-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DnZBGXUDv61+Bk2M/HeOwavGrJJsRK1rmQ3imsz9C8sdYxE6SeiXpuYyQQTdkRyX 1U6P4OGvTnygqNMDvqTEZQ== 0000892626-97-000051.txt : 19970329 0000892626-97-000051.hdr.sgml : 19970329 ACCESSION NUMBER: 0000892626-97-000051 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JMB INCOME PROPERTIES LTD XIII CENTRAL INDEX KEY: 0000790603 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363426137 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-19496 FILM NUMBER: 97566343 BUSINESS ADDRESS: STREET 1: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3129151700 MAIL ADDRESS: STREET 1: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 10-K405 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1996 Commission file no. 000-19496 JMB INCOME PROPERTIES, LTD. - XIII ------------------------------------------------------ (Exact name of registrant as specified in its charter) Illinois 36-3426137 (State of organization) (I.R.S. Employer Identification No.) 900 N. Michigan Ave., Chicago, Illinois 60611 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code 312-915-1987 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered - ------------------- ------------------------------- None None Securities registered pursuant to Section 12(g) of the Act: LIMITED PARTNERSHIP INTERESTS (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K X State the aggregate market value of the voting stock held by non-affiliates of the registrant. Not applicable. Documents incorporated by reference: None TABLE OF CONTENTS Page ---- PART I Item 1. Business . . . . . . . . . . . . . . . . . . 1 Item 2. Properties . . . . . . . . . . . . . . . . . 5 Item 3. Legal Proceedings. . . . . . . . . . . . . . 8 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . 8 PART II Item 5. Market for the Partnership's Limited Partnership Interests and Related Security Holder Matters. . . . . . . 8 Item 6. Selected Financial Data. . . . . . . . . . . 9 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . 15 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . 48 PART III Item 10. Directors and Executive Officers of the Partnership . . . . . . . . . . . . . 48 Item 11. Executive Compensation . . . . . . . . . . . 51 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . 52 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . 53 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. . . . . . . . . . . 53 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 55 i PART I Item 1. Business All references to "Notes" are to Notes to Consolidated Financial Statements contained in this report. Capitalized terms used herein, but not defined, have the same meanings as used in the Notes. The registrant, JMB Income Properties, Ltd. - XIII (the "Partnership"), is a limited partnership formed in 1986 and currently governed by the Revised Uniform Limited Partnership Act of the State of Illinois to invest in income-producing properties, primarily existing commercial real properties. On August 20, 1986, the Partnership commenced an offering to the public of $100,000,000 (subject to increase by up to $250,000,000) in Limited Partnership Interests (the "Interests") pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (Registration No. 33-4107). A total of 126,409 Interests (at an offering price of $1,000 per Interest, before discounts) were sold to the public during 1987. The offering closed on April 14, 1987. No investor has made any additional capital contribution after such date. The investors in the Partnership share in their portion of the benefits of ownership of the Partnership's real property investments according to the number of Interests held. The Partnership is engaged solely in the business of the acquisition, operation, and sale and disposition of equity real estate investments. Such equity investments are held by fee title and/or through joint venture partnership interests. The Partnership's real property investments are located throughout the nation, and it has no real estate investments located outside the United States. A presentation of information about industry segments, geographic regions, raw materials or seasonality is not applicable and would not be material to an understanding of the Partnership's business taken as a whole. Pursuant to the Partnership Agreement, the Partnership is required to terminate no later than October 31, 2036. The Partnership is self-liquidating in nature. At sale of a particular property, the net proceeds, if any, are generally distributed or reinvested in existing properties rather than invested in acquiring additional properties. As discussed further in Item 7, the Partnership currently expects to conduct an orderly liquidation of its remaining investment portfolio as quickly as practicable and to wind up its affairs no later than December 31, 1999, barring any unforeseen economic developments. The Partnership has made the real property investments set forth in the following table:
SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1996, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP - ---------------------- ---------- -------- ---------------------- --------------------- 1. Mid Rivers Mall St. Peters (St. Louis), Missouri. . . . . . 323,100 12/12/86 1/30/92 Fee ownership of land and sq.ft. improvements (through g.l.a. joint venture partnerships) 2. First Financial Plaza Office Building Encino (Los Angeles), California. . . . . 216,000 5/20/87 9/11/96 Fee ownership of land and sq.ft. improvements (through n.r.a. joint venture partnerships) (c)(f) 3. Miami International Mall Miami, Florida. . . 967,300 1/1/88 4/8/96 Fee ownership of land and sq.ft. improvements (through g.l.a. joint venture partnerships) (c)(f) 4. Rivertree Court Shopping Center Vernon Hills (Chicago), Illinois. . . . . . 297,000 10/20/88 23% Fee ownership of land and sq.ft. improvements (b)(d)(e) g.l.a. 5. Fountain Valley Industrial Park Industrial Buildings Fountain Valley (Los Angeles), California. . . . . 393,100 11/1/88 16% Fee ownership of land and sq.ft. improvements (b)(e) b.a. SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1996, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP - ---------------------- ---------- -------- ---------------------- --------------------- 6. Cerritos Industrial Park Industrial Buildings Cerritos (Los Angeles), California. . . . . 197,100 11/1/88 7% Fee ownership of land and sq.ft. improvements (b)(e) b.a. 7. Adams/Wabash Self Park Chicago, Illinois . 671 spaces and 10/1/90 25% Fee ownership of land and 28,800 improvements (through sq.ft. joint venture partnership) g.l.a. (c)(d)(e) - ----------------------- (a) The computation of this percentage for properties held at December 31, 1996 does not include amounts invested from sources other than the original net proceeds of the public offering as described above and in Item 7. (b) Reference is made to the Notes and to Schedule III filed with this annual report for the current outstanding principal balances and a description of the long-term mortgage indebtedness secured by the Partnership's real property investments. (c) Reference is made to the Notes filed with this annual report for a description of the joint venture partnerships through which the Partnership made this real property investment. (d) Reference is made to Item 6 - Selected Financial Data for additional operating and lease expiration data concerning this investment property. (e) Reference is made to Item 8 - Schedule III filed with the annual report for further information concerning real estate taxes and depreciation. (f) The property has been sold. Reference is made to the Notes for a description of the sale of such real property investment.
The Partnership's real property investments are subject to competition from similar types of properties (including, in certain areas, properties owned by affiliates of the General Partners) in the vicinities in which they are located. Such competition is generally for the retention of existing tenants. Additionally, the Partnership is in competition for new tenants in markets where significant vacancies are present. Reference is made to Item 7 below for a discussion of competitive conditions and future renovation and capital improvement plans of the Partnership and certain of its significant investment properties. Approximate occupancy levels for the properties are set forth in Item 2 below to which reference is hereby made. The Partnership maintains the suitability and competitiveness of its properties in its markets primarily on the basis of effective rents, tenant allowances and service provided to tenants. In the opinion of the Managing General Partner of the Partnership, all of the investment properties held at December 31, 1996 are adequately insured. Although there is earthquake insurance coverage for a portion of the value of the Partnership's investment properties, the Managing General Partner does not believe that such coverage for the entire replacement cost of the investment properties is available on economic terms. In April 1996, effective March 31, 1996, the Partnership sold its direct interest in West Dade County Associates (which owned the land, building, related improvements and personal property known as the Miami International Mall located in Miami, Florida). Reference is made to the Notes for a further description of such transaction. The Partnership through JMB/First Financial Associates, a joint venture with JMB Income Properties, Ltd. - XII (a partnership sponsored by the Managing General Partner of the Partnership), has an interest in JMB Encino Partnership, L.P. ("Encino"), with an unaffiliated venture partner ("Encino Venture Partner"). On September 11, 1996, Encino sold the land, building, related improvements and personal property known as First Financial Office Building located in Encino, California. Reference is made to the Notes for a further description of such transaction. In December 1996, the Partnership sold the land, building, related improvements and personal property of one of the land parcels that compose the Fountain Valley Industrial Park located in Fountain Valley, California as described further in the Notes. Reference is made to the Notes for a schedule of minimum lease payments to be received in each of the next five years, and in the aggregate thereafter, under leases in effect at the Partnership's consolidated properties as of December 31, 1996. The Partnership has no employees other than personnel performing on- site duties at certain of the Partnership's properties, none of whom are officers or directors of the Managing General Partner of the Partnership. The terms of transactions between the Partnership, the General Partners and their affiliates are set forth in Item 11 below to which reference is hereby made for a description of such terms and transactions. Item 2. Properties The Partnership owns directly or through joint venture partnerships the properties or interests in the properties referred to under Item 1 above to which reference is hereby made for a description of said properties. The following is a listing of principal businesses or occupations carried on in and approximate physical occupancy levels by quarter during fiscal years 1996 and 1995 for the Partnership's investment properties owned during 1996:
1995 1996 ------------------------------ ------------------------------ Principal At At At At At At At At Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 ------------- ---- ---- ---- ----- ---- ---- ----- ----- 1. First Financial Plaza Encino (Los Angeles), California. . . . University/ Bank/Housing Developer 89% 86% 88% 89% 82% 84% N/A N/A 2. Miami Interna- tional Mall Miami, Florida. . Retail 89% 91% 90% 94% 94% N/A N/A N/A 3. Rivertree Court Shopping Center Vernon Hills (Chicago), Illinois. . . . . Retail 85% 96% 95% 99% 84% 83% 89% 90% 4. Fountain Valley Industrial Park Fountain Valley (Los Angeles), California. . . . Retail/ Electronics Repair/ Nuts and Bolts Distributor 92% 92% 100% 88% 93% 100% 94% 94% 5. Cerritos Industrial Park Cerritos (Los Angeles), California. . . . Aircraft Parts Manufacturer/ Tire Distributor 100% 100% 100% 100% 100% 100% 100% 100% 6. Adams/Wabash Self Park Chicago, Illinois. . . . . Parking Garage * * * * * * * * - -------------------- An asterisk indicates that the property is primarily a parking garage and occupancy information is not applicable. However, the approximate occupancy level for the retail portion of the structure as of December 31, 1996 is 45%. The Rivertree Court Shopping Center is 99% leased as of December 31, 1996. In December 1996, PetsMart (25,031 square feet or 8% of the property), which opened its store to the public on February 19, 1997, commenced rental payments per their lease, as further described in the Notes. Reference is made to Item 6, Item 7 and to the Notes for further information regarding property occupancy, competitive conditions and tenant leases at the Partnership's investment properties.
