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 March 31, 1997
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
March 31, 1997 and December 31, 1996
(unaudited)
Assets
------
1997 1996
---- ----
Current assets:
Cash and cash equivalents (Note 1).............. $ 991 89,672
Accounts and accrued interest receivable........ 11,233 -
Other current assets............................ 1,187 2,330
------------ ------------
Total current assets.......................... 13,411 92,002
------------ ------------
Other assets...................................... 19,915 19,915
Investments in land and improvements, at cost
(including acquisition fees paid to Affiliates
of $1,462,051 and $1,464,852 at March 31, 1997
and December 31, 1996, respectively (Notes 1,
2 and 3)........................................ 29,213,022 28,676,326
------------ ------------
Total assets...................................... $29,246,348 28,788,243
============ ============
See accompanying notes to financial statements.
-2-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
March 31, 1997 and December 31, 1996
(unaudited)
Liabilities and Partners' Capital
---------------------------------
1997 1996
---- ----
Current liabilities:
Accounts payable and accrued expenses........... $ 127,401 82,373
Accrued real estate taxes....................... 60,275 48,117
Due to Affiliates (Note 2)...................... 284,106 149,376
Notes payable to Affiliate (Notes 5 and 6)...... 2,954,664 2,801,635
Unearned income................................. 40,236 23,239
------------ ------------
Total current liabilities..................... 3,466,682 3,104,740
------------ ------------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 166,585 167,675
Cumulative cash distributions................. (153,743) (153,743)
------------ ------------
13,342 14,432
Limited Partners: ------------ ------------
Units of $1,000. Authorized 30,001 Units,
29,659.25 Units outstanding (net of offering
costs of $3,768,113, of which $1,069,764
was paid to Affiliates)..................... 25,926,243 25,926,243
Cumulative net income......................... 3,986,596 3,889,232
Cumulative cash distributions................. (4,146,515) (4,146,404)
------------ ------------
25,766,324 25,669,071
------------ ------------
Total Partners' capital....................... 25,779,666 25,683,503
------------ ------------
Total liabilities and Partners' capital........... $29,246,348 28,788,243
============ ============
See accompanying notes to financial statements.
-3-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Operations
For the three months ended March 31, 1997 and 1996
(unaudited)
1997 1996
Income: ---- ----
Land sales (Notes 1 and 3)...................... $ 301,557 6,306
Rental income (Note 4).......................... 58,363 57,359
Interest income................................. 148 6,964
Other income.................................... - 30
------------ ------------
360,068 70,659
------------ ------------
Expenses:
Cost of land sold............................... 96,237 -
Professional services to Affiliates............. 19,228 10,560
Professional services to non-affiliates......... 26,306 23,580
General and administrative expenses to
Affiliates.................................... 8,436 8,568
General and administrative expenses to
non-affiliates................................ 10,679 3,766
Marketing expenses to Affiliates................ 47,030 32,240
Marketing expenses to non-affiliates............ 28,225 12,348
Land operating expenses to Affiliates........... 14,129 14,256
Land operating expenses to non-affiliates....... 13,524 13,011
------------ ------------
263,794 118,329
------------ ------------
Net income (loss)............................... $ 96,274 (47,670)
============ ============
Net income (loss) allocated to:
General Partner................................. (1,090) (540)
Limited Partners................................ 97,364 (47,130)
------------ ------------
Net income (loss)............................. $ 96,274 (47,670)
============ ============
Net income (loss) allocated to the one General
Partner Unit.................................... $ (1,090) (540)
============ ============
Net income (loss) per weighted average Limited
Partner Units (29,659.24 and 29,792.24 for the
three months ended March 31, 1997 and 1996,
respectively)................................... $ 3.28 (1.58)
============ ============
See accompanying notes to financial statements.
