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EX-32 - JMB 245 PARK AVENUE ASSOCIATES LTDpark_32.txt
EX-31.1 - JMB 245 PARK AVENUE ASSOCIATES LTDpark_311.txt
EX-31.2 - JMB 245 PARK AVENUE ASSOCIATES LTDpark_312.txt




                               FORM 10-Q

                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549




              Quarterly Report under Section 13 or 15(d)
                of the Securities Exchange Act of 1934




For the quarter ended September 30, 2009   Commission file #0-13545



                 JMB/245 PARK AVENUE ASSOCIATES, LTD.
        (Exact name of registrant as specified in its charter)




             Illinois                           36-3265541
      (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




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 (the "Exchange Act") 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes  [  ]    No [ X ]

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).  Yes  [  ]    No [ X ]




TABLE OF CONTENTS PART I FINANCIAL INFORMATION Item 1. Financial Statements . . . . . . . . . . . . . . . 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . 8 Item 4T. Controls and Procedures. . . . . . . . . . . . . . 10 PART II OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . 11 Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . 11 Item 6. Exhibits . . . . . . . . . . . . . . . . . . . . . 11 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS JMB/245 PARK AVENUE ASSOCIATES, LTD. (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2009 AND DECEMBER 31, 2008 ASSETS ------ SEPTEMBER 30, 2009 DECEMBER 31, (UNAUDITED) 2008 ------------ ------------ Current assets: Cash and cash equivalents . . . . . $ 12,524 12,112 Interest and other receivables. . . -- 1,307 ------------ ------------ Total assets. . . . . . . . $ 12,524 13,419 ============ ============ LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS) ----------------------------------------------------- Current liabilities: Accounts payable. . . . . . . . . . $ 14,038 27,657 Demand note payable to an affiliate, including accrued interest of $1,929,269 at September 30, 2009 and $1,728,703 at December 31, 2008. . . . . . . . . . . . . . . 6,533,553 6,137,987 ------------ ------------ Commitments and contingencies Total liabilities . . . . . 6,547,591 6,165,644 Partners' capital accounts (deficits): General partners: Capital contributions . . . . . . 26,664,247 26,664,247 Cumulative cash distributions . . (480,000) (480,000) Cumulative net losses . . . . . . (10,960,628) (10,937,657) ------------ ------------ 15,223,619 15,246,590 ------------ ------------ Limited partners (943 interests at September 30, 2009 and December 31, 2008): Capital contributions, net of offering costs . . . . . 113,057,394 113,057,394 Cumulative cash distributions . . (7,520,000) (7,520,000) Cumulative net losses . . . . . . (127,296,080) (126,936,209) ------------ ------------ (21,758,686) (21,398,815) ------------ ------------ Total partners' capital accounts (deficits) . . . (6,535,067) (6,152,225) ------------ ------------ $ 12,524 13,419 ============ ============ See accompanying notes to consolidated financial statements.
JMB/245 PARK AVENUE ASSOCIATES, LTD. (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF OPERATIONS THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------- ------------------- 2009 2008 2009 2008 --------- -------- -------- -------- Income: Interest income . . . $ -- 49 -- 329 --------- -------- -------- -------- Expenses: Interest. . . . . . . 69,011 89,248 200,566 277,465 Professional services. . . . . . 15,289 5,500 108,183 93,203 General and administrative. . . 8,964 18,772 74,093 81,336 --------- -------- -------- -------- 93,264 113,520 382,842 452,004 --------- -------- -------- -------- Net loss. . . . . $ (93,264) (113,471) (382,842) (451,675) ========= ======== ======== ======== Net loss per limited partnership interest. . . . $ (93) (113) (382) (449) ========= ======== ======== ======== See accompanying notes to consolidated financial statements.
JMB/245 PARK AVENUE ASSOCIATES, LTD. (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED) 2009 2008 ---------- ---------- Cash flows from operating activities: Net loss. . . . . . . . . . . . . . . . $ (382,842) (451,675) Items not requiring (providing) cash: Changes in: Interest and other receivables. . . . 1,307 (300) Accounts payable. . . . . . . . . . . (13,619) (4,055) Interest payable to affiliate . . . . 200,566 277,465 ---------- ---------- Net cash used in operating activities. . . . . (194,588) (178,565) ---------- ---------- Cash flows from financing activities: Fundings of demand note payable . . . . 195,000 200,000 ---------- ---------- Net cash provided by financing activities. . . . . 195,000 200,000 ---------- ---------- Net increase in cash. . . . . . 412 21,435 Cash and cash equivalents, beginning of period . . . . . 12,112 545 ---------- ---------- Cash and cash equivalents, end of period . . . . . . . . $ 12,524 21,980 ========== ========== See accompanying notes to consolidated financial statements.
