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, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File #0-15759
Inland Mortgage Investors Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3436439
(State of organization) (I.R.S. Employer Identification Number)
2901 Butterfield Road, Oak Brook, Illinois 60523
(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 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 February 12, 1986, 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 MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
TABLE OF CONTENTS
Part I Page
------ ----
Item 1. Business...................................................... 3
Item 2. Properties.................................................... 3
Item 3. Legal Proceedings............................................. 3
Item 4. Submission of Matters to a Vote of Security Holders........... 3
Part II
-------
Item 5. Market for the Partnership's Limited Partnership Units
and Related Security Holder Matters.......................... 4
Item 6. Selected Financial Data....................................... 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 6
Item 8. Financial Statements and Supplementary Data................... 8
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....................... 21
Part III
--------
Item 10. Directors and Executive Officers of the Registrant............ 21
Item 11. Executive Compensation........................................ 26
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 27
Item 13. Certain Relationships and Related Transactions................ 27
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 28
SIGNATURES............................................................. 29
-2-
PART I
Item 1. Business
The Registrant, Inland Mortgage Investors Fund, L.P. (the "Partnership"), is a
limited partnership formed on December 5, 1985 pursuant to the Delaware Revised
Uniform Limited Partnership Act. On February 12, 1986, the Partnership
commenced an Offering of 40,000 Limited Partnership Units (the "Units") at $500
per Unit, 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 resulting in gross offering proceeds of
$10,064,620, not including $500 which is the General Partner contribution. All
of the holders of these Units were admitted to the Partnership. A majority of
these proceeds were used to fund first mortgage loans. The Partnership funded
fifteen loans between October 1986 and August 1988 utilizing $8,466,875 of
offering proceeds collected, net of participations. As of December 31, 1997,
$7,558,390 has been repaid, which includes principal amortization, payoffs on
eleven loans, prepayment penalties and proceeds from the sale of three
properties. The Limited Partners of the Partnership share in the benefits of
ownership of the Partnership's first mortgage receivable investments in
proportion to the number of Units held. Inland Real Estate Investment
Corporation is the General Partner.
The Partnership is engaged in the business of making and acquiring loans
collateralized by mortgages on improved, income producing multi-family
residential properties in or near Chicago, Illinois. The loans are being
serviced by Inland Mortgage Servicing Corporation, a subsidiary of the General
Partner. The Partnership does not segregate revenues or assets by geographic
region, and such a presentation would not be material to an understanding of
the Partnership's business taken as a whole.
The Partnership had no employees during 1997.
The terms of transactions between the Partnership and Affiliates of the General
Partner are set forth in Item 11 below and Note 3 of the Notes to Financial
Statements (Item 8 of this Annual Report) to which reference is hereby made.
The Partnership has reviewed its current computer systems and does not
anticipate any future problems relating to the year 2000.
Item 2. Properties
The Partnership acquired title to a 62-unit apartment building located in
Aurora, Illinois on April 4, 1997 in settlement of a loan that had previously
been in default. The property is currently being held for sale.
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 1997.
-3-
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1997, there were 741 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.
The Partnership's Liquidity Plan is available to the Limited Partners. See
"Liquidity Plan" and "Distribution Reinvestment Plan," page 18 and pages 37-38,
respectively, of the Prospectus of the Partnership dated February 12, 1986,
which is incorporated herein by reference. At this time, there are no Limited
Partners contributing to the DRP.
