ARVIDA JMB PARTNERS L P, 10-Q, 1994-11-14

ARVIDA JMB PARTNERS L P
10-Q, 1994-11-14
LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES)

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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 September 30, 1994 Commission file #0-16976

ARVIDA/JMB PARTNERS, L.P.
(Exact name of registrant as specified in its charter)

Delaware 36-3507015
(State of organization) (IRS Employer Identification No.)

900 N. Michigan Avenue., Chicago, IL 60611
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code 312/440-4800

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 a shorter period that
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. . . . . . . . . . . . . . . . . . . . . . . . 24

PART II OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 31

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 34
<TABLE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 1994 AND DECEMBER 31, 1993

(UNAUDITED)

ASSETS
------

<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Cash and cash equivalents (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,867,052 20,566,609
Restricted cash (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,654,285 12,645,678
Trade and other accounts receivable (net of allowance for doubtful
accounts of $342,393 at September 30, 1994 and $381,151 at
December 31, 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,859,712 7,298,714
Mortgages receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,519,688 2,940,961
Real estate inventories (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . 209,807,590 188,679,152
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,583,580 66,989,577
Investments in and advances to joint ventures, net . . . . . . . . . . . . . . . . . . 24,113,911 24,731,852
Equity memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,723,831 15,146,661
Amounts due from affiliates (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . 262,481 88,389
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,743,021 9,007,402
------------ ------------

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $384,135,151 348,094,995
============ ============
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(UNAUDITED)

LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------

SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ -----------

Liabilities:
Bank overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,287,413 1,659,930
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,467,322 10,667,317
Deposits and unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,249,617 22,010,408
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . 19,373,039 13,896,171
Notes and mortgages payable, net (note 4). . . . . . . . . . . . . . . . . . . . . . 129,510,531 147,770,992
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,887,922 196,004,818
------------ ------------
Partners' capital accounts (deficits):
General Partner and Associate Limited Partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,165,129 33,739,753
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (33,609,346) (33,466,823)
------------ ------------
575,783 292,930
------------ ------------
Limited Partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . 364,841,815 364,841,815
Cumulative net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48,524,061) (78,963,692)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . (136,646,308) (134,080,876)
------------ ------------
179,671,446 151,797,247
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . . . . . 180,247,229 152,090,177
------------ ------------
Commitments and contingencies (notes 1, 4, 5, 6, 7 and 8)

Total liabilities and partners' capital. . . . . . . . . . . . . . . . . . . $384,135,151 348,094,995
============ ============

<FN>
The accompanying notes are an integral part
of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . $47,597,166 19,943,472 138,925,711 38,734,596
Homesites. . . . . . . . . . . . . . . . . . . . . 9,961,667 17,396,155 33,857,895 37,877,140
Land and property. . . . . . . . . . . . . . . . . 3,185,798 11,220,202 8,006,935 18,115,447
Operating properties . . . . . . . . . . . . . . . 5,882,926 5,920,463 19,597,595 19,151,202
Brokerage and other operations . . . . . . . . . . 7,338,695 8,008,342 23,597,186 23,311,590
----------- ---------- ----------- -----------
Total revenues . . . . . . . . . . . . . . . 73,966,252 62,488,634 223,985,322 137,189,975
----------- ---------- ----------- -----------
Cost of revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . 38,692,173 16,202,738 109,679,555 31,454,296
Homesites. . . . . . . . . . . . . . . . . . . . . 5,396,961 10,179,483 19,619,916 23,873,622
Land and property. . . . . . . . . . . . . . . . . 2,044,729 10,023,535 4,291,094 14,867,711
Operating properties . . . . . . . . . . . . . . . 6,567,634 6,445,865 19,789,951 20,122,953
Brokerage and other operations . . . . . . . . . . 6,088,869 6,926,380 19,550,564 19,278,308
----------- ---------- ----------- -----------
Total cost of revenues . . . . . . . . . . . 58,790,366 49,778,001 172,931,080 109,596,890
----------- ---------- ----------- -----------
Gross operating profit . . . . . . . . . . . . . . . 15,175,886 12,710,633 51,054,242 27,593,085
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . 4,810,375 4,838,719 14,062,348 13,516,455
Charges to the carrying value of real
estate inventories and other assets. . . . . . . . -- -- -- 4,896,000
----------- ---------- ----------- -----------
Net operating income . . . . . . . . . . . . 10,365,511 7,871,914 36,991,894 9,180,630

ARVIDA/JMB PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- ---------------------------
1994 1993 1994 1993
----------- ---------- ----------- -----------

Interest income. . . . . . . . . . . . . . . . . . . 311,852 81,835 656,847 459,723
Equity in earnings of unconsolidated
ventures . . . . . . . . . . . . . . . . . . . . . (159,142) 150,868 (181,492) 660,283
Interest and real estate taxes, net. . . . . . . . . 1,802,996 3,083,508 6,602,242 9,935,511
----------- ---------- ----------- -----------

Net income before extra-
ordinary item. . . . . . . . . . . . . . . 8,715,225 5,021,109 30,865,007 365,125

Extraordinary item:
Gain on early extinguishment
of debt (note 4) . . . . . . . . . . . . -- 9,535,781 -- 9,535,781
----------- ---------- ----------- -----------

Net income . . . . . . . . . . . . . . . . . $ 8,715,225 14,556,890 30,865,007 9,900,906
=========== ========== =========== ===========

Net income per Limited
Partnership Interest . . . . . . . . . . . $ 21.35 35.78 75.34 24.26
=========== ========== =========== ===========
Cash Distribution per
Limited Partnership Interest . . . . . . . $ -- -- 6.35 --
=========== ========== =========== ===========

<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993

(UNAUDITED)

<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,865,007 9,900,906
Charges (credits) to net income not using (providing) cash:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,149,683 4,705,340
Equity in (earnings) losses of unconsolidated ventures . . . . . . . . . . . . . . . 181,492 (660,283)
Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . 28,234 73,215
(Gain) loss on sale of property and equipment. . . . . . . . . . . . . . . . . . . . 33,121 (6,664)
Charge to carrying value of real estate inventories and other assets . . . . . . . . -- 4,896,000
Extraordinary gain on early extinguishment of debt . . . . . . . . . . . . . . . . . -- (9,535,781)
Changes in:
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,008,607) (2,925,511)
Trade and other accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . (18,589,232) (400,091)
Real estate inventories:
Additions to real estate inventories . . . . . . . . . . . . . . . . . . . . . . . (146,235,805) (82,721,987)
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,590,565 70,195,629
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,085,929) (6,038,845)
Capitalized real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . (2,397,269) (2,661,440)
Equity memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,422,830 4,770,226
Amounts due from affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (174,092) 114,282
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . (179,669) 966,417
Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . . . . 16,168,019 8,636,076
Deposits and unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,239,209 5,415,061
------------ -----------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,857,450) (5,178,356)
------------ -----------
Net cash provided by operations. . . . . . . . . . . . . . . . . . . . . . . 21,007,557 4,722,550
------------ -----------

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

1994 1993
------------ -----------
Cash flows from investing activities:
Mortgages receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,421,273 553,338
Acquisitions of property and equipment . . . . . . . . . . . . . . . . . . . . . . . (5,335,285) (2,518,717)
Proceeds from disposals of property and equipment. . . . . . . . . . . . . . . . . . 2,528 52,581
Joint venture distributions (contributions), net . . . . . . . . . . . . . . . . . . 372,626 1,569,435
Payments from joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,677 3,419,147
Proceeds from acquisition of joint venture interest. . . . . . . . . . . . . . . . . -- 6,614
------------ -----------
Net cash provided by (used in) investing activities. . . . . . . . . . . . . (3,366,181) 3,082,398
------------ -----------
Cash flows from financing activities:
Proceeds from notes and mortgages payable. . . . . . . . . . . . . . . . . . . . . . 14,644,990 22,066,280
Payments of notes and mortgages payable. . . . . . . . . . . . . . . . . . . . . . . (32,905,451) (36,965,692)
Distributions to General Partner and Associate Limited Partners. . . . . . . . . . . (142,523) --
Distributions to Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . (2,565,432) --
Payments of bank overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (372,517) --
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . (21,340,933) (14,899,412)
------------ -----------
Decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . (3,699,557) (7,094,464)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . 20,566,609 7,634,320
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . $ 16,867,052 539,856
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest, net of amounts capitalized. . . . . . . . $ 2,193,827 5,936,916
============ ===========
Non-cash investing and financing activities:
Acquisition of joint venture interests (note 5). . . . . . . . . . . . . . . . . . $ -- 324,169
============ ===========

<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 1994 AND 1993

(UNAUDITED)

Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1993,
which are included in the Partnership's 1993 Annual Report, as certain
footnote disclosures which would substantially duplicate those contained in
such audited financial statements have been omitted from this report.

(1) BASIS OF ACCOUNTING

Principles of Consolidation

The consolidated financial statements include the accounts of
Arvida/JMB Partners, L.P. (the "Partnership") and its consolidated ventures
(note 5). All material intercompany balances and transactions have been
eliminated in consolidation.

Recognition of Profit from Sales of Real Estate

For sales of real estate, profit is recognized in full when the
collectibility of the sales price is reasonably assured and the earnings
process is virtually complete. When the sale does not meet the
requirements for recognition of income, profit is deferred until such
requirements are met. For sales of residential units, profit is recognized
at the time of closing or, if certain criteria are met, on the percentage
of completion method.

Real Estate Inventories and Cost of Real Estate Revenues

Real estate inventories are carried at cost, including capitalized
interest and property taxes, but not in excess of the net realizable value
determined by the evaluation of individual projects. Management's
evaluation of net realizable value is based on each project's estimated
selling price in the ordinary course of business less estimated costs of
completion, holding and disposal. These estimates are reviewed
periodically and compared to each project's recorded book value.
Adjustments to book value, as they become necessary, are reported in the
period in which they become known. The total cost of land, land
development and common costs are apportioned among the projects on the
relative sales value method. Costs pertaining to the Partnership's
housing, homesite and land and property revenues reflect the cost of the
acquired assets as well as development costs, construction costs,
capitalized interest, capitalized real estate taxes and capitalized
overheads. Certain marketing costs relating to housing projects, including
exhibits and displays, and certain planning and other pre-development
activities, excluding normal period expenses, are capitalized and charged
to housing cost of revenues as related units are closed. A warranty
reserve is provided as residential units are closed. This reserve is
reduced by the cost of subsequent work performed.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Capitalized Interest and Real Estate Taxes

Interest and real estate taxes incurred are capitalized to qualifying
assets, principally real estate inventories. Such capitalized interest and
real estate taxes are charged to cost of revenues as sales of real estate
inventories are recognized. Interest, including the amortization of loan
fees, of $8,338,592 and $11,318,289 was incurred for the nine months ended
September 30, 1994 and 1993, respectively, of which $6,085,929 and
$6,038,845 was capitalized, respectively. Interest payments, including
amounts capitalized, of $8,279,756 and $11,975,761 were made during the
nine months ended September 30, 1994 and 1993, respectively. Interest,
including the amortization of loan fees, of $2,795,676 and $3,525,027 was
incurred for the three months ended September 30, 1994 and 1993, respec-
tively, of which $2,293,570 and $2,162,946 was capitalized, respectively.
Interest payments of $1,569,376 and $4,431,558 were made during the three
months ended September 30, 1994 and 1993, respectively.

