<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For The Fiscal Year Ended December 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File #0-15743
Inland Real Estate Growth Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3371418
(State of organization) (I.R.S. Employer Identification Number)
2901 Butterfield Road, Oak Brook, Illinois 60521
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 708-218-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP UNITS
(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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. Not applicable.
The Prospectus of the Registrant dated December 9, 1985, as supplemented and
filed pursuant to Rule 424(b) and 424(c) under the Securities Act of 1933 is
incorporated by reference in Parts I, II and III of this Annual Report on Form
10-K.
-1-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
TABLE OF CONTENTS
Part I Page
------ ----
Item 1. Business...................................................... 3
Item 2. Properties.................................................... 4
Item 3. Legal Proceedings............................................. 4
Item 4. Submission of Matters to a Vote of Security Holders........... 5
Part II
-------
Item 5. Market for the Partnership's Limited Partnership Units
and Related Security Holder Matters.......................... 5
Item 6. Selected Financial Data....................................... 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 7
Item 8. Financial Statements and Supplementary Data................... 9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.......................... 23
Part III
--------
Item 10. Directors and Executive Officers of the Registrant............ 23
Item 11. Executive Compensation........................................ 28
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 29
Item 13. Certain Relationships and Related Transactions................ 29
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 30
SIGNATURES............................................................. 31
-2-
<PAGE>
PART I
Item 1. Business
The Registrant, Inland Real Estate Growth Fund, L.P. (the "Partnership"), was
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. The Partnership has 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 December 31, 1995. The Limited Partners
of the Partnership share 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 Partnership is engaged solely in the business of real estate investment. A
presentation of information about industry segments would not be material to an
understanding of the Partnership's business taken as a whole.
The Partnership made the following real property investments:
<TABLE>
<CAPTION>
Name of Property Number Date of Type of
and Location of Units Purchase Ownership
- - ---------------- -------- -------- -------------
<S> <C> <C> <C>
Peppertree Apartments 204 11/21/85 Fee ownership
Brandon, Florida (sold of land and
6/30/87) improvements
Evergreen Court Apartments 188 12/27/85 Fee ownership
Arlington Heights, Illinois (sold of land and
6/30/86) improvements
Country Club Apartments (a) 86 12/30/85 Fee ownership
Arlington Heights, Illinois (various of land and
sales dates improvements
1993 through
1994)
Scottsdale Sierra Apartments (b) 160 12/31/85 Fee ownership
Scottsdale, Arizona of land and
improvements
</TABLE>
-3-
<PAGE>
(a) Reference is made to Note 2 of the Notes to Financial Statements filed with
this Annual Report for a description of the sale of Country Club Apartments.
(b) Reference is made to Notes 2 and 3 of the Notes to Financial Statements
filed with this Annual Report for the current outstanding principal balance
and a description of the long-term mortgage indebtedness secured by
Scottsdale Sierra Apartments.
Scottsdale Sierra Apartments, the Partnership's remaining real property
investment, is subject to competition from similar types of properties in the
vicinity in which it is located. Approximate occupancy levels for the property
are set forth in Item 2 below to which reference is hereby made. The
Partnership's real property investments are or were located in or near the
Chicago, Illinois, Phoenix, Arizona or Tampa, Florida metropolitan areas. The
Partnership had no real property investments located outside the United States.
The Partnership does not segregate revenues or assets by geographic region, and
such a presentation is not applicable and would not be material to an
understanding of the Partnership's business taken as a whole.
The Partnership had no employees during 1995.
The terms of transactions between the Partnership and Affiliates of the General
Partner of the Partnership are set forth in Item 11 and Note 6 of the Notes to
Financial Statements filed with this Annual Report to which reference is hereby
made for a description of such terms and transactions.
Item 2. Properties
The Partnership owns directly the property referred to under Item 1 above to
which reference is hereby made for a description of said property.
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 N/A
Scottsdale Sierra
Apartments
Scottsdale, Arizona 96% 92% 94% 96% 98% 81% 86% 95%
</TABLE>
* This occupancy represented three occupied units of the remaining eleven units.
All eleven units were under contract to be sold.
Item 3. Legal Proceedings
The Partnership is not subject to any material pending legal proceedings.
-4-
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during 1995.
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1995, there were 687 holders of Units of the Partnership.
There is no public market for Units nor is it anticipated that any public market
for Units will develop. Reference is made to Item 6 below for a discussion of
cash distributions made to the Limited Partners.
Although the Partnership had established a Unit Repurchase Program consisting of
1% of the offering proceeds plus earnings realized thereon, there are no funds
remaining for the repurchase of Units through this program. The General Partner
has committed to purchase with its own funds Units having an aggregate purchase
price up to 1% of Cash Available for Distribution realized from the commencement
of the Partnership through the end of the Partnership fiscal year immediately
preceding receipt of such repurchase request. Reference is made to "Unit
Repurchase Program" on page 20 of the Prospectus of the Partnership dated
December 9, 1985, which is incorporated herein by reference.
Item 6. Selected Financial Data
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
For the years ended December 31, 1995, 1994, 1993, 1992 and 1991
(not covered by Independent Auditors' Report)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Total assets........... $5,074,173 5,496,803 8,341,847 8,889,356 9,478,440
========== ========== ========== ========== ==========
Long-term debt......... $1,058,634 1,446,668 3,184,598 4,757,703 4,792,130
========== ========== ========== ========== ==========
Total income........... $1,003,116 1,035,851 1,470,707 1,552,824 1,568,520
========== ========== ========== ========== ==========
Operating income (loss) 94,593 57,841 (220,588) (134,808) (17,335)
Extraordinary items
relating to
refinancing.......... - (125,886) - - -
Gain on sale of
investment property.. - 897,048 1,339,172 - -
---------- ---------- ---------- ---------- ----------
Net income (loss)...... $ 94,593 829,003 1,118,584 (134,808) (17,335)
========== ========== ========== ========== ==========
</TABLE>
-5-
<PAGE>
Item 6. Selected Financial Data, continued.