-4-
Item 6. Selected Financial Data
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
For the years ended December 31, 1997, 1996, 1995, 1994 and 1993
(not covered by the Report of Independent Accountants)
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Total assets......... $1,232,074 4,965,920 5,923,235 6,470,865 7,142,969
=========== =========== =========== =========== ==========
Total income......... $ 382,462 434,350 596,496 635,063 794,889
=========== =========== =========== =========== ==========
Income from
operations......... 58,174 361,529 521,719 555,677 541,702
Gain on sale of
investment property - - - - 44,434
----------- ----------- ----------- ----------- ----------
Net income........... $ 58,174 361,529 521,719 555,677 586,136
=========== =========== =========== =========== ==========
Income from operations
allocated to the one
General Partner Unit$ 3,210 17,786 26,480 26,766 28,394
=========== =========== =========== =========== ==========
Net income per Unit
allocated to Limited
Partners from (b):
Operations........... 2.73 17.08 24.60 26.28 25.50
Gain on sale of
investment property - - - - 2.21
----------- ----------- ----------- ----------- ----------
$ 2.73 17.08 24.60 26.28 27.71
=========== =========== =========== =========== ==========
Distributions to Limited
Partners from:
Operations........... 127,627 391,806 509,563 520,964 542,105
Repayment proceeds... 3,723,959 900,900 530,920 671,989 326,388
----------- ----------- ----------- ----------- ----------
$3,851,586 1,292,706 1,040,483 1,192,953 868,493
=========== =========== =========== =========== ==========
Distributions per
Unit to Limited
Partners from (b):
Operations........... 6.34 19.46 25.31 25.88 26.93
Repayment proceeds... 185.00 44.76 26.38 33.38 16.22
----------- ----------- ----------- ----------- ----------
$ 191.34 64.22 51.69 59.26 43.15
=========== =========== =========== =========== ==========
(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 per Unit, basic and diluted, and distributions per Unit are
based upon the weighted average number of Units outstanding of 20,129.24.
-5-
Item 7. 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 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, 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 December 31, 1997,
cumulative distributions to Limited Partners totaled $13,586,443, of which
$7,558,390 represents principal amortization, payoffs on eleven loans,
prepayment penalties and proceeds from the sale of three properties.
At December 31, 1997, the Partnership had cash and cash equivalents aggregating
$108,890 which will be utilized for future distributions to partners and
working capital requirements. At December 31, 1997, the Partnership's
remaining asset is an investment property. The source of future liquidity and
distributions to the Limited and General Partners is expected to be from the
cash flow and sale of this investment property. Until such sale occurs, the
Partnership may rely on advances from Affiliates of the General Partner or
other short-term financing to meet the Partnership's needs.
Results of Operations
Interest income on mortgage loans receivable decreased for the year ended
December 31, 1997, as compared to the year ended December 31, 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 held for sale as
of April 4, 1997, the date on which the Partnership acquired title.
-6-
Interest income on mortgage loans receivable decreased for the year ended
December 31, 1996, as compared to the year ended December 31, 1995, due 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 December 31, 1996, the Partnership was owed
interest of $49,404 for the period from July to December 1996. The loan on
this property, previously recorded as a mortgage loan receivable, was being
recorded as a mortgage loan in substantive foreclosure as of September 30,
1996. These decreases in interest income were partially offset by an increase
in the adjustable interest rate (6.747% to 6.975%) in the mortgage loan
receivable collateralized by the property located at 7428 West Washington in
April 1996.
Interest on investments increased for the year ended December 31, 1997, as
compared to the years ended December 31, 1996 and 1995, due to an increase in
interest rates on short-term investments and the Partnership investing
repayment proceeds before being distributed to the Limited Partners.
The other income recorded by the Partnership for the year ended December 31,
1997 consists of 50% of the appreciated values of the properties located at
288, 294-298 Pennsylvania/Kenilworth, Glen Ellyn, Illinois and 5830 West 87th
Street, Burbank, Illinois and the prepayment penalty received from the payoff
of the loan collateralized by the property located at 6910 Sheridan, Chicago,
Illinois on April 3, 1997. The appreciated value is defined as the difference
between the appraised value of the property at maturity and the appraised value
at the time of the loan origination. The other income recorded by the
Partnership for the year ended December 31, 1996, is primarily the prepayment
penalty received for the payoff of the loan collateralized by the property
located at 7434-7442 North Hermitage on June 27, 1996 and late charges received
on the Partnership's other mortgage loans receivable. The other income
recorded by the Partnership for the year ended December 31, 1995, is primarily
the prepayment penalty received for the payoff of the loan collateralized by
the property located at 2659 South Austin on May 23, 1995.
