UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 1997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File #0-19220
Inland Land Appreciation Fund II, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3664407
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60521
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 630-218-8000
N/A
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
-1-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Balance Sheets
March 31, 1997 and December 31, 1996
(unaudited)
Assets
------
1997 1996
Current assets: ---- ----
Cash and cash equivalents (Note 1).............. $ 3,920,297 3,904,046
Investments in marketable securities (Note 1)... 1,811,736 2,232,785
Accounts and accrued interest receivable........ 105,294 28,778
Deposits and other current assets............... 8,738 2,477
------------ ------------
Total current assets.............................. 5,846,065 6,168,086
------------ ------------
Investment properties (including acquisition
fees paid to Affiliates of $2,020,407 and
$2,020,973 at March 31, 1997 and December 31,
1996, respectively) (Notes 1 and 3):
Land and improvements........................... 41,010,495 40,514,211
Buildings....................................... 93,082 93,082
------------ ------------
41,103,577 40,607,293
Less accumulated depreciation................... 13,057 12,282
Total investment properties, net of accumulated ------------ ------------
depreciation.................................... 41,090,520 40,595,011
------------ ------------
Total assets...................................... $46,936,585 46,763,097
============ ============
See accompanying notes to financial statements.
-2-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Balance Sheets
(continued)
March 31, 1997 and December 31, 1996
(unaudited)
Liabilities and Partners' Capital
----------------------------------
1997 1996
---- ----
Current liabilities:
Accounts payable................................ $ 67,047 65,387
Accrued real estate taxes....................... 131,291 104,059
Due to Affiliates (Note 3)...................... 95,573 4,307
Unearned income................................. 100,340 70,088
------------ ------------
Total current liabilities......................... 394,251 243,841
------------ ------------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution........................... 500 500
Cumulative net income.......................... 449,190 449,394
Cumulative cash distributions.................. (93,034) (93,034)
------------ ------------
356,656 356,860
Limited Partners: ------------ ------------
Units of $1,000. Authorized 60,000 Units,
50,184.52 Units outstanding (net of offering
costs of $7,532,439, of which $2,535,445 was
paid to Affiliates)........................... 42,655,371 42,655,371
Cumulative net income.......................... 6,367,366 6,343,988
Cumulative cash distributions.................. (2,837,059) (2,836,963)
------------ ------------
46,185,678 46,162,396
------------ ------------
Total Partners' capital....................... 46,542,334 46,519,256
------------ ------------
Total liabilities and Partners' capital........... $46,936,585 46,763,097
============ ============
See accompanying notes to financial statements.
-3-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Statements of Operations
For the three months ended March 31, 1997 and 1996
(unaudited)
1997 1996
Income: ---- ----
Sale of investment properties (Notes 1 and 3)... $ 77,887 430,140
Rental income (Note 4).......................... 91,907 76,740
Interest income................................. 85,612 72,947
------------ ------------
255,406 579,827
------------ ------------
Expenses:
Cost of investment properties sold.............. 34,337 263,002
Professional services to Affiliates............. 10,278 4,765
Professional services to non-affiliates......... 32,027 29,974
General and administrative expenses to
Affiliates.................................... 10,141 12,013
General and administrative expenses to
non-affiliates................................ 13,752 21,926
Marketing expenses to Affiliates................ 41,013 21,712
Marketing expenses to non-affiliates............ 24,078 5,582
Land operating expenses to Affiliates........... 22,901 23,218
Land operating expenses to non-affiliates....... 42,930 34,744
Depreciation.................................... 775 776
------------ ------------
232,232 417,712
------------ ------------
Net income........................................ $ 23,174 162,115
============ ============
Net income (loss) allocated to:
General Partner................................. (204) (50)
Limited Partners................................ 23,378 162,165
------------ ------------
Net income........................................ $ 23,174 162,115
============ ============
Net loss allocated to the one General Partner
Unit............................................ $ (204) (50)
============ ============
Net income per weighted average Limited
Partnership Units (50,184.52 and 50,190.46
for the three months ended March 31, 1997
and 1996, respectively)......................... $ .47 3.23
============ ============
See accompanying notes to financial statements.
