UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number: 0-5537
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(Exact Name of registrant as specified in its charter)
A New York Limited Partnership 13-2647723
- ------------------------------ ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
60 East 42nd Street, New York, New York
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(Address of principal executive offices)
10165
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(Zip Code)
Registrant's telephone number, including area code: (212) 687-6400
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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
820,000 Participations in Limited Partnership Interest
<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
I N D E X
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Page Number
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Item 1. Financial Statements.
Balance Sheets 3
Statement of Operations 4
Unaudited Statement of Cash Flows 5
Notes to Unaudited Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures 9
about Market Risk.
Signatures 10
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<PAGE>
Item 1. Financial Statements.
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
BALANCE SHEET
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AS AT MARCH 31, 1999 AND DECEMBER 31, 1998
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<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
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(Unaudited) (Note)
<S> <C> <C>
ASSETS
Real estate, at cost $ 71,988,544 $ 71,323,688
Less: Accumulated depreciation and amortization 44,723,675 44,261,629
------------ ------------
27,264,869 27,062,059
Less: Allowance for loss on impairment of real estate 2,733,895 2,733,895
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24,530,974 24,328,164
Cash and cash equivalents 4,188,890 13,831,031
Due from managing agent (Helmsley-Spear, Inc.)
including tenants' security deposits of
$1,615,883 (1999) and $1,614,898 (1998) 2,311,565 2,375,753
Receivables, principally from rentals 468,996 471,968
Deferred rent receivable 1,314,763 1,045,707
Other deferred charges including deferred
leasing commissions 7,770,209 7,709,611
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$ 40,585,397 $ 49,762,234
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Accounts payable $ 1,067,939 $ 1,155,069
Accrued real estate taxes 1,568,207 3,067,023
Accrued interest 152,385 155,025
Distributions payable to General Partners,
Special Limited Partners and Limited Partner 781,676 10,884,318
Sundry liabilities and other accrued expenses 2,337,875 2,072,198
Mortgages payable 22,847,488 23,847,488
Deposits and rents received in advance 1,692,547 1,859,300
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30,448,117 43,040,421
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Partners' Capital (Deficiency):
General Partners (2,717,716) (2,768,948)
Special Limited Partners (19,669,147) (21,325,648)
Limited Partner (represented by the equivalent
of 820,000 Participation Interests) 32,524,143 30,816,409
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10,137,280 6,721,813
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$ 40,585,397 $ 49,762,234
============ ============
</TABLE>
Note: The balance sheet at December 31, 1998 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 THREE MONTHS ENDED
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MARCH 31, 1999 MARCH 31, 1998
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<S> <C> <C>
Revenues:
Gross revenues from real estate $ 7,894,118 $11,606,278
Interest 164,811 63,607
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8,058,929 11,669,885
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Expenses:
Leasehold rentals 146,911
Real estate taxes 1,209,774 2,323,135
Interest on mortgages 445,885 1,157,496
Other expenses 2,456,928 4,743,683
Co-owners share of income 8,983
Depreciation and amortization of real estate 462,046 713,103
Amortization of mortgage refinancing costs 1,593
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4,576,226 9,093,311
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Income before items shown below 3,482,703 2,576,574
Gain on Sale of Ground Lease 611,700
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3,482,703 3,188,274
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Payments required under the Limited
Partnership Agreement:
To the Limited Partner 3,750 3,750
To the General and Special Limited Partners 63,486 83,733
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67,236 87,483
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Net income transferred to Partners' Capital Accounts $ 3,415,467 $ 3,100,791
=========== ===========
Net income allocable as follows (based on terms of the
Limited Partnership Agreement):
General Partners $ 51,232 $ 46,512
Special Limited Partners 1,656,501 1,503,884
Limited Partner (represented by the equivalent of 820,000
Participation Interests - unchanged during
the periods) 1,707,734 1,550,395
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$ 3,415,467 $ 3,100,791
=========== ===========
Per Participation Interest:
Net Income $ 2.0826 $ 1.8907
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</TABLE>
See notes to financial statements.