-4-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the three months ended March 31, 1997 and 1996
(unaudited)
1997 1996
Cash flows from operating activities: ---- ----
Net income (loss)............................... $ 96,274 (47,670)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Gain on sale of land.......................... (205,320) (6,306)
Changes in assets and liabilities:
Accounts and accrued interest receivable.... (11,233) (14,451)
Other current assets........................ 1,143 849
Other assets................................ - 1,000
Accounts payable and accrued expenses....... 45,028 (29,363)
Accrued real estate taxes.................. 12,158 13,118
Due to Affiliates........................... 134,730 61,147
Unearned income............................. 16,997 13,943
Net cash provided by (used in) operating ------------ ------------
activities...................................... 89,777 (7,733)
------------ ------------
Cash flows from investing activities:
Additions investments in land................... (632,933) (329,661)
Principal payments collected on mortgage
loans receivable.............................. - 37,952
Proceeds from disposition of investment in land. 301,557 -
------------ ------------
Net cash used in investing activities............. (331,376) (291,709)
------------ ------------
Cash flows from financing activities:
Cash distributions.............................. (111) -
Proceeds from notes payable to Affiliate........ 153,029 -
------------ ------------
Net cash provided by financing activities......... 152,918 -
------------ ------------
Net decrease in cash and cash equivalents......... (88,681) (299,442)
Cash and cash equivalents at beginning of period.. 89,672 626,942
------------ ------------
Cash and cash equivalents at end of period........ $ 991 327,500
============ ============
See accompanying notes to financial statements.
-5-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
March 31, 1997
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1996, which are
included in the Partnership's 1996 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
The Registrant, Inland Land Appreciation Fund, L.P. (the "Partnership"), was
formed in October 1987, pursuant to the Delaware Revised Uniform Limited
Partnership Act, to invest in undeveloped land on an all-cash basis and realize
appreciation of such land upon resale. On October 12, 1988, the Partnership
commenced an Offering of 10,000 (subject to increase to 30,000) Limited
Partnership Units ("Units") pursuant to a Registration Statement on Form S-11
under the Securities Act of 1933. Inland Real Estate Investment Corporation is
the General Partner. The Offering terminated on October 6, 1989, with total
sales of 30,000 Units, at $1,000 per Unit, not including the General Partner or
the Initial Limited Partner. All of the holders of these Units have been
admitted to this Partnership. The Limited Partners of the Partnership share in
their portion of benefits of ownership of the Partnership's real property
investments according to the number of Units held. As of March 31, 1997, the
Partnership has repurchased a total of 341.75 Units for $306,646 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.
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 market.
-6-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
The Partnership adopted Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" ("SFAS 121") as required in the first quarter of 1996. SFAS
121 requires that the Partnership record an impairment loss on its property to
be held for investment whenever its carrying value cannot be fully recovered
through estimated undiscounted future cash flows from their operations and
sale. The amount of the impairment loss to be recognized would be the
difference between the property's carrying value and the property's estimated
fair value. The adoption of SFAS 121 did not have any effect on the
Partnership's financial position, results of operations or liquidity.
Except as described in footnote (b) to Note 3 of these notes, the Partnership
uses the area method of allocation, which approximates the 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 the parcel
is divided by the total number of acres to arrive at a per acre price.
The Partnership is required to pay a withholding tax to the Internal Revenue
Service with respect to a Partner's allocable share of the Partnership's
taxable net income, if the Partner is a foreign person. The Partnership will
first pay the withholding tax from the distributions to any foreign partner,
and to the extent that the tax exceeds the amount of distributions withheld, or
if there have been no distributions to withhold, the excess will be accounted
for as a distribution to the foreign partner. Withholding tax payments are made
every April, June, September and December.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the partners rather than 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 and general and administrative expenses to Affiliates, of
which $51,106 and $40,569 was unpaid as of March 31, 1997 and December 31,
1996, respectively.
-7-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
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 $14,129 and
$14,256 have been incurred for the three months ended March 31, 1997 and 1996,
respectively, and are included in land operating expenses to Affiliates, of
which $14,129 and $14,066 was unpaid as of March 31, 1997 and December 31,
1996, respectively.
