<PAGE> 1
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 June 30, 1996
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: 630-218-8000
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
--- ---
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<PAGE> 2
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
June 30, 1996 and December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Assets
1996 1995
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1).............. $ 180,819 130,097
Rent and other receivables...................... 235 1,273
Prepaid expenses................................ 9,303 4,734
---------- -------
Total current assets.......................... 190,357 136,104
---------- -------
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...................... 5,429,889 5,429,889
--------- ---------
7,038,347 7,038,347
Less accumulated depreciation................... 2,211,069 2,121,518
--------- ---------
Net investment property....................... 4,827,278 4,916,829
--------- ---------
Deferred financing costs (net of accumulated
amortization of $14,823 and $11,544 for 1996
and 1995, respectively) (Note 1)................ 17,961 21,240
----------- ----------
Total assets...................................... $ 5,035,596 5,074,173
============ ============
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 3
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
June 30, 1996 and December 31, 1995
(unaudited)
<TABLE>
<CAPTION>
Liabilities and Partners' Capital (Deficit)
-------------------------------------------
1996 1995
---- ----
<S> <C> <C>
Current liabilities:
Current portion of long-term debt............... $ 72,089 63,049
Accounts payable and accrued expenses........... 16,707 13,045
Accrued real estate taxes....................... 22,000 22,000
Prepaid rents................................... 1,158 2,173
Due to Affiliates (Note 2)...................... 505 2,786
---------- -------
Total current liabilities..................... 112,459 103,053
Tenant security deposits.......................... 19,050 22,055
Long-term debt, less current portion (Notes 1
and 3).......................................... 937,025 1,058,634
--------- ---------
Total liabilities............................. 1,068,534 1,183,742
--------- ---------
Partners' capital (deficit) (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 4,574 3,153
Cumulative cash distributions................. (13,647) (12,992)
--------- ---------
(8,573) (9,339)
--------- ---------
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......................... 682,381 541,671
Cumulative cash distributions................. (4,581,713) (4,516,868)
--------- ---------
3,975,635 3,899,770
--------- ---------
Total Partners' capital..................... 3,967,062 3,890,431
--------- ---------
Total liabilities and Partners' capital........... $ 5,035,596 5,074,173
============ ============
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 4
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and six months ended June 30, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
Three months Six months
ended ended
June 30, June 30,
------------ ----------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Rental income.................... $ 265,730 233,883 544,079 491,702
Interest income.................. 1,748 1,552 2,903 3,725
Other income..................... 8,304 7,115 12,979 24,381
--------- --------- --------- ---------
275,782 242,550 559,961 519,808
Expenses: --------- --------- --------- ---------
Professional services to
Affiliates..................... 2,198 3,068 4,518 6,746
Professional services to
non-affiliates................. (806) - 17,194 18,121
General and administrative
expenses to Affiliates......... 1,843 4,244 6,139 8,892
General and administrative
expenses to non-affiliates..... 2,955 1,476 3,489 2,366
Property operating expenses to
Affiliates..................... 12,348 11,597 24,984 23,854
Property operating expenses to
non-affiliates................. 104,788 120,732 227,360 251,105
Mortgage and other interest...... 20,071 22,504 41,316 47,201
Depreciation..................... 44,776 43,988 89,551 87,975
Amortization..................... 1,639 1,639 3,279 3,279
--------- --------- --------- ---------
189,812 209,248 417,830 449,539
--------- --------- --------- ---------
Net income......................... $ 85,970 33,302 142,131 70,269
========== ========== ========== ==========
Net income allocated to:
General Partner.................. 860 333 1,421 703
Limited Partners................. 85,110 32,969 140,710 69,566
--------- --------- --------- ---------
Net income......................... $ 85,970 33,302 142,131 70,269
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 5
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the three and six months ended June 30, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
Three months Six months
ended ended
June 30, June 30,
-------------- ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income allocated to the one
General Partner Unit............. $ 860 333 1,421 703
========== ========== ========== ==========
Net income allocated to Limited
Partners per weighted average of
Limited Partnership Units of
9,246.62......................... $ 9.21 3.57 15.22 7.52
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 6
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the six months ended June 30, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 142,131 70,269
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................. 89,551 87,975
Amortization of loan fees..................... 3,279 3,279
Changes in assets and liabilities:
Rents and other receivables................. 1,038 (129)
Prepaid expenses............................ (4,569) (5,828)
