JMB 245 PARK AVENUE ASSOCIATES LTD - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934

For the fiscal year
ended December 31, 2001 Commission File Number 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 312-915-1960

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each class which registered
- ------------------- -------------------------
None None

Securities registered pursuant to Section 12(g) of the Act:

LIMITED PARTNERSHIP INTERESTS
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K [ ]

State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.

Documents Incorporated by Reference: Portions of the Private Placement
Memorandum of the Registrant dated May 7, 1984 are incorporated by
reference in Part I of this Annual Report on Form 10-K.

TABLE OF CONTENTS

Page
----
PART I

Item 1. Business . . . . . . . . . . . . . . . . . . 1

Item 2. Properties . . . . . . . . . . . . . . . . . 3

Item 3. Legal Proceedings. . . . . . . . . . . . . . 3

Item 4. Submission of Matters to a
Vote of Security Holders . . . . . . . . . . 3

PART II

Item 5. Market for the Partnership's
Limited Partnership Interests and
Related Security Holder Matters. . . . . . . 3

Item 6. Selected Financial Data. . . . . . . . . . . 4

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 5

Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 9

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 10

Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 35

PART III

Item 10. Directors and Executive Officers
of the Partnership . . . . . . . . . . . . . 35

Item 11. Executive Compensation . . . . . . . . . . . 37

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 39

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 40

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 40

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 43

i

PART I

ITEM 1. BUSINESS

Unless otherwise indicated, all references to "Notes" are to Notes to
Consolidated Financial Statements of JMB/245 Park Avenue Associates, Ltd.
contained in this report. Capitalized terms used herein, but not defined,
have the same meanings as used in the Notes.

The registrant, JMB/245 Park Avenue Associates, Ltd. (the
"Partnership"), is a limited partnership formed in 1983 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois for the original purpose of acquiring and owning an approximate
48.25% interest in 245 Park Avenue Company, a New York general partnership,
("245 Park" or the "Joint Venture") which owned and operated an office
building located at 245 Park Avenue, New York, New York. The Partnership
was admitted to the Joint Venture through the purchase of one of the
existing unaffiliated joint venture partner's interests. The unaffiliated
venture partners (the "O&Y partners") were affiliates of Olympia & York
Developments, Ltd. ("O&Y"). On May 7, 1984, the Partnership commenced a
private offering of $124,300,000 in Limited Partnership Interests (the
"Interests") pursuant to a Private Placement Memorandum (the "Private
Placement Memorandum") in accordance with Rules 501-503 and 506 of
Regulation D of the Securities Act of 1933. A total of 1,000 Interests
were sold at $124,300 per Interest (except for twenty interests which were
sold net of any selling commission) of which $10,500 per Interest was due
upon admission, with the remaining purchase price paid in annual
installments from 1985 through 1990. The offering closed on June 28, 1984.

The holders of Interests (herein after "Holders" or "Holders of Interests")
in the Partnership share in their portion of the benefits of ownership of
the Partnership's real property investment according to the number of
Interests held.

As a result of the financial difficulties of the O&Y partners, in
October 1995 each of the O&Y partners and certain other O&Y affiliates (but
not the Joint Venture) filed for bankruptcy protection from creditors under
Chapter 11 of the United States Bankruptcy Code. During 1996, the O&Y
partners and these certain other O&Y affiliates restructured their
ownership interest in various office buildings, including their interest in
the 245 Park Avenue office building. In connection with such
restructuring, the Joint Venture filed for bankruptcy under Chapter 11 of
the United States Bankruptcy Code in April 1996 seeking approval of a plan
of reorganization by its creditors and the partners of the Joint Venture,
including the Partnership, and in August 1996, the Third Amended Joint Plan
of Reorganization and Disclosure Statement (the "Plan") was filed with the
Bankruptcy Court. The Plan was accepted by the various classes of claims
and equity holders and confirmed by the Court on September 20, 1996. The
Plan became effective on November 21, 1996 ("Effective Date") upon
completion of several additional steps. The conditions to the Plan
included, but were not limited to, the completion of significant
refinancing and capital transactions regarding 245 Park Avenue as well as
other properties. Pursuant to the terms of the Plan, the Partnership owns
(through a limited liability company of which the Partnership is a 99%
member) an approximate 5% general partner interest (slightly diluted from
the original ownership percentage by notes converted to equity) in
Brookfield Financial Properties, L.P. ("BFP, LP"), formerly known as World
Financial Properties, L.P. ("WFP, LP"). The managing general partner of
BFP, LP is an entity affiliated with certain O&Y creditors and the
proponents of the Plan governing the restructuring and, subject to the
partnership agreement of BFP, LP and the JMB Transaction Agreement
(discussed below), has full authority to manage its affairs. BFP, LP's
principal assets are majority and controlling interests in the following
seven office buildings:

APPROXIMATE RENTABLE AREA
PROPERTY AND LOCATION (Includes Office and Retail Space)

One World Financial Center 1,600,000 square feet
New York, New York

Two World Financial Center 2,500,000 square feet
New York, New York

Four World Financial Center 1,800,000 square feet
New York, New York

One Liberty Plaza 2,200,000 square feet
New York, New York

245 Park Avenue 1,700,000 square feet
New York, New York

53 State Street 1,150,100 square feet
Boston, Massachusetts

75 State Street 1,000,000 square feet
Boston, Massachusetts
(acquired 9/15/98)

The One, Two and Four World Financial Center and 53 State Street
office buildings are owned subject to ground leases of the underlying land.

BFP, LP is currently developing a 35-story, approximately 1,200,000
square foot office building at 300 Madison Avenue in New York, New York.
The property is currently expected to be substantially completed in late
2003. Brookfield Properties Corporation ("BPC"), the parent company of the
managing general partner of BFP, LP, has reported that acquisition and
ongoing development costs are to be funded primarily through financing
obtained in April 2002 and secured by the project. The entire project has
been leased to one tenant for a 30-year term. The tenant also has an
option, for two years after substantial completion of the project, to
acquire a 49% interest in the project at cost.

As part of the restructuring, the Partnership received certain limited
rights with respect to BFP, LP, pursuant to a separate agreement ("JMB
Transaction Agreement") with BFP, LP. These included, among other things,
the right to receive one-third of the property management fees earned at
the 245 Park Avenue property through December 2001, subject to certain
limitations, and the right, except under certain circumstances, to prohibit
(i) the sale of the 245 Park Avenue property prior to January 2, 2000 and
(ii) a reduction of the indebtedness secured by the 245 Park Avenue
property below a certain level prior to January 2, 2003. During 2001, the
debt secured by the 245 Park Avenue property was refinanced with a new
mortgage obligation in the principal amount of $500 million.

BFP, LP and the Partnership each have a substantial amount of
indebtedness remaining. If any of the buildings are sold, any proceeds
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
would then be used to satisfy notes payable and deferred interest
(aggregating $86,507,505 at December 31, 2001) to JMB Realty Corporation
("JMB"). Only after such applications would any remaining proceeds be
available to be distributed to the Holders of Interests. As a result, it
is unlikely that the Holders of Interests ever will receive any significant
portion of their original investment. However, over the remaining term of
the Partnership, as a result of sale or other disposition (including a
transfer to the lenders) of the properties or of the Partnership's interest
in BFP, LP, or a decrease in the Partnership's indebtedness for Federal
income tax purposes, the Holders of Interests will be allocated substantial

gain for Federal income tax purposes (corresponding at a minimum to all or
most of their deficit capital accounts for tax purposes) without a
significant amount of proceeds from such sale or disposition. Such gain
may be offset by suspended losses from prior years (if any) that have been
allocated to the Holders of Interests. The actual tax liability of each
Holder of Interests will depend on such Holder's own tax situation.

The Partnership has no employees.

The terms of transactions between the Partnership and the General
Partners and their affiliates are set forth in Item 11 below and in the
Notes, to which reference is hereby made for a description of such
transactions.

ITEM 2. PROPERTIES

The Partnership owns an indirect interest in the properties referred
to under Item 1 above to which reference is hereby made for a description
of said properties. Reference is also made to Note 3 of the Notes to the
Consolidated Financial Statements of Brookfield Financial Properties, L.P.
included with this Report for a further description of the properties.
BFP, LP has mortgage loans secured by its properties. Reference is made to
Note 4 of the Notes to the Consolidated Financial Statements of Brookfield
Financial Properties, L.P. included in this Report for a discussion of BFP,
LP's mortgage indebtedness. The Partnership's interest in BFP, LP is
pledged as collateral for certain notes payable with deferred interest
(aggregating $86,507,505 at December 31, 2001) to JMB.

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 security holders during
2000 and 2001.

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS

As of December 31, 2001, there were 880 record holders of the 995
outstanding Interests of the Partnership. There is no public market for
Interests and it is not anticipated that a public market for Interests will
develop. The Interests have not been registered under the Securities Act
of 1933, as amended, or (with certain exceptions) under state securities
laws. Transfers of the Interests must be made in compliance with
applicable federal and state securities laws and are subject to the
restrictions on transfers set forth in Article 14 (pages 15-17) of the
Amended and Restated Agreement of Limited Partnership of the Partnership,
which is incorporated herein by reference to Exhibit 99.1 to this annual
report.

The Partnership has not made any distributions since 1989. The
Partnership's interest in BFP, LP is pledged as collateral for certain
notes payable with deferred interest (aggregating $86,507,505 at
December 31, 2001) to JMB, which require mandatory payment of principal and
interest out of any distributions received from BFP, L.P. Reference is
made to the Notes and Item 7 for a discussion of the restrictions on the
distributions (if any) to the Partnership from BFP, LP.

ITEM 6. SELECTED FINANCIAL DATA
JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture

DECEMBER 31, 2001, 2000, 1999, 1998 AND 1997
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

Capitalized terms used but not defined in this Item 7 have the same
meanings as used in Item 1. Business or in the Notes.

On May 7, 1984, the Partnership commenced a private offering of
$124,300,000 in Limited Partnership Interests pursuant to a Private
Placement Memorandum. A total of 1,000 Interests were sold at $124,300 per
Interest (except for twenty Interests which were sold net of any selling
commission) of which $10,500 per Interest was due upon admission, with the
remaining purchase price paid in annual installments from 1985 through
1990. The purchase price installments were utilized primarily for the
payment of the Partnership's bank borrowings and related interest.

