<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 March 31, 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: 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
---- ----
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<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
March 31, 1996 and December 31, 1995
(unaudited)
Assets
------
1996 1995
<TABLE> ---- ----
<CAPTION>
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1).............. $ 190,402 130,097
Rent and other receivables...................... 1,368 1,273
Prepaid expenses................................ 2,159 4,734
---------- ---------
Total current assets.......................... 193,929 136,104
---------- ---------
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................... 2,166,294 2,121,518
---------- ---------
Net investment property....................... 4,872,053 4,916,829
---------- ---------
Deferred financing costs (net of accumulated
amortization of $13,184 and $11,544 for 1996
and 1995, respectively) (Note 1)................ 19,600 21,240
---------- ---------
Total assets...................................... $5,085,582 5,074,173
========== =========
See accompanying notes to financial statements.
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</TABLE>
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
March 31, 1996 and December 31, 1995
(unaudited)
Liabilities and Partners' Capital (Deficit)
-------------------------------------------
1996 1995
<TABLE> ---- ----
<CAPTION>
<S> <C> <C>
Current liabilities:
Current portion of long-term debt............... $ 66,719 63,049
Accounts payable and accrued expenses........... 30,049 13,045
Accrued real estate taxes....................... 33,000 22,000
Prepaid rents................................... 1,337 2,173
Due to Affiliates (Note 2)...................... 7,052 2,786
----------- -----------
Total current liabilities..................... 138,157 103,053
Tenant security deposits.......................... 22,066 22,055
Long-term debt, less current portion (Notes 1
and 3).......................................... 1,009,267 1,058,634
----------- -----------
Total liabilities............................. 1,169,490 1,183,742
----------- -----------
Partners' capital (deficit) (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 3,714 3,153
Cumulative cash distributions................. (13,297) (12,992)
----------- -----------
(9,083) (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 $337,307 was
paid to Affiliates)......................... 7,874,967 7,874,967
Cumulative net income......................... 597,271 541,671
Cumulative cash distributions................. (4,547,063) (4,516,868)
----------- -----------
3,925,175 3,899,770
----------- -----------
Total Partners' capital..................... 3,916,092 3,890,431
----------- -----------
Total liabilities and Partners' capital...........$ 5,085,582 5,074,173
=========== ===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
For the three months ended March 31, 1996 and 1995
(unaudited)
1996 1995
<TABLE> ---- ----
<CAPTION>
<S> <C> <C>
Income:
Rental income................................... $ 278,349 257,819
Interest income................................. 1,155 2,173
Other income.................................... 4,675 17,266
--------- --------
284,179 277,258
--------- --------
Expenses:
Professional services to Affiliates............. 2,320 3,678
Professional services to non-affiliates......... 18,000 18,221
General and administrative expenses to
Affiliates.................................... 4,296 4,648
General and administrative expenses to
non-affiliates................................ 533 790
Property operating expenses to Affiliates....... 12,636 12,257
Property operating expenses to non-affiliates... 122,572 130,373
Mortgage and other interest..................... 21,245 24,697
Depreciation.................................... 44,776 43,988
Amortization.................................... 1,640 1,639
--------- --------
228,018 240,291
--------- --------
Net income........................................ $ 56,161 36,967
========= ========
Net income allocated to:
General Partner................................. 561 370
Limited Partners................................ 55,600 36,597
--------- --------
Net income........................................ $ 56,161 36,967
========= ========
Net income allocated to the one General
Partner Unit.................................... $ 561 370
========= ========
Net income allocated to Limited Partners per
weighted average of Limited Partnership Units
of 9,246.62..................................... $ 6.01 3.96
========= ========
See accompanying notes to financial statements.
