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, 2000
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the transition period from to
Commission File #0-17593
Inland Monthly Income Fund II, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3587209
(State or other jurisdiction (I.R.S. Employer
Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60523
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 630-218-
8000
N/A
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has
filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of
1934 during the preceding 12 months (or for such shorter
period that the
registrant was required to file such reports), and (2) has been
subject to such
filing requirements for the past 90 days. Yes X No
-1-
INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)
Balance Sheets
March 31, 2000 and December 31, 1999
(unaudited)
Assets
------
2000
1999
----
- ----
Current assets:
Cash and cash equivalents (Note 1).............. $ 1,216,338
3,665,630
Accounts and rents receivable................... 1,314
10,406
Other assets.................................... 72
167
------------ -
- -----------
Total current assets.............................. 1,217,724
3,676,203
------------ -
- -----------
Investment properties (including acquisition fees
paid to Affiliates of $1,430,682)(Notes 1 and 3):
Land.......................................... 3,187,438
3,187,438
Buildings and improvements.................... 12,423,443
12,423,443
------------ -
- -----------
15,610,881
15,610,881
Less accumulated depreciation............... 4,141,697
4,046,018
------------ -
- -----------
Net investment properties......................... 11,469,184
11,564,863
------------ -
- -----------
Other assets:
Deferred leasing fees to Affiliates (net of
accumulated amortization of $165,620 and
$161,097 at March 31, 2000 and December 31,
1999, respectively)(Notes 1 and 3)............ 62,112
66,635
Deferred rent receivable (Note 2)............... 202,194
222,021
------------ -
- -----------
Total other assets................................ 264,306
288,656
------------ -
- -----------
Total assets...................................... $12,951,214
15,529,722
============
============
See accompanying notes to financial statements.
-2-
INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)
Balance Sheets
(continued)
March 31, 2000 and December 31, 1999
(unaudited)
Liabilities and Partners' Capital
---------------------------------
2000
1999
----
- ----
Current liabilities:
Accounts payable................................ $ 57,092
22,749
Distributions payable (Note 4).................. 123,832
140,427
Due to Affiliates (Note 3)...................... 10,849
878
Deposits held for others........................ 344,503
458,859
------------ -
- -----------
Total current liabilities......................... 536,276
622,913
Commission payable to Affiliate (Note 3).......... 132,000
132,000
------------ -
- -----------
Total liabilities................................. 668,276
754,913
------------ -
- -----------
Partners' capital (Notes 1, 3 and 4):
General Partner:
Capital contribution.......................... 500
500
Cumulative net income......................... 59,036
59,993
------------ -
- -----------
59,536
60,493
Limited Partners: ------------ -
- -----------
Units of $500. Authorized 80,000 Units,
50,095.50 Units outstanding (net of
offering costs of $3,148,734, of which
$653,165 was paid to Affiliates)............ 21,916,510
21,916,510
Cumulative net income......................... 16,022,595
15,740,975
Cumulative distributions...................... (25,715,703)
(22,943,169)
------------ -
- -----------
12,223,402
14,714,316
------------ -
- -----------
Total Partners' capital........................... 12,282,938
14,774,809
------------ -
- -----------
Total liabilities and Partners' capital........... $12,951,214
15,529,722
============
============
See accompanying notes to financial statements.
