-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F8pWY+mi4xcCa+FbyBc23dKMhH5vQXhHrJlixPaHxUVnwjEEUzrnX8ybhJWWFhDN 9ZBF4dCZwaUe6zq96x7p9A== 0000786149-98-000001.txt : 19980319 0000786149-98-000001.hdr.sgml : 19980319 ACCESSION NUMBER: 0000786149-98-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980318 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INLAND MORTGAGE INVESTORS FUND LP CENTRAL INDEX KEY: 0000786149 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 363436439 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-15759 FILM NUMBER: 98568179 BUSINESS ADDRESS: STREET 1: 2901 BUTTERFIELD RD CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7082188000 MAIL ADDRESS: STREET 1: 2901 BUTTERFIELD ROAD CITY: OAK BROOK STATE: IL ZIP: 60521 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For The Fiscal Year Ended December 31, 1997 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File #0-15759 Inland Mortgage Investors Fund, L.P. (Exact name of registrant as specified in its charter) Delaware 36-3436439 (State of organization) (I.R.S. Employer Identification Number) 2901 Butterfield Road, Oak Brook, Illinois 60523 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: 630-218-8000 Securities registered pursuant to Section 12(b) of the Act: Title of each class: Name of each exchange on which registered: None None Securities registered pursuant to Section 12(g) of the Act: LIMITED PARTNERSHIP UNITS (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by nonaffiliates of the registrant. Not applicable. The Prospectus of the Registrant dated February 12, 1986, as supplemented and filed pursuant to Rule 424(b) and 424(c) under the Securities Act of 1933 is incorporated by reference in Parts I, II and III of this Annual Report on Form 10-K. -1- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) TABLE OF CONTENTS Part I Page ------ ---- Item 1. Business...................................................... 3 Item 2. Properties.................................................... 3 Item 3. Legal Proceedings............................................. 3 Item 4. Submission of Matters to a Vote of Security Holders........... 3 Part II ------- Item 5. Market for the Partnership's Limited Partnership Units and Related Security Holder Matters.......................... 4 Item 6. Selected Financial Data....................................... 5 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 6 Item 8. Financial Statements and Supplementary Data................... 8 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....................... 21 Part III -------- Item 10. Directors and Executive Officers of the Registrant............ 21 Item 11. Executive Compensation........................................ 26 Item 12. Security Ownership of Certain Beneficial Owners and Management................................................... 27 Item 13. Certain Relationships and Related Transactions................ 27 Part IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................................................. 28 SIGNATURES............................................................. 29 -2- PART I Item 1. Business The Registrant, Inland Mortgage Investors Fund, L.P. (the "Partnership"), is a limited partnership formed on December 5, 1985 pursuant to the Delaware Revised Uniform Limited Partnership Act. On February 12, 1986, the Partnership commenced an Offering of 40,000 Limited Partnership Units (the "Units") at $500 per Unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on February 12, 1987, with total sales of 20,129.24 Units resulting in gross offering proceeds of $10,064,620, not including $500 which is the General Partner contribution. All of the holders of these Units were admitted to the Partnership. A majority of these proceeds were used to fund first mortgage loans. The Partnership funded fifteen loans between October 1986 and August 1988 utilizing $8,466,875 of offering proceeds collected, net of participations. As of December 31, 1997, $7,558,390 has been repaid, which includes principal amortization, payoffs on eleven loans, prepayment penalties and proceeds from the sale of three properties. The Limited Partners of the Partnership share in the benefits of ownership of the Partnership's first mortgage receivable investments in proportion to the number of Units held. Inland Real Estate Investment Corporation is the General Partner. The Partnership is engaged in the business of making and acquiring loans collateralized by mortgages on improved, income producing multi-family residential properties in or near Chicago, Illinois. The loans are being serviced by Inland Mortgage Servicing Corporation, a subsidiary of the General Partner. The Partnership does not segregate revenues or assets by geographic region, and such a presentation would not be material to an understanding of the Partnership's business taken as a whole. The Partnership had no employees during 1997. The terms of transactions between the Partnership and Affiliates of the General Partner are set forth in Item 11 below and Note 3 of the Notes to Financial Statements (Item 8 of this Annual Report) to which reference is hereby made. The Partnership has reviewed its current computer systems and does not anticipate any future problems relating to the year 2000. Item 2. Properties The Partnership acquired title to a 62-unit apartment building located in Aurora, Illinois on April 4, 1997 in settlement of a loan that had previously been in default. The property is currently being held for sale. Item 3. Legal Proceedings The Partnership is not subject to any material pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during 1997. -3- PART II Item 5. Market for the Partnership's Limited Partnership Units and Related Security Holder Matters As of December 31, 1997, there were 741 holders of Units of the Partnership. There is no public market for Units nor is it anticipated that any public market for Units will develop. Reference is made to Item 6 below for a discussion of cash distributions made to the Limited Partners. The Partnership's Liquidity Plan is available to the Limited Partners. See "Liquidity Plan" and "Distribution Reinvestment Plan," page 18 and pages 37-38, respectively, of the Prospectus of the Partnership dated February 12, 1986, which is incorporated herein by reference. At this time, there are no Limited Partners contributing to the DRP. -4- Item 6. Selected Financial Data INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) For the years ended December 31, 1997, 1996, 1995, 1994 and 1993 (not covered by the Report of Independent Accountants) 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- Total assets......... $1,232,074 4,965,920 5,923,235 6,470,865 7,142,969 =========== =========== =========== =========== ========== Total income......... $ 382,462 434,350 596,496 635,063 794,889 =========== =========== =========== =========== ========== Income from operations......... 58,174 361,529 521,719 555,677 541,702 Gain on sale of investment property - - - - 44,434 ----------- ----------- ----------- ----------- ---------- Net income........... $ 58,174 361,529 521,719 555,677 586,136 =========== =========== =========== =========== ========== Income from operations allocated to the one General Partner Unit$ 3,210 17,786 26,480 26,766 28,394 =========== =========== =========== =========== ========== Net income per Unit allocated to Limited Partners from (b): Operations........... 2.73 17.08 24.60 26.28 25.50 Gain on sale of investment property - - - - 2.21 ----------- ----------- ----------- ----------- ---------- $ 2.73 17.08 24.60 26.28 27.71 =========== =========== =========== =========== ========== Distributions to Limited Partners from: Operations........... 