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, 1998
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................... 10
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........................................ 27
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 28
Item 13. Certain Relationships and Related Transactions................ 28
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 29
SIGNATURES............................................................. 30
-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, 1998,
$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 1998.
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.
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 1998.
-3-
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1998, there were 737 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, 1998, 1997, 1996, 1995 and 1994
(not covered by the Report of Independent Accountants)
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Total assets......... $1,151,562 1,232,074 4,965,920 5,923,235 6,470,865
=========== =========== =========== =========== ==========
Total income......... $ 260,149 382,462 434,350 596,496 635,063
=========== =========== =========== =========== ==========
Net income (loss).... $ (55,906) 58,174 361,529 521,719 555,677
=========== =========== =========== =========== ==========
Net income (loss)
allocated to the one
General Partner Unit$ (559) 3,210 17,786 26,480 26,766
=========== =========== =========== =========== ==========
Net income (loss)
per Unit allocated
to Limited Partners
from (b)........... $ (2.75) 2.73 17.08 24.60 26.28
=========== =========== =========== =========== ==========
Distributions to Limited
Partners from:
Operations........... - 127,627 391,806 509,563 520,964
Repayment proceeds... - 3,723,959 900,900 530,920 671,989
----------- ----------- ----------- ----------- ----------
$ - 3,851,586 1,292,706 1,040,483 1,192,953
=========== =========== =========== =========== ==========
Distributions per
Unit to Limited
Partners from (b):
Operations........... - 6.34 19.46 25.31 25.88
Repayment proceeds... - 185.00 44.76 26.38 33.38
----------- ----------- ----------- ----------- ----------
$ - 191.34 64.22 51.69 59.26
=========== =========== =========== =========== ==========
(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, 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 December 31, 1998, the Partnership had cash and cash equivalents aggregating
$14,310 which will be utilized for future distributions to partners and working
capital requirements. At December 31, 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 income on mortgage loans receivable decreased for the years ended
December 31, 1998 and 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 on investments decreased for the year ended December 31, 1998, as
compared to the year ended December 31, 1997, due to the Partnership
distributing repayment proceeds to the Limited Partners in 1997. Interest on
investments increased for the year ended December 31, 1997, as compared to the
year ended December 31, 1996, 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,
1998 consists of damage income from tenants of the investment property located
at Indian Trail Road in Aurora, Illinois. 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.
Rental income increased for the year ended December 31, 1998, as compared to
the year ended December 31, 1997, due to the Partnership recording property
operations for twelve months in 1998 versus nine months in 1997. The
Partnership began recording operations of the investment property as of April
4, 1997. Property operating expenses to non-affiliates decreased for the year
ended December 31, 1998, as compared to the year ended December 31, 1997,
despite the fact that twelve months of operations are included in 1998 versus
nine months of operations in 1997. The decrease is due to decreases in repairs
and maintenance and lower real estate taxes due to property tax adjustments for
vacancies.
Professional services to Affiliates decreased for the years ended December 31,
1998 and 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 non-affiliates was higher for the year ended December
31, 1997, as compared to the years ended December 31, 1998 and 1996, due to
increases in legal and accounting services required by the Partnership as a
result of the foreclosure on the property located at Indian Trail Road in
Aurora, Illinois.
General and administrative expenses to Affiliates decreased for the years ended
December 31, 1998 and 1997, as compared to the year ended December 31, 1996,
due to a decrease in mortgage servicing fees on the Partnership's mortgage
loans receivable as they were prepaid and/or matured and a decrease in investor
services expense.
-7-
Year 2000 Issues
GENERAL
- -------
Many computer operating systems and software applications were designed such
that the year 1999 is the maximum date that can be processed accurately. In
conducting business, the Partnership relies on computers and operating systems
provided by equipment manufacturers, and also on application software developed
internally and, to a limited extent, by outside software vendors. The
Partnership has assessed its vulnerability to the so-called "Year-2000 Issue"
with respect to its equipment and computer systems.
