-----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, LFM32w3TZvemeWSpGLdpFvPdxRxlIMNAK8SUIuHD5Fg4vKOeXpzosDsb+weUjg5B 8Eh9/6Vg9c+m1LCv098wPg== 0000892626-99-000210.txt : 19990330 0000892626-99-000210.hdr.sgml : 19990330 ACCESSION NUMBER: 0000892626-99-000210 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990329 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: SEC FILE NUMBER: 000-19496 FILM NUMBER: 99576108 BUSINESS ADDRESS: STREET 1: C/O JMB REALTY CORP STREET 2: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3129151987 MAIL ADDRESS: STREET 1: C/O JMB REALTY CORP STREET 2: 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, 1998 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 AND ASSIGNEE INTERESTS THEREIN (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 . . . . . . . . . . . . . . . . . 4 Item 3. Legal Proceedings. . . . . . . . . . . . . . 6 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . 6 PART II Item 5. Market for the Partnership's Limited Partnership Interests and Related Security Holder Matters. . . . . . . 6 Item 6. Selected Financial Data. . . . . . . . . . . 7 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . 9 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . 11 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . 12 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . . 36 PART III Item 10. Directors and Executive Officers of the Partnership . . . . . . . . . . . . . 36 Item 11. Executive Compensation . . . . . . . . . . . 39 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . 40 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . 41 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. . . . . . . . . . . 41 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 43 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"), was a limited partnership formed in 1986 and 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 made any additional capital contribution after such date. The investors in the Partnership shared in their portion of the benefits of ownership of the Partnership's real property investments according to the number of Interests held. The Partnership was engaged solely in the business of the acquisition, operation, and sale and disposition of equity real estate investments. Such equity investments were held by fee title and/or through joint venture partnership interests. The Partnership's investments were located throughout the nation and it had no real estate investments located outside the United States. A presentation of information about industry segments, geographic regions, raw materials or seasonality was not applicable and wound not have been material to an understanding of the Partnership's business taken as a whole. The Partnership was self-liquidating in nature. At sale of a particular property, the net proceeds, if any, were generally distributed to all partners or reinvested in existing properties rather than invested in acquiring additional properties. As discussed further in Item 7, during 1998 the Partnership sold its remaining investment property, wound up its affairs and made a final liquidating distribution of $21,121,251 including $1,140,254 to a liquidating trust established for the benefit of the Holders of Interests and terminated its operations and dissolved effective December 31, 1998. The Partnership made the real property investments set forth in the following table:
NAME, TYPE OF PROPERTY DATE OF SALE OR AND LOCATION SIZE PURCHASE DISPOSITION DATE 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) (a)(b) 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) (a)(b) 4. Rivertree Court Shopping Center Vernon Hills (Chicago), Illinois. . . . . . 297,000 10/20/88 7/17/97 Fee ownership of land and sq.ft. improvements (b) g.l.a. 5. Fountain Valley Industrial Park Industrial Buildings Fountain Valley (Los Angeles), California. . . . . 393,100 11/1/88 12/11/98 Fee ownership of land and sq.ft. improvements (b) b.a. NAME, TYPE OF PROPERTY DATE OF SALE OR AND LOCATION SIZE PURCHASE DISPOSITION DATE TYPE OF OWNERSHIP - ---------------------- ---------- -------- ---------------- --------------------- 6. Cerritos Industrial Park Industrial Buildings Cerritos (Los Angeles), California. . . . . 197,100 11/1/88 5/29/97 Fee ownership of land and sq.ft. improvements (b) b.a. 7. Adams/Wabash Self Park Chicago, Illinois . 671 spaces and 10/1/90 8/11/97 Fee ownership of land and 28,800 improvements (through sq.ft. joint venture partnership) g.l.a. (a)(b) - ----------------------- (a) 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. (b) 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 remaining real property investment was subject to competition from similar types of properties (including properties owned by affiliates of the General Partners) in the vicinity in which it was located. Such competition was generally for the retention of existing tenants. Additionally, the Partnership was in competition for new tenants. Approximate occupancy levels for the properties owned during 1998 are set forth in Item 2 below to which reference is hereby made. The Partnership maintained the suitability and competitiveness of its property in its market primarily on the basis of effective rents, tenant allowances and service provided to tenants. On December 11, 1998, the Partnership sold the remaining land, buildings and related improvements of the Fountain Valley Industrial Park located in Fountain Valley, California. Reference is made to the Notes for a further description of such transaction. The Partnership had 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 owned 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 1998 and 1997 for the Partnership's remaining investment property owned during 1998:
1997 1998 ------------------------------ ------------------------------ 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 ------------- ---- ---- ---- ----- ---- ---- ----- ----- Fountain Valley Industrial Park Fountain Valley (Los Angeles), California (A). . . Retail/ Electronics Repair/ Nuts and Bolts Distributor 94% 100% 100% 100% 100% 100% 100% N/A - -------------------- An "N/A" indicates that the property was not owned by the Partnership at the end of the quarter. (A) The occupancy percentages reflected in this table are computed based upon the remaining square footage of the complex owned as of the respective dates as portions of the complex were sold in December 1996 and May 1997.
