UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For The Fiscal Year Ended December 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file #0-16783
Inland Mortgage Investors Fund, L.P.-II
(Exact name of registrant as specified in its charter)
Delaware 36-3495248
(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's 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 10, 1987, as supplemented to
date 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.-II
(a limited partnership)
TABLE OF CONTENTS
Part I Page
------ ----
Item 1. Business...................................................... 3
Item 2. Properties.................................................... 3
Item 3. Legal Proceedings............................................. 3
Item 4. Submission of Matters to a Vote of Security Holders........... 3
Part II
-------
Item 5. Market for the Partnership's Limited Partnership Units
and Related Security Holder Matters........................... 4
Item 6. Selected Financial Data....................................... 5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 6
Item 8. Financial Statements and Supplementary Data................... 8
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........................ 20
Part III
--------
Item 10. Directors and Executive Officers of the Registrant............ 20
Item 11. Executive Compensation........................................ 25
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................... 26
Item 13. Certain Relationships and Related Transactions................ 26
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K................................................... 27
SIGNATURES............................................................. 28
-2-
PART I
Item 1. Business
The Registrant, Inland Mortgage Investors Fund, L.P.-II (the "Partnership"),
was formed on December 24, 1986 pursuant to the Delaware Revised Uniform
Limited Partnership Act. 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. All of the holders of
these Units were admitted to the Partnership. The Partnership funded fifteen
loans between December 1987 and June 1992 utilizing $8,131,884 of capital
proceeds collected, net of participations. The Limited Partners of the
Partnership share in the benefits of ownership of the Partnership's mortgage
receivable investments in proportion to the number of Units held. Inland Real
Estate Investment Corporation is the General Partner.
The Partnership is engaged solely in the business of making and acquiring loans
collateralized by mortgages on improved, income producing properties in or near
Chicago, Illinois. The loans are being serviced by Inland Mortgage Servicing
Corporation, a subsidiary of the General Partner. The Partnership does not
segregate revenues or assets by geographic region, and such a presentation
would not be material to an understanding of the Partnership's business taken
as a whole.
The Partnership had no employees during 1997.
The terms of transactions between the Partnership and Affiliates of the General
Partner of the Partnership are set forth in Item 11 below and Note (3) of the
Notes to Financial Statements (Item 8 of this Annual Report) to which
reference is hereby made.
The Partnership has reviewed its current computer systems and does not
anticipate any future problems relating to the year 2000.
Item 2. Properties
The Partnership owns no real properties.
Item 3. Legal Proceedings
The Partnership is not subject to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during 1997.
-3-
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1997, there were 756 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 19 and pages 41-42,
respectively, of the Prospectus of the Partnership dated February 10, 1987,
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.-II
(a limited partnership)
For the years ended December 31, 1997, 1996, 1995, 1994 and 1993
(not covered by Report of Independent Accountants)
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Total assets........... $2,870,059 2,952,893 3,660,678 3,919,522 4,725,413
=========== ========== ========== ========== ==========
Total income........... $ 292,440 332,279 397,275 407,501 478,280
=========== ========== ========== ========== ==========
Net income............. $ 228,536 268,982 331,245 337,951 410,547
=========== ========== ========== ========== ==========
Net income allocated
to the one General
Partner Unit......... $ 2,285 2,690 12,782 10,149 21,332
=========== ========== ========== ========== ==========
Net income allocated
per Limited Partner
Unit (b)............. $ 12.05 14.18 16.96 17.46 20.73
=========== ========== ========== ========== ==========
Distributions to Limited
Partners from:
Operations (c)......... 266,770 294,272 331,076 375,976 429,753
Repayment proceeds..... 80,934 688,458 260,833 768,027 562,984
----------- ---------- ---------- ---------- ----------
$ 347,704 982,730 591,909 1,144,003 992,737
=========== ========== ========== ========== ==========
Distributions per
Unit to Limited
Partners from (b):
Operations............. 14.21 15.67 17.63 20.02 22.89
Repayment proceeds..... 4.31 36.67 13.89 40.91 29.98
----------- ---------- ---------- ---------- ----------
$ 18.52 52.34 31.52 60.93 52.87
=========== ========== ========== ========== ==========
(a) The above selected financial data should be read in conjunction with the
financial statements and related notes and management's discussion (Items
7 and 8) 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
18,776.32.
(c) This amount represents distributions to the Limited Partners from
operations, a portion of which may have been funded by the General
Partner.
-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 10, 1987, 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 August 10, 1988 with a
total of 18,776.32 Units being sold to the public at $500 per Unit resulting in
$9,388,158 gross offering proceeds which were received by the Partnership,
which does not include the General Partner's $500 contribution. The
Partnership funded fifteen loans between December 1987 and June 1992 utilizing
$8,131,884 of capital proceeds collected, net of participations. As of
December 31, 1997 cumulative distributions to Limited Partners totaled
$11,132,121. A total of $6,439,636 of mortgage receivables has been repaid by
borrowers, of which $966,160 has been reloaned and $5,467,139 was repayment
proceeds and principal amortization distributed to Limited Partners and $6,337
was added to the working capital reserve.
At December 31, 1997, the Partnership had cash and cash equivalents aggregating
$169,895, which will be utilized for future distributions to partners and for
working capital requirements. The source of future liquidity and distributions
is expected to be through cash generated by earnings from the Partnership's
mortgage investments and through the repayment of such investments. To the
extent that cash flow is 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.
