)
----------- -----------
4,414,883 4,455,974
----------- -----------
Total partners' capital accounts. . . . . . . . . . . . . . . 4,171,515 4,217,172
----------- -----------
$11,567,538 11,711,899
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . . . . . . . . . . . . $393,232 453,145
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,453 21,014
-------- --------
413,685 474,159
-------- --------
Expenses:
Mortgage and other interest. . . . . . . . . . . . . . . . . . . . . 88,362 138,942
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,922 92,984
Property operating expenses. . . . . . . . . . . . . . . . . . . . . 245,484 193,862
Professional services. . . . . . . . . . . . . . . . . . . . . . . . 10,500 15,021
Amortization of deferred expenses. . . . . . . . . . . . . . . . . . 13,700 2,944
General and administrative . . . . . . . . . . . . . . . . . . . . . 44,417 34,424
-------- --------
475,385 478,177
-------- --------
Operating earnings (loss) . . . . . . . . . . . . . . . . . . (61,700) (4,018)
Partnership's share of income from operations of
unconsolidated venture. . . . . . . . . . . . . . . . . . . . . . . . 16,043 13,626
-------- --------
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . $(45,657) 9,608
======== ========
Net earnings (loss) per limited
partnership interest. . . . . . . . . . . . . . . . . . . . $ (.86) .18
======== ========
Cash distributions per limited
partnership interest. . . . . . . . . . . . . . . . . . . . $ -- 2.50
======== ========
<FN>
See accompanying notes to financial statements.
</TABLE>
<TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (45,657) 9,608
Items not requiring (providing) cash or cash equivalents:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,922 92,984
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 13,700 2,944
Partnership's share of operations of
unconsolidated venture. . . . . . . . . . . . . . . . . . . . . . . . (16,043) (13,626)
Changes in:
Interest, rents and other receivables. . . . . . . . . . . . . . . . . . 13,679 51,198
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,312 (81,620)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,942 1,070
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,950) (557)
Accrued real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . (159,974) (140,764)
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,278 (60,580)
---------- ----------
Net cash provided by (used in)
operating activities. . . . . . . . . . . . . . . . . . . . . . (37,791) (139,343)
---------- ----------
Cash flows from investing activities:
Additions to investment property. . . . . . . . . . . . . . . . . . . . . -- (55,098)
Net sales and maturities (purchases) of
short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . -- 727,143
Partnership's distributions from
unconsolidated venture. . . . . . . . . . . . . . . . . . . . . . . . . 48,033 46,483
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (1,112) (145,889)
---------- ----------
Net cash provided by (used in)
investing activities. . . . . . . . . . . . . . . . . . . . . . 46,921 572,639
---------- ----------
Cash flows from financing activities:
Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (101,392) (870,000)
Distributions to limited partners . . . . . . . . . . . . . . . . . . . . -- (118,835)
---------- ----------
Net cash provided by (used in)
financing activities. . . . . . . . . . . . . . . . . . . . . . (101,392) (988,835)
---------- ----------
Net increase (decrease) in cash and cash equivalents. . . . . . . (92,262) (555,539)
Cash and cash equivalents, beginning of year. . . . . . . . . . . 619,423 630,900
---------- ----------
Cash and cash equivalents, end of period. . . . . . . . . . . . . $ 527,161 75,361
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 72,000 100,626
========== ==========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
========== ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
IDS/JMB BALANCED INCOME GROWTH, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1995
which are included in the Partnership's 1995 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.
Capitalized terms used herein, but not defined, have the same meanings as
used in such Annual Report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Statement of Financial Accounting Standards No. 121 was adopted by the
Partnership on January 1, 1996.
TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to affiliates of the General Partners as of March 31, 1996 and
for the three months ended March 31, 1996 and 1995 are as follows:
UNPAID AT
MARCH 31,
1996 1995 1996
------ ------ ---------
Property management fees. . . $9,442 10,370 --
Reimbursement (at cost)
for out-of-pocket
expenses. . . . . . . . . . 180 145 --
------ ------ ------
$9,622 10,515 --
====== ====== ======
According to the terms of the Partnership Agreement, the General
Partners have deferred payment of their distributions of net cash flow from
the Partnership. The cumulative amount of such deferred distributions was
$290,486 at March 31, 1996. All amounts deferred or currently payable do
not bear interest.
