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 #0-19220
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 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 LAND APPRECIATION 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).............. $ 1,604,362
471,223
Accounts and accrued interest receivable
(Note 5)...................................... 169,608
129,269
Other current assets............................ 906
2,136
------------ -
- -----------
Total current assets.............................. 1,774,876
602,628
------------ -
- -----------
Mortgage loans receivable (Note 5)................ 1,443,792
1,453,943
Investment properties (including acquisition
fees paid to Affiliates of $1,831,666 and
$1,845,438 at March 31, 2000 and December 31,
1999, respectively) (Notes 1 and 3):
Land and improvements........................... 37,502,351
38,249,783
Buildings....................................... 93,082
93,082
------------ -
- -----------
37,595,433
38,342,865
Less accumulated depreciation................... 22,366
21,590
Total investment properties, net of accumulated ------------ -
- -----------
depreciation.................................... 37,573,067
38,321,275
------------ -
- -----------
Total assets...................................... $40,791,735
40,377,846
============
============
See accompanying notes to financial statements.
-2-
INLAND LAND APPRECIATION 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................................ $ 48,710
38,560
Accrued real estate taxes....................... 138,981
107,546
Due to Affiliates (Note 2)...................... 78,705
54,577
Unearned income................................. 113,543
41,674
------------ -
- -----------
Total current liabilities......................... 379,939
242,357
------------ -
- -----------
Deferred gain on sale of investment
properties (Note 5)............................. 752,062
758,342
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution........................... 500
500
Cumulative net income.......................... 617,727
618,083
Cumulative cash distributions.................. (259,531)
(259,531)
------------ -
- -----------
358,696
359,052
Limited Partners: ------------ -
- -----------
Units of $1,000. Authorized 60,000 Units,
50,089 Units outstanding (net of offering
costs of $7,532,439, of which $2,535,445 was
paid to Affiliates)........................... 42,574,139
42,574,139
Cumulative net income.......................... 10,520,005
10,237,062
Cumulative cash distributions.................. (13,793,106)
(13,793,106)
------------ -
- -----------
39,301,038
39,018,095
------------ -
- -----------
Total Partners' capital........................... 39,659,734
39,377,147
------------ -
- -----------
Total liabilities and Partners' capital........... $40,791,735
40,377,846
============
============
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, 2000 and 1999
(unaudited)
2000
1999
Income: ----
- ----
Sale of investment properties (Notes 1 and 3)... $ 1,174,765
609,348
Recognition of deferred gain on sale of
investment properties......................... 6,279
1,841
Rental income (Note 4).......................... 98,324
96,510
Interest income................................. 45,051
33,174
------------ -
- -----------
1,324,419
740,873
------------ -
- -----------
Expenses:
Cost of investment properties sold.............. 862,870
441,975
Professional services to Affiliates............. 16,272
12,435
Professional services to non-affiliates......... 30,023
34,708
General and administrative expenses to
Affiliates.................................... 8,764
12,278
General and administrative expenses to
non-affiliates................................ 16,716
21,875
Marketing expenses to Affiliates................ 7,525
10,112
Marketing expenses to non-affiliates............ 29,070
24,429
Land operating expenses to Affiliates........... 20,920
21,598
Land operating expenses to non-affiliates....... 48,896
46,260
Depreciation.................................... 776
776
------------ -
- -----------
1,041,832
626,446
------------ -
- -----------
Net income........................................ $ 282,587
114,427
============
============
Net income (loss) allocated to:
General Partner................................. (356)
(548)
Limited Partners................................ 282,943
114,975
------------ -
- -----------
Net income........................................ $ 282,587
114,427
============
============
Net income (loss) allocated to the one General
Partner Unit.................................... $ (356)
(548)
============
============
Net income per Unit allocated to Limited Partners
per weighted average Limited Partnership Units
(50,089 and 50,119 for the three months
ended March 31, 2000 and 1999, respectively).... $ 5.65
2.29
============
============
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, 2000 and 1999
(unaudited)
2000
1999
Cash flows from operating activities: ----
- ----
Net income...................................... $ 282,587
114,427
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation.................................. 776
776
Gain on sale of investment properties......... (311,895)
(167,373)
Recognition of deferred gain on sale of
investment properties....................... (6,280)
(1,841)
Changes in assets and liabilities:
Accounts and accrued interest receivable.... (40,339)
(43,321)
Other current assets........................ 1,230
1,255
Accounts payable............................ 10,150
23,129
Accrued real estate taxes................... 31,435
30,826
Due to Affiliates........................... 24,128
12,965
Unearned income............................. 71,869
73,394
------------ -
- -----------
Net cash provided by operating activities......... 63,661
44,237
------------ -
- -----------
Cash flows from investing activities:
Principal payments on mortgage loans receivable. 10,151
2,977
Additions to investment properties.............. (115,438)
(131,200)
Proceeds from sale of investment properties..... 1,174,765
609,348
------------ -
- -----------
Net cash provided by investing activities......... 1,069,478
481,125
------------ -
- -----------
Net increase in cash and cash equivalents......... 1,133,139
525,362
Cash and cash equivalents at beginning of
period.......................................... 471,223
340,191
------------ -
- -----------
Cash and cash equivalents at end of period........ $ 1,604,362
865,553
============
============
See accompanying notes to financial statements.
