<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 1995
or
[ ] Transition Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
------------- ---------------
Commission File #0-15743
Inland Real Estate Growth Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3371418
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60521
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 708-218-8000
N/A
----------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
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
--- ---
-1-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
September 30, 1995 and December 31, 1994
(unaudited)
Assets
------
1995 1994
---------- ---------
Current assets:
Cash and cash equivalents (Note 1).............. $ 78,491 388,432
Rent and other receivables...................... 3,574 4,266
Prepaid expenses................................ 7,653 4,530
---------- ---------
Total current assets........................ 89,718 397,228
---------- ---------
Investment property (including acquisition fees
paid to Affiliates of $463,000) (Notes 1 and 2):
Land............................................ 1,608,458 1,608,458
Buildings and improvements...................... 5,406,554 5,406,554
---------- ---------
7,015,012 7,015,012
Less accumulated depreciation................... 2,075,197 1,943,233
---------- ---------
Total investment property, net of
accumulated depreciation.................. 4,939,815 5,071,779
---------- ---------
Deferred financing costs (net of accumulated
amortization of $9,906 and $4,988 for 1995
and 1994, respectively) (Note 1).................. 22,878 27,796
----------- ---------
Total assets........................................ $5,052,411 5,496,803
========== =========
See accompanying notes to financial statements.
-2-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
September 30, 1995 and December 31, 1994
(unaudited)
Liabilities and Partners' Capital (Deficit)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt............... $ 61,843 31,451
Accounts payable and accrued expenses........... 34,192 4,723
Accrued real estate taxes....................... 41,002 28,468
Prepaid rents................................... 4,660 2,079
Due to Affiliates (Note 2)...................... 2,092 412
----------- ----------
Total current liabilities................... 143,789 67,133
Tenant security deposits........................ 20,617 19,295
Long-term debt, less current portion (Note 1)... 1,074,856 1,446,668
----------- ----------
Total liabilities........................... 1,239,262 1,533,096
----------- ----------
Partners' capital (deficit) (Notes 1 and 2):
General Partner:
Capital contribution...................... 500 500
Cumulative net income..................... 2,380 2,207
Cumulative cash distributions............. (12,992) (11,313)
----------- ----------
(10,112) (8,606)
----------- ----------
Limited Partners:
Units of $1,000. Authorized 16,000 Units,
9,246.62 Units outstanding (net of
offering costs of $1,379,705, of which
$337,307 was paid to Affiliates)........ 7,874,967 7,874,967
Cumulative net income.................... 465,162 448,024
Cumulative cash distributions............ (4,516,868) (4,350,678)
----------- ----------
3,823,261 3,972,313
----------- ----------
Total Partners' capital................... 3,813,149 3,963,707
----------- ----------
Total liabilities and Partners' capital......... $ 5,052,411 5,496,803
=========== ==========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, September 30,
------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income:
Rental income.................... $215,839 218,426 707,541 717,782
Interest income.................. 1,031 9,816 4,756 34,833
Other income..................... 9,400 11,097 33,781 29,786
-------- -------- -------- --------
226,270 239,339 746,078 782,401
-------- -------- -------- --------
Expenses:
Professional services to
Affiliates..................... 4,522 3,606 11,268 15,108
Professional services to
non-affiliates................. - - 18,121 22,829
General and administrative
expenses to Affiliates......... 3,690 3,306 12,582 12,885
General and administrative
expenses to non-affiliates..... 1,502 901 3,868 3,693
Property operating expenses to
Affiliates..................... 9,240 10,184 33,094 32,811
Property operating expenses to
non-affiliates................. 192,431 125,629 443,536 418,866
Mortgage and other interest...... 22,215 28,587 69,416 137,881
Depreciation..................... 43,989 42,920 131,964 138,378
Amortization..................... 1,639 1,617 4,918 5,462
-------- -------- -------- --------
279,228 216,750 728,767 787,913
-------- -------- -------- --------
Operating income (loss)............ (52,958) 22,589 17,311 (5,512)
Extraordinary items relating to
refinancing...................... - - - (125,886)