Since the Partnership had not been receiving operating cash flow
distributions from its original investment property, the Partnership
initially utilized its cash reserves to make the payments on the
Partnership's bank obligations. Effective with the first quarter of 1990,
the Partnership suspended cash distributions to the partners and retained
funds for its cash requirements. These reserves were exhausted, and
consequently, the Partnership was not able to pay the interest payment due
on the bank obligations for September 1993 in the approximate amount of
$223,000. In addition, the Partnership did not have adequate reserves to
pay a lump sum interest swap payment due February 1, 1994 in the amount of
$2,194,631. The Partnership and its bank lender reached a modification and
extension agreement regarding the $50,000,000 term loans that matured in
October 1993. These term loans were secured by the Partnership's interest
in its real estate investment, and a guaranty by JMB Realty Corporation
("JMB"), an affiliate of the Corporate General Partner, of $25,000,000 of
the term loans. The terms of the modification and extension generally
provided for (i) an extension period through December 1998; (ii) interest
payable currently on one-half of the principal amount of the term loans at
a rate related to either the London Interbank Offer Rate (LIBOR) or the
prime rate while interest on the balance of the term loans accrued at an
annual rate of 2% compounded annually; (iii) one-half of the original
principal amount of the term loans bearing interest at a rate related to
either LIBOR (the "LIBOR Note") or the prime rate was subject to periodic
amortization through payment of quarterly installments of principal
(principal in the amount of $2,500,000 per annum in 1994 and $2,707,000 in
1995); and (iv) the past due lump sum interest swap payment in the amount
of $2,194,631 was converted to a note payable which was due December 1998
with interest accruing at an annual rate of 2% compounded annually.

In December 1993, approximately $5,647,000 was paid to the lenders
under the term loans (all of which was advanced on behalf of the
Partnership by JMB), which included a $5,000,000 principal paydown of the
LIBOR Note and the interest payable for the period September through
December 1993. During the year ended December 31, 1994, an additional
amount of approximately $2,479,000 was paid to the lenders under the term
loans which included a $1,251,000 principal paydown of the LIBOR Note and
the interest payable for the period January through December 1994. An
additional $1,249,000 and two payments of $729,000 each were paid in
January through June 1995, respectively. All payments of principal and
interest made by JMB under its guaranty of the $25,000,000 portion of the
Partnership's term loans have been treated as advances to the Partnership.
As of December 31, 2001, JMB has advanced approximately $12,375,000, under
the original demand note, which reflects the principal and interest
payments made related to the loan modification discussed above and advances
to pay operating costs of the Partnership. Interest accrues on these
advances at the annual rate of the prime rate (as such prime rate changes
from time to time) plus 1% (5.75% at December 31, 2001 and 10.50% at
December 31, 2000) and payment is deferred. The demand note payable to JMB
allows a maximum principal sum of a specified amount. The Partnership made
payments to JMB of $400,000 and $850,000 during 2001 and 1999, respective-
ly, for interest payable on the notes. Reference is made to the Notes for
further information concerning borrowings incurred by the Partnership.

In July 1995, JMB purchased from the lenders the term loans (including
the note representing the interest swap payment) and their security
interests in the related collateral, including the JMB guarantee, which was
terminated. JMB continued to hold the notes for these loans generally
under the same terms and conditions that were in effect prior to the
purchase. However, no scheduled principal payments were required prior to
the scheduled maturity of the LIBOR Note. Interest on the LIBOR Note was
payable monthly at a floating rate which, at the option of the Partnership,
was related to either LIBOR or the prime rate of Bank of America. Through
December 31, 2000, no payments of interest on the LIBOR Note had been made
subsequent to July 31, 1995, and unpaid interest at the applicable interest
rate (including the default interest rate for the period from December 31,
1998, as discussed below) accrued and compounded monthly. The scheduled
maturity of the term loans was December 31, 1998. However, JMB did not
pursue its remedies under these notes as a result of the non-payment of
interest under the LIBOR Note or the maturity of these notes.

Effective January 3, 2001, the Partnership and JMB agreed to extend
the maturity date of the term loan notes from December 31, 1998 to
January 2, 2006 and otherwise to follow literally the various terms of the
notes. As a result, the parties agreed that the Partnership would be
required to pay default interest on each of the three term loan notes (at
the prime rate plus 3% per annum) for the period from the maturity date of
December 31, 1998 to January 3, 2001, the effective date on which JMB and
the Partnership agreed to extend each of the notes. Accordingly,
incremental interest cost relating to the default interest rate aggregating
approximately $7.7 million was recorded as expense in the year ended
December 31, 2000. Under the extended notes, interest accrues under the
same terms as applicable to the term loan notes prior to December 31, 1998.

Interest is due and payable monthly on the LIBOR Note with the outstanding
principal due and payable on January 2, 2006. All principal and accrued
and compounded interest on the other term loan notes (including the note
representing the interest rate swap payment) are due and payable on
January 2, 2006. Further, all outstanding interest as of December 31, 2000
on the LIBOR Note (approximately $10.8 million) was due and payable
immediately. The Partnership issued a new demand note payable to JMB,
bearing interest at the prime rate (as such prime rate changes from time to
time) plus 1% (5.75% at December 31, 2001) per annum with interest accruing
and compounding quarterly. Through December 31, 2001, JMB has advanced
approximately $12,240,000 to the Partnership pursuant to the new demand
note. The Partnership used the advances to pay the outstanding interest on
the LIBOR Note through December 31, 2000 of approximately $10,845,000 and
to pay accrued interest on the LIBOR Note from January 1, 2001 through
December 31, 2001 of approximately $1,395,000.

Prior to November 1996, the Partnership was partner with certain
affiliates of Olympia & York Developments, Ltd. ("O&Y") in 245 Park, which
owned the 245 Park Avenue office building in New York, New York. As a
result of a 1996 bankruptcy reorganization of 245 Park, the Partnership
owns (through a limited liability company of which the Partnership is a 99%
member) an approximate 5% general partner interest (slightly diluted from
the original ownership percentage by notes convertible to equity) in
Brookfield Financial Properties, L.P. ("BFP, LP"), formerly known as World
Financial Properties, L.P. ("WFP, LP"). The managing general partner of
BFP, LP is an entity affiliated with certain O&Y creditors and the
proponents of the Plan governing the restructuring and, subject to the
partnership agreement of BFP, LP and the JMB Transaction Agreement, has
full authority to manage its affairs. BFP, LP's principal assets are
majority and controlling interests in various office buildings located in
New York, New York and Boston, Massachusetts.

BPC has reported that BFP, LP's four downtown Manhattan office
buildings (One Liberty Plaza, One World Financial Center, Two World
Financial Center and Four World Financial Center) sustained no structural
damage as a result of the September 11, 2001, attacks on the World Trade
Center. The properties did incur broken windows, damaged window frames and
building facade and loss of water, electric and telephone services for a
period of time. Substantial clean-up of the properties was also required.
In addition, the glass atrium in the middle of the World Financial Center
complex incurred more damage from falling debris than other areas of the
complex. Accordingly to BPC, the atrium, which is not integral to the
daily operation or re-tenanting of the World Financial Center complex is
expected to be restored and re-opened in the Fall of 2002.

Accordingly to BPC, BFP, LP is responsible for repairs to One Liberty
Plaza, One World Financial Center, the glass atrium and common areas of the
World Financial Center complex, and Merrill Lynch & Company, as the tenant
under triple-net leases, is responsible for repairs to Two World Financial
Center and Four World Financial Center. BPC has reported that BFP, LP is
covered for any costs incurred to repair One Liberty Plaza, One World
Financial Center, the glass atrium and common areas at the complex and for
business interruption claims. BPF, LP has received a portion of its
insurance claims and expects to receive the full balance of these claims.
According to BPC, repairs to Two World Financial Center and Four World
Financial Center are covered by insurance obtained by the tenant under its
leases for those properties. BPC has reported that to date there have been
no lease cancellations at BFP, LP's New York properties, although there is
no assurance that a tenant or tenants will not attempt to do so as a result
of events occurring on September 11, 2001. Tenants re-occupied One Liberty
Plaza and Four World Financial Center in October 2001, and One World
Financial Center and Two World Financial Center re-opened in the first
quarter of 2002.

Property and casualty and business interruption insurance coverage for
BFP, LP's properties was renewed in October, 2001. The renewal insurance
covers the replacement cost of the properties but does not include coverage
for damage or business interruption claims related to acts of terrorism.
Accordingly, damage or business interruption costs due to acts of terrorism
could result in material costs to BFP, LP. Reference is made to Note 9 of
the Notes to Consolidated Financial Statements of Brookfield Financial
Properties, L.P. included in this Report for a discussion of the damage
incurred as a result of the events of September 11, 2001, and insurance
coverage for BFP, LP's properties.

In December 1999, BFP, LP executed an agreement pursuant to which an
institutional investor agreed to an option to purchase a 49% limited
partnership interest in the entities that own the 53 State Street and 75
State Street office buildings. The transaction closed during the first
quarter of 2001 and generated net proceeds of approximately $168 million to
BFP, LP. The transaction resulted in gain for federal income tax purposes
without any cash proceeds to the Partnership.

BPC has reported that during the first quarter of 2001, BFP, LP
refinanced the loans secured by the 245 Park Avenue and One Liberty Plaza
office buildings with loans of $500 million and $432 million, respectively.

The new financing secured by the 245 Park Avenue property has a term of ten
years and bears interest at a fixed rate of 6.65% per annum. The new
financing secured by One Liberty Plaza has a term of ten years and bears
interest at a fixed rate of 6.75% per annum.

BFP, LP is currently developing a 31-story office building at 300
Madison Avenue in New York, New York. The property is currently expected
to be completed in late 2003. BPC has reported that acquisition and
ongoing development costs are to be funded primarily through financing
obtained in April 2002 and secured by the project. BPC has reported that a
majority of the approximately 1.2 million square feet of space to be built
for this property has been pre-leased to a single tenant for a 30-year
term. The tenant also has an option, for two years after substantial
completion of the project, to acquire a 49% interest in the project at
cost.

BFP, LP and the Partnership each have a substantial amount of
indebtedness remaining. If any of the buildings (or interests therein) are
sold, any proceeds would be first applied to repayment of the mortgage or
other indebtedness of BFP, LP. In any event, any net proceeds obtained by
the Partnership would then be required to be used to satisfy notes payable
and deferred interest owed to JMB (aggregating $86,507,505 at December 31,
2001). Only after such applications would any remaining proceeds be
available to be distributed to the Holders of Interests. As a result, it
is unlikely that the Holders of Interests ever will receive any significant
portion of their original investment. However, over the remaining term of
the Partnership, as a result of sale or other disposition (including a
transfer to the lenders) of the properties, or of the Partnership's
interest in BFP, LP, or a decrease in the Partnership's indebtedness for
Federal income tax purposes, the Holders of Interests will be allocated
substantial gain for Federal income tax purposes (corresponding at a
minimum to all or most of their deficit capital accounts for tax purposes)
without a significant amount of proceeds from such transaction. Such gain
may be offset by suspended losses from prior years (if any) that have been
allocated to the Holders of Interests. The actual tax liability of each
Holder of Interests will depend on such Holder's own tax situation.