Real estate taxes of $6,746,848 and $7,317,507 were incurred for the
nine months ended September 30, 1994 and 1993, respectively, of which
$2,397,269 and $2,661,440 were capitalized, respectively. Real estate tax
payments of $570,613 and $418,571 were made during the nine months ended
September 30, 1994 and 1993, respectively. Real estate taxes of $2,226,701
and $2,506,081 were incurred for the three months ended September 30, 1994
and 1993, respectively, of which $925,811 and $784,654 was capitalized,
respectively. Real estate tax payments of $265,395 and $159,091 were made
during the three months ended September 30, 1994 and 1993, respectively.
The preceding analysis of real estate taxes does not include real estate
taxes incurred or paid with respect to the Partnership's club facilities
and operating properties as these taxes are included in cost of revenues
for operating properties.

Property and Equipment and Other Assets

Property and equipment are carried at cost less accumulated
depreciation and are depreciated on the straight-line method over the
estimated useful lives of the assets, which range from two to 40 years.
Expenditures for maintenance and repairs are charged to expense as
incurred. Costs of major renewals and improvements which extend useful
lives are capitalized. Other assets are amortized on the straight-line
method over the useful lives of the assets which range from one to five
years. Depreciation expense of approximately $3,705,600 and $4,108,600 was
incurred for the nine months ended September 30, 1994 and 1993,
respectively. Amortization of other assets, excluding loan fees, of
approximately $160,300 and $131,100 was incurred for the nine months ended
September 30, 1994 and 1993, respectively. Amortization of loan fees,
which is included in interest expense, of approximately $283,800 and
$465,600 was incurred for the nine months ended September 30, 1994 and
1993, respectively. Depreciation expense of approximately $1,230,500 and
$1,397,700 was incurred for the three month periods ended September 30,
1994 and 1993, respectively. Amortization of other assets, excluding loan
fees, of approximately $52,800 and $41,100 was incurred for the three
months ended September 30, 1994 and 1993, respectively. Amortization of
loan fees, which is included in interest expense, of approximately $15,000
and $121,900 was incurred for the three months ended September 30, 1994 and
1993, respectively.

Investments in and Advances to Joint Ventures, Net

In general, the equity method of accounting has been applied in the
accompanying consolidated financial statements with respect to those
investments for which the Partnership does not have majority control and
where the Partnership's ownership interest is 50% or less (note 5). The

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

cost method of accounting has been applied in the accompanying consolidated
financial statements with respect to the Coto de Caza joint venture. The
cost method of accounting is used when a limited partner has virtually no
influence over the venture operations and financial policies. Under the
cost method, income is generally recorded only to the extent of
distributions received.

Investments in joint ventures are carried at the Partnership's
proportionate share of the ventures' assets (not in excess of their net
realizable value determined by evaluation of individual projects), net of
their related liabilities and adjusted for any basis differences. Basis
differences result from the purchase of interests at values which differ
from the recorded cost of the Partnership's proportionate share of the
joint ventures' net assets.

The Partnership periodically advances funds to its joint ventures in
which it holds ownership interests when deemed necessary and economically
justifiable. Such advances are generally interest bearing and are repaid
to the Partnership from amounts earned through joint venture operations.

Equity Memberships

The amenities within certain of the Partnership's Boca Raton and
Jacksonville, Florida Communities, as well as its Community near Highlands,
North Carolina are sold to the respective homeowners through the sale of
equity memberships. The amounts recorded as equity memberships in the
accompanying Consolidated Balance Sheets represent the accumulation of
costs incurred in constructing clubhouses, golf courses, tennis courts and
various other related assets less amounts allocated to memberships sold not
in excess of their net realizable value determined by evaluations of
individual amenities. Equity membership revenues and related cost of
revenues are included in land and property in the accompanying Consolidated
Statement of Operations.

Partnership Records

The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments where applicable to reflect
the Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP") and to consolidate the accounts of the ventures as
described above. The net effect of these items is summarized as follows
for the nine months ended September 30:

1994 1993
-------------------- ---------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
Net income . . . . $30,865,007 29,013,084 9,900,906 4,829,187
Net income per
Limited
Partnership
Interest. . . . . $ 75.34 70.81 24.26 11.83
Cash distribu-
tions per
Limited
Partnership
Interest. . . . . $ 6.35 6.35 -- --
=========== ========== ========== ==========

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Reference is made to note 9 for further discussion of the allocation
of profits and losses to the General Partner, Associate Limited Partners
and Limited Partners.

The net income per Limited Partnership Interest is based upon the
Limited Partnership Interests outstanding at the end of each period.

Reclassifications

Certain reclassifications have been made to the 1993 financial
statements to conform to the 1994 presentation.

Income Taxes

No provision for Federal or state income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain instances, the Partnership has been
required under applicable state law to remit directly to the state tax
authorities amounts representing withholding on applicable taxable income
allocated to partners.

(2) INVESTMENT PROPERTIES

The Partnership's assets consist principally of interests in land
which is in the process of being developed into master-planned residential
communities (the "Communities") and, to a lesser extent, commercial
properties; mortgage notes and accounts receivable; management and other
service contracts; construction, brokerage and other support activities;
real estate assets held for investment; club and recreational facilities;
and cable television businesses serving certain of its Communities.

The Partnership's Communities are in various stages of development,
with estimated remaining build-outs ranging from one to ten years. The
Partnership's condominium project on Longboat Key, Florida known as
Arvida's Grand Bay, is in its early stage of development. The Weston
Community, located in Broward County, Florida is the Partnership's largest
Community and is in its mid stage of development. Also in their mid stages
of development are the River Hills Country Club in Tampa, Florida;
Jacksonville Golf and Country Club in Jacksonville, Florida; the Water's
Edge Community in Atlanta, Georgia and The Cullasaja Club, near Highlands,
North Carolina. The Partnership's remaining Communities known as Sawgrass
Country Club, in Jacksonville, Florida and Dockside in Atlanta, Georgia are
in their final stages of development with anticipated close-outs in 1996.
In addition, the Broken Sound Community, located in Boca Raton, Florida, is
nearing completion with an anticipated close-out in 1995. Future revenues
will be impacted to the extent that there are lower levels of inventories
available for sale as these Communities approach or undertake their final
phases.

For a discussion of a lawsuit initiated by the General Partner, on
behalf of the Partnership, against The Walt Disney Company ("Disney"),
which arose out of the Partnership's acquisition of substantially all of
the real estate and other assets of Arvida Corporation, a subsidiary of
Disney, in September 1987, reference is made to Note 2 of Notes to
Consolidated Financial Statements of the Partnership's report on Form 10-K
(File No. 0-16976) filed on March 25, 1994.

(3) CASH, CASH EQUIVALENTS AND RESTRICTED CASH

At September 30, 1994 and December 31, 1993, cash and cash equivalents
primarily consisted of U.S. Government obligations with original maturities

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

of three months or less, money market demand accounts and repurchase
agreements, the costs of which approximate market value. Cash and cash
equivalents include treasury bills with original maturity dates of three
months or less of approximately $1,786,000 and $3,900,000 at September 30,
1994 and December 31, 1993, respectively. Included in restricted cash are
amounts restricted under various escrow agreements. Credit risk associated
with cash, cash equivalents and restricted cash is considered low due to
the quality of the financial institutions in which these assets are held.

(4) NOTES AND MORTGAGES PAYABLE

At September 30, 1994, the Partnership's credit facility consists of a
term loan in the original amount of $126,805,195, a revolving line of
credit facility up to $20 million, an income property term loan in the
original amount of $20 million and a $15 million letter of credit facility.

The term loan, the revolving line of credit and the letter of credit
facility are secured by recorded mortgages on all otherwise unencumbered
real property assets of the Partnership, as well an assignment of all
mortgages receivable, equity memberships, certain joint venture interests
or joint venture proceeds and cash balances (with the exception of deposits
held in escrow). The income property term loan is secured by the recorded
first mortgages on a mixed-use center and an office building in Boca Raton,
Florida. All of the notes under the facility are cross-collateralized and
cross-defaulted. At September 30, 1994, the term loan, the revolving line
of credit and the income property term loan bear interest based, at the
Partnership's option, on one of the lenders' prime rate plus 1.25% per
annum or the relevant London Inter-Bank Offering Rate (LIBOR) plus 2.50%
per annum. At December 31, 1993, $75 million of the Partnership's
outstanding credit facility was under two interest rate swap arrangements.
However, one of the interest rate swap arrangements matured in February
1994, and at September 30, 1994, only $25 million of the Partnership's
outstanding credit facility was under an interest rate swap arrangement.
The remaining interest rate swap arrangement matured in October 1994. For
the nine month period ended September 30, 1994, the effective interest rate
for the combined term loan, income property term loan and revolving line of
credit facility was approximately 7.8% per annum. This rate includes the
effect of the interest rate swap arrangements.

Under the term loan agreement, the Partnership made the first required
principal payments of $8 million in February 1993 and $10 million in March
1994. Principal payments of $10 million on the term loan are due in each
of the years 1995 and 1996, and the remaining balance outstanding is due in
July 1997. In addition, the term loan agreement provides for additional
principal payments based upon a specified percentage of available cash flow
and upon the sale of certain assets. For the nine months ended September
30, 1994, the Partnership made such additional term loan payments totalling
approximately $11.5 million. Under the income property term loan,
principal payments of $0.1 million are paid monthly. At September 30,
1994, all of the term loan proceeds had been borrowed with a remaining
outstanding balance of $83,811,608; and $0, $18,233,659 and $9,768,906 were
outstanding on the revolving line of credit facility, the income property
term loan and the letter of credit facility, respectively.

Loan fees incurred in connection with the Partnership's credit
facility were capitalized and were fully amortized as a component of
interest expense as of September 30, 1994.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

The income property term loan, revolving line of credit and letter of
credit facility matured in July 1994 and were extended for 60 days to
September 1994. The term loan matures in July 1997. The Partnership has
reached an agreement in principle with its lenders for an eighteen month
renewal of its entire credit facility. The new credit facility is expected
to consist of a term loan in the amount of $85,252,520, a revolving line of
credit facility up to $20 million, an income property term loan of
$18,233,326 and a $15 million letter of credit facility. The term loan,
revolving line of credit facility and income property term loan are
expected to bear interest based, at the Partnership's option, on one of the
lenders' prime rate plus 1.25% or the relevant LIBOR plus 2.50%. The term
loan agreement is expected to require principal payments of $10 million and
$5 million in February and July of each year, respectively, and the
remaining outstanding balance is due on the maturity date, July 1, 1997.
Under the income property term loan, monthly principal payments of $0.1
million are expected to be paid and the remaining outstanding balance is
due on the maturity date, March 1, 1996. In addition, the term loan and
income property term loan agreements are expected to provide for additional
repayments based upon the sale of certain assets. The term loan is also
expected to provide for additional principal payments based upon the net
cash flow generated by the Partnership each year. The revolving line of
credit facility and letter of credit facility are expected to mature in
December 1995 and July 1995, respectively. In connection with obtaining
this extension and renewal, the Partnership made a $3 million principal
payment on its term loan in July 1994, and is expected to make an
additional $9.5 million term loan payment upon closing of the renewal of
the credit facility. Although the Partnership is optimistic that the
renewal of its credit facility will be finalized, there can be no assurance
that such renewal will be obtained.

