UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended June 30, 1997
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 60523
(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
June 30, 1997 and December 31, 1996
(unaudited)
Assets
------
1997 1996
---- ----
Cash and cash equivalents (Note 1)................ $ 2,880,017 1,226,087
Accrued interest and other receivables............ 29,008 26,667
Investment property held for sale (Notes 1 and 4):
Land............................................ 151,301 -
Building and improvements....................... 929,420 -
------------ ------------
1,080,721 -
------------ ------------
Investment in mortgage loans receivable:
Mortgage loans receivable (Note 3).............. - 2,712,445
Mortgage loan in substantive foreclosure
(Note 1, 3 and 4)............................. - 1,000,721
------------ ------------
- 3,713,166
------------ ------------
Total assets...................................... $ 3,989,746 4,965,920
============ ============
See accompanying notes to financial statements.
-2-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
June 30, 1997 and December 31, 1996
(unaudited)
Liabilities and Partners' Capital
---------------------------------
1997 1996
Liabilities: ---- ----
Accounts payable................................ 16,205 52
Due to Affiliates (Note 2)...................... 5,421 2,429
Deposits held for others........................ 15,470 -
Accrued real estate taxes....................... 20,736 -
Unearned income (Note 1)........................ 1,621 3,843
------------ ------------
Total liabilities................................. 59,453 6,324
------------ ------------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 278,531 275,321
Cumulative cash distributions................. (275,443) (269,940)
------------ ------------
3,588 5,881
------------ ------------
Limited Partners:
Units of $500. Authorized 40,000 Units,
20,129.24 Units outstanding (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......................... 5,818,354 5,706,612
Cumulative cash distributions................. (10,873,609) (9,734,857)
------------ ------------
3,926,705 4,953,715
------------ ------------
Total Partners' capital........................... 3,930,293 4,959,596
------------ ------------
Total liabilities and Partners' capital........... $ 3,989,746 4,965,920
============ ============
See accompanying notes to financial statements.
-3-
INLAND MORTGAGE INVESTORS FUND L.P.
(a limited partnership)
Statements of Operations
For the three and six months ended June 30, 1997 and 1996
(unaudited)
Three months Six months
ended ended
June 30, June 30,
-------- --------
Income: 1997 1996 1997 1996
Interest and fees on mortgage ---- ---- ---- ----
loans receivable (Note 3)...... $ 3,040 112,101 43,540 243,620
Interest on investments.......... 39,834 9,772 58,594 16,301
Rental income.................... 74,245 - 74,245 -
Other income..................... 9,825 7,167 84,484 8,159
---------- ---------- ---------- ----------
126,944 129,040 260,863 268,080
---------- ---------- ---------- ----------
Expenses:
Professional services to
Affiliates..................... 228 2,834 4,590 5,967
Professional services to
non-affiliates................. 2,724 446 21,594 18,946
General and administrative
expenses to Affiliates......... 4,538 7,801 19,609 15,484
General and administrative
expenses to non-affiliates..... 3,910 2,843 6,674 6,030
Property operating expenses
to Affiliates.................. 3,288 - 3,288 -
Property operating expenses
to non-affiliates.............. 90,156 - 90,156 -
---------- ---------- ---------- ----------
104,844 13,924 145,911 46,427
---------- ---------- ---------- ----------
Net income......................... $ 22,100 115,116 114,952 221,653
========== ========== ========== ==========
Net income allocated to:
General Partner.................. 1,214 4,523 3,210 10,565
Limited Partners................. 20,886 110,593 111,742 211,088
---------- ---------- ---------- ----------
Net income......................... $ 22,100 115,116 114,952 221,653
========== ========== ========== ==========
Net income allocated to the one
General Partner Unit............. $ 1,214 4,523 3,210 10,565
========== ========== ========== ==========
Net income per weighted average
Limited Partnership Units
of 20,129.24..................... $ 1.04 5.50 5.55 10.49
========== ========== ========== ==========
See accompanying notes to financial statements.