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</TABLE>
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the three months ended March 31, 1996 and 1995
(unaudited)
1996 1995
<TABLE> ---- ----
<CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 56,161 36,967
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................. 44,776 43,988
Amortization of loan fees..................... 1,640 1,639
Changes in assets and liabilities:
Rents and other receivables................. (95) 1,749
Prepaid expenses............................ 2,575 1,403
Accounts payable and accrued expenses....... 17,004 41,699
Accrued real estate taxes................... 11,000 10,686
Prepaid rents............................... (836) 2,953
Due to Affiliates........................... 4,266 6,663
Tenant security deposits.................... 11 (499)
--------- --------
Net cash provided by operating activities......... 136,502 147,248
--------- --------
Cash flows from financing activities:
Principal payments of long-term debt............ (45,697) (312,245)
Cash distributions.............................. (30,500) (60,938)
--------- --------
Net cash used in financing activities............. (76,197) (373,183)
--------- --------
Net increase (decrease) in cash and cash
equivalents..................................... 60,305 (225,935)
Cash and cash equivalents at beginning of period.. 130,097 388,432
--------- --------
Cash and cash equivalents at end of period........ $ 190,402 162,497
========= ========
Supplemental disclosure of cash flow information:
Cash paid for interest.......................... $ 21,245 24,697
========= ========
See accompanying notes to financial statements.
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</TABLE>
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
March 31, 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 March 31, 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 March 31, 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.
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 March 31, 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.
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INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1996
(unaudited)
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.
(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 $6,982 and $2,704 was unpaid as of March 31, 1996 and
December 31, 1995, respectively.
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<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1996
(unaudited)
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 $12,636 and $12,257 for the three months ended March 31, 1996 and 1995,
respectively. Such fees are included in property operating expenses to
Affiliates, of which $70 and $82 was unpaid as of March 31, 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 April 1996, the Partnership paid a distribution of $35,000 to the Partners,
of which $34,650 was distributed to the Limited Partners and $350 was
distributed to the General Partner.
On May 1, 1996, the Partnership paid an additional $50,000 as a principal
reduction of the long-term debt collateralized by the Scottsdale Sierra
Apartments.
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<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 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 March 31, 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 March 31, 1996.
At March 31, 1996, the Partnership had cash and cash equivalents of $190,402.
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 3% for the three months ended
March 31, 1996, as compared to the three months ended March 31, 1995, due to a
firming of the Scottsdale rental market and higher per unit rents. Repairs to
the property decreased approximately 6% for the three months ended March 31,
1996, as compared to the three months ended March 31, 1995, due to decreases in
maintenance expenses. This decrease was partially offset by increases in
marketing, supplies and salaries expenses.
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<PAGE>
Interest income decreased for the three months ended March 31, 1996, as compared
to the three months ended March 31, 1995, due to a decrease in interest rates.
Other income decreased for the three months ended March 31, 1996, as compared to
the three months ended March 31, 1995, due to decreases in damage and non-
operating income at Scottsdale Sierra Apartments.
Professional services to Affiliates decreased for the three months ended March
31, 1996, as compared to the three months ended March 31, 1995, due to decreases
in legal, accounting and other professional services required by the
Partnership.
Mortgage and other interest decreased for the three months ended March 31, 1996,
as compared to the three months ended March 31, 1995, due to the refinancing and
debt reduction of the mortgage loans 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:
1995 1996
----------------------- -----------------------
<TABLE>
<CAPTION>
<S> <C> <C>
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
----------- ----- ----- ----- ----- ----- ----- ----- -----
Scottsdale Sierra
Apartments
Scottsdale, Arizona 98% 81% 86% 95% 97%
PART II
Items 1 through 6(b) are omitted because of the absence of conditions under
which they are required.
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</TABLE>
<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
/S/ ROBERT D. PARKS
By: Robert D. Parks
Chairman
Date: May 13, 1996
/S/ CYNTHIA M. HASSETT
By: Cynthia M. Hassett
Principal Financial Officer and
Principal Accounting Officer
Date: May 13, 1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 190,402
<SECURITIES> 0
<RECEIVABLES> 1,368
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 193,929
<PP&E> 7,038,347
<DEPRECIATION> 2,166,294
<TOTAL-ASSETS> 5,085,582
<CURRENT-LIABILITIES> 138,157
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,916,092
<TOTAL-LIABILITY-AND-EQUITY> 5,085,582
<SALES> 0
<TOTAL-REVENUES> 284,179
<CGS> 0
<TOTAL-COSTS> 135,208
<OTHER-EXPENSES> 26,789
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,245
<INCOME-PRETAX> 56,161
<INCOME-TAX> 0
<INCOME-CONTINUING> 56,161
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,161
<EPS-PRIMARY> 6.01
<EPS-DILUTED> 6.01
</TABLE>
