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, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file #0-18431
Inland Land Appreciation Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3544798
(State of organization) (I.R.S. Employer Identification Number)
2901 Butterfield Road, Oak Brook, Illinois 60521
(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 October 12, 1988, as supplemented
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 LAND APPRECIATION FUND, L.P.
(a limited partnership)
TABLE OF CONTENTS
Part I Page
------ ----
Item 1. Business....................................................... 3
Item 2. Properties..................................................... 5
Item 3. Legal Proceedings.............................................. 5
Item 4. Submission of Matters to a Vote of Security Holders............ 5
Part II
-------
Item 5. Market for Partnership's Limited Partnership Units
and Related Security Holder Matters........................... 5
Item 6. Selected Financial Data........................................ 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 7
Item 8. Financial Statements and Supplementary Data.................... 10
Item 9. Changes in and Disagreements with Independent Auditors on
Accounting and Financial Disclosure........................... 27
Part III
--------
Item 10. Directors and Executive Officers of the Registrant............. 27
Item 11. Executive Compensation......................................... 32
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................... 33
Item 13. Certain Relationships and Related Transactions................. 33
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K................................................... 34
SIGNATURES.............................................................. 35
-2-
PART I
Item 1. Business
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. The Offering terminated on October 6, 1989,
with total sales of 30,000 Units, at $1,000 per Unit, resulting in gross
offering proceeds of $30,000,000, which does not include the General Partner or
the Initial Limited Partner. All of the holders of these Units have been
admitted to the Partnership. Inland Real Estate Investment Corporation is the
General Partner. 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. 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 December 31,
1996, 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 Partnership is engaged in the business of real estate investment. A
presentation of information about industry segments would not be material to an
understanding of the Partnership's business taken as a whole.
The Partnership acquired fee ownership of the following real property
investments:
Gross Acres Purchase/Sales
Parcel & Location Purchased/Sold Date
- ----------------------------------- -------------------- -----------------
Parcel 1, Kendall County, Illinois 84.7360 01/19/89
(3.5200 sold 12/24/96)
Parcel 2, McHenry County, Illinois 223.4121 01/19/89
(183.3759 sold 12/27/90)
Parcel 3, Kendall County, Illinois 20.0000 02/09/89
(20.0000 sold 05/08/90)
Parcel 4, Kendall County, Illinois 69.2760 04/18/89
(.4860 sold 02/28/91)
(27.5750 sold 08/25/95)
Parcel 5, Kendall County, Illinois 372.2230 (a) 05/03/89
(Option sold 04/06/90)
Parcel 6, Kendall County, Illinois 78.3900 06/21/89
Parcel 7, Kendall County, Illinois 77.0490 06/21/89
(a) Included in the purchase agreement of this parcel was a condition that
required the Partnership to buy an option to purchase an additional 243
acres immediately to the west of this parcel.
-3-
Gross Acres Purchase/Sales
Parcel & Location Purchased/Sold Date
- ----------------------------------- -------------------- -----------------
Parcel 8, Kendall County, Illinois 5.0000 06/21/89
(5.0000 sold 10/06/89)
Parcel 9, McHenry County, Illinois 51.0300 08/07/89
Parcel 10, McHenry County, Illinois 123.9400 08/07/89
(123.9400 sold 12/06/89)
Parcel 11, McHenry County, Illinois 30.5920 08/07/89
Parcel 12, Kendall County 90.2710 10/31/89
(.7090 sold 04/26/91)
Parcel 13, McHenry County, Illinois 92.7800 11/07/89
Parcel 14, McHenry County, Illinois 76.2020 11/07/89
Parcel 15, Lake County, Illinois 84.5564 01/03/90
(10.5300 sold Var 1996)
Parcel 16, Kane/Kendall Counties, 72.4187 01/29/90
Illinois
Parcel 17, McHenry County, Illinois 99.9240 01/29/90
Parcel 18, McHenry County, Illinois 71.4870 01/29/90
(1.0000 sold Var 1990)
(.5200 sold 03/11/93)
Parcel 19, McHenry County, Illinois 63.6915 02/23/90
Parcel 20, Kane County, Illinois 224.1480 02/28/90
(.2790 sold 10/17/91)
Parcel 21, Kendall County, Illinois 172.4950 03/08/90
Parcel 22, McHenry County, Illinois 254.5250 04/11/90
Parcel 23, Kendall County, Illinois 140.0210 05/08/90
(4.4100 sold Var 1993)
(35.8800 sold Var 1994)
(3.4400 sold Var 1995)
Parcel 24, Kendall County, Illinois 298.4830 05/23/90
(12.4570 sold 05/25/90)
(4.6290 sold 04/01/96)
Parcel 25, Kane County, Illinois 225.0000 06/01/90
Reference is made to Note 4 of the Notes to Financial Statements (Item 8 of
this Annual Report) for additional descriptions of the Partnership's real
property investments.