Also included in notes and mortgages payable at September 30, 1994 is
approximately $6.9 million representing project specific financing for the
Partnership's retail property located in its Weston Community,
approximately $3.0 million of subordinated debt attributable to the
Cullasaja Joint Venture, which is now consolidated with the Partnership
(note 5), and a $2.0 million note executed in conjunction with the
Partnership's repurchase of a land parcel in Weston's Increment III.

In addition to the above, the Partnership has a $24 million revolving
construction line of credit for the first building and certain amenities
within the Partnership's new condominium project on Longboat Key, Florida
know as Arvida's Grand Bay. At September 30, 1994, approximately $11.9
million was outstanding under this note. During October 1994, the
Partnership obtained an approximate $4.9 million revolving construction
line of credit for another building within Arvida's Grand Bay.

Certain of the Partnership's property within the Cullasaja Community
was encumbered by a mortgage note which matured on March 1, 1994. The note
was collateralized by a first mortgage on certain real estate inventories
and 12.5% of the outstanding balance was guaranteed by the Partnership.
The Partnership was unable to obtain an extension of the loan, and
therefore, on June 29, 1994, purchased the note at par and paid the accrued
interest thereon and certain attorney and conveyance fees. The total
amount of such payment was approximately $5,278,000. The note was
subsequently assigned to the Partnership's lender under its credit
facilities.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

executed an agreement in August 1993 with its joint venture partner, CIS
Oaks, Ltd., ("CIS"), whereby CIS assigned its 20% interest in The Oaks to
the Partnership, thereby vesting 100% control of the assets of the joint
venture to the Partnership.

The assets of the Oaks joint venture were encumbered by two mortgage
loans. A $12,492,200 loan was scheduled to mature in January 1997 and a
$3,260,000 loan was scheduled to mature in December 1993. The joint
venture had guaranteed $2.7 million of the loans, and the guaranteed amount
was with recourse to the Partnership. The joint venture was in default
under the terms of these loan agreements as a result of its failure to make
principal payments of approximately $1.3 million in January 1993 to release
the minimum number of homesite lots as required under these agreements and
its failure to pay interest commencing with a payment due in April 1993.
The Partnership was able to reach an agreement with its lenders to pay off
the existing mortgage loans at a substantial discount from face value. On
September 3, 1993, the Partnership paid the joint venture's lenders $6.7
million in full satisfaction of the outstanding mortgage loans, accrued
interest and guaranty. This transaction was the cause of the approximate
$9.5 million extraordinary gain on the early extinguishment of debt as of
September 30, 1993.

Given the finite amount of available capital to the Partnership, the
Partnership determined that it was in its best long-term interest to
utilize that capital for the development of its other properties and sold
its remaining land holdings in The Oaks Community and its interest in The
Oaks Club to an unaffiliated third party purchaser for $5.8 million. This
sale transaction occurred simultaneously with the repayment of the loans
and satisfaction of the mortgages. In light of the Partnership's guarantee
under the loan agreement of $2.7 million of the outstanding mortgage loans,
as well as other factors, these transactions were pursued as the least
costly alternative available to the Partnership. These transactions
resulted in a minimal net gain for Federal income tax purposes.

(5) INVESTMENTS IN AND ADVANCES TO JOINT VENTURES

The Partnership has numerous investments in real estate joint ventures
with ownership interests ranging from 20% to 50%. Under certain
circumstances, either pursuant to the venture agreement or due to the
Partnership's obligations as a general partner, the Partnership may be
required to make cash advances or contributions to the ventures. The total
of such advances outstanding were approximately $4.2 million at September
30, 1994 and December 31, 1993, and are included in Investments in and
Advances to Joint Ventures in the accompanying Consolidated Balance Sheets.

These amounts primarily represent outstanding advances to the Coto de Caza
Joint Venture. In addition, there are certain risks associated with the
Partnership's investments made through joint ventures, including the
possibility that the Partnership's joint venture partners in an investment
might become unable or unwilling to fulfill their financial obligations, or
that such joint venture partners may have economic or business interests or
goals that are inconsistent with those of the Partnership.

During the first quarter of 1993, the Partnership reached a settlement
agreement with AOK Group, its joint venture partner in a property located
in Ocala, Florida, whereby in exchange for its joint venture partner's 50%
interest in the venture, the Partnership agreed to dismiss a lawsuit
previously filed against its joint venture partner for failure to perform
in accordance with the terms of a $1,600,000 note which had been issued to
the Partnership by the joint venture. This agreement was pursued as a more
favorable remedy to other alternatives available to the Partnership. As a
result of this transaction, the Partnership changed from the equity method

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

of accounting to the consolidated method of accounting for the joint
venture effective March 1, 1993. This transaction resulted in an increase
in the Partnership's total assets of approximately $324,000.

The Partnership also incurs certain general and administrative
expenses which it pays on behalf of the joint ventures in which it holds
interests. The Partnership receives reimbursements from the joint ventures
for such costs. For the nine months ended September 30, 1994, the
Partnership was entitled to receive approximately $368,000 from certain of
the joint ventures in which it holds interests. At September 30, 1994,
approximately $76,200 was owed to the Partnership of which approximately
$50,800 was received as of November 4, 1994. For the nine month period
ended September 30, 1993, the Partnership was entitled to receive
reimbursements of approximately $216,300.

(6) TRANSACTIONS WITH AFFILIATES

The Partnership, subject to certain limitations, may engage affiliates
of the General Partner for property management, insurance and certain other
administrative services to be performed in connection with the
administration of the Partnership and its assets. The total of such costs
(consisting primarily of insurance commissions) for the nine months ended
September 30, 1994 was approximately $332,600, all of which was paid as of
September 30, 1994. The total of such costs for the nine months ended
September 30, 1993 was approximately $162,400. In addition, the General
Partner and its affiliates are entitled to reimbursements for salaries and
salary-related costs relating to the administration of the Partnership and
the operation of the Partnership's properties. Such costs were
approximately $93,700 for the year ended December 31, 1993, all of which
has been paid.

The Partnership also receives reimbursements from or reimburses other
affiliates of the General Partner engaged in real estate activities for
certain general and administrative expenditures including, and without
limitation, salary and salary-related costs relating to work performed by
employees of the Partnership and certain out-of-pocket expenditures
incurred on behalf of such affiliates. For the nine months ended September
30, 1994, the total of such costs incurred by the Partnership on behalf of
these affiliates totalled approximately $366,300. At September 30, 1994,
approximately $39,600 was owed to the Partnership, all of which was
received as of November 4, 1994. For the nine month period ended September
30, 1993, the Partnership was entitled to reimbursements of approximately
$124,200.

The Partnership and Arvida/JMB Partners, L.P.-II (a publicly-held
limited partnership affiliated with the General Partner) each employ
project related and administrative personnel who perform services on behalf
of both partnerships. In addition, certain out-of-pocket expenditures
related to such services and other general and administrative costs are
incurred and charged to each partnership as appropriate. The Partnership
receives reimbursements from or reimburses Arvida/JMB Partners, L.P.-II for
such costs (including salary and salary-related costs). For the nine month
periods ended September 30, 1994 and 1993, the Partnership was entitled to
receive approximately $995,800 and $2,064,900, respectively, from
Arvida/JMB Partners, L.P.-II. At September 30, 1994, approximately
$257,200 was owed to the Partnership, all of which was received as of
November 4, 1994. In addition, for the nine month periods ended
September 30, 1994 and 1993, the Partnership was obligated to reimburse
Arvida/JMB Partners, L.P.-II approximately $416,700 and $956,200,
respectively. At September 30, 1994, approximately $126,800 was unpaid,
all of which was paid as of November 4, 1994.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Arvida Company ("Arvida"), pursuant to an agreement with the
Partnership, provides development, construction, management and other
personnel and services to the Partnership for all of its projects and
operations. Pursuant to such agreement, the Partnership shall reimburse
Arvida for all of its out-of-pocket expenditures (including salary and
salary-related costs), subject to certain limitations. The total of such
costs for the nine month periods ended September 30, 1994 and 1993 were
approximately $5,300,600 and $4,785,000, respectively, all of which was
paid as of September 30, 1994.

The Partnership pays for certain general and administrative costs,
including certain insurance premiums, on behalf of its clubs, homeowners
associations and maintenance associations. The Partnership receives
reimbursements from these entities for such costs. For the nine month
period ended September 30, 1994, the Partnership was entitled to receive
approximately $239,500 from these entities. At September 30, 1994,
approximately $92,500 was owed to the Partnership. As of November 4, 1994
approximately $77,900 had been received. For the nine months ended
September 30, 1993, the Partnership was entitled to receive approximately
$379,600 from these entities.

In accordance with the Partnership Agreement, the General Partner and
Associate Limited Partners have deferred a portion of their distributions
of net cash flow from the Partnership totalling approximately $936,000.
This amount does not bear interest and is expected to be paid in future
periods subject to certain restrictions contained in the Partnership's
credit facility agreement.

All amounts receivable or payable to the General Partner or its
affiliates do not bear interest and are expected to be paid in future
periods.

(7) COMMITMENTS AND CONTINGENCIES

As security for performance of certain development obligations, the
Partnership is contingently liable under standby letters of credit and
performance bonds for approximately $9,769,000 and $7,739,000,
respectively, at September 30, 1994. At December 31, 1993, the Partnership
was contingently liable under standby letters of credit and performance
bonds for approximately $11,501,000 and $12,106,000, respectively. In
addition, certain joint ventures in which the Partnership holds an interest
are also contingently liable under bonds for approximately $1,020,000 and
$1,089,000 at September 30, 1994 and December 31, 1993, respectively.

The Partnership was named a defendant in a number of homeowner
lawsuits, certain of which purported to be class actions, that allegedly in
part arose out of or related to Hurricane Andrew, which on August 24, 1992
resulted in damage to a former community development known as Country Walk.

The homeowner lawsuits alleged, among other things, that the damage
suffered by the plaintiffs' homes and/or condominiums within Country Walk
was beyond what could have been reasonably expected from the hurricane
and/or was a result of the defendants' alleged defective design,
construction, inspection and/or other improper conduct in connection with
the development, construction and sales of such homes and condominiums,
including alleged building code violations. The various plaintiffs sought
varying and, in some cases, unspecified amounts of compensatory damages and
other relief. In certain of the lawsuits injunctive relief and/or punitive
damages were sought.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Several of these lawsuits allege that the Partnership was liable,
among other reasons, as a result of its own alleged acts of misconduct or
as a result of the Partnership's assumption of Arvida Corporation's
liabilities in connection with the Partnership's purchase of Arvida
Corporation's assets from Disney in 1987, which included certain assets
related to the Country Walk development. Pursuant to the agreement to
purchase such assets, the Partnership obtained indemnification by Disney
for certain liabilities relating to facts or circumstances arising or
occurring prior to the closing of the Partnership's purchase of the assets.