An Affiliate of the General Partner performed sales marketing and advertising
services for the Partnership and was reimbursed (as set forth under terms of
the Partnership Agreement) for direct costs. Such costs of $47,030 and $32,240
have been incurred and are included in marketing expenses to Affiliates for the
three months ended March 31, 1997 and 1996, respectively, of which $77,068 and
$30,091 was unpaid as of March 31, 1997 and December 31, 1996, 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 recognize a
profit on any project. Such costs of $3,239 have been incurred for the three
months ended March 31, 1997 and are included in investments in land, of which
$141,803 and $58,347 was unpaid as of March 31, 1997 and December 31, 1996,
respectively.
-8-
<TABLE>
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investments in Land and Improvements
<CAPTION>
Total
Gross Initial Costs Costs Remaining Current
Acres Purchase/ -------------------------------------- Capitalized Costs of Costs of Year Gain
Location: Purchased Sales Original Acquisition Total Subsequent to Property Parcels at on Sale
Parcel County (Sold) Date Costs Costs Costs Acquisition Sold 3/31/97 Recognized
- ------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ----------- ------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Kendall 84.7360 01/19/89 $ 423,680 61,625 485,305 3,875,944 280,587 4,080,662 -
(3.52) 12/24/96
2 McHenry 223.4121 01/19/89 650,000 95,014 745,014 20,871 611,505 154,380 -
(183.3759) 12/27/90
3 Kendall 20.0000 02/09/89 189,000 13,305 202,305 - 202,305 - -
(20.0000) 05/08/90
4 Kendall 69.2760 04/18/89 508,196 38,126 546,322 20,660 235,275 331,707 -
(.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 25,839 160,313 2,533,696 -
(Option) 04/06/90
6 Kendall(b) 78.3900 06/21/89 416,783 31,691 448,474 158,837 - 607,311 -
7 Kendall(b) 77.0490 06/21/89 84,754 8,163 92,917 143,539 - 236,456 -
8 Kendall(b) 5.0000 06/21/89 60,000 5,113 65,113 - 65,113 - -
(5.0000) 10/06/89
9 McHenry(b) 51.0300 08/07/89 586,845 22,482 609,327 745 - 610,072 -
10 McHenry(b) 123.9400 08/07/89 91,939 7,224 99,163 600 99,763 - -
(123.9400) 12/06/89
11 McHenry(b) 30.5920 08/07/89 321,216 22,641 343,857 5,539 - 349,396 -
12 Kendall 90.2710 10/31/89 907,389 41,908 949,297 529 7,456 942,370 -
(.7090) 04/26/91
13 McHenry 92.7800 11/07/89 251,306 19,188 270,494 3,092 - 273,586 -
14 McHenry 76.2020 11/07/89 419,111 23,402 442,513 42,853 - 485,366 -
15 Lake 84.5564 01/03/90 1,056,955 85,283 1,142,238 1,358,566 360,751 2,140,053 205,320
(10,5300) Var 1996
(3.1980) Var 1997 ------------ ------------ ------------ -------------- ------------ ----------- ------------
Subtotal 8,499,401 611,108 9,110,509 5,657,614 2,023,068 12,745,055 205,320
</TABLE>
-9-
<TABLE>
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investments in Land and Improvements (continued)
<CAPTION>
Total
Gross Initial Costs Costs Remaining Current
Acres Purchase/ -------------------------------------- Capitalized Costs of Costs of Year Gain
Location: Purchased Sales Original Acquisition Total Subsequent to Property Parcels at on Sale
Parcel County (Sold) Date Costs Costs Costs Acquisition Sold 3/31/97 Recognized
- ------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ------------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Subtotal 8,499,401 611,108 9,110,509 5,657,614 2,023,068 12,745,055 205,320
16 Kane/Kendall 72.4187 01/29/90 1,273,537 55,333 1,328,870 67,549 - 1,396,419 -
17 McHenry 99.9240 01/29/90 739,635 61,038 800,673 231,889 - 1,032,562 -
18 McHenry 71.4870 01/29/90 496,116 26,259 522,375 19,358 11,109 530,624 -
(1.0000) Var 1990
(.5200) 03/11/93
19 McHenry 63.6915 02/23/90 490,158 29,158 519,316 6,961 - 526,277 -
20 Kane 224.1480 02/28/90 2,749,800 183,092 2,932,892 298,942 3,651 3,228,183 -
(.2790) 10/17/91
