ARVIDA JMB PARTNERS L P, 10-Q, 1994-08-15

ARVIDA JMB PARTNERS L P
10-Q, 1994-08-15
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 June 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. . . . . . . . . . . . . . . . . . . . . . . . 22

PART II OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 28

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 31

<TABLE>
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

CONSOLIDATED BALANCE SHEETS

JUNE 30, 1994 AND DECEMBER 31, 1993

(UNAUDITED)

ASSETS
------

<CAPTION>
JUNE 30, DECEMBER 31,
1994 1993
------------ -----------
<S> <C> <C>
Cash and cash equivalents (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,645,552 18,906,679
Restricted cash (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,008,354 12,645,678
Trade and other accounts receivable (net of allowance for doubtful accounts of $380,372 at
June 30, 1994 and $381,151 at December 31, 1993) . . . . . . . . . . . . . . . . . . . . . . 19,396,410 7,298,714
Mortgages receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,814,373 2,940,961
Real estate inventories (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197,028,318 188,679,152
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,770,117 66,989,577
Investments in and advances to joint ventures, net . . . . . . . . . . . . . . . . . . . . . . 24,229,321 24,731,852
Equity memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,628,590 15,146,661
Amounts due from affiliates (note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,705 88,389
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,736,013 9,007,402
------------ ------------

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $362,302,753 346,435,065
============ ============
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(UNAUDITED)

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

JUNE 30, DECEMBER 31,
1994 1993
------------ -----------

Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,211,061 10,667,317
Deposits and unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,059,426 22,010,408
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,823,006 13,896,171
Notes and mortgages payable, net (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . 130,677,256 147,770,992
------------ ------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,770,749 194,344,888
------------ ------------
Partners' capital accounts (deficits):
General Partner and Associate Limited Partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,077,977 33,739,753
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (33,609,346) (33,466,823)
------------ ------------
488,631 292,930
------------ ------------
Limited Partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . . . . . . . 364,841,815 364,841,815
Cumulative net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (57,152,134) (78,963,692)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (136,646,308) (134,080,876)
------------ ------------
171,043,373 151,797,247
------------ ------------
Total partners' capital accounts (deficits). . . . . . . . . . . . . . . . . . . . . 171,532,004 152,090,177
------------ ------------
Commitments and contingencies (notes 1, 4, 5, 6, 7 and 8)

Total liabilities and partners' capital. . . . . . . . . . . . . . . . . . . . . . . $362,302,753 346,435,065
============ ============

<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 SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
-------------------------- --------------------------
1994 1993 1994 1993
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $59,421,466 10,869,634 91,328,545 18,791,124
Homesites. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,799,494 9,644,821 23,896,228 20,480,985
Land and property. . . . . . . . . . . . . . . . . . . . . . . . 2,382,739 3,877,247 4,821,137 6,895,245
Operating properties . . . . . . . . . . . . . . . . . . . . . . 6,202,194 6,117,011 13,714,669 13,230,739
Brokerage and other operations . . . . . . . . . . . . . . . . . 9,472,056 8,264,112 16,258,491 15,303,248
----------- ---------- ----------- ----------
Total revenues . . . . . . . . . . . . . . . . . . . . . 89,277,949 38,772,825 150,019,070 74,701,341
----------- ---------- ----------- ----------
Cost of revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,000,439 8,702,239 70,987,382 15,251,558
Homesites. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,084,899 6,474,443 14,222,955 13,694,139
Land and property. . . . . . . . . . . . . . . . . . . . . . . . 675,972 2,395,740 2,246,365 4,844,176
Operating properties . . . . . . . . . . . . . . . . . . . . . . 6,581,978 4,958,571 13,222,317 13,677,088
Brokerage and other operations . . . . . . . . . . . . . . . . . 7,513,632 6,373,297 13,461,695 12,351,928
----------- ---------- ----------- ----------
Total cost of revenues . . . . . . . . . . . . . . . . . 68,856,920 28,904,290 114,140,714 59,818,889
----------- ---------- ----------- ----------
Gross operating profit . . . . . . . . . . . . . . . . . . . . . . 20,421,029 9,868,535 35,878,356 14,882,452
Selling, general and administrative expenses . . . . . . . . . . . 4,287,165 5,040,718 9,251,973 8,677,736
Charges to the carrying value of real estate inventories and other
assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. -- 4,896,000 -- 4,896,000
----------- ---------- ----------- ----------
Net operating income (loss). . . . . . . . . . . . . . . 16,133,864 (68,183) 26,626,383 1,308,716

Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . 237,850 123,586 344,995 377,888
Equity in earnings of unconsolidated ventures. . . . . . . . . . . (75,541) 336,441 (22,350) 509,415
Interest and real estate taxes, net. . . . . . . . . . . . . . . . (2,637,390) (3,787,598) (4,799,246) (6,852,003)
----------- ---------- ----------- ----------

Net income (loss). . . . . . . . . . . . . . . . . . . . $13,658,783 (3,395,754) 22,149,782 (4,655,984)
=========== ========== =========== ==========
Net income (loss) per Limited Partnership Interest . . . $ 33.47 (8.41) 53.99 (11.52)
=========== ========== =========== ==========

<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

SIX MONTHS ENDED JUNE 30, 1994 AND 1993

(UNAUDITED)

