-----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, MrEbE3PQQfadTNaiGr+dgVhRowRssBFT+RQPjrSFqSNysf2cTrO9Q2Of3T/LZyIP C5RyzIdinibj+ekbHGg4RQ== 0000808434-98-000001.txt : 19980319 0000808434-98-000001.hdr.sgml : 19980319 ACCESSION NUMBER: 0000808434-98-000001 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 II CENTRAL INDEX KEY: 0000808434 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 363495248 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-16783 FILM NUMBER: 98568189 BUSINESS ADDRESS: STREET 1: 2901 BUTTERFIELD RD CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7082188000 MAIL ADDRESS: STREET 1: 2901 BUTTERFIELD RD 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 #0-16783 Inland Mortgage Investors Fund, L.P.-II (Exact name of registrant as specified in its charter) Delaware 36-3495248 (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's 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 10, 1987, as supplemented to date 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.-II (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........................ 20 Part III -------- Item 10. Directors and Executive Officers of the Registrant............ 20 Item 11. Executive Compensation........................................ 25 Item 12. Security Ownership of Certain Beneficial Owners and Management.................................................... 26 Item 13. Certain Relationships and Related Transactions................ 26 Part IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................................................... 27 SIGNATURES............................................................. 28 -2- PART I Item 1. Business The Registrant, Inland Mortgage Investors Fund, L.P.-II (the "Partnership"), was formed on December 24, 1986 pursuant to the Delaware Revised Uniform Limited Partnership Act. On February 10, 1987, 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 August 10, 1988, with total sales of 18,776.32 Units, resulting in gross offering proceeds of $9,388,158, which does not include the General Partner's contribution of $500. All of the holders of these Units were admitted to the Partnership. The Partnership funded fifteen loans between December 1987 and June 1992 utilizing $8,131,884 of capital proceeds collected, net of participations. The Limited Partners of the Partnership share in the benefits of ownership of the Partnership's mortgage receivable investments in proportion to the number of Units held. Inland Real Estate Investment Corporation is the General Partner. The Partnership is engaged solely in the business of making and acquiring loans collateralized by mortgages on improved, income producing 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 of the Partnership 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 owns no real properties. 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 756 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 19 and pages 41-42, respectively, of the Prospectus of the Partnership dated February 10, 1987, 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.-II (a limited partnership) For the years ended December 31, 1997, 1996, 1995, 1994 and 1993 (not covered by Report of Independent Accountants) 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- Total assets........... $2,870,059 2,952,893 3,660,678 3,919,522 4,725,413 =========== ========== ========== ========== ========== Total income........... $ 292,440 332,279 397,275 407,501 478,280 =========== ========== ========== ========== ========== Net income............. $ 228,536 268,982 331,245 337,951 410,547 =========== ========== ========== ========== ========== Net income allocated to the one General Partner Unit......... $ 2,285 2,690 12,782 10,149 21,332 =========== ========== ========== ========== ========== Net income allocated per Limited Partner Unit (b)............. $ 12.05 14.18 16.96 17.46 20.73 =========== ========== ========== ========== ========== Distributions to Limited Partners from: Operations (c)......... 266,770 294,272 331,076 375,976 429,753 Repayment proceeds..... 80,934 688,458 260,833 768,027 562,984 ----------- ---------- ---------- ---------- ---------- $ 347,704 982,730 591,909 1,144,003 992,737 =========== ========== ========== ========== ========== Distributions per Unit to Limited Partners from (b): Operations............. 14.21 15.67 17.63 20.02 22.89 Repayment proceeds..... 4.31 36.67 13.89 40.91 29.98 ----------- ---------- ---------- ---------- ---------- $ 18.52 52.34 31.52 60.93 52.87 =========== ========== ========== ========== ========== (a) The above selected financial data should be read in conjunction with the financial statements and related notes and management's discussion (Items 7 and 8) 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 18,776.32. (c) This amount represents distributions to the Limited Partners from operations, a portion of which may have been funded by the General Partner. -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 10, 1987, 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 August 10, 1988 with a total of 18,776.32 Units being sold to the public at $500 per Unit resulting in $9,388,158 gross offering proceeds which were received by the Partnership, which does not include the General Partner's $500 contribution. The Partnership funded fifteen loans between December 1987 and June 1992 utilizing $8,131,884 of capital proceeds collected, net of participations. As of December 31, 1997 cumulative distributions to Limited Partners totaled $11,132,121. A total of $6,439,636 of mortgage receivables has been repaid by borrowers, of which $966,160 has been reloaned and $5,467,139 was repayment proceeds and principal amortization distributed to Limited Partners and $6,337 was added to the working capital reserve. At December 31, 1997, the Partnership had cash and cash equivalents aggregating $169,895, which will be utilized for future distributions to partners and for working capital requirements. The source of future liquidity and distributions is expected to be through cash generated by earnings from the Partnership's mortgage investments and through the repayment of such investments. To the extent that cash flow is insufficient to meet the minimum 7% annualized distribution to investors, as well as any other financial needs, the Partnership may rely on Supplemental Capital Contributions from the General Partner, advances from Affiliates of the General Partner or other short term financing. At December 31, 1997, the Partnership had five mortgage loans receivable totaling $2,664,745. The maturity dates range from October 1997 to July 2001. In October 1997, the loan collateralized by the property located at 1549-1571 Sherman Avenue was extended on a month to month basis to allow the borrower time to proceed with refinancing. In October 1997, Inland Real Estate Investment Corporation, the General Partner, purchased the participating interest in the loan from an unaffiliated third party and has accepted the terms of the month to month extension. All other terms remain the same. When and as the Partnership receives Repayment Proceeds as a result of the sale or repayment of a loan, the Repayment Proceeds which are available for distribution will be distributed to the Limited Partners. When the loans are repaid, cash flows from operating activities will decrease as a result of the decrease in interest income earned by the Partnership. -6- Results of Operations The decrease in interest and fee income on mortgage loans receivable for the year ended December 31, 1997, as compared to the years ended December 31, 1996 and 1995, is due to the prepayment of the loan collateralized by the properties located at 1881, 1885 and 1889 Edgebrook in April 1996 and the partial paydowns of the loan collateralized by the property located at 7432 Washington in the second, third and fourth quarters of 1996 and the first and fourth quarters of 1997. Interest on short-term investments decreased for the year ended December 31, 1997 as compared to the years ended December 31, 1995 and 1996, as repayment proceeds received in 1995 and 1996 were temporarily invested before being distributed to the Limited Partners. Other income increased for the year ended December 31, 1996, as compared to the years ended December 31, 1997 and 1995 due to higher late charges collected in 1996 on mortgage loans receivable and a one-time prepayment penalty received from the payoff of the Edgebrook mortgage loan receivable in the second quarter of 1996. The partnership received $14,502, $18,574 and $6,219 of late charge income in 1997, 1996 and 1995 respectively. Professional service 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 accounting services required by the Partnership. The increase in general and administrative expenses to Affiliates for the year ended December 31, 1997, as compared to the year ended December 31, 1996, is due to increases in investor service charges and data processing expense which were partially offset by decreases in mortgage servicing fees. The decrease in general and administrative expenses to Affiliates for the year ended December 31, 1996, as compared to the year ended December 31, 1995, is due to decreases in postage and mortgage servicing fees which were partially offset by an increase in investor service charges. The increase in general and administrative expenses to non-affiliates for the year ended December 31, 1997, as compared to the year ended December 31, 1996, is due to increases in printing and postage expense which were partially offset by a decrease in bank charges and filing fees. General and administrative expenses to non-affiliates increased for the year ended December 31, 1996, as compared to the year ended December 31, 1995, due to an increase in bank charges and filing fees. Inflation The Partnership's right to additional interest in connection with certain mortgage notes as described in Note (4) of the Notes to Financial Statements, (Item 8 of this Annual Report) is intended to provide a hedge against the impact of inflation. To date, the operations of the Partnership have not been significantly affected by inflation. -7- Item 8. Financial Statements and Supplementary Data INLAND MORTGAGE INVESTORS FUND, L.P.-II (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..................................... 11 Statements of Partners' Capital, for the years ended December 31, 1997, 1996 and 1995..................................... 12 Statements of Cash Flows, for the years ended December 31, 1997, 1996 and 1995..................................... 13 Notes to Financial Statements.......................................... 14 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. 1549-71 Sherman, Evanston, Illinois: Report of Independent Certified Public Accountants* Statement of Operating Income and Expenses for the year ended December 31, 1997* Notes to Statement of Operating Income and Expenses for the year ended December 31, 1997* * The Partnership will subsequently file these reports on or before May 15, 1998 -8- REPORT OF INDEPENDENT ACCOUNTANTS The Partners of Inland Mortgage Investors Fund, L.P. - II We have audited the financial statements of Inland Mortgage Investors Fund, L.P. - II 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. - II 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.-II (a limited partnership) Balance Sheets December 31, 1997 and 1996 Assets ------ 1997 1996 ---- ---- Cash and cash equivalents (Note 1)................ $ 169,895 177,482 Accrued interest receivable....................... 35,419 33,951 Mortgage loans receivable (Note 4)................ 2,664,745 2,741,460 ------------ ------------ Total assets.................................. $ 2,870,059 2,952,893 ============ ============ Liabilities and Partners' Capital --------------------------------- Liabilities: Due to affiliates (Note 3)...................... $ 1,544 1,690 Unearned income (Note 1)........................ 1,044 2,191 ------------ ------------ Total liabilities............................. 2,588 3,881 ------------ ------------ Partners' capital (Notes 1, 2 and 3): General Partner: Capital contribution.......................... 500 500 Cumulative net income......................... 251,346 249,061 Supplemental Capital Contribution............. 77,871 40,244 Supplemental distributions to Limited Partners (77,871) (40,244) Cumulative cash distributions................. (244,958) (244,958) ------------ ------------ 6,888 4,603 Limited Partners: ------------ ------------ Units of $500. Authorized 40,000 Units, 18,776.32 outstanding (net of offering costs of $1,072,632, of which $89,040 was paid to Affiliates)............. 8,315,526 8,315,526 Cumulative net income......................... 5,599,307 5,373,056 Supplemental Capital Contributions from General Partner............................. 77,871 40,244 Cumulative cash distributions................. (11,132,121) (10,784,417) ------------ ------------ 2,860,583 2,944,409 ------------ ------------ Total Partners' capital....................... 2,867,471 2,949,012 ------------ ------------ Total liabilities and Partners' capital........... $ 2,870,059 2,952,893 ============ ============ See accompanying notes to financial statements. -10- INLAND MORTGAGE INVESTORS FUND, L.P.-II (a limited partnership) Statements of Operations For the years ended December 31, 1997, 1996 and 1995 1997 1996 1995 Income: ---- ---- ---- Interest and fees on mortgage loans receivable (Note 4)....... $ 264,013 291,605 367,939 Interest on investments........... 13,925 16,647 23,117 Other income...................... 14,502 24,027 6,219 ------------ ------------ ------------ 292,440 332,279 397,275 ------------ ------------ ------------ Expenses: Professional services to Affiliates...................... 6,574 9,831 14,209 Professional services to non-affiliates.................. 23,348 21,142 20,687 General and administrative to Affiliates................... 26,126 24,683 25,355 General and administrative to non-affiliates............... 7,856 7,641 5,779 ------------ ------------ ------------ 63,904 63,297 66,030 ------------ ------------ ------------ Net income.......................... $ 228,536 268,982 331,245 ============ ============ ============ Net income allocated to (Note 2): General Partner.................. $ 2,285 2,690 12,782 Limited Partners.................. 226,251 266,292 318,463 ------------ ------------ ------------ Net income.......................... $ 228,536 268,982 331,245 ============ ============ ============ Net income allocated to the one General Partner Unit.............. $ 2,285 2,690 12,782 ============ ============ ============ Net income allocated to Limited Partners per weighted average Limited Partnership Units of 18,776.32, basic and diluted...... $ 12.05 14.18 16.96 ============ ============ ============ See accompanying notes to financial statements. -11- INLAND MORTGAGE INVESTORS FUND, L.P.-II (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.......... $ 1,913 3,909,500 3,911,413 Net income.......................... 12,782 318,463 331,245 Supplemental Capital Contributions made by the General Partner on behalf of the Limited Partners.... - 8,111 8,111 Distributions to Partners ($31.52 per Limited Partnership Unit based on Units of 18,776.32) (Note 2).......................... (8,564) (591,909) (600,473) ------------ ------------ ------------ Balance at December 31, 1995........ 6,131 3,644,165 3,650,296 Net income.......................... 2,690 266,292 268,982 Supplemental Capital Contributions made by the General Partner on behalf of the Limited Partners.... - 16,682 16,682 Distributions to Partners ($52.34 per Limited Partnership Unit based on Units of 18,776.32) (Note 2).......................... (4,218) (982,730) (986,948) ------------ ------------ ------------ Balance at December 31, 1996........ 4,603 2,944,409 2,949,012 Net income.......................... 2,285 226,251 228,536 Supplemental Capital Contributions made by the General Partner on behalf of the Limited Partners.... - 37,627 37,627 Distributions to Partners ($18.52 per Limited Partnership Unit based on Units of 18,776.32) (Note 2).......................... - (347,704) (347,704) ------------ ------------ ------------ Balance at December 31, 1997........ $ 6,888 2,860,583 2,867,471 ============ ============ ============ See accompanying notes to financial statements. -12- INLAND MORTGAGE INVESTORS FUND, L.P.-II (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........................ $ 228,536 268,982 331,245 Adjustments to reconcile net income to net cash provided by operating activities: Changes in assets and liabilities: Accrued interest receivable... (1,468) (3,382) 20,655 Accounts payable.............. - (859) 408 Due to Affiliates............. (146) (2,088) 3,578 Unearned income............... (1,147) (3,554) (1,713) Net cash provided by operating ------------ ------------ ------------ activities........................ 225,775 259,099 354,173 ------------ ------------ ------------ Cash flows from investing activities: Principal payments collected (net) 76,715 636,995 750,374 Principal payments on participations and underlying mortgages........ - - (500,000) Net cash provided by investing ------------ ------------ ------------ activities........................ 76,715 636,995 250,374 ------------ ------------ ------------ Cash flows from financing activities: Supplemental Capital Contribution. 37,627 16,682 8,111 Distributions paid................ (347,704) (986,948) (600,473) Net cash used in financing ------------ ------------ ------------ activities........................ (310,077) (970,266) (592,362) ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents.............. (7,587) (74,172) 12,185 Cash and cash equivalents at beginning of year................. 177,482 251,654 239,469 Cash and cash equivalents at end of ------------ ------------ ------------ year.............................. $ 169,895 177,482 251,654 ============ ============ ============ See accompanying notes to financial statements. -13- INLAND MORTGAGE INVESTORS FUND, L.P.-II (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.-II (the "Partnership"), was formed on December 24, 1986, pursuant to the Delaware Revised Uniform Limited Partnership Act to make or acquire loans collateralized by mortgages on improved, income producing properties. On February 10, 1987, the Partnership commenced an offering of 40,000 Limited Partnership Units ("Units") at $500 per Unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on August 10, 1988, with total sales of 18,776.32 Units, resulting in gross offering proceeds of $9,388,158, which does not include the General Partner's contribution of $500. All of the holders of these Units were admitted to the Partnership. 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. The Partnership sold participations in mortgage receivables which may yield the Partnership a return which is greater than the return based on the stated interest rate of the instrument. The differential between the stated rate and the interest rate paid to the participant is recognized as income over the term of the mortgage loan. 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 collectibility 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. The Partnership intends to pursue collection of all amounts currently due from the borrowers. -14- INLAND MORTGAGE INVESTORS FUND, L.P.-II (a limited partnership) Notes to Financial Statements (continued) The Partnership believes that the interest rates associated with the mortgage receivable approximate the market interest rates, and as such, the carrying amount of the mortgages receivable approximate their fair value. No provision for Federal income taxes has been made as the liability for such taxes is that of the Partners rather than the Partnership. 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. 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................ $2,870,059 2,870,059 2,952,893 2,952,893 Partners' capital: General Partner........... 6,888 13,274 4,603 10,988 Limited Partners.......... 2,860,583 2,854,197 2,944,409 2,938,023 Net income (loss): General Partner........... 2,285 (35,343) 2,690 (12,464) Limited Partners.......... 226,251 263,877 266,292 281,445 Net income per Limited Partnership Unit, basic and diluted................... 12.05 14.05 14.18 14.99 The net income per Limited Partnership Unit is based upon the weighted average number of Units outstanding of 18,776.32. -15- INLAND MORTGAGE INVESTORS FUND, L.P.-II (a limited partnership) Notes to Financial Statements (continued) (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 11% per annum. Distributions of Loan Repayment Proceeds will be distributed first to the 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 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. (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 the professional services to Affiliates and general and administrative expenses to Affiliates, of which $1,544 and $1,690 remained unpaid at December 31, 1997 and 1996, respectively. Inland Mortgage Servicing Corporation, a subsidiary of the General Partner, services the Partnership's mortgage loans receivable. Its services include processing mortgage loan collections and escrow deposits and maintaining related records. For these services, the Partnership is obligated to pay fees at an annual rate equal to 1/4 of 1% of the outstanding mortgage loans receivable balance of the Partnership. Such fees of $6,444 in 1997, $6,988 in 1996 and $9,325 in 1995 have been incurred and paid to the subsidiary of the General Partner and are included in the Partnership's general and administrative expenses to Affiliates. The General Partner is required to make Supplemental Capital Contributions, if necessary, from time to time in sufficient amounts to allow the Partnership to make distributions to the Limited Partners amounting to at least 7% per annum on their Invested Capital. The cumulative amount of such Supplemental Capital Contributions at December 31, 1997 is $77,871, all of which has been received from the General Partner. -16- INLAND MORTGAGE INVESTORS FUND, L.P.-II (a limited partnership) Notes to Financial Statements (continued) (4) Mortgage Loans Receivable Mortgage loans receivable are collateralized principally by first mortgages and wrap mortgages on multi-family residential properties located in Chicago, Illinois or its surrounding metropolitan area, except for the Evanston, Illinois loan which is collateralized by a multi-use retail and office building and the Richton Park, Illinois loan which is collateralized by a shopping mall. As additional collateral, the Partnership holds assignments of rents and leases or personal guarantees of the borrowers. Generally, the mortgage notes are payable in equal monthly installments based on 20 or 30 year amortization periods. Mortgage loans receivable consist of the following:
Monthly Balance at Interest Balloon P & I December 31, Rate at Maturity at Payments ----------------------- Property Location 12/31/97 Date Maturity Prepayment (net) 1997 1996 - ------------------ --------- ------------- ---------- ----------------- ----------- ----------- ----------- 1549-71 Sherman and (A) 9.50% October 1997 $1,572,075 60 days notice $ 15,130 $1,569,892 1,595,869 627 Grove, Evanston Extended & 3% penalty Month to Month 3900 Cornelia/ 9.04% October 268,245 At any time 2,428 272,149 276,420 3508-10 Springfield, 1998 without penalty Chicago 7409-13 Seeley, (B) 9.22% November 418,274 60 days notice 3,770 424,119 429,785 Chicago 1998 & 3% penalty Richton Park Plaza, (C) 10.000% January 317,205 At any time 2,979 321,328 324,757 Richton Park 1999 without penalty 1881, 1885, 1889 (D) 10.900% - - 60 days notice - - - Edgebrook, Chicago & 3% penalty 7432 Washington, (E) 10.000% July 70,400 At any time 644 77,257 114,629 Forest Park 2001 without penalty $2,664,745 2,741,460 =========== =========== -17- -17- INLAND MORTGAGE INVESTORS FUND, L.P.-II (a limited partnership) Notes to Financial Statements (continued) (A) On March 24, 1989, in accordance with a pre-existing agreement, the Partnership amended its Participation Agreements with Inland Mortgage Corporation (IMC), a subsidiary of the General Partner, and an unaffiliated third party participant in the loans collateralized by the Sherman and Grove properties. The Partnership repurchased all of IMC's interest of $135,000 to resell this interest to the unaffiliated third party participant. Upon completion of the transaction the third party's total interest in the $2,700,000 original loan amount was $985,000. Terms of the November 1988 Participation Agreement were modified so that the entire $985,000 participating interest earned interest at 11.55% per annum through December 1989. On January 1, 1990 and each succeeding January 1, the interest rate adjusts to 2.82% over the yield of one-year U.S. Treasury Bills, with a cap of 13.75% and a floor of 8.75% per annum. The installments were interest only until February 1990 and currently consist of principal and interest (based on a 25 year amortization) with the final installment due in October 1997. In October 1997, the loan collateralized by the property located at 1549- 1571 Sherman Avenue matured. The loan term has been extended on a month to month basis to allow the borrower time to proceed with refinancing. In October 1997, Inland Real Estate Investment Corporation, the General Partner, purchased the participating interest in the loan from an unaffiliated third party and has accepted the terms of the month to month extension. All other terms remain the same. (B) In November 1988, the Partnership purchased this loan from Inland Mortgage Corporation, a subsidiary of the General Partner. The cost of the loan was $467,556, including the principal balance of $463,500 and accrued interest of $4,056. This loan currently bears interest at the rate of 9.22% per annum and adjusts annually to 3.75% above the One Year Treasury Constant Maturity Average. (C) On May 23, 1989, the Partnership purchased a $1,095,000 interest in a first mortgage loan funded originally on behalf of the Partnership by Inland Mortgage Corporation (IMC), a subsidiary of the General Partner. The loan was in the amount of $2,600,000 and was collateralized by a first mortgage on the Richton Park Plaza Shopping Mall. The initial interest rate on the loan was 11.21% and adjusted annually to 3% over the One Year Treasury Constant Maturity Average beginning in January 1990. Payments adjusted annually with the interest rate. The loan matured on January 1, 1994, at which time the Partnership extended the maturity date of the loan. On June 30, 1994 the Partnership modified the loan and received $735,827 in principal and accrued interest, as a result of the partial payoff of this loan. Under the loan modification, the remaining principal balance of $330,402 is collateralized by a second mortgage on the property and requires principal and interest payments at the rate of 10% per annum with a final balloon payment due January 1, 1999. The interest rate adjusts annually on January 1st to three points over the One Year Treasury Constant Maturity Average. The borrower has paid a $3,300 extension fee to the Partnership. -18- INLAND MORTGAGE INVESTORS FUND, L.P.-II (a limited partnership) Notes to Financial Statements (continued) (D) In April 1996, the Partnership received a complete prepayment of the loan collateralized by the properties located at 1881, 1885 and 1889 Edgebrook. Proceeds from the prepayment, including principal, accrued interest and a prepayment penalty totaled $556,220 and were distributed to the Limited Partners in April 1996. (E) In June 1992, the Partnership funded this $700,000 loan to refinance an existing mortgage owed to an Affiliate of the General Partner and sold a $500,000 interest in the loan to Inland Mortgage Investors Fund III, L.P. ("Participant"), which is another publicly registered partnership sponsored by the General Partner. Therefore, the net funds invested by the Partnership in the loan was $200,000. The loan has a fixed interest rate and requires monthly payments of interest only. The Partnership will receive its percentage share of all such payments. The borrower on the loan collateralized by the property located at 7432 Washington made additional partial paydowns on the mortgage. The Partnership received $37,371 $59,828 and $16,200, its proportionate share of the total paydowns, during 1997, 1996 and 1995, respectively. (5) Subsequent Events In January 1998, the Partnership paid a distribution of $87,375, all of which was distributed to Limited Partners, including $20,815 of repayment proceeds and $66,560 of operating cash flow. -19- 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 -20- 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. -21- 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. -22- 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. -23- 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. -24- 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 profits or losses as described under the caption "Allocation of Profits and 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, included as an exhibit to the Prospectus, which is hereby 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 $26,256, of which $1,544 was unpaid at December 31, 1997. A subsidiary of the General Partner earned mortgage servicing fees of $6,444 in 1997, in connection with servicing the Partnership's mortgage loans receivable. -25- Item 12. Security Ownership of Certain Beneficial Owners and Management (a) The Liquidity Plan (page 19 of the Prospectus of the Partnership dated February 10, 1987, 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 5,401.45 Units, Directly 28.77% 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 One Unit Directly Less than 1% 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 of 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 and Note (3) of the Notes to Financial Statements (Item 8 of this Annual Report). -26- 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 10, 1987, as supplemented, are incorporated herein by reference thereto. 28 Prospectus dated February 10, 1987, as supplemented, included in post-effective Amendment No. 2 to Form S-11 Registration Statement, File No. 33-11110, 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 None 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. -27- 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.-II 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 -28-
EX-27 2
5 YEAR DEC-31-1997 DEC-31-1997 169895 0 2700164 0 0 205314 0 0 2870059 2588 0 0 0 0 2867471 2870059 0 292440 0 0 63904 0 0 228536 0 228536 0 0 0 228536 12.05 12.05
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