SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 1995 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. . . . . . . . . . . . . . . . . . . . . . . . 26
PART II OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 33
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 37
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
ASSETS
------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------
<S> <C> <C>
Cash and cash equivalents (note 3) . . . . . . . . . . . . . . . . . . . . . . . . $ 666,922 22,024,390
Restricted cash (note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,355,581 14,232,540
Trade and other accounts receivable (net of allowance for doubtful
accounts of $214,953 at September 30, 1995 and $229,542 at
December 31, 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,709,947 18,209,957
Mortgages receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 872,101 1,094,223
Real estate inventories (note 2) . . . . . . . . . . . . . . . . . . . . . . . . . 235,578,477 207,874,438
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,630,356 69,114,559
Investments in and advances to joint ventures, net . . . . . . . . . . . . . . . . 13,869,287 23,178,951
Equity memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,225,857 10,536,864
Amounts due from affiliates (note 6) . . . . . . . . . . . . . . . . . . . . . . . 221,273 524,556
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . . . 9,365,613 9,581,234
------------ ------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $372,495,414 376,371,712
============ ============
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- -----------
Liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,743,733 24,142,890
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,158,727 27,082,766
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . 18,634,428 13,418,777
Notes and mortgages payable, net (note 4). . . . . . . . . . . . . . . . . . . . 91,208,309 115,147,525
------------ ------------
Commitments and contingencies (notes 1, 4, 5, 6, 7 and 8)
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,745,197 179,791,958
------------ ------------
Partners' capital accounts:
General Partner and Associate Limited Partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 20,000
Cumulative net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,795,572 34,328,454
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . (33,912,035) (33,609,346)
------------ ------------
903,537 739,108
------------ ------------
Limited Partners:
Capital contributions, net of offering costs . . . . . . . . . . . . . . . . . 364,841,815 364,841,815
Cumulative net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,900,363) (32,354,861)
Cumulative cash distributions. . . . . . . . . . . . . . . . . . . . . . . . . (142,094,772) (136,646,308)
------------ ------------
211,846,680 195,840,646
------------ ------------
Total partners' capital accounts . . . . . . . . . . . . . . . . . . . . 212,750,217 196,579,754
------------ ------------
Total liabilities and partners' capital. . . . . . . . . . . . . . . . . $372,495,414 376,371,712
============ ============
<FN>
The accompanying notes are an integral part
of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . . . $52,852,200 47,597,166 153,272,951 138,925,711
Homesites. . . . . . . . . . . . . . . . . . . . . . . 8,095,500 9,961,667 20,592,114 33,857,895
Land and property. . . . . . . . . . . . . . . . . . . 2,233,962 3,185,798 27,456,635 8,006,935
Operating properties . . . . . . . . . . . . . . . . . 6,138,199 5,882,926 21,344,683 19,597,595
Brokerage and other operations . . . . . . . . . . . . 6,633,496 7,338,695 21,367,572 23,597,186
----------- ---------- ----------- -----------
Total revenues . . . . . . . . . . . . . . . . . 75,953,357 73,966,252 244,033,955 223,985,322
----------- ---------- ----------- -----------
Cost of revenues:
Housing. . . . . . . . . . . . . . . . . . . . . . . . 46,283,942 38,692,173 129,390,715 109,679,555
Homesites. . . . . . . . . . . . . . . . . . . . . . . 4,582,978 5,396,961 12,705,371 19,619,916
Land and property. . . . . . . . . . . . . . . . . . . 763,071 2,044,729 11,715,187 4,291,094
Operating properties . . . . . . . . . . . . . . . . . 6,688,270 6,567,634 20,803,206 19,789,951
Brokerage and other operations . . . . . . . . . . . . 6,307,434 6,088,869 20,033,598 19,550,564
----------- ---------- ----------- -----------
Total cost of revenues . . . . . . . . . . . . . 64,625,695 58,790,366 194,648,077 172,931,080
----------- ---------- ----------- -----------
Gross operating profit . . . . . . . . . . . . . . . . . 11,327,662 15,175,886 49,385,878 51,054,242
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . . . (4,959,400) (4,810,375) (17,408,010) (14,062,348)
Writedowns to the carrying value of real estate
inventories and other assets . . . . . . . . . . . . . (8,544,668) -- (8,544,668) --
----------- ---------- ----------- -----------
Net operating income (loss). . . . . . . . . . . (2,176,406) 10,365,511 23,433,200 36,991,894
ARVIDA/JMB PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
-------------------------- --------------------------
1995 1994 1995 1994
----------- ---------- ----------- ----------
Interest income. . . . . . . . . . . . . . . . . . . . . 231,171 311,852 842,833 656,847
Equity in earnings (losses) of
unconsolidated ventures. . . . . . . . . . . . . . . . (51,131) (159,142) 1,028,054 (181,492)
Interest and real estate taxes, net. . . . . . . . . . . (1,069,026) (1,802,996) (3,382,471) (6,602,242)
----------- ---------- ----------- ----------
Net income (loss). . . . . . . . . . . . . . . . $(3,065,392) 8,715,225 21,921,616 30,865,007
=========== ========== =========== ==========
Net income (loss) per Limited
Partnership Interest . . . . . . . . . . . . . $ (7.51) 21.35 53.11 75.34
=========== ========== =========== ==========
Cash distributions per Limited
Partnership Interest . . . . . . . . . . . . . $ -- -- 13.49 6.35
=========== ========== =========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,921,616 30,865,007
Charges (credits) to net income not requiring (providing) cash:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,142,937 4,149,683
Equity in (earnings) losses of unconsolidated ventures . . . . . . . . . . . . . . . (1,028,054) 181,492
Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . 797 28,234
Loss (gain) on disposition of property and equipment . . . . . . . . . . . . . . . . (3,558,118) 33,121
Writedowns to the carrying value of real estate inventories
and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,544,668 --
Changes in:
Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,123,041) (4,008,607)
Trade and other accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . 2,499,213 (18,589,232)
Real estate inventories:
Additions to real estate inventories . . . . . . . . . . . . . . . . . . . . . . . (171,146,574) (146,235,805)
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,811,273 133,590,565
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,305,017) (6,085,929)
Capitalized real estate taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . (3,346,249) (2,397,269)
Equity memberships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,311,007 3,422,830
Amounts due from affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303,283 (174,092)
Prepaid expenses and other assets. . . . . . . . . . . . . . . . . . . . . . . . . . (230,059) (179,669)
Accounts payable, accrued expenses and other liabilities . . . . . . . . . . . . . . 1,730,068 16,168,019
Deposits and unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,075,961 10,239,209
------------ -----------
Net cash provided by operating activities. . . . . . . . . . . . . . . . . . 9,603,711 21,007,557
------------ -----------
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
1995 1994
------------ -----------
Cash flows from investing activities:
Mortgages receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222,122 1,421,273
Acquisitions of property and equipment . . . . . . . . . . . . . . . . . . . . . . . (9,682,156) (5,335,285)
Proceeds from sales and disposals of property and equipment. . . . . . . . . . . . . 7,027,220 2,528
Joint venture distributions, net . . . . . . . . . . . . . . . . . . . . . . . . . . 1,212,594 372,626
Payments from (advances to) joint ventures . . . . . . . . . . . . . . . . . . . . . (50,590) 172,677
------------ -----------
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . (1,270,810) (3,366,181)
------------ -----------
Cash flows from financing activities:
Proceeds from notes and mortgages payable. . . . . . . . . . . . . . . . . . . . . . 46,816,477 14,644,990
Payments of notes and mortgages payable. . . . . . . . . . . . . . . . . . . . . . . (70,755,693) (32,905,451)
Distributions to General Partner and Associate Limited Partners. . . . . . . . . . . (302,689) (142,523)
Distributions to Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . (5,448,464) (2,565,432)
Payment of bank overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (372,517)
------------ -----------
Net cash used in financing activities. . . . . . . . . . . . . . . . . . . . (29,690,369) (21,340,933)
------------ -----------
Decrease in cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . (21,357,468) (3,699,557)
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . . . . . . 22,024,390 20,566,609
------------ -----------
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . . . . . $ 666,922 16,867,052
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest, net of amounts capitalized. . . . . . . . $ -- 2,193,827
============ ===========
Non-cash investing and financing activities:
Distribution of land from unconsolidated joint venture . . . . . . . . . . . . . . $ 717,472 --
============ ===========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the fiscal year ended December 31, 1994,
which are included in the Partnership's 1994 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, homesites 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 $6,439,468 and $8,338,592 was incurred for the nine months ended
September 30, 1995 and 1994, respectively, of which $6,305,017 and
$6,085,929 was capitalized, respectively. Interest payments, including
amounts capitalized, of $6,037,837 and $8,279,756 were made during the nine
months ended September 30, 1995 and 1994, respectively. Interest,
including the amortization of loan fees, of $2,051,043 and $2,795,676 was
incurred for the three months ended September 30, 1995 and 1994,
respectively, of which $2,034,716 and $2,293,570 was capitalized,
respectively. Interest payments of $1,757,846 and $1,569,376 were made
during the three months ended September 30, 1995 and 1994, respectively.