Pursuant to the terms of the JMB Transaction Agreement dated
November 21, 1996, the Partnership was entitled to receive one third of the
monthly management fees earned at the 245 Park Avenue property through
December 2001. Amounts received may not be less than $400,000 or exceed
$600,000 for any twelve month period and may not be less than $2,300,000
over the term of the agreement. In addition, pursuant to the JMB
Transaction Agreement, the Partnership has the right, except under certain
circumstances, to prohibit (i) a sale of the 245 Park Avenue property prior
to January 2, 2000 (such right has expired), and (ii) a reduction of the
indebtedness secured by the 245 Park Avenue property below a certain level
prior to January 2, 2003.

The Partnership's liquidity and ability to continue as a going concern
is dependent upon additional advances from JMB under the demand loans, and
there is no assurance that such advances will continue to be made.

RESULTS OF OPERATIONS

The increase in accounts payable at December 31, 2001 as compared to
December 31, 2000 is primarily due to the timing of payment of certain
administrative expenses of the Partnership as of the 2001 year end.

The decrease in interest payable to affiliate and the corresponding
increases in demand notes payable to affiliate and notes payable to
affiliate - long-term including accrued interest at December 31, 2001, as
compared to December 31, 2000 are primarily due to the advances under the
new demand note payable and the payment of outstanding interest on the
LIBOR Note, and the reclassification of short-term accrued interest to note
payable to an affiliate - long-term including accrued interest, as a result
of the extension of the term loan notes effective January 3, 2001.

Interest and other income for the years ended December 31, 2001, 2000
and 1999 primarily consists of the Partnership's share of the property
management fees from the 245 Park Avenue property pursuant to the terms of
the JMB Transaction Agreement described above.

The decrease in interest expense for the year ended December 31, 2001
as compared to the year ended December 31, 2000 and the increase in
interest expense for the year ended December 31, 2000 as compared to the
year ended December 31, 1999 is primarily due to default interest being
recorded during 2000 on the term loans for the two years ended December 31,
2000. The decrease in interest expense for 2001 is also due to lower
interest rates on the term loans and demand notes, which are variable rate
obligations.

The increase in professional services for the year ended December 31,
2001 as compared to the year ended December 31, 2000 is primarily due to
legal fees related to the extension of the Partnership's term loan notes.

INFLATION

Due to the low levels of inflation in recent years, inflation
generally has not had a material effect on rental income or property
operating expenses.

However, to the extent that inflation in future periods would have an
adverse impact on property operating expenses, the effect would generally
be offset by amounts recovered from tenants as many of the long-term leases
at the Partnership's commercial properties have escalation clauses covering
increases in the cost of operating the properties as well as real estate
taxes. Therefore, there should be little effect on operating earnings if
the properties remain substantially occupied.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership has identified interest rate changes as a potential
market risk. Since the Partnership has certain notes payable that bear
interest at variable rates, an increase in interest rates would increase
the Partnership's cost of borrowings under these notes. Reference is made
to the Notes for further information concerning borrowings incurred by the
Partnership.

As a result of September 11, 2001, BFP, LP presently has limited
terrorism insurance. Accordingly, a terrorist attack could have a material
effect on BFP, LP's assets. BFP, LP has reviewed its mortgage loan
agreements and believes it is in compliance, in all material respects, with
the contractual obligations therein.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture

INDEX

Independent Auditors' Report
Consolidated Balance Sheets, December 31, 2001 and 2000
Consolidated Statements of Operations, years ended
December 31, 2001, 2000 and 1999
Consolidated Statements of Partners' Capital Accounts (Deficits),
years ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows, years ended
December 31, 2001, 2000 and 1999
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 consolidated financial
statements or related notes.

BROOKFIELD FINANCIAL PROPERTIES, L.P.

INDEX

Independent Auditors' Report
Consolidated Balance Sheet, December 31, 2001
Consolidated Statement of Operations, for the year ended
December 31, 2001
Consolidated Statement of Partners' Capital, for the year ended
December 31, 2001
Consolidated Statement of Cash Flows, for the year ended
December 31, 2001
Notes to Consolidated Financial Statements

INDEPENDENT AUDITORS' REPORT

The Partners
JMB/245 Park Avenue Associates, Ltd.:

We have audited the consolidated financial statements of JMB/245 Park
Avenue Associates, Ltd., a limited partnership (the "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 auditing standards
generally accepted in the United States of America. 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/245 Park Avenue Associates, Ltd. and consolidated venture as of
December 31, 2001 and 2000, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 2001, in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared
assuming that JMB/245 Park Avenue Associates, Ltd. will continue as a going
concern. As described in the notes to the financial statements, the
Partnership is dependent upon additional advances from JMB under the demand
loans. This uncertainty and the fact that the Partnership has a net
capital deficiency raise substantial doubt about its ability to continue as
a going concern. The General Partners' plans in regard to these matters
are also described in the notes to the financial statements. The
accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

KPMG LLP

Chicago, Illinois
May 1, 2002

JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2001 AND 2000

ASSETS
------

JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

JMB/245 PARK AVENUE ASSOCIATES, LTD.
(A LIMITED PARTNERSHIP)
and Consolidated Venture

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001, 2000 AND 1999

OPERATIONS AND BASIS OF ACCOUNTING

GENERAL

As a result of the 1996 restructuring, JMB/245 Park Avenue Associates,
Ltd. (the "Partnership") owns (through a limited liability company of which
the Partnership is a 99% member, described below) an approximate 5% general
partner interest (slightly diluted from the original ownership percentage
by notes converted to equity) in Brookfield Financial Properties, L.P.
("BFP, LP"), formerly known as World Financial Properties, L.P. ("WFP,
LP"), a joint venture that holds an equity investment in commercial office
buildings located in New York, New York and Boston, Massachusetts.
Business activities consist of rentals to a variety of commercial 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 limited liability company, JMB/245 Park Avenue
Holding Company, LLC, ("JMB/245 LLC"), which was formed November 21, 1996
("Effective Date"). Prior to the Effective Date, the Partnership held an
approximate 48.25% interest in 245 Park Avenue Company ("245 Park" or the
"Joint Venture"), which owned the 245 Park Avenue office building in New
York, New York (see "Investment in Unconsolidated Venture" below). The
effect of all transactions between the Partnership and its consolidated
venture has been eliminated.

The equity method of accounting has been applied in the accompanying
consolidated financial statements with respect to the Partnership's
approximate 5% interest in BFP, LP subsequent to the Effective Date.
Accordingly, the financial statements do not include the accounts of
BFP, LP.

The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to reflect the Partnership's
accounts in accordance with accounting principles generally accepted in the
United States of America ("GAAP") and to consolidate the accounts of
JMB/245 LLC as described above. Such GAAP and consolidation adjustments
are not recorded on the records of the Partnership. The net effect of
these items for the years ended December 31, 2001 and 2000 is summarized as
follows:
2001 2000
------------------------ -------------------------
TAX BASIS TAX BASIS
GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED)
------------ ------------ ------------ ------------
Total assets. . . .$ 557,938 (107,577,851) 567,272 (112,940,629)

Partners' capital
accounts (deficits):
General partners.(12,513,842) (44,886,198) (12,752,568) (27,428,893)
Limited partners.(104,582,808)(136,339,455)(108,322,854)(141,858,999)

Net earnings
(losses):
General partners. 238,726 (17,457,305) (261,427) 257,636
Limited partners. 3,740,046 5,519,544 (4,095,692) 4,036,300

Net earnings (loss)
per limited
partnership
interest. . . . . 3,759 5,547 (4,116) 4,057
============ ============ ============ ============

The net earnings (loss) per limited partnership interest is based upon
the number of limited partnership interests outstanding at the end of the
period. The above-noted deficit capital accounts will result, through the
duration of the Partnership, in net gain for financial reporting and
Federal income tax purposes to the General Partners and Limited Partners.

The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

No provision for Federal or state income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership.

INVESTMENT IN UNCONSOLIDATED VENTURE

The Partnership acquired an interest in 245 Park, which owned a
46-story office building located at 245 Park Avenue, New York, New York.
The Partnership acquired its approximate 48.25% ownership interest in 245
Park for approximately $63,927,000 from an affiliate of the joint venture
partners. In addition to the Partnership, the other partners (the "O&Y
partners") of 245 Park included Olympia & York 245 Park Ave. Holding
Company, L.P., Olympia & York Equity Company, L.P., and Olympia & York 245
Corp., all of which were affiliates of Olympia & York Developments, Ltd.
("O&Y").

As a result of the financial difficulties of the O&Y partners, in
October 1995 each of the O&Y partners and certain other O&Y affiliates (but
not the Joint Venture) filed for bankruptcy protection from creditors under
Chapter 11 of the United States Bankruptcy Code. During 1996, the O&Y
partners and these certain other O&Y affiliates restructured their
ownership interests in various office buildings, including their interest
in the 245 Park Avenue office building. In connection with such
restructuring, 245 Park filed for bankruptcy under Chapter 11 of the United
States Bankruptcy Code in April 1996 seeking approval of a plan of
reorganization by its creditors and the partners of 245 Park, including the
Partnership, and in August 1996, the Third Amended Joint Plan of
Reorganization and Disclosure Statement (the "Plan") was filed with the
Bankruptcy Court. The Plan was accepted by the various classes of claims
and equity holders and confirmed by the Court on September 20, 1996. The
Plan became effective on November 21, 1996 ("Effective Date") upon
completion of several additional steps. The conditions to the Plan
included, but were not limited to, the completion of significant
refinancing and capital transactions regarding the 245 Park Avenue office
building as well as other properties. Pursuant to the terms of the Plan,
the Partnership owns (through a limited liability company of which the
Partnership is a 99% member) an approximate 5% general partner interest
(slightly diluted from the original ownership percentage by notes converted
to equity) in a newly formed partnership, BFP, LP. The managing general
partner of BFP, LP is an entity affiliated with certain O&Y creditors and
the proponents of the Plan governing the restructuring. BFP, LP's
principal assets are wholly-owned or majority and controlling interests in
seven office buildings (including 245 Park Avenue office building).

BFP, LP and the Partnership each have a substantial amount of
indebtedness remaining. If any of the buildings (or interests therein) are
sold, any proceeds 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 would then be required to be used to satisfy notes payable
and deferred interest owed to JMB Realty Corporation ("JMB") (aggregating
$86,507,505 at December 31, 2001). Only after such applications would any
remaining proceeds be available to be distributed to the Holders of
Interests. As a result, it is unlikely that the Holders of Interests ever
will receive any significant portion of their original investment.

However, over the remaining term of the Partnership, as a result of
sale or other disposition (including a transfer to the lenders) of the
properties, or of the Partnership's interest in BFP, LP, or a decrease in
the Partnership's indebtedness for Federal income tax purposes, the Holders
of Interests will be allocated substantial gain for Federal income tax
purposes (corresponding at a minimum to all or most of their deficit
capital accounts for tax purposes) without a significant amount of proceeds
from such transaction. Such gain may be offset by suspended losses from
prior years (if any) that have been allocated to the Holders of Interests.
The actual tax liability of each Holder of Interests will depend on such
Holder's own tax situation.