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
For the years ended December 31, 1995, 1994, 1993, 1992 and 1991
(not covered by Independent Auditors' Report)
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net income (loss)
allocated to the one
General Partner Unit:
Operating income (loss) 946 578 (2,206) (1,348) (173)
Extraordinary items
relating to
refinancing........ - (1,258) - - -
Gain on sale of
investment property - 8,970 13,392 - -
---------- ---------- ---------- ---------- ----------
Net income (loss)...... $ 946 8,290 11,186 (1,348) (173)
========== ========== ========== ========== ==========
Net income (loss) per
Unit allocated to
Limited Partners (b):
Operating income (loss) 10.13 6.19 (23.62) (14.43) (1.84)
Extraordinary items
relating to
refinancing........ - (13.48) - - -
Gain on sale of
investment property - 96.04 143.38 - -
---------- ---------- ---------- ---------- ----------
Net income (loss)...... $ 10.13 88.75 119.76 (14.43) (1.84)
========== ========== ========== ========== ==========
Cash distributed to
Limited Partners..... $ 166,190 1,715,198 55,062 362,699 421,636
========== ========== ========== ========== ==========
Cash distributions
to Limited Partners
per Unit (b)......... $ 17.97 185.49 5.95 39.21 45.30
========== ========== ========== ========== ==========
Weighted average
Limited Partnership
Units outstanding.... 9,246.62 9,246.62 9,246.62 9,250.12 9,307.95
========== ========== ========== ========== ==========
</TABLE>
(a) The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Annual
Report.
(b) The net income (loss) and cash distributions per Limited Partner Unit are
based upon the weighted average number of Units outstanding.
-6-
<PAGE>
Item 7. 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 December 31, 1995, 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
December 31, 1995.
At December 31, 1995, the Partnership had cash and cash equivalents of $130,097.
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
Country Club Apartments
- - -----------------------
As of December 31, 1993, the Partnership had sold fifty-five of the eighty-six
Country Club condominium units resulting in a gain on sale of $1,339,172. As of
December 31, 1994, the Partnership sold Country Club's remaining thirty-one
condominium units, resulting in a gain on sale of $897,048. The decrease in
rental and other income, property operating expenses and depreciation for the
years ended December 31, 1995 and 1994, as compared to the year ended December
31, 1993, is due to the sale of these condominium units.
-7-
<PAGE>
Scottsdale Sierra Apartments
- - ----------------------------
Rental income at Scottsdale Sierra Apartments increased approximately 3%, for
the year ended December 31, 1995, as compared to the year ended December 31,
1994, due to a firming of the Scottsdale rental market. Property operating
expenses to non-affiliates increased approximately 15% for the year ended
December 31, 1995, as compared to the year ended December 31, 1994, due
primarily to scheduled exterior painting at the property. The decrease in
mortgage and other interest for the years ended December 31, 1995 and 1994, as
compared to the year ended December 31, 1993, is the result of the refinancing
and debt reduction of the mortgage loans 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 amortization for the years ended December 31, 1995 and 1994, as
compared to the year ended December 31, 1993, is due to the refinancing of the
long-term debt secured by the Partnership's assets and the write off of the
related unamortized loan fees as an extraordinary expense for the year ended
December 31, 1994. A prepayment penalty on the then existing first mortgage and
the balance of the discount on the junior mortgage have also been included as
extraordinary expenses for the year ended December 31, 1994. Reference is made
to Notes 2 and 7 of the Notes to Financial Statements for further discussion on
the refinancing and long-term debt reduction of Scottsdale Sierra Apartments.
Interest income decreased for the year ended December 31, 1995, as compared to
the year ended December 31, 1994, due to the Partnership using net sales
proceeds received from the Country Club condominium sales for distributions to
Limited Partners and paydown the debt on Scottsdale Sierra Apartments. Interest
income increased for the year ended December 31, 1994, as compared to the year
ended December 31, 1993, due to the Partnership investing net sales proceeds
received from the Country Club condominium sales prior to being distributed to
the Limited Partners.
Professional services to Affiliates and non-affiliates increased for the year
ended December 31, 1994, as compared to the years ended December 31, 1995 and
1993, due to the legal and accounting services required by the Partnership for
the condominium conversion and sales and refinancing of the debt secured by the
Partnership's properties.
Inflation
Inflation in future periods is likely to increase rental income levels (from
leases to new tenants or renewals of existing tenants) to rise and fall in
accordance with normal market conditions. Due to the short term nature
(generally no longer than one year) of the property's leases, the adjustments to
rental income should offset most of the increases in property operating expenses
with little effect on operating income.
Continued inflation may cause capital appreciation of the Partnership's
investment property over a period of time as rental rates and replacement costs
of the property continue to increase.
-8-
<PAGE>
Impact of Accounting Pronouncements Not Yet Adopted
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.
Item 8. Financial Statements and Supplementary Data
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Index
-----
Page
----
Independent Auditors' Report............................................. 10
Financial Statements:
Balance Sheets, December 31, 1995 and 1994............................. 11
Statements of Operations, for the years ended
December 31, 1995, 1994 and 1993...................................... 13
Statements of Partners' Capital (Deficit), for the
years ended December 31, 1995, 1994 and 1993.......................... 15
Statements of Cash Flows, for the years ended
December 31, 1995, 1994 and 1993...................................... 16
Notes to Financial Statements.......................................... 18
Schedules not filed:
All schedules have been omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.
-9-
<PAGE>
Independent Auditors' Report
The Partners
Inland Real Estate Growth Fund, L.P.
We have audited the financial statements of Inland Real Estate Growth Fund, L.P.