<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,149,782 (4,655,984)
Charges (credits) to net income (loss) not using (providing) cash:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,851,410 3,193,435
Equity in (earnings) losses of unconsolidated ventures . . . . . . . . . . . . . . . . . . . . . 22,350 (509,415)
Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 46,239
(Gain) loss on sale of property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 33,111 (6,864)
Charge to carrying value of real estate inventories and other assets . . . . . . . . . . . . . . -- 4,896,000
Changes in:
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,362,676) (1,524,417)
Trade and other accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12,097,696) (807,217)
Real estate inventories:
Additions to real estate inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (90,542,051) (42,495,884)
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,456,702 33,789,873
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,792,359) (3,875,899)
Capitalized real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,471,458) (1,876,785)
Equity memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,518,071 1,871,567
Amounts due from affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,684 146,660
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (104,880) 680,226
Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . 5,390,051 5,950,037
Deposits and unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,049,018 2,359,710
------------ -----------
Total adjustments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,007,723) 1,837,266
------------ -----------
Net cash provided by (used in) operations. . . . . . . . . . . . . . . . . . . . . . . . 16,142,059 (2,818,718)
------------ -----------
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,126,588 762,913
Acquisitions of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,291,320) (1,599,445)
Proceeds from disposals of property and equipment. . . . . . . . . . . . . . . . . . . . . . . . 2,528 8,099
Joint venture distributions (contributions), net . . . . . . . . . . . . . . . . . . . . . . . . 375,353 956,501
Payments from (advances to) joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,357 4,415,318
Proceeds from acquisition of joint venture interest. . . . . . . . . . . . . . . . . . . . . . . -- 6,614
------------ -----------
Net cash provided by (used in) investing activities. . . . . . . . . . . . . . . . . . . (1,601,494) 4,550,000
------------ -----------
Cash flows from financing activities:
Proceeds from notes and mortgages payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,183,087 13,056,743
Payments of notes and mortgages payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,276,823) (22,422,345)
Distributions to General Partner and Associate Limited Partners. . . . . . . . . . . . . . . . . (142,523) --
Distributions to Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,565,433) --
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . (19,801,692) (9,365,602)
------------ -----------
Decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,261,127) (7,634,320)
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . 18,906,679 7,634,320
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 13,645,552 --
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest, net of amounts capitalized. . . . . . . . . . . . . . $ 2,918,021 3,668,334
============ ===========
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

JUNE 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 $5,542,916 and $7,793,261 was incurred for the six months ended June
30, 1994 and 1993, respectively, of which $3,792,359 and $3,875,899 was
capitalized, respectively. Interest payments, including amounts capitalized,
of $6,710,380 and $7,544,233 were made during the six months ended June 30,
1994 and 1993, respectively. Interest, including the amortization of loan
fees, of $2,707,328 and $4,080,161 was incurred for the three months ended
June 30, 1994 and 1993, respectively, of which $1,822,138 and $1,777,603 was
capitalized, respectively. Interest payments of $3,289,041 and $3,069,576
were made during the three months ended June 30, 1994 and 1993, respectively.

Real estate taxes of $4,520,147 and $4,811,426 were incurred for the six
months ended June 30, 1994 and 1993, respectively, of which $1,471,458 and
$1,876,785 were capitalized, respectively. Real estate tax payments of
$305,218 and $259,480 were made during the six months ended June 30, 1994 and
1993, respectively. Real estate taxes, of $2,297,847 and $2,367,287 were
incurred for the three months ended June 30, 1994 and 1993, respectively, of
which $545,647 and $882,247 was capitalized, respectively. Real estate tax
payments of $225,474 and $108,568 were made during the three months ended June
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 $2,475,100 and $2,711,000 was incurred for the six months ended
June 30, 1994 and 1993, respectively. Amortization of other assets, excluding
loan fees, of approximately $107,500 and $138,000 was incurred for the six
months ended June 30, 1994 and 1993, respectively. Amortization of loan fees,
which is included in interest expense, of approximately $268,750 and $343,750
was incurred for the six months ended June 30, 1994 and 1993, respectively.
Depreciation expense of approximately $1,231,000 and $1,212,800 was incurred
for the three month periods ended June 30, 1994 and 1993, respectively.
Amortization of other assets, excluding loan fees, of approximately $51,500
and $81,000 was incurred for the three months ended June 30, 1994 and 1993,
respectively. Amortization of loan fees, which is included in interest
expense, of approximately $136,900 and $171,900 was incurred for the three
months ended June 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 cost method
of accounting has been applied in the accompanying consolidated financial
statements with respect to the Coto de Caza joint venture as a result of the

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Partnership's decrease in its ownership interest and its joint venture
partner's control over the future operations of the Community. 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 six months ended June 30:
<TABLE>
<CAPTION>
1994 1993
--------------------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net income (loss). . . . . $22,149,782 20,520,511 (4,655,984) (1,283,491)
Net income (loss) per
Limited Partnership
Interest. . . . . . . . . $ 53.99 50.02 (11.52) (3.18)
Cash distributions per
Limited Partnership
Interest. . . . . . . . . $ 6.35 6.35 -- --
=========== ========== ========== ==========
</TABLE>
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 (loss) per Limited Partnership Interest is based upon the
Limited Partnership Interests outstanding at the end of each period.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 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 June 30, 1994 and December 31, 1993, cash and cash equivalents
primarily consisted of U.S. Government obligations with original maturities 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 $1,465,000 and $3,900,000 at June 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.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(4) NOTES AND MORTGAGES PAYABLE

At June 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 $45 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 June 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% per annum or the relevant London Inter-Bank Offering Rate (LIBOR)
plus 2.25% 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 June 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 matures in October 1994. For the six month period ended
June 30, 1994, the effective interest rate for the combined term loan, income
property term loan and revolving line of credit facility was approximately
8.0% 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 repayments of $8 million in February 1993 and $10 million in March
1994. Principal repayments 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
repayments based upon a specified percentage of available cash flow and upon
the sale of certain assets. For the six months ended June 30, 1994, the
Partnership made additional term loan payments totalling approximately $8.4
million. Under the income property term loan, monthly principal and interest
payments are required to be paid on a 25-year amortization schedule. At June
30, 1994, all of the term loan proceeds had been borrowed with a remaining
outstanding balance of $89,859,688; and $0, $18,533,326 and $9,674,101 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
have been capitalized and are being amortized over the lives of the loans
included in the credit facility using the straight-line method, which
approximates the interest method.

