UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 1996
or
[ ] Transition Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File #0-15759
Inland Mortgage Investors Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3436439
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60521
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 630-218-8000
N/A
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-1-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Balance Sheets
September 30, 1996 and December 31, 1995
(unaudited)
Assets
------
1996 1995
---- ----
Cash and cash equivalents (Note 1)................ $ 1,225,365 250,761
Accrued interest and other receivables............ 34,125 47,500
Investment in mortgage loans receivable:
Mortgage loans receivable (Note 3).............. 2,724,498 5,624,974
Mortgage loans in substantive foreclosure
(Notes 1, 3 and 4)............................ 1,000,722 -
------------ ------------
3,725,220 5,624,974
------------ ------------
Total assets...................................... $ 4,984,710 5,923,235
============ ============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable................................ $ - 858
Due to Affiliates (Note 2)...................... 402 3,740
Unearned income (Note 1)........................ 4,693 7,243
------------ ------------
Total liabilities............................. 5,095 11,841
------------ ------------
Partners' capital (Notes 1, 2 and 5):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 271,814 257,535
Cumulative cash distributions................. (266,227) (249,319)
------------ ------------
6,087 8,716
------------ ------------
Limited Partners:
Units of $500. Authorized 40,000 Units,
20,129.24 Units outstanding at 1996 and
1995 (net of offering costs of $1,082,660,
of which $219,526 was paid to Affiliates)... 8,981,960 8,981,960
Cumulative net income......................... 5,641,978 5,362,869
Cumulative cash distributions................. (9,650,410) (8,442,151)
------------ ------------
4,973,528 5,902,678
------------ ------------
Total Partners' capital....................... 4,979,615 5,911,394
------------ ------------
Total liabilities and Partners' capital........... $ 4,984,710 5,923,235
============ ============
See accompanying notes to financial statements.
-2-
INLAND MORTGAGE INVESTORS FUND L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 1996 and 1995
(unaudited)
Three months Nine months
ended ended
September 30, September 30,
------------- -------------
Income: 1996 1995 1996 1995
---- ---- ---- ----
Interest and fees on mortgage
loans receivable (Note 3)...... $ 63,608 131,714 307,228 417,975
Interest on investments.......... 19,532 10,071 35,833 28,807
Other income..................... 1,351 300 9,510 9,240
---------- ---------- ---------- ----------
84,491 142,085 352,571 456,022
---------- ---------- ---------- ----------
Expenses:
Professional services to
Affiliates..................... 3,076 5,052 9,043 12,809
Professional services to
non-affiliates................. - - 18,946 18,690
General and administrative
expenses to Affiliates......... 7,677 8,109 23,161 25,061
General and administrative
expenses to non-affiliates..... 2,003 (725) 8,033 5,104
---------- ---------- ---------- ----------
12,756 12,436 59,183 61,664
---------- ---------- ---------- ----------
Net income......................... $ 71,735 129,649 293,388 394,358
========== ========== ========== ==========
Net income allocated to:
General Partner.................. 3,714 6,953 14,279 20,137
Limited Partners................. 68,021 122,696 279,109 374,221
---------- ---------- ---------- ----------
Net income......................... $ 71,735 129,649 293,388 394,358
========== ========== ========== ==========
Net income allocated to the one
General Partner Unit............. $ 3,714 6,953 14,279 20,137
========== ========== ========== ==========
Net income allocated to Limited
Partners per Limited Partnership
Units of 20,129.24............... $ 3.38 6.09 13.87 18.59
========== ========== ========== ==========
See accompanying notes to financial statements.
-3-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 1996 and 1995
(unaudited)
1996 1995
---- ----
Cash flows from operating activities:
Net income...................................... $ 293,388 394,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Unearned income............................... (2,550) (4,749)
Changes in assets and liabilities:
Accrued interest and other receivables...... 13,375 11,653
Accounts payable............................ (858) (128)
Due to Affiliates........................... (3,338) 2,117
------------ ------------
Net cash provided by operating activities......... 300,017 403,251
------------ ------------
Cash flows from investing activities:
Principal payments collected.................... 1,899,754 503,524
------------ ------------
Net cash provided by investing activities......... 1,899,754 503,524
------------ ------------
Cash flows from financing activities:
Distributions paid.............................. (1,225,167) (891,354)
------------ ------------
Net cash used in financing activities............. (1,225,167) (891,354)
------------ ------------
Net increase in cash and cash equivalents......... 974,604 15,421
Cash and cash equivalents at beginning of period.. 250,761 265,659
------------ ------------
Cash and cash equivalents at end of period........ $ 1,225,365 281,080
============ ============
See accompanying notes to financial statements.
-4-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 1996
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1995, which are
included in the Partnership's 1995 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.