Real estate taxes of $6,594,269 and $6,746,848 were incurred for the
nine months ended September 30, 1995 and 1994, respectively, of which
$3,346,249 and $2,397,269 were capitalized, respectively. Real estate tax
payments of $584,581 and $570,613 were made during the nine months ended
September 30, 1995 and 1994, respectively. Real estate taxes of $2,213,260
and $2,226,701 were incurred for the three months ended September 30, 1995
and 1994, respectively, of which $1,160,561 and $925,811 was capitalized,
respectively. Real estate tax payments of $209,576 and $265,395 were made
during the three months ended September 30, 1995 and 1994, 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.
Provisions for value impairment are recorded with respect to such assets
whenever the estimated future cash flows from operations and projected
sales proceeds are less than the net carrying value. 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 $3,697,257 and $3,705,633 was incurred for the
nine months ended September 30, 1995 and 1994, respectively. Amortization
of other assets, excluding loan fees, of $167,338 and $160,300 was incurred
for the nine months ended September 30, 1995 and 1994. Amortization of
loan fees, which is included in interest expense, of $278,342 and $283,750
was incurred for the nine months ended September 30, 1995 and 1994,
respectively. Depreciation expense of $1,143,216 and $1,230,492 was
incurred for the three months ended September 30, 1995 and 1994,
respectively. Amortization expense of other assets excluding loan fees, of
$57,345 and $52,781 was incurred for the three months ended September 30,
1995 and 1994, respectively. Amortization of loan fees, which is included
in interest expense, of $74,447 and $15,000 was incurred for the three
months ended September 30, 1995 and 1994, respectively.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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. 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 the remaining 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
repayable 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 conveyed 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
Statements of Operations.
Partnership Records
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments where applicable to reflect
the Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP") and to consolidate the accounts of the ventures as
described above. The net effect of these items is summarized as follows
for the nine months ended September 30:
<TABLE>
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
1995 1994
----------------------- -----------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net income . . . . . . $21,921,616 22,661,668 30,865,007 29,013,084
Net income per
Limited
Partnership
Interest. . . . . . . $ 53.11 56.09 75.34 70.81
Cash distribu-
tions per
Limited
Partnership
Interest. . . . . . . $ 13.49 13.49 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.
In February 1995, the Partnership made a distribution for 1994 of
$5,421,680 to its Limited Partners ($13.42 per Interest) and $301,201 to
the General Partner and Associate Limited Partners, collectively. In
addition, during the first quarter of 1995, the Partnership remitted each
Limited Partner's share of a North Carolina non-resident withholding tax on
behalf of each of the Limited Partners. Such payment, which totalled
$26,784 ($.07 per Interest), was deemed a distribution to the Limited
Partners. A distribution of $1,488 was also paid at that time to the
General Partner and Associate Limited Partners, collectively, a portion of
which was also remitted to the state tax authorities on their behalf.
The net income per Limited Partnership Interest is based upon the
average number of Limited Partnership Interests outstanding during each
period.
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. In such regard, the cash distribution per Limited
Partnership Interest made during the nine months ended September 30, 1995
includes $.07 which represents each Limited Partner's share of a North
Carolina non-resident withholding tax which was paid directly to the state
tax authorities on behalf of the Limited 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 a cable television business serving its Weston Community.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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 mid 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.
The Broken Sound Community, located in Boca Raton, Florida, is complete and
had its final closings in 1995. Future revenues will be impacted to the
extent that there are lower levels of inventories available for sale as
these Communities approach or undertake their final phases.
For a discussion of a lawsuit initiated by the General Partner, on
behalf of the Partnership, against The Walt Disney Company ("Disney"),
which arose out of the Partnership's acquisition of substantially all of
the real estate and other assets of Arvida Corporation, a subsidiary of
Disney, in September 1987, reference is made to Note 2 of Notes to
Consolidated Financial Statements of the Partnership's report for December
31, 1994 on Form 10-K (File No. 0-16976) filed on March 27, 1995.
(3) CASH, CASH EQUIVALENTS AND RESTRICTED CASH
At September 30, 1995 and December 31, 1994, 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 being held to maturity with original
maturity dates of three months or less of approximately $0 and $1,777,000
at September 30, 1995 and December 31, 1994, respectively. The decrease in
cash and cash equivalents at September 30, 1995 as compared to December 31,
1994 is due primarily to debt service payments as well as distributions to
partners made in February 1995. Included in restricted cash are amounts
restricted under various escrow agreements. Credit risk associated with
cash, cash equivalents and restricted cash is considered low due to the
quality of the financial institutions in which these assets are held.
(4) NOTES AND MORTGAGES PAYABLE
At September 30, 1995, the Partnership's credit facility consists of a
term loan in the original amount of $85,252,520, a revolving line of credit
facility up to $20 million, an income property term loan in the original
amount of $18,233,326 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
mortgage on a mixed-use center in Boca Raton, Florida. Another office
building, also located in Boca Raton, which served as additional collateral
for the income property loan, was sold in May 1995. All of the notes under
the facility are cross-collateralized and cross-defaulted. At September
30, 1995, the term loan, the revolving line of credit and the income
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
property term loan bear interest based, at the Partnership's option, on one
of the lenders' prime rate plus 1.25% per annum or the relevant London
Inter-Bank Offering Rate (LIBOR) plus 2.50% per annum. For the nine month
period ended September 30, 1995, the effective interest rate for the
combined term loan, income property term loan and revolving line of credit
facility was approximately 8.7% per annum.
Under the term loan agreement, the Partnership made scheduled
principal payments of $10 million in March 1994 and February 1995 and a $5
million principal payment in July 1995. 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. During the nine months ended September 30, 1995, the Partnership
made such additional term loan payments totalling approximately $21.1
million. Principal repayments of $10 million and $5 million on the term
loan are due in February 1996 and July 1996, respectively. The remaining
balance outstanding is due in July 1997. Under the income property term
loan, principal payments of $0.1 million are required to be paid monthly
until March 1996 when the remaining outstanding principal balance will be
due. The revolving line of credit matures in December 1995. The letter of
credit facility was scheduled to mature in July 1995, but has been extended
for one year and will mature in July 1996. At September 30, 1995, all of
the term loan proceeds had been borrowed with a remaining balance of
$37,394,526. The balances outstanding on the revolving line of credit
facility, the income property term loan and the letter of credit facility
at September 30, 1995 are $16,000,000, $13,066,746 and $8,546,767,
respectively.
The Partnership closed on the sale of an office building located in
downtown Boca Raton, Florida known as Mizner Place during May, 1995. In
accordance with the terms of the Partnership credit facility, the net
proceeds from the sale of approximately $4.0 million were used to pay down
the income property term loan.
The credit agreement 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. At this time, the
Partnership anticipates renewing certain of its facilities with its lenders
at the time of their maturities. Although there can be no assurance, the
Partnership currently believes that it will be able to obtain such renewals
from its lenders.
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 as discussed above, using the
straight-line method, which approximates the interest method.
Also included in notes and mortgages payable at September 30, 1995 is
approximately $6.8 million representing project specific financing for the
Partnership's retail property located in its Weston Community, $3.0 million
of subordinated debt attributable to the Cullasaja Joint Venture and a $1.5
million note executed in conjunction with the Partnership's repurchase of a
land parcel in Weston's Increment III. The $1.5 million note was
subsequently paid off in October 1995.
In addition to the above, the Partnership has a $28.9 million
revolving construction line of credit for three buildings and certain
amenities within the Partnership's condominium project on Longboat Key,
Florida known as Arvida's Grand Bay. This line of credit currently bears
interest at the lender's prime rate (8.75% at September 30, 1995) plus 1/2%
per annum and matures in January 1997. At September 30, 1995,
approximately $10.0 million was outstanding under this line of credit,
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
related to two buildings currently under construction. The Partnership
currently anticipates that this amount will be repaid with the proceeds
from the sale of condominium units within these two buildings. The receipt
of sales proceeds from units sold within the first building prior to
December 31, 1994 which closed during the nine months ended September 30,
1995 is the primary cause of the decrease in trade and other accounts
receivable at September 30, 1995 as compared to December 31, 1994.
(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. During
the nine months ended September 30, 1995, the Partnership advanced
approximately $220,400 to certain of the joint ventures in which it holds
interests and received reimbursements during the same period of
approximately $169,800. The total of such advances outstanding were
approximately $4.2 million and $4.1 million at September 30, 1995 and
December 31, 1994, respectively, and are included in Investments in and
Advances to Joint Ventures in the accompanying Consolidated Balance Sheets.
These amounts primarily represent outstanding advances made to the Coto de
Caza Joint Venture in previous years. As of November 3, 1995, none of the
advances made to the joint ventures were received by the Partnership. In
addition, there are certain risks associated with the Partnership's
investments made through joint ventures, including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial obligations, or that such joint
venture partners may have economic or business interests or goals that are
inconsistent with those of the Partnership. During July 1995, the
Partnership was informed by its partner in the Coto de Caza Joint Venture
of such partner's intention to sell its interest in the joint venture.