-4-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Statements of Cash Flows
For the three months ended March 31, 1997 and 1996
(unaudited)
1997 1996
Cash flows from operating activities: ---- ----
Net income...................................... $ 23,174 162,115
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation.................................. 775 776
Gain on sale of investment properties......... (43,550) (167,138)
Changes in assets and liabilities:
Accounts and accrued interest receivable.... (76,516) (19,831)
Deposits and other current assets........... (6,261) (6,933)
Accounts payable............................ 1,660 90,885
Accrued real estate taxes................... 27,232 17,019
Due to Affiliates........................... 91,266 66,127
Unearned income............................. 30,252 48,212
------------ ------------
Net cash provided by operating activities......... 48,032 191,232
------------ ------------
Cash flows from investing activities:
Additions to investment properties.............. (530,621) (218,646)
Sale (purchase) of short-term investments....... 421,049 -
Proceeds from sale of investment properties..... 77,887 430,140
Net cash provided by (used in) investing ------------ ------------
activities...................................... (31,685) 211,494
------------ ------------
Cash flows from financing activities:
Cash distributions.............................. (96) (55)
------------ ------------
Net cash used in financing activities............. (96) (55)
------------ ------------
Net increase in cash and cash equivalents......... 16,251 402,671
Cash and cash equivalents at beginning of
period.......................................... 3,904,046 5,097,705
------------ ------------
Cash and cash equivalents at end of period........ $ 3,920,297 5,500,376
============ ============
See accompanying notes to financial statements.
-5-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
March 31, 1997
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1996, which are
included in the Partnership's 1996 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.
(1) Organization and Basis of Accounting
The Registrant, Inland Land Appreciation Fund II, L.P. (the "Partnership"), is
a limited partnership formed on June 28, 1989, 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 25, 1989,
the Partnership commenced an Offering of 30,000 (subject to increase to 60,000)
Limited Partnership Units pursuant to a Registration under the Securities Act
of 1933. The Amended and Restated Agreement of Limited Partnership (the
"Partnership Agreement") provides for Inland Real Estate Investment Corporation
to be the General Partner. On October 24, 1991, the Partnership terminated its
Offering of Units, with total sales of 50,476.17 Units, at $1,000 per Unit,
resulting in $50,476,170 in gross offering proceeds, not including the General
Partner's capital contribution of $500. All of the holders of these Units have
been admitted to the Partnership. As of March 31, 1997, the Partnership has
repurchased a total of 291.65 Units for $288,360 from various Limited Partners
through the Unit Repurchase Program. Under this program, Limited Partners may,
under certain circumstances, have their Units repurchased for an amount equal
to their Invested Capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Offering costs have been offset against the Limited Partners' capital accounts.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents and are carried at
cost, which approximates market.
Investments purchased with a maturity of three months or more are considered to
be investments in marketable securities and are carried at cost, which
approximates market.
-6-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
The Partnership adopted Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of" ("SFAS 121") as required in the first quarter of 1996. SFAS
121 requires that the Partnership record an impairment loss on its property to
be held for investment whenever its carrying value cannot be fully recovered
through estimated undiscounted future cash flows from their operations and
sale. The amount of the impairment loss to be recognized would be the
difference between the property's carrying value and the property's estimated
fair value. The adoption of SFAS 121 did not have any effect on the
Partnership's financial position, results of operations or liquidity.
For vacant land parcels and parcels with insignificant buildings and
improvements, 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. For parcels with significant buildings and improvements
(Parcel 24, described in Note 3), the Partnership records the buildings and
improvements at a cost based upon the appraised value at the date of
acquisition. Building and improvements are depreciated using the straight-line
method of depreciation over a useful life of thirty years. Repair and
maintenance expenses are charged to operations as incurred. Significant
improvements are capitalized and depreciated over their estimated useful lives.
The Partnership is required to pay a withholding tax to the Internal Revenue
Service with respect to a Partner's allocable share of the Partnership's
taxable net income, if the Partner is a foreign person. The Partnership will
first pay the withholding tax from the distributions to any foreign partner,
and to the extent that the tax exceeds the amount of distributions withheld, or
if there have been no distributions to withhold, the excess will be accounted
for as a distribution to the foreign partner. Withholding tax payments are made
every April, June, September and December.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations for the period
presented herein. Results of interim periods are not necessarily indicative of
results to be expected for the year.
-7-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
(2) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services and general and administrative expenses to Affiliates, of
which $24,426 and $4,307 were unpaid as of March 31, 1997 and December 31,
1996, 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 $22,901 and
$23,218 have been incurred for the three months ended March 31, 1997 and 1996,
respectively, and are included in land operating expenses to Affiliates, of
which $22,901 was unpaid as of March 31, 1997.
An Affiliate of the General Partner performed sales marketing and advertising
services for the Partnership and was reimbursed (as set forth under terms of
the Partnership Agreement) for direct costs. Such costs of $41,013 and $21,712
have been incurred and are included in marketing expenses to Affiliates for the
three months ended March 31, 1997 and 1996, respectively, of which $40,996 was
unpaid as of March 31, 1997.