Over 80% of the Arvida-built homes in Country Walk were built prior to the
Partnership's ownership of the Community. Where appropriate, the
Partnership has tendered or will tender each of the above-described
lawsuits to Disney for defense and indemnification in whole or in part
pursuant to the Partnership's indemnification rights. Where appropriate,
the Partnership has also tendered these lawsuits to its various insurance
carriers for defense and coverage. The Partnership is unable to determine
at this time to what extent damages in these lawsuits, if any, against the
Partnership, as well as the Partnership's cost of investigating and
defending the lawsuits, will ultimately be recoverable by the Partnership
either pursuant to its rights of indemnification by Disney or under
contracts of insurance.

On August 10, 1993, the Circuit Court of Dade County issued a final
order approving the terms of a class action settlement in one of the
pending homeowners' lawsuits which resolved substantial portions of the
pending homeowners' lawsuits that had been filed. The settlement, which is
designed to resolve claims arising in connection with estate and patio
homes and condominiums sold by the Partnership after September 10, 1987, is
structured to compensate residents for losses not covered by insurance.
Homeowners of approximately 85% of the units in Country Walk have accepted
the settlement. The Partnership currently believes that the class action
settlement may cost approximately $2.5 million. The settlement is being
funded by one of the Partnership's insurers, subject to a reservation of
rights. The amount of money, if any, which the insurance company may
recover from the Partnership pursuant to its reservation of rights is
uncertain. Due to this uncertainty, the accompanying Consolidated
Financial Statements do not reflect an accrual for such costs.

Any homeowners who affirmatively rejected the offer of settlement may
continue to litigate. The Partnership is currently a defendant in a number
of lawsuits brought by condominium and patio home owners, all of whom have
declined to accept the terms of the class action settlement. These
lawsuits, involving various named individuals, are pending in the Circuit
Court of Dade County. The Partnership intends to vigorously defend itself
in these matters.

On February 24, 1994, the Partnership was dismissed from the pending
class action lawsuits pursuant to the class action settlement discussed
above. In addition, the Partnership has been informed that Disney and an
insurer have reached agreements to settle five of the individual homeowners
actions which were tendered by the Partnership to Disney. These Disney
settlements were funded without any contribution from the Partnership.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

also a defendant in this suit. The Partnership believes that the amount of
this claim that allegedly relates to units it sold is approximately
$3,600,000. Plaintiffs also seek a declatory judgement seeking to hold the
Partnership and other defendants responsible for amounts American Reliance
must pay in the future to its insured as additional damages beyond the
$10,873,000 previously paid. This litigation is still pending and the
Partnership intends to vigorously defend itself.

The Partnership has also been involved in subrogation lawsuits or
threatened subrogation actions with Prudential Property and Casualty
Company, Travelers Insurance Company ("Travelers"), Allstate Insurance
Company ("Allstate") and State Farm Insurance Company. These insurance
companies sought to recover damages, costs and interest in connection with
amounts allegedly paid to their insureds living in Country Walk at the time
of Hurricane Andrew. The Partnership settled these claims and all
settlement proceeds were funded by the Partnership's insurance carriers.
The Allstate and Travelers settlements were funded subject to a reservation
of rights by one of the Partnership's insurance carriers. The amount of
money the insurance carrier may seek to recover from the Partnership for
these and any other settlements it has funded is uncertain but is not
expected to be material to the Partnership. The Partnership is a defendant
in and anticipates other subrogation claims by insurance companies which
have allegedly paid policy benefits to Country Walk residents. The
Partnership intends to defend itself vigorously in all such matters.

The Partnership has also resolved a claim brought by the Villages of
Country Walk Homeowners' Association, Inc., and related entities, for
damages to the common elements of the condominium units at Country Walk. A
settlement in the amount of $2,740,000 was paid by the Partnership's
insurance carriers. A reservation of rights in connection with these
claims of approximately $740,000 was issued by one insurance carrier. The
extent to which the insurance company may ultimately recover any of these
proceeds from the Partnership is unknown. Therefore, the accompanying
Consolidated Financial Statements do not reflect an accrual for such costs.

A second amended complaint captioned Berry v. Merrill Lynch, Pierce
Fenner & Smith, Arvida/JMB Partners, Limited Partnership, Arvida/JMB
Managers, Inc., JMB Realty Corporation and Does 1 through 100, has been
filed in the Superior Court of the State of California in and for the
County of San Diego, Case No. 669709. The lawsuit is purportedly filed as
a class action on behalf of the named plaintiffs and all other persons or
entities in the State of California who bought or acquired, directly or
indirectly, limited partnership interests ("Interests") in the Partnership
from September 1, 1987 through the present. The second amended complaint
in the action alleges, among other things, that the defendants made
misrepresentations and concealed various facts, breached fiduciary duties,
and violated a contractual covenant of good faith in connection with the
sale of Interests in the Partnership. The second amended complaint further
alleges that such conduct violated California state law relating to fraud,
constructive fraud, breach of fiduciary duty, willful suppression of facts,
breach of the covenant of good faith, and conspiracy. Plaintiffs, on
behalf of themselves and the purported plaintiff class, seek unspecified
compensatory damages, consequential damages, punitive and exemplary
damages, recission, interest, costs of the suit, and such other relief as
the court may order. In October 1994, after the court denied defendants'
demurrers, defendants answered the second amendment complaint. The
Partnership believes that the lawsuit is without merit and intends to
vigorously defend itself.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

In addition, the Partnership has been advised by Merrill Lynch that
Merrill Lynch has been named a defendant in actions pending in the Eleventh
and Seventeenth Judicial Circuit Courts in Dade and Broward Counties,
Florida to compel arbitration of claims brought by certain investors of the
Partnership representing approximately 5% of the total of 404,000 Interests
outstanding. Merrill Lynch has asked the Partnership and its General
Partner to confirm an obligation of the Partnership and its General Partner
to indemnify Merrill Lynch in these claims against all loss, liability,
claim, damage and expense, including without limitation attorneys' fees and
expenses, under the terms of a certain Agency Agreement dated September 15,
1987 ("Agency Agreement") with the Partnership relating to the sale of
Interests through Merrill Lynch on behalf of the Partnership. In the
actions to compel arbitration, the claimants have advised Merrill Lynch
that they will seek to file demands for arbitration and claims for
unspecified damages against Merrill Lynch based on Merrill Lynch's alleged
violation of applicable state and/or federal securities laws and alleged
violations of the rules of the National Association of Securities Dealers,
Inc., together with pendent state law claims. The Agency Agreement
generally provides that the Partnership and its General Partner shall
indemnify Merrill Lynch against losses occasioned by any actual or alleged
misstatements or omissions of material facts in the Partnership's offering
materials used in connection with the sale of Interests and suffered by
Merrill Lynch in performing its duties under the Agency Agreement, under
certain specified conditions. The Agency Agreement also generally
provides, under certain conditions, that Merrill Lynch shall indemnify the
Partnership and its General Partner for losses suffered by the Partnership
and occasioned by certain specified conduct by Merrill Lynch in the course
of Merrill Lynch's solicitation of subscriptions for, and sale of,
Interests. The Partnership is unable to determine at this time the
ultimate investment of investors who have filed arbitration claims as to
which Merrill Lynch might seek indemnification in the future. At this
time, and based upon the information presently available about the
arbitration statements of claims filed by some of these investors, the
Partnership and its General Partner believe that they have meritorious
defenses to demands for indemnification made by Merrill Lynch and intend to
vigorously pursue such defenses. In the event Merrill Lynch is entitled to
indemnification of its attorney's fees and expenses or other losses and
expenses, these amounts may prove to be material.

The Partnership is also a defendant in several other actions brought
against it arising in the normal course of business. It is the belief of
the General Partner, based on knowledge of facts and advice of counsel,
that the claims made against the Partnership in such actions will not
result in any material adverse effect on the Partnership's consolidated
financial position or results of operations.

The Partnership owns a 50% joint venture interest in 31 commercial /
industrial acres in Pompano Beach, Florida, which is encumbered by a
mortgage loan in the principal amount of approximately $4 million at
September 30, 1994. As a result of the Partnership's previous
determination that the development of the land was no longer economically
profitable, during April 1992, the Partnership and its joint venture
partner each tendered payment in the amount of approximately $3.1 million
to the lender for their respective shares of the guarantee payment required
under the loan agreement and certain other holding costs, the majority of
which reduced the outstanding mortgage loan to its current balance. The
venture also intended at that time to convey title to the property to the
lender; however, such conveyance is pending resolution of certain general
development obligations of the venture as well as certain environmental
issues. The Partnership has been negotiating with the lender regarding the

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

scope of the development work required to be done and does not anticipate
the associated costs to be significant. With respect to the environmental
issues, the previous owner remains obligated to undertake the clean up
pursuant to, among other things, a surviving obligation under the purchase
and sale agreement. The clean-up began in July 1994, and the first phase
of the remedial action plan was completed in October 1994. Further action
plans are now underway. If the previous owner is unable to fulfill all its
obligations as they relate to this environmental issue, the venture and
ultimately the Partnership may be obligated for such costs. Should this
occur, the Partnership does not anticipate the cost of this clean-up to be
material to its operations. The lender has asserted the mortgage loan is
with recourse to the joint venture partners as a result of the partners'
failure to perform in accordance with the terms of the loan agreement. The
Partnership believes this claim is without merit and will vigorously defend
itself against this allegation. The transfer of title, when fully
consummated, will not have a significant impact on the Partnership's
operations for financial reporting purposes due to the prior payment of the
financial guarantees and certain holding costs. However, the Partnership
will recognize a loss for Federal income tax purposes.

The Partnership is seeking a permit to develop 1,156 of the 2,475
gross acres contained in Increment III of the Weston Community, portions of
which are environmentally sensitive areas and are subject to protection as
wetlands. The Partnership's current application for a wetlands permit for
Increment III includes proposed wetlands mitigation of 1,319 acres together
with construction of schools, parks, roads, sewers and related
infrastructure, in addition to residential and commercial development.
However, in August 1994, the Environmental Protection Agency (the "EPA")
issued a letter to the United States Army Corps of Engineers (the "Corps"),
which is the governmental agency responsible for issuing permits involving
development of wetlands areas, setting forth the EPA's position that the
Partnership's proposed development of Increment III should be denied unless
substantially fewer acres than contemplated in the application are
developed.

The Partnership believes that the EPA's recommendation is flawed based
on scientific evidence, and it continues to pursue issuance of the permit
for development of Increment III on the terms and conditions previously set
forth in its application. The Corps has not accepted the recommendation of
the EPA and has advised the Partnership that it is continuing to consider
the Partnership's current application as presently submitted. During
October 1994, the Corps performed an independent analysis of the wetlands
impact and mitigation. To date, the Partnership has not received a formal
response from the Corps regarding the results of this analysis.

If the Corps ultimately issues a permit generally on the same terms
and conditions as set forth in the Partnership's previously submitted
application, the EPA retains certain rights to veto or to seek to elevate
the determination to issue a permit to higher governmental officials.
Elevation could result in a decision to uphold, modify or retract issuance
of the permit. If the Partnership does not ultimately receive its permit,
it may seek a judicial review in federal district court of the denial of
the permit. Additionally, the Partnership could initiate an action in the
United States Court of Federal Claims seeking a determination that denial
of the permit constitutes a "taking" of the Partnership's property for
which the Partnership is due just compensation. The pursuit of these legal
actions would likely be lengthy.

