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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the year ended December 31, 2002
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File Number 0-7798
FIRST WILKOW VENTURE, A LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
Illinois 36-6169280
(State of Organization) (I.R.S. Employer Identification No.)
180 North Michigan Avenue, Chicago, Illinois 60601
(Address of Principal Executive Offices)
Registrant's Telephone Number, including area code: (312) 726-9622
Securities Registered Pursuant to Section 12(h) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Units of Partnership Interest, Exchange Value $129
(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 | |
The Registrant's units of limited partnership interest are not traded in a
regulated market. The restrictions on the sale, transfer, assignment or pledge
of partnership units are described in the Agreement of Limited Partnership of
the Registrant.
PART I
ITEM 1 - BUSINESS
ORGANIZATION
First Wilkow Venture (the "Registrant") is a limited partnership composed
of 394 limited partners and two general partners who are Marc R. Wilkow and
Clifton J. Wilkow.
Marc R. Wilkow and Clifton J. Wilkow have been engaged in real estate
activities for over 20 years as officers of M&J Wilkow, Ltd., a closely held
corporation, and certain affiliated companies which have been involved (through
their predecessors in interest) in the acquisition, sale, development, leasing,
operation, brokerage and management of real estate since 1939.
Marc R. Wilkow is also president and sole director and stockholder of the
law firm of Wilkow & Wilkow, P.C., which is the general counsel for the
Registrant.
All of the above entities, including the Registrant, have their principal
offices at 180 North Michigan Avenue in Chicago, Illinois 60601. M&J Wilkow,
Ltd. and its affiliated companies have a combined administrative staff of 46 and
ancillary clerical, office and maintenance staff of approximately 44.
DESCRIPTION OF BUSINESS
The Registrant owns outright or otherwise has participatory ownership
interests in real property for investment purposes. At December 31, 2002, there
are 21 properties in which the Registrant has interests, divided among
residential, commercial and industrial buildings and shopping centers. Nineteen
of the properties are neither owned nor leased by the Registrant directly, but
are owned by the Registrant in participation with other partnerships, some of
which the Registrant has contracted for a priority position with respect to the
receipt of cash distributions. These properties break down into the following
categories: one is a residential project; twelve are shopping centers; five are
office buildings; and one is a real estate investment trust. The remaining two
properties are owned and operated by the Registrant as office buildings.
2
CHANGES IN PROPERTIES
During the calendar year ended December 31, 2002, certain of the property
investments held by the Registrant underwent the changes described below:
(a) Purchases:
On December 17, 2002, the Registrant invested $635,000 to obtain a 100%
interest in Centennial FWV, LLC, which has a 21.17% undivided interest in
Centennial Village Phase II, a shopping center in Roswell, Georgia.
(b) Sales:
On April 10, 2002, M&J/Retail Limited Partnership received a liquidating
distribution from Northlake Tower Limited Partnership in the amount of $645,986,
resulting in a loss on disposition of investment in partnership of $104,014.
This loss was offset by over $600,000 in gains taken as a result of the 1997
refinancing.
On August 6, 2002, the underlying unimproved land held by Rosemont 28
Limited Partnership was old for $475,000. The Registrant received cash proceeds
of $93,455, resulting in a loss to Registrant of $407,062.
On November 26, 2002, Mid Oak Plaza Shopping Center was sold for
$6,025,000. M&J/Mid Oak Limited Partnership is due to receive a liquidating
distribution in 2003 for the aount of $192,000, which will result in a gain on
disposition of $77,284 in 2003.
(c) Proposed Purchases and Sales:
None
(d) Declined Purchases:
None
3
COMPETITIVE POSITION
In general, none of the Registrant's properties are immune from the
pressures of competition. There are competing properties serving the
geographical areas in which each of the Registrant's properties are located. The
amount of revenue generated annually from these properties is very much
dependent upon national economic conditions generally and upon local economic
conditions specifically, among the latter of which are the availability and
demand for office space, commercial space and apartment units, as the case may
be. In general, the Registrant may incur substantial costs, from time to time,
at its commercial properties, in connection with either the renewal of existing
leases or the marketing of vacant space to new tenants. These costs may include
the costs of improving and upgrading space to be competitive, as well as the
payment of brokerage commissions.
4
ITEM 2 - PROPERTIES
The Registrant has an ownership interest in the following properties as of
December 31, 2002:
PROPERTIES INVOLVING PARTICIPATIONS
DUKE REALTY LIMITED PARTNERSHIP
On December 2, 1994, the Registrant's interests in three partnerships were
redeemed for 50,251 partnership units in Duke Realty Limited Partnership, the
operating partnership ("UPREIT") of more than 108 million square feet of
property. The UPREIT's sole general partner is Duke Realty Corporation (formerly
Duke Realty Investments, Inc.), a real estate investment trust ("REIT") listed
on the New York Stock Exchange. The partnership units in the UPREIT are
convertible, on a one-for-one basis, to shares of common stock to the REIT.
The Registrant on April 15, 1997, converted 25,000 units in Duke Realty
Limited Partnership to 25,000 shares of common stock of Duke Realty Corporation.
The stock was sold in two blocks of 12,500 shares on June 12, 1997, and July 21,
1997, for total proceeds of $1,028,212, resulting in a gain of $794,962.
On August 18, 1997, a 2-for-1 stock and unit split occurred, resulting in
an additional 25,251 units of Duke Realty Limited Partnership being issued to
the Registrant. The Registrant thus held 50,502 units in Duke Realty Limited
Partnership at December 31, 2002.
ROSEMONT 28 LIMITED PARTNERSHIP (UNIMPROVED LAND IN ORLANDO, FLORIDA)
In June 1985, the Registrant invested $275,000 to obtain a 22.92% interest
in Rosemont 28 Limited Partnership, which owned 11.25 acres of unimproved land
held for development in Orlando, Florida. Additional investments of $485,618
have been funded to cover the Registrant's pro rata share of the costs of
carrying the property and paying off the mortgage loan in full. On August 6,
2002, the underlying unimproved land held by Rosemont 28 Limited Partnership was
sold for $475,000. The Registrant received cash proceeds of $93,455, resulting
in a loss to Registrant of $407,062.
M&J/GROVE LIMITED PARTNERSHIP (THE GROVE OFFICE PARK)
The Grove Office Park consists of three two-story office buildings lying
on six acres of land located in Wheaton, Illinois. The complex contains 105,454
square feet of prime office space with parking available for 343 cars.
5
Through December 31, 1995, the Registrant had invested a total of $931,000
to acquire 981 limited partnership units (a 23.08% interest) in M&J/Grove
Limited Partnership ("M&J/Grove"), the partnership that was formed to acquire
the subject property. In addition, the Registrant owns seven units (a 3.02%
interest) in Wilkow/Grove Partners Limited Partnership, which has a 5.87%
interest in M&J/Grove. As a Class A limited partner, the Registrant is entitled
to a cumulative cash flow priority of 8% per annum.
On July 1, 1996, the Registrant invested an additional $98,100 in
M&J/Grove in connection with the purchase of 981 Call Units, increasing its
interest in the investment to 27.34%. The Call Unit holders are entitled to a
cumulative cash flow priority of 12% per annum. Upon sale or refinancing, the
Call Unit holders will receive the first $367,500 of available net proceeds pro
rata. Any proceeds remaining thereafter will be split 25% to the holders of the
Call Units and 75% to the General and Class A Limited Partners. The proceeds of
the M&J/Grove capital call were primarily used for a mortgage debt restructuring
of the Grove Office Park. The original $8,000,000 mortgage was paid off at a
discounted amount of $5,600,000 and replaced with a new first mortgage loan in
the amount of $5,500,000, bearing interest at the fixed rate of 8.55% per annum
for five years. In March 2001, the loan was refinanced. The property is
encumbered with a mortgage loan of $6,500,000, bearing interest at 6.6875% and
maturing in April 2011.
L-C OFFICE PARTNERSHIP IV (DOVER FARMS APARTMENTS)
The Registrant holds a 74.92% interest in L-C Office Partnership IV,
which, through two investment partnerships, has a 53.9% effective interest in
M&J/Dover Farms Limited Partnership, which owns Dover Farms Apartments, a 300
unfurnished one- and two-bedroom apartment complex located in North Royalton,
Ohio.
On December 18, 2002, M&J/Dover Farms Limited Partnership admitted CAPREIT
of Dover Farms, LLP as a partner. At this time, the partnership's name was
changed to Dover Farms LP. As a result of the admittance, L-C Office Partnership
IV's effective interest in Dover Farms LP was reduced to 5.4%, with the
explicit proviso that, through its interest in DFA, LLC, L-C Office Partnership
IV will benefit from a cash flow and residual proceed preference.
6
The Registrant owned limited partnership interests in several partnerships
whose sole asset was an interest in Lake Cook Office Development Building IV
Limited Partnership, one of the investment partnerships referred to above. On
December 31, 1999, the Registrant received an interest in Lake Cook Office
Development Building IV Limited Partnership in liquidation of these
partnerships, with the exception of TOP Investors Limited Partnership. The
result of this transaction was that the Registrant now owns a direct ownership
interest in Lake Cook Office Development Building IV Limited Partnership of
..64%.
FIRST CANDLEWICK ASSOCIATES
The Registrant owns an 11.96% interest (55 units) in First Candlewick
Associates, which holds multiple partnership and debenture investments.
SECOND WILKOW VENTURE
The Registrant owns a 4.89% interest (197 units) in Second Wilkow Venture,
which holds multiple partnership and debenture investments.
M&J/MID OAK LIMITED PARTNERSHIP
On August 26, 1997, the Registrant invested $70,000 to obtain a 35%
interest in M&J/Mid Oak Limited Partnership, which has a 9% interest in Mid Oak
Plaza LLC, which owned Mid Oak Plaza Shopping Center located in Midlothian,
Illinois. Mid Oak Plaza Shopping Center was sold on November 26, 2002, for a
purchase price of $6,025,000. M&J/Mid Oak Limited Partnership is due to receive
a distribution for the amount of $192,000, which will result in a gain on
disposition of $77,284 in 2003.
M&J/EDEN PRAIRIE LIMITED PARTNERSHIP
On April 10, 1998, the Registrant invested $64,000 to obtain a 26.44%
ownership in M&J/Eden Prairie Limited Partnership, which has a 10% interest in
Eden Prairie LLC, which acquired a 70,689 square foot shopping center in Eden
Prairie, Minnesota. On September 27, 1999, an additional investment of $76,174
was made, increasing the Registrant's ownership to 42.98%.
The property was acquired with a $6,950,000 mortgage bearing interest at
7.2% per annum. The term of the loan is ten years.
7
M&J/NCT LOUISVILLE LP
On September 29, 1999, the Registrant invested $300,000 to obtain a 23.47%
interest in M&J/NCT Louisville LP, which has a 10% interest in CMJ/NCT
Louisville LLC. CMJ/NCT Louisville LLC is a 50% owner of NCT Louisville LLC,
which was formed to acquire National City Tower, a 712,533 square foot office
tower located in Louisville, Kentucky.
The property was acquired with a $45,775,000 note bearing interest at
7.43% per annum and an additional note of $7,500,000 bearing interest at 7.66%
per annum. The term of each note is five years.
ARLINGTON LLC (ANNEX OF ARLINGTON HEIGHTS)
On September 29, 1999, the Registrant converted its loan receivable of
$1,226,000 to a 30.65% interest in Arlington LLC, which owns Annex of Arlington
Heights, a 197,110 square foot community center located in Arlington Heights,
Illinois.
In addition, the Registrant posted a letter of credit in the amount of
$280,000 with the mortgagee as credit enhancement in exchange for an additional
7% interest in Arlington LLC. On April 26, 2001, the Registrant invested
$280,000 to release the letter of credit held by the mortgagee as credit
enhancement for no additional interest in Arlington LLC. In March 2002, the
property was refinanced. The property is encumbered with a mortgage of
$18,250,000, bearing interest at 7.85% and maturing in April 2012.
M&J/Retail Limited Partnership also holds an 8.75% interest in Arlington
LLC (see Page 13).
M&J/PROSPECT CROSSING LIMITED PARTNERSHIP
On February 24, 2000, the Registrant invested $530,000 to obtain an 11.21%
interest in M&J/Prospect Crossing Limited Partnership, which owns Centre at Lake
in the Hills, a shopping center located in Lake in the Hills, Illinois. The
property is encumbered with two mortgages. The first mortgage of $10,350,000
bears interest at 7.25% and matures in January 2008. The second mortgage of
$1,500,000 bears interest at 8% and matures in March 2008.
M&J/Retail Limited Partnership also holds a 10.58% interest in
M&J/Prospect Crossing Limited Partnership (see Page 13).
8
M&J/CLARK STREET, LLC
On August 14, 2000, the Registrant invested $577,000 to obtain a 17.48%
interest in M&J/Clark Street, LLC, which has a 20.00% interest in 20 South Clark
Street, LLC, which owns 20 South Clark, an office building located in Chicago,
Illinois. The property is encumbered with a mortgage of $24,831,000, bearing
interest at 9.00% and maturing August 2010.
M&J/BATTERY, LLC
On May 31, 2001, the Registrant invested $300,000 to obtain a 15.79%
interest in M&J/Battery, LLC, which has a 14.50% interest in 600 Battery Street,
LLC, which owns 600 Battery Street, an office building in San Francisco,
California. The property is encumbered with a mortgage of $26,100,000, bearing
interest at 7.625% and maturing May 2011.
CENTENNIAL FWV, LLC
On December 17, 2002, the Registrant invested $635,000 to obtain a 100%
interest in Centennial FWV, LLC, which has a 21.17% undivided interest in
Centennial Village Phase II, a shopping center in Roswell, Georgia. The property
is encumbered with a mortgage of $13,000,000, bearing interest at 5.90% and
maturing January 2013.
9
PROPERTIES INVOLVING PROMISSORY NOTES
RAMADA INN & SUITES, ORLANDO, FLORIDA
At December 31, 2002, the Registrant has a loan receivable in the
principal amount of $731,124 from The Villas at Monterey Limited Partnership and
Tango Bay of Orlando, L.C.
The property was sold for $5,985,000 in 2001 on the installment basis with
a promissory note secured by the property. On October 1, 2002, the maker of the
note failed to make a scheduled payment, thereby defaulting on the note, and
legal action is currently being pursued. Due to the fact that the value of the
asset exceeds the Registrant's receivable, a write-down of the receivable is not
deemed necessary at this time.
PROPERTIES OWNED AND OPERATED BY REGISTRANT OR CONSOLIDATED SUBSIDIARIES
180 NORTH MICHIGAN, CHICAGO, ILLINOIS
The leasehold estate to this commercial office building on Chicago's
prestigious Michigan Avenue was acquired in 1968 at a price of $6,550,000, of
which $5,250,000 comprised mortgage financing. The property was constructed in
1926 and completely renovated in 1967 at a cost in excess of $3,000,000. In
1973, the Registrant acquired the fee simple estate of 18,649 square feet of
land for $1,600,000. In November 1986, the leasehold and fee simple estates were
merged and the property was refinanced.
In July 1998, the property was refinanced. The property is encumbered with
a first mortgage loan of $7,300,000 bearing interest at an annual rate of 7.13%.
The loan is to be amortized over a 30-year schedule, with a balloon payment of
the unpaid principal balance due on September 1, 2008.
10
M&J/RETAIL LIMITED PARTNERSHIP
The Registrant originally invested a total of $3,995,000 to obtain a
56.97% interest in M&J/Retail Limited Partnership ("M&J/Retail"). The Registrant
also owns three limited partnership units (.75% interest) in Wilkow/Retail
Partners Limited Partnership, which has a 5.63% interest in M&J/Retail. On July
1, 1995, the Registrant sold 300 Class A units of M&J/Retail for a total of
$314,800, resulting in a gain of $137,245 and reducing its ownership in this
partnership from 56.97% to 52.75%.
