SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File Number
December 31, 1994 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 Office) (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
------- ------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [X]
Documents Incorporated by Reference
Portions of the Prospectus of the Registrant, dated February 13, 1985, are
incorporated by reference into Part IV.
I.R.E. PENSION INVESTORS, LTD.
(A Florida Limited Partnership)
PART I
------
ITEM 1. BUSINESS
-----------------
I.R.E. PENSION INVESTORS, LTD., a limited partnership organized under the laws
of the State of Florida as of January 17, 1985, is primarily engaged in the
business of operating and holding for investment an income producing real
property. The Partnership commenced a public offering of its units of limited
partnership interest in February 1985, broke escrow in April 1985 and closed the
offering in October 1985, having raised $15,960,250 in capital and issued 63,837
units of limited partnership interest at $250 per unit. The Partnership
initially acquired two properties, Independence Tower in Charlotte, North
Carolina and One West Nine Mile in Hazel Park, Michigan for cash. The One West
Nine Mile Holiday Inn was sold in December 1991. The Partnership currently
holds one property, Independence Tower which is currently being marketed for
sale. The property is 88% leased and is generating a positive cash flow
Uninvested cash of the Registrant is deposited in demand accounts with
commercial banks and may be invested temporarily in U.S. Treasury Bills,
certificates of deposit or other interest bearing accounts or investments.
Alan B. Levan and I.R.E. Pension Advisors, Corp. are the general partners of the
Registrant. I.R.E. Pension Advisors, Corp., as Managing General Partner,
manages and controls the Registrant's affairs and has general responsibility and
the ultimate authority in all matters affecting the Registrant's business.
Affiliates of the general partners of the Registrant also own and operate their
own improved real estate and may have investment objectives and policies similar
to those of the Registrant. Registrant may be in competition with other limited
partnerships served by affiliates of the Managing General Partner or by other
companies wherein the individual general partner is a controlling stockholder.
On December 31, 1994, Registrant had 2 employees. The balance of information
required in Item 1 is either inapplicable or not material to an understanding of
the Registrant's business.
ITEM 2. PROPERTIES
-------------------
The property listed below is not utilized by Registrant but is held for
investment. This property is zoned for its current use.
Independence Tower 103,512 square feet owned
Charlotte, NC leasable office space
ITEM 3. LEGAL PROCEEDINGS
--------------------------
Martha Hess, et. al., on behalf of themselves and all others similarly situated,
v. Gordon, Boula, Financial Concepts, Ltd., KFB Securities, Inc., et al. In the
Circuit Court of Cook County, Illinois. On or about May 20, 1988, an individual
investor filed the above referenced 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
Registrant, interests in which were sold by the individual and corporate
defendants.
Plaintiff alleged that the sale of limited partnership interests in Registrant
(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 would not be 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
December 31, 1994, 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 March 31, 1995, (including interest payments thereon) would
amount to approximately $136,000. A provision of $67,000 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. Partners' capital, units outstanding, per
unit information, including income (loss) per unit amounts, have not been
adjusted for the potential rescission of units.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP INTEREST AND
------------------------------------------------------------------------------
RELATED SECURITY HOLDER MATTERS
-------------------------------
(a) There is no established public trading market for Registrant's units of
limited partnership interest.
(b) There are approximately 2,740 holders of units of limited partnership
interest as of December 31, 1994.
(c) See Item 6.-Selected Financial Data regarding Registrant's distributions,
incorporated herein by reference as if set forth herein.
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------
For the five years ended December 31, 1994.
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
Revenues $ 1,429,560 1,440,418 1,109,557 1,146,293 1,266,818
========== ========== ========== ========== ==========
Net income (loss) $ (56,238) (1,796,743) 61,421 (24,174) 42,284
========== ========== ========== ========== ==========
Net income (loss)
per weighted
average limited
partnership unit
outstanding $ (.87) (27.89) .95 (.38) .66
========== ========== ========== ========== ==========
Total assets $12,012,102 9,620,472 7,739,318 7,826,907 7,268,449
========== ========== ========== ========== ==========
Partners' capital $11,287,606 9,490,863 7,552,523 7,528,349 7,070,371
========== ========== ========== ========== ==========
Distributions
per weighted
average limited
partnership
unit outstanding $ - - - 31.36 7.84
========== ========== ========== ========== ==========
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF I.R.E. PENSION INVESTORS, LTD.