Gain on sale of investment
property......................... - 801 - 903,048
-------- -------- -------- --------
Net income (loss).................. $(52,958) 23,390 17,311 771,650
======== ======== ======== ========
Net income (loss) allocated to:
General Partner.................. (530) 234 173 7,716
Limited Partners................. (52,428) 23,156 17,138 763,934
-------- -------- -------- --------
Net income (loss).................. $(52,958) 23,390 17,311 771,650
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the three and nine months ended September 30, 1995 and 1994
(unaudited)
Three months Nine months
ended ended
September 30, September 30,
------------- -------------
1995 1994 1995 1994
------ ---- ---- ------
Net income (loss) allocated to the one
General Partner Unit:
Operating income (loss)............. $ (530) 226 173 (56)
Extraordinary items relating to
refinancing....................... - - - (1,258)
Gain on sale of investment property. - 8 - 9,030
------ ---- ---- ------
$ (530) 234 173 7,716
====== ==== ==== ======
Net income (loss) per weighted average
Limited Partner Unit (9,246.62 for
1995 and 1994):
Operating income (loss)............. (5.67) 2.42 1.85 (.59)
Extraordinary items relating to
refinancing....................... - - - (13.48)
Gain on sale of investment property. - .08 - 96.69
------ ---- ---- ------
$(5.67) 2.50 1.85 82.62
====== ==== ==== ======
See accompanying notes to financial statements.
-5-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income .................................... $ 17,311 771,650
Adjustments to reconcile net income to net
cash provided by operating activities:
Gain on sale of investment property ........... - (903,048)
Extraordinary items relating to refinancing ... - 125,886
Depreciation .................................. 131,964 138,378
Amortization of loan fees ..................... 4,918 5,462
Amortization of discount on long-term debt .... - 8,309
Changes in assets and liabilities:
Rents and other receivables ............... 692 66,966
Prepaid expenses .......................... (3,123) (4,203)
Escrow deposits ........................... - 5,632
Accounts payable and accrued expenses ..... 29,469 (35,106)
Accrued real estate taxes ................. 12,534 (140,833)
Prepaid rents ............................. 2,581 (2,359)
Due to Affiliates ......................... 1,680 (226)
Tenant security deposits .................. 1,322 (566)
--------- ----------
Net cash provided by operating activities ......... 199,348 35,942
--------- ----------
Cash flows from investing activities:
Condominium conversion costs .................. - (84,827)
Proceeds from sale of investment property ..... - 2,090,525
--------- ----------
Net cash provided by investing activities ......... - 2,005,698
--------- ----------
Cash flows from financing activities:
Principal payments of long-term debt .......... (341,420) (19,253)
Payoff of long-term debt ...................... - (3,242,131)
Proceeds from refinancing of long-term debt ... - 1,500,000
Payments of deferred financing costs .......... - (32,793)
Payment of prepayment penalty ................. - (86,084)
Cash distributions ............................ (167,869) (1,260,000)
--------- ----------
Net cash used in financing activities ............. (509,289) (3,140,261)
--------- ----------
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
(continued)
For the nine months ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Net decrease in cash and cash equivalents ................................... $ (309,941) (1,098,621)
Cash and cash equivalents at beginning of period ............................ 388,432 1,894,776
----------- ----------
Cash and cash equivalents at end of period .................................. $ 78,491 796,155
=========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest .................................................. $ 69,407 129,581
=========== ==========
Supplemental schedule of non-cash investing and financing activities:
Sale of investment property:
Basis in investment property sold ........................................... $ - 1,531,284
Reduction of accumulated depreciation related to investment property sold ... - (431,283)
Condominium conversion costs ................................................ - 87,476
Gain on sale ................................................................ - 903,048
----------- ----------
Proceeds from sale of Country Club condominium units ........................ $ - 2,090,525
=========== ==========
</TABLE>
See accompanying notes to financial statements.
-7-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 1995
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1994, which are
included in the Partnership's 1994 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.
