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, 1996
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: 630-218-8000
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-
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........... 4
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................... 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.......................... 25
Part III
--------
Item 10. Directors and Executive Officers of the Registrant............ 25
Item 11. Executive Compensation........................................ 30
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 31
Item 13. Certain Relationships and Related Transactions................ 31
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 32
SIGNATURES............................................................. 33
-2-
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 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 21.57 Units
($18,064) with its own funds from cash distributions received through December
31, 1996. 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 acquired fee ownership of the following real property
investments:
Property and Location Number of Units Date of Purchase/Sale
- ---------------------------------- ----------------- -----------------------
Peppertree Apartments 204 11/21/85
Brandon, Florida (sold 06/30/87)
Evergreen Court Apartments 188 12/27/85
Arlington Heights, Illinois (sold 06/30/86)
Country Club Apartments (a) 86 12/30/85
Arlington Heights, Illinois (various sales dates
1993 through 1994)
Scottsdale Sierra Apartments (b) 160 12/31/85
Scottsdale, Arizona
(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, 3 and 7 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.
-3-
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 1996.
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 property as of the end of each quarter during 1995 and 1996:
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
---------- ------------------------ -----------------------
Scottsdale Sierra
Apartments
Scottsdale, Arizona (a) 98% 81% 86% 95% 97% 89% 82% 84%
(a) As of the date of this report, the property is 98% occupied.
Item 3. Legal Proceedings
The Partnership is not subject to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during 1996.
-4-
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1996, there were 636 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
<TABLE>
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
For the years ended December 31, 1996, 1995, 1994, 1993 and 1992
(not covered by Independent Auditors' Report)
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total assets........... $4,990,769 5,074,173 5,496,803 8,341,847 8,889,356
=========== =========== =========== =========== ===========
Long-term debt......... $ 837,403 1,058,634 1,446,668 3,184,598 4,757,703
=========== =========== =========== =========== ===========
Total income........... $1,059,917 1,003,116 1,035,851 1,470,707 1,552,824
=========== =========== =========== =========== ===========
Operating income (loss) 245,153 94,593 57,841 (220,588) (134,808)
Extraordinary items
relating to
refinancing.......... - - (125,886) - -
Gain on sale of
investment property.. - - 897,048 1,339,172 -
----------- ----------- ----------- ----------- -----------
Net income (loss)...... $ 245,153 94,593 829,003 1,118,584 (134,808)
=========== =========== =========== =========== ===========
-5-
Item 6. Selected Financial Data, continued.
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
For the years ended December 31, 1996, 1995, 1994, 1993 and 1992
(not covered by Independent Auditors' Report)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Net income (loss)
allocated to the one
General Partner Unit:
Operating income(loss)$ 2,451 946 578 (2,206) (1,348)
Extraordinary items
relating to
refinancing........ - - (1,258) - -
Gain on sale of
investment property - - 8,970 13,392 -
----------- ----------- ----------- ----------- -----------
Net income (loss)...... $ 2,451 946 8,290 11,186 (1,348)
=========== =========== =========== =========== ===========
Net income (loss) per
Unit allocated to
Limited Partners (b):
Operating income (loss) 26.25 10.13 6.19 (23.62) (14.43)
Extraordinary items
relating to
refinancing........ - - (13.48) - -
Gain on sale of
investment property - - 96.04 143.38 -
----------- ----------- ----------- ----------- -----------
Net income (loss)...... $ 26.25 10.13 88.75 119.76 (14.43)
=========== =========== =========== =========== ===========
Cash distributed to
Limited Partners..... $ 135,030 166,190 1,715,198 55,062 362,699
=========== =========== =========== =========== ===========
Cash distributions
to Limited Partners
per Unit (b)......... $ 14.60 17.97 185.49 5.95 39.21
=========== =========== =========== =========== ===========
Weighted average
Limited Partnership
Units outstanding.... 9,246.62 9,246.62 9,246.62 9,246.62 9,250.12
=========== =========== =========== =========== ===========
</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-
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this annual report on
Form 10-K constitute "forward-looking statements" within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. These forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the Partnership's actual results, performance, or
achievements to be materially different from any future results, performance,
or achievements expressed or implied by these forward-looking statements.
These factors include, among other things, competition for tenants; federal,
state, or local regulations; adverse changes in general economic or local
conditions; uninsured losses; and potential conflicts of interest between the
Partnership and its Affiliates, including the General Partner.