Under the terms of the joint venture agreement, the Partnership has a right
of first offer with respect to such interest. The Partnership does not
believe that its partner has complied with the terms of the joint venture
agreement for the sale of its interest. The Partnership has informed its
partner of the Partnership's position and is considering its alternatives
in the event that its partner proceeds with a sale without addressing the
Partnership's concerns.
The Partnership has been evaluating its long term plans for its
interest in the Coto de Caza Joint Venture, and is considering a shorter
holding period than originally anticipated. Therefore, as a matter of
prudent accounting practice, the Partnership recorded a writedown of
approximately $8.5 million to Investments In and Advances to Joint Ventures
during the quarter ended September 30, 1995 to reflect the fair value of
this investment under present market conditions. This writedown is the
primary cause for the decrease in Investments In and Advances to Joint
Ventures on the accompanying Consolidated Balance Sheets at September 30,
1995 as compared to December 31, 1994.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(6) TRANSACTIONS WITH AFFILIATES
The Partnership, subject to certain limitations, may engage affiliates
of the General Partner for property management, insurance and certain other
administrative services to be performed in connection with the
administration of the Partnership and its assets. The total of such costs
(consisting primarily of insurance commissions) for the nine months ended
September 30, 1995 was approximately $399,400, all of which was paid as of
September 30, 1995. The total of such costs for the nine months ended
September 30, 1994 was approximately $323,600. 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 $73,300 and $128,600 for the nine months ended September 30,
1995 and for the year ended December 31, 1994, respectively, all of which
were paid as of September 30, 1995.
The Partnership receives reimbursements from or reimburses other
affiliates of the General Partner engaged in real estate activities for
certain general and administrative costs including, and without limitation,
salary and salary-related costs relating to work performed by employees of
the Partnership and certain out-of-pocket expenditures incurred on behalf
of such affiliates. For the nine months ended September 30, 1995, the
amount of such costs incurred by the Partnership on behalf of these
affiliates totalled approximately $426,200. At September 30, 1995,
approximately $158,100 was owed to the Partnership, of which approximately
$41,000 was received as of November 3, 1995. For the nine month period
ended September 30, 1994, the Partnership was entitled to reimbursements of
approximately $366,300.
The Partnership and Arvida/JMB Partners, L.P.-II (a publicly-held
limited partnership affiliated with the General Partner) each employ
project related and administrative personnel who perform services on behalf
of both partnerships. In addition, certain out-of-pocket expenditures
related to such services and other general and administrative costs are
incurred and charged to each partnership as appropriate. The Partnership
receives reimbursements from or reimburses Arvida/JMB Partners, L.P.-II for
such costs (including salary and salary-related costs). For the nine month
periods ended September 30, 1995 and 1994, the Partnership was entitled to
receive approximately $839,400 and $995,800 respectively, from Arvida/JMB
Partners, L.P.-II. At September 30, 1995, approximately $214,300 was owed
to the Partnership, all of which was received as of November 3, 1995. In
addition, for the nine month periods ended September 30, 1995 and 1994, the
Partnership was obligated to reimburse Arvida/JMB Partners, L.P.-II
approximately $195,900 and $416,700, respectively. At September 30, 1995,
approximately $49,600 was unpaid, all of which was paid as of November 3,
1995.
Arvida Company ("Arvida"), pursuant to an agreement with the
Partnership, provides development, construction, management and other
personnel and services to the Partnership for all of its projects and
operations. Pursuant to such agreement, the Partnership shall reimburse
Arvida for all of its out-of-pocket expenditures (including salary and
salary-related costs), subject to certain limitations. The total of such
costs for the nine month periods ended September 30, 1995 and 1994 were
approximately $4,714,200 and $5,300,600, respectively. At September 30,
1995, approximately $12,700 was unpaid, all of which was paid as of
November 3, 1995.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership pays for certain general and administrative costs on
behalf of its equity clubs, homeowners associations and maintenance
associations. The Partnership receives reimbursements from these entities
for such costs. For the nine month period ended September 30, 1995, the
Partnership was entitled to receive approximately $341,600 from these
entities. At September 30, 1995, approximately $36,700 was owed to the
Partnership. As of November 3, 1995, approximately $18,800 had been
received. For the nine months ended September 30, 1994, the Partnership
was entitled to receive approximately $239,500 from these entities. In
addition, the Partnership owes its equity clubs for certain costs incurred
by the clubs which are obligations of the Partnership. For the nine month
period ended September 30, 1995, the Partnership was obligated to reimburse
its equity clubs approximately $70,600. At September 30, 1995,
approximately $54,200 was unpaid, of which approximately $700 was paid as
of November 3, 1995.
The Partnership also funds operating deficits of its equity clubs, as
deemed necessary. Such amounts are expensed by the Partnership, but may be
reimbursed by these clubs from future cash flow. At September 30, 1995,
the Partnership owed approximately $71,300 for such funding, none of which
was paid as of November 3, 1995.
The Partnership periodically incurs salary and salary-related costs on
behalf of an affiliate of the General Partner of the Partnership. The
Partnership was entitled to receive approximately $394,000 for such costs
for the nine months ended September 30, 1995, all of which was paid as of
September 30, 1995.
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 $1,208,700.
This amount does not bear interest and is expected to be paid in future
periods subject to certain restrictions contained in the Partnership's
credit facility agreement.
All amounts receivable or payable to the General Partner or its
affiliates do not bear interest and are expected to be paid in future
periods.
(7) COMMITMENTS AND CONTINGENCIES
As security for performance of certain development obligations, the
Partnership is contingently liable under standby letters of credit and
performance bonds for approximately $8,546,800 and $7,593,700,
respectively, at September 30, 1995. At December 31, 1994, the Partnership
was contingently liable under standby letters of credit and performance
bonds for approximately $10,170,000 and $7,588,700, respectively. In
addition, certain joint ventures in which the Partnership holds an interest
are also contingently liable under bonds for approximately $1,020,000 at
September 30, 1995 and December 31, 1994.
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
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
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.
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 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.
The Partnership entered into a court-approved settlement which
resolved substantial portions of the pending homeowners' lawsuits that had
been filed. Homeowners of approximately 85% of the units in Country Walk
accepted the settlement which 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, or otherwise, is uncertain. Due to this uncertainty, the
accompanying consolidated financial statements do not reflect an accrual
for such costs.
The Partnership was a party to a number of claims brought by
condominium and patio homeowners, all of whom have declined to accept the
terms of the class action settlement. These actions have been settled for
approximately $520,000. One of the Partnership's insurers has funded these
settlements. The amount of money that the insurance company may recover
from the Partnership pursuant to any reservation of rights, or otherwise,
is uncertain. Therefore, the accompanying consolidated financial
statements do not reflect any accruals related to this matter.
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 was issued by one of the
Partnership's insurance carriers in connection with payment of
approximately $740,000 of the settlement. 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 any accruals related to this matter.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The Partnership was 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 one of the Partnership's insurance carriers. The
aggregate amount of these settlements is approximately $4.5 million. 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. Therefore, the
accompanying consolidated financial statements do not reflect any accruals
related to this matter.
Currently, the Partnership is involved in two subrogation actions. On
April 19, 1993, a subrogation claim entitled Village Homes at Country Walk
Master Maintenance Association, Inc. v. Arvida Corporation et al., was
filed in the 11th Judicial Circuit for Dade County. Plaintiffs filed this
suit for the use and benefit of American Reliance Insurance Company
("American Reliance"). In this suit, as amended, plaintiffs seek to
recover damages and pre- and post-judgment interest in connection with
$10,873,000 American Reliance has allegedly paid, plus amounts it may have
to pay in the future, to the condominium association at Country Walk in the
wake of Hurricane Andrew. Disney is also a defendant in this suit. The
Partnership believes that the amount of this claim that allegedly relates
to units it sold is approximately $3,600,000. Plaintiffs also seek a
declaratory judgement seeking to hold the Partnership and other defendants
responsible for amounts American Reliance must pay in the future to its
insured as additional damages beyond the $10,873,000 previously paid. The
Partnership has filed motions directed to the complaint, as amended, and
the litigation is in the discovery stage. The Partnership intends to
vigorously defend itself. The Partnership is also involved in a
subrogation action brought by the Insurance Company of North America
("INA") arising out of a claim that INA allegedly paid on a single home in
Country Walk. The Partnership intends to vigorously defend itself in this
action, as well. The Partnership could be named in other subrogation
actions, and in such event, the Partnership intends to vigorously defend
itself in such actions.
As noted above, one of the Partnership's insurance carriers has been
funding settlements of various litigation related to Hurricane Andrew. In
some, but not all, instances, the insurance carrier has provided the
Partnership with written reservation of rights letters. The aggregate
amount of the settlements funded to date by this carrier is approximately
$8.0 million. The insurance carrier that funded these settlements pursuant
to certain reservations of rights has stated its position that it has done
so pursuant to various non-waiver agreements. The carrier's position was
that these non-waiver agreements permitted the carrier to fund settlements
without barring the carrier from raising insurance coverage issues or
waiving such coverage issues. On May 23, 1995, the insurance carrier
rescinded the various non-waiver agreements currently in effect regarding
the remainder of the Hurricane Andrew litigation, allegedly without waiving
any future coverage defenses, conditions, limitations, or rights. For this
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
and other reasons, the extent to which the insurance carrier may recover
any of these proceeds from the Partnership is uncertain. Therefore, the
accompanying consolidated financial statements do not reflect any accruals
related to this matter.