Rental income and property operating expenses for the year ended December 31,
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 year ended December 31,
1997, as compared to the year ended December 31, 1996, due to decreases in
legal and accounting services required by the Partnership. Professional
services to Affiliates decreased for the year ended December 31, 1996, as
compared to the year ended December 31, 1995, due primarily to a decrease in
accounting services required by the Partnership. Professional services to non-
affiliates increased for the year ended December 31, 1997, as compared to the
years ended December 31, 1996 and 1995, 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.
-7-
General and administrative expenses to Affiliates decreased for the year ended
December 31, 1997, as compared to the years ended December 31, 1996 and 1995,
due to a decrease in mortgage servicing fees on the Partnership's mortgage
loans receivable as they were prepaid and/or mature. This decrease was
partially offset by an increase in data processing and investor services
expenses. General and administrative expenses to non-affiliates was higher for
the year ended December 31, 1996, as compared to the years ended December 31,
1997 and 1995, due to an increase in supplies and filing fees.
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.
Item 8. Financial Statements and Supplementary Data
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Index
-----
Page
----
Report of Independent Accountants........................................ 9
Financial Statements:
Balance Sheets, December 31, 1997 and 1996............................. 10
Statements of Operations, for the years
ended December 31, 1997, 1996 and 1995............................... 12
Statements of Partners' Capital, for the years
ended December 31, 1997, 1996 and 1995............................... 13
Statements of Cash Flows, for the years ended
December 31, 1997, 1996 and 1995..................................... 14
Notes to Financial Statements.......................................... 15
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.
-8-
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners of Inland Mortgage
Investors Fund, L.P.
We have audited the financial statements of Inland Mortgage Investors Fund,
L.P. listed in the index on page 8 of this Form 10-K. These financial
statements are the responsibility of the Partnership's management. 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 management, 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 Mortgage Investors
Fund, L.P. as of December 31, 1997 and 1996 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 5, 1998
-9-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Balance Sheets
December 31, 1997 and 1996
Assets
------ 1997 1996
---- ----
Cash and cash equivalents (Note 1)................ $ 108,890 1,226,087
Accrued interest and other receivables............ 7,846 26,667
Investment property held for sale (Notes 1 and 4):
Land............................................ 140,101 -
Building and improvements....................... 975,237 -
------------ ------------
1,115,338 -
------------ ------------
Investment in mortgage loans receivable:
Mortgage loans receivable (Note 5).............. - 2,712,445
Mortgage loans in substantive foreclosure
(Note 1, 4 and 5)............................. - 1,000,721
------------ ------------
- 3,713,166
------------ ------------
Total assets...................................... $ 1,232,074 4,965,920
============ ============
See accompanying notes to financial statements.
-10-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Balance Sheets
December 31, 1997 and 1996
(continued)
Liabilities and Partners' Capital
---------------------------------
1997 1996
---- ----
Liabilities:
Accounts payable................................ $ 11,939 52
Due to Affiliates (Note 3)...................... 2,228 2,429
Security deposits............................... 15,876 -
Accrued real estate taxes....................... 41,472 -
Unearned income (Note 1)........................ 1,092 3,843
------------ ------------
Total liabilities................................. 72,607 6,324
------------ ------------
Partners' capital (Notes 1, 2 and 3):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 278,531 275,321
Cumulative cash distributions................. (276,657) (269,940)
------------ ------------
2,374 5,881
Limited Partners: ------------ ------------
Units of $500. Authorized 40,000 Units,
20,129.24 Units outstanding at 1997 and
1996 (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......................... 5,761,576 5,706,612
Cumulative cash distributions................. (13,586,443) (9,734,857)
------------ ------------
1,157,093 4,953,715
------------ ------------
Total Partners' capital........................... 1,159,467 4,959,596
------------ ------------
Total liabilities and Partners' capital........... $ 1,232,074 4,965,920
============ ============
See accompanying notes to financial statements.