(1) Organization and Basis of Accounting
Inland Mortgage Investors Fund, L.P. (the "Partnership") was organized on
December 5, 1985, pursuant to the Delaware Revised Uniform Limited Partnership
Act, to make or acquire loans secured by mortgages on improved, income-
producing multi-family residential properties in or near the Chicago
metropolitan area. On February 12, 1986, the Partnership commenced an Offering
of 40,000 Limited Partnership Units pursuant to a Registration Statement on
Form S-11 under the Securities Act of 1933. The Offering terminated on
February 12, 1987, with total sales of 20,129.24 Units at $500 per Unit
resulting in $10,064,620 of gross offering proceeds, not including the General
Partner's contribution of $500. 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.
Loan assumption fees received are deferred as unearned income and amortized
over the remaining life of the related loan.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents and are carried at
cost, which approximates fair value due to the short maturity of those
instruments.
The fair value of the mortgage loans receivable and related mortgage interest
receivable is based upon contractual payments to be received and current market
interest rates for issuance of mortgage loans with similar terms and
maturities. The estimated fair value of the mortgage loans receivable at
September 30, 1996 approximates their carrying value.
-5-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
Interest income on mortgage loans receivable is accrued when earned. The
accrual of interest, on loans that are in default, is discontinued when, in the
opinion of the General Partner, the borrower has not complied with loan work-
out arrangements. Once a loan has been placed on a non-accrual status, all cash
received is applied against the outstanding loan balance until such time as the
borrower has demonstrated an ability to make payments under the terms of the
original or renegotiated loan agreement. The Partnership intends to pursue
collection of all amounts currently due from the borrowers.
Loans are classified in substantive foreclosure when a determination has been
made that the borrower meets the following criteria:
1) The borrower has little or no equity in the collateral, considering the
current fair value of the collateral; and
2) Proceeds for repayment of the loan can be expected to come only from the
operation or sale of the collateral; and
3) The borrower has either:
a) Formally or effectively abandoned control of the collateral to the
creditors; or
b) Retained control of the collateral but, because of the current
financial condition of the borrower or the economic prospects for the
borrower and/or the collateral in the foreseeable future, it is
doubtful that the borrower will be able to rebuild equity in the
collateral or otherwise repay the loan in the foreseeable future.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
Disclosure of the estimated fair value of financial instruments is made in
accordance with the requirements of Statement of Financial Accounting Standards
No. 107, "Disclosures About Fair Value of Financial Instruments." The estimated
fair value amounts have been determined by using available market information
and appropriate valuation methodologies.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations for the period
presented herein. Results of interim periods are not necessarily indicative of
results to be expected for the year.
-6-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
(2) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services to Affiliates and general and administrative expenses to
Affiliates, of which $402 and $3,740 was unpaid as of September 30, 1996 and
December 31, 1995, respectively.
Inland Mortgage Servicing Corporation, a subsidiary of the General Partner,
services the Partnership's mortgage loans receivable. Its services include
processing mortgage collections and escrow deposits and maintaining related
records. For these services, the Partnership is obligated to pay fees at an
annual rate equal to 1/4 of 1% of the outstanding mortgage loans receivable
balance of the Partnership. Such fees of $8,701 and $11,315 for the nine
months ended September 30, 1996 and 1995, respectively, have been incurred and
paid to the subsidiary and are included in the Partnership's general and
administrative expenses to Affiliates.
In connection with the sales of 6910 North Sheridan, 5420 North Kenmore and
712-720 West Grace, sales commissions of $18,125, $27,500 and $14,553,
respectively, 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.
(3) Mortgage Loans Receivable
Mortgage loans receivable are collateralized by first mortgages and wrap
mortgages on multi-family residential properties located in Chicago, Illinois
or its surrounding metropolitan area. As additional collateral, the
Partnership holds assignments of rents and leases or personal guarantees of the
borrowers. Generally, the mortgage notes are payable in equal monthly
installments based on 20 or 30 year amortization periods.
On April 2, 1996, the loan collateralized by the property located at 5420 North
Kenmore, Chicago was prepaid by the borrower. The total proceeds received from
the prepayment were $840,077, which represented the current loan balance and
accrued interest. The proceeds were distributed to the Limited Partners in
April 1996.
On June 18, 1996, the loan collateralized by the property located at 712-720
West Grace, Chicago was prepaid by the borrower. The Partnership received its
share of the proceeds received from the prepayment of $435,834, which
represented the current loan balance and accrued interest.
-7-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
On June 27, 1996, the loan collateralized by the property located at 7434-7442
North Hermitage, Chicago was prepaid by the borrower. The total proceeds
received from the prepayment were $591,906, which represented the current loan
balance, accrued interest and a 1% prepayment penalty.