ITEM 3. LEGAL PROCEEDINGS The Partnership is not subject to any material pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of holders of Interests during fiscal years 1996 and 1995. PART II ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS As of December 31, 1996, there were 8,927 record holders of Interests of the Partnership. There is no public market for Interests, and it is not anticipated that a public market for Interests will develop. Upon request, the Managing General Partner may provide information relating to a prospective transfer of Interests to an investor desiring to transfer his Interests. The price to be paid for the Interests, as well as any other economic aspects of the transaction, will be subject to negotiation by the investor. There are certain conditions and restrictions on the transfer of Interests, including, among other things, the requirement that the substitution of a transferee of Interests as a Limited Partner of the Partnership be subject to the written consent of the Managing General Partner, which, may be granted or withheld in its sole and absolute discretion. The rights of a transferee of Interests who does not become a substituted Limited Partner will be limited to the rights to receive his share of profits or losses and cash distributions from the Partnership, and such transferee will not be entitled to vote such Interests or have other rights of a Limited Partner. No transfer will be effective until the first day of the next succeeding calendar quarter after the requisite transfer form satisfactory to the Managing General Partner has been received by the Managing General Partner. The transferee consequently will not be entitled to receive any cash distributions or any allocable share of profits or losses for tax purposes until such next succeeding calendar quarter. Profits or losses from operations of the Partnership for a calendar year in which a transfer occurs will be allocated between the transferor and the transferee based upon the number of quarterly periods in which each was recognized as the holder of the Interests, without regard to the results of the Partnership's operations during particular quarterly periods and without regard to whether cash distributions were made to the transferor or transferee. Profits or losses arising from the sale or other disposition of Partnership properties will be allocated to the recognized holder of the Interests as of the last day of the quarter in which the Partnership recognized such profits or losses. Cash distributions to a holder of Interests arising from the sale or other disposition of Partnership properties will be distributed to the recognized holder of the Interests as of the last day of the quarterly period with respect to which such distribution is made. Reference is made to Item 6 for a discussion of cash distributions made to the Limited Partners. ITEM 6. SELECTED FINANCIAL DATA JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE YEARS ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992 (NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
1996 1995 1994 1993 1992 ------------- ------------- ----------- ------------ ------------ Total income. . . . . . . $ 11,973,382 12,545,834 11,984,676 12,292,002 11,140,476 ============ ============ ============ ============ =========== Operating earnings (loss) . . . . . . . . . $ 3,526,448 (4,938,478) 2,853,977 3,179,510 2,206,794 Partnership's share of operations of uncon- solidated ventures . . . 258,637 760,913 (1,894,493) (157,847) (251,748) ------------ ------------ ------------ ------------ ------------ Net operating earnings (loss) . . 3,785,085 (4,177,565) 959,484 3,021,663 1,955,046 Partnership's share of gain on sale of investment property and gain on sale of investment property from unconsolidated venture . . . . . . . . 11,090,549 -- 298,917 346,208 6,366,463 ------------ ------------ ------------ ------------ ------------ Net earnings (loss) before partnership's share of extra- ordinary item from unconsolidated venture . . . . . . . . 14,875,634 (4,177,565) 1,258,401 3,367,871 8,321,509 Partnership's share of extraordinary items from unconsolidated venture . . . . . . . . -- -- (375,000) (521,183) -- ------------ ------------ ------------ ------------ ------------ Net earnings (loss) . . . $ 14,875,634 (4,177,565) 883,401 2,846,688 8,321,509 ============ ============ ============ ============ =========== 1996 1995 1994 1993 1992 ------------- ------------- ----------- ------------ ------------ Net earnings (loss) per Interest (b): Net operating earnings (loss) . . . $ 28.74 (31.72) 7.29 22.95 14.85 Partnership's share of gain on invest- ment property and share of gain on sale of investment property from unconsolidated venture . . . . . . . 86.85 -- 2.34 2.71 49.86 Partnership's share of extraordinary item from uncon- solidated venture . . -- -- (2.85) (3.96) -- ------------ ------------ ------------ ------------ ------------ Net earnings (loss) per Interest. . . . $ 115.59 (31.72) 6.78 21.70 64.71 ============ ============ ============ ============ =========== Total assets. . . . . . . $ 80,097,683 99,483,214 109,171,952 113,581,933 115,959,504 Long-term debt. . . . . . $ 25,482,974 26,146,638 26,436,573 26,700,000 15,700,000 Cash distributions per Interest (c). . . . $ 261.00 44.00 41.00 40.00 85.00 ============ ============ ============ ============ =========== - ------------- (a) The above selected financial data should be read in conjunction with the financial statements and the related notes appearing elsewhere in this annual report. (b) The net earnings per Interest is based upon the Interests outstanding at the end of each period (126,414). (c) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for financial reporting or Federal income tax purposes. Each partner's taxable income (loss) from the Partnership in each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the cash generated or distributed by the Partnership. Accordingly, cash distributions to the Limited Partners since the inception of the Partnership have not resulted in taxable income to such Limited Partners and have therefore represented a return of capital.
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1996
Property - -------- Adams/Wabash Self Park a) The gross leasable area ("GLA") occupancy rate and average base rent per square foot as of December 31 for each of the last five years were as follows: GLA Avg. Base Rent Per December 31, Occupancy Rate Square Foot (1) ------------ -------------- ------------------ 1992 . . . . . 40% 51.93 1993 . . . . . 47% 52.86 1994 . . . . . 51% 47.94 1995 . . . . . 45% 50.93 1996 . . . . . 45% 48.85 (1) Average base rent per square foot is based on GLA occupied as of December 31 of each year.
Base Rent Scheduled Lease Lease b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option(s) ------------------- ----------- --------- --------------- ----------------- No individual tenant comprises more than 10% of the GLA at the property.
c) The following table sets forth certain information with respect to the expiration of leases for the next ten years at the Adams/Wabash Self Park: Annualized Percent of Number of Approx. Total Base Rent Total 1996 Year Ending Expiring GLA of Expiring of Expiring Base Rent December 31, Leases Leases Leases Expiring ------------ --------- --------------- ----------- ---------- 1997 1 1,784 86,114 13% 1998 1 1,133 47,856 7% 1999 -- -- -- -- 2000 1 1,034 51,452 8% 2001 3 6,215 313,515 48% 2002 1 2,038 66,000 10% 2003 -- -- -- -- 2004 -- -- -- -- 2005 1 2,591 90,000 14% 2006 -- -- -- --
Property - -------- Rivertree Court Shopping Center a) The gross leasable area ("GLA") occupancy rate and average base rent per square foot as of December 31 for each of the last five years were as follows: GLA Avg. Base Rent Per December 31, Occupancy Rate Square Foot (1) ------------ -------------- ------------------ 1992 . . . . . 90% 11.28 1993 . . . . . 97% 11.52 1994 . . . . . 85% 12.86 1995 . . . . . 99% 12.04 1996 . . . . . 90% 12.10 (1) Average base rent per square foot is based on GLA occupied as of December 31 of each year.
Base Rent Scheduled Lease Lease b) Significant Tenants Square Feet Per Annum Expiration Date Renewal Option(s) ------------------- ----------- --------- --------------- ----------------- Cineplex Odeon 40,000 720,000 2/2008 $24.00 psf (Cinema) through 2/2013 $26.00 psf through 2/2018 Best Buy (c(2)) 44,384 384,424 1/2011 $10.87 psf (Retail) through 1/2016 $11.57 psf through 1/2021 $12.26 psf through 1/2025
c) The following table sets forth certain information with respect to the expiration of leases for the next ten years at the Rivertree Court Shopping Center: Annualized Percent of Number of Approx. Total Base Rent Total 1996 Year Ending Expiring GLA of Expiring of Expiring Base Rent December 31, Leases Leases Leases Expiring ------------ --------- --------------- ----------- ---------- 1997 3 5,250 52,625 2% 1998 9 60,624 647,588 19% 1999 8 18,760 300,238 9% 2000 6 11,409 150,500 4% 2001 6 31,512 391,711 11% 2002 1 2,318 37,088 1% 2003 -- -- -- -- 2004 1 1,000 19,000 1% 2005 -- -- -- -- 2006 1 11,250 157,500 5%
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES As a result of the public offering of Interests as described in Item 1, the Partnership had approximately $113,741,000 (after deducting selling expenses and other offering costs) with which to make investments (primarily in existing commercial real property), to pay legal fees and other costs (including acquisition fees) related to such investments and to satisfy working capital requirements. A portion of such proceeds was utilized to acquire the properties described in Item 1 above. During 1996 and early 1997, some of the Limited Partners in the Partnership received unsolicited tender offers to purchase up to 4.9% of the Interests in the Partnership from unaffiliated third parties with offers ranging between $265 and $350 per Interest. The Partnership recommended against acceptance of these offers on the basis that, among other things, the offer price was inadequate. Two of the aforementioned offers have expired and two are currently scheduled to expire by early April 1997. In November 1996, an unaffiliated third party made an unsolicited tender offer for up to 4.9% of the Interest in the Partnership at $400 per Interest. The Partnership was neutral in its recommendation to accept or reject such offer. The offer expired in December 1996. As of the date of this report, the Partnership is aware that 1,365.58 Interests have been purchased by such unaffiliated third parties either pursuant to such tender offers or through negotiated purchases. It is possible that other offers for Interests may be made by unaffiliated third parties in the future, although there is no assurance that any other third party will commence an offer for Interests, the terms of any such offer or whether any such offer, if made, will be consummated, amended or withdrawn. The board of directors of JMB Realty Corporation ("JMB") the managing general partner of the Partnership, has established a special committee (the "Special Committee") consisting of certain directors of JMB to deal with all matters relating to tender offers for Interests in the Partnership, including any and all responses to such tender offers. The Special Committee has retained independent counsel to advise it in connection with any potential tender offers for Interests and has retained Lehman Brothers Inc. as financial advisor to assist the Special Committee in evaluating and responding to any additional potential tender offers for Interests. At December 31, 1996, the Partnership and its consolidated venture had cash and cash equivalents of approximately $3,744,000. Such funds are available for future distributions to partners and working capital requirements. As more fully described in the Notes, distributions to the General Partners have been deferred in accordance with the subordination requirements of the Partnership Agreement. The Partnership and its consolidated venture have currently budgeted in 1997 approximately $537,000 for tenant improvements and other capital expenditures. The Partnership's share of such items in 1997 is currently budgeted to be approximately $483,000. Actual amounts expended in 1997 may vary depending on a number of factors including actual leasing activity, results of property operations, liquidity considerations and other market conditions over the course of the year. The source of capital for such items and for both short-term and long-term future liquidity and distributions is expected to be through cash generated by the Partnership's investment properties and through the sale of such investments. In 1996, in an effort to reduce Partnership operating expenses, the Partnership elected to make semi- annual, rather than quarterly, distributions of operating cash flow in the months of May and November of each year. In May 1996, the Partnership made its first semi-annual distribution of cash generated from operations of $20 per Interest ($11 per Interest for the first quarter and $9 per Interest for the second quarter). In November, the Partnership made a semi-annual distribution of cash generated from operations of $17 per Interest ($9 per Interest for the third quarter and $8 per Interest for the fourth quarter). The net reduction in distributions from prior distribution levels was necessary primarily due to reductions in operating cash flow resulting from the sale of the Partnership's interest in the Miami International Mall and the First Financial Plaza office building. A special distribution of $70 per Interest was made in May 1996 consisting of $20 of previously undistributed cash generated from operations and $50 of previously undistributed sales proceeds. In August 1996, a distribution of $105 per Interest was made representing sales proceeds from the sale of the Partnership's interest in Miami International Mall. In addition, the Partnership paid a distribution of sale proceeds of $38 per Interest from the sale of First Financial in November 1996. Previously, these sums had been reserved to fund the costs associated with the possible redevelopment of portions of the Fountain Valley Industrial Park to retail use. However, the Partnership did not receive municipal approval for the redevelopment program, and therefore, the General Partner's funds are no longer required for the project. Future cash distributions from sales or property operations will depend upon a combination of operating cash flow from the remaining investment properties, the expected future capital requirements of the Partnership and the eventual sale prices of the Partnership's investment properties. CERRITOS INDUSTRIAL PARK Cerritos is currently 100% leased and occupied. From 1997 through 1998, leases at the Cerritos Industrial Park representing 59% of the rentable square footage are scheduled to expire, not all of which are expected to renew. The Cerritos Industrial Park investment property was classified as held for sale or disposition at October 1, 1996, and therefore, will not be subject to continued depreciation after that date. During 1996, the Partnership has been marketing the Cerritos Industrial Park investment property for sale and is currently in negotiations with a prospective buyer for the purchase of the property. If the sale was consummated on its proposed terms, the Partnership would expect to recognize a gain for both financial reporting and Federal income tax purposes. However, there can be no assurance that these discussions will result in a sale that will be finalized on any terms. In February 1994, True Form (42,750 square feet or 22% of the gross leasable area), filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. The Partnership determined that the $80,000 owed by True Form as of the date of the bankruptcy filing is uncollectible and has been written-off. The Partnership entered into a new lease with True Form's successor in bankruptcy, TFI Acquisition, Inc., in May, 1995. FOUNTAIN VALLEY INDUSTRIAL PARK Fountain Valley is currently 94% leased and occupied (including temporary tenants). From 1997 through 1998, leases at the Fountain Valley Industrial Park representing 39% of the leasable square footage are scheduled to expire, not all of which are expected to be renewed. The Partnership had been examining the economic benefits, including