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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, 2004
[ ] 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
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(State of Organization) (I.R.S. Employer Identification No.)
180 North Michigan Avenue, Chicago, Illinois 60601
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(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 $130
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(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 406
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
approximately 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. As of December 31,2004, there are 19
properties in which the Registrant has interests, divided among residential,
commercial and industrial buildings and shopping centers. Seventeen 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; nine are shopping centers; six 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.
CHANGES IN PROPERTIES
During the calendar year ended December 31,2004, certain of the property
investments held by the Registrant underwent the changes described below:
(a) Purchases:
On July 29, 2004, the Registrant invested $215,000 to obtain a 7.28% interest in
M & J/2121 K Street, LLC, which has a 22% interest in 2121 K Street, LLC, which
owns 2121 K Street, an office building located in Washington, D.C. The
Registrant is also obligated to subscribe to a like number of Call Units in the
event that a proposed development of Expansion Space takes place. The cost of a
Call Unit shall not exceed $400 per unit.
On December 3, 2004, the Registrant invested $373,000 to acquire 373 Call Units
representing a 65.60% interest in Metro Equities, Ltd., which owns an 8.83%
undivided interest in Walnut Creek Retail & Storage Center, located in Walnut
Creek, California.
-2-
PART I
ITEM 1 - BUSINESS (Continued)
(b) Sales:
On February 24, 2004, the property owned by M & J/Eden Prairie Limited
Partnership was sold for $13,000,000, resulting in net cash proceeds of
$4,983,000 after satisfaction of the outstanding mortgage obligation. The
transaction netted a gain on sale of $4,285,000. The Registrant received a
distribution related to the sale in March 2004.
On June 11, 2004, the property owned by Shops at Clark's Pond LLC was sold for
$20,050,000, resulting in net cash proceeds of $3,848,000 after satisfaction of
the outstanding mortgage obligation. The transaction netted a gain on sale of
$3,087,000. M & J/Retail Limited Partnership received a distribution related to
the sale via its interest in Fulcrum, LLC in June 2004.
On August 26, 2004, the property owned by Arlington LLC was sold for
$27,200,000, resulting in net cash proceeds of $8,480,000 after satisfaction of
the outstanding mortgage obligation. The transaction netted a gain on sale of
$9,651,700. The Registrant as well as M & J/Retail Limited Partnership received
a distribution related to the sale in September 2004.
(c) Proposed Purchases and Sales:
None
(d) Declined Purchases:
None
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.
-3-
PART I
ITEM 2 - PROPERTY
The Registrant has an ownership interest in the following properties as of
December 31,2004:
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, 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.
On April 15, 1997, the Registrant converted 25,000 units in Duke Realty Limited
Partnership to 25,000 shares of common stock of Duke Realty Corporation and sold
the shares 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 as of December 31, 2004.
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.
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 at that time. The property currently 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 5.40% interest in Dover Farms, LP 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 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
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PART I
ITEM 2 - PROPERTY (Continued)
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 proceeds preference.
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 investments.
SECOND WILKOW VENTURE
The Registrant owns a 4.89% interest (197 units) in Second Wilkow Venture, which
holds multiple partnership investments.
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 shopping center
was sold on February 24, 2004, for a purchase price of $13,000,000, netting a
gain on sale of $4,285,000. A distribution was received by the Registrant in
March 2004.
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. In February 2004, the property was
refinanced and the Registrant received $187,500. The property is encumbered with
a mortgage of $67,000,000, bearing interest at a variable interest rate and
maturing in March 2007.
M & J/LOUISVILLE, LLC
On May 28, 2003, the Registrant invested $250,000 to obtain an 11.26% interest
in M & J/Louisville, LLC, which has a 33% interest in NW Acquisition Company,
LLC, which has a 90% interest in CMJ/NCT Louisville LLC, which has a 50%
interest in NCT Louisville LLC, which owns National City Tower, an office
building located in Louisville, Kentucky.
-5-
PART I
ITEM 2 - PROPERTY (Continued)
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. Annex of Arlington Heights was sold on August 26, 2004, for a purchase
price of $27,200,000, netting a gain on sale of $9,651,700. A distribution in
the amount of $3,296,180 was received by the Registrant.
M & J/Retail Limited Partnership also holds an 8.75% interest in Arlington LLC
(see Page 9).
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 9).
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.
On March 15, 2004, an agreement was reached with the principal partner to
recapitalize the investment and make modifications to both the mortgage loan as
well as the limited liability company agreement. The principal balance of the
first mortgage loan was reduced from $29,376,208 to $19,905,000, with a
corresponding applicable interest accrual rate reduction from 9.00% to 7.00%. A
provision was also made for the first 36 months for a minimum "pay" rate in the
amount of 5.50% per annum with the difference between the accrual rate and the
pay rate being added to the then outstanding principal balance of the loan on a
monthly basis. The mortgage matures in August 2010.
The amount by which the first loan was reduced will be treated as Preferred
Equity and earn a cumulative Preferred Return equal to 8.00% per annum. The
modifications also allow for the principal partner to provide an additional
$7,700,000 of funds to cover near-term tenant improvement and leasing commission
expenses, as well as building improvements.
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 in May 2011.
-6-
PART I
ITEM 2 - PROPERTY (Continued)
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 in January 2013.
METRO EQUITIES, LTD.
On December 3, 2004, the Registrant invested $373,000 to acquire 373 Call Units
representing a 65.60% interest in Metro Equities, Ltd., which owns an 8.83%
undivided interest in Walnut Creek Retail & Storage Center, located in Walnut
Creek, California. The Call Unit holders are entitled to a cumulative cash flow
priority of 12.50% per annum. Upon sale or refinancing, the Call Unit holders
will receive the first $373,000 of available net proceeds pro rata. Any proceeds
remaining thereafter will be split 75% to the holders of the Call Units and 25%
to the General and Class A Limited Partners.
M & J/2121 K STREET, LLC
On July 29, 2004, the Registrant invested $215,000 to obtain a 7.28% interest in
M & J/2121 K Street, LLC, which has a 22% interest in 2121 K Street, LLC, which
owns 2121 K Street, an office building located in Washington, D.C. The
Registrant is also obligated to subscribe to a like number of Call Units in the
event that a proposed development of Expansion Space takes place. The cost of a
Call Unit shall not exceed $400 per unit. The property is encumbered with a
mortgage of $38,850,000, bearing interest at 4.97% and maturing in July 2007.
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. 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 currently 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.
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%.
-7-
PART I
ITEM 2 - PROPERTY (Continued)
The Registrant is entitled to a cumulative cash flow priority in the amount of
9% per annum on its investment.
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. On December 31, 1997, M & J/Crossroads
contributed its interest in the shopping center for a 39% interest in M & J/JPC
Retail, which owns three shopping centers.
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, 2006, 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.
On June 11, 2004, the property owned by Shops at Clark's Pond LLC was sold for
$20,050,000.
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.
On June 11, 2004, the property owned by Shops at Clark's Pond LLC was sold for
$20,050,000.
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.
Annex of Arlington Heights was sold on August 26, 2004, for a purchase price of
$27,200,000, netting a gain on sale of $9,651,700. A distribution in the amount
of $766,000 was received by M & J/Retail.
-8-
PART I
ITEM 2 - PROPERTY (Continued)
The Registrant also holds a 37.65% interest in Arlington LLC (see Page 6).