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
UNAUDITED
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND MARCH 31, 1998
------------------------------------------------------------
1999 1998
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,415,467 $ 3,100,791
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of real estate 462,046 713,103
Amortization of mortgage refinancing costs 1,593
Gain on Sale of Real Estate (611,700)
Amortization of deferred leasing commissions 196,397 265,465
Changes in operating assets and liabilities:
Decrease in due from managing agent 64,188 1,009,536
Decrease in receivables 2,972 164,778
Increase in deferred rent receivable (269,056)
Decrease (Increase) in other deferred charges (258,588) 83,799
(Decrease) in accounts payable (87,130) (615,942)
(Decrease) in accrued real estate tax (1,498,816) (1,533,666)
(Decrease) Increase in accrued interest (2,640) 5,301
Increase in sundry and other accrued expenses 265,677 1,030,892
(Decrease) Increase in deposits and rents received in
advance (166,753) 27,358
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Net Cash Provided by Operating Activities 2,125,357 3,639,715
------------ ------------
INVESTING ACTIVITIES:
Property improvements (664,856) (713,089)
Net Proceeds from Sale of Real Estate 1,298,000
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Net Cash Provided by Investing Activities (664,856) 584,911
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FINANCING ACTIVITIES:
Distributions of net operating revenues to General Partners,
Special Limited Partners and Limited Partner (10,102,642) (3,190,251)
Principal payments on mortgage payable (1,000,000) (1,000,000)
------------ ------------
Net Cash Used in Financing Activities (11,102,642) (4,190,251)
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(9,642,141) 34,375
(Decrease) Increase in Cash and Cash Equivalents
13,831,031 2,240,190
------------ ------------
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at March 31 $ 4,188,890 $ 2,274,565
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 488,525 $ 1,152,195
============ ============
</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, 1998, 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 March 31, 1999 and the results of
operations for the three months ended March 31, 1999 and 1998.
NOTE 3
The results of operations for the three months ended March 31, 1999 and 1998 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 $3,122,954 (March 31, 1999)
and $3,413,505 (March 31, 1998) as compared with net income of $3,415,467 and
$3,100,791 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 - Mortgages Payable
On March 24, 1999, the Company paid the scheduled March 15, 1999 principal
payment of $1,000,000 to Chase Manhattan Bank. The payment was applied to 261
Fifth Avenue and 245 Fifth Ave., New York, New York.
The $8,000,000 first mortgage loan on 1328 Broadway Building, New York, New York
(in which the Company has a 50% tenancy in common interest) which became due
initially on November 24, 1997 was extended to April 30, 1999, at the interest
rate of 8.5% per annum. The mortgage was further extended to May 31, 1999 at the
same interest rate. Discussions are being held regarding new terms.
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<PAGE>
NOTE 6
On April 14, 1999, the Company sold Mojud Building in Long Island City, New York
for $6,500,000. The sales proceeds would be used to first pay mortgage debt,
closing costs, other commitments and future distributions to the partners.
-7-
<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Gross revenue from rentals for 1999 decreased approximately 37.39% as
compared to 1998. The decrease was primarily due to the sale of the five Chicago
properties (the "Chicago Properties") in 1998 offset in part by increase in
rental in New York properties.
The increase in interest income was due to the proceeds received from the
sale of Chicago Properties invested in Commercial Paper.
The decrease in other expenses in 1999 as compared to 1998 is principally
attributable to the sale of the Chicago Properties.
The decrease in real estate taxes was primarily attributable to the sale
of the Chicago Properties.
The decrease in leasehold rentals was due to the sale of the ground lease
of the Chicago Property.
The decrease in interest expense was due to the repayment of notes payable
to the partners and mortgage principal balance.
The decrease in depreciation and amortization of real estate was primarily
due to the sale of the Chicago Properties.
Liquidity and Capital Resources - The Company'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)
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate risk on its variable rate
mortgages. On March 31, 1999, the Company had total mortgage debt of
approximately $22,847,000 of which approximately $18,847,000 (or approximately
82%) is at a variable rate. All of the Company's mortgage debt is scheduled to
mature within the next 12 months. If the Company elects to refinance such
mortgage debt upon maturity, the Company would seek to manage its interest rate
risk through the use of fixed rate debt or interest rate derivatives in
conjunction with variable rate debt. The Company believes that it can refinance
such mortgage debt at commercially reasonable rates, although there can be no
assurances in this regard.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
INVESTMENT PROPERTIES ASSOCIATES
By: /s/ Irving Schneider
--------------------
Irving Schneider
General and Special
Limited Partner
Dated: June 14, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-1-1999
<PERIOD-END> Mar-31-1999
<CASH> 4,884,572
<SECURITIES> 0
<RECEIVABLES> 1,783,759
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,284,214
<PP&E> 69,254,649
<DEPRECIATION> 44,723,675
<TOTAL-ASSETS> 40,585,397
<CURRENT-LIABILITIES> 3,570,207
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 40,585,397
<SALES> 0
<TOTAL-REVENUES> 8,058,929
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,197,577
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 445,886
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,415,467
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