-4-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the six months ended June 30, 1997 and 1996
(unaudited)
1997 1996
Cash flows from operating activities: ---- ----
Net income...................................... $ 114,952 221,653
Adjustments to reconcile net income to net cash
provided by operating activities:
Unearned income............................... (2,222) (1,700)
Changes in assets and liabilities:
Accrued interest and other receivables...... (2,341) 5,079
Accounts payable............................ 16,153 (352)
Deposits held for others.................... 15,470 -
Accrued real estate taxes................... 20,736 -
Due to Affiliates........................... 2,992 (3,275)
------------ ------------
Net cash provided by operating activities......... 165,740 221,405
------------ ------------
Cash flows from investing activities:
Additions to investment property................ (80,000) -
Principal payments collected.................... 2,712,445 1,885,860
------------ ------------
Net cash provided by investing activities......... 2,632,445 1,885,860
------------ ------------
Cash flows from financing activities:
Distributions paid.............................. (1,144,255) (1,114,210)
------------ ------------
Net cash used in financing activities............. (1,144,255) (1,114,210)
------------ ------------
Net increase in cash and cash equivalents......... 1,653,930 993,055
Cash and cash equivalents at beginning of period.. 1,226,087 250,761
------------ ------------
Cash and cash equivalents at end of period........ $ 2,880,017 1,243,816
============ ============
Supplemental schedule of non-cash investing activities:
Foreclosure of mortgaged property (Note 4):
Reduction of mortgage loans receivable............ $ 1,000,721 -
Increase in investment property................... (1,000,721) -
------------ ------------
$ - -
============ ============
See accompanying notes to financial statements.
-5-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
June 30, 1997
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1996, which are
included in the Partnership's 1996 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 collateralized 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.
The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
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 General Partner evaluates the
collectability of the mortgage loans on a quarterly basis. This evaluation
includes determining the valuation of the underlying operating property subject
to the mortgage. Should a portion of the principal of the mortgage loan be
considered unrecoverable either through collection or foreclosure, a provision
would be made to reduce the carrying amount of the mortgage loans.
-6-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1997
(unaudited)
Loan assumption fees received are deferred as unearned income and amortized
over the remaining life of the related loan.
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.
The Partnership accounts for the investment property in accordance with
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"). 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 investment property was obtained on April 4, 1997 in
a sheriff's sale (Note 4) and was recorded at the lower of the loan balance
plus costs incurred or its 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.
Maintenance and repair expenses are charged to operations as incurred.
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 April 4, 1997, the Partnership's investment property was held for
sale.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
-7-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1997
(unaudited)
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.
(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 $5,421 and $2,429 was unpaid as of June 30, 1997 and
December 31, 1996, respectively.
Inland Mortgage Servicing Corporation, a subsidiary of the General Partner,
serviced the Partnership's mortgage loans receivable. Its services included
processing mortgage loan collections and escrow deposits and maintaining
related records. For these services, the Partnership was 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 $2,312 and $6,576 for the
six months ended June 30, 1997 and 1996, respectively, have been incurred and
paid to the subsidiary and are included in the Partnership's general and
administrative expenses to Affiliates.
The Partnership's investment property is managed by an Affiliate of the General
Partner which earns annual fees not to exceed 5% of gross rental receipts. The
Affiliate earned Property Management Fees of $3,288 for the six months ended
June 30, 1997 and are included in property operating expenses to Affiliates.
No Property Management Fees were incurred by the Partnership in 1996.
In connection with the previous 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.
-8-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1997
(unaudited)
(3) Mortgage Loans Receivable
Mortgage loans receivable and mortgage loans in substantive foreclosure were
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 held assignments
of rents and leases or personal guarantees of the borrowers. Generally, the
mortgage notes were payable in equal monthly installments based on 20 or 30
year amortization periods.
In January 1997, the loan collateralized by the property located at 5830 West
87th Street, Burbank, Illinois, with an original maturity of January 1997, was
extended for three months until March 1997, with an option to extend to June
1999. The interest rate of 8.9% remained the same. On February 13, 1997, the
loan was prepaid. The total proceeds received were $447,191, which represented
the loan balance, accrued interest, accrued additional interest and 50% of the
appreciated value of the property totaling $15,000 which is included in other
income. The proceeds were distributed to the Limited Partners in July 1997.
On January 28, 1997, the loan collateralized by the property located at 288,
294-298 Pennsylvania/Kenilworth, Glen Ellyn, Illinois matured. The total
proceeds received at maturity were $1,023,078, which represented the loan
balance, accrued interest, accrued additional interest and 50% of the
appreciated value of the property totaling $52,500 which is included in other
income. The proceeds were distributed to the Limited Partners in July 1997.
On March 31, 1997, the loan collateralized by the property located at 7428 West
Washington, Forest Park, Illinois matured. The total proceeds received at
maturity were $828,658, which represented the loan balance, accrued interest
and accrued late charges. The proceeds were distributed to the Limited Partners
in July 1997.
On April 3, 1997, the loan collateralized by the property located at 6910 North
Sheridan, Chicago, Illinois was prepaid. The total proceeds received were
$505,325, which represented the loan balance, accrued interest and a 2%
prepayment penalty. The proceeds were distributed to the Limited Partners in
July 1997.