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.
The Registrant also holds an 11.21% interest in M & J/Prospect Crossing Limited
Partnership (see Page 6).
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 had a 99.00% interest in Bayfair 580,
LLC, which owned Bayfair Mall, a shopping center located in San Leandro,
California.
On September 29, 2003, Bayfair Mall was sold for $37,000,000, resulting in net
cash proceeds of $16,293,000, after satisfaction of the outstanding mortgage
obligation. The transaction netted a gain on sale of $11,360,000. M & J/Retail
received a distribution related to the sale in October 2003 and a final
distribution in July 2004.
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.
On June 8, 1998, the property was refinanced and encumbered with a mortgage of
$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.
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 another asset.
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. Subsequent to a partial pay down of the principal balance and
-9-
PART I
ITEM 2 - PROPERTY (Continued)
approximately $5,000,000 of debt forgiveness by the property's lender, GE
Capital Corporation, the property's debt was reduced to $10,000,000.
On November 1, 2004, the property was refinanced with a new floating rate loan
from GE Capital Corporation. As part of the refinancing, 209 West Jackson LLC
was required to contribute new capital in the amount of $1,000,000. A capital
call was required for $850,000, of which the Registrant's share was $603,500.
The loan was funded in the amount of $8,660,000 initially and carries an
additional facility of $3,270,000 to fund capital improvements and leasing
costs. The note matures on November 1, 2007.
-10-
PART I
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.
-11-
PART I
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
-12-
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 31,2004, was approximately:
TITLE OF CLASS NUMBER OF RECORD HOLDERS
- -------------- ------------------------
Unit of Limited Partnership Interest 406
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.
-13-
PART II
ITEM 6 - SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
2004 2003 2002 2001
--------- -------- --------- -----------
OPERATING RESULTS
(IN THOUSANDS)
Total revenue $ 8,647 $ 8,728 $ 8,588 $ 10,687
Net income (loss)* $ 4,058 $ 1,099 $ (389) $ (216)
PARTNERSHIP UNIT DATA
(PER PARTNERSHIP UNIT)
Net income (loss):
General partner* $ 23.74 $ 6.43 $ (2.28) $ (1.26)
Limited partner* $ 23.74 $ 6.43 $ (2.28) $ (1.26)
Cash distributions paid:
General partner $ 6.60 $ 4.40 $ 6.30 $ 6.75
Limited partner $ 6.60 $ 4.40 $ 6.30 $ 6.75
* Includes gain (loss) on sale of real estate properties
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
2004 2003 2002 2001
---------- -------- ----------- -----------
FINANCIAL POSITION DATA
Total assets (in thousands) $ 41,440 $ 39,306 $ 38,692 $ 41,361
Net book value per unit $ 95.04 $ 77.90 $ 75.87 $ 84.44
-14-
PART II
ITEM 7 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIION AND RESULT
OF OPERATIONS
RESULTS OF OPERATIONS - 2004 COMPARED TO 2003
For the year ended December 31, 2004, the net income was $4,058,011 compared
to a net income of $1,099,159 for the comparative period of 2003.
The Registrant made distributions to its partners this year as follows:
DATE AMOUNT PER UNIT
---- ------ --------
January 10 $ 188,007 $ 1.10
April 10 564,024 3.30
July 10 188,007 1.10
October 10 188,007 1.10
On February 24, 2004, the property owned by M & J/Eden Prairie Limited
Partnership was sold for $13,000,000, resulting in net cash proceeds of
$4,983,000 after satisfaction of the outstanding mortgage obligation. The
transaction netted a gain on sale of $4,285,000. The Registrant received a
distribution related to the sale in March 2004.
On June 11, 2004, the property owned by Shops at Clark's Pond LLC was sold for
$20,050,000, resulting in net cash proceeds of $3,848,000 after satisfaction of
the outstanding mortgage obligation. The transaction netted a gain on sale of
$3,087,000. M & J/Retail Limited Partnership received a distribution related to
the sale via its interest in Fulcrum, LLC in June 2004.
On July 29, 2004, the Registrant invested $215,000 to obtain a 7.28% interest in
M & J/2121 K Street, LLC, which has a 22% interest in 2121 K Street, LLC, which
owns 2121 K Street, an office building located in Washington, D.C. The
Registrant is also obligated to subscribe to a like number of Call Units in the
event that a proposed development of Expansion Space takes place. The cost of a
Call Unit shall not exceed $400 per unit.
On August 26, 2004, the property owned by Arlington LLC was sold for
$27,200,000, resulting in net cash proceeds of $8,480,000 after satisfaction of
the outstanding mortgage obligation. The transaction netted a gain on sale of
$9,651,700. The Registrant as well as M & J/Retail Limited Partnership received
a distribution related to the sale in September 2004.
On November 1, 2004, the Registrant contributed $603,500 as its share of a
capital call related to the refinancing of the 209 West Jackson property.
On December 3, 2004, the Registrant invested $373,000 to acquire 373 Call Units
representing a 65.60% interest in Metro Equities, Ltd., which owns an 8.83%
undivided interest in Walnut Creek Retail & Storage Center, located in Walnut
Creek, California.
-15-
PART II
ITEM 7 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS - 2003 COMPARED TO 2002
For the year ended December 31, 2003, the net income was $1,099,159 compared to
a net loss of $388,901 for the comparative period of 2002.
The Registrant made distributions to its partners this year as follows:
DATE AMOUNT PER UNIT
- ---------- --------- ---------
January 10 $ 188,007 $ 1.10
April 10 188,008 1.10
July 10 188,007 1.10
October 10 188,008 1.10
In March of 2003, the Registrant received a payment of $123,638 on the
indebtedness from M & J/Dover Limited Partnership.
On May 28, 2003, the Registrant invested $250,000 to obtain an 11.26% interest
in M & J/Louisville, LLC, which has a 33.33% interest in NW Acquisition Company,
LLC, which has a 90% interest in CMJ/NCT Louisville LLC, which has a 50%
interest in NCT Louisville LLC, which owns National City Tower, an office
building located in Louisville, Kentucky.
In May of 2003, the Registrant received a payment of $1,373,038, including
$641,914 of accrued interest, to satisfy the indebtedness from The Villas at
Monterey Limited Partnership and Tango Bay of Orlando L.C.
On July 8, 2003, a property owned by M & J/Retail Limited Partnership, Evergreen
Commons, was sold for $660,000, resulting in net cash proceeds of $212,395 after
satisfaction of the outstanding mortgage obligation. The transaction netted a
gain on sale of $94,002.
On September 29, 2003, Bayfair Mall was sold for $37,000,000, resulting in net
cash proceeds of $16,293,000, after satisfaction of the outstanding mortgage
obligation. The transaction netted a gain on sale of $11,360,000. M & J/Retail
received a distribution related to the sale in October 2003.
- 16 -
PART II
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 net loss was $388,901 compared to a
net loss of $215,523 for the comparative period of 2001.
The Registrant made distributions 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 received a liquidating distribution in 2003 for
the amount of $192,000, which resulted 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 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 proceeds preference.
- 17 -
PART II
ITEM 7 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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, 2005, 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, 2004, no amounts are
outstanding under this facility.
The liquid assets of the Registrant increased as of December 31, 2004, when
compared to December 31, 2003, due to partnership investment sales.
