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 Quarter Ended Commission File Number
June 30, 1995 0-13624
---------------------- --------------------
I.R.E. PENSION INVESTORS, LTD.
(Exact name of Registrant as specified in its
Certificate of Limited Partnership)
Florida 59-2483870
----------------------- -------------------------------------
(State of Organization) (I.R.S. Employer Identification Number)
1750 E. Sunrise Boulevard
Fort Lauderdale, Florida 33304
---------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (305) 760-5200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
$250 Per Unit - Minimum Purchase 20 Units/
8 Units for Individual Retirement Accounts,
Keogh Plans and Corporate Pension Plans
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
------ -------
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statements of Operations
For the Six and Three Month Periods ended June 30, 1994 and 1995
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
-------------------- -----------------
1994 1995 1994 1995
------- ------- ------ ------
Revenues:
Rental income $ 575,934 614,173 287,886 315,361
Interest income 41,847 78,318 24,380 39,047
Other income 2,951 4,422 1,291 1,550
------- ------- ------- --------
Total revenues 620,732 696,913 313,557 355,958
------- ------- ------- -------
Costs and expenses:
Depreciation 241,519 258,818 122,145 131,307
Property operations:
Taxes 34,829 34,523 17,606 17,213
Insurance 13,811 21,377 6,905 10,591
Utilities 96,828 104,766 46,592 48,804
Property management fees
to affiliate 35,258 37,116 17,394 19,015
Repairs and maintenance 98,740 118,702 46,967 64,521
Other 39,549 40,726 18,869 20,789
General and administrative:
To affiliates 29,370 22,642 12,151 11,391
Other 24,802 20,899 14,055 9,025
------- ------- ------- -------
Total costs and expenses 614,706 659,569 302,684 332,656
------- ------- ------- -------
Net income $ 6,026 37,344 10,873 23,302
====== ======= ======= =======
Net income per weighted
average limited partnership
unit outstanding $ .09 .58 .17 .36
======== ========= ======= =======
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Balance Sheets
December 31, 1994 and June 30, 1995
(Unaudited)
Assets
------
December 31, June 30,
1994 1995
----------- -----------
Cash and cash equivalents $ 303,072 472,100
Securities available for sale 2,377,757 2,446,333
Investment in real estate:
Office building 7,562,066 7,690,729
Less accumulated depreciation (2,999,846) (3,258,664)
---------- -----------
Net investment in real estate 4,562,220 4,432,065
Other assets, net 25,400 23,630
---------- ----------
$ 7,268,449 7,374,128
========= =========
Liabilities and Partners' Capital
---------------------------------
Accrued expenses 72,640 106,654
Accounts payable and other liabilities 114,639 147,919
Due to affiliates 10,799 11,840
---------- ----------
Total liabilities 198,078 266,413
Partners' capital:
63,776 limited partnership units issued
and outstanding 7,070,371 7,107,715
---------- ----------
$ 7,268,449 7,374,128
========== ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statement of Partners' Capital
For the Six Months Ended June 30, 1995
(Unaudited)
Limited General
Partners Partners Total
---------- -------- -----
Balance at December 31, 1994 $ 7,084,237 (13,866) 7,070,371
Net income 36,971 373 37,344
--------- -------- ---------
Balance at June 30, 1995 $ 7,121,208 (13,493) 7,107,715
========= ========= =========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statements of Cash Flows
For the Six Months ended June 30, 1994 and 1995
(Unaudited)
1994 1995
---------- ---------
Operating Activities:
Net income $ 6,026 37,344
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 241,519 258,818
Non-cash portion of rental income 429 1,045
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses
accounts payable and other liabilities,
and due to affiliates (62,595) 68,335
Decrease in other assets, net 1,276 725
--------- ---------
Net cash provided by operating activities 186,655 366,267
--------- ---------
Investing Activities:
Increase in securities available for sale - (2,446,333)
Decrease in securities available for sale - 2,377,757
Property improvements (132,423) (128,663)
---------- ----------
Net cash (used) in investing activities (132,423) (197,239)
---------- ----------
Increase in cash and
cash equivalents 54,232 169,028
Cash and cash equivalents at beginning of year 2,942,559 303,072
--------- ---------
Cash and cash equivalents at end of quarter $ 2,996,791 472,100
========= =========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
June 30, 1995
NOTE 1 - GENERAL
----------------
The accompanying financial statements have been prepared by the Partnership in
accordance with the accounting policies described in its 1994 Annual Report and
should be read in conjunction with the notes to financial statements which
appear in that report.
NOTE 2 - LITIGATION
-------------------
During May 1988, an individual investor filed an action against two individual
defendants who allegedly sold securities without being registered as securities
brokers, two corporations organized and controlled by such individuals, and
against approximately sixteen publicly offered limited partnerships, including
the Partnership, interests in which were sold by the individual and corporate
defendants.
