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 Nine 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 SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------ ------------
(Unaudited) (Note)
ASSETS
Real estate, at cost ........................... $142,546,202 $144,016,508
Less: Accumulated depreciation and
amortization .......................... 96,211,571 97,003,567
------------ ------------
46,334,631 47,012,941
Less: Allowance for loss on impairment of
real estate ........................... 2,733,895 2,733,895
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43,600,736 44,279,046
Cash and cash equivalents ...................... 361,642 3,090,409
Due from managing agent (Helmsley-Spear, Inc.)
including tenants' security deposits of
$1,804,367 (1996) and $1,398,781 (1995) ...... 1,843,533 2,740,657
Receivables, principally from rentals .......... 1,334,655 1,282,917
Other deferred charges including deferred
leasing commissions .......................... 5,796,079 3,668,320
------------ ------------
$ 52,936,645 $ 55,061,349
============ ============
LIABILITIES AND PARTNERS' CAPITAL/DEFICIENCY
Accounts payable ............................... $ 3,916,999 $ 2,529,484
Accrued real estate taxes ...................... 3,678,190 4,564,270
Accrued Interest ............................... 385,163 434,526
Distributions payable to General Partners,
Special Limited Partners and Limited Partner . 10,434,903 15,609,719
Sundry liabilities and other accrued expenses .. 3,648,390 3,658,532
Note payable to related parties ................ 18,000,000 18,000,000
Mortgages payable (Note 5) ..................... 40,827,150 43,363,342
Deposits and rents received in advance ......... 1,905,042 1,720,896
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82,795,837 89,880,769
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Partners' Capital (Deficiency):
General Partners ............................. (8,264,949) (7,597,996)
Special Limited Partners ..................... (40,521,177) (43,291,921)
Limited Partner (represented by the equivalent
of 820,000 Participation Interests) ........ 18,926,934 16,070,497
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(29,859,192) (34,819,420)
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$ 52,936,645 $ 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 NINE MONTHS ENDED FOR THE THREE MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Revenues:
Gross revenues from real estate ..................... $38,183,981 $41,210,732 $12,104,451 $14,430,373
Interest ............................................ 48,565 77,077 8,996 26,951
----------- ----------- ----------- -----------
38,232,546 41,287,809 12,113,447 14,457,324
----------- ----------- ----------- -----------
Expenses:
Leasehold rentals ................................... 780,419 944,018 148,884 314,886
Real estate taxes ................................... 7,645,222 8,092,653 2,234,378 2,343,632
Interest on mortgages ............................... 3,701,729 4,105,790 1,196,937 1,318,489
Other Expenses ...................................... 17,467,555 17,315,798 5,658,964 6,117,027
Co-owners share of income ........................... 38,142 51,349 4,576 24,445
Depreciation and amortization of real estate ........ 2,460,668 2,376,443 788,977 792,146
Amortization of mortgage refinancing costs .......... 147,411 139,015 49,137 51,055
----------- ----------- ----------- -----------
32,241,146 33,025,066 10,081,853 10,961,680
----------- ----------- ----------- -----------
Income before items shown below 5,991,400 8,262,743 2,031,594 3,495,644
Loss on Ground Lease Termination..................... (752,646) (752,646)
----------- ----------- ----------- -----------
5,238,754 8,262,743 1,278,948 3,495,644
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Guaranteed payments required under the
Limited Partnership Agreement:
To the Limited Partner ............................ 11,250 11,250 3,750 3,750
To the General and Special Limited Partners ....... 267,276 282,086 85,847 97,357
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278,526 293,336 89,597 101,107
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Net income transferred to Partners'
Capital Accounts .................................. $ 4,960,228 $ 7,969,407 $ 1,189,351 $ 3,394,537
=========== =========== =========== ===========
Net Income (loss) allocable as follows (based on
terms of the Limited Partnership Agreement):
General Partners .................................. $ (666,953) $ 119,541 $ (723,517) $ 50,918
Special Limited Partners .......................... 2,770,744 3,865,163 941,869 1,646,351
Limited Partner (represented by the equivalent
of 820,000 Participation Interests - unchanged
during the periods) ............................. 2,856,437 3,984,703 970,999 1,697,268
----------- ----------- ----------- -----------
$ 4,960,228 $ 7,969,407 $ 1,189,351 $ 3,394,537
=========== =========== =========== ===========
Per Participation Interest:
Net Income .......................................... $ 3.4835 $ 4.8594 $ 1.1842 $ 2.0698
=========== =========== =========== ===========
See notes to financial statements.
</TABLE>
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
UNAUDITED
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................. $ 4,960,228 $ 7,969,407
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of real estate ......... 2,460,668 2,376,443
Amortization of mortgage refinancing costs ........... 147,411 139,015
Loss on ground lease termination ..................... 752,646
Amortization of deferred leasing commissions ......... 831,376 817,317
Changes in operating assets and liabilities:
Decrease (Increase) in due from managing agent ..... 897,124 (235,433)
(Increase) in receivables .......................... (51,738) (432,574)
(Increase) in other deferred charges ............... (3,322,043) (2,694,133)
Increase in accounts payable ....................... 1,387,515 1,100,385
(Decrease) Increase in accrued real estate tax ..... (886,080) 797,445
(Decrease) in accrued interest ..................... (49,363) (106,421)
Increase in sundry and other
accrued expenses ................................. 319,975 842,862
Increase in deposits and rents
received in advance .............................. 184,146 66,924
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Net Cash Provided by Operating Activities ....... 7,631,865 10,641,237
------------ ------------
INVESTING ACTIVITIES:
Property improvements .................................. (2,649,623) (3,639,587)
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FINANCING ACTIVITIES:
Distributions of net operating revenues to General
Partners, Special Limited Partners and Limited Partners (5,174,816) (5,366,517)
Principal payments on mortgage payable ................. (2,536,193) (3,033,736)
------------ ------------
Net Cash (Used in)
Financing Activities ........................... (7,711,009) (8,400,253)
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(Decrease) in Cash and Cash Equivalents ......... (2,728,767) (1,398,603)
Cash and Cash Equivalents at Beginning of Year ........... 3,090,409 4,138,916
------------ ------------
Cash and Cash Equivalents at End of Year ................. $ 361,642 $ 2,740,313
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest ................. $ 3,751,092 $ 4,212,210
============ ============
</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 September 30,
1996 and 1995, and the results of operations for the nine months then ended.
NOTE 3
The results of operations for the nine months ended September 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 $4,912,470 (September 30,
1996) and $8,577,651 (September 30, 1995) as compared with net income of
$4,960,228 and $7,969,407 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 nine months ended September 30, 1996, IPA, in addition to a
regular mortgage amortization of $36,192, made a principal payment in the amount
of $2,500,000, reducing the mortgage balance from $43,363,342 as of January 1,
1996 to $40,827,150 as of September 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 capital loss arising from this lease
termination is $1,554,288 for federal income tax purposes as compared with
$752,646 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 7.34% 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.
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<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 December 13, 1996
--------------------
/s/ Irving Schneider
--------------------------------
(signature)
IRVING SCHNEIDER
General and Special Limited Partner
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 361,642
<SECURITIES> 0
<RECEIVABLES> 3,178,188
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 139,812,307
<DEPRECIATION> 92,211,571
<TOTAL-ASSETS> 52,936,645
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 52,936,645
<SALES> 0
<TOTAL-REVENUES> 38,232,546
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,539,417
<LOSS-PROVISION> 752,656
<INTEREST-EXPENSE> 3,701,729
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,960,228
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