(1) Organization and Basis of Accounting
Inland Real Estate Growth Fund, L.P. (the "Partnership"), was formed on June 26,
1985 pursuant to the Delaware Revised Uniform Limited Partnership Act. On
December 9, 1985, the Partnership commenced an Offering of 25,000 (decreased to
16,000 in 1986) Limited Partnership Units (the "Units") pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933. The
Offering terminated in August 1987 with a total of 9,465 Units sold to the
public at $1,000 per Unit resulting in $9,465,000 gross offering proceeds, not
including the General Partner's contribution of $500. In January 1988, the
Partnership repurchased a total of 90 Units ($90,000) from certain investors who
were not deemed eligible to be partners in this Partnership under the terms of
the Partnership Agreement. As of September 30, 1995, the Partnership has
repurchased 128 Units ($120,328) from various Limited Partners through the Unit
Repurchase Program. In addition, the General Partner has repurchased 16.57
Units ($15,064) with its own funds from cash distributions received as of
September 30, 1995. Inland Real Estate Investment Corporation is the General
Partner.
Offering costs have been offset against the Limited Partners' capital accounts.
The Partnership originally acquired four apartment complexes. The investment
properties are recorded at cost. Three of these properties have been sold.
The Partnership uses the straight-line method of depreciation with useful lives
of thirty years and five years for buildings and improvements and personal
property, respectively. Maintenance and repair expenses are charged to
operations as incurred. Significant improvements are capitalized and
depreciated over their estimated useful lives.
Deferred financing costs are amortized on a straight-line basis over the terms
of the related loans. Discounts on long-term mortgage notes were amortized
over the term of the respective notes using the interest method.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
Certain amounts in the 1994 financial statements have been reclassified to
conform to the 1995 presentation. Such reclassifications did not change the
1994 reported results.
-8-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1995
(unaudited)
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present fairly
the financial position and results of operations. Interim periods are not
necessarily indicative of results to be expected for the year.
(2) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services to Affiliates and general and administrative expenses to
Affiliates, of which $2,092 and $412 was unpaid as of September 30, 1995 and
December 31, 1994, respectively.
The Partnership's property is managed by an Affiliate of the General Partner
pursuant to a management agreement which provides for annual fees not to exceed
4.5% of gross rental receipts. The Affiliate earned Property Management Fees
of $33,094 and $32,811 for the nine months ended September 30, 1995 and 1994,
respectively. Such costs are included in property operating expenses to
Affiliates, all of which has been paid.
Inland Residential Sales ("IRS"), an Affiliate of the General Partner, is acting
as general contractor for the condominium conversion of Country Club Apartments
and will be reimbursed (as set forth under terms of the Partnership Agreement)
for direct costs. IRS has not and will not take any profit on this project.
The Partnership had incurred $61,691 of such costs for the nine months ended
September 30, 1994, all of which was paid as of September 30, 1994.
In connection with the sales of Country Club condominium units, sales
commissions of $200,441, that were not included in the costs of sale, may be
payable to an Affiliate of the General Partner to the extent that the Limited
Partners have received their Original Capital plus a return thereon as specified
in the Partnership Agreement.
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
On December 9, 1985, the Partnership commenced an Offering of 25,000 (decreased
to 16,000 in 1986) Limited Partnership Units pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. The Offering
terminated in August 1987 with a total of 9,465 Units sold to the public at
$1,000 per Unit resulting in $9,465,000 in gross offering proceeds, which does
not include the General Partner's contribution of $500. Of the $9,465,000 of
gross offering proceeds, $5,633,955 was invested in the two properties owned by
the Partnership. In addition, proceeds from the Offering were used to pay debt
service on certain notes payable incurred with property acquisitions and to pay
offering and organization costs. In January 1988, the Partnership repurchased a
total of 90 Units ($90,000) from certain investors who were not deemed eligible
to be partners in this Partnership under the terms of the Partnership Agreement.
As of September 30, 1995, the Partnership has repurchased 128 Units ($120,328)
from various Limited Partners through the Unit Repurchase Program. There are no
funds remaining for the repurchase of Units through this program. In addition,
the General Partner used its own funds from cash distributions received through
September 30, 1995, to purchase 16.57 Units ($15,064) from Limited Partners.