JMB/245 PARK AVENUE ASSOCIATES, LTD. (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2009 AND 2008 (UNAUDITED) GENERAL Readers of this quarterly report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 2008, which are included in the Partnership's 2008 Annual Report on Form 10-K (File No. 0-13545) filed on March 27, 2009, as certain footnote disclosures which would substantially duplicate those contained in such audited financial statements have been omitted from this report. Capitalized terms used but not defined in this quarterly report have the same meanings as in the Partnership's 2008 Annual Report on Form 10-K. JMB/245 Park Avenue Associates, Ltd. (the "Partnership"), through JMB 245 Park Avenue Holding Company, LLC ("245 Park Holding"), owns an approximate .5% general partner interest in Brookfield Financial Properties, L.P. ("BFP, LP"), formerly known as World Financial Properties, L.P. The ownership is represented by 567.375 Class A Units. BFP, LP is a limited partnership that holds equity investments in commercial office buildings, certain of which are owned subject to ground leases of the underlying land. Business activities consist primarily of rentals to a variety of commercial tenants and the ultimate sale or disposition of such real estate. 245 Park Holding is a limited liability company in which the Partnership is a 99% member and BFP Property GP Corp. ("BFP GP"), which is an affiliate of the managing general partner of BFP, LP, is a 1% member. The accompanying consolidated financial statements include the accounts of the Partnership and its majority-owned limited liability company, 245 Park Holding. The effect of all transactions between the Partnership and its consolidated venture has been eliminated. Because the Partnership has no future funding obligations to BFP, LP, has not received distributions from BFP, LP and has no indication from BFP, LP that it intends to make distributions in the future, has no influence or control over the day-to-day affairs of BFP, LP, and its investment in BFP, LP has been reduced to less than 1%, the Partnership discontinued the application of the equity method of accounting, recorded its investment at zero and no longer recognizes its share of earnings or losses from BFP, LP. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The Partnership's future liquidity and ability to continue as a going concern is dependent upon additional cash advances from JMB Realty Corporation ("JMB") and there is no assurance that such advances will be made. JMB's advances, as well as consolidated balances from prior notes, are evidenced by a demand note (the "Demand Note"), dated December 1, 2004, which Demand Note is secured by the Partnership's indirect interest in BFP, LP. JMB is under no obligation to make further advances and has the right to require repayment of the Demand Note together with accrued and unpaid interest at any time. The Partnership has evaluated subsequent events through the date the financial statements were issued as part of the quarterly report filed on Form 10-Q for the period ended September 30, 2009.
RECENTLY ISSUED ACCOUNTING STANDARDS In June 2009, the FASB issued guidance related to variable interest entities, to eliminate certain scope exceptions previously permitted, provide additional guidance for determining whether an entity is a variable interest entity, and require companies to more frequently reassess whether they must consolidate variable interest entities. The guidance also replaces the quantitative approach to determining the primary beneficiary of a variable interest entity previously required with a requirement for an enterprise to perform a qualitative analysis to determine whether the enterprise's variable interest on interests give it a controlling financial interest in a variable interest entity. The guidance is effective for periods beginning after November 15, 2009; earlier application is prohibited. The Partnership is currently evaluating the application of this Statement. TRANSACTIONS WITH AFFILIATES The operations of the Partnership since 2004 have been funded entirely by cash advances from JMB which totaled $1,122,000 as of September 30, 2009 ($195,000 of which was funded during the nine months ended September 30, 2009) and which, together with the amount owed and rolled over from prior notes, are evidenced by the Demand Note. The Demand Note, which had an outstanding balance of unpaid principal and accrued interest at September 30, 2009 of $6,533,553, accrues interest at prime plus 1 percent, with interest compounded quarterly and included in principal, and is secured by the Partnership's indirect interest in BFP, LP. JMB is under no obligation to make further advances and has the right to require repayment of the Demand Note together with accrued and unpaid interest at any time. In accordance with the Partnership Agreement, the Corporate General Partner and its affiliates are entitled to receive payment or reimbursement for direct expenses and out-of-pocket expenses related to the administration of the Partnership and operation of the Partnership's real property investment. Additionally, the Corporate General Partner and its affiliates are entitled to reimbursements for portfolio management, legal and accounting services. The Partnership incurred costs of $16,605 and $4,731 for the nine months ended September 30, 2009 and 2008, respectively, for these services, of which $9,778 was unpaid as of September 30, 2009. Any reimbursable amounts currently payable to the General Partners and their affiliates do not bear interest. ADJUSTMENTS In the opinion of the Corporate General Partner, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation (assuming the Partnership continues as a going concern) have been made to the accompanying financial statements as of September 30, 2009 and 2008 and for the three and nine months ended September 30, 2009 and 2008.
PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Capitalized terms used herein but not defined have the same meanings as in the Partnership's 2008 Annual Report on Form 10-K. The Partnership's future liquidity and ability to continue as a going concern are dependent upon additional cash advances from JMB and there is no assurance that such advances will continue to be made. The operations of the Partnership since 2004 have been funded entirely by cash advances from JMB which totaled $1,122,000 as of September 30, 2009 ($195,000 of which was funded during the nine months ended September 30, 2009) and which, together with the amount owed and rolled over from prior notes, are evidenced by the Demand Note. The Demand Note, which had an outstanding balance of unpaid principal and accrued interest at September 30, 2009 of $6,533,553, accrues interest at prime plus 1 percent, with interest compounded quarterly and included in principal, and is secured by the Partnership's indirect interest in BFP, LP. JMB is under no obligation to make further advances and has the right to require repayment of advances previously made together with accrued and unpaid interest at any time. BFP, LP has the right to sell the 245 Park Avenue property and any of its other assets without the consent of the Partnership. Under certain circumstances, the Partnership may have obligations for Federal or state withholding or estimated tax payments on behalf of certain Holders of Interests. Notwithstanding any such obligations, the Partnership believes that the Holders of Interests have the ultimate responsibility for the timely filing of state and Federal tax returns and the payment of all related taxes, including the reimbursement to the Partnership of all withholding tax payments or estimated tax payments made on their behalf. The Partnership holds, through 245 Park Holding, an approximate .5% interest in BFP, LP. Persons who are interested in obtaining information concerning BFP, LP should be aware that Brookfield Properties Corporation ("BPC") files periodic reports and other information, which includes information about BFP, LP and its assets and operations, with the U.S. Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934. BPC's filings with the SEC are available to the public through the SEC's Electronic Data Gathering, Analysis and Retrieval system accessible through the SEC's web site at http://www.sec.gov. Interested persons also may read and copy any report, statement or other information that BPC has filed with the SEC at its Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549, or may call the SEC for more information on obtaining information from the SEC's public reference rooms. This description is provided for informational purposes only. The Partnership does not prepare, and is not responsible for the preparation of, any of BPC's reports or other information it files with the SEC including, but not limited to, those concerning the business and financial results of BFP, LP. Those reports and other information are not intended to be incorporated by reference into this report on Form 10-Q, and the Partnership has no responsibility for the accuracy of any information included in BPC's reports or other information.
BFP, LP has a substantial amount of indebtedness outstanding. Any proceeds from the sale of the buildings in which BFP, LP has an interest would be first applied to repayment of the mortgage and other indebtedness of BFP, LP. In any event, any net proceeds obtained by the Partnership could then be available to satisfy the Demand Note (previously discussed). Only after such applications would any remaining proceeds be available to be distributed to the Holders of Interests. Similarly, in the event of a sale or other disposition of the Retained Interest (including a redemption), the Partnership's share of the proceeds of such sale or disposition would first be available to satisfy the Demand Note. Only after such application would remaining proceeds, if any, be available to be distributed to the Holders of Interests. It is unlikely that the Holders of Interests ever will receive any significant portion of their original investment. However, it is expected that Holders of Interests will be allocated a substantial amount of additional gain for Federal and state income tax purposes as a result of transactions which may occur over the remaining term of the Partnership. These transactions include (i) a sale or other disposition of the 245 Park Avenue property or other properties in which BFP, LP owns an interest; (ii) a sale or other disposition of the Partnership's interest in BFP, LP (including a redemption of the Retained