Plaintiff alleged that the sale of limited partnership interests in the
Partnership (among other affiliated and unaffiliated partnerships) by persons
and corporations not registered as securities brokers under the Illinois
Securities Act constituted a violation of such Act, and that the Plaintiff, and
all others who purchased securities through the individual or corporate
defendants, should be permitted to rescind their purchases and recover their
principal plus 10% interest per year, less any amounts received. The
Partnership's securities were properly registered in Illinois and the basis of
the action relates solely to the alleged failure of the Broker Dealer to be
properly registered.
In November 1988, Plaintiff's class action claims were dismissed by the Court.
Amended complaints, including additional named plaintiffs, were filed subsequent
to the dismissal of the class action claims. Motions to dismiss were filed on
behalf of the Partnership and the other co-defendants. In December 1989, the
Court ordered that the Partnership and the other co-defendants rescind sales of
any plaintiff that brought suit within three years of the date of sale. Under
the Court's order of December 1989, the Partnership was not required to rescind
any sales.
Plaintiffs appealed, among other items, the Court's order with respect to
plaintiffs that brought suit after three years of the date of sale. In February
1993, the Appellate court ruled that the statute of limitations was tolled
during the pendency of the class action claims. Therefore, those investors that
Page 9 of 17
brought suit within 3.6 years and potentially 4 years from the date of sale may
be entitled to rescission. The Partnership and the other co-defendants sought
leave to appeal before the Illinois Supreme Court and on October 6, 1993, the
leave to appeal was denied. Plaintiff's claims are now pending in Circuit
Court. Plaintiffs filed a purported Class Action Amendment on March 24, 1994
seeking to consolidate and amend their claims. The amendment sought to continue
the claims against the predecessor partnerships along with their general
partners and sought to add BFC Financial Corporation as a defendant. The
plaintiffs also moved for class certification. Motions to dismiss and to deny
class certification have been filed. Before plaintiffs responded or the motions
were heard, plaintiffs filed a new motion for leave to file consolidated class
action amendments and a new motion for class certification.
The individual and corporate defendants sold a total of $109,250 of limited
partnership interests in the Partnership. As of June 30, 1995, limited partners
holding approximately $69,500 of limited partnership interests had filed an
action for rescission. Under the appellate decision, if rescission was made to
all remaining limited partners that filed an action, refunds, at August 15,
1995, (including interest payments thereon) would amount to approximately
$139,000. A provision of $69,000 has been made in the accompanying financial
statements for interest on amounts that would be due upon rescission, however,
the financial statements do not reflect a rescission of the units subject to the
Court ruling. Accordingly, partners' capital, units outstanding, per unit
information, including income (loss) per unit amounts, have not been adjusted
for the potential rescission of units.
NOTE 3 - OTHER MATTERS
----------------------
A preliminary environmental site assessment and asbestos survey of Independence
Tower revealed the presence of asbestos containing materials. The estimated cost
Page 10 of 17
to remove and replace the asbestos items is approximately a range of $1.6 to
$2.2 million. Implementation of an operations and maintenance program has been
initiated, however, in the future, it may be necessary for the Partnership to
remove any asbestos in order to sell or refinance this property.
NOTE 4 - COMPENSATION TO GENERAL PARTNERS AND AFFILIATES
--------------------------------------------------------
During the six and three month periods ended June 30, 1994 and 1995 compensation
to general partners and affiliates were as follows:
Six Months Ended Three Months Ended
June 30, June 30,
-------------------- -----------------
1994 1995 1994 1995
--------- -------- ------ --------
Reimbursement for
administrative and
accounting services $ 29,370 22,642 12,151 11,391
Property management fees 35,258 37,116 17,394 19,015
------- ------- ------ -------
Total $ 64,628 59,758 29,545 30,406
======= ======= ====== ======
NOTE 5 - SECURITIES AVAILABLE FOR SALE
--------------------------------------
The Partnership's securities are available for sale. In accordance with
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities ("FAS 115") issued in May 1993 by the
Financial Accounting Standards Board ("FASB"), these securities are carried at
fair value, with any related unrealized appreciation or and depreciation
reported as a separate component of partners capital. At December 31, 1994 and
June 30, 1995 the cost of securities available for sale approximated their fair
value.
NOTE 6 - RECLASSIFICATIONS
--------------------------
For comparative purposes, certain prior year balances have been reclassified to
conform with the 1995 financial statement presentation.
NOTE 7 - MANAGEMENT REPRESENTATION
----------------------------------
In the opinion of Partnership management, all adjustments, none of which were
other than normal recurring accruals, necessary for a fair presentation of the
accompanying financial information have been included.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
June 30, 1995
The Partnership owns Independence Tower, a 107,000 square foot office building
located in Charlotte, North Carolina.
The reason for the changes in the rental income, and property operating expenses
for the six and three month periods ended June 30, 1995 as compared to the
comparable periods in 1994 all relate to the operations of Independence Tower.