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, 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, 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 21.57 Units
($18,064) with its own funds from cash distributions received.
At December 31, 1996, the Partnership had cash and cash equivalents of
$169,026. 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 the Partnership's cash flow 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.
-7-
Results of Operations
Scottsdale Sierra Apartments
- ----------------------------
Rental income increased over 6% for the year ended December 31, 1996, as
compared to the year ended December 31, 1995, due to the continued
strengthening of the Scottsdale rental market and higher per units rents.
Property operating expenses to non-affiliates decreased over 15% for the year
ended December 31, 1996, as compared to the year ended December 31, 1995, due
to scheduled repairs and maintenance performed at the property during 1995 that
resulted in higher operating expenses for the period. This decrease was
partially offset by increases in swimming pool, insurance and salaries
expenses. Mortgage and other interest decreased for the year ended December
31, 1996, as compared to the year ended December 31, 1995, due to the
additional principal reductions of the long-term debt totaling $435,000 since
February 1995.
Rental income increased over 3% for the year ended December 31, 1995, as
compared to the year ended December 31, 1994, due to the firming of the
Scottsdale rental market. Property operating expenses to non-affiliates
increased for the year ended December 31, 1996, as compared to the year ended
December 31, 1995, due to scheduled exterior painting performed at the
property. Mortgage and other interest decreased for the year ended December
31, 1995, as compared to the year ended December 31, 1994, as a 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. A prepayment penalty and the balance of unamortized
loan fees from the original debt have been classified as extraordinary expenses
for the year ended December 31, 1994.
As of January 1, 1997, the Partnership has listed and is actively marketing
Scottsdale Sierra Apartments for sale at an amount in excess of its carrying
value and has suspended depreciation. As of the date of this report, the
Partnership has received and is currently negotiating an offer for the purchase
of Scottsdale Sierra Apartments for an amount which exceeds the carrying value
of the property.
Country Club Apartments
- -----------------------
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. Rental and
other income, property operating expenses and depreciation for the year ended
December 31, 1994 include operations from these thirty-one condominium units
until they were sold.
Interest income increased for the year ended December 31, 1996, as compared to
the year ended December 31, 1995, due to an increase in interest rates.
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.
-8-
Professional services to Affiliates decreased for the year ended December 31,
1996, as compared to the year ended December 31, 1995, due to decreases in
legal and accounting services required by the Partnership. Professional
services to Affiliates and non-affiliates decreased for the year ended December
31, 1995, as compared to the year ended December 31, 1994, due to increased
legal and accounting services required in 1994 related to the condominium
conversion and sales and refinancing of the debt collateralized by the
Partnership's properties.
General and administrative expenses to Affiliates decreased for the year ended
December 31, 1996, as compared to the years ended December 31, 1995 and 1994,
due primarily to a decrease in investor service expenses.
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.
-9-
Item 8. Financial Statements and Supplementary Data
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Index
-----
Page
Independent Auditors' Report............................................. 11
Financial Statements:
Balance Sheets, December 31, 1996 and 1995............................ 12
Statements of Operations, for the years ended
December 31, 1996, 1995 and 1994..................................... 14
Statements of Partners' Capital (Deficit), for the
years ended December 31, 1996, 1995 and 1994......................... 16
Statements of Cash Flows, for the years ended
December 31, 1996, 1995 and 1994..................................... 17
Notes to Financial Statements.......................................... 19
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.
-10-
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, 1996 and 1995, and the results of its operations
and its cash flows for each of the years in the three-year period ended
December 31, 1996, in conformity with generally accepted accounting principles.
As discussed in the notes to the financial statements, in 1996, the Partnership
changed its method of accounting for long-lived assets and long-lived assets to
be disposed of to conform with Statement of Financial Accounting Standards No.
121.
KPMG Peat Marwick LLP
Chicago, Illinois
January 30, 1997
-11-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
December 31, 1996 and 1995
Assets
------
1996 1995
---- ----
Current assets:
Cash and cash equivalents (Note 1).............. $ 169,026 130,097
Rent and other receivables...................... 407 1,273
Prepaid expenses................................ 8,047 4,734
------------ ------------
Total current assets.......................... 177,480 136,104
------------ ------------
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...................... 5,497,534 5,429,889
------------ ------------
7,105,992 7,038,347
Less accumulated depreciation................... 2,307,385 2,121,518
------------ ------------
Net investment property....................... 4,798,607 4,916,829
------------ ------------
Deferred financing costs (net of accumulated
amortization of $18,102 and $11,544 for 1996
and 1995, respectively) (Note 1)................ 14,682 21,240
------------ ------------
Total assets...................................... $ 4,990,769 5,074,173
============ ============
See accompanying notes to financial statements.