Interest); or (iii) a significant reduction in the indebtedness of the 245 Park Avenue property or other indebtedness of the Partnership for Federal and state income tax purposes. Moreover, given the current balance of the Demand Note, none of these transactions is expected to result in Holders of Interests receiving any significant cash distributions. The amount of gain for Federal and state income tax purposes to be allocated to a Holder of Interests over the remaining term of the Partnership is expected to be, at a minimum, equal to all or most of the amount of such Holder's deficit capital account for tax purposes. Such gain may be offset by suspended losses from prior years (if any) that have been allocated to the Holder of Interests. The actual tax liability of each Holder of Interests will depend on such Holder's own tax situation. RESULTS OF OPERATIONS The operations of the Partnership since 2004 have been funded entirely by cash advances from JMB which totaled $1,122,000 as of September 30, 2009 ($195,000 of which was funded during the nine months ended September 30, 2009) and which, together with the amount owed and rolled over from prior notes, are evidenced by the Demand Note at September 30, 2009. The decrease in accounts payable at September 30, 2009 as compared to December 31, 2008 is due primarily to a decrease in unpaid costs related to compliance with the Sarbanes-Oxley Act of 2002. The increase in demand note payable to an affiliate at September 30, 2009 as compared to December 31, 2008 is due to fundings totaling $195,000 and interest of approximately $201,000 added to the principal in 2009. The decreases in interest expense for the three and nine months ended September 30, 2009 as compared to the three and nine months ended September 30, 2008 are due to lower effective interest rates in 2009. The increases in fees for professional services for the three and nine months ended September 30, 2009 as compared to the same periods in 2008 are due to higher fees for year-end tax and audit services and for costs related to compliance with the Sarbanes-Oxley Act of 2002. The decreases in general and administrative expenses for the three and nine months ended September 30, 2009 as compared to the year-ago periods is due primarily to decreases in costs for accounting services.
ITEM 4T. CONTROLS AND PROCEDURES Pursuant to Section 302 of the Sarbanes-Oxley Act and Rule 13a-15(e) of the Securities Exchange Act of 1934 promulgated thereunder, the principal executive officer and the principal financial officer of the Partnership have evaluated the effectiveness of the Partnership's disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and the principal financial officer have concluded that the Partnership's disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed in this report was recorded, processed, summarized and reported within the time period specified in the applicable rules and form of the Securities and Exchange Commission for this report. The Partnership's disclosure controls and procedures do not include the disclosure controls and procedures of BFP, LP, which the Partnership has no ability to control.
PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Partnership is not subject to any material pending legal proceedings. ITEM 1A. RISK FACTORS There has been no known material changes from risk factors as previously disclosed in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2008. ITEM 6. EXHIBITS (a) Exhibits. 3.1. Amended and Restated Agreement of Limited Partnership of the Partnership is hereby incorporated herein by reference to the Partnership's Report for June 30, 2002 on Form 10-Q (File No. 0-13545) dated August 21, 2002. 3.2. Amendment to the Amended and Restated Agreement of Limited Partnership of JMB/245 Park Avenue Associates, Ltd. by and between JMB Park Avenue, Inc. and Park Associates, L.P. dated January 1, 1994 is hereby incorporated herein by reference to Exhibit 3-B to the Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-13545) dated May 11, 1995. 4.1 Security Agreement, dated May 7, 2001, by JMB/245 Park Avenue Associates, Ltd. in favor of JMB Realty Corporation is hereby incorporated herein by reference to the Partnership's Report for September 30, 2004 on Form 10-Q (File No. 0-13545) dated November 10, 2004. 4.2 Promissory Note, payable on demand, dated December 1, 2004, in the original amount of $172,000, is hereby incorporated herein by reference to the Partnership's Report for December 1, 2004 on Form 8-K (File No. 0-13545), dated December 7, 2004. 31.1. Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities and Exchange Act of 1934, as amended, is filed herewith. 31.2. Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities and Exchange Act of 1934, as amended, is filed herewith. 32. Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. JMB/245 PARK AVENUE ASSOCIATES, LTD. BY: JMB Park Avenue, Inc. Corporate General Partner By: GAILEN J. HULL Gailen J. Hull, Vice President Date: November 9, 2009 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person in the capacities and on the date indicated. By: GAILEN J. HULL Gailen J. Hull, Chief Financial Officer and Principal Accounting Officer Date: November 9, 200