-3-
INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)
Statements of Operations
For the three months ended March 31, 2000 and 1999
(unaudited)
2000
1999
----
- ----
Income:
Rental income (Notes 1 and 2)................... $ 418,458
473,970
Additional rental income........................ -
45,144
Interest income................................. 25,548
6,722
------------ -
- -----------
444,006
525,836
Expenses: ------------ -
- -----------
Professional services to Affiliates............. 6,486
1,909
Professional services to non-affiliates......... 20,337
30,557
General and administrative expenses to
Affiliates.................................... 9,689
8,589
General and administrative expenses to
non-affiliates................................ 18,578
13,537
Property operating expenses to Affiliates....... 4,992
8,568
Property operating expenses to non-affiliates... 3,059
95,217
Depreciation.................................... 95,679
108,340
Amortization.................................... 4,523
4,523
------------ -
- -----------
163,343
271,240
------------ -
- -----------
Net income........................................ $ 280,663
254,596
============
============
Net income (loss) allocated to:
General Partner................................. (957)
(1,083)
Limited Partners................................ 281,620
255,679
------------ -
- -----------
Net income........................................ $ 280,663
254,596
============
============
Net loss allocated to the one General Partner Unit $ (957)
(1,083)
============
============
Net income per Unit, allocated to Limited Partners
per weighted average Limited Partnership
Units of 50,095.50.............................. $ 5.62
5.10
============
============
See accompanying notes to financial statements.
-4-
INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)
Statements of Cash Flows
For the three months ended March 31, 2000 and 1999
(unaudited)
2000
1999
----
- ----
Cash flows from operating activities:
Net income...................................... $ 280,663
254,596
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation.................................. 95,679
108,340
Amortization.................................. 4,523
4,523
Changes in assets and liabilities:
Accounts and rents receivable............... 9,092
(1,023)
Other assets................................ 95
1,068
Deferred rent receivable.................... 19,827
16,434
Accounts payable............................ 34,343
23,893
Accrued real estate taxes................... -
(39,700)
Due to Affiliates........................... 9,971
1,142
Other current liabilities................... -
11,453
------------ -
- -----------
Net cash provided by operating activities......... 454,193
380,726
------------ -
- -----------
Cash flows from financing activities:
Deposits held for others........................ (114,356)
(100,841)
Cash distributions.............................. (2,789,129)
(407,693)
------------ -
- -----------
Net cash used in financing activities............. (2,903,485)
(508,534)
------------ -
- -----------
Net decrease in cash and cash equivalents......... (2,449,292)
(127,808)
Cash and cash equivalents at beginning of period.. 3,665,630
1,161,470
------------ -
- -----------
Cash and cash equivalents at end of period........ $ 1,216,338
1,033,662
============
============
See accompanying notes to financial statements.
-5-
INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
March 31, 2000
(unaudited)
Readers of this Quarterly Report should refer to the
Partnership's audited
financial statements for the fiscal year ended December 31,
1999, which are
included in the Partnership's 1999 Annual Report, as
certain footnote
disclosures which would substantially duplicate those contained in
such audited
financial statements have been omitted from this Report.
(1) Organization and Basis of Accounting
The Registrant, Inland Monthly Income Fund II, L.P. (the
"Partnership"), was
formed on June 20, 1988 pursuant to the Delaware Revised
Uniform Limited
Partnership Act, to invest in improved residential, retail,
industrial and
other income producing properties. On August 4, 1988, the
Partnership commenced
an Offering of 50,000 (subject to increase to 80,000) Limited
Partnership Units
pursuant to a Registration under the Securities Act of 1933.
The Offering
terminated on August 4, 1990, with total sales of 50,647.14
Units at $500 per
Unit, resulting in gross offering proceeds of $25,323,569, not
including the
General Partner's contribution for $500. All of the holders of
these Units have
been admitted to the Partnership. Inland Real Estate Investment
Corporation is
the General Partner. The Limited Partners of the Partnership
share in the
benefits of ownership of the Partnership's real property
investments in
proportion to the number of Units held. The Partnership
repurchased 551.64
Units for $260,285 from various Limited Partners through the
Unit Repurchase
Program. There are no funds remaining for the repurchase of Units
through this
program.
The preparation of financial statements in conformity with
generally accepted
accounting principles requires management to make estimates
and assumptions
that affect the reported amounts of assets and liabilities and
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.
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
the results to be expected for the year.
-6-
INLAND MONTHLY INCOME FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2000
(unaudited)
(2) Deferred Rent Receivable
Certain tenant leases contain provisions providing for stepped
rent increases.