M&J/Retail owns a 100% interest in Evergreen Commons, a retail shopping
center in Chicago, Illinois. The property is encumbered with a mortgage of
$530,000, bearing interest at 7.88% and maturing in April 2004.
The Registrant is entitled to a cumulative cash flow priority in the
amount of 9% per annum on its investment.
Northlake Tower Limited Partnership
On July 28, 1995, M&J/Retail acquired a majority interest in Northlake
Tower Limited Partnership ("Tower") by contributing $1,112,677 of initial
capital. Additional contributions through December 31, 1999, of $116,837
increased the total capital investment to $1,229,514. Tower owns a 17.08% share
of BSRT/M&J Northlake Limited Partnership ("BSRT/M&J"), which purchased a
leasehold interest in the Northlake Tower Festival Shopping Center for
$16,989,000 on July 28, 1995. The purchase of this property was made subject to
a $10,350,000 first mortgage loan bearing interest only at the fixed rate of
8.5% per annum for ten years. On November 18, 1997, this loan was refinanced
with a first mortgage of $17,600,000 with principal and interest payments based
on a 30-year amortization and an interest rate of 7.64%. A portion of the
refinancing proceeds were used to make distributions to the partners of
BSRT/M&J, with M&J/Retail ultimately receiving a distribution of $1,166,745. On
April 10, 2002, M&J/Retail received a liquidating distribution from Northlake
Tower Limited Partnership in the amount of $654,986, resulting in a loss on
disposition of investment in partnership of $104,014. This loss was offset by
over $600,000 in gains taken as a result of the 1997 refinancing.
11
M&J/Crossroads Limited Partnership
On October 27, 1995, M&J/Retail invested a total of $297,000 to acquire a
46.41% interest in M&J/Crossroads Limited Partnership ("M&J/Crossroads").
M&J/Crossroads purchased a 330,505 square foot shopping center known as
Crossroads of Roseville for $19,250,000. The property is currently encumbered
with a mortgage of $16,722,960, bearing interest at 7.23% and maturing in
January 2008. The center is located on 19.9 acres of land in Roseville,
Minnesota. As a result of a refinancing of the first mortgage loan on December
31, 1997, M&J/Retail received a distribution on January 10, 1998, of $501,065.
M&J/Clarkfair Limited Partnership
In 1998, M&J/Retail invested $415,000 to acquire a 70.90% investment in
M&J/Clarkfair Limited Partnership, which has a 9% interest in Clarkfair LLC.
Clarkfair LLC was the sole owner of two limited liability companies, namely
Marketfair North LLC and Shops at Clark's Pond LLC, which were formed to acquire
the following described properties:
Marketfair North - a 136,989 square foot shopping center in
Clay, New York
Shops at Clark's Pond - a 208,325 square foot shopping center in
South Portland, Maine
In addition to the above cash contributions, M&J/Retail has posted two
letters of credit totaling $500,000 as additional collateral with the mortgagee
of Marketfair North. These letters of credit, which expire on March 15, 2004,
renew automatically until the underlying obligations are satisfied. The general
partner of M&J/Clarkfair Limited Partnership has indemnified M&J/Retail for 10%,
or $50,000, of these letters of credit. In the event that the mortgagee is
entitled to liquidate the letters of credit, M&J/Retail will be required to fund
$450,000 of the obligation. At that time, M&J/Retail's interest in M&J/Clarkfair
Limited Partnership will increase from 70.9% to 79.72%.
On May 31, 2000, Clarkfair LLC distributed to its members its interest in
Shops at Clark's Pond LLC, leaving only an investment in Marketfair North LLC.
As a result of this transaction, M&J/Clarkfair Limited Partnership received a
33.50% interest in Shops at Clark's Pond LLC.
12
Fulcrum, LLC
On May 31, 2000, M&J/Retail invested $1,133,750 to obtain a 53.13%
interest in Fulcrum, LLC, which has a 65.65% interest in Shops at Clark's Pond
LLC.
Arlington, LLC
On September 29, 1999, M&J/Retail invested a total of $350,000 to obtain
an 8.75% interest in Arlington LLC, which owns Annex of Arlington Heights, a
197,110 square foot community center located in Arlington Heights, Illinois.
The property was acquired with an $11,616,888 mortgage bearing interest at
9.65% per annum. In March 2002, the property was refinanced. The property is
encumbered with a mortgage of $18,250,000, bearing interest at 7.85% and
maturing in April 2012.
The Registrant also holds a 37.65% interest in Arlington LLC (see Page 8).
M&J/Prospect Crossing Limited Partnership
On February 24, 2000, M&J/Retail invested $500,000 to obtain a 10.58%
interest in M&J/Prospect Crossing Limited Partnership, which owns Centre at Lake
in the Hills, a shopping center located in Lake in the Hills, Illinois. The
property is encumbered with two mortgages. The first mortgage of $10,350,000
bears interest at 7.25% and matures in January 2008. The second mortgage of
$1,500,000 bears interest at 8% and matures in March 2008.
Yorkshire Plaza Investors, LLC
On April 10, 2000, M&J/Retail invested $243,000 to obtain a 26.01%
interest in Yorkshire Plaza Investors, LLC, which has a 20.00% interest in
Yorkshire LLC, which owns Yorkshire Plaza, a shopping center located in Aurora,
Illinois. The property is encumbered with a mortgage of $18,680,000, bearing
interest at 8.31% and maturing May 2005.
M&J/Bayfair 580, LLC
On June 6, 2001, M&J/Retail invested a total of $371,000 to obtain an
11.24% interest in M&J/Bayfair 580, LLC, which has a 99.00% interest in Bayfair
580, LLC, which owns Bayfair Mall, a shopping center located in San Leandro,
California. The property is encumbered with a mortgage of $24,000,000, bearing
interest at a variable rate of 300 basis points over the 30-day LIBOR and
maturing July 2003.
NAPERVILLE OFFICE COURT, NAPERVILLE, ILLINOIS
In August 1986, pursuant to the terms of an exchange agreement, the
Registrant acquired the Naperville Office Court for $4,830,000.
13
On April 6, 1988, the Registrant procured a $3,000,000 first mortgage loan
on the property which bears interest at the rate of 9.75% per annum and was due
in May 1998. During 1993, the Registrant exercised an option to adjust the
interest rate to 8.875%.
On June 8, 1998, the property was refinanced. The principal amount of the
new first mortgage loan is $4,500,000 bearing interest at an annual rate of
7.13%. The loan is to be amortized over a 30-year schedule, with a balloon
payment of the unpaid principal balance due on August 1, 2008. The existing
mortgage loan of $2,690,185 was paid off, resulting in net refinancing proceeds
of $1,642,123.
Naperville Office Court is located at 1801 - 1813 Mill Street in
Naperville, Illinois. Consisting of four single-story office buildings, the
property rests on 5.5 acres, contains 66,405 net rentable square feet and
provides parking space for 300 automobiles.
209 WEST JACKSON, CHICAGO, ILLINOIS
On August 24, 1995, the Registrant acquired a 59.44% undivided interest in
209 West Jackson, a 142,996 square foot office building located in downtown
Chicago, in exchange for its 57.67% undivided interest in Tango Bay Suites
(Tango Bay Suites is now Ramada Inn & Suites). The 209 West Jackson building was
subject to a first mortgage of $10,000,000 and an additional $5,661,000 note
secured by the first mortgage, both interest only at General Electric Capital
Corporation's commercial paper rate plus 3.25% per annum.
14
On October 22, 1999, both the ownership and the debt were restructured.
The Registrant and its tenants in common rolled up their interests into a new
limited liability company, 209 West Jackson LLC. In addition to the interest,
each cotenant was responsible for a capital infusion, of which the Registrant's
share was $710,000, to obtain a 71% interest in the newly formed 209 West
Jackson LLC. The Registrant was responsible for additional equity contributions
of $852,000, which have been fully funded. Through a partial paydown of the
principal balance and approximately $5,000,000 of debt forgiveness by the
property's lender, General Electric Capital Corporation, the property's debt was
reduced to $10,000,000 and separated into two notes. The first note is for
$8,600,000, and the second note, a line of credit, is for $1,400,000. Funds in
the amount of $804,588 have been drawn on the second note as of December 31,
2002. The first note matures on October 15, 2004, and bears interest at 8.95%
per annum, payable monthly. The second note also matures on October 15, 2004,
but bears interest at a variable rate.
15
ITEM 3 - LEGAL PROCEEDINGS
Legal proceedings pending involve either suits which have been instituted
by the Registrant or its agents against tenants who are in default of their
lease obligations or the defense of alleged personal injury claims incidental to
the operation of properties accessible to the general public. All of the
personal injury claims are covered by insurance. It is not anticipated that the
outcome of any of these proceedings, if unfavorable to the Registrant, will have
a materially adverse impact on the Registrant.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
16
PART II
ITEM 5 - MARKET FOR REGISTRANT'S CAPITAL UNITS AND RELATED SECURITY
HOLDER MATTERS
The number of holders of record of equity securities of the Registrant as
of December 31, 2002, was approximately:
Title of Class Number of Record Holders
-------------- ------------------------
Unit of Limited Partnership Interest 394
The Registrant's units of limited partnership interest are not actively
traded in a regulated market. The restrictions on the sale, transfer, assignment
or pledge of partnership units are described in the Agreement of Limited
Partnership of the Registrant as amended.
17
ITEM 6 - SELECTED FINANCIAL DATA
December 31,
------------
2002 2001 2000 1999
-------- --------- -------- ---------
OPERATING RESULTS
(IN THOUSANDS)
Total Revenue $ 8,588 $ 10,687 $16,119 $14,273
Net Income (Loss)* $ (389) $ (216) $ 2,284 $ 4,477
PARTNERSHIP UNIT DATA
(PER PARTNERSHIP UNIT)
Net Income (Loss):
General Partner* $ (2.28) $ (1.26) $ 13.36 $ 26.19
Limited Partner* (2.28) (1.26) 13.36 26.19
Cash Distributions Paid:
General Partner $ 6.30 $ 6.75 $ 4.00 $ 3.35
Limited Partner 6.30 6.75 4.00 3.35
* Includes gain (loss) on sale of real estate properties
December 31,
------------
2002 2001 2000 1999
-------- --------- -------- ---------
FINANCIAL POSITION DATA
Total Assets (In thousands) $ 38,692 $ 41,361 $ 49,725 $ 58,423
Net Book Value Per Unit $ 75.87 $ 84.44 $ 92.45 $ 83.09
18
ITEM 7 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS - 2002 COMPARED TO 2001
For the year ended December 31, 2002, the loss from partnerships was $105,735
compared to income of $101,498 for the comparative period of 2001. The decrease
in 2002 is primarily due to the loss on the sale of the underlying unimproved
land held by Rosemont 28 Limited Partnership, which was reduced by income from
other partnerships.
For the year ended December 31, 2002, the Registrant loaned to an investment
partnership in which it has a substantial equity interest the following amounts:
Advances Collections Write-offs Total Loan
Year Ended Year Ended Year Ended Balance at
December 31, December 31, December 31, December 31,
2002 2002 2002 2002
------------ ------------- ------------ ------------
M&J/Dover Limited Partnership $ 36,038 $ -- $ -- $ 123,638
The Registrant made a distribution to its partners this year as follows:
Date Amount Per Unit
---- ------ --------
January 10 $ 170,916 $ 1.00
April 10 529,841 3.10
July 10 188,007 1.10
October 10 188,007 1.10
On April 10, 2002, M&J/Retail Limited Partnership received a liquidating
distribution from Northlake Tower Limited Partnership in the amount of $645,986,
resulting in a loss on disposition of investment in partnership of $104,014.
This loss was offset by over $600,000 in gains taken as a result of the 1997
refinancing.
On August 6, 2002, the underlying unimproved land held by Rosemont 28 Limited
Partnership was sold for $475,000. The Registrant received cash proceeds of
$93,455, resulting in a loss to Registrant of $407,062.
On November 26, 2002, Mid Oak Plaza Shopping Center was sold for $6,025,000.
M&J/Mid Oak Limited Partnership is due to receive a liquidating distribution in
2003 for the amount of $192,000, which will result in a gain on disposition of
$77,284 in 2003.
On December 17, 2002, the Registrant invested $635,000 to obtain a 100% interest
in Centennial FWV, LLC, which has a 21.17% undivided interest in Centennial
Village Phase II, a shopping center in Roswell, Georgia.
On December 18, 2002, M&J/Dover Farms Limited Partnership admitted CAPREIT of
Dover Farms, LLP as a partner. At this time, the partnership's name was changed
to Dover Farms LP. As a result of the admittance, L-C Office Partnership IV's
effective interest in Dover Farms LP was reduced to 5.4%, with the explicit
proviso that, through its interest in DFA, LLC, L-C Office Partnership IV will
benefit from a cash flow and residual proceed preference.
19
RESULTS OF OPERATIONS - 2001 COMPARED TO 2000
For the year ended December 31, 2001, the income from partnerships was $101,498
compared to a loss of $5,883 for the comparative period of 2000. The increase in
2001 is due to income from investments that generated losses in 2000, primarily
M&J/Grove Limited Partnership and Fulcrum, LLC.
For the year ended December 31, 2001, the Registrant loaned to an investment
partnership in which it has a substantial equity interest the following amounts:
Advances Collections Write-offs Total Loan
Year Ended Year Ended Year Ended Balance at
December 31, December 31, December 31, December 31,
2001 2001 2001 2001
------------ -------------- ------------ -------------
M&J/Dover Limited Partnership $ 87,600 $ -- $ -- $ 87,600
The Registrant made a distribution to its partners this year as follows:
Date Amount Per Unit
---- ------ --------
January 10 $ 128,187 $ 0.75
April 10 683,664 4.00
July 10 170,916 1.00
October 5 170,916 1.00
On April 26, 2001, the Registrant invested $280,000 to release the letter of
credit held by the mortgagee as credit enhancement for no additional interest in
Arlington LLC.
On May 31, 2001, the Registrant invested $300,000 to obtain a 15.79% interest in
M&J/Battery, LLC, which has a 14.50% interest in 600 Battery Street, LLC, which
owns 600 Battery Street, an office building in San Francisco, California.
On June 6, 2001, M&J/Retail Limited Partnership invested a total of $371,000 to
obtain an 11.24% interest in M&J/Bayfair 580, LLC, which has a 99.00% interest
in Bayfair 580, LLC, which owns Bayfair Mall, a shopping center located in San
Leandro, California.
On July 31, 2001, Waterfall Plaza was sold for $1,800,000, resulting in no cash
proceeds after satisfaction of the outstanding mortgage loan. The transaction
created a gain on sale of $115,675.
On July 31, 2001, the Highland Park Professional Building was sold for
$2,375,000, resulting in net cash proceeds of $909,134 after satisfaction of the
outstanding mortgage loan. The transaction netted a loss on sale of $293,182.
The Registrant had an 89.286% interest in M&J/Sheridan Limited Partnership,
which owned the building.
On September 13, 2001, a property owned by M&J/Retail Limited Partnership,
Archer and Central, was sold for $2,817,500, resulting in net cash proceeds of
$492,175 after satisfaction of the outstanding mortgage loan. The transaction
created a gain on sale of $726,593.
On September 18, 2001, a property owned by M&J/Retail Limited Partnership, Oak
Lawn Square, was sold for $1,450,000, resulting in net cash proceeds of $480,811
after satisfaction of the outstanding mortgage loan. The transaction created a
gain on sale of $264,847.