At December 31, 1997, the Partnership had five mortgage loans receivable
totaling $2,664,745. The maturity dates range from October 1997 to July 2001.
In October 1997, the loan collateralized by the property located at 1549-1571
Sherman Avenue was extended on a month to month basis to allow the borrower
time to proceed with refinancing. In October 1997, Inland Real Estate
Investment Corporation, the General Partner, purchased the participating
interest in the loan from an unaffiliated third party and has accepted the
terms of the month to month extension. All other terms remain the same. When
and as the Partnership receives Repayment Proceeds as a result of the sale or
repayment of a loan, the Repayment Proceeds which are available for
distribution will be distributed to the Limited Partners. When the loans are
repaid, cash flows from operating activities will decrease as a result of the
decrease in interest income earned by the Partnership.
-6-
Results of Operations
The decrease in interest and fee income on mortgage loans receivable for the
year ended December 31, 1997, as compared to the years ended December 31, 1996
and 1995, is due to the prepayment of the loan collateralized by the properties
located at 1881, 1885 and 1889 Edgebrook in April 1996 and the partial paydowns
of the loan collateralized by the property located at 7432 Washington in the
second, third and fourth quarters of 1996 and the first and fourth quarters of
1997.
Interest on short-term investments decreased for the year ended December 31,
1997 as compared to the years ended December 31, 1995 and 1996, as repayment
proceeds received in 1995 and 1996 were temporarily invested before being
distributed to the Limited Partners.
Other income increased for the year ended December 31, 1996, as compared to the
years ended December 31, 1997 and 1995 due to higher late charges collected in
1996 on mortgage loans receivable and a one-time prepayment penalty received
from the payoff of the Edgebrook mortgage loan receivable in the second quarter
of 1996. The partnership received $14,502, $18,574 and $6,219 of late charge
income in 1997, 1996 and 1995 respectively.
Professional service expenses to Affiliates decreased for the year ended
December 31, 1997, as compared to the years ended December 31, 1996 and 1995,
due to a decrease in accounting services required by the Partnership.
The increase in general and administrative expenses to Affiliates for the year
ended December 31, 1997, as compared to the year ended December 31, 1996, is
due to increases in investor service charges and data processing expense which
were partially offset by decreases in mortgage servicing fees.
The decrease in general and administrative expenses to Affiliates for the year
ended December 31, 1996, as compared to the year ended December 31, 1995, is
due to decreases in postage and mortgage servicing fees which were partially
offset by an increase in investor service charges.
The increase in general and administrative expenses to non-affiliates for the
year ended December 31, 1997, as compared to the year ended December 31, 1996,
is due to increases in printing and postage expense which were partially offset
by a decrease in bank charges and filing fees.
General and administrative expenses to non-affiliates increased for the year
ended December 31, 1996, as compared to the year ended December 31, 1995, due
to an increase in bank charges and filing fees.
Inflation
The Partnership's right to additional interest in connection with certain
mortgage notes as described in Note (4) of the Notes to Financial Statements,
(Item 8 of this Annual Report) is intended to provide a hedge against the
impact of inflation. To date, the operations of the Partnership have not been
significantly affected by inflation.
-7-
Item 8. Financial Statements and Supplementary Data
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Index
-----
Page
----
Report of Independent Accountants........................................ 9
Financial Statements:
Balance Sheets, December 31, 1997 and 1996............................. 10
Statements of Operations, for the years ended
December 31, 1997, 1996 and 1995..................................... 11
Statements of Partners' Capital, for the years ended
December 31, 1997, 1996 and 1995..................................... 12
Statements of Cash Flows, for the years ended
December 31, 1997, 1996 and 1995..................................... 13
Notes to Financial Statements.......................................... 14
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.
1549-71 Sherman, Evanston, Illinois:
Report of Independent Certified Public Accountants*
Statement of Operating Income and Expenses for the year ended
December 31, 1997*
Notes to Statement of Operating Income and Expenses for the year ended
December 31, 1997*
* The Partnership will subsequently file these reports on or before
May 15, 1998
-8-
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners of Inland Mortgage
Investors Fund, L.P. - II
We have audited the financial statements of Inland Mortgage Investors Fund,
L.P. - II listed in the index on page 8 of this Form 10-K. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Inland Mortgage Investors
Fund, L.P. - II as of December 31, 1997 and 1996 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 5, 1998
-9-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Balance Sheets
December 31, 1997 and 1996
Assets
------
1997 1996
---- ----
Cash and cash equivalents (Note 1)................ $ 169,895 177,482
Accrued interest receivable....................... 35,419 33,951
Mortgage loans receivable (Note 4)................ 2,664,745 2,741,460
------------ ------------
Total assets.................................. $ 2,870,059 2,952,893
============ ============
Liabilities and Partners' Capital
---------------------------------
Liabilities:
Due to affiliates (Note 3)...................... $ 1,544 1,690
Unearned income (Note 1)........................ 1,044 2,191
------------ ------------
Total liabilities............................. 2,588 3,881
------------ ------------
Partners' capital (Notes 1, 2 and 3):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 251,346 249,061
Supplemental Capital Contribution............. 77,871 40,244
Supplemental distributions to Limited Partners (77,871) (40,244)
Cumulative cash distributions................. (244,958) (244,958)
------------ ------------
6,888 4,603
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......................... 5,599,307 5,373,056
Supplemental Capital Contributions from
General Partner............................. 77,871 40,244
Cumulative cash distributions................. (11,132,121) (10,784,417)
------------ ------------
2,860,583 2,944,409
------------ ------------
Total Partners' capital....................... 2,867,471 2,949,012
------------ ------------
Total liabilities and Partners' capital........... $ 2,870,059 2,952,893
============ ============
See accompanying notes to financial statements.