-4-
The Partnership purchased on an all-cash basis, twenty-five parcels of
undeveloped land and is engaged in the rezoning and resale of the parcels. All
of the investments were made in the Chicago metropolitan area. The anticipated
holding period of the land is approximately two to seven years from the
completion of the land portfolio acquisitions. As of December 31, 1996, the
Partnership has had multiple sales transactions, through which it has disposed
of approximately 438 acres of the approximately 3,102 acres originally owned.
The General Partner anticipates that land purchased by the Partnership will
produce sufficient income to pay property taxes, insurance and other
miscellaneous expenses. Income will be derived through leases to farmers or
from other activities compatible with undeveloped land. The majority of the
parcels purchased by the Partnership consist of land which generates revenue
from farming or other leasing activities. It is not expected that the
Partnership will generate cash distributions to investors from farm leases or
other activities.
The Partnership had no employees during 1996.
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 for a description of such terms and transactions.
Item 2. Properties
The Partnership owns directly the parcels of land referred to in Item 1 and in
Note 4 of the Notes to Financial Statements (Item 8 of this Annual Report) to
which reference is hereby made for a description of said parcels.
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 1996.
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1996, there were 3,354 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.
Although the Partnership has established a Unit Repurchase Program, funds for
repurchase of Units are limited. Reference is made to "Unit Repurchase
Program" on pages 17-18 of the Prospectus of the Partnership dated October 12,
1988, which is incorporated herein by reference. As of December 31, 1996, the
Partnership had approximately $84,500 available for the repurchase of Units.
-5-
Item 6. Selected Financial Data
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
For the years ended December 31, 1996, 1995, 1994, 1993 and 1992
(not covered by Independent Auditors' Report)
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Total assets........... $28,788,243 25,575,833 25,507,940 26,490,788 26,405,633
=========== ========== ========== ========== ==========
Total income........... $ 1,348,095 1,017,740 1,649,345 525,180 334,249
=========== ========== ========== ========== ==========
Net income............. $ 451,249 354,647 396,656 95,938 116,370
=========== ========== ========== ========== ==========
Net income (loss)
allocated to the one
General Partner Unit.. $ (822) (82) 624 245 1,164
=========== ========== ========== ========== ==========
Net income allocated
per Limited
Partnership Unit (b). $ 15.20 11.90 13.27 3.20 3.85
=========== ========== ========== ========== ==========
Distributions per
Limited Partnership
Unit from sales
(b)(c)............... $ - 12.36 45.89 - -
=========== ========== ========== ========== ==========
Weighted average Limited
Partnership Units.... 29,738.54 29,802.51 29,843.92 29,900.61 29,918.44
=========== ========== ========== ========== ==========
(a) The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Annual
Report.
(b) The net income and cash distributions per Unit data is based upon the
weighted average number of Units outstanding.
(c) Distributions from sales represent a return of Invested Capital, as
defined in the Partnership Agreement.
(d) Reference is made to Note 4 of the Notes to Financial Statements (Item 8
of this Annual Report) for a description of the Partnership's land
acquisitions and dispositions.
-6-
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
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; uninsured losses; and
potential conflicts of interest between the Partnership and its Affiliates,
including the General Partner.
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 December 31, 1996, the Partnership has had multiple sales transactions,
through which it has disposed of approximately 438 acres of the approximately
3,102 acres originally owned. As of December 31, 1996, cumulative distributions
to the Limited Partners have totaled $4,146,404 (which represents a return of
Invested Capital, as defined in the Partnership Agreement) and $153,743 to the
General Partner. Through December 31, 1996, the Partnership has used
$6,712,420 of working capital reserve for rezoning and other activities. Such
amounts have been capitalized and are included in investment properties.
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 December 31, 1996, 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.
-7-
At December 31, 1996, the Partnership had cash and cash equivalents of $89,672,
of which approximately $84,500 is reserved for the repurchase of Units through
the Unit Repurchase Program. The remaining cash is available to be used for
Partnership expenses and liabilities, cash distributions to partners, and other
activities with respect to some or all of its land parcels. The Partnership
plans to maximize 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 4 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, six lots
were sold to individuals in 1996 (see Note 4 of the Notes to Financial
Statements) and an additional three lots were sold to individuals in 1997 (see
Note 8 of the Notes to Financial Statements.) Parcels 16, 21 and 23 have been
zoned with development and marketing underway.
