THIS DOCUMENT IS A COPY OF THE FORM 10-Q FILED ON [DATE].
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Six Months Ended June 30, 1996 Commission File Number 0-5537
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INVESTMENT PROPERTIES ASSOCIATES
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(Exact name of registrant as specified in its charter)
NEW YORK 13-2647723
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
60 East 42nd Street, New York, New York 10165
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 880-0389
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NOT APPLICABLE
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Total Number of Pages 9
<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
I N D E X
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Page Number
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PART 1: Financial Statements
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Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
Management's Discussion and Analysis
of Financial Condition and
Results of Operations 7
PART 2: Other Information 8
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SIGNATURES 9
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
BALANCE SHEETS
AS AT JUNE 30, 1996 AND DECEMBER 31, 1995
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
(Unaudited) (Note)
ASSETS
Real estate, at cost ........................... $145,830,330 $144,016,508
Less: Accumulated depreciation and
amortization .......................... 98,675,257 97,003,567
------------ ------------
47,155,073 47,012,941
Less: Allowance for loss on impairment of
real estate ........................... 2,733,895 2,733,895
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44,421,178 44,279,046
Cash and cash equivalents ...................... 1,588,434 3,090,409
Due from managing agent (Helmsley-Spear, Inc.)
including tenants' security deposits of
$1,810,567 (1996) and $1,398,781 (1995) ...... 1,806,541 2,740,657
Receivables, principally from rentals .......... 1,494,691 1,282,917
Other deferred charges including deferred
leasing commissions .......................... 4,077,195 3,668,320
------------ ------------
$ 53,388,039 $ 55,061,349
============ ============
LIABILITIES AND PARTNERS' CAPITAL/DEFICIENCY
Accounts payable ............................... $ 3,920,123 $ 2,529,484
Accrued real estate taxes ...................... 4,642,579 4,564,270
Accrued Interest ............................... 395,844 434,526
Distributions payable to General Partners,
Special Limited Partners and Limited Partner . 10,434,903 15,609,719
Sundry liabilities and other accrued expenses .. 3,773,545 3,658,532
Note payable to related parties ................ 18,000,000 18,000,000
Mortgages payable (Note 5) ..................... 41,339,408 43,363,342
Deposits and rents received in advance ......... 1,930,180 1,720,896
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84,436,582 89,880,769
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Partners' Capital (Deficiency):
General Partners ............................. (7,541,432) (7,597,996)
Special Limited Partners ..................... (41,463,046) (43,291,921)
Limited Partner (represented by the equivalent
of 820,000 Participation Interests) ........ 17,955,935 16,070,497
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(31,048,543) (34,819,420)
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$ 53,388,039 $ 55,061,349
============ ============
Note: The balance sheets at December 31, 1995 has been derived from the audited
financial statements at that date.
See notes to financial statements
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
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JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
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<S> <C> <C> <C> <C>
Revenues:
Gross revenues from real estate ..................... $26,079,530 $26,780,359 $13,133,045 $13,175,656
Interest ............................................ 39,569 50,126 8,493 17,163
----------- ----------- ----------- -----------
26,119,099 26,830,485 13,141,538 13,192,819
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Expenses:
Leasehold rentals ................................... 631,535 629,132 316,809 314,566
Real estate taxes ................................... 5,410,844 5,749,021 2,705,423 2,874,986
Interest on mortgages ............................... 2,504,792 2,787,301 1,276,499 1,390,267
Other Expenses ...................................... 11,808,591 11,198,771 5,850,974 5,613,317
Co-owners share of income ........................... 33,566 26,904 17,711 15,147
Depreciation and amortization of real estate ........ 1,671,691 1,584,297 835,845 792,151
Amortization of mortgage refinancing costs .......... 98,274 87,960 49,136 50,491
----------- ----------- ----------- -----------
22,159,293 22,063,386 11,052,397 11,050,925
----------- ----------- ----------- -----------
Income before items shown below 3,959,806 4,767,099 2,089,141 2,141,894
Payments required under the Limited
Partnership Agreement:
To the Limited Partner ............................ 7,500 7,500 3,750 3,750
To the General and Special Limited Partners ....... 181,429 184,729 91,024 91,145
----------- ----------- ----------- -----------
188,929 192,229 94,774 94,895
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Net income transferred to Partners'
Capital Accounts .................................. $ 3,770,877 $ 4,574,870 $ 1,994,367 $ 2,046,999
=========== =========== =========== ===========
Net Income allocable as follows (based on
terms of the Limited Partnership Agreement):
General Partners .................................. $ 56,564 $ 68,623 $ 29,916 $ 30,705
Special Limited Partners .......................... 1,828,875 2,218,812 967,268 992,795
Limited Partner (represented by the equivalent
of 820,000 Participation Interests - unchanged
during the periods) ............................. 1,885,438 2,287,435 997,183 1,023,499
----------- ----------- ----------- -----------
$ 3,770,877 $ 4,574,870 $ 994,367 $ 2,046,999
=========== =========== =========== ===========
Per Participation Interest:
Net Income .......................................... $ 2.2993 $ 2.7896 $ 1.2161 $ 1.2482
=========== =========== =========== ===========
</TABLE>
<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
UNAUDITED
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................. $ 3,770,877 $ 4,574,870
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of real estate ......... 1,671,691 1,584,297