Rental income increased approximately $38,000 and $27,000 for the six and three
month periods ended June 30, 1995,respectively, as compared to the comparable
periods in 1994 primarily due to an increase in occupancy and a decrease in the
allowance for bad debt. Interest income increased approximately $36,000 and
$15,000 for the six and three month periods ended June 30, 1995, respectively,
as compared to the comparable periods in 1994 primarily due to an increase in
yields on the investment of funds. Depreciation expense increased approximately
$17,000 and $9,000 for the six and three month periods ended June 30, 1995,
respectively, as compared with the prior year comparable periods due to
depreciation related to additional property improvements. Utilities expense
increased approximately $8,000 and $2,000 for the six and three month periods
ended June 30, 1995, respectively, as compared to the comparable periods in 1994
as result of an increase in electrical consumption during 1995. Repairs and
maintenance expense increased approximately $20,000 and $18,000 for the six and
three month periods ended June 30, 1995, respectively, as compared to the
comparable periods in 1994 primarily due to an increase in janitorial cost,
windows maintenance and general repair and maintenance costs. General and
administrative expense to affiliates decreased approximately $7,000 for the six
month period ended June 30, 1995 as compared to the comparable period in 1994
as a result of decreased costs associated with administrative and accounting
service reimbursements. Other general and administrative expenses decreased
approximately $4,000 and $5,000 for the six and three month periods ended June
30, 1995, respectively, as compared to the comparable periods in 1994 primarily
due to a decrease in auditing fees, partially offset with an increase in legal
fees.
A summary of the Partnership's cash flows is as follows:
Six Months Ended June 30,
-------------------------
1994 1995
-------- --------
Net cash provided (used) by:
Operating activities $ 186,655 366,267
Investing activities (132,423) (197,239)
--------- ---------
$ 54,232 169,028
======== ========
The changes in operating activities were impacted by the changes in net income
described above and the changes in operating assets and liabilities between the
periods. Investing activities include an increase and decrease in securities
available for sale related to the redemption and purchase of treasury bills and
property improvements related to Independence Tower. Such improvements normally
are incurred in connection with the obtaining or renewal of tenant leases.
Although there are no significant improvements contemplated for the property,
improvement costs will be incurred in connection with the obtaining or renewal
of tenant leases. Any costs related to the asbestos removal and replacement
issue discussed below would be considered property improvements subject to an
impairment test for the property. Present costs of implementing an operations
and maintenance program for the asbestos issue are considered a cost of
operations.
At June 30, 1995, the Partnership had cash and cash equivalents of approximately
$472,100 and approximately $2.4 million in Treasury Bills included in securities
available for sale. Management is of the opinion that the Partnership's
liquidity, based on its current activities is adequate to meet anticipated,
normal operating requirements during the near term. The costs of asbestos
removal at Independence Tower is estimated at from $1.6 million to $2.2 million
and the Partnership has retained funds for such removal if it becomes necessary.
Should the cost of removal exceed the above estimates, it may need to be funded
through financing of this property. Implementation of an operations and
maintenance program has been initiated; however, in the future it may be
necessary for the Partnership to remove any asbestos in order to sell or
refinance the property. Also, as discussed in note 2 of the notes to financial
statements, the Partnership is a party to litigation which potentially involves
payment by the Partnership of an amount in excess of $100,000. However in the
event the plaintiffs are ultimately successful in their claims, management does
not believe that such a resolution would have a material adverse impact on the
Partnership's liquidity.
In addition to the items discussed above, the Partnership's long term prospects
will be primarily effected by future occupancy levels and rental rates achieved
at Independence Tower. Due to the uncertain economic climate in general and the
real estate market in particular, management cannot reasonably determine the
Partnership's long term liquidity position.
Part II - Other Information
June 30, 1995
ITEM 1 THROUGH 5
----------------
Not applicable.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
a. Index to exhibits
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession - Not applicable.
(4) Instruments defining the rights of security holders, including
indentures - Not applicable.
(10) Material contracts - Not applicable.
(11) Statement re computation of per unit earnings - Not applicable.
(15) Letter re unaudited interim financial information - Not applicable.
(18) Letter re change in accounting principles - Not applicable.
(19) Report furnished to security holders - Not applicable.
(22) Published report regarding matters submitted to vote of security
holders - Not applicable.
(23) Consents of experts and counsel - Not applicable.
(24) Power of attorney - Not applicable.
(27) Financial data schedule - Included as Exhibit 27.
(99) Additional exhibits - Not applicable.
b. Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
I.R.E. PENSION INVESTORS, LTD.
Registrant
By: I.R.E. Pension Advisors, Corp.
Managing General Partner of Registrant
Date: August 11, 1995 By: /s/ Glen R. Gilbert
-----------------------------
Glen R. Gilbert, Senior Vice President
and Chief Financial Officer
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<CIK> 0000748827
<NAME> I.R.E. PENSION INVESTORS, LTD.
<S> <C>
<PERIOD-TYPE> 6-MOS
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<PERIOD-END> JUN-30-1995
<CASH> 472100
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<F1>Entity presents an unclassified balance sheet.
<F2>Represents partners' capital.
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