(4) Mortgage Loans in Substantive Foreclosure
As of September 1996, with consent of the borrower, an Affiliate of the General
Partner began management of the property located at Indian Trail Road, Aurora,
Illinois. The Partnership has begun foreclosure proceedings to gain title to
the property.
(5) Subsequent Events
In October 1996, the Partnership paid a distribution of $88,160 to the
Partners, of which $84,447 was distributed to the Limited Partners and $3,713
was distributed to the General Partner. Of the $84,447 distributed to the
Limited Partners, $13,893 was principal amortization and the remainder was from
net interest income.
-8-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
On February 12, 1986, the Partnership commenced an Offering of 40,000 Limited
Partnership Units pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933. The Offering terminated on February 12, 1987, with a
total of 20,129 Units being sold to the public at $500 per Unit resulting in
$10,064,620 of gross offering proceeds which were received by the Partnership,
not including $500 which is the General Partner's contribution. The Partnership
funded fifteen loans between October 1986 and August 1988 utilizing $8,466,875
of capital proceeds collected, net of participations. As of September 30,
1996, cumulative distributions to Limited Partners totaled $9,650,410, of which
$3,820,538 represents principal amortization, payoffs on eight loans,
prepayment penalties and proceeds from the sale of three properties.
At September 30, 1996, the Partnership had cash and cash equivalents
aggregating $1,225,365 which will be utilized for future distributions to
partners and working capital requirements. The sources of future liquidity and
distributions to the Limited and General Partners are expected to be from the
collection of interest and repayment of principal of the Partnership's mortgage
loan investments. To the extent that these sources are 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 liquidate certain
mortgage loans or other assets.
At September 30, 1996, the Partnership had five mortgage loans receivable
totaling $3,725,220. The maturity dates range from January 1997 to August
1999. When and as the Partnership receives Repayment Proceeds as a result of
the sale or repayment of a loan, the Repayment Proceeds which are available for
distribution will be distributed to the Limited Partners. When the loans are
repaid, cash flows from operating activities will decrease as a result of the
decrease in interest income earned by the Partnership.
Results of Operations
The maturity dates of the five remaining mortgage loans receivable range from
January 1997 to August 1999. As the loans are repaid by the borrowers and
Repayment Proceeds are distributed to the Limited Partners, interest income
will decrease accordingly.
Interest income on mortgage loans receivable decreased for the three and nine
months ended September 30, 1996, as compared to the three and nine months ended
September 30, 1995, due primarily to the prepayments of four of the
Partnership's mortgage loans receivable (2659 South Austin prepaid on May 23,
1995, 5420 North Kenmore prepaid on April 2, 1996, 712-720 West Grace prepaid
on June 18, 1996 and 7434-7442 North Hermitage prepaid on June 27, 1996). In
addition to the loan prepayments, interest income decreased due to the
Partnership discontinuing accruing interest on the mortgage loan receivable
collateralized by the property located at Indian Trail Road, Aurora, Illinois.
As of September 30, 1996, the Partnership is owed interest of $27,057 for the
period from July to September 1996. The loan on this property, previously
recorded as a mortgage loan receivable, is being recorded as a mortgage loan in
substantive foreclosure as of September 30, 1996. This decrease was partially
-9-
offset by an increase in interest income on mortgage loans receivable due to an
increase in the adjustable interest rate (6.747% to 6.975%) of the mortgage
loan receivable collateralized by the property located at 7428 West Washington
in April 1996.
Interest on investments increased for the three and nine months ended September
30, 1996, as compared to the three and nine months months ended September 30,
1995, due to the Partnership investing proceeds before being distributed to the
Partners.
Professional services to Affiliates decreased for the three and nine months
ended September 30, 1996, as compared to the three and nine months ended
September 30, 1995, due to decreases in legal and accounting services required
by the Partnership.
General and administrative expenses to Affiliates decreased for the three and
nine months ended September 30, 1996, as compared to the three and nine months
ended September 30, 1995, due primarily to the decrease in mortgage servicing
fees on the Partnership's mortgage loans receivables as they are prepaid.
General and administrative expenses to non-affiliates increased for the three
and nine months ended September 30, 1996, as compared to the three and nine
months ended September 30, 1995, due to increases in supplies and filing fees.
PART II - Other Information
Items 1 through 5 are omitted because of the absence of conditions under which
they are required.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K:
None
-10-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INLAND MORTGAGE INVESTORS FUND, L.P.
By: Inland Real Estate Investment Corporation
General Partner
/S/ ROBERT D. PARKS
By: Robert D. Parks
Chairman
Date: November 13, 1996
/S/ MARK ZALATORIS
By: Mark Zalatoris
Vice President
Date: November 13, 1996
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: November 13, 1996
-11-
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