|
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, 2000
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 #0-16790
Inland's Monthly Income Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware |
#36-3525989 |
(State or other jurisdiction |
(I.R.S. Employer Identification Number) |
of incorporation or organization) |
|
2901 Butterfield Road, Oak Brook, Illinois |
60523 |
(Address of principal executive office) |
(Zip code) |
Registrant's telephone number, including area code: 630-218-8000
N/A
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Balance Sheets
September 30, 2000 and December 31, 1999
(unaudited)
Assets
2000 |
1999 |
||
Current assets: |
|||
Cash and cash equivalents (Note 1) |
$ |
979,315 |
1,299,088 |
Accounts and rents receivable |
63,850 |
31,130 |
|
Interest receivable |
26,601 |
41,884 |
|
Current portion of mortgage loans receivable |
42,728 |
64,776 |
|
Current portion of deferred rent receivable |
4,818 |
4,818 |
|
Other assets |
- |
2,190 |
|
Total current assets |
1,117,312 |
1,443,886 |
|
Investment properties (including acquisition fees paid to Affiliates of $1,542,405 and $1,738,621 at September 30, 2000 and December 31, 1999, respectively) (Note 1): |
|||
Land |
2,342,537 |
2,672,620 |
|
Buildings and improvements |
12,373,800 |
15,876,969 |
|
Tenant improvements |
793,112 |
793,112 |
|
15,509,449 |
19,342,701 |
||
Less accumulated depreciation |
4,874,623 |
6,044,601 |
|
Net investment properties |
10,634,826 |
13,298,100 |
|
Other assets: |
|||
Mortgage loans receivable, less current portion |
3,274,354 |
5,302,485 |
|
Deferred loan fees (net of accumulated amortization of $59,048 and $50,704 at September 30, 2000 and December 31, 1999, respectively) (Note 1) |
39,862 |
48,206 |
|
Deferred leasing fees (including $219,451 paid to Affiliates) (net of accumulated amortization of $248,089 and $232,317 at September 30, 2000 and December 31, 1999, respectively) (Note 1) |
96,298 |
112,070 |
|
Deferred rent receivable, less current portion (Notes 1 and 2) |
273,723 |
338,411 |
|
Total other assets |
3,684,237 |
5,801,172 |
|
Total assets |
$ |
15,436,375 |
20,543,158 |
========= |
========= |
See accompanying notes to financial statements.
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
September 30, 2000 and December 31, 1999
(unaudited)
Liabilities and Partners' Capital
2000 |
1999 |
||
Current liabilities: |
|||
Accounts payable and accrued expenses |
$ |
1,301 |
467 |
Accrued real estate taxes |
4,831 |
63,421 |
|
Distributions payable (Note 5) |
136,062 |
177,761 |
|
Due to Affiliates (Note 3) |
10,221 |
878 |
|
Deposits held for others |
105,263 |
189,875 |
|
Prepaid rent |
- |
47,980 |
|
Current portion of deferred gain on sale of investment property |
9,785 |
14,583 |
|
Total current liabilities |
267,463 |
494,965 |
|
Commission payable to Affiliates |
68,700 |
- |
|
Deferred loan fees |
16,088 |
28,080 |
|
Long-term debt |
2,500,000 |
2,500,000 |
|
Deferred gain on sale of investment property, less current portion |
977,705 |
1,559,942 |
|
Total liabilities |
3,829,956 |
4,582,987 |
|
Partners' capital (Notes 1 and 5): |
|||
General Partner: |
|||
Capital contribution |
500 |
500 |
|
Supplemental Capital Contributions |
2,095,863 |
2,095,863 |
|
Supplemental capital distributions to Limited Partners |
(2,095,863) |
(2,095,863) |
|
Cumulative net loss |
(36,743) |
(36,743) |
|
(36,243) |
(36,243) |
||
Limited Partners: |
|||
Units of $500. Authorized 60,000 Units, 59,285.65 Units outstanding (net of offering costs of $3,289,242, of which $388,902 was paid to Affiliates) |
26,353,582 |
26,353,582 |
|
Supplemental Capital Contributions from General Partner |
2,095,863 |
2,095,863 |
|
Cumulative net income |
21,276,261 |
18,778,291 |
|
Cumulative distributions |
(38,083,044) |
(31,231,322) |
|
11,642,662 |
15,996,414 |
||
Total partners' capital |
11,606,419 |
15,960,171 |
|
Total liabilities and partners' capital |
$ |
15,436,375 |
20,543,158 |
========= |
========= |
See accompanying notes to financial statements.
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 2000 and 1999
(unaudited)
Three months |
Three months |
Nine months |
Nine months |
||
ended |
ended |
ended |
Ended |
||
September 30, 2000 |
September 30, 1999 |
September 30, 2000 |
September 30, 1999 |
||
Income: |
|||||
Rental income (Notes 1 and 2) |
$ |
423,124 |
494,097 |
1,452,192 |
1,513,837 |
Additional rental income |
6,429 |
8,911 |
23,525 |
28,547 |
|
Interest income |
98,876 |
140,789 |
331,518 |
469,615 |
|
Other income |
- |
- |
17,130 |
9,175 |
|
528,429 |
643,797 |
1,824,365 |
2,021,174 |
||
Expenses: |
|||||
Professional services to Affiliates |
7,981 |
2,792 |
14,557 |
10,186 |
|
Professional services to non-affiliates |
2,001 |
- |
31,825 |
35,339 |
|
General and administrative expenses to Affiliates |
12,137 |
6,345 |
31,813 |
27,302 |
|
General and administrative expenses to non-affiliates |
7,038 |
3,854 |
40,042 |
39,580 |
|
Property operating expenses to Affiliates |
5,372 |
7,755 |
23,237 |
26,729 |
|
Property operating expenses to non- affiliates |
12,916 |
38,534 |
175,268 |
166,133 |
|
Interest expense to non-affiliates |
44,530 |
44,531 |
132,623 |
136,996 |
|
Depreciation |
97,476 |
125,926 |
352,460 |
377,778 |
|
Amortization |
8,040 |
8,039 |
24,116 |
34,677 |
|
197,491 |
237,776 |
825,941 |
854,720 |
||
Operating income |
330,938 |
406,021 |
998,424 |
1,166,454 |
|
Gain on sale of investment property |
988,957 |
4,259 |
1,499,546 |
285,603 |
|
Net income |
$ |
1,319,895 |
410,280 |
2,497,970 |
1,452,057 |
========== |
========== |
========== |
========== |
||
Net income allocated to: |
|||||
General Partner |
- |
- |
- |
- |
|
Limited Partners |
1,319,895 |
410,280 |
2,497,970 |
1,452,057 |
|
Net income |
$ |
1,319,895 |
410,280 |
2,497,970 |
1,452,057 |
========== |
========== |
========== |
========== |
||
Net income per weighted average Limited Partner Units of 59,285.65 |
$ |
22.26 |
6.92 |
42.13 |
24.49 |
========== |
========== |
========== |
========== |
See accompanying notes to financial statements.
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 2000 and 1999
(unaudited)
2000 |
1999 |
||
Cash flows from operating activities: |
|||
Net income |
$ |
2,497,970 |
1,452,057 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|||
Gain on sale of investment property |
(1,499,546) |
(285,603) |
|
Depreciation |
352,460 |
377,778 |
|
Amortization |
24,116 |
34,676 |
|
Changes in assets and liabilities: |
|||
Accounts and rents receivable |
(32,720) |
(4,222) |
|
Interest receivable |
15,283 |
4,491 |
|
Other current assets |
2,190 |
576 |
|
Deferred rent receivable |
64,688 |
42,334 |
|
Accounts payable and accrued expenses |
834 |
(13,414) |
|
Accrued real estate taxes |
(58,590) |
(10,554) |
|
Due to Affiliates |
9,343 |
6,567 |
|
Unearned income |
(59,972) |
35,938 |
|
Net cash provided by operating activities |
1,316,056 |
1,640,624 |
|
Cash flows from investing activities: |
|||
Principal payments received on mortgage loans receivable |
2,050,179 |
1,200,638 |
|
Proceeds from disposition of property |
3,292,025 |
- |
|
Net cash provided by investing activities |
5,342,204 |
1,200,638 |
|
Cash flows from financing activities: |
|||
Cash distributions |
(6,893,421) |
(3,754,955) |
|
Deposits held for others |
(84,612) |
39,837 |
|
Principal payments of long-term debt |
- |
(1,489,207) |
|
Loan proceeds |
- |
2,500,000 |
|
Loan fees |
- |
(55,622) |
|
Net cash used in financing activities |
(6,978,033) |
(2,759,947) |
|
Net increase (decrease) in cash and cash equivalents |
(319,773) |
81,315 |
|
Cash and cash equivalents at beginning of period |
1,299,088 |
681,003 |
|
Cash and cash equivalents at end of period |
$ |
979,315 |
762,318 |
========= |
========= |
||
Supplemental disclosure of non-cash investing activities: |
|||
Cash paid for interest |
$ |
132,623 |
149,096 |
========= |
========= |
||
Commission payable to Affiliate |
$ |
68,700 |
- |
========= |
========= |
See accompanying notes to financial statements.
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 2000
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited financial statements for the fiscal year ended December 31, 1999, which are included in the Partnership's 1999 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's Monthly Income Fund, L.P. (the "Partnership"), was formed on March 26, 1987 pursuant to the Delaware Revised Uniform Limited Partnership Act, to invest in improved residential, retail, industrial and other income producing properties. On August
3, 1987, the Partnership commenced an Offering of 50,000 (subject to an increase up to 60,000) Limited Partnership Units ("Units") pursuant to a Registration Statement under the Securities Act of 1933. The Offering terminated on August 3, 1988, with total
sales of 59,999 Units at $500 per Unit, resulting in gross offering proceeds of $29,999,500, not including 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 Limited Partners of the Partnership share in the benefits of ownership of the Partnership's real property investments in proportion to the number of Units held. The Partnership has repurchased a total of 713 Units
for $356,676 from various Limited Partners through the Unit Repurchase Program. There are no funds remaining for the repurchase of Units through this program.
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 disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
In the opinion of management, the financial statements contain all the adjustments necessary, which are of a normal recurring nature, to present fairly the financial position and results of operations for the periods presented herein. Results of interim
periods are not necessarily indicative of results to be expected for the year.
(2) Deferred Rent Receivable
Certain tenant leases contain provisions providing for stepped rent increases. Generally accepted accounting principles require that rental income be recorded for the period of occupancy on a straight-line basis. The accompanying financial statements
include decreases of $64,688 and $42,334 for 2000 and 1999, respectively, of rental income for the period of occupancy for which stepped rent increases apply and $278,541 and $343,229 in related deferred rent receivable as of September 30, 2000 and
December 31, 1999, respectively. These amounts will be collected over the terms of the related leases as scheduled rent payments are made.
INLAND'S MONTHLY INCOME FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 2000
(unaudited)
(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 and
general and administrative expenses to Affiliates, of which $10,221 and $878 was unpaid at September 30, 2000 and December 31, 1999, respectively.
An Affiliate of the General Partner is entitled to receive Property Management Fees for management and leasing services. The Partnership has incurred property management fees of $23,237 and $26,729 for the nine months ended September 30, 2000 and 1999,
respectively.
In connection with the sale of McHenry Plaza Shopping Center on July 19, 2000, the Partnership recorded $68,700 of sales commission payable to an Affiliate of the General Partner. Such commission has been deferred until the Limited Partners receive
their Original Capital plus a return as specified in the Partnership Agreement.
(4) Long-Term Debt
On April 30, 1999, the Partnership refinanced the existing $1,700,000 loan collateralized by the Rantoul Wal-Mart. The replacement loan is for $2,500,000 and is collateralized by the Rantoul Wal-Mart and the Duncan Wal-Mart. The replacement loan bears
an interest rate of 6.97% as compared to an interest rate of 9.75% on the original loan. The replacement loan will require monthly interest-only payments and will mature on April 30, 2004. The Partnership distributed excess refinancing proceeds to the
limited partners on June 10, 1999. At September 30, 2000, the fair market value of the mortgage loan payable approximated its carrying value.
(5) Sale of McHenry Plaza Shopping Center
On July 19, 2000, the Partnership sold the McHenry Plaza Shopping Center in McHenry, Illinois to an unaffiliated third party for approximately $3,290,000 on an all cash basis. The Partnership recorded a gain of $912,511 as a result of this sale. Net
sales proceeds of $3,158,000 were distributed to the Limited Partners on August 10, 2000.
(6) Subsequent Events
During October 2000, the Partnership paid a distribution of $136,062 to the Limited Partners.
During November 2000, the Partnership entered into a contract to sell the Rantoul, Illinois Wal-Mart for approximately $2,750,000. The sale is expected to close by the end of the year.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this quarterly report on Form 10-Q constitute "forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Partnership's actual results, performance, or achievements to be materially different from
any future results, performance, or achievements expressed or implied by these forward-looking statements. These factors include, among other things, competition for tenants; 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 August 3, 1987, the Partnership commenced an Offering of 50,000 (increased to 60,000) Limited Partnership Units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on August 3, 1988, with total
sales of 59,999 Units at $500 per Unit, resulting in gross offering proceeds of $29,999,500, not including the General Partner's contribution of $500. All of the holders of these Units have been admitted to the Partnership. The Partnership acquired seven
properties utilizing $25,831,542 of capital proceeds collected. During 1994 and 1995, the Partnership sold the thirty-eight six-unit condominium buildings comprising the Schaumburg Terrace condominium complex. Also, the Partnership sold one of the three
lots adjacent to the Hillside Living Center during September 1997. As of September 30, 2000, cumulative distributions to Limited Partners totaled $38,083,044, including $2,095,863 of Supplemental Capital Contributions from the General Partner, which
represents distributable cash flow from the properties. The Partnership repurchased 713 Units for $356,676 from various Limited Partners through the Unit Repurchase Program. There are no funds remaining for the repurchase of Units through this program.
As of September 30, 2000, the Partnership had cash and cash equivalents of $979,315 which includes approximately $105,000 for the payment of real estate taxes for Douglas and Hillside Living Centers. Since December 1999, the Partnership received
prepayments on nine of the twenty-four remaining mortgage loans receivable on the six-unit condominium buildings comprising the Schaumburg Terrace condominium complex. Repayment proceeds from these prepayments totaled approximately $2,000,000. A
portion of these repayment proceeds was included in the distributions to the limited partners on February 10, 2000, April 10, 2000 and June 10, 2000. The Partnership intends to use the remaining balance of such funds for future distributions and working
capital requirements.
The properties owned by the Partnership, along with the interest received on the Schaumburg Terrace mortgage receivables, are generating sufficient cash flow to meet the 8% annualized distributions to the Limited Partners (paid monthly), in addition to
covering all the operating expenses of the Partnership. To the extent that the cash flow is insufficient to meet the Partnership's needs, the Partnership may rely on Supplemental Capital Contributions from the General Partner, advances from Affiliates of
the General Partner, other short-term financing, or may sell one or more of the properties.
On April 30, 1999, the Partnership refinanced the existing $1,700,000 loan collateralized by the Rantoul Wal-Mart. The replacement loan is for $2,500,000 and is collateralized by the Rantoul Wal-Mart and the Duncan Wal-Mart. The replacement loan bears
an interest rate of 6.97% as compared to the interest rate of 9.75% on the original loan. The replacement loan requires monthly interest only payments and will mature on April 30, 2004. The Partnership distributed excess refinancing proceeds to the
limited partners on June 10, 1999.
Results of Operations
As of September 30, 2000, the Partnership owned five operating properties which are leased on a "triple-net" basis which means that all expenses of the property are passed through to the tenant.
On July 19, 2000, the Partnership sold the McHenry Plaza Shopping Center to an unaffiliated third party for $3,290,000 on an all cash basis. The Partnership recorded a gain of $912,511 as a result of this sale. Net sales proceeds were distributed to the
Limited Partners on August 10, 2000.
Since December 1999, the Partnership received prepayments on nine of the twenty-four remaining mortgage loans receivable on the six-unit condominium buildings comprising the Schaumburg Terrace condominium complex which the Partnership had sold during
1994 and 1995.
The gain on the sale of investment property recorded for the nine months ended September 30, 2000 is also the result of deferred gain from the Schaumburg Terrace condominium sales being recognized as cash is received on the related financing extended by
the Partnership to the individual purchasers. The increase in the gain on the sale of investment property for the nine months ended September 30, 2000, as compared to the nine months ended September 30, 1999, is due to the recognition of approximately
$587,000 of deferred gain from the prepayment of nine of the twenty-four mortgage loans receivable.
Rental and additional income increased for the nine months ended September 30, 2000, as compared to the nine months ended September 30, 1999, due to the sale of McHenry Plaza Shopping Center
Professional services to Affiliates increased for the nine months ended September 30, 2000, as compared to the nine months ended September 30, 1999, due to an increase in accounting services.
Property operating expenses to non-affiliates increased for the nine months ended September 30, 2000, as compared to the nine months ended September 30, 1999, due to an increase in repair and maintenance expenses at McHenry Plaza Shopping Center. This
increase was partially offset by a decrease in grounds maintenance expenses.
The following is a list of approximate occupancy levels for the Partnership's investment properties as of the end of each quarter during 1999 and 2000:
1999 |
2000 |
|||||||||
Properties |
03/31 |
06/30 |
09/30 |
12/31 |
03/31 |
06/30 |
09/30 |
12/31 |
||
McHenry Plaza |
79% |
79% |
79% |
89% |
89% |
89% |
N/A |
|||
McHenry, Illinois |
||||||||||
Douglas Living & Retirement Center |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
|||
Mattoon, Illinois |
||||||||||
Hillside Living Center |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
|||
Yorkville, Illinois |
||||||||||
Scandinavian Health Spa |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
|||
Westlake, Ohio |
||||||||||
Rantoul Wal-Mart |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
|||
Rantoul, Illinois |
||||||||||
Duncan Wal-Mart |
100% |
100% |
100% |
100% |
100% |
100% |
100% |
|||
Duncan, Oklahoma |
PART II - Other Information
Items 1 through 6 (b) are omitted because of the absence of conditions under which they are required.
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'S MONTHLY INCOME FUND, L.P. |
|
By: |
Inland Real Estate Investment Corporation |
General Partner |
|
/S/ ROBERT D. PARKS |
|
By: |
Robert D. Parks |
Chairman |
|
Date: |
November 13, 2000 |
/S/ PATRICIA A. DELROSSO |
|
By: |
Patricia A. DelRosso |
Senior Vice President |
|
Date: |
November 13, 2000 |
/S/ KELLY TUCEK |
|
By: |
Kelly Tucek |
Principal Financial Officer and |
|
Principal Accounting Officer |
|
Date: |
November 13, 2000 |
|