UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 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 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
March 31, 1997 and December 31, 1996
(unaudited)
Assets
------
1997 1996
---- ----
Cash and cash equivalents (Note 1)................ $ 2,388,804 1,226,087
Accrued interest and other receivables............ 96,694 26,667
Investment in mortgage loans receivable:
Mortgage loans receivable (Notes 3 and 5)....... 491,213 2,712,445
Mortgage loans in substantive foreclosure
(Note 1, 4 and 5)............................. 1,000,721 1,000,721
------------ ------------
1,491,934 3,713,166
------------ ------------
Total assets...................................... $ 3,977,432 4,965,920
============ ============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable................................ $ 8,800 52
Due to Affiliates (Note 2)...................... 17,872 2,429
Unearned income (Note 1)........................ 2,642 3,843
------------ ------------
Total liabilities............................. 29,314 6,324
------------ ------------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 277,317 275,321
Cumulative cash distributions................. (273,447) (269,940)
------------ ------------
4,370 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......................... 5,797,468 5,706,612
Cumulative cash distributions................. (10,835,680) (9,734,857)
------------ ------------
3,943,748 4,953,715
------------ ------------
Total Partners' capital....................... 3,948,118 4,959,596
------------ ------------
Total liabilities and Partners' capital........... $ 3,977,432 4,965,920
============ ============
See accompanying notes to financial statements.
-2-
INLAND MORTGAGE INVESTORS FUND L.P.
(a limited partnership)
Statements of Operations
For the three months ended March 31, 1997 and 1996
(unaudited)
Income: 1997 1996
Interest and fees on mortgage loans receivable ---- ----
(Note 3)...................................... $ 40,500 131,519
Interest on investments......................... 18,760 6,529
Other income.................................... 74,659 992
------------ ------------
133,919 139,040
------------ ------------
Expenses:
Professional services to Affiliates............. 4,362 3,133
Professional services to non-affiliates......... 18,870 18,500
General and administrative expenses to
Affiliates.................................... 15,071 7,683
General and administrative expenses to
non-affiliates................................ 2,764 3,187
------------ ------------
41,067 32,503
------------ ------------
Net income........................................ $ 92,852 106,537
============ ============
Net income allocated to:
General Partner................................. 1,996 6,042
Limited Partners................................ 90,856 100,495
------------ ------------
Net income...................................... $ 92,852 106,537
============ ============
Net income allocated to the one General Partner
Unit............................................ $ 1,996 6,042
============ ============
Net income allocated to Limited Partners per
Limited Partnership Units of 20,129.24.......... $ 4.51 4.99
============ ============
See accompanying notes to financial statements.
-3-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the three months ended March 31, 1997 and 1996
(unaudited)
1997 1996
---- ----
Cash flows from operating activities:
Net income...................................... $ 92,852 106,537
Adjustments to reconcile net income to
net cash provided by operating activities:
Unearned income............................... (1,201) (850)
Changes in assets and liabilities:
Accrued interest and other receivables...... (70,027) 91
Accounts payable............................ 8,748 8,057
Due to Affiliates........................... 15,443 4,415
------------ ------------
Net cash provided by operating activities......... 45,815 118,250
------------ ------------
Cash flows from investing activities:
Principal payments collected.................... 2,221,232 18,835
------------ ------------
Net cash provided by investing activities......... 2,221,232 18,835
------------ ------------
Cash flows from financing activities:
Distributions paid.............................. (1,104,330) (144,320)
------------ ------------
Net cash used in financing activities............. (1,104,330) (144,320)
Net increase (decrease) in cash and cash ------------ ------------
equivalents..................................... 1,162,717 (7,235)
Cash and cash equivalents at beginning of period.. 1,226,087 250,761
------------ ------------
Cash and cash equivalents at end of period........ $ 2,388,804 243,526
============ ============
See accompanying notes to financial statements.
-4-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
March 31, 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
collectibility 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. The
Partnership intends to pursue collection of all amounts currently due from the
borrowers.
-5-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 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.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations 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 $17,872 and $2,429 was unpaid as of March 31, 1997 and
December 31, 1996, respectively.
-6-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
Inland Mortgage Servicing Corporation, a subsidiary of the General Partner,
services the Partnership's mortgage loans receivable. Its services include
processing mortgage loan 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 $2,001 and $3,511 for the
three months ended March 31, 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.
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.
(3) Mortgage Loans Receivable
Mortgage loans receivable and mortgage loans in substantive foreclosure 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.
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.
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.
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.
-7-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
(4) Mortgage Loans in Substantive Foreclosure
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 and the General Partner of the Partnership began foreclosure
proceedings to gain title to the property.
(5) Subsequent Events
In April 1997, the Partnership paid a distribution of $39,926 to the Partners,
of which $37,930 was distributed to the Limited Partners and $1,996 was
distributed to the General Partner. All of the $37,930 distributed to the
Limited Partners was from net interest income.
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.
On April 4, 1997, the Partnership acquired title to the property located at
Indian Trail Road, Aurora, Illinois 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 in property as of April 4, 1997.
-8-
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 of "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 March 31, 1997,
cumulative distributions to Limited Partners totaled $10,835,680, of which
$4,868,621 represents principal amortization, payoffs on ten loans, prepayment
penalties and proceeds from the sale of three properties.
At March 31, 1997, the Partnership had cash and cash equivalents aggregating
$2,388,804 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 March 31, 1997, the Partnership had one mortgage loan receivable and one
mortgage loan in substantive foreclosure totaling $1,491,934. The maturity
dates range from August 1998 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.
-9-
Results of Operations
Interest income on mortgage loans receivable decreased for the three months
ended March 31, 1997, as compared to the three months ended March 31, 1996, due
primarily to the prepayments and/or maturities of six 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 and 7428 West Washington
matured on March 31, 1997).
Additionally, 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 March 31, 1997,
the Partnership is owed interest of $73,984 for the period from July 1996 to
March 1997. 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.
Interest on investments increased for the three months ended March 31, 1997, as
compared to the three months ended March 31, 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 three months ended March 31, 1997, as compared to
the three months ended March 31, 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.
Professional services to Affiliates increased for the three months ended March
31, 1997, as compared to the three months ended March 31, 1996, due to
increases in legal and accounting services required by the Partnership.
General and administrative expenses to Affiliates increased for the three
months ended March 31, 1997, as compared to the three months ended March 31,
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 are prepaid and/or mature.
General and administrative expenses to non-affiliates decreased for the three
months ended March 31, 1997, as compared to the three months ended March 31,
1996, due primarily to a decrease in the Illinois Replacement Tax paid in 1997.
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: May 14, 1997
/S/ MARK ZALATORIS
By: Mark Zalatoris
Vice President
Date: May 14, 1997
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: May 14, 1997
-11-
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