-5-
INLAND LAND APPRECIATION 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 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, 2000, the
Partnership has
repurchased a total of 386.65 Units for $369,592 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.
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.
-6-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2000
(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 $24,203 and $878 was unpaid as of March 31, 2000 and
December 31, 1999,
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 $20,920 and
$21,598 have been incurred for the three months ended March 31,
2000 and 1999,
respectively. As of March 31, 2000 and December 31, 1999,
$20,920 and $0,
respectively, was unpaid.
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
$7,525 and $10,112
have been incurred for the three months ended March 31,
2000 and 1999,
respectively, and are included in marketing expenses to
Affiliates. As of
March 31, 2000 and December 31, 1999, $4,124 and $0, respectively,
was unpaid.
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 are included in investment
properties. As
of March 31, 2000 and December 31, 1999, $29,458 and $53,699,
respectively, was
unpaid.
-7-
<TABLE> INLAND LAND APPRECIATION
FUND II, L.P.
(a limited
partnership)
Notes to Financial
Statements
(continued)
(3) Investment Properties
<CAPTION>
Total
Gross Initial Costs
Costs Remaining Current
Acres Purchase/ ----------------------------
- ---------- Capitalized Costs of Costs of Year Gain
Parcel Location: Purchased Sales Original Acquisition
Total Subsequent to Property Parcels at on Sale
# County (Sold) Date Costs Costs
Costs Acquisition Sold 03/31/00 Recognized
- ------ --------- --------- ---------- ------------ ------------ --
- ---------- -------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
1 McHenry 372.759 04/25/90 $ 2,114,295 114,070
2,228,365 535,625 - 2,763,990 -
2 Kendall 41.118 07/06/90 549,639 43,889
593,528 10,975 - 604,503 -
3 Kendall 120.817 11/06/90 1,606,794 101,863
1,708,657 36,198 - 1,744,855 -
4 Kendall 299.025 06/28/91 1,442,059 77,804
1,519,863 4,212 - 1,524,075 -
5 Kane 189.0468 02/28/91 1,954,629 94,569
2,049,198 228,147 - 2,277,345 -
6 Lake 57.3345 04/16/91 904,337 71,199
975,536 22,165 4,457 993,244 -
(.258) 10/01/94
7 McHenry 56.7094 04/22/91 680,513 44,444
724,957 3,160,628 3,448,331 437,254 127,320
(12.6506) Var 1997
(15.7041) Var 1998
(19.6296) Var 1999
(1.9027) 02/01/00
8 Kane 325.394 06/14/91 3,496,700 262,275
3,758,975 29,640 10,000 3,778,615 -
(.870) 04/03/96
9 Will 9.867 08/13/91 217,074 988
218,062 11,173 - 229,235 -
10 Will 150.66 08/20/91 1,866,716 89,333
1,956,049 10,569 - 1,966,618 -
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 9,296 - 475,670 -
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 49,453 - 1,005,723 -
15 Kendall 100.364 09/04/91 1,050,000 52,694
1,102,694 117,829 1,220,523 - -
(5.000) 09/01/93
(11.000) 12/01/94
(84.364) 08/14/98
16 McHenry 168.905 09/13/91 1,402,058 69,731
1,471,789 94,701 - 1,566,490 -
17 Kendall 3.462 10/30/91 435,000 22,326
457,326 19,227 - 476,553 -
18 McHenry 139.1697 11/07/91 1,160,301 58,190
1,218,491 270,052 - 1,488,543 -
------------ ------------ ---
- --------- -------------- ------------ ------------ ------------
Subtotal $20,641,999 1,214,121
21,856,120 4,612,590 5,135,997 21,332,713 127,320
-
8-
-8-
INLAND LAND
APPRECIATION FUND II, L.P.