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 1998 and 1997. PART II ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS Immediately prior to the dissolution of the Partnership, there were 8,533 record holders of Interests of the Partnership. On December 31, 1998, the Partnership made a liquidating distribution to its Limited Partners including amounts to a liquidating trust established for the benefit of Holders of Interests and subsequently terminated its operations and dissolved effective December 31, 1998. There had been no public market for Interests and it had not been anticipated that a public market for Interests would develop. Upon request, the Managing General Partner provided information relating to a prospective transfer of Interests to an investor desiring to transfer his Interests. The price paid for the Interests, as well as any other economic aspects of the transaction, was subject to negotiation by the Investor. Reference is made to Item 6 for a discussion of cash distributions made to the Limited Partners. Reference is made to Item 7 for a discussion of unsolicited tender offers received from unaffiliated third parties. ITEM 6. SELECTED FINANCIAL DATA JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE YEAR ENDED DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), AND YEARS ENDED DECEMBER 31, 1997, 1996, 1995 AND 1994 (NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
1998 1997 1996 1995 1994 ------------ ---------- ---------- ----------- ----------- Total income. . . . . . . .$ 2,380,865 8,483,213 11,973,382 12,545,834 11,984,676 ============ ========== ========== =========== =========== Earnings (loss) before gains on sales or disposition of invest- ment properties . . . . .$ 658,782 1,524,818 3,785,085 (4,177,565) 959,484 Gains on sales of investment properties and Partnership's share of gain on sale of investment property from unconsolidated venture . . . . . . . . . 4,867,960 7,186,234 11,090,549 -- 298,917 ------------ ---------- ---------- ----------- ----------- Earnings (loss) before Partnership's share of extraordinary items. . 5,526,742 8,711,052 14,875,634 (4,177,565) 1,258,401 Extraordinary items . . . . (328,184) (89,545) -- -- (375,000) ------------ ---------- ---------- ----------- ----------- Net earnings (loss) . . . .$ 5,198,558 8,621,507 14,875,634 (4,177,565) 883,401 ============ ========== ========== =========== =========== 1998 1997 1996 1995 1994 ------------ ----------- ---------- ----------- ----------- Net earnings (loss) per Limited Partner Interest (b): Earnings (loss) before gains on sales or disposition of invest- ment properties. . . . .$ 5.00 11.58 28.74 (31.72) 7.29 Gains on sales of investment properties and Partnership's share of gain on sale of investment property from uncon- solidated venture . . . 32.21 56.28 86.85 -- 2.34 Extraordinary items . . . (2.49) (.68) -- -- (2.85) ------------ ---------- ---------- ----------- ----------- Net earnings (loss) per Limited Partner Interest. . .$ 34.72 67.18 115.59 (31.72) 6.78 ============ ========== ========== =========== =========== Total assets. . . . . . . .$ 21,121,251 22,059,131 80,097,683 99,483,214 109,171,952 Long-term debt. . . . . . .$ -- 5,976,472 25,482,974 26,146,638 26,436,573 Cash distributions per Limited Partner Interest (c)(d) . . . . .$ 4.00 355.00 261.00 44.00 41.00 ============ ========== ========== =========== =========== - ------------- (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 were 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 was 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. (d) This amount does not include the final liquidating cash distribution of $19,980,997 ($158.06 per Interest) to the Limited Partners and $1,140,254 to a liquidating trust established for the benefit of the Holders of Interests.
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. The board of directors of JMB Realty Corporation ("JMB") the managing general partner of the Partnership, had 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 retained independent counsel to advise it in connection with any potential tender offers for Interests and had retained Lehman Brothers Inc. as financial advisor to assist the Special Committee in evaluating and responding to potential tender offers for Interests. During 1997 unaffiliated third parties made unsolicited tender offers for up to 4.9% of the Interests in the Partnership with offers ranging between $245 and $350 per Interest. The Special Committee recommended against acceptance of these offers, all of which have expired. During the first half of 1998 unaffiliated third parties made unsolicited tender offers to purchase up to 4.9% of the outstanding Interests in the Partnership for up to $65 per Interest. The Special Committee recommended against acceptance of these offers on the basis that, among other things, the offer price was inadequate. Such offers have expired. The Partnership was aware that 6.04% of the Interests of the Partnership had been purchased by all such unaffiliated third parties either pursuant to all such tender offers or through negotiated purchases. On December 11, 1998, the Partnership sold the Fountain Valley Industrial Park to an unaffiliated third party for $21,475,000. Reference is made to the notes for a further description of such event. Pursuant to the terms of the Partnership Agreement, upon liquidation of the Partnership the Special Limited Partner of the Partnership was required to contribute to the Holders of Interests the amount of all distributions it previously received from operating cash and sales and refinancing proceeds due to the fact that the Holders of Interests had not received sale or refinancing proceeds in an aggregate amount equal to their capital contributions. In December 1998, the Special Limited Partner contributed $1,349,489 in accordance with this provision, which amount was distributed to the Holders of Interests in conjunction with the final liquidating distribution in December 1998. In connection with the liquidation and termination of the Partnership, the Managing General Partner formed a liquidating trust into which all of the Partnership's remaining assets of $1,140,254, subject to liabilities, were transferred by means of the final liquidating distribution on December 31, 1998. Such transferred amount represents the maximum estimated potential obligation (including administrative costs) of the Partnership due to certain representations and warranties issued to the buyer of the Fountain Valley Industrial Park investment property. Although there can be no assurance, the Partnership does not expect to incur any amounts in connection with such representations and warranties (which are scheduled to expire June 11, 1999). The initial trustees of the liquidating trust are individuals who are officers of the Managing General Partner. Each Holder of Interests in the Partnership is deemed to be the beneficial owner of a comparable share of the aggregate beneficial interests in the liquidating trust. It is anticipated that the liquidating trust will permit the realization of substantial cost savings in administrative and other expenses until the remaining funds are distributed to the beneficial owners of the liquidating trust. The liquidating trust is expected to be in existence for approximately one year, subject to extension under certain circumstances. The Partnership made a final liquidating cash distribution of $19,980,997 ($158.06 per Interest) to its Holders of Interests and wound up its affairs and dissolved effective December 31, 1998. In accordance with the subordination requirements of the Partnership Agreement, the General Partners deferred payment of certain of their distributions of net cash flow and sale proceeds from the Partnership. The cumulative amount of such deferred distributions was approximately $5,767,000 immediately prior to the final liquidating distribution. RESULTS OF OPERATIONS Significant variances between the periods reflected in the accompanying consolidated financial statements are the result of the sales of the Cerritos Industrial Park, Rivertree Court Shopping Center and Adams/Wabash Self-Park in 1997, the sales of the two land parcels and related buildings at the Fountain Valley Industrial Park in December 1996 and May 1997, and the sale of the remaining portion of the Fountain Valley Industrial Park in December 1998. The decrease in interest