STATE OF READINESS
- ------------------
The Partnership has identified the following three areas for "Year-2000"
compliance efforts:
Business Computer Systems: The majority of the Partnership's information
technology systems were developed internally and include accounting, lease
management, investment portfolio tracking, and tax return preparation. The
Partnership has rights to the source code for these applications and employs
programmers who are knowledgeable regarding these systems. The process of
testing these internal systems to determine year 2000 compliance is nearly
complete. The Partnership does not anticipate any material costs relating to
its business computer systems regarding year 2000 compliance since the
Partnership's critical hardware and software systems use four digits to
represent the applicable year. The Partnership does use various computers, so-
called "PC's", that may run software that may not use four digits to represent
the applicable year. The Partnership is in the process of testing the PC
hardware and software to determine year 2000 compliance, but it must be noted
that such PC's are incidental to the Partnership's critical systems. The
Partnership is considering independent testing of its critical systems.
Tenants and Suppliers: The Partnership is in the process of surveying tenants,
suppliers and other parties with whom the Partnership does a significant amount
of business to identify the Partnership's potential exposure in the event such
parties are not year 2000 compliant in a timely manner. At this time, the
Partnership is not aware of any party that is anticipating a material Year 2000
compliance issue. However, since this area involves some parties over which
the Partnership has no control, such as public utility companies, it is
difficult, at best, to judge the status of the outside companies' year 2000
compliance. The Partnership is working closely with all suppliers of goods and
services in an effort to minimize the impact of the failure of any supplier to
become year 2000 compliant by December 31, 1999. The Partnership's
investigations and assessments of possible year 2000 issues are in a
preliminary stage, and currently the Partnership is not aware of any material
impact on its business, operations or financial condition even if one or more
parties is not Year 2000 compliant in a timely manner, due to the number and
nature of the Partnership's tenants or suppliers.
Non-Information Technology Systems: In the operation of its properties, the
Partnership has acquired equipment with embedded technology such as
microcontrollers, which operate heating, ventilation, and air conditioning
systems, fire alarms, security systems, telephones and other equipment
utilizing time-sensitive technology. The Partnership is in the process of
evaluating its potential exposure and costs if such non-information technology
systems are not year 2000 compliant and expects to be able to complete its
assessment during the second quarter of 1999.
-8-
YEAR 2000 RISKS
- ---------------
The most reasonable likely worst case scenario for the Partnership with respect
to the year 2000 non-compliance of its business computer systems would be the
inability to access information which could result in the failure to issue
financial reports. The most reasonable likely worst case scenario for the
Partnership with respect to the year 2000 non-compliance of its tenants is
failure to receive rental income which could result in the Partnership being
unable to meet cash requirements for monthly expenses. The most reasonable
likely worst case scenario for the Partnership with respect to the year 2000
non-compliance of its suppliers is the failure to supply necessary utilities;
including, but not limited to heating, as a result of a malfunctioning of non-
information technology systems in some of the Partnership's properties.
YEAR 2000 COSTS
- ---------------
The Partnership's General Partner and its Affiliates estimate that costs to
achieve year 2000 compliance will not exceed $100,000. However, only
approximately 1% of these costs will be directly allocated to and paid by the
Partnership. The balance of the year 2000 compliance costs, approximately 99%,
will be paid by the General Partner and its Affiliates. Total year 2000
compliance costs incurred through December 31, 1998 are estimated at
approximately $5,000.
CONTINGENCY PLAN
- ----------------
The Partnership expects to be Year 2000 compliant in advance of the year 2000.
The Partnership will continue to monitor its progress and state of readiness,
and is in the process of formulating a contingency plan which the Partnership
will be prepared to adopt with respect to areas in which evidence arises that
it may not become Year 2000 compliant in sufficient time. With respect to its
tenants, suppliers and other parties with whom the Partnership conducts
business, the Partnership does not yet have sufficient information to identify
the types of problems it may encounter in the event these third parties are not
Year 2000 compliant. As information is obtained that may indicate such parties
may not become Year 2000 compliant in sufficient time, the Partnership is
prepared to develop contingency plans, accordingly.