-11-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Operations
For the years ended December 31, 1997, 1996 and 1995
Income: 1997 1996 1995
Interest and fees on mortgage loans ---- ---- ----
receivable (Note 5)............. $ 43,540 371,225 549,635
Interest on investments........... 73,496 53,615 36,270
Rental income..................... 188,023 - -
Other income...................... 77,403 9,510 10,591
------------ ------------ ------------
382,462 434,350 596,496
Expenses: ------------ ------------ ------------
Professional services to
Affiliates...................... 8,913 13,455 17,030
Professional services to
non-affiliates.................. 21,364 18,946 18,690
General and administrative
expenses to Affiliates.......... 27,554 32,173 32,367
General and administrative
expenses to non-affiliates...... 6,349 8,247 6,690
Property operating expenses
to Affiliates................... 9,060 - -
Property operating expenses
to non-affiliates............... 251,048 - -
------------ ------------ ------------
324,288 72,821 74,777
------------ ------------ ------------
Net income.......................... $ 58,174 361,529 521,719
============ ============ ============
Net income allocated to (Note 2):
General Partner................... 3,210 17,786 26,480
Limited Partners.................. 54,964 343,743 495,239
------------ ------------ ------------
Net income.......................... $ 58,174 361,529 521,719
============ ============ ============
Net income from operations allocated
to the one General Partner Unit... $ 3,210 17,786 26,480
============ ============ ============
Net income per Unit, basic and
diluted, allocated to Limited
Partners per Limited Partnership
Units of 20,129.24................ $ 2.73 17.08 24.60
============ ============ ============
See accompanying notes to financial statements.
-12-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Partners' Capital
For the years ended December 31, 1997, 1996 and 1995
General Limited
Partner Partners Total
------------ ------------ ------------
Balance at January 1, 1995.......... $ 9,055 6,447,922 6,456,977
Net income.......................... 26,480 495,239 521,719
Distributions to Partners ($51.69 per
Limited Partnership Unit based on
Units of 20,129.24)(Note 2)....... (26,819) (1,040,483) (1,067,302)
------------ ------------ ------------
Balance at December 31, 1995........ 8,716 5,902,678 5,911,394
Net income.......................... 17,786 343,743 361,529
Distributions to Partners ($64.22 per
Limited Partnership Unit based on
Units of 20,129.24)(Note 2)....... (20,621) (1,292,706) (1,313,327)
------------ ------------ ------------
Balance at December 31, 1996........ 5,881 4,953,715 4,959,596
Net income.......................... 3,210 54,964 58,174
Distributions to Partners ($191.34
per Limited Partnership Unit based
on Units of 20,129.24)(Note 2).... (6,717) (3,851,586) (3,858,303)
------------ ------------ ------------
Balance at December 31, 1997........ $ 2,374 1,157,093 1,159,467
============ ============ ============
See accompanying notes to financial statements.
-13-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Cash flows from operating activities: ---- ---- ----
Net income........................ $ 58,174 361,529 521,719
Adjustments to reconcile net income
to net cash provided by
operating activities:
Changes in assets and liabilities:
Accrued interest and other
receivables................. 18,821 20,833 11,742
Accounts payable.............. 11,887 (806) 235
Unearned income............... (2,751) (3,400) (5,599)
Security deposits............. 15,876 - -
Accrued real estate taxes..... 41,472 - -
Due to Affiliates............. (201) (1,311) 3,317
Net cash provided by operating ------------ ------------ ------------
activities........................ 143,278 376,845 531,414
------------ ------------ ------------
Cash flows from investing activities:
Additions to investment property.. (114,617) - -
Principal payments collected...... 2,712,445 1,911,808 520,990
Net cash provided by investing ------------ ------------ ------------
activities........................ 2,597,828 1,911,808 520,990
------------ ------------ ------------
Cash flows from financing activities:
Distributions paid................ (3,858,303) (1,313,327) (1,067,302)
Net cash used in financing ------------ ------------ ------------
activities........................ (3,858,303) (1,313,327) (1,067,302)
Net increase (decrease) in cash and ------------ ------------ ------------
cash equivalents.................. (1,117,197) 975,326 (14,898)
Cash and cash equivalents at
beginning of year................. 1,226,087 250,761 265,659
Cash and cash equivalents at ------------ ------------ ------------
end of year....................... $ 108,890 1,226,087 250,761
============ ============ ============
Supplemental schedule of non-cash investing activities:
Foreclosure of mortgaged property (Note 5):
Reduction of mortgage loans
receivable........................ $ 1,000,721 - -
Increase in investment property..... (1,000,721) - -
------------ ------------ ------------
$ - - -
============ ============ ============
See accompanying notes to financial statements.