Generally accepted accounting principles require that rental
income be recorded
for the period of occupancy using the straight-line basis. The
accompanying
financial statements include decreases of $19,827 and $16,434
for the three
months ended March 31, 2000 and 1999, respectively, of rental
income for the
period of occupancy for which stepped rent increases apply and
$202,194 and
$222,021 in related deferred rent receivable as of March 31, 2000
and December
31, 1999, respectively. These amounts will be collected over the
terms of the
related leases as scheduled rent payments are made.
(3) Transactions with Affiliates
The General Partner and its Affiliates are entitled to
reimbursement for
salaries and expenses of employees of the General Partner and
its Affiliates
relating to the administration of the Partnership. Such costs
are included in
professional services and general and administrative expenses to
Affiliates, of
which $10,849 and $878 was unpaid as of March 31, 2000 and
December 31, 1999,
respectively.
An Affiliate of the General Partner earned Property Management
Fees of $4,992
and $8,568 for the three months ended March 31, 2000 and 1999,
respectively, in
connection with managing the Partnership's properties. Such fees
are included
in property operating expenses to Affiliates, all of which
were paid as of
March 31, 2000.
In connection with the sale of The Wholesale Club on January
8, 1991, the
Partnership recorded $132,000 of sales commission payable to an
Affiliate of
the General Partner. Such commission has been deferred
until the Limited
Partners receive their Original Capital plus a return as
specified in the
Partnership Agreement.
(4) Subsequent Events
During April 2000, the Partnership paid a distribution of
$123,832 to the
Limited Partners.
-7-
Item 2. Management's Discussion and Analysis of Financial
Condition and
Results of Operations
Certain statements in this "Management's Discussion and Analysis
of Financial
Condition and Results of Operations" and elsewhere in this
quarterly report on
Form 10-Q constitute "forward-looking statements" within the
meaning of the
Federal Private Securities Litigation Reform Act of 1995.
These forward-
looking statements involve known and unknown risks,
uncertainties and other
factors which may cause the Partnership's actual results,
performance or
achievements to be materially different from any future results,
performance or
achievements expressed or implied by these forward-looking
statements. These
factors include, among other things, federal, state or local
regulations;
adverse changes in general economic or local conditions;
inability of borrower
to meet financial obligations; uninsured losses; and potential
conflicts of
interest between the Partnership and its Affiliates,
including the General
Partner.
Liquidity and Capital Resources
On August 4, 1988, the Partnership commenced an Offering of
50,000 (subject to
increase to 80,000) Limited Partnership Units pursuant to a
Registration
Statement on Form S-11 under the Securities Act of 1933.
The Offering
terminated on August 4, 1990, with total sales of 50,647.14
Units at $500 per
Unit, resulting in gross offering proceeds of $25,323,569, not
including the
General Partner's contribution of $500. All of the holders of
these Units have
been admitted to the Partnership. The Partnership has acquired
five properties
utilizing $21,224,542 of capital proceeds collected. On January
8, 1991, the
Partnership sold one of its properties, The Wholesale Club. On
November 30,
1999, the Partnership sold another of its properties, Eurofresh
Plaza. As of
March 31, 2000, cumulative distributions to Limited
Partners totaled
$25,715,703, of which $4,395,565 represents proceeds from the
sale of The
Wholesale Club, $2,392,818 represents proceeds from the sale
of Eurofresh
Plaza, and $18,927,320 represents distributable cash flow from
the properties.
The Partnership repurchased 551.64 Units for $260,285 from
various Limited
Partners through the Unit Repurchase Program. There are no funds
remaining for
the repurchase of Units through this program.
As of March 31, 2000, the Partnership had cash and cash
equivalents of
$1,216,338 which includes approximately $344,500 held in an
unrestricted escrow
account for the payment of real estate taxes for Colonial Manor
Living Center.
The Partnership intends to use such remaining funds for
property upgrades,
distributions and for other working capital requirements.