Inflation
Inflation in future periods is likely to increase rental income levels (from
leases to new tenants or renewals of existing tenants) 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 7(a). Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
-9-
Item 8. Financial Statements and Supplementary Data
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Index
-----
Page
----
Report of Independent Accountants........................................ 11
Financial Statements:
Balance Sheets, December 31, 1998 and 1997............................. 12
Statements of Operations, for the years
ended December 31, 1998, 1997 and 1996............................... 13
Statements of Partners' Capital, for the years
ended December 31, 1998, 1997 and 1996............................... 14
Statements of Cash Flows, for the years ended
December 31, 1998, 1997 and 1996..................................... 15
Notes to Financial Statements.......................................... 16
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.
-10-
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners of Inland Mortgage
Investors Fund, L.P.
In our opinion, the accompanying balance sheets and the related statements of
operations, partners' capital and cash flows present fairly, in all material
respects, the financial position of Inland Mortgage Investors Fund, L.P. (the
"Company") at December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1998 in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 15, 1999
-11-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Balance Sheets
December 31, 1998 and 1997
Assets
------ 1998 1997
---- ----
Cash and cash equivalents (Note 1)................ $ 14,310 108,890
Accrued interest and other receivables............ 5,613 7,846
Investment property held for sale (Notes 1 and 4):
Land............................................ 140,101 140,101
Building and improvements....................... 991,538 975,237
------------ ------------
Total assets...................................... $ 1,151,562 1,232,074
============ ============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable................................ $ 5,817 11,939
Due to Affiliates (Note 3)...................... 472 2,228
Security deposits............................... 10,416 15,876
Accrued real estate taxes....................... 28,369 41,472
Unearned income (Note 1)........................ 2,927 1,092
------------ ------------
Total liabilities................................. 48,001 72,607
------------ ------------
Partners' capital (Notes 1, 2 and 3):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 277,972 278,531
Cumulative cash distributions................. (276,657) (276,657)
------------ ------------
1,815 2,374
Limited Partners: ------------ ------------
Units of $500. Authorized 40,000 Units,
20,129.24 Units outstanding at 1998 and
1997 (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......................... 5,706,229 5,761,576
Cumulative cash distributions................. (13,586,443) (13,586,443)
------------ ------------
1,101,746 1,157,093
------------ ------------
Total Partners' capital........................... 1,103,561 1,159,467
------------ ------------
Total liabilities and Partners' capital........... $ 1,151,562 1,232,074
============ ============
See accompanying notes to financial statements.
-12-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Operations
For the years ended December 31, 1998, 1997 and 1996
Income: 1998 1997 1996
Interest and fees on mortgage loans ---- ---- ----
receivable (Note 5)............. $ - 43,540 371,225
Interest on investments........... 2,531 73,496 53,615
Rental income..................... 253,430 188,023 -
Other income...................... 4,188 77,403 9,510
------------ ------------ ------------
260,149 382,462 434,350
Expenses: ------------ ------------ ------------
Professional services to
Affiliates...................... 6,829 8,913 13,455
Professional services to
non-affiliates.................. 19,407 21,364 18,946
General and administrative
expenses to Affiliates.......... 18,178 27,554 32,173
General and administrative
expenses to non-affiliates...... 5,518 6,349 8,247
Property operating expenses
to Affiliates................... 17,526 9,060 -
Property operating expenses
to non-affiliates............... 248,597 251,048 -
------------ ------------ ------------
316,055 324,288 72,821
------------ ------------ ------------
Net income (loss)................... $ (55,906) 58,174 361,529
============ ============ ============
Net income (loss) allocated to (Note 2):
General Partner................... (559) 3,210 17,786
Limited Partners.................. (55,347) 54,964 343,743
------------ ------------ ------------
Net income (loss)................... $ (55,906) 58,174 361,529
============ ============ ============
Net income (loss) from operations
allocated to the one General
Partner Unit...................... $ (559) 3,210 17,786
============ ============ ============
Net income (loss) per Unit, basic
and diluted, allocated to Limited
Partners per Limited Partnership
Units of 20,129.24................ $ (2.75) 2.73 17.08
============ ============ ============
See accompanying notes to financial statements.
