<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 1995
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 #0-18456
Inland Mortgage Investors Fund III, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3604866
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60521
(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: 708-218-8000
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 [_]
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<TABLE>
<CAPTION>
INLAND MORTGAGE INVESTORS FUND III, L.P.
(a limited partnership)
Balance Sheets
September 30, 1995 and December 31, 1994
(unaudited)
Assets
------
1995 1994
---- ----
<S> <C> <C>
Cash and cash equivalents (Note 1)................ $ 71,464 99,103
Accrued interest receivable....................... 10,468 14,817
Mortgage loans receivable (Note 3)................ 1,216,794 1,761,698
----------- ------------
Total assets...................................... $ 1,298,726 1,875,618
=========== ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable................................ $ 836 665
Distributions payable (Note 4).................. 22,758 56,357
Due to Affiliates (Note 2)...................... 8,257 150
----------- ------------
Total liabilities............................. 31,851 57,172
----------- ------------
Partners' capital (Notes 1, 2 and 4):
General Partner:
Capital contribution.......................... 500 500
Supplemental Capital Contributions............ 306,874 306,874
Supplemental distributions to Limited Partners (306,874) (306,874)
Cumulative net income......................... 15,669 11,324
Cumulative distributions...................... (10,604) (6,259)
----------- ------------
5,565 5,565
----------- ------------
Limited Partners:
Units of $500. Authorized 40,000 Units,
5,674.50 Units outstanding at September 30,
1995 and December 31, 1994 (net of offering
costs of $422,642, of which $115,754 was
paid to Affiliates)......................... 2,414,607 2,414,607
Supplemental Capital Contributions from
General Partner............................. 306,874 306,874
Cumulative net income......................... 699,542 623,661
Cumulative distributions...................... (2,159,713) (1,532,261)
----------- ------------
1,261,310 1,812,881
----------- ------------
Total Partners' capital....................... 1,266,875 1,818,446
----------- ------------
Total liabilities and Partners' capital........... $ 1,298,726 1,875,618
=========== ============
</TABLE>
See accompanying notes to financial statements.
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INLAND MORTGAGE INVESTORS FUND III, L.P.
(a limited partnership)
Statements of Operations
For the three and nine months ended September 30, 1995 and 1994
(unaudited)
Three months Nine months
ended ended
September 30, September 30,
---------------- -----------------
1995 1994 1995 1994
------- ------ ------- -------
Income:
Interest on mortgage loans
receivable (Note 3)............ $32,763 44,937 121,088 134,909
Interest on investments.......... 1,455 - 2,777 276
------- ------ ------- -------
34,218 44,937 123,865 135,185
------- ------ ------- -------
Expenses:
Professional services to
Affiliates..................... 2,971 2,438 8,443 10,271
Professional services to
non-affiliates................. - 778 19,514 20,120
General and administrative
expenses to Affiliates......... 3,756 3,827 12,175 11,831
General and administrative
expenses to non-affiliates..... 998 517 3,507 2,925
------- ------ ------- -------
7,725 7,560 43,639 45,147
------- ------ ------- -------
Net income................... $26,493 37,377 80,226 90,038
======= ====== ======= =======
Net income allocated to:
General Partner.................. 1,063 1,681 4,345 4,679
Limited Partners................. 25,430 35,696 75,881 85,359
------- ------ ------- -------
Net income....................... $26,493 37,377 80,226 90,038
======= ====== ======= =======
Net income allocated to the one
General Partner Unit............. $ 1,063 1,681 4,345 4,679
======= ====== ======= =======
Net income per Limited Partner Unit
(5,674.50 for 1995 and 1994)..... $ 4.48 6.29 13.37 15.04
======= ====== ======= =======
See accompanying notes to financial statements.
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INLAND MORTGAGE INVESTORS FUND III, L.P.