(a limited partnership) as listed in the accompanying index. These financial
statements are the responsibility of the General Partner of the Partnership. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with 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 the
General Partner of the Partnership, 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 financial statements referred to above present fairly, in
all material respects, the financial position of Inland Real Estate Growth Fund,
L.P. as of December 31, 1995 and 1994 and the results of its operations and its
cash flows for each of the years in the three-year period ended December 31,
1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
January 19, 1996
-10-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets
------
1995 1994
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1).............. $ 130,097 388,432
Rent and other receivables...................... 1,273 4,266
Prepaid expenses................................ 4,734 4,530
---------- ----------
Total current assets.......................... 136,104 397,228
---------- ----------
Investment property (including acquisition fees paid
to Affiliates of $463,000) (Notes 1, 2 and 6):
Land............................................ 1,608,458 1,608,458
Buildings and improvements...................... 5,429,889 5,406,554
---------- ----------
7,038,347 7,015,012
Less accumulated depreciation................... 2,121,518 1,943,233
---------- ----------
Net investment property....................... 4,916,829 5,071,779
---------- ----------
Deferred financing costs (net of accumulated
amortization of $11,544 and $4,988 for 1995
and 1994, respectively) (Note 1)................ 21,240 27,796
---------- ----------
Total assets...................................... $5,074,173 5,496,803
========== ==========
</TABLE>
See accompanying notes to financial statements.
-11-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Liabilities and Partners' Capital (Deficit)
-------------------------------------------
1995 1994
----------- ----------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt (Note 3)...... $ 63,049 31,451
Accounts payable and accrued expenses........... 13,045 4,723
Accrued real estate taxes....................... 22,000 28,468
Prepaid rents................................... 2,173 2,079
Due to Affiliates (Note 6)...................... 2,786 412
----------- ----------
Total current liabilities..................... 103,053 67,133
Tenant security deposits.......................... 22,055 19,295
Long-term debt, less current portion (Notes 1
and 3).......................................... 1,058,634 1,446,668
----------- ----------
Total liabilities............................. 1,183,742 1,533,096
----------- ----------
Partners' capital (deficit) (Notes 1, 4 and 6):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 3,153 2,207
Cumulative cash distributions................. (12,992) (11,313)
----------- ----------
(9,339) (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......................... 541,671 448,024
Cumulative cash distributions................. (4,516,868) (4,350,678)
----------- ----------
3,899,770 3,972,313
----------- ----------
Total Partners' capital (deficit)........... 3,890,431 3,963,707
----------- ----------
Commitments and contingencies (Notes 5 and 6).....
----------- ----------
Total liabilities and Partners' capital (deficit). $ 5,074,173 5,496,803
=========== ==========
</TABLE>
See accompanying notes to financial statements.
-12-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Income:
Rental income..................... $ 955,313 958,308 1,409,976
Interest income................... 5,110 40,939 10,176
Other income...................... 42,693 36,604 50,555
---------- ---------- ----------
1,003,116 1,035,851 1,470,707
---------- ---------- ----------
Expenses:
Professional services to
Affiliates...................... 14,780 18,665 14,891
Professional services to
non-affiliates.................. 18,122 22,829 20,342
General and administrative
expenses to Affiliates.......... 16,087 15,470 17,769
General and administrative
expenses to non-affiliates...... 5,520 4,193 2,524
Property operating expenses
to Affiliates................... 44,685 44,113 65,440
Property operating expenses
to non-affiliates............... 533,145 515,340 774,046
Mortgage and other interest....... 91,343 166,606 442,176
Depreciation...................... 178,285 183,702 289,364
Amortization...................... 6,556 7,092 64,743
---------- ---------- ----------
908,523 978,010 1,691,295
---------- ---------- ----------
Operating income (loss)............. 94,593 57,841 (220,588)
Extraordinary items relating to
refinancing (Note 2).............. - (125,886) -
Gain on sale of investment property
(Note 2).......................... - 897,048 1,339,172
---------- ---------- ----------
Net income.......................... $ 94,593 829,003 1,118,584
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
-13-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- ----------
<S> <C> <C> <C>
Net income allocated to (Note 4):
General Partner................... $ 946 8,290 11,186
Limited Partners.................. 93,647 820,713 1,107,398
-------- -------- ----------
Net income.......................... $ 94,593 829,003 1,118,584
======== ======== ==========
Net income (loss) allocated to
the one General Partner Unit:
Operating income (loss)............. 946 578 (2,206)
Extraordinary items relating to
refinancing....................... - (1,258) -
Gain on sale of investment
property.......................... - 8,970 13,392
-------- -------- ----------
$ 946 8,290 11,186
======== ======== ==========
Net income (loss) allocated to Limited
Partners per weighted average of
Limited Partnership Units of 9,246.62:
Operating income (loss)............. 10.13 6.19 (23.62)
Extraordinary items relating to
refinancing....................... - (13.48) -
Gain on sale of investment
property.......................... - 96.04 143.38
-------- -------- ----------
$ 10.13 88.75 119.76
======== ======== ==========
</TABLE>
See accompanying notes to financial statements.
-14-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Partners' Capital (Deficit)
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
-------- ---------- ----------
<S> <C> <C> <C>
Balance (deficit) January 1, 1993... $(27,623) 3,814,462 3,786,839
Distributions ($5.95 per weighted
average of Limited Partnership
Units of 9,246.62)................ (459) (55,062) (55,521)
Net income.......................... 11,186 1,107,398 1,118,584
-------- ---------- ----------
Balance (deficit) December 31, 1993. (16,896) 4,866,798 4,849,902
Distributions ($185.49 per weighted
average of Limited Partnership
Units of 9,246.62)................ - (1,715,198) (1,715,198)
Net income.......................... 8,290 820,713 829,003
-------- ---------- ----------
Balance (deficit) December 31, 1994. (8,606) 3,972,313 3,963,707
Distributions ($17.97 per weighted
average of Limited Partnership
Units of 9,246.62)................ (1,679) (166,190) (167,869)
Net income.......................... 946 93,647 94,593
-------- ---------- ----------
Balance (deficit) December 31, 1995. $ (9,339) 3,899,770 3,890,431
======== ========== ==========
</TABLE>
See accompanying notes to financial statements.
