Item 1. Business
The Registrant, InLand Capital Fund, L.P. (the "Partnership"), is a limited partnership formed on June 21, 1991 pursuant to the Delaware Revised Uniform Limited Partnership Act, to invest in multiple parcels of land on an all-cash basis. The Partnership intends to engage in a number of preliminary development activities with the objective of maximizing the resale value of the land parcels. On December 13, 1991, the Partnership commenced an Offering of 60,000 Limited Partnership Units ("Units") at $1,000 per Unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on August 23, 1993, with total sales of 32,399.28 Units, at $1,000 per Unit, resulting in $32,399,282 in gross offering proceeds, not including the General Partner's capital contribution of $500. All of the holders of these Units have been admitted to the Partnership. Inland Real Estate Investment Corporation is the General Partner. The Limited Partners of the Partnership will share in their portion of benefits of ownership of the Partnership's real property investments according to the number of Units held. As of December 31, 1999, the Partnership has repurchased a total of 50.17 Units for $48,172 from various Limited Partners through the Unit Repurchase Program. Under this program, Limited Partners may under certain circumstances have their Units repurchased for an amount equal to their Invested Capital.
The Partnership is engaged in the business of real estate investment. A presentation of information about industry segments would not be material to an understanding of the Partnership's business taken as a whole.
The Partnership acquired fee ownership of the following real property investments:
Gross Acres Purchase/Sales Parcel & Location Purchased/Sold Date - ----------------------------------- -------------------- ------------------ Parcel 1, Kendall County, Illinois 108.8960 07/22/92
Parcel 2, McHenry County, Illinois 201.0000 11/09/93 (17.7420 sold 08/02/95) (8.6806 sold Var 1997) (1.9290 sold Var 1998) (13.5030 sold Var 1999)
Parcel 3, Will County, Illinois 34.0474 03/04/94 (34.0474 sold 02/04/99)
Parcel 4, Will County, Illinois 86.9195 03/30/94 (2.3050 sold Var 1997) (3.3600 sold Var 1998) (1.0331 sold 08/19/99)
Parcel 5, LaSalle County, Illinois 190.9600 04/01/94 (2.0600 sold 04/08/98) (188.9000 sold 10/07/99)
Parcel 6, DeKalb County, Illinois 59.0800 05/11/94 (4.9233 sold Apr 1998) (54.1567 sold 07/23/98)
Gross Acres Purchase/Sales Parcel & Location Purchased/Sold Date - ----------------------------------- -------------------- ------------------ Parcel 7, Kendall County, Illinois 200.8210 07/28/94
Parcel 8, Kendall County, Illinois 133.0000 08/17/94
Parcel 9, LaSalle County, Illinois 335.9600 08/30/94
Parcel 10, Kendall County, Illinois 230.7860 09/16/94 (7.0390 sold 04/21/95) (2.9770 sold 11/03/99)
Parcel 11, Kane County, Illinois 123.0000 09/26/94
Parcel 12, Kendall County, Illinois 110.2530 09/28/94
Parcel 13, LaSalle County, Illinois 352.7390 10/06/94 (10.0000 sold 07/27/98) (342.7390 sold 08/31/98)
Parcel 14, Kendall County, Illinois 134.7760 10/26/94 (10.6430 sold 05/21/99)
Parcel 15, McHenry County, Illinois 169.5400 10/31/94
Parcel 16, McHenry County, Illinois 207.0754 11/30/94
Parcel 17, LaSalle County, Illinois 236.4400 12/07/94
Parcel 18, Kendall County, Illinois 386.9900 11/02/95 (386.9900 sold 08/31/98)
Reference is made to Note 4 of the Notes to Financial Statements (Item 8 of this Annual Report) for additional descriptions of the Partnership's real property investments.
The Partnership purchased, primarily on an all-cash basis, eighteen parcels of undeveloped land and one building and is engaged in the rezoning and resale of the parcels. All of the investments were made in the collar counties surrounding the Chicago metropolitan area. The anticipated holding period of the land is approximately two to seven years from the completion of the land portfolio acquisitions. As of December 31, 1999, the Partnership has had multiple sales transactions through which it has disposed of the building and approximately 1,093 acres of the approximately 3,302 acres originally owned.
The General Partner anticipates that land purchased by the Partnership will produce sufficient income to pay property taxes, insurance and other miscellaneous expenses, with surplus funds, if any, to be retained in the working capital reserve for pre-development activities. Income is expected to be derived from leases to farmers or from other activities compatible with the the Partnership's business plan for land parcels. Although the General Partner believes that leasing the Partnership's land will generate sufficient revenues to pay these expenses, there can be no assurance that this will in fact occur.
However, the General Partner has agreed to make a Supplemental Capital Contribution to the Partnership if and to the extent that real estate taxes and insurance payable with respect to the Partnership's land during a given year exceed the revenue earned by the Partnership from leasing its land during such year. Any Supplemental Capital Contribution will be repaid only after Limited Partners have received, over the life of the Partnership, a return of their Original Capital plus the 15% Cumulative Return. All of the parcels purchased by the Partnership consist of land which generates revenue from farming or other leasing activities. It is not expected that the Partnership will generate cash distributions to the partners from farm leases or other activities.
The Partnership had no employees during 1999.
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 for a description of such terms and transactions.
Item 2.
Item 2. Properties
The Partnership owns directly the parcels of land referred to in Item 1 and in Note 4 of the Notes to Financial Statements (Item 8 of this Annual Report) to which reference is hereby made for a description of said parcels.