-12-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
December 31, 1996 and 1995
Liabilities and Partners' Capital (Deficit)
-------------------------------------------
1996 1995
---- ----
Current liabilities:
Current portion of long-term debt (Note 3)...... $ 79,495 63,049
Accounts payable and accrued expenses........... 10,834 13,045
Accrued real estate taxes....................... 21,048 22,000
Prepaid rents................................... 17,718 2,173
Due to Affiliates (Note 6)...................... 1,877 2,786
Tenant security deposits........................ 23,204 22,055
------------ ------------
Total current liabilities..................... 154,176 125,108
Long-term debt, less current portion (Notes 1
and 3).......................................... 837,403 1,058,634
------------ ------------
Total liabilities............................. 991,579 1,183,742
------------ ------------
Partners' capital (deficit) (Notes 1 and 4):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 5,604 3,153
Cumulative cash distributions................. (14,356) (12,992)
------------ ------------
(8,252) (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......................... 784,373 541,671
Cumulative cash distributions................. (4,651,898) (4,516,868)
------------ ------------
4,007,442 3,899,770
------------ ------------
Total Partners' capital (deficit)........... 3,999,190 3,890,431
------------ ------------
Commitments and contingencies (Notes 5 and 6).....
------------ ------------
Total liabilities and Partners' capital (deficit). $ 4,990,769 5,074,173
============ ============
See accompanying notes to financial statements.
-13-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Income: ---- ---- ----
Rental income..................... $ 1,013,968 955,313 958,308
Interest income................... 6,269 5,110 40,939
Other income...................... 39,680 42,693 36,604
------------ ------------ ------------
1,059,917 1,003,116 1,035,851
Expenses: ------------ ------------ ------------
Professional services to
Affiliates...................... 10,243 14,780 18,665
Professional services to
non-affiliates.................. 17,195 18,122 22,829
General and administrative
expenses to Affiliates.......... 12,927 16,087 15,470
General and administrative
expenses to non-affiliates...... 4,893 5,520 4,193
Property operating expenses
to Affiliates................... 47,808 44,685 44,113
Property operating expenses
to non-affiliates............... 451,287 533,145 515,340
Mortgage and other interest....... 77,986 91,343 166,606
Depreciation...................... 185,867 178,285 183,702
Amortization...................... 6,558 6,556 7,092
------------ ------------ ------------
814,764 908,523 978,010
------------ ------------ ------------
Operating income.................... 245,153 94,593 57,841
Extraordinary items relating to
refinancing (Note 2).............. - - (125,886)
Gain on sale of investment property
(Note 2).......................... - - 897,048
------------ ------------ ------------
Net income.......................... $ 245,153 94,593 829,003
============ ============ ============
See accompanying notes to financial statements.
-14-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Net income allocated to (Note 4): ---- ---- ----
General Partner................... $ 2,451 946 8,290
Limited Partners.................. 242,702 93,647 820,713
------------ ------------ ------------
Net income.......................... $ 245,153 94,593 829,003
============ ============ ============
Net income allocated to
the one General Partner Unit:
Operating income.................... 2,451 946 578
Extraordinary items relating to
refinancing....................... - - (1,258)
Gain on sale of investment
property.......................... - - 8,970
------------ ------------ ------------
$ 2,451 946 8,290
============ ============ ============
Net income allocated to Limited
Partners per weighted average of
Limited Partnership Units of 9,246.62:
Operating income.................... 26.25 10.13 6.19
Extraordinary items relating to
refinancing....................... - - (13.48)
Gain on sale of investment
property.......................... - - 96.04
------------ ------------ ------------
$ 26.25 10.13 88.75
============ ============ ============
See accompanying notes to financial statements.
-15-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Partners' Capital (Deficit)
For the years ended December 31, 1996, 1995 and 1994
General Limited
Partner Partners Total
------------- ------------- ------------
Balance (deficit) January 1, 1994... (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
Distributions ($14.60 per weighted
average of Limited Partnership
Units of 9,246.62)................ (1,364) (135,030) (136,394)
Net income.......................... 2,451 242,702 245,153
------------ ------------ ------------
Balance (deficit) December 31, 1996. $ (8,252) 4,007,442 3,999,190
============ ============ ============
See accompanying notes to financial statements.