the use of Partnership funds, of a partial redevelopment of the property to retail uses, with the support of the City of Fountain Valley. However, the City of Fountain Valley is not currently able to give its approval to such a partial retail conversion due to other city projects currently underway. Hence, the Partnership is no longer pursuing such redevelopment. On December 31, 1996, the Partnership sold one of the buildings and related land parcel at the Fountain Valley Industrial Park for $665,000 (before selling costs). Reference is made to the Notes for a further description of such sale. ADAMS/WABASH The Palmer House Hotel did not renew its exclusive parking agreement with the Adams/Wabash Self Park upon its expiration in December 1995. This has had a negative impact on the property's operating cash flow in 1996 and should be partially mitigated in future years as the property continues to increase transient parking volume to replace revenues previously generated by the Palmer House contract as discussed in the Notes. Effective November 1, 1996, an affiliate of the General Partner assumed responsibility for the management of Adams/Wabash Self Park on substantially the same terms as previous management. RIVERTREE COURT SHOPPING CENTER The Rivertree Court Shopping Center operates in a market which continues to experience significant growth in the commercial and residential sectors. In January 1996, HomeGoods vacated its approximate 40,000 square feet of space in the center. Primarily as a result thereof, the occupancy of the center declined from 99% to 84% during the first quarter. The HomeGoods lease was assigned to Best Buy Company, Inc. ("Best Buy"), an existing tenant of approximately 25,000 square feet at the center. On August 2, 1996, Best Buy relocated to the former HomeGoods space (expanded to approximately 44,000 square feet) and the Partnership allowed Best Buy to terminate its former lease upon vacating its former space. The Partnership entered into a lease with PetsMart to lease Best Buy's former space. PetsMart commenced rental payments in December 1996 and opened its store on February 15, 1997. The property was classified as held for sale or disposition at July 1, 1996, and therefore, has not been subject to continued depreciation since that date. During September 1996, the Partnership entered into a letter of intent and subsequently, a purchase and sale agreement with an unaffiliated third-party to sell the property. The closing was subject to documentation and certain other closing conditions. Prior to the satisfaction of all closing conditions under the purchase and sale agreement, the buyer elected not to continue with the transaction. The Partnership continues to market the property for sale. FIRST FINANCIAL On September 11, 1996, the joint venture sold the First Financial office building for $37,900,000 (before selling costs). Reference is made to the Notes for a further description of such sale. JMB/MIAMI On April 8, 1996, effective March 31, 1996, JMB/Miami was voluntarily dissolved by an agreement of its partners and its 50% ownership interest in West Dade and related assets were distributed to its partners based on their respective ownership percentages. Accordingly, the Partnership acquired a direct 25% ownership interest in West Dade. The Partnership then sold its entire 25% interest in West Dade for $13,436,731 (before selling costs). Reference is made to the Notes for a further description of such sale. GENERAL In accordance with the subordination requirements of the Partnership Agreement, the General Partners have deferred payment of certain of their distributions of net cash flow and sale proceeds from the Partnership. The cumulative amount of such deferred distributions are approximately $5,511,000 at December 31, 1996. All amounts deferred or currently payable do not bear interest. The Partnership continues to conserve its working capital. All expenditures are carefully analyzed and certain capital projects are deferred when appropriate. The Partnership may seek loan modifications where appropriate. By conserving working capital, the Partnership will be in a better position to meet the future needs of its properties since the availability of satisfactory outside sources of capital may be limited. Due to these factors, the Partnership has held its remaining investment properties longer than originally anticipated in an effort to maximize the return to the Limited Partners. However, after reviewing the remaining properties and the marketplaces in which they operate, the General Partners of the Partnership expect to be able to conduct an orderly liquidation of its remaining investment portfolio as quickly as practicable. In such regard, all of the remaining properties of the Partnership have been classified as held for sale or disposition as of December 31, 1996 and are no longer subject to continued depreciation. Therefore, the affairs of the Partnership are expected to be wound up no later than December 31, 1999 (sooner if the properties are sold in the nearer term), barring unforeseen economic developments. RESULTS OF OPERATIONS The decrease in cash and cash equivalents at December 31, 1996 as compared to December 31, 1995 is primarily due to the special distribution to the Limited Partners of $70 per Interest in May 1996. The decrease in investment in unconsolidated ventures at December 31, 1996 as compared to December 31, 1995 is primarily due to the April 1996 sale of the Partnership's interest in the Miami International Mall investment property and the September 1996 sale of the First Financial Plaza office building investment property. The decrease in accrued rents receivable at December 31, 1996 as compared to December 31, 1995 is primarily due to the amortization of rental income on a straight-line basis for certain tenants at the Partnership's investment properties. The increase in accounts payable as of December 31, 1996 as compared to December 31, 1995 is primarily due to the timing of payment of certain annual professional services at the Partnership level. The decrease in unearned rents at December 31, 1996 as compared to December 31, 1995 is primarily due to the timing of rental receipts at the Rivertree Court Shopping Center investment property. The decrease in rental income for the year ended December 31, 1996 as compared to the year ended December 31, 1995 is primarily due to the loss of the Palmer House parking contract at the Adams/Wabash investment property. The increase in rental income for the year ended December 31, 1995 as compared to the year ended December 31, 1994 is primarily due to the increase in transient parking income at the Adams/Wabash investment property. This increase is partially offset by lower effective tenant rents upon renewal at certain of the Partnership's other investment properties. The decrease in interest income year ended December 31, 1996 as compared to the year ended December 31, 1995 is primarily due to the decrease in the Partnership's average invested balance in U.S. Government obligations during 1996 as compared to during 1995. The increase in interest income for the year ended December 31, 1995 as compared to the year ended December 31, 1994 is primarily due to the increase in the average balance in U.S. Government obligations and higher rates earned in 1995. The decrease in depreciation for the year ended December 31, 1996 as compared to the years ended December 31, 1995 is primarily due to the Rivertree Court Shopping Center and Cerritos Industrial Park investment properties being classified as held for sale or disposition at July 1, 1996 and October 1, 1996, respectively, and therefore, not being subject to continued depreciation. The decrease in depreciation for the year ended December 31, 1995 as compared to the year ended December 31, 1994 is primarily due to both the Fountain Valley and Cerritos Industrial Park investment properties having recorded provisions for value impairment of $4,200,000 and $4,000,000, respectively, on September 30, 1995. The increase in professional costs for the year ended December 31, 1996 as compared to the years ended December 31, 1995 and 1994 is primarily due to the costs associated with retaining Lehman Brothers Inc. as financial advisor in matters dealing with tender offers as described above, and legal fees incurred during the potential sale of Rivertree. The increase in general and administrative expenses for the year ended December 31, 1995 as compared to the years ended December 31, 1996 and 1994 are attributable primarily to an increase in reimbursable costs to affiliates of the General Partner in 1995 and the recognition of certain additional prior year reimbursable costs to such affiliates. The provision for value impairment for the year ended December 31, 1995 is due to the provisions for value impairments recorded at September 30, 1995 for both the Fountain Valley and Cerritos Industrial Park investment properties of $4,200,000 and $4,000,000, respectively. Such provisions were recorded to reduce the net carrying value of the investment properties to their then estimated recoverable values. The decrease in Partnership's share of operations from unconsolidated ventures and the increase in the Partnership's share of the gain on sale of investment property of unconsolidated venture for the year ended December 31, 1996 as compared to the year ended December 31, 1995 is primarily due to the sale of the Partnership's interest in the Miami International Mall effective March 31, 1996 and the sale of the First Financial Plaza office building effective September 11, 1996. The decrease in the amount of loss from Partnership's share of operations of unconsolidated ventures for the year ended December 31, 1995 as compared to the year ended December 31, 1994 is primarily due to the provision for value impairment recorded at First Financial of approximately $6,475,000 at December 31, 1994. The Partnership's decrease in share of the gain on sale of investment property of unconsolidated venture for the year ended December 31, 1995 as compared to the year ended December 31, 1994 is primarily due to the sale of an outparcel at the Miami International Mall in December 1994. The extraordinary item from unconsolidated venture for the year ended December 31, 1994 is due to the Partnership recognizing its share of estimated earthquake repair costs at the First Financial office building. INFLATION Due to the decrease in the level of inflation in recent years, inflation generally has not had a material effect on rental income or property operating expenses. Inflation is not expected to significantly impact future operations due to the expected liquidation of the Partnership by 1999. However, to the extent that inflation in future periods would have an adverse impact on property operating expenses, the effect would generally be offset by amounts recovered from tenants as many of the long-term leases at the Partnership's commercial properties have escalation clauses covering increases in the cost of operating and maintaining the properties as well as real estate taxes. Therefore, there should be little effect from inflation on operating earnings if the properties remain substantially occupied. In addition, many of the leases at the Partnership's shopping center investments contain provisions which entitle the Partnership to participate in gross receipts of tenants above fixed minimum amounts. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE INDEX Independent Auditors' Report Consolidated Balance Sheets, December 31, 1996 and 1995 Consolidated Statements of Operations, years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Partners' Capital Accounts (Deficits), years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows, years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements SCHEDULE -------- Consolidated Real Estate and Accumulated Depreciation III SCHEDULES NOT FILED: All schedules other than the one indicated in the index have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. INDEPENDENT AUDITORS' REPORT The Partners JMB INCOME PROPERTIES, LTD. - XIII: We have audited the consolidated financial statements of JMB Income Properties, Ltd. - XIII (a limited partnership) and consolidated venture as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the General Partners of the Partnership, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of JMB Income Properties, Ltd. - XIII and consolidated venture at December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1996, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. As discussed in the Notes to the consolidated financial statements, in 1996 the Partnership and its consolidated ventures changed their method of accounting for long-lived assets and long-lived assets to be disposed of to conform with Statement of Financial Accounting Standards No. 121. KPMG PEAT MARWICK LLP Chicago, Illinois March 21, 1997 JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND 1995 ASSETS ------
1996 1995 ------------ ----------- Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 3,743,541 13,599,171 Interest, rents and other receivables . . . . . . . . . . . . . . . 1,232,970 1,121,270 Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 71,674 68,901 Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 144,050 102,680 ------------ ----------- Total current assets. . . . . . . . . . . . . . . . . . . . . 5,192,235 14,892,022 Investment properties - Schedule III: Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 21,300,842 Buildings and improvements. . . . . . . . . . . . . . . . . . . . . -- 69,439,819 ------------ ----------- -- 90,740,661 Less: accumulated depreciation . . . . . . . . . . . . . . . . . . -- 16,583,348 ------------ ----------- Total properties held for investment, net of accumulated depreciation. . . . . . . . . . . . . . -- 74,157,313 Properties held for sale or disposition . . . . . . . . . . . . . . 72,718,307 -- ------------ ----------- Total investment properties . . . . . . . . . . . . . . . . 72,718,307 74,157,313 Investments in unconsolidated ventures, at equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 8,026,013 Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 732,036 741,184 Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 1,455,105 1,666,682 ------------ ----------- $ 80,097,683 99,483,214 ============ =========== JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED BALANCE SHEETS - CONTINUED LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS) ---------------------------------------------------- 1996 1995 ------------ ----------- Current liabilities: Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 313,664 291,589 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 300,262 197,765 Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 194,950 196,729 Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . 1,201,572 1,171,341 Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 444,575 612,082 ------------ ----------- Total current liabilities . . . . . . . . . . . . . . . . . . 2,455,023 2,469,506 Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 314,124 328,622 Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,482,974 26,146,638 ------------ ----------- Commitments and contingencies Total liabilities . . . . . . . . . . . . . . . . . . . . . . 28,252,121 28,944,766 ------------ ----------- Partners' capital accounts (deficits): General partners: Capital contributions.. . . . . . . . . . . . . . . . . . . . 20,000 20,000 Cumulative net earnings . . . . . . . . . . . . . . . . . . . 721,969 459,660 Cumulative cash distributions . . . . . . . . . . . . . . . . (1,631,037) (1,389,844) ------------ ----------- (889,068) (910,184) ------------ ----------- Limited partners (126,414 interests): Capital contributions, net of offering costs. . . . . . . . . 113,741,315 113,741,315 Cumulative net earnings . . . . . . . . . . . . . . . . . . . 30,903,922 16,290,597 Cumulative cash distributions . . . . . . . . . . . . . . . . (91,910,607) (58,583,280) ------------ ----------- 52,734,630 71,448,632 ------------ ----------- Total partners' capital accounts. . . . . . . . . . . . . . . 51,845,562 70,538,448 ------------ ----------- $ 80,097,683 99,483,214 ============ =========== See accompanying notes to consolidated financial statements.
JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994 ------------ ------------ ------------ Income: Rental income . . . . . . . . . . . . . . . . . . $11,279,441 11,715,228 11,453,067 Interest income . . . . . . . . . . . . . . . . . 693,941 830,606 531,609 ----------- ----------- ----------- 11,973,382 12,545,834 11,984,676 ----------- ----------- ----------- Expenses: Mortgage and other interest . . . . . . . . . . . 2,370,249 2,369,963 2,397,689 Depreciation. . . . . . . . . . . . . . . . . . . 1,721,808 2,468,066 2,489,094 Property operating expenses . . . . . . . . . . . 3,561,629 3,608,455 3,596,944 Professional services . . . . . . . . . . . . . . 271,487 206,307 196,630 Amortization of deferred expenses . . . . . . . . 191,354 234,401 205,219 General and administrative. . . . . . . . . . . . 330,407 397,120 245,123 Provision for value impairment. . . . . . . . . . -- 8,200,000 -- ----------- ----------- ----------- 8,446,934 17,484,312 9,130,699 ----------- ----------- ----------- Operating earnings (loss) . . . . . . . . . 3,526,448 (4,938,478) 2,853,977 Partnership's share of operations of uncon- solidated ventures. . . . . . . . . . . . . . . . 258,637 760,913 (1,894,493) ----------- ----------- ----------- Net operating earnings (loss) . . . . . . . 3,785,085 (4,177,565) 959,484 Partnership's gain on sale of investment property . 217,690 -- -- Partnership's share of gain on sale of investment property from unconsolidated venture . 10,872,859 -- 298,917 ----------- ----------- ----------- Net earnings (loss) before Partner- ship's share of extraordinary item from unconsolidated venture. . . . . 14,875,634 (4,177,565) 1,258,401 Partnership's share of extraordinary item from unconsolidated venture. . . . . . . . . . . . . . -- -- (375,000) ----------- ----------- ----------- Net earnings (loss) . . . . . . . . . . . . $14,875,634 (4,177,565) 883,401 =========== =========== =========== JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED 1996 1995 1994 ------------ ------------ ------------ Net earnings (loss) per limited partnership interest: Net operating earnings (loss) . . . . . . . . . . $ 28.74 (31.72) 7.29 Partnership's gain on sale of investment property 1.70 -- -- Partnership's share of gain on sale of investment property from unconsolidated venture . . . . . . . . . . . . . . . . . . . . 85.15 -- 2.34 Partnership's share of extra- ordinary items from unconsolidated venture. . . . . . . . . . . . . -- -- (2.85) ----------- ----------- ----------- Net earnings (loss) . . . . . . . . . . . . $ 115.59 (31.72) 6.78 =========== =========== =========== See accompanying notes to consolidated financial statements.
JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
GENERAL PARTNERS LIMITED PARTNERS (126,414 INTERESTS) -------------------------------------------------- --------------------------------------------------- CONTRI- BUTIONS NET NET OF NET CONTRI- EARNINGS CASH OFFERING EARNINGS CASH BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL -------- ---------- ------------- -------- ----------- ---------- ------------- ---------- Balance (deficit) at Decem- ber 31, 1993 . . . . $20,000 600,395 (1,088,351) (467,956) 113,741,315 19,444,026 (47,729,553) 85,455,788 Net earnings (loss) . . . -- 26,368 -- 26,368 -- 857,033 -- 857,033 Cash distri- butions ($41.00 per Interest). . -- -- (145,426) (145,426) -- -- (5,235,327) (5,235,327) ------- -------- ---------- -------- ----------- ---------- ----------- ---------- Balance (deficit) at Decem- ber 31, 1994 . . . . $20,000 626,763 (1,233,777) (587,014) 113,741,315 20,301,059 (52,964,880) 81,077,494 Net earnings (loss) . . . -- (167,103) -- (167,103) -- (4,010,462) -- (4,010,462) Cash distri- butions ($44.00 per Interest). . -- -- (156,067) (156,067) -- -- (5,618,400) (5,618,400) ------- -------- ---------- -------- ----------- ---------- ----------- ---------- JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED GENERAL PARTNERS LIMITED PARTNERS (126,414 INTERESTS) -------------------------------------------------- --------------------------------------------------- CONTRI- BUTIONS NET NET OF NET CONTRI- EARNINGS CASH OFFERING EARNINGS CASH BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL -------- ---------- ------------- -------- ----------- ---------- ------------- ---------- Balance (deficit) at Decem- ber 31, 1995 . . . . 20,000 459,660 (1,389,844) (910,184) 113,741,315 16,290,597 (58,583,280) 71,448,632 Net earnings (loss) . . . -- 262,309 -- 262,309 -- 14,613,325 -- 14,613,325 Cash distri- butions ($261.00 per Interest). . -- -- (241,193) (241,193) -- -- (33,327,327)(33,327,327) ------- -------- ---------- -------- ----------- ---------- ----------- ---------- Balance (deficit) at Decem- ber 31, 1996 . . . . $20,000 721,969 (1,631,037) (889,068) 113,741,315 30,903,922 (91,910,607) 52,734,630 ======= ======== ========== ======== =========== ========== =========== ========== See accompanying notes to consolidated financial statements.
JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994 ----------- ----------- ----------- Cash flows from operating activities: Net earnings (loss) . . . . . . . . . . . . . . . $14,875,634 (4,177,565) 883,401 Items not requiring (providing) cash or cash equivalents: Depreciation. . . . . . . . . . . . . . . . . . 1,721,808 2,468,066 2,489,094 Amortization of deferred expenses . . . . . . . 191,354 234,401 205,219 Partnership's share of operations of unconsolidated ventures, net of distributions. . . . . . . . . . . . . 318,805 (760,913) 1,894,493 Partnership's gain on sale of investment property. . . . . . . . . . . . . . . . . . . (217,690) -- -- Partnership's share of gain on sale of investment property from unconsolidated venture . . . . . . . . . . . . . . . . . . . (10,872,859) -- (298,917) Partnership's share of extraordinary item from unconsolidated venture. . . . . . . -- -- 375,000 Provision for value impairment. . . . . . . . . -- 8,200,000 -- Changes in: Interest, rents and other receivables . . . . . (111,700) (290,577) 209,191 Prepaid expenses. . . . . . . . . . . . . . . . (2,773) (2,973) 1,680 Escrow deposits . . . . . . . . . . . . . . . . (41,370) (2,803) 30,592 Accrued rents receivable. . . . . . . . . . . . 211,577 (228,961) (264,239) Accounts payable . . . . . . . . . . . . . . . 102,497 65,817 (83,765) Accrued interest. . . . . . . . . . . . . . . . (1,779) (1,653) (13,786) Accrued real estate taxes . . . . . . . . . . . 30,231 (59,886) 75,475 Unearned rents. . . . . . . . . . . . . . . . . (167,507) 541,674 70,408 Tenant security deposits. . . . . . . . . . . . (14,498) (11,591) 29,745 ----------- ----------- ----------- Net cash provided (used in) by operating activities . . . . . . . . . 6,021,730 5,973,036 5,603,591 ----------- ----------- ----------- JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1996 1995 1994 ----------- ----------- ----------- Cash flows from investing activities: Net sales and maturities (purchases) of short-term investments . . . . . . . . . . . -- 9,214,950 2,305,513 Additions to investment properties. . . . . . . . (678,815) (280,626) (139,621) Partnership's distributions from unconsolidated ventures and proceeds from sale of investment property. . . . . . . . 18,908,480 1,346,250 1,800,625 Partnership's contributions to uncon- solidated ventures. . . . . . . . . . . . . . . (64,710) (1,539,075) (64,095) Payment of deferred expenses. . . . . . . . . . . (182,206) (80,931) (224,919) ----------- ----------- ----------- Net cash provided by (used in) investing activities. . . . . . . . . . . 17,982,749 8,660,568 3,677,503 ----------- ----------- ----------- Cash flows from financing activities: Principal payments on long-term debt. . . . . . . (291,589) (271,067) (190,706) Distributions to limited partners . . . . . . . . (33,327,327) (5,618,400) (5,235,327) Distributions to general partners . . . . . . . . (241,193) (156,067) (145,426) ----------- ----------- ----------- Net cash provided by (used in) financing activities. . . . . . . . . . . (33,860,109) (6,045,534) (5,571,459) ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents . . . . . . . . (9,855,630) 8,588,070 3,709,635 Cash and cash equivalents, beginning of year . . . . . . . . . . . . 13,599,171 5,011,101 1,301,466 ----------- ----------- ----------- Cash and cash equivalents, end of year . . . . . . . . . . . . . . . $ 3,743,541 13,599,171 5,011,101 =========== =========== =========== JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1996 1995 1994 ----------- ----------- ----------- Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest . . . . $ 2,372,028 2,371,616 2,411,475 =========== =========== =========== Non-cash investing and financing activities: Refinancing of long-term debt: Proceeds of new debt. . . . . . . . . . . . . $ -- -- 11,200,000 Retirement of old debt. . . . . . . . . . . . -- -- (11,000,000) Deferred mortgage costs . . . . . . . . . . . -- -- (69,531) Funding of escrow . . . . . . . . . . . . . . -- -- (130,469) ----------- ----------- ----------- Net proceeds from refinancing of long-term debt. . . . . . . . . . . . . $ -- -- -- =========== =========== =========== See accompanying notes to consolidated financial statements.
JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 OPERATIONS AND BASIS OF ACCOUNTING GENERAL The Partnership holds (either directly or through a joint venture) an equity investment portfolio of United States real estate. Business activities consist of rentals to a variety of commercial and retail companies, and the ultimate sale or disposition of such real estate. The Partnership currently expects to conduct an orderly liquidation of its remaining investment portfolio and wind up its affairs not later than December 31, 1999. The accompanying consolidated financial statements include the accounts of the Partnership and its majority-owned consolidated venture, Adams/Wabash Limited Partnership ("Adams/Wabash"). The effect of all transactions between the Partnership and Adams/Wabash have been eliminated in the consolidated financial statements. The equity method of accounting has been applied in the accompanying financial statements with respect to the Partnership's interests in JMB First Financial Associates ("First Financial") (prior to its sale in September 1996) and JMB/Miami International Associates ("JMB/Miami") (prior to its sale of interest in April 1996). Accordingly, the accompanying financial statements do not include the accounts of First Financial and JMB/Miami. The Partnership's records are maintained on the accrual basis of accounting as adjusted for Federal income tax reporting purposes. The accompanying financial statements have been prepared from such records after making appropriate adjustments where applicable to reflect the Partnership's accounts in accordance with generally accepted accounting principles ("GAAP"). Such GAAP and consolidation adjustments are not recorded on the records of the Partnership. The net effect of these items is summarized as follows for the years ended December 31, 1996 and 1995:
1996 1995 ------------------------------ ------------------------------ TAX BASIS TAX BASIS GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED) ------------ ----------- ------------ ----------- Total assets. . . . . . . . . . . . $80,097,683 98,913,009 99,483,214 118,361,537 Partners' capital accounts (deficits): General partners. . . . . . . . . (889,068) 180,325 (910,184) (681,719) Limited partners. . . . . . . . . 52,734,630 71,153,760 71,448,632 90,969,526 Net earnings (loss): General partners. . . . . . . . . 262,309 1,103,238 (167,103) 127,926 Limited partners. . . . . . . . . 14,613,325 13,511,562 (4,010,462) 3,070,232 Net earnings (loss) per Interest. . . . . . . . . . . 115.59 106.88 (31.72) 24.29 =========== =========== =========== ============
The net earnings (loss) per limited partnership interest is based upon the limited partnership interests outstanding at the end of the period (126,414). Deficit capital accounts will result, through the duration of the Partnership, in net gain for financial reporting and income tax purposes. The preparation of financial statements in accordance with GAAP requires the Partnership to make estimates and assumptions that affect the reported or disclosed amount of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Statement of Financial Accounting Standards No. 95 requires the Partnership to present a statement which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The required information has been segregated and accumulated according to the classifications specified in the pronouncement. Partnership distributions from its unconsolidated ventures are considered cash flow from operating activities only to the extent of the Partnership's cumulative share of net earnings. The Partnership records amounts held in U.S. Government obligations at cost, which approximates market. For the purposes of these statements, the Partnership's policy is to consider all such amounts held with original maturities of three months or less ($2,576,773 and $13,321,024 at December 31, 1996 and 1995, respectively) as cash equivalents, which includes investments in an institutional mutual fund which holds United States Government obligations, with any remaining amounts (generally with original maturities of one year or less) reflected as short-term investments being held to maturity. Deferred expenses consist primarily of deferred lease commissions and loan fees which are amortized over their respective terms using the straight-line method. Although certain leases of the Partnership provide for tenant occupancy during periods for which no rent is due and/or increases in minimum lease payments over the term of the lease, the Partnership accrues rental income for the full period of occupancy on a straight-line basis. No provision for State or Federal 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 law to remit directly to the tax authorities amounts representing withholding from distributions paid to Partners. The Partnership has acquired, either directly or through joint ventures, three shopping centers, two multi-tenant industrial buildings, an office complex and a parking/retail structure. In January 1992, the Partnership's interest in the Mid Rivers Mall was sold. In 1996, the Partnership's interest in the First Financial office building and the Miami International Mall were sold. All of the properties owned at December 31, 1996 were operating. The cost of the investment properties represents the total cost to the Partnership plus miscellaneous acquisition costs. Depreciation on the properties has been provided over the estimated useful lives of the various components as follows: YEARS ----- Building and improvements -- straight-line. . 30 Personal property -- straight-line. . . . . . 