The general partners currently believe that the amount of working capital
reserves, when considered with the Registrant's projected cash flows from
operations in 2005 and borrowings under the revolving credit facility, will be
sufficient to cover any normal cash or liquidity requirements which may be
reasonably foreseen.
- 18 -
PART II
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report 20
First Wilkow Venture:
Consolidated Balance Sheets, December 31, 2004 and 2003 22
Consolidated Statements of Operations,
Years Ended December 31, 2004, 2003 and 2002 23
Consolidated Statements of Partners' Capital,
Years Ended December 31, 2004, 2003 and 2002 24
Consolidated Statements of Cash Flows,
Years Ended December 31, 2004, 2003 and 2002 25
Notes to Financial Statements,
December 31, 2004, 2003 and 2002 26
- 19 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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 19 as of and for the years ended December 31, 2004 and 2003.
Our audits also include the financial statement schedules listed in the index at
Item 15 on Page 52 for the years ended December 31, 2004 and 2003. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits 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, 2004 and 2003, and the results of their
operations, changes in partners' capital and their cash flows for the years then
ended 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.
/s/ Mayer Hoffman McCann P.C.
Mayer Hoffman McCann P.C.
Chicago, Illinois
February 18, 2005
- 20 -
INDEPENDENT AUDITOR'S REPORT
To the Partners
First Wilkow Venture
We have audited the consolidated financial statements of First Wilkow Venture
(the "Partnership") for the year ended December 31, 2002. Our audit also
included the financial statement schedules for the year ended December 31, 2002,
listed in the index at Item 15 on Page 52. 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 audit.
We conducted our audit 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 audit provides 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 the results of their
operations, changes in partners' capital and cash flows for the year ended
December 31, 2002, 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.
/s/ PHILIP ROOTBERG & COMPANY, LLP
PHILIP ROOTBERG & COMPANY, LLP
Chicago, Illinois
February 7, 2003
- 21 -
FIRST WILKOW VENTURE
CONSOLIDATED BALANCE SHEETS
December 31, 2004 and 2003
2004 2003
------------ ------------
ASSETS
REAL ESTATE
Land $ 4,030,069 $ 4,030,069
Buildings and improvements 33,052,041 31,659,299
Fixtures and equipment 23,511 46,999
------------ ------------
TOTAL REAL ESTATE 37,105,621 35,736,367
Accumulated depreciation 14,360,780 13,709,271
------------ ------------
NET REAL ESTATE 22,744,841 22,027,096
------------ ------------
INVESTMENTS IN REAL ESTATE PARTNERSHIPS 5,060,888 7,241,842
------------ ------------
LOANS RECEIVABLE 86,963 86,963
------------ ------------
OTHER ASSETS
Cash and cash equivalents 9,863,712 6,602,360
Certificates of deposit - restricted 250,000 250,000
Receivables and prepaid expenses 1,193,922 881,089
Deposits 893,892 1,020,331
Deferred charges 1,345,651 1,196,706
------------ ------------
TOTAL OTHER ASSETS 13,547,177 9,950,486
------------ ------------
TOTAL ASSETS $ 41,439,869 $ 39,306,387
============ ============
LIABILITIES AND PARTNERS' CAPITAL
MORTGAGE NOTES PAYABLE $ 19,638,439 $ 20,516,241
------------ ------------
OTHER LIABILITIES
Accounts payable and accrued expenses 95,758 345,792
Accrued property taxes 1,297,188 1,301,996
Deferred state income taxes 170,000 170,000
Security deposits and prepaid rent 856,963 506,740
------------ ------------
TOTAL OTHER LIABILITIES 2,419,909 2,324,528
------------ ------------
MINORITY INTEREST 3,137,378 3,151,441
------------ ------------
PARTNERS' CAPITAL (170,916 units authorized
and issued) 16,244,143 13,314,177
------------ ------------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $ 41,439,869 $ 39,306,387
============ ============
See Notes to Financial Statements
- 22 -
FIRST WILKOW VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2004, 2003 and 2002
2004 2003 2002
------------ ------------ ------------
REVENUE
Rental $ 8,375,821 $ 8,299,619 $ 8,387,447
Interest 120,296 85,272 172,154
Gain on disposal of real estate and other revenue 151,234 343,605 28,617
------------ ------------ ------------
TOTAL REVENUE 8,647,351 8,728,496 8,588,218
------------ ------------ ------------
PARTNERSHIP INVESTMENTS' INCOME (LOSS) 5,056,986 1,586,062 (105,735)
------------ ------------ ------------
EXPENSES
Operating 4,340,605 4,044,172 4,321,962
Real estate taxes 1,255,043 1,271,941 1,319,208
Depreciation and amortization 1,251,479 1,267,932 1,287,174
Interest 1,552,783 1,631,888 1,656,185
General and administrative 112,261 104,477 110,521
------------ ------------ ------------
TOTAL EXPENSES 8,512,171 8,320,410 8,695,050
------------ ------------ ------------
LOSS ON DISPOSITION OF TENANT
IMPROVEMENTS - 148,175 65,700
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 5,192,166 1,845,973 (278,267)
MINORITY INTEREST IN SUBSIDIARIES'
NET INCOME (1,134,155) (746,814) (110,634)
------------ ------------ ------------
NET INCOME (LOSS) $ 4,058,011 $ 1,099,159 $ (388,901)
============ ============ ============
UNITS - AUTHORIZED AND ISSUED
General partner 9,445 9,329 9,199
Limited partner 161,471 161,587 161,717
NET INCOME (LOSS) PER UNIT
General partner $ 23.74 $ 6.43 $ (2.28)
Limited partner 23.74 6.43 (2.28)
BOOK VALUE PER UNIT
General partner $ 95.04 $ 77.90 $ 75.87
Limited partner 95.04 77.90 75.87
CASH DISTRIBUTIONS PAID
General partner $ 6.60 $ 4.40 $ 6.30
Limited partner 6.60 4.40 6.30
See Notes to Financial Statements
- 23 -
FIRST WILKOW VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 2004, 2003 and 2002
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
------------- ------------- -------------
BALANCE - DECEMBER 31, 2001 $ 780,342 $ 13,652,378 $ 14,432,720
ADD (DEDUCT)
Loss for 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
ADD (DEDUCT)
Income for year ended
December 31, 2003 59,369 1,039,790 1,099,159
To reflect changes in partnership capital
between general and limited partners - net 16,770 (16,770) -
Cash distributions for the year ended
December 31, 2003 (40,620) (711,410) (752,030)
------------ ------------ ------------
BALANCE - DECEMBER 31, 2003 816,927 12,497,250 13,314,177
ADD (DEDUCT)
Income for year ended
December 31, 2004 224,002 3,834,009 4,058,011
To reflect changes in partnership capital
between general and limited partners - net 15,080 (15,080) -
Cash distributions for the year ended
December 31, 2004 (62,268) (1,065,777) (1,128,045)
------------ ------------ ------------
BALANCE - DECEMBER 31, 2004 $ 993,741 $ 15,250,402 $ 16,244,143
============ ============ ============
See Notes to Financial Statements
- 24 -
FIRST WILKOW VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2004, 2003 and 2002
2004 2003 2002
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 4,058,011 $ 1,099,159 $ (388,901)
Adjustments to reconcile net income (loss) to net cash
flows from operating activities:
Depreciation and amortization 1,251,479 1,267,932 1,287,174
Deferred state income taxes - - (6,000)
Net gain on disposal of land, building and
improvements - (94,002) -
Net loss on disposal of tenant improvements - 148,175 65,700
(Income) loss from partnerships (5,056,986) (1,586,062) 105,735
Decrease (increase) in operating assets:
Receivables and prepaid expenses (312,833) 357,003 (368,581)
Deposits 126,439 (215,502) 487,131
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (250,034) 174,419 64,877
Accrued property taxes (4,808) 6,274 39,447
Security deposits and prepaid rent 350,223 (77,707) (263,901)
------------ ------------ ------------
NET CASH FLOWS FROM OPERATING ACTIVITIES 161,491 1,079,689 1,022,681
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in land, building and furniture and equipment (1,709,278) (1,156,932) (667,844)
Investment in partnerships (697,747) (378,601) (883,293)
Collections of loans receivable - 854,762 -
Investments in loans receivable - - (36,038)
Investment in deferred charges (primarily unamortized
broker commissions) (408,891) (328,113) (415,734)
Proceeds from sale of real estate, net of selling expenses - 212,396 -
Partnership investment draws 7,935,687 1,904,058 1,667,101
Increase (decrease) in minority interest (14,063) 573,248 (810,623)
------------ ------------ ------------
NET CASH FLOWS FROM INVESTING ACTIVITIES 5,105,708 1,680,818 (1,146,431)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes and notes payable (1,223,946) (235,988) (227,090)
Proceeds from mortgage note financing 346,144 267,090 -
Distributions to partners (1,128,045) (752,030) (1,076,771)
------------ ------------ ------------
NET CASH FLOWS FROM FINANCING ACTIVITIES (2,005,847) (720,928) (1,303,861)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,261,352 2,039,579 (1,427,611)
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 6,602,360 4,562,781 5,990,392
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 9,863,712 $ 6,602,360 $ 4,562,781
============ ============ ============
See Notes to Financial Statements
- 25 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The financial statements include the
accounts of all entities in which First Wilkow Venture (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.