In addition, the Partnership has been advised by Merrill Lynch that
various investors have sought to compel Merrill Lynch to arbitrate claims
brought by certain investors of the Partnership representing approximately
5% of the total of approximately 404,000 Interests outstanding. Merrill
Lynch has asked the Partnership and its General Partner to confirm an
obligation of the Partnership and its General Partner to indemnify Merrill
Lynch in these claims against all loss, liability, claim, damage and
expense, including without limitation attorneys' fees and expenses, under
the terms of a certain Agency Agreement dated September 15, 1987 ("Agency
Agreement") with the Partnership relating to the sale of Interests through
Merrill Lynch on behalf of the Partnership. These claimants have sought
and are seeking to arbitrate claims involving 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. Some of these investors have begun the arbitration
process. The Partnership believes that Merrill Lynch has resolved some of
these claims through litigation and otherwise, and that Merrill Lynch is
defending other 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. Although there can be no
assurance regarding the outcome of the claims for indemnification, at this
time, based on information presently available about such arbitration
statements of claims, the Partnership and its General Partner do not
believe that the demands for indemnification by Merrill Lynch will have a
material adverse effect on the financial condition of the Partnership.
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
On or about October 16, 1995, a lawsuit was filed against the
Partnership and others in the Circuit Court of the 15th Judicial Circuit,
in and for Palm Beach County, Florida, entitled Council of Villages, Inc.
et al v. Arvida/JMB Partners, Arvida/JMB Managers, Inc., Arvida/JMB
Partners, Ltd., Broken Sound Club, Inc., and Country Club Maintenance
Association, Inc., Case No. CL 95 8107-AJ. The multi-count lawsuit is
brought as a class action, and individually, on behalf of various residents
of the Broken Sound Community, and alleges that defendants engaged in
various acts of misconduct in, among other things, the establishment,
operation, management and marketing of the Broken Sound golf course and
recreational facilities as well as the alleged improper failure to turn
over said facilities to the Broken Sound homeowners on a timely basis.
Plaintiffs seek, through various theories, including but not limited to
breach of ordinance, fiduciary duty, fraud, and civil theft, damages in
excess of $45 million, the appointment of a receiver for the Broken Sound
Club, other unspecified compensatory damages, the right to seek punitive
damages, treble damages, prejudgment interest, attorneys' fees and costs.
The Partnership believes that the lawsuit is without merit and intends to
vigorously defend itself in this matter.
The Partnership is also a defendant in several other actions brought
against it arising in the normal course of business. It is the belief of
the General Partner, based on knowledge of facts and advice of counsel,
that the claims made against the Partnership in such actions will not
result in any material adverse effect on the Partnership's consolidated
financial position or results of operations.
The Partnership owns a 50% joint venture interest in 31 commercial /
industrial acres in Pompano Beach, Florida, which is encumbered by a
mortgage loan in the principal amount of approximately $4 million at
September 30, 1995. As a result of the Partnership's previous
determination that the development of the land was no longer economically
profitable, during April 1992, the Partnership and its joint venture
partner each tendered payment in the amount of approximately $3.1 million
to the lender for their respective shares of the guarantee payment required
under the loan agreement and certain other holding costs, the majority of
which reduced the outstanding mortgage loan to its current balance. The
venture also intended at that time to convey title to the property to the
lender; however, such conveyance was deferred pending resolution of certain
general development obligations of the venture as well as certain
environmental issues. The venture had been negotiating with the lender
regarding the scope of the development and environmental work required to
be done. Negotiations with the lender were unsuccessful, and the lender
has filed a lawsuit with the Broward County Circuit Court in which the
lender asserts, among other things, that 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 lender is
demanding payment of the outstanding loan balance plus interest thereon.
The Partnership believes this claim is without merit and is vigorously
defending the lawsuit. With respect to the environmental issues, the
previous owner remains obligated to undertake the clean-up pursuant to,
among other things, a surviving obligation under the purchase and sale
agreement. The clean-up began in July 1994, and the first phase of the
remedial action plan was completed in October 1994. Further action plans
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
are now underway. If the previous owner is unable to fulfill all its
obligations as they relate to this environmental issue, the venture and
ultimately the Partnership may be obligated for such costs. Should this
occur, the Partnership does not anticipate the cost of this clean-up to be
material to its operations.
The Partnership is seeking a permit to develop approximately 1,166 of
the approximate 2,475 gross acres contained in Increment III of the Weston
Community, portions of which are environmentally sensitive areas and are
subject to protection as wetlands. The Partnership's current application
for a wetlands permit for Increment III, as modified on July 31, 1995,
includes proposed wetlands mitigation of approximately 1,553 acres. This
includes approximately 226 acres of land owned by the Partnership outside
of Increment III, and approximately 18 acres of land owned by the Florida
Department of Transportation which will be included in the mitigation
response. The land outside Increment III was acquired to augment the
Partnership's mitigation response to The United States Army Corps of
Engineers (the "Corps"), which is the governmental agency responsible for
issuing permits involving development of wetlands areas. The mitigation
proposal calls for the improvement of the function and value of the
wetlands, including development of refuge habitat areas, and ongoing
maintenance and monitoring of the same. After the mitigation response, the
Partnership will have approximately 1,166 acres available for residential
and commercial development, less requirements for schools, parks, roads and
related development infrastructure.
During October 1994, the Corps performed an independent analysis of
the wetlands impact and mitigation, and on May 15, 1995, the Partnership
received a formal response from the Corps regarding the results of this
analysis. The Corps' response contained a computation of wetland impacts
and mitigation credits showing a net loss of 59 functional units as
analyzed by the Corps. The Corps required the Partnership to demonstrate
mitigation for wetland impacts resulting from the project and how the
Partnership would recover the loss of the 59 functional units. The
Partnership filed supplemental submittal No. 7 on July 31, 1995 describing
how the Partnership proposes to overcome the deficit and that analysis has
been accepted by the Corps. The Partnership's application was subject to a
30 day comment period which expired September 1, 1995. Comments were
received from the Environmental Protection Agency ("EPA") and the U.S. Fish
and Wildlife Service, among others. In a letter received in November 1995,
the EPA removed its objection to permit issuance, making a finding that the
"applicant has addressed the EPA's concerns on water quality issues and
compensatory mitigation to our (EPA's) satisfaction." The Corps is
continuing to process the Partnership's current application as modified on
July 31, 1995. The Partnership is now negotiating what it anticipates to
be final permit conditions which, when concluded, should allow issuance of
the permit.
If the Corps ultimately issues a permit generally on the same terms
and conditions as set forth in the Partnership's amended application, the
EPA has now relinquished its right to veto or elevate the permit decision
to higher governmental officials so long as the issued permit tracks the
permit reviewed by the EPA. If the Partnership does not ultimately receive
its permit through the administrative process, it may seek a judicial
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
review in Federal district court of the denial of the permit.
Additionally, the Partnership could initiate an action in the United States
Court of Federal Claims seeking a determination that denial of the permit
constitutes a "taking" of the Partnership's property for which the
Partnership is due just compensation. The pursuit of these legal actions
would likely be lengthy.
The Partnership continues to believe that it will ultimately obtain a
permit from the Corps to develop Increment III of the Weston Community on
substantially the same terms and conditions for which it has currently
applied, including the July 31, 1995 modification. However, there is no
assurance that such permit will in fact be obtained or, if not obtained,
that the Partnership would be successful in pursuing the above-mentioned
legal actions. In addition, if such a permit were obtained, the
Partnership would also need certain other approvals, including state and
local approvals, to develop Increment III in accordance with the
Partnership's current development plans. If such permits and other
approvals are not obtained, the Partnership would be required to revise its
development plans for the remaining portions of Increment I and II of the
Weston Community, as well as its development plans for Increment III. Such
revisions would have a material adverse impact on the timing and amount of
net income and net cash flow ultimately realized by the Partnership from
the development of the Weston Community.
The Partnership may be responsible for funding certain other ancillary
activities for related entities in the ordinary course of business which
the Partnership does not currently believe will have any material effect on
its consolidated financial position or results of operations.
(8) TAX INCREMENT FINANCING ENTITIES
In connection with the development of the Partnership's Weston
Community, bond financing is utilized to construct certain on-site and off-
site infrastructure improvements, including major roadways, lakes, other
waterways and pump stations, which the Partnership would otherwise be
obligated to finance and construct as a condition to obtain certain
approvals for the project. This bond financing is obtained by The Indian
Trace Community Development District ("District"), a local government
district operating in accordance with Chapter 190 of the Florida Statutes.
Under this program, the Partnership is not obligated directly to repay the
bonds. Rather, the bonds are expected to be fully serviced by special
assessment taxes levied on the property, which effectively collateralizes
the obligation to pay such assessments. 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.
For the twelve months ended December 31, 1994, the Partnership paid special
assessments of approximately $5.0 million.