The Partnership and its lender had reached a modification and
extension agreement regarding the former $50,000,000 term loans that
matured in October 1993. These term loans (described below) were secured
by the Partnership's interest in its real estate investment, and
$25,000,000 (current principal outstanding balance of $16,042,000 at
December 31, 2001 and 2000) of the term loans was guaranteed by JMB. The
terms of the modification and extension generally provided for (i) an
extension period through December 1998; (ii) one-half of the principal
amount of the term loans required interest to be paid currently at a rate
related to either the London Interbank Offer Rate (LIBOR) or the prime rate
while interest on the balance of the term loans accrued at an annual rate
of 2% compounded annually; (iii) the term loan bearing interest at a rate
related to either LIBOR (the "LIBOR Note") or the prime rate was subject to
periodic amortization; and (iv) the past due lump sum interest swap payment
in the amount of $2,194,631 was converted to a note payable which was due
December 1998 with interest accruing at an annual rate of 2% compounded
annually. Payments of principal and interest made by JMB under its
guaranty of the $25,000,000 portion of the Partnership's term loans were
treated as advances to the Partnership. Interest accrues on these advances
at the annual rate of prime (as such prime rate changes from time to time)
plus 1% (5.75% at December 31, 2001 and 10.5% at December 31, 2000). As of
December 31, 2001, JMB had advanced approximately $12,376,000, evidenced by
a demand note, which included the principal and interest payments made
related to the loan modification discussed above and advances to pay
operating costs of the Partnership. The demand note payable to JMB, which
allows a maximum principal sum of a specified amount, had been subordinate
to payment of the LIBOR Note but is no longer subordinated and is now
secured by the Partnership's interest in BFP, LP. The Partnership made
payments to JMB of $400,000 and $850,000 during 2001 and 1999,
respectively, for interest payable on the notes.

In July 1995, JMB purchased from the lenders the term loans (including
the note representing the interest swap payment) and their security
interests in the related collateral, including the JMB guarantee, which was
terminated. JMB continued to hold the notes for these loans generally
under the same terms and conditions that were in effect prior to the
purchase. However, no scheduled principal payments were required prior to
the scheduled maturity of the LIBOR Note. Interest on the LIBOR Note was
payable monthly at a floating rate which, at the option of the Partnership,
was related to either LIBOR or the prime rate of Bank of America. Through
December 31, 2000, no payments of interest on the LIBOR Note had been made
subsequent to July 31, 1995, and unpaid interest at the applicable interest
rate (including the default interest rate for the period from December 31,
1998, as discussed below) accrued and compounded monthly. The scheduled
maturity of the term loans was December 31, 1998. However, JMB did not
pursue any remedies under these notes as a result of the non-payment of
monthly interest under the LIBOR Note or the maturity of the term loan
notes. In 2001, the maturity date was extended to January 2, 2006, as
discussed below.

Effective January 3, 2001, the Partnership and JMB agreed to extend
the maturity date of the term loan notes from December 31, 1998 to January
2, 2006 and otherwise to follow literally the various terms of the notes.
As a result, the parties agreed that the Partnership would be required to
pay default interest on each of the three term loan notes (at the prime
rate plus 3% per annum) for the period from the maturity date of
December 31, 1998 to January 3, 2001, the effective date on which JMB and
the Partnership agreed to extend each of the notes. Accordingly,
incremental interest cost relating to the default interest rate aggregating
approximately $7.7 million was recorded as expense in the year ended
December 31, 2000. Under the extended notes, interest accrues under the
same terms as applicable to the term loan notes prior to December 31, 1998.

Interest is due and payable monthly on the LIBOR Note with the outstanding
principal due and payable on January 2, 2006. All principal and accrued
and compounded interest on the other term loan notes (including the note
representing the interest rate swap payment) are due and payable on
January 2, 2006. Further, all outstanding interest as of December 31, 2000
on the LIBOR Note (approximately $10.8 million) was due and payable
immediately. The Partnership issued a new demand note payable to JMB,
bearing interest at the prime rate (as such prime rate changes from time to
time) plus 1% (5.75% at December 31, 2001) per annum with interest accruing
and compounding quarterly. Through December 31, 2001, JMB has advanced
approximately $12,240,000 to the Partnership pursuant to the new demand
note. The Partnership used the advances to pay the outstanding interest on
the LIBOR Note through December 31, 2000 of approximately $10,845,000 and
to pay accrued interest on the LIBOR Note from January 1, 2001 through
December 31, 2001 of approximately $1,395,000.

Each of the notes to JMB is cross-defaulted, secured by the
Partnership's interest in BFP, LP and subject to mandatory payment of
principal and interest out of any distributions received by the Partnership
from BFP, LP. It currently appears unlikely, however, that any significant
operating distributions will be received by the Partnership from BFP, LP
due to the level of indebtedness remaining on the properties owned by BFP,
LP. Accordingly, the Partnership's primary source of capital to pay for
continuing operations is additional advances from JMB under the demand
loans. Accrued interest on the demand notes and term loan notes was
approximately $18,064,000, $27,704,000 and $15,982,000 at December 31,
2001, 2000 and 1999, respectively.

NOTES PAYABLE TO AN AFFILIATE

Notes payable to an affiliate consist of the following at December 31,
2001 and 2000:
2001 2000
----------- -----------
Note payable (term loan) bearing
interest at a variable rate related
to LIBOR plus 2.625% (4.74% per annum
at December 31, 2001); secured by the
Partnership's interest in BFP, LP;
interest payable monthly with unpaid
interest accruing and compounding
monthly; scheduled maturity was
December 31, 1998; extended,
effective January 3, 2001, to
January 2, 2006. . . . . . . . . . . . $16,042,000 16,042,000

Note payable (term loan) bearing
interest at 2% per annum, compounded
annually; secured by the Partnership's
interest in BFP, LP; no payments until
December 1998 when the entire principal
amount and accrued compounded interest
were scheduled to be due (as discussed
above); extended, effective January 3,
2001, to January 2, 2006 . . . . . . . 25,000,000 25,000,000

2001 2000
----------- -----------

Note payable (term loan) bearing
interest at 2% per annum, compounded
annually; secured by the Partnership's
interest in BFP, LP; no payments
until December 1998 when the entire
principal amount and accrued
compounded interest were scheduled to
be due (as discussed above); extended,
effective January 3, 2001, to
January 2, 2006. . . . . . . . . . . . 2,194,631 2,194,631

Demand note payable bearing
interest at prime plus 1%
(5.75% per annum at December 31,
2001); advanced by JMB; maximum
principal sum of a specified
amount, secured by the Partner-
ship's interest in BFP, LP . . . . . . 12,375,591 12,375,591

Demand note payable bearing
interest at prime plus 1%
(5.75% per annum at December 31,
2001); advanced by JMB, maximum
principal sum of a specified
amount, secured by the Partner-
ship's interest in BFP, LP . . . . . . 12,830,494 --
----------- -----------
$68,442,716 55,612,222
=========== ===========

In addition, interest payable was approximately $18,064,000,
$27,704,000 and $15,982,000 as of December 31, 2001, 2000 and 1999,
respectively.

PARTNERSHIP AGREEMENT

Pursuant to the terms of the Partnership Agreement, net profits and
losses of the Partnership from operations are generally allocated 94% to
the Holders and 6% to the General Partners. Profits from the sale or other
disposition of all or substantially all of the Partnership's interest in
BFP, LP or of all or substantially all of the 245 Park Avenue office
building or other real property owned by BFP, LP will be allocated to the
General Partners in an amount equal to the greater of 1% of such profits or
any cash from the proceeds of such sale or other disposition distributed to
the General Partners, plus an additional amount of such profits to
eliminate deficits, if any, in the General Partners' capital accounts. The
remainder of such profits will be allocated to the Holders. All losses
from the sale of all or substantially all of the Partnership's interest in
BFP, LP or of all or substantially all of the 245 Park Avenue office
building or other real property owned by BFP, LP will be allocated 99% to
the Holders and 1% to the General Partners. All such profits or losses
will be allocated among the Holders in proportion to the number of
Interests held.

The General Partners are not required to make any additional capital
contributions except under certain limited circumstances upon dissolution
and termination of the Partnership. Distributions of "Distributable Cash"
(as defined) of the Partnership generally will be made 94% to the Holders
of Interest and 6% to the General Partners. Distributions of "Sale
Proceeds" or "Financing Proceeds" (as defined) will be made first to the
Holders in an amount equal to their contributed capital, next to the
General Partners in an amount equal to their capital contributions, and the
balance 70% to the Holders and 30% to the General Partners. Distributions
would be made to the General Partners and Holders of Interests generally
only after the satisfaction of all Partnership liabilities.

TRANSACTIONS WITH AFFILIATES

The Partnership, pursuant to the Partnership Agreement, is permitted
to engage in various transactions involving the Corporate 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 real property investments. Fees,
commissions and other expenses required to be paid by the Partnership to
the General Partners and their affiliates as of December 31, 2001, 2000 and
1999 are as follows:

UNPAID AT
DECEMBER 31,
2001 2000 1999 2001
------- ------ ------ ------------

Insurance commissions . . . $ -- 563 792 --
Reimbursement (at cost)
for legal services . . . . 9,613 4,676 2,063 5,244
Reimbursement (at cost)
for accounting services. . -- -- 680 --
Reimbursement (at cost)
for portfolio management
services . . . . . . . . . 2,673 3,768 -- 90
Reimbursement (at cost)
for out-of-pocket
expenses . . . . . . . . . -- -- -- --
------- ------ ------ ------
$12,286 9,007 3,535 5,334
======= ====== ====== ======

Any reimbursable amounts currently payable to the General Partners and
their affiliates do not bear interest.

Reference is made to the Notes, "Investment in Unconsolidated Venture"
and "Notes Payable to an Affiliate" above for a discussion of certain loans
and notes payable by the Partnership to JMB and related collateral held by
JMB.