(a limited partnership)
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
(unaudited)
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 80,226 90,038
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in assets and liabilities:
Accrued interest receivable........................... 4,349 51
Accounts payable...................................... 171 (694)
Due to Affiliates..................................... 8,107 (105)
--------- --------
Net cash provided by operating activities................. 92,853 89,290
--------- --------
Cash flows from investing activities:
Principal payments collected............................ 544,904 3,974
--------- --------
Net cash provided by investing activities................. 544,904 3,974
--------- --------
Cash flows from financing activities:
Supplemental Capital contributions...................... - 13,575
Cash distributions...................................... (665,396) (113,986)
--------- --------
Net cash used in financing activities..................... (665,396) (100,411)
--------- --------
Net decrease in cash and cash equivalents................. (27,639) (7,147)
Cash and cash equivalents at beginning of period.......... 99,103 77,342
--------- --------
Cash and cash equivalents at end of period................ $ 71,464 70,195
========= ========
Supplemental schedule of non-cash investing and
financing activities:
Accrued distributions payable............................. $ 22,758 34,980
========= ========
</TABLE>
See accompanying notes to financial statements.
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INLAND MORTGAGE INVESTORS FUND III, L.P.
(a limited partnership)
Notes to Financial Statements
September 30, 1995
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1994, which are
included in the Partnership's 1994 Annual Report as certain footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.
(1) Organization and Basis of Accounting
Inland Mortgage Investors Fund III, L.P. (the "Partnership"), was formed in
September 1988 pursuant to the Delaware Revised Uniform Limited Partnership Act
to make or acquire loans collateralized by mortgages on improved, income
producing properties. On January 9, 1989, the Partnership commenced an
Offering of 40,000 (subject to an increase up to 50,000) Limited Partnership
Units ("Units") pursuant to a Registration Statement on Form S-11 under the
Securities Act of 1933. The Offering terminated January 9, 1991, with total
sales of 5,674.50 Units, resulting in gross offering proceeds of $2,837,249,
not including the General Partner's contribution of $500 for one Unit. All of
the holders of these Units were admitted to the Partnership. Inland Real
Estate Investment Corporation is the General Partner.
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.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations. Interim periods are
not necessarily indicative of results to be expected for the year.
(2) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services to Affiliates and general and administrative expenses to
Affiliates, of which $1,860 and $150 remained unpaid at September 30, 1995 and
December 31, 1994, respectively.
Due to Affiliates includes $6,397 owed to another partnership sponsored by the
General Partner for a remittance adjustment to the mortgage loan receivable
which is participated between the two partnerships.
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<PAGE>
INLAND MORTGAGE INVESTORS FUND III, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
September 30, 1995
(unaudited)
The General Partner was required to make Supplemental Capital Contributions, if
necessary, from time to time in sufficient amounts to allow the Partnership to
make cumulative distributions to the Limited Partners amounting to at least 8%
per annum on their Invested Capital through January 9, 1994. The cumulative
amount of such Supplemental Capital Contributions at September 30, 1995 is
$306,874, all of which has been paid.
The Partnership has arranged for Inland Mortgage Servicing Corporation
("IMSC"), a subsidiary of the General Partner, to service the Partnership's
mortgage loans receivable. The services include processing mortgage
collections and escrow deposits and maintaining related records. For these
services, the Partnership is obligated to pay fees at an annual rate equal to
1/4 of 1% of the outstanding mortgage loans receivable of the Partnership.
Such fees of $3,069 and $3,354 for the nine months ended September 30, 1995 and
1994, respectively, have been incurred and paid to IMSC and are included in
general and administrative expenses to Affiliates.
3) Mortgage Loans Receivable
Mortgage loans receivable are collateralized by first mortgages on improved,
income producing properties located in the Chicago metropolitan area. As
additional collateral, the Partnership will hold assignments of rents and
leases or personal guarantees of the borrowers. Generally, the mortgage notes
are payable in equal monthly installments based on 20 or 30 year amortization
periods.