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. In order
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
to reduce the exposure of variable rate debt, the District pursued new bond
issuances. During March 1995, the District issued approximately $98.6
million of bonds at fixed rates of interest ranging from 4% to 8.25% per
annum. These bonds mature in various years commencing May 1999 through May
2011. The proceeds from this offering were used to refund the outstanding
1989 and 1991 bonds described above, as well as to fund the issuance costs
incurred in connection with this offering and deposits to certain reserve
accounts for future bond debt service requirements. At September 30, 1995,
the amount of bonds issued and outstanding totalled $98,575,000.
(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.
Section 4.2F of the Partnership Agreement requires the allocation of
Profits (as defined) to the General Partner and Associate Limited Partners
in order to take account of a current or anticipated reduction in the
Partnership's indebtedness and certain other circumstances. As the
Partnership had net income for financial reporting and Federal income tax
purposes for the nine months ended September 30, 1995, an allocation of
Profits to the General Partner and Associate Limited Partners in accordance
with Section 4.2F of the Partnership Agreement was not required for this
period. In future periods in which the Partnership incurs a loss, the
General Partner and Associate Limited Partners may be allocated Profits
pursuant to Section 4.2F equivalent to the amount of loss (as adjusted for
such allocation of Profits), if any, allocable to them for financial
reporting and Federal income tax purposes.
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 their Capital
Investments. Any deferred amounts owed to the General Partner and
Associate Limited Partners (collectively) will be distributable to them out
ARVIDA/JMB PARTNERS, L.P.
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONCLUDED
of Cash Flow to the extent of one-half of Cash Flow otherwise distributable
to the Holders of Interests at such time as the Holders of Interests 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 financial statements as of
September 30, 1995 and December 31, 1994 and for the three and nine month
periods ended September 30, 1995 and 1994.<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 September 30, 1995 and December 31, 1994, the Partnership had cash
and cash equivalents of approximately $667,000 and $22,024,400,
respectively. The decrease in cash and cash equivalents at September 30,
1995 as compared to December 31, 1994 is due primarily to required debt
service payments as well as distributions to partners made in February
1995, as further discussed below. Remaining cash and cash equivalents were
available for debt service and working capital requirements. The source of
both short-term and long-term future liquidity is expected to be derived
primarily 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 decision to place more emphasis on the
Partnership's home building operations, management's efforts to broaden the
product lines offered within the Partnership's Communities, as well as the
robust housing market, the Partnership was able to generate significant
cash flow before debt service during 1994. The Partnership utilized this
excess cash flow to make scheduled and additional 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
1995, the Partnership made a distribution for 1994 of $5,421,680 to its
Limited Partners ($13.42 per Interest) and $301,201 to the General Partner
and Associate Limited Partners, collectively. In addition, during the
first quarter of 1995, the Partnership remitted each Limited Partner's
share of a North Carolina non-resident withholding tax on behalf of each of
the Limited Partners. Such payment, which totalled $26,784 ($.07 per
Interest), was deemed a distribution to the Limited Partners. An
additional distribution of $1,488 was also paid at that time to the General
Partner and Associate Limited Partners, collectively, a portion of which
was also remitted to the state tax authorities on their behalf.
At September 30, 1995, the Partnership's credit facility consists of a
term loan in the original amount of $85,252,520, a revolving line of credit
facility up to $20 million, an income property term loan in the original
amount of $18,233,326 and a $15 million letter of credit facility. The
term loan, the revolving line of credit and the letter of credit facility
are secured by recorded mortgages on all otherwise unencumbered real
property assets of the Partnership as well as an assignment of all
mortgages receivable, equity memberships, certain joint venture interests
or joint venture proceeds, and cash balances (with the exception of
deposits held in escrow). The income property term loan is secured by the
recorded first mortgage on a mixed-use center in Boca Raton, Florida.
Another office building also located in Boca Raton which served as
additional collateral for the income property term loan was sold in May
1995. All of the notes under the facility are cross-collateralized and
cross-defaulted.
Under the term loan agreement, the Partnership made scheduled
principal payments of $10 million in March 1994 and February 1995 and a $5
million principal payment in July 1995. 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. During the nine months ended September 30, 1995, the Partnership
made such additional term loan payments totalling approximately $21.1
million. Principal repayments of $10 million and $5 million on the term
loan are due in February 1996 and July 1996, respectively. The remaining
balance outstanding is due in July 1997. Under the income property term
loan, principal payments of $0.1 million are required to be paid monthly
until March 1996 when the remaining outstanding principal balance will be
due. The revolving line of credit matures in December 1995. The letter of
credit facility was scheduled to mature in July 1995, but has been extended
for one year and will mature in July 1996. At September 30, 1995, all of
the term loan proceeds had been borrowed with a remaining balance of
$37,394,526. The balances outstanding on the revolving line of credit
facility, the income property term loan and the letter of credit facility
at September 30, 1995 are $16,000,000, $13,066,746 and $8,546,767,
respectively.
The Partnership closed on the sale of an office building located in
downtown Boca Raton, Florida known as Mizner Place during May, 1995. In
accordance with the terms of the Partnership's credit facility, the net
proceeds from the sale of approximately $4.0 million were used to paydown
the income property term loan.
The credit 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. Although the
Partnership's term loan, income property term loan, revolving line of
credit and letter of credit facility mature at varying dates ranging from
December 1995 to July 1997, as discussed above, the Partnership believes
that the current and expected future liquidity and capital resources of the
Partnership, including its credit facilities, generally should be adequate
to fund currently expected short- and long-term capital requirements for
development and other costs of operations. At this time, the Partnership
anticipates renewing certain of its facilities with its lenders at the time
of their maturities. Although there can be no assurance, the Partnership
currently believes that it will be able to obtain such renewals from its
lenders.
The Partnership had previously executed a contract to purchase
approximately 241 acres of undeveloped land adjacent to its River Hills
Community located near Tampa, Florida. The due diligence phase with
respect to this acquisition has terminated, during which the Partnership
and seller were unable to reach terms for final agreement acceptable to the
Partnership. To date, there have been no further negotiations with the
seller regarding this acquisition.
The Partnership has a $28.9 million revolving construction line of
credit for three buildings and certain amenities within the Partnership's
condominium project on Longboat Key, Florida known as Arvida's Grand Bay.
This line of credit currently bears interest at the lender's prime rate
(8.75% at September 30, 1995) plus 1/2% per annum and matures in January
1997. At September 30, 1995, approximately $10.0 million was outstanding
under this line of credit, related to two buildings currently under
construction. The Partnership currently anticipates that this amount will
be repaid from the proceeds from the sale of condominium units within these
two buildings. The receipt of sales proceeds from units sold within the
first building prior to December 31, 1994 which closed during the nine
months ended September 30, 1995 is the primary cause of the decrease in
trade and other accounts receivable at September 30, 1995 as compared to
December 31, 1994.
The Partnership is seeking a permit to develop approximately 1,166 of
the approximate 2,475 gross acres contained in Increment III of the Weston
Community, portions of which are environmentally sensitive areas and are
subject to protection as wetlands. The Partnership's current application
for a wetlands permit for Increment III, as modified on July 31, 1995,
includes proposed wetlands mitigation of approximately 1,553 acres. This
includes approximately 226 acres of land owned by the Partnership outside
of Increment III, and approximately 18 acres of land owned by the Florida
Department of Transportation which will be included in the mitigation
response. The land outside Increment III was acquired to augment the
Partnership's mitigation response to The United States Army Corps of
Engineers (the "Corps"), which is the governmental agency responsible for
issuing permits involving development of wetlands areas. The mitigation
proposal calls for the improvement of the function and value of the
wetlands, including development of refuge habitat areas, and ongoing
maintenance and monitoring of the same. After the mitigation response, the
Partnership will have approximately 1,166 acres available for residential
and commercial development, less requirements for schools, parks, roads and
related development infrastructure.
During October 1994, the Corps performed an independent analysis of
the wetlands impact and mitigation and on May 15, 1995 the Partnership
received a formal response from the Corps regarding the results of this
analysis. The Corps' response contained a computation of wetland impacts
and mitigation credits showing a net loss of 59 functional units as
analyzed by the Corps. The Corps required the Partnership to demonstrate
mitigation for wetland impacts resulting from the project and how the
Partnership would recover the loss of the 59 functional units. The
Partnership filed supplemental submittal No. 7 on July 31, 1995 describing
how the Partnership proposes to overcome the deficit and that analysis has
been accepted by the Corps. The Partnership's application was subject to a
30 day comment period expiring September 1, 1995. Comments were received
from the Environmental Protection Agency ("EPA") and the U.S. Fish and
Wildlife Service, among others. In a letter received in November 1995, the
EPA removed its objection to permit issuance, making a finding that the
"applicant has addressed the EPA's concerns on water quality issues and
compensatory mitigation to our (EPA's) satisfaction." The Corps is
continuing to process the Partnership's current application as modified on
July 31, 1995. The Partnership is now negotiating what it anticipates to
be final permit conditions which, when concluded, should allow issuance of
the permit.
If the Corps ultimately issues a permit generally on the same terms
and conditions as set forth in the Partnership's amended application, the
EPA has now relinquished its right to veto or elevate the permit decision
to higher governmental officials so long as the issued permit tracks the
permit reviewed by the EPA. If the Partnership does not ultimately receive
its permit through the administrative process, it may seek a judicial
review in Federal district court of the denial of the permit.