-16-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from operating activities: ---- ---- ----
Net income........................ $ 245,153 94,593 829,003
Adjustments to reconcile net income
to net cash provided by
operating activities:
Gain on sale of investment
property...................... - - (897,048)
Extraordinary items relating
to refinancing................ - - 125,886
Depreciation.................... 185,867 178,285 183,702
Amortization of loan fees....... 6,558 6,556 7,092
Amortization of discount on
long-term debt................ - - 8,309
Changes in assets and liabilities:
Rents and other receivables... 866 2,993 75,258
Prepaid expenses.............. (3,313) (204) 140
Deposits and other assets..... - - 11,532
Accounts payable and accrued
expenses.................... (2,211) 8,322 (63,010)
Accrued real estate taxes..... (952) (6,468) (151,519)
Prepaid rents................. 15,545 94 (4,546)
Due to Affiliates............. (909) 2,374 (507)
Tenant security deposits...... 1,149 2,760 2,101
Net cash provided by ------------ ------------ ------------
operating activities...... 447,753 289,305 126,393
------------ ------------ ------------
Cash flows from investing activities:
Addition to property.............. (67,645) (23,335) (24,413)
Condominium conversion costs...... - - (437,231)
Proceeds from sale of investment
property........................ - - 2,432,555
Net cash provided by (used in) ------------ ------------ ------------
investing activities....... (67,645) (23,335) 1,970,911
------------ ------------ ------------
See accompanying notes to financial statements.
-17-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Statements of Cash Flows
(continued)
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from financing activities: ---- ---- ----
Principal payments of long-term
debt............................ $ (204,785) (356,436) (27,451)
Payoff of long term debt.......... - - (3,242,131)
Proceeds from refinancing of
long-term debt.................. - - 1,500,000
Payments of deferred financing
costs........................... - - (32,784)
Payment of prepayment penalty..... - - (86,084)
Cash distributions................ (136,394) (167,869) (1,715,198)
Net cash used in financing ------------ ------------ ------------
activities.................... (341,179) (524,305) (3,603,648)
Net increase (decrease) in cash and ------------ ------------ ------------
cash equivalents.................. 38,929 (258,335) (1,506,344)
Cash and cash equivalents at
beginning of year................. 130,097 388,432 1,894,776
Cash and cash equivalents at ------------ ------------ ------------
end of year....................... $ 169,026 130,097 388,432
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest............ $ 77,986 91,334 158,297
============ ============ ============
Supplemental schedule of non-cash investing and financing activities:
Sale of investment property:
Basis in investment property sold... $ - - 1,531,284
Reduction of accumulated
depreciation related to investment
property sold..................... - - (431,283)
Condominium conversion costs........ - - 435,506
Gain on sale........................ - - 897,048
Proceeds from sale of Country Club ------------ ------------ ------------
condominium units................. $ - - 2,432,555
============ ============ ============
See accompanying notes to financial statements.
-18-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1996, 1995 and 1994
(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 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, 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 21.57 Units ($18,064) with its own funds from cash distributions
received through December 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.
The Partnership adopted Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" ("SFAS 121") as required in the first quarter of 1996. SFAS
121 requires that the Partnership record an impairment loss on its property to
be held for investment whenever its carrying value cannot be fully recovered
through estimated undiscounted future cash flows from their operations and
sale. The amount of the impairment loss to be recognized would be the
difference between the property's carrying value and the property's estimated
fair value. The Partnership's policy is to consider a property to be held for
sale or disposition when the Partnership has committed to sell such property
and active marketing activity has commenced or is expected to commence in the
near term. In accordance with SFAS 121, any property identified as "held for
sale or disposition" is no longer depreciated. Adjustments for impairment loss
for such properties (subsequent to the date of adoption of SFAS 121) are made
in each period as necessary to report these properties at the lower of carrying
value or fair value less costs to sell. Effective December 31, 1996, the
Partnership's investment property was held for sale. The adoption of SFAS 121
did not have any effect on the Partnership's financial position, results of
operations or liquidity.
-19-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
Offering costs have been offset against the Limited Partners' capital accounts.
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.