Results of Operations
As of December 31, 1996, the Partnership owned twenty-two parcels of land
consisting of approximately 2,664 acres. Of the 2,664 acres owned,
approximately 2,145 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 year ended December 31, 1996 is a
result of the sale of 4.629 acres of Parcel 24, the sale of six lots of Parcel
15 totaling 10.53 acres, the sale of 15 lots of Parcel 1 totaling 3.52 acres,
and the prepayments of the remaining mortgage loans receivable and recognition
of deferred gain relating to the 1994 lot sales of Parcel 23. Income from the
sale of investments in land and the cost of investments in land sold recorded
for the year ended December 31, 1995 is a result of the sale of the remaining
three lots of Parcel 23 totaling 3.44 acres and the sale of 27.575 acres of
Parcel 4. Income from the sale of investments in land and the cost of
investments in land sold recorded for the year ended December 31, 1994 is a
result of the sale of thirty-one lots of Parcel 23 totaling 35.88 acres. The
decrease in rental income and land operating expenses to Affiliates for the
years ended December 31, 1996 and 1995, as compared to the year ended December
31, 1994, 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
year ended December 31, 1996, as compared to the year ended December 31, 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 years ended December 31, 1996 and 1995, as
compared to the year ended December 31, 1994, due primarily to the Partnership
utilizing its working capital reserve to fund pre-development activity on the
Partnership's land investments.
-8-
Professional services to Affiliates increased for the years ended December 31,
1996 and 1995, as compared to the year ended December 31, 1994, 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 year ended December 31, 1996, as compared to
the years ended December 31, 1995 and 1994, due to an increase in legal
services.
General and administrative expenses to Affiliates decreased for the year ended
December 31, 1996, as compared to the years ended December 31, 1995 and 1994,
due to decreases in postage and data processing expenses. General and
administrative expenses to non-affiliates decreased for the year ended December
31, 1996, as compared to the year ended December 31, 1995, and increased as
compared to the year ended December 31, 1994, due to the Illinois Replacement
Tax.
Marketing expenses to Affiliates decreased for the year ended December 31,
1996, as compared to the year ended December 31, 1995, and increased for the
year ended December 31, 1995, as compared to the year ended December 31, 1994,
due to the timing of expenses relating to marketing and advertising the
Partnership's land investments. Marketing expenses to non-affiliates increased
for the year ended December 31, 1996, as compared to the years ended December
31, 1995 and 1994, due to the timing of advertising and travel expenses
relating to marketing the land portfolio to prospective purchasers.
Inflation
Inflation in future periods may cause capital appreciation of the Partnership's
investments in land. Rental income levels (from leases to new tenants or
renewals of existing tenants) will rise and fall in accordance with normal
agricultural market conditions and may or may not be affected by inflation.
-9-
Item 8. Financial Statements and Supplementary Data
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Index
-----
Page
----
Independent Auditors' Report............................................. 11
Financial Statements:
Balance Sheets, December 31, 1996 and 1995............................. 12
Statements of Operations, for the years ended
December 31, 1996, 1995 and 1994..................................... 14
Statements of Partners' Capital, for the years ended
December 31, 1996, 1995 and 1994..................................... 16
Statements of Cash Flows, for the years ended
December 31, 1996, 1995 and 1994..................................... 17
Notes to Financial Statements.......................................... 19
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.
-10-
INDEPENDENT AUDITORS' REPORT
To the Partners of
Inland Land Appreciation Fund, L.P.
We have audited the accompanying balance sheets of Inland Land Appreciation
Fund, L.P. (a limited partnership) as of December 31, 1996 and 1995, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1996. 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 general 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, such financial statements present fairly, in all material
respects, the financial position of Inland Land Appreciation Fund, L.P. as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Chicago, Illinois
January 31, 1997
(March 7, 1997 as to Note 8)
-11-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
December 31, 1996 and 1995
Assets
------
1996 1995
Current assets: ---- ----
Cash and cash equivalents (Note 1).............. $ 89,672 626,942
Accounts and accrued interest receivable........ - 7,224
Mortgage loans receivable (Note 6).............. - 73,614
Other current assets............................ 2,330 1,165
------------ ------------
Total current assets.............................. 92,002 708,945
------------ ------------
Other assets...................................... 19,915 19,915
Investments in land and improvements, at cost
(including acquisition fees paid to Affiliates
of $1,464,852 and $1,476,810 at December 31,
1996 and 1995, respectively) (Notes 3 and 4).... 28,676,326 24,846,973
------------ ------------
Total assets...................................... $28,788,243 25,575,833
============ ============
See accompanying notes to financial statements.
