<PAGE>
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 September 30, 1995
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 #0-16783
Inland Mortgage Investors Fund, L.P.-II
(Exact name of registrant as specified in its charter)
Delaware #36-3495248
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60521
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 708-218-8000
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
-- ---
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<PAGE>
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Balance Sheets
September 30, 1995 and December 31, 1994
(unaudited)
Assets
------
1995 1994
----------- -----------
Cash and cash equivalents (Note 1)................ $ 208,948 239,469
Accrued interest receivable....................... 45,382 51,224
Due from Affiliate................................ 14,508 -
Mortgage loans receivable (Note 3)................ 3,388,132 3,628,829
----------- -----------
Total assets.................................. $ 3,656,970 3,919,522
=========== ===========
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Accounts payable................................ 506 451
Due to affiliates (Note 2)...................... 2,450 200
Distribution payable (Note 4)................... 87,659 -
Unearned income (Note 1)........................ 6,173 7,458
----------- -----------
Total liabilities............................. 96,788 8,109
----------- -----------
Partners' capital (Notes 1, 2 and 4):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 242,153 233,589
Supplemental Capital Contribution............. 23,562 15,451
Supplemental distributions to Limited Partners (23,562) (15,451)
Cumulative cash distributions................. (240,740) (232,176)
----------- -----------
1,913 1,913
----------- -----------
Limited Partners:
Units of $500. Authorized 40,000
Units, 18,776.32 outstanding (net of
offering costs of $1,072,632, of which
$89,040 was paid to Affiliates)............. 8,315,526 8,315,526
Cumulative net income......................... 5,020,868 4,788,301
Supplemental Capital Contributions from
General Partner............................. 23,562 15,451
Cumulative cash distributions................. (9,801,687) (9,209,778)
----------- -----------
3,558,269 3,909,500
----------- -----------
Total Partners' capital....................... 3,560,182 3,911,413
----------- -----------
Total liabilities and Partners' capital........... $ 3,656,970 3,919,522
=========== ===========
See accompanying notes to financial statements.
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<PAGE>
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, September 30,
--------------- ----------------
1995 1994 1995 1994
------- ------ ------- -------
<S> <C> <C> <C> <C>
Income:
Interest and fees on mortgage
loans receivable (Notes 1 and 3)..... $89,665 78,317 278,705 289,280
Interest on investments................ 6,794 6,439 17,542 12,492
------- ------ ------- -------
96,459 84,756 296,247 301,772
------- ------ ------- -------
Expenses:
Professional services to
Affiliates........................... 3,773 2,690 10,900 11,858
Professional services to
non-affiliates....................... -- 946 20,685 20,688
General and administrative
expenses to Affiliates............... 5,794 7,339 18,639 22,840
General and administrative
expenses to non-affiliates........... 980 (111) 4,892 4,335
------- ------ ------- -------
10,547 10,864 55,116 59,721
------- ------ ------- -------
Net income........................... $85,912 73,892 241,131 242,051
======= ====== ======= =======
Net income allocated to:
General Partner........................ -- -- 8,564 10,149
Limited Partners....................... 85,912 73,892 232,567 231,902
------- ------ ------- -------
Net income........................... $85,912 73,892 241,131 242,051
======= ====== ======= =======
Net income allocated to the one
General Partner Unit................... $ -- -- 8,564 10,149
======= ====== ======= =======
Net income per Limited Partner Unit
(18,776.32 for 1995 and 1994).......... $ 4.58 3.94 12.39 12.35
======= ====== ======= =======
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
(unaudited)
1995 1994
---- ----
Cash flows from operating activities:
Net income...................................... $ 241,131 242,051
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in assets and liabilities:
Accrued interest receivable................. 5,842 (2,319)
Due from Affiliates......................... (6,397) -
Accounts payable............................ 55 (467)
Due to Affiliates........................... 2,250 33
Unearned income............................. (1,285) 927
------------ -------------
Net cash provided by operating activities......... 241,596 240,225
------------ -------------
Cash flows from investing activities:
Principal payments collected.................... 240,697 757,042
------------ -------------
Net cash provided by investing activities......... 240,697 757,042
------------ -------------
Cash flows from financing activities:
Distributions paid.............................. (512,814) (1,067,121)
------------ -------------
Net cash used in financing activities............. (512,814) (1,067,121)
------------ -------------
Net decrease in cash and cash equivalents......... (30,521) (69,854)
Cash and cash equivalents at beginning of period.. 239,469 284,299
------------ -------------
Cash and cash equivalents at end of period........ $ 208,948 214,445
============ =============
Supplemental schedule of non-cash investing and financing activities:
Supplemental Capital Contribution receivable
from General Partner.......................... $ 8,111 -
============ =============
Accrued distributions payable................... $ 87,659 -
============ =============
See accompanying notes to financial statements.