-15-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................ $ 94,593 829,003 1,118,584
Adjustments to reconcile net income
to net cash provided by operating
activities:
Gain on sale of investment
property................... - (897,048) (1,339,172)
Extraordinary items relating
to refinancing............. - 125,886 -
Depreciation.................. 178,285 183,702 289,364
Amortization of loan fees..... 6,556 7,092 64,743
Amortization of discount on
long-term debt............. - 8,309 35,942
Changes in assets and liabilities:
Rents and other receivables... 2,993 75,258 (74,024)
Due from Affiliates........... - - (5,058)
Prepaid expenses.............. (204) 140 1,681
Deposits and other assets..... - 11,532 26,107
Accounts payable and accrued
expenses.................... 8,322 (63,010) 55,077
Accrued real estate taxes..... (6,468) (151,519) (22,529)
Accrued interest.............. - - (8,010)
Prepaid rents................. 94 (4,546) (4,051)
Due to Affiliates............. 2,374 (507) (1,544)
Tenant security deposits...... 2,760 2,101 (32,014)
-------- -------- ----------
Net cash provided by
operating activities...... 289,305 126,393 115,212
-------- -------- ----------
Cash flows from investing activities:
Additions to investment properties (23,335) (24,413) (17,984)
Condominium conversion costs...... - (437,231) (848,727)
Proceeds from sale of investment
property........................ - 2,432,555 4,022,820
-------- -------- ----------
Net cash provided by (used in)
investing activities....... (23,335) 1,970,911 3,156,109
-------- -------- ----------
</TABLE>
See accompanying notes to financial statements.
-16-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
(continued)
For the years ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
--------- ---------- ----------
<S> <C> <C> <C>
Cash flows from financing activities:
Principal payments of long-term
debt............................ $(356,436) (27,451) (39,980)
Payoff of long-term debt from sale
of investment property.......... - - (1,650,000)
Payoff of long term debt.......... - (3,242,131) (1,593,463)
Proceeds from refinancing of
long-term debt.................. - 1,500,000 1,650,000
Payments of deferred financing
costs........................... - (32,784) (44,358)
Payment of prepayment penalty..... - (86,084) -
Cash distributions................ (167,869) (1,715,198) (55,521)
--------- ---------- ----------
Net cash used in financing
activities.................... (524,305) (3,603,648) (1,733,322)
--------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents.................. (258,335) (1,506,344) 1,537,999
Cash and cash equivalents at
beginning of year................. 388,432 1,894,776 356,777
--------- ---------- ----------
Cash and cash equivalents at
end of year....................... $ 130,097 388,432 1,894,776
========= ========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest............ $ 91,334 158,297 414,244
========= ========== ==========
Supplemental schedule of non-cash investing and financing activities:
Sale of investment property:
Basis in investment property sold... $ - 1,531,284 2,513,583
Reduction of accumulated
depreciation related to investment
property sold..................... - (431,283) (680,387)
Condominium conversion costs........ - 435,506 850,452
Gain on sale........................ - 897,048 1,339,172
--------- ---------- ----------
Proceeds from sale of Country Club
condominium units................. $ - 2,432,555 4,022,820
========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
-17-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1995, 1994 and 1993
(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 December 31, 1995, 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 December 31, 1995.
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 December 31, 1995, 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. Discounts on long-term mortgage notes (Note 3) 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 and are carried at cost,
which approximates market.
-18-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
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.
The Partnership records are maintained on the accrual basis of accounting in
accordance with generally accepted accounting principles ("GAAP"). The Federal
income tax return has been prepared from such records after making appropriate
adjustments to reflect the Partnership's accounts as adjusted for Federal income
tax reporting purposes. Such adjustments are not recorded on the records of the
Partnership. The net effect of these items is summarized as follows:
1995 1994
----------------------- ----------------------
Tax Tax
GAAP Basis GAAP Basis
Basis (unaudited) Basis (unaudited)
---------- ---------- --------- ----------
Total assets................ $5,074,173 4,931,881 5,496,803 5,396,940
Partners' capital (deficits):
General Partner........... (9,339) (6,106) (8,606) (4,949)
Limited Partners.......... 3,899,770 3,501,694 3,972,313 3,616,147
Net income:
General Partner........... 946 522 8,290 26,823
Limited Partners.......... 93,647 51,737 820,713 1,063,153
Net income per Limited
Partnership Unit.......... 10.13 5.60 88.75 114.98
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.
-19-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(2) Investment Properties
Scottsdale Sierra Apartments, Scottsdale, Arizona
As of December 31, 1995, the Partnership owns Scottsdale Sierra Apartments,
which were purchased on December 31, 1985. This property is pledged as
collateral for long-term debt (Note 3), for which there is no recourse to the
Partnership.
On March 24, 1994, the Partnership simultaneously paid off the second mortgage
note and refinanced the first mortgage note collateralized by the Scottsdale
Sierra Apartments. The balances at refinancing were $2,869,474 and $372,657 for
the first and second mortgage notes, respectively. The Partnership paid a 3%
prepayment penalty of $86,084 on the first mortgage loan. The new first mortgage
of $1,500,000 matures March 24, 1999 with a 7.75% interest rate. Loan fees of
$32,784 were paid to third parties. The Partnership was able to refinance the
debt on Scottsdale Sierra Apartments by using sales proceeds received from the
sale of Country Club condominium units. The write off of the related unamortized
loan fees, the prepayment penalty on the first mortgage and the balance of the
discount on the second mortgage have been recorded as extraordinary items for
the year ended December 31, 1994.