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

pursuing the above-mentioned legal actions. In addition, if such a permit
were obtained, the Partnership would also need certain other approvals,
including state and local approvals, to develop Increment III in accordance
with the Partnership's current development plans. If such permits and
other approvals are not obtained, the Partnership would be required to
revise its development plans for the remaining portions of Increment I and
II of the Weston Community, as well as its development plans for Increment
III. Such revisions would have a material adverse impact on the timing and
amount of net income and net cash flow ultimately realized by the
Partnership from the development of the Weston Community.

The Partnership may be responsible for funding certain other ancillary
activities for related entities in the ordinary course of business which
the Partnership does not currently believe will have any material effect on
its consolidated financial position or results of operations.

(8) TAX INCREMENT FINANCING ENTITIES

In connection with the development of the Partnership's Weston
Community, bond financing is utilized to construct certain on-site and off-
site infrastructure improvements, including major roadways, lakes, other
waterways and pump stations, which the Partnership would otherwise be
obligated to finance and construct as a condition to obtain certain
approvals for the project. This bond financing is obtained by The Indian
Trace Community Development District ("District"), a local government
district operating in accordance with Chapter 190 of the Florida Statutes.
Under this program, the Partnership is not obligated directly to repay the
bonds. Rather, the bonds are expected to be fully serviced by special
assessment taxes levied on the property, which effectively collateralizes
the obligation to pay such assessments. While the owner of the property,
the Partnership is responsible to pay the special assessment taxes until
land parcels are sold. At such point, the liability for the assessments
related to parcels sold will be borne by the purchasers through a tax
assessment on their property. These special assessment taxes are designed
to cover debt service on the bonds, including principal and interest
payments, as well as the operating and maintenance budgets of the District.

The use of this type of bond financing is a common practice for major land
developers in South Florida.

The District issued $64,660,000 of variable rate bonds in November
1989 and $31,305,000 of variable rate bonds in July 1991. These bonds
mature in various years commencing in May 1991 through May 2011. At
September 30, 1994, the amount of bonds issued and outstanding totalled
$87,085,000. For the twelve months ended December 31, 1993, the
Partnership paid special assessments related to these bonds of
approximately $5.2 million.

In order to take advantage of historically low interest rates and
reduce the exposure of variable rate debt, the District is pursuing a new
bond issuance. The District has reached an agreement in principle on the
issuance of fixed rate bonds which are expected to total approximately
$96,000,000. These bonds are expected to be issued during the fourth
quarter of 1994 and mature in various years commencing in 1995 through
2006. If successful, the proceeds from this offering will be used to
refund 1989 and 1991 bonds currently outstanding.

(9) PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement (and subject to
Section 4.2F which allocates Profits, as defined, to the General Partner
and Associate Limited Partners), profits or losses of the Partnership will

ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED

be allocated as follows: (i) profits will be allocated such that the
General Partner and the Associate Limited Partners will be allocated
profits equal to the amount of cash flow distributed to them for such
fiscal period with the remainder allocated to the Limited Partners, except
that in all events, the General Partner shall be allocated at least 1% of
profits and (ii) losses will be allocated 1% to the General Partner, 1% to
the Associate Limited Partners and 98% to the Limited Partners.

In the event profits to be allocated in any given year do not equal or
exceed cash distributed to the General Partner and the Associate Limited
Partners for such year, the allocation of profits will be as follows: The
General Partner and the Associate Limited Partners will be allocated
profits equal to the amount of cash flow distributed to them for such year.

The Limited Partners will be allocated losses such that the sum of amounts
allocated to the General Partner, Associate Limited Partners, and Limited
Partners equals the net profit for the given year.

In general, and subject to certain limitations, the distribution of
Cash Flow (as defined) after the initial admission date is allocated 90% to
the Holders of Interests and 10% to the General Partner and the Associate
Limited Partners (collectively) until the Holders of Interests have
received cumulative distributions of Cash Flow equal to a 10% per annum
return (non-compounded) on their Adjusted Capital Investments (as defined)
plus the return of their Capital Investments; provided, however, that
4.7369% of the 10% amount otherwise distributable to the General Partner
and Associate Limited Partners (collectively) will be deferred, and such
amount will be paid to the Holders of Interests, until the Holders of
Interests receive Cash Flow distributions equal to a cumulative, non-
compounded amount of 12% per annum on their Capital Investments (as
defined). This deferral provision is in place until the Holders of
Interests receive total cash distributions equal to their Capital
Investments. Any deferred amounts owed to the General Partner and
Associate Limited Partners (collectively) will be distributable to them out
of Cash Flow otherwise distributable to the Holders of Interests at such
time as such Holders have received a 12% per annum cumulative, non-
compounded return on their Capital Investments (as defined) or in any
event, to the extent of one-half of Cash Flow otherwise distributable to
the Holders of Interests at such time as they have received total
distributions of Cash Flow equal to their Capital Investments (as defined).

Thereafter, all distributions of Cash Flow will be made 85% to the Holders
of Interests and 15% to the General Partner and the Associate Limited
Partners (collectively); provided, however, that the General Partner and
the Associate Limited Partners (collectively) shall be entitled to receive
an additional share of Cash Flow otherwise distributable to the Holders of
Interests equal to the lesser of an amount equal to 2% of the cumulative
gross selling prices of any interests in real property of the Partnership
(subject to certain limitations) or 13% of the aggregate distributions of
Cash Flow to all parties pursuant to this sentence.

(10) ADJUSTMENTS

In the opinion of the General Partner, all adjustments (consisting
solely of normal recurring adjustments) necessary for a fair presentation
have been made to the accompanying consolidated statements as of September
30, 1994 and December 31, 1993 and for the three and nine month periods
ended September 30, 1994 and 1993.

PART I. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.

At September 30, 1994 and December 31, 1993, the Partnership had cash
and cash equivalents of approximately $16,867,000 and $20,567,000,
respectively. Bank overdrafts, which represent checks in transit, of
approximately $1,287,000 and $1,660,000 at September 30, 1994 and December
31, 1993, respectively, were repaid from cash on hand in October and
January 1994, respectively. Remaining cash and cash equivalents were
available for debt service, working capital requirements and distributions
to partners. The source of both short-term and long-term future liquidity
is expected to be derived from the sale of housing units, homesites and
land parcels and through the Partnership's credit facilities, which are
discussed below.

As a result of management's efforts to broaden the appeal of the
Partnership's Communities through the introduction of new housing products,
the implementation of a series of cost reductions, and the upward trends in
housing activity that the nation, as well as the markets in which the
Partnership's properties are located, have been experiencing, the
Partnership was able to generate significant cash flow before debt service
during 1993. The Partnership utilized this excess cash flow to make
scheduled and accelerated principal repayments on its outstanding debt, as
required under the terms of the credit facility agreement, and to increase
its cash reserves. Furthermore, in February 1994, the Partnership made a
distribution for 1993 of $2,565,433 to its Limited Partners ($6.35 per
Interest) and $142,523 to the General Partner and Associate Limited
Partners, collectively. These positive trends have continued into 1994 as
the Partnership was able to generate significant cash flow before debt
service and net income for the nine months ended September 30, 1994.

At September 30, 1994, the Partnership's credit facility consists of
a term loan in the original amount of $126,805,195, a revolving line of
credit facility up to $20 million, an income property term loan in the
original amount of $20 million and a $15 million letter of credit facility.

The term loan, the revolving line of credit and the letter of credit
facility are secured by recorded mortgages on all otherwise unencumbered
real property assets of the Partnership as well as an assignment of all
mortgages receivable, equity memberships, certain joint venture interests
or joint venture proceeds, and cash balances with the exception of deposits
held in escrow). The income property term loan is secured by the recorded
first mortgages on a mixed-use center and an office building in Boca Raton,
Florida. All of the notes under the facility are cross-collateralized and
cross-defaulted. The Partnership made the required principal payments of
$8 million and $10 million on the term loan in February 1993 and March
1994, respectively. Principal payments of $10 million on the term loan are
due in each of the years 1995 and 1996, and the remaining balance
outstanding is due in 1997. In addition, the term loan agreement provides
for additional principal payments based upon a specified percentage of
available cash flow and upon the sale of certain assets. For the nine
months ended September 30, 1994, the Partnership made such additional term
loan payments totalling approximately $11.5 million. Under the income
property term loan, principal payments of $0.1 million are paid monthly.
At September 30, 1994, all of the term loan proceeds had been borrowed with
a remaining outstanding balance of $83,811,608; and $0, $18,233,659 and
$9,768,906 were outstanding on the revolving line of credit facility, the
income property term loan and the letter of credit facility, respectively.

The facility contains significant restrictions with respect to the
payment of distributions to partners, the maintenance of certain loan-to-
value ratios, the use of proceeds from the sale of the Partnership's
assets, and advances to the Partnership's joint ventures. Other than the
uncertainty surrounding the funding of any required joint venture advances,
which require the lenders' approval, and subject to the successful renewal
of the Partnership's credit facilities as discussed below, the Partnership
believes that the current and expected future liquidity and capital
resources of the Partnership, including its renewed bank credit facilities,
generally should be adequate to fund currently expected short- and long-
term capital requirements for development and other costs of operations.

The income property term loan, revolving line of credit and letter of
credit facility matured in July 1994 and were extended for sixty days to
September 1994. The term loan matures in July 1997. The Partnership has
reached an agreement in principle with its lender for an eighteen month
renewal of its entire credit facility. The new credit facility is expected
to consist of a term loan in the amount of $85,252,520, a revolving line of
credit facility up to $20 million, an income property term loan of
$18,233,326 and a $15 million letter of credit facility. The term loan,
revolving line of credit facility and income property term loan expected to
bear interest based, at the Partnership's option, one of the lenders' prime
rate plus 1.25% or the relevant LIBOR plus 2.50%. The term loan agreement
is expected to require principal payments of $10 million and $5 million in
February and July of each year, respectively, and the remaining outstanding
balance is due on the maturity date, July 1, 1997. Under the income
property term loan, monthly principal payments of $0.1 million are expected
to be paid and the remaining outstanding balance is due on the maturity
date, March 1, 1996. In addition, the term loan and income property term
loan agreements are expected to provide for additional payments based upon
the sale of certain assets. The term loan is also expected to provide for
additional principal payments based upon the net cash flow generated by the
Partnership each year. The revolving line of credit facility and letter of
credit facility are expected to mature in December 1995, and July 1995,
respectively. In connection with obtaining this extension and renewal,
the Partnership made a $3 million principal payment on its term loan in
July 1994, and is expected to make an additional $9.5 million term loan
payment upon closing of the renewal of the credit facility. Although the
Partnership is optimistic that the renewal of its credit facility will be
finalized, there can be no assurance that such renewal will be obtained.

The Partnership has a $24 million revolving construction line of
credit for the first building and certain amenities within the
Partnership's new condominium project on Longboat Key, Florida known as
Arvida's Grand Bay. The line of credit bears interest at the lender's
prime rate plus 3/4% per annum and matures in January 1996. As of
September 30, 1994, approximately $11.9 million was outstanding under this
note. During October 1994, the Partnership obtained an approximate $4.9
million revolving construction line of credit for another building within
Arvida's Grand Bay. This line of credit also bears interest at the
lender's prime rate plus 3/4% per annum and matures in January 1996.