Additionally, the Partnership could initiate an action in the United States
Court of Federal Claims seeking a determination that denial of the permit
constitutes a "taking" of the Partnership's property for which the
Partnership is due just compensation. The pursuit of these legal actions
would likely be lengthy.
The Partnership continues to believe that it will ultimately obtain a
permit from the Corps to develop Increment III of the Weston Community on
substantially the same terms and conditions for which it has currently
applied, including the July 31, 1995 modification. However, there is no
assurance that such permit will in fact be obtained or, if not obtained,
that the Partnership would be successful in pursuing the above-mentioned
legal actions. In addition, if such a permit were obtained, the
Partnership would also need certain other approvals, including state and
local approvals, to develop Increment III in accordance with the
Partnership's current development plans. If such permits and other
approvals are not obtained, the Partnership would be required to revise its
development plans for the remaining portions of Increment I and II of the
Weston Community, as well as its development plans for Increment III. Such
revisions would have a material adverse impact on the timing and amount of
net income and net cash flow ultimately realized by the Partnership from
the development of the Weston Community.
In addition, the Partnership has been advised by Merrill Lynch that
various investors have sought to compel Merrill Lynch to arbitrate claims
brought by certain investors of the Partnership representing approximately
5% of the total of approximately 404,000 Interests outstanding. Merrill
Lynch has asked the Partnership and its General Partner to confirm an
obligation of the Partnership and its General Partner to indemnify Merrill
Lynch in these claims against all loss, liability, claim, damage and
expense, including without limitation attorneys' fees and expenses, under
the terms of a certain Agency Agreement dated September 15, 1987 ("Agency
Agreement") with the Partnership relating to the sale of Interests through
Merrill Lynch on behalf of the Partnership. These claimants have sought
and are seeking to arbitrate claims involving 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. Some of these investors have begun the arbitration
process. The Partnership believes that Merrill Lynch has resolved some of
these claims through litigation, and otherwise; and that Merrill Lynch is
defending other 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. Although there can be no
assurance regarding the outcome of the claims for indemnification, at this
time, based on information presently available about such arbitration
statements of claims, the Partnership and its General Partner do not
believe that the demands for indemnification by Merrill Lynch will have a
material adverse effect on the financial condition of the Partnership.
Reference is made to Part II - OTHER INFORMATION - Item 1. Legal
Proceedings, for a discussion of various lawsuits, in which the Partnership
is a defendant, allegedly arising out of or relating to Hurricane Andrew
and certain property damage allegedly suffered by the plaintiffs at a
previously developed community known as Country Walk.
RESULTS OF OPERATIONS
The results of operations for the three and nine months ended
September 30, 1995 and 1994 are primarily attributable to the development
and sale or operation of the Partnership's assets. See Note 1 for a
discussion regarding the recognition of profit from sales of real estate.
For the quarter ended September 30, 1995, the Partnership (including
its consolidated joint ventures) closed on the sale of 269 housing units,
109 homesites and approximately two acres of developed land. This compares
to closings in the third quarter of 1994 of 215 housing units, 136 home-
sites and approximately 12 acres of undeveloped land tracts. Outstanding
contracts ("backlog") as of September 30, 1995 were for 1,038 housing
units, 157 homesites and approximately ten acres of developed and
undeveloped land tracts. This compares to a backlog as of September 30,
1994 of 952 housing units, 107 homesites and approximately 18 acres of
developed and undeveloped land tracts.
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 mid 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.
The Broken Sound Community, located in Boca Raton, Florida, is complete and
had its final closings in 1995. Future revenues will be impacted to the
extent that there are lower levels of inventories available for sale as
these Communities approach or undertake their final phases.
Revenues from housing and homesite activities are recognized upon the
closing of homes built by the Partnership and developed lots, respectively,
within the Partnership's Communities. Land and property revenues are
generated from the closing of developed and undeveloped residential and/or
commercial land tracts, the sale of operating properties as well as gross
revenues earned from the sale of equity memberships in the clubs within the
Partnership's Boca Raton and Jacksonville, Florida Communities, as well as
its Community near Highlands, North Carolina.
Cost of revenues pertaining to the Partnership's housing sales reflect
the cost of the acquired assets as well as development and construction
expenditures, certain capitalized overhead costs, capitalized interest,
real estate taxes and marketing, as well as 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 and real estate taxes, as well as
disposition costs. Land and property costs reflect the cost of the
acquired assets, certain development costs and related disposition costs,
as well as the cost associated with the sale of equity memberships.
South Florida building code changes, which have been effective since
September 1, 1994, have impacted construction requirements in Dade and
Broward Counties. These building code changes have resulted in increased
construction costs, not all of which have been recoverable from the home
purchasers at this time. As a result, the Partnership anticipates some
erosion in its gross operating profit margins from housing and homesite
sales during 1995 as compared to 1994.
Historically, a substantial portion of the Partnership's housing
revenues during the first six months of a given year are generated from the
closing of units contracted in the prior year. The increase in housing
revenues for the nine months ended September 30, 1995 as compared to the
same period in 1994 is primarily attributable to the substantial increase
in the backlog of unclosed housing units at the Partnership's Weston
Community, as well as the increased backlog at its Communities in
Jacksonville, Florida, at December 31, 1994 in comparison to December 31,
1993. The increase in revenues for the three months ended September 30,
1995 as compared to the same period in 1994 is due primarily to the
introduction of new products in Weston and Jacksonville which had their
initial closings in the fourth quarter of 1994. In addition, during 1994,
the Partnership commenced home building activities in its Waters Edge and
Dockside Communities. Initial revenues from the closings of these homes
were generated in 1995, also contributing to the favorable revenue variance
for the three and nine months ended September 30, 1995. The favorable
variance in housing revenues is partially offset by a decrease in the
number of units closed at the Partnership's Broken Sound Community which
had its final closings in 1995. Also offsetting the favorable variance was
a decline in the amount of revenue recognized under the percentage of
completion method at Arvida's Grand Bay on Longboat Key, Florida. The
Partnership recognized the initial revenue from this project in May of
1994.
The gross operating profit margin from housing activity decreased for
the three and nine months ended September 30, 1995 primarily as a result of
the substantial decline in the number of units closed at the Partnership's
Broken Sound Community. Due to the close-out of this Community's higher
priced, higher profit margin product built by the Partnership, future gross
operating margins from housing activities are not expected to be as high as
recent years' margins. Also contributing to the decrease in the gross
operating profit margin from housing activities is additional cost of sales
recorded in the third quarter of 1995 to reflect increased construction
costs incurred on the first two buildings at Arvida's Grand Bay with no
corresponding increase in sales revenues from closings for these buildings.
The decrease in homesite revenues for the nine months ended September
30, 1995 as compared to the same period in 1994 is due primarily to fewer
lot closings in the Partnership's Weston and Sawgrass Country Club
Communities. Fewer closings were generated in Weston as a result of a slow
down in sales of the higher priced product in that Community. The decrease
in closings at Sawgrass Country Club is due to the close-out of lots in
that Community in the third quarter of 1995. Homesite revenues decreased
for the three months ended September 30, 1995 as compared to the same
period in 1994 due primarily to the close-out of lots at Sawgrass Country
Club in the third quarter of 1995, as well as slower sales activity at the
Partnership's Cullasaja Community near Highlands, North Carolina. The
decrease in homesite revenues for the three and nine month periods ended
September 30, 1995 as compared to the same periods in 1994 is also due to
fewer closings at River Hills due to management's decision to place more
emphasis on its home building operations in that Community. Due to the
emphasis on its home building operations, the Partnership's homesite
revenues for 1995 and future years are expected to fall substantially below
amounts recognized in prior years.
The decrease in the gross operating profit margin from homesite
activities for the nine months ended September 30, 1995 as compared to the
same period in 1994 is due primarily to certain adjustments made to the
cost of sales in the first quarter of 1994 to reflect changes in
development cost estimates for certain of the Partnership's products,
primarily in the Weston Community.
The increase in land and property revenues for the nine months ended
September 30, 1995 as compared to the same period in 1994 is due primarily
to closings in 1995 of approximately 67.3 acres of undeveloped commercial
land parcels in Palm Beach County, Florida, the sale of the Partnership's
cable operation in its Broken Sound Community and the sale of an office
building located in downtown Boca Raton, Florida known as Mizner Place.
Also contributing to the increased revenues is the sale of approximately 82
acres of undeveloped land located near Sarasota, Florida, which was
distributed to the Partnership by one of its unconsolidated joint ventures.
Land and property revenues for the nine months ended September 30, 1994
consisted primarily of approximately 12 acres of undeveloped commercial
land parcels in the Partnership's Weston Community, as well as an
approximate 7-acre undeveloped commercial parcel in Palm Beach County,
Florida. The decrease in land and property revenues for the three months
ended September 30, 1995 as compared to the same period in 1994 is due
primarily to 1994 revenues including the sale of an approximate 12-acre
undeveloped commercial parcel in Weston, while there were no significant
closings in the third quarter of 1995. In addition, the unfavorable
revenue variance for the third quarter in 1995 as compared to the same
quarter in 1994 resulted from fewer memberships sold at the Partnership's
equity clubs in its Sawgrass Country Club Community in Florida as well as
the Cullasaja Club near Highlands, North Carolina.