-14-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1997, 1996 and 1995
(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.
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 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.
-15-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
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.
Statement of Financial Accounting Standards No. 121 ("SFAS 121") requires the
Partnership to 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 5)
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. Effective April 4, 1997, the Partnership's investment
property was held for sale. 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 are made in each period as
necessary to report these properties at the lower of carrying value or fair
value less costs to sell. As of December 31, 1997, the Partnership has not
recognized any such impairment on its property.
The investment property consists of a 62-unit apartment building located in
Aurora, Illinois. 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 recorded when earned.
Statement of Financial Accounting Standards No. 128 "Earnings per Share" was
adopted by the Partnership for the year ended December 31, 1997 and has been
applied to all prior earnings periods presented in the financial statements.
The Partnership has no dilutive securities.
-16-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
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:
1997 1996
------------------------ -----------------------
GAAP Tax GAAP Tax
Basis Basis Basis Basis
----------- ------------ ----------- -----------
Total assets................ $1,232,074 1,232,074 4,965,920 4,965,920
Partners' capital:
General Partner........... 2,374 1,615 5,881 1,614
Limited Partners.......... 1,157,093 1,157,853 4,953,715 4,957,981
Net income:
General Partner........... 3,210 6,717 17,786 20,621
Limited Partners.......... 54,964 51,457 343,743 340,908
Net income per Limited
Partnership Unit, basic
and diluted............... 2.73 2.56 17.08 16.94
(2) Partnership Agreement
The Partnership Agreement defines the distribution of Operating Cash Flow.
Such Operating Cash Flow will be distributed 90% to the Limited Partners and
10% to the General Partner. Of the 10% of Operating Cash Flow allocated to the
General Partner, one-half shall be subordinated to the Limited Partners'
receipt of a Cumulative Preferred Return of 14% per annum. Distributions of
Loan Repayment Proceeds will be distributed first to Limited Partners in
proportion to their participating percentages until they have received an
amount equal to their Invested Capital plus any deficiency in the Cumulative
Preferred Return. Thereafter, any remaining Repayment Proceeds which are
available for distribution will be distributed 90% to the Limited Partners and
10% to the General Partner.
The General Partner will be allocated net operating profits of the Partnership
in an amount equal to the greater of 1% of net operating profits or the amount
of the General Partner's distributive share of Operating Cash Flow, with the
balance of such net operating profits allocated to the Limited Partners. The
General Partner will be allocated net operating profits from repayments in an
amount equal to the General Partner's distributive share of Repayment Proceeds,
with the balance of such net operating profits allocated to the Limited
Partners. Net operating losses will be allocated 1% to the General Partner and
99% to the Limited Partners.
-17-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services to Affiliates and general and administrative expenses to
Affiliates, of which $2,228 and $2,429 was unpaid as of December 31, 1997 and
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 in 1997, $11,444 in
1996 and $14,838 in 1995 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 $9,060 for the year ended December
31, 1997 which are included in property operating expenses to Affiliates. No
Property Management Fees were incurred by the Partnership in 1996 or 1995.
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.
(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 held
for sale as of April 4, 1997.
-18-
<TABLE> INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(5) Investments in 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.
Mortgage loans receivable and mortgage loans in substantive foreclosure consist of the following:
<CAPTION>
Balance at
Interest Balloon Monthly December 31,
Rate at Maturity at P & I -------------------------
Property Location 12/31/96 Date Maturity Prepayment Payments 1997 1996
- ------------------------ --------- ---------- ---------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Penn./Kenilworth, (A) 8.9% January $ 958,742 No Prepayment $ 8,564 $ - 960,185
Glen Ellyn 1997
5830 W. 87th Street, (B) 8.9% January 430,612 No Prepayment 3,847 - 431,260
Burbank 1997
7428 W. Washington, (C) 6.975% March 823,803 At any time 6,375 - 828,508
Forest Park 1997 without penalty
Indian Trail Road, (D) 9.9% August 971,567 No Prepayment 9,311 - 1,000,721
Aurora 1998
6910 N. Sheridan, (E) 9.75% August 477,099 60 days notice 4,425 - 492,492
Chicago 1999 & 3% penalty ----------- -----------
$ - 3,713,166
=========== ===========
</TABLE>
-19-
-19-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(A) 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 of $700 and 50%
of the appreciated value of the property totaling $52,500 which is included
in other income. The appreciated value is defined as the difference between
the appraised value of the property at maturity and the appraised value at
the time of the loan origination. The proceeds were distributed to the
Limited Partners in July 1997.