SUMMARY FINANCIAL INFORMATION OF UNCONSOLIDATED VENTURE

Summary financial information for BFP, LP as of and for the years
ended December 31, 2001 and 2000:

2001 2000
----------- -----------
(000's) (000's)
Assets:
Commercial properties . . . . . . . . $ 2,930,857 3,299,778
Other assets. . . . . . . . . . . . . 856,670 239,338
----------- -----------
Total assets . . . . . . . . . . . $ 3,787,527 3,539,116
=========== ===========

Liabilities and Partners Capital:
Accounts payable and other
liabilities . . . . . . . . . . . . $ 83,290 254,151
Long term debt. . . . . . . . . . . . 2,705,777 2,375,189
Venture Partners' equity. . . . . . . 944,057 860,204
----------- -----------
Total liabilities. . . . . . . . . $ 3,733,124 3,489,544
=========== ===========
Partnership's capital. . . . . . . $ 54,403 49,572
=========== ===========

2001 2000
----------- -----------
(000's) (000's)
Represented by:
Invested capital. . . . . . . . . . . $ 31,725 31,725
Cumulative distributions and other. . (610) (605)
Cumulative net earnings . . . . . . . 23,288 18,452
----------- -----------
$ 54,403 49,572
=========== ===========

Total income. . . . . . . . . . . . . . $ 513,422 514,729
Expenses. . . . . . . . . . . . . . . . 392,739 427,921
----------- -----------
Net income before extraordinary item. . 120,683 86,808

Loss on early extinguishment of debt. . (31,483) --
----------- -----------
Net income. . . . . . . . . . . . . . . $ 89,200 86,808
=========== ===========
Partnership's share:
Equity in earnings of BFP, LP . . . . $ 4,836 4,617
----------- -----------
$ 4,836 4,617
=========== ===========

The Partnership's capital in BFP, LP differs from its investment in
unconsolidated venture, primarily due to the adoption of fresh start
accounting by BFP, LP in connection with the restructuring, and the
resultant restatement of all of its assets and liabilities to reflect their
reorganization value. The Partnership is amortizing the difference between
its historical basis in 245 Park and its underlying equity (which was
transferred to the basis in BFP, LP on the Effective Date) over a period
not to exceed forty years. The amortization for the years ended
December 31, 2001, 2000 and 1999 was $2,455,143, $2,455,143 and $2,455,143,
respectively. Such amounts may be written off sooner in the event of the
sale or disposition of the properties owned by BFP, LP or the Partnership's
interest in BFP, LP.

The total income, expenses and net income for the year ended
December 31, 1999 were $544,393,000, $419,190,000, and $125,203,000,
respectively.

SUPPLEMENTARY QUARTERLY DATA (UNAUDITED)

2001
----------------------------------------------
At 3/31 At 6/30 At 9/30 At 12/31
---------- ---------- ---------- ----------
Total income. . . . . . $ 145,425 149,085 163,101 152,023
========== ========== ========== ==========
Net earnings (loss) . . $2,603,109 885,711 (494,109) 984,061
========== ========== ========== ==========
Net earnings (loss)
per Interest . . . . . $ 2,459 837 (467) 930
========== ========== ========== ==========

2000
----------------------------------------------
At 3/31 At 6/30 At 9/30 At 12/31
---------- ---------- ---------- ----------
Total income. . . . . . $ 144,288 112,628 138,564 134,104
========== ========== ========== ==========
Net earnings (loss) . . $ 963,136 1,119,337 970,575 (7,410,167)
========== ========== ========== ==========
Net earnings (loss)
per Interest . . . . . $ 908 1,055 915 (6,994)
========== ========== ========== ==========

INDEPENDENT AUDITORS' REPORT

To the Partners of
Brookfield Financial Properties, L.P.
New York, New York

We have audited the accompanying consolidated balance sheet of
Brookfield Financial Properties, L.P. and subsidiaries (the Company) as of
December 31, 2001, and the related consolidated statements of operations,
partners' capital and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Brookfield Financial
Properties, L.P. and subsidiaries as of December 31, 2001, and the results
of their operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the United
States of America.

Deloitte & Touche LLP
April 25, 2002

BROOKFIELD FINANCIAL PROPERTIES, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2001
(000's)

ASSETS

Commercial properties . . . . . . . . . . . . . . . . . $2,930,857

Cash and cash equivalents (including
restricted cash of $135,232). . . . . . . . . . . . . 150,949
Restricted treasury bills . . . . . . . . . . . . . . . 276,317
Accounts receivable . . . . . . . . . . . . . . . . . . 50,644
Loan to affiliate . . . . . . . . . . . . . . . . . . . 302,848
Other assets. . . . . . . . . . . . . . . . . . . . . . 75,912
----------
Total Assets. . . . . . . . . . . . . . . . . . . . . . $3,787,527
==========

LIABILITIES AND PARTNERS' CAPITAL

Long term debt. . . . . . . . . . . . . . . . . . . . . $2,705,777
Accounts payable and other liabilities. . . . . . . . . 83,290
----------
2,789,067
----------

Partners' capital . . . . . . . . . . . . . . . . . . . 998,460
----------
Total Liabilities and Partners' Capital . . . . . . . . $3,787,527
==========

The accompanying notes are an integral part
of these consolidated financial statements.

BROOKFIELD FINANCIAL PROPERTIES, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2001
(000's)

REVENUES:
Rental income . . . . . . . . . . . . . . . . . . . . $ 387,542
Reimbursed rental income. . . . . . . . . . . . . . . 48,660
Gain on sale of partnership interest. . . . . . . . . 32,082
Equity earnings from joint ventures . . . . . . . . . 17,123
Interest and other income . . . . . . . . . . . . . . 28,015
----------
513,422
----------

EXPENSES:
Property operations . . . . . . . . . . . . . . . . . 145,097
Interest. . . . . . . . . . . . . . . . . . . . . . . 176,328
Administrative and development. . . . . . . . . . . . 11,067
Depreciation and amortization . . . . . . . . . . . . 60,247
----------
392,739
----------

Net Income Before Extraordinary Item. . . . . . . . . . 120,683

Loss on Early Extinguishment of Debt. . . . . . . . . . (31,483)
----------

NET INCOME. . . . . . . . . . . . . . . . . . . . . . . $ 89,200
==========

The accompanying notes are an integral part
of these consolidated financial statements.

BROOKFIELD FINANCIAL PROPERTIES, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL

FOR THE YEAR ENDED DECEMBER 31, 2001
(000's)

Units
Balance Retired Balance
January 1, and Net December 31,
2001 Transferred Income 2001
---------- ----------- ---------- ------------

GENERAL PARTNERS

Brookfield Financial
Properties, Inc.. . . $ 9,151 $ (1) $ 894 $ 10,044

JMB 245 Park Avenue
Holding Company,
LLC . . . . . . . . . 49,572 (5) 4,836 54,403

LIMITED PARTNERS

Brookfield Properties
Corporation:

Brookfield Proper-
ties Holdings,
Inc. . . . . . . . . 371,221 (37) 36,422 407,606

Olympia & York
Tower B Company. . . 72,180 (7) 7,069 79,242

Battery Park
Partners . . . . . . 351,081 (35) 34,447 385,493

BFP II LLC. . . . . . -- 51,430 816 52,246

Emerald LP Holdings,
Inc. . . . . . . . . . 47,597 (51,435) 3,838 --

Other . . . . . . . . . 8,974 (426) 878 9,426
-------- ------- ------- --------

$909,776 $ (516) $89,200 $998,460
======== ======= ======= ========

The accompanying notes are an integral part
of these consolidated financial statements.

BROOKFIELD FINANCIAL PROPERTIES, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2001
(000's)

OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . $ 89,200
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Loss on early extinguishment of debt. . . . . . . . 31,483
Depreciation and amortization . . . . . . . . . . . 60,247
Equity earnings from joint venture. . . . . . . . . (17,123)
Accrued interest income . . . . . . . . . . . . . . (20,817)
Accrued interest expense. . . . . . . . . . . . . . (3,722)
Gain on sale of partnership interest. . . . . . . . (32,082)
Increase in straight-line rent receivable . . . . . (11,121)
Changes in other operating assets and liabilities:
Increase in restricted cash . . . . . . . . . . . (8,703)
Increase in accounts receivable . . . . . . . . . (1,241)
Increase in other assets. . . . . . . . . . . . . (45,558)
Increase in accounts payable and
other liabilities . . . . . . . . . . . . . . . 15,334
---------
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . 55,897
---------

INVESTING ACTIVITIES:
Additions to commercial properties. . . . . . . . . . (139,361)
Sale of partnership interest. . . . . . . . . . . . . 172,590
Loan to affiliate . . . . . . . . . . . . . . . . . . (294,976)
Distributions from joint ventures . . . . . . . . . . 10,680
Other assets. . . . . . . . . . . . . . . . . . . . . 3,320
---------
NET CASH USED IN INVESTING ACTIVITIES . . . . . (247,747)
---------

FINANCING ACTIVITIES:
Additions to long term debt . . . . . . . . . . . . . 1,032,000
Repayments of long term debt. . . . . . . . . . . . . (403,315)
Purchase of restricted treasury bills . . . . . . . . (295,330)
Redemption of restricted treasury bills . . . . . . . 19,013
Repayment of loan from affiliate. . . . . . . . . . . (158,014)
Equity units retired. . . . . . . . . . . . . . . . . (516)
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES . . . 193,838
---------

Decrease in cash and cash equivalents . . . . . . . . . 1,988
Cash and cash equivalents - beginning of year . . . . . 13,729
---------

Cash and cash equivalents - end of year . . . . . . . . $ 15,717
=========

The accompanying notes are an integral part
of these consolidated financial statements.

BROOKFIELD FINANCIAL PROPERTIES, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2001
(000's)

1. ORGANIZATION

Brookfield Financial Properties, L.P. (the "Company") is a Delaware
limited partnership organized by and among Brookfield Financial Properties,
Inc., a subsidiary of Brookfield Properties Holdings, Inc., a Delaware
corporation, as a general partner, JMB 245 Park Avenue Holding Company,
LLC, as a general partner, and Brookfield Properties Holdings, Inc.,
Olympia & York Tower B Company, BFP II LLC, and Battery Park Partners
(which are subsidiaries of Brookfield Properties Corporation and are
collectively referred to as BPHI), and various other partners as limited
partners. BFP II LLC acquired its interest from Emerald LP Holdings, Inc.,
a subsidiary of Citigroup, on March 31, 2001.

2. SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Presentation

(i) The consolidated financial statements include the accounts of
the Company and all of its subsidiaries, as well as joint ventures and
partnerships which the Company controls, after elimination of intercompany
accounts and transactions.

(ii) The Company accounts for its investments in joint ventures and
partnerships in which it does not have a controlling interest under the
equity method.

b. Commercial Properties

Included in commercial properties is real estate under development
which is carried at cost. Interest, property taxes, insurance and direct
project costs such as construction, administration and legal are
capitalized as property costs. Capitalized carrying costs, consisting
primarily of interest and real estate taxes, aggregated $34,000 for the
year ended December 31, 2001, including interest of approximately $16,300.

c. Depreciation and amortization

Depreciation of office buildings and improvements is provided on the
straight-line method over the estimated lives of the buildings which
management has estimated to range from 38 to 50 years. Amortization of
tenant improvements and other leasing costs is provided on the straight-
line method over the terms of the related leases.

d. Income taxes

The Company, as a partnership, is not subject to federal, state and
city income taxes, with the exception of certain corporate subsidiaries.
Accordingly, the Company makes no provision for income taxes in its
financial statements except for the aforementioned corporate subsidiaries,
where income taxes are provided as required. The Company's taxable income
or loss, excluding the taxable income or loss of the corporate
subsidiaries, is reportable by the partners.

e. Cash and Cash Equivalents

The Company considers all highly liquid investments that have original
maturities of three months or less to be cash equivalents.