-12-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
December 31, 1996 and 1995
Liabilities and Partners' Capital
---------------------------------
1996 1995
---- ----
Current liabilities:
Accounts payable................................ $ 82,373 131,772
Accrued real estate taxes....................... 48,117 47,733
Due to Affiliates (Notes 3 and 7)............... 149,376 13,855
Notes payable to Affiliate (Note 7)............. 2,801,635 -
Unearned income................................. 23,239 20,707
Current portion of deferred gain on sales....... - 14,926
------------ ------------
Total current liabilities......................... 3,104,740 228,993
------------ ------------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 167,675 168,497
Cumulative cash distributions................. (153,743) (153,743)
------------ ------------
14,432 15,254
Limited Partners: ------------ ------------
Units of $1,000. Authorized 30,001 Units,
29,659.25 and 29,792.25 outstanding at
December 31, 1996 and 1995, respectively
(net of offering costs of $3,768,113, of
which $1,069,764 was paid to Affiliates).... 25,926,243 26,040,820
Cumulative net income......................... 3,889,232 3,437,161
Cumulative cash distributions................. (4,146,404) (4,146,395)
------------ ------------
25,669,071 25,331,586
------------ ------------
Total Partners' capital........................... 25,683,503 25,346,840
------------ ------------
Total liabilities and Partners' capital........... $28,788,243 25,575,833
============ ============
See accompanying notes to financial statements.
-13-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Operations
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---- ---- ----
Income:
Sale of investments in land
(Note 4)........................ $ 1,101,329 691,990 1,305,041
Rental income (Note 5)............ 235,458 255,956 263,832
Interest income................... 11,129 69,794 76,034
Other income...................... 179 - 4,438
------------ ------------ ------------
1,348,095 1,017,740 1,649,345
------------ ------------ ------------
Expenses:
Cost of investments in land sold.. 567,886 329,165 970,808
Professional services to
Affiliates...................... 45,673 31,791 21,916
Professional services to
non-affiliates.................. 32,627 25,549 23,598
General and administrative
expenses to Affiliates.......... 29,644 32,144 31,074
General and administrative
expenses to non-affiliates...... 15,674 18,997 13,237
Marketing expenses
to Affiliates................... 57,870 84,033 43,037
Marketing expenses to
non-affiliates.................. 35,228 21,664 31,137
Land operating expenses to
Affiliates...................... 56,774 57,216 58,415
Land operating expenses to
non-affiliates.................. 55,470 62,534 59,467
------------ ------------ ------------
896,846 663,093 1,252,689
------------ ------------ ------------
Net income.......................... $ 451,249 354,647 396,656
============ ============ ============
See accompanying notes to financial statements.
-14-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---- ---- ----
Net income (loss) allocated (Note 2):
General Partner................... $ (822) (82) 624
Limited Partners.................. 452,071 354,729 396,032
------------ ------------ ------------
Net income.......................... $ 451,249 354,647 396,656
============ ============ ============
Net income (loss) allocated to
the one General Partner Unit...... $ (822) (82) 624
============ ============ ============
Net income allocated to Limited
Partners per weighted average
Limited Partnership Units
(29,738.54, 29,802.51 and 29,843.92
for the years ended December 31,
1996, 1995 and 1994, respectively) $ 15.20 11.90 13.27
============ ============ ============
See accompanying notes to financial statements.
-15-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Partners' Capital
For the years ended December 31, 1996, 1995 and 1994
General Limited
Partner Partners Total
------- -------- -----
Balance at January 1, 1994.......... $ 14,712 26,389,735 26,404,447
Net income.......................... 624 396,032 396,656
Distributions to Partners ($45.89 per
weighted average Limited Partnership
Units of 29,843.92) (Note 2)...... - (1,369,677) (1,369,677)
Repurchase of Limited Partnership
Units............................. - (53,392) (53,392)
------------ ------------ -------------
Balance at December 31, 1994........ 15,336 25,362,698 25,378,034
Net income (loss)................... (82) 354,729 354,647
Distributions to Partners ($12.36 per
weighted average Limited Partnership
Units of 29,802.51) (Note 2)...... - (368,325) (368,325)
Repurchase of Limited Partnership
Units............................. - (17,516) (17,516)
------------ ------------ ------------
Balance at December 31, 1995........ 15,254 25,331,586 25,346,840
Net income (loss)................... (822) 452,071 451,249
Distributions to Partners (Note 1).. - (9) (9)
Repurchase of Limited Partnership
Units............................. - (114,577) (114,577)
------------ ------------ ------------
Balance at December 31, 1996........ $ 14,432 25,669,071 25,683,503
============ ============ ============
See accompanying notes to financial statements.