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 $7,250 have been incurred for the three
months ended March 31, 1997 and are included in investment properties, of which
$7,250 was unpaid as of March 31, 1997.
-8-
<TABLE> INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investment Properties
<CAPTION>
The following real property investments are owned by the Partnership as of March 31, 1997:
Total
Gross Initial Costs Costs Remaining Current
Acres Purchase/ -------------------------------------- Capitalized Costs of Costs of Year Gain
Parcel Location: Purchased Sales Original Acquisition Subsequent to Property Parcels at on Sale
# County (Sold) Date Costs Costs Total Acquisition Sold 3/31/97 Recognized
- ------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 McHenry 372.759 04/25/90 $ 2,114,295 114,070 2,228,365 243,964 - 2,472,329 -
2 Kendall 41.118 07/06/90 549,639 43,889 593,528 7,327 - 600,855 -
3 Kendall 120.817 11/06/90 1,606,794 101,863 1,708,657 5,893 - 1,714,550 -
4 Kendall 299.025 06/28/91 1,442,059 77,804 1,519,863 661 - 1,520,524 -
5 Kane 189.0468 02/28/91 1,954,629 94,569 2,049,198 146,302 - 2,195,500 -
6 Lake 57.3345 04/16/91 904,337 71,199 975,536 16,172 4,457 987,251 -
(.258) 10/01/94
7 McHenry 56.7094 04/22/91 680,513 44,444 724,957 1,144,430 34,337 1,835,050 43,550
(.8724) 02/12/97
8 Kane 325.394 06/14/91 3,496,700 262,275 3,758,975 24,171 10,000 3,773,146 -
(.870) 04/03/96
9 Will 9.867 08/13/91 217,074 988 218,062 1,037 - 219,099 -
10 Will 150.66 08/20/91 1,866,716 89,333 1,956,049 274 - 1,956,323 -
11 Will 138.447 08/20/91 289,914 20,376 310,290 2,700 312,990 - -
(138.447) 05/03/93
12 Will 44.732 08/20/91 444,386 21,988 466,374 191 - 466,565 -
13 Will 6.342 09/23/91 139,524 172 139,696 - 139,696 - -
(6.342) 05/03/93
14 Kendall 44.403 09/03/91 888,060 68,210 956,270 711 - 956,981 -
15 Kendall 100.364 09/04/91 1,050,000 52,694 1,102,694 52,222 177,298 977,618 -
(5.000) 09/01/93
(11.000) 12/01/94
16 McHenry 168.905 09/13/91 1,402,058 69,731 1,471,789 79,954 - 1,551,743 -
17 Kendall 3.462 10/30/91 435,000 22,326 457,326 448 - 457,774 -
18 McHenry 139.1697 11/07/91 1,160,301 58,190 1,218,491 225,469 - 1,443,960 -
------------ ------------ ------------ -------------- ------------ ------------ ------------
Subtotal $20,641,999 1,214,121 21,856,120 1,951,926 678,778 23,129,268 43,550
</TABLE>
-9-
<TABLE>
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investment Properties (continued)
<CAPTION> Total
Gross Initial Costs Costs Remaining Current
Acres Purchase/ -------------------------------------- Capitalized Costs of Costs of Year Gain
Parcel Location: Purchased Sales Original Acquisition Subsequent to Property Parcels at on Sale
# County (Sold) Date Costs Costs Total Acquisition Sold 3/31/97 Recognized
- ------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Subtotal $20,641,999 1,214,121 21,856,120 1,951,926 678,778 23,129,268 43,550
19 Kane 436.236 12/13/91 4,362,360 321,250 4,683,610 118,152 - 4,801,762 -
20 Kane &
Kendall 400.129 01/31/92 1,692,623 101,318 1,793,941 46,673 - 1,840,614 -
21 Kendall 15.013 05/26/92 250,000 23,844 273,844 6,331 - 280,175 -
22 Kendall 391.959 10/30/92 3,870,000 283,186 4,153,186 90,460 164,804 4,078,842 -
(10.000) 01/06/94
(5.538) 01/05/96
23 (c) Kendall 133.2074 10/30/92 3,231,942 251,373 3,483,315 4,257,244 4,003,880 3,736,679 -
(11.525) 07/16/93
(44.070) Var 1995
(8.250) Var 1996
23A(a) Kendall .2676 10/30/92 170,072 12,641 182,713 - 182,713 - -
(.2676) 03/16/93
24 Kendall 3.908 01/21/93 645,000 56,316 701,316 736 - 702,052 -
24A(b) Kendall .406 01/21/93 155,000 13,533 168,533 - - 168,533 -
25 Kendall 656.687 01/28/93 1,625,000 82,536 1,707,536 22,673 1,730,209 - -
(656.687) 10/31/95
26 Kane 89.511 03/10/93 1,181,555 89,312 1,270,867 54,634 - 1,325,501 -
27 Kendall 83.525 03/11/93 984,474 54,846 1,039,320 831 - 1,040,151 -
------------ ------------ ------------ -------------- ------------ ------------ -----------
$38,810,025 2,504,276 41,314,301 6,549,660 6,760,384 41,103,577 43,550
============ ============ ============ ============== ============ ============ ===========
(a) Included in the purchase of Parcel 23 was a newly constructed 2,500 square foot house. The house was sold in March 1993.