NATURE OF OPERATIONS - The Partnership owns outright or has participatory
ownership interests in real property located throughout the United States
for investment purposes. Rental income is derived from leasing to lessees
(under operating leases) various types of real estate owned by the
Partnership.
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 financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
DEPRECIATION - Depreciation on buildings, improvements, furniture and
equipment is computed using the straight-line and accelerated methods
based on the estimated useful lives of the respective assets as follows:
PROPERTY PRINCIPAL METHODS USEFUL LIVES
- ----------------------------- ---------------------- ------------------------------
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
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
- 26 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
AMORTIZATION - Deferred charges are being amortized using the
straight-line method over lives ranging from 1 to 40 years. These costs
represent real estate acquisition costs, deferred broker commissions and
mortgage financing costs.
INCOME TAXES - 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.
BASIS OF ACCOUNTING - For purposes of the consolidated statements 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 are in excess of the amount insured by
the Federal Deposit Insurance Corporation and are, therefore, considered a
concentration of credit risk.
Investments 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.
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 impairment has occurred, the excess of carrying value of the
asset over its estimated fair value will be charged to income.
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. No allowance for doubtful
accounts was deemed necessary as of December 31, 2004 and 2003.
- 27 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES
A summary of the income or loss from partnership investments included in
the accompanying consolidated statements of operations on the equity
method of accounting, unless otherwise indicated, is as follows:
2004 2003 2002
--------------- --------------- ---------------
L-C Office Partnership IV $ (181,735) $ (46,441) $ (172,302)
M & J/Grove Limited Partnership 6,933 (43,049) 6,328
Rosemont 28 Limited Partnership - - (471,697(b)
M & J/Eden Prairie Limited Partnership 213,731(a) -(a) -(a)
Duke Realty Limited Partnership 89,727(a) 88,694(a) 87,375(a)
First Candlewick Associates 48,675(a) 15,400(a) 23,650(a)
Second Wilkow Venture 13,888(a) 5,122(a) 4,728(a)
Wilkow/Retail Partners Limited Partnership 1,463(a) 189(a) 1,105(a)
M & J/Louisville, LLC 28,125(a) n/a n/a
M & J/LaSalle Associates LP 25,781(a) n/a n/a
M & J/Mid Oak Limited Partnership - 7,284(a) 1,050(a)
Northlake Tower Limited Partnership - - (62,399(a)(b)
Arlington LLC 3,083,679(b) 7,064 130,123
M & J/NCT Louisville LP 10,923(a) -(a) 6,750(a)
M & J/Prospect Crossing Limited Partnership 29,654 114,706 50,915
Fulcrum, LLC 705,884 1,536 15,658
M & J/Clark Street, LLC -(a) -(a) 30,582(a)
Yorkshire Plaza Investors, LLC -(a) 13,972(a) 29,159(a)
Wilkow/Grove Partners Limited Partnership -(a) 81(a) 322(a)
M & J/Battery, LLC 58,557(a) 29,813(a) 29,255(a)
M & J/Clarkfair Limited Partnership 829,699(b) 33,891 80,857
M & J/Westwood Limited Partnership 43,708 n/a n/a
M & J/Crossroads Limited Partnership (128,601) - 10,365
Metro Equities, Ltd. 1,496 n/a n/a
M & J/Bayfair 580, LLC 62,733(a) 1,244,014(a) 92,441(a)
Centennial FWV, LLC 112,666 113,786 -
------------ ------------ ------------
$ 5,056,986 $ 1,586,062 $ (105,735)
============ ============ ============
(a) Income recognized under the cost method.
(b) Includes gain/loss on disposition of investment.
- 28 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
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 unaudited
financial information provided by these partnerships as of their calendar
year ends.