Accounts payable and accrued expenses....... 3,662 19,337
Prepaid rents............................... (1,015) (1,238)
Due to Affiliates........................... (2,281) 945
Tenant security deposits.................... (3,005) (3,177)
----------- -----------
Net cash provided by operating activities......... 228,791 171,433
----------- -----------
Cash flows from financing activities:
Principal payments of long-term debt............ (112,569) (326,692)
Cash distributions.............................. (65,500) (121,875)
----------- -----------
Net cash used in financing activities............. (178,069) (448,567)
----------- -----------
Net increase (decrease) in cash and
cash equivalents................................ 50,722 (277,134)
Cash and cash equivalents at beginning of period.. 130,097 388,432
----------- -----------
Cash and cash equivalents at end of period........ $ 180,819 111,298
============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest.......................... $ 41,316 47,201
============ ============
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 7
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
June 30, 1996
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1995, which are
included in the Partnership's 1995 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"), is a limited
partnership formed in June 1985 pursuant to the Delaware Revised Uniform
Limited Partnership Act, to invest in income-producing multi-family residential
properties. On December 9, 1985, the Partnership commenced an Offering of
25,000 (decreased to 16,000 Units in 1986) Limited Partnership Units (the
"Units") pursuant to a Registration under the Securities Act of 1933. The
Partnership terminated its Offering period in August 1987 with a total of 9,465
Units sold, yielding gross offering proceeds of $9,465,000, of which $5,633,955
was invested in two properties, Country Club Apartments and Scottsdale Sierra
Apartments. All of the holders of these Units were admitted to the Partnership.
In January 1988, the Partnership repurchased a total of 90 Units ($90,000) from
certain investors who were deemed not eligible to be partners in this
Partnership under the Partnership Agreement. As of June 30, 1996, the
Partnership had repurchased 128 Units ($120,328) through the Unit Repurchase
Program from various Limited Partners. In addition, the General Partner has
repurchased 16.57 Units ($15,064) with its own funds from cash distributions
received through June 30, 1996. The Limited Partners of the Partnership share
in the benefits of ownership of the Partnership's real property investments in
proportion to the number of Units held. Inland Real Estate Investment
Corporation is the General Partner.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Offering costs have been offset against the Limited Partners' capital accounts.
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<PAGE> 8
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1996
(unaudited)
The investment properties are carried at the lower of aggregate cost or net
realizable value. Periodically, the Partnership will review its real estate
portfolio and if the investment property suffers an impairment in value which
is deemed to be other than temporary, the investment property would be reduced
to the net realizable value of the property. As of June 30, 1996, there have
been no such impairments. 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 loan.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents and are carried at
cost, which approximates market.
The carrying amount of cash and cash equivalents, rents and other receivables,
accounts payable and accrued expenses and accrued real estate taxes
approximates fair value because of the relative short maturity of these
instruments.
The Partnership believes that the interest rate associated with the long-term
debt approximates market interest rates for this type of debt instrument, and
as such, the carrying amount of the long-term debt approximates the fair value.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets to Be Disposed Of" was issued in March 1995 and
is effective for fiscal years beginning after December 15, 1995. This
pronouncement is not expected to have a material effect on the financial
position or results of operations of 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.
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<PAGE> 9
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1996
(unaudited)
(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 $437 and $2,704 was unpaid as of June 30, 1996 and
December 31, 1995, respectively.
The Partnership's investment 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 $24,984 and $23,854 for the six months ended June 30, 1996
and 1995, respectively. Such fees are included in property operating expenses
to Affiliates, of which $68 and $82 was unpaid as of June 30, 1996 and December
31, 1995, respectively.
In connection with the sales of Country Club condominium units, sales
commissions of $200,441, that have not been 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. In the opinion of the General Partner,
it is unlikely that these sales commissions will be paid by the Partnership.
(3) Subsequent Events
In July 1996, the Partnership paid a distribution of $45,700 to the Partners,
of which $45,243 was distributed to the Limited Partners and $457 was
distributed to the General Partner.
On August 1, 1996, the Partnership paid an additional $55,000 as a principal
reduction of the long-term debt collateralized by the Scottsdale Sierra
Apartments.
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<PAGE> 10
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 as described in Item 1 above) 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.