127,627 391,806 509,563 520,964 542,105 Repayment proceeds... 3,723,959 900,900 530,920 671,989 326,388 ----------- ----------- ----------- ----------- ---------- $3,851,586 1,292,706 1,040,483 1,192,953 868,493 =========== =========== =========== =========== ========== Distributions per Unit to Limited Partners from (b): Operations........... 6.34 19.46 25.31 25.88 26.93 Repayment proceeds... 185.00 44.76 26.38 33.38 16.22 ----------- ----------- ----------- ----------- ---------- $ 191.34 64.22 51.69 59.26 43.15 =========== =========== =========== =========== ========== (a) The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this Annual Report. (b) The net income per Unit, basic and diluted, and distributions per Unit are based upon the weighted average number of Units outstanding of 20,129.24. -5- Item 7. 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 annual report on Form 10-K constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward- looking statements involve known and unknown risks, uncertainties and other factors which may cause the Partnership's actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among other things, federal, state or local regulations; adverse changes in general economic or local conditions; 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 February 12, 1986, the Partnership commenced an Offering of 40,000 Limited Partnership Units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on February 12, 1987, with a total of 20,129 Units being sold to the public at $500 per Unit resulting in $10,064,620 of gross offering proceeds which were received by the Partnership, not including $500 which is the General Partner's contribution. The Partnership funded fifteen loans between October 1986 and August 1988 utilizing $8,466,875 of capital proceeds collected, net of participations. As of December 31, 1997, cumulative distributions to Limited Partners totaled $13,586,443, of which $7,558,390 represents principal amortization, payoffs on eleven loans, prepayment penalties and proceeds from the sale of three properties. At December 31, 1997, the Partnership had cash and cash equivalents aggregating $108,890 which will be utilized for future distributions to partners and working capital requirements. At December 31, 1997, the Partnership's remaining asset is an investment property. The source of future liquidity and distributions to the Limited and General Partners is expected to be from the cash flow and sale of this investment property. Until such sale occurs, the Partnership may rely on advances from Affiliates of the General Partner or other short-term financing to meet the Partnership's needs. Results of Operations Interest income on mortgage loans receivable decreased for the year ended December 31, 1997, as compared to the year ended December 31, 1996, due primarily to the prepayments and/or maturities of seven of the Partnership's mortgage loans receivable (5420 North Kenmore prepaid on April 2, 1996, 712-720 West Grace prepaid on June 18, 1996, 7434-7442 North Hermitage prepaid on June 27, 1996, 288, 294-298 Pennsylvania/Kenilworth matured on January 28, 1997, 5830 West 87th Street prepaid on February 13, 1997, 7428 West Washington matured on March 31, 1997 and 6910 North Sheridan prepaid on April 3, 1997). Additionally, interest income on mortgage loans receivable decreased due to the Partnership discontinuing accruing interest on the mortgage loan receivable collateralized by the property located at Indian Trail Road, Aurora, Illinois. As of March 31, 1997, the Partnership was owed and had not recorded interest of $73,984 for the period from July 1996 to March 1997. The loan on this property, previously accounted for as a mortgage loan in substantive foreclosure, is being accounted for as an investment property held for sale as of April 4, 1997, the date on which the Partnership acquired title. -6- Interest income on mortgage loans receivable decreased for the year ended December 31, 1996, as compared to the year ended December 31, 1995, due to the prepayments of four of the Partnership's mortgage loans receivable (2659 South Austin prepaid on May 23, 1995, 5420 North Kenmore prepaid on April 2, 1996, 712-720 West Grace prepaid on June 18, 1996 and 7434-7442 North Hermitage prepaid on June 27, 1996). In addition to the loan prepayments, interest income decreased due to the Partnership discontinuing accruing interest on the mortgage loan receivable collateralized by the property located at Indian Trail Road, Aurora, Illinois. As of December 31, 1996, the Partnership was owed interest of $49,404 for the period from July to December 1996. The loan on this property, previously recorded as a mortgage loan receivable, was being recorded as a mortgage loan in substantive foreclosure as of September 30, 1996. These decreases in interest income were partially offset by an increase in the adjustable interest rate (6.747% to 6.975%) in the mortgage loan receivable collateralized by the property located at 7428 West Washington in April 1996. Interest on investments increased for the year ended December 31, 1997, as compared to the years ended December 31, 1996 and 1995, due to an increase in interest rates on short-term investments and the Partnership investing repayment proceeds before being distributed to the Limited Partners. The other income recorded by the Partnership for the year ended December 31, 1997 consists of 50% of the appreciated values of the properties located at 288, 294-298 Pennsylvania/Kenilworth, Glen Ellyn, Illinois and 5830 West 87th Street, Burbank, Illinois and the prepayment penalty received from the payoff of the loan collateralized by the property located at 6910 Sheridan, Chicago, Illinois on April 3, 1997. The appreciated value is defined as the difference between the appraised value of the property at maturity and the appraised value at the time of the loan origination. The other income recorded by the Partnership for the year ended December 31, 1996, is primarily the prepayment penalty received for the payoff of the loan collateralized by the property located at 7434-7442 North Hermitage on June 27, 1996 and late charges received on the Partnership's other mortgage loans receivable. The other income recorded by the Partnership for the year ended December 31, 1995, is primarily the prepayment penalty received for the payoff of the loan collateralized by the property located at 2659 South Austin on May 23, 1995. Rental income and property operating expenses for the year ended December 31, 1997 are the result of the Partnership recording the property operations of the investment property as of April 4, 1997. Professional services to Affiliates decreased for the year ended December 31, 1997, as compared to the year ended December 31, 1996, due to decreases in legal and accounting services required by the Partnership. Professional services to Affiliates decreased for the year ended December 31, 1996, as compared to the year ended December 31, 1995, due primarily to a decrease in accounting services required by the Partnership. Professional services to non- affiliates increased for the year ended December 31, 1997, as compared to the years ended December 31, 1996 and 1995, due to increases in legal and accounting services required by the Partnership as a result of the foreclosure on the property located at Indian Trail Road in Aurora, Illinois. -7- General and administrative expenses to Affiliates decreased for the year ended December 31, 1997, as compared to the years ended December 31, 1996 and 1995, due to a decrease in mortgage servicing fees on the Partnership's mortgage