UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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
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(State or other jurisdiction of (IRS 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
--- ---
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 Participation in Limited Partnership Interest.
<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(A New York Limited Partnership)
Table of Contents
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10Q
Page Number
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PART I
Item 1
Balance Sheets 3
Statement of Operations 4
Statement of Cash Flows 5
Notes to Financial Statements 6
Item 2 8
Item 3 9
Part II
Item 6 10
EX-27
Exhibit 27 Table 12
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(A New York Limited Partnership)
BALANCE SHEETS
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<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
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(Unaudited) (Note)
<S> <C> <C>
ASSETS
------
Real estate, at cost $ 35,421,982 $ 41,215,769
Less: Accumulated depreciation and amortization 24,074,522 26,391,697
------------ ------------
11,347,460 $ 14,824,072
Less: Allowance for loss on impairment of
real estate 565,809 565,809
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10,781,651 14,258,263
Cash and cash equivalents 3,498,542 79,770,013
Due from managing agent (Helmsley-Spear, Inc.)
including tenants' security deposits of
$1,513,718 (2000) and $1,963,001 (1999) 6,743,285 2,858,418
Receivables, principally from rentals 263,424 467,233
Other deferred charges including deferred
leasing commissions 4,614,438 5,257,104
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$ 25,901,340 $102,611,031
============ ============
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
----------------------------------------------
Accounts payable $ 488,191 $ 678,177
Accrued real estate taxes 1,483,011 1,480,861
Accrued interest 29,278
Distributions payable to General Partners,
Special Limited Partners and Limited Partners 1,347,420 77,979,781
Sundry liabilities and other accrued expenses 879,351 1,142,546
Mortgages payable -- 4,000,000
Deposits and rents received in advance 1,542,465 1,696,853
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5,740,438 87,007,496
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Partners' Capital (Deficiency):
General Partners (2,653,845) (2,683,508)
Special Limited Partners (10,976,840) (13,643,808)
Limited Partners (represented by the equivalent
of 820,000 Participation Interest) 33,791,587 31,930,851
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20,160,902 15,603,535
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$ 25,901,340 $102,611,031
============ ============
</TABLE>
Note: The balance sheets at December 31, 1999 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 UNAUDITED
---------------------------------
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
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Revenues:
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<S> <C> <C>
Gross revenues from real estate $ 4,057,422 $7,894,118
Interest 472,616 164,811
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4,530,038 8,058,929
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Expenses:
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Real Estate taxes 431,170 1,209,774
Interest on mortgages 43,584 445,885
Other expenses 1,621,638 2,456,928
Depreciation and amortization of real estate 313,832 462,046
Amortization of mortgage refinancing costs -- 1,593
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2,410,224 4,576,226
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Income before items shown below 2,119,814 3,482,703
Gain on sale of real estate 37,489,074 --
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39,608,888 3,482,703
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Payments required under the Limited
Partnership Agreement:
To the Limited Partners 3,750 3,750
To the General and Special Limited Partners 47,875 63,486
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51,625 67,236
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Net income transferred to Partners' Capital Accounts $39,557,263 $3,415,467
=========== ==========
Net income allocable as follows (based on terms
of the Limited Partnership Agreement):
General Partners $ 233,163 $ 51,232
Special Limited Partners 20,963,468 1,656,501
Limited Partners (represented by the equivalent of
820,000 Participation Interests - unchanged
during the periods) 18,360,632 1,707,734
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$39,557,263 $3,415,467
=========== ==========
Per Participation Interest:
Net Income $ 22.3910 $ 2.0826
=========== ==========
</TABLE>
See notes to financial statements.
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(A New York Limited Partnership)
--------------------------------
STATEMENT OF CASH FLOWS (UNAUDITED)
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FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
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<TABLE>
<CAPTION>
2000 1999
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OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 39,557,263 $ 3,415,467
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of real estate 313,832 462,046
Amortization of mortgage refinancing costs -- 1,593
Gain on Sale of Real Estate (37,489,074) --
Amortization of deferred leasing commissions 120,098 196,397
Changes in operating assets and liabilities:
(Increase) Decrease in due from managing agent (3,884,867) 64,188
Decrease in receivables 203,809 2,972
(Increase) in deferred rent receivable -- (269,056)
Decrease (Increase) in other deferred charges 288,653 (258,588)
(Decrease) in accounts payable (189,986) (87,130)
Increase (Decrease) in accrued real estate tax 2,150 (1,498,816)
(Decrease) in accrued interest -- (2,640)
(Decrease) Increase in sundry and other
accrued expenses (263,195) 265,677
(Decrease) in deposits and rents
received in advance (154,388) (166,753)
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Net Cash (Used) Provided by Operating Activities (1,495,705) 2,125,357
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INVESTING ACTIVITIES:
Property improvements (137,966) (664,856)
Net Proceeds From Sale of Real Estate 40,994,457
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Net Cash (Used in) Provided by Investing Activities 40,856,491 (664,856)
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FINANCING ACTIVITIES:
Distributions of net operating revenues and proceeds
from sale of Real Estate to General Partners, Special
Limited Partners and Limited Partners (111,632,257) (10,102,642)
Principal payments on mortgage payable (4,000,000) (1,000,000)
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Net Cash Used in
Financing Activities (115,632,257) (11,102,642)
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(Decrease) in Cash and Cash Equivalents (76,271,471) (9,642,141)
Cash and Cash Equivalents at Beginning of Year 79,770,013 13,831,031
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Cash and Cash Equivalents at March 31 $ 3,498,542 $ 4,188,890
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Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 14,306 $ 448,525
============= ============
</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, 1999, 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,
2000 and the results of operations for the three months ended March 31, 2000 and
1999.