20
RESULTS OF OPERATIONS - 2000 COMPARED TO 1999
For the year ended December 31, 2000, the loss from partnerships was $5,883
compared to income of $781,850 for the comparative period of 1999. The decrease
in 2000 is primarily due to gains on the disposition of 21st M&J Venture, Orhow
Associates and XXI Office Plaza Associates that occurred during 1999.
For the year ended December 31, 2000, the Registrant loaned to an investment
partnership in which it has a substantial equity interest the following amounts:
Advances Collections Write-offs Total Loan
Year Ended Year Ended Year Ended Balance at
December 31, December 31, December 31, December 31,
2000 2000 2000 2000
------------ ------------- ------------ ------------
Clarkfair LLC $ 40,000 $( 40,000) $ -- $ --
The Registrant made a distribution to its partners this year as follows:
Date Amount Per Unit
---- ------ --------
January 10 $ 85,458 $ 0.50
April 10 341,832 2.00
July 6 128,187 0.75
October 5 128,187 0.75
On February 24, 2000, the Registrant invested $530,000 to obtain an 11.21%
interest in M&J/Prospect Crossing Limited Partnership, which owns Centre at Lake
in the Hills, a shopping center located in Lake in the Hills, Illinois.
On February 24, 2000, M&J/Retail Limited Partnership invested $500,000 to obtain
a 10.58% interest in M&J/ Prospect Crossing Limited Partnership, which owns
Centre at Lake in the Hills, a shopping center located in Lake in the Hills,
Illinois.
On April 10, 2000, M&J/Retail Limited Partnership invested $243,000 to obtain a
26.01% interest in Yorkshire Plaza Investors, LLC, which has a 20.00% interest
in Yorkshire LLC, which owns Yorkshire Plaza, a shopping center located in
Aurora, Illinois.
On May 25, 2000, a property owned by M&J/Retail Limited Partnership, Melrose and
Kimball, was sold for $1,250,000, resulting in net cash proceeds of $175,589
after satisfaction of the outstanding mortgage obligation. The transaction
netted a gain on sale of $50,836.
On May 26, 2000, a property owned by M&J/Retail Limited Partnership, Irving and
Kimball, was sold for $1,875,000, resulting in net cash proceeds of $445,822
after satisfaction of the outstanding mortgage obligation. The transaction
netted a gain on sale of $318,533.
On May 31, 2000, M&J/Retail Limited Partnership invested $1,133,750 to obtain a
53.13% interest in Fulcrum, LLC, which has a 65.65% interest in Shops at Clark's
Pond LLC, which owns a shopping center in Portland, Maine.
21
On August 11, 2000, a property owned by M&J/Retail Limited Partnership, Broadway
Festival, was sold for $3,713,750, resulting in net cash proceeds of $929,567
after satisfaction of the outstanding mortgage obligation. The transaction
netted a gain on sale of $1,110,976.
On August 14, 2000, the Registrant invested $577,000 to obtain a 17.48% interest
in M&J/Clark Street, LLC, which has a 20.00% interest in 20 South Clark Street,
LLC, which owns 20 South Clark, an office building located in Chicago, Illinois.
On September 15, 2000, a property owned by M&J/Retail Limited Partnership,
Diversey and Sheffield, was sold for $2,375,000, resulting in net cash proceeds
of $947,509 after satisfaction of the outstanding mortgage obligation. The
transaction netted a gain on sale of $686,559.
On November 17, 2000, a property owned by M&J/Retail Limited Partnership, Oak
Lawn Promenade, was sold for $4,250,000, resulting in net cash proceeds of
$1,234,331 after satisfaction of the outstanding mortgage obligation. The
transaction netted a gain on sale of $899,262.
On December 11, 2000, a property owned by M&J/Retail Limited Partnership, Harlem
and North shopping center, was sold for $3,800,000, resulting in net cash
proceeds of $1,011,663 after satisfaction of the outstanding mortgage
obligation. The transaction netted a gain on sale of $874,143.
22
LIQUIDITY AND CAPITAL RESOURCES
On January 20, 1995, the Registrant entered into a revolving credit
facility with the LaSalle National Bank. The facility, due August 31, 2003, pays
interest at the prime rate. Maximum borrowings under the facility agreement are
the lesser of $675,000 or 80% of the fair market value of the Registrant's
investment in Duke Realty Limited Partnership (see Item 2). Borrowings under the
facility agreement are secured by the partnership units of Duke Realty Limited
Partnership owned by the Registrant. As of December 31, 2002, no amounts are
outstanding under this facility.
The liquid assets of the Registrant decreased as of December 31, 2002,
when compared to December 31, 2001, due to investments in assets and partner
distributions.
The general partners currently believe that the amount of working capital
reserves, when considered with the Registrant's projected cash flows from
operations in 2003 and borrowings under the revolving credit facility, will be
sufficient to cover any normal cash or liquidity requirements which may be
reasonably foreseen.
23
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditor's Report 25
First Wilkow Venture:
Consolidated Balance Sheet, December 31, 2002 and 2001 26
Consolidated Statement of Operations,
Years Ended December 31, 2002, 2001 and 2000 27
Consolidated Statement of Partners' Capital,
Years Ended December 31, 2002, 2001 and 2000 28
Consolidated Statement of Cash Flows,
Years Ended December 31, 2002, 2001 and 2000 29
Notes to Consolidated Financial Statements,
December 31, 2002, 2001 and 2000 31
24
INDEPENDENT AUDITOR'S REPORT
To the Partners
First Wilkow Venture
We have audited the consolidated financial statements of First Wilkow Venture
(the "Partnership") listed in the index to the consolidated financial statements
set forth on Page 24. Our audits also included the financial statement schedules
listed in the index at Item 14 on Page 58. These consolidated financial
statements and financial statement schedules are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with U.S. generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, 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 First Wilkow Venture
and its subsidiaries as of December 31, 2002 and 2001, and the results of their
operations, changes in partners' capital and cash flows for the years ended
December 31, 2002, 2001 and 2000, in conformity with U.S. generally accepted
accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
PHILIP ROOTBERG & COMPANY, LLP
Chicago, Illinois
February 7, 2003
25
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002 2001
- ------------ ---- ----
ASSETS
REAL ESTATE AND INVESTMENTS IN
REAL ESTATE PARTNERSHIPS
Real estate:
Land $ 4,100,376 $ 4,100,376
Buildings and improvements 31,458,038 31,014,435
Fixtures and equipment 41,670 41,670
----------- -----------
Total 35,600,084 35,156,481
Less accumulated depreciation 13,070,307 12,169,085
----------- -----------
Net Real Estate 22,529,777 22,987,396
Investments in real estate partnerships 7,181,237 8,070,780
----------- -----------
Total 29,711,014 31,058,176
----------- -----------
LOANS RECEIVABLE 941,725 905,687
----------- -----------
OTHER ASSETS
Cash and cash equivalents 4,562,781 5,990,392
Certificates of deposit - restricted 250,000 250,000
Receivables 1,238,092 863,205
Prepaid expenses -- 6,306
Deposits 832,105 1,319,236
Deferred charges 1,155,828 967,505
----------- -----------
Total 8,038,806 9,396,644
----------- -----------
TOTAL ASSETS $38,691,545 $41,360,507
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
MORTGAGES PAYABLE $20,870,507 $21,097,597
----------- -----------
OTHER LIABILITIES
Accounts payable and accrued expenses 191,688 126,811
Accrued property taxes 1,329,662 1,290,215
Deferred state income taxes 170,000 176,000
Security deposits and prepaid rent 584,447 848,348
----------- -----------
Total 2,275,797 2,441,374
----------- -----------
MINORITY INTEREST 2,578,193 3,388,816
----------- -----------
PARTNERS' CAPITAL (170,916 units authorized
and issued) 12,967,048 14,432,720
----------- -----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $38,691,545 $41,360,507
=========== ===========
See accompanying notes to consolidated financial statements 26
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 2002 2001 2000
- ------------------------ ---- ---- ----
REVENUE
Rental $ 8,387,447 $ 9,360,624 $ 11,734,975
Interest 172,154 290,427 374,138
Gain on disposal of real estate
and other revenue 28,617 1,035,560 4,010,226
----------- ------------ ------------
Total 8,588,218 10,686,611 16,119,339
----------- ------------ ------------
PARTNERSHIP INVESTMENTS' INCOME (LOSS)
Share of net income (loss) (105,735) 101,498 (5,883)
----------- ------------ ------------
EXPENSES
Operating 4,321,962 4,294,856 4,578,872
Real estate taxes 1,319,208 1,335,161 2,055,150
Depreciation and amortization 1,287,174 1,691,684 2,249,720
Interest 1,656,185 2,049,983 2,868,319
General and administrative 110,521 140,648 138,318
----------- ------------ ------------
Total 8,695,050 9,512,332 11,890,379
----------- ------------ ------------
LOSS ON DISPOSITION OF TENANT IMPROVEMENTS 65,700 825,678 --
----------- ------------ ------------
INCOME (LOSS) FROM OPERATIONS (278,267) 450,099 4,223,077
MINORITY INTEREST IN SUBSIDIARIES' NET INCOME (110,634) (665,622) (1,939,108)
----------- ------------ ------------
NET INCOME (LOSS) $ (388,901) $ (215,523) $ 2,283,969
=========== ============ ============
UNITS - AUTHORIZED AND ISSUED
General Partner 9,199 8,614 7,890
Limited Partner 161,717 162,302 163,026
NET INCOME (LOSS) PER UNIT
General Partner $ (2.28) $ (1.26) $ 13.36
Limited Partner (2.28) (1.26) 13.36
BOOK VALUE OF A UNIT
General Partner $ 75.87 $ 84.44 $ 92.45
Limited Partner 75.87 84.44 92.45
CASH DISTRIBUTIONS PAID
General Partner $ 6.30 $ 6.75 $ 4.00
Limited Partner 6.30 6.75 4.00
See accompanying notes to consolidated financial statements 27
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
--------- ------------ ------------
BALANCE - DECEMBER 31, 1999 $ 653,511 $ 13,548,110 $ 14,201,621
Add (deduct):
Income for the year ended
December 31, 2000 103,030 2,180,939 2,283,969
To reflect changes in partnership capital
between general and limited partners - net 24,000 (24,000) --
Cash distributions for the year ended
December 31, 2000 (30,600) (653,064) (683,664)
--------- ------------ ------------
BALANCE - DECEMBER 31, 2000 749,941 15,051,985 15,801,926
Add (deduct):
Loss for the year ended
December 31, 2001 (10,544) (204,979) (215,523)
To reflect changes in partnership capital
between general and limited partners - net 95,568 (95,568) --
Cash distributions for the year ended
December 31, 2001 (54,623) (1,099,060) (1,153,683)
--------- ------------ ------------
BALANCE - DECEMBER 31, 2001 780,342 13,652,378 14,432,720
Add (deduct):
Loss for the year ended
December 31, 2002 (20,599) (368,302) (388,901)
To reflect changes in partnership capital
between general and limited partners - net 77,220 (77,220) --
Cash distributions for the year ended
December 31, 2002 (55,555) (1,021,216) (1,076,771)
--------- ------------ ------------
BALANCE - DECEMBER 31, 2002 $ 781,408 $ 12,185,640 $ 12,967,048
========= ============ ============
See accompanying notes to consolidated financial statements 28
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002 2001 2000
- ------------------------ ---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (388,901) $ (215,523) $ 2,283,969
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization 1,287,174 1,691,684 2,249,720
Net gain on disposal of land, building
and improvements -- (813,933) (3,940,310)
Net loss on disposal of tenant improvements 65,700 825,678 --
(Income) loss from partnerships 105,735 (101,498) 5,883
Changes in assets and liabilities:
(Increase) decrease in receivables
and prepaid expenses - net (368,581) 89,502 (75,935)
(Increase) decrease in deposits 487,131 (214,690) (256,765)
Increase (decrease) in accounts payable
and accrued expenses 64,877 (60,247) (56,386)
Increase (decrease) in accrued property taxes 39,447 (60,755) (203,175)
Decrease in deferred state income taxes (6,000) (24,000) --
Increase (decrease) in security deposits
and prepaid rent (263,901) 317,197 (144,370)
Decrease in accrued interest -- (14,992) (16,563)
----------- ----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,022,681 1,418,423 (153,932)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in land, building and
furniture and equipment (667,844) (1,151,114) (1,068,405)
Investment in partnerships (883,293) (953,590) (2,983,750)
Investments in loans receivable (36,038) (87,600) (40,000)
Investment in deferred charges (primarily
unamortized broker commissions) (415,734) (296,545) (315,870)
Proceeds from sale of real estate,
net of selling expenses -- 1,882,120 4,744,482
Partnership investment draws 1,667,101 747,401 526,253
Increase (decrease) in minority interest (810,623) (611,258) 1,855,277
Collection of notes receivable -- -- 40,000
----------- ----------- -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (1,146,431) (470,586) 2,757,987
----------- ----------- -----------
See accompanying notes to consolidated financial statements 29
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENT OF CASH FLOWS - Continued
YEARS ENDED DECEMBER 31, 2002 2001 2000
- ------------------------ ---- ---- ----
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of mortgages and notes payable $ (227,090) $ (457,562) $ (366,360)
Proceeds from mortgage financing -- 460,797 599,126
Distributions to partners (1,076,771) (1,153,683) (683,664)
----------- ----------- ------------
NET CASH USED BY FINANCING ACTIVITIES (1,303,861) (1,150,448) (450,898)
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,427,611) (202,611) 2,153,157
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 5,990,392 6,193,003 4,039,846
----------- ----------- ------------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 4,562,781 $ 5,990,392 $ 6,193,003
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid during the year $ 1,656,185 $ 2,064,975 $ 2,884,882
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Proceeds from sale of real estate used to
retire debt $ -- $ 6,169,101 $ 11,213,575
Write-off of fully depreciated
fixed assets 52,964 59,640 50,522
See accompanying notes to consolidated financial statements 30
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Wilkow Venture (the "Partnership") owns outright or has
participatory ownership interests in real property located throughout the
United States for investment purposes.
A summary of the principal accounting policies followed by the Partnership
is set forth as follows:
The financial statements include the accounts of all entities in
which the Partnership owns fifty percent or more and maintains
effective control. Investments in entities in which ownership
interests are less than fifty percent and the Partnership exercises
significant influence over operating and financial policies are
accounted for on the equity method. Other investments are accounted
for on the cost method. Intercompany accounts and transactions
between consolidated entities have been eliminated in consolidation.
For purposes of the consolidated statement of cash flows, the
Partnership considers certificates of deposit with a maturity of
three months or less to be cash equivalents. Certain Partnership
deposits at LaSalle National Bank and Bank One are in excess of the
amount insured by the Federal Deposit Insurance Corporation and are,
therefore, considered a concentration of credit risk.
Rental income is derived from leasing to lessees (under operating
leases) various types of real estate owned by the Partnership.
Investments in real estate partnerships are reported using either
the cost or equity methods of accounting. Under the equity method,
the cost of these investments is reduced by a pro rata share of net
losses and drawings and increased by a pro rata share of net income
of the investee. Under the cost method, income is reported as draws
are received.
Land, buildings and improvements are carried at cost. Major
additions and betterments are charged to the property accounts;
maintenance and repairs which do not improve or extend the life of
the respective assets are charged to expense as incurred. When
assets are sold or retired, the cost and accumulated depreciation
are removed from the accounts, and any gain or loss is recognized.
Depreciation on buildings, improvements, furniture and equipment is
computed using the straight-line and accelerated methods based on
the estimated useful lives of the assets.