The income property term loan, revolving line of credit and letter of
credit facility matured in July 1994. The term loan matures in July 1997.
The Partnership is currently in the process of negotiating an eighteen month
renewal of its entire credit facility. During July 1994, the Partnership
received approval from its lenders for a sixty day extension of its existing
facility. The Partnership made a $3 million principal payment on its term
loan in connection with obtaining this extension. The Partnership will
continue its negotiations for the eighteen month renewal during the sixty day

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

extension period. 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 June 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, during November 1993, the Partnership received
a commitment from a lender for 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.
This note was subsequently executed in January 1994. At June 30, 1994,
approximately $6.7 million was outstanding under this note.

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.

(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. 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. The total advances outstanding at June 30, 1994 and December
31, 1993 are approximately $4.1 million and $4.2 million, respectively, 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.

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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 has changed from the equity method
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 incurs certain general and administrative expenses which
are paid by the Partnership on behalf of the joint ventures in which it holds
interests. The Partnership receives reimbursements from the joint ventures
for such costs. For the six months ended June 30, 1994, the Partnership was
entitled to receive approximately $366,000 from certain of the joint ventures
in which it holds interests. At June 30, 1994, approximately $26,100 was owed
to the Partnership of which approximately $10,200 was received as of August
10, 1994.

(6) TRANSACTIONS WITH AFFILIATES

The Partnership, subject to certain limitations, may engage affiliates of
the General Partner for property management services and certain
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 six months ended June 30, 1994 was
approximately $280,000, all of which was paid as of June 30, 1994. The total
of such costs for the six months ended June 30, 1993 was approximately
$82,600. 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 was unpaid as of June 30, 1994, but was paid in full as
of August 10, 1994.

The Partnership receives reimbursements from or reimburses affiliates of
the General Partner 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 six months ended
June 30, 1994, the total of such costs incurred by the Partnership on behalf
of these affiliates totalled approximately $243,000. At June 30, 1994,
approximately $142,200 was owed to the Partnership. As of August 10, 1994,
approximately $138,700 was received by the Partnership. For the six month
period ended June 30, 1993, the Partnership was entitled to net reimbursements
of approximately $19,200.

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 six month periods ended June 30,
1994 and 1993, the Partnership was entitled to receive approximately $626,800
and $1,606,000, respectively, from Arvida/JMB Partners, L.P.-II. At June 30,
1994, approximately $106,300 was owed to the Partnership, all of which was
received as of August 10, 1994. In addition, for the six month periods ended
June 30, 1994 and 1993, the Partnership was obligated to reimburse Arvida/JMB
Partners, L.P.-II approximately $270,300 and $608,300, respectively. At June
30, 1994, approximately $91,400 was unpaid, all of which was paid as of August
10, 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 six month periods ended
June 30, 1994 and 1993 were approximately $4,061,000 and $4,278,700,
respectively, of which approximately $57,800 was unpaid at June 30, 1994, all
of which was paid as of August 10, 1994.

The Partnership pays for certain general and administrative costs,
including certain insurance premiums, on behalf of its affiliated clubs,
homeowners associations and maintenance associations. The Partnership
receives reimbursements from the affiliates for such costs. For the six
month period ended June 30, 1994, the Partnership was entitled to receive
approximately $270,000 from its affiliates. At June 30, 1994, approximately
$40,000 was owed to the Partnership. As of August 10, 1994 approximately
$3,400 had been received. For the six months ended June 30, 1993, the
Partnership was entitled to receive approximately $73,900 from its affiliates.

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 affiliates of the General Partner 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 $9,674,000 and $7,984,000, respectively,
at June 30, 1994. At December 31, 1993, the Partnership was contingently
liable under standby letters of credit and performance bonds for approximately
$11,651,000 and $11,146,000, respectively. In addition, certain joint
ventures in which the Partnership holds an interest are also contingently
liable under bonds for approximately $1,081,000 and $1,089,000 at June 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.

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"). 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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

in this suit. The Partnership believes that the amount of this claim that
allegedly relates to units it sold is approximately $3,600,000. 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.

The Partnership had been involved in an Environmental Protection Agency
(EPA) administrative enforcement proceeding under which the EPA had asserted
that a dam built to create a lake at the Water's Edge property during the time
the property was owned by Arvida Corporation was in violation of Section 404
of the Clean Water Act in that certain wetland areas had been filled.
Pursuant to a Consent Agreement and Order entered into with the EPA, the
Partnership acquired certain land (at a cost of approximately $400,000) for
which it has developed and implemented a plan of mitigation for the wetlands
lost. In accordance with certain provisions of the Consent Agreement and
Order, the Partnership must provide the EPA with periodic reports regarding
the status of the mitigation. The Partnership also entered into another
Consent Agreement and Order with the EPA which was finalized in May 1994,
pursuant to which the Partnership paid a civil penalty of $125,000. The
Partnership is actively pursuing indemnification from Disney for the total
costs that will ultimately be incurred to resolve this issue. There can be no
assurance that the Partnership will be reimbursed by Disney.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

complaint further alleges that such conduct violated California state law
relating to 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, recision,
interest, costs of the suit, and such other relief as the court may order.
The Partnership believes that the lawsuit is without merit and intends to
vigorously defend itself.

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 Interests outstanding
(404,000). 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 June 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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 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. 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.