-16-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---- ---- ----
Cash flows from operating activities:
Net income........................ $ 451,249 354,647 396,656
Adjustments to reconcile net income
to net cash provided by (used
in) operating activities:
Gain on sale of investment in
land.......................... (533,443) (362,825) (334,233)
Changes in assets and liabilities:
Accounts and accrued interest
receivable................... 7,224 10,708 118,648
Other current assets.......... (1,165) (89) (299)
Other assets.................. - (19,915) -
Accounts payable.............. (49,399) (172) 573
Accrued real estate taxes..... 384 4,704 (749)
Due to Affiliates............. 135,521 13,289 (534)
Unearned income............... 2,532 (2,274) (3,557)
Other current liabilities..... - (300) 300
Net cash provided by (used in) ------------ ------------ ------------
operating activities.............. 12,903 (2,227) 176,805
------------ ------------ ------------
Cash flows from investing activities:
Principal payments collected on
mortgage loans receivable....... 73,614 40,997 41,310
Additions to investments in land.. (4,397,239) (975,495) (384,903)
Proceeds from disposition of
investments in land............. 1,086,403 681,566 1,174,470
Net cash flow provided by (used in) ------------ ------------ ------------
investing activities.............. (3,237,222) (252,932) 830,877
------------ ------------ ------------
Cash flows from financing activities:
Repurchase of Limited Partnership
Units........................... (114,577) (17,516) (53,392)
Proceeds from notes payable to
Affiliate....................... 2,951,635 - -
Payment on notes payable to
Affiliate....................... (150,000) - -
Cash distributions................ (9) (368,325) (1,369,677)
Net cash flow provided by (used in) ------------ ------------ ------------
financing activities.............. 2,687,049 (385,841) (1,423,069)
------------ ------------ ------------
See accompanying notes to financial statements.
-17-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Statements of Cash Flows
(continued)
For the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---- ---- ----
Net decrease in cash and cash
equivalents....................... $ (537,270) (641,000) (415,387)
Cash and cash equivalents at
beginning of year................. 626,942 1,267,942 1,683,329
Cash and cash equivalents at end ------------ ------------ ------------
of year........................... $ 89,672 626,942 1,267,942
============ ============ ============
Supplemental schedule of non-cash investing and financing activities:
1996 1995 1994
---- ---- ----
Mortgage loans receivable......... $ - - (155,921)
Reduction in investments in land.. - - 970,808
Gain on sale of investment in land - - 334,233
Deferred gain on sales............ - - 25,350
Proceeds from disposition of ------------ ------------ ------------
investments in land........... $ - - 1,174,470
============ ============ ============
See accompanying notes to financial statements.
-18-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1996, 1995 and 1994
(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 December 31, 1996,
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 period.
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.
Except as described in footnote (b) to Note 4 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 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.
-19-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
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.
The Partnership's 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, if any, to reflect the Partnership's accounts as adjusted for
Federal income tax reporting purposes. Such adjustments are not recorded in
the records of the Partnership. The net effect of these items is summarized as
follows:
1996 1995
------------------------- -----------------------
Tax Tax
GAAP Basis GAAP Basis
Basis (unaudited) Basis (unaudited)
------------ ------------ ----------- ------------
Total assets.............. $28,788,243 32,556,357 25,575,833 29,343,947
Partners' capital:
General Partner......... 14,432 16,094 15,254 15,567
Limited Partners........ 25,669,071 29,435,522 25,331,586 29,099,386
Net income (loss):
General Partner......... (822) 527 (82) 96
Limited Partners........ 452,071 689,992 354,729 385,427
Net income per Limited
Partnership Unit........ 15.20 23.20 11.90 12.93
The net income per Limited Partnership Unit is based upon the weighted average
number of Units of 29,738.54 and 29,802.51 during 1996 and 1995, respectively.
-20-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(2) Partnership Agreement
The Partnership Agreement defines the allocation of profits and losses, and
available cash. If and to the extent that real estate taxes and insurance
payable with respect to the Partnership's land during a given year exceed
revenues of the Partnership, the General Partner will make a Supplemental
Capital Contribution of such amount to the Partnership to ensure that it has
sufficient funds to make such payments.
Profits and losses from operations (other than capital transactions) will be
allocated 99% to the Limited Partners and 1% to the General Partner. The net
gain from a sale of Partnership properties is first allocated among the
Partners in proportion to the negative balances, if any, in their respective
capital accounts. Thereafter, except as provided below, net gain is allocated
to the General Partner in an amount equal to the proceeds distributed to the
General Partner from such sale and the balance of any net gain is allocated to
the Limited Partners. If the amount of net gain realized from a sale is less
than the amount of cash distributed to the General Partner from such sale, the
Partnership will allocate income or gain to the General Partner in an amount
equal to the excess of the cash distributed to the General Partner with respect
to such sale as quickly as permitted by law. Any net loss from a sale will be
allocated to the Limited Partners.
Distributions of Net Sale Proceeds will be allocated between the General
Partner and the Limited Partners based upon both an aggregate overall return to
the Limited Partners and a separate return with respect to each parcel of land
purchased by the Partnership.