The increase in the gross operating profit margin from land and
property sales for the nine months ended September 30, 1995 as compared to
the same period in 1994 is due primarily to the low cost basis of the land
sales generated in 1995. Also contributing to the increase in the profit
margin for the three and nine months ended September 30, 1995 as compared
to the same period in 1994 is an increase in the profits recognized on
sales of memberships at certain of the Partnership's equity clubs.
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 nine months ended September 30, 1995 as
compared to the same periods in 1994 due primarily to increased membership
activity at the Partnership's club operations in Weston. Due to the fixed
nature of certain of the costs incurred at the Partnership's clubs, the
gross operating profit margin from operating properties improved as a
result of the increase in revenues.
Brokerage and other operations represents activity from the sale of
unaffiliated third-party builders' homes within the Partnership's
Communities, activity from the resale of real estate inside and outside of
the Partnership's Communities, proceeds from the Partnership's property
management activities, as well as fees earned from various management
agreements with joint ventures. The decrease in revenues from brokerage
and other operations for the three and nine month periods ended September
30, 1995 as compared to the same periods in 1994 is due to a decrease in
the number of builder unit closings in the Partnership's Broken Sound and
Sawgrass Country Club Communities, as well as decreased builder unit
closings in the Partnership's Weston Community resulting from the
Partnership's increased emphasis on its home building operations. Revenues
for the three and nine months ended September 30, 1995 also decreased as
compared to the same periods in 1994 due to a lower volume of resale
activity generated in Palm Beach County and Sarasota, Florida.
The gross operating profit margin from brokerage and other operations
declined for the nine month period ended September 30, 1995 as compared to
the same period in 1994 primarily due to an adjustment recorded to cost of
revenues during the first quarter of 1995 to properly reflect commissions
paid in connection with the sales of builders' homes within the
Partnership's Communities which had closed prior to December 31, 1994. The
decrease in builder unit closing activity as well as the decreased resale
activities discussed above also contributed to the decline in the gross
operating profit margin from brokerage and other operations for the three
and nine months ended September 30, 1995 as compared to the same periods in
1994.
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. The increase in selling, general and
administrative expenses for the nine months ended September 30, 1995 as
compared to the same periods in 1994 is due primarily to an increase in
project administrative costs and marketing expenditures at certain of the
Partnership's Communities related to the increased housing volume discussed
above. The unfavorable variance for the three and nine months ended
September 30, 1995 as compared to the same periods in 1994 also resulted
from lower marketing fees earned due to the decrease in the number of
builder unit closings within the Partnership's Communities as discussed
above, as well as an increase in legal fees incurred.
Writedowns to the carrying value of real estate inventories and other
assets for the three and nine months ended September 30, 1995 represents a
writedown of approximately $8.5 million to Investments in and Advances to
Joint Ventures. The Partnership has been evaluating its long-term plans
for its interest in the Coto de Caza Joint Venture and is considering a
shorter holding period than originally anticipated. Therefore, the
Partnership recorded this writedown to reflect the fair value of this
investment under present market conditions.
The increase in equity in earnings of unconsolidated ventures for the
nine months ended September 30, 1995 as compared to the same period in 1994
resulted primarily from the recording of the Partnership's share of income
generated from a land sale by its commercial joint venture located in
Ocala, Florida.
Interest and real estate taxes decreased for the three and nine months
ended September 30, 1995 as compared to the same periods in 1994 due
primarily to a decrease in the average amount of borrowings outstanding
during the period, as well as an increase in the amount of real estate
inventories which meet the requirements for capitalization of these costs.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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.
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.
The Partnership entered into a court-approved settlement which
resolved substantial portions of the pending homeowners' lawsuits that had
been filed. Homeowners of approximately 85% of the units in Country Walk
accepted the settlement which 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, or otherwise, is uncertain. Due to this uncertainty, the
accompanying consolidated financial statements do not reflect an accrual
for such costs.
The Partnership was a party to a number of claims brought by
condominium and patio homeowners, all of whom have declined to accept the
terms of the class action settlement. These actions have been settled for
approximately $520,000. One of the Partnership's insurers has funded these
settlements. The amount of money that the insurance company may recover
from the Partnership pursuant to any reservation of rights, or otherwise,
is uncertain. Therefore, the accompanying consolidated financial
statements do not reflect any accruals related to this matter.
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 was issued by one of the
Partnership's insurance carriers in connection with the payment of
approximately $740,000 of the settlement. 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 any accruals related to this matter.
The Partnership was 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 one of the Partnership's insurance carriers. The
aggregate amount of these settlements is approximately $4.5 million. 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. Therefore, the
accompanying consolidated financial statements do not reflect any accruals
related to this matter.
Currently, the Partnership is involved in two subrogation actions. On
April 19, 1993, a subrogation claim entitled Village Homes at Country Walk
Master Maintenance Association, Inc. v. Arvida Corporation et al., was
filed in the 11th Judicial Circuit for Dade County. Plaintiffs filed this
suit for the use and benefit of American Reliance Insurance Company
("American Reliance"). In this suit, as amended, plaintiffs seek to
recover damages and pre- and post-judgment interest in connection with
$10,873,000 American Reliance has allegedly paid, plus amounts it may have
to pay in the future, to the condominium association at Country Walk in the
wake of Hurricane Andrew. Disney is also a defendant in this suit. The
Partnership believes that the amount of this claim that allegedly relates
to units it sold is approximately $3,600,000. Plaintiffs also seek a
declaratory judgement seeking to hold the Partnership and other defendants
responsible for amounts American Reliance must pay in the future to its
insured as additional damages beyond the $10,873,000 previously paid. The
Partnership has filed motions directed to the complaint, as amended, and
the litigation is in the discovery stage. The Partnership intends to
vigorously defend itself. The Partnership is also involved in a
subrogation action brought by the Insurance Company of North America
("INA") arising out of a claim that INA allegedly paid on a single home in
Country Walk. The Partnership intends to vigorously defend itself in this
action, as well. The Partnership could be named in other subrogation
actions, and in such event, the Partnership intends to vigorously defend
itself in such actions.
As noted above, one of the Partnership's insurance carriers has been
funding settlements of various litigation related to Hurricane Andrew. In
some, but not all, instances, the insurance carrier has provided the
Partnership with written reservation of rights letters. The aggregate
amount of the settlements funded to date by this carrier is approximately
$8.0 million. The insurance carrier that funded these settlements pursuant
to certain reservations of rights has stated its position that it has done
so pursuant to various non-waiver agreements. The carrier's position was
that these non-waiver agreements permitted the carrier to fund settlements
without barring the carrier from raising insurance coverage issues or
waiving such coverage issues. On May 23, 1995, the insurance carrier
rescinded the various non-waiver agreements currently in effect regarding
the remainder of the Hurricane Andrew litigation, allegedly without waiving
any future coverage defenses, conditions, limitations, or rights. For this
and other reasons, the extent to which the insurance carrier may recover
any of these proceeds from the Partnership is uncertain. Therefore, the
accompanying consolidated financial statements do not reflect any accruals
related to this matter.
The Partnership was involved in a lawsuit captioned Berry v. Merrill
Lynch, Pierce Fenner & Smith, Arvida/JMB Partners, Limited Partnership,
Arvida/JMB Managers, Inc., JMB Realty Corporation and Does 1 through 100,
which was filed in the Superior Court of the State of California in and for
the County of San Diego, Case No. 669709. The lawsuit was 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 lawsuit
alleged, 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 lawsuit further alleged that such conduct violated
California state law relating to fraud, constructive fraud, breach of
fiduciary duty, willful suppression of facts, breach of the covenant of
good faith, and conspiracy. The Partnership filed an answer denying the
material allegations of the complaint and setting forth various affirmative
defenses. Subsequent thereto, defendants settled the suit in order to put
to rest all controversy and to avoid further disruption to defendants'
ordinary business operations and the expense, burden and risk of protracted
litigation. The settlement, which has been concluded, is not an admission
of liability, which the defendants expressly denied. The settlement did
not result in the payment of a material amount by the defendants.
In addition, the Partnership has been advised by Merrill Lynch that
various investors have sought to compel Merrill Lynch to arbitrate claims
brought by certain investors of the Partnership representing approximately
5% of the total of approximately 404,000 Interests outstanding. Merrill
Lynch has asked the Partnership and its General Partner to confirm an
obligation of the Partnership and its General Partner to indemnify Merrill
Lynch in these claims against all loss, liability, claim, damage and
expense, including without limitation attorneys' fees and expenses, under
the terms of a certain Agency Agreement dated September 15, 1987 ("Agency
Agreement") with the Partnership relating to the sale of Interests through
Merrill Lynch on behalf of the Partnership. These claimants have sought
and are seeking to arbitrate claims involving 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. Some of these investors have begun the arbitration
process. The Partnership believes that Merrill Lynch has resolved some of
these claims through litigation and otherwise, and that Merrill Lynch is
defending other 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. Although there can be no
assurance regarding the outcome of the claims for indemnification, at this
time, based on information presently available about such arbitration
statements of claims, the Partnership and its General Partner do not
believe that the demands for indemnification by Merrill Lynch will have a
material adverse effect on the financial condition of the Partnership.