-9-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1997
(unaudited)
(4) Investment Property Held For Sale
As of September 30, 1996, with consent of the borrower, an Affiliate of the
General Partner began management of the property located at Indian Trail Road,
Aurora, Illinois. On April 4, 1997, the Partnership acquired title to the
property through a sheriff's sale. The General Partner believes that when the
property is sold, the Partnership will ultimately realize an amount equal to or
greater than the unpaid principal balance of the mortgage loan receivable. The
loan on this property, previously accounted for as a mortgage loan in
substantive foreclosure, is being accounted for as an investment property as of
April 4, 1997.
(5) Subsequent Events
In July 1997, the Partnership paid a distribution of $2,714,049 to the
Partners, of which $2,712,835 was distributed to the Limited Partners and
$1,214 was distributed to the General Partner. Of the $2,712,835 distributed
to the Limited Partners, $2,689,769 was repayment proceeds and the remainder
was net interest income.
-10-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this quarterly report on
Form 10-Q 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, federal, state or local regulations;
adverse changes in general economic or local conditions; inability of borrower
to meet financial obligations; uninsured losses; and potential conflicts of
interest between the Partnership and its Affiliates, including the General
Partner.
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 June 30, 1997,
cumulative distributions to Limited Partners totaled $10,873,609, of which
$4,868,621 represents principal amortization, payoffs on ten loans, prepayment
penalties and proceeds from the sale of three properties.
At June 30, 1997, the Partnership had cash and cash equivalents aggregating
$2,880,017 which will be utilized for future distributions to partners and
working capital requirements. The source of future liquidity and distributions
to the Limited and General Partners is expected to be from the cash flow from
the Partnership's investment property. 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 investment property.
At June 30, 1997, the Partnership's remaining asset is an investment property.
When the Partnership had received Repayment Proceeds as the result of the
repayment of a loan, the Repayment Proceeds which were available for
distribution were distributed to the Limited Partners. With the Partnership's
mortgage loans receivable repaid, cash flows from operating activities will
result from operations of the Partnership's investment property held for sale.
-11-
Results of Operations
Interest income on mortgage loans receivable decreased for the three and six
months ended June 30, 1997, as compared to the three and six months ended June
30, 1996, due primarily to the prepayments and/or maturities of seven of the
Partnership's mortgage loans receivable (5420 North Kenmore prepaid on April 2,
1996, 712-720 West Grace prepaid on June 18, 1996, 7434-7442 North Hermitage
prepaid on June 27, 1996, 288, 294-298 Pennsylvania/Kenilworth matured on
January 28, 1997, 5830 West 87th Street prepaid on February 13, 1997, 7428 West
Washington matured on March 31, 1997 and 6910 North Sheridan prepaid on April
3, 1997).
Additionally, interest income on mortgage loans receivable 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 March 31, 1997, the Partnership was owed and had not recorded interest of
$73,984 for the period from July 1996 to March 1997. The loan on this
property, previously accounted for as a mortgage loan in substantive
foreclosure, is being accounted for as an investment property as of April 4,
1997.
Interest on investments increased for the three and six months ended June 30,
1997, as compared to the three and six months ended June 30, 1996, due to an
increase in interest rates and the Partnership investing repayment proceeds
before distributing to the Limited Partners.
Other income increase for the six months ended June 30, 1997, as compared to
the six months ended June 30, 1996, due to the Partnership receiving 50% of the
appreciated value of two properties at maturity of the related mortgage loans
receivable totaling $67,500.
Rental income and property operating expenses for the three and six months
ended June 30, 1997 are the result of the Partnership recording the property
operations of the investment property as of April 4, 1997.
Professional services to Affiliates decreased for the three and six months
ended June 30, 1997, as compared to the three and six months ended June 30,
1996, due to decreases in in-house legal and accounting services required by
the Partnership. Professional services to non-affiliates increased for the
three and six months ended June 30, 1997, as compared to the three and six
months ended June 30, 1996, due to increases in legal and accounting services
required by the Partnership as a result of the foreclosure on the property
located at Indian Trail Road in Aurora, Illinois.
General and administrative expenses to Affiliates increased for the six months
ended June 30, 1997, as compared to the six months ended June 30, 1996, due to
increases in data processing and investor services expenses. This increase was
partially offset by a decrease in mortgage servicing fees on the Partnership's
mortgage loans receivables as they were prepaid and/or mature.
-12-
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 Schedules
(b) Reports on Form 8-K:
None
-13-
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: August 11, 1997
/S/ MARK ZALATORIS
By: Mark Zalatoris
Vice President
Date: August 11, 1997
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: August 11, 1997
-14-
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