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<PAGE>
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
September 30, 1995
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1994, which are
included in the Partnership's 1994 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.-II (the "Partnership"), was formed on
December 24, 1986 pursuant to the Delaware Revised Uniform Limited Partnership
Act to make or acquire loans collateralized by mortgages on improved, income
producing properties. On February 10, 1987, 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 August 10, 1988, with total sales of
18,776.32 Units, resulting in gross offering proceeds of $9,388,158, not
including the General Partner's contribution of $500 for one Unit. All of the
holders of these Units were admitted to the Partnership. Inland Real Estate
Investment Corporation is the General Partner.
Offering costs have been offset against the Limited Partners' capital accounts.
Loan assumption fees received are deferred as unearned income and amortized as
yield adjustments on a straight-line basis over the remaining life of the
related loan.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents and are carried at cost
which approximates market.
The Partnership sold participations in mortgage receivables which may yield the
Partnership a return which is greater than the return based on the stated
interest rate of the instrument. The differential between the stated rate and
the interest rate paid to the participant is recognized as income over the term
of the mortgage loan.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
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<PAGE>
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1995
(unaudited)
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations. 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 $2,450 and $200 remained unpaid at September 30, 1995 and
December 31, 1994, respectively.
Inland Mortgage Servicing Corporation, a subsidiary of the General Partner,
services the Partnership's mortgage loans receivable. Its services include
processing mortgage collections and escrow deposits and maintaining related
records. For these services, the Partnership is obligated to pay fees at an
annual rate equal to 1/4 of 1% of the outstanding mortgage receivables balance
of the Partnership. Such fees of $6,872 and $7,473 for the nine months ended
September 30, 1995 and 1994, respectively, have been incurred and are included
in general and administrative expenses to Affiliates.
The General Partner is required to make Supplemental Capital Contributions, if
necessary, from time to time in sufficient amounts to allow the Partnership to
make distributions to the Limited Partners amounting to at least 7% per annum
on their Invested Capital. The cumulative amount of such Supplemental Capital
Contributions at September 30, 1995 is $23,562, of which $8,111 is included in
due from Affiliates.
Due from Affiliates includes $6,397 receivable from another partnership
sponsored by the General Partner for a remittance adjustment on the mortgage
loan receivable which is participated between the two partnerships.
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<PAGE>
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1995
(unaudited)
(3) Mortgage Loans Receivable
Mortgage loans receivable are collateralized by first mortgages and wrap
mortgages on multi-family residential properties located in Chicago, Illinois
or its surrounding metropolitan area, except for the Evanston, Illinois loan
which is a multi-use retail and office building and the Richton Park loan which
is a shopping mall. As additional collateral, the Partnership will hold
assignments of rents and leases or personal guarantees of the borrowers.
Generally, the mortgage notes are payable in equal monthly installments based
on 20 or 30 year amortization periods.
In June 1995, the borrower on the loan collateralized by the property located
at 7432 Washington made a partial paydown on the mortgage. The Partnership
received $9,343, its proportionate share of the total paydown.