Restricted cash principally represents amounts which are restricted
pursuant to the terms of certain loan agreements.

f. Financial instruments

Statement of Financial Accounting Standards No. 107 "Disclosures About
Fair Value of Financial Instruments" requires disclosures of fair values of
financial instruments for which it is practicable to estimate that value.
Based on available market information, the Company estimates that the fair
value of its financial assets and liabilities approximates their carrying
value.

g. Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP")
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported period.
Actual results could differ from those estimates.

h. Rental income

Rental income from leases providing for periodic increases in base
rent is recognized on a straight-line basis over the noncancellable term of
the respective leases.

i. Accounting Pronouncements

New Accounting Pronouncements SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS 133"), was adopted by the Company
as of January 1, 2001. SFAS 133, as amended and interpreted, establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and for hedging
activities. Because the Company does not currently utilize derivative
instruments or engage in hedging activities, the implementation of this
standard had no effect on the Company's consolidated financial statements.

In August of 2001, the Financial Accounting Standards Board issued
Statement No. 144, Accounting for the Impairment of Disposal of Long Lived
Assets ("SFAS 144"). SFAS 144 was adopted by the Partnership as of January
1, 2002, and supercedes existing accounting literature dealing with
impairment and disposal of long lived assets, including discontinued
operations. It addresses financial accounting and reporting for the
impairment of long-lived assets and for long-lived assets to be disposed
of, and expands current reporting for discontinued operations to include
disposals of "component" of an entity that has been disposed of or is
classified as held for sale. The implementation of this standard did not
have an impact on the Company's consolidated financial statements.

3. COMMERCIAL PROPERTIES

Description

The Company, through its subsidiaries and joint ventures, is primarily
involved in the operation and development of commercial real estate located
in New York City and Boston and whose tenants are principally large
financial and professional service institutions. The properties owned by
the Company, in whole or in part, are as follows:

NEW YORK CITY BOSTON
------------- ------
World Financial Center - Tower A 53 State Street
World Financial Center - Tower B 75 State Street
World Financial Center - Tower D
245 Park Avenue
One Liberty Plaza
300 Madison Avenue

These properties aggregate approximately 12 million square feet. The
properties which are wholly owned at December 31, 2001 are World Financial
Center Towers A and B, 245 Park Avenue, One Liberty Plaza and 300 Madison
Avenue, a property currently under development expected to be completed in
2003. CIBC, a major tenant in Tower A, held a 26% partnership interest in
Tower A, which the Company acquired on December 31, 2001.

Properties which are not consolidated as a result of the Company sharing
control with its joint venture partners include Tower D which is held 51%
by the Company and 49% by an affiliate of Merrill Lynch & Co. ("Merrill
Lynch") and 53 State Street and 75 State Street, which are held 51% by the
Company and 49% by an affiliate of Deutsche Bank, (DB). DB acquired its
interest from the Company on March 30, 2001, pursuant to an option
agreement executed on December 31, 1999, whereby DB had acquired an option
to acquire 49% limited partnership interest in the entities which own 53
State Street and 75 State Street. The purchase price of the acquisition
was approximately $172,000, resulting in a gain on the sale of
approximately $32,000.

Included in Commercial Properties at December 31, 2001 are consolidated
operating commercial properties of $2,337,000, real estate under
development of $242,000, joint venture investments of $232,000, and
straight-line rent receivables of $112,000.

CONSOLIDATED COMMERCIAL PROPERTIES:

The Company's consolidated operating commercial properties at
December 31, 2001 are as follows:

Land . . . . . . . . . . . . $ 348,179
Buildings and improvements . 2,225,064
----------
2,573,243
Accumulated depreciation
and amortization. . . . . . (235,867)
----------
Total. . . . . . . . . . . . $2,337,376
==========

JOINT VENTURE - COMMERCIAL PROPERTY:

The condensed balance sheet and condensed statement of operations of
the Company's partially owned properties, in which the Company has a joint
venture investment, at and for the year ended December 31, 2001 is as
follows:

BALANCE SHEET

ASSETS
Commercial property. . . . . . . . . . $1,125,507
Other assets . . . . . . . . . . . . . 148,801
----------
Total assets . . . . . . . . . . . . . $1,274,308
==========
LIABILITIES
Long term debt . . . . . . . . . . . . $ 766,844
Accounts payable and other . . . . . . 13,213
----------
Total liabilities. . . . . . . . . . . 780,057
----------
PARTNERS' CAPITAL
Brookfield Financial Properties, L.P.. 232,698
Co-venturers . . . . . . . . . . . . . 261,553
----------
494,251
----------
Total liabilities and
partners' capital. . . . . . . . . . $1,274,308
==========

STATEMENT OF OPERATIONS

Revenues . . . . . . . . . . . . . . . . $ 156,742
Operating expenses . . . . . . . . . . . (98,500)
Depreciation and amortization. . . . . . (23,895)
----------
Net income . . . . . . . . . . . . . . $ 34,347
==========

4. LONG TERM DEBT

Long term debt secured by mortgages and other security interests which
are collateralized by commercial properties of $2,646,000 at December 31,
2001 carries a weighted average interest rate of 7.0%. Cash paid for
interest on long term debt obligations for the year ended December 31, 2001
aggregated approximately $173,000.

On January 31, 2001, the Company entered into a new mortgage loan for
One Liberty Plaza in the principal amount of $432,000, and purchased
treasury bills of approximately $295,000 which were transferred to a trust
to service the existing debt and are classified as restricted. The
defeasance did not meet the requirements of a defeasance under GAAP.

On February 2, 2001, the Company refinanced its mortgage obligation
for 245 Park Avenue. The new financing is in the principal amount of
$500,000. The Company repaid the existing loans in the principal amounts
of $201,000 and $73,000, and incurred a prepayment penalty and other costs
aggregating $31,483, which are shown as an extraordinary loss on early
extinguishment of debt in the consolidated statement of operations.

In addition, included in long term debt is subordinated long term debt
of $59,800 which represents the net carrying value of a zero coupon note
(the Note) payable by WFP Tower B Co., L.P. (the Partnership), a subsidiary
of the Company, upon its maturity on October 1, 2014. The Note carries a
face principal amount of $150,000 (the Face Principal Amount). On maturity
the Partnership will pay the Face Principal Amount and, if any, the
Maturity Contingent Principal Amount (together, the Maturity Stated
Principal Amount). The Maturity Contingent Principal Amount is the lesser
of (a) 25% of amount by which Tower B fair market value at maturity exceeds
$600,000 and (b) $517,298. In lieu of paying in cash the Maturity Stated
Principal Amount, the Partnership may elect to deliver to the lender a 25%
interest in the Building located at Parcel B at the World Financial Center,
New York, New York (the Equity Interest), provided that the fair market
value of the Building, taking into account the then outstanding principal
indebtedness secured by the leasehold interest in the Building, is at least
$600,000. However, if the lender elects to receive cash instead, then the
Partnership has to repay the Maturity Stated Principal Amount and not
deliver the Equity Interest. The carrying amount of this Note represents
the current value of the Note based upon the estimated residual value of
the building discounted at 9.5%.

The scheduled repayments of long term debt at December 31, 2001 are as
follows:

Years ending December 31, 2002 . . . . $ 44,625
2003 . . . . . 758,291
2004 . . . . . 68,178
2005 . . . . . 73,265
2006 . . . . . 78,480
Thereafter . . 1,682,938
----------
$2,705,777
==========

5. RENTALS UNDER OPERATING LEASES

Rental revenues are derived from the leasing of space in the buildings
to commercial and retail tenants. The leases are for fixed terms of
varying length and generally provide for annual rentals and expense
escalations to be paid in monthly installments. Rental income includes
additional rentals for operating expense reimbursements and escalations
amounting to $68,900 for the year ended December 31, 2001.

The following is a schedule of minimum future rental payments under
noncancellable operating leases during the next five years and thereafter.

Years ending December 31, 2002 . . . . $ 335,380
2003 . . . . . 340,877
2004 . . . . . 347,645
2005 . . . . . 324,742
2006 . . . . . 301,698
Thereafter . . 2,334,536
----------
Total future
minimum
rental
payments . . $3,984,878
==========

6. RELATED PARTY TRANSACTIONS

Included in other assets is a note receivable from BPHI in the amount
of $1,800. This note bore interest at 9% through November 2001, at which
time the note was extended for a five year period through November 2006 at
an interest rate of prime less .5%.

During the year the Company was indebted to an affiliate of BPHI,
which amount bore interest at 8% and was repaid during the year. Interest
paid in 2001 on this loan aggregated $900 in 2001. Furthermore, during the
year the Company entered into a loan agreement with an affiliate of BPHI
which matures on December 31, 2003, whereby the Company made advances to
the affiliate. Such advances bear interest at a rate of prime less .5%,
such rate being 4.75% at December 31, 2001. Total interest earned on the
advances aggregated $13,200 for the year ended December 31, 2001, at which
time the balance outstanding, including accrued interest, was $303,000.

7. PARTNERS' CAPITAL

During the year the Company purchased limited partnership units from
certain partners at a price in excess of current carrying value which
resulted in an adjustment to the carrying value of the remaining
partnership units.

8. COMMITMENTS AND CONTINGENCIES

The Company is obligated under various ground leases expiring between
2069 and 2077. The following is a schedule of the future minimum rental
payments under these leases.

Years ending December 31, 2002 . . . . $ 12,980
2003 . . . . 12,997
2004 . . . . 13,016
2005 . . . . 13,033
2006 . . . . 13,051
Thereafter . 633,125
--------
$698,202
========

9. SEPTEMBER 11, 2001

The Company owns four properties, Tower A, B and D at the World
Financial Center and One Liberty Plaza that are located near or adjacent to
the World Trade Center site. As a result of the collapse of the World
Trade Center, the properties suffered various degrees of non-structural
damage, primarily in the form of broken windows and debris infiltration.
Consequently, the properties were rendered temporarily untenantable.

The Company is responsible for the repair and clean-up work to be done
at Tower A and One Liberty Plaza, and Merrill Lynch, pursuant to its lease
obligation, is responsible for the work to be done at Towers B and D. As
of December 31, 2001, the work at all four properties was substantially
complete, and tenants had re-occupied both One Liberty Plaza and Tower D.
Tenants re-occupied Tower A and Tower B in the first quarter of 2002.