As a general rule, Net Sale Proceeds will be distributed 90% to the Limited
Partners and 10% to the General Partner until the Limited Partners have
received from Net Sale Proceeds (i) a return of their Original Capital plus
(ii) a noncompounded Cumulative Preferred Return of 15% of their Invested
Capital. However, with respect to each parcel of land, the General Partner's
10% share will be subordinated until the Limited Partners receive a return of
the Original Capital attributed to such parcel ("Parcel Capital") plus a 6% per
annum noncompounded Cumulative Preferred Return thereon.
After the amounts described in items (i) and (ii) above and any previously
subordinated distributions to the General Partner have been paid, and the
amount of any Supplemental Capital Contributions have been repaid to the
General Partner, subsequent distributions shall be paid 75% to the Limited
Partners and 25% to the General Partner without considering Parcel Capital.
If, after all Net Sale Proceeds have been distributed, the General Partner has
received more than 25% of all Net Sale Proceeds (exclusive of distributions
made to the Limited Partners to return their Original Capital), the General
Partner shall contribute to the Partnership for distribution to the Limited
Partners an amount equal to such excess.
-21-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
Any distributions from Net Sale Proceeds at a time when Invested Capital is
greater than zero shall be deemed applied first as a reduction of such Invested
Capital before application to payment of any deficiency in the 15% Cumulative
Preferred Return.
(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 $40,569 and $13,440 was unpaid as of December 31, 1996 and 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 $56,774, $57,216
and $58,415 have been incurred for the years ended December 31, 1996, 1995 and
1994, respectively, of which $14,066 and $415 was unpaid as of December 31,
1996 and 1995, respectively.
An Affiliate of the General Partner performed marketing and advertising
services for the Partnership's land investments and was reimbursed (as set
forth under terms of the Partnership Agreement) for direct costs. Such costs
of $57,870, $84,033 and $43,037 have been incurred and are included in
marketing expenses to Affiliates for the years ended December 31, 1996, 1995
and 1994, respectively, of which $30,091 was unpaid as of December 31, 1996.
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 $118,765 and $73,308 have been incurred
for the years ended December 31, 1996 and 1995, respectively, and are included
in investments in land, of which $58,347 was unpaid as of December 31, 1996.
-22-
<TABLE> INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(4) 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 12/31/96(d) Recognized
- ------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Kendall 84.7360 01/19/89 $ 423,680 61,625 485,305 3,607,021 280,587 3,811,739 220,093
(3.52) 12/24/96
2 McHenry 223.4121 01/19/89 650,000 95,014 745,014 16,918 611,505 150,427 -
(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 11,713 235,275 322,760 -
(.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 25,836 160,313 2,533,693 -
(Option) 04/06/90
6 Kendall (b) 78.3900 06/21/89 416,783 31,691 448,474 149,923 - 598,397 -
7 Kendall (b) 77.0490 06/21/89 84,754 8,163 92,917 134,592 - 227,509 -
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 22,482 609,327 717 - 610,044 -
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 5,478 - 349,335 -
12 Kendall 90.2710 10/31/89 907,389 41,908 949,297 510 7,456 942,351 -
(.7090) 04/26/91
13 McHenry 92.7800 11/07/89 251,306 19,188 270,494 3,064 - 273,558 -
14 McHenry 76.2020 11/07/89 419,111 23,402 442,513 42,849 - 485,362 -
15 Lake 84.5564 01/03/90 1,056,955 85,283 1,142,238 1,437,341 264,514 2,315,065 268,398
(10.5300) Var 1996 ------------ ------------ ------------ -------------- ------------ ------------- -----------
Subtotal 8,499,401 611,108 9,110,509 5,436,562 1,926,831 12,620,240 488,491
</TABLE>
-23-
<TABLE>
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(4) 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 12/31/96(d) Recognized
- ------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Subtotal 8,499,401 611,108 9,110,509 5,436,562 1,926,831 12,620,240 488,491
16 Kane/Kendall 72.4187 01/29/90 1,273,537 55,333 1,328,870 49,116 - 1,377,986 -
17 McHenry 99.9240 01/29/90 739,635 61,038 800,673 224,192 - 1,024,865 -
18 McHenry 71.4870 01/29/90 496,116 26,259 522,375 17,504 11,109 528,770 -
(1.0000) Var 1990
(.5200) 03/11/93
19 McHenry 63.6915 02/23/90 490,158 29,158 519,316 6,949 - 526,265 -
20 Kane 224.1480 02/28/90 2,749,800 183,092 2,932,892 220,183 3,651 3,149,424 -
(.2790) 10/17/91
21 Kendall 172.4950 03/08/90 1,327,459 75,822 1,403,281 268,659 - 1,671,940 -
22 McHenry 254.5250 04/11/90 2,608,881 136,559 2,745,440 23,719 - 2,769,159 -
23 Kendall 140.0210 05/08/90 1,480,000 116,240 1,596,240 432,521 1,196,909 831,852 14,926
(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 18,571 83,663 1,393,603 30,026
(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 14,444 - 2,782,222 -
------------ ------------ ------------ -------------- ------------ ----------- -----------
$23,624,761 1,562,308 25,187,069 6,712,420 3,222,163 28,676,326 533,443
============ ============ ============ ============== ============ =========== ===========
</TABLE>
-24-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(4) 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:
1996 1995
---- ----
Balance at January 1,........... $24,846,973 24,106,379
Additions during year........... 4,397,239 1,069,759
Sales during year............... 567,886 329,165
------------ ------------
Balance at December 31,......... $28,676,326 24,846,973
============ ============
(d) The aggregate cost of real estate owned at December 31, 1996 for Federal
income tax purposes was approximately $28,700,000 (unaudited).