A description of the Partnership's original investment properties follows:
* Independence Tower - A 107,000 square foot office building located in
Charlotte, North Carolina.
* One West Nine Mile Holiday Inn Hotel ("Holiday Inn") - A 211 room
hotel located in Hazel Park, Michigan through a joint venture in which
the Partnership had 91.3% interest. This property was sold in
December 1991.
The Partnership was organized on January 17, 1985, to engage in acquiring,
improving, operating and holding for investment, income producing real
properties. The Partnership's objectives were to invest in properties which
would: 1) Preserve and protect the Partnership's original capital; 2) Provide
long-term appreciation in the value of the Partnership's properties; and 3)
Provide cash distributions to the Limited Partners.
On April 1, 1985, sufficient capital had been raised to allow funds to be
released from escrow to the Partnership. The Partnership closed the offering in
October 1985, having raised $15,960,250 in capital and issued 63,837 units of
limited partnership interest at $250 per unit.
During August 1985, the Partnership acquired an office building in Charlotte,
North Carolina. In December 1986, the Partnership acquired a majority interest
in a joint venture with an affiliate. This joint venture acquired a hotel in
Hazel Park, Michigan. The hotel building was net leased to Holiday Inn. During
1991, the hotel was sold and the joint venture was liquidated.
Rental income increased for the year ended December 31, 1994 as compared with
prior years primarily due to an increase in occupancy and an increase in average
rental rates at Independence Tower. The occupied percentages at Independence
Tower increased from 83% in December 1992 to 88% in December 1994.
Interest income increased for the year ended December 31, 1994 as compared to
the comparable period in 1993 primarily due to an increase in yields on the
investment of funds. Interest income decreased for the year ended December 31,
1993 as compared with the prior year due to lower yields on the investment of
funds.
Other income decreased for the year ended December 31, 1994 as compared to the
comparable periods in 1993 and 1992 due principally to decreased fees resulting
from investor transfers of partnership units.
Depreciation expense increased for the year ended December 31, 1994 as compared
to the comparable periods in 1993 and 1992 due to additional property
improvements at Independence Tower.
Real estate taxes decreased for the year ended December 31, 1992 as compared
with the 1993 and 1994 periods, primarily due to a refund received and a
successful appeal of the 1991 taxes at Independence Tower.
Insurance increased for the year ended December 31, 1994 as compared to the
comparable periods in 1993 and 1992 primarily due to an increase in Independence
Tower insurance premium.
Utilities expense decreased for the year ended December 31, 1992 as compared to
the comparable periods in 1993 and 1994 primarily due to a decrease in
electrical consumption at Independence Tower.
The net increase in rental income in 1994 was the causal factor for the increase
in property management fees to affiliate for the year ended December 31, 1994 as
compared to the comparable periods in 1993 and 1992.
Repairs and maintenance increased for the year ended December 31, 1993 as
compared to 1992 primarily due to an increase in janitorial expenses and general
repair and maintenance costs at Independence Tower as a result of increase in
occupancy.
Other property expenses decreased for the year ended December 31, 1993 as
compared to 1992 primarily due to decreased legal costs, postage and office
supplies at Independence Tower.
Other general and administrative expenses decreased for the year ended December
31, 1993 as compared to the prior year comparable period in 1992 primarily due
to interest of $53,000 accrued in 1992 on the potential rescission of
partnership units. In 1993 and 1994 the interest accrued on the potential
rescission of partnership units amounted to $6,500 and $7,300, respectively.
General and administrative expense to affiliates decreased for the year ended
December 31, 1994 as compared to the 1993 and 1992 comparable periods as a
result of decreased costs associated with administrative and accounting service
reimbursements. These cost reimbursements are associated with filing
requirements to regulatory agencies, tax return preparation, general accounting
services and monitoring of pending litigation.