21 Kendall 172.4950 03/08/90 1,327,459 75,822 1,403,281 430,577 - 1,833,858 -
22 McHenry 254.5250 04/11/90 2,608,881 136,559 2,745,440 26,583 - 2,772,023 -
23 Kendall 140.0210 05/08/90 1,480,000 116,240 1,596,240 572,753 1,196,909 972,084 -
(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 18,681 83,663 1,393,713 -
(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 13,446 - 2,782,224 -
------------ ------------ ------------ -------------- ------------ ------------- ------------
$23,624,761 1,562,308 25,187,069 7,344,353 3,318,400 29,213,022 205,320
============ ============ ============ ============== ============ ============= ============
</TABLE>
-10-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
(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 and 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:
1997 1996
---- ----
Balance at January 1,............ $28,676,326 24,846,973
Additions during period.......... 632,933 4,397,239
Sales during period.............. 96,237 567,886
------------ ------------
Balance at end of period......... $29,213,022 28,676,326
============ ============
(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 March 31, 1997, the Partnership had farm leases of generally one year in
duration, for approximately 2,110 acres of the approximately 2,661 acres owned.
-11-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
(5) 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 March 31, 1997, notes payable to
the Affiliate were $2,576,264, of which $321,456 was applicable to the note
collateralized by Parcel 15 and $2,254,808 was applicable to the note
collateralized by Parcel 1. For the three months ended March 31, 1997,
interest of $67,150 was capitalized, of which $68,879 and $3,942 was unpaid as
of March 31, 1997 and December 31, 1996, respectively. 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 March 31, 1997, loan fees paid to the General Partner
totaled $35,681, 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 required a principal paydown of $150,000 on October 1, 1996, and
thereafter Net Sales Proceeds from Parcel 15 are being 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 Net Sales Proceeds
from Parcel 1 are being applied first to paydown the note. This note has a
maturity date of May 1, 1997. Reference is made to Note 6 for discussion on
the extension of these two notes.
Additionally, Inland Real Estate Investment Corporation loaned the Partnership
$378,400 for Partnership operations. This note accrues interest at 10%, of
which $6,042 has been capitalized for the three months ended March 31, 1997, of
which $5,035 and $2,361 is unpaid as of March 31, 1997 and December 31, 1996,
respectively.
(6) Subsequent Events
As of May 1, 1997, the two notes payable to the General Partner matured and
were subsequently extended for three months at the same interest rate. Loan
extension fees of $5,898 and $436 for Parcels 1 and 15, respectively, were
paid. The new maturity dates for both notes is August 1, 1997.
On May 13, 1997, the General Partner of the Partnership received funding from
an unaffiliated third-party bank to provide funds specifically for the pre-
development improvements for Phase I of Parcel 23. The General Partner had
previously loaned the Partnership $259,000 for these improvements. The terms of
this loan include a maximum borrowing amount of $744,000, with an interest rate
of 9.625% and a maturity date of May 13, 1998. Interest-only payments are due
quarterly and the loan may be prepaid at any time without penalty. This loan
allows the General Partner to continue funding advances to the Partnership so
that improvements of Phase I of Parcel 23 can be completed. The terms of the
General Partner's loan to the Partnership will be the same as those agreed to
with the third-party bank.