In anticipation of its future development plans, the Partnership is
currently in the process of obtaining permits for development of Increment III
of its Weston Community, portions of which are environmentally sensitive areas
and are subject to protection as wetlands. The time involved to complete this
process, which involves the approvals of the Army Corps of Engineers, the
Environmental Protection Agency and other regulatory agencies, is expected to
be lengthy. It is anticipated that certain costs of mitigation will be
incurred in conjunction with obtaining the necessary permits, the amount and
extent of which are unknown at this time. The Partnership had previously gone
through a similar process and was successful in obtaining the approvals for
Increment II of the Weston Community. Although there can be no assurance,
given the Partnership's prior experience and discussions to date with the
appropriate agencies, the Partnership is hopeful that a compromise will
ultimately be reached that will adequately address the concerns of the
environmental agencies, while allowing the Partnership to continue its
development plans for Weston's Increment III.

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,
which is in the mid-stage of development, 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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

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 June 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 third 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 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

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED

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 June 30, 1994 and
December 31, 1993 and for the three and six month periods ended June 30, 1994
and 1993.<PAGE>
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 June 30, 1994 and December 31, 1993, the Partnership had cash and cash
equivalents of approximately $13,646,000 and $18,907,000, respectively. Such
funds 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.

At June 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 $45 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 and security interests 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 proceeds from joint ventures, 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 new facility are
cross-collateralized and cross-defaulted. The Partnership made the required
principal repayments of $8 million and $10 million on the term loan in
February 1993 and March 1994, respectively. Principal repayments 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 repayments based upon a specified
percentage of available cash flow and upon the sale of certain assets. For
the six months ended June 30, 1994, the Partnership made additional term loan
payments totalling approximately $8.4 million. Under the income property term
loan, monthly principal and interest payments are required to be paid on a 25-
year amortization schedule. At June 30, 1994, all of the term loan proceeds
had been borrowed with a remaining outstanding balance of $89,859,688; and $0,
$18,533,326 and $9,674,100 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 restructured bank credit facilities, generally
should be adequate to fund currently expected short- and long-term capital
requirements for development and other costs of operations.

During November 1993, the Partnership received a commitment from a lender
for 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. This line of credit was
subsequently executed in January 1994. The line of credit bears interest at
the lender's prime rate plus 3/4% per annum and matures in January 1996. See
Note 4 for further discussion regarding this line of credit.

In anticipation of its future development plans, the Partnership is
currently in the process of obtaining permits for development of Increment III
of its Weston Community, portions of which are environmentally sensitive areas
and are subject to protection as wetlands. The time involved to complete this
process, which involves the approvals of the Army Corps of Engineers, the
Environmental Protection Agency and comparable state and local regulatory
agencies, is expected to be lengthy. It is anticipated that certain costs of
mitigation will be incurred in conjunction with obtaining the necessary
permits, the amount and extent of which are unknown at this time. The
Partnership had previously gone through a similar process and was successful
in obtaining approvals for Increment II of the Weston Community. Although
there can be no assurance, given the Partnership's prior experience and
discussions to date with the appropriate agencies, the Partnership is hopeful
that a compromise will ultimately be reached that will adequately address the
concerns of the environmental agencies, while allowing the Partnership to
continue its development plans for Increment III of Weston.

During the first quarter of 1993, the Partnership reached a settlement
agreement with its joint venture partner in a property located in Ocala,
Florida, whereby in exchange for its partner's 50% interest in the venture,
the Partnership agreed to dismiss a lawsuit previously filed against its
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 of accounting to the consolidated
method of accounting for the joint venture effective March 1, 1993.

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 Interests outstanding (404,000).
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 six months ended June 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 June 30, 1994, the Partnership (including its
consolidated and unconsolidated joint ventures accounted for under the equity
method) closed on the sale of 248 housing units, 143 homesites and
approximately ten acres of undeveloped land. This compares to closings in the
second quarter of 1993 of 125 housing units, 133 homesites and approximately
eight acres of developed and undeveloped land tracts. Outstanding contracts
("backlog") as of June 30, 1994 were for 880 housing units, 95 homesites, and
approximately 28 acres of developed and undeveloped land tracts. This
compares to a backlog as of June 30, 1993 of 431 housing units, 196 homesites
and approximately 40 acres of developed and undeveloped land tracts.
Increased market demand in recent years for lower-cost, value-oriented
products has resulted in the Partnership 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 development in addition to the
profits earned from homesite development. The increase in housing closings
and outstanding contracts from the prior year, as shown 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 their final phases.

South Florida building code changes, which are expected to be effective
September 1, 1994, will impact construction requirements in Dade and Broward
Counties. These building code changes will result in increased construction
costs which, if not passed through to purchasers, could negatively impact
future housing margins realized by the Partnership.

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, 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.

Housing revenues increased significantly for the three and six month
periods ended June 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 revenue
for the first building at Arvida's Grand Bay on Longboat Key during the second
quarter of 1994. In addition, sales at Arvida's Grand Bay and the resulting
recognition of revenue under the percentage of completion method are the
primary cause of the increase in trade and other accounts receivable at June
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 which had
their initial closings in the third quarter of 1993. The success of these
products contributed significantly to the increased closings in Weston and the
overall increase in housing revenues for the three and six months ended June
30, 1994 as compared to the same periods in 1993. Revenues increased at
Broken Sound due to new products introduced in late 1992 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 new products in 1993 which had their
initial closings in the fourth quarter of 1993.

Gross operating profit from housing activities increased for the three
and six months ended June 30, 1994 as compared to the same periods in 1993 due
to a change in the mix of product closed, primarily at the Partnership's
Broken Sound Community, where more of the products sold in 1994 had a higher
profit margin than those sold in 1993, as well as the effect of a change in
estimated construction costs which resulted in a reduction in housing cost of
sales during the first quarter of 1994. The initial recognition of profit in
1994 for the first building at Arvida's Grand Bay also contributed to the
higher gross operating profit for the three and six months ended June 30, 1994
as compared to 1993.

