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, 1998
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-
PART I - Financial Information
Item 1. Financial Statements
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Balance Sheets
June 30, 1998 and December 31, 1997
(unaudited)
Assets
------
1998 1997
---- ----
Cash and cash equivalents (Note 1)................ $ 42,449 108,890
Accrued interest and other receivables............ 11,009 7,846
Investment property held for sale (Notes 1 and 4):
Land............................................ 140,101 140,101
Building and improvements....................... 991,539 975,237
------------ ------------
1,131,640 1,115,338
------------ ------------
Total assets...................................... $ 1,185,098 1,232,074
============ ============
See accompanying notes to financial statements.
-2-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
June 30, 1998 and December 31, 1997
(unaudited)
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable................................ $ 9,587 11,939
Due to Affiliates (Note 2)...................... 359 2,228
Security deposits............................... 11,838 15,876
Accrued real estate taxes....................... 27,694 41,472
Unearned income................................. 2,273 1,092
------------ ------------
Total liabilities................................. 51,751 72,607
------------ ------------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 278,270 278,531
Cumulative cash distributions................. (276,657) (276,657)
------------ ------------
2,113 2,374
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......................... 5,735,717 5,761,576
Cumulative cash distributions................. (13,586,443) (13,586,443)
------------ ------------
1,131,234 1,157,093
------------ ------------
Total Partners' capital........................... 1,133,347 1,159,467
------------ ------------
Total liabilities and Partners' capital........... $ 1,185,098 1,232,074
============ ============
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, 1998 and 1997
(unaudited)
Three months Six months
ended ended
June 30, June 30,
-------- --------
Income: 1998 1997 1998 1997
Interest and fees on mortgage ---- ---- ---- ----
loans receivable (Note 3)...... $ - 3,040 - 43,540
Interest on investments.......... 821 39,834 2,108 58,594
Rental income.................... 69,051 74,245 145,212 74,245
Other income..................... - 9,825 - 84,484
---------- ---------- ---------- ----------
69,872 126,944 147,320 260,863
---------- ---------- ---------- ----------
Expenses:
Professional services to
Affiliates..................... 1,458 228 3,535 4,590
Professional services to
non-affiliates................. 8,696 2,724 27,547 21,594
General and administrative
expenses to Affiliates......... 3,469 4,538 9,759 19,609
General and administrative
expenses to non-affiliates..... 3,950 3,910 6,364 6,674
Property operating expenses
to Affiliates.................. 3,209 3,288 11,642 3,288
Property operating expenses
to non-affiliates.............. 45,152 90,156 114,593 90,156
---------- ---------- ---------- ----------
65,934 104,844 173,440 145,911
---------- ---------- ---------- ----------
Net income (loss).................. $ 3,938 22,100 (26,120) 114,952
========== ========== ========== ==========
Net income (loss) allocated to:
General Partner.................. 39 1,214 (261) 3,210
Limited Partners................. 3,899 20,886 (25,859) 111,742
---------- ---------- ---------- ----------
Net income (loss).................. $ 3,938 22,100 (26,120) 114,952
========== ========== ========== ==========
Net income (loss) allocated to the
one General Partner Unit......... $ 39 1,214 (261) 3,210
========== ========== ========== ==========
Net income (loss) per Unit, basic
and diluted, allocated to Limited
Partners per Limited Partnership
Units of 20,129.24............... $ .20 1.04 (1.28) 5.55
========== ========== ========== ==========
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, 1998 and 1997
(unaudited)
1998 1997
Cash flows from operating activities: ---- ----
Net income (loss)............................... $ (26,120) 114,952
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Changes in assets and liabilities:
Accrued interest and other receivables...... (3,163) (2,341)
Accounts payable............................ (2,352) 16,153
Unearned income............................. 1,181 (2,222)
Deposits held for others.................... (4,038) 15,470
Accrued real estate taxes................... (13,778) 20,736
Due to Affiliates........................... (1,869) 2,992
Net cash provided by (used in) operating ------------ ------------
activities...................................... (50,139) 165,740
------------ ------------
Cash flows from investing activities:
Additions to investment property................ (16,302) (80,000)
Principal payments collected.................... - 2,712,445
Net cash provided by (used in) investing ------------ ------------
activities...................................... (16,302) 2,632,445
------------ ------------
Cash flows from financing activities:
Distributions paid.............................. - (1,144,255)
------------ ------------
Net cash used in financing activities............. - (1,144,255)
------------ ------------
Net increase (decrease) in cash and cash
equivalents..................................... (66,441) 1,653,930
Cash and cash equivalents at beginning of period.. 108,890 1,226,087
------------ ------------
Cash and cash equivalents at end of period........ $ 42,449 2,880,017
============ ============
Supplemental schedule of non-cash investing activities:
Foreclosure of mortgaged property (Note 3):
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, 1998
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1997, which are
included in the Partnership's 1997 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.