income for the twelve months ended December 31, 1998, as compared to the twelve months ended December 31, 1997, and the increase in interest income for the twelve months ended December 31, 1997, as compared to the twelve months ended December 31, 1996 is primarily due to the fluctuation of the Partnership's average invested balance due to the timing of receipts of cash generated from the various sales of the Partnership's investment properties in 1996 and 1997 and the timing of the Partnership's subsequent distribution of sales proceeds to the Holders of Interests. The decrease in depreciation for the twelve months ended December 31, 1998 and December 31, 1997 as compared to the twelve months ended December 31, 1996 is primarily due to the timing of the classification of the investment properties as properties held for sale, and therefore, not subject to continued depreciation. The increase in professional services for the year ended December 31, 1998 as compared to the years ended December 31, 1997 and December 31, 1996 is primarily due to environmental groundwater testing done at the Fountain Valley Industrial Park in 1998. The $2,500,000 provision for value impairment reported for the twelve months ended December 31, 1997 was recorded as of June 30, 1997 based upon the expected sale price for the Rivertree Court Shopping Center investment property, which was sold July 17, 1997. The decrease in Partnership's share of operations from unconsolidated ventures for the twelve months ended December 31, 1998 and the twelve months ended December 31, 1997 as compared to the twelve months ended December 31, 1996 is due to the sale of the Partnership's interest in the Miami International Mall in April 1996 and the sale of the First Financial Plaza office building in September 1996. The gain on sale of investment properties reported for the twelve months ended December 31, 1998 and the twelve months ended December 31, 1997 is due to the sale of the Cerritos Industrial Park investment property on May 29, 1997, the sale of the Adams/Wabash investment property on August 11, 1997, the sale of the Rivertree Court Shopping Center investment property on July 17, 1997 the sale of a land parcel and related building at the Fountain Valley Industrial Park investment property on May 1, 1997, and the sale of the remaining land and relating buildings at the Fountain Valley Industrial Park on December 11, 1998. The extraordinary items reported for the twelve months ended December 31, 1998 and the twelve months ended December 31, 1997 represent the prepayment premiums on the early termination of debt in 1998 and 1997 and the write-off of deferred mortgage expense in 1998 in conjunction with the sales of certain of the Partnership's investment properties in 1998 and 1997. INFLATION Due to the decrease in the level of inflation in recent years, inflation generally has not had a material effect on the operations of the Partnership. Inflation in future periods is not applicable since the Partnership wound up its affairs and dissolved effective December 31, 1998. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Partnership wound up its affairs and dissolved in 1998. As a result, there is no meaningful disclosure for this item. YEAR 2000 The Partnership wound up its affairs and dissolved in 1998. 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, 1998 (Immediately prior to final liquidating distribution) and December 31, 1997 Consolidated Statements of Operations, year ended December 31, 1998 (Immediately prior to final liquidating distribution) and years ended December 31, 1997 and 1996 Consolidated Statements of Partners' Capital Accounts (Deficits), year ended December 31, 1998 (Immediately prior to final liquidating distribution) and years ended December 31, 1997 and 1996 Consolidated Statements of Cash Flows, year ended December 31, 1998 (Immediately prior to final liquidating distribution) and years ended December 31, 1997 and 1996 Notes to Consolidated Financial Statements SCHEDULES NOT FILED: All schedules have been omitted as the required information is inapplicable or the information is presented in the 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. These consolidated financial statements are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these consolidated financial statements 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, 1998 (immediately prior to final liquidating distribution) and December 31, 1997, and the results of their operations and their cash flows for the year ended December 31, 1998 (immediately prior to final liquidating distribution) and for the years ended December 31, 1997 and 1996, in conformity with generally accepted accounting principles. As discussed in the Notes to the consolidated financial statements, in 1996 the Partnership and its consolidated venture 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 LLP Chicago, Illinois March 10, 1999 JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION) AND 1997 ASSETS ------
1998 1997 ------------ ----------- Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 21,121,251 4,666,891 Interest, rents and other receivables . . . . . . . . . . . . . . . -- 1,093,810 Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . -- 25,047 Escrow deposits . . . . . . . . . . . . . . . . . . . . . . . . . . -- 69,470 ------------ ----------- Total current assets. . . . . . . . . . . . . . . . . . . . . 21,121,251 5,855,218 Properties held for sale or disposition . . . . . . . . . . . . . . . -- 15,480,159 Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . -- 371,870 Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . -- 351,884 ------------ ----------- $ 21,121,251 22,059,131 ============ =========== JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED BALANCE SHEETS - CONTINUED LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS) ---------------------------------------------------- 1998 1997 ------------ ----------- Current liabilities: Current portion of long-term debt . . . . . . . . . . . . . . . . . $ -- 200,366 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . -- 140,099 Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . -- 37,679 Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 478,255 ------------ ----------- Total current liabilities . . . . . . . . . . . . . . . . . . -- 856,399 Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . -- 160,403 Long-term debt, less current portion. . . . . . . . . . . . . . . . . -- 5,976,472 ------------ ----------- Commitments and contingencies Total liabilities . . . . . . . . . . . . . . . . . . . . . . -- 6,993,274 ------------ ----------- Partners' capital accounts (deficits): General partners: Capital contributions.. . . . . . . . . . . . . . . . . . . . 52,299 20,000 Cumulative net earnings . . . . . . . . . . . . . . . . . . . 1,663,865 853,929 Cumulative cash distributions . . . . . . . . . . . . . . . . (1,716,164) (1,701,976) ------------ ----------- -- (828,047) ------------ ----------- Limited partners (126,414 interests): Capital contributions, net of offering costs. . . . . . . . . 115,090,804 113,741,315 Cumulative net earnings . . . . . . . . . . . . . . . . . . . 43,782,091 39,393,469 Cumulative cash distributions . . . . . . . . . . . . . . . . (137,751,644) (137,240,880) ------------ ----------- 21,121,251 15,893,904 ------------ ----------- Total partners' capital accounts. . . . . . . . . . . . . . . 21,121,251 15,065,857 ------------ ----------- $ 21,121,251 22,059,131 ============ =========== 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, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