During 1992 and 1993, the Partnership funded all development and
construction costs, as well as certain overheads, incurred on behalf of the
two joint ventures in Weston which had been formed to construct homes in
that Community. Such amounts were funded in accordance with the
development management agreements the Partnership had entered into with
these joint ventures. The majority of these amounts were reimbursed to the
Partnership as of September 30, 1993. In addition, during the nine months
ended September 30, 1993 the Partnership received $0.8 million and $0.3
million of distributions from the Mizner Tower and Mizner Court joint
ventures, respectively. The receipt of these amounts during 1993 are the
primary causes for the decrease in payments from joint ventures and joint
venture distributions (contributions), net, respectively, as well as the
overall decrease in cash provided by (used in) investing activities as
reflected in the accompanying Consolidated Statements of Cash Flows for the
nine months ended September 30, 1994 as compared to the same period in
1993.

The Partnership owned an 80% general partnership interest in The Oaks
Community located near Sarasota, Florida. During the fourth quarter of
1991, the Partnership's joint venture partner failed to make capital
contributions required to fund ongoing operations and pursuant to the joint
venture agreement, was in default of the agreement. The Partnership
executed an agreement in August 1993 with its joint venture partner, CIS
Oaks, Ltd., ("CIS"), whereby CIS assigned its 20% interest in The Oaks to
the Partnership, thereby vesting 100% control of the assets of the joint
venture to the Partnership.

The Partnership believes that the EPA's recommendation is flawed based
on scientific evidence, and it continues to pursue issuance of the permit
for development of Increment III the terms and conditions previously set
forth in its application. The Corps has not accepted the recommendation of
the EPA and has advised the Partnership that it is continuing to consider
the Partnership's current application as presently submitted. During
October 1994, the Corps performed an independent analysis of the wetlands
impact and mitigation. To date, the Partnership has not received a formal
response from the Corps regarding the results of this analysis.

The Partnership continues to believe that it will ultimately obtain a
permit from the Corps to develop Increment III of the Weston Community on
substantially the same terms and conditions for which it has currently
applied. However, there is no assurance that such permit will in fact be
obtained or, if not obtained, that the Partnership would be successful in
pursuing the above-mentioned legal actions. In addition, if such a permit
were obtained, the Partnership would also need certain other approvals,
including state and local approvals, to develop Increment III in accordance
with the Partnership's current development plans. If such permits and
other approvals are not obtained, the Partnership would be required to
revise its development plans for the remaining portions of Increment I and
II of the Weston Community, as well as its development plans for Increment
III. Such revisions would have a material adverse impact on the timing and
amount of net income and net cash flow ultimately realized by the
Partnership from the development of the Weston Community.

The Partnership has been advised by Merrill Lynch that Merrill Lynch
has been named a defendant in actions pending in the Eleventh and
Seventeenth Judicial Circuit Courts in Dade and Broward Counties, Florida
to compel arbitration of claims brought by certain investors of the
Partnership representing approximately 5% of the total of 404,000 Interests
outstanding. Merrill Lynch has asked the Partnership and its General
Partner to confirm an obligation of the Partnership and its General Partner
to indemnify Merrill Lynch in these claims against all loss, liability,
claim, damage and expense, including without limitation attorney's fees and
expenses, under the terms of a certain Agency Agreement dated September 15,
1987 with the Partnership relating to the sale of Interests in the
Partnership through Merrill Lynch on behalf of the Partnership. The
Partnership is unable to determine at this time the ultimate investment of
investors who have filed arbitration claims as to which Merrill Lynch might
seek indemnification in the future. At this time, and based upon the
information presently available about the arbitration statements of claims
filed by some of these investors, the Partnership and its General Partner
believe that they have meritorious defenses to demands for indemnification
made by Merrill Lynch and intend to vigorously pursue such defenses. In
the event Merrill Lynch is entitled to indemnification of its attorney's
fees and expenses or other losses and expenses, these amounts may prove to
be material.

Reference is made to Part II - OTHER INFORMATION - Item 1. Legal
Proceedings, for a discussion of various lawsuits, in which the Partnership
is a defendant, allegedly arising out of or relating to Hurricane Andrew
and certain property damage allegedly suffered by the plaintiffs at a
previously developed community known as Country Walk.

RESULTS OF OPERATIONS

The results of operations for the three and nine months ended
September 30, 1994 and 1993 are primarily attributable to the development
and sale or operation of the Partnership's assets. See Note 1 for a
discussion regarding the recognition of profit from sales of real estate.

For the quarter ended September 30, 1994, the Partnership (including
its consolidated and unconsolidated joint ventures accounted for under the
equity method) closed on the sale of 215 housing units, 136 homesites and
approximately 12 acres of undeveloped land tracts. This compares to
closings in the third quarter of 1993 of 122 housing units, 206 homesites
and approximately three acres of developed and undeveloped land tracts.
Outstanding contracts ("backlog") as of September 30, 1994 were for 952
housing units, 107 homesites, and approximately 18 acres of developed and
undeveloped land tracts. This compares to a backlog as of September 30,
1993 of 570 housing units, 154 homesites, approximately 37 acres of
developed and undeveloped land tracts as well as the Oak Bridge Club in
Jacksonville, Florida. In an effort to capture additional market share and
increase profitability, the Partnership is building a larger proportion of
the homes within its Communities as opposed to selling homesites to
unaffiliated third-party builders. This shift in strategy allows the
Partnership to earn the incremental building profit from housing
construction in addition to the profits earned from homesite development.
The increase in housing closings and outstanding contracts from the prior
year, as indicated above, reflect this change in strategy as well as the
improvement seen in market conditions and demand for the Partnership's
products.

The Partnership's Communities are in various stages of development,
with estimated remaining build-outs ranging from one to ten years. The
Partnership's condominium project on Longboat Key, Florida known as
Arvida's Grand Bay, is in its early stage of development. The Weston
Community, located in Broward County, Florida, is the Partnership's largest
Community and is in its mid stage of development. Also in their mid stages
of development are the River Hills Country Club in Tampa, Florida;
Jacksonville Golf and Country Club in Jacksonville, Florida; the Water's
Edge Community in Atlanta, Georgia and The Cullasaja Club, near Highlands,
North Carolina. The Partnership's remaining Communities known as Sawgrass
Country Club, in Jacksonville, Florida and Dockside in Atlanta, Georgia are
in their final stages of development with anticipated close-outs in 1996.
In addition, the Broken Sound Community, located in Boca Raton, Florida, is
nearing completion with an anticipated close-out in 1995. Future revenues
will be impacted to the extent that there are lower levels of inventories
available for sale as these Communities approach or undertake their final
phases.

Revenues from housing and homesite activities are recognized upon the
closing of homes and developed lots, respectively, within the Partnership's
Communities. Land and property revenues are generated from the closing of
developed and undeveloped residential and/or commercial land tracts, the
sale of operating properties as well as gross revenues earned from the sale
of equity memberships in the clubs within the Partnership's Boca Raton and
Jacksonville, Florida Communities, as well as its Community near Highlands,
North Carolina.

Cost of revenues pertaining to the Partnership's housing sales reflect
the cost of the acquired assets as well as development and construction
expenditures, certain capitalized overhead costs, capitalized interest,
real estate taxes, marketing, and disposition costs. The costs related to
the Partnership's homesite sales reflect the cost of the acquired assets,
related development expenditures, certain capitalized overhead costs,
capitalized interest, real estate taxes and disposition costs. Land and
property costs reflect the cost of the acquired assets, certain development
costs and related disposition costs, as well as the cost associated with
the sale of equity memberships.

South Florida building code changes, which have been effective since
September 1, 1994, have impacted construction requirements in Dade and
Broward Counties. These building code changes have resulted in increased
construction costs which, if not passed through to purchasers, would
negatively impact housing margins realized by the Partnership. At this
time, it is uncertain as to whether or not the Partnership will be able to
fully recover such increased costs through increases in the sales price of
homes.

Housing revenues increased significantly for the three and nine month
periods ended September 30, 1994 as compared to the same periods in 1993
due primarily to an increase in the number of closings at the Partnership's
Weston and Broken Sound Communities, as well as the initial recognition of
revenues for the first building at Arvida's Grand Bay on Longboat Key
during 1994. As of September 30, 1994, the Partnership had entered into
contracts for the sale of approximately 73% of the units within the first
building. Construction of the second building commenced in August 1994.
Sales at Arvida's Grand Bay and the resulting recognition of revenue under
the percentage of completion method are also the primary cause of the
increase in trade and other accounts receivable at September 30, 1994 as
compared to December 31, 1993.

In an effort to capture additional market share in Broward County,
Florida, the Partnership introduced several new value-oriented products in
Weston in late 1992 and early 1993. These products had their initial
closings in the third quarter of 1993. The continued success of these
products contributed significantly to the increased closings in Weston as
well as the overall increase in housing revenues for the three and nine
months ended September 30, 1994 as compared to the same periods in 1993.
Revenues increased at Broken Sound due to the continued sale of products
which had their initial closings in the second quarter of 1993. The
Partnership also experienced increased revenues at its Communities in Tampa
and Jacksonville, Florida, due to the introduction of products which had
their initial closings in the fourth quarter of 1993. During the third
quarter of 1994, the Partnership commenced home building activities in the
Atlanta market with the introduction of housing products in its Waters Edge
and Dockside Communities. The Partnership anticipates generating the
initial revenues from the closings of these homes in the first quarter of
1995.

The favorable variances experienced in housing revenues are also
attributable to management's decision to place more emphasis on the
Partnership's home building operations. This decision will result in more
housing products offered which are built by the Partnership, in lieu of the
Partnership selling homesites to unaffiliated third-party builders. Due to
the implementation of this decision, revenues from homesite activities
decreased for the three and nine months ended September 30, 1994 as
compared to the same periods in 1993. The decrease in homesite revenues
for the three months ended September 30, 1994 as compared to the same
period in 1993 was also due to decreased closings at the Partnership's
Sawgrass Country Club Community as a result of this Community being in its
final stages of development. Slow sales at Waters Edge and Dockside also
contributed to the unfavorable revenue variance for 1994 as compared to
1993. Sales continue to be slow in these communities due to weak market
demand for the products offered in this particular sub-market in Atlanta.

The increase in the gross operating profit from homesite activities
for the three and nine months ended September 30, 1994 as compared to the
same period in 1993 was due primarily to adjustments to cost of sales,
recorded in the third quarter of 1994, to reflect changes in future
development cost estimates for certain of the Partnership's products,
primarily in the Weston Community. Current development estimates indicate
lower costs to be incurred than were previously anticipated, therefore
contributing to this favorable variance.

Land and property revenues decreased for the three and nine months
ended September 30, 1994 as compared to the same periods in 1993 due
primarily to the sale of the Partnership's property in the Oaks in
September 1993, as well as a lower volume of other land sale activity.
Revenues for 1993 included approximately $5.8 million from the sale of the
Partnership's remaining land holdings in the Oaks Community and its
interest in The Oaks Club in September 1993, as previously discussed in
Liquidity and Capital Resources. However, despite the decrease in
revenues, the gross operating profit from land and property activities
increased for 1994 due to an increase in the amount of revenues and related
profits recognized for those land sales closed in previous years which had
been deferred for financial reporting purposes, as well as a lower
inventory cost basis for certain land parcels closed in 1994 as compared to
1993.