The Corporate General Partner and its affiliates are entitled to
reimbursement for salaries and direct expenses of officers and employees of
the Corporate General Partner and its affiliates relating to the
administration of the Partnership and operation of the Partnership's
investment properties. Such costs were $11,296 for the three months ended
March 31, 1996 and $16,196 for the three months ended March 31, 1995, of
which $20,893 was unpaid as of March 31, 1996.
JMB/MIAMI
The Partnership was a general partner in JMB/Miami International
Associates ("JMB/Miami"), which owned a 50% partnership interest in West
Dade County Associates ("West Dade"). West Dade owns an interest in the
Miami International Mall. The other partners of JMB/Miami were JMB Income
Properties, Ltd. - XIII and Urban Shopping Centers, L.P. ("Urban"), both of
which are affiliates of the Partnership. Effective as of 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 2.547% ownership interest in West Dade.
On April 8, 1996, the Partnership then sold its entire 2.547% interest in
West Dade as described below.
On April 8, 1996, DeBartolo Realty Partnership, L.P. ("DeBartolo"),
the unaffiliated venture partner in West Dade, purchased 100% of the
Partnership's interest (i.e., a 2.547% interest) in West Dade for
$1,368,888 (paid in cash at closing), subject to proration. DeBartolo also
assumed the Partnership's proportionate share of obligations and
liabilities of West Dade from and after March 31, 1996, the effective date
of the transaction. The terms of the sale were determined by arm's-length
negotiations.
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
sale. The Partnership expects to recognize a gain for Federal income tax
and financial reporting purposes. In addition, the Partnership expects to
make a distribution of sales proceeds related to this transaction of
approximately $20 per Interest in August 1996.
FASHION SQUARE
In March 1995, the Partnership obtained a replacement irrevocable
direct pay letter of credit with a major institutional lender in the amount
of $7,140,000. The replacement letter of credit required the Partnership
to fund an interest-bearing cash collateral account with an initial deposit
of $840,000 at closing and requires monthly deposits of $30,000 thereafter
until the December 1, 1999 expiration. On a cumulative basis, $60,000 per
annum (although no more than $120,000 in any calendar year) can be drawn
down by the Partnership under certain circumstances (as defined) from the
collateral account for tenant improvements and leasing costs at the Fashion
Square Shopping Center. The Partnership may be required to make additional
deposits to the cash collateral account should the property's net operating
income (as defined) fall below a stipulated level. As of March 31, 1996,
the Partnership was not required to make any additional deposits to the
cash collateral account other than the initial deposit and monthly deposits
discussed above. Such additional deposits can be drawn down by the
Partnership as reimbursement for certain releasing costs incurred at the
property provided the property's net operating income exceeds the
stipulated level for two consecutive quarters. As of the date of this
report, no amounts have been drawn or requested from this account. Upon
expiration of the letter of credit on December 1, 1999, the balance of the
cash collateral account plus interest will revert to the Partnership.
In 1996, leases representing approximately 17% of the leasable square
footage at the Fashion Square Shopping Center are scheduled to expire.
Leases representing approximately 9,000 square feet (11% of the center) are
in negotiation. The property is 78% leased and the property manager is
actively pursuing replacement tenants for the remaining vacant space. The
costs of lease commissions and tenant improvements incurred prior to tenant
occupancy for the re-leasing of this space will result in a decrease in
cash flow from operations over the near term, to the extent not permitted
to be funded from the collateral cash account. Although the Partnership
has budgeted for re-leasing costs, the market in which the property
operates is extremely competitive, and there is no assurance that the
Partnership will be fully successful in re-leasing this space.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1996 and for the three months ended March 31, 1996 and 1995.
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning certain of the
Partnership's investments.
Due to the current competitive market in which the Fashion Square
Shopping Center operates and in light of the severely depressed real estate
markets which characterized the Partnership's operations during the past
few years, it currently appears that the Partnership's goal of capital
appreciation will not be fully achieved. Although some portion of the
Limited Partners' original capital is expected to be distributed from sales
proceeds, without a dramatic improvement in market conditions relative to
its sole remaining investment property, the Limited Partners will not
receive a full return of their original investment.
The Partnership sold its interest in the Miami International Mall on
April 8, 1996. After reviewing the Fashion Square Shopping Center and the
marketplace in which it operates, the General Partners of the Partnership
expect to be able to conduct an orderly liquidation of this remaining
property as quickly as practicable. Therefore, the affairs of the
Partnership are expected to be wound up no later than December 31, 1999
(sooner if its remaining property is sold in the near term), barring
unforeseen economic developments.