A summary of the Partnership's cash flows is as follows:
1992 1993 1994
---- ---- ----
Net cash provided (used) by:
Operating activities $ 521,532 541,869 413,945
Investing activities (412,975) (274,819) (2,553,170)
Financing activities (1,999,761) - (500,262)
----------- ---------- ----------
$(1,891,204) 267,050 (639,487)
========== ========== =========
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 in 1994, 1993 and 1992. Such
improvements normally are incurred in connection with the obtaining or renewal
of tenant leases, however, during the third and fourth quarters of 1992,
approximately $150,000 was expended in connection with improvements to the HVAC
system and building windows. Although there are no other 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. Financing activities for
1994 and 1992 reflect a cash distribution to limited partners.
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 December 31,
1994, the Partnership had cash and cash equivalents of approximately $303,000
and approximately $2.4 million un 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 5 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.
ITEM 8. INDEX TO FINANCIAL STATEMENTS
--------------------------------------
Independent Auditors' Report
Financial Statements:
Balance Sheets - December 31, 1993 and 1994
Statements of Operations - For each of the Years in the Three Year Period
ended December 31, 1994
Statements of Partners' Capital - For each of the Years in the Three Year
Period ended December 31, 1994
Statements of Cash Flows - For each of the Years in the Three Year Period
ended December 31, 1994
Notes to Financial Statements
ITEM 14. FINANCIAL STATEMENT SCHEDULE
--------------------------------------
XI. Properties and Accumulated Depreciation - December 31, 1994.
All other schedules are omitted as the required information is either not
applicable or is presented in the financial statements and related notes.
INDEPENDENT AUDITORS REPORT
---------------------------
The Partners
I.R.E. Pension Investors, Ltd.:
We have audited the financial statements of I.R.E. Pension Investors, Ltd. (a
Florida Limited Partnership), as listed in the accompanying index. In
connection with our audits of the financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
financial statements and financial statement schedule are the responsibility of
I.R.E. Pension Investors, Ltd.'s management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of I.R.E. Pension Investors, Ltd.,
at December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the years in the three-year period ended December 31,
1994, in conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
Fort Lauderdale, Florida
March 24, 1995
I.R.E. PENSION INVESTORS, LTD.
(A Florida Limited Partnership)
Balance Sheets
December 31, 1993 and 1994
Assets
------
1993 1994
---- ----
Cash and cash equivalents $ 2,942,559 303,072
Securities available for sale - 2,361,081
Investment in real estate:
Office building 7,369,977 7,562,066
Less accumulated depreciation (2,509,029) (2,999,846)
---------- -----------
Net investment in real estate 4,860,948 4,562,220
Other assets, net 23,400 42,076
---------- ----------
$ 7,826,907 7,268,449
========== ==========
Liabilities and Partners' Capital
---------------------------------
Accrued expenses 61,821 72,640
Accounts payable and other liabilities 222,067 114,639
Due to affiliates 14,670 10,799
---------- ---------
Total liabilities 298,558 198,078
Partners' capital:
63,776 limited partnership units issued and
outstanding 7,528,349 7,070,371
---------- ---------
$ 7,826,907 7,268,449
========== ==========
See accompanying notes to financial statements.
I.R.E. PENSION INVESTORS, LTD.
(A Florida Limited Partnership)
Statements of Operations
For each of the Years in the Three Year Period ended December 31, 1994
1992 1993 1994
---- ---- ----
Revenues:
Rental income $ 994,663 1,068,273 1,159,262
Tenant reimbursements 948 1,226 -
Interest income 98,164 70,711 103,995
Other income 15,782 6,083 3,561
---------- ---------- ---------
Total revenues 1,109,557 1,146,293 1,266,818
---------- ---------- ---------
Costs and expenses:
Depreciation 359,112 430,330 490,817
Property operations:
Taxes 36,440 71,445 68,692
Insurance 19,966 17,424 35,383
Utilities 161,618 195,997 184,917
Property management fees to affiliate 59,980 64,170 69,769
Repairs and maintenance 167,058 199,131 196,349
Other 86,508 83,285 84,363
General and administrative:
To affiliates 64,363 63,987 51,582
Other 93,091 44,698 42,662
--------- ---------- ---------
Total costs and expenses 1,048,136 1,170,467 1,224,534
--------- ---------- ---------
Net income (loss) $ 61,421 (24,174) 42,284
========== ========== ==========
Net income (loss) per weighted average
limited partnership unit outstanding $ .95 (.38) .66
========== ========== ==========
See accompanying notes to financial statements.