Year ended December 31, 2004:
M & J/
PROSPECT
M & J/ CROSSING M & J/GROVE METRO SHOPS AT
ARLINGTON CENTENNIAL, LIMITED LIMITED EQUITIES, CLARK'S
LLC LLC PARTNERSHIP PARTNERSHIP LTD. POND LLC
----------- ----------- ----------- ----------- ---------- -----------
BALANCE SHEET
Real estate - net of accumulated
depreciation $ - $11,925,289 $10,622,765 $ 8,512,189 $ 463,026 $ -
Current assets 533,626 141,509 772,779 430,153 10,267 9,500
Other assets - 100,412 24,051 194,227 12,300 -
----------- ----------- ----------- ----------- ----------- -----------
TOTAL ASSETS $ 533,626 $12,167,210 $11,419,595 $ 9,136,569 $ 485,593 $ 9,500
=========== =========== =========== =========== =========== ===========
Mortgages payable $ - $10,002,726 $10,987,027 $ 6,239,174 $ 1,757,170 $ -
Other liabilities - 14,839 348,928 382,852 700 -
Partners' capital (deficit) 533,626 2,149,645 83,640 2,514,543 (1,272,277) 9,500
----------- ----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL (DEFICIT) $ 533,626 $12,167,210 $11,419,595 $ 9,136,569 $ 485,593 $ 9,500
=========== =========== =========== =========== =========== ===========
STATEMENT OF OPERATIONS
Revenue $ 2,438,030 $ 1,172,682 $ 1,936,967 $ 1,675,060 $ 17,404 $ 1,075,437
Less:
Operating expenses 879,459 191,237 704,259 961,599 5,036 916,619
Other expenses 1,015,035 604,062 824,921 426,944 10,842 609,009
Depreciation 297,307 255,314 277,071 338,316 2,581 187,360
----------- ----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 246,229 $ 122,069 $ 130,716 $ (51,799) $ (1,055) $ (637,551)
=========== =========== =========== =========== =========== ===========
- 29 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
Year ended December 31, 2002:
M & J/
PROSPECT
M & J/ CROSSING M & J/GROVE SHOPS AT
CENTENNIAL, LIMITED LIMITED CLARK'S
ARLINGTON LLC LLC PARTNERSHIP PARTNERSHIP POND LLC
------------- ------------ ------------ ------------ ------------
BALANCE SHEET
Real estate - net of
accumulated depreciation $ 17,299,046 $ 12,180,603 $ 10,899,835 $ 8,675,906 $ 16,481,481
Current assets 1,092,684 167,842 823,286 384,366 458,724
Other assets 359,591 113,096 10,255 194,782 605,384
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $ 18,751,321 $ 12,461,541 $ 11,733,376 $ 9,255,054 $ 17,545,589
============ ============ ============ ============ ============
Mortgages payable $ 18,019,168 $ 10,128,072 $ 11,141,446 $ 6,314,874 $ 15,615,291
Other liabilities 699,460 13,856 341,372 378,442 15,782
Partners' capital 32,693 2,319,613 250,558 2,561,738 1,914,516
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 18,751,321 $ 12,461,541 $ 11,733,376 $ 9,255,054 $ 17,545,589
============ ============ ============ ============ ============
STATEMENT OF OPERATIONS
Revenue $ 3,866,476 $ 1,248,594 $ 1,917,374 $ 1,555,574 $ 2,849,836
Less:
Operating expenses 2,052,979 202,638 518,112 955,073 986,203
Other expenses 1,442,898 609,642 834,012 430,734 1,379,791
Depreciation 371,805 255,314 277,065 331,990 410,141
------------ ------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (1,206) $ 181,000 $ 288,185 $ (162,223) $ 73,701
============ ============ ============ ============ ============
- 30 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
Year ended December 31, 2002:
M & J/
PROSPECT
M & J/ CROSSING M & J/GROVE SHOPS AT
CENTENNIAL, LIMITED LIMITED CLARK'S
ARLINGTON LLC LLC PARTNERSHIP PARTNERSHIP POND LLC
------------- ----------- ----------- ----------- -----------
BALANCE SHEET
Real estate - net of
accumulated depreciation $ 17,682,422 $12,435,917 $11,176,171 $ 8,828,460 $16,892,675
Current assets 1,172,251 50,222 754,887 553,489 282,775
Other assets 384,374 125,780 6,505 168,957 611,076
------------- ----------- ----------- ----------- -----------
TOTAL ASSETS $ 19,239,047 $12,611,919 $11,937,563 $ 9,550,906 $17,786,526
============= =========== =========== =========== ===========
Mortgages payable $ 18,162,923 $10,247,800 $11,286,775 $ 6,386,785 $15,736,376
Other liabilities 661,294 6,144 390,426 364,949 15,782
Partners' capital 414,830 2,357,975 260,362 2,799,172 2,034,368
------------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 19,239,047 $12,611,919 $11,937,563 $ 9,550,906 $17,786,526
============= =========== =========== =========== ===========
STATEMENT OF OPERATIONS
Revenue $ 4,114,839 $ 44,978 $ 2,126,486 $ 1,778,593 $ 2,802,933
Less:
Operating expenses 2,052,844 1,057 704,448 921,362 951,416
Other expenses 1,478,704 40,308 861,986 435,435 1,389,956
Depreciation 371,488 10,638 276,748 327,668 411,775
------------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 211,803 $ (7,025) $ 283,304 $ 94,128 $ 49,786
============= =========== =========== =========== ===========
- 31 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
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 project in Orlando, Florida. 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 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 had a loan receivable of
$731,124 from The Villas at Monterey Limited Partnership and Tango Bay of
Orlando, L.C. The loan was repaid in May 2003.
In 2001, The Villas at Monterey Limited Partnership and Tango Bay of
Orlando, L.C. sold the property for $5,985,000 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 was pursued. In April 2003, a foreclosure
action was completed that facilitated the liquidation of the asset through
a sale to an unrelated third party. The net proceeds of this sale allowed
for the full repayment of the loan receivable that had been outstanding
from The Villas at Monterey Limited Partnership and Tango Bay of Orlando,
L.C. in 2003.
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, 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 11).
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, which were subsequently sold in two separate lots of 12,500
shares for $500,044 and $528,168, resulting in gains of $383,419 and
$411,543, respectively.
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, 2004.
- 32 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
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 the 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.
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 and $71,872 from Lake Cook Office
Development - Building Four Limited Partnership and L-C Office Partnership
IV, 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.
On December 18, 2002, M & J/Dover Limited Partnership admitted CAPREIT of
Dover Farms, LLP as a partner. At this time, the partnership's name was
changed to Dover
- 33 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
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 proceeds
preference.
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 received a liquidating distribution in the amount of $192,000,
which resulted 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%. On February 24, 2004, the shopping center was sold for
$13,000,000. M & J/Eden Prairie Limited Partnership received a
distribution related to the sale in March 2004.
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. The property is
encumbered with a mortgage loan of $67,000,000, bearing interest at a
variable rate and maturing in March 2007.
M & J/LOUISVILLE, LLC
On May 28, 2003, the Partnership invested $250,000 to obtain an 11.26%
interest in M & J/Louisville LLC, which has a 33% interest in NW
Acquisition Company LLC, which has a 90% interest in CMJ/NCT Louisville
LLC, which has a 50% interest in NCT Louisville LLC, which owns National
City Tower, an office building 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. On August 26, 2004, Annex of Arlington
Heights was sold for $27,200,000. Arlington LLC received a distribution
related to the sale in September 2004.
- 34 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
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 37).
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 $19,905,000, bearing interest at 7.00% and maturing in 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 in 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 in January 2013.
METRO EQUITIES, LTD.
On December 3, 2004, the Partnership invested $373,000 to acquire 373 Call
Units representing a 65.60% interest in Metro Equities, Ltd., which owns
an 8.83% undivided interest in Walnut Creek Retail & Storage Center
located in Walnut Creek, California. The Call Unit holders are entitled to
a cumulative cash flow priority of 12.50% per annum. Upon sale or
refinancing, the Call Unit holders will receive the first $373,000 of
available net proceeds pro rata. Any proceeds remaining thereafter will be
split 75% to the holders of the Call Units and 25% to the General and
Class A Limited Partners.
- 35 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
M & J/2121 K STREET, LLC
On July 29, 2004, the Partnership invested $215,000 to obtain a 7.28%
interest in M & J/2121 K Street, LLC, which has a 22% interest in 2121 K
Street, LLC, which owns 2121 K Street, an office building located in
Washington, D.C. The Partnership is also obligated to subscribe to a like
number of Call Units in the event that a proposed development of Expansion
Space takes place. The cost of a Call Unit shall not exceed $400 per unit.
The property is encumbered with a mortgage of $38,850,000, bearing
interest at 4.97% and maturing in July 2007.
CONSOLIDATED PARTNERSHIPS
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 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.
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. Through a partial pay down of the
principal balance and approximately $5,000,000 of debt forgiveness by the
property's lender, GE Capital Corporation, the property's debt was reduced
to $10,000,000 and separated into two notes, the first note for $8,600,000
and the second note for $1,400,000.