The assets of the Partnership are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying value
may not be recoverable. An asset is considered to be impaired when
the estimated future undiscounted operating income is less than its
carrying value. To the extent an impairment has occurred, the excess
of carrying value of the asset over its estimated fair value will be
charged to income.
Deferred charges represent real estate acquisition costs, deferred
broker commissions and mortgage financing costs. These costs are
being amortized using the straight-line method over lives ranging
from 1 to 40 years.
31
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
There is no provision for federal income taxes as the partners
report their share of the Partnership's net income or loss in their
individual income tax returns.
Deferred state income taxes are provided on certain real estate
sales that are taxable to the Partnership which are being reported
on an installment or tax free exchange basis for income tax
purposes.
Use of Estimates - The preparation of financial statements in
conformity with U.S. generally accepted accounting principles
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 reporting period. Actual results could differ from those
estimates.
Receivables - The Partnership carries its receivables at cost. On a
periodic basis, the Partnership evaluates its receivables and
determines if an allowance for doubtful accounts is necessary. This
determination is based on a history of past write-offs and
collections and current credit conditions. If the Partnership
determines an account is uncollectible, the account is written off
to bad debt expense.
2 - DEPRECIATION
Depreciation is based on the method and estimated useful life of the
respective assets as follows:
Property Method Life
-------- ------ ----
180 North Michigan
a. Building Straight Line 35 years
b. Building improvements Straight Line Various
c. Tenant improvements Straight Line Terms of related
tenant leases
d. Furniture and equipment 150% Declining Balance 12 years
Naperville Office Court
a. Building Straight Line 25 years
b. Building improvements Straight Line Various
c. Tenant improvements Straight Line Terms of related
tenant leases
d. Furniture and equipment 150% Declining Balance Various
M&J/Retail Limited Partnership (1 retail center)
a. Buildings Straight Line 40 years
b. Building improvements Straight Line 40 years
c. Tenant improvements Straight Line Terms of related
tenant leases
209 West Jackson
a. Building Straight Line 40 years
b. Building improvements Straight Line Various
c. Tenant improvements Straight Line Terms of related
tenant leases
32
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
3 - INVESTMENTS IN PARTNERSHIPS
A summary of the income or loss from partnership investments included in
the accompanying consolidated statement of operations on the equity method
of accounting, unless otherwise indicated, is as follows:
2002 2001 2000
---------- ---------- ---------
L-C Office Partnership IV (d) $ (172,302) $ (56,919) $ (81,440)
M&J/Grove Limited Partnership 6,328 20,491 (63,280)
Rosemont 28 Limited Partnership (471,697)(b) (2,180) (2,864)
M&J/Eden Prairie Limited Partnership -- (a) 17,129 (a) 16,518 (a)
Duke Realty Limited Partnership 87,375 (a) 85,525 (a) 79,074 (a)
First Candlewick Associates 23,650 (a) 28,380 (a) 6,930 (a)
Second Wilkow Venture 4,728 (a) 7,092 (a) 4,925 (a)
Wilkow/Retail Partners Limited Partnership 1,105 (a) 1,493 (a) 218 (a)
Lake Cook Office Development IV -- (a) -- (a) -- (a)
M&J/Hotel Investors Limited Partnership -- (a) (200,000)(a)(c) 24,000 (a)
M&J/Mid Oak Limited Partnership 1,050 (a) 4,725 (a) 6,300 (a)
Northlake Tower Limited Partnership (62,399)(a)(b) 71,331 (a) 120,349 (a)
Arlington LLC 130,123 (69,372) (71,830)
M&J/NCT Louisville LP 6,750 (a) 27,000 (a) 33,750 (a)
M&J/Prospect Crossing Limited Partnership 50,915 31,573 (12,997)
Fulcrum, LLC 15,658 27,204 (72,489)
M&J/Clark Street, LLC 30,582 (a) 54,238 (a) 6,953 (a)
Yorkshire Plaza Investors, LLC 29,159 (a) 26,730 (a) -- (a)
Wilkow/Grove Partners Limited Partnership 322 (a) 161 (a) --
M&J/Battery, LLC 29,255 (a) 8,569 (a) --
M&J/Clarkfair Limited Partnership 80,857 18,328 --
M&J/Crossroads Limited Partnership 10,365 -- --
M&J/Bayfair 580, LLC (a) 92,441 (a) -- --
---------- --------- ---------
$(105,735) $ 101,498 $ (5,883)
========== ========= =========
(a) Income recognized under the cost method.
(b) Includes loss on disposition of investment.
(c) Includes provision for loss in book value.
(d) Income will be recognized under the cost method in future years.
33
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
The following is a summary of financial position and results of operations
of the properties in which the Partnership has an equity partnership
interest. The following schedule has been prepared from financial
information provided by these partnerships as of their calendar year ends.
YEAR ENDED DECEMBER 31, 2002:
M&J/
Prospect
M&J/ Crossing
Arlington Centennial, Limited
LLC LLC Partnership
----------- ------------ -----------
(a) (a) (a)
BALANCE SHEET
Real estate - net of
accumulated depreciation $17,682,422 $ 12,435,917 $11,176,171
Current assets 1,172,251 50,222 754,887
Other assets 384,374 125,780 6,505
----------- ------------ -----------
TOTAL ASSETS $19,239,047 $ 12,611,919 $11,937,563
=========== ============ ===========
Mortgages payable $18,162,923 $ 10,247,800 $11,286,775
Other liabilities 661,294 6,144 390,426
Partners' capital 414,830 2,357,975 260,362
----------- ------------ -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $19,239,047 $ 12,611,919 $11,937,563
=========== ============ ===========
STATEMENT OF OPERATIONS
Revenue $ 4,114,839 $ 44,978 $ 2,126,486
Less: Operating expenses 2,052,844 1,057 704,448
Other expenses 1,478,704 40,308 861,986
Depreciation 371,488 10,638 276,748
----------- ------------ -----------
NET INCOME (LOSS) $ 211,803 $ (7,025) $ 283,304
=========== ============ ===========
(a) Based upon unaudited financial statements.
34
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
M&J/Grove Shops at
Limited Clark's
Partnership Pond LLC
----------- -----------
(a) (a)
BALANCE SHEET
Real estate - net of
accumulated depreciation $8,828,460 $16,892,675
Current assets 553,489 282,775
Other assets 168,957 611,076
---------- -----------
TOTAL ASSETS $9,550,906 $17,786,526
========== ===========
Mortgages payable $6,386,785 $15,736,376
Other liabilities 364,949 15,782
Partners' capital 2,799,172 2,034,368
---------- -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $9,550,906 $17,786,526
========== ===========
STATEMENT OF OPERATIONS
Revenue $1,778,593 $ 2,802,933
Less: Operating expenses 921,362 951,416
Other expenses 435,435 1,389,956
Depreciation 327,668 411,775
---------- -----------
NET INCOME $ 94,128 $ 49,786
========== ===========
(a) Based upon unaudited financial statements.
35
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2001:
M&J/
Prospect Prospect
28 Crossing
Arlington Limited Limited
LLC Partnership Partnership
----------- ----------- -----------
(a) (a) (a)
BALANCE SHEET
Real estate - net of
accumulated depreciation $18,057,775 $ 1,909,955 $11,438,324
Current assets 691,905 10,673 549,532
Other assets 368,777 556 --
----------- ----------- -----------
TOTAL ASSETS $19,118,457 $ 1,921,184 $11,987,856
=========== =========== ===========
Mortgages payable $17,314,508 $ -- $11,404,130
Other liabilities 1,113,667 27,515 309,212
Partners' capital 690,282 1,893,669 274,514
----------- ----------- -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $19,118,457 $ 1,921,184 $11,987,856
=========== =========== ===========
STATEMENT OF OPERATIONS
Revenue $ 3,912,284 $ 307 $ 1,946,722
Less: Operating expenses 1,681,225 -- 633,308
Other expenses 1,583,664 12,446 854,019
Depreciation 369,752 -- 276,687
----------- ----------- -----------
NET INCOME (LOSS) $ 277,643 $ (12,139) $ 182,708
=========== =========== ===========
(a) Based upon unaudited financial statements.
36
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
M&J/Grove Dover Shops at
Limited Farms Clark's
Partnership Apartments Pond LLC
----------- ------------ -----------
(a) (a) (a)
BALANCE SHEET
Real estate - net of
accumulated depreciation $ 8,966,951 $ 12,939,076 $17,249,060
Current assets 525,626 135,092 198,141
Other assets 232,189 48,843 684,714
----------- ------------ -----------
TOTAL ASSETS $ 9,724,766 $ 13,123,011 $18,131,915
=========== ============ ===========
Mortgages payable $ 6,453,994 $ 11,317,471 $15,847,296
Other liabilities 375,659 617,830 23,640
Partners' capital 2,895,113 1,187,710 2,260,979
----------- ------------ -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 9,724,766 $ 13,123,011 $18,131,915
=========== ============ ===========
STATEMENT OF OPERATIONS
Revenue $ 1,818,637 $ 2,616,809 $ 2,771,556
Less: Operating expenses 926,617 1,400,771 924,325
Other expenses 656,322 906,482 1,399,268
Depreciation 325,985 342,522 400,954
----------- ------------ -----------
NET INCOME (LOSS) $ (90,287) $ (32,966) $ 47,009
=========== ============ ===========
(a) Based upon unaudited financial statements.
37
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2000:
M&J/
Rosemont Prospect
28 Crossing
Arlington Limited Limited
LLC Partnership Partnership
------------ ----------- -----------
(a) (a) (a)
BALANCE SHEET
Real estate - net of
accumulated depreciation $ 18,310,143 $ 1,909,955 $11,715,011
Current assets 315,046 5,272 356,397
Other assets 396,652 618 --
------------ ----------- -----------
TOTAL ASSETS $ 19,021,841 $ 1,915,845 $12,071,408
============ =========== ===========
Mortgages payable $ 17,152,387 $ -- $11,529,451
Other liabilities 1,439,820 21,337 216,472
Partners' capital 429,634 1,894,508 325,485
------------ ----------- -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 19,021,841 $ 1,915,845 $12,071,408
============ =========== ===========
STATEMENT OF OPERATIONS
Revenue $ 3,205,327 $ 696 $ 1,753,285
Less: Operating expenses 1,585,866 -- 555,305
Other expenses 1,462,930 10,211 865,011
Depreciation 357,094 -- 268,928
------------ ----------- -----------
NET INCOME (LOSS) $ (200,563) $ (9,515) $ 64,041
============ =========== ===========
(a) Based upon unaudited financial statements.
38
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
M&J/Grove Dover Shops at
Limited Farms Clark's
Partnership Apartments Pond LLC
----------- ------------ ------------
(a) (a) (a)
BALANCE SHEET
Real estate - net of
accumulated depreciation $9,083,278 $ 13,245,939 $ 17,413,431
Current assets 129,422 182,189 133,142
Other assets 164,864 62,337 1,051,015
---------- ------------ ------------
TOTAL ASSETS $9,377,564 $ 13,490,465 $ 18,597,588
========== ============ ============
Mortgages payable $5,915,568 $ 11,446,054 $ 15,948,904
Other liabilities 389,555 457,989 31,856
Partners' capital 3,072,441 1,586,422 2,616,828
---------- ------------ ------------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $9,377,564 $ 13,490,465 $ 18,597,588
========== ============ ============
STATEMENT OF OPERATIONS
Revenue $1,757,636 $ 2,652,102 $ 1,482,012
Less: Operating expenses 919,986 1,374,058 579,987
Other expenses 517,208 916,289 863,637
Depreciation 317,670 533,194 222,714
---------- ------------ ------------
NET INCOME (LOSS) $ 2,772 $ (171,439) $ (184,326)
========== ============ ============
(a) Based upon unaudited financial statements.
39
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
M&J/Westwood Limited Partnership
In December 1986, the Partnership invested $517,000 to obtain an 18.52%
interest in M&J/Westwood Limited Partnership, which owns 48% of The Villas
at Monterey Limited Partnership, which owns a 145-unit all suites hotel
and corporate rental project in Orlando, Florida, known as Tango Bay
Suites Resort (Tango Bay Suites Resort is now Ramada Inn & Suites). On
December 31, 1993, the Partnership acquired an additional 2.19% interest
in M&J/Westwood Limited Partnership.
In March 1993, the Partnership acquired a 63.64% undivided interest in
Ramada Inn & Suites pursuant to an exchange for an ownership interest in a
similar property. The Villas at Monterey Limited Partnership retained the
remaining 36.36% interest. In November 1993, the Partnership sold a 5.98%
undivided interest in Ramada Inn & Suites to an unrelated party for a
relative proportion of the debt, recognizing a gain of $53,231 on the
disposition. The Partnership exchanged its interest in Ramada Inn & Suites
for an undivided interest in the 209 West Jackson building effective June
30, 1995. The Partnership also has a loan receivable of $731,124 at
December 31, 2002, from The Villas at Monterey Limited Partnership and
Tango Bay of Orlando, L.C. (see Note 4).
At December 31, 2002, the Partnership has a loan receivable in the
principal amount of $731,124 from The Villas at Monterey Limited
Partnership and Tango Bay of Orlando, L.C.
The property was sold for $5,985,000 in 2001 on the installment basis with
a promissory note secured by the property. On October 1, 2002, the maker
of the note failed to make a scheduled payment, thereby defaulting on the
note, and legal action is currently being pursued. Due to the fact that
the value of the asset exceeds the Partnership's receivable, a write-down
of the receivable is not deemed necessary at this time.
Duke Realty Limited Partnership
On December 2, 1994, the Partnership redeemed its interest in three
partnerships for a direct ownership in an operating partnership, Duke
Realty Limited Partnership (the "UPREIT"), the sole general partner of
which is Duke Realty Corporation (formerly Duke Realty Investments, Inc.),
a real estate investment trust ("REIT") listed on the New York Stock
Exchange. The redemption resulted in the Partnership owning 50,251
partnership units in the UPREIT, which are convertible on a one-for-one
basis to shares of common stock of the REIT. The Partnership's limited
partner units are currently pledged as collateral for a revolving credit
facility with LaSalle National Bank (see Note 9).
On April 15, 1997, the Partnership converted 25,000 units in Duke Realty
Limited Partnership to 25,000 shares of common stock of Duke Realty
Corporation. On June 12, 1997, 12,500 shares were sold for $500,044,
resulting in a gain of $383,419. On July 21, 1997, the remaining 12,500
shares were sold for $528,168, resulting in a gain of $411,543.
On August 18, 1997, a 2-for-1 stock and unit split occurred, resulting in
an additional 25,251 units of Duke Realty Limited Partnership being issued
to the Partnership. The Partnership thus held 50,502 units in Duke Realty
Limited Partnership at December 31, 2002.
40
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
Rosemont 28 Limited Partnership
The Partnership has invested a total of $760,618 to obtain a 22.92%
interest in Rosemont 28 Limited Partnership, which owns 11.25 acres of
land held for development in Orlando, Florida. On August 6, 2002, the
underlying unimproved land held by Rosemont 28 Limited Partnership was
sold for $475,000. The Partnership received cash proceeds of $93,455,
resulting in a loss to Partnership of $407,062.
M&J/Grove Limited Partnership
The Partnership had invested a total of $931,000 to obtain a 21.91%
interest in M&J/Grove Limited Partnership ("M&J/Grove"), which owns an
office complex in Wheaton, Illinois. As a Class A limited partner, the
Partnership is entitled to a cumulative cash flow priority of 8% per
annum. On December 31, 1993, the Partnership acquired an additional 1.17%
interest in M&J/Grove.