Country Club Apartments, Arlington Heights, Illinois
On March 25, 1993, the Partnership refinanced the mortgage note collateralized
by Country Club Apartments. The replacement loan balance was $1,650,000 and had
an interest rate of prime plus 1%. Payments were to be interest-only until its
maturity date in March 1995. The Partnership received net refinancing proceeds
of $24,495 after payment of costs and fees. A loan fee of $16,500 (1% of the
loan balance) was paid to an unaffiliated lender. In addition, the Partnership
paid a mortgage brokerage fee of $14,850 (9/10 of the customary fee of 1%) to
Inland Mortgage Corporation, an Affiliate of the General Partner. On November
23, 1993, the note was paid in full by the Partnership. No gain or loss was
recognized by the Partnership on either financing transaction.
As of December 31, 1993, the Partnership sold fifty-five of the eighty-six
Country Club condominium units to unaffiliated third parties for a total sales
price of $4,166,375. The gain on sale recorded by the Partnership for the year
ended December 31, 1993 was $1,339,172, net of closing costs and third-party
commissions of $143,555. As of December 31, 1994, the Partnership sold the
remaining thirty-one Country Club condominium units to unaffiliated third
parties for total sales prices of $2,519,575. The gain on sale recorded by the
Partnership for the year ended December 31, 1994 was $897,048, net of closing
costs and third-party commissions of $87,019. Of the net sales proceeds
received, $1,650,000 was used to payoff the underlying debt on the Country Club
property, $1,715,198 was distributed to the Limited Partners, $1,832,785 was
used to paydown the debt on Scottsdale Sierra Apartments and the remainder was
used to fund condominium conversion costs at the property.
-20-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Long-Term Debt
Long-term debt consists of the following at December 31, 1995 and 1994:
1995 1994
------------ ------------
7.75% mortgage note collateralized by Scottsdale
Sierra Apartments in Scottsdale, Arizona; payable
in monthly principal and interest payments of
$12,314, with a balance of $904,113 due on
March 24, 1999.................................. 1,121,683 1,478,119
------------ ------------
Total debt........................................ 1,121,683 1,478,119
Less current portion of long-term debt............ (63,049) (31,451)
------------ ------------
Total long-term debt.............................. $ 1,058,634 1,446,668
============ ============
As of December 31, 1995, the required principal payments on the Partnership's
long-term debt over the next five years are as follows:
1996.......................................... $ 63,049
1997.......................................... 68,112
1998.......................................... 73,583
1999.......................................... 916,939
2000.......................................... -
(4) Partnership Agreement
Pursuant to the terms of the Partnership Agreement (as amended) net profits or
losses of the Partnership from operations are allocated 99% to the Limited
Partners and 1% to the General Partner. For income tax reporting purposes, net
profits from the sale or other disposition of the Partnership's properties will
first be allocated to those partners with negative balances in their capital
accounts, and thereafter, allocated in the same ratio as the distribution of net
proceeds arising from such transaction. Losses from the sale or other
disposition of the Partnership's properties will first be allocated to all
partners having positive balances in their capital accounts, and thereafter,
allocated 1% to the General Partner, with the remaining losses allocated to the
Limited Partners. For financial reporting purposes net profits from the sale or
other disposition of the Partnership's properties will generally be allocated in
the same ratio as the distribution of net proceeds arising from such
transaction. In the event there are no distributions from such transactions, net
profits will be allocated 99% to the Limited Partners and 1% to the General
Partner.
Cash available for distribution from operations will be distributed 99% to the
Limited Partners and 1% to the General Partner. Net sale or refinancing proceeds
will be distributed first to the Limited Partners up to an amount equal to their
Invested Capital plus any deficiency in a 10% cumulative annual return. Any
remaining proceeds will be distributed 85% to the Limited Partners and 15% to
the General Partner.
-21-
<PAGE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(5) Leases
At December 31, 1995, the Partnership's principal asset is an apartment complex.
Apartment complex leases are generally for a term of one year or less. The
Partnership has determined that all leases relating to this property are
properly classified as operating leases; therefore, rental income is reported
when earned and the cost of the property, excluding cost of land, is depreciated
over its estimated useful life.
(6) 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 $2,704 and $412 was unpaid as of December 31, 1995 and
1994, respectively.
The Partnership's properties are managed by an Affiliate of the General Partner
pursuant to management agreements which provide for annual fees not exceeding
4.5% of gross rental receipts. The Affiliate earned Property Management Fees of
$44,685, $44,113 and $65,440 for the years ended December 31, 1995, 1994 and
1993, respectively, of which $82 was unpaid as of December 31, 1995.
Inland Residential Sales ("IRS"), an Affiliate of the General Partner, was
acting as general contractor for the condominium conversion of Country Club
Apartments and was reimbursed (as set forth under terms of the Partnership
Agreement) for direct costs. IRS did not take any profit on this project. The
Partnership incurred $61,691 of such costs for the year ended December 31, 1994,
all of which have been paid.
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.
(7) Subsequent Events
In January 1996, the Partnership paid a distribution of $30,500 to the Partners,
of which $30,195 was distributed to the Limited Partners and $305 was
distributed to the General Partner.
On February 1, 1996, the Partnership paid an additional $30,000 as a principal
reduction of the long-term debt collateralized by the Scottsdale Sierra
Apartments.
-22-
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements on accounting or financial disclosures during 1995.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partner of the Partnership, Inland Real Estate Investment
Corporation, was organized in 1984 for the purpose of acting as general partner
of limited partnerships formed to acquire, own and operate real properties. The
General Partner is a wholly-owned subsidiary of The Inland Group, Inc. In 1990,
Inland Real Estate Investment Corporation became the replacement General Partner
for an additional 301 privately-owned real estate limited partnerships
syndicated by Affiliates. The General Partner has responsibility for all aspects
of the Partnership's operations. The relationship of the General Partner to its
Affiliates is described under the caption "Conflicts of Interest" at pages 11 to
13 of the Prospectus, a copy of which description is hereby incorporated herein
by reference.