On November 1, 2004, the property was refinanced with a new floating rate
loan from GE Capital Corporation. As part of the refinancing, 209 West
Jackson LLC was required to contribute new capital in the amount of
$1,000,000. A capital call was required for $850,000, of which the
Partnership's share was $603,500. The loan was funded in the amount of
$8,660,000 initially and carries an additional facility of $3,270,000 to
fund capital improvements and leasing costs. The note matures on November
1, 2007.
The financial position and results of operations of this company are
included in the accompanying consolidated financial statements.
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 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.
- 36 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
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.
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
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 June 11, 2004, the
property owned by Shops at Clark's Pond LLC was sold for $20,050,000.
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. On August 26, 2004, Annex of Arlington Heights was sold for
$27,200,000.
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 in San Leandro,
California. On September 29, 2003, Bayfair Mall was sold for $37,000,000.
M & J/Retail received distributions related to the sale in October 2003
and July 2004.
The financial position and results of operations of this partnership are
included in the accompanying consolidated financial statements.
- 37 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
The following is a summary of the financial positions and results of
operations of the entities included in consolidation as of December 31,
2004:
M & J/
209 WEST RETAIL LIMITED
JACKSON LLC PARTNERSHIP
----------- --------------
BALANCE SHEET
Real estate - net of
accumulated depreciation $11,559,514 $ -
Current assets 90,290 2,311,898
Other assets 2,086,273 30,000
----------- -----------
TOTAL ASSETS $13,736,077 $ 2,341,898
=========== ===========
Mortgages payable $ 8,660,000 $ -
Other long-term payables - -
Current liabilities 1,028,304 37,830
Minority interest 1,173,854 1,963,524
Partners' capital 2,873,919 340,544
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL $13,736,077 $ 2,341,898
=========== ===========
STATEMENT OF OPERATIONS
Revenue $ 3,568,601 $ 2,099,654
Less:
Operating expenses 1,822,259 16,489
Other expenses 815,096 14,240
Depreciation and amortization 391,539 -
Minority interest 156,515 977,640
----------- -----------
NET INCOME $ 383,192 $ 1,091,285
=========== ===========
- 38 -
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
The following is a summary of the financial positions and results of
operations of the entities included in consolidation as of December 31,
2004:
M & J/
209 WEST RETAIL LIMITED
JACKSON LLC PARTNERSHIP
----------- --------------
BALANCE SHEET
Real estate - net of
accumulated depreciation $11,767,932 $ -
Current assets 28,688 23,452
Other assets 996,011 2,142,672
----------- -----------
TOTAL ASSETS $12,792,631 $ 2,166,124
=========== ===========
Mortgages payable $ 8,313,451 $ -
Other long-term payables - -
Current liabilities 1,821,114 121,972
Minority interest 770,839 2,380,602
Partners' capital (deficit) 1,887,227 (336,450)
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL (DEFICIT) $12,792,631 $ 2,166,124
=========== ===========
STATEMENT OF OPERATIONS
Revenue $ 3,377,494 $ 1,595,496
Less:
Operating expenses 1,626,808 60,241
Other expenses 1,242,119 21,841
Depreciation and amortization 360,716 23,742
Minority interest 42,877 703,937
----------- -----------
NET INCOME $ 104,974 $ 785,735
=========== ===========
-39-
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(2) INVESTMENTS IN REAL ESTATE PARTNERSHIPS AND COTENANCIES (CONTINUED)
The following is a summary of the financial positions and results of
operations of the entities included in consolidation as of December 31,
2004:
M & J/
209 WEST RETAIL LIMITED
JACKSON 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 and amortization 325,847 20,913
Minority interest 39,961 70,672
----------- -----------
NET INCOME $ 97,837 $ 58,573
=========== ===========
-40-
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(3) LOANS RECEIVABLE
DECEMBER 31,
--------------------------
2004 2003
---------- ----------
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
---------- ----------
$ 86,963 $ 86,963
========== ==========
(4) RECENT ACCOUNTING PRONOUNCEMENTS
In December 2003, the Financial Accounting Standards Board ("FASB") issued
FASB Interpretation No. 46R ("FIN No. 46R"), "Consolidation of Variable
Interest Entities." The objective of this interpretation is to provide
guidance on how to identify a variable interest entity ("VIE") and
determine whether the assets, liabilities, noncontrolling interests, and
results of operations of a VIE need to be included in a company's
consolidated financial statements. A company that holds variable interests
in an entity will need to consolidate the entity if the company's interest
in the VIE is such that the company will absorb a majority of the VIE's
expected losses and/or receive a majority of the entity's expected
residual returns, if they occur. FIN No. 46R also requires additional
disclosures by primary beneficiaries and other significant variable
interest holders. The provisions of this interpretation are effective in
2004 for any of the Partnership's unconsolidated real estate investments
that may qualify as a VIE created after January 1, 2004. The Partnership
has determined that none of these investments will need to be consolidated
for 2004. For investments created before January 1, 2004, the provisions
are effective at the beginning of the Partnership's 2005 fiscal year. The
Partnership is currently assessing these investments to determine the
impact of any potential consolidation requirements in applying FIN No.
46R.
-41-
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(5) MORTGAGE NOTES PAYABLE
The mortgage notes payable as of December 31, 2004, consist of:
OUTSTANDING
ORIGINAL BALANCE AS OF PRINCIPAL PAYMENTS DURING YEAR ENDED DECEMBER 31,
PRINCIPAL MONTHLY DECEMBER 31, ---------------------------------------------------------
AMOUNT PAYMENTS 2004 2005 2006 2007 2008 2009
----------- ----------- ------------- ----------- ----------- ---------- ----------- ----
180 North Michigan,
7.13% due monthly
to August 1, 2008 (a) $ 7,300,000 $ 49,206 $ 6,794,404 $ 102,131 $ 109,764 $ 118,691 $ 6,463,818 $ -
Naperville Office Court,
7.13% due monthly
to July 1, 2008 (b) 4,500,000 30,337 4,184,035 63,276 68,005 73,088 3,979,666 -
209 West Jackson,
variable interest due
October 1, 2007 (c) 8,660,000 - 8,660,000 - - 8,660,000 - -
----------- ----------- ----------- ---------- ----------- ----
Total outstanding mortgage
note balance $19,638,439 $ 165,407 $ 177,769 $8,851,779 $10,443,484 $ -
=========== =========== =========== ========== =========== ====
(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 the balance outstanding will be due October 1, 2007.
The principal amount of $8,660,000 carries an additional facility for
$3,270,000. As of December 31, 2004, no amounts have been drawn on the
additional facility.
-42-
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(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, 2004, 2003 and 2002, were $1,274,331, $1,316,276
and $1,120,178, respectively. These fees related to a portfolio
encompassing approximately 435,000 square feet.
As of December 31, 2004 and 2003, $11,612 and $0, 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, 2004, 2003 and 2002, to Wilkow & Wilkow, P.C. (a company owned by a
general partner of the Partnership) for services in the ordinary course of
business were $38,000, $41,000 and $38,600, respectively. For the years
ended December 31, 2004, 2003 and 2002, $84,883, $91,275 and $90,184,
respectively, were paid to M & J Wilkow, Ltd. for administrative 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
$293,474, $283,870 and $283,857 for the years ended December 31, 2004,
2003 and 2002, respectively, under a lease for office space.