Operating properties represents activity from the Partnership's club
and hotel operations, commercial properties and certain other operating
assets. Revenues generated by the Partnership's operating properties
increased for the nine months ended September 30, 1994 as compared to the
same period in 1993 primarily due to increased revenues from the
Partnership's cable operations in Weston. This increase resulted from an
increase in the number of cable subscribers within that Community, as well
as a change in the cable rate structure. In addition, cable revenues
increased due to the collection of amounts in 1994 which had not previously
been accrued. Revenues generated at the Partnership's club operations in
Weston and River Hills also increased during the three and nine months
ended September 30, 1994 as compared to 1993 due to an increase in
membership activity. The favorable variance in club revenues was offset,
however, as 1994 revenues do not include any activity from the Oakbridge
Club which was sold to an unaffiliated third party in October 1993.

Brokerage and other operations represents activity from the sale of
unaffiliated third-party builders' homes within the Partnership's
Communities, activity from the resale of real estate inside and outside of
the Partnership's Communities, proceeds from the Partnership's property
management activities, as well as fees earned from various management
agreements with joint ventures. The decrease in revenues from brokerage
and other operations for the three months ended September 30, 1994 as
compared to the same period in 1993 was due primarily to a decrease in
commissions earned from the sales of builders' homes within the
Partnership's Communities. Such commissions are expected to decrease as a
direct result of management's decision to place more emphasis on its home
building operations, as discussed above. The unfavorable revenue variance
from brokerage activities was partially offset by increased commissions
earned from the Partnership's resale operations in the Palm Beach County
area.

Selling, general and administrative expenses include all marketing
costs, with the exception of those costs capitalized in conjunction with
the construction of housing units, and project and general administrative
costs. These expenses are net of the marketing fee reimbursements received
from third-party builders.

Charges to the carrying value of real estate inventories and other
assets represent adjustments to the book values of the Partnership's assets
based upon each asset's estimated selling price in the ordinary course of
business, less estimated costs of completion, holding and disposal as
compared to its recorded book value. During the nine months ended
September 30, 1993, the Partnership recorded a charge to the inventory
carrying values of the Waters Edge and Dockside Communities in Atlanta due
to slower than anticipated sales absorptions. Market studies at that time
indicated that the housing product offered for sale by third-party builders
in those Communities was priced higher than market and, therefore,
reductions in housing sales prices were warranted. The $4.9 million charge
to the carrying values of Waters Edge and Dockside was necessary to reflect
the adverse impact of the housing price reductions on future anticipated
lot sales.

Interest income increased for the three and nine months ended
September 30, 1994 as compared to the same periods in 1993 due primarily to
an increase in the average amounts invested in 1994 in short-term financial
instruments.

The decrease in equity in earnings (losses) of unconsolidated ventures
for the three and nine months ended September 30, 1994 as compared to 1993
was due primarily to the reduction in earnings from the two joint ventures
in Weston which had been formed to construct homes within that Community.
Those homes had been completed and were virtually closed out by December
31, 1993.

Interest and real estate taxes decreased for the three and nine month
periods ended September 30, 1994 as compared to the same periods in 1993
due primarily to an overall decrease in the Partnership's average debt
balance outstanding, as well as the maturity of one of the Partnership's
interest rate swap arrangements in February 1994. The Partnership's
remaining interest rate swap arrangement matured in October 1994.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Several of these lawsuits alleged that the Partnership was liable,
among other reasons, as a result of its own alleged acts of misconduct or
as a result of the Partnership's assumption of Arvida Corporation's
liabilities in connection with the Partnership's purchase of Arvida
Corporation's assets from the Walt Disney Company ("Disney") in 1987, which
included certain assets related to the Country Walk development. Pursuant
to the agreement to purchase such assets, the Partnership obtained
indemnification by Disney for certain liabilities relating to facts or
circumstances arising or occurring prior to the closing of the
Partnership's purchase of the assets. Over 80% of the Arvida-built homes
in Country Walk were built prior to the Partnership's ownership of the
Community. Where appropriate, the Partnership has tendered or will tender
each of the above-described lawsuits to Disney for defense and
indemnification in whole or in part pursuant to the Partnership's
indemnification rights. Where appropriate, the Partnership has also
tendered these lawsuits to its various insurance carriers for defense and
coverage. The Partnership is unable to determine at this time to what
extent damages in these lawsuits, if any, against the Partnership, as well
as the Partnership's cost of investigating and defending the lawsuits, will
ultimately be recoverable by the Partnership either pursuant to its rights
of indemnification by Disney or under contracts of insurance.

On August 10, 1993, the Circuit Court of Dade County issued a final
order approving the terms of a class action settlement with opposing
counsel in one of the pending homeowners' lawsuits, which resolved
substantial portions of the pending homeowners' lawsuits that had been
filed. The settlement, which is designed to resolve claims arising in
connection with estate and patio homes and condominiums sold by the
Partnership after September 10, 1987, is structured to compensate residents
for losses not covered by insurance. Homeowners of approximately 85% of
the units in Country Walk have accepted the settlement. The Partnership
currently believes that the class action settlement may cost approximately
$2.5 million. The settlement is being funded by one of the Partnership's
insurers, subject to a reservation of rights. The amount of money, if any,
which the insurance company may recover from the Partnership pursuant to
its reservation of rights is uncertain.

On February 24, 1994, the Partnership was dismissed from the pending
class action homeowner lawsuits pursuant to the class action settlement.
In addition, the Partnership has been informed that Disney and an insurer
have reached agreements to settle five of the individual homeowner actions
which were tendered by the Partnership to Disney. These Disney settlements
were funded without any contribution from the Partnership.

Any homeowners who affirmatively rejected the offer of settlement may
continue to litigate. The Partnership is currently a defendant in a number
of lawsuits brought by condominium and patio homeowners, all of whom have
declined to accept the terms of the class action settlement. These
lawsuits, involving various named individuals, are pending in the Circuit
Court of Dade County. The Partnership intends to vigorously defend itself
in these matters.

On April 19, 1993, a subrogation claim entitled Village Homes at
Country Walk Master Maintenance Association, Inc. v. Arvida Corporation et
al., was filed in the 11th Judicial Circuit for Dade County. Plaintiffs
filed this suit for the use and benefit of American Reliance Insurance
Company ("American Reliance"). In this suit, as amended, plaintiffs seek
to recover damages and pre- and post-judgment interest in connection with
$10,873,000 American Reliance has allegedly paid, plus amounts it may have
to pay in the future to the condominium association at Country Walk in the
wake of Hurricane Andrew. Disney is also a defendant in this suit. The
Partnership believes that the amount of this claim that allegedly relates
to units it sold is approximately $3,600,000. Plaintiffs also seek a
declatory judgment seeking to hold the Partnership and other defendants
responsible for amounts American Reliance must pay in the future to its
insureds as additional damages beyond the $10,873,000 previously paid. The
resolution of this claim is still pending and the Partnership intends to
vigorously defend itself.

The Partnership has also been involved in subrogation lawsuits or
threatened subrogation actions with Prudential Property and Casualty
Company, Travelers Insurance Company ("Travelers"), Allstate Insurance
Company ("Allstate") and State Farm Insurance Company. These insurance
companies sought to recover damages, costs, and interest in connection with
amounts allegedly paid to their insureds living in Country Walk at the time
of Hurricane Andrew. The Partnership settled these claims and all
settlement proceeds were funded by the Partnership's insurance carriers.
The Allstate and Travelers settlements were funded subject to a reservation
of rights by one of the Partnership's insurance carriers. The amount of
money the insurance carrier may seek to recover from the Partnership for
these and any other settlements it has funded is uncertain but is not
expected to be material to the Partnership. The Partnership is a defendant
in and anticipates other subrogation claims by insurance companies which
have allegedly paid policy benefits to Country Walk residents. The
Partnership intends to defend itself vigorously in all such matters.

A second amended complaint captioned Berry v. Merrill Lynch, Pierce
Fenner & Smith, Arvida/JMB Partners, Limited Partnership, Arvida/JMB
Managers, Inc., JMB Realty Corporation and Does 1 through 100, has been
filed in the Superior Court of the State of California in and for the
County of San Diego, Case No. 669709. The lawsuit is purportedly filed as
a class action on behalf of the named plaintiffs and all other persons or
entities in the State of California who bought or acquired, directly or
indirectly, limited partnership interests ("Interests") in the Partnership
from September 1, 1987 through the present. The second amended complaint
in the action alleges, among other things, that the defendants made
misrepresentations and concealed various facts, breached fiduciary duties,
and violated a contractual covenant of good faith in connection with the
sale of Interests in the Partnership. The second amended complaint further
alleges that such conduct violated California state law relating to fraud,
constructive fraud, breach of fiduciary duty, willful suppression of facts,
breach of the covenant of good faith, and conspiracy. Plaintiffs, on
behalf of themselves and the purported plaintiff class, seek unspecified
compensatory damages, consequential damages, punitive and exemplary
damages, recission, interest, costs of the suit, and such other relief as
the court may order. In October 1994, after the court denied defendants'
demurrers, defendants answered the second amended complaint. The
Partnership believes that the lawsuit is without merit and intends to
vigorously defend itself.

Other than as described above, the Partnership is not subject to any
material pending legal proceedings, other than ordinary routine litigation
incidental to the business of the Partnership. Reference is made to Note 2
regarding certain other litigation involving the Partnership. Reference is
also made to Note 7 of Notes to Consolidated Financial Statements for a
discussion of certain claims by Merrill Lynch for indemnification by the
Partnership and the General Partner against losses and expenses that may be
suffered by Merrill Lynch relating to claims for arbitration asserted
against it by certain investors in the Partnership.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3. Amended and Restated Agreement of Limited Partnership.*

4.0 Assignment Agreement by and among the General Partner, the
Initial Limited Partner and the Partnership.*

4.1 Amended and Restated Credit Agreement dated October 7, 1992,
among Arvida/JMB Partners, L.P., Arvida/JMB Partners, Southeast Florida
Holdings, Inc., Center Office Partners, Center Retail Partners, Center
Hotel Limited Partnership, Weston Hills Country Club Limited Partnership
and Chemical Bank and Nationsbank of Florida, N.A. is herein incorporated
by reference to Exhibit No. 4.4 to the Partnership's Report on Form 10-Q
(File number 0-16976) dated November 11, 1992.

4.2 Security Agreement dated as of October 7, 1992 made by
Arvida/JMB Partners, L.P., Arvida/JMB Partners, Southeast Florida Holdings,
Inc., Center Office Partners, Center Retail Partners, Center Hotel Limited
Partnership and Weston Hills Country Club Limited Partnership (as
"grantors") in favor of Chemical Bank and Nationsbank of Florida, N.A. (as
"lenders") is herein incorporated by reference to Exhibit No. 4.5 the
Partnership's Report on Form 10-Q (File number 0-16976) dated November 11,
1992.

4.3 Pledge Agreement dated as of October 7, 1992 among Arvida/JMB
Partners, L.P., Arvida/JMB Partners, Southeast Florida Holdings, Inc.,
Center Office Partners, Center Retail Partners, Center Hotel Limited
Partnership and Weston Hills Country Club Limited Partnership (as
"pledgors") and Chemical Bank and Nationsbank of Florida, N.A. (as
"lenders") is herein incorporated by reference to Exhibit No. 4.6 the
Partnership's Report on Form 10-Q (File number 0-16976) dated November 11,
1992.