1998 1997 1996 ------------ ------------ ------------ Income: Rental income . . . . . . . . . . . . . . . . . . $ 2,125,282 7,583,750 11,279,441 Interest income . . . . . . . . . . . . . . . . . 255,583 899,463 693,941 ----------- ----------- ----------- 2,380,865 8,483,213 11,973,382 ----------- ----------- ----------- Expenses: Mortgage and other interest . . . . . . . . . . . 423,631 1,422,849 2,370,249 Depreciation. . . . . . . . . . . . . . . . . . . -- -- 1,721,808 Property operating expenses . . . . . . . . . . . 501,987 2,314,081 3,561,629 Professional services . . . . . . . . . . . . . . 331,813 216,694 271,487 Amortization of deferred expenses . . . . . . . . 73,153 131,498 191,354 General and administrative. . . . . . . . . . . . 378,346 373,273 330,407 Provision for value impairment. . . . . . . . . . -- 2,500,000 -- ----------- ----------- ----------- 1,708,930 6,958,395 8,446,934 ----------- ----------- ----------- 671,935 1,524,818 3,526,448 Partnership's share of operations of uncon- solidated ventures. . . . . . . . . . . . . . . . (13,153) -- 258,637 ----------- ----------- ----------- Earnings (loss) before gains on sales of investment properties . . . . 658,782 1,524,818 3,785,085 Gains on sales of investment properties . . . . . . 4,867,960 7,186,234 217,690 Partnership's share of gain on sale of investment property from unconsolidated venture . -- -- 10,872,859 ----------- ----------- ----------- Earnings (loss) before Partner- ship's share of extraordinary items . . . . . . . . . . . . . . . . . . 5,526,742 8,711,052 14,875,634 Extraordinary items . . . . . . . . . . . . . . . . (328,184) (89,545) -- ----------- ----------- ----------- Net earnings (loss) . . . . . . . . . . . . $ 5,198,558 8,621,507 14,875,634 =========== =========== =========== JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED 1998 1997 1996 ------------ ------------ ------------ Net earnings (loss) per limited partnership interest: Earnings (loss) before gains on sales of investment properties. . . . . . . . . . . . $ 5.00 11.58 28.74 Gains on sales of investment properties . . . . . 32.21 56.28 1.70 Partnership's share of gain on sale of investment property from unconsolidated venture . . . . . . . . . . . . . . . . . . . . -- -- 85.15 Extraordinary items . . . . . . . . . . . . . . . (2.49) (.68) -- ----------- ----------- ----------- Net earnings (loss) . . . . . . . . . . . . $ 34.72 67.18 115.59 =========== =========== =========== 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, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
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 Net earnings (loss) . . . -- 131,960 -- 131,960 -- 8,489,547 -- 8,489,547 Cash distri- butions ($355.00 per Interest). . -- -- (70,939) (70,939) -- -- (45,330,273)(45,330,273) ------- --------- ---------- -------- ----------- ---------- ------------ ---------- 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, 1997 . . . . 20,000 853,929 (1,701,976) (828,047) 113,741,315 39,393,469 (137,240,880) 15,893,904 Capital con- tributions . 32,299 -- -- 32,299 1,349,489 -- -- 1,349,489 Net earnings (loss) . . . -- 809,936 -- 809,936 -- 4,388,622 -- 4,388,622 Cash distri- butions ($4.00 per Interest). . -- -- (14,188) (14,188) -- -- (510,764) (510,764) ------- --------- ---------- -------- ----------- ---------- ------------ ---------- Balance (deficit) at Decem- ber 31, 1998 . . . . $52,299 1,663,865 (1,716,164) -- 115,090,804 43,782,091 (137,751,644) 21,121,251 ======= ========= ========== ======== =========== ========== ============ ========== 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, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996
1998 1997 1996 ----------- ----------- ----------- Cash flows from operating activities: Net earnings (loss) . . . . . . . . . . . . . . . $ 5,198,558 8,621,507 14,875,634 Items not requiring (providing) cash or cash equivalents: Depreciation. . . . . . . . . . . . . . . . . . -- -- 1,721,808 Amortization of deferred expenses . . . . . . . 73,153 131,498 191,354 Partnership's share of operations of unconsolidated ventures, net of distributions. . . . . . . . . . . . . -- -- 318,805 Partnership's gain on sales of investment properties. . . . . . . . . . . . . . . . . . (4,867,960) (7,186,234) (217,690) Partnership's share of gain on sale of investment property from unconsolidated venture . . . . . . . . . . . . . . . . . . . -- -- (10,872,859) Extraordinary items . . . . . . . . . . . . . . 328,184 89,545 -- Provision for value impairment. . . . . . . . . -- 2,500,000 -- Changes in: Interest, rents and other receivables . . . . . 1,093,810 145,445 (111,700) Prepaid expenses. . . . . . . . . . . . . . . . 25,047 46,627 (2,773) Escrow deposits . . . . . . . . . . . . . . . . 69,470 74,580 (41,370) Accrued rents receivable. . . . . . . . . . . . 40,709 42,194 211,577 Accounts payable . . . . . . . . . . . . . . . (140,099) (160,129) 102,497 Accrued interest. . . . . . . . . . . . . . . . (37,679) (157,271) (1,779) Accrued real estate taxes . . . . . . . . . . . -- (1,201,572) 30,231 Unearned rents. . . . . . . . . . . . . . . . . (478,255) 33,680 (167,507) Tenant security deposits. . . . . . . . . . . . (160,403) (133,806) (14,498) ----------- ----------- ----------- Net cash provided by (used in) operating activities. . . . . . . . . . . 1,144,535 2,846,064 6,021,730 ----------- ----------- ----------- JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1998 1997 1996 ----------- ----------- ----------- Cash flows from investing activities: Additions to investment properties. . . . . . . . (20,336) (127,500) (678,815) Partnership's distributions from unconsolidated ventures and cash proceeds from sales of investment properties, net of selling expenses . . . . . . 14,698,015 43,972,567 18,908,480 Partnership's contributions to uncon- solidated ventures. . . . . . . . . . . . . . . -- -- (64,710) Payment of deferred expenses. . . . . . . . . . . (24,324) (84,769) (182,206) ----------- ----------- ----------- Net cash provided by (used in) investing activities. . . . . . . . . . . 14,653,355 43,760,298 17,982,749 ----------- ----------- ----------- Cash flows from financing activities: Principal payments on long-term debt. . . . . . . (200,366) (281,800) (291,589) Distributions to limited partners . . . . . . . . (510,764) (45,330,273) (33,327,327) Distributions to general partners . . . . . . . . (14,188) (70,939) (241,193) Special Limited Partner contributions of prior year distributions. . . . . . . . . . . . 1,349,489 -- -- Contributions from general partners . . . . . . . 32,299 -- -- ----------- ----------- ----------- Net cash provided by (used in) financing activities. . . . . . . . . . . 656,470 (45,683,012) (33,860,109) ----------- ----------- ----------- Net increase (decrease) in cash and cash equivalents . . . . . . . . 16,454,360 923,350 (9,855,630) Cash and cash equivalents, beginning of year . . . . . . . . . . . . 4,666,891 3,743,541 13,599,171 ----------- ----------- ----------- Cash and cash equivalents, end of year . . . . . . . . . . . . . . . $21,121,251 4,666,891 3,743,541 =========== =========== =========== JMB INCOME PROPERTIES, LTD. - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1998 1997 1996 ----------- ----------- ----------- Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest . . . . $ 461,310 1,580,120 2,372,028 =========== =========== =========== Non-cash investing and financing activities: Total sales proceeds from sales of investment properties: Total sales proceeds, net of selling expenses. . . . . . . . . . . . . . $20,969,649 63,400,112 -- Prepayment premium. . . . . . . . . . . . . . (295,162) (89,545) -- Payoff of mortgage loans. . . . . . . . . . . (5,976,472) (19,338,000) -- ----------- ----------- ----------- Cash proceeds from sales of investment properties . . . . . . . . . $14,698,015 43,972,567 -- =========== =========== =========== 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, 1998 (IMMEDIATELY PRIOR TO FINAL LIQUIDATING DISTRIBUTION), 1997 AND 1996 OPERATIONS AND BASIS OF ACCOUNTING GENERAL During 1998, the Partnership held an equity investment in an industrial park in Fountain Valley, California. Business activities consisted of rentals to a variety of commercial and retail companies, and the ultimate sale or disposition of such real estate. The accompanying consolidated financial statements include the accounts of the Partnership and its majority-owned venture, Adams/Wabash Limited Partnership ("Adams/Wabash") (prior to the sale of the property in August 1997). 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 the sale of the property in September 1996) and JMB/Miami International Associates ("JMB/Miami") (prior to the Partnership's sale of its Partnership interest therein in April 1996). Accordingly, the accompanying financial statements do not include the accounts of First Financial and JMB/Miami. The Partnership's records were 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") (and to consolidate the accounts of its majority owned venture in 1996). 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, 1998 (immediately prior to final liquidating distribution) and 1997:
1998 1997 ------------------------------ ------------------------------ TAX BASIS TAX BASIS GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED) ------------ ----------- ------------ ----------- Total assets. . . . . . . . . . . . $21,121,251 21,121,251 22,059,131 38,163,238 Partners' capital accounts (deficits): General partners. . . . . . . . . -- -- (828,047) 235,083 Limited partners. . . . . . . . . 21,121,251 21,121,251 15,893,904 30,716,105 Net earnings (loss): General partners. . . . . . . . . 809,936 (253,194) 131,960 125,696 Limited partners. . . . . . . . . 4,388,622 (10,433,578) 8,489,547 4,892,617 Net earnings (loss) per Interest. . . . . . . . . . . 34.72 82.53 67.18 38.70 =========== =========== =========== ============
The net earnings (loss) per limited partnership interest was based upon the limited partnership interests outstanding at the end of the period (126,414). Also, because net earnings (loss) was computed immediately prior to dissolution, Holders of Interests may have, on dissolution, an additional capital gain or loss depending on the Holders' basis for Federal income tax purposes. The preparation of financial statements in accordance with GAAP required 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 have differed from those estimates. Statement of Financial Accounting Standards No. 95 required 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 had been segregated and accumulated according to the classifications specified in the pronouncement. The Partnership recorded amounts held in U.S. Government obligations at cost, which approximates market. For the purposes of these statements, the Partnership's policy was to consider all such amounts held with original maturities of three months or less (none and $4,380,270 at December 31, 1998 and 1997, respectively) as cash equivalents, which included 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 consisted primarily of deferred lease commissions and loan fees which were amortized over their respective terms using the straight-line method. Although certain leases of the Partnership provided for tenant occupancy during periods for which no rent was due and/or increases in minimum lease payments over the term of the lease, the Partnership accrued rental income for the full period of occupancy on a straight-line basis. No provision for State or Federal income taxes had been made as the liability for such taxes was that of the Partners rather than the Partnership. However, in certain instances, the Partnership had been required under applicable law to remit directly to the tax authorities amounts representing withholding from distributions paid to Partners. The Partnership had 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. In 1997, the Partnership's interest in the Cerritos Industrial Park, Rivertree Court Shopping Center, one of the land parcels that compose the Fountain Valley Industrial Park located in Fountain Valley, California, and the Adams/Wabash Self-Park were sold. In December 1998, the Partnership's remaining interest in the Fountain Valley Industrial Park was sold. The cost of the investment properties represented 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 were generally charged to operations as incurred. Significant betterments and improvements were 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 required 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 was to consider a property to be held for sale or disposition when the Partnership had committed to a plan to sell or dispose of such property and active marketing activity had commenced or was expected to commence in the near term or the Partnership had concluded that it might 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" were no longer depreciated. Adjustments for impairment loss for such properties (subsequent to the date of adoption of SFAS 121) were 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 have been less than the existing non- recourse debt which was secured by the property. The remaining property was classified as held for sale as of December 31, 1996, and therefore, had not been subject to continued depreciation. The results of operations, net of venture partners' share, for consolidated properties classified as held for sale or disposition as of December 31, 1998 or sold or disposed of during the past three years were $828,074, $1,254,195 and $3,468,110, respectively, for the years ended December 31, 1998, 1997 and 1996. In addition, the accompanying consolidated financial statements include $0, $0 and $258,637, respectively, of the Partnership's share of total property operations of $0, $0 and $1,016,511 of unconsolidated properties held for sale or disposition as of December 31, 1998 or sold or disposed of in the past three years. During the second quarter of 1997, Statements of Financial Accounting Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of Information about Capital Structure") were issued. These standards became effective for reporting periods after December 15, 1997. As the Partnership's capital structure only had general and limited partnership interests, the Partnership did not experience any significant impact on its consolidated financial statements. The Partnership's investment properties were generally pledged as security for the Partnership's long-term debt, for which there was no recourse to the Partnership. INVESTMENT PROPERTIES CERRITOS INDUSTRIAL PARK On May 29, 1997, the Partnership sold the land and related improvements known as the Cerritos Industrial Park to an unaffiliated third-party for $7,500,000. The Partnership realized net sale proceeds of approximately $4,074,000 after repayment of the mortgage loan securing the property in the amount of $3,168,000, the payment of the prepayment premium and reconveyance fee on such loan of approximately $78,700 (which was included as an extraordinary item in the Partnership's 1997 consolidated financial statements) and the payment of selling expenses of approximately $180,000. The sale of the property resulted in an approximate $1,474,000 gain on sale to the Partnership in 1997 for financial reporting purposes. The Partnership recognized a loss of approximately $2,228,000 for Federal income tax purposes in 1997. In addition, in connection with the sale of this property and as is customary in such transactions, the Partnership agreed to certain representations and warranties, with a stipulated survival period which expired December 15, 1997 with no liability to the Partnership. The property was 100% occupied at the date of sale. The Partnership made a cash distribution of $35 per Interest from the sale proceeds in August 1997. The Cerritos Industrial Park investment property was classified as held for sale or disposition at October 1, 1996, and therefore, was not subject to continued depreciation after that date. FOUNTAIN VALLEY INDUSTRIAL PARK On December 31, 1996, the Partnership sold a 9,500 square foot building 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 as required by the Lender and closing costs, were $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. On May 1, 1997, the Partnership sold a 12,702 square foot building and related land parcel within the park to the current tenant for a sales price of $970,000. As a result of this sale, the lender required a $470,000 prepayment of the outstanding mortgage and a prepayment premium of approximately $11,000 (which was included as an extraordinary item in the Partnership's 1997 consolidated financial statements). The net sale proceeds to the Partnership were approximately $436,000 after payment of closing costs and the prepayment premium to the lender. The sale of the building and related land parcel resulted in an approximate $375,000 gain on sale to the Partnership for financial reporting purposes and approximately $253,000 for Federal income tax purposes in 1997. In early 1998, groundwater contamination was discovered at the property. The Partnership temporarily suspended the active marketing of the property for sale while it undertook an assessment of the nature and extent of the contamination. The Partnership completed its investigation of the groundwater contamination in mid-1998 and submitted it to the state regulatory agency for its review and approval. Based upon its review of the groundwater investigation report, the state regulatory agency concluded that no further action or remediation was required