loans receivable as they were prepaid and/or mature. This decrease was partially offset by an increase in data processing and investor services expenses. General and administrative expenses to non-affiliates was higher for the year ended December 31, 1996, as compared to the years ended December 31, 1997 and 1995, due to an increase in supplies and filing fees. Inflation Inflation in future periods is likely to increase rental income levels (from leases to new tenants or renewals of existing tenants) to rise and fall in accordance with normal market conditions. Due to the short term nature (generally no longer than one year) of the property's leases, the adjustments to rental income should offset most of the increases in property operating expenses with little effect on operating income. Continued inflation may cause capital appreciation of the Partnership's investment property over a period of time as rental rates and replacement costs of the property continue to increase. Item 8. Financial Statements and Supplementary Data INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Index ----- Page ---- Report of Independent Accountants........................................ 9 Financial Statements: Balance Sheets, December 31, 1997 and 1996............................. 10 Statements of Operations, for the years ended December 31, 1997, 1996 and 1995............................... 12 Statements of Partners' Capital, for the years ended December 31, 1997, 1996 and 1995............................... 13 Statements of Cash Flows, for the years ended December 31, 1997, 1996 and 1995..................................... 14 Notes to Financial Statements.......................................... 15 Schedules not filed: All schedules have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. -8- REPORT OF INDEPENDENT ACCOUNTANTS The Partners of Inland Mortgage Investors Fund, L.P. We have audited the financial statements of Inland Mortgage Investors Fund, L.P. listed in the index on page 8 of this Form 10-K. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Inland Mortgage Investors Fund, L.P. as of December 31, 1997 and 1996 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. Chicago, Illinois March 5, 1998 -9- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Balance Sheets December 31, 1997 and 1996 Assets ------ 1997 1996 ---- ---- Cash and cash equivalents (Note 1)................ $ 108,890 1,226,087 Accrued interest and other receivables............ 7,846 26,667 Investment property held for sale (Notes 1 and 4): Land............................................ 140,101 - Building and improvements....................... 975,237 - ------------ ------------ 1,115,338 - ------------ ------------ Investment in mortgage loans receivable: Mortgage loans receivable (Note 5).............. - 2,712,445 Mortgage loans in substantive foreclosure (Note 1, 4 and 5)............................. - 1,000,721 ------------ ------------ - 3,713,166 ------------ ------------ Total assets...................................... $ 1,232,074 4,965,920 ============ ============ See accompanying notes to financial statements. -10- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Balance Sheets December 31, 1997 and 1996 (continued) Liabilities and Partners' Capital --------------------------------- 1997 1996 ---- ---- Liabilities: Accounts payable................................ $ 11,939 52 Due to Affiliates (Note 3)...................... 2,228 2,429 Security deposits............................... 15,876 - Accrued real estate taxes....................... 41,472 - Unearned income (Note 1)........................ 1,092 3,843 ------------ ------------ Total liabilities................................. 72,607 6,324 ------------ ------------ Partners' capital (Notes 1, 2 and 3): General Partner: Capital contribution.......................... 500 500 Cumulative net income......................... 278,531 275,321 Cumulative cash distributions................. (276,657) (269,940) ------------ ------------ 2,374 5,881 Limited Partners: ------------ ------------ Units of $500. Authorized 40,000 Units, 20,129.24 Units outstanding at 1997 and 1996 (net of offering costs of $1,082,660, of which $219,526 was paid to Affiliates)... 8,981,960 8,981,960 Cumulative net income......................... 5,761,576 5,706,612 Cumulative cash distributions................. (13,586,443) (9,734,857) ------------ ------------ 1,157,093 4,953,715 ------------ ------------ Total Partners' capital........................... 1,159,467 4,959,596 ------------ ------------ Total liabilities and Partners' capital........... $ 1,232,074 4,965,920 ============ ============ See accompanying notes to financial statements. -11- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Statements of Operations For the years ended December 31, 1997, 1996 and 1995 Income: 1997 1996 1995 Interest and fees on mortgage loans ---- ---- ---- receivable (Note 5)............. $ 43,540 371,225 549,635 Interest on investments........... 73,496 53,615 36,270 Rental income..................... 188,023 - - Other income...................... 77,403 9,510 10,591 ------------ ------------ ------------ 382,462 434,350 596,496 Expenses: ------------ ------------ ------------ Professional services to Affiliates...................... 8,913 13,455 17,030 Professional services to non-affiliates.................. 21,364 18,946 18,690 General and administrative expenses to Affiliates.......... 27,554 32,173 32,367 General and administrative expenses to non-affiliates...... 6,349 8,247 6,690 Property operating expenses to Affiliates................... 9,060 - - Property operating expenses to non-affiliates............... 251,048 - - ------------ ------------ ------------ 324,288 72,821 74,777 ------------ ------------ ------------ Net income.......................... $ 58,174 361,529 521,719 ============ ============ ============ Net income allocated to (Note 2): General Partner................... 3,210 17,786 26,480 Limited Partners.................. 54,964 343,743 495,239 ------------ ------------ ------------ Net income.......................... $ 58,174 361,529 521,719 ============ ============ ============ Net income from operations allocated to the one General Partner Unit... $ 3,210 17,786 26,480 ============ ============ ============ Net income per Unit, basic and diluted, allocated to Limited Partners per Limited Partnership Units of 20,129.24................ $ 2.73 17.08 24.60 ============ ============ ============ See accompanying notes to financial statements. -12- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Statements of Partners' Capital For the years ended December 31, 1997, 1996 and 1995 General Limited Partner Partners Total ------------ ------------ ------------ Balance at January 1, 1995.......... $ 9,055 6,447,922 6,456,977 Net income.......................... 26,480 495,239 521,719 Distributions to Partners ($51.69 per Limited Partnership Unit based on Units of 20,129.24)(Note 2)....... (26,819) (1,040,483) (1,067,302) ------------ ------------ ------------ Balance at December 31, 1995........ 8,716 5,902,678 5,911,394 Net income.......................... 17,786 343,743 361,529 Distributions to Partners ($64.22 per Limited Partnership Unit based on Units of 20,129.24)(Note 2)....... (20,621) (1,292,706) (1,313,327) ------------ ------------ ------------ Balance at December 31, 1996........ 5,881 4,953,715 4,959,596 Net income.......................... 3,210 54,964 58,174 Distributions to Partners ($191.34 per Limited Partnership Unit based on Units of 20,129.24)(Note 2).... (6,717) (3,851,586) (3,858,303) ------------ ------------ ------------ Balance at December 31, 1997........ $ 2,374 1,157,093 1,159,467 ============ ============ ============ See accompanying notes to financial statements. -13- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Statements of Cash Flows For the years ended December 31, 1997, 1996 and 1995 1997 1996 1995 Cash flows from operating activities: ---- ---- ---- Net income........................ $ 58,174 361,529 521,719 Adjustments to reconcile net income to net cash provided by operating activities: Changes in assets and liabilities: Accrued interest and other receivables................. 18,821 20,833 11,742 Accounts payable.............. 11,887 (806) 235 Unearned income............... (2,751) (3,400) (5,599) Security deposits............. 15,876 - - Accrued real estate taxes..... 41,472 - - Due to Affiliates............. (201) (1,311) 3,317 Net cash provided by operating ------------ ------------ ------------ activities........................ 143,278 376,845 531,414 ------------ ------------ ------------ Cash flows from investing activities: Additions to investment property.. (114,617) - - Principal payments collected...... 2,712,445 1,911,808 520,990 Net cash provided by investing ------------ ------------ ------------ activities........................ 2,597,828 1,911,808 520,990 ------------ ------------ ------------ Cash flows from financing activities: Distributions paid................ (3,858,303) (1,313,327) (1,067,302) Net cash used in financing ------------ ------------ ------------ activities........................ (3,858,303) (1,313,327) (1,067,302) Net increase (decrease) in cash and ------------ ------------ ------------ cash equivalents.................. (1,117,197) 975,326 (14,898) Cash and cash equivalents at beginning of year................. 1,226,087 250,761 265,659 Cash and cash equivalents at ------------ ------------ ------------ end of year....................... $ 108,890 1,226,087 250,761 ============ ============ ============ Supplemental schedule of non-cash investing activities: Foreclosure of mortgaged property (Note 5): Reduction of mortgage loans receivable........................ $ 1,000,721 - - Increase in investment property..... (1,000,721) - - ------------ ------------ ------------ $ - - - ============ ============ ============ See accompanying notes to financial statements. -14- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Notes to Financial Statements For the years ended December 31, 1997, 1996 and 1995 (1) Organization and Basis of Accounting Inland Mortgage Investors Fund, L.P. (the "Partnership") was organized on December 5, 1985, pursuant to the Delaware Revised Uniform Limited Partnership Act, to make or acquire loans collateralized by mortgages on improved, income- producing multi-family residential properties in or near the Chicago metropolitan area. On February 12, 1986, the Partnership commenced an Offering of 40,000 Limited Partnership Units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on February 12, 1987, with total sales of 20,129.24 Units at $500 per Unit resulting in $10,064,620 of gross offering proceeds, not including the General Partner's contribution of $500. Inland Real Estate Investment Corporation is the General Partner. 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. Loan assumption fees received are deferred as unearned income and amortized over the remaining life of the related loan. The Partnership considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Interest income on mortgage loans receivable is accrued when earned. The accrual of interest, on loans that are in default, is discontinued when, in the opinion of the General Partner, the borrower has not complied with loan work- out arrangements. Once a loan has been placed on a non-accrual status, all cash received is applied against the outstanding loan balance until such time as the borrower has demonstrated an ability to make payments under the terms of the original or renegotiated loan agreement. The General Partner evaluates the collectability of the mortgage loans on a quarterly basis. This evaluation includes determining the valuation of the underlying operating property subject to the mortgage. Should a portion of the principal of the mortgage loan be considered unrecoverable either through collection or foreclosure, a provision would be made to reduce the carrying amount of the mortgage loans. -15- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Notes to Financial Statements (continued) Loans are classified in substantive foreclosure when a determination has been made that the borrower meets the following criteria: 1) The borrower has little or no equity in the collateral, considering the current fair value of the collateral; and 2) Proceeds for repayment of the loan can be expected to come only from the operation or sale of the collateral; and 3) The borrower has either: a) Formally or effectively abandoned control of the collateral to the creditors; or b) Retained control of the collateral but, because of the current financial condition of the borrower or the economic prospects for the borrower and/or the collateral in the foreseeable future, it is doubtful that the borrower will be able to rebuild equity in the collateral or otherwise repay the loan in the foreseeable future. Statement of Financial Accounting Standards No. 121 ("SFAS 121") requires the Partnership to 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 investment property was obtained on April 4, 1997 in a sheriff's sale (Note 5) and was recorded at the lower of the loan balance plus costs incurred or its estimated fair value. The Partnership's policy is to consider a property to be held for sale or disposition when the Partnership has committed to sell such property and active marketing activity has commenced or is expected to commence in the near term. Effective April 4, 1997, the Partnership's investment property was held for sale. In accordance with SFAS 121, any property identified as "held for sale or disposition" is no longer depreciated. Maintenance and repair expenses are charged to operations as incurred. Adjustments for impairment loss for such properties are made in each period as necessary to report these properties at the lower of carrying value or fair value less costs to sell. As of December 31, 1997, the Partnership has not recognized any such impairment on its property. The investment property consists of a 62-unit apartment building located in Aurora, Illinois. Apartment complex leases are generally for a term of one year or less. The Partnership has determined that all leases relating to this property are properly classified as operating leases; therefore rental income is recorded when earned. Statement of Financial Accounting Standards No. 128 "Earnings per Share" was adopted by the Partnership for the year ended December 31, 1997 and has been applied to all prior earnings periods presented in the financial statements. The Partnership has no dilutive securities. -16- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Notes to Financial Statements (continued) No provision for Federal income taxes has been made as the liability for such taxes is that of the Partners rather than the Partnership. The Partnership records are maintained on the accrual basis of accounting in accordance with generally accepted accounting principles ("GAAP"). The Federal income tax return has been prepared from such records after making appropriate adjustments to reflect the Partnership's accounts as adjusted for Federal income tax reporting purposes. Such adjustments are not recorded on the records of the Partnership. The net effect of these items is summarized as follows: 1997 1996 ------------------------ ----------------------- GAAP Tax GAAP Tax Basis Basis Basis Basis ----------- ------------ ----------- ----------- Total assets................ $1,232,074 1,232,074 4,965,920 4,965,920 Partners' capital: General Partner........... 2,374 1,615 5,881 1,614 Limited Partners.......... 1,157,093 1,157,853 4,953,715 4,957,981 Net income: General Partner........... 3,210 6,717 17,786 20,621 Limited Partners.......... 54,964 51,457 343,743 340,908 Net income per Limited Partnership Unit, basic and diluted............... 2.73 2.56 17.08 16.94 (2) Partnership Agreement The Partnership Agreement defines the distribution of Operating Cash Flow. Such Operating Cash Flow will be distributed 90% to the Limited Partners and 10% to the General Partner. Of the 10% of Operating Cash Flow allocated to the General Partner, one-half shall be subordinated to the Limited Partners' receipt of a Cumulative Preferred Return of 14% per annum. Distributions of Loan Repayment Proceeds will be distributed first to Limited Partners in proportion to their participating percentages until they have received an amount equal to their Invested Capital plus any deficiency in the Cumulative Preferred Return. Thereafter, any remaining Repayment Proceeds which are available for distribution will be distributed 90% to the Limited Partners and 10% to the General Partner. The General Partner will be allocated net operating profits of the Partnership in an amount equal to the greater of 1% of net operating profits or the amount of the General Partner's distributive share of Operating Cash Flow, with the balance of such net operating profits allocated to the Limited Partners. The General Partner will be allocated net operating profits from repayments in an amount equal to the General Partner's distributive share of Repayment Proceeds, with the balance of such net operating profits allocated to the Limited Partners. Net operating losses will be allocated 1% to the General Partner and 99% to the Limited Partners. -17- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Notes to Financial Statements (continued) (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 to Affiliates and general and administrative expenses to Affiliates, of which $2,228 and $2,429 was unpaid as of December 31, 1997 and 1996, respectively. Inland Mortgage Servicing Corporation, a subsidiary of the General Partner, serviced the Partnership's mortgage loans receivable. Its services included processing mortgage loan collections and escrow deposits and maintaining related records. For these services, the Partnership was obligated to pay fees at an annual rate equal to 1/4 of 1% of the outstanding mortgage loans receivable balance of the Partnership. Such fees of $2,312 in 1997, $11,444 in 1996 and $14,838 in 1995 have been incurred and paid to the subsidiary and are included in the Partnership's general and administrative expenses to Affiliates. The Partnership's investment property is managed by an Affiliate of the General Partner which earns annual fees not to exceed 5% of gross rental receipts. The Affiliate earned Property Management Fees of $9,060 for the year ended December 31, 1997 which are included in property operating expenses to Affiliates. No Property Management Fees were incurred by the Partnership in 1996 or 1995. In connection with the sales of 6910 North Sheridan, 5420 North Kenmore and 712-720 West Grace, sales commissions of $18,125, $27,500 and $14,553, respectively, that have not been included in the costs of sale, may be payable to an Affiliate of the General Partner to the extent that the Limited Partners have received their Original Capital plus a return thereon as specified in the Partnership Agreement. (4) Investment Property Held For Sale As of September 30, 1996, with consent of the borrower, an Affiliate of the General Partner began management of the property located at Indian Trail Road, Aurora, Illinois. On April 4, 1997, the Partnership acquired title to the property through a sheriff's sale. The General Partner believes that when the property is sold, the Partnership will ultimately realize an amount equal to or greater than the unpaid principal balance of the mortgage loan receivable. The loan on this property, previously accounted for as a mortgage loan in substantive foreclosure, is being accounted for as an investment property held for sale as of April 4, 1997. -18- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Notes to Financial Statements (continued) (5) Investments in Mortgage Loans Receivable Mortgage loans receivable and mortgage loans in substantive foreclosure were collateralized by first mortgages and wrap mortgages on multi-family residential properties located in Chicago, Illinois or its surrounding metropolitan area. As additional collateral, the Partnership held assignments of rents and leases or personal guarantees of the borrowers. Generally, the mortgage notes were payable in equal monthly installments based on 20 or 30 year amortization periods. Mortgage loans receivable and mortgage loans in substantive foreclosure consist of the following:
Balance at Interest Balloon Monthly December 31, Rate at Maturity at P & I ------------------------- Property Location 12/31/96 Date Maturity Prepayment Payments 1997 1996 - ------------------------ --------- ---------- ---------- ------------ ---------- ----------- ----------- Penn./Kenilworth, (A) 8.9% January $ 958,742 No Prepayment $ 8,564 $ - 960,185 Glen Ellyn 1997 5830 W. 87th Street, (B) 8.9% January 430,612 No Prepayment 3,847 - 431,260 Burbank 1997 7428 W. Washington, (C) 6.975% March 823,803 At any time 6,375 - 828,508 Forest Park 1997 without penalty Indian Trail Road, (D) 9.9% August 971,567 No Prepayment 9,311 - 1,000,721 Aurora 1998 6910 N. Sheridan, (E) 9.75% August 477,099 60 days notice 4,425 - 492,492 Chicago 1999 & 3% penalty ----------- ----------- $ - 3,713,166 =========== ===========
-19- -19- INLAND MORTGAGE INVESTORS FUND, L.P. (a limited partnership) Notes to Financial Statements (continued) (A) On January 28, 1997, the loan collateralized by the property located at 288, 294-298 Pennsylvania/Kenilworth, Glen Ellyn, Illinois matured. The total proceeds received at maturity were $1,023,078, which represented the loan balance, accrued interest, accrued additional interest of $700 and 50% of the appreciated value of the property totaling $52,500 which is included in other income. The appreciated value is defined as the difference between the appraised value of the property at maturity and the appraised value at the time of the loan origination. The proceeds were distributed to the Limited Partners in July 1997. (B) In January 1997, the loan collateralized by the property located at 5830 West 87th Street, Burbank, Illinois, with an original maturity of January 1997, was extended for three months until March 1997, with an option to extend to June 1999. The interest rate of 8.9% remained the same. On February 13, 1997, the loan was prepaid. The total proceeds received were $447,191, which represented the loan balance, accrued interest, accrued additional interest of $850 and 50% of the appreciated value of the property totaling $15,000 which is included in other income. The appreciated value is defined as the difference between the appraised value of the property at maturity and the appraised value at the time of the loan origination. The proceeds were distributed to the Limited Partners in July 1997. (C) On March 31, 1997, the loan collateralized by the property located at 7428 West Washington, Forest Park, Illinois matured. The total proceeds received at maturity were $828,658, which represented the loan balance, accrued interest and accrued late charges. The proceeds were distributed