At September 30, 1995, the Partnership had cash and cash equivalents of $78,491.
The Partnership intends to use such funds to provide cash distributions to
partners and for working capital requirements.
The Partnership is generating sufficient cash flow to cover operating expenses
and debt service. To the extent that this source is insufficient to meet the
Partnership's needs, the Partnership may rely on advances from Affiliates of the
General Partner, other short-term financing, or may sell the remaining property.
Results of Operations
Scottsdale Sierra rental income increased approximately 3% for the nine months
ended September 30, 1995, as compared to the nine months ended September 30,
1994, due to a firming of the Scottsdale rental market and higher per unit
rents. Repairs to the property increased approximately 21% for the nine months
ended September 30, 1995, as compared to the nine months ended September 30,
1994, due primarily to scheduled exterior painting at the property. The
decrease in mortgage and other interest for the three and nine months ended
September 30, 1995, as compared to the three and nine months ended September 30,
1994, is the result of the refinancing and debt reduction of the mortgage loan
collateralized by the Scottsdale Sierra Apartments. Monthly principal and
interest payments decreased from $27,819 to $12,314 due primarily to the
reduction in the principal amount as well as a lower interest rate (7.75% as
compared to 10.25%) on the new first mortgage.
The decrease in rental income for the three and nine months ended September 30,
1995, as compared to the three and nine months ended September 30, 1994, is due
to the sale of the remaining Country Club condominium units during June 1994.
-10-
<PAGE>
Interest income decreased for the three and nine months ended September 30,
1995, as compared to the three and nine months ended September 30, 1994, due to
the Partnership investing net sales proceeds received from the Country Club
condominium sales prior to the distributions to the Limited Partners. This
increase was partially offset by an increase in interest rates.
Other income increased for the nine months ended September 30, 1995, as compared
to the nine months ended September 30, 1994, due to an increase in non-operating
income at Scottsdale Sierra Apartments.
Professional services to Affiliates and non-affiliates decreased for the nine
months ended September 30, 1995, as compared to the nine months ended September
30, 1994, due to decreases in legal, accounting and other professional services
required by the Partnership and the sale of the Country Club condominium units.
The gain on sale of investment property for the three and nine months ended
September 30, 1994 is the result of the sale of the remaining Country Club
condominium units.
The following is a list of approximate occupancy levels for the Partnership's
investment properties as of the end of each quarter during 1994 and 1995:
<TABLE>
<CAPTION>
1994 1995
-------------------------------- --------------------------------
at at at at at at at at
Properties 03/31 06/30 09/30 12/31 03/31 06/30 09/30 12/31
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Country Club Apartments
Arlington Heights, Illinois 27%* N/A N/A N/A N/A N/A N/A
Scottsdale Sierra Apartments
Scottsdale, Arizona 96% 92% 94% 96% 98% 92% 89%
</TABLE>
* This occupancy represented three occupied of the remaining eleven units. All
eleven units were under contract to be sold.
PART II
Items 1 through 6(b) are omitted because of the absence of conditions under
which they are required.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INLAND REAL ESTATE GROWTH FUND, L.P.
By: Inland Real Estate Investment Corporation
General Partner
By: Robert D. Parks
Chairman
Date: November 13, 1995
By: Cynthia M. Hassett
Principal Financial Officer and
Principal Accounting Officer
Date: November 13, 1995
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 78,491
<SECURITIES> 0
<RECEIVABLES> 3,574
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 89,718
<PP&E> 7,015,012
<DEPRECIATION> 2,075,197
<TOTAL-ASSETS> 5,052,411
<CURRENT-LIABILITIES> 143,789
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,813,149
<TOTAL-LIABILITY-AND-EQUITY> 5,052,411
<SALES> 0
<TOTAL-REVENUES> 746,078
<CGS> 0
<TOTAL-COSTS> 476,630
<OTHER-EXPENSES> 182,721
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69,416
<INCOME-PRETAX> 17,311
<INCOME-TAX> 0
<INCOME-CONTINUING> 17,311
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,311
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 1.85
</TABLE>