On July 1, 1996, the Partnership invested an additional $98,100 in
M&J/Grove in connection with the purchase of 981 Call Units, increasing
its interest in this investment to 27.34%. The Call Unit holders are
entitled to a cumulative cash flow priority of 12% per annum. Upon sale or
refinancing, the Call Unit holders will receive the first $367,500 of
available proceeds. Any proceeds remaining thereafter will be split 25% to
the holders of the Call Units and 75% to the General and Class A Limited
Partners. The proceeds of the M&J/Grove capital call were primarily used
for a mortgage debt restructuring of the Grove Office Park. The original
$8,000,000 mortgage was paid off at a discounted amount of $5,600,000 and
replaced with a new first mortgage loan in the amount of $5,500,000,
bearing interest at the fixed rate of 8.55% per annum for five years. In
March 2001, the loan was refinanced. The property is encumbered with a
mortgage loan of $6,500,000, bearing interest at 6.6875% and maturing in
April 2011. The property was also encumbered by unsecured debentures of
$1,000,000, which matured on May 1, 2001, and bore interest at 9% per
annum, payable quarterly. The debentures were repaid in 2001.
L-C Office Partnership IV
Prior to December 31, 1993, the Partnership had a 73.34% ownership
interest in L-C Office Partnership IV Limited Partnership ("L-C Office
Partnership IV"), which holds a 94% interest in Lake Cook Office
Development - Building Four Limited Partnership ("Lake-Cook IV"), which
has a 57.915% interest in DFA Limited Partnership, which has a 99%
interest in M&J/Dover Limited Partnership, which owns Dover Farms
Apartments, a 300-unit apartment complex located in a suburb of Cleveland,
Ohio.
On December 31, 1993, the Partnership acquired an additional 1.35%
interest in L-C Office Partnership IV. On January 1, 1994, the Partnership
acquired a 0.4906% interest in Lake Cook Office Development - Building
Four Limited Partnership. In addition to the investment, the Partnership
has notes receivable of $15,091, $71,872 and $123,638 from Lake Cook
Office Development - Building Four Limited Partnership, L-C Office
Partnership IV and M&J/Dover Limited Partnership, respectively. The
Partnership contributed an additional $175,097 in 1997, $60,379 in 1998
and $242,983 in 2002 to maintain its 74.69% interest in L-C Office
Partnership IV.
41
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
On December 18, 2002, M&J/Dover Farms Limited Partnership admitted CAPREIT
of Dover Farms, LLP as a partner. At this time, the partnership's name was
changed to Dover Farms LP. As a result of the admittance, L-C Office
Partnership IV's effective interest in Dover Farms LP was reduced to 5.4%,
with the explicit proviso that, through its interest in DFA, LLC, L-C
Office Partnership IV will benefit from a cash flow and residual proceed
preference.
M&J/Hotel Investors Limited Partnership
On October 8, 1997, the Partnership invested $200,000 to obtain a 14.81%
interest in M&J/Hotel Investors Limited Partnership, which owns a 164-room
hotel in Kissimmee, Florida. At the time of purchase, the property was
operating as the EconoLodge Maingate Central Hotel, but immediately
following the closing, the property was converted to a Howard Johnson
franchise. As of December 31, 2001, the investment in this property was
deemed to have no liquidating value. The value of the assets of the
property was less than the first mortgage loan that secures the property.
As such, the Partnership's equity position was deemed worthless and
written off in 2001. The mortgage on the property was foreclosed in 2002.
M&J/Mid Oak Limited Partnership
On August 26, 1997, the Partnership invested $70,000 to obtain a 35%
interest in M&J/Mid Oak Limited Partnership, which has a 9% interest in
Mid Oak Plaza LLC, which owned Mid Oak Plaza Shopping Center located in
Midlothian, Illinois. Mid Oak Plaza Shopping Center was sold on November
26, 2002, for a purchase price of $6,025,000. M&J/Mid Oak Limited
Partnership is due to receive a liquidating distribution in 2003 for the
amount of $192,000, which will result in a gain on disposition of $77,284
in 2003.
M&J/Eden Prairie Limited Partnership
On April 10, 1998, the Partnership invested $64,000 to obtain a 26.44%
ownership in M&J/Eden Prairie Limited Partnership, which has a 10%
interest in Eden Prairie LLC, which acquired a 70,689 square foot shopping
center in Eden Prairie, Minnesota. On September 27, 1999, an additional
investment of $76,174 was made, increasing the Partnership's interest to
42.98%.
M&J/NCT Louisville LP
On September 29, 1999, the Partnership invested $300,000 to obtain a
23.47% interest in M&J/NCT Louisville LP, which has a 10% interest in
CMJ/NCT Louisville LLC. CMJ/NCT Louisville LLC is a 50% owner of NCT
Louisville LLC, which was formed to acquire National City Tower, a 712,533
square foot office tower located in Louisville, Kentucky.
Arlington LLC
On September 29, 1999, the Partnership converted its loan receivable of
$1,226,000 to a 30.65% interest in Arlington LLC, which owns Annex of
Arlington Heights, a 197,110 square foot community center located in
Arlington Heights, Illinois.
In addition, the Partnership posted a letter of credit in the amount of
$280,000 with the mortgagee as credit enhancement in exchange for an
additional 7% interest in Arlington LLC.
42
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
The Partnership also has a non-interest-bearing unsecured loan payable to
Arlington LLC in the amount of $11,027 at December 31, 2001 and 2000.
On April 26, 2001, the Partnership invested $280,000 to release the letter
of credit held by the mortgagee as credit enhancement for no additional
interest in Arlington LLC.
M&J/Prospect Crossing Limited Partnership
On February 24, 2000, the Partnership invested $530,000 to obtain an
11.21% interest in M&J/Prospect Crossing Limited Partnership, which owns
Centre at Lake in the Hills, a shopping center located in Lake in the
Hills, Illinois. The property is encumbered with two mortgages. The first
mortgage of $10,350,000 bears interest at 7.25% and matures in January
2008. The second mortgage of $1,500,000 bears interest at 8% and matures
in March 2008.
M&J/Retail Limited Partnership also holds a 10.58% interest in
M&J/Prospect Crossing Limited Partnership (see Page 46).
M&J/Clark Street, LLC
On August 14, 2000, the Partnership invested $577,000 to obtain a 17.48%
interest in M&J/Clark Street, LLC, which has a 20.00% interest in 20 South
Clark Street, LLC, which owns 20 South Clark, an office building located
in Chicago, Illinois. The property is encumbered with a mortgage of
$24,831,000, bearing interest at 9.00% and maturing August 2010.
M&J/Battery, LLC
On May 31, 2001, the Partnership invested $300,000 to obtain a 15.79%
interest in M&J/Battery, LLC, which has a 14.50% interest in 600 Battery
Street, LLC, which owns 600 Battery Street, an office building in San
Francisco, California. The property is encumbered with a mortgage of
$26,100,000, bearing interest at 7.625% and maturing May 2011.
Centennial FWC, LLC
On December 17, 2002, the Partnership invested $635,000 to obtain a 100%
interest in Centennial FWV, LLC, which has a 21.17% undivided interest in
Centennial Village Phase II, a shopping center in Roswell, Georgia. The
property is encumbered with a mortgage of $13,000,000, bearing interest at
5.90% and maturing January 2013.
43
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
CONSOLIDATED PARTNERSHIPS
M&J/Sheridan Limited Partnership
During 1988, the Partnership invested $2,500,000 to obtain an 89.29%
interest in M&J/Sheridan Limited Partnership, which owns a 22,523 square
foot office building in Highland Park, Illinois. The property was sold on
July 31, 2001, resulting in a loss of $293,182.
The financial position and results of operations of this partnership are
included in the accompanying consolidated financial statements.
209 West Jackson LLC
On August 24, 1995, the Partnership acquired a 59.44% undivided interest
in 209 West Jackson, a 142,996 square foot office building located in
downtown Chicago, in exchange for its 57.67% undivided interest in Tango
Bay Suites Resort (Tango Bay Suites Resort is now Ramada Inn & Suites).
The 209 West Jackson building was subject to a first mortgage of
$10,000,000 and an additional $5,661,000 note secured by the first
mortgage, both interest only at General Electric Capital Corporation's
commercial paper rate plus 3.25% per annum.
On October 22, 1999, both the ownership and the debt were restructured.
The Partnership and its tenants in common rolled up their interests into a
new limited liability company, 209 West Jackson LLC. In addition to the
interest, each cotenant was responsible for a capital infusion, of which
the Partnership's share was $710,000, to obtain a 71% interest in the
newly formed 209 West Jackson LLC. The Partnership was responsible for
additional equity contributions of $852,000, which have been fully funded.
Through a partial paydown of the principal balance and approximately
$5,000,000 of debt forgiveness by the property's lender, General Electric
Capital Corporation, the property's debt was reduced to $10,000,000 and
separated into two notes. The first note is for $8,600,000, and the second
note, an unfunded line of credit, is for $1,400,000. Funds in the amount
of $804,588 have been drawn on the second note as of December 31, 2002.
The financial position and results of operations of this company are
included in the accompanying consolidated financial statements.
44
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
M&J/Retail Limited Partnership
The Partnership had invested a total of $3,995,000 to obtain a 56.27%
limited partnership interest in M&J/Retail Limited Partnership
("M&J/Retail"), which owns a majority interest in one strip shopping
center in the metropolitan Chicago area and seven partnership interests.
The Partnership is entitled to a 9% cumulative cash flow priority on
invested capital. On December 31, 1993, the Partnership acquired an
additional 0.70% interest in M&J/Retail. On July 1, 1995, the Partnership
sold 4.22% of its limited partnership interest in M&J/Retail to an
unrelated party for $314,800 and recognized a gain of $137,245.
On July 28, 1995, M&J/Retail acquired a majority interest in Northlake
Tower Limited Partnership ("Tower"), contributing $1,112,667 of initial
capital. Additional contributions of $116,837 were made through December
31, 1997, increasing the total capital investment to $1,229,514. Tower
owns a 17.08% share of BSRT/M&J Northlake Limited Partnership
("BSRT/M&J"), which purchased a leasehold interest in the Northlake Tower
Festival Shopping Center for $16,989,000 on July 28, 1995. The purchase of
this property was made subject to a $10,350,000 first mortgage loan
bearing interest only at the fixed rate of 8.5% per annum for ten years.
On November 18, 1997, this loan was refinanced with a first mortgage of
$17,600,000 with principal and interest payments based on a 30-year
amortization and an interest rate of 7.64%. A portion of the refinancing
proceeds were used to make distributions to the partners of BSRT/ M&J,
with M&J/Retail ultimately receiving a distribution of $1,166,745. On
April 10, 2002, M&J/Retail received a liquidating distribution from
Northlake Tower Limited Partnership in the amount of $654,986, resulting
in a loss on disposition of investment in partnership of $104,014.
On October 27, 1995, M&J/Retail invested a total of $297,000 to acquire a
46.41% Class A interest in M&J/Crossroads Limited Partnership. The balance
of $303,000 of the total $600,000 required capital for Class A investors
was also financed by M&J/Retail, resulting in a receivable from the other
investors for their respective share of capital contributions as of
December 31, 1995. These receivables were repaid in full during 1996. As a
result of a refinancing of the first mortgage loan on December 31, 1997,
M&J/Retail received a distribution on January 10, 1998, of $501,065.
In 1998, M&J/Retail invested $415,000 to acquire a 70.90% investment in
M&J/Clarkfair Limited Partnership, which has a 9% interest in Clarkfair
LLC. Clarkfair LLC was the sole owner of two limited liability companies,
namely Marketfair North LLC and Shops at Clark's Pond LLC, which were
formed to acquire the following described properties:
Marketfair North - a 136,989 square foot shopping center in Clay, New York
Shops at Clark's Pond - a 208,325 square foot shopping center in South Portland, Maine
45
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
On May 31, 2000, Clarkfair LLC distributed to its members its interest in
Shops at Clark's Pond LLC, leaving only an investment in Marketfair North
LLC. As a result of this transaction, M&J/Clarkfair Limited Partnership
received a 33.50% interest in Shops at Clark's Pond LLC. M&J/Retail also
invested $1,133,750 to obtain a 53.13% interest in Fulcrum, LLC, which has
a 65.65% interest in Shops at Clark's Pond LLC.
On September 29, 1999, M&J/Retail invested a total of $350,000 to obtain
an 8.75% interest in Arlington LLC, which owns Annex of Arlington Heights,
a 197,110 square foot community center located in Arlington Heights,
Illinois.
The property was acquired with an $11,616,888 mortgage bearing interest at
9.65% per annum. In March 2002, the property was refinanced. The property
is encumbered with a mortgage of $18,250,000, bearing interest at 7.85%
and maturing in April 2012. (See also Page 42).
On February 24, 2000, M&J/Retail invested $500,000 to obtain a 10.58%
interest in M&J/Prospect Crossing Limited Partnership, which owns Centre
at Lake in the Hills, a shopping center located in Lake in the Hills,
Illinois. The property is encumbered with two mortgages. The first
mortgage of $10,350,000 bears interest at 7.25% and matures in January
2008. The second mortgage of $1,500,000 bears interest at 8% and matures
in March 2008.
On April 10, 2000, M&J/Retail invested $243,000 to obtain a 26.01%
interest in Yorkshire Plaza Investors, LLC, which has a 20.00% interest in
Yorkshire LLC, which owns Yorkshire Plaza, a shopping center located in
Aurora, Illinois. The property is encumbered with a mortgage of
$18,680,000, bearing interest at 8.31% and maturing May 2005.
On June 6, 2001, M&J/Retail invested $371,000 to obtain an 11.24% interest
in M&J/Bayfair 580, LLC, which has a 99.00% interest in Bayfair 580, LLC,
which owns Bayfair Mall, a shopping center located in San Leandro,
California. The property is encumbered with a mortgage of $24,000,000,
bearing interest at a variable rate of 300 basis points over the 30-day
LIBOR and maturing July 2003.
The financial position and results of operations of this partnership are
included in the accompanying consolidated financial statements.