(a limited
partnership)
Notes to
Financial Statements
(continued)
(3) Investment Properties (continued)
Total
Gross Initial Costs
Costs Remaining Current
Acres Purchase/ ----------------------------
- ---------- Capitalized Costs of Costs of Year Gain
Parcel Location: Purchased Sales Original Acquisition
Total Subsequent to Property Parcels at on Sale
# County (Sold) Date Costs Costs
Costs Acquisition Sold 03/31/00 Recognized
- ------ --------- --------- ---------- ------------ ------------ --
- ---------- -------------- ------------ ------------ ----------
Subtotal $20,641,999 1,214,121
21,856,120 4,612,590 5,135,997 21,332,713 127,320
19 Kane 436.236 12/13/91 4,362,360 321,250
4,683,610 173,134 - 4,856,744 -
20 Kane &
Kendall 400.129 01/31/92 1,692,623 101,318
1,793,941 1,210,146 1,250,469 1,753,618 -
(21.138) 06/30/99
21 Kendall 15.013 05/26/92 250,000 23,844
273,844 10,252 18,798 265,298 -
(1.000) 03/16/99
22 Kendall 391.959 10/30/92 3,870,000 283,186
4,153,186 159,990 190,683 4,122,493 -
(10.000) 01/06/94
(5.538) 01/05/96
(2.400) 07/27/99
23 (c) Kendall 133.2074 10/30/92 3,231,942 251,373
3,483,315 4,590,798 6,854,881 1,219,232 76,625
(11.525) 07/16/93
(44.070) Var 1995
(8.250) Var 1996
(2.610) Var 1997
(10.6624) Var 1998
(5.8752) Var 1999
(1.5232) Var 2000
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 6,867 - 708,183 -
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 1,794,075 949,745 2,115,197 107,950
(2.108) Var 1999
(5.792) 03/01/00
27 Kendall 83.525 03/11/93 984,474 54,846
1,039,320 14,102 - 1,053,422 -
------------ ------------ ---
- --------- -------------- ------------ ------------ -----------
$38,810,025 2,504,276
41,314,301 12,594,627 16,313,495 37,595,433 311,895
============ ============
============ ============== ============ ============ ===========
</TABLE>
-9-
-9-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2000
(unaudited)
(3) Investment Properties (continued)
(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 is 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,
2000, 207 of the
243 single-family lots.
(d) Reconciliation of investment properties and improvements
owned:
March 31,
December 31,
2000
1999
------------ -
- -----------
Balance at January 1,........................... $38,342,865
39,309,364
Additions during period......................... 115,438
3,165,180
Sales during period............................. (862,870)
(4,131,679)
------------ -
- -----------
Balance at end of period........................ $37,595,433
38,342,865
============
============
(e) Reconciliation of accumulated depreciation:
2000
1999
----
- ----
Balance at January 1,........................... $ 21,590
18,487
Depreciation expense............................ 776
3,103
------------ -
- -----------
Balance at end of period........................ $ 22,366
21,590
============
============
(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, 2000, the Partnership had farm leases of
generally one year in
duration, for approximately 2,866 acres of the approximately 3,395
acres owned.
-10-
INLAND LAND APPRECIATION FUND II, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 2000
(unaudited)
(5) Mortgage Loans Receivable
Mortgage loans receivable are the result of sales of Parcels,
in whole or in
part. The Partnership has recorded a deferred gain on
these sales. The
deferred gain will be recognized over the life of the related
mortgage loan
receivable as principal payments are received. At March 31,
2000, the fair
market value of the mortgage loans receivable approximated
their carrying
value.
Accrued
Interest
Deferred
Interest Principal Balance Receivable
Gain
Parcel Maturity Rate 03/31/00 12/31/99 03/31/00
03/31/00
- ------ --------- -------- ----------- ------------- -------------
- -----------
15 07/31/01 9.00% $1,215,792 1,215,792 145,838
752,062
26 10/04/04 8.00% 228,000 228,000 9,045
- -
----------- ----------- -----------
- -----------
$1,443,792 1,443,792 154,883
752,062
=========== =========== ===========
===========
(6) Subsequent Events
On April 7, 2000, the Partnership sold 4 lots of Parcel 26,
the Sugar Grove
parcel, to an unaffiliated third party for $167,000. The
Partnership received
net sales proceeds of $166,499 and recorded a gain on sale of
$48,635.
-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 "forward-looking statements" within the
meaning of the
Federal Private Securities Litigation Reform Act of 1995.