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.
-6-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1998
(unaudited)
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 3)
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 June 30, 1998, the Partnership has not
recognized any such impairment on its property.
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.
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 $359 and $2,228 was unpaid as of June 30, 1998 and
December 31, 1997, respectively.
-7-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
June 30, 1998
(unaudited)
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 for the six months
ended June 30, 1997 have been incurred and paid to the subsidiary and are
included in the Partnership's general and administrative expenses to
Affiliates. No such fees were incurred in 1998.
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 $7,165 and $3,288 for the six
months ended June 30, 1998 and June 30, 1997, respectively, which are included
in property operating expenses to Affiliates. In addition, an Affiliate of the
General Partner performed professional services relating to the Partnership's
investment property and was reimbursed (as set forth under terms of the
Partnership Agreement) for direct costs. Such costs of $4,477 for the six
months ended June 30, 1998 are included in property operating expenses to
Affiliates, all of which have been paid as of June 30, 1998. No such costs were
incurred in 1997.
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) 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.
-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 "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, 1998,
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 June 30, 1998, the Partnership had cash and cash equivalents aggregating
$42,449 which will be utilized for future distributions to partners and working
capital requirements. At June 30, 1998, 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 and fees on mortgage loans receivable decreased for the three and six
months ended June 30, 1998, as compared to the three and six months ended June
30, 1997, due to the prepayments and/or maturities of the Partnership's
remaining mortgage loans receivable.
Interest on investments decreased for the three and six months ended June 30,
1998, as compared to the three and six months ended June 30, 1997, due to the
Partnership distributing repayment proceeds to the Limited Partners.
-9-
The other income recorded by the Partnership for the six months ended June 30,
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. The appreciated value is defined as the difference between the
appraised value of the property at maturity of the loan and the appraised value
at the time of the loan origination.
Rental income and property operating expenses increased for the six months
ended June 30, 1998, as compared to the six months ended June 30, 1997, due to
the Partnership recording the property operations of the investment property as
of April 4, 1997.
Professional services to Affiliates decreased for the six months ended June 30,
1998, as compared to the six months ended June 30, 1997, due to a decrease in
accounting services required by the Partnership. This decrease was partially
offset by an increase in legal services. Professional services to non-
affiliates increased for the three and six months ended June 30, 1998, as
compared to the three and six months ended June 30, 1997, due to an increase in
legal services required by the Partnership.
General and administrative expenses to Affiliates decreased for the three and
six months ended June 30, 1998, as compared to the three and six months ended
June 30, 1997, due primarily to decreases in mortgage servicing fees, data
processing and investor services expenses.
Year 2000 Compliance
The Partnership has reviewed its current computer systems and does not
anticipate any future problems relating to the year 2000.
PART II - Other Information
Items 1 through 6(b) are omitted because of the absence of conditions under
which they are required.
Item 7: 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: August 6, 1998
/S/ MARK ZALATORIS
By: Mark Zalatoris
Vice President
Date: August 6, 1998
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: August 6, 1998
-11-
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