46
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
The following is a summary of the financial position and results of
operations of the entities included in consolidation at December 31, 2002:
209 M&J/
West Retail
Jackson Limited
LLC Partnership
----------- -----------
BALANCE SHEET
Real estate - net of
accumulated depreciation $11,736,697 $ 538,738
Current assets 26,004 10,670
Other assets 1,241,721 1,043,338
----------- -----------
TOTAL ASSETS $13,004,422 $ 1,592,746
=========== ===========
Mortgages payable $ 8,392,344 $ 398,229
Other long-term payables 1,304,588 --
Current liabilities 797,274 175,394
Minority interest 727,963 1,850,230
Partners' capital (deficit) 1,782,253 (831,107)
----------- -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL (DEFICIT) $13,004,422 $ 1,592,746
=========== ===========
STATEMENT OF OPERATIONS
Revenue $ 3,301,066 $ 309,783
Less: Operating expenses 1,953,890 127,352
Other expenses 883,531 32,273
Depreciation 325,847 20,913
Minority interest 39,961 70,672
----------- -----------
NET INCOME $ 97,837 $ 58,573
=========== ===========
47
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
The following is a summary of the financial position and results of
operations of the entities included in consolidation at December 31, 2001:
209 M&J/ M&J/
West Sheridan Retail
Jackson Limited Limited
LLC Partnership Partnership
----------- ----------- -----------
BALANCE SHEET
Real estate - net of
accumulated depreciation $11,962,190 $ -- $ 538,577
Current assets 26,228 9,012 35,968
Other assets 1,192,425 -- 2,474,807
----------- --------- -----------
TOTAL ASSETS $13,180,843 $ 9,012 $ 3,049,352
=========== ========= ===========
Mortgages payable $ 9,269,094 $ -- $ 418,952
Other long-term payables 900,000 -- --
Current liabilities 1,039,331 9,012 109,102
Minority interest 572,001 -- 2,816,814
Partners' capital (deficit) 1,400,417 -- (295,516)
----------- --------- -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL (DEFICIT) $13,180,843 $ 9,012 $ 3,049,352
=========== ========= ===========
STATEMENT OF OPERATIONS
Revenue $ 3,289,267 $ (55,810) $ 1,780,200
Less: Operating expenses 1,965,681 160,452 256,643
Other expenses 937,777 89,195 202,864
Depreciation 324,895 109,557 237,779
Minority interest 17,665 136,241 511,715
----------- --------- -----------
NET INCOME (LOSS) $ 43,249 $(551,255) $ 571,199
=========== ========= ===========
48
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
The following is a summary of the financial position and results of
operations of the entities included in consolidation at December 31, 2000:
209 M&J/ M&J/
West Sheridan Retail
Jackson Limited Limited
LLC Partnership Partnership
----------- ----------- ----------
BALANCE SHEET
Real estate - net of
accumulated depreciation $11,983,459 $ 2,566,405 $3,765,774
Current assets 13,250 27,999 36,111
Other assets 969,166 48,974 4,937,970
----------- ----------- ----------
TOTAL ASSETS $12,965,875 $ 2,643,378 $8,739,855
=========== =========== ==========
Mortgages payable $ 8,858,822 $ 1,297,613 $3,616,307
Other long-term payables 1,916,866 492,000 --
Current liabilities 678,683 276,751 258,961
Minority interest 438,336 (134,637) 3,696,375
Partners' capital 1,073,168 711,651 1,168,212
----------- ----------- ----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $12,965,875 $ 2,643,378 $8,739,855
=========== =========== ==========
STATEMENT OF OPERATIONS
Revenue $ 3,162,513 $ 402,438 $7,130,978
Less: Operating expenses 1,749,802 215,330 1,344,590
Other expenses 990,473 162,969 881,283
Depreciation 292,989 148,106 852,703
Minority interest 37,482 (13,277) 1,914,903
----------- ----------- ----------
NET INCOME (LOSS) $ 91,767 $ (110,690) $2,137,499
=========== =========== ==========
49
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
4 - LOANS RECEIVABLE
2002 2001
--------- ---------
The Villas at Monterey Limited Partnership and Tango Bay of Orlando, L.C.
Unsecured promissory note bearing interest at 3% over prime issued in
connection with Ramada Inn & Suites located in Orlando, Florida. The note
is due on demand or, if demand is not sooner made, on December 31, 2005
(see Note 3). $ 731,124 $ 731,124
L-C Office Partnership IV
Unsecured promissory note bearing interest at 2% over prime issued in
connection with the Dover Farms Apartments located in North Royalton,
Ohio. The note is due on demand or, if demand is not sooner made, on
December 31, 2005. 71,872 71,872
Lake Cook Office Development - Building Four Limited Partnership
Unsecured promissory note bearing interest at 2% over prime issued in
connection with the Dover Farms Apartments located in North Royalton, Ohio.
The note is due on demand or, if demand is not sooner made, on
December 31, 2005. 15,091 15,091
M&J/Dover Farms Limited Partnership
Unsecured promissory note bearing interest at prime issued in connection
with the Dover Farms Apartments located in North Royalton, Ohio. The note
is due on demand or, if demand is not sooner made, on December 31, 2005. 123,638 87,600
--------- ---------
$ 941,725 $ 905,687
========= =========
50
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
5 - MORTGAGES PAYABLE
The mortgages payable at December 31, 2002, consist of:
OUTSTANDING
ORIGINAL BALANCE
PRINCIPAL MONTHLY DECEMBER 31,
AMOUNT PAYMENTS 2002
------------ -------- -----------
180 North Michigan, 7.13%
due monthly to August 1,
2008 (a) $ 7,300,000 $49,206 $ 6,977,726
Naperville Office Court,
7.13% due monthly to
July 1, 2008 (b) 4,500,000 30,337 4,297,620
209 West Jackson,
8.95% due October 1, 2004 (c) 10,000,000 68,888 9,196,932
Evergreen Commons, 7.88% due
April 30, 2004 (d) 530,000 4,516 398,229
-----------
TOTAL OUTSTANDING MORTGAGE BALANCE $20,870,507
===========
PRINCIPAL PAYMENTS
--------------------------------------------------------------------------
DURING THE YEAR ENDED DECEMBER 31
--------------------------------------------------------------------------
2003 2004 2005 2006 2007 THEREAFTER
-------- ---------- ------- -------- -------- -----------
180 North Michigan, 7.13%
due monthly to August 1,
2008 (a) $ 88,514 $ 93,690 $102,131 $109,764 $118,691 $ 6,464,936
Naperville Office Court,
7.13% due monthly to
July 1, 2008 (b) 54,840 58,052 63,276 68,005 73,088 3,980,359
209 West Jackson,
8.95% due October 1, 2004 (c) 91,697 9,105,235 -- -- -- --
Evergreen Commons, 7.88% due
April 30, 2004 (d) 22,416 375,813 -- -- -- --
-------- ---------- -------- -------- -------- -----------
TOTAL OUTSTANDING MORTGAGE BALANCE $257,467 $9,632,790 $165,407 $177,769 $191,779 $10,445,295
======== ========== ======== ======== ======== ===========
(a) A balloon payment of $6,283,329 will be due August 1, 2008.
(b) A balloon payment of $3,946,123 will be due July 1, 2008.
(c) A balloon payment of $8,823,280 will be due October 1, 2004. The
original principal amount of $10,000,000 is divided into two notes.
The first note is for $8,600,000, and the second note, an unfunded
line of credit, is for $1,400,000. As of December 31, 2002, $804,588
has been drawn on the second note.
(d) A balloon payment of $369,898 will be due April 30, 2004.
51
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
6 - RELATED PARTY TRANSACTIONS
Management and Other Fees
Management, leasing and consulting fees paid to M&J Wilkow, Ltd. and M&J
Wilkow Brokerage Corp. (companies whose principal shareholders are general
partners of the Partnership) for the years ended December 31, 2002, 2001
and 2000, were $1,120,178, $1,245,523 and $1,424,852, respectively. These
fees related to a portfolio encompassing approximately 435,000 square
feet.
At December 31, 2002 and 2001, $20,462 and $15,263, respectively, are owed
to M&J Wilkow, Ltd. for management, leasing and consulting fees.
Professional Fees
Professional fees paid during the years ended December 31, 2002, 2001 and
2000, to Wilkow & Wilkow, P.C. (a company owned by a general partner of
the Partnership) for services in the ordinary course of business were
$38,600, $44,417 and $46,583, respectively. For the years ended December
31, 2002, 2001 and 2000, $90,184, $98,256 and $88,562, respectively, were
paid to M&J Wilkow, Ltd. for professional services.
Investments in Partnerships
The general partners and/or entities controlled or managed by one or more
of such partners have ownership interests in a majority of the real estate
projects in which the Partnership also has ownership interests.
Rental Income
Rental income received from M&J Wilkow, Ltd. (a company whose principal
shareholders are partners of the Partnership) was $283,857, $257,519 and
$245,480 for the years ended December 31, 2002, 2001 and 2000,
respectively, under a lease for office space.
Receivables
Included in receivables at December 31, 2000, is a $216,866 advance made
to M&J Wilkow, Ltd. as a result of a bookkeeping error. This advance was
made in December of 2000 and was repaid in January of 2001.
52
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
7 - RENTALS RECEIVABLE UNDER OPERATING LEASES
Minimum future rentals receivable by the Partnership on noncancelable
operating leases as of December 31, 2002, are as follows:
Year Ending
December 31, Total
------------------
2003 $ 6,497,873
2004 5,640,642
2005 5,344,622
2006 3,308,807
2007 2,856,445
Thereafter 5,902,677
------------
Total $ 29,551,066
============
8 - DEFERRED CHARGES
Deferred mortgage costs were incurred in connection with obtaining the
mortgages payable and are amortized over the lives of the loans. Deferred
leasing commissions are amortized over the terms of related tenant leases
ranging from 1 to 10 years. Syndication costs were incurred in connection
with the formation of M&J/Retail Limited Partnership and are carried at
cost.
Deferred charges at December 31, 2002, consist of the following:
Deferred Deferred
Mortgage Leasing Syndication
Costs Commissions Costs Total
--------- ----------- ----------- -----------
Original cost $ 270,494 $ 1,798,434 $ 25,000 $ 2,093,928
Accumulated amortization (124,073) (814,027) -- (938,100)
--------- ----------- ---------- -----------
$ 146,421 $ 984,407 $ 25,000 $ 1,155,828
========= =========== ========== ===========
Deferred charges at December 31, 2001, consist of the following:
Deferred Deferred
Mortgage Leasing Syndication
Costs Commissions Costs Total
--------- ----------- ----------- -----------
Original cost $ 312,916 $ 1,400,728 $ 25,000 $ 1,738,644
Accumulated amortization (136,806) (634,333) -- (771,139)
--------- ----------- ---------- -----------
$ 176,110 $ 766,395 $ 25,000 $ 967,505
========= =========== ========== ===========
53
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002, 2001 AND 2000
The total amortization expense recognized for the years ended December 31,
2002, 2001 and 2000, is $227,411, $440,460 and $678,955, respectively.
Estimated amortization expense for the next five years will vary depending
on the amount of deferred charges outstanding but is expected to be
similar to the 2002 amount.
9 - PARTNERS' CAPITAL
At December 31, 2002, general partner units totaled 9,199 units and the
general partners also beneficially owned 4,340 limited partner units.
At December 31, 2001, general partner units totaled 8,614 units and the
general partners also beneficially owned 4,160 limited partner units.
At December 31, 2000, general partner units totaled 7,890 units and the
general partners also beneficially owned 3,717 limited partner units.
10 - COMMITMENTS AND CONTINGENCIES
As of December 31, 2002, the Partnership has a revolving credit facility
with LaSalle National Bank which is secured by the Partnership's limited
partnership units in Duke Realty Limited Partnership (see Note 3). The
facility, due September 1, 2003, pays interest at the prime rate. Maximum
borrowings under the agreement are the lesser of $675,000 or 80% of the
fair market value of the Partnership's 50,502 units in Duke Realty Limited
Partnership (see Note 3). As of December 31, 2002, there are no amounts
outstanding under this facility.
As of December 31, 2002 and 2001, the Partnership, through its investment
in M&J/Retail Limited Partnership, is required to maintain a certificate
of deposit of $250,000 with LaSalle National Bank. The certificate of
deposit is maintained as collateral for two $250,000 letters of credit
relating to Marketfair North, of which M&J/Retail Limited Partnership is
an equity holder.
11 - SUBSEQUENT EVENTS
In January 2003, the Partnership made a distribution in the amount of
$188,008, or $1.10 per unit.
In March 2003, the Partnership received a payment of $113,638 on the
indebtedness from M&J/Dover Limited Partnership.
54
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth certain information with respect to each general
partner of the Registrant:
Name Position
---- --------
Marc R. Wilkow General Partner
Clifton J. Wilkow General Partner
Marc R. Wilkow has been in the real estate management and investment
business since 1977. He is also a lawyer and the sole stockholder of the law
firm of Wilkow & Wilkow, P.C. Clifton J. Wilkow has been involved in the
business of the Registrant since 1976. Also see "ITEM 1: Business Organization"
for further information.
There have been no proceedings of any kind involving bankruptcy,
criminality or restraint in the area of financial dealings against or otherwise
affecting any general partner during the last ten years.
The executive officers of the Registrant are its general partners. Their
names, ages, positions and relationships are listed below:
Name Position Age Other Positions Relation to Other Officer
---- -------- --- --------------- -------------------------
Marc R. Wilkow General 53 General Counsel Brother of Clifton Wilkow
Partner
Clifton J. Wilkow General 50 None Brother of Marc Wilkow
Partner
55
ITEM 11 - EXECUTIVE COMPENSATION
The general partners do not receive any remuneration or other special
benefit directly from the Registrant; however, Marc R. and Clifton J. Wilkow are
owners and shareholders of M&J Wilkow, Ltd., which receives management, leasing,
consulting and brokerage fees from each of the operating properties and/or
partnerships. In addition, the Registrant pays M&J Wilkow, Ltd. an asset
management fee. M&J Wilkow, Ltd. receives accounting and tax return preparation
fees based upon hourly service. Wilkow & Wilkow, P.C. also receives a retainer
for services rendered as general counsel to the Registrant and legal fees on an
hourly rate basis for professional services rendered beyond the scope of the
services contemplated by the retainer fee. Also see "ITEM 1: Business
Organization" for further information.
Options Granted to Management to Purchase Securities
There have been no options granted to management to purchase securities
from the Registrant.
Interest of Management and Others in Certain Transactions
For transactions to date, and those anticipated, reference is made to
"ITEM 1: Business."
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No general partner holds 5% or more of any of the securities.
The following limited partners hold 5% or more of the Registrant's
total units:
Units Owned % of Total Units
----------- ----------------
William W. Wilkow Marital Trust 18,339 10.73%
Gisa W. Slonim Irrevocable Trust 11,779 6.89%
(b) The following table sets forth the equity securities of the
Registrant beneficially owned directly or indirectly by the general
partners and their spouses as a group (three persons) at December
31, 2002:
Amount
Beneficially Owned % of Owned
------------------ ----------
General Partnership Units 9,199 5.38%
Units of Limited
Partnership Interest 4,340 2.54%
56
(c) There are no contractual arrangements known to the Registrant
including any pledge of securities of the Registrant, the operation
of the terms of which may at a subsequent date result in a change of
control of the Registrant.
Wilkow & Wilkow, P.C., a professional corporation owned by one of
the general partners, acting in its capacity as attorney and general
counsel for the Registrant, was involved with the Registrant in
certain transactions.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management, leasing and consulting fees paid to M&J Wilkow, Ltd. and M&J
Wilkow Brokerage Corp. (companies whose principal shareholders are general
partners of the Registrant) for the years ended December 31, 2002, 2001 and
2000, were $1,120,178, $1,245,523 and $1,424,852, respectively (see Note 6 to
Consolidated Financial Statements).
Professional fees paid during the years ended December 31, 2002, 2001 and
2000, to Wilkow & Wilkow, P.C. for services in the ordinary course of business
were $38,600, $44,417 and $46,583, respectively.
Professional fees paid during the years ended December 31, 2002, 2001 and
2000, to M&J Wilkow, Ltd. were $90,184, $98,256 and $88,562, respectively.
The general partners and/or entities controlled or managed by one or more
of such partners have ownership interests in a majority of the real estate
projects in which the Registrant also has ownership interests.
57
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
1. The Index to Consolidated Financial Statements is set forth on
Page 24
2. Financial Statement Schedules: Page No.
--------
Independent Auditor's Report 25
Schedule VIII - Valuation and Qualifying Accounts and
Reserves, Years Ended December 31, 2002, 2001 and 2000 59
Schedule X - Supplementary Profit and Loss Information, Years
Ended December 31, 2002, 2001 and 2000 60
Schedule XI - Real Estate and Accumulated Depreciation, Year
Ended December 31, 2002 61
Notes to Schedule XI 63
Schedule XIII - Investments in, Equity in Earnings of, and
Drawings Received From Affiliates and Other Persons, Years
Ended December 31, 2002, 2001 and 2000 72
Schedules other than those listed above have been omitted since they are
either not applicable or not required or the information is included elsewhere
herein.
3. Exhibits: See Index to Exhibits on Page 81 (b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the year ended
December 31, 2002.