Homesite revenues increased for the three and six months ended June 30,
1994 as compared to the same periods in 1993 due primarily to increased
closings of homesites to unaffiliated third-party builders at the
Partnership's Weston and Sawgrass Country Club Communities. Weston's closings
for the first six months of 1994 exceeded levels for the same period in 1993
due to lot closings during 1994 within several homesite products which were
introduced early in 1993 and had their initial closings in the third and
fourth quarters of that year. The increase in revenues at Sawgrass Country
Club was also due to the introduction of a new homesite product in that
Community in early 1993 which had its initial closing in June 1993. This
product was sold out as of June 30, 1994 and all lots should close prior to
year end. These favorable variances were partially offset for the six months
ended June 30, 1994 as compared to the same period in 1993 by a decreased
number of lot closings at the Partnership's Jacksonville Golf & Country Club,
Waters Edge and Dockside Communities. Waters Edge and Dockside continue to
experience weak market demand for their product. The decrease in lot closings
at Jacksonville Golf & Country Club is primarily due to the introduction of
new housing products built by the Partnership in lieu of selling homesites to
unaffiliated third-party builders.

The increase in the gross operating profit from homesite activities for
the six months ended June 30, 1994 as compared to 1993 is due primarily to
increased revenues from the closings of certain golf and water-view lots
within the Partnership's Weston Hills Country Club section of the Weston
Community.

Land and property revenues decreased for the three and six months ended
June 30, 1994 as compared to 1993 due primarily to a lower volume of new land
sale activity and a decrease in the number of equity club memberships sold.
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 sales from
previous years which had been deferred as well as a lower inventory cost basis
for certain land parcels for which revenues were recognized 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
three and six months ended June 30, 1994 as compared to the same periods in
1993 primarily due to increased revenues from the Partnership's cable
operations in Weston resulting 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 six months ended June 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.

Gross operating profit generated by the Partnership's operating
properties increased for the six months ended June 30, 1994 as compared to the
same period in 1993 due primarily to higher profits recognized at the
Partnership's hotel and club facilities resulting from the continuation of
numerous cost reduction programs. Also contributing to the favorable variance
are increased profits from the Partnership's cable operation in Weston
resulting from the collection of amounts which had not previously been
accrued. The decrease in gross operating profits for the three months ended
June 30, 1994 as compared to 1993 is due primarily to the reclassification
during the second quarter of 1993 of amounts advanced from the Partnership to
the Broken Sound Club which had been recorded to operating properties cost of
sales in the first quarter of 1993. These amounts were reclassified to
accounts receivable in May 1993 as the year-to-date operations and the club's
operating budget for the remainder of 1993 indicated there would be
significant cash available by year end 1993, and all amounts advanced by the
Partnership would be reimbursed prior to December 31, 1993.

Brokerage and other operations represent activity from the sale of
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 favorable
variance in revenues from brokerage and other operations for the three and six
months ended June 30, 1994 as compared to the same periods in 1993 is due
primarily to increased commissions earned from the Partnership's resale
operations in the Palm Beach County area, Weston and Longboat Key, Florida.

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. While selling, general and administrative expenses
decreased for the three months ended June 30, 1994 as compared to the same
period in 1993, the increase in these expenses for the six months ended June
30, 1994 as compared to 1993 is due primarily to an increase in salary and
salary-related costs incurred relative to the administration of the
Partnership in 1994. This unfavorable variance is partially offset by an
increase in marketing fees earned from third-party builders along with
decreased marketing expenses for the three and six months ended June 30, 1994
as compared to those periods in 1993.

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 six months ended June 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 months ended June 30, 1994 as
compared to the same period in 1993 due primarily to an increase in the
average amounts invested in short-term instruments.

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

Interest and real estate taxes decreased for the three and six month
periods ended June 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.

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"). 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. 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., et al 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, 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, recision,
interest, costs of the suit, and such other relief as the court may order.
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

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 10Q (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
10Q (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 10Q (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 10Q (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 10K (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 10K (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 10K (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 and
filed herewith.

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 and filed herewith.

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.

* Previously filed with the Securities and Exchange Commission
as Exhibit 4.0 to the Partnership's Form 10-K Report (File No. 0-16976) filed
on March 29, 1993 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.

*** Previously filed with the Securities and Exchange Commission
as Exhibits 4.2 and 4.3, 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
Commissions as Exhibits 4.1 and 4.2, respectively, to the Partnership's Form
10-Q (File No. 0-16976) filed on August 13, 1993 and incorporated herein by
reference.

(b) No reports on Form 8-K were required or filed since the beginning of
the last quarter of the period covered by this report.

SIGNATURES

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

ARVIDA/JMB PARTNERS, L.P.

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

By: GAILEN J. HULL
Gailen J. Hull, Vice President
Date: August 13, 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: August 13, 1994

FOURTH AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT

This FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT dated as
of July 1, 1994 (this "Amendment") further amends that certain Amended and
Restated Credit Agreement dated as of October 7, 1992 (as heretofore amended,
and as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") and is made by and among Arvida/JMB Partners, L.P.,
Arvida/JMB Partners ("A/JMB Partners"), Southeast Florida Holdings, Inc.,
Center Office Partners, Center Retail Partners, Center Hotel Limited
Partnership, Weston Hills Country Club Limited Partnership (collectively, the
"Borrowers"), the banks named in the Credit Agreement (the "Banks") and
Chemical Bank, as agent for the Banks (in such capacity, the "Agent").
Capitalized terms used herein which are defined in the Credit Agreement and
not otherwise defined herein are used herein with such defined meanings.