5 == Maintenance and repairs are generally charged to operations as incurred. Significant betterments and improvements are capitalized and depreciated over their estimated useful lives. Statement of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" was issued in March 1995. The Partnership adopted SFAS 121 as required in the first quarter of 1996. SFAS 121 requires that the Partnership record an impairment loss on its properties to be held for investment whenever their carrying value cannot be fully recovered through estimated undiscounted future cash flows from their operations and sale. The amount of the impairment loss to be recognized would be the difference between the property's carrying value and the property's estimated fair value. The Partnership's policy is to consider a property to be held for sale or disposition when the Partnership has committed to a plan to sell or dispose of such property and active marketing activity has commenced or is expected to commence in the near term or the Partnership has concluded that it may dispose of the property by no longer funding operating deficits or debt service requirements of the property thus allowing the lender to realize upon its security. In accordance with SFAS 121, any properties identified as "held for sale or disposition" are no longer depreciated. Adjustments for impairment loss for such properties (subsequent to the date of adoption of SFAS 121) are made in each period as necessary to report these properties at the lower of carrying value or fair value less costs to sell. In certain situations, such estimated fair value could be less than the existing non-recourse debt which is secured by the property. There can be no assurance that any estimated fair value of these properties would ultimately be realized by the Partnership in any future sale or disposition transaction. All remaining properties are considered to be held for sale as of December 31, 1996, and therefore, will not be subject to continued depreciation. The results of operations for consolidated properties classified as held for sale or disposition as of December 31, 1996 or sold or disposed of during the past three years were $3,468,110, ($5,149,790) and $2,769,803, respectively, for the years ended December 31, 1996, 1995 and 1994. In addition, the accompanying consolidated financial statements include $258,637, $760,913 and ($1,894,493), respectively, of the Partnership's share of total property operations of $1,016,511, $3,519,977 and ($3,855,963) of unconsolidated properties held for sale or disposition as of December 31, 1996 or sold or disposed of in the past three years. Certain investment properties are pledged as security for the long- term debt, for which there is no recourse to the Partnership. INVESTMENT PROPERTIES FOUNTAIN VALLEY AND CERRITOS INDUSTRIAL PARKS On December 31, 1996, the Partnership sold one of the buildings and related land parcel at the Fountain Valley Industrial Park to the unaffiliated tenant that had been leasing the building. The sale price was $665,000 and the net sale proceeds after paying down $350,000 of the outstanding mortgage, required per the Lender, and closing costs was $255,723. The sale resulted in approximately $218,000 and $121,000 of gain for financial reporting and Federal income tax purposes, respectively, in 1996. The Cerritos Industrial Park investment property was classified as held for sale or disposition at October 1, 1996, and therefore, has not been subject to continued depreciation since that date. As previously reported, the Partnership has been marketing the Cerritos Industrial Park investment property for sale and is currently in negotiations with a prospective buyer for the purchase of the property. If the sale was consummated on its proposed terms, the Partnership would expect to recognize a gain for both financial reporting and Federal income tax purposes. However, there can be no assurance that these discussions will result in a sale that will be finalized on any terms. The Fountain Valley Industrial Park investment property has been classified as held for sale or disposition at December 31, 1996, and therefore, will not be subject to continued depreciation after that date. New and renewal leases at the Fountain Valley and Cerritos Industrial Parks may continue to require expenditures for lease commissions and tenant improvements prior to tenant occupancy. The costs incurred upon releasing may result in a decrease in cash flow from operations from these properties over the near term. As of September 30, 1995, due to the uncertainty at such time of the Partnership's ability to recover the net carrying values of the Fountain Valley Industrial Park and Cerritos Industrial Park investment properties through future operations and sale, given the expected holding period not being in excess of December 31, 1999, the Partnership recorded, as a matter of prudent accounting practice, a provision for value impairment of such investments of $4,200,000 and $4,000,000, respectively. Such provisions were recorded to reduce the net carrying value of the investment properties to their then estimated fair values based upon an analysis of discounted estimated future cash flows over the projected holding period. There can be no assurance that the estimated fair value of either of the properties would ultimately be realized by the Partnership in any future sale or disposition transaction. RIVERTREE COURT SHOPPING CENTER The property was classified as held for sale or disposition at July 1, 1996, and therefore, has not been subject to continued depreciation since that date. During September 1996, the Partnership entered into a letter of intent and subsequently, a purchase and sale agreement with an unaffiliated third-party to sell the property. The closing was subject to documentation and certain other closing conditions under the purchase and sale agreement, the buyer elected not to continue with the transaction. The Partnership continues to market the property for sale. In January 1996, HomeGoods vacated its approximate 40,000 square feet of space in the center. Primarily as a result thereof, the occupancy of the center declined from 99% to 84% during the first quarter. The HomeGoods lease was assigned to Best Buy Company, Inc. ("Best Buy"), an existing tenant of approximately 25,000 square feet at the center. On August 2, 1996, Best Buy relocated to the former HomeGoods space (expanded to approximately 44,000 square feet) and the Partnership allowed Best Buy to terminate its former lease upon vacating its former space. The Partnership entered into a lease with PetsMart to lease Best Buy's former space. PetsMart commenced rental payments in December 1996 and opened its store on February 15, 1997. VENTURE AGREEMENTS - GENERAL The Partnership at December 31, 1996 is a party to one operating joint venture agreement. Pursuant to such agreement, the Partnership has made initial cash capital contributions of approximately $24,994,000. Under certain circumstances, either pursuant to the venture agreement or due to the Partnership's obligations as general partner, the Partnership may be required to make additional cash contributions to the ventures. The Partnership acquired, through the above venture, one parking/retail structure. There are certain risks associated with the Partnership's investment made through the joint venture including the possibility that the Partnership's joint venture partners might become unable or unwilling to fulfill their financial or other obligations, or that such joint venture partners may have economic or business interests or goals that are inconsistent with those of the Partnership. FIRST FINANCIAL On May 20, 1987, the Partnership, through First Financial, a joint venture with JMB-XII, acquired an interest in a general partnership ("Encino") with an affiliate of the developer ("Encino Venture Partner"). Encino owned an office building in Encino (Los Angeles), California. First Financial made an initial investment in the aggregate amount of approximately $49,812,000 to Encino. In November 1987, First Financial caused Encino to obtain a third party first mortgage loan in the amount of $30,000,000. The proceeds of such loan were distributed to First Financial to reduce its contribution and to the Encino Venture Partner who subsequently repaid a $15,500,000 loan from First Financial. Thus, the total cash investment of First Financial for its interest in the office building, after consideration of the funding of the $30,000,000 permanent financing, was approximately $20,000,000, of which the Partnership's share was approximately $7,500,000. The first mortgage loan on the property matured November 1, 1995. Effective November 1, 1995, Encino and the existing lender amended and restated the existing mortgage loan. The new principal balance of the amended note at November 1, 1995 was $24,970,148. This amount was comprised of the then outstanding principal portion of $28,970,148 on the original $30,000,000 note less a required $4,000,000 principal paydown by Encino, all of which was advanced by First Financial at closing of which the Partnership's share of such paydown was $1,500,000. The amended loan had an interest rate of 8.67% and a term of two years resulting in a maturity date of November 1, 1997. In order to finalize the loan extension described above, the Partnership and its affiliated partner advanced approximately $4.0 million (approximately $1.5 million by the Partnership) to the joint venture to fund the required principal paydown and related loan fees. A capital call had been made on the unaffiliated joint venture partner for its share of the total required amount; however, the unaffiliated joint venture partner indicated that it did not intend to fund its required share. The Partnership and its affiliated partner reached an agreement with the unaffiliated partner to modify the joint venture agreement. In April 1996, the unaffiliated partner became a limited partner as a result of this modification. Due to the uncertainty of Encino's ability to recover the net carrying value of the First Financial office building investment property through future operations and sale during the estimated holding period, Encino recorded, as a matter of prudent accounting practice, a provision for value impairment of such investment of approximately $6,475,000, all of which was allocated to First Financial. The Partnership's share of such provision to First Financial was approximately $2,428,000. Such provision was recorded at December 31, 1994 to reduce the net carrying value of the investment property to its then estimated fair value based upon an analysis of discounted estimated future cash flows over the projected holding period. As previously reported, the First Financial office building appeared to have experienced only minor cosmetic damage as a result of the January 17, 1994 Northridge earthquake in southern California. On February 22, 1995, the city council of the city of Los Angeles passed an ordinance requiring certain buildings (identified by building type and location) to perform testing on the welded steel moment connections to determine if the earthquake had weakened such joint weldings and to repair such joint weldings if weakness is detected. This property qualified for the testing under the ordinance, and therefore, Encino retained a structural engineer to perform the testing. Results of the testing by the structural engineer indicated that some of the building's joint weldings suffered damage which, in accordance with the ordinance, were required to be repaired. Encino's structural engineer informed Encino that the damage detected did not pose a life safety risk for the building's tenants. All testing and repairs necessary to comply with such ordinance were completed as of October 1995. The total cost of such testing and repairs was approximately $826,000 (of which the Partnership's share was approximately $309,750). The First Financial office building was classified as held for sale as of April 1, 1996 and therefore was not subject to continued depreciation since that time. On September 11, 1996, the joint venture sold the First Financial office building to an unaffiliated third-party for a sale price of $37,900,000 (before selling expenses and prorations). The joint venture received approximately $13,000,000 of net sale proceeds at closing (which reflected the assumption by the buyer of the mortgage loan with a current balance of approximately $24,700,000 and closing costs), substantially all of which were allocable to JMB/First Financial pursuant to the Encino venture agreement. The sale resulted in approximately $2,880,000 and $18,800,000 of gain for financial reporting purposes and Federal income tax purposes in 1996, respectively, of which approximately $1,268,000 and $28,000 of gain was allocated to the Partnership, respectively. The Partnership made a cash distribution of $38 per Interest from the sales proceeds in November 1996. The Encino partnership agreement generally provided that First Financial was entitled to receive (after any participating amounts due to Pepperdine University pursuant to its tenant lease) from cash flow from operations (as defined) an annual cumulative preferred return equal to 9.05% through April 30, 1995 (and 8.9% thereafter) of its capital contri- butions. Any remaining cash flow was to be split equally between First Financial and the Encino Venture Partner. Pepperdine University, under its tenant lease, was entitled to an amount based on 6.6% of the Venture Partner's share of the office building's net operating profit and net sale profit (as defined). All of Encino's operating profits and losses before depreciation were allocated to First Financial in 1994, 1995 and 1996. The Encino partnership agreement also generally provided that net sale proceeds and net refinancing proceeds (as defined), after any amounts due to Pepperdine University pursuant to its tenant lease, were to be distributed: first, to First Financial in an amount equal to the deficiency, if any, in its cumulative preferred return as described above; next, to First Financial in the amount of its capital contributions; next, to the Encino Venture Partner in an amount equal to $400,000; any remaining proceeds were to be split equally between First Financial and the Encino Venture Partner. The terms of the First Financial partnership agreement provided that annual cash flow, net sale or refinancing proceeds, and tax items were to be distributed or allocated, as the case may be, to the Partnership in proportion to its 37.5% share of capital contributions. The office building was managed by an affiliate of the Encino Venture Partner for a fee based upon a percentage of rental receipts (as defined) of the property. JMB/MIAMI On