In June 1995, the borrower on the loan collateralized by the property located
at 7432 Washington made a partial paydown on the mortgage. The Partnership
received $23,357, its proportionate share of the total paydown.
In July 1995, the loan collateralized by the property located at 9716-18 and
9806-12 Mayline was prepaid by the borrower. The Partnership received
$501,760, its proportionate share of the total prepayment.
In July 1995, the borrower on the loan collateralized by the property located
at 7432 Washington made an additional partial paydown on the mortgage. The
Partnership received $17,143, its proportionate share of the total paydown.
(4) Subsequent Events
In October 1995, the Partnership paid a distribution of $22,758 to the
Partners, of which $21,695 was distributed to the Limited Partners, including
$1,506 of principal amortization and $20,189 of net interest income; and
$1,063 was distributed to the General Partner.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
On January 9, 1989, the Partnership commenced an Offering of 40,000 (subject to
an increase to 50,000) Limited Partnership Units pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. The Offering
terminated on January 9, 1991 with total sales of 5,674.50 Units being sold to
the public at $500 per Unit resulting in $2,837,249 gross offering proceeds
which were received by the Partnership, not including the General Partner's
contribution for one Unit of $500. The Partnership funded seven loans between
October 1990 and June 1992 utilizing $2,302,064 of capital proceeds collected.
As of September 30, 1995, cumulative distributions to the Limited Partners
totaled $2,159,713, including $1,095,163 of repayment proceeds and principal
amortization, $51,147 from working capital reserves, $706,529 from operations
and $306,874 in Supplemental Capital Contributions from the General Partner.
As of September 30, 1995, the Partnership had cash and cash equivalents of
$71,464. The Partnership intends to use such remaining funds to pay
distributions and for working capital requirements.
The mortgage loans receivable of the Partnership are generating sufficient cash
flow to cover the operating expenses of the Partnership. To the extent that
cash flow was insufficient to meet the minimum 8% annualized distribution to
investors through January 9, 1994, as well as any other financial needs, the
Partnership received Supplemental Capital Contributions from the General
Partner. The sources of future liquidity and distributions to the Limited and
General Partners are expected to be from the collection of interest and
repayment of principal of the Partnership's mortgage loan investments. To the
extent that these sources are 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 liquidate certain mortgage loans or other assets.
Results of Operations
The decrease in interest income on mortgage loans for the three and nine months
ended September 30, 1995, as compared to the three and nine months ended
September 30, 1994, is due to the payoff the loan collateralized by the
property located at 9617-18 and 9806-12 Mayline in July 1995 and the partial
paydowns of the loan collateralized by the property located at 7432 Washington
in the second and third quarters of 1995..
The decrease in professional services to Affiliates for the nine months ended
September 30, 1995, as compared to the nine months ended September 30, 1994, is
due to a decrease in accounting fees paid to Affiliates.
PART II
Items 1 through 6(b) are omitted because of the absence of conditions under
which they are required.
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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 MORTGAGE INVESTORS FUND III, L.P.
By: Inland Real Estate Investment Corporation
General Partner
By: Robert D. Parks
Chairman
Date: November 13, 1995
By: Mark Zalatoris
Vice President
Date: November 13, 1995
By: Cynthia M. Hassett
Principal Financial Officer and
Principal Accounting Officer
Date: November 13, 1995
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 71,464
<SECURITIES> 0
<RECEIVABLES> 1,227,262
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 81,932
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,298,726
<CURRENT-LIABILITIES> 31,851
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,266,875
<TOTAL-LIABILITY-AND-EQUITY> 1,298,726
<SALES> 0
<TOTAL-REVENUES> 123,865
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 43,639
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 80,226
<INCOME-TAX> 0
<INCOME-CONTINUING> 80,226
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 80,226
<EPS-PRIMARY> 13.37
<EPS-DILUTED> 13.37
</TABLE>