(B) 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 of $850 and 50% of the appreciated value of the
property totaling $15,000 which is included in other income. The
appreciated value is defined as the difference between the appraised value
of the property at maturity and the appraised value at the time of the loan
origination. The proceeds were distributed to the Limited Partners in July
1997.
(C) 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.
(D) The loan on this property, previously accounted for as a mortgage loan in
substantive foreclosure, is being accounted for as an investment property
held for sale as of April 4, 1997. See Note 4.
(E) This mortgage loan was collateralized by a property which the Partnership
previously owned through foreclosure. The property was sold to unaffiliated
third party and financing was provided by the Partnership. 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.
-20-
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements on accounting or financial disclosure during 1997.
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 property, and
make and acquire loans collateralized by mortgages on improved, income
producing multi-family residential 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-offered 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 10
and 11 of the Prospectus, 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
Catherine L. Lynch......... Treasurer
Roberta S. Matlin.......... Assistant Vice President-Investments
Mark Zalatoris............. Assistant Vice President-Due Diligence
Patricia A. Challenger..... Vice President-Asset Management
Frances C. Panico.......... Vice President-Mortgage Corporation
Raymond E. Petersen........ Vice President-Mortgage Corporation
Paul J. Wheeler............ Vice President-Personal Financial Services Group
Kelly Tucek................ Assistant Vice President-Partnership Accounting
Venton J. Carlston......... Assistant Controller
-21-
DANIEL L. GOODWIN (age 54) 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 7 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
Man of the Year for the Illinois construction industry. In 1989, the Chicago
Metropolitan Coalition on Aging presented Mr. Goodwin with an award in
recognition of his efforts in making housing more affordable to Chicago's
Senior Citizens. On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter)
presented Mr. Goodwin with an award, recognizing The Inland Group as the
leading corporate provider of transitional housing for the homeless people of
DuPage County. Mr. Goodwin also 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 the 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 educate disabled students
about the workplace. Most of these original students are still employed at
Inland today, and Inland continues as one of the largest employers of the
disabled in DuPage County. Mr. Goodwin 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.
-22-
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 54) 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 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 54) has been with The Inland Group, Inc. and its
affiliates since 1968 and is one of the four original principals. Mr. Cosenza
is a Director and Vice Chairman of The Inland Group, Inc. and oversees,
coordinates and directs Inland's many enterprises. 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 and Hillside, Illinois.
-23-
ROBERT D. PARKS (age 54) is a 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.
CATHERINE L. LYNCH (age 39) 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.
ROBERTA S. MATLIN (age 53) 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 40) 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 45) 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.
-24-
FRANCES C. PANICO (age 48) joined Inland in 1972 after earning a B.A.
degree from Northern Illinois University in Business and Communication. She is
currently President of Inland Mortgage Servicing Corporation, Sr. Vice
President of Inland Mortgage Investment Corporation and Sr. Vice President of
Inland Mortgage Corporation. Ms. Panico oversees the operation of loan
services, which has a loan portfolio in excess of $430 million. She is a
member of the loan committee which approves loans funded by IMIC and IMC. She
monitors IMIC's assets, and is the business person in charge of loans in
foreclosure. She previously served on the Board of Directors for Burbank State
Bank and supervised the origination, processing and underwriting of single-
family mortgages. Ms. Panico also packaged and sold loans to Freddie Mac.