(5) 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 December 31, 1996, the Partnership had farm leases of generally one year
in duration, for approximately 2,145 acres of the approximately 2,664 acres
owned.
(6) Mortgage Loans Receivable
As a result of the sale of four lots in Parcel 23 in 1994, the Partnership
received mortgage loans receivable totaling $155,921. The loan documents
allowed for the Partnership to receive monthly interest only payments at an
interest rate of 9% per annum. For the years ended December 31, 1996 and 1995,
mortgage loans receivable prepaid totaled $73,614 and $40,997, respectively.
-25-
INLAND LAND APPRECIATION FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1996
(unaudited)
(7) 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 December 31, 1996, notes payable
to Affiliate were $2,641,635, of which $594,252 was applicable to the note
collateralized by Parcel 15, $2,047,383 was applicable to the note
collateralized by Parcel 1. For the year ended December 31, 1996, interest of
$70,909 was capitalized, of which $3,942 was unpaid as of December 31, 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 December 31, 1996, loan fees paid to
the General Partner totaled $33,392, 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 June 30, 1998.
Additionally, Inland Real Estate Investment Corporation loaned the Partnership
$160,000 for Partnership operations. This note accrues interest at 10%, of
which $2,361 has been capitalized and is unpaid as of December 31, 1996.
(8) Subsequent Events
During January, February and March 1997, the Partnership sold Lots 6, 27 and 32
in the Countryside Glen Subdivision (Parcel 15) to unaffiliated third parties
for a total of $303,220. The cost allocated to these lots totalled $96,238,
resulting in gains on sale of $205,320, net of closing costs.
As a result of these sales, net sales proceeds of $301,557 have been used to
paydown the note payable to Affiliate relating to Parcel 15.
-26-
Item 9. Changes in and Disagreements with Independent Auditors on Accounting
and Financial Disclosure
There were no disagreements on accounting or financial disclosure during 1996.
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 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-owned 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 11 to 13 of the Prospectus, a copy of which description is
hereby 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
Norbert J. Treonis...... Senior Vice President-Property Management
Catherine L. Lynch...... Treasurer
Paul J. Wheeler......... Vice President-Personal Financial Services Group
Roberta S. Matlin....... Assistant Vice President-Investments
Mark Zalatoris.......... Assistant Vice President-Due Diligence
Patricia A. Challenger.. Vice President-Asset Management
Kelly Tucek............. Assistant Vice President-Partnership Accounting
Cynthia M. Hassett...... Assistant Vice President-Partnership Accounting
Venton J. Carlston...... Assistant Controller
-27-
DANIEL L. GOODWIN (age 53) 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 6 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
1980's 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. Also, Mr. Goodwin 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 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 train disabled students in
the workplace. Most of these students are still employed at Inland today, and
Inland has become one of the largest employers of the disabled in DuPage
County. He 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.
-28-
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 53) 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 all 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 53) is a Director and Vice Chairman of The Inland
Group, Inc. Mr. Cosenza oversees, coordinates and directs Inland's many
enterprises and, 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, Illinois.
-29-
ROBERT D. PARKS (age 53) is 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.
NORBERT J. TREONIS (age 46) joined The Inland Group, Inc. and its
affiliates in 1975 and he is currently Chairman and Chief Executive Officer of
The Inland Property Management Group, Inc. and a Director of The Inland Group,
Inc. He serves on the Board of Directors of all Inland subsidiaries involved
in the property management, acquisitions and maintenance of real estate,
including Mid-America Property Management Corporation, and Metropolitan
Construction Services, Inc. Mr. Treonis is charged with the responsibility of
the overall management and leasing of all apartment units, retail, industrial
and commercial properties nationwide.
Mr. Treonis is a licensed real estate broker. He is a past member of the Board
of Directors of American National Bank of DuPage, the Apartment Builders and
Managers Association of Illinois, the National Apartment Association and the
Chicagoland Apartment Association.