In July 1995, the loan collateralized by the property located at 9716-18 and
9806-12 Mayline was prepaid by the borrower. The Partnership received
$200,704, its proportionate share of the total prepayment.
In July 1995, the borrower on the loan collateralized by the property located
at 7432 Washington made an additional partial paydown on the mortgage. The
Partnership received $6,857, its proportionate share of the total paydown.
(4) Subsequent Events
In October 1995, the Partnership paid a distribution of $87,659 to the Limited
Partners, of which $7,394 was repayment proceeds, $8,111 was a Supplemental
Capital Contribution from the General Partner and the remainder was net
interest income.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
On February 10, 1987, 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 August 10, 1988, with total sales of 18,776.32 Units, resulting
in gross offering proceeds of $9,388,158, which does not include the General
Partner's contribution of $500 for one Unit. The Partnership funded fifteen
loans between December 1987 and June 1992 utilizing $8,131,884 of capital
proceeds collected, net of participations. As of September 30, 1995,
cumulative distributions to Limited Partners totaled $9,801,687. Mortgage
receivables totaling $5,708,855 have been repaid by borrowers, of which
$966,160 was re-lent, $4,736,358 was repayment proceeds and principal
amortization distributed to Limited Partners and $6,337 was added to working
capital reserve.
At September 30, 1995, the Partnership had cash and cash equivalents
aggregating $208,948, which will be utilized for future distributions to
partners and for working capital requirements.
The source of future liquidity and distributions is to be through cash
generated by earnings from the Partnership's mortgage investments and through
the repayment of such investments. To the extent that these sources are
insufficient to meet the minimum 7% annualized distribution to investors, as
well as any other financial needs, the Partnership may rely on Supplemental
Capital Contributions from the General Partner, advances from Affiliates of the
General Partner or other short-term financing.
Results of Operations
Interest income on mortgage loans receivable decreased for the nine months
ended September 30, 1995, as compared to the nine months ended September 30,
1994, due to the partial payoff of the loan collateralized by the Richton Park
Shopping Center in June 1994, the payoff of the loan collateralized by the
property located at 9716-18 and 9806-12 Mayline in July 1995 and the partial
paydowns of the loan collateralized by the property located at 7432 Washington
in the second and third quarters of 1995. This decrease was partially offset
as interest rates on approximately 65% of the mortgage loan receivable
portfolio adjusted upward in late 1994 and early 1995 reflecting market
conditions. The increase in interest income on mortgage loans receivable for
the three months ended September 30, 1995, as compared to the three months
ended September 30, 1994, is due to the increase in interest rates.
The decrease in professional services to Affiliates for the nine months ended
September 30, 1995, as compared to the nine months ended September 30, 1994, is
due a decrease in accounting fees paid to Affiliates.
The decrease in general and administrative expenses to Affiliates for the nine
months ended September 30, 1995, as compared to the nine months ended September
30, 1994, is due to decreases in mortgage servicing fees, data processing and
investor service expenses.
PART II
Items 1 through 6 (b) are omitted because of the absence of conditions under
which they are required.
-8-
<PAGE>
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.-II
By: Inland Real Estate Investment Corporation
General Partner
By: Robert D. Parks
Chairman
Date: November 13, 1995
By: Mark Zalatoris
Vice President
Date: November 13, 1995
By: Cynthia M. Hassett
Principal Financial Officer and
Principal Accounting Officer
Date: November 13, 1995
-9-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 208,948
<SECURITIES> 0
<RECEIVABLES> 3,357,022
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 268,838
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,656,970
<CURRENT-LIABILITIES> 96,788
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,560,182
<TOTAL-LIABILITY-AND-EQUITY> 3,656,970
<SALES> 0
<TOTAL-REVENUES> 296,247
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 55,116
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 241,131
<INCOME-TAX> 0
<INCOME-CONTINUING> 241,131
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 241,131
<EPS-PRIMARY> 12.39
<EPS-DILUTED> 12.39
</TABLE>