RESULTS OF OPERATIONS
The decrease in cash and cash equivalents and the corresponding
increase in escrow deposits at March 31, 1996 as compared to December 31,
1995 is due primarily to the required funding of the cash collateral
account of $90,000 associated with the replacement letter of credit
obtained for the Fashion Square Shopping Center.
The decrease in rental income for the three months ended March 31,
1996 as compared to the three months ended March 31, 1995 is due to lower
average occupancy at the Fashion Square Shopping Center.
The decrease in mortgage and other interest for the three months ended
March 31, 1996 as compared to the three months ended March 31, 1995 is due
primarily to letter of credit fees for the Fashion Square Shopping Center.
The decrease in depreciation expense for the three months ended March
31, 1996 as compared to the three months ended March 31, 1995 is due
primarily to the $3,500,000 provision for value impairment recorded for the
Fashion Square Shopping Center at September 30, 1995.
The increase in property operating expenses for the three months ended
March 31, 1996 as compared to the three months ended March 31, 1995 is
primarily due to a provision for doubtful accounts of $62,000 at the
Fashion Square Shopping Center.
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate physical occupancy levels by quarter for the Partnership's
investment properties:
<CAPTION>
1995 1996
------------------------------- -------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Fashion Square
Shopping Center
Skokie, Illinois. . . . . 88% 79% 79% 86% 78%
2. Miami International Mall
Miami, Florida. . . . . . 89% 91% 90% 94% 94%
</TABLE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3-A. The Prospectus of the Partnership dated August 6, 1987, the
Partnership's supplement to the Prospectus dated August 1, 1988 and the
supplement dated April 28, 1989.
3-B. Amended and Restated Agreement of Limited Partnership.
4-A. Assignment Agreement set forth as Exhibit B to the
Prospectus is hereby incorporated by reference to Exhibit 4-A to the
Partnership's report for December 31, 1992 on Form 10-K (File No. 0-17699)
dated March 5, 1993.
4-B. Documents relating to the loan agreement and letter of
credit agreement secured by a non-recourse mortgage on Fashion Square
Shopping Center are incorporated by reference to the Partnership's
Registration Statement on Form S-11 dated August 6, 1987 (as amended) (File
No. 33-12561).
4-C. Letter of credit agreement extension document secured by
non-recourse mortgage in the Fashion Square Shopping Center are hereby
incorporated by reference to the Partnership's report on Form 10-K (File
No. 0-17699) for December 31, 1994 dated March 21, 1995.
4-D. Documents relating to the replacement Irrevocable Direct Pay
Letter of Credit and exhibits thereto and the Reimbursement Agreement and
exhibits thereto dated March 30, 1995, are hereby incorporated by reference
to the Partnership's report on Form 10-Q (File No. 0-17699) for March 31,
1995 dated May 11, 1995.
10-A. Acquisition documents relating to the purchase by the
Partnership of the Fashion Square Shopping Center in Skokie, Illinois (a
suburb north of Chicago) are incorporated by reference to the Partnership's
Registration Statement on Form S-11 dated August 6, 1987 (as amended) (File
No. 33-12561).
(b) No reports on Form 8-K have been filed since the beginning
of the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDS/JMB BALANCED INCOME GROWTH, LTD.
BY: Income Growth Managers, Inc.
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Vice President
Date: May 10, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED
IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 527,161
<SECURITIES> 0
<RECEIVABLES> 87,794
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 614,955
<PP&E> 11,531,720
<DEPRECIATION> 2,602,204
<TOTAL-ASSETS> 11,567,538
<CURRENT-LIABILITIES> 583,649
<BONDS> 6,800,000
<COMMON> 0
0
0
<OTHER-SE> 4,171,515
<TOTAL-LIABILITY-AND-EQUITY> 11,567,538
<SALES> 393,232
<TOTAL-REVENUES> 413,685
<CGS> 0
<TOTAL-COSTS> 332,106
<OTHER-EXPENSES> 54,917
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88,362
<INCOME-PRETAX> (61,700)
<INCOME-TAX> 0
<INCOME-CONTINUING> (45,657)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,657)
<EPS-PRIMARY> (0.86)
<EPS-DILUTED> (0.86)
</TABLE>