Mr. Treonis has been the Chairman of the Board of Directors of Inland
Commercial Property Management, Inc. since its formation in 1994.
CATHERINE L. LYNCH (age 38) 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.
PAUL J. WHEELER (age 44) 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.
-30-
ROBERTA S. MATLIN (age 52) 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 39) 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 44) 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.
KELLY TUCEK (age 34) 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.
CYNTHIA M. HASSETT (age 37) joined Inland in 1983 and was a Vice President
of Inland Real Estate Investment Corporation. Through August 1996, Ms. Hassett
was 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. Hassett was on the audit staff of
Altschuler, Melvoin and Glasser since 1980. She received her B.S. degree in
Accounting from Illinois State University. Ms. Hassett is a Certified Public
Accountant and a member of the American Institute of Certified Public
Accountants.
-31-
VENTON J. CARLSTON (age 39) 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 American Institute of Certified Public Accountants and the
Illinois CPA Society. He is registered with the National Association of
Securities Dealers, Inc. as a Financial Operations Principal.
Item 11. Executive Compensation
The General Partner is entitled to receive a share of cash distributions of Net
Sales Proceeds based upon both an aggregate overall return to the Limited
Partners and a separate return with respect to each parcel of land purchased by
the Partnership as described under the caption "Cash Distributions" and a share
of profits or losses as described under the caption "Allocation of Profits or
Losses" at page 38 of the Prospectus, and at pages A-6 to A-9 of the
Partnership Agreement, included as an exhibit to the Prospectus, a copy of
which descriptions is incorporated herein by reference.
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 7-9 and "Conflicts of Interest" at
pages 9-11 of the Prospectus, and at pages A-10 through A-19 of the Partnership
Agreement, included as an exhibit to the Prospectus, a copy of which is
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 and its Affiliates may be reimbursed for their expenses or
out-of-pocket costs relating to the administration of the Partnership. For the
year ended December 31, 1996, such costs were $75,317, of which $40,569 was
unpaid as of December 31, 1996.
The General Partner is entitled to receive an Asset Management Fee 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. For the year ended December
31, 1996, the Partnership incurred $56,774 in Asset Management Fees, of which
$14,066 was unpaid.
An Affiliate of the General Partner performed marketing and advertising
services for the Partnership's land investments and was reimbursed (as set
forth under terms of the Partnership Agreement) for direct costs. For the year
ended December 31, 1996, the Partnership incurred $57,870 of such costs, of
which $30,091 was unpaid.
-32-
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. For the year ended December 31, 1996,
the Partnership incurred $118,765 of such costs, of which $58,347 was unpaid,
and included in the investments in land and improvements. As of December 31,
1996, notes payable to Affiliate was $2,801,635. For the year ended December
31, 1996, interest of $73,270 was capitalized, of which $6,303 was unpaid as of
December 31, 1996. The Partnership is required to pay a 1% loan fee to the
General Partner on lines of credit as money is funded. As of December 31,
1996, loan fees paid to the General Partner totaled $33,392, all of which have
been paid and included in investment in land and improvements.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No person or group is known by the Partnership to own beneficially more
than 5% of the outstanding Units of the Partnership
(b) The officers and directors of the General Partner of the Partnership own
as a group the following Units of the Partnership:
Amount and Nature
of Beneficial Percent
Title of Class Ownership of Class
-------------- ----------------- ------------
Limited Partnership 267 Units 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 or 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. Reference is made to Note 3 of the Notes to Financial
Statements (Item 8 of this Annual Report) for information regarding related
party transactions.
-33-
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements listed in the index at page 10 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 Restated Certificate of Limited Partnership and amended and restated
Agreement of Limited Partnership, included as Exhibits A and B of the
Prospectus dated October 12, 1988 as supplemented, are incorporated
herein by reference thereto.
4 Form of Certificate of Ownership representing interests in the
registrant filed as Exhibits 4(a) and 4(b) to Registration Statement on
Form S-11, File No. 33-18607, is incorporated herein by reference
thereto.
27 Financial Data Schedule
28 Prospectus, to Form S-11 Registration Statement, File No. 33-18607, as
filed with Securities Exchange Commission on October 12, 1988, as
supplemented to date, 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 1996 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.
-34-
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 LAND APPRECIATION FUND, L.P.
Inland Real Estate Investment Corporation
General Partner
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 24, 1997
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
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 24, 1997
By: Patricia A. Challenger
Senior Vice President
Date: March 24, 1997
By: Kelly Tucek
Principal Financial Officer
and Principal Accounting Officer
Date: March 24, 1997
By: Daniel L. Goodwin
Director
Date: March 24, 1997
By: Robert H. Baum
Director
Date: March 24, 1997
-35-
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