58
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
BALANCE AT CHARGED TO BALANCE AT
BEGINNING PROFIT OR CLOSE OF
OF YEAR INCOME OTHER DEDUCTIONS YEAR
---------- --------- -------- ---------- ----------
YEAR ENDED DECEMBER 31, 2000
Reserve for bad debts $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
Reserve for losses on loans $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
Reserve for valuation of investments $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
YEAR ENDED DECEMBER 31, 2001
Reserve for bad debts $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
Reserve for losses on loans $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
Reserve for valuation of investments $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
YEAR ENDED DECEMBER 31, 2002
Reserve for bad debts $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
Reserve for losses on loans $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
Reserve for valuation of investments $ -- $ -- $ -- $ -- $ --
========= ========= ======== ======== =======
59
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE X - SUPPLEMENTARY PROFIT AND LOSS INFORMATION
YEARS ENDED DECEMBER 31, 2002 2001 2000
- ------------------------ ---- ---- ----
1 REPAIRS AND MAINTENANCE
Name of property:
180 North Michigan $ 704,391 $ 483,482 $ 520,494
Naperville Office Court 122,368 87,088 52,586
209 West Jackson 394,003 385,815 365,489
Highland Park Professional Building -- 36,487 40,131
Waterfall Plaza -- 9,026 21,369
Retail Centers 11,523 4,189 90,680
---------- ---------- ----------
TOTAL $1,232,285 $1,006,087 $1,090,749
========== ========== ==========
2. DEPRECIATION, DEPLETION AND AMORTIZATION
OF FIXED AND INTANGIBLE ASSETS
Depreciation expense $1,059,763 $1,251,224 $1,570,765
Amortization expense 227,411 440,460 678,955
---------- ---------- ----------
TOTAL $1,287,174 $1,691,684 $2,249,720
========== ========== ==========
3 TAXES, OTHER THAN INCOME TAXES
Real estate taxes:
180 North Michigan $ 655,715 $ 546,379 $ 629,889
Naperville Office Court 125,258 106,929 102,423
Highland Park Professional Building -- 14,398 53,303
Retail Centers 33,240 54,402 690,982
Waterfall Plaza -- 77,390 139,204
209 West Jackson 504,995 535,663 439,349
---------- ---------- ----------
TOTAL $1,319,208 $1,335,161 $2,055,150
========== ========== ==========
4. MANAGEMENT FEES $ 602,856 $ 678,759 $ 800,051
========== ========== ==========
5. RENTS
Ground rent - 180 North Michigan $ 33,194 $ 11,855 $ 11,855
========== ========== ==========
60
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
YEAR ENDED DECEMBER 31, 2002
INITIAL COST TO COST CAPITALIZED
COMPANY SUBSEQUENT TO ACQUISITION
--------------------------- ---------------------------
BUILDINGS
AND CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COST
----------- ------------ ----------- ------------ ------------ --------
Naperville Office Court, Office
Naperville, Illinois Building $ 4,297,620 $ 1,796,459 $ 3,321,535 $ 2,140,629 $ --
180 North Michigan, Office
Chicago, Illinois Building 6,977,726 1,061,120 6,550,000 7,272,176 --
209 West Jackson, Office
Chicago, Illinois Building (B) 9,196,932 1,172,490 10,552,406 910,390 --
One Strip Shopping Center:
Evergreen Commons, Shopping
Evergreen Park, Illinois Center (A) 398,229 70,307 632,760 78,142 --
----------- ----------- ----------- ----------- --------
TOTAL $20,870,507 $ 4,100,376 $21,056,701 $10,401,337 $ --
=========== =========== =========== =========== ========
See Notes 1, 2 and 3 accompanying Schedule XI.
(A) Owned by M&J/Retail Limited Partnership; 53%-owned subsidiary of First
Wilkow Venture.
(B) Owned by 209 West Jackson LLC; 71%-owned subsidiary of First Wilkow
Venture.
61
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEAR ENDED DECEMBER 31, 2002
GROSS AMOUNT AT WHICH CARRIED AT
DECEMBER 31, 2002
----------------------------------------
BUILDINGS LIFE ON WHICH
AND ACCUMULATED DATE OF DATE DEPRECIATION IS
LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED COMPUTED
---------- ------------ ----------- ------------ ------------ -------- -----------------
Naperville Office Court,
Naperville, Illinois $1,796,459 $ 5,462,164 $ 7,258,623 $ 2,724,141 1980 1986 25 Years
180 North Michigan,
Chicago, Illinois 1,061,120 13,822,176 14,883,296 9,165,386 1926 1968 35 Years
Renovated in 1967
209 West Jackson,
Chicago, Illinois 1,172,490 11,462,796 12,635,286 898,590 1898 1999 40 Years
Renovated in 1989
One Strip Shopping Center:
Evergreen Commons,
Evergreen Park, Illinois 70,307 710,902 781,209 242,470 1987 1988 40 Years
---------- ----------- ----------- -----------
TOTAL $4,100,376 $31,458,038 $35,558,414 $13,030,587
========== =========== =========== ===========
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
1 - RECONCILIATION OF COSTS OF REAL ESTATE DURING EACH
OF THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
----------- -------- ----------- ------------- -----------
BUILDINGS AND IMPROVEMENTS -
YEAR ENDED DECEMBER 31, 2002
Naperville Office Court,
Naperville, Illinois $ 5,392,533 $135,905 $ 66,274 $ -- $ 5,462,164
180 North Michigan,
Chicago, Illinois 13,529,782 450,361 157,967 -- 13,822,176
209 West Jackson,
Chicago, Illinois 11,399,152 63,644 -- -- 11,462,796
One Strip Shopping Center:
Evergreen Commons,
Evergreen Park, Illinois 692,968 17,934 -- -- 710,902
----------- -------- ------- ----------- -----------
TOTAL $31,014,435 $667,844 $224,241 $ -- $31,458,038
=========== ======== ======= =========== ===========
63
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
1 - RECONCILIATION OF COSTS OF REAL ESTATE DURING EACH
OF THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
------------ --------- ----------- ------------- -----------
BUILDINGS AND IMPROVEMENTS -
YEAR ENDED DECEMBER 31, 2001
Naperville Office Court,
Naperville, Illinois $ 5,696,152 $ 460,510 $ 764,129 $ -- $ 5,392,533
180 North Michigan,
Chicago, Illinois 13,757,515 404,970 632,703 -- 13,529,782
Highland Park Professional Building,
Highland Park, Illinois 3,815,053 15,662 3,830,715 -- --
Waterfall Plaza,
Orland Park, Illinois 1,728,583 7,776 1,736,359 -- --
209 West Jackson,
Chicago, Illinois 11,136,999 262,153 -- -- 11,399,152
Three Strip Shopping Centers:
Oak Lawn Square,
Oak Lawn, Illinois 1,451,382 -- 1,451,382 -- --
Archer and Central,
Chicago, Illinois 2,617,546 -- 2,617,546 -- --
Evergreen Commons,
Evergreen Park, Illinois 692,968 -- -- -- 692,968
----------- ----------- ----------- ------------ -----------
TOTAL $40,896,198 $1,151,071 $11,032,834 $ -- $31,014,435
=========== ========== =========== ============ ===========
64
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
1 - RECONCILIATION OF COSTS OF REAL ESTATE DURING EACH
OF THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
------------ -------- ----------- ------------- ---------------
BUILDINGS AND IMPROVEMENTS -
YEAR ENDED DECEMBER 31, 2000
Naperville Office Court,
Naperville, Illinois $ 5,580,284 $115,868 $ -- $ -- $ 5,696,152
180 North Michigan,
Chicago, Illinois 13,400,521 370,927 13,933 -- 13,757,515
Highland Park Professional Building,
Highland Park, Illinois 3,710,444 108,302 3,693 -- 3,815,053
Waterfall Plaza,
Orland Park, Illinois 1,728,583 -- -- -- 1,728,583
209 West Jackson,
Chicago, Illinois 10,601,774 535,225 -- -- 11,136,999
65
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
----------- ---------- ----------- --------- ---------
Nine Strip Shopping Centers:
Oak Lawn Promenade,
Oak Lawn, Illinois $ 4,175,701 $ 22,063 $ 4,197,764 $ -- $ --
Oak Lawn Square,
Oak Lawn, Illinois 1,445,442 5,940 -- -- 1,451,382
Broadway Festival,
Chicago, Illinois 2,880,458 37,230 2,917,688 -- --
Irving and Kimball,
Chicago, Illinois 1,787,318 -- 1,787,318 -- --
Melrose and Kimball,
Chicago, Illinois 1,396,752 -- 1,396,752 -- --
Archer and Central,
Chicago, Illinois 2,617,546 -- -- -- 2,617,546
Evergreen Commons,
Evergreen Park, Illinois 692,968 -- -- -- 692,968
Diversey and Sheffield,
Chicago, Illinois 1,903,035 -- 1,903,035 -- --
Harlem and North Shopping Center,
Oak Park, Illinois 2,977,596 -- 2,977,596 -- --
----------- ---------- ----------- ----------- -----------
TOTAL $54,898,422 $1,195,555 $15,197,779 $ -- $40,896,198
=========== ========== =========== =========== ===========
66
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
2- RECONCILIATIONS OF ACCUMULATED DEPRECIATION OF REAL ESTATE DURING EACH
OF THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
------------ -------- ----------- ------------- -------
YEAR ENDED DECEMBER 31, 2002
Naperville Office Court,
Naperville, Illinois $ 2,549,015 $ 231,547 $ 56,421 $ -- $ 2,724,141
180 North Michigan,
Chicago, Illinois 8,747,907 519,598 102,119 -- 9,165,386
209 West Jackson,
Chicago, Illinois 609,451 289,139 -- -- 898,590
One Strip Shopping Center:
Evergreen Commons,
Evergreen Park, Illinois 224,698 17,772 -- -- 242,470
----------- ---------- -------------- -------------- -----------
TOTAL $12,131,071 $1,058,056 $ 158,540 $ -- $13,030,587
----------- ---------- -------------- -------------- -----------
67
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
2 - RECONCILIATIONS OF ACCUMULATED DEPRECIATION OF REAL ESTATE
DURING EACH OF THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
----------- ---------- ---------- ----------- -----------
YEAR ENDED DECEMBER 31, 2001
Naperville Office Court,
Naperville, Illinois $ 2,596,206 $ 238,103 $ 285,294 $ -- $ 2,549,015
180 North Michigan,
Chicago, Illinois 8,507,943 525,823 285,859 -- 8,747,907
Highland Park Professional Building,
Highland Park, Illinois 1,406,648 80,741 1,487,389 -- --
Waterfall Plaza,
Orland Park, Illinois 312,263 25,278 337,541 -- --
209 West Jackson,
Chicago, Illinois 326,029 283,422 -- -- 609,451
Three Strip Shopping Centers:
Oak Lawn Square,
Oak Lawn, Illinois 449,659 27,213 476,872 -- --
Archer and Central,
Chicago, Illinois 813,205 49,078 862,283 -- --
Evergreen Commons,
Evergreen Park, Illinois 207,373 17,325 -- -- 224,698
----------- ---------- ---------- ----------- -----------
TOTAL $14,619,326 $1,246,983 $3,735,238 $ -- $12,131,071
=========== ========== ========== =========== ===========
68
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
2 - RECONCILIATIONS OF ACCUMULATED DEPRECIATION OF REAL ESTATE
DURING EACH OF THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
------------ -------- ----------- ------------ --------
YEAR ENDED DECEMBER 31, 2000
Naperville Office Court,
Naperville, Illinois $2,371,852 $224,354 $ -- $ -- $2,596,206
180 North Michigan,
Chicago, Illinois 8,018,333 503,544 13,934 -- 8,507,943
Highland Park Professional Building,
Highland Park, Illinois 1,273,228 133,420 -- -- 1,406,648
Waterfall Plaza,
Orland Park, Illinois 269,048 43,215 -- -- 312,263
209 West Jackson,
Chicago, Illinois 54,960 271,069 -- -- 326,029
69
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
BALANCE AT BALANCE
BEGINNING OF ADDITION OTHER CHARGES AT END
YEAR AT COST RETIREMENTS ADD (DEDUCT) OF YEAR
----------- ---------- ---------- ---------- -----------
Nine Strip Shopping Centers:
Oak Lawn Promenade,
Oak Lawn, Illinois $ 1,256,411 $ 92,425 $1,348,836 $ -- $ --
Oak Lawn Square,
Oak Lawn, Illinois 413,524 36,135 -- -- 449,659
Broadway Festival,
Chicago, Illinois 856,421 45,327 901,748 -- --
Irving and Kimball,
Chicago, Illinois 491,890 18,536 510,426 -- --
Melrose and Kimball,
Chicago, Illinois 410,299 14,548 424,847 -- --
Archer and Central,
Chicago, Illinois 747,767 65,438 -- -- 813,205
Evergreen Commons,
Evergreen Park, Illinois 190,048 17,325 -- -- 207,373
Diversey and Sheffield,
Chicago, Illinois 507,551 32,176 539,727 -- --
Harlem and North Shopping Center,
Oak Park, Illinois 470,019 68,271 538,290 -- --
----------- ---------- ---------- ---------- -----------
TOTAL $17,331,351 $1,565,783 $4,277,808 $ -- $14,619,326
=========== ========== ========== ========== ===========
70
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
3 - BASIS OF REAL ESTATE FOR FEDERAL INCOME TAX PURPOSES
BUILDINGS
AND
LAND IMPROVEMENTS
---------- -----------
(A)
First Wilkow Venture:
180 North Michigan $1,080,374 $ 4,932,218
Naperville Office Court 301,349 1,852,704
---------- -----------
Subtotal 1,381,723 6,784,922
---------- -----------
Subsidiaries:
209 West Jackson 1,581,844 7,416,250
One Strip Shopping Center:
Evergreen Commons 70,307 468,431
---------- -----------
Subtotal 1,652,151 7,884,681
---------- -----------
Total Consolidated $3,033,874 $14,669,603
========== ===========
(A) Net of accumulated depreciation
71
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XIII - INVESTMENTS IN, EQUITY IN EARNINGS OF, AND
DRAWINGS RECEIVED FROM AFFILIATES AND OTHER PERSONS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XIII - INVESTMENTS IN, EQUITY IN EARNINGS OF, AND
DRAWINGS RECEIVED FROM AFFILIATES AND OTHER PERSONS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2002:
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT ADDITIONS DEDUCTIONS
BEGINNING ------------------ ---------------------------- BALANCE
OF YEAR INCOME OTHER LOSS DRAWS OTHER OF YEAR
---------- -------- -------- -------- -------- -------- ---------
INVESTMENTS IN PARTNERSHIPS ACCOUNTED
FOR BY THE EQUITY METHOD
Registrant:
L-C Office Partnership IV (F) $ 157,496 $ -- $242,983 $172,302 $ -- $ -- $ 228,177
M&J/Grove Limited Partnership 545,720 6,328 -- -- 71,969 -- 480,079
Rosemont 28 Limited Partnership (E) 562,058 -- 3,094 1,635 93,455 470,062 (E) --
Arlington LLC (B) 1,425,999 130,123 -- -- 292,320 -- 1,263,802
M&J/Prospect Crossing Limited Partnership 493,721 24,104 -- -- 34,381 -- 483,444
Centennial FWV, LLC (D) -- -- 635,000 (D) -- -- -- 635,000
---------- -------- -------- -------- -------- -------- ----------
Total Registrant 3,184,994 160,555 881,077 173,937 492,125 470,062 3,090,502
M&J/Clarkfair Limited Partnership (A)(C) 289,678 80,857 -- -- 41,500 -- 329,035
M&J/Prospect Crossing Limited
Partnership (A) 461,702 26,811 -- -- 32,435 -- 456,078
Fulcrum, LLC (A) 945,458 15,658 -- -- 96,649 -- 864,467
M&J/Crossroads Limited Partnership (A) -- 10,365 -- -- 10,365 -- --
---------- -------- -------- -------- -------- -------- ----------
TOTAL INVESTMENTS - EQUITY METHOD $4,881,832 $294,246 $881,077 $173,937 $673,074 $470,062 $4,740,082
========== ======== ======== ======== ======== ======== ==========
(A) Investment is owned by M&J/Retail Limited Partnership, which is
consolidated with the Registrant.