at the property. On December 11, 1998, the Partnership sold the remaining land and related improvements at the Fountain Valley Industrial Park to an unaffiliated third-party for $21,475,000. The Partnership realized net sale proceeds of approximately $14,698,000 after repayment of the mortgage loan securing the property of approximately $5,976,000, the payment of the prepayment premium on such loan of approximately $295,000 (which was included as an extraordinary item in the Partnership's 1998 consolidated financial statements) and the payment of selling expenses of approximately $505,000. The sale of the property resulted in an approximate $4,868,000 gain on sale to the Partnership in 1998 for financial reporting purposes. The Partnership recognized a gain of approximately $2,426,000 for Federal income tax purposes in 1998. In addition, in connection with the sale of this property and as is customary in such transactions, the Partnership agreed to certain representations and warranties, with a stipulated survival period which expires June 11, 1999. Although it is not expected, the Partnership may ultimately have some liability under such representations and warranties which are limited to actual damages and shall in no event exceed $1,000,000 in the aggregate. Also, in accordance with the purchase agreement, the Partnership was required to establish reserves of at least $1,100,000 in cash or reasonably liquid investments as of the closing date for the purpose of paying any specified liabilities (as defined) during the survival period. These reserves will be held in the liquidating trust. The property was 100% occupied at the date of sale. The Fountain Valley Industrial Park investment property was classified as held for sale or disposition at October 1, 1996, and therefore, was not subject to continued depreciation since that date. Effective June 1, 1997, the Partnership's 7.32% mortgage note, originally secured by both the Fountain Valley Industrial Park and the Cerritos Industrial Park investment properties, was modified due to the sales of the Cerritos Industrial Park in 1997 and sales of the outparcels at the Fountain Valley Industrial Park in 1996 and 1997. In conjunction with the property sales described above, the Partnership was required to repay principal of approximately $3,988,000 on the outstanding mortgage note. Accordingly, the $88,998 monthly loan installments of principal and interest were recast downward to $53,823. The loan was thereafter solely collateralized by the remainder of the Fountain Valley Industrial Park owned by the Partnership until it was sold in December, 1998. 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. On July 17, 1997, the Partnership sold the land and related improvements known as the Rivertree Court Shopping Center to an unaffiliated third-party for $31,175,000. The Partnership received approximately $14,915,000 of net sales proceeds at closing (which reflected the assumption by the buyer of the mortgage loan which had a current balance of approximately $15,700,000 and the payment of selling expenses and closing costs of approximately $560,000). Based upon the proposed sale price, the Partnership recognized a provision for value impairment of $2,500,000 on June 30, 1997. The sale resulted in a nominal gain for financial reporting purposes and the Partnership recognized an approximate loss of $965,000 for Federal income tax purposes in 1997. In addition, in connection with the sale of this property and as is customary in such transactions, the Partnership agreed to certain representations and warranties, with a stipulated survival period which expired on December 1, 1997 with no liability to the Partnership. VENTURE AGREEMENTS 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. 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 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 were 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 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 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 the 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. 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 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 contained 671 parking spaces and approximately 28,800 square feet of rentable retail area. The Partnership 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 had a .1% interest with the remaining 25% held by the developers. The Partnership was 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 would have been distributed in accordance with the ownership interests of Adams/Wabash. The Partnership also had a preferred position with respect to distributions of sales and financing proceeds. Items of profit and loss were, in general, allocated in accordance with distributions of cash flow. Accordingly, for financial reporting purposes, for the years ended December 31, 1996 and 1995, 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, 1997, the Partnership had a cumulative deficiency in its annual preferred return of approximately $1,000,000. 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. The property was classified as held for sale or disposition at December 31, 1996, and therefore, was not subject to continued depreciation after that time. On August 11, 1997, the Adams/Wabash joint venture sold the Adams/Wabash Self-Park to an unaffiliated third party. The sale price of the land and improvements, determined by arm's-length negotiations, was $25,000,000. Net cash proceeds from the sale, net of closing costs and selling expenses of approximately $454,000, were approximately $24,546,000. The retail portion of the Property was 39% occupied at the date of sale. The Adams/Wabash joint venture reported a gain on sale of approximately $5,146,000, all of which was allocable to the Partnership for financial reporting purposes, in 1997. The Adams/Wabash joint venture recognized a gain of approximately $5,442,000 for Federal income tax reporting purposes, substantially all of which was allocable to the Partnership, in 1997. In addition, in connection with the sale of this property and as is customary in such transactions, the Adams/Wabash joint venture agreed to certain representations and warranties, with a stipulated survival period which expired on December 15, 1997 with no liability to the Partnership. In November 1997, the Partnership made a cash distribution of proceeds from the sales of the Adams/Wabash Self Park and the Rivertree Court Shopping Center totaling $300 per Interest. The Partnership was entitled to a cumulative annual preferred return, payable from operating cash flow, of 10% of its capital contributions to Adams/Wabash. Any distributable cash flow in excess of the Partnership's preferred return would have been distributed in accordance with the ownership interests of Adams/Wabash. The Adams/Wabash partnership agreement stipulated that sale or financing proceeds would be distributed such that the Partnership shall first receive any deficit in its cumulative annual preferred return followed by the return of the Partnership's original capital investment in Adams/Wabash of approximately $24,994,000. Since there was a deficit in the Partnership's cumulative preferred annual return and net sale proceeds were below the Partnership's original capital investment, all distributable sale proceeds were distributed to the Partnership. LONG-TERM DEBT Long-term debt consisted of the following at December 31, 1998 and 1997: 1998 1997 ----------- ----------- 7.32% mortgage note; secured by the Fountain Valley Industrial Park located in Fountain Valley California; payable in monthly installments of principal and interest of $53,823, remaining principal balance of approximately $5,489,000 plus accrued interest due on March 1, 2001 partially repaid in 1997, along with a prepayment premium, as described below, with the remaining balance repaid in conjunction with the Partnership's December 1998 sale of its interest in the property . . . . . . . . . . . . $ -- 6,176,838 ----------- ---------- Total debt. . . . . . . . . . -- 6,176,838 Less current portion of long-term debt . . . . . . . -- 200,366 ----------- ---------- Total long-term debt. . . . . $ -- 5,976,472 =========== ========== FOUNTAIN VALLEY INDUSTRIAL PARK AND CERRITOS INDUSTRIAL PARK 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 reduced the balloon payment due on March 1, 2001. Reference is made to