-10-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Statements of Operations
For the years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Income: ---- ---- ----
Interest and fees on mortgage
loans receivable (Note 4)....... $ 264,013 291,605 367,939
Interest on investments........... 13,925 16,647 23,117
Other income...................... 14,502 24,027 6,219
------------ ------------ ------------
292,440 332,279 397,275
------------ ------------ ------------
Expenses:
Professional services to
Affiliates...................... 6,574 9,831 14,209
Professional services to
non-affiliates.................. 23,348 21,142 20,687
General and administrative
to Affiliates................... 26,126 24,683 25,355
General and administrative
to non-affiliates............... 7,856 7,641 5,779
------------ ------------ ------------
63,904 63,297 66,030
------------ ------------ ------------
Net income.......................... $ 228,536 268,982 331,245
============ ============ ============
Net income allocated to (Note 2):
General Partner.................. $ 2,285 2,690 12,782
Limited Partners.................. 226,251 266,292 318,463
------------ ------------ ------------
Net income.......................... $ 228,536 268,982 331,245
============ ============ ============
Net income allocated to the one
General Partner Unit.............. $ 2,285 2,690 12,782
============ ============ ============
Net income allocated to Limited
Partners per weighted average
Limited Partnership Units of
18,776.32, basic and diluted...... $ 12.05 14.18 16.96
============ ============ ============
See accompanying notes to financial statements.
-11-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Statements of Partners' Capital
For the years ended December 31, 1997, 1996 and 1995
General Limited
Partner Partners Total
------------ ------------ ------------
Balance at January 1, 1995.......... $ 1,913 3,909,500 3,911,413
Net income.......................... 12,782 318,463 331,245
Supplemental Capital Contributions
made by the General Partner on
behalf of the Limited Partners.... - 8,111 8,111
Distributions to Partners
($31.52 per Limited Partnership
Unit based on Units of 18,776.32)
(Note 2).......................... (8,564) (591,909) (600,473)
------------ ------------ ------------
Balance at December 31, 1995........ 6,131 3,644,165 3,650,296
Net income.......................... 2,690 266,292 268,982
Supplemental Capital Contributions
made by the General Partner on
behalf of the Limited Partners.... - 16,682 16,682
Distributions to Partners
($52.34 per Limited Partnership
Unit based on Units of 18,776.32)
(Note 2).......................... (4,218) (982,730) (986,948)
------------ ------------ ------------
Balance at December 31, 1996........ 4,603 2,944,409 2,949,012
Net income.......................... 2,285 226,251 228,536
Supplemental Capital Contributions
made by the General Partner on
behalf of the Limited Partners.... - 37,627 37,627
Distributions to Partners
($18.52 per Limited Partnership
Unit based on Units of 18,776.32)
(Note 2).......................... - (347,704) (347,704)
------------ ------------ ------------
Balance at December 31, 1997........ $ 6,888 2,860,583 2,867,471
============ ============ ============
See accompanying notes to financial statements.
-12-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Cash flows from operating activities:
Net income........................ $ 228,536 268,982 331,245
Adjustments to reconcile net income
to net cash provided by
operating activities:
Changes in assets and liabilities:
Accrued interest receivable... (1,468) (3,382) 20,655
Accounts payable.............. - (859) 408
Due to Affiliates............. (146) (2,088) 3,578
Unearned income............... (1,147) (3,554) (1,713)
Net cash provided by operating ------------ ------------ ------------
activities........................ 225,775 259,099 354,173
------------ ------------ ------------
Cash flows from investing activities:
Principal payments collected (net) 76,715 636,995 750,374
Principal payments on participations
and underlying mortgages........ - - (500,000)
Net cash provided by investing ------------ ------------ ------------
activities........................ 76,715 636,995 250,374
------------ ------------ ------------
Cash flows from financing activities:
Supplemental Capital Contribution. 37,627 16,682 8,111
Distributions paid................ (347,704) (986,948) (600,473)
Net cash used in financing ------------ ------------ ------------
activities........................ (310,077) (970,266) (592,362)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents.............. (7,587) (74,172) 12,185
Cash and cash equivalents at
beginning of year................. 177,482 251,654 239,469
Cash and cash equivalents at end of ------------ ------------ ------------
year.............................. $ 169,895 177,482 251,654
============ ============ ============
See accompanying notes to financial statements.
-13-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1997, 1996 and 1995
(1) Organization and Basis of Accounting
Inland Mortgage Investors Fund, L.P.-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 ("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. All of the holders of
these Units were admitted to the Partnership. Inland Real Estate Investment
Corporation is the General Partner.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Offering costs have been offset against the Limited Partners' capital accounts.
Loan assumption fees received are deferred as unearned income and amortized
over the remaining life of the related loan.
The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
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.
Interest income on mortgage loans receivable is accrued when earned. The
accrual of interest, on loans that are in default, is discontinued when, in the
opinion of the General Partner, the borrower has not complied with loan work-
out arrangements. Once a loan has been placed on a non-accrual status, all
cash received is applied against the outstanding loan balance until such time
as the borrower has demonstrated an ability to make payments under the terms of
the original or renegotiated loan agreement. The General Partner evaluates the
collectibility of the mortgage loans on a quarterly basis. This evaluation
includes determining the valuation of the underlying operating property subject
to the mortgage. Should a portion of the principal of the mortgage loan be
considered unrecoverable either through collection or foreclosure, a provision
would be made to reduce the carrying amount of the mortgage loans. The
Partnership intends to pursue collection of all amounts currently due from the
borrowers.
-14-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
(continued)
The Partnership believes that the interest rates associated with the mortgage
receivable approximate the market interest rates, and as such, the carrying
amount of the mortgages receivable approximate their fair value.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
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.
The Partnership records are maintained on the accrual basis of accounting in
accordance with generally accepted accounting principles ("GAAP"). The Federal
income tax return has been prepared from such records after making appropriate
adjustments to reflect the Partnership's accounts as adjusted for Federal
income tax reporting purposes. Such adjustments are not recorded on the
records of the Partnership. The net effect of these items is summarized as
follows:
1997 1996
----------------------- -----------------------
GAAP Tax GAAP Tax
Basis Basis Basis Basis
----------- ----------- ----------- -----------
Total assets................ $2,870,059 2,870,059 2,952,893 2,952,893
Partners' capital:
General Partner........... 6,888 13,274 4,603 10,988
Limited Partners.......... 2,860,583 2,854,197 2,944,409 2,938,023
Net income (loss):
General Partner........... 2,285 (35,343) 2,690 (12,464)
Limited Partners.......... 226,251 263,877 266,292 281,445
Net income per Limited
Partnership Unit, basic and
diluted................... 12.05 14.05 14.18 14.99
The net income per Limited Partnership Unit is based upon the weighted average
number of Units outstanding of 18,776.32.
-15-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
(continued)
(2) Partnership Agreement
The Partnership Agreement defines the distribution of Operating Cash Flow.
Such Operating Cash Flow will be distributed 90% to the Limited Partners and
10% to the General Partner. Of the 10% of Operating Cash Flow allocated to the
General Partner, one-half shall be subordinated to the Limited Partners'
receipt of a Cumulative Preferred Return of 11% per annum. Distributions of
Loan Repayment Proceeds will be distributed first to the Limited Partners in
proportion to their Participating Percentages until they have received an
amount equal to their Invested Capital plus any deficiency in the Cumulative
Preferred Return. Thereafter, any remaining Repayment Proceeds which are
available for distribution will be distributed 90% to the Limited Partners and
10% to the General Partner.
The General Partner will be allocated net operating profits 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
the professional services to Affiliates and general and administrative expenses
to Affiliates, of which $1,544 and $1,690 remained unpaid at December 31, 1997
and 1996, respectively.
Inland Mortgage Servicing Corporation, a subsidiary of the General Partner,
services the Partnership's mortgage loans receivable. Its services include
processing mortgage loan collections and escrow deposits and maintaining
related records. For these services, the Partnership is obligated to pay fees
at an annual rate equal to 1/4 of 1% of the outstanding mortgage loans
receivable balance of the Partnership. Such fees of $6,444 in 1997, $6,988 in
1996 and $9,325 in 1995 have been incurred and paid to the subsidiary of the
General Partner and are included in the Partnership's 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 December 31, 1997 is $77,871, all of which has been received
from the General Partner.
-16-
<TABLE> INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
(continued)
(4) Mortgage Loans Receivable
Mortgage loans receivable are collateralized principally 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 collateralized by a multi-use retail and office building and the Richton Park, Illinois loan
which is collateralized by a shopping mall. As additional collateral, the Partnership holds assignments of rents
and leases or personal guarantees of the borrowers. Generally, the mortgage notes are payable in equal monthly
installments based on 20 or 30 year amortization periods.
Mortgage loans receivable consist of the following:
<CAPTION>
Monthly Balance at
Interest Balloon P & I December 31,
Rate at Maturity at Payments -----------------------
Property Location 12/31/97 Date Maturity Prepayment (net) 1997 1996
- ------------------ --------- ------------- ---------- ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1549-71 Sherman and (A) 9.50% October 1997 $1,572,075 60 days notice $ 15,130 $1,569,892 1,595,869
627 Grove, Evanston Extended & 3% penalty
Month to Month
3900 Cornelia/ 9.04% October 268,245 At any time 2,428 272,149 276,420
3508-10 Springfield, 1998 without penalty
Chicago
7409-13 Seeley, (B) 9.22% November 418,274 60 days notice 3,770 424,119 429,785
Chicago 1998 & 3% penalty
Richton Park Plaza, (C) 10.000% January 317,205 At any time 2,979 321,328 324,757
Richton Park 1999 without penalty
1881, 1885, 1889 (D) 10.900% - - 60 days notice - - -
Edgebrook, Chicago & 3% penalty
7432 Washington, (E) 10.000% July 70,400 At any time 644 77,257 114,629
Forest Park 2001 without penalty
$2,664,745 2,741,460
=========== ===========
-17-
-17-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
(continued)
(A) On March 24, 1989, in accordance with a pre-existing agreement, the
Partnership amended its Participation Agreements with Inland Mortgage
Corporation (IMC), a subsidiary of the General Partner, and an unaffiliated
third party participant in the loans collateralized by the Sherman and
Grove properties. The Partnership repurchased all of IMC's interest of
$135,000 to resell this interest to the unaffiliated third party
participant. Upon completion of the transaction the third party's total
interest in the $2,700,000 original loan amount was $985,000.
Terms of the November 1988 Participation Agreement were modified so that
the entire $985,000 participating interest earned interest at 11.55% per
annum through December 1989. On January 1, 1990 and each succeeding
January 1, the interest rate adjusts to 2.82% over the yield of one-year
U.S. Treasury Bills, with a cap of 13.75% and a floor of 8.75% per annum.
The installments were interest only until February 1990 and currently
consist of principal and interest (based on a 25 year amortization) with
the final installment due in October 1997.
In October 1997, the loan collateralized by the property located at 1549-
1571 Sherman Avenue matured. The loan term has been extended on a month to
month basis to allow the borrower time to proceed with refinancing. In
October 1997, Inland Real Estate Investment Corporation, the General
Partner, purchased the participating interest in the loan from an
unaffiliated third party and has accepted the terms of the month to month
extension. All other terms remain the same.
(B) In November 1988, the Partnership purchased this loan from Inland Mortgage
Corporation, a subsidiary of the General Partner. The cost of the loan was
$467,556, including the principal balance of $463,500 and accrued interest
of $4,056. This loan currently bears interest at the rate of 9.22% per
annum and adjusts annually to 3.75% above the One Year Treasury Constant
Maturity Average.
(C) On May 23, 1989, the Partnership purchased a $1,095,000 interest in a first
mortgage loan funded originally on behalf of the Partnership by Inland
Mortgage Corporation (IMC), a subsidiary of the General Partner. The loan
was in the amount of $2,600,000 and was collateralized by a first mortgage
on the Richton Park Plaza Shopping Mall. The initial interest rate on the
loan was 11.21% and adjusted annually to 3% over the One Year Treasury
Constant Maturity Average beginning in January 1990. Payments adjusted
annually with the interest rate. The loan matured on January 1, 1994, at
which time the Partnership extended the maturity date of the loan. On June
30, 1994 the Partnership modified the loan and received $735,827 in
principal and accrued interest, as a result of the partial payoff of this
loan. Under the loan modification, the remaining principal balance of
$330,402 is collateralized by a second mortgage on the property and
requires principal and interest payments at the rate of 10% per annum with
a final balloon payment due January 1, 1999. The interest rate adjusts
annually on January 1st to three points over the One Year Treasury Constant
Maturity Average. The borrower has paid a $3,300 extension fee to the
Partnership.
-18-
INLAND MORTGAGE INVESTORS FUND, L.P.-II
(a limited partnership)
Notes to Financial Statements
(continued)
(D) In April 1996, the Partnership received a complete prepayment of the loan
collateralized by the properties located at 1881, 1885 and 1889 Edgebrook.
Proceeds from the prepayment, including principal, accrued interest and a
prepayment penalty totaled $556,220 and were distributed to the Limited
Partners in April 1996.
(E) In June 1992, the Partnership funded this $700,000 loan to refinance an
existing mortgage owed to an Affiliate of the General Partner and sold a
$500,000 interest in the loan to Inland Mortgage Investors Fund III, L.P.
("Participant"), which is another publicly registered partnership sponsored
by the General Partner. Therefore, the net funds invested by the
Partnership in the loan was $200,000. The loan has a fixed interest rate
and requires monthly payments of interest only. The Partnership will
receive its percentage share of all such payments.
The borrower on the loan collateralized by the property located at 7432
Washington made additional partial paydowns on the mortgage. The
Partnership received $37,371 $59,828 and $16,200, its proportionate share
of the total paydowns, during 1997, 1996 and 1995, respectively.
(5) Subsequent Events
In January 1998, the Partnership paid a distribution of $87,375, all of which
was distributed to Limited Partners, including $20,815 of repayment proceeds
and $66,560 of operating cash flow.
-19-
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements on accounting or financial disclosure during 1997.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partner of the Partnership, Inland Real Estate Investment
Corporation, was organized in 1984 for the purpose of acting as general partner
of limited partnerships formed to acquire, own and operate real property, and
make and acquire loans collateralized by mortgages on improved, income
producing multi-family residential properties. The General Partner is a
wholly-owned subsidiary of The Inland Group, Inc. In 1990, Inland Real Estate
Investment Corporation became the replacement General Partner for an additional
301 privately-offered real estate limited partnerships syndicated by
Affiliates. The General Partner has responsibility for all aspects of the
Partnership's operations. The relationship of the General Partner to its
Affiliates is described under the caption "Conflicts of Interest" at pages 10
and 11 of the Prospectus, incorporated herein by reference.
Officers and Directors
The officers, directors and key employees of The Inland Group, Inc. and its
Affiliates ("Inland") that are likely to provide services to the Partnership
are as follows:
Functional Title
Daniel L. Goodwin.......... Chairman and Chief Executive Officer
Robert H. Baum............. Executive Vice President-General Counsel
G. Joseph Cosenza.......... Senior Vice President-Acquisitions
Robert D. Parks............ Senior Vice President-Investments
Catherine L. Lynch......... Treasurer
Roberta S. Matlin.......... Assistant Vice President-Investments
Mark Zalatoris............. Assistant Vice President-Due Diligence
Patricia A. Challenger..... Vice President-Asset Management
Frances C. Panico.......... Vice President-Mortgage Corporation
Raymond E. Petersen........ Vice President-Mortgage Corporation
Paul J. Wheeler............ Vice President-Personal Financial Services Group
Kelly Tucek................ Assistant Vice President-Partnership Accounting
Venton J. Carlston......... Assistant Controller
-20-
DANIEL L. GOODWIN (age 54) is Chairman of the Board of Directors of The
Inland Group, Inc., a billion-dollar real estate and financial organization
located in Oak Brook, Illinois. Among Inland's subsidiaries is the largest
property management firm in Illinois and one of the largest commercial real
estate and mortgage banking firms in the Midwest.
Mr. Goodwin has served as Director of the Avenue Bank of Oak Park and as a
Director of the Continental Bank of Oakbrook Terrace. He was Chairman of the
Bank Holding Company of American National Bank of DuPage. Currently he is the
Chairman of the Board of Inland Mortgage Investment Corporation.
Mr. Goodwin has been in the housing industry for more than 28 years, and has
demonstrated a lifelong interest in housing-related issues. He is a licensed
real estate broker and a member of the National Association of Realtors. He
has developed thousands of housing units in the Midwest, New England, Florida,
and the Southwest. He is also the author of a nationally recognized real
estate reference book for the management of residential properties.
Mr. Goodwin has served on the Board of the Illinois State Affordable Housing
Trust Fund for the past 7 years. He is an advisor for the Office of Housing
Coordination Services of the State of Illinois, and a member of the Seniors
Housing Committee of the National Multi-Housing Council. Recently, Governor
Edgar appointed him Chairman of the Housing Production Committee for the
Illinois State Affordable Housing Conference. He also served as a member of
the Cook County Commissioner's Economic Housing Development Committee, and he
was the Chairman of the DuPage County Affordable Housing Task Force. The 1992
Catholic Charities Award was presented to Mr. Goodwin for his work in
addressing affordable housing needs. The City of Hope designated him as the
Man of the Year for the Illinois construction industry. In 1989, the Chicago
Metropolitan Coalition on Aging presented Mr. Goodwin with an award in
recognition of his efforts in making housing more affordable to Chicago's
Senior Citizens. On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter)
presented Mr. Goodwin with an award, recognizing The Inland Group as the
leading corporate provider of transitional housing for the homeless people of
DuPage County. Mr. Goodwin also serves as Chairman of New Directions Housing
Corporation, a leading provider of affordable housing in northern Illinois.
Mr. Goodwin is a product of Chicago-area schools, and obtained his Bachelor's
and Master's Degrees from Illinois Universities. Following graduation, he
taught for five years in the Chicago Public Schools. His commitment to
education has continued through his work with the Better Boys Foundation's
Pilot Elementary School in Chicago, and the development of the Inland
Vocational Training Center for the Handicapped located at Little City in
Palatine, Illinois. He personally established an endowment which funds a
perpetual scholarship program for inner-city disadvantaged youth. In 1990 he
received the Northeastern Illinois University President's Meritorious Service
Award. Mr. Goodwin holds a Master's Degree in Education from Northern Illinois
University, and in 1986, he was awarded an Honorary Doctorate from Northeastern
Illinois University College of Education. More than 12 years ago, under Mr.
Goodwin's direction, Inland instituted a program to educate disabled students
about the workplace. Most of these original students are still employed at
Inland today, and Inland continues as one of the largest employers of the
disabled in DuPage County. Mr. Goodwin has served as a member of the Board of
Governors of Illinois State Colleges and Universities, and he is currently a
trustee of Benedictine University. He was elected Chairman of Northeastern
Illinois University Board of Trustees in January 1996.
-21-
Mr. Goodwin served as a member of Governor Jim Edgar's Transition Team. In
1988 he received the Outstanding Business Leader Award from the Oak Brook
Jaycees and has been the General Chairman of the National Football League
Players Association Mackey Awards for the benefit of inner-city youth. He
served as the recent Chairman of the Speakers Club of the Illinois House of
Representatives. In March 1994, he won the Excellence in Business Award from
the DuPage Area Association of Business and Industry. Additionally, he was
honored by Little Friends on May 17, 1995 for rescuing their Parent-Handicapped
Infant Program when they lost their lease. He was the recipient of the 1995
March of Dimes Life Achievement Award and was recently recognized as the 1997
Corporate Leader of the Year by the Oak Brook Area Association of Commerce and
Industry.
ROBERT H. BAUM (age 54) has been with The Inland Group, Inc. and its
affiliates since 1968 and is one of the four original principals. Mr. Baum is
Vice Chairman and Executive Vice President-General Counsel of The Inland Group,
Inc. In his capacity as General Counsel, Mr. Baum is responsible for the
supervision of the legal activities of The Inland Group, Inc. and its
affiliates. This responsibility includes the supervision of The Inland Law
Department and serving as liaison with outside counsel. Mr. Baum has served as
a member of the North American Securities Administrators Association Real
Estate Advisory Committee and as a member of the Securities Advisory Committee
to the Secretary of State of Illinois. He is a member of the American
Corporation Counsel Association and has also been a guest lecturer for the
Illinois State Bar Association. Mr. Baum has been admitted to practice before
the Supreme Court of the United States, as well as the bars of several federal
courts of appeals and federal district courts and the State of Illinois. He
received his B.S. Degree from the University of Wisconsin and his J.D. Degree
from Northwestern University School of Law. Mr. Baum has served as a director
of American National Bank of DuPage. Currently, he serves as a director of
Westbank, and is a member of the Governing Council of Wellness House, a
charitable organization that provides emotional support for cancer patients and
their families.
G. JOSEPH COSENZA (age 54) has been with The Inland Group, Inc. and its
affiliates since 1968 and is one of the four original principals. Mr. Cosenza
is a Director and Vice Chairman of The Inland Group, Inc. and oversees,
coordinates and directs Inland's many enterprises. In addition, immediately
supervises a staff of eight persons who engage in property acquisition. Mr.
Cosenza has been a consultant to other real estate entities and lending
institutions on property appraisal methods.
Mr. Cosenza received his B.A. Degree from Northeastern Illinois University and
his M.S. Degree from Northern Illinois University. From 1967 to 1968, he
taught at the LaGrange School District in Hodgkins, Illinois and from 1968 to
1972, he served as Assistant Principal and taught in the Wheeling, Illinois
School District. Mr. Cosenza has been a licensed real estate broker since 1968
and an active member of various national and local real estate associations,
including the National Association of Realtors and the Urban Land Institute.
Mr. Cosenza has also been Chairman of the Board of American National Bank of
DuPage, and has served on the Board of Directors of Continental Bank of
Oakbrook Terrace. He is presently Chairman of the Board of Westbank in
Westchester and Hillside, Illinois.
-22-
ROBERT D. PARKS (age 54) is a Director of The Inland Group, Inc.,
President, Chairman and Chief Executive Officer of Inland Real Estate
Investment Corporation and President, Chief Executive Officer, Chief Operating
Officer and Affiliated Director of Inland Real Estate Corporation.
Mr. Parks is responsible for the ongoing administration of existing investment
programs, corporate budgeting and administration for Inland Real Estate
Investment Corporation. He oversees and coordinates the marketing of all
investments and investor relations.
Prior to joining Inland, Mr. Parks was a school teacher in Chicago's public
schools. He received his B.A. degree from Northeastern Illinois University and
his M.A. degree from the University of Chicago. He is a registered Direct
Participation Program Principal with the National Association of Securities
Dealers, Inc., and he is a member of the Real Estate Investment Association and
a member of NAREIT.
CATHERINE L. LYNCH (age 39) joined Inland in 1989 and is the Treasurer of
Inland Real Estate Investment Corporation. Ms. Lynch is responsible for
managing the Corporate Accounting Department. Prior to joining Inland, Ms.
Lynch worked in the field of public accounting for KPMG Peat Marwick since
1980. She received her B.S. degree in Accounting from Illinois State
University. Ms. Lynch is a Certified Public Accountant and a member of the
American Institute of Certified Public Accountants and the Illinois CPA
Society. She is registered with the National Association of Securities Dealers
as a Financial Operations Principal.
ROBERTA S. MATLIN (age 53) joined Inland in 1984 as Director of Investor
Administration and currently serves as Senior Vice President-Investments.
Prior to that, Ms. Matlin spent 11 years with the Chicago Region of the Social
Security Administration of the United States Department of Health and Human
Services. As Senior Vice President-Investments, she directs the day-to-day
internal operations of the General Partner. Ms. Matlin received her B.A.
degree from the University of Illinois. She is registered with the National
Association of Securities Dealers, Inc. as a General Securities Principal.
MARK ZALATORIS (age 40) joined Inland in 1985 and currently serves as Vice
President of Inland Real Estate Investment Corporation. His responsibilities
include the coordination of due diligence activities by selling broker/dealers
and is also involved with limited partnership asset management including the
mortgage funds. Mr. Zalatoris is a graduate of the University of Illinois
where he received a Bachelors degree in Finance and a Masters degree in
Accounting and Taxation. He is a Certified Public Accountant and holds a
General Securities License with Inland Securities Corporation.
PATRICIA A. CHALLENGER (age 45) joined Inland in 1985. Ms. Challenger
serves as Senior Vice President of Inland Real Estate Investment Corporation in
the area of Asset Management. As head of the Asset Management Department, she
develops operating and disposition strategies for all investment-owned
properties. Ms. Challenger received her Bachelor's degree from George
Washington University and her Master's from Virginia Tech University. Ms.
Challenger was selected and served from 1980-1984 as Presidential Management
Intern, where she was part of a special government-wide task force to eliminate
waste, fraud and abuse in government contracting and also served as Senior
Contract Specialist responsible for capital improvements in 109 government
properties. Ms. Challenger is a licensed real estate broker, NASD registered
securities sales representative and is a member of the Urban Land Institute.
-23-
FRANCES C. PANICO (age 48) joined Inland in 1972 after earning a B.A.
degree from Northern Illinois University in Business and Communication. She is
currently President of Inland Mortgage Servicing Corporation, Sr. Vice
President of Inland Mortgage Investment Corporation and Sr. Vice President of
Inland Mortgage Corporation. Ms. Panico oversees the operation of loan
services, which has a loan portfolio in excess of $430 million. She is a
member of the loan committee which approves loans funded by IMIC and IMC. She
monitors IMIC's assets, and is the business person in charge of loans in
foreclosure. She previously served on the Board of Directors for Burbank State
Bank and supervised the origination, processing and underwriting of single-
family mortgages. Ms. Panico also packaged and sold loans to Freddie Mac.
RAYMOND E. PETERSEN (age 58) joined Inland in 1981. Mr. Petersen is
responsible for the selection and approval of all corporate and limited
partnership financing, as well as for the daily supervision of the commercial
lending activity of Inland Mortgage Corporation where he is President. For
the six years prior to joining Inland, Mr. Petersen was affiliated with the
mortgage banking firm of Downs, Mohl Mortgage Corporation, serving as President
and Chief Executive Officer. Previously he was also associated with the
mortgage banking houses of B.B. Cohen & Company and Percy Wilson Mortgage and
Finance Corporation. Mr. Petersen's professional credentials include a B.A.
degree from DePaul University, senior membership in the National Association of
Review Appraisers, state licensed as a real estate broker and licensed
securities representative. Mr. Petersen was also a Director and Chairman of
the Asset and Liability Committee of American National Bank of Downers Grove
and is currently a Director of Westbank of Westchester, Illinois.
PAUL J. WHEELER (age 45) joined Inland in 1982 and is currently the
President of Inland Property Sales, Inc., the entity responsible for all
corporately owned real estate. Mr. Wheeler received his B.A. degree in
Economics from DePauw University and an M.B.A. in Finance/Accounting from
Northwestern University. Mr. Wheeler is a Certified Public Accountant and
licensed real estate broker. For three years prior to joining Inland, Mr.
Wheeler was Vice President/Finance at the real estate brokerage firm of Quinlan
& Tyson, Inc.
KELLY TUCEK (age 35) joined Inland in 1989 and is an Assistant Vice
President of Inland Real Estate Investment Corporation. As of August 1996, Ms.
Tucek is responsible for the Investment Accounting Department which includes
all public partnership accounting functions along with quarterly and annual SEC
filings. Prior to joining Inland, Ms. Tucek was on the audit staff of Coopers
and Lybrand since 1984. She received her B.A. Degree in Accounting and
Computer Science from North Central College.
VENTON J. CARLSTON (age 40) joined Inland in 1985 and is the Assistant
Controller of Inland Real Estate Investment Corporation where he supervises the
corporate bookkeeping staff and is responsible for financial statement
preparation and budgeting for Inland Real Estate Investment Corporation and its
subsidiaries. Prior to joining Inland, Mr. Carlston was a partnership
accountant with JMB Realty. He received his B.S. degree in Accounting from
Southern Illinois University. Mr. Carlston is a Certified Public Accountant
and a member of the Illinois CPA Society. He is registered with the National
Association of Securities Dealers, Inc. as a Financial Operations Principal.
-24-
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 profits or losses as described
under the caption "Allocation of Profits and 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, included as an exhibit to the Prospectus, which is
hereby incorporated herein by reference. The relationship of the General
Partner (and its directors and officers) to its Affiliates is set forth above
in Item 10.
The General Partner may be reimbursed for salaries and direct expenses of
employees of the General Partner and its Affiliates for the administration of
the Partnership. In 1997, costs relating to such services were $26,256, of
which $1,544 was unpaid at December 31, 1997.
A subsidiary of the General Partner earned mortgage servicing fees of $6,444 in
1997, in connection with servicing the Partnership's mortgage loans receivable.
-25-
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The Liquidity Plan (page 19 of the Prospectus of the Partnership dated
February 10, 1987, which is incorporated herein by reference) owns the
following Units of the Partnership as of December 31, 1997:
Amount and Nature
of Beneficial Percent
Title of Class Ownership of Class
-------------- ------------------ ----------
Limited Partnership 5,401.45 Units, Directly 28.77%
Units
(b) The officers and directors of the General Partner of the Partnership own as
a group the following Units of the Partnership as of December 31, 1997:
Amount and Nature
of Beneficial Percent
Title of Class Ownership of Class
-------------- ------------------ ----------
Limited Partnership One Unit Directly Less than 1%
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 of 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 and Note (3) of the Notes to Financial Statements (Item 8
of this Annual Report).
-26-
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The Financial Statements listed in the index on page 8 of this Annual
Report are filed as part of this Annual Report.
(b) Exhibits. The following documents are filed as part of this Report:
3 Amended and Restated Agreement of Limited Partnership and
Certificate of Limited Partnership, included as Exhibits A and B to
the Prospectus dated February 10, 1987, as supplemented, are
incorporated herein by reference thereto.
28 Prospectus dated February 10, 1987, as supplemented, included in
post-effective Amendment No. 2 to Form S-11 Registration Statement,
File No. 33-11110, 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
None
No Annual Report or proxy material for the year 1997 has been sent to the
Partners of the Partnership. An Annual Report will be sent to the Partners
subsequent to this filing and the Partnership will furnish copies of such
report to the Commission when it is sent to the Partners.
-27-
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.-II
Inland Real Estate Investment Corporation
General Partner
/s/ Robert D. Parks
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 16, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
By: Inland Real Estate Investment Corporation
General Partner
/s/ Robert D. Parks
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 16, 1998
/s/ Mark Zalatoris
By: Mark Zalatoris
Vice President
Date: March 16, 1998
/s/ Kelly Tucek
By: Kelly Tucek
Principal Financial Officer
and Principal Accounting Officer
Date: March 16, 1998
/s/ Daniel L. Goodwin
By: Daniel L. Goodwin
Director
Date: March 16, 1998
/s/ Robert H. Baum
By: Robert H. Baum
Director
Date: March 16, 1998
-28-
</TABLE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 169895
<SECURITIES> 0
<RECEIVABLES> 2700164
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 205314
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2870059
<CURRENT-LIABILITIES> 2588
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2867471
<TOTAL-LIABILITY-AND-EQUITY> 2870059
<SALES> 0
<TOTAL-REVENUES> 292440
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 63904
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 228536
<INCOME-TAX> 0
<INCOME-CONTINUING> 228536
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<CHANGES> 0
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<EPS-PRIMARY> 12.05
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</TABLE>