On or about October 16, 1995, a lawsuit was filed against the
Partnership and others in the Circuit Court of the 15th Judicial Circuit,
in and for Palm Beach County, Florida, entitled Council of Villages, Inc.
et al v. Arvida/JMB Partners, Arvida/JMB Managers, Inc., Arvida/JMB
Partners, Ltd., Broken Sound Club, Inc., and Country Club Maintenance
Association, Inc., Case No. CL 95 8107-AJ. The multi-count lawsuit is
brought as a class action, and individually, on behalf of various residents
of the Broken Sound Community, and alleges that defendants engaged in
various acts of misconduct in, among other things, the establishment,
operation, management and marketing of the Broken Sound golf course and
recreational facilities, as well as the alleged improper failure to turn
over said facilities to the Broken Sound homeowners on a timely basis.
Plaintiffs seek, through various theories, including but not limited to
breach of ordinance, fiduciary duty, fraud, and civil theft, damages in
excess of $45 million, the appointment of a receiver for the Broken Sound
Club, other unspecified compensatory damages, the right to seek punitive
damages, treble damages, prejudgment interest, attorneys' fees and costs.
The Partnership believes that the lawsuit is without merit and intends to
vigorously defend itself in this matter.
Other than as described above, the Partnership is not subject to any
material pending legal proceedings, other than ordinary routine litigation
incidental to the business of the Partnership. Reference is made to Note 2
regarding certain other litigation involving the Partnership. Reference is
also made to Note 7 of Notes to Consolidated Financial Statements for a
discussion of certain claims by Merrill Lynch for indemnification by the
Partnership and the General Partner against losses and expenses that may be
suffered by Merrill Lynch relating to claims for arbitration asserted
against it by certain investors in the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1. Amended and Restated Agreement of Limited Partnership.*
3.2. Assignment Agreement by and among the General Partner, the
Initial Limited Partner and the Partnership.*
4.1. Amended and Restated Credit Agreement dated October 7, 1992,
among Arvida/JMB Partners, L.P., Arvida/JMB Partners, Southeast Florida
Holdings, Inc., Center Office Partners, Center Retail Partners, Center
Hotel Limited Partnership, Weston Hills Country Club Limited Partnership
and Chemical Bank and Nationsbank of Florida, N.A. is herein incorporated
by reference to Exhibit No. 4.4 to the Partnership's Report on Form 10-Q
(File number 0-16976) dated November 11, 1992.
4.2. Security Agreement dated as of October 7, 1992 made by
Arvida/JMB Partners, L.P., Arvida/JMB Partners, Southeast Florida Holdings,
Inc., Center Office Partners, Center Retail Partners, Center Hotel Limited
Partnership and Weston Hills Country Club Limited Partnership (as
"grantors") in favor of Chemical Bank and Nationsbank of Florida, N.A. (as
"lenders") is herein incorporated by reference to Exhibit No. 4.5 the
Partnership's Report on Form 10-Q (File number 0-16976) dated November 11,
1992.
4.3. Pledge Agreement dated as of October 7, 1992 among Arvida/JMB
Partners, L.P., Arvida/JMB Partners, Southeast Florida Holdings, Inc.,
Center Office Partners, Center Retail Partners, Center Hotel Limited
Partnership and Weston Hills Country Club Limited Partnership (as
"pledgors") and Chemical Bank and Nationsbank of Florida, N.A. (as
"lenders") is herein incorporated by reference to Exhibit No. 4.6 the
Partnership's Report on Form 10-Q (File number 0-16976) dated November 11,
1992.
4.4. Various mortgages and other security interests dated October
7, 1992 related to the assets of Arvida/JMB Partners, Center Office
Partners, Center Retail Partners, Center Hotel Limited Partnership, Weston
Hills Country Club Limited Partnership which secure loans under the Amended
and Restated Credit Agreement referred to in Exhibit 4.1 are herein
incorporated by reference to Exhibit No. 4.7 the Partnership's Report on
Form 10-Q (File number 0-16976) dated November 11, 1992.
4.7. $24,000,000 Consolidated Revolving Promissory Note dated
January 14, 1994 by and between Arvida Grand Bay Limited Partnership-I,
Arvida Grand Bay Limited Partnership-II, Arvida Grand Bay Limited
Partnership-III, Arvida Grand Bay Limited Partnership-IV, Arvida Grand Bay
Limited Partnership-V, and Arvida Grand Bay Limited Partnership-VI and
Barnett Bank of Broward County, N.A. is herein incorporated by reference to
the Partnership's report for December 31, 1993 on Form 10-K (File No. 0-
16976) dated March 25, 1994.
4.8. Amended and Restated Mortgage and Security Agreement dated
January 14, 1994 by and between Arvida Grand Bay Limited Partnership-I,
Arvida Grand Bay Limited Partnership-II, Arvida Grand Bay Limited
Partnership-III, Arvida Grand Bay Limited Partnership-IV, Arvida Grand Bay
Limited Partnership-V, Arvida Grand Bay Limited Partnership-VI and Arvida
Grand Bay Properties, Inc. and Barnett Bank of Broward County, N.A. is
herein incorporated by reference to the Partnership's report for December
31, 1993 on Form 10-K (File No. 0-16976) dated March 25, 1994.
4.9. Construction Loan Agreement dated January 14, 1994 by and
between Arvida Grand Bay Limited Partnership-I and Arvida Grand Bay
Properties, Inc. and Barnett Bank of Broward County, N.A. is herein
incorporated by reference to the Partnership's report for December 31, 1993
on Form 10-K (File No. 0-16976) dated March 25, 1994.
4.10. Second Amended and Restated Credit Agreement dated November
29, 1994, 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. ***
4.11. Affirmation and Amendment of Security Documents dated November
29, 1994, among 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 and Chemical Bank. ***
4.12. Modification of Mortgage and Security Agreement and Other loan
Documents dated November 29, 1994, among Arvida/JMB Partners, Weston Hills
Country Club Limited Partnership and Chemical Bank. ***
4.13. Modification of First Mortgage and Security Agreement and
Other Loan Documents dated November 29, 1994, among Arvida/JMB Partners,
Center Office Partners, Center Retail Partners, Center Hotel Limited
Partnership and Chemical Bank. ***
4.14. Credit Agreement extension dated July 28, 1995 made by
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 incorporated by reference to the Partnership's Report for June 30,
1995 on Form 10-Q (File No. 0-16976) dated August 9, 1995.
10.1. Agreement between the Partnership and The Walt Disney Company
dated January 29, 1987 is hereby incorporated by reference to Exhibit 10.2
to the Partnership's Registration Statement on Form S-1 (File No. 33-14091)
under the Securities Act of 1933 filed on May 7, 1987.
10.2. Management, Advisory and Supervisory Agreement is hereby
incorporated by reference to Exhibit 10.2 to the Partnership's report for
December 31, 1990 on Form 10-K (File No. 0-16976) dated March 27, 1991.
10.3. Letter Agreement, dated as of September 10, 1987, between the
Partnership and The Walt Disney Company, together with exhibits and related
documents.**
10.4. Joint Venture Agreement dated as of September 10, 1987, of
Arvida/JMB Partners, a Florida general partnership. **
10.5. Credit facility restructuring proposal between the Partnership
and Chemical Bank dated March 5, 1992 is hereby incorporated by reference
to Exhibit 10.5 to the Partnership's report for December 31, 1991 on Form
10-K (File No. 0-16976) filed on March 27, 1992.
27. Financial Data Schedule
* Previously filed with the Securities and Exchange
Commission as Exhibits 3. and 4.0, respectively, to the Partnership's Form
10-K Report (File No. 0-16976) filed on March 27, 1990 and incorporated
herein by reference.
** Previously filed with the Securities and Exchange
Commission as Exhibits 10.4 and 10.5, respectively, to the Partnership's
Registration Statement (as amended) on Form S-1 (File No. 33-14091) under
the Securities Act of 1933 filed on September 11, 1987 and incorporated
herein by reference.
*** Previously filed with the Securities and Exchange
Commission as Exhibits 4.10, 4.11, 4.12 and 4.13, respectively, to the
Partnership's Form 10-K Report (File No. 0-16976) filed on March 27, 1995
and hereby incorporated herein by reference.
(b) No reports on Form 8-K have been filed by the Partnership during
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: November 9, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: November 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000814046
<NAME> ARVIDA/JMB PARTNERS, L.P.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 16,022,503
<SECURITIES> 0
<RECEIVABLES> 16,797,001
<ALLOWANCES> (214,953)
<INVENTORY> 235,578,477
<CURRENT-ASSETS> 0
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<OTHER-SE> 212,750,217
<TOTAL-LIABILITY-AND-EQUITY> 372,495,414
<SALES> 244,033,955
<TOTAL-REVENUES> 244,033,955
<CGS> 194,648,077
<TOTAL-COSTS> 29,335,149
<OTHER-EXPENSES> 0
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