The properties owned by the Partnership are generating cash flow
in excess of
the 8% annualized distributions to the Limited Partners (paid
monthly), in
addition to covering all the operating expenses of the
Partnership. As of
March 31, 2000, the Partnership has made cumulative
distributions of $253,868
in addition to the 8% annualized return to the Limited
Partners from excess
cash flow. To the extent that the cash flow from the properties is
insufficient
to meet the Partnership's needs, the Partnership may rely on
advances from
Affiliates of the General Partner, other short-term financing, or
may sell one
or more of the properties.
-8-
Results of Operations
At March 31, 2000, the Partnership owns three operating
properties. Two of the
Partnership's three operating properties, Scandinavian Health Spa
and Colonial
Manor Living Center, are leased on a "triple-net" basis which
means that all
expenses of the property are passed through to the tenant. The
lease of the
other property owned by the Partnership, K mart, provides that
the Partnership
be responsible for maintenance of the structure and the
parking lot and the
tenant is required to reimburse the Partnership for portions of
insurance, real
estate taxes and common area maintenance.
Rental income decreased for the three months ended March 31,
2000, as compared
to the three months ended March 31, 1999, due to the absence
of Eurofresh
Plaza's rent since the sale of the property on November 30, 1999.
Interest income increased for the three months ended March
31, 2000, as
compared to the three months ended March 31, 1999, due to an
increase in cash
available to invest in short-term investments from the proceeds
of the sale of
Eurofresh Plaza. Proceeds of $2,392,818 were distributed on
February 10, 2000.
Professional services to Affiliates increased for the three
months ended March
31, 2000, as compared to the three months ended March 31,
1999, due to an
increase in legal services required. Professional services to
non-affiliates
decreased for the three months ended March 31, 2000, as compared
to the three
months ended March 31, 1999, due to a decrease in legal fees.
General and administrative expenses to Affiliates increased
for the three
months ended March 31, 2000, as compared to the three months
ended March 31,
1999, due to an increase in data processing and postage expenses.
General and
administrative expenses to non-affiliates increased for the three
months ended
March 31, 2000, as compared to the three months ended March 31,
1999, due to an
increase in state taxes.
Property operating expenses to Affiliates and non-affiliates
decreased for the
three months ended March 31, 2000, as compared to the three
months ended March
31, 1999, due to the sale of Eurofresh Plaza as of November 30,
1999.
-9-
The following is a list of approximate occupancy levels for the
Partnership's
investment properties as of the end of each quarter during 1999
and 2000:
1999
2000
------------------------ ------------
- ------------
at at at at at at
at at
Properties 3/31 6/30 9/30 12/31 3/31 6/30
9/30 12/31
---------- ----- ----- ----- ----- ----- -----
- ----- -----
Scandinavian Health Spa 100% 100% 100% 100% 100%
Broadview Heights, Ohio
Colonial Manor 100% 100% 100% 100% 100%
LaGrange, Illinois
K mart 100% 100% 100% 100% 100%
Chandler, Arizona
PART II - Other Information
Items 1 through 5(b) 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
-10-
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 MONTHLY INCOME FUND II, L.P.
By: Inland Real Estate Investment
Corporation
General Partner
/S/ ROBERT D. PARKS
By: Robert D. Parks
Chairman
Date: May 11, 2000
/S/ PATRICIA A. DELROSSO
By: Patricia A. DelRosso
Senior Vice President
Date: May 11, 2000
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: May 11, 2000
-11-
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1216338
<SECURITIES> 0
<RECEIVABLES> 1314
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1217724
<PP&E> 15610881
<DEPRECIATION> 4141697
<TOTAL-ASSETS> 12951214
<CURRENT-LIABILITIES> 536276
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 12282938
<TOTAL-LIABILITY-AND-EQUITY> 12951214
<SALES> 0
<TOTAL-REVENUES> 444006
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 163343
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 280663
<INCOME-TAX> 0
<INCOME-CONTINUING> 280663
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 280663
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