(7) RENTALS RECEIVABLE UNDER OPERATING LEASES
Future minimum rentals receivable by the Partnership on noncancelable
operating leases as of December 31, 2004, are as follows:
Years Ending December 31,
- -------------------------
2005 $ 6,403,400
2006 4,982,854
2007 4,438,464
2008 4,019,737
2009 3,284,376
Thereafter 5,102,887
-------------
Total future minimum rentals receivable $ 28,231,718
=============
-43-
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(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 as of December 31, 2004, consist of the following:
DEFERRED DEFERRED
MORTGAGE LEASING SYNDICATION
COSTS COMMISSIONS COSTS TOTAL
----------- ----------- ----------- -----------
Original cost $ 276,394 $ 2,073,349 $ 25,000 $ 2,374,743
Accumulated amortization (182,089) (847,003) - (1,029,092)
----------- ----------- ----------- -----------
$ 94,305 $ 1,226,346 $ 25,000 $ 1,345,651
=========== =========== =========== ===========
Deferred charges as of December 31, 2003, consist of the following:
DEFERRED DEFERRED
MORTGAGE LEASING SYNDICATION
COSTS COMMISSIONS COSTS TOTAL
----------- ----------- ----------- -----------
Original cost $ 267,994 $ 2,061,598 $ 25,000 $ 2,354,592
Accumulated amortization (152,656) (1,005,230) - (1,157,886)
----------- ----------- ----------- -----------
$ 115,338 $ 1,056,368 $ 25,000 $ 1,196,706
=========== =========== =========== ===========
The total amortization expense recognized for the years ended December 31,
2004, 2003 and 2002, is $259,946, $287,235 and $227,411, 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 2004 amount.
(9) PARTNERS' CAPITAL
As of December 31, 2004, general partner units totaled 9,445 units and the
general partners also beneficially owned 4,472 limited partner units.
As of December 31, 2003, general partner units totaled 9,329 units and the
general partners also beneficially owned 4,340 limited partner units.
As of December 31, 2002, general partner units totaled 9,199 units and the
general partners also beneficially owned 4,340 limited partner units.
-44-
FIRST WILKOW VENTURE
NOTES TO FINANCIAL STATEMENTS
(10) CASH FLOW DISCLOSURES
The following is a summary of supplemental cash flow information:
YEARS ENDED DECEMBER 31,
----------------------------------------
2004 2003 2002
------------ ----------- -------------
Interest paid during the year $ 1,552,783 $ 1,631,888 $ 1,656,185
============ =========== =============
Noncash investing and financing activities:
Proceeds from the sale of real estate
and escrow deposits used to retire
debt $ - $ 385,368 $ -
============ =========== =============
Refinancing $ 8,369,032 $ - $ -
============ =========== =============
Write-off of fully depreciated fixed
assets $ 340,024 $ - $ 52,964
============ =========== =============
(11) COMMITMENTS AND CONTINGENCIES
As of December 31, 2004, 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 2). The
facility, due September 1, 2005, 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 2). As of December 31, 2004, there are no amounts
outstanding under this facility.
As of December 31, 2004 and 2003, 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.
(12) SUBSEQUENT EVENTS
In January 2005, the Partnership made a distribution in the amount of
$1,041,978, or $6.10 per unit.
-45-
PART II
ITEM 9 - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
None
-46-
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 Partner 55 General Counsel Brother of Clifton J. Wilkow
Clifton J. Wilkow General Partner 52 None Brother of Marc R. Wilkow
AUDIT COMMITTEE
The Registrant's units are not traded on a major stock exchange, and therefore,
there is no requirement for the Registrant to maintain an audit committee.
CODE OF ETHICS
The Registrant has not adopted a written code of ethics, primarily because
management believes and understands its officers and employees adhere to and
follow ethical standards without the necessity of a written policy.
-47-
PART III
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."
-48-
PART III
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 18,427 10.78%
Gisa W. Slonim Irrevocable Trust 11,779 6.89%
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) as of December 31, 2004:
AMOUNT BENEFICIALLY OWNED % OF OWNED
------------------------- ----------
General Partnership Units 9,445 5.53%
Units of Limited Partnership Interest 4,472 2.62%
(b) 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.
-49-
PART III
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, 2004, 2003 and
2002, were $1,274,331, $1,316,276 and $1,120,178, respectively (see Note 6 to
Consolidated Financial Statements).
Professional fees paid during the years ended December 31, 2004, 2003 and 2002,
to Wilkow & Wilkow, P.C. for services in the ordinary course of business were
$38,000, $41,000 and $38,600, respectively.
Professional fees paid during the years ended December 31, 2004, 2003 and 2002,
to M & J Wilkow, Ltd. were $84,883, $91,275 and $90,184, 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.
-50-
PART IV
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
Audit fees paid to Philip Rootberg & Company, LLP, whose name changed to Mayer
Hoffman McCann P.C. on October 1, 2003, for 2004 and 2003 were $64,635 and
$68,813, respectively, including fees associated with the reviews of the
Registrant's quarterly reports on Form 10-Q.
AUDIT-RELATED FEES
There were no audit-related fees paid to the Registrant's principal accountants
during 2004 and 2003.
TAX FEES
Tax fees paid to CBIZ Rootberg Business Services, Inc., whose name changed to
CBIZ Accounting, Tax & Advisory Services of Chicago, Inc. on October 1, 2003, in
2004 and 2003 were $40,700 and $38,317, respectively. Tax services rendered to
the Registrant primarily include federal and state tax return preparation
services and consultations on tax matters.
ALL OTHER FEES
Fees related to the evaluation of software of $2,400 were paid to CBIZ Rootberg
Business Services, Inc. in 2004. There were no other fees paid to the
Registrant's principal accountants in 2003.
-51-
PART IV
ITEM 16- EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. The Index to Consolidated Financial Statements is set forth on Page
19
2. Financial Statement Schedules:
Page
----
Report of Independent Registered Public Accounting Firm 20
Schedule II - Valuation and Qualifying Accounts and Reserves,
Years Ended December 31, 2004, 2003 and 2002 53
Schedule III - Real Estate and Accumulated Depreciation,
Year Ended December 31, 2004 54
Notes to Schedule III 56
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 65
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the year ended
December 31, 2004.
-52-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Years Ended December 31, 2004, 2003 and 2002
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
------------- ---------- -------- ---------- -------------
BALANCE AS OF CHARGED TO ADDITIONS
BEGINNING PROFIT OR BALANCE AS OF
OF YEAR INCOME OTHER DEDUCTIONS CLOSE OF YEAR
------------- ---------- -------- ---------- -------------
YEAR ENDED DECEMBER 31, 2004
Reserve for bad debts $ - $ - $ - $ - $ -
============= ========== ======== ========== =============
Reserve for losses on loans $ - $ - $ - $ - $ -
============= ========== ======== ========== =============
Reserve for valuation of investments $ - $ - $ - $ - $ -
============= ========== ======== ========== =============
YEAR ENDED DECEMBER 31, 2003
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 $ - $ - $ - $ - $ -
============= ========== ======== ========== =============
-53-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2004
COST CAPITALIZED
INITIAL COST TO COMPANY SUBSEQUENT TO ACQUISITION
---------------------------- --------------------------
BUILDINGS AND CARRYING
DESCRIPTION ENCUMBRANCES LAND IMPROVEMENTS IMPROVEMENTS COST
------------------- ------------ ------------ ------------- ------------- ----------
Naperville Office Court,
Naperville, Illinois Office Building $ 4,184,035 $ 1,796,459 $ 3,321,535 $ 2,410,680 $ -
180 North Michigan,
Chicago, Illinois Office Building 6,794,404 1,061,120 6,550,000 8,836,132 -
209 West Jackson,
Chicago, Illinois Office Building (A) 8,660,000 1,172,490 10,552,406 1,381,288 -
------------ ------------ ------------- ------------- ----------
Total $ 19,638,439 $ 4,030,069 $ 20,423,941 $ 12,628,100 $ -
============ ============ ============= ============= ==========
See Notes 1, 2 and 3 accompanying Schedule III.