NOTE 3
------
The results of operations for the three months ended March 31, 2000 and
1999 are not necessarily indicative of the results to be expected for the full
year.
NOTE 4 - Taxes
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The net income for Federal income tax purposes is $39,197,958 (March 31,
2000) and $3,122,954 (March 31, 1999) as compared with net income of $39,557,263
and $3,415,467 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 - Sale of Marbridge Building
-----------------------------------
On January 18, 2000 IPA sold its 50% undivided interest in the 1328
Broadway property for a sales price of $43,500,000. In connection with this
transaction, IPA recognized a gain of approximately $37,400,000. The sales
proceeds were used to repay IPA's $4,000,000 share of the outstanding principal
balance of the loan payable to Apple Bank, sales commissions of $1,087,500 paid
to an affiliate of one of the general partners and other closing costs of
approximately $1,438,000. On January 18, 2000, IPA also declared a distribution
of $37,000,000 to its partners using the proceeds from the sale of 1328 Broadway
and the remaining proceeds from previous asset sales. An amount of $18,500,000
was paid to the General Partners and Special Limited Partners in January 2000
and $18,500,000 was paid to the holders of Participation Interests in February
2000. In connection with this transaction, IPA recognized a gain on sale of
approximately $37,035,455 for Federal income tax purposes as compared with
$37,489,074 for financial statement purposes.
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<PAGE>
NOTE 6 - Subsequent Event
-------------------------
On May 8, 2000 IPA sold 245 Fifth Avenue and 261 Fifth Avenue properties
for $135,000,000. The sales proceeds were used to first pay closing costs and
other commitments, aggregating approximately $15,000,000. On June 14, 2000, IPA
made a special distribution to holders of record of its participations of
partnership interests as of the close of business on May 31, 2000. The
distribution totaled $120 million at a rate of $73.17 per participation
interest.
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(A New York Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Gross revenue from rentals for 2000 decreased approximately 48.60% as compared
to 1999. The decrease was primarily due to the sale of 1440 Broadway and Mojud
Building.
The increase in interest income was due to the proceeds received form the sale
of properties invested in Commercial Paper.
The decrease in Real Estate Taxes and other expenses in 2000 as compared to 1999
is principally attributable to the sale of 1440 Broadway, Mojud Building and
Midland Building.
The decrease in interest expense was due to the repayment of mortgage principal
balance.
The decrease in depreciation and amortization of real estate was due to the sale
of 1440 Broadway, Mojud Building and Midland Building.
Liquidity and Capital Resources - IPA's cash generated from operations plus its
proceeds from the sale of properties provide it with the resources needed to
meet its anticipated obligations including operating expenses and required
distributions to partners.
The remaining properties owned by IPA are 570 Broad Street, Newark, New Jersey
and two pieces of unimproved land in Houston, Texas. IPA will continue to
explore the possible sale of these properties but there can be no assurances
that any such sale will be concluded.
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(A New York Limited Partnership)
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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Upon the repayment of all of its variable rate mortgage indebtedness in
December 1999, Registrant had significantly reduced its exposure to interest
rate risk, and, at that time, Registrant's sole interest bearing indebtedness
related to its obligation for one-half of the $8 million mortgage payable to
Apple Bank which bears interest at a fixed rate of 8 1/2 percent. Registrant
repaid its $4 million share of such obligation on January 18, 2000 using the
proceeds from the sale of its 50% tenancy in common interest of the 1328
Broadway property which secured such indebtedness. Should Registrant elect to
refinance any of its remaining properties, Registrant 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. Registrant believes that it
can refinance its properties at commercially reasonable rates, although there
can be no assurances in this regard.
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<PAGE>
Exhibits and Reports on Form 8-K
--------------------------------
(i) On May 10, 2000, Registrant filed a Current Report on Form 8-K relating to
the completion of the sale of 245 Fifth Avenue and 261 Fifth Avenue, New York,
N.Y. for $135,000,000.
(ii) On April 25, 2000, Registrant filed a Current Report on Form 8-K relating
to the contract to sell 245 Fifth Avenue and 261 Fifth Avenue, New York, New
York for $135,000,000.
(iii) On April 13, 2000, Registrant filed a Current Report on Form 8-K relating
to its intention to sell 245 Fifth Avenue and 261 Fifth Avenue, New York, New
York.
(iv) On February 15, 2000, Registrant filed a Current Report on Form 8-K
relating to the sale of 1440 Broadway, New York, New York for
$152,000,000.
(v) On January 21, 2000, Registrant filed a Current Report on Form 8-K relating
to the sale of 1328 Broadway, New York, New York for $43,500,000.
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<PAGE>
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(A New York Limited Partnership)
SIGNATURES
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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
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Irving Schneider
General and Special Limited Partner
Dated: June 23, 2000
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