-12-
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 of "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 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. On October 6, 1989,
the Offering terminated with a total of 30,000 Units sold to the public at
$1,000 per Unit resulting in $30,000,000 in gross offering proceeds, which does
not include the Initial Limited Partner and the General Partner. All of the
holders of these Units have been admitted to the Partnership. The Limited
Partners of the Partnership 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 include 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 March 31, 1997, the Partnership has had multiple sales transactions, through
which it has disposed of approximately 441 acres of the approximately 3,102
acres originally owned. As of March 31, 1997, cumulative distributions to the
Limited Partners have totaled $4,146,515 (which represents a return of Invested
Capital, as defined in the Partnership Agreement) and $153,743 to the General
Partner. Through March 31, 1997, the Partnership has used $7,344,353 of
working capital reserve for rezoning and other activities. Such amounts have
been capitalized and are included in investments in land.
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 March 31, 1997, the Partnership owns, in whole or in part,
twenty-two of its twenty-five original parcels, the majority of which are
leased to local farmers and are generating sufficient cash flow from farm
leases to cover property taxes and insurance.
-13-
At March 31, 1997, the Partnership had cash and cash equivalents of $991. The
Unit Repurchase Program has approximately $85,600 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.
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 with a
preliminary plan approved by the Village of Oswego, has improvements underway
and sites are being marketed. Of the 199 single-family lots, 75 lots are under
contract with a homebuilder, of which the first 15 lots closed on December 24,
1996 (see Note 3 of the Notes to Financial Statements.) Parcels 4, 6 and 7 have
completed improvements for an industrial park and sites are being marketed.
Parcel 15, zoned and annexed to the Village of Hawthorn Woods, also has
improvements underway and sites are being marketed. Of the forty lots, nine
lots were sold to individuals during 1996 and 1997 (see Note 3 of the Notes to
Financial Statements.) Parcels 16, 21 and 23 have been zoned with development
and sales marketing underway.
Results of Operations
As of March 31, 1997, the Partnership owned twenty-two parcels of land
consisting of approximately 2,672 acres. Of the 2,672 acres owned,
approximately 2,110 acres are tillable, leased to local farmers and generate
sufficient cash flow to cover property taxes, insurance and other miscellaneous
expenses. Income from the sale of investments in land and the cost of
investments in land sold recorded for the three months ended March 31, 1997 is
a result of the sale of three additional lots of Parcel 15. Income from the
sale of investments in land and the cost of investments in land sold recorded
for the three months ended March 31, 1996 is a result of the prepayment of a
mortgage loan receivable and recognition of deferred gain relating to the 1994
lot sales of Parcel 23. The increase in rental income for the three months
ended March 31, 1997, as compared to three months ended March 31, 1996, is due
to the annual increase in lease amounts from tenants.
Interest income decreased for the three months ended March 31, 1997, as
compared to the three months ended March 31, 1996, 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 months ended March
31, 1997, as compared to the three months ended March 31, 1996, due to
increases in legal and accounting services related to the increase in sales
activity within the Partnership. Professional services to non-affiliates
increased for the three months ended March 31, 1997, as compared to the three
months ended March 31, 1996, due to an increase in legal services related to
the increase in sales activity within the Partnership.
General and administrative expenses to non-affiliates increased for the three
months ended March 31, 1997, as compared to the three months ended March 31,
1996, due primarily to increases in postage, printing and the Illinois
Replacement Tax paid in 1997.
-14-
Marketing expenses to Affiliates increased for the three months ended March 31,
1997, as compared to the three months ended March 31, 1996, due to increases in
expenses relating to marketing and advertising the Partnership's land
investments for sale. Marketing expenses to non-affiliates increased for the
three months ended March 31, 1997, as compared to the three months ended March
31, 1996, 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
-15-
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: May 14, 1997
/S/ PATRICIA A. CHALLENGER
By: Patricia A. Challenger
Senior Vice President
Date: May 14, 1997
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: May 14, 1997
-16-
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