W I T N E S S E T H:

WHEREAS, the Borrowers have requested that the Banks consent to the
extension of the Revolving Credit Loan Commitment and the Revolving Credit
Loan Maturity Date and the extension of the I/P Loan Maturity Date; and

WHEREAS, the LC Bank and Borrowers have heretofore extended the LC
Commitment and the LC Termination Date and amended certain provisions relating
thereto; and

WHEREAS, the Borrowers and the Banks have agreed to further amend the
provisions of the Credit Agreement in the manner hereinafter set forth upon
satisfaction of the terms set forth herein;

NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, it is hereby agreed as follows:

1. Amendment of Credit Agreement.

1.1. Article I - Definitions.

(a) The following definitions set forth in Article I of
the Credit Agreement are hereby amended in their entirety to read as follows:

"I/P Loan Maturity Date" shall mean September 1, 1994.

"LC Termination Date" shall mean September 1, 1994;
provided, however, that if the LC Bank agrees to extend the LC Commitment, the
LC Termination Date shall mean the date to which the LC Commitment has been
extended. The LC Commitment may be further extended, upon the request of the
Borrowers at the sole discretion of the LC Bank, by notice from the LC Bank to
the Borrowers.

"Revolving Credit Loan Maturity Date" shall mean September
1, 1994; provided, however, that if the Banks agree to extend their Revolving
Credit Loan Commitments, the Revolving Credit Loan Maturity Date shall mean
the date to which the Revolving Credit Loan Commitments have been extended.

(b) Effective July 1, 1994, the first sentence of the
definition of "Floating Rate" is hereby amended to read as follows:

"Floating Rate" shall mean a rate per annum equal to 1.25%
plus the greater on a daily basis of (a) the Prime Rate, or (b) the Alternate
Base Rate.

"LIBOR Rate" applicable to a particular Interest Period
shall mean a rate per annum equal to 2.50% plus the Base LIBOR Rate applicable
to such Interest Period.

1.2. Article II - The Loans

(a) Effective July 1, 1994, Section 2.2(a) of the Credit
Agreement is hereby amended to delete the table set forth in such section and
substitute the following:

Percentage of
Name and Address Revolving Credit Loan Revolving Credit
of Bank Commitment Loan Commitments

Chemical Bank $16,000,000 80%
380 Madison Avenue,
11th Floor
New York, New York 10017
Attn.: Thomas S. Matesich

NationsBank of Florida, N.A.
One Financial Plaza,
9th Floor
Ft. Lauderdale, FL 33394 4,000,000 20%
Attn.: Lisa Crawford

Total . . . .$20,000,000 100%

(b) Section 2.2(b) of the Credit Agreement is hereby
amended to delete the period at the end of the section, substitute a
semicolon, and add the following:

provided further, however, that notwithstanding any other provision of
this Agreement, during the period from July 1, 1994 through and including the
Revolving Credit Loan Maturity Date, the Lenders shall not be required to make
Revolving Credit Loans at any time that Borrowers' aggregate amount of cash
and Cash Equivalents (collectively, "cash balances") exceed $5,000,000, and
the Borrowers shall certify that their cash balances do not exceed such amount
in each request for a Revolving Credit Loan made pursuant to Section 2.5
hereof.

(c) Section 2.4(d) of the Credit Agreement is amended to
increase the rate of the LC Fee described therein to 2.50% per annum, such
rate to take effect on July 1, 1994.

(d) Section 2.6(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:

(b) The aggregate principal amount of the I/P Loans shall be
payable in monthly installments of $100,000 per month on the first day of each
calendar month (each an "I/P Repayment Date") beginning with July 1, 1994
until the I/P Loan Maturity Date on which date the entire outstanding
principal balance thereof shall be due and payable. Such payments shall be
distributed ratably among the Banks in accordance with their pro rata share of
the I/P Loans.

Each voluntary prepayment of the principal amount of the I/P Loans
pursuant to Section 2.13(a) shall be applied to reduce scheduled payments of
principal due under this Section 2.6(b) on the date of such prepayment, in the
order of maturity thereof. To the extent not previously paid, all I/P Loans
shall be due and payable on the I/P Maturity Date. Accrued interest on the
principal amount of each I/P Loan repaid pursuant to this Section 2.6(b) shall
be paid on the next Interest Payment Date with respect to such I/P Loan unless
the date of repayment is an Interest Payment Date, in which case such accrued
interest shall be paid on such date. No scheduled payment of principal in
respect of I/P Loans shall be required to the extent that a lesser principal
payment would result in the payment in full of the outstanding principal
amount of all I/P Loans, and such lesser amount is paid. Prepayments made
pursuant to Section 6.11 shall not be considered voluntary prepayments for
purposes of this subsection.

1.3. Article IX - Miscellaneous

(a) Subsection 9.1(b) of the Credit Agreement is hereby
deleted and the following language substituted:

(b) if to the Agent or the LC Bank, to it at 380 Madison
Avenue (11th Floor), New York, New York 10017, Attention of Thomas S. Matesich
(Telecopy No.: 212-622-3580), with a copy to Weil, Gotshal & Manges, 767 Fifth
Avenue, New York, New York 10153, Attention of J. Philip Rosen, Esq. (Telecopy
No.: 212-310-8007); and

2. Amendment of Notes.

2.1. Revolving Credit Notes.Each of the Revolving Credit Notes
is hereby amended to (i) change the address of Chemical Bank in the first
paragraph thereof to "380 Madison Avenue, New York, New York 10017", and (ii)
to delete the reference to "July 1, 1994" in the third paragraph thereof and
to substitute "September 1, 1994" in its place and stead. The Revolving
Credit Note in favor of Chemical is further amended to change the amount of
"$36,000,000" or "THIRTY-SIX MILLION AND NO/100 DOLLARS" to "$16,000,000" and
"SIXTEEN MILLION AND NO/100 DOLLARS", respectively, in each place where such
amount appears. The Revolving Credit Note in favor of NationsBank is further
amended to change the amount of "$9,000,000" or "NINE MILLION AND NO/100
DOLLARS" to "$4,000,000" and "FOUR MILLION AND NO/100 DOLLARS", respectively,
in each place where such amount appears.