4.4 Various mortgages and other security interests dated October
7, 1992 related to the assets of Arvida/JMB Partners, Center Office
Partners, Center Retail Partners, Center Hotel Limited Partnership, Weston
Hills Country Club Limited Partnership which secure loans under the Amended
and Restated Credit Agreement referred to in Exhibit 4.1 are herein
incorporated by reference to Exhibit No. 4.7 the Partnership's Report on
Form 10-Q (File number 0-16976) dated November 11, 1992.

4.7 $24,000,000 Consolidated Revolving Promissory Note dated
January 14, 1994 by and between Arvida Grand Bay Limited Partnership-I,
Arvida Grand Bay Limited Partnership-II, Arvida Grand Bay Limited
Partnership-III, Arvida Grand Bay Limited Partnership-IV, Arvida Grand Bay
Limited Partnership-V, and Arvida Grand Bay Limited Partnership-VI and
Barnett Bank of Broward County, N.A. is herein incorporated by reference to
the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-
16976) dated March 25, 1994.

4.8 Amended and Restated Mortgage and Security Agreement dated
January 14, 1994 by and between Arvida Grand Bay Limited Partnership-I,
Arvida Grand Bay Limited Partnership-II, Arvida Grand Bay Limited
Partnership-III, Arvida Grand Bay Limited Partnership-IV, Arvida Grand Bay
Limited Partnership-V, Arvida Grand Bay Limited Partnership-VI and Arvida
Grand Bay Properties, Inc. and Barnett Bank of Broward County, N.A. is
herein incorporated by reference to the Partnership's report for December
31, 1993 on Form 10-K (File No. 0-16976) dated March 25, 1994.

4.9 Construction Loan Agreement dated January 14, 1994 by and
between Arvida Grand Bay Limited Partnership-I and Arvida Grand Bay
Properties, Inc. and Barnett Bank of Broward County, N.A. is herein
incorporated by reference to the Partnership's report for December 31, 1993
on Form 10-K (File No. 0-16976) dated March 25, 1994.

4.10 Fourth Amendment to Amended and Restated Credit Agreement
dated as of July 1, 1994 by and among Arvida/JMB Partners, L.P., Arvida/JMB
Partners, Southeast Florida Holdings, Inc., Center Office Partners, Center
Retail Partners, Center Hotel Limited Partnership, Weston Hills Country
Club Limited Partnership and Chemical Bank is herein incorporated by
reference to Exhibit 4.10 to the Partnership's report for June 30, 1994 on
Form 10-Q (File No. 0-16976) dated August 13, 1994.

4.11 Letter Agreement dated June 29, 1994 by and among Arvida/JMB
Partners, L.P., Arvida/JMB Partners, Southeast Florida Holdings, Inc.,
Center Office Partners, Center Retail Partners, Center Hotel Limited
Partnership, Weston Hills Country Club Limited Partnership and Chemical
Bank regarding an extension of the termination date of the letter of credit
facility is herein incorporated by reference to Exhibit 4.11 to the
Partnership's report for June 30, 1994 on Form 10-Q (File No. 0-16976)
dated August 13, 1994.

10.1. Agreement between the Partnership and The Walt Disney Company
dated January 29, 1987 is hereby incorporated by reference to Exhibit 10.2
to the Partnership's Registration Statement on Form S-1 (File No. 33-14091)
under the Securities Act of 1933 filed on May 7, 1987.

10.2. Management, Advisory and Supervisory Agreement is hereby
incorporated by reference to Exhibit 10.2 to the Partnership's report for
December 31, 1990 on Form 10-K (File No. 0-16976) dated March 27, 1991.

10.3. Letter Agreement, dated as of September 10, 1987, between the
Partnership and The Walt Disney Company, together with exhibits and related
documents.**

10.4. Joint Venture Agreement dated as of September 10, 1987, of
Arvida/JMB Partners, a Florida general partnership. **

10.5. Credit facility restructuring proposal between the Partnership
and Chemical Bank dated March 5, 1992 is hereby incorporated by reference
to Exhibit 10.5 to the Partnership's report for December 31, 1991 on Form
10-K (File No. 0-16976) filed on March 27, 1992.

27. Financial Data Schedule.

99. Partnership report on Form 8K dated September 13, 1994.

* Previously filed with the Securities and Exchange
Commission as Exhibits 3. and 4.0, respectively, to the Partnership's Form
10-K Report (File No. 0-16976) filed on March 27, 1990 and incorporated
herein by reference.

** Previously filed with the Securities and Exchange
Commission as Exhibits 10.4 and 10.5, respectively, to the Partnership's
Registration Statement (as amended) on Form S-1 (File No. 33-14091) under
the Securities Act of 1933 filed on September 11, 1987 and incorporated
herein by reference.

(b) The Partnership has filed the following reports on Form 8-K
during the period covered by this report.

The Partnership's report dated September 13, 1994 describing the
Partnership's application for a development permit for Increment III of its
Weston Community.

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.

ARVIDA/JMB PARTNERS, L.P.

BY: Arvida/JMB Managers, Inc.
(The General Partner)

By: GAILEN J. HULL
Gailen J. Hull, Vice President
Date: November 10, 1994

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.

GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 10, 1994

<ARTICLE> 5

<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>

<CIK> 0000814046
<NAME> ARVIDA/JMB PARTNERS, L.P.

<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994

<CASH> 33,521,337
<SECURITIES> 0
<RECEIVABLES> 27,984,274
<ALLOWANCES> (342,393)
<INVENTORY> 209,807,590
<CURRENT-ASSETS> 0
<PP&E> 68,583,580
<DEPRECIATION> 0
<TOTAL-ASSETS> 384,135,151
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (180,247,229)
<TOTAL-LIABILITY-AND-EQUITY> (384,135,151)
<SALES> (223,985,322)
<TOTAL-REVENUES> (223,985,322)
<CGS> 172,931,080
<TOTAL-COSTS> 172,931,080
<OTHER-EXPENSES> 14,062,348
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (30,865,007)
<INCOME-TAX> 0
<INCOME-CONTINUING> (30,865,007)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,865,007)
<EPS-PRIMARY> (75.34)
<EPS-DILUTED> 0

</TABLE>

September 13, 1994

Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549

RE: ARVIDA/JMB PARTNERS, L.P.
Commission File No. 0-16976
Form 8-K
___________________________

Gentlemen:

Transmitted, for the above-captioned registrant, is the
electronically filed executed copy of registrant's current report
on Form 8-K dated September 13, 1994.

Thank you.

Very truly yours,

ARVIDA/JMB PARTNERS, L.P.

By: Arvida/JMB Managers, Inc.
(The General Partner)

By: GAILEN J. HULL
______________________________
Gailen J. Hull, Vice President
Principal Accounting Officer

GJH/jo

Enclosures
<PAGE>

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported): September 13, 1994

ARVIDA/JMB PARTNERS, L.P.
(Exact name of registrant as specified in its charter)

Delaware 0-16976 36-3507015
- ------------------- --------------- ---------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
organization)

900 N. Michigan Avenue, Chicago, Illinois 60611-1575
-----------------------------------------------------
(Address of principal executive offices)

Registrant's telephone number, including area code: (312) 915-1987
- -----------------------------------------------------------------

<PAGE>
ARVIDA/JMB PARTNERS, L.P.

Item 5. - Other Events
- ----------------------

The Partnership is seeking a permit to develop 1,156 of the
2,475 gross acres contained in Increment III of its Weston
community, portions of which are environmentally sensitive areas
and are subject to protection as wetlands. The Partnership's
current application for the permit includes proposed wetlands
mitigation of 1,319 acres together with construction of schools,
parks, roads, sewers and related infrastructure, in addition to
residential and commercial development. However, in August 1994
the Environmental Protection Agency (the "EPA") issued a letter
to the United States Army Corps of Engineers (the "Corps")
setting forth the EPA's response to the Partnership's
application. In its response to the Corps, the EPA stated its
position that the Partnership's proposed development of Increment
III will result in significant degradation of the environment
and . . . is not consistent with Section 404(b)(1) Guidelines
[under the Clean Water Act], which require the applicant to go
through the procedural sequence of avoidance, minimization and
compensatory mitigation. The EPA recommended that no more than
120 gross acres in Increment III be permitted to be developed.
In addition, the EPA recommended that adequate compensatory
mitigation be implemented in connection with such development.

The Partnership believes that the EPA's recommendation is
flawed based on scientific evidence and it continues to pursue
issuance of a permit for development of Increment III on the
terms and conditions previously set forth in its application.
The Corps, which is responsible for issuing permits involving
development of wetland areas may accept or reject the EPA's
recommendation relative to the Partnership's application for a
permit. The Corps has not accepted the recommendation of the EPA
as of this date and has advised the Partnership that it is
continuing to consider the Partnership's application as presently
submitted. The Corps has also advised that it will undertake
further independent analysis of the wetland impacts and
mitigation in October 1994.

If the Corps issues a permit generally on the terms and
conditions set forth in the Partnership's previously submitted
application, the EPA could seek to veto the permit through an
administrative proceeding under Section 404(c) of the Clean Water
Act, although such proceedings historically have not been
instituted. Alternatively, the EPA could request an elevation of
the determination to issue a permit. If the Corps agrees with
the request for elevation, the effectiveness of a permit issued
by the Corps would be stayed while the Assistant Secretary of the
Civil Works for the Corps and the Assistant Administrator for
Water for the EPA review the issuance of a permit and resolve the
differing views of the agencies. Such resolution could result in
a decision upholding, modifying or retracting the permit.

If the Corps agrees with the EPA's recommendation, or if a
permit were not otherwise obtained by the Partnership through the
administrative process, the Partnership may seek a judicial
review in federal district court of an administrative decision
denying a permit on the grounds that such decision, in light of
all of the facts and circumstances, is, among other things,
arbitrary and capricious and an abuse of administrative
discretion. Additionally, the Partnership could initiate an
action in the United States Court of Federal Claims seeking a
determination that the administrative denial of a permit
constitutes a "taking" of the Partnership's property that it is
unable to develop for which the Partnership is due just
compensation. The pursuit of these legal actions would likely
be lengthy.

The Partnership continues to believe that it will ultimately
obtain a permit from the Corps to develop Increment III of the
Weston community on substantially the same terms and conditions
for which it has currently applied. However, there is no
assurance that such a permit will in fact be obtained or, if not
obtained, that the Partnership would be successful in pursuing
the above-mentioned legal actions. In addition, if such a permit
were obtained, the Partnership would also need certain other
approvals, including state and local approvals, to develop
Increment III in accordance with the Partnership's current
development plans. If such a permit and other approvals are not
obtained, the Partnership would be required to significantly
revise its development plans for the remaining portions of
Increments I and II<PAGE>
of the Weston community to be developed, as well as its
development plans for Increment III. Such revisions would have a
material adverse impact on the timing and amount of net income
and net cash flow ultimately realized by the Partnership from the
development of the Weston community.

Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
_________________________________________________________________
___________

(a) Financial Statements. Not applicable.

(b) Pro Forma Financial Information. Not applicable.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

ARVIDA/JMB PARTNERS, L.P.

By: Arvida/JMB Managers, Inc.
(The General Partner)

By: GAILEN J. HULL

______________________________
Gailen J. Hull, Vice President
Principal Accounting Officer

Dated: September 13, 1994