The Company maintains insurance coverage for the clean-up and repair
work at Tower A and One Liberty Plaza while Merrill Lynch carries similar
coverages for Towers B and D. The total costs of the clean-up and repair
work the Company is responsible for is estimated to be $131,900,
substantially all of which the Company believes is recoverable from
insurance carriers. As of December 31, 2001, approximately $23,100 of
costs have been incurred, for which $50,000 has been received from
insurance carriers. In addition, the Company has recognized approximately
$46,500 as lost rental income of which $23,500 has been received as of
December 31, 2001. Furthermore, rent credits in the amount of $17,700 are
due to tenants as a result of rent received for periods when Tower A and
One Liberty Plaza were untenantable, and are included in accounts payable
and other liabilities at December 31, 2001.

In accordance with GAAP clean-up and other costs are expensed when
incurred and insurance recoveries are recognized when they are deemed
probable as evidenced by receipts. Insurance proceeds received through
April 25, 2002 were approximately $105,000.

As a result of September 11, 2001, the Company presently has limited
terrorism insurance. Accordingly, a terrorist attack could have a material
effect on the Company's assets. The Company has reviewed its mortgage loan
agreements and believes it is in compliance, in all material respects, with
the contractual obligations therein.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

There were no changes in, or disagreements with, accountants during
2001 and 2000.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

The Corporate General Partner of the Partnership, JMB Park Avenue,
Inc., an Illinois corporation, is a wholly-owned subsidiary of JMB
Investment Holdings - I, Inc., a Delaware corporation. Substantially all
of the outstanding shares of stock of JMB Investment Holdings - I, Inc. are
owned, indirectly, by JMB Realty Corporation, a Delaware corporation
("JMB"). Substantially all of the shares of JMB are owned, directly or
indirectly, by certain of its officers, directors, members of their
families and their affiliates. The Corporate General Partner has
responsibility for all aspects of the Partnership's operations, subject to
the requirement that the sale of all or substantially all of the
Partnership's interest in BFP, LP or of all or substantially all of the 245
Park Avenue office building, unless required by the terms of the BFP, LP
venture agreement, must be approved by the Associate General Partner of the
Partnership, Park Associates, L.P., an Illinois limited partnership with
JMB Park Avenue, Inc. as the sole general partner. The limited partners of
the Associate General Partner are generally JMB, current or former officers
and directors of JMB, their affiliates and current or former officers of
Merrill Lynch, Pierce, Fenner & Smith Incorporated.

The Partnership is subject to certain conflicts of interest arising
out of its relationships with the General Partners and their affiliates as
well as the fact that the General Partners and their affiliates are engaged
in a range of real estate activities. Certain services have been and may
in the future be provided to the Partnership by affiliates of the General
Partners, including insurance brokerage and administrative services. In
general, such services are to be provided on terms no less favorable to the
Partnership than could be obtained from independent third parties and are
otherwise subject to conditions and restrictions contained in the
Partnership Agreement. The Partnership Agreement permits the General
Partners and their affiliates to provide services to, and otherwise deal
and do business with, persons who may be engaged in transactions with the
Partnership, and permits the Partnership to borrow from, purchase goods and
services from, and otherwise to do business with, persons doing business
with the General Partners or their affiliates. The General Partners and
their affiliates may be in competition with the Partnership or its
investment properties under certain circumstances, including for tenants
for properties and/or for the sale of properties. Because the timing and
amount of cash distributions and profits and losses of the Partnership may
be affected by various determinations by the General Partners under the
Partnership Agreement, including whether and when to sell (or consent to
the sale of) investment property, the establishment and maintenance of
reasonable reserves, the timing of expenditures and the allocation of
certain tax items under the Partnership Agreement, the General Partners may
have a conflict of interest with respect to such determinations. The
General Partners and their affiliates may also have a conflict of interest
with respect to matters relating to the term loan notes and the demand
notes payable to JMB, including, among other things, the assessment by JMB
of default interest and the remedies available to JMB in the event of a
default under any of the notes. Reference is made to the discussions under
"Investment in Unconsolidated Venture" and "Notes Payable to an Affiliate"
in the Notes for further information concerning the term loan and demand
notes.

The names, current positions and length of service therein of the
director and the executive officers of the Corporate General Partner of the
Partnership are as follows:

SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 03/26/84
Neil G. Bluhm Vice President 03/26/84
Gary Nickele Vice President 12/18/90
Patrick J. Meara President and Director 12/22/00
H. Rigel Barber Vice President 03/26/84
Gailen J. Hull Vice President 03/26/84

There is no family relationship among any of the foregoing director or
officers. The foregoing director has been elected to serve a term until
the annual meeting of the Corporate General Partner to be held on
August 13, 2002. All of the foregoing officers have been elected to serve
terms until the first meeting of the Board of Directors held after the
annual meeting of the Corporate General Partner to be held on August 13,
2002. There are no arrangements or understandings between or among any of
said director or officers and any other person pursuant to which any
director or officer was elected as such.

The foregoing director and officers are also officers and/or directors
of JMB. JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII") and Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV") and the managing general partner of JMB
Income Properties, Ltd.-V ("JMB Income-V"). JMB is also the sole general
partner of the associate general partner of Carlyle-XIII and Carlyle-XIV.

The foregoing director and officers are also officers and/or directors
of various affiliated companies of JMB. Certain of such officers are also
partners, directly or indirectly, in the associate general partners in the
Partnership, Carlyle-XIII and Carlyle-XIV.

The business experience during the past five years of each such
director and officer of the Corporate General Partner of the Partnership
includes the following:

Judd D. Malkin (age 64) is Chairman, a director and Chief Financial
Officer of JMB and an officer and/or director of various JMB affiliates.
He is also an individual general partner of JMB Income-V. Mr. Malkin has
been associated with JMB since October, 1969. He is also a director of
Chisox Corporation, which is the general partner of a limited partnership
that owns the Chicago White Sox, a Major League Baseball team, and a
director of CBLS, Inc., which is the general partner of the general partner
of a limited partnership that owns the Chicago Bulls, a National Basketball
Association team. Mr. Malkin was also Co-Chairman of the Board of
Directors of Urban Shopping Centers, Inc. from its inception in 1993 until
November 2000.

Neil G. Bluhm (age 64) is President and a director of JMB and an
officer and/or director of various JMB affiliates. He is also 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. He
was also Co-Chairman of the Board of Directors of Urban Shopping Centers,
Inc. from its inception in 1993 until November 2000. Mr. Bluhm is a
member of the Bar of the State of Illinois.

Gary Nickele (age 49) is Executive Vice President and General Counsel
of JMB and an officer and/or director of various JMB affiliates. Mr.
Nickele 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.

Patrick J. Meara (age 39) is a Senior Vice President of JMB. Prior to
becoming President and Director of the Corporate General Partner, Mr. Meara
was a Vice President of the Corporate General Partner from August 8, 2000
to December 22, 2000. He is also an officer and/or director of various
other JMB affiliates. He has been associated with JMB, JMB Institutional
Realty Corporation or their affiliates since 1987. Mr. Meara is a
Certified Public Accountant.

H. Rigel Barber (age 53) is Executive Vice President and Chief
Executive Officer of JMB and an officer of various JMB affiliates.
Mr. Barber 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.

Gailen J. Hull (age 53) is Senior Vice President of JMB and an officer
of various JMB affiliates. Mr. Hull 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.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no officers or directors. The General Partners
are entitled to receive a share of cash distributions, when and as cash
distributions are made to the Holders of Interests, and a share of profits
or losses as described in the Notes. No such cash distributions were paid
to the General Partners in 2001, 2000 or 1999. The General Partners were
allocated aggregate profits for tax purposes of $204,707 from the
Partnership in 2001. Such allocation of profits reduces the deficit
balances in the capital accounts of the General Partners and an obligation
under the terms of the Partnership Agreement to make capital contributions
in the amount of the deficit balances in their capital accounts (determined
for Federal income tax purposes) upon termination of the Partnership.

The Partnership is permitted to engage in various transactions
involving affiliates of the Corporate General Partner of the Partnership,
as described under the captions "Compensation, Fees and Other Payments" at
pages 19-21, and "Management" at pages 31-38 of the Private Placement
Memorandum, which descriptions are hereby incorporated herein by reference
to Exhibit 99.1 to this annual report. Such transactions may involve
conflicts of interest for the General Partners or their affiliates,
including, among others, those discussed in Item 10. Various relationships
of the Partnership to the Corporate General Partner (and its director and
executive officers) and its affiliates are also set forth above in Item 10.

The General Partners of the Partnership or their affiliates may be
reimbursed for their direct expenses and out-of-pocket expenses relating to
the administration of the Partnership and operation of the Partnership's
real property investments. No such expenses were reimbursed to the General
Partners during 2001.

The General Partners and their affiliates are entitled to
reimbursements of salary and salary related expenses for legal, accounting
and certain other services. Such reimbursements will not exceed the lesser
of the actual cost of such services or the amount which the Partnership
would be required to pay independent parties for comparable services. For
2001, an affiliate of the General Partners was entitled to reimbursements
for such expenses in the amount of $12,286 of which $5,334 was payable at
December 31, 2001.

As of December 31, 2001, JMB has advanced approximately $12,375,000,
under the original demand note, which reflects the principal and interest
payments made related to a term loan modification in prior years and
advances to pay operating costs of the Partnership. Interest accrues on
these advances at the annual rate of prime (as such prime rate changes from
time to time) plus 1% (5.75% at December 31, 2001) and payment is deferred.

The demand note allows a maximum principal sum of a specified amount.

JMB's term loans to the Partnership had a maturity date of
December 31, 1998. Effective January 3, 2001, the Partnership and JMB
agreed to extend the maturity date of the term notes to January 2, 2006 and
otherwise to follow literally the various terms of the notes. As a result,
the parties agreed that the Partnership would be required to pay default
interest on each of the three term loan notes (at the prime rate plus 3%
per annum) for the period from the maturity date of December 31, 1998 to
January 3, 2001, the effective date on which JMB and the Partnership agreed
to extend each of the notes. Accordingly, incremental interest cost
relating to the default interest rate aggregating approximately $7.7
million was recorded as expense in the year ended December 31, 2000. Under
the extended notes, interest accrues under the same terms as applicable to
the term loan notes prior to December 31, 1998. Interest is due and
payable monthly on the LIBOR Note with the outstanding principal due and
payable on January 2, 2006. All principal and interest on the other term
loan notes (including the note representing the interest rate swap payment)
are due and payable on January 2, 2006. Further, all outstanding interest
as of December 31, 2000 on the LIBOR Note (approximately $10.8 million) was
due and payable immediately. The Partnership issued a new demand note
payable to JMB, bearing interest at the prime rate (as such prime rate
changes from time to time) plus 1% (5.75% at December 31, 2001) per annum
with interest accruing and compounding quarterly. Through December 31,
2001, JMB has advanced approximately $12,240,000 to the Partnership
pursuant to the new demand note. The Partnership used the advances to pay
the outstanding interest on the LIBOR Note through December 31, 2000 of
approximately $10,845,000 and to pay accrued interest on the LIBOR Note
from January 1, 2001 through December 31, 2001 of approximately $1,395,000.

