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
March 31, 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
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I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statements of Operations
For the Three Month Periods ended March 31, 1994 and 1995
(Unaudited)
Three Months ended
March 31,
-----------------
1994 1995
---- ----
Revenues:
Rental income $288,048 298,812
Interest income 17,467 39,271
Other income 1,660 2,872
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Total revenues 307,175 340,955
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Costs and expenses:
Depreciation 119,374 127,511
Property operations:
Taxes 17,223 17,310
Insurance 6,906 10,786
Utilities 50,236 55,962
Property management fees to affiliate 17,864 18,101
Repairs and maintenance 51,773 54,181
Other 20,680 19,937
General and administrative:
To affiliates 17,219 11,251
Others 10,747 11,874
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Total costs and expenses 312,022 326,913
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Net income (loss) $ (4,847) 14,042
======= =======
Net income (loss) per weighted average
limited partnership unit outstanding $ (.08) .22
======= =======
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Balance Sheets
December 31, 1994 and March 31, 1995
(Unaudited)
Assets
------
December 31, March 31,
1994 1995
----------- ----------
Cash and cash equivalents $ 303,072 379,702
Securities available for sale 2,377,757 2,412,770
Investment in real estate:
Office building 7,562,066 7,651,506
Less accumulated depreciation (2,999,846) (3,127,357)
---------- ----------
Net investment in real estate 4,562,220 4,524,149
Other assets, net 25,400 26,691
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$ 7,268,449 7,343,312
========== ==========
Liabilities and Partners' Capital
---------------------------------
Accrued expenses 72,640 86,287
Accounts payable and other liabilities 114,639 159,715
Due to affiliates 10,799 12,897
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Total liabilities 198,078 258,899
Partners' capital:
63,776 limited partnership units issued
and outstanding 7,070,371 7,084,413
------------ ----------
$ 7,268,449 7,343,312
========== ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statement of Partners' Capital
For the Three Months Ended March 31, 1995
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1994 $ 7,084,237 (13,866) 7,070,371
Net income 13,902 140 14,042
--------- ----- ---------
Balance at March 31, 1995 $ 7,098,139 (13,726) 7,084,413
========== ====== ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statements of Cash Flows
For the Three Months ended March 31, 1994 and 1995
(Unaudited)
1994 1995
---- ----
Operating Activities:
Net income (loss) $ (4,847) 14,042
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation 119,374 127,511
Non-cash portion of rental income 268 484
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses,
accounts payable and other liabilities,
and due to affiliates (56,259) 60,821
Increase in other assets, net (7,981) (1,775)
--------- ----------
Net cash provided by operating activities 50,555 201,083
--------- ----------
Investing Activities:
Increase in securities available for sale - (35,013)
Property improvements (97,210) (89,440)
--------- ---------
Net cash (used) in investing activities (97,210) (124,453)
--------- ---------
Increase (decrease) in cash and cash
equivalents (46,655) 76,630
Cash and cash equivalents at beginning of year 2,942,559 303,072
--------- ---------
Cash and cash equivalents at end of quarter $ 2,895,904 379,702
========= =========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
March 31, 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
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 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 March 31, 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 May 15,
1995, (including interest payments thereon) would amount to approximately
$137,000. A provision of $68,000 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) A preliminary environmental site assessment and asbestos survey of
Independence Tower has revealed the presence of asbestos containing
materials. The estimated cost 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.
(b) An affiliate earned a real estate brokerage commission of approximately
$97,000 in connection with the sale of One West Nine Mile Holiday Inn.
However, in accordance with the terms of the Partnership Agreement, payment
of such commission is subordinated to the limited partners receipt of their
original capital plus a specified return thereon. The Partnership has not
reflected its portion of this commission in its financial statements,
because payment of such commission is remote.
NOTE 4 - COMPENSATION TO GENERAL PARTNERS AND AFFILIATES
- --------------------------------------------------------
During the three months ending March 31, 1994 and 1995 compensation and
reimbursements to general partners and affiliates were as follows:
1994 1995
---- ----
Reimbursements for administrative and
accounting services 17,219 11,251
Property management fees 17,864 18,101
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Total 35,083 29,352
======= =======
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
March 31, 1995, the cost of available for sale securities 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
March 31, 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 three month period ended March 31, 1995 as compared to the comparable
period in 1994 all relate to the operations of Independence Tower. Rental
income increased approximately $11,000 for the three month period ended March
31, 1995 as compared to the comparable period in 1994 primarily due to an
increase in occupancy at Independence Tower. Interest income increased
approximately $22,000 for the three month period ended March 31, 1995 as
compared to the comparable period in 1994 primarily due to an increase in yields
on the investment of funds. Depreciation expense increased approximately $8,000
for the three month period ended March 31, 1995 as compared with the prior year
comparable period due to depreciation related to additional property
improvements at Independence Tower. Utilities expense increased approximately
$6,000 for the three month period ended March 31, 1995 as compared to the
comparable period in 1994 as result of an increase in electrical consumption
during 1995 at Independence Tower. Repairs and maintenance expense increased
approximately $2,000 for the three month period ended March 31, 1995 as compared
to the comparable period in 1994 primarily due to an increase in parking lot
repairs and general repair and maintenance costs at Independence Tower. General
and administrative expense to affiliates decreased approximately $6,000 for the
three month period ended March 31, 1995 as compared to the comparable period in
1994 as a result of decreased costs associated with administrative and
accounting service reimbursements.
A summary of the Partnership's cash flows is as follows:
Three Months Ended March 31,
----------------------------
1994 1995
---- ----
Net cash provided (used) by:
Operating activities $ 50,555 201,083
Investing activities (97,210) (124,453)
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$ (46,655) 76,630
========= =========
The changes in operating activities were impacted by the changes in net income
(loss) described above and the changes in operating assets and liabilities
between the periods. Investing activities include an increase in securities
available for sale related to the purchase of treasury bills in 1994 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.
Real estate is cyclical in nature and the entire industry is currently
experiencing a downturn in the cycle. There is increasing competition for
quality tenants, overbuilding in certain markets, and increased property
operating costs. In light of these conditions, specifically considering the
decline in revenue from the hotel property and growth being less than originally
anticipated for Independence Tower, distributions paid to limited partners were
reduced in 1988 to 3.5% of original capital from the 7% level paid in prior
years and no distributions were paid in 1989, 1990, 1991 or 1993. Future
distributions, if any, are anticipated to be paid on an annual basis and will be
commensurate with actual prior year operations, cash reserves and anticipated
operating requirements. During March 1992, a distribution of approximately
$2,000,000 ($31.36 per limited partnership unit) was made to all limited
partners. In September 1994, a distribution of approximately $500,000 ($7.84
per limited partnership unit) was paid to all limited partners. At March 31,
1995, the Partnership had cash and cash equivalents of approximately $380,000
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
March 31, 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: May 10, 1995 By: /s/ Glen R. Gilbert
------------------------------------
Glen R. Gilbert, Senior Vice President
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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.
</LEGEND>
<CIK> 0000748827
<NAME> I.R.E. PENSION INVESTORS, LTD.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 379702
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<RECEIVABLES> 0
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<OTHER-SE> 784413<F2>
<TOTAL-LIABILITY-AND-EQUITY> 7343312
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<FN>
<F1>Entity presents an unclassified balance sheet.
<F2>Represents partners' capital.
</FN>
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