(B) Includes investments by the Registrant and M&J/Retail Limited
Partnership.
(C) Investment was accounted for under the cost method prior to 2000.
(D) New investment.
(E) Loss on disposition.
(F) Investment will be accounted for by the cost method in future years.
Note: Any partnership investments in which the Registrant's investment basis has
been reduced to zero have been omitted from the above schedule.
72
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XIII - INVESTMENTS IN, EQUITY IN EARNINGS OF, AND
DRAWINGS RECEIVED FROM AFFILIATES AND OTHER PERSONS - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2002:
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING ------------------ ---------------------------- AT END
OF YEAR INCOME OTHER LOSS DRAWS OTHER OF YEAR
---------- -------- -------- -------- -------- -------- ----------
INVESTMENTS IN PARTNERSHIPS ACCOUNTED
FOR BY THE COST METHOD
Registrant:
M&J/Eden Prairie Limited Partnership $ 140,174 $ -- $ -- $ -- $ -- $ -- $ 140,174
Duke Realty Limited Partnership 235,654 87,375 -- -- 87,375 -- 235,654
First Candlewick Associates 125,950 23,650 -- -- 23,650 -- 125,950
Second Wilkow Venture 64,813 4,728 -- -- 4,728 -- 64,813
Wilkow/Retail Partners Limited Partnership 2,799 1,105 10 -- 1,105 -- 2,809
Lake Cook Office Development IV 2,068 -- 2,206 -- -- -- 4,274
M&J/Mid Oak Limited Partnership 70,000 1,050 -- -- 1,050 -- 70,000
Mid Oak Plaza LLC 10 -- -- -- 10 -- --
M&J/NCT Louisville LP 300,000 6,750 -- -- 6,750 -- 300,000
M&J/LaSalle Limited Partnership 6,480 -- -- -- -- -- 6,480
Wilkow/Grove Limited Partnership -- 322 -- -- 322 -- --
M&J/Clark Street, LLC 577,000 30,582 -- -- 30,581 -- 577,001
M&J/Battery, LLC 300,000 29,255 -- -- 29,255 -- 300,000
---------- -------- ------ ------ -------- -------- ----------
Total Registrant 1,824,948 184,817 2,216 -- 184,826 -- 1,827,155
Northlake Tower Limited Partnership (A)(B) 750,000 -- -- 687,601 62,399 (B) --
Yorkshire Plaza Investors, LLC(A) 243,000 29,159 -- -- 29,159 -- 243,000
M&J/Bayfair 580, LLC(A) 371,000 92,441 -- -- 92,441 -- 371,000
---------- -------- ------ ------ -------- -------- ----------
TOTAL INVESTMENTS - COST METHOD $3,188,948 $306,417 $2,216 $ -- $994,027 $ 62,399 $2,441,155
========== ======== ====== ====== ======== ======== ==========
(A) Investment is owned by M&J/Retail Limited Partnership, which is
consolidated with the Registrant.
(B) Loss on disposition.
Note: Any partnership investments in which the Registrant's investment basis has
been reduced to zero have been omitted from the above schedule.
73
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XIII - INVESTMENTS IN, EQUITY IN EARNINGS OF, AND
DRAWINGS RECEIVED FROM AFFILIATES AND OTHER PERSONS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2001:
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING ------------------ -------------------------------- AT END
OF YEAR INCOME OTHER LOSS DRAWS OTHER OF YEAR
---------- -------- -------- -------- -------- -------- ----------
INVESTMENTS IN PARTNERSHIPS ACCOUNTED
FOR BY THE EQUITY METHOD
Registrant:
L-C Office Partnership IV $ 214,415 $ -- $ -- $ 56,919 $ -- $ -- $ 157,496
M&J/Grove Limited Partnership 567,112 20,491 -- -- 41,883 -- 545,720
Rosemont 28 Limited Partnership 561,648 -- 2,590 2,180 -- -- 562,058
Arlington LLC (B) 1,340,651 -- 280,000 (D) 69,372 125,280 -- 1,425,999
M&J/Prospect Crossing Limited Partnership 502,644 18,340 -- -- 27,263 -- 493,721
---------- ------- -------- -------- --------- --------- ----------
Total Registrant 3,186,470 38,831 282,590 128,471 194,426 -- 3,184,994
M&J/Clarkfair Limited Partnership (A)(C) 323,225 18,328 -- -- 51,875 -- 289,678
M&J/Prospect Crossing Limited
Partnership (A) 474,189 13,233 -- -- 25,720 -- 461,702
Fulcrum, LLC (A) 1,061,261 27,204 -- -- 143,007 -- 945,458
---------- ------- -------- -------- --------- --------- ----------
TOTAL INVESTMENTS - EQUITY METHOD $5,045,145 $97,596 $282,590 $128,471 $ 415,028 $ -- $4,881,832
========== ======= ======== ======== ========= ========= ==========
(A) Investment is owned by M&J/Retail Limited Partnership, which is
consolidated with the Registrant.
(B) Includes investments by the Registrant and M&J/Retail Limited
Partnership.
(C) Investment was accounted for under the cost method prior to 2000.
(D) Investment to release letter of credit held by mortgagee.
Note: Any partnership investments in which the Registrant's investment basis has
been reduced to zero have been omitted from the above schedule.
74
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XIII - INVESTMENTS IN, EQUITY IN EARNINGS OF, AND
DRAWINGS RECEIVED FROM AFFILIATES AND OTHER PERSONS - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2001:
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING ------------------ ------------------------------- AT END
OF YEAR INCOME OTHER LOSS DRAWS OTHER OF YEAR
---------- -------- -------- ------- -------- -------- ---------
INVESTMENTS IN PARTNERSHIPS ACCOUNTED
FOR BY THE COST METHOD
Registrant:
M&J/Eden Prairie Limited Partnership $ 140,174 $ 17,129 $ -- $ -- $ 17,129 $ -- $ 140,174
Duke Realty Limited Partnership 235,654 85,525 -- -- 85,525 -- 235,654
First Candlewick Associates 125,950 28,380 -- -- 28,380 -- 125,950
Second Wilkow Venture 64,813 7,092 -- -- 7,092 -- 64,813
Wilkow/Retail Partners Limited Partnership 2,799 1,493 -- -- 1,493 -- 2,799
Lake Cook Office Development IV 2,068 -- -- -- -- -- 2,068
M&J/Hotel Investors Limited Partnership 200,000 -- -- -- -- 200,000 (C) --
M&J/Mid Oak Limited Partnership 70,000 4,725 -- -- 4,725 -- 70,000
Mid Oak Plaza LLC 10 -- -- -- -- -- 10
M&J/NCT Louisville LP 300,000 27,000 -- -- 27,000 -- 300,000
M&J/LaSalle Limited Partnership 6,480 -- -- -- -- -- 6,480
Wilkow/Grove Limited Partnership -- 161 -- -- 161 -- --
M&J/Clark Street, LLC 577,000 54,238 -- -- 54,238 -- 577,000
M&J/Battery, LLC (B) -- 8,569 300,000 (B) -- 8,569 -- 300,000
---------- -------- --------- --------- -------- -------- ----------
Total Registrant 1,724,948 234,312 300,000 -- 234,312 200,000 1,824,948
Northlake Tower Limited Partnership (A) 750,000 71,331 -- -- 71,331 -- 750,000
Yorkshire Plaza Investors, LLC (A) 243,000 26,730 -- -- 26,730 -- 243,000
M&J/Bayfair 580, LLC (A)(B) -- -- 371,000 (B) -- -- -- 371,000
---------- -------- --------- --------- -------- -------- ----------
TOTAL INVESTMENTS - COST METHOD $2,717,948 $332,373 $ 671,000 $ -- $332,373 $200,000 $3,188,948
========== ======== ========= ========= ======== ======== ==========
(A) Investment is owned by M&J/Retail Limited Partnership, which is
consolidated with the Registrant.
(B) New investment.
(C) Provision for loss in book value.
Note: Any partnership investments in which the Registrant's investment basis has
been reduced to zero have been omitted from the above schedule.
75
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XIII - INVESTMENTS IN, EQUITY IN EARNINGS OF, AND
DRAWINGS RECEIVED FROM AFFILIATES AND OTHER PERSONS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2000:
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING ---------------------- ---------------------------- AT END
OF YEAR INCOME OTHER LOSS DRAWS OTHER OF YEAR
---------- -------- ---------- ------- ------- -------- ---------
INVESTMENTS IN PARTNERSHIPS ACCOUNTED
FOR BY THE EQUITY METHOD
Registrant:
L-C Office Partnership IV $ 295,855 $ -- $ -- $ 81,440 $ -- $ -- $ 214,415
M&J/Grove Limited Partnership 642,164 -- -- 63,280 11,772 -- 567,112
Rosemont 28 Limited Partnership 564,512 -- -- 2,864 -- -- 561,648
Arlington LLC(C) 1,496,000 -- -- 71,830 83,519 -- 1,340,651
M&J/Prospect Crossing Limited Partnership -- -- 530,000 (A) 6,686 20,670 -- 502,644
---------- ---------- ---------- -------- -------- ---------- ----------
Total Registrant 2,998,531 -- 530,000 226,100 115,961 -- 3,186,470
M&J/Clarkfair Limited Partnership (B)(D) 415,000 -- -- -- 91,775 -- 323,225
M&J/Prospect Crossing Limited
Partnership (B) -- -- 500,000 (A) 6,311 19,500 -- 474,189
Fulcrum, LLC (B) -- -- 1,133,750 (A) 72,489 -- -- 1,061,261
---------- ---------- ---------- -------- -------- ---------- ----------
TOTAL INVESTMENTS - EQUITY METHOD $3,413,531 $ -- $2,163,750 $304,900 $227,236 $ -- $5,045,145
========== ========== ========== ======== ======== ========== ==========
(A) New investment.
(B) Investment is owned by M&J/Retail Limited Partnership, which is
consolidated with the Registrant.
(C) Includes investments by the Registrant and M&J/Retail Limited
Partnership.
(D) Investment was accounted for under the cost method in prior years.
Note: Any partnership investments in which the Registrant's investment basis has
been reduced to zero have been omitted from the above schedule.
76
FIRST WILKOW VENTURE
(A LIMITED PARTNERSHIP)
SCHEDULE XIII - INVESTMENTS IN, EQUITY IN EARNINGS OF, AND
DRAWINGS RECEIVED FROM AFFILIATES AND OTHER PERSONS - Continued
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
YEAR ENDED DECEMBER 31, 2000:
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
BALANCE AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING ---------------------- ---------------------------- AT END
OF YEAR INCOME OTHER LOSS DRAWS OTHER OF YEAR
---------- -------- ---------- ------- ------- -------- ---------
INVESTMENTS IN PARTNERSHIPS ACCOUNTED
FOR BY THE COST METHOD
Registrant:
M&J/Eden Prairie Limited Partnership $ 140,174 $ 16,518 $ -- $ -- $ 16,518 $ -- $ 140,174
Duke Realty Limited Partnership 235,654 79,074 -- -- 79,074 -- 235,654
First Candlewick Associates 125,950 6,930 -- -- 6,930 -- 125,950
Second Wilkow Venture 64,813 4,925 -- -- 4,925 -- 64,813
Wilkow/Retail Partners Limited Partnership 2,799 218 -- -- 218 -- 2,799
Lake Cook Office Development IV 2,068 -- -- -- -- -- 2,068
M&J/Hotel Investors Limited Partnership 200,000 24,000 -- -- 24,000 -- 200,000
M&J/Mid Oak Limited Partnership 70,000 6,300 -- -- 6,300 -- 70,000
Mid Oak Plaza LLC 10 -- -- -- -- -- 10
M&J/NCT Louisville LP 300,000 33,750 -- -- 33,750 -- 300,000
M&J/LaSalle Limited Partnership 6,480 -- -- -- -- -- 6,480
M&J/Clark Street, LLC -- 6,953 577,000 (B) -- 6,953 -- 577,000
---------- -------- -------- ------ -------- ------- ----------
Total Registrant 1,147,948 178,668 577,000 -- 178,668 -- 1,724,948
Northlake Tower Limited Partnership (A) 750,000 120,349 -- -- 120,349 -- 750,000
Yorkshire Plaza Investors, LLC (A) -- -- 243,000 (B) -- -- -- 243,000
---------- -------- -------- ------ -------- ------- ----------
TOTAL INVESTMENTS - COST METHOD $1,897,948 $299,017 $820,000 $ -- $299,017 $ -- $2,717,948
========== ======== ======== ====== ======== ======= ==========
(A) Investment is owned by M&J/Retail Limited Partnership, which is
consolidated with the Registrant.
(B) New investment.
Note: Any partnership investments in which the Registrant's investment basis has
been reduced to zero have been omitted from the above schedule.
77
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FIRST WILKOW VENTURE
By: Marc R. Wilkow
--------------------------------------
Marc R. Wilkow, General Partner and
President of M&J Wilkow, Ltd., its
Managing Agent
DATED: March 27, 2003
---------------
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, in the capacities indicated, on ................
Clifton J. Wilkow
----------------------------------------
Clifton J. Wilkow, General Partner and
Executive Vice President of
M&J Wilkow, Ltd.
Thomas Harrigan
----------------------------------------
Thomas Harrigan, Senior Vice President
of M&J Wilkow, Ltd.
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Marc R. Wilkow, certify that:
1. I have reviewed this annual report on Form 10-K of First Wilkow
Venture;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented
in this annual report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and we have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors
and the audit committee of Registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report
financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
..................................
Marc R. Wilkow
----------------------------------
Marc R. Wilkow
Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Thomas Harrigan, certify that:
1. I have reviewed this annual report on Form 10-K of First Wilkow
Venture;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented
in this annual report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and we have:
a. designed such disclosure controls and procedures to ensure
that material information relating to the Registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this annual report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this annual report (the "Evaluation Date");
and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the Registrant's auditors
and the audit committee of Registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Registrant's ability to record, process, summarize and report
financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in
this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
..................................
Thomas Harrigan
----------------------------------
Thomas Harrigan
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
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(A) Agreement of Limited Partnership of First Wilkow Venture (filed
as Exhibit A or Prospectus for Exchange Offer of First Wilkow
Venture dated July 2, 1973).
(B) Amendments to Certificate of Limited Partnership filed as an
Exhibit to Annual Report on Form 10-K for 1983 which is hereby
incorporated by reference.
(C) Proxy Statement issued October 20, 1986, filed as Exhibit D to
the Annual Report on 10-K for 1986 which is hereby incorporated
by reference.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of First Wilkow Venture (the "Company") on
Form 10-K for the year ended December 31, 2002, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Marc R. Wilkow, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 or 15(d)
of the Securities Exchange Act of 1934; and (2) The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Marc R. Wilkow
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Marc R. Wilkow
Chief Executive Officer
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CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of First Wilkow Venture (the "Company") on
Form 10-K for the year ended December 31, 2002, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Thomas Harrigan, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 or 15(d)
of the Securities Exchange Act of 1934; and (2) The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Thomas Harrigan
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Thomas Harrigan
Chief Financial Officer
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