(b) Included in the purchase of Parcel 24 was a 2,400 square foot office building.
(c) Parcel 23, annexed and zoned to Oswego, Illinois as part of the Mill Race Creek subdivision, consists of two parts: a 28-acre
multi-family portion and a 105-acre single-family portion. The Partnership sold the 28-acre multi-family portion on June 7, 1995
and as of March 31, 1997, 112 of the 243 single-family lots. Of the 131 remaining single-family lots, 122 are under contract for
sale with homebuilders.
</TABLE>
-10-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1997
(unaudited)
(3) Investment Properties (continued)
(d) Reconciliation of real estate owned:
1997 1996
---- ----
Balance at January 1,........................... $40,607,293 40,892,494
Additions during period......................... 530,621 888,754
Sales during period............................. 34,337 1,173,955
------------ ------------
Balance at end of period........................ $41,103,577 40,607,293
============ ============
(e) Reconciliation of accumulated depreciation:
1997 1996
---- ----
Balance at January 1,........................... $ 12,282 9,179
Depreciation expense............................ 775 3,103
Sales during period............................. - -
------------ ------------
Balance at end of period........................ $ 13,057 12,282
============ ============
(4) Farm Rental Income
The Partnership has determined that all leases relating to the farm parcels are
operating leases. Accordingly, rental income is reported when earned.
As of March 31, 1997, the Partnership had farm leases of generally one year in
duration, for approximately 3,045 acres of the approximately 3,580 acres owned.
-11-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this quarterly report on
Form 10-Q constitute of "forward-looking statements" within the meaning of the
Federal Private Securities Litigation Reform Act of 1995. These forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the Partnership's actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements. These
factors include, among other things, federal, state or local regulations;
adverse changes in general economic or local conditions; inability of borrower
to meet financial obligations; uninsured losses; and potential conflicts of
interest between the Partnership and its Affiliates, including the General
Partner.
Liquidity and Capital Resources
October 25, 1989, the Partnership commenced an Offering of 30,000 (subject to
increase to 60,000) Limited Partnership Units pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. On October 24, 1991,
the Partnership terminated its Offering of Units, with total sales of 50,476.17
Units, at $1,000 per Unit, resulting in $50,476,170 in gross offering proceeds,
not including the General Partner's capital contribution of $500. All of the
holders of these Units have been admitted to the Partnership. The Limited
Partners of the Partnership will share in their portion of benefits of
ownership of the Partnership's real property investments according to the
number of Units held.
The Partnership used $41,314,301 of gross offering proceeds to purchase, on an
all-cash basis, twenty-seven parcels of undeveloped land and two buildings.
These investments include the payment of the purchase price, acquisition fees
and acquisition costs of such properties. Three of the parcels were purchased
during 1990, sixteen during 1991, four during 1992 and four during 1993. As of
March 31, 1997, the Partnership has had multiple sales transactions through
which it has disposed of approximately 900 acres of the approximately 4,480
acres originally owned. As of March 31, 1997, cumulative distributions have
totaled $2,837,059 to the Limited Partners and $93,034 to the General Partner.
Of the $2,837,059 distributed to the Limited Partners, $2,116,059 was net sales
proceeds (which represents a return of Invested Capital, as defined in the
Partnership Agreement) and $721,000 was from operations. As of March 31, 1997,
the Partnership has used $6,549,660 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 March 31, 1997, the Partnership owns, in whole or in part,
twenty-four of its twenty-seven original parcels and one office building, the
majority of which are leased to local tenants and are generating sufficient
cash flow from leases to cover property taxes and insurance.