-13-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Partners' Capital
For the years ended December 31, 1998, 1997 and 1996
General Limited
Partner Partners Total
------------- ------------- ------------
Balance at January 1, 1996.......... $ 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
Net loss............................ (559) (55,347) (55,906)
------------ ------------ ------------
Balance at December 31, 1998........ $ 1,815 1,101,746 1,103,561
============ ============ ============
See accompanying notes to financial statements.
-14-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1998, 1997 and 1996
1998 1997 1996
Cash flows from operating activities: ---- ---- ----
Net income (loss)................. $ (55,906) 58,174 361,529
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................. 2,233 18,821 20,833
Accounts payable.............. (6,122) 11,887 (806)
Unearned income............... 1,835 (2,751) (3,400)
Security deposits............. (5,460) 15,876 -
Accrued real estate taxes..... (13,103) 41,472 -
Due to Affiliates............. (1,756) (201) (1,311)
Net cash provided by (used in) ------------ ------------ ------------
operating activities.............. (78,279) 143,278 376,845
------------ ------------ ------------
Cash flows from investing activities:
Additions to investment property.. (16,301) (114,617) -
Principal payments collected...... - 2,712,445 1,911,808
Net cash provided by (used in) ------------ ------------ ------------
investing activities.............. (16,301) 2,597,828 1,911,808
------------ ------------ ------------
Cash flows from financing activities:
Distributions paid................ - (3,858,303) (1,313,327)
Net cash used in financing ------------ ------------ ------------
activities........................ - (3,858,303) (1,313,327)
Net increase (decrease) in cash and ------------ ------------ ------------
cash equivalents.................. (94,580) (1,117,197) 975,326
Cash and cash equivalents at
beginning of year................. 108,890 1,226,087 250,761
Cash and cash equivalents at ------------ ------------ ------------
end of year....................... $ 14,310 108,890 1,226,087
============ ============ ============
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.
-15-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1998, 1997 and 1996
(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.
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, 1998, 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.
-16-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
Statement of Financial Accounting Standards No. 128 "Earnings per Share" was
adopted by the Partnership for the year ended December 31, 1998 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.
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:
1998 1997
----------------------- -----------------------
GAAP Tax GAAP Tax
Basis Basis Basis Basis
---------- ----------- ----------- -----------
Total assets................ $1,151,562 1,151,562 1,232,074 1,232,074
Partners' capital:
General Partner........... 1,815 1,056 2,374 1,615
Limited Partners.......... 1,103,561 1,102,505 1,157,093 1,157,853
Net income (loss):
General Partner........... (559) (559) 3,210 6,717
Limited Partners.......... (55,347) (55,347) 54,964 51,457
Net income (loss) per Limited
Partnership Unit, basic
and diluted............... (2.75) (2.75) 2.73 2.56
(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 Non-compounded 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.
-17-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
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.
(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 $472 and $2,228 was unpaid as of December 31, 1998 and
1997, 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 and $11,444
in 1996 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 $13,049 and $9,060 for the years
ended December 31, 1998 and 1997, respectively, which are included in property
operating expenses to Affiliates. No Property Management Fees were incurred by
the Partnership in 1996. 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 year ended December
31, 1998 are included in property operating expenses to Affiliates, all of
which have been paid as of December 31, 1998. No such costs were incurred in
1997 or 1996.
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.
-18-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(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.
(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.
On January 28, 1997, the loan collateralized by the property located at 288,
294-298 Pennsylvania/Kenilworth, Glen Ellyn, Illinois matured. The loan had an
interest rate of 8.9%. 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.
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.
On March 31, 1997, the loan collateralized by the property located at 7428 West
Washington, Forest Park, Illinois matured. The loan had an interest rate of
6.975%. 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.
-19-
INLAND MORTGAGE INVESTORS FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
The loan on the property, located on Indian Trail Road in Aurora, Illinois,
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.