All of the holders of these Units were admitted to the Partnership. Of the
$9,465,000 of gross offering proceeds, $5,633,955 was invested in two
properties, Country Club Apartments and Scottsdale Sierra Apartments. 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 and distributions to Limited Partners. 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 June 30, 1996, the Partnership had
repurchased 128 Units ($120,328) through the Unit Repurchase Program from
various Limited Partners. In addition, the General Partner has repurchased
16.57 Units ($15,064) with its own funds from cash distributions received as of
June 30, 1996.
At June 30, 1996, the Partnership had cash and cash equivalents of $180,819.
The Partnership intends to use such funds to provide cash distributions to
partners, pay down the debt on the Scottsdale Sierra Apartments 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
The Partnership has one remaining investment property, Scottsdale Sierra
Apartments. Rental income increased approximately 11% for the six months ended
June 30, 1996, as compared to the six months ended June 30, 1995, due primarily
to a firming of the Scottsdale rental market and higher per unit rents. Repairs
to the property decreased approximately 8% for the six months ended June 30,
1996, as compared to the six months ended June 30, 1995, due to decreases in
maintenance expenses. This decrease was partially offset by increases in
swimming pool, security and salaries expenses.
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<PAGE> 11
Interest income decreased for the six months ended June 30, 1996, as compared
to the six months ended June 30, 1995, due to the Partnership using cash
available to paydown the debt on Scottsdale Sierra Apartments. Interest income
increased for the three months ended June 30, 1996, as compared to the three
months ended June 30, 1995, due to the Partnership investing cash available
until it was distributed to the Limited Partners or used to paydown the debt on
Scottsdale Sierra Apartments.
Other income decreased for the six months ended June 30, 1996, as compared to
the six months ended June 30, 1995, due to decreases in damage and non-
operating income at Scottsdale Sierra Apartments.
Professional services to Affiliates decreased for the three and six months
ended June 30, 1996, as compared to the three and six months ended June 30,
1995, due to decreases in accounting and other professional services required
by the Partnership. Professional services to non-affiliates decreased for the
three and six months ended June 30, 1996, as compared to the three and six
months ended June 30, 1995, due to a decrease in outside accounting fees.
General and administrative expenses to Affiliates decreased for the three and
six months ended June 30, 1996, as compared to the three and six months ended
June 30, 1995, due to a decrease in investor service expenses. General and
administrative expenses increased for the three and six months ended June 30,
1996, as compared to the three and six months ended June 30, 1995, due to
increases in printing and filing fees.
Mortgage and other interest decreased for the three and six months ended June
30, 1996, as compared to the three and six months ended June 30, 1995, due to
the debt reduction of the mortgage loan collateralized by the Scottsdale Sierra
Apartments.
The following is a list of approximate occupancy levels for the Partnership's
investment property as of the end of each quarter during 1995 and 1996:
<TABLE>
<CAPTION>
1995 1996
----------------------- -----------------------
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>
Scottsdale Sierra
Apartments
Scottsdale, Arizona 98% 81% 86% 95% 97% 89%
</TABLE>
PART II
Items 1 through 6(b) are omitted because of the absence of conditions under
which they are required.
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<PAGE> 12
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
/S/ ROBERT D. PARKS
-------------------
By: Robert D. Parks
Chairman
Date: August 12, 1996
/S/ PATRICIA A. CHALLENGER
--------------------------
By: Patricia A. Challenger
Senior Vice President
Date: August 12, 1996
/S/ CYNTHIA M. HASSETT
-------------------------------
By: Cynthia M. Hassett
Principal Financial Officer and
Principal Accounting Officer
Date: August 12, 1996
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 180,819
<SECURITIES> 0
<RECEIVABLES> 235
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 190,357
<PP&E> 7,038,347
<DEPRECIATION> 2,211,069
<TOTAL-ASSETS> 5,035,596
<CURRENT-LIABILITIES> 112,459
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,967,062
<TOTAL-LIABILITY-AND-EQUITY> 5,035,596
<SALES> 0
<TOTAL-REVENUES> 559,961
<CGS> 0
<TOTAL-COSTS> 252,344
<OTHER-EXPENSES> 34,619
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,316
<INCOME-PRETAX> 142,131
<INCOME-TAX> 0
<INCOME-CONTINUING> 142,131
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 142,131
<EPS-PRIMARY> 15.22
<EPS-DILUTED> 15.22
</TABLE>