2.2. Term Notes. Each of the Term Notes is hereby amended to
change the address of Chemical Bank in the first paragraph thereof to "380
Madison Avenue, New York, New York 10017".

2.3 I/P Notes. Each of the I/P Notes is hereby amended to (i)
change the address of Chemical Bank in the first paragraph thereof to "380
Madison Avenue, New York, New York 10017", and (ii) to delete the reference to
"July 1, 1994" in the third paragraph thereof and to substitute "September 1,
1994" in its place and stead.

3. Representations and Warranties.All representations made by Borrowers
in the Credit Agreement, as supplemented by
Borrowers' letter dated June 30, 1993 (a copy of which is attached hereto as
Exhibit "A") are hereby reaffirmed with the same force and effect as though
made on the date of this Amendment (it being understood that representations
and warranties that speak to the "Loan Documents" shall be deemed to include
this Amendment and all other documents executed by each Borrower in connection
herewith, including without limitation any documents listed as conditions to
effectiveness of this Amendment, that representations and warranties that
speak as of a specified date shall continue to speak as of the date so
specified, and that the representations and warranties made in Sections
3.7(a), 3.9, 3.16, 3.17, 3.19, 3.20, 3.21 and 3.22 shall be deemed to speak as
of June 30, 1993.

4. Release of Banks. The Borrowers hereby irrevocably release the
Banks and their respective officers, directors, employees and agents from any
and all claims or liabilities of any kind and nature whatsoever relating to
(i) the Credit Agreement, (ii) any prior restructurings or attempted
restructurings of the Borrowers' debt or (iii) the transactions contemplated
by this Amendment and arising prior to the date of this Amendment.

5. Confirmation and Ratification. Borrowers and Banks each
acknowledge and confirm that the aggregate outstanding principal balance as of
June 30, 1994 of the Term Notes is $89,859,687 and of the I/P Notes is
$18,533,325. Except as expressly modified pursuant to the terms and
conditions of this Amendment or of any of the other documents executed in
connection herewith, all of the terms, covenants and conditions of the Notes,
the Credit Agreement, the Mortgages and all of the other Loan Documents, shall
continue unamended and in full force and effect, and Borrowers and Banks each
hereby confirm, ratify and reaffirm all of such terms, covenants and
conditions.

6. Effectiveness. This Amendment shall not become effective until
the date upon which the Agent shall have received counterparts of this
Amendment, duly executed and delivered by the Borrowers and the Banks,
together with:

(a) a principal payment in the amount of $3,000,000 which
payment shall be made not later than July 1, 1994 and shall be applied to the
Term Loans in the inverse order of maturity; and

(b) the following documents, duly executed by the necessary
parties thereto:

(i) letter dated June 29, 1994 from Chemical Bank to
Borrowers regarding the extension of the LC Commitment and related matters
("LC Extension Letter");

(ii) letter dated June 30, 1994 from Lenders to Borrowers
regarding certain matters pertaining to Cullasaja Joint Venture ("Cullasaja
Consent Letter");

(iii) an opinion of White & Case, as counsel for Borrowers,
in the form attached hereto as Exhibit "B"; and

(iv) a certificate signed by all of the Borrowers updating
the representations and warranties set forth in Sections 3.7(a), 3.9, 3.16,
3.17, 3.19, 3.20, 3.21 and 3.27 of the Credit Agreement as of a date not
earlier than the date of this Amendment.

7. Fees and Expenses. The Borrowers agree to pay all out-of-
pocket expenses reasonably incurred by the Agent in connection with the
preparation of this Amendment, the LC Extension Letter and the Cullasaja
Consent Letter and any other documents executed in connection herewith or
therewith (the "Transaction Documents") or with any amendments, modifications
or waivers of the provisions hereof or thereof (whether or not the
transactions hereby contemplated shall be consummated) or reasonably incurred
by the Agent, the Banks or the LC Bank in connection with the enforcement or
protection of their rights in connection with this Amendment and the other
Transaction Documents, including, but not limited to, the reasonable fees and
disbursements of Weil, Gotshal & Manges, special counsel for the Banks and, in
connection with such enforcement or protection, the reasonable fees and
disbursements of any other counsel for the Agent, the Banks or the LC Bank.
The Borrowers further agree that they shall indemnify the Banks and the LC
Bank from and hold them harmless against any documentary taxes, intangibles
taxes, assessments or charges made by any governmental authority by reason of
the execution and delivery of this Amendment or any of the other Transaction
Documents.

8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

9. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which, when so executed and delivered, shall be deemed
to be an original and all of which when taken together shall constitute but
one and the same instrument.

10. Continuing Effect. Except as expressly amended hereby, the Credit
Agreement and the other Loan Documents shall continue to be and shall remain
in full force and effect in accordance with their terms.

IN WITNESS WHEREOF, this Amendment has been duly executed as of the date
first written above.

BANKS: CHEMICAL BANK, as Agent and a Bank

By:
Title:

NATIONSBANK OF FLORIDA, N.A.

By:
Title:

BORROWERS: ARVIDA/JMB PARTNERS, L.P.

By: ARVIDA/JMB MANAGERS, INC., as
General Partner

By:
Title:

ARVIDA/JMB PARTNERS

By: ARVIDA/JMB MANAGERS, INC., as
General Partner

By:
Title:

SOUTHEAST FLORIDA HOLDINGS,
INC.