Item 3.
Item 3. Legal Proceedings
The Partnership is not subject to any material pending legal proceedings.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during 1999.
PART II
Item 5.
Item 5. Market for the Partnership's Limited Partnership Units and Related Security Holder Matters
As of December 31, 1999, there were 2,665 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.
Although the Partnership has established a Unit Repurchase Program, funds for repurchase of Units are limited. Reference is made to "Unit Repurchase Program" on page 61 of the Prospectus of the Partnership dated December 13, 1991, as amended, which is incorporated herein by reference. As of December 31, 1999, the Partnership had approximately $167,000 available for the repurchase of Units.
Item 6.
Item 6. Selected Financial Data
INLAND CAPITAL FUND, L.P. (a limited partnership)
For the years ended December 31, 1999, 1998, 1997, 1996 and 1995
(not covered by the Report of Independent Accountants)
1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- Total assets....... $23,494,350 25,966,480 28,953,356 29,381,700 28,884,088 =========== =========== =========== =========== ===========
Total income....... $ 5,264,045 5,259,595 1,717,766 410,743 1,102,930 =========== =========== =========== =========== ===========
Net income......... $ 2,399,704 1,207,517 1,066,944 94,338 368,124 =========== =========== =========== =========== =========== Net income allocated to the one General Partner Unit..... $ 260,957 44 635 943 1,393 =========== =========== =========== =========== =========== Net income allocated per Limited Partnership Unit (b)......... $ 66.11 37.32 32.94 2.88 11.32 =========== =========== =========== =========== ===========
Distributions per Limited Partnership Unit from sales (b)(c):.......... $ 145.50 130.39 30.89 - 19.90 =========== =========== =========== =========== ===========
Weighted average Limited Partnership Units............ 32,351.35 32,352.11 32,368.73 32,388.75 32,397.11 =========== =========== =========== =========== ===========
(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.
(c) Distributions from sales represents a return of Invested Capital, as defined in the Partnership Agreement.
(d) Reference is made to Note 4 of the Notes to Financial Statements (Item 8 of this Annual Report) for a description of the Partnership's land acquisitions and dispositions.
Item 7.
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; uninsured losses; and potential conflicts of interest between the Partnership and its Affiliates, including the General Partner.
Liquidity and Capital Resources
On December 13, 1991, the Partnership commenced an Offering of 60,000 Limited Partnership Units ("Units") at $1,000 per Unit, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on August 23, 1993, with total sales of 32,399.28 Units, at $1,000 per Unit, resulting in $32,399,282 in gross offering proceeds, not including the General Partner's capital contribution of $500. All of the holders of these Units have been admitted to the Partnership. The Limited Partners of the Partnership will share in their portion of benefits of ownership of the Partnership's real property investments according to the number of Units held.
The Partnership used $25,945,989 of gross offering proceeds to purchase, on an all-cash basis, eighteen parcels of land and one building. These investments include the payment of the purchase price, acquisition fees and acquisition costs of such properties. One of the parcels was purchased during 1992, one during 1993, fifteen during 1994 and one during 1995. As of December 31, 1999, the Partnership has had multiple sales transactions through which it has disposed of the building and approximately 1,093 acres of the 3,302 acres originally owned. As of December 31, 1999, cumulative distributions to the Limited Partners have totaled $10,571,706 (which represents a return of Invested Capital, as defined in the Partnership Agreement) and $259,418 to the General Partner. Through December 31, 1999, the Partnership has used $3,686,748 of working capital reserve for rezoning and other activities and such amount is included in investment properties.
The Partnership's capital needs and resources will vary depending upon a number of factors, including the extent to which the Partnership conducts rezoning and other activities relating to utility access, the installation of roads, subdivision and/or annexation of land to a municipality, changes in real estate taxes affecting the Partnership's land, and the amount of revenue received from leasing. As of December 31, 1999, the Partnership owns, in whole or in part, thirteen of its original parcels, the majority of which are leased to local farmers and are generating sufficient cash flow from farm leases to cover property taxes and insurance.
At December 31, 1999, the Partnership had cash and cash equivalents of $288,022, of which approximately $167,000 is reserved for the repurchase of Units through the Unit Repurchase Program. The remaining $121,022 is available, upon maturity, to be used for Partnership expenses and liabilities, cash distributions to partners, and other activities with respect to some or all of its land parcels. The Partnership plans to maximize its parcel sales effort in anticipation of rising land values.
The Partnership plans to enhance the value of its land through pre-development activities such as rezoning, annexation and land planning. The Partnership has already been successful in, or is in the process of pre-development activity on a majority of the Partnership's land investments. Parcel 2, annexed to the village of McHenry and zoned for a business park, has one phase of improvements complete and sites are being marketed to potential buyers, of which 25 of the 190 lots were sold as of December 31, 1999. (See Note 4 of the Notes to Financial Statements.) Parcel 4, zoned for a variety of business uses, has improvements underway and sites are being marketed to potential buyers, of which one site consisting of .87 acres was sold to a hotel chain on June 6, 1997, another site consisting of 1.435 acres was sold to a combination gas station/convenient store on August 12, 1997, a third site consisting of 1.5 acres was sold to a national fast-food chain on August 13, 1998, a fourth site consisting of 1.86 acres was sold to a different national fast-food chain on October 16, 1998 and a fifth site consisting of 1.033 acres was sold to a national discount tire retailer on August 19, 1999. (See Note 4 of the Notes to Financial Statements.) Parcels 15 and 16 have been annexed to the village of Huntley and zoned for residential and commercial development. The Partnership sold a portion of Parcels 10 and 14 and the remaining acres of Parcels 3 and 5 to unaffiliated third-parties. (See Note 4 of the Notes to Financial Statements.)
Results of Operations
As of December 31, 1999, the Partnership owned thirteen parcels of land consisting of approximately 2,209 acres. Of the 2,209 acres owned, approximately 2,058 acres are tillable and leased to local farmers and are generating sufficient cash flow to cover property taxes, insurance and other miscellaneous property expenses. Income from the sale of investment properties and the cost of investment properties sold for the year ended December 31, 1999 is the result of the sale of Parcel 3 and Parcel 5, additional lot sales at Parcel 2, the sale of 1.033 acres of Parcel 4, the sale of 2.977 acres of Parcel 10, and the sale of 10.643 acres of Parcel 14. Income from the sale of investment properties and the cost of investment properties sold for the year ended December 31, 1998 is the result of the sale of Parcels 6, 13 and 18, additional sales at Parcels 2 and 4 and an easement sale on Parcel 5. Income from the sale of investment properties and cost of investment properties sold for the year ended December 31, 1997 is the result of the sale of .87 acres of Parcel 4 on June 6, 1997, the sale of 1.435 acres of Parcel 4 on August 12, 1997, the sale of 1.929 acres of Parcel 2 on September 2, 1997 and the sale of 6.7516 acres of Parcel 2 on November 7, 1997. (See Note 4 of the Notes to Financial Statements.)
Rental income decreased for the year ended December 31, 1999, as compared to the years ended December 31, 1998 and 1997, due to the decrease in tillable acres due to land sales and pre-development activity on the Partnership's land investments. This decrease was partially offset by the annual increase in lease amounts from tenants.
Interest income increased for the years ended December 31, 1999 and 1998, as compared to the year ended December 31, 1997, due primarily as a result of the interest income earned on the mortgage loan receivable the Partnership received from the sale of the remaining acreage of Parcel 6. See Note 6 of the Notes to Financial Statements for further discussion of the terms of the mortgage loan receivable received from this sale.
The other income recorded for the year ended December 31, 1999 is the result of the Partnership receiving a non-refundable deposit on a land sale which did not occur. The other income recorded for the year ended December 31, 1998 is the result of the Partnership receiving non-refundable extension fees from the potential buyer of Parcel 3. The other income recorded for the year ended December 31, 1997 is the result of the Partnership receiving a non-refundable deposit on a land sale which did not occur.
Professional services to Affiliates decreased for the year ended December 31, 1999, as compared to the years ended December 31, 1998 and December 31, 1997, due to a decrease in legal services and accounting services. Professional services to non-affiliates decreased for the years ended December 31, 1999 and 1998, as compared to the year ended December 31, 1997, due to a decrease in legal services. This decrease was partially offset by an increase in accounting fees.
General and administrative expenses to Affiliates decreased for the year ended December 31, 1999, as compared to the years ended December 31, 1998 and 1997, due to decreases in postage and investor services expenses. The decrease for the year ended December 31, 1999 was partially offset by an increase in data processing expenses. General and administrative expenses to non-affiliates increased for the years ended December 31, 1999 and 1998, as compared to the year ended December 31, 1997, due primarily to an increase in the Illinois Replacement Tax.
Marketing expenses to Affiliates and non-affiliates decreased for the year ended December 31, 1999, as compared to the year ended December 31, 1998, due to a decrease in non-recurring marketing, advertising and travel expenses relating to marketing the land portfolio to prospective purchasers, as well as an increase in the capitalization of marketing costs to specific land parcels. Marketing expenses to Affiliates and non-affiliates increased for the year ended December 31, 1998, as compared to the year ended December 31, 1997, due to increases in marketing, advertising and travel expenses relating to marketing the land portfolio to prospective purchasers.
Land operating expenses to Affiliates decreased for the year ended December 31, 1999, as compared to the years ended December 31, 1998 and 1997, due to a decrease in tillable acres due to land sales. Land operating expenses to non- affiliates decreased for the year ended December 31, 1999, as compared to the year ended December 31, 1998, due to a decrease in real estate tax expense which was partially offset by an increase in grounds maintenance. Land operating expenses to non-affiliates increased for the year ended December 31, 1998, as compared to the years ended December 31, 1997, due to an increase in real estate taxes and maintenance expenses of the Partnership's land investments.
Year 2000 Issues
As part of it's year 2000 readiness plan, the Partnership had identified three areas for compliance efforts: business computer systems, tenants and suppliers and non-information technology systems. The Partnership had not experienced any problems relating to year 2000 issues in any of these areas. Total costs associated with year 2000 readiness were not material.
Inflation
Inflation in future periods may cause capital appreciation of the Partnership's investments in land. Rental income levels (from leases to new tenants or renewals of existing tenants) are expected to rise and fall in accordance with normal agricultural market conditions and may or may not be affected by inflation. To date, the operations of the Partnership have not been significantly affected by inflation.
Item 7(a). Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
INLAND CAPITAL FUND, L.P. (a limited partnership)
Index ----- Page ----
Independent Auditors' Reports............................................ 13
Financial Statements:
Balance Sheets, December 31, 1999 and 1998............................. 15
Statements of Operations, for the years ended December 31, 1999, 1998 and 1997........................................................ 17
Statements of Partners' Capital, for the years ended December 31, 1999, 1998 and 1997.............................................. 19
Statements of Cash Flows, for the years ended December 31, 1999, 1998 and 1997........................................................ 20
Notes to Financial Statements.......................................... 22
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.
INDEPENDENT AUDITORS' REPORT
To the Partners of InLand Capital Fund, L.P.
We have audited the accompanying balance sheet of InLand Capital Fund, L.P. (a limited partnership) as of December 31, 1999, and the related statements of operations, partners' capital, and cash flows for the year ended December 31, 1999. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material respects, the financial position of InLand Capital Fund, L.P. as of December 31, 1999, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Chicago, Illinois February 18, 2000
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners of InLand Capital Fund, L.P.
In our opinion, the accompanying balance sheets and the related statements of operations, partners' capital and cash flows present fairly, in all material respects, the financial position of Inland Capital Fund, L.P. (the "Company") at December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers
Chicago, Illinois March 15, 1999
INLAND CAPITAL FUND, L.P. (a limited partnership)
Balance Sheets
December 31, 1999 and 1998
Assets ------
1999 1998 Current assets: ---- ---- Cash and cash equivalents (Note 1).............. $ 288,022 569,663 Accrued interest and other receivables.......... 82,119 44,801 Other current assets............................ 1,837 2,406 ------------ ------------ Total current assets.............................. 371,978 616,870 ------------ ------------ Other assets...................................... 47,554 3,074 Mortgage loan receivable (Note 6)................. 400,000 400,000 Investment properties and improvements (including acquisition fees paid to Affiliates of $1,076,390 and $1,187,120 at December 31, 1999 and 1998, respectively) (Notes 3 and 4)................... 22,674,818 24,946,536 ------------ ------------ Total assets...................................... $23,494,350 25,966,480 ============ ============
See accompanying notes to financial statements.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Balance Sheets (continued)
December 31, 1999 and 1998
Liabilities and Partners' Capital ---------------------------------
1999 1998 Current liabilities: ---- ---- Accounts payable................................ $ 75,366 18,124 Accrued real estate taxes....................... 53,194 80,989 Due to Affiliates (Note 3)...................... 27,698 19,796 Unearned income................................. 74,537 15,012 ------------ ------------ Total current liabilities......................... 230,795 133,921 ------------ ------------ Deferred gain on sale (Note 6).................... 2,805 2,805
Partners' capital (Notes 1 and 2): General Partner: Capital contribution.......................... 500 500 Cumulative cash distributions................. (259,418) - Cumulative net income......................... 274,676 13,719 ------------ ------------ 15,758 14,219 Limited Partners: ------------ ------------ Units of $1,000. Authorized 60,000 Units, 32,349.11 and 32,352.11 outstanding at December 31, 1999 and 1998, respectively (net of offering costs of $4,466,765, of which $3,488,574 was paid to Affiliates).... 27,884,346 27,886,551 Cumulative cash distributions................. (10,571,706) (5,864,621) Cumulative net income......................... 5,932,352 3,793,605 ------------ ------------ 23,244,992 25,815,535 ------------ ------------ Total Partners' capital........................... 23,260,750 25,829,754 ------------ ------------ Total liabilities and Partners' capital........... $23,494,350 25,966,480 ============ ============
See accompanying notes to financial statements.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Statements of Operations
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997 Income: ---- ---- ---- Sale of investment properties..... $ 4,848,387 4,812,864 1,328,482 Rental income..................... 237,072 273,188 298,616 Interest income................... 139,586 133,043 57,643 Other income...................... 39,000 40,500 33,025 ------------ ------------ ------------ 5,264,045 5,259,595 1,717,766 Expenses: ------------ ------------ ------------ Cost of investment properties sold 2,602,552 3,609,742 325,044 Professional services to Affiliates...................... 31,333 36,583 36,820 Professional services to non-affiliates.................. 24,139 24,655 45,112 General and administrative expenses to Affiliates.......... 19,402 23,174 22,472 General and administrative expenses to non-affiliates...... 21,391 19,139 12,558 Marketing expenses to Affiliates.. (2,259) 76,926 10,812 Marketing expenses to non-affiliates.................. 34,345 60,702 48,084 Land operating expenses to Affiliates...................... 50,421 61,445 63,744 Land operating expenses to non-affiliates.................. 83,017 139,712 86,176 ------------ ------------ ------------ 2,864,341 4,052,078 650,822 ------------ ------------ ------------ Net income.......................... $ 2,399,704 1,207,517 1,066,944 ============ ============ ============
See accompanying notes to financial statements.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Statements of Operations (continued)
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997 ---- ---- ---- Net income allocated to (Note 2): General Partner................... $ 260,957 44 635 Limited Partners.................. 2,138,747 1,207,473 1,066,309 ------------ ------------ ------------ Net income.......................... $ 2,399,704 1,207,517 1,066,944 ============ ============ ============
Net income per the one General Partner Unit...................... $ 260,957 44 635 ============ ============ ============ Net income per Unit, basic and diluted, allocated to Limited Partners per weighted average Limited Partnership Units (32,351.35, 32,352.11 and 32,368.73 for the years ended December 31, 1999, 1998 and 1997, respectively) $ 66.11 37.32 32.94 ============ ============ ============
See accompanying notes to financial statements.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Statements of Partners' Capital
For the years ended December 31, 1999, 1998 and 1997
General Limited Partner Partners Total ------------ ------------ ------------ Balance January 1, 1997............. $ 13,540 28,784,092 28,797,632
Repurchase of Limited Partnership Units............................. - (24,192) (24,192) Distributions to Partners ($30.89 per weighted average Limited Partnership Units of 32,368.73) (Note 2)...... - (999,860) (999,860) Net income.......................... 635 1,066,309 1,066,944 ------------ ------------ ------------ Balance at December 31, 1997........ 14,175 28,826,349 28,840,524
Distributions to Partners ($130.39 per weighted average Limited Partnership Units of 32,352.11) (Note 2)...... - (4,218,287) (4,218,287) Net income.......................... 44 1,207,473 1,207,517 ------------ ------------ ------------ Balance at December 31, 1998........ 14,219 25,815,535 25,829,754
Repurchase of Limited Partnership Units............................. - (2,205) (2,205) Distributions to Partners ($145.50 per weighted average Limited Partnership Units of 32,351.35) (Note 2)...... (259,418) (4,707,085) (4,966,503) Net income.......................... 260,957 2,138,747 2,399,704 ------------ ------------ ------------ Balance December 31, 1999........... $ 15,758 23,244,992 23,260,750 ============ ============ ============
See accompanying notes to financial statements.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997 Cash flows from operating activities: ---- ---- ---- Net income........................ $ 2,399,704 1,207,517 1,066,944 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Gain on sale of investment properties..................... (2,245,835) (1,203,122) (1,003,438) Changes in assets and liabilities: Accrued interest and other receivables.................. (37,318) (43,783) 3,885 Other current assets.......... (43,911) 226 70 Accounts payable.............. 57,242 9,534 (465,468) Accrued real estate taxes..... (27,795) 7,892 66 Due to Affiliates............. 7,902 9,453 3,892 Unearned income............... 59,525 (5,790) (9,726) Deferred gain on sale......... - (5,084) - Net cash provided by (used in) ------------ ------------ ------------ operating activities.............. 169,514 (23,157) (403,775) ------------ ------------ ------------ Cash flows from investing activities: Additions to investment properties (330,834) (254,963) (911,759) Sale (purchase) of marketable securities, net................. - 174,800 903,002 Other assets...................... - 166,065 (169,139) Principal payments collected on mortgage loans receivable....... - 725,000 - Proceeds from sale of investment properties...................... 4,848,387 3,695,753 1,328,482 Net cash provided by (used in) ------------ ------------ ------------ investing activities.............. 4,517,553 4,506,655 1,150,586 ------------ ------------ ------------
See accompanying notes to financial statements.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Statements of Cash Flows (continued)
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997 ---- ---- ---- Cash flows from financing activities: Repurchase of Limited Partnership Units........................... $ (2,205) - (24,192) Distributions paid................ (4,966,503) (4,218,287) (999,860) ------------ ------------ ------------ Net cash used in financing activities (4,968,708) (4,218,287) (1,024,052) Net increase (decrease) in cash and ------------ ------------ ------------ cash equivalents.................. (281,641) 265,211 (277,241) Cash and cash equivalents at beginning of year................. 569,663 304,452 581,693 Cash and cash equivalents at end of ------------ ------------ ------------ year.............................. $ 288,022 569,663 304,452 ============ ============ ============
Supplemental schedule of noncash investing activities:
Mortgage loan receivable............ $ - (1,125,000) - Reduction of investment properties.. 2,602,552 3,609,742 - Deferred gain on sale............... - 7,889 - Gain on sale of land................ 2,245,835 1,203,122 - Proceeds from sale of investment ------------ ------------ ------------ properties........................ $ 4,848,387 3,695,753 - ============ ============ ============
See accompanying notes to financial statements.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1999, 1998 and 1997
(1) Organization and Basis of Accounting
InLand Capital Fund, L.P. (the "Partnership") was organized on June 21, 1991 by the filing of a Certificate of Limited Partnership under the Revised Uniform Limited Partnership Act of the State of Delaware. On December 13, 1991, the Partnership commenced an Offering of 60,000 Limited Partnership Units pursuant to a Registration under the Securities Act of 1933. The Amended and Restated Agreement of Limited Partnership (the "Partnership Agreement") provides for Inland Real Estate Investment Corporation to be the General Partner. The Offering terminated on August 23, 1993, with total sales of 32,399.28 Units, at $1,000 per Unit, resulting in $32,399,282 in gross offering proceeds, not including the General Partner's capital contribution of $500. All of the holders of these Units have been admitted to the Partnership. The Limited Partners of the Partnership will share in their portion of benefits of ownership of the Partnership's real property investments according to the number of Units held. As of December 31, 1999, the Partnership has repurchased and canceled a total of 50.17 Units for $48,172 from various Limited Partners through the Units Repurchase Program. Under this program, Limited Partners may under certain circumstances have their Units repurchased for an amount equal to their Invested Capital.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
The Partnership considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Notes to Financial Statements (continued)
For vacant land parcels and parcels with insignificant buildings and improvements, the Partnership uses the area method of allocation, which approximates the relative sales method of allocation, whereby a per acre price is used as the standard allocation method for land purchases and sales. The total cost of the parcel is divided by the total number of acres to arrive at a per acre price. For parcels with significant buildings and improvements (Parcel 10, described in Note 4), the Partnership recorded the buildings and improvements at a cost based upon the appraised value at the date of acquisition. Repair and maintenance expenses are charged to operations as incurred. Significant improvements are capitalized and depreciated over their estimated useful lives.
Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121") 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 adoption of SFAS 121 did not have any effect on the Partnership's financial position, results of operations or liquidity. As of December 31, 1999, the Partnership has not recognized any such impairment.
Statement of Financial Accounting Standards No. 128 "Earnings per Share" was adopted by the Partnership for the year ended December 31, 1998 and has been applied to all prior earnings periods presented in the financial statements. The Partnership has no dilutive securities.
The Partnership is required to pay a withholding tax to the Internal Revenue Service with respect to a Partner's allocable share of the Partnership's taxable net income, if the Partner is a foreign person. The Partnership will first pay the withholding tax from the distributions to any foreign person, and to the extent that the tax exceeds the amount of distributions withheld, or if there have been no distributions to withhold, the excess will be accounted for as a distribution to the foreign person. Future withholding tax payments will be made every April, June, September and December.
INLAND CAPITAL 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, if any, 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: 1999 1998 ------------------------ ------------------------ GAAP Tax GAAP Tax Basis Basis Basis Basis ----------- ------------ ----------- ------------ Total assets................ $23,494,350 23,494,350 25,966,480 25,966,480
Partners' capital: General Partner........... 15,758 15,758 14,219 14,219 Limited Partners.......... 23,244,992 23,245,060 25,815,535 25,815,604
Net income: General Partner........... 260,957 260,957 44 44 Limited Partners.......... 2,138,747 2,138,747 1,207,473 1,207,473
Net income per Limited Partnership Unit, basic and diluted............... 66.11 66.11 37.32 37.32
The net income per Limited Partnership Unit is based upon the weighted average number of Units of 32,351.35 and 32,352.11 during 1999 and 1998, respectively.
(2) Partnership Agreement
The Partnership Agreement defines the allocation of profits and losses, and available cash. If and to the extent that real estate taxes and insurance payable with respect to the Partnership's land during a given year exceed revenues of the Partnership, the General Partner will make a Supplemental Capital Contribution of such amount to the Partnership to ensure that it has sufficient funds to make such payments.
Distributions of Net Sale Proceeds will be allocated between the General Partner and the Limited Partners based upon both an aggregate overall return to the Limited Partners and a separate return with respect to each parcel of land purchased by the Partnership.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Notes to Financial Statements (continued)
Profits and losses from operations (other than capital transactions) will be allocated 99% to the Limited Partners and 1% to the General Partner. The net gain from a sale of Partnership properties is first allocated among the Partners in proportion to the negative balances, if any, in their respective capital accounts. Thereafter, except as provided below, net gain is allocated to the General Partner in an amount equal to the proceeds distributable to the General Partner from such sale and the balance of any net gain is allocated to the Limited Partners. If the amount of net gain realized from a sale is less than the amount of cash distributed to the General Partner from such sale, the Partnership will allocate income or gain to the General Partner in an amount equal to the excess of the cash distributed to the General Partner with respect to such sale as quickly as permitted by law. Any net loss from a sale will be allocated to the Limited Partners.
As a general rule, Net Sale Proceeds will be distributed 90% to the Limited Partners and 10% to the General Partner until the Limited Partners have received from Net Sale Proceeds (i) a return of their Original Capital plus (ii) a noncompounded Cumulative Preferred Return of 15% on their Invested Capital. However, with respect to each parcel of land, the General Partner's 10% share will be subordinated until the Limited Partners receive a return of the Original Capital attributed to such parcel ("Parcel Capital") plus a 6% per annum noncompounded cumulative preferred return thereon.
At the conclusion of Partnership operations, after all Parcels have been sold, if Limited Partners have not received the return of their Original Capital, plus a 6% annual, noncompounded return on their Invested Capital, the General Partner has agreed to rebate to the Partnership, for distribution to the Limited Partners, sales proceeds received by the General Partner in an amount equal to the deficiency in the Limited Partners' return, plus 6% noncompounded annual interest. The amount of this rebate by the General Partner, exclusive of the 6% noncompounded annual interest to be paid on the rebate, will not exceed the amount of sales proceeds received by the General Partner over the life of the Partnership.
After the amounts described in items (i) and (ii) above and any previously subordinated distributions to the General Partner have been paid, and the amount of any Supplemental Capital Contributions have been repaid to the General Partner, subsequent distributions shall be paid 75% to the Limited Partners and 25% to the General Partner without considering Parcel Capital. If, after all Net Sale Proceeds have been distributed, the General Partner has received more than 25% of all Net Sale Proceeds (exclusive of distributions made to the Limited Partners to return their Original Capital), the General Partner shall contribute to the Partnership for distribution to the Limited Partners an amount equal to such excess.
Any distributions from Net Sales Proceeds at a time when Invested Capital is greater than zero shall be deemed applied first to reduction of such Invested Capital before application to payment of any deficiency in the 15% noncompounded Cumulative Preferred Return.
INLAND CAPITAL 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 and general and administrative expenses to Affiliates, of which $878 and $2,722 was unpaid as of December 31, 1999 and 1998, respectively.
The General Partner is entitled to receive Asset Management Fees equal to one- quarter of 1% of the original cost to the Partnership of undeveloped land annually, limited to a cumulative total over the life of the Partnership of 2% of the land's original cost to the Partnership. Such fees of $50,421, $61,445 and $63,744 have been incurred for the years ended December 31, 1999, 1998 and 1997, respectively, of which $0 and $14,024 was unpaid as of December 31, 1999 and 1998, respectively.
An Affiliate of the General Partner performed sales marketing and advertising services for the Partnership and was reimbursed (as set forth under terms of the Partnership Agreement) for direct costs. Such costs of $(2,259), $76,926 and $10,812 have been incurred and are included in marketing expenses to Affiliates for the years ended December 31, 1999, 1998 and 1997, respectively, of which $0 and $3,000 was unpaid as of December 31, 1999 and 1998, respectively.
An Affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the Partnership Agreement) for salaries and direct costs. The Affiliate did not take a profit on any project. Such costs of $100,516, $48,939, and $102,300 have been incurred for the years ended December 31, 1999, 1998 and 1997, respectively, and are included in investment properties, of which $26,819 and $0 was unpaid as of December 31, 1999 and 1998, respectively.
INLAND CAPITAL FUND, L.P. (a limited partnership)
Notes to Financial Statements (continued)
(4) Investment Properties (continued)
(a) Included in the purchase of Parcel 10 was a house and several outbuildings, located on approximately seven acres, which was sold on April 21, 1995.
(b) The aggregate cost of real estate owned at December 31, 1999 for Federal income tax purposes was approximately $22,675,000 (unaudited).
(c) Reconciliation of real estate owned:
1999 1998 ---- ---- Balance at January 1,................... $24,946,536 28,301,315 Additions during year................... 330,834 254,963 ------------ ------------ 25,277,370 28,556,278 Sales during year....................... 2,602,552 3,609,742 ------------ ------------ Balance at December 31,................. $22,674,818 24,946,536 ============ ============
(5) Farm Rental Income
The Partnership has determined that all leases relating to the farm parcels are operating leases. Accordingly, rental income is reported when earned.
As of December 31, 1999, the Partnership had farm leases of generally one year in duration, for approximately 2,058 acres of the approximately 2,209 acres owned.
(6) Mortgage Loans Receivable
As a result of the sale of the remaining acres of Parcel 6 for a sales price of $1,125,000 on July 7, 1998, the Partnership received a mortgage loan receivable of $1,125,000 and recorded a deferred gain on sale of $7,889. The deferred gain will be recognized over the life of the related mortgage loan receivable as principal payments are received, of which $5,084 has been recognized as of December 31, 1999. Of the $1,125,000 mortgage loan receivable received, $725,000 accrued interest at 9% per annum and had a maturity date of November 30, 1998 (extended from September 30, 1998). On November 30, 1998, the $725,000 principal payment was received. The remaining $400,000 accrues interest at 9% per annum and has a maturity date of July 7, 2001, at which time all accrued interest, as well as principal, is due. As of December 31, 1999, accrued interest totaled $80,744.
As of December 31, 1999, the fair market value of the mortgage loan receivable approximated its carrying value.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements on accounting or financial disclosure during 1999.
PART III
Item 10.
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 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-owned 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 11 to 13 of the Prospectus, a copy of which description is hereby 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 Brenda G. Gujral........ President and Chief Operating Officer-IREIC Catherine L. Lynch...... Treasurer Roberta S. Matlin....... Assistant Vice President-Investments Mark Zalatoris.......... Assistant Vice President-Due Diligence Patricia A. DelRosso.... Vice President-Asset Management Kelly Tucek............. Assistant Vice President-Partnership Accounting Venton J. Carlston...... Assistant Controller
DANIEL L. GOODWIN (age 56) 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 Corporation.
Mr. Goodwin has been in the housing industry for more than 30 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 six 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. He was appointed Chairman of the Housing Production Committee for the Illinois State Affordable Housing Conference by former Governor Edgar. 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 provider of affordable housing.
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 BBF Family Services' 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 those original students are 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 Vice Chairman of the Board of Trustees of Benedictine University. Since January 1996, he has been Chairman of the Northeastern Illinois University Board of Trustees.
In 1988 Mr. Goodwin received the Outstanding Business Leader Award from the Oak Brook Jaycees and in March 1994 he won the Excellence in Business Award from the DuPage Area Association of Business and Industry. Additionally, he was by Little Friends on May 17, 1995 for rescuing their Parent-Handicapped Infant Program. He was the recipient of the 1995 March of Dimes Life Achievement Award and was recently recognized as the 1998 Corporate Leader of the Year by the Oak Brook Area Association of Commerce and Industry. The Ray Graham Association for People with Disabilities honored Mr. Goodwin as the 1999 Employer of the Year. Also, in 1999, the YWCA DuPage District bestowed the Corporate Recognition Award for Inland's policies and practices that demonstrate a commitment to the advancement of women in the workplace. For many years, he has been Chairman of the National Football League Players Association Mackey Awards for the benefit of inner-city youth and he served as the recent Chairman of the Speakers Club of the Illinois House of Representatives.
ROBERT H. BAUM (age 55) 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 has served as a director of American National Bank of DuPage and currently serves as a director of Westbank. Mr. Baum also 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 55) 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, Mr. Cosenza immediately supervises a staff of twelve 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 in the LaGrange Illinois School District 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 a Director on the Board of Westbank in Westchester and Hillside, Illinois.
ROBERT D. PARKS (age 55) is a Director of The Inland Group, Inc.; Chairman of Inland Real Estate Investment Corporation; President, Chief Executive Officer, Chief Operating Officer and Affiliated Director of Inland Real Estate Corporation, and Chairman, Chief Executive Officer and Affiliated Director of Inland Retail Real Estate Trust, Inc.
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 member of the Real Estate Investment Association and a member of the National Association of Real Estate Investment Trusts (NAREIT).
BRENDA G. GUJRAL (age 58) is President and Chief Operating Officer of Inland Real Estate Investment Corporation (IREIC), the parent company of the Advisor. She is also President and Chief Operating Officer of the Dealer- Manager, Inland Securities Corporation (ISC), a member firm of the National Association of Securities Dealers (NASD).
Mrs. Gujral has overall responsibility for the operations of IREIC, including the distribution of checks to over 50,000 investors, review of periodic communications to those investors, the filing of quarterly and annual reports for Inland's publicly registered investment programs with the Securities and Exchange Commission, compliance with other SEC and NASD securities regulations both for IREIC and ISC, review of asset management activities, and marketing and communications with the independent broker/dealer firms selling Inland's current and prior programs. Mrs. Gujral works with internal and outside legal counsel in structuring and registering the prospectuses for IREIC's investment programs.
Mrs. Gujral has been with Inland for 18 years, becoming an officer in 1982. Prior to joining Inland, she worked for the Land Use Planning Commission establishing an office in Portland, Oregon, to implement land use legislation for that state.
She is a graduate of California State University. She holds Series 7, 22, 39 and 63 licenses from the NASD and is a member of the National Association of Real Estate Investment Trusts (NAREIT) and the National Association of Female Executives.
CATHERINE L. LYNCH (age 41) 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 55) 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. She is a Director of Inland Real Estate Investment Corporation, Inland Securities Corporation, and Inland Real Estate Advisory Services, Inc. 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 42) 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, especially with regard to financing activities. 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. DELROSSO (age 47) joined Inland in 1985. Ms. DelRosso 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. DelRosso received her Bachelor's degree from George Washington University and her Master's from Virginia Tech University. Ms. DelRosso is a licensed real estate broker, NASD registered securities sales representative and is a member of the Urban Land Institute.
KELLY TUCEK (age 37) 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 42) 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.
Item 11.
Item 11. Executive Compensation
The General Partner is entitled to receive a share of cash distributions of Net Sales Proceeds based upon both an aggregate overall return to the Limited Partners and a separate return with respect to each parcel of land purchased by the Partnership as described under the caption "Cash Distributions" and a share of profits or losses as described under the caption "Allocation of Profits or Losses" at pages 41-42 of the Prospectus, and at pages A-10 to A-11 of the Partnership Agreement, included as an exhibit to the Prospectus, a copy of which descriptions is incorporated herein by reference.
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 14-16 and "Conflicts of Interest" at pages 16-18 of the Prospectus, and at pages A-13 to A-22 of the Partnership Agreement, included as an exhibit to the Prospectus, a copy of which descriptions 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 and its Affiliates may be reimbursed for its expenses or out-of-pocket costs relating to the administration of the Partnership. As of December 31, 1999, such costs were $50,735, of which $878 was unpaid.
The General Partner is entitled to receive Asset Management Fees equal to one- quarter of 1% of the original cost to the Partnership of undeveloped land annually, limited to a cumulative total over the life of the Partnership of 2% of the land's original cost to the Partnership. For the year ended December 31, 1999, the Partnership incurred $50,421 in Asset Management Fees, of which $0 was unpaid.
An Affiliate of the General Partner performed sales marketing and advertising services for the Partnership and was reimbursed (as set forth under terms of the Partnership Agreement) for direct costs. For the year ended December 31, 1999, such costs were $(2,259), of which $0 was unpaid.
An Affiliate of the General Partner performed property upgrades, rezoning, annexation and other activities to prepare the Partnership's land investments for sale and was reimbursed (as set forth under terms of the Partnership Agreement) for salaries and direct costs. For the year ended December 31, 1999, the Partnership incurred $100,516 of such costs, of which $26,819 is unpaid, and are included in investment properties.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Units of the Partnership.
(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, 1999:
Amount and Nature of Beneficial Percent Title of Class Ownership of Class -------------- ---------------- -------------- Limited Partnership 11.09 Units directly Less than 1/2% 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.
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.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements listed in the index at page 13 of this Annual Report are filed as part of this Annual Report.
(b) Exhibits. The following exhibits are filed as part of this Report:
23 Consent of Independent Accountants
27 Financial Data Schedule
The following exhibits are incorporated herein by reference:
3 Amended and Restated Agreement of Limited Partnership, included in Post- Effective Amendment #3 dated February 16, 1993, and as Exhibit A of the Prospectus dated December 13, 1991, as amended, is incorporated herein by reference thereto.
28 Prospectus, to Form S-11 Registration Statement, File No. 33-42245, as filed with Securities and Exchange Commission on December 13, 1991, as supplemented to date, 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:
Report on Form 8-K dated January 26, 2000 Item 4. Changes in Registrant's Certifying Accountant
No Annual Report or proxy material for the year 1999 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.
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 CAPITAL 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 22, 2000
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 22, 2000
/s/ Patricia A. DelRosso
By: Patricia A. DelRosso Senior Vice President Date: March 22, 2000
/s/ Kelly Tucek
By: Kelly Tucek Principal Financial Officer and Principal Accounting Officer Date: March 22, 2000
/s/ Daniel L. Goodwin
By: Daniel L. Goodwin Director Date: March 22, 2000
/s/ Robert H. Baum
By: Robert H. Baum Director Date: March 22, 2000