RAYMOND E. PETERSEN (age 58) joined Inland in 1981. Mr. Petersen is
responsible for the selection and approval of all corporate and limited
partnership financing, as well as for the daily supervision of the commercial
lending activity of Inland Mortgage Corporation where he is President. For
the six years prior to joining Inland, Mr. Petersen was affiliated with the
mortgage banking firm of Downs, Mohl Mortgage Corporation, serving as President
and Chief Executive Officer. Previously he was also associated with the
mortgage banking houses of B.B. Cohen & Company and Percy Wilson Mortgage and
Finance Corporation. Mr. Petersen's professional credentials include a B.A.
degree from DePaul University, senior membership in the National Association of
Review Appraisers, state licensed as a real estate broker and licensed
securities representative. Mr. Petersen was also a Director and Chairman of
the Asset and Liability Committee of American National Bank of Downers Grove
and is currently a Director of Westbank of Westchester, Illinois.
PAUL J. WHEELER (age 45) 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.
KELLY TUCEK (age 35) 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.
VENTON J. CARLSTON (age 40) 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 Illinois CPA Society. He is registered with the National
Association of Securities Dealers, Inc. as a Financial Operations Principal.
-25-
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, as described under
the caption "Cash Distributions" and a share of profit and losses as described
under the caption "Allocation of Profits or Losses" of the Prospectus.
The Partnership is permitted to engage in various transactions involving
Affiliates of the General Partner of the Partnership, as described under the
captions "Compensation and Fees" at pages 8 and 9, "Conflicts of Interest" at
pages 10 and 11 of the Prospectus and at pages A-9 through A-17 of the
Partnership Agreement, which is incorporated herein by reference. The
relationship of the General Partner (and its directors and officers) to its
Affiliates is set forth above in Item 10.
The General Partner may be reimbursed for salaries and direct expenses of
employees of the General Partner and its Affiliates for the administration of
the Partnership. In 1997, costs relating to such services were $34,155, of
which $2,228 was unpaid as of December 31, 1997.
A subsidiary of the General Partner earned mortgage servicing fees of $2,312 in
1997, in connection with servicing the Partnership's mortgage loans receivable.
An Affiliate of the General Partner earned management fees in 1997 totaling
$9,060 in connection with managing the Partnership's investment property.
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.
-26-
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The Liquidity Plan (page 18 of the Prospectus of the Partnership dated
February 12, 1986, which is incorporated herein by reference) owns the
following Units of the Partnership as of December 31, 1997:
Amount and Nature
of Beneficial Percent
Title of Class Ownership of Class
-------------- ------------------ --------
Limited Partnership 6,370.22 Units directly 31.65%
Units
(b) The officers and directors of the General Partner of the Partnership own as
a group the following Units of the Partnership as of December 31, 1997:
Amount and Nature
of Beneficial Percent
Title of Class Ownership of Class
-------------- ----------------- --------
Limited Partnership 246.88 Units directly 1.23%
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 3 of the Notes to Financial
Statements (Item 8 of this Annual Report) for information regarding related
party transactions.
-27-
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements listed in the index on page 8 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 Certificate of
Limited Partnership, included as Exhibits A and B to the Prospectus dated
February 12, 1986, as supplemented, are incorporated herein by reference
thereto.
28 Prospectus dated February 12, 1986, as supplemented, included in Post-
Effective Amendment No. 2 to Form S-11 Registration Statement, File No. 33-
2377, 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
No reports on Form 8-K have been filed since the beginning of the last
quarter of the period covered by this report.
No Annual Report or proxy material for the year 1997 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.
-28-
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 MORTGAGE INVESTORS FUND, L.P.
Inland Real Estate Investment Corporation
General Partner
/s/ Robert D. Parks
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 16, 1998
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
/s/ Robert D. Parks
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 16, 1998
/s/ Mark Zalatoris
By: Mark Zalatoris
Vice President
Date: March 16, 1998
/s/ Kelly Tucek
By: Kelly Tucek
Principal Financial Officer
and Principal Accounting Officer
Date: March 16, 1998
/s/ Daniel L. Goodwin
By: Daniel L. Goodwin
Director
Date: March 16, 1998
/s/ Robert H. Baum
By: Robert H. Baum
Director
Date: March 16, 1998
-29-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
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