the Fountain Valley footnote above for a further discussion of the sale. Effective June 1, 1997, the Partnership's 7.32% mortgage note, originally secured by both the Fountain Valley Industrial Park and the Cerritos Industrial Park investment properties, was modified due to the sales of the Cerritos Industrial Park in 1997 and sales of the outparcels at the Fountain Valley Industrial Park in 1996 and 1997. In conjunction with the property sales described above, the Partnership was required to repay principal of approximately $3,988,000 on the outstanding mortgage note. Accordingly, the $88,998 monthly loan installments of principal and interest were recast downward to $53,823. The loan was solely collateralized by the remainder of the Fountain Valley Industrial Park owned by the Partnership until it was repaid in December 1998, upon sale of the property. PARTNERSHIP AGREEMENT Pursuant to the terms of the Partnership Agreement, net profits or losses of the Partnership from operations generally were 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 were allocated 99% to the Limited Partners and 1% to the General Partners. However, net profits from the sale of properties was additionally allocated to the General Partners (i) to the extent that cash distributions to the General Partners of sale proceeds from such sale exceeded 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 made initial capital contributions to the Partnership aggregating $20,000. The General Partners were 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, was distributed 90% to the Limited Partners and 10% to the General Partners, subject to certain limitations. Pursuant to the Partnership Agreement, in December 1998, the General Partners made a capital contribution of approximately $32,300, representing a partial return of previously received disbursable cash from operations. Sale or refinancing proceeds were distributed 100% to the Limited Partners until the Limited Partners had received their contributed capital plus a stipulated return thereon. The General Partners were then to receive 100% of the sale or refinancing proceeds until they received 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 had been sold, subject to certain limitations. Any remaining sale or refinancing proceeds were then to be distributed 85% to the Limited Partners and 15% to the General Partners. As the Limited Partners received less distributions than their original investment, the General Partners' share of operating distributions previously deferred of approximately $5,767,000 as of December 31, 1998 was paid to the Holders of Interests (or used for other Partnership obligations); furthermore, the General Partners did not receive any distributions of sale or refinancing proceeds. Pursuant to the terms of the Partnership Agreement, the Special Limited Partner of the Partnership was required to contribute, to the Holders of Interests, the amount of all distributions it previously received from operating cash and sales and refinancing proceeds due to the fact that the Holders of Interests had not received sale or refinancing proceeds in an aggregate amount equal to their capital contributions. In December 1998, the Special Limited Partner contributed $1,349,489 in accordance with this provision, which amount was distributed to the Holders of Interests in conjunction with the final liquidating distribution in 1998. TRANSACTIONS WITH AFFILIATES Certain of the Partnership's properties were 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 was 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, was 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, 1998, 1997 and 1996 were as follows: UNPAID AT DECEMBER 31, 1998 1997 1996 1998 -------- ------- ------- ------------ Property management and leasing fees . . . . $ -- 104,495 97,773 -- Insurance commissions . . 3,535 6,382 10,028 -- Reimbursement (at cost) for accounting services . . . . . . . . 8,230 5,823 4,416 -- Reimbursement (at cost) for portfolio manage- ment services. . . . . . 59,286 25,588 39,269 -- Reimbursement (at cost) for legal services . . . 11,460 6,473 7,578 -- Reimbursement (at cost) for administrative charges and other out-of-pocket expenses . 25,855 -- 1,099 -- Partnership winding up fee . . . . . . . . . 4,634 -- -- -- -------- ------- ------- ------ $113,000 148,761 160,163 -- ======== ======= ======= ====== In accordance with the subordination requirements of the Partnership Agreement, the General Partners deferred payment of certain of their distributions of net cash flow and sale proceeds from the Partnership. All amounts deferred or payable did not bear interest. During 1994, certain officers and directors of the Managing General Partner acquired interests in a company which provided certain property management services to certain of the properties owned by the Partnership. The fees earned by such company from the Partnership's consolidated venture for the twelve months ended December 31, 1998 and 1997 were approximately $0 and $71,000, respectively, all of which was paid at December 31, 1997. Effective November 1, 1996, and through its date of sale on August 11, 1997, 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. INVESTMENT IN UNCONSOLIDATED VENTURES The Partnership sold its interests in First Financial and JMB/Miami during 1996. Summary combined financial information for First Financial and JMB/Miami during 1996 consisted of total income of $7,227,991, operating expenses of $6,209,999, gain on sale of land and property of $2,882,573 and net income of $3,900,565. 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 1998 and 1997. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP The Managing General Partner of the Partnership was 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, as the Managing General Partner, had responsibility for all aspects of the Partnership's operations. AGPP Associates, L.P., an Illinois limited partnership, with JMB as its sole general partner, was 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 was the other Associate General Partner of the Partnership. The Partnership was 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 were provided to the Partnership or its investment properties by affiliates of the General Partners, including insurance brokerage services. In general, such services were to be provided on terms no less favorable to the Partnership than could be obtained from independent third parties and were otherwise subject to conditions and restrictions contained in the Partnership Agreement. The Partnership Agreement permitted the General Partners and their affiliates to provide services to, and otherwise deal and do business with, persons who may have been engaged in transactions with the Partnership, and permitted 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 have been in competition with the Partnership under certain circumstances, including, in certain geographical markets, for tenants and/or for the sale of property. Because the timing and amount of cash distributions and profits and losses of the Partnership may have been affected by various determinations by the General Partners under the Partnership Agreement, including whether and when to sell a property, the establishment and maintenance of reasonable reserves and the determination of the sources (i.e., offering proceeds, cash generated from operations or sale proceeds) and uses of such reserves, the timing of expenditures and the allocation of certain tax items under the Partnership Agreement, the General Partners may have had 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 2, 1999. 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 2, 1999. 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-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV ("Carlyle- - -XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II"), and the managing general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties, Ltd.-X ("JMB Income-X"), and JMB Income Properties, Ltd.-XI ("JMB Income-XI"). 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")). Most of such directors and officers are also partners, directly or indirectly, of certain partnerships which are or were associate general partners in the following real estate limited partnerships, among others: the Partnership, Carlyle-XI, Carlyle-XIII, Carlyle-XIV, Carlyle-XV, JMB Income-VII, JMB Income-X, JMB Income-XI, and Carlyle Income Plus-II. 