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:
1996 1995
------------------------ -------------------------
Tax Tax
GAAP Basis GAAP Basis
Basis (unaudited) Basis (unaudited)
----------- ------------ ------------ ------------
Total assets................ $4,990,769 4,804,930 5,074,173 4,931,881
Partners' capital (deficits):
General Partner........... (8,252) (5,299) (9,339) (6,106)
Limited Partners.......... 4,007,442 3,581,643 3,899,770 3,501,694
Net income:
General Partner........... 2,451 2,171 946 522
Limited Partners.......... 242,702 214,979 93,647 51,737
Net income per Limited
Partnership Unit.......... 26.25 23.25 10.13 5.60
-20-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(2) Properties
Scottsdale Sierra Apartments, Scottsdale, Arizona
- -------------------------------------------------
As of December 31, 1996, 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.
As of January 1, 1997, the Partnership has listed and is actively marketing
Scottsdale Sierra Apartments for sale at an amount in excess of its carrying
value and has suspended depreciation. As of the date of this report, the
Partnership has received and is currently negotiating an offer for the purchase
of Scottsdale Sierra Apartments for an amount which exceeds the carrying value
of the property.
Country Club Apartments, Arlington Heights, Illinois
- ----------------------------------------------------
As of December 31, 1994, the Partnership sold the remaining thirty-one Country
Club condominium units to unaffiliated third parties for a total sales price 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.
-21-
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, 1996 and 1995:
1996 1995
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 $736,554 due on
March 24, 1999.................................. $ 916,898 1,121,683
------------ ------------
Total debt........................................ 916,898 1,121,683
Less current portion of long-term debt............ (79,495) (63,049)
------------ ------------
Total long-term debt.............................. $ 837,403 1,058,634
============ ============
As of December 31, 1996, the required principal payments on the Partnership's
long-term debt over the next five years are as follows:
1997.......................................... $ 79,495
1998.......................................... 85,880
1999.......................................... 751,523
2000.......................................... -
2001.......................................... -
(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.
-22-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
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.
(5) Leases
At December 31, 1996, 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 $1,786 and $2,704 was unpaid as of December 31, 1996 and
1995, 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
$47,808, $44,685 and $44,113 for the years ended December 31, 1996, 1995 and
1994, respectively, of which $91 and $82 was unpaid as of December 31, 1996 and
1995, respectively.
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.
-23-
INLAND REAL ESTATE GROWTH FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(7) Subsequent Events
In January 1997, 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 February 1, 1997, the Partnership paid an additional $100,000 as a principal
reduction of the long-term debt collateralized by the Scottsdale Sierra
Apartments.
As of January 1, 1997, the Partnership has listed and is actively marketing
Scottsdale Sierra Apartments for sale at an amount in excess of its carrying
value and has suspended depreciation. As of the date of this report, the
Partnership has received and is currently negotiating an offer for the purchase
of Scottsdale Sierra Apartments for an amount which exceeds the carrying value
of the property.
-24-
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements on accounting or financial disclosures during 1996.
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
Kelly Tucek............. Assistant Vice President-Partnership Accounting
Cynthia M. Hassett...... Assistant Vice President-Partnership Accounting
Venton J. Carlston...... Assistant Controller
-25-
DANIEL L. GOODWIN (age 53) 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 Chairman of the
Bank Holding Company of American National Bank of DuPage. Currently he is the
Chairman of the Board of Inland Mortgage Investment Corporation.
Mr. Goodwin has been in the housing industry for more than 28 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 real
estate reference book for the management of residential properties.
Mr. Goodwin has served 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. Also, Mr. Goodwin serves as Chairman of New Directions Housing
Corporation, a leading provider of affordable housing in northern Illinois.
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. More than 12 years ago, under Mr.
Goodwin's direction, Inland instituted a program to train disabled students in
the workplace. Most of these students are still employed at Inland today, and
Inland has become one of the largest employers of the disabled in DuPage
County. He has served as a member of the Board of Governors of Illinois State
Colleges and Universities, and he is currently a trustee of Benedictine
University. He was elected Chairman of Northeastern Illinois University Board
of Trustees in January 1996.
-26-
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 and has been the General Chairman of the National Football League
Players Association Mackey Awards for the benefit of inner-city youth. He
served as the recent Chairman of the Speakers Club of the Illinois House of
Representatives. 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. He was the recipient of the 1995
March of Dimes Life Achievement Award and was recently recognized as the 1997
Corporate Leader of the Year by the Oak Brook Area Association of Commerce and
Industry.