By:
Title:

CENTER OFFICE PARTNERS

By: ARVIDA/JMB PARTNERS, L.P., as
General Partner

By: ARVIDA/JMB MANAGERS, INC., as
General Partner

By:
Title:

CENTER RETAIL PARTNERS

By: ARVIDA/JMB PARTNERS, L.P., as
General Partner

By: ARVIDA/JMB MANAGERS, INC., as
General Partner

By:
Title:

CENTER HOTEL LIMITED
PARTNERSHIP

By: JMB/PCH CORPORATION, as General
Partner

By:
Title:

WESTON HILLS COUNTRY CLUB
LIMITED PARTNERSHIP

By: WHCC, INC., as General Partner

By:
Title:

June 29, 1994

VIA TELECOPIER

Arvida/JMB Partners
Arvida/JMB Partners, L.P.
Southeast Florida Holdings, Inc.
Center Office Partners
Center Retail Partners
Center Hotel Limited Partnership
Weston Hills Country Club Limited Partnership
c/o Arvida/JMB Managers, Inc.
900 North Michigan Avenue
Chicago, Illinois 60601

Attn: Stephen A. Lovelette

Re: LC Termination Date; Notices to Chemical Bank

Gentlemen:

Reference is made to that certain Amended and Restated Revolving
Credit and Security Agreement dated as of October 7, 1992 among ARVIDA/JMB
PARTNERS, L.P., a Delaware limited partnership ("Arvida LP" or the
"Partnership"), ARVIDA/JMB PARTNERS, a Florida general partnership ("Arvida
GP"), SOUTHEAST FLORIDA HOLDINGS, INC., an Illinois corporation
("Southeast"), CENTER OFFICE PARTNERS, a Florida general partnership
("Office Partners"), CENTER RETAIL PARTNERS, a Florida general partnership
("Retail Partners"), CENTER HOTEL LIMITED PARTNERSHIP, a Delaware limited
partnership ("Hotel Partnership") and WESTON HILLS COUNTRY CLUB LIMITED
PARTNERSHIP, a Delaware limited partnership ("Weston Partnership"; Weston
Partnership, Arvida LP, Arvida GP, Southeast, Office Partners, Retail
Partners and Hotel Partnership being hereinafter collectively referred to
as the "Borrowers"), CHEMICAL BANK and NATIONSBANK OF FLORIDA, N.A.
(collectively, "Lenders") and CHEMICAL BANK, AS AGENT ("Agent") as
heretofore amended (the "Credit Agreement"). Unless otherwise defined
herein, all capitalized terms shall have the same meaning as in the Credit
Agreement.

Chemical Bank, as the "LC Bank" under the Credit Agreement, hereby
gives notice to Borrowers of the extension of the term of the LC
Commitment, as well as the LC Termination Date, to September 1, 1994. This
extension is expressly conditioned upon Borrowers' agreement, evidenced by
signing below, to an amendment to the second sentence of Section 2.20(c) of
the Credit Agreement which shall read as follows:

Subject to the provisions of Section 2.11, each LC Disbursement shall
bear interest (computed on the basis of the actual number of days elapsed
in a year of 365 or 366 days, as the case may be), from and including the
date of such LC Disbursement to but excluding the date of reimbursement, at
a rate per annum equal to 1.25% plus the greater on a daily basis of (a)
the Prime Rate, or (b) the Alternate Base Rate (as each such term is
defined in the definition of "Floating Rate").

This extension affects only the term of LC Commitment and the interest rate
on LC Disbursements and does not waive or modify any other term, provision
or condition of the Credit Agreement. Nor does it relate to any other
requests for waiver of, consent to deviation from, or extension of, the
terms of the Credit Agreement, including without limitation, any request by
Borrowers for extension of the Revolving Credit Loan Commitment Maturity
Date or of the I/P Loan Maturity Date.

Chemical Bank, as Agent, further advises Borrowers that
notwithstanding such extension Lenders reserve all rights and remedies
available to them for the full protection and enforcement of their rights
under the Credit Agreement and the other loan documents and under
applicable law. Furthermore, nothing contained herein or therein shall
constitute an agreement by Lenders to continue discussion with Borrower
under any circumstances, to extend any Loan or Loan Commitment made under
the terms of the Credit Agreement, or to forbear from exercising any of
their rights or remedies under the Credit Agreement, any other loan
document or under applicable law.

In addition, notice is hereby given that all future communications to
Chemical Bank, as Agent, Lender or LC Bank pursuant to Section 9.1 of the
Credit Agreement, should be made to the following address:

Chemical Bank
380 Madison Avenue (11th Floor)
New York, New York 10017
Attention:Thomas S. Matesich
Telecopy No.: 212-622-3580

Copies should still be provided to Weil, Gotshal & Manges, 767 Fifth
Avenue, New York, New York 10153, Attention of J. Philip Rosen, Esq.
(Telecopy No.: 212-310-8007).

Please countersign below to indicate your agreement with the
foregoing.

Sincerely,

CHEMICAL BANK

By:
Thomas S. Matesich
Vice President

cc: Lisa Crawford
H. William Walker, Esq.
Susan Werth, P.A.

Accepted and Agreed this ___ day of
June, 1994.

ARVIDA/JMB PARTNERS, L.P.

By: ARVIDA/JMB MANAGERS,
INC., as General Partner

By:
Title:

ARVIDA/JMB PARTNERS

By: ARVIDA/JMB MANAGERS,
INC., as General Partner

By:
Title:

SOUTHEAST FLORIDA HOLDINGS,
INC.

By:
Title:

CENTER OFFICE PARTNERS

By: ARVIDA/JMB PARTNERS, L.P.,
as General Partner

By: ARVIDA/JMB MANAGERS, INC.,
as General Partner

By:
Title:

CENTER RETAIL PARTNERS

By: ARVIDA/JMB PARTNERS, L.P.,
as General Partner

By: ARVIDA/JMB MANAGERS,
INC., as General Partner

By:
Title:

CENTER HOTEL LIMITED
PARTNERSHIP

By: JMB/PCH CORPORATION,
as General Partner

By:
Title:

WESTON HILLS COUNTRY CLUB
LIMITED PARTNERSHIP

By: WHCC, INC., as General
Partner

By:
Title: