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, 1996
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 #0-18431
Inland Land Appreciation Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3544798
(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: 630-218-8000
N/A
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
-1-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
September 30, 1996 and December 31, 1995
(unaudited)
Assets
------
1996 1995
---- ----
Current assets:
Cash and cash equivalents (Note 1).............. $ 57,845 626,942
Accounts and accrued interest receivable........ 45,773 7,224
Mortgage loans receivable (Note 5).............. 35,662 73,614
Other current assets............................ 2,741 1,165
------------ ------------
Total current assets.......................... 142,021 708,945
------------ ------------
Other assets...................................... 19,915 19,915
Investments in land and improvements, at cost
(including acquisition fees paid to Affiliates
of $1,470,375 and $1,476,810 at September 30, 1996
and December 31, 1995, respectively) (Notes 1,
2 and 3)........................................ 26,094,303 24,846,973
------------ ------------
Total assets...................................... $26,256,239 25,575,833
============ ============
See accompanying notes to financial statements.
-2-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
September 30, 1996 and December 31, 1995
(unaudited)
Liabilities and Partners' Capital
---------------------------------
1996 1995
---- ----
Current liabilities:
Accounts payable................................ $ 73,137 131,772
Accrued real estate taxes....................... 35,967 47,733
Due to Affiliates (Notes 2 and 6)).............. 89,775 13,855
Notes payable to Affiliate (Note 6)............. 752,158 -
Unearned income................................. 4,720 20,707
Current portion of deferred gain on sale........ 8,619 14,926
------------ ------------
Total current liabilities......................... 964,376 228,993
------------ ------------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 167,941 168,497
Cumulative cash distributions................. (153,743) (153,743)
------------ ------------
14,698 15,254
------------ ------------
Limited Partners:
Units of $1,000. Authorized 30,001 Units,
29,705.25 and 29,792.25 Units outstanding at
September 30, 1996 and December 31, 1995,
respectively (net of offering costs
of $3,768,113, of which $1,069,764 was
paid to Affiliates)......................... 25,965,871 26,040,820
Cumulative net income......................... 3,457,689 3,437,161
Cumulative cash distributions................. (4,146,395) (4,146,395)
------------ ------------
25,277,165 25,331,586
------------ ------------
Total Partners' capital....................... 25,291,863 25,346,840
------------ ------------
Total liabilities and Partners' capital........... $26,256,239 25,575,833
============ ============
See accompanying notes to financial statements.
-3-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 1996 and 1995
(unaudited)
Three months Nine months
ended ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
Income:
Sale of investments in land
(Notes 1 and 3)................ $ 159,624 542,440 218,741 681,567
Rental income (Note 4)........... 82,944 68,069 175,841 191,371
Interest income.................. 1,738 20,319 10,235 58,387
Other income..................... 149 - 179 -
---------- ---------- ---------- ----------
244,455 630,828 404,996 931,325
---------- ---------- ---------- ----------
Expenses:
Cost of investments in land sold. 120,389 231,338 143,174 329,165
Professional services to
Affiliates..................... 13,149 9,767 26,713 22,900
Professional services to
non-affiliates................. 789 455 28,253 25,018
General and administrative
expenses to Affiliates......... 11,636 7,683 25,098 22,274
General and administrative
expenses to non-affiliates..... 2,852 5,733 13,649 16,123
Marketing expenses to Affiliates. 16,541 17,008 43,593 59,667
Marketing expenses to
non-affiliates................. 3,079 10,544 21,640 20,921
Land operating expenses to
Affiliates..................... 13,781 14,301 42,708 43,162
Land operating expenses to
non-affiliates................. 16,473 12,064 40,196 46,234
---------- ---------- ---------- ----------
198,689 308,893 385,024 585,464
---------- ---------- ---------- ----------
Net income....................... $ 45,766 321,935 19,972 345,861
========== ========== ========== ==========
See accompanying notes to financial statements.
-4-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the three and nine months ended September 30, 1996 and 1995
(unaudited)
Three months Nine months
ended ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
Net income (loss) allocated to:
General Partner.................. $ 65 109 (556) (65)
Limited Partners................. 45,701 321,826 20,528 345,926
---------- ---------- ---------- ----------
Net income..................... $ 45,766 321,935 19,972 345,861
========== ========== ========== ==========
Net income (loss) allocated to the
one General Partner Unit......... $ 65 109 (556) (65)
========== ========== ========== ==========
Net income allocated to Limited
Partners per weighted average
Limited Partnership Units (29,713
and 29,801 for the three months
ended September 30, 1996 and 1995,
and 29,760 and 29,806 for the
nine months ended September 30,
1996 and 1995, respectively)..... $ 1.54 10.80 .69 11.61
========== ========== ========== ==========
See accompanying notes to financial statements.
-5-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 1996 and 1995
(unaudited)
1996 1995
---- ----
Cash flows from operating activities:
Net income...................................... $ 19,972 345,861
Adjustments to reconcile net income to net
cash used in operating activities:
Gain on sale of investments in land........... (75,567) (352,402)
Changes in assets and liabilities:
Accounts and accrued interest receivable.... (38,549) (37,402)
Other current assets........................ (1,576) (2,715)
Accounts payable............................ (58,635) 2,321
Accrued real estate taxes.................. (11,766) (7,229)
Due to Affiliates........................... 75,920 6,477
Unearned income............................. (15,987) (19,808)
------------ ------------
Net cash used in operating activities............. (106,188) (64,897)
------------ ------------
Cash flows from investing activities:
Additions to investments in land................ (1,390,504) (757,362)
Notes payable to Affiliate...................... 752,158 -
Principal payments collected on mortgage
loans receivable.............................. 37,952 -
Proceeds from disposition of land investments... 212,434 681,567
------------ ------------
Net cash used in investing activities............. (387,960) (75,795)
------------ ------------
Cash flows from financing activities:
Distributions................................... - (368,325)
Repurchase of Limited Partnership Units......... (74,949) (12,347)
------------ ------------
Net cash used in financing activities............. (74,949) (380,672)
------------ ------------
Net decrease in cash and cash equivalents........ (569,097) (521,364)
Cash and cash equivalents at beginning of period.. 626,942 1,267,942
------------ ------------
Cash and cash equivalents at end of period........ $ 57,845 746,578
============ ============
See accompanying notes to financial statements.
-6-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 1996
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1995, which are
included in the Partnership's 1995 Annual Report, as certain footnote
disclosures which would duplicate those contained in such audited financial
statements have been omitted from this Report.
(1) Organization and Basis of Accounting
Inland Land Appreciation Fund, L.P. (the "Partnership") was organized on
October 23, 1987 by the filing of a Certificate of Limited Partnership, which
was restated on August 25, 1988, under the Revised Uniform Limited Partnership
Act of the State of Delaware. On October 12, 1988, the Partnership commenced
an Offering of 10,000 (subject to increase to 30,000) Limited Partnership Units
pursuant to a Registration under the Securities Act of 1933. The Offering
terminated on October 6, 1989, with total sales of 30,000 Units at $1,000 per
Unit, resulting in $30,000,000 in gross offering proceeds, not including the
General Partner's contribution of $500 or the Initial Limited Partner's
contribution of $1,000. All of the holders of these Units have been admitted
to the Partnership. As of September 30, 1996, the Partnership has repurchased
a total of 295.75 Units for $267,018 from various Limited Partners through the
Unit Repurchase Program. Under this program Limited Partners may under certain
circumstances have their Units repurchased for an amount equal to their
Invested Capital. Inland Real Estate Investment Corporation is the General
Partner.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Offering costs have been offset against the Limited Partners' capital accounts.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents and are carried at
cost, which approximates fair value because of the relative short maturity of
these instruments.
Investments in land held by the Partnership are carried at the lower of
aggregate cost or net realizable value. Periodically, the Partnership reviews
the portfolio and if management determines that parcels suffered an impairment
in value which is deemed to be other than temporary, the carrying value of the
parcels would be reduced to their net realizable value. Through September 30,
1996, there were no such impairments.
-7-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
Except as described in footnote (b) to Note (3) of these notes, the Partnership
uses the area method of allocation, which approximates relative sales method of
allocation, whereby a per acre price is used as the standard allocation method
for land purchases and sales. The total cost of parcel is divided by the total
number of acres to arrive at a per acre price.
The fair value of the mortgage loans receivable approximates their carrying
value due to their short term to maturity.
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. 121, "Accounting for the
Impairment of Long-Lived Assets to Be Disposed Of" was issued in March 1995 and
is effective for fiscal years beginning after December 15, 1995. This
pronouncement is not expected to have a material effect on the financial
position or results of operations of the Partnership.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations for the periods
presented herein. Results of interim periods are not necessarily indicative of
results to be expected for the year.
(2) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services to Affiliates and general and administrative expenses to
Affiliates, of which $17,278 and $13,440 was unpaid as of September 30, 1996
and December 31, 1995, respectively.
The General Partner is entitled to receive Asset Management Fees equal to one-
quarter of 1% of the original cost to the Partnership of undeveloped land
annually, limited to a cumulative total over the life of the Partnership of 2%
of the land's original cost to the Partnership. Such fees of $42,708 and
$43,162 have been incurred for the nine months ended September 30, 1996 and
1995, respectively, and are included in land operating expenses to Affiliates,
of which $13,781 and $415 was unpaid as of September 30, 1996 and December 31,
1995, respectively.
-8-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
An Affiliate of the General Partner performed marketing and advertising
services of the Partnership's land investments and was reimbursed (as set forth
under terms of the Partnership Agreement) for direct costs. Such costs of
$43,593 and $59,667 have been incurred and are included in marketing expenses
to Affiliates for the nine months ended September 30, 1996 and 1995,
respectively, of which $15,814 and $0 was unpaid as of September 30, 1996 and
December 31, 1995, respectively.
An Affiliate of the General Partner performed property upgrades, rezoning,
annexation and other activities to prepare the Partnership's land investments
for sale and was reimbursed (as set forth under terms of the Partnership
Agreement) for salaries and direct costs. The Affiliate did not take a profit
on any project. Such costs of $113,920 and $66,175 have been incurred for the
nine months ended September 30, 1996 and 1995, respectively, and are included
in investments in land and improvements, of which $42,902 and $0 was unpaid as
of September 30, 1996 and December 31, 1995, respectively.
Through the Partnership's participation in an insurance program, claims from
the Partnership's properties, as well as properties owned by other limited
partnerships syndicated by Affiliates, were managed through a loss reserve
trust. For the nine months ended September 30, 1996 and 1995, the Partnership
paid $2,919 and $2,605, respectively, to the loss reserve trust for the land
parcels.
-9-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investments in Land and Improvements
Gross
Acres Purchase/ Initial Costs
Location: Purchased Sales Original Acquisition
Parcel County (Sold) Date Costs Costs Total
1 Kendall 84.7360 01/19/89 $ 423,680 61,625 485,305
2 McHenry 223.4121 01/19/89 650,000 95,014 745,014
(183.3759) 12/27/90
3 Kendall 20.0000 02/09/89 189,000 13,305 202,305
(20.0000) 05/08/90
4 Kendall 69.2760 04/18/89 508,196 38,126 546,322
(.4860) 02/28/91
(27.5750) 08/25/95
5 Kendall (a) 372.2230 05/03/89 2,532,227 135,943 2,668,170
(Option) 04/06/90
6 Kendall (b) 78.3900 06/21/89 416,783 31,691 448,474
7 Kendall (b) 77.0490 06/21/89 84,754 8,163 92,917
8 Kendall (b) 5.0000 06/21/89 60,000 5,113 65,113
(5.0000) 10/06/89
9 McHenry (b) 51.0300 08/07/89 586,845 22,482 609,327
10 McHenry (b) 123.9400 08/07/89 91,939 7,224 99,163
(123.9400) 12/06/89
11 McHenry (b) 30.5920 08/07/89 321,216 22,641 343,857
12 Kendall 90.2710 10/31/89 907,389 41,908 949,297
(.7090) 04/26/91
13 McHenry 92.7800 11/07/89 251,306 19,188 270,494
14 McHenry 76.2020 11/07/89 419,111 23,402 442,513
15 Lake 84.5564 01/03/90 1,056,955 85,283 1,142,238
(5.6770) 08/08/96 ------------ ------------ ------------
Subtotal 8,499,401 611,108 9,110,509
Total
Costs Remaining Current
Capitalized Costs of Costs of Year Gain
Subsequent to Property Parcels at on Sale
Parcel Acquisition Sold 9/30/96 Recognized
1 1,564,075 - 2,049,380 -
2 16,869 611,505 150,378 -
3 - 202,305 - -
4 (4,517) 235,275 306,530 -
5 25,671 160,313 2,533,528 -
6 134,154 - 582,628 -
7 118,724 - 211,641 -
8 - 65,113 - -
9 610 - 609,937 -
10 600 99,763 - -
11 5,420 - 349,277 -
12 329 7,456 942,170 -
13 2,981 - 273,475 -
14 42,784 - 485,297 -
15 733,926 120,389 1,755,775 39,235
-------------- ------------ ------------- ------------
2,641,626 1,502,119 10,250,016 39,235
-10-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investments in Land and Improvements (continued)
Gross
Acres Purchase/ Initial Costs
Location: Purchased Sales Original Acquisition
Parcel County (Sold) Date Costs Costs Total
Subtotal 8,499,401 611,108 9,110,509
16 Kane/Kendall 72.4187 01/29/90 1,273,537 55,333 1,328,870
17 McHenry 99.9240 01/29/90 739,635 61,038 800,673
18 McHenry 71.4870 01/29/90 496,116 26,259 522,375
(.5000) 06/05/90
(.5000) 12/11/90
(.5200) 03/11/93
19 McHenry 63.6915 02/23/90 490,158 29,158 519,316
20 Kane 224.1480 02/28/90 2,749,800 183,092 2,932,892
(.2790) 10/17/91
21 Kendall 172.4950 03/08/90 1,327,459 75,822 1,403,281
22 McHenry 254.5250 04/11/90 2,608,881 136,559 2,745,440
23 Kendall 140.0210 05/08/90 1,480,000 116,240 1,596,240
(4.4100) var 1993
(35.8800) var 1994
(3.4400) var 1995
24 Kendall 298.4830 05/23/90 1,359,774 98,921 1,458,695
(12.4570) 05/25/90
(4.6290) 04/01/96
25 Kane 225.0000 06/01/90 2,600,000 168,778 2,768,778
------------ ------------ ------------
$23,624,761 1,562,308 25,187,069
============ ============ ============
Total
Costs Remaining Current
Capitalized Costs of Costs of Year Gain
Subsequent to Property Parcels at on Sale
Parcel Acquisition Sold 9/30/96 Recognized
2,641,626 1,502,119 10,250,016 39,235
16 45,788 - 1,374,658 -
17 193,485 - 994,158 -
18 16,077 11,109 527,343 -
19 6,752 - 526,068 -
20 211,893 3,651 3,141,134 -
21 118,840 - 1,522,121 -
22 22,260 - 2,767,700 -
23 417,870 1,196,909 817,201 6,306
24 16,735 83,663 1,391,767 30,026
25 13,359 - 2,782,137 -
-------------- ------------ ------------- ------------
3,704,685 2,797,451 26,094,303 75,567
============== ============ ============= ============
-11-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investments in Land and Improvements (continued)
a. Included in the purchase agreement of Parcel 5 was a condition
that required the Partnership to buy an option to purchase an
additional 243 acres immediately to the west of this parcel. The sale
transaction relates to the sale of this option.
b. The Partnership purchased from two third parties, two sets of
three contiguous parcels of land (Parcels 6,7 & 8; and Parcels 9,
10 and 11). The General Partner believes that the total value of this
land will be maximized if it is treated and marketed to buyers as six
separate parcels and closed the transactions as six separate purchases
to facilitate this. Parcels 6, 7, and 8 will be treated as one parcel and
Parcels 9, 10 and 11 will be treated as one parcel for purposes of
computing Parcel Capital (as defined) and distributions to the Partners.
c. Reconciliation of real estate owned:
1996 1995
---- ----
Balance at January 1,........... $24,846,973 24,106,379
Additions during period......... 1,390,504 1,069,759
Sales during period............. 143,174 329,165
------------ ------------
Balance at end of period........ $26,094,303 24,846,973
============ ============
-12-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
(4) Farm Rental Income
The Partnership has determined that all leases relating to the farm parcels are
operating leases. Accordingly, rental income is reported when earned.
As of September 30, 1996, the Partnership had farm leases of generally one year
in duration, for approximately 2,145 acres of the approximately 2,672 acres
owned.
(5) Mortgage Loans Receivable
As a result of the sale of four lots in Parcel 23, the Partnership received
mortgage loans receivable totaling $155,921. As of December 31, 1995, two
mortgage loans receivable totaling $82,307 had been prepaid. During June
1996, an additional mortgage loan receivable of $37,952 was prepaid. The
Partnership will continue to receive interest only payments based on an
interest rate of 9% per annum on the remaining mortgage loan which has
principal due in the fourth quarter of 1996.
(6) Notes Payable to Affiliate
On May 1, 1996 and June 1, 1996, the Partnership obtained two separate lines of
credit from the General Partner, Inland Real Estate Investment Corporation, in
the aggregate amounts of $1,000,000 and $3,000,000, to be used specifically for
the pre-development improvements on two of the Partnership's land investments,
Parcel 15 and Parcel 1, respectively. As of September 30, 1996, notes payable
to Affiliate was $752,158, of which $250,249 was applicable to the note
collateralized by Parcel 15 and $501,909 was applicable to the note
collateralized by Parcel 1. Included in the $752,158 is accrued interest of
$14,462, of which $6,686 was unpaid as of September 30, 1996. The Partnership
is required to pay a 1% loan fee to the General Partner on each line of credit
as money is funded. As of September 30, 1996, loan fees paid to the General
Partner totaled $7,522, all of which have been paid and included in investment
in land and improvements. The note collateralized by Parcel 15, accrues
interest at 10.9%, and requires a principal paydown of $150,000 on October 1,
1996, and thereafter Net Sales Proceeds from Parcel 15 will be applied first to
paydown the note. This note has a maturity date of May 1, 1997. The note
collateralized by Parcel 1, accrues interest at 10.9%, and requires Net Sales
Proceeds from Parcel 1 to be applied first to paydown the note. This note has
a maturity date of June 30, 1998.
-13-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
(7) Subsequent Events
On October 28, 1996, the Partnership sold its third lot (Lot #25) in the
Countryside Glen Subdivision (Parcel 15) to an unaffiliated third party for
$105,990. The cost allocated to the lot was $30,592, resulting in a gain on
sale of $74,835, net of closing costs.
-14-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
On October 12, 1988, the Partnership commenced an Offering of 10,000 (subject
to increase to 30,000) Limited Partnership Units pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. The Offering
terminated on October 6, 1989, with total sales of 30,000 Units at $1,000 per
Unit, resulting in $30,000,000 in gross offering proceeds, not including the
General Partner's contribution of $500 or the Initial Limited Partner's
contribution of $1,000. The Limited Partners of the Partnership will share in
their portion of benefits of ownership of the Partnership's real property
investments according to the number of Units held.
The Partnership used $25,187,069 of gross offering proceeds to purchase, on an
all-cash basis, twenty-five parcels of undeveloped land and an option to
purchase undeveloped land. These investments included the payment of the
purchase price, acquisition fees and acquisition costs of such properties.
Fourteen of the parcels were purchased during 1989 and eleven during 1990. As
of September 30, 1996, the Partnership has had multiple sales transactions,
through which it has disposed of approximately 430 acres of the approximately
3,102 acres originally owned. As of September 30, 1996, cumulative
distributions of net sales proceeds have totaled $4,146,395 to the Limited
Partners (which represents a return of Invested Capital, as defined in the
Partnership Agreement) and $153,743 to the General Partner. As of September
30, 1996, the Partnership has used $3,704,685 of working capital reserve for
rezoning and other activities and such amount is included in investments in
land and improvements.
The Partnership's capital needs and resources will vary depending upon a number
of factors, including the extent to which the Partnership conducts rezoning and
other activities relating to utility access, the installation of roads,
subdivision and/or annexation of land to a municipality, changes in real estate
taxes affecting the Partnership's land, and the amount of revenue received from
leasing. As of September 30, 1996, the Partnership owns, in whole or in part,
twenty-two of its original parcels, the majority of which are leased to local
tenants and are generating sufficient cash flow from leases to cover property
taxes and insurance.
At September 30, 1996, the Partnership had cash and cash equivalents of
$57,845. The Unit Repurchase Program has approximately $123,023 remaining for
the repurchase of Units. There are currently no requests for repurchase, but
the Partnership plans to replenish cash available for this program through
future parcel sales. The Partnership has increased its parcel sales effort in
anticipation of rising land values.
-15-
The Partnership plans to enhance the value of its land through pre-development
activities such as rezoning annexation and land planning. The Partnership has
already been successful in, or is in the process of pre-development activity on
a majority of the Partnership's land investments. Parcel 1, zoned and its
preliminary plan approved by the Village of Oswego, has improvements underway
and sites are being marketed to potential buyers. Parcel 15, zoned and annexed
to the Village of Hawthorn Woods, also has improvements underway and sites are
being marketed to potential buyers.
Results of Operations
As of September 30, 1996, the Partnership owned twenty-two parcels of land
consisting of approximately 2,672 acres. Of the 2,672 acres owned,
approximately 2,145 acres are tillable and leased to local farmers and are
generating sufficient cash flow to cover property taxes, insurance and other
miscellaneous expenses. The sale of investments in land income and the cost of
investments in land sold recorded for the three and nine months ended September
30, 1995 is a result of the continued sale of lots of Parcel 23 and the sale of
27.575 acres of Parcel 4. The sale of investments in land income and the cost
of investments in land sold recorded for the three and nine months ended
September 30, 1996 is a result of the sale of 4.629 acres of Parcel 24, the
sale of 5.677 acres (Lots 1 and 2) of Parcel 15 and the prepayment of a
mortgage loan receivable and recognition of deferred gain relating to the 1994
lot sales of Parcel 23. The decrease in rental income and land operating
expenses to Affiliates for the nine months ended September 30, 1996, as
compared to nine months ended September 30, 1995, is due to the decrease of
tillable acres and an overall decrease of the land portfolio as a result of
land sales and pre-development. This decrease was partially offset by the
annual increase in lease amounts from tenants. The decrease in land operating
expenses to non-affiliates for the nine months ended September 30, 1996, as
compared to the nine months ended September 30, 1995, is due to decreases in
real estate taxes, insurance and grounds maintenance of the land portfolio as a
result of land sales.
Interest income decreased for the three and nine months ended September 30,
1996, as compared to the three and nine months ended September 30, 1995, due
primarily to the Partnership utilizing its working capital reserve to fund pre-
development activity on the Partnership's land investments.
Professional services to Affiliates increased for the three and nine months
ended September 30, 1996, as compared to the three and nine months ended
September 30, 1995, due to increases in legal services required by the
Partnership. This increase was partially offset by a decrease in accounting
services. Professional services to non-affiliates increased for the three and
nine months ended September 30, 1996, as compared to the three and nine months
ended September 30, 1995, due to an increase in legal services.
General and administrative expenses to Affiliates increased for the three and
nine months ended September 30, 1996, as compared to the three and nine months
ended September 30, 1995, due primarily to an increase in postage. General and
administrative expenses to non-affiliates decreased for the three and nine
months ended September 30, 1996, as compared to the three and nine months ended
September 30, 1995, due primarily to a decrease in the Illinois Replacement
Tax.
-16-
Marketing expenses to Affiliates decreased for the three and nine months ended
September 30, 1996, as compared to the three and nine months ended September
30, 1995, due to a decrease in expenses relating to marketing and advertising
the Partnership's land investments. Marketing expenses to non-affiliates
increased for the nine months ended September 30, 1996, as compared to the nine
months ended September 30, 1995, due to an increase in advertising and travel
expenses relating to marketing the land portfolio to prospective purchasers.
PART II - Other Information
Items 1 through 5 are omitted because of the absence of conditions under which
they are required.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K:
None
-17-
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 LAND APPRECIATION FUND, L.P.
By: Inland Real Estate Investment Corporation
General Partner
/S/ ROBERT D. PARKS
By: Robert D. Parks
Chairman
Date: November 13, 1996
/S/ PATRICIA A. CHALLENGER
By: Patricia A. Challenger
Senior Vice President
Date: November 13, 1996
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: November 13, 1996
-18-
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