I.R.E. PENSION INVESTORS, LTD.
(A Florida Limited Partnership)
Statements of Partners' Capital
For each of the Years in the Three Year Period ended December 31, 1994
Limited General
Partners Partners Total
---------- -------- ---------
Balance at December 31, 1991 $ 9,505,524 (14,661) 9,490,863
Limited partner distribution (1,999,761) - (1,999,761)
Net income 60,807 614 61,421
---------- ------ ---------
Balance at December 31, 1992 7,566,570 (14,047) 7,552,523
Net (Loss) (23,932) (242) (24,174)
----------- -------- ----------
Balance at December 31, 1993 7,542,638 (14,289) 7,528,349
Limited partner distribution (500,262) - (500,262)
Net income 41,861 423 42,284
--------- ------- ---------
Balance at December 31, 1994 $ 7,084,237 (13,866) 7,070,371
========= ======== =========
See accompanying notes to financial statements.
I.R.E. PENSION INVESTORS, LTD.
(A Florida Limited Partnership)
Statements of Cash Flows
For each of the Years in the Three Year Period ended December 31, 1994
1992 1993 1994
---- ---- ----
Operating Activities:
Net income (loss) $ 61,421 (24,174) 42,284
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 359,112 430,330 490,817
Non-cash portion of rental income (112) 715 1,574
Changes in operating assets and
liabilities:
Increase (decrease) in accrued
expenses, accounts payable
and other liabilities,
and due to affiliates 57,186 111,763 (100,480)
(Increase) decrease in other
assets, net 43,925 23,235 (20,250)
--------- --------- ---------
Net cash provided by operating
activities 521,532 541,869 413,945
--------- -------- ---------
Investing Activities:
Increase in securities available
for sale - - (2,361,081)
Property improvements (412,975) (274,819) (192,089)
--------- --------- ---------
Net cash (used) in
investing activities (412,975) (274,819) (2,553,170)
--------- --------- -----------
Financing Activities:
Limited partner distribution (1,999,761) - (500,262)
--------- --------- ---------
Net cash (used) in financing
activities (1,999,761) - (500,262)
--------- --------- ---------
Increase (decrease)in cash and cash
equivalents (1,891,204) 267,050 (2,639,487)
Cash and cash equivalents at
beginning of year 4,566,713 2,675,509 2,942,559
--------- --------- ---------
Cash and cash equivalents at end of year $2,675,509 2,942,559 303,072
========= ========= =========
See accompanying notes to financial statements.
I.R.E. PENSION INVESTORS, LTD.
(A Florida Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
-----------------------------------------------
General
-------
I.R.E. Pension Investors, Ltd. (the "Partnership") was organized on January 17,
1985 in accordance with the provisions of the Florida Uniform Limited
Partnership Act to invest in, hold and manage income producing real estate. A
sufficient amount of capital was raised to allow funds to be released from
escrow to the Partnership on April 1, 1985. The Partnership closed its offering
of limited partnership units in October 1985 after having raised $15,960,250.
The Managing General Partner has complete authority in the management and
control of the Partnership. I.R.E. Pension Advisors, Corp. is the Managing
General Partner and Alan B. Levan is the individual General Partner of the
Partnership. The General Partners may serve in the same capacity for other
entities having similar investment objectives. Should any conflicts of interest
arise among these entities, the management of the managing general partners
will, at their sole discretion, resolve such conflicts.