Amortization of mortgage refinancing costs ........... 98,274 87,960
Amortization of deferred leasing commissions ......... 552,931 514,993
Changes in operating assets and liabilities:
Decrease (Increase) in due from managing agent ..... 934,116 (501,493)
(Increase) in receivables........................... (211,774) (286,526)
(Increase) Decrease in other deferred charges ...... (1,060,080) 121,522
Decrease in accounts payable ....................... 1,390,639 546,745
Increase in accrued real estate tax ................ 78,309 266,604
(Decrease) in accrued interest ..................... (38,682) (96,846)
Increase in sundry and other accrued expenses ...... 115,012 1,361,379
Increase in deposits and rents received
in advance ....................................... 209,284 153,421
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Net Cash Provided by Operating Activities ....... 7,510,597 8,326,926
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INVESTING ACTIVITIES:
Property improvements................................... (1,813,822) (2,376,053)
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FINANCING ACTIVITIES:
Distributions of net operating revenues to General
Partners, Special Limited Partners and Limited Partners (5,174,816) (5,206,719)
Principal payments on mortgage payable ................. (2,023,934) (2,322,369)
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Net Cash (Used in)
Financing Activities ........................... (7,198,750) (7,529,088)
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(Decrease) in Cash and Cash Equivalents ......... (1,501,975) (1,578,215)
Cash and Cash Equivalents at Beginning of Year ........... 3,090,409 4,138,916
----------- -----------
Cash and Cash Equivalents at End of Year ................. $ 1,588,434 $ 2,560,701
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest ................. $ 2,543,474 $ 2,884,147
=========== ===========
</TABLE>
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1
As permitted by the Securities and Exchange Commission, the accompanying
Unaudited Financial Statements and footnotes have been condensed and therefore,
do not contain all disclosures required by generally accepted accounting
principles. Reference should be made to the Company's Annual Report Form 10-K
for the year ended December 31, 1995, filed with the Securities and Exchange
Commission.
NOTE 2
In the opinion of the Company, the accompanying Unaudited Financial
Statements contain all adjustments (consisting only of normal recurring
accruals) necessary to present fairly its financial position as of June 30, 1996
and 1995, and the results of operations for the six months then ended.
NOTE 3
The results of operations for the six months ended June 30, 1996 and 1995
are not necessarily indicative of the results to be expected for the full year.
NOTE 4 - Taxes
The net income for Federal income tax purposes is $4,291,644 (June 30,
1996) and $5,009,829 (June 30, 1995) as compared with net income of $3,770,877
and $4,574,870 respectively, as shown in the statement of operations. The
differences result principally from (a) rents received in advance and recognized
currently for income tax purposes, and (b) differences in depreciation expense
resulting from differences in the basis of real estate for tax and financial
reporting purposes.
NOTE 5 - Mortgage Payable
During the six months ended June 30, 1996, IPA, in addition to a regular
mortgage amortization of $23,934, made a principal payment in the amount of
$2,000,000, reducing the mortgage balance from $43,363,342 as of January 1, 1996
to $41,339,408 as of June 30, 1996.
On November 13, 1995, Registrant and First Fidelity Bank ("Fidelity")
entered into a modification of the mortgage note held by Fidelity on
Registrant's Federal Trust building in Newark, New Jersey. Effective January 1,
1996, the maturity date of the note was extended to June 30, 1997. Interest on
the amended note is based on the weekly average yield on U.S. Treasury
Securities plus 2% and the modification calls for the monthly payment of
principal and interest. The principal balance of the Fidelity loan at December
31, 1995 was $515,855.
NOTE 6 - Subsequent Event
On July 1, 1996, IPA exercised its option to terminate the ground lease on
the 744 Broad Street Building. The estimated capital loss arising from this
lease termination is $1,584,000 for federal income tax purposes as compared with
$1,112,000 for financial statement purposes. The lease which expires August 31,
2002, has an annual rental of $659,500. In addition, IPA is exploring the
possibility of similar action on other sub-performing properties.
-6-
<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross revenue from rentals for 1996 decreased approximately 2.62% as
compared to 1995. The decrease was due primarily to a decrease in occupancy in
One North Dearborn building in Chicago, New Jersey properties offset by the
increase in 261 Fifth Avenue and 1328 Broadway, New York, New York.
The increase in other expenses in 1996 as compared to 1995 is principally
attributable to the increase in security labor, heating cost, building repairs,
utility tax assessment offset by decrease in wages and cleaning expenses.
The decrease in real estate taxes was attributable primarily to decreases
in real estate assessments for properties located in New York City and Chicago.
Decrease in mortgage interest expense was due primarily to a reduction in
mortgage outstanding balance.
Liquidity and Capital Resources - IPA's cash generated from operations plus
its ability to refinance certain mortgage obligations provide it with the
resources needed to meet its anticipated obligations including operating
expenses, mortgage amortization and required distributions to partners.
-7-
<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
PART 2 - OTHER INFORMATION
NONE
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INVESTMENT PROPERTIES ASSOCIATES
(Registrant)
DATE 9/12/96
-----------
/s/ Irving Schneider
--------------------------------
(Signature)
IRVING SCHNEIDER
General and Special Limited Partner
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,588,434
<SECURITIES> 0
<RECEIVABLES> 3,301,232
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 143,096,435
<DEPRECIATION> 98,675,257
<TOTAL-ASSETS> 53,388,039
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 53,388,039
<SALES> 0
<TOTAL-REVENUES> 26,119,099
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 19,654,501
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,504,792
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,770,877
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