These forward-
looking statements involve known and unknown risks,
uncertainties and other
factors which may cause the Partnership's actual results,
performance or
achievements to be materially different from any future results,
performance or
achievements expressed or implied by these forward-looking
statements. These
factors include, among other things, federal, state or local
regulations;
adverse changes in general economic or local conditions;
inability of borrower
to meet financial obligations; uninsured losses; and potential
conflicts of
interest between the Partnership and its Affiliates,
including the General
Partner.
Liquidity and Capital Resources
On October 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, 2000, the Partnership has had multiple sales
transactions through
which it has disposed of approximately 1,085 acres of the
approximately 4,480
acres originally owned. As of March 31, 2000, cumulative
distributions have
totaled $13,793,106 to the Limited Partners and $259,531 to
the General
Partner. Of the $13,793,106 distributed to the Limited
Partners, $13,072,106
was from 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, 2000, the Partnership has used $12,594,627 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, 2000, the Partnership owns, in
whole or in part,
twenty-three 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, 2000, the Partnership had cash and cash equivalents
of $1,604,362
of which approximately $261,000 is reserved for the repurchase of
Units through
the Unit Repurchase Program. The remaining approximately
$1,343,362 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 3 is zoned for various manufacturing uses
and preliminary
planning is in progress. Parcels 5 and 19 are under contract for
sale and the
purchaser has an approved plan with the Village of Elburn.
Parcel 7, the Olde
Mill Ponds on Boone Creek subdivision, has closed all of the
total 130 single-
family lots which were under contract with a homebuilder (see
Note 3 of the
Notes to Financial Statements). Parcels 14, 17 and 24 were
rezoned for
commercial and multi-family uses in 1999 and are currently being
marketed for
sale with approximately 20 acres under contract for sale. Parcel
18, zoned for
multi- and single-family use, is being marketed to potential
homebuilders. As
of March 31, 2000, the Partnership has sold 208 of the 243
single-family lots
at the Ponds of Mill Race Creek (Parcel 23) in addition to the
multi-family
portion, the Winding Waters of Mill Race Creek. Parcel 26 is
under development
for single family homes with all 170 lots under contract for
sale, as of March
31, 2000, 33 of the 170 lots have already closed (see Note 3 of
the Notes to
Financial Statements).
Results of Operations
Income from the sale of investment properties and cost of
investment properties
sold for the three months ended March 31, 2000 is the result
of the sale of
approximately nine acres, consisting of additional lots at the
Olde Mill Ponds
on Boone Creek subdivision (Parcel 7), the sale of additional lots
at the Ponds
of Mill Race Creek subdivision (Parcel 23), and the sale of
additional lots of
the Bliss Woods subdivision (Parcel 26). Income from the sale
of investment
properties and the cost of investment properties sold for the
three months
ended March 31, 1999 is the result of the sale of
approximately six acres,
consisting of additional lots at the Olde Mill Ponds at Boone
Creek subdivision
(Parcel 7), the sale of additional lots at the Ponds of
Mill Race Creek
subdivision (Parcel 23) and the sale of one acre of Parcel 21.
As of March 31, 2000, the Partnership owned twenty-three
parcels of land
consisting of approximately 3,395 acres and one office
building. Of the
approximately 3,395 acres owned, 2,866 acres are tillable,
leased to local
farmers and generate sufficient cash flow to cover property
taxes, insurance
and other miscellaneous expenses. Rental income increased
for the three
months ended March 31, 2000, as compared to the three months
ended March 31,
1999, due to the annual increase in lease amounts from tenants.
-13-
Interest income increased for the three months ended March
31, 2000, as
compared to the three months ended March 31, 1999, due
primarily to the
interest income earned on the mortgage loan receivable the
Partnership received
from the sale of a portion of Parcel 26, as well as an
increase in cash
available for investing due to the sale of land parcels since
December 31,
1999.
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
increases in legal services required by the Partnership, which
is partially
offset by a decrease in accounting 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
accounting fees.
General and administrative expenses to 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 investor services expenses.
General and
administrative expenses to non-affiliates decreased for the three
months ended
March 31, 2000, as compared to the three months ended March
31, 1999, due
primarily to a decrease in the Illinois Replacement Tax.
Marketing expenses to Affiliates decreased for the three months
ended March 31,
2000, as compared to the three months ended March 31, 1999, due
to an increase
in marketing costs capitalized to individual land parcels.
Marketing 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
advertising and promotion costs relating to marketing the land
portfolio to
prospective purchasers.
Land operating 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 ground maintenance expense and utilities expense.
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 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
-15-
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