Compensation to General Partners and Affiliates
-----------------------------------------------
The General Partners and/or their affiliates are entitled to receive
compensation only as specified by the Partnership Agreement. The determination
of amount and timing of payment is subject to certain limitations and to cash
distribution preferences of limited partners. Following is a brief description
of such compensation and the services to be rendered:
Underwriting Commissions:
Due upon the sale of Partnership units of interest.
Non-recurring Acquisition Fees:
Principally for evaluating and selecting real property for potential
purchase by the Partnership.
Property Management Fee:
Due for services in connection with the continuing professional property
management of the Partnership properties.
Partnership Management Fee:
Due for services rendered in evaluating and selecting properties for the
Partnership, reviewing cash requirements, including the determination of
the amount and timing of distributions, if any, making decisions as to the
nature and terms of the acquisition and disposition of such properties,
selecting, retaining and supervising consultants, contractors, architects,
engineers, lenders, borrowers, agents and others and otherwise generally
managing the day-to-day operations of the Partnership.
Mortgage Servicing Fees:
Due for mortgage servicing on notes held by the Partnership.
Subordinated Real Estate Commissions:
Related to sales of Partnership properties.
Interest in Cash from Sales or Financing:
Due also for services as listed under "Partnership Management Fee".
Interest in Net Income and Net Loss as Determined for Federal Income Tax
Purposes:
1% of net losses and the greater of (a) 1% of net income or (b) an amount
of such net income which is in proportion to the percentage of cash
distributed to the General Partners as a Partnership Management Fee or for
their Interest in Cash From Sales or Financing.
Cash and cash equivalents
-------------------------
Cash equivalents include liquid investments with a maturity of three months or
less.
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, the
Partnership owned one treasury bill that matures in May 1995 for which cost
approximated fair value. The Partnership adopted FAS 115 prospectively on
January 1, 1994. The impact upon the 1994 financial statements was immaterial
because the cost of available for sale securities approximated their fair value
in 1994.
Properties
----------
Properties are stated at the lower cost or net realizable value in the
accompanying statements of financial condition. The office building is
depreciated using the straight-line method over an estimated useful life of 20
years. Tenant improvements are capitalized and depreciated using the straight-
line method over an estimated useful life of five years.
Income Taxes
------------
The payment of income taxes is the obligation of the individual partners;
therefore, there is no provision for income taxes in the accompanying financial
statements. The Partnership's tax returns have not been examined by Federal or
state taxing authorities.
Net income or loss reported for income tax purposes involves, among other
things, various determinations relating to properties purchased. Although
management of the Partnership believes that such determinations are appropriate,
there can be no assurance that the Internal Revenue Service will not contest the
Partnership's tax treatment of various items or, if contested, such treatment
will be sustained by the Courts. Further, there is a possibility that the
Treasury will amend existing regulations or promulgate new regulations, and such
action may be retroactive. Accordingly, the tax status of the Partnership and
the availability of prior and future income tax benefits to limited partners may
be adversely affected.
Financial Reporting
-------------------
The Partnership maintains its accounting records on a modified cash basis. The
accompanying financial statements are presented on an accrual basis
Reclassifications
-----------------
For comparative purposes, certain prior year balances have been reclassified to
conform with the 1994 financial statement presentation.
Rental Income
-------------
Rental income is recognized under the operating method whereby aggregate rentals
are reported as income over the life of the lease and the costs and expenses are
charged against such revenue. Leasing commissions, when significant, are
capitalized and amortized over the term of the lease. Rental income, from
leases with periods of rent abatement and/or graduated payments, is recognized
ratably over the term of the lease when the credit worthiness of the tenant can
be verified to assure collectability. When this policy is followed a receivable
is created in the early years of the lease.
(2) Properties
---------------
Following is a brief description of the property investments made by the
Partnership.
Independence Tower
------------------
On August 19, 1985, the Partnership purchased a twelve story office building
containing 103,512 square feet of net leasable area in Charlotte, North
Carolina. See note 6(a).
One West Nine Mile Holiday Inn Hotel
------------------------------------
On December 18, 1986, the Partnership acquired a 91.3% interest in a Joint
Venture with an affiliate. This joint venture purchased a 211-room hotel in
Hazel Park, Michigan. In December 1991, One West Nine Mile Holiday Inn Hotel
was sold and the joint venture was liquidated.
Leases
------
The aggregate sum of the minimum lease rental payments to be received for
Independence Tower over the five succeeding years is approximately as follows:
Year ending December 31,
------------------------------------------------
1995 1996 1997 1998 1999
---------- -------- -------- -------- ------
$1,115,000 896,000 707,000 241,000 104,000
========= ======= ======= ======= =======
The above table does not consider exercise of renewal options by existing
tenants, leasing premises that were not leased as of December 31, 1994 or
renewal of leases expiring during the above periods.
(3) Compensation To General Partners And Affiliates
---------------------------------------------------
During the year ending December 31, 1992, 1993 and 1994 compensation and
reimbursements to general partners and affiliates were as follows:
1992 1993 1994
---- ---- ----
Reimbursements for administrative and
accounting services $ 64,363 63,987 51,582
Property management fees 59,980 64,170 69,769
------- ------- -------
Total 124,343 128,157 121,351
======= ======= =======
(4) Reconciliation of Net Income (Loss) and Partners' Capital
--------------------------------------------------------------
The following reconciliation provides details of the nature and amount of
differences between net income (loss) and partners' capital per the accompanying
financial statements and the Partnership's tax return.
1992 1993 1994
---- ---- ----
Net income (loss):
Amount reported for financial statement
purposes $ 61,421 (24,174) 42,284
Difference in financial statement/tax
depreciation expense 180,024 241,740 294,467
Difference between accrual basis of
accounting used for financial
statements and the method used for
income tax purposes 26,765 (9,834) 8,100
--------- --------- ----------
Amount reported for income tax purposes $ 268,210 207,732 344,851
========== ========== ==========
1992 1993 1994
---- ---- ----
Partners' capital:
Amount reported for financial statement
purposes $ 7,552,523 7,528,349 7,070,371
Difference in financial statement/tax
depreciation expense 883,521 1,125,261 1,419,728
Difference between accrual basis of
accounting used for financial
statements and the method used for
income tax purposes 65,948 56,115 64,214
Cost of raising capital, deducted from
partners' capital for financial
statements and included in other assets
for income tax purposes, net 1,751,049 1,751,049 1,751,049
---------- ---------- ----------
Amount reported for income tax purposes $10,253,041 10,460,774 10,305,362
========== ========== ==========
(5) 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 would not be 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
December 31, 1994, 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 March 31, 1995, (including interest payments thereon) would
amount to approximately $136,000. A provision of $67,000 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.
(6) 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.
SCHEDULE XI
-----------
Properties and Accumulated Depreciation
December 31, 1994
Independence
Tower
Office Building
Charlotte
North Carolina
--------------
Acquisition Date 8/85
Encumbrances $ -
=========
Initial Costs:
Land $ 823,161
Building and Improvements 4,628,240
---------
5,451,401
---------
Improvements:
Costs capitalized subsequent to acquisition:
Land -
Building and Improvements 2,110,665
---------
2,110,665
---------
Gross Amount:
Land 823,161
Building and Improvements 6,738,905
---------
Total $ 7,562,066
=========
Accumulated Depreciation $ 2,999,846
=========
Life on which depreciation is computed 20 years
=========
Reconciliation of Cost and Accumulated Depreciation
For each of the Years in the Three Year Period ended December 31, 1994
1992 1993 1994
---- ---- ----
Cost:
----
Balance at beginning of period $ 6,682,183 7,095,158 7,369,977
Additions:
Improvements 412,975 274,819 192,089
---------- --------- ---------
Balance at end of period $ 7,095,158 7,369,977 7,562,066
========== ========== ==========
Accumulated Depreciation:
------------------------
Balance at beginning of period $ 1,719,587 2,078,699 2,509,029
Addition:
Depreciation 359,112 430,330 490,817
---------- --------- ---------
Balance at end of period $ 2,078,699 2,509,029 2,999,846
========== ========== ==========
The aggregate basis (not reduced by accumulated depreciation) for Federal income
tax purposes of the above property was approximately $7,562,000 at December 31,
1994.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------------------------------------------------------------------------
FINANCIAL DISCLOSURE.
---------------------
None.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-----------------------------------------------------------
Registrant has no directors or officers.
a) Directors.
----------
Listed below are the directors of I.R.E. Pension Advisors Corp., Managing
General Partner of Registrant, all of whom are to serve until the election
and qualification of their respective successors unless sooner removed from
office:
NAME AGE POSITIONS HELD
---- --- --------------
Alan B. Levan 50 Director since 1985
Earl Pertnoy 68 Director since 1985
Carl E. B. McKenry, Jr. 66 Director since 1985
b) Executive Officers.
-------------------
Listed below are the executive officers of I.R.E. Pension Advisors Corp.,
all of whom are to serve until they resign or are replaced by the Board of
Directors:
NAME AGE POSITIONS HELD
---- --- --------------
Alan B. Levan 50 President since 1985
Glen R. Gilbert 50 Senior Vice President
since 1985; Chief Financial
Officer since 1987;
Secretary since 1988
c) Certain Significant Employees.
------------------------------
Not applicable.
d) Family Relationships.
---------------------
Not applicable.
e) Business Experience.
--------------------
ALAN B. LEVAN formed the I.R.E. Group in 1972. Since 1978, he has been the
Chairman of the Board, President, and Chief Executive Officer of BFC
Financial Corporation (or its predecessor companies), a financial services
and savings bank holding company. He is also Chairman of the Board and
President of I.R.E. Realty Advisors, Inc., I.R.E. Properties, Inc., I.R.E.
Realty Advisory Group, Inc., U.S. Capital Securities, Inc., and Florida
Partners Corporation. Mr. Levan is also Chairman of the Board and Chief
Executive Officer of BankAtlantic, Bancorp, Inc. Mr. Levan is also an
individual general partner and an officer and a director of the corporate
general partners of various public limited partnerships (including the
Registrant), all of which are affiliated with BFC Financial Corporation.
GLEN R. GILBERT has been Senior Vice President of BFC Financial Corporation
since 1984, Chief Financial Officer since 1987 and Secretary since 1988.
Mr. Gilbert has been a certified public accountant since 1970. Mr. Gilbert
serves as an officer of Florida Partners Corporation and of the corporate
general partners of various public limited partnerships (including the
Registrant), all of which are affiliated with BFC Financial Corporation.
EARL PERTNOY has been for more than the past five years a real estate
investor and developer. He has been a director of BFC Financial Corporation
and its predecessor companies since 1978. He is a director of the corporate
general partners of various public limited partnerships (including the
Registrant), all of which are affiliated with BFC Financial Corporation.
CARL E. B. McKenry, JR. is the Director of the Small Business Institute at
the University of Miami in Coral Gables, Florida. He has been associated in
various capacities with the University since 1955. He has been a director
of BFC Financial Corporation since 1981 and is a director of the corporate
general partners of various public limited partnerships (including the
Registrant), all of which are affiliated with BFC Financial Corporation.
f) Certain Legal Proceedings.
--------------------------
None.
ITEM 11. EXECUTIVE COMPENSATION
--------------------------------
a) Cash Compensation.
------------------
The Registrant has no officers or directors.
The Registrant did not pay salaries or expenses of the officers and
directors of the general partner of the Registrant in 1994, except for
travel and other expenses directly related to activities of the Registrant.
b) Compensation Pursuant to Plans.
-------------------------------
Registrant has no annuity, pension or retirement plan for any director,
officer or employee.
c) Other Compensation.
-------------------
Not applicable.
d) Compensation of Directors.
--------------------------
Registrant has no directors.
e) Termination of Employment and Change of Control Arrangement.
------------------------------------------------------------
Not applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
a) No person owns 5% or more of Registrant's voting securities.
b) Registrant has no officers or directors.
(3)
AMOUNT AND
(2) NATURE OF (4)
(1) NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
-------------- ---------------- ---------- --------
(i)
Units of Limited Alan B. Levan 28 Direct .0% (approx.)
Partnership 1750 E. Sunrise Blvd. (ii)
Interest Fort Lauderdale, FL 33304
All other directors and
officers of the Managing
General Partner as a
group 0 Direct .0%
--------- ---
TOTAL 28 Direct .0% (approx.)
========= ===
(I) Alan B. Levan is a general partner of Registrant and is President
and Director of the Managing General Partner.
(ii) Includes 8 units held by spouse.
c) Registrant knows of no contract or other arrangement that could result in a
change in control of registrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
a) & b)During the year ending December 31, 1994, the following entities
received the fees and payments indicated for services rendered with
respect to the Registrant:
NAME AND
RELATIONSHIP TO REGISTRANT TRANSACTION AMOUNT
-------------------------- ----------- ------
BFC Financial Corporation Reimbursement for
and subsidiaries, administrative and
Affiliates of the General accounting services $51,582
Partners
Property management fees $69,769
c) Indebtedness of Management.
---------------------------
None.
d) Transactions with Promoters.
----------------------------
Not applicable.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------
A-1. See Item 8. Financial Statements and Supplementary Data.
A-2. See Item 8. Financial Statements and Supplementary Data.
A-3. Exhibits:
(3) Articles of incorporation and by-laws. Limited Partnership
Agreement set forth as Exhibit A to the Prospectus of the
Partnership dated February 13, 1985, as filed with the Commission
pursuant to Rule 424(c), is hereby incorporated herein by
reference.
(4) Instruments defining the rights of security holders, including
indentures - Not applicable.
(9) Voting trust agreement - Not applicable.
(10) Material contracts - Not applicable.
(11) Statement re computation of per share earnings - Not applicable.
(12) Statements re computation of ratios - Not applicable.
(13) Annual report to security holders, Form 10-Q or quarterly report
to security holders - Not applicable.
(18) Letter re change in accounting principles - Not applicable.
(19) Previously unfiled documents - Not applicable.
(22) Subsidiaries of the Registrant - Not applicable.
(23) Published report regarding matters submitted to a vote of
security holders - Not applicable.
(24) Consents of experts and counsel - Not applicable.
(25) Power of attorney - Not applicable.
(28) Additional exhibits - None.
(29) Information from reports furnished to state insurance regulatory
authorities - Not applicable.
B. REPORTS ON FORM 8-K
-------------------
No reports on Form 8-K have been filed during the last quarter of the period
covered by this report.
No annual report or proxy material for the year 1994 has been sent to the
Partners of the Partnership. An annual report will be sent to the Partners
subsequent to this filing.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
I.R.E. PENSION INVESTORS, LTD.
Registrant
By: I.R.E. Pension Advisors Corp.,
Managing General Partner
By: /S/ Alan B. Levan
------------------------------------
Alan B. Levan, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Managing General
Partner on behalf of the Registrant and in the capacities and on the dates
indicated.
/S/ Alan B. Levan March 27 1995
-------------------------------------------------------
Alan B. Levan, Director and Principal Executive Officer
/S/ Earl Pertnoy March 27, 1995
-------------------------------------------------------
Earl Pertnoy, Director
/S/ Carl E.B. McKenry, Jr. March 27, 1995
-------------------------------------------------------
Carl E. B. McKenry Jr., Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS
ENTIRETY BY REFRENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000748827
<NAME> I.R.E. PENSION INVESTORS, LTD.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 303
<SECURITIES> 2,361
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 7,562
<DEPRECIATION> 3,000
<TOTAL-ASSETS> 7,268
<CURRENT-LIABILITIES> 198
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 7,070<F2>
<TOTAL-LIABILITY-AND-EQUITY> 7,268
<SALES> 0
<TOTAL-REVENUES> 1,267
<CGS> 0
<TOTAL-COSTS> 1,225
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 42
<INCOME-TAX> 0
<INCOME-CONTINUING> 42
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
<FN>
<F1>THE COMPANY MAINTAINS AN UNCLASSIFIED BALANCE SHEET.
<F2>ENTITY IS A PARTNERSHIP. AMOUNT REPRESENTS PARTNERS' CAPITAL.
</FN>
</TABLE>