Officers and Directors
The officers, directors, and key employees of The Inland Group, Inc. and its
Affiliates ("Inland") that are likely to provide services to the Partnership are
as follows:
Functional Title
----------------
Daniel L. Goodwin....... Chairman and Chief Executive Officer
Robert H. Baum.......... Executive Vice President-General Counsel
G. Joseph Cosenza....... Senior Vice President-Acquisitions
Robert D. Parks......... Senior Vice President-Investments
Norbert J. Treonis...... Senior Vice President-Property Management
Catherine L. Lynch...... Treasurer
Paul J. Wheeler......... Vice President-Personal Financial Services Group
Roberta S. Matlin....... Assistant Vice President-Investments
Mark Zalatoris.......... Assistant Vice President-Due Diligence
Patricia A. Challenger.. Vice President-Asset Management
Cynthia M. Hassett...... Assistant Vice President-Partnership Accounting
Venton J. Carlston...... Assistant Controller
-23-
<PAGE>
DANIEL L. GOODWIN (age 52) is Chairman of the Board of Directors of The
Inland Group, Inc., a billion-dollar real estate and financial organization
located in Oak Brook, Illinois. Among Inland's subsidiaries is the largest
property management firm in Illinois and one of the largest commercial real
estate and mortgage banking firms in the Midwest.
Mr. Goodwin has served as Director of the Avenue Bank of Oak Park and as a
Director of the Continental Bank of Oakbrook Terrace. He was also Chairman of
the Bank Holding Company of American National Bank of DuPage. Currently he is
the President of Inland Mortgage Investment Corporation.
Mr. Goodwin has been in the housing industry for more than 25 years, and has
demonstrated a lifelong interest in housing-related issues. He is a licensed
real estate broker and a member of the National Association of Realtors. He has
developed thousands of housing units in the Midwest, New England, Florida, and
the Southwest. He is also the author of a nationally recognized reference book
for the management of residential properties.
Mr. Goodwin serves on the Board of the Illinois State Affordable Housing Trust
Fund for the past 6 years. He is an advisor for the Office of Housing
Coordination Services of the State of Illinois, and a member of the Seniors
Housing Committee of the National Multi-Housing Council. Recently, Governor
Edgar appointed him Chairman of the Housing Production Committee for the
Illinois State Affordable Housing Conference. He also served as a member of the
Cook County Commissioner's Economic Housing Development Committee, and he was
the Chairman of the DuPage County Affordable Housing Task Force. The 1992
Catholic Charities Award was presented to Mr. Goodwin for his work in addressing
affordable housing needs. The City of Hope designated him as the 1980's Man of
the Year for the Illinois construction industry. In 1989, the Chicago
Metropolitan Coalition on Aging presented Mr. Goodwin with an award in
recognition of his efforts in making housing more affordable to Chicago's Senior
Citizens. On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter)
presented Mr. Goodwin with an award, recognizing The Inland Group as the leading
corporate provider of transitional housing for the homeless people of DuPage
County.
Mr. Goodwin is a product of Chicago-area schools, and obtained his Bachelor's
and Master's Degrees from Illinois Universities. Following graduation, he taught
for five years in Chicago Public Schools. His commitment to education has
continued through his work with the Better Boys Foundation's Pilot Elementary
School in Chicago, and the development of the Inland Vocational Training Center
for the Handicapped located at Little City in Palatine, Illinois. He personally
established an endowment which funds a perpetual scholarship program for inner-
city disadvantaged youth. In 1990 he received the Northeastern Illinois
University President's Meritorious Service Award. Mr. Goodwin holds a Master's
Degree in Education from Northern Illinois University, and in 1986, he was
awarded an Honorary Doctorate from Northeastern Illinois University College of
Education. He served as a member of the Board of Governors of Illinois State
Colleges and Universities, and he is currently a trustee of Illinois Benedictine
College. He was elected Chairman of Northeastern Illinois University Board of
Trustees in January 1996.
-24-
<PAGE>
Mr. Goodwin served as a member of Governor Jim Edgar's Transition Team. In 1988
he received the Outstanding Business Leader Award from the Oak Brook Jaycees. He
also serves as the Chairman of the Illinois Speaker of the House of
Representatives Club, and has been the General Chairman of the National Football
League Players Association Mackey Awards for the benefit of inner-city youth. In
March 1994, he won the Excellence in Business Award from the DuPage Area
Association of Business and Industry. Additionally, he was honored by Little
Friends on May 17, 1995 for rescuing their Parent-Handicapped Infant Program
when they lost their lease last year, and on June 9, he received the 1995 March
of Dimes Birth Defects Foundation Life Achievement Award.
ROBERT H. BAUM (age 52) has been with Inland since 1968 and is one of the
four original principals. Mr. Baum is Vice Chairman and Executive Vice President
- - -General Counsel of The Inland Group, Inc. In his capacity as General Counsel,
Mr. Baum is responsible for the supervision of the legal activities of The
Inland Group, Inc. and its affiliates. This responsibility includes the
supervision of The Inland Law Department and serving as liaison with all outside
counsel. Mr. Baum has served as a member of the North American Securities
Administrators Association Real Estate Advisory Committee and as a member of the
Securities Advisory Committee to the Secretary of State of Illinois. He is a
member of the American Corporation Counsel Association, as well as a member of
several bar associations. Mr. Baum has been admitted to practice before the
Supreme Courts of the United States and the State of Illinois, as well as the
bars of several federal courts of appeals and federal district courts. He
received his B.S. Degree from the University of Wisconsin and his J.D. Degree
from Northwestern University School of Law. Mr. Baum has served as a director of
American National Bank of DuPage and is a member of the Governing Council of
Wellness House, a charitable organization that provides emotional support for
cancer patients and their families.
G. JOSEPH COSENZA (age 52) joined Inland in 1968. Mr. Cosenza, is a
director, Vice Chairman and Chief Executive Officer of the Inland Group Inc. Mr.