to the Limited Partners in July 1997. (D) The loan on this property, previously accounted for as a mortgage loan in substantive foreclosure, is being accounted for as an investment property held for sale as of April 4, 1997. See Note 4. (E) This mortgage loan was collateralized by a property which the Partnership previously owned through foreclosure. The property was sold to unaffiliated third party and financing was provided by the Partnership. On April 3, 1997, the loan collateralized by the property located at 6910 North Sheridan, Chicago, Illinois was prepaid. The total proceeds received were $505,325, which represented the loan balance, accrued interest and a 2% prepayment penalty. The proceeds were distributed to the Limited Partners in July 1997. -20- Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There were no disagreements on accounting or financial disclosure during 1997. PART III Item 10. Directors and Executive Officers of the Registrant The General Partner of the Partnership, Inland Real Estate Investment Corporation, was organized in 1984 for the purpose of acting as general partner of limited partnerships formed to acquire, own and operate real property, and make and acquire loans collateralized by mortgages on improved, income producing multi-family residential properties. The General Partner is a wholly-owned subsidiary of The Inland Group, Inc. In 1990, Inland Real Estate Investment Corporation became the replacement General Partner for an additional 301 privately-offered real estate limited partnerships syndicated by Affiliates. The General Partner has responsibility for all aspects of the Partnership's operations. The relationship of the General Partner to its Affiliates is described under the caption "Conflicts of Interest" at pages 10 and 11 of the Prospectus, incorporated herein by reference. Officers and Directors The officers, directors and key employees of The Inland Group, Inc. and its Affiliates ("Inland") that are likely to provide services to the Partnership are as follows: Functional Title Daniel L. Goodwin.......... Chairman and Chief Executive Officer Robert H. Baum............. Executive Vice President-General Counsel G. Joseph Cosenza.......... Senior Vice President-Acquisitions Robert D. Parks............ Senior Vice President-Investments Catherine L. Lynch......... Treasurer Roberta S. Matlin.......... Assistant Vice President-Investments Mark Zalatoris............. Assistant Vice President-Due Diligence Patricia A. Challenger..... Vice President-Asset Management Frances C. Panico.......... Vice President-Mortgage Corporation Raymond E. Petersen........ Vice President-Mortgage Corporation Paul J. Wheeler............ Vice President-Personal Financial Services Group Kelly Tucek................ Assistant Vice President-Partnership Accounting Venton J. Carlston......... Assistant Controller -21- DANIEL L. GOODWIN (age 54) is Chairman of the Board of Directors of The Inland Group, Inc., a billion-dollar real estate and financial organization located in Oak Brook, Illinois. Among Inland's subsidiaries is the largest property management firm in Illinois and one of the largest commercial real estate and mortgage banking firms in the Midwest. Mr. Goodwin has served as Director of the Avenue Bank of Oak Park and as a Director of the Continental Bank of Oakbrook Terrace. He was Chairman of the Bank Holding Company of American National Bank of DuPage. Currently he is the Chairman of the Board of Inland Mortgage Investment Corporation. Mr. Goodwin has been in the housing industry for more than 28 years, and has demonstrated a lifelong interest in housing-related issues. He is a licensed real estate broker and a member of the National Association of Realtors. He has developed thousands of housing units in the Midwest, New England, Florida, and the Southwest. He is also the author of a nationally recognized real estate reference book for the management of residential properties. Mr. Goodwin has served on the Board of the Illinois State Affordable Housing Trust Fund for the past 7 years. He is an advisor for the Office of Housing Coordination Services of the State of Illinois, and a member of the Seniors Housing Committee of the National Multi-Housing Council. Recently, Governor Edgar appointed him Chairman of the Housing Production Committee for the Illinois State Affordable Housing Conference. He also served as a member of the Cook County Commissioner's Economic Housing Development Committee, and he was the Chairman of the DuPage County Affordable Housing Task Force. The 1992 Catholic Charities Award was presented to Mr. Goodwin for his work in addressing affordable housing needs. The City of Hope designated him as the Man of the Year for the Illinois construction industry. In 1989, the Chicago Metropolitan Coalition on Aging presented Mr. Goodwin with an award in recognition of his efforts in making housing more affordable to Chicago's Senior Citizens. On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter) presented Mr. Goodwin with an award, recognizing The Inland Group as the leading corporate provider of transitional housing for the homeless people of DuPage County. Mr. Goodwin also serves as Chairman of New Directions Housing Corporation, a leading provider of affordable housing in northern Illinois. Mr. Goodwin is a product of Chicago-area schools, and obtained his Bachelor's and Master's Degrees from Illinois Universities. Following graduation, he taught for five years in the Chicago Public Schools. His commitment to education has continued through his work with the Better Boys Foundation's Pilot Elementary School in Chicago, and the development of the Inland Vocational Training Center for the Handicapped located at Little City in Palatine, Illinois. He personally established an endowment which funds a perpetual scholarship program for inner-city disadvantaged youth. In 1990 he received the Northeastern Illinois University President's Meritorious Service Award. Mr. Goodwin holds a Master's Degree in Education from Northern Illinois University, and in 1986, he was awarded an Honorary Doctorate from Northeastern Illinois University College of Education. More than 12 years ago, under Mr. Goodwin's direction, Inland instituted a program to educate disabled students about the workplace. Most of these original students are still employed at Inland today, and Inland continues as one of the largest employers of the disabled in DuPage County. Mr. Goodwin has served as a member of the Board of Governors of Illinois State Colleges and Universities, and he is currently a trustee of Benedictine University. He was elected Chairman of Northeastern Illinois University Board of Trustees in January 1996. -22- Mr. Goodwin served as a member of Governor Jim Edgar's Transition Team. In 1988 he received the Outstanding Business Leader Award from the Oak Brook Jaycees and has been the General Chairman of the National Football League Players Association Mackey Awards for the benefit of inner-city youth. He served as the recent Chairman of the Speakers Club of the Illinois House of Representatives. In March 1994, he won the Excellence in Business Award from the DuPage Area Association of Business and Industry. Additionally, he was honored by Little Friends on May 17, 1995 for rescuing their Parent-Handicapped Infant Program when they lost their lease. He was the recipient of the 1995 March of Dimes Life Achievement Award and was recently recognized as the 1997 Corporate Leader of the Year by the Oak Brook Area Association of Commerce and Industry. ROBERT H. BAUM (age 54) has been with The Inland Group, Inc. and its affiliates since 1968 and is one of the four original principals. Mr. Baum is Vice Chairman and Executive Vice President-General Counsel of The Inland Group, Inc. In his capacity as General Counsel, Mr. Baum is responsible for the supervision of the legal activities of The Inland Group, Inc. and its affiliates. This responsibility includes the supervision of The Inland Law Department and serving as liaison with outside counsel. Mr. Baum has served as a member of the North American Securities Administrators Association Real Estate Advisory Committee and as a member of the Securities Advisory Committee to the Secretary of State of Illinois. He is a member of the American Corporation Counsel Association and has also been a guest lecturer for the Illinois State Bar Association. Mr. Baum has been admitted to practice before the Supreme Court of the United States, as well as the bars of several federal courts of appeals and federal district courts and the State of Illinois. He received his B.S. Degree from the University of Wisconsin and his J.D. Degree from Northwestern University School of Law. Mr. Baum has served as a director of American National Bank of DuPage. Currently, he serves as a director of Westbank, and is a member of the Governing Council of Wellness House, a charitable organization that provides emotional support for cancer patients and their families. G. JOSEPH COSENZA (age 54) has been with The Inland Group, Inc. and its affiliates since 1968 and is one of the four original principals. Mr. Cosenza is a Director and Vice Chairman of The Inland Group, Inc. and oversees, coordinates and directs Inland's many enterprises. In addition, immediately supervises a staff of eight persons who engage in property acquisition. Mr. Cosenza has been a consultant to other real estate entities and lending institutions on property appraisal methods. Mr. Cosenza received his B.A. Degree from Northeastern Illinois University and his M.S. Degree from Northern Illinois University. From 1967 to 1968, he taught at the LaGrange School District in Hodgkins, Illinois and from 1968 to 1972, he served as Assistant Principal and taught in the Wheeling, Illinois School District. Mr. Cosenza has been a licensed real estate broker since 1968 and an active member of various national and local real estate associations, including the National Association of Realtors and the Urban Land Institute. Mr. Cosenza has also been Chairman of the Board of American National Bank of DuPage, and has served on the Board of Directors of Continental Bank of Oakbrook Terrace. He is presently Chairman of the Board of Westbank in Westchester and Hillside, Illinois. -23- ROBERT D. PARKS (age 54) is a Director of The Inland Group, Inc., President, Chairman and Chief Executive Officer of Inland Real Estate Investment Corporation and President, Chief Executive Officer, Chief Operating Officer and Affiliated Director of Inland Real Estate Corporation. Mr. Parks is responsible for the ongoing administration of existing investment programs, corporate budgeting and administration for Inland Real Estate Investment Corporation. He oversees and coordinates the marketing of all investments and investor relations. Prior to joining Inland, Mr. Parks was a school teacher in Chicago's public schools. He received his B.A. degree from Northeastern Illinois University and his M.A. degree from the University of Chicago. He is a registered Direct Participation Program Principal with the National Association of Securities Dealers, Inc., and he is a member of the Real Estate Investment Association and a member of NAREIT. CATHERINE L. LYNCH (age 39) joined Inland in 1989 and is the Treasurer of Inland Real Estate Investment Corporation. Ms. Lynch is responsible for managing the Corporate Accounting Department. Prior to joining Inland, Ms. Lynch worked in the field of public accounting for KPMG Peat Marwick since 1980. She received her B.S. degree in Accounting from Illinois State University. Ms. Lynch is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants and the Illinois CPA Society. She is registered with the National Association of Securities Dealers as a Financial Operations Principal. ROBERTA S. MATLIN (age 53) joined Inland in 1984 as Director of Investor Administration and currently serves as Senior Vice President-Investments. Prior to that, Ms. Matlin spent 11 years with the Chicago Region of the Social Security Administration of the United States Department of Health and Human Services. As Senior Vice President-Investments, she directs the day-to-day internal operations of the General Partner. Ms. Matlin received her B.A. degree from the University of Illinois. She is registered with the National Association of Securities Dealers, Inc. as a General Securities Principal. MARK ZALATORIS (age 40) joined Inland in 1985 and currently serves as Vice President of Inland Real Estate Investment Corporation. His responsibilities include the coordination of due diligence activities by selling broker/dealers and is also involved with limited partnership asset management including the mortgage funds. Mr. Zalatoris is a graduate of the University of Illinois where he received a Bachelors degree in Finance and a Masters degree in Accounting and Taxation. He is a Certified Public Accountant and holds a General Securities License with Inland Securities Corporation. PATRICIA A. CHALLENGER (age 45) joined Inland in 1985. Ms. Challenger serves as Senior Vice President of Inland Real Estate Investment Corporation in the area of Asset Management. As head of the Asset Management Department, she develops operating and disposition strategies for all investment-owned properties. Ms. Challenger received her Bachelor's degree from George Washington University and her Master's from Virginia Tech University. Ms. Challenger was selected and served from 1980-1984 as Presidential Management Intern, where she was part of a special government-wide task force to eliminate waste, fraud and abuse in government contracting and also served as Senior Contract Specialist responsible for capital improvements in 109 government properties. Ms. Challenger is a licensed real estate broker, NASD registered securities sales representative and is a member of the Urban Land Institute. -24- FRANCES C. PANICO (age 48) joined Inland in 1972 after earning a B.A. degree from Northern Illinois University in Business and Communication. She is currently President of Inland Mortgage Servicing Corporation, Sr. Vice President of Inland Mortgage Investment Corporation and Sr. Vice President of Inland Mortgage Corporation. Ms. Panico oversees the operation of loan services, which has a loan portfolio in excess of $430 million. She is a member of the loan committee which approves loans funded by IMIC and IMC. She monitors IMIC's assets, and is the business person in charge of loans in foreclosure. She previously served on the Board of Directors for Burbank State Bank and supervised the origination, processing and underwriting of single- family mortgages. Ms. Panico also packaged and sold loans to Freddie Mac. RAYMOND E. PETERSEN (age 58) joined Inland in 1981. Mr. Petersen is responsible for the selection and approval of all corporate and limited partnership financing, as well as for the daily supervision of the commercial lending activity of Inland Mortgage Corporation where he is President. For the six years prior to joining Inland, Mr. Petersen was affiliated with the mortgage banking firm of Downs, Mohl Mortgage Corporation, serving as President and Chief Executive Officer. Previously he was also associated with the mortgage banking houses of B.B. Cohen & Company and Percy Wilson Mortgage and Finance Corporation. Mr. Petersen's professional credentials include a B.A. degree from DePaul University, senior