The mortgage loan collateralized by 6910 North Sheridan, Chicago, Illinois, was
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 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 1998.
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
Brenda G. Gujral........... President and Chief Operating Officer-IREIC
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 55) 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. Mr.
Goodwin 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 six 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 Mr. Goodwin as 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 BBF Family Services' 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 the Northeastern
Illinois University Board of Trustees in January 1996.
-22-
In 1988 he received the Outstanding Business Leader Award from the Oak Brook
Jaycees and in March 1994, he won the Excellence in Business Award from the
DuPage Area Association of Business and Industry. Additionally, he was honored
with a dinner sponsored 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 1998 Corporate Leader of the Year by the Oak Brook Area
Association of Commerce and Industry. The Ray Graham Association for People
with Disabilities honored Mr. Goodwin as the 1999 Employer of the Year. For
many years, he has been Chairman of the National Football League Players
Association Mackey Awards for the benefit of inner-city youth and he served as
the recent Chairman of the Speakers Club of the Illinois House of
Representatives.
ROBERT H. BAUM (age 55) 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 and currently serves as a director of
Westbank. Mr. Baum also 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 55) 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, Mr. Cosenza
immediately supervises a staff of nine 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 a Director on the Board of Westbank in
Westchester and Hillside, Illinois.
-23-
ROBERT D. PARKS (age 55) 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 member of the Real
Estate Investment Association and a member of NAREIT.
BRENDA G. GUJRAL (age 56) is President and Chief Operating Officer of
Inland Real Estate Investment Corporation (IREIC), the parent company of the
Advisor. She is also President and Chief Operating Officer of the Dealer-
Manager, Inland Securities Corporation (ISC), a member firm of the National
Association of Securities Dealers (NASD).
Mrs. Gujral has overall responsibility for the operations of IREIC, including
the distribution of checks to over 50,000 investors, review of periodic
communications to those investors, the filing of quarterly and annual reports
for Inland's publicly registered investment programs with the Securities and
Exchange Commission, compliance with other SEC and NASD securities regulations
both for IREIC and ISC, review of asset management activities, and marketing
and communications with the independent broker/dealer firms selling Inland's
current and prior programs. Mrs. Gujral works with internal and outside legal
counsel in structuring and registering the prospectuses for IREIC's investment
programs.
Mrs. Gujral has been with Inland for 18 years, becoming an officer in 1982.
Prior to joining Inland, she worked for the Land Use Planning Commission
establishing an office in Portland, Oregon, to implement land use legislation
for that state.
She is a graduate of California State University. She holds Series 7, 22, 39
and 63 licenses from the NASD and is a member of the National Association of
Real Estate Investment Trusts (NAREIT) and the National Association of Female
Executives.
CATHERINE L. LYNCH (age 40) 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.
-24-
ROBERTA S. MATLIN (age 54) 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. She is a Director of Inland Real Estate Investment Corporation,
Inland Securities Corporation, and Inland Real Estate Advisory Services, Inc.
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 41) 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 46) 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.
FRANCES C. PANICO (age 49) 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.
-25-
RAYMOND E. PETERSEN (age 59) 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 46) joined Inland in 1982 and is currently the
President of Inland Real Estate Equities, 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 36) 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 41) 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.
-26-
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 1998, costs relating to such services were $29,484, of
which $472 was unpaid as of December 31, 1998.
An Affiliate of the General Partner earned management fees in 1998 totaling
$13,049 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.
-27-
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, 1998:
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, 1998:
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.
-28-
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements listed in the index on page 10 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 1998 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.
-29-
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 22, 1999
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 22, 1999
/s/ Mark Zalatoris
By: Mark Zalatoris
Vice President
Date: March 22, 1999
/s/ Kelly Tucek
By: Kelly Tucek
Principal Financial Officer
and Principal Accounting Officer
Date: March 22, 1999
/s/ Daniel L. Goodwin
By: Daniel L. Goodwin
Director
Date: March 22, 1999
/s/ Robert H. Baum
By: Robert H. Baum
Director
Date: March 22, 1999
-30-
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