-12-
At March 31, 1997, the Partnership had cash, cash equivalents and investments
in marketable securities of $5,732,033, of which approximately $298,600 is
reserved for the repurchase of Units through the Unit Repurchase Program. The
remaining $5,433,433 is available to be used for the Partnership expenses and
liabilities, cash distributions to partners and other activities with respect
to some or all of its land parcels. The Partnership has increased its parcel
sales effort in anticipation of rising land values.
The Partnership plans to enhance the value of its land through pre-development
activities such as rezoning, annexation and land planning. The Partnership has
already been successful in, or is in the process of, pre-development activity
on a majority of the Partnership's land investments. Parcel 1, annexed to the
Village of Huntley and zoned for residential and commercial development, has
improvements in planning stage and sites are being marketed to potential
buyers. Parcel 7, annexed to the Village of McHenry and zoned residential, has
improvements underway and sites are being marketed. Sixty-five lots of the
total 130 single-family lots are under contract (see Note 3 of the Notes to
Financial Statements for sale of the first two lots on February 12, 1997).
Parcel 18, zoned for multi- and single-family use, is being marketed to
potential homebuilders. Parcel 15 has been zoned with development and sales
marketing underway. Parcel 23, the Ponds at Mill Race Creek Subdivision, has
234 of the total 243 single-family lots under contract with homebuilders, of
which 112 have already closed (see Note 3 of the Notes to Financial Statements
for further discussion on Parcel 23).
Results of Operations
Income from the sale of investment properties and cost of investment properties
sold recorded for the three months ended March 31, 1997 is a result of the sale
of lots 92 and 93 in the Olde Mill Ponds on Boone Creek Subdivision (Parcel 7).
Income from the sale of investment properties and cost of investment properties
sold recorded for the three months ended March 31, 1996 is a result of sales at
the Mill Race Creek Subdivision (Parcel 23) and the sale of approximately 5 1/2
acres of Parcel 22.
As of March 31, 1997, the Partnership owned twenty-four parcels of land
consisting of approximately 3,580 acres and one office building. Of the
approximately 3,580 acres owned, 3,045 acres are tillable, leased to local
farmers and generate sufficient cash flow to cover property taxes, insurance
and other miscellaneous expenses. The increase in rental income for the three
months ended March 31, 1997, as compared to the three months ended March 31,
1996, is due to an under-accrual of rental income for the three months ended
March 31, 1996. Land operating expenses to non-affiliates increased for the
three months ended March 31, 1997, as compared to the three months ended March
31, 1996, due to increases in repair and maintenance on incidental rental
buildings located on the Partnership's investment properties and real estate
taxes. This increase was partially offset by decreases in assessment fees and
insurance.
Interest income increased for the three months ended March 31, 1997, as
compared to the three months ended March 31, 1996, due to the Partnership
replenishing its working capital reserve from sales and an increase in interest
rates.
-13-
Professional services to Affiliates increased for the three months ended March
31, 1997, as compared to the three months ended March 31, 1996, due to an
increase in legal services related to the increase in sales activity within the
Partnership. Professional services to non-affiliates increased for the three
months ended March 31, 1997, as compared to the three months ended March 31,
1996, due primarily to an increase in outside legal services related to the
increase in sales activity within the Partnership.
General and administrative expenses to Affiliates decreased for the three
months ended March 31, 1997, as compared to the three months ended March 31,
1996, due primarily to an decrease in investor service expenses. General and
administrative expenses to non-affiliates decreased for the three months ended
March 31, 1997, as compared to the three months ended March 31, 1996, due
primarily to an decrease in the Illinois Replacement Tax paid by the
Partnership in 1997. This decrease was partially offset by increases in
postage and printing expenses.
Marketing expenses to Affiliates increased for the three months ended March 31,
1997, as compared to the three months ended March 31, 1996, due to an increase
in expenses relating to marketing and advertising the Partnership's land
investments for sale. Marketing expenses to non-affiliates increased for the
three months ended March 31, 1997, as compared to the three months ended March
31, 1996, due to an increase in advertising and travel expenses relating to
marketing the land portfolio to prospective purchasers.
PART II - Other Information
Items 1 through 5 are omitted because of the absence of conditions under which
they are required.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K:
None
-14-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INLAND LAND APPRECIATION FUND II, L.P.
By: Inland Real Estate Investment Corporation
General Partner
/S/ ROBERT D. PARKS
By: Robert D. Parks
Chairman
Date: May 14, 1997
/S/ PATRICIA A. CHALLENGER
By: Patricia A. Challenger
Senior Vice President
Date: May 14, 1997
/S/ KELLY TUCEK
By: Kelly Tucek
Principal Financial Officer and
Principal Accounting Officer
Date: May 14, 1997
-15-
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