(A) Owned by 209 West Jackson LLC; 71%-owned subsidiary of First Wilkow Venture.
-54-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
December 31, 2004
GROSS AMOUNT AT WHICH CARRIED AS OF
DECEMBER 31, 2004
------------------------------------------ LIFE ON WHICH
BUILDINGS AND ACCUMULATED DATE OF DATE DEPRECIATION
LAND IMPROVEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED
------------ ------------- ------------- ------------ ----------------- -------- -------------
Naperville Office Court,
Naperville, Illinois $ 1,796,459 $ 5,732,215 $ 7,528,674 $ 3,196,868 1980 1986 25 Years
180 North Michigan,
Chicago, Illinois 1,061,120 15,386,132 16,447,252 9,598,491 1926 1968 35 Years
Renovated in 1967
209 West Jackson,
Chicago, Illinois 1,172,490 11,933,694 13,106,184 1,546,668 1898 1999 40 Years
Renovated in 1989
------------ ------------- ------------- ------------
Total $ 4,030,069 $ 33,052,041 $ 37,082,110 $ 14,342,027
============ ============= ============= ============
-55-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
Years Ended December 31, 2004, 2003 and 2002
1. Reconciliation of Cost of Real Estate During Each of the Years Ended
December 31, 2004, 2003 and 2002
BALANCE AS OF ADDITIONS BALANCE AS OF
DECEMBER 31, 2003 AT COST RETIREMENTS DECEMBER 31, 2004
----------------- ----------- ----------- -----------------
Naperville Office Court,
Naperville, Illinois $ 5,494,605 $ 240,317 $ 2,707 $ 5,732,215
180 North Michigan,
Chicago, Illinois 14,355,420 1,344,542 313,830 15,386,132
209 West Jackson,
Chicago, Illinois 11,809,274 124,420 - 11,933,694
----------------- ----------- ----------- -----------------
Total $ 31,659,299 $ 1,709,279 $ 316,537 $ 33,052,041
================= =========== =========== =================
-56-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
Years Ended December 31, 2004, 2003 and 2002
1. Reconciliation of Cost of Real Estate During Each of the Years Ended
December 31, 2004, 2003 and 2002
BALANCE AS OF ADDITIONS BALANCE AS OF
DECEMBER 31, 2002 AT COST RETIREMENTS DECEMBER 31, 2003
----------------- ----------- ----------- -----------------
Naperville Office Court,
Naperville, Illinois $ 5,462,164 $ 32,441 $ - $ 5,494,605
180 North Michigan,
Chicago, Illinois 13,822,176 533,244 - 14,355,420
209 West Jackson,
Chicago, Illinois 11,462,796 346,478 - 11,809,274
One Strip Shopping Center:
Evergreen Commons,
Evergreen Park, Illinois 710,902 - 710,902 -
----------------- ----------- ----------- -----------------
Total $ 31,458,038 $ 912,163 $ 710,902 $ 31,659,299
================= =========== =========== =================
-57-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
Years Ended December 31, 2004, 2003 and 2002
1. Reconciliation of Cost of Real Estate During Each of the Years Ended
December 31, 2004, 2003 and 2002
BALANCE AS OF ADDITIONS BALANCE AS OF
DECEMBER 31, 2001 AT COST RETIREMENTS 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
================= ========= =========== =================
-58-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
Years Ended December 31, 2004, 2003 and 2002
2. Reconciliation of Accumulated Depreciation of Real Estate During Each of
the Years Ended December 31, 2004, 2003 and 2002
DECEMBER 31, 2003 AT COST RETIREMENTS DECEMBER 31, 2004
----------------- ----------- ----------- -----------------
Naperville Office Court,
Naperville, Illinois $ 2,953,490 $ 246,084 $ 2,706 $ 3,196,868
180 North Michigan,
Chicago, Illinois 9,501,024 411,296 313,829 9,598,491
209 West Jackson,
Chicago, Illinois 1,213,832 332,836 - 1,546,668
----------------- ----------- ----------- -----------------
Total $ 13,668,346 $ 990,216 $ 316,535 $ 14,342,027
================= =========== =========== =================
-59-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
Years Ended December 31, 2004, 2003 and 2002
2. Reconciliation of Accumulated Depreciation of Real Estate During Each of
the Years Ended December 31, 2004, 2003 and 2002
BALANCE AS OF ADDITIONS BALANCE AS OF
DECEMBER 31, 2002 AT COST RETIREMENTS DECEMBER 31, 2003
----------------- --------- ----------- -----------------
Naperville Office Court,
Naperville, Illinois $ 2,724,141 $ 237,383 $ 8,034 $ 2,953,490
180 North Michigan,
Chicago, Illinois 9,165,386 419,162 83,524 9,501,024
209 West Jackson,
Chicago, Illinois 898,590 315,258 16 1,213,832
One Strip Shopping Center:
Evergreen Commons,
Evergreen Park, Illinois 242,470 8,894 251,364 -
----------------- --------- ----------- -----------------
Total $ 13,030,587 $ 980,697 $ 342,938 $ 13,668,346
================= ========= =========== =================
-60-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
Years Ended December 31, 2004, 2003 and 2002
2. Reconciliation of Accumulated Depreciation of Real Estate During Each of
the Years Ended December 31, 2004, 2003 and 2002
BALANCE AS OF ADDITIONS BALANCE AS OF
DECEMBER 31, 2001 AT COST RETIREMENTS 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
================= ========== ============ =================
-61-
FIRST WILKOW VENTURE
(A Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION - Continued
December 31, 2004, 2003 and 2002
BASIS OF REAL ESTATE FOR FEDERAL INCOME TAX PURPOSES
BUILDINGS AND
LAND IMPROVEMENTS (A)
----------- ----------------
FIRST WILKOW VENTURE
180 North Michigan $ 1,080,374 $ 5,943,475
Naperville Office Court 301,349 1,802,212
----------- ----------------
SUBTOTAL 1,381,723 7,745,687
SUBSIDIARIES
209 West Jackson 1,581,844 7,368,874
----------- ----------------
TOTAL CONSOLIDATED $ 2,963,567 $ 15,114,561
=========== ================
(A) Net of accumulated depreciation
-62-
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 26, 2005
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 March 26, 2005.
By: Clifton J. Wilkow
-------------------------------------
Clifton J. Wilkow, General Partner and
Executive Vice President of
M & J Wilkow, Ltd.
By: Peter Boelke
-------------------------------------
Peter Boelke, Senior Vice President of
M & J Wilkow, Ltd.
-63-
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
(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.
-64-