January 26, 1988, the Partnership, through JMB/Miami International Associates ("JMB/Miami"), a general partnership with JMB/Miami Investors L.P., a partnership sponsored by an affiliate of the General Partners of the Partnership, acquired an interest in an existing partnership, West Dade County Associates ("West Dade") in which JMB/Miami was a general partner, with an affiliate of the developer (the "Venture Partner"), which owned an enclosed regional shopping center in Miami, Florida known as Miami International Mall. During February 1989, IDS/JMB Balanced Income Growth, Ltd. ("IDS/JMB"), a partnership sponsored by an affiliate of the General Partners of the Partnership made a capital contribution to JMB/Miami to acquire an interest therein. During October 1993, JMB/Miami Investors L.P. transferred its interest in JMB/Miami to Urban Shopping Centers, L.P. ("Urban"), a partnership controlled by Urban Shopping Centers, Inc. (a public corporation organized by an affiliate of the General Partners of the Partnership). The Partnership's cash investment in JMB/Miami was $10,402,500. The terms of JMB/Miami partnership agreement provided that annual cash flow, net sale or refinancing proceeds, and tax items were to be distributed or allocated, as the case may be, to the Partnership in proportion to its 50% share of capital contributions. JMB/Miami invested $17,678,694 for a 50% interest in West Dade and $1,126,306 as a contribution for initial working capital requirements of West Dade. The West Dade venture agreement provided that JMB/Miami and the Venture Partner generally were each entitled to receive 50% of profits and losses, net cash flow and net sale or refinancing proceeds of West Dade and were each obligated to advance 50% of any additional funds required under the terms of the West Dade venture agreement. West Dade sold a 4 acre outparcel of land at the Miami International Mall in December 1994 for a net sales price of approximately $1,466,000 after certain selling costs, of which the Partnership's share was approximately $367,000. For financial reporting purposes, West Dade has recognized a gain in 1994 of approximately $1,195,000, of which the Partnership's share is approximately $299,000. For income tax purposes, West Dade has recognized a gain in 1994 of approximately $985,000, of which the Partnership's share is a gain of approximately $274,000. On April 8, 1996, effective March 31, 1996, JMB/Miami was voluntarily dissolved by agreement of its partners and its 50% ownership interest in West Dade and related assets were distributed to its partners based on their respective ownership percentages. Accordingly, the Partnership acquired a direct 25% ownership interest in West Dade. The Partnership then sold its entire 25% interest in West Dade as described below. On April 8, 1996, the Venture Partner purchased 29.812% (i.e., a 7.453% interest) of the Partnership's interest in West Dade for $4,005,624 (paid in cash at closing), subject to proration. The Venture Partner also assumed a proportionate share of the Partnership's obligations and liabilities of West Dade from and after March 31, 1996, the effective date of the transaction. The Venture Partner is not affiliated with the Partnership or its General Partners, and the terms of the sale were determined by arm's-length negotiations. Concurrently, Urban exercised its right of first refusal and purchased the other 70.188% of the Partnership's interest (i.e., a 17.547% interest) in West Dade for $9,431,107 (paid in cash at closing), subject to proration. Urban also assumed a proportionate share of the Partnership's share of obligations and liabilities of West Dade from and after the effective date of the transaction. The price of the interest sold to Urban was in proportion to that sold to the Venture Partner, and the other terms of the sale with Urban were based on those applicable to the sale with the Venture Partner. In addition, West Dade agreed to indemnify the Partnership generally from and against claims and liabilities incurred by the Partnership in connection with West Dade or its property after the effective date of the transaction. The Partnership recognized an approximate $9,604,000 gain for financial reporting purposes and recognized a gain of approximately $11,475,000 for Federal income tax purposes in 1996. The Partnership made a cash distribution of $105 per Interest from the sales proceeds in August 1996. The shopping center was managed by an affiliate of the Venture Partner. The manager is paid an annual fee equal to 4-1/2% of the net operating income of the shopping center. ADAMS/WABASH On April 19, 1988, an affiliate of the Partnership entered into a forward commitment on behalf of the Partnership to make a cash investment in the Adams/Wabash Limited Partnership ("Adams/Wabash"), which constructed a parking garage and retail space structure (the "Project") in Chicago, Illinois. The Project contains 671 parking spaces and approximately 28,800 square feet of rentable retail area. The Partnership has funded approximately $24,994,000 in full satisfaction of its total cash commitment. Upon acquisition, the Partnership was admitted to Adams/Wabash with a 49.9% ownership interest, which increased to 74.9% effective October 1, 1993 pursuant to the terms of the Adams/Wabash Partnership Agreement. The Managing General Partner of the Partnership has a .1% interest with the remaining 25% held by the developers. The Partnership is entitled to a cumulative annual preferred return, payable from operating cash flow, of 10% of its capital contributions to the existing partnership. Any distributable cash flow in excess of the Partnership's preferred return will be distributed in accordance with the ownership interests of Adams/Wabash. The Partnership also has a preferred position with respect to distributions of sales and financing proceeds. Items of profit and loss are, in general, allocated in accordance with distributions of cash flow. Accordingly, for financial reporting purposes, for the years ended December 31, 1996, 1995 and 1994, the Partnership was allocated 100% of the operating profits of Adams/Wabash. Although the Partnership received its preferred returns for 1994 and 1995, as of December 31, 1996, the Partnership has a cumulative deficiency in its annual preferred return of approximately $300,000. The property has been classified as held for sale or disposition at December 31, 1996, and therefore, will not be subject to continued depreciation after that time. Effective November 1, 1996, an affiliate of the General Partners assumed the management of the retail portion of the property for an annual fee equal to 5% of the gross revenue of the retail portion of the property, the same terms as the previous unaffiliated manager. LONG-TERM DEBT (a) Long-term debt consisted of the following at December 31, 1996 and 1995: 1996 1995 ----------- ----------- 10.03% mortgage note; secured by the Rivertree Court Shopping Center located in Vernon Hills (Chicago), Illinois; payable monthly, interest only; due January 1, 1999. . . . . . . . . $15,700,000 15,700,000 7.32% mortgage note; secured by the Fountain Valley and Cerritos Industrial Parks located in Fountain Valley and Cerritos (Los Angeles), California, respectively; payable in monthly installments of principal and interest of $88,998, remaining principal balance of approximately $8,624,000 plus accrued interest due on March 1, 2001 . . . . . . 10,096,638 10,738,227 ----------- ---------- Total debt. . . . . . . . . . 25,796,638 26,438,227 Less current portion of long-term debt . . . . . . . 313,664 291,589 ----------- ---------- Total long-term debt. . . . . $25,482,974 26,146,638 =========== ========== Five year maturities of long-term debt are summarized as follows: 1997 . . . . . . . . $ 313,664 1998 . . . . . . . . 337,410 1999 . . . . . . . . 16,062,954 2000 . . . . . . . . 390,432 2001 . . . . . . . . 8,692,178 =========== (b) FOUNTAIN VALLEY INDUSTRIAL PARK AND CERRITOS INDUSTRIAL PARK In February 1994, the Partnership extended and increased the Fountain Valley and Cerritos Industrial Park first mortgage loan to the principal amount of $11,200,000. After payment of costs and fees related to the refinancing, there were no distributable proceeds from the loan extension. In December 1996, the Partnership sold one of the parcels and related building that compose the Fountain Valley Industrial Park investment property for a sale price of $665,000. The lender required a principal paydown of the loan in the amount of $350,000 which reduces the balloon payment due on March 1, 2001. Reference is made to the Fountain Valley footnote for a further discussion of the sale. PARTNERSHIP AGREEMENT Pursuant to the terms of the Partnership Agreement, net profits or losses of the Partnership from operations generally are allocated 96% to the Limited Partners and 4% to the General Partners. Profits or losses for Federal income tax purposes from the sale or refinancing of properties generally will be allocated 99% to the Limited Partners and 1% to the General Partners. However, net profits from the sale of properties will be additionally allocated to the General Partners (i) to the extent that cash distributions to the General Partners of sale proceeds from such sale exceed the aforesaid 1% of such profits and (ii) in order to reduce deficits, if any, in the General Partners' capital accounts to a level consistent with the gain anticipated to be realized from the sale of additional properties. The General Partners have made capital contributions to the Partnership aggregating $20,000. The General Partners are not required to make any additional capital contributions except under certain limited circumstances upon dissolution and termination of the Partnership. Disbursable cash from operations, as defined in the Partnership Agreement, will be distributed 90% to the Limited Partners and 10% to the General Partners, subject to certain limitations. Sale or refinancing proceeds will be distributed 100% to the Limited Partners until the Limited Partners have received their contributed capital plus a stipulated return thereon. The General Partners will then receive 100% of the sale or refinancing proceeds until they receive amounts equal to (i) the cumulative deferral of their 10% distribution of disbursable cash and (ii) 2% of the selling prices of all properties which have been sold, subject to certain limitations. Any remaining sale or refinancing proceeds will then be distributed 85% to the Limited Partners and 15% to the General Partners. Accordingly, approximately $4,893,000 of disbursable cash and approximately $618,000 of sale proceeds from the sale of the Mid Rivers Mall have been deferred by the General Partners. The Partnership does not expect that the subordination requirements of the Partnership agreement will be satisfied over the expected remaining term of the Partnership to permit payment of the majority of these amounts. Accordingly, the General Partners waived their right to receive the allocation of sale proceeds, which otherwise would have been deferred per above, from the sale of the Partnership's interest in the Miami International Mall and the First Financial Plaza in 1996. LEASES - AS PROPERTY LESSOR The Partnership and its consolidated venture's principal assets are two multi-tenant industrial building complexes, a shopping center and a parking/retail structure. The Partnership has determined that all leases relating to these properties are properly classified as operating leases; therefore, rental income is reported when earned and the cost of the properties, excluding the cost of the land, is depreciated over their estimated useful lives. Leases with tenants range in term from one to fifteen years and provide for fixed minimum rent and partial reimbursement of operating costs. In addition, certain leases with shopping center tenants provide for additional rent based upon percentages of tenants' sales volumes. With respect to the Partnership's shopping center investment, a substantial portion of the ability of retail tenants to honor their leases is dependent upon the retail economic sector. Cost and accumulated depreciation of the leased assets are summarized as follows at December 31, 1996: Industrial Building Complexes: Cost . . . . . . . . . . . . . . . . . . . . $28,704,198 Accumulated depreciation . . . . . . . . . . (7,066,326) ----------- 21,637,872 ----------- Shopping Center: Cost . . . . . . . . . . . . . . . . . . . . 39,928,703 Accumulated depreciation . . . . . . . . . . (8,042,403) ----------- 31,886,300 ----------- Parking/Retail Structure: Cost . . . . . . . . . . . . . . . . . . . . 22,390,562 Accumulated depreciation . . . . . . . . . . (3,196,427) ----------- 19,194,135 ----------- $72,718,307 =========== Minimum lease payments, including amounts representing executory costs (e.g. taxes, maintenance, insurance) and any related profit, to be received in the future under the operating leases are as follows: 1997 . . . . . . . . . . . . . . . . . . . . . $ 6,230,942 1998 . . . . . . . . . . . . . . . . . . . . . 5,270,789 1999 . . . . . . . . . . . . . . . . . . . . . 4,495,019 2000 . . . . . . . . . . . . . . . . . . . . . 4,082,291 2001 . . . . . . . . . . . . . . . . . . . . . 3,466,665 Thereafter . . . . . . . . . . . . . . . . . . 14,891,094 ----------- Total . . . . . . . . . . . . . . . . . . $38,436,800 =========== TRANSACTIONS WITH AFFILIATES Certain of the Partnership's properties are managed by affiliates of the General Partners or their assignees for fees computed as a percentage of certain rents received by the properties. In December 1994, one of the affiliated property managers sold substantially all of its assets and assigned its interest in its management contracts to an unaffiliated third party. In addition, certain of the management personnel of the property manager became management personnel of the purchaser and its affiliates. The successor to such affiliated property manager's assets is acting as the property manager of the Fountain Valley and Cerritos Industrial Parks after the assignment on the same terms that existed prior to the assignment. Effective November 1, 1996, an affiliate of the General Partners assumed the management of the retail portion of the Adams/Wabash Self Park for an annual fee equal to 5% of the gross revenue of the retail portion of the property, the same terms as the previous unaffiliated manager. The Partnership, pursuant to the Partnership Agreement, is permitted to engage in various transactions involving the Managing General Partner and its affiliates including the reimbursement for salaries and salary- related expenses of its employees, certain of its officers, and other direct expenses relating to the administration of the Partnership and the operation of the Partnership's investments. Fees, commissions and other expenses required to be paid by the Partnership to the General Partners and their affiliates as of December 31, 1996, 1995 and 1994 are as follows: UNPAID AT DECEMBER 31, 1996 1995 1994 1996 -------- -------- -------------------- Property management and leasing fees . . . . $ 97,773 103,838 212,212 2,418 Insurance commissions . . 