Accrued interest on the demand notes and term loan notes was approximately
$18,064,000, $27,704,000 and $15,982,000 at December 31, 2001, 2000 and
1999, respectively. In the first quarter of 2001, the Partnership made an
interest payment to JMB of $400,000 on the notes.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no significant transactions or business relationships with
the Corporate General Partner, affiliates or their management other than
those described in Items 10, 11 and 12 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 and
Supplementary Data filed with this report).

(2) Exhibits.

3-A. Amended and Restated Agreement of Limited Partnership
of the Partnership is hereby incorporated by
reference to Exhibit 3 to the Partnership's Form 10-K
Report for December 31, 1992 (File No. 0-13545) filed
on March 19, 1993.

3-B. 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 by reference to Exhibit 3-B to
the Partnership's Form 10-Q Report for March 31, 1995
(File No. 0-13545) filed May 11, 1995.

4-A. Loan agreement dated June 27, 1984 between JMB/245
Park Avenue Associates and Continental Illinois
National Bank and Trust Company of Chicago is hereby
incorporated by reference to Exhibit 4-B to the
Partnership's Registration Statement on Form 10 (as
amended) of the Securities Exchange Act of 1934 (File
No. 0-13545) filed on April 29, 1985.

4-B. $16,042,000 Second Amended and Restated Promissory
Note and related documents dated August 1, 1995
between JMB/245 Park Avenue Associates and JMB Realty
Corporation are hereby incorporated herein by
reference to Exhibit 4-U to the Partnership's Form
10-Q Report for September 30, 1995, (File No. 013545)
filed on November 9, 1995.

4-C. $25,000,000 Second Amended and Restated Promissory
Note and related documents dated August 1, 1995
between JMB/245 Park Avenue Associates and JMB Realty
Corporation, are hereby incorporated herein by
reference to Exhibit 4-V to the Partnership's
Form 10-Q Report for September 30, 1995, (File
No. 0-13545) filed on November 9, 1995.

4-D. $2,194,631.25 Amended and Restated Promissory Note
and related documents dated August 1, 1995 between
JMB/245 Park Avenue Associates and JMB Realty
Corporation, are hereby incorporated herein by
reference to Exhibit 4-W to the Partnership's
Form 10-Q Report for September 30, 1995, (File
No. 0-13545) filed on November 9, 1995.

4-E. Amended and Restated Demand Note dated August 1, 1995
between JMB/245 Park Avenue Associates, Ltd. and JMB
Realty Corporation, are hereby incorporated herein by
reference to Exhibit 4-X to the Partnership's
Form 10-Q Report for September 30, 1995, (File
No. 0-13545) filed on November 9, 1995.

4-F. Fourth Amendment to Loan Documents dated August 1,
1995 between JMB/245 Park Avenue Associates, Ltd. and
JMB Realty Corporation detailing amendments to the
term loans, are hereby incorporated herein by
reference to Exhibit 4-Y to the Partnership's
Form 10-Q Report for September 30, 1995, (File
No. 0-13545) filed on November 9, 1995.

4-G. Consent Agreement dated December 29, 1983 from
JMB/245 Park Avenue Associates, Ltd. to Continental
Illinois Bank of Chicago (Continental) detailing the
transactions for which the Partnership would obtain
Continental's consent, are hereby incorporated herein
by reference to Exhibit 4-Z to the Partnership's
Form 10-Q Report for September 30, 1995, (File
No. 0-13545) filed on November 9, 1995.

4-H. Third Amended and Restated Security Agreement dated
August 1, 1995 between JMB/245 Park Avenue
Associates, Ltd. and JMB Realty Corporation, are
hereby incorporated herein by reference to
Exhibit 4-AA to the Partnership's Form 10-Q Report
for September 30, 1995, (File No. 0-13545) filed on
November 9, 1995.

4-I. Amendment No. 1 to $16,042,000 Second Amended and
Restated Promissory Note made effective January 3,
2001 between JMB/245 Park Avenue Associates, Ltd. and
JMB Realty Corporation is hereby incorporated herein
by reference to the Partnership's Report for
March 31, 2001 on Form 10-Q (File No. 0-13545) dated
May 9, 2001.

4-J. Amendment No. 1 to $25,000,000 Second Amended and
Restated Promissory Note made effective January 3,
2001 between JMB/245 Park Avenue Associates, Ltd. and
JMB Realty Corporation is hereby incorporated herein
by reference to the Partnership's Report for
March 31, 2001 on Form 10-Q (File No. 0-13545) dated
May 9, 2001.

4-K. Amendment No. 1 to $2,194,321.25 Amended and Restated
Promissory Note made effective January 3, 2001
between JMB/245 Park Avenue Associates, Ltd. and JMB
Realty Corporation is hereby incorporated herein by
reference to the Partnership's Report for March 31,
2001 on Form 10-Q (File No. 0-13545) dated May 9,
2001.

4-L. Demand Note dated May 7, 2001 between JMB/245 Park
Avenue Associates, Ltd. and JMB Realty Corporation is
hereby incorporated herein by reference to the
Partnership's Report for June 30, 2001 on Form 10-Q
(File NO. 0-13545) dated August 10, 2001.

10-A. Third Amended Joint Plan of Reorganization dated
September 12, 1996 is hereby incorporated herein by
reference to the Partnership's report for
September 31, 1996 on Form 10-Q (File No. 0-13545)
filed on November 8, 1996.

10-B. Limited Liability Company Agreement of JMB 245 Park
Avenue Holding Company, LLC dated as of November 12,
1996 is hereby incorporated by reference to the
Partnership's Report for November 21, 1996 on
Form 8-K (File No. 0-13545) filed on December 6,
1996.

10-C. Amended and Restated Agreement of Limited Partnership
of World Financial Properties, L.P. dated as of
November 21, 1996 is hereby incorporated by reference
to the Partnership's Report for November 21, 1996 on
Form 8-K (File No. 0-13545) filed on December 6,
1996.

10-D. JMB Transaction Agreement dated as of November 21,
1996 is hereby incorporated by reference to the
Partnership's Report for November 21, 1996 on
Form 8-K (File No. 0-13545) filed on December 6,
1996.

10-E. Consent and Substitution of Collateral dated
November 21, 1996 is hereby incorporated herein by
reference to the Partnership's Report for March 31,
1997 on Form 10-Q (File No. 0-13545) filed on May 9,
1997.

21. List of Subsidiaries of the Partnership.

99.1. Pages 19-21 and 31-38 from the Partnership's Private
Place Memorandum dated May 7, 1984 and Article 14
(pages 15-17) of the Partnership's Amended and
Restated Agreement of Limited Partnership are filed
herewith.

(b) No report on Form 8-K has been filed since the beginning of the
last quarter of the period covered by this report.

No annual report or proxy material for the fiscal year 2001 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
Exchange Act of 1934, the Partnership 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

GAILEN J. HULL
By: Gailen J. Hull
Vice President
Date: May 10, 2002

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 Park Avenue, Inc.
Corporate General Partner

PATRICK J. MEARA
By: Patrick J. Meara, President and Director
Principal Executive Officer
Date: May 10, 2002

JUDD D. MALKIN
By: Judd D. Malkin
Principal Financial Officer
Date: May 10, 2002

GAILEN J. HULL
By: Gailen J. Hull, Vice President
Principal Accounting Officer
Date: May 10, 2002

JMB/245 PARK AVENUE ASSOCIATES, LTD.

EXHIBIT INDEX

DOCUMENT
INCORPORATED
BY REFERENCE
-------------
3-A. Amended and Restated Agreement of
Limited Partnership of the
Partnership. Yes

3-B. Amendment to the Amended Limited
Partnership Agreement of Partnership
of JMB/245 Park Avenue Associates, Ltd. Yes

4-A. Loan agreement dated June 27,
1984 between JMB/245 Park Avenue
Associates and Continental Illinois
National Bank and Trust Company of
Chicago. Yes

4-B. $16,042,000 Second Amended and
Restated Promissory Note and
related documents dated August 1,
1995 between JMB/245 Park Avenue
Associates and JMB Realty Corporation Yes

4-C. $25,000,000 Second Amended and
Restated Promissory Note and
related documents dated August 1,
1995 between JMB/245 Park Avenue
Associates and JMB Realty Corporation Yes

4-D. $2,194,631.25 Amended and Restated
Promissory Note and related documents
dated August 1, 1995 between
JMB/245 Park Avenue Associates and
JMB Realty Corporation Yes

4-E. Amended and Restated Demand Note
dated August 1, 1995 between JMB/245
Park Avenue Associates and JMB Realty
Corporation Yes

4-F. Fourth Amendment to Loan Documents
dated August 1, 1995 between JMB/245
Park Avenue Associates, Ltd. and
JMB Realty Corporation Yes

4-G. Consent Agreement dated December 29,
1983 from JMB/245 Park Avenue Associates
to Continental Illinois Bank of
Chicago (Continental) Yes

4-H. Third Amended and Restated Security
Agreement dated August 1, 1995 between
JMB/245 Park Avenue Associates, Ltd.
and JMB Realty Corporation Yes

4-I. Amendment No. 1 to $16,042,000 Second
Amended and Restated Promissory Note
made effective January 3, 2001 between
JMB/245 Park Avenue Associates and
JMB Realty Corporation Yes

DOCUMENT
INCORPORATED
BY REFERENCE
-------------

4-J. Amendment No. 1 to $25,000,000 Second
Amended and Restated Promissory Note
made effective January 3, 2001 between
JMB/245 Park Avenue Associates and
JMB Realty Corporation Yes

4-K. Amendment No. 1 to $2,194,321.25
Amended and Restated Promissory Note
made effective January 3, 2001 between
JMB/245 Park Avenue Associates and
JMB Realty Corporation Yes

4-L. Demand Note dated May 7, 2001 between
JMB/245 Park Avenue Associates and
JMB Realty Corporation Yes

10-A. Third Amended Joint Plan of Reorganiza-
tion dated September 12, 1996 Yes

10-B. Limited Liability Company Agreement of
JMB 245 Park Avenue Holding Company, LLC
dated as of November 12, 1996. Yes

10-C. Amended and Restated Agreement of
Limited Partnership of World Financial
Properties dated as of November 21, 1996 Yes

10-D. JMB Transaction Agreement dated as of
November 21, 1996 Yes

10-E. Consent and Substitution of Collateral
dated November 21, 1996 Yes

21. List of Subsidiaries of the Partnership. No

99.1. Pages 19-21 and 31-38 from the
Partnership's Private Place Memorandum
dated May 7, 1984 and Article 14
(pages 15-17) of the Partnership's
Amended and Restated Agreement of
Limited Partnership No