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 61) is an individual general partner of JMB Income-V. Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin is also a director of Urban Shopping Centers, 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 61) is an individual general partner of JMB Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm is also a principal of Walton Street Capital, L.L.C., which sponsors real estate investment funds, and a director of Urban Shopping Centers, Inc. He is a member of the Bar of the State of Illinois and a Certified Public Accountant. Burton E. Glazov (age 60) has been associated with JMB since June, 1971 and served as an Executive Vice President of JMB until December of 1990. Mr. Glazov is currently retired. He is a member of the Bar of the State of Illinois. Stuart C. Nathan (age 57) has been associated with JMB since July, 1972. He is a member of the Bar of the State of Illinois. A. Lee Sacks (age 65) has been associated with JMB since December, 1972. He is also President and a director of JMB Insurance Agency, Inc. John G. Schreiber (age 52) 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., which is engaged in the real estate investing business. He is also a senior advisor and partner of Blackstone Real Estate Advisors L.P., an affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a director of Urban Shopping Centers, Inc., a trustee of Amli Residential Property Trust and a director of a number of investment companies advised or managed by T. Rowe Price Associates, Inc. and its affiliates. He holds a Masters degree in Business Administration from Harvard University Graduate School of Business. H. Rigel Barber (age 50) 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 51) 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 46) 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 50) 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 63) 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 1998, 1997 and 1996, the General Partners received cash distributions in the amount of $14,188, $70,939 and $241,193, respectively. 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. 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 1998, the Managing General Partner was due reimbursement for such expenses in the amount of $98,571, all of which was paid as of December 31, 1998. 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 1997. In 1997, such affiliates earned aggregate property management fees amounting to $104,495, all of which was paid as of December 31, 1997. 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 1997. In 1997, such company earned aggregate property management fees amounting to $93,684, all of which was paid at December 31, 1997. JMB Insurance Agency, Inc., an affiliate of the Managing General Partner of the Partnership, earned and received insurance brokerage commissions in 1998 aggregating $3,535 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 Managing General Partner also was entitled to and received a fee of $4,634 in 1998, pursuant to a winding up agreement between the Partnership and the Managing General Partner, in consideration of the Managing General Partner's assumption of the obligation of potential Partnership liabilities (as defined). The Partnership was 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 was known by the Partnership to own beneficially more than 5% of the outstanding Interests of the Partnership immediately prior to its liquidation. (b) The Managing General Partner, its officers and directors and the Associate General Partners beneficially owned the following Interests of the Partnership immediately prior to its liquidation: NAME OF AMOUNT AND NATURE BENEFICIAL OF BENEFICIAL PERCENT TITLE OF CLASS OWNER OWNERSHIP OF CLASS - -------------- ---------- ----------------- -------- Limited Partnership Interests and Assignee Interests Therein 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) Included 5 Interests owned by the Initial Limited Partner of the Partnership for which JMB Realty Corporation, as its indirect majority shareholder, was deemed to have sole investment and voting power. Reference is made to Item 10 for information concerning ownership of the Managing General Partner. (c) There existed no arrangement, known to the Partnership, the operation of which may have resulted 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. 3-D. Liquidating Trust Agreement between JMB Income Properties, Ltd. - XIII and the liquidating trustees dated as of December 29, 1998 is hereby incorporated herein by reference to Exhibit 10.2 to the Partnership's Report for January 13, 1999 on Form 8-K (File No. 000-19496). 10-A. 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-B. Option Agreement to sell Adams/Wabash Self Park, dated June 27, 1997, is hereby incorporated by reference to Exhibit 10.1 to the Partnership's Report for August 11, 1997 on Form 8-K (File No. 000-19496). 10-C. Agreement to purchase Rivertree Court Shopping Center, dated June 11, 1997, and exhibits thereto are hereby incorporated herein by reference to Exhibit 10.1 to the Partnership's Report for July 17, 1997 on Form 8-K (File No. 000-19496). 10-D. Purchase Agreement and related amendments to sell the Fountain Valley Industrial Park, dated November 9, 1998 is hereby incorporated by reference to Exhibits 1, 2 and 3 to the Partnership's Report for December 11, 1998 on Form 8-K (File No. 0-19496). 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) The following report on Form 8-K was filed since the beginning of the last quarter of the period covered by this report. The Partnership's report on Form 8-K for December 29, 1998 (File No. 0-19496) describing the Partnership's establishment of the Liquidating Trust, final liquidating distribution and dissolution was filed. No financial statements were required to be filed therewith. The Partnership's report on Form 8-K for December 11, 1998 (File No. 0-19496) describing the Partnership's sale of the Fountain Valley Industrial Park was filed. No annual report or proxy material for the fiscal year 1998 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 22, 1999 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 22, 1999 NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 22, 1999 H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 22, 1999 GLENN E. EMIG* By: Glenn E. Emig, Chief Operating Officer Date: March 22, 1999 GAILEN J. HULL By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 22, 1999 A. LEE SACKS* By: A. Lee Sacks, Director Date: March 22, 1999 STUART C. NATHAN* By: Stuart C. Nathan, Executive Vice President and Director Date: March 22, 1999 *By: GAILEN J. HULL, Pursuant to a Power of Attorney GAILEN J. HULL By: Gailen J. Hull, Attorney-in-Fact Date: March 22, 1999 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 -- 3-D. Liquidating Trust Agreement dated dated November 9, 1998 Yes -- 10-A. Acquisition documents relating to the Fountain Valley Industrial Buildings and Cerritos Industrial Buildings Yes -- 10-B. Option Agreement to sell Adams/Wabash Self Park, dated June 27, 1997 Yes -- 10-C. Agreement to purchase Rivertree Court Shopping Center, dated June 11, 1997 Yes -- 10-D. Purchase Agreement to sell the Fountain Valley Industrial Park dated November 9, 1998 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 was a limited partner in Adams/Wabash Limited Partnership, an Illinois limited partnership. Adams/Wabash Limited Partnership held 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, 1998, 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 29th day of January, 1999. 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, 1998, and any and all amendments thereto, the 29th day of January, 1999. 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, 1998, 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 29th day of January, 1999. 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, 1998, and any and all amendments thereto, the 29th day of January, 1999. 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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 12-MOS DEC-31-1998 DEC-31-1998 21,121,251 0 0 0 21,121,251 0 0 0 21,121,251 0 0 0 0 0 21,121,251 21,121,251 2,125,282 2,380,865 0 575,140 710,159 0 423,631 671,935 0 658,782 4,867,960 (328,184) 0 5,198,558 34.72 34.72
-----END PRIVACY-ENHANCED MESSAGE-----