10,028 9,986 8,393 -- Reimbursement (at cost) for accounting services . . . . . . . . 4,416 76,545 82,333 -- Reimbursement (at cost) for portfolio manage- ment services. . . . . . 39,269 69,714 40,240 5,247 Reimbursement (at cost) for legal services . . . 7,578 1,762 6,221 3,899 Reimbursement (at cost) for administrative charges and other out-of-pocket expenses . 1,099 137,851 12,151 114 -------- ------- ------- ------ $160,163 399,696 361,550 11,678 ======== ======= ======= ====== In accordance with the subordination requirements of the Partnership Agreement, the General Partners have deferred payment of certain of their distributions of net cash flow and sale proceeds from the Partnership. All amounts deferred or currently payable do not bear interest. During 1994, certain officers and directors of the Managing General Partner acquired interests in a company which provides certain property management services to a property owned by the Partnership. The fees earned by such company from the Partnership for the year ended December 31, 1996 were approximately $133,000, all of which has been paid at December 31, 1996. INVESTMENT IN UNCONSOLIDATED VENTURE Summary combined financial information for First Financial and JMB/Miami as of and for the years ended December 31, 1996 and 1995 is as follows: 1996 1995 ------------ ----------- Current assets. . . . . . . . . . . . . $ -- 4,433,344 Other current liabilities . . . . . . . -- (915,416) ------------ ----------- Working capital . . . . . . . . . . -- 3,517,928 Investment property, net. . . . . . . . -- 77,209,499 Other assets, net . . . . . . . . . . . -- 1,723,225 Long-term debt. . . . . . . . . . . . . -- (72,080,876) Other liabilities . . . . . . . . . . . -- (359,793) Venture partners' equity. . . . . . . . -- (1,983,970) ------------ ----------- Partnership's capital. . . . . . . $ -- 8,026,013 ============ =========== Represented by: Invested capital. . . . . . . . . . . $ -- 33,638,348 Cumulative distributions. . . . . . . -- (30,079,909) Cumulative earnings . . . . . . . . . -- 4,467,574 ------------ ----------- $ -- 8,026,013 =========== =========== Total income. . . . . . . . . . . . . . $ 7,227,991 19,328,590 ============ =========== Operating expenses. . . . . . . . . . . $ 6,209,999 15,808,613 ============ =========== Operating earnings (loss) . . . . . . . $ 1,017,992 3,519,977 ============ =========== Gain on sale of land and property . . . $ 2,882,573 -- ============ =========== Net income (loss) . . . . . . . . . . . $ 3,900,565 3,519,977 ============ =========== Total income, operating expenses, gain on sale of land and property, extraordinary item and net loss of the above-mentioned ventures for the year ended December 31, 1994 were $18,725,264, $22,776,897, $1,195,670, ($1,000,000) and ($3,855,963), respectively. SCHEDULE III JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996
COSTS CAPITALIZED INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED PARTNERSHIP (A) ACQUISITION (C) AT CLOSE OF PERIOD (B) ----------------------- ------------------------------------------------------------- BUILDINGS BUILDINGS BUILDINGS ENCUM- AND AND AND BRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS TOTAL (D) ------ -------- ----------------------- ------------ -------- ------------ ---------- Industrial Complexes: Fountain Valley Industrial Park and Cerritos Industrial Park . . . . .$10,096,638 9,111,020 25,783,707 (2,372,929) (3,817,600) 6,738,091 21,966,107 28,704,198 Shopping Center: Rivertree Court Shopping Center . . . . 15,700,000 7,893,178 30,830,231 -- 1,205,294 7,893,178 32,035,525 39,928,703 Parking/Retail: Adams/Wabash Self Park. . . -- 6,530,093 14,547,233 32,411 1,280,825 6,562,504 15,828,058 22,390,562 ----------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total . . .$25,796,638 23,534,291 71,161,171 (2,340,518) (1,331,481) 21,193,773 69,829,690 91,023,463 =========== ========== ========== ========== ========== ========== ========== ==========
SCHEDULE III - CONTINUED JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
LIFE ON WHICH DEPRECIATION IN LATEST STATEMENT OF 1996 ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE DEPRECIATION(E) CONSTRUCTION ACQUIRED IS COMPUTED TAXES ---------------- ------------ ---------- --------------- ----------- Industrial Complexes: Fountain Valley Industrial Park and Cerritos Industrial Park. . . . . . . . . . $ 7,066,326 1967-1970 11/1/88 5-30 years 205,910 Shopping Center: Rivertree Court Shopping Center. . . . . . . . . . 8,042,403 1988 10/20/88 5-30 years 749,542 Parking/Retail: Adams/Wabash Self Park. . . . . . . . . . . . . 3,196,427 1989-1990 10/1/90 30 years 474,326 ----------- --------- Total . . . . . . . . . . . . . $18,305,156 1,429,778 =========== ========= - ------------------ (A) The initial cost to the Partnership represents the original purchase price of the properties, including amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired. (B) The aggregate cost of real estate owned at December 31, 1996 for Federal income tax purposes was $98,777,887. (C) The Partnership recorded a provision for value impairment of $8,200,000 in 1995 which was recorded as a reduction to land and building and improvements.
SCHEDULE III - CONTINUED JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED (D) Reconciliation of real estate owned:
1996 1995 1994 ------------ ------------ ----------- Balance at beginning of period . . . . . . . . . $90,740,661 98,660,035 98,520,414 Additions during period. . . . . . . . . . . . . 678,815 280,626 139,621 Reductions during period . . . . . . . . . . . . (396,013) -- -- Provision for value impairment . . . . . . . . . -- (8,200,000) -- ----------- ----------- ----------- Balance at end of period . . . . . . . . . . . . $91,023,463 90,740,661 98,660,035 =========== =========== =========== (E) Reconciliation of accumulated depreciation: Balance at beginning of period . . . . . . . . . $16,583,348 14,115,282 11,626,188 Depreciation expense . . . . . . . . . . . . . . 1,721,808 2,468,066 2,489,094 ----------- ----------- ----------- Balance at end of period . . . . . . . . . . . . $18,305,156 16,583,348 14,115,282 =========== =========== ===========
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes of, or disagreements with, accountants during fiscal years 1996 and 1995. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP The Managing General Partner of the Partnership is JMB Realty Corporation ("JMB"), a Delaware Corporation, substantially all of the outstanding stock of which is owned, directly or indirectly, by certain of its officers, directors, members of their families and their affiliates. JMB has responsibility for all aspects of the Partnership's operations. AGPP Associates, L.P., an Illinois limited partnership, with JMB as its sole general partner, is an Associate General Partner of the Partnership. The limited partners of AGPP Associates, L.P. are generally officers, directors and affiliates of JMB or its affiliates. AGPP Associates, L.P. is also the sole general partner of Income Partners-XIII, an Illinois limited partnership that is the other Associate General Partner of the Partnership. The Partnership is subject to certain conflicts of interest arising out of its relationships with the General Partners and their affiliates as well as the fact that the General Partners and their affiliates are engaged in a range of real estate activities. Certain services have been and may in the future be provided to the Partnership or its investment properties by affiliates of the General Partners, including property management services and insurance brokerage services. In general, such services are to be provided on terms no less favorable to the Partnership than could be obtained from independent third parties and are otherwise subject to conditions and restrictions contained in the Partnership Agreement. The Partnership Agreement permits the General Partners and their affiliates to provide services to, and otherwise deal and do business with, persons who may be engaged in transactions with the Partnership, and permits the Partnership to borrow from, purchase goods and services from, and otherwise to do business with, persons doing business with the General Partners or their affiliates. The General Partners and their affiliates may be in competition with the Partnership under certain circumstances, including, in certain geographical markets, for tenants for properties and/or for the sale of properties. Because the timing and amount of cash distributions and profits and losses of the Partnership may be affected by various determinations by the General Partners under the Partnership Agreement, including whether and when to sell or refinance a property, the establishment and maintenance of reasonable reserves, the timing of expenditures and the allocation of certain tax items under the Partnership Agreement, the General Partners may have a conflict of interest with respect to such determinations. The names, positions held and length of service therein of each director and the executive and certain other officers of the Managing General Partner of the Partnership are as follows: SERVED IN NAME OFFICE OFFICE SINCE - ---- ------ ------------ Judd D. Malkin Chairman 5/03/71 Director 5/03/71 Chief Financial Officer 2/22/96 Neil G. Bluhm President 5/03/71 Director 5/03/71 Burton E. Glazov Director 7/01/71 Stuart C. Nathan Executive Vice President 5/08/79 Director 3/14/73 A. Lee Sacks Director 5/09/88 John G. Schreiber Director 3/14/73 H. Rigel Barber Chief Executive Officer 8/01/93 Executive Vice President 1/02/87 Glenn E. Emig Executive Vice President 1/01/93 Chief Operating Officer 1/01/95 Gary Nickele Executive Vice President 1/01/92 General Counsel 2/27/84 Gailen J. Hull Senior Vice President 6/01/88 Howard Kogen Senior Vice President 1/02/86 Treasurer 1/01/91 There is no family relationship among any of the foregoing directors or officers. The foregoing directors have been elected to serve a one-year term until the annual meeting of the Managing General Partner to be held on June 7, 1997. All of the foregoing officers have been elected to serve one-year terms until the first meeting of the Board of Directors held after the annual meeting of the Managing General Partner to be held on June 7, 1997. There are no arrangements or understandings between or among any of said directors or officers and any other person pursuant to which any director or officer was elected as such. JMB is the corporate general partner of Carlyle Real Estate Limited Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX ("Carlyle-IX"), Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle- XVII"), JMB Mortgage Partners, Ltd.-III ("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the managing general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI ("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties, Ltd.-X ("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI") and JMB Income Properties, Ltd.-XII ("JMB Income-XII"). JMB is also the sole general partner of the associate general partner of most of the foregoing partnerships. Most of the foregoing directors and officers are also officers and/or directors of various affiliated companies of JMB including Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P. ("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner of Arvida/JMB Partners, L.P.-II ("Arvida-II") and Income Growth Managers, Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd. ("IDS/BIG")). Most of such directors and officers are also partners of certain partnerships which are associate general partners in the following real estate limited partnerships: Carlyle-VII, Carlyle-IX, Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle- XVII, JMB Income-VI, JMB Income-VII, JMB Income-X, JMB Income-XI, JMB Income-XII, Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG. The business experience during the past five years of each such director and officer of the Managing General Partner of the Partnership in addition to that described above is as follows: Judd D. Malkin (age 59) is an individual general partner of JMB Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc. ("USC, Inc."), an affiliate of JMB that is a real estate investment trust in the business of owning, managing and developing shopping centers. He is a Certified Public Accountant. Neil G. Bluhm (age 59) is an individual general partner of JMB Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm is a director of USC, Inc. He is a member of the Bar of the State of Illinois and a Certified Public Accountant. Burton E. Glazov (age 58) has been associated with JMB since June, 1971 and served as an Executive Vice President of JMB until December of 1990. He is a member of the Bar of the State of Illinois and a Certified Public Accountant. Stuart C. Nathan (age 55) has been associated with JMB since July, 1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of sporting goods. He is a member of the Bar of the State of Illinois. A. Lee Sacks (age 63) (President and Director of JMB Insurance Agency, Inc.) has been associated with JMB since December, 1972. John G. Schreiber (age 50) has been associated with JMB since December, 1970 and served as an Executive Vice President of JMB until December 1990. Mr. Schreiber is President of Schreiber Investments, Inc., a company which is engaged in the real estate investing business. He is also a senior advisor and partner of Blackstone Real Estate Partners, an affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has also served as a Trustee of Amli Residential Property Trust, a publicly-traded real estate investment trust that invests in multi-family properties. Mr. Schreiber is a director of USC, Inc. as well as a director of a number of investment companies advised or managed by T. Rowe Price Associates and its affiliates. He holds a Masters degree in Business Administration from Harvard University Graduate School of Business. H. Rigel Barber (age 47) has been associated with JMB since March, 1982. He holds a J.D. degree from the Northwestern Law School and is a member of the Bar of the State of Illinois. Glenn E. Emig (age 49) has been associated with JMB since December, 1979. Prior to becoming Executive Vice President of JMB in 1993, Mr. Emig was Executive Vice President and Treasurer of JMB Institutional Realty Corporation. He holds a Masters Degree in Business