membership in the National Association of Review Appraisers, state licensed as a real estate broker and licensed securities representative. Mr. Petersen was also a Director and Chairman of the Asset and Liability Committee of American National Bank of Downers Grove and is currently a Director of Westbank of Westchester, Illinois. PAUL J. WHEELER (age 45) joined Inland in 1982 and is currently the President of Inland Property Sales, Inc., the entity responsible for all corporately owned real estate. Mr. Wheeler received his B.A. degree in Economics from DePauw University and an M.B.A. in Finance/Accounting from Northwestern University. Mr. Wheeler is a Certified Public Accountant and licensed real estate broker. For three years prior to joining Inland, Mr. Wheeler was Vice President/Finance at the real estate brokerage firm of Quinlan & Tyson, Inc. KELLY TUCEK (age 35) joined Inland in 1989 and is an Assistant Vice President of Inland Real Estate Investment Corporation. As of August 1996, Ms. Tucek is responsible for the Investment Accounting Department which includes all public partnership accounting functions along with quarterly and annual SEC filings. Prior to joining Inland, Ms. Tucek was on the audit staff of Coopers and Lybrand since 1984. She received her B.A. Degree in Accounting and Computer Science from North Central College. VENTON J. CARLSTON (age 40) joined Inland in 1985 and is the Assistant Controller of Inland Real Estate Investment Corporation where he supervises the corporate bookkeeping staff and is responsible for financial statement preparation and budgeting for Inland Real Estate Investment Corporation and its subsidiaries. Prior to joining Inland, Mr. Carlston was a partnership accountant with JMB Realty. He received his B.S. degree in Accounting from Southern Illinois University. Mr. Carlston is a Certified Public Accountant and a member of the Illinois CPA Society. He is registered with the National Association of Securities Dealers, Inc. as a Financial Operations Principal. -25- Item 11. Executive Compensation The General Partner is entitled to receive a share of cash distributions, when and as cash distributions are made to the Limited Partners, as described under the caption "Cash Distributions" and a share of profit and losses as described under the caption "Allocation of Profits or Losses" of the Prospectus. The Partnership is permitted to engage in various transactions involving Affiliates of the General Partner of the Partnership, as described under the captions "Compensation and Fees" at pages 8 and 9, "Conflicts of Interest" at pages 10 and 11 of the Prospectus and at pages A-9 through A-17 of the Partnership Agreement, which is incorporated herein by reference. The relationship of the General Partner (and its directors and officers) to its Affiliates is set forth above in Item 10. The General Partner may be reimbursed for salaries and direct expenses of employees of the General Partner and its Affiliates for the administration of the Partnership. In 1997, costs relating to such services were $34,155, of which $2,228 was unpaid as of December 31, 1997. A subsidiary of the General Partner earned mortgage servicing fees of $2,312 in 1997, in connection with servicing the Partnership's mortgage loans receivable. An Affiliate of the General Partner earned management fees in 1997 totaling $9,060 in connection with managing the Partnership's investment property. In connection with the sales of 6910 North Sheridan, 5420 North Kenmore and 712-720 West Grace, sales commissions of $18,125, $27,500 and $14,553, respectively, that have not been included in the costs of sale, may be payable to an Affiliate of the General Partner to the extent that the Limited Partners have received their Original Capital plus a return thereon as specified in the Partnership Agreement. -26- Item 12. Security Ownership of Certain Beneficial Owners and Management (a) The Liquidity Plan (page 18 of the Prospectus of the Partnership dated February 12, 1986, which is incorporated herein by reference) owns the following Units of the Partnership as of December 31, 1997: Amount and Nature of Beneficial Percent Title of Class Ownership of Class -------------- ------------------ -------- Limited Partnership 6,370.22 Units directly 31.65% Units (b) The officers and directors of the General Partner of the Partnership own as a group the following Units of the Partnership as of December 31, 1997: Amount and Nature of Beneficial Percent Title of Class Ownership of Class -------------- ----------------- -------- Limited Partnership 246.88 Units directly 1.23% Units No officer or director of the General Partner of the Partnership possesses a right to acquire beneficial ownership of Units of the Partnership. All of the outstanding shares of the General Partner of the Partnership are owned by an Affiliate or its officers and directors as set forth above in Item 10. (c) There exists no arrangement, known to the Partnership, the operation of which may, at a subsequent date, result in a change in control of the Partnership. Item 13. Certain Relationships and Related Transactions There were no significant transactions or business relationships with the General Partner, Affiliates or their management other than those described in Items 10 and 11 above. Reference is made to Note 3 of the Notes to Financial Statements (Item 8 of this Annual Report) for information regarding related party transactions. -27- PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) The financial statements listed in the index on page 8 of this Annual Report are filed as part of this Annual Report. (b) Exhibits. The following documents are filed as part of this Report: 3 Amended and Restated Agreement of Limited Partnership and Certificate of Limited Partnership, included as Exhibits A and B to the Prospectus dated February 12, 1986, as supplemented, are incorporated herein by reference thereto. 28 Prospectus dated February 12, 1986, as supplemented, included in Post- Effective Amendment No. 2 to Form S-11 Registration Statement, File No. 33- 2377, is incorporated herein by reference thereto. (c) Financial Statement Schedules: All schedules have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. (d) Reports on Form 8-K No reports on Form 8-K have been filed since the beginning of the last quarter of the period covered by this report. No Annual Report or proxy material for the year 1997 has been sent to the Partners of the Partnership. An Annual Report will be sent to the Partners subsequent to this filing and the Partnership will furnish copies of such report to the Commission when it is sent to the Partners. -28- SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INLAND MORTGAGE INVESTORS FUND, L.P. Inland Real Estate Investment Corporation General Partner /s/ Robert D. Parks By: Robert D. Parks Chairman of the Board and Chief Executive Officer Date: March 16, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: By: Inland Real Estate Investment Corporation General Partner /s/ Robert D. Parks By: Robert D. Parks Chairman of the Board and Chief Executive Officer Date: March 16, 1998 /s/ Mark Zalatoris By: Mark Zalatoris Vice President Date: March 16, 1998 /s/ Kelly Tucek By: Kelly Tucek Principal Financial Officer and Principal Accounting Officer Date: March 16, 1998 /s/ Daniel L. Goodwin By: Daniel L. Goodwin Director Date: March 16, 1998 /s/ Robert H. Baum By: Robert H. Baum Director Date: March 16, 1998 -29-
EX-27 2
5 YEAR DEC-31-1997 DEC-31-1997 108890 0 7846 0 0 116736 1115338 0 1232074 72607 0 0 0 0 1159467 1232074 0 382462 0 260108 64180 0 0 58174 0 58174 0 0 0 58174 2.73 2.73
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