ROBERT H. BAUM (age 53) has been with The Inland Group, Inc. and its
affiliates 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 and has also been a guest lecturer for
the Illinois State Bar Association. Mr. Baum has been admitted to practice
before the Supreme Court of the United States, as well as the bars of several
federal courts of appeals and federal district courts and the State of
Illinois. 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. Currently, he serves as a
director of Westbank, 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 53) is a Director and Vice Chairman of The Inland
Group, Inc. Mr. Cosenza oversees, coordinates and directs Inland's many
enterprises and, in addition, immediately supervises a staff of eight 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, he
taught at the LaGrange School District in Hodgkins, Illinois and from 1968 to
1972, he served as Assistant Principal and taught in the Wheeling, Illinois
School District. Mr. Cosenza 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 has served on the Board of Directors of Continental Bank of
Oakbrook Terrace. He is presently Chairman of the Board of Westbank in
Westchester, Illinois.
-27-
ROBERT D. PARKS (age 53) is Director of The Inland Group, Inc., President,
Chairman and Chief Executive Officer of Inland Real Estate Investment
Corporation and President, Chief Executive Officer, Chief Operating Officer and
Affiliated Director of Inland Real Estate Corporation.
Mr. Parks is responsible for the ongoing administration of existing investment
programs, corporate budgeting and administration for Inland Real Estate
Investment Corporation. He oversees and coordinates the marketing of all
investments and investor relations.
Prior to joining Inland, Mr. Parks was a school teacher in Chicago's public
schools. He received his B.A. degree from Northeastern Illinois University and
his 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 he is a member of the Real Estate Investment Association and
a member of NAREIT.
NORBERT J. TREONIS (age 46) joined The Inland Group, Inc. and its
affiliates in 1975 and he is currently Chairman and Chief Executive Officer of
The Inland Property Management Group, Inc. and a Director of The Inland Group,
Inc. He serves on the Board of Directors of all Inland subsidiaries involved
in the property management, acquisitions and maintenance of real estate,
including Mid-America Property Management Corporation, and Metropolitan
Construction Services, Inc. Mr. Treonis is charged with the responsibility of
the overall management and leasing of all apartment units, retail, industrial
and commercial properties nationwide.
Mr. Treonis is a licensed real estate broker. He is a past member of the Board
of Directors of American National Bank of DuPage, the Apartment Builders and
Managers Association of Illinois, the National Apartment Association and the
Chicagoland Apartment Association.
Mr. Treonis has been the Chairman of the Board of Directors of Inland
Commercial Property Management, Inc. since its formation in 1994.
CATHERINE L. LYNCH (age 38) 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 and the Illinois CPA
Society. She is registered with the National Association of Securities Dealers
as a Financial Operations Principal.
PAUL J. WHEELER (age 44) joined Inland in 1982 and is currently the
President of Inland Property Sales, Inc., the entity responsible for all
corporately owned real estate. 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 and
licensed real estate broker. For three years prior to joining Inland, Mr.
Wheeler was Vice President/Finance at the real estate brokerage firm of Quinlan
& Tyson, Inc.
-28-
ROBERTA S. MATLIN (age 52) 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 39) 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 44) 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 broker, NASD registered
securities sales representative and is a member of the Urban Land Institute.
KELLY TUCEK (age 34) joined Inland in 1989 and is an Assistant Vice
President of Inland Real Estate Investment Corporation. As of August 1996, Ms.
Tucek 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. Tucek was on the audit staff of Coopers
and Lybrand since 1984. She received her B.A. Degree in Accounting and
Computer Science from North Central College.
CYNTHIA M. HASSETT (age 37) joined Inland in 1983 and was a Vice President
of Inland Real Estate Investment Corporation. Through August 1996, Ms. Hassett
was 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.
-29-
VENTON J. CARLSTON (age 39) 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.
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 4 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 in 1996.
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 1996 were $23,170, of which $1,786 was unpaid as of
December 31, 1996.
An Affiliate of the General Partner earned management fees in 1996 totaling
$47,808 in connection with managing the Partnership's property, of which $91
was unpaid as of December 31, 1996.
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.
-30-
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.
-31-
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements listed in the index on page 10 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.
27 Financial Data Schedule
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 1996 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.
-32-
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 24, 1997
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 24, 1997
By: Patricia A. Challenger
Senior Vice President
Date: March 24, 1997
By: Kelly Tucek
Principal Financial Officer
and Principal Accounting Officer
Date: March 24, 1997
By: Daniel L. Goodwin
Director
Date: March 24, 1997
By: Robert H. Baum
Director
Date: March 24, 1997
-33-
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