Administration from the Harvard University Graduate School of Business and is a Certified Public Accountant. Gary Nickele (age 44) has been associated with JMB since February, 1984. He holds a J.D. degree from the University of Michigan Law School and is a member of the Bar of the State of Illinois. Gailen J. Hull (age 48) has been associated with JMB since March, 1982. He holds a Masters degree in Business Administration from Northern Illinois University and is a Certified Public Accountant. Howard Kogen (age 61) has been associated with JMB since March, 1973. He is a Certified Public Accountant. ITEM 11. EXECUTIVE COMPENSATION The officers and director of the Managing General Partner receive no current or proposed direct remuneration in such capacities. Pursuant to the Partnership Agreement, the General Partners of the Partnership are entitled to receive a share of cash distributions, when and as cash distributions are made to the Investors, and a share of profits or losses. Reference is also made to the Notes for a description of such transactions, distributions and allocations. In 1996, 1995 and 1994, the General Partners received cash distributions in the amount of $241,193, $156,067 and $141,879, respectively. As of December 31, 1996, the General Partners have deferred payment of distributions in the aggregate amount of approximately $5,511,000. The General Partners of the Partnership may be reimbursed for their direct expenses relating to the offering, the administration of the Partnership and the operation of the Partnership's real property investments. In 1996, an affiliate of the General Partners was due reimbursement for such out-of-pocket expenses in the amount of $1,099, of which $114 was unpaid as of December 31, 1996. The General Partners may be reimbursed for salaries and salary-related direct expenses of officers and employees of the Managing General Partner and its affiliates while directly engaged in the administration of the Partnership and the operation of the Partnership's real property investments. In 1996, the Managing General Partner was due reimbursement for such expenses in the amount of $51,263 of which $9,146 was unpaid as of December 31, 1996. Affiliates of the General Partners have provided property management services for the Rivertree Court Shopping Center and the retail portion of the Adams/Wabash Self Park during 1996. In 1996, such affiliates earned aggregate property management fees amounting to $97,773 of which $2,418 was unpaid as of December 31, 1996. Certain directors and officers of the General Partners have an equity interest in a company that provided property management services for the Adams/Wabash Self Park during 1996. In 1996, such company earned aggregate property management fees amounting to $133,000, all of which was paid at December 31, 1996. JMB Insurance Agency, Inc., an affiliate of the Managing General Partner of the Partnership, earned and received insurance brokerage commissions in 1996 aggregating $10,028 in connection with the providing of insurance coverage for certain of the real property investments of the Partnership. Such commissions are at rates set by insurance companies for the classes of coverage provided. The Partnership is permitted to engage in various transactions involving affiliates of the Managing General Partner of the Partnership. The relationship of the Managing General Partner (and its directors and officers) to its affiliates is set forth in Item 10 above and Exhibit 21 hereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Interests of the Partnership. (b) The Managing General Partner, its officers and directors and the Associate General Partners own the following Interests of the Partnership: NAME OF AMOUNT AND NATURE BENEFICIAL OF BENEFICIAL PERCENT TITLE OF CLASS OWNER OWNERSHIP OF CLASS - -------------- ---------- ----------------- -------- Limited Partnership Interests JMB Realty Corporation 5 Interests (1) Less than 1% indirectly Limited Partnership Interests Managing General Partner, 5 Interests (1) Less than 1% its officers and indirectly directors and the Associate General Partners as a group (1) Includes 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB Realty Corporation, as its indirect majority shareholder, is deemed to have sole investment and voting power. All of the outstanding shares of the Managing General Partner of the Partnership are owned by an affiliate of its officers and directors as set forth above in Item 10. Reference is made to Item 10 for information concerning ownership of the Managing General Partner. (c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date result in a change in control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There were no significant transactions or business relationships with the Managing General Partner, affiliates or their management other than those described in Items 10 and 11 above. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Financial Statements (See Index to Financial Statements filed with this annual report). (2) Exhibits. 3-A. The Prospectus of the Partnership dated August 20, 1986 as supplemented October 31, 1986 and January 26, 1987 as filed with the Commission pursuant to Rules 424(b) and 424(c) is hereby incorporated herein by reference to Exhibit 3-A to the Partnership's Form 10-K dated March 18, 1993. 3-B. Amended and Restated Agreement of Limited Partnership set forth as Exhibit A to the Prospectus, which is hereby incorporated by reference to Exhibit 3-B to the Partnership's From 10-K dated March 18, 1993. 3-C. Acknowledgement of rights and duties of the General Partners of the Partnership between AGPP Associates, L.P. (a successor Associated General Partner of the Partnership) and JMB Realty Corporation as of December 31, 1995 is hereby incorporated herein by reference to the Partnership's report for June 30, 1996 on Form 10-Q (File No. 000-19496) dated August 9, 1996. 4-A. Copy of documents relating to the mortgage loan secured by the Rivertree Court Shopping Center, Vernon Hills (Chicago), Illinois dated December 30, 1988 is hereby incorporated by reference to Exhibit 4-A to the Partnership's Form 10-K dated March 18, 1993. 4-B. Copy of documents relating to the mortgage loan secured by a first mortgage on West Dade's interest in Miami International Mall, Miami, Florida dated December 21, 1993 incorporated herein by reference to Exhibit 4-B to the Partnership's Report for December 31, 1993 on Form 10-K (File No. 000-19496) dated March 24, 1994. 4-C. Modification document relating to the mortgage loan secured by the First Financial Plaza Office Building in Encino, California, which is hereby incorporated by reference to Exhibit 4-C to the Partnership's Report for December 31, 1995 on Form 10-K (File No. 000- 19496) dated March 25, 1996. 10-A. Acquisition documents relating to the purchase by the Partnership of Rivertree Court Shopping Center in Vernon Hills (Chicago), Illinois, are hereby incorporated by reference to Exhibit 1 to the Partnership's Form 8-K dated November 4, 1988. 10-B. Acquisition documents relating to the purchase by the Partnership of Fountain Valley Industrial Buildings in Fountain Valley, California and Cerritos Industrial Buildings in Cerritos, California, are hereby incorporated by reference to Exhibits 1 and 2 to the Partnership's Form 8-K dated November 15, 1988. 10-C. Acquisition documents relating to the acquisition by the Partnership of an interest in the Adams/Wabash Parking Garage in Chicago, Illinois are hereby incorporated by reference to Exhibit 3 to the Partnership's Form 8-K dated October 15, 1990. 10-D. Sale documents and exhibits thereto relating to the sale of the Partnership's interest in Mid Rivers Mall in St. Peters (St. Louis), Missouri are hereby incorporated by reference to the Partnership's Report on Form 8-K dated February 18, 1992. 10-E. Sale documents relating to the sale by the Partnership of an interest in the Miami International Mall in Miami, Florida are hereby incorporated by reference to the Partnership's Report for April 8, 1996 on Form 8-K (File No. 0-19496) dated April 23, 1996. 10-F. Purchase Agreement and amendments thereto dated August 9, 1996 relating to the sale of First Financial Plaza by JMB Encino Partnership, L.P. are hereby incorporated by reference to the Partnership's Report for September 30, 1996 on Form 10-Q (File No. 0-19496) dated November 8, 1996. 21. List of Subsidiaries. 24. Powers of Attorney 27. Financial Data Schedule Although certain long-term debt instruments of the Registrant have been excluded from Exhibit 4 above, pursuant to Rule (b)(4)(iii), the Registrants commits to provide copies of such agreements to the Securities and Exchange Commission upon request. (b) No reports on Form 8-K were required to be filed during the last quarter of the period covered by this annual report. No annual report or proxy material for the fiscal year 1996 has been sent to the Partners of the Partnership. An annual report will be sent to the Partners subsequent to this filing. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JMB INCOME PROPERTIES, LTD. - XIII By: JMB Realty Corporation Managing General Partner GAILEN J. HULL By: Gailen J. Hull Senior Vice President Date: March 21, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: JMB Realty Corporation Managing General Partner JUDD D. MALKIN* By: Judd D. Malkin, Chairman and Chief Financial Officer Date: March 21, 1997 NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 21, 1997 H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 21, 1997 GLENN E. EMIG* By: Glenn E. Emig, Chief Operating Officer Date: March 21, 1997 GAILEN J. HULL By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 21, 1997 A. LEE SACKS* By: A. Lee Sacks, Director Date: March 21, 1997 STUART C. NATHAN* By: Stuart C. Nathan, Executive Vice President and Director Date: March 21, 1997 *By: GAILEN J. HULL, Pursuant to a Power of Attorney GAILEN J. HULL By: Gailen J. Hull, Attorney-in-Fact Date: March 21, 1997 JMB INCOME PROPERTIES, LTD. - XIII EXHIBIT INDEX DOCUMENT INCORPORATED BY REFERENCE PAGE ------------ ---- 3-A. Pages 8-19, 64-70, A-7 to A-16, A-34 to A-35 of the Prospectus of the Partnership dated August 20, 1986, as supplemented on October 31, 1986, and January 26, 1987 Yes -- 3-B. Amended and Restated Agreement of Limited Partnership Yes -- 3-C. Acknowledgement of rights and duties of the General Partners of the Partnership Yes -- 4-A. Mortgage loan agreement related to the Rivertree Court Shopping Center Yes -- 4-B. Mortgage loan agreement related to West Dade Yes -- 4-C. Mortgage loan modification documents related to First Financial Plaza Office Building Yes -- 10-A. Acquisition documents relating to the Rivertree Court Shopping Center Yes -- 10-B. Acquisition documents relating to the Fountain Valley Industrial Buildings and Cerritos Industrial Buildings Yes -- 10-C. Acquisition documents relating to the Adams/Wabash Parking Garage Yes -- 10-D. Sale documents relating to the Mid Rivers Mall Yes -- 10-E. Sale documents relating to the sale by the Partnership of an interest in the Miami International Mall Yes -- 10-F. Purchase Agreement and amendments thereto relating to the sale of First Financial Plaza by JMB Encino Partnership, L.P. Yes -- 21. List of Subsidiaries No 24. Powers of Attorney No 27. Financial Data Schedule No EX-21 2 EXHIBIT 21 LIST OF SUBSIDIARIES The Partnership is a limited partner in Adams/Wabash Limited Partnership, an Illinois limited partnership. Adams/Wabash Limited Partnership holds title to the Adams/Wabash Self Park. Reference is made to the Notes to Financial Statements filed with this annual report for a summary description of the terms of such partnership agreement. The Partnership's interest in the foregoing joint venture partnership and the results of its operations are included in the Consolidated Financial Statements of the Partnership filed with this annual report. EX-24 3 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB Realty Corporation, the managing general partner of JMB INCOME PROPERTIES, LTD. - XIII, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the undersigned with full power of authority to sign in the name and on behalf of the undersigned officers a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1996, and any and all amendments thereto, hereby ratifying and confirming all that said attorneys and agents and any of them may do by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney the 22nd day of January, 1997. H. RIGEL BARBER - ----------------------- H. Rigel Barber Chief Executive Officer GLENN E. EMIG - ----------------------- Glenn E. Emig Chief Operating Officer The undersigned hereby acknowledge and accept such power of authority to sign, in the name and on behalf of the above named officers, a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1996, and any and all amendments thereto, the 22nd day of January, 1997. GARY NICKELE ----------------------- Gary Nickele GAILEN J. HULL ----------------------- Gailen J. Hull DENNIS M. QUINN ----------------------- Dennis M. Quinn EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB Realty Corporation, the managing general partner of JMB INCOME PROPERTIES, LTD. - XIII, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the undersigned with full power of authority to sign in the name and on behalf of the undersigned officers a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1996, and any and all amendments thereto, hereby ratifying and confirming all that said attorneys and agents and any of them may do by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney the 22nd day of January, 1997. NEIL G. BLUHM - ----------------------- President and Director Neil G. Bluhm JUDD D. MALKIN - ----------------------- Chairman and Chief Financial Officer Judd D. Malkin A. LEE SACKS - ----------------------- Director of General Partner A. Lee Sacks STUART C. NATHAN - ----------------------- Executive Vice President Stuart C. Nathan Director of General Partner The undersigned hereby acknowledge and accept such power of authority to sign, in the name and on behalf of the above named officers, a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1996, and any and all amendments thereto, the 22nd day of January, 1997. GARY NICKELE ----------------------- Gary Nickele GAILEN J. HULL ----------------------- Gailen J. Hull DENNIS M. QUINN ----------------------- Dennis M. Quinn EX-27 4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 12-MOS DEC-31-1996 DEC-31-1996 3,743,541 0 1,448,694 0 0 5,192,235 72,718,307 0 80,097,683 2,455,023 25,482,974 0 0 0 51,845,562 80,097,683 11,279,441 11,973,382 0 5,474,791 601,894 0 2,370,249 3,526,448 0 3,785,085 11,090,549 0 0 14,875,634 115.59 115.59
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