Cosenza oversees, coordinates and directs Inland's many enterprises and, in
addition, immediately supervises a staff of five persons who engage in property
acquisition. Mr. Cosenza has been a consultant to other real estate entities and
lending institutions on property appraisal methods. Mr. Cosenza received his
B.A. degree from Northeastern Illinois University and his M.S. degree from
Northern Illinois University. From 1967 to 1968, Mr. Cosenza taught at the
LaGrange School District in Hodgkins, and from 1968 to 1972, he served as
Assistant Principal and teacher in the Wheeling School District. He has been a
licensed real estate broker since 1968 and an active member of various national
and local real estate associations, including the National Association of
Realtors and the Urban Land Institute. Mr. Cosenza has also been Chairman of the
Board of American National Bank of DuPage and part owner of American National
Bank of DuPage and Burbank State Bank, and has served on the Board of Directors
of Continental Bank of Oakbrook Terrace.
-25-
<PAGE>
ROBERT D. PARKS (age 52) joined Inland in 1968. He is Director of The Inland
Group, Inc. and is President, Chairman and Chief Executive Officer of Inland
Real Estate Investment Corporation and is Director of Inland Securities
Corporation. Mr. Parks is responsible for the ongoing administration of existing
partnerships, corporate budgeting and administration for Inland Real Estate
Investment Corporation. He oversees and coordinates the marketing of all limited
partnership interests nationwide and has overall responsibility for the
portfolio management of all partnership investments and investor relations. Mr.
Parks received his B.A. degree from Northeastern Illinois University and M.A.
degree from the University of Chicago. He is a registered Direct Participation
Program Principal with the National Association of Securities Dealers, Inc., and
a licensed real estate broker. He is a member of the Real Estate Investment
Association and a member of NAREIT.
NORBERT J. TREONIS (age 45) joined Inland in 1975 and is currently a
director of The Inland Group, Inc. and Chairman and Chief Executive Officer of
Inland Property Management Group, Inc. He serves on the board of directors of
all Inland subsidiaries involved in property management and construction,
including Mid-America Property Management Corporation, Inland Commercial
Property Management, Inc., Community Property Management, Inc. and Metropolitan
Construction Services, Inc. Mr. Treonis is responsible for the overall
management and leasing of all Inland apartment units. In addition, he is
Executive Vice President of Inland Real Estate Acquisitions, Inc. and has been
involved in the acquisition of thousands of apartment units. Mr. Treonis is a
licensed real estate broker and has served as a board member of American
National Bank of DuPage, the National Apartment Association, The Chicagoland
Apartment Association and The Apartment Building Owners and Managers Association
of Illinois.
CATHERINE L. LYNCH (age 37) joined Inland in 1989 and is the Treasurer of
Inland Real Estate Investment Corporation. Ms. Lynch is responsible for managing
the Corporate Accounting Department. Prior to joining Inland, Ms. Lynch worked
in the field of public accounting for KPMG Peat Marwick since 1980. She received
her B.S. degree in Accounting from Illinois State University. Ms. Lynch is a
Certified Public Accountant and a member of the American Institute of Certified
Public Accountants. She is registered with the National Association of
Securities Dealers as a Financial Operations Principal.
PAUL J. WHEELER (age 43) joined Inland in 1982 and is currently the
President of Inland Property Sales, Inc. and President of Inland Securities
Corporation, Inland's broker/dealer. Mr. Wheeler received his B.A. degree in
Economics from DePauw University and an M.B.A. in Finance/Accounting from
Northwestern University. Mr. Wheeler is a Certified Public Accountant, a
licensed real estate broker and is registered with the National Association of
Securities Dealers, Inc. as a General Securities Principal. For three years
prior to joining Inland, Mr. Wheeler was Vice President/Finance at the real
estate brokerage firm of Quinlan & Tyson, Inc.
-26-
<PAGE>
ROBERTA S. MATLIN (age 51) joined Inland in 1984 as Director of Investor
Administration and currently serves as Senior Vice President-Investments. Prior
to that, Ms. Matlin spent 11 years with the Chicago Region of the Social
Security Administration of the United States Department of Health and Human
Services. As Senior Vice President-Investments, she directs the day-to-day
internal operations of the General Partner. Ms. Matlin received her B.A. degree
from the University of Illinois. She is registered with the National Association
of Securities Dealers, Inc. as a General Securities Principal.
MARK ZALATORIS (age 38) joined Inland in 1985 and currently serves as Vice
President of Inland Real Estate Investment Corporation. His responsibilities
include the coordination of due diligence activities by selling broker/dealers
and is also involved with limited partnership asset management including the
mortgage funds. Mr. Zalatoris is a graduate of the University of Illinois where
he received a Bachelors degree in Finance and a Masters degree in Accounting and
Taxation. He is a Certified Public Accountant and holds a General Securities
License with Inland Securities Corporation.
PATRICIA A. CHALLENGER (age 43) joined Inland in 1985. Ms. Challenger serves
as Senior Vice President of Inland Real Estate Investment Corporation in the
area of Asset Management. As head of the Asset Management Department, she
develops operating and disposition strategies for all investment-owned
properties. Ms. Challenger received her bachelor's degree from George Washington
University and her master's from Virginia Tech University. Ms. Challenger was
selected and served from 1980-1984 as Presidential Management Intern, where she
was part of a special government-wide task force to eliminate waste, fraud and
abuse in government contracting and also served as Senior Contract Specialist
responsible for capital improvements in 109 government properties. Ms.
Challenger is a licensed real estate salesperson, NASD registered securities
sales representative and is a member of the Urban Land Institute.
CYNTHIA M. HASSETT (age 37) joined Inland in 1983 and is a Vice President of
Inland Real Estate Investment Corporation. Ms. Hassett is responsible for the
Investment Accounting Department which includes all public partnership
accounting functions along with quarterly and annual SEC filings. Prior to
joining Inland, Ms. Hassett was on the audit staff of Altschuler, Melvoin and
Glasser since 1980. She received her B.S. degree in Accounting from Illinois
State University. Ms. Hassett is a Certified Public Accountant and a member of
the American Institute of Certified Public Accountants.
VENTON J. CARLSTON (age 38) joined Inland in 1985 and is the Assistant
Controller of Inland Real Estate Investment Corporation where he supervises the
corporate bookkeeping staff and is responsible for financial statement
preparation and budgeting for Inland Real Estate Investment Corporation and its
subsidiaries. Prior to joining Inland, Mr. Carlston was a partnership accountant
with JMB Realty. He received his B.S. degree in Accounting from Southern
Illinois University. Mr. Carlston is a Certified Public Accountant and a member
of the American Institute of Certified Public Accountants and the Illinois CPA
Society. He is registered with the National Association of Securities Dealers,
Inc. as a Financial Operations Principal.
-27-
<PAGE>
Item 11. Executive Compensation
The General Partner is entitled to receive a share of cash distributions, when
and as cash distributions are made to the Limited Partners, and a share of
profits or losses. As described under the caption "Cash Distributions" at page
50 and "Allocation of Profits or Losses" at page 49 of the Prospectus and at
pages A-7 to A-8 of the Partnership Agreement, included as an exhibit to the
Prospectus, which is hereby incorporated herein by reference. Reference is made
to Note 6 of the Notes to Financial Statements filed with this Annual Report for
a description of such distributions and allocations. The General Partner
received a share of Partnership income and losses in 1995, 1994 and 1993. Such
losses may benefit the General Partner to the extent that such losses may be
offset against taxable income from the Partnership or other sources.
The Partnership is permitted to engage in various transactions involving
Affiliates of the General Partner of the Partnership. The relationship of the
General Partner (and its directors and officers) to its Affiliates is set forth
above in Item 10.
The General Partner is also entitled to reimbursement for legal, accounting,
data processing, certain other administrative services and out-of-pocket
expenses. Such costs for 1995 were $30,867, of which $2,704 was unpaid as of
December 31, 1995.
An Affiliate of the General Partner earned management fees in 1995, 1994 and
1993, aggregating $44,685, $44,113 and $65,440, respectively, in connection with
managing certain of the Partnership's properties, of which $82 was unpaid as of
December 31, 1995.
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.
-28-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No person or group is known by the Partnership to own beneficially more
than 5% of the outstanding Units of the Partnership.
(b) The officers and directors of the General Partner of the Partnership own as
a group the following Units of the Partnership:
Amount and Nature
of Beneficial Percent
Title of Class Ownership of Class
-------------- ----------------- --------
Limited Partnership 105 Units directly 1.1%
Units
No officer or director of the General Partner of the Partnership possesses a
right to acquire beneficial ownership of Units of the Partnership.
All of the outstanding shares of the General Partner of the Partnership are
owned by an Affiliate or its officers and directors as set forth above in
Item 10.
(c) There exists no arrangement, known to the Partnership, the operation of
which may, at a subsequent date, result in a change in control of the
Partnership.
Item 13. Certain Relationships and Related Transactions
There were no significant transactions or business relationships with the
General Partner, Affiliates or their management other than those described in
Items 10 and 11 above. Reference is made to Note 6 of the Notes to Financial
Statements (Item 8 of this Annual Report) for information regarding related
party transactions.
-29-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements listed in the index on page 9 of this Annual Report
are filed as part of this Annual Report.
(b) Exhibits. The following documents are filed as part of this Report:
3 Amended and Restated Agreement of Limited Partnership and Amended and
Restated Certificate of Limited Partnership, included as Exhibits A and B to
the Prospectus dated December 9, 1985, as supplemented, are incorporated
herein by reference thereto.
4 Form of Certificate of Ownership representing interests in the Registrant
filed as Exhibit 4 to Registration Statement on S-11, File No. 2-99403, is
incorporated herein by reference thereto.
28 Prospectus dated December 9, 1985, as supplemented, included in Post-
Effective Amendment No. 3 to Form S-11 Registration Statement, File No. 2-
99403, is incorporated herein by reference thereto.
(c) Financial Statement Schedules:
All schedules have been omitted as the required information is inapplicable
or the information is presented in the financial statements or related
notes.
(d) Reports on Form 8-K.
None.
No Annual Report or proxy material for the year 1995 has been sent to the
Partners of the Partnership. An Annual Report will be sent to the Partners
subsequent to this filing and the Partnership will furnish copies of such report
to the Commission when it is sent to the Partners.
-30-
<PAGE>
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.
INLAND REAL ESTATE GROWTH FUND, L.P.
Inland Real Estate Investment Corporation
General Partner
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 28, 1996
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 and
in the capacities and on the dates indicated:
By: Inland Real Estate Investment Corporation
General Partner
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 28, 1996
By: Patricia A. Challenger
Senior Vice President
Date: March 28, 1996
By: Cynthia M. Hassett
Principal Financial Officer
and Principal Accounting Officer
Date: March 28, 1996
By: Daniel L. Goodwin
Director
Date: March 28, 1996
By: Robert H. Baum
Director
Date: March 28, 1996
-31-
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<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 130,097
<SECURITIES> 0
<RECEIVABLES> 1,273
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 136,104
<PP&E> 7,038,347
<DEPRECIATION> 2,121,518
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<CURRENT-LIABILITIES> 103,053
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,890,431
<TOTAL-LIABILITY-AND-EQUITY> 5,074,173
<SALES> 0
<TOTAL-REVENUES> 1,003,116
<CGS> 0
<TOTAL-COSTS> 577,830
<OTHER-EXPENSES> 61,065
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 91,343
<INCOME-PRETAX> 94,593
<INCOME-TAX> 0
<INCOME-